Opinion
02-16-1888
RYAN v. ANGLESEA R. CO. et al.
J. J. Crandall, for complainant. S. H. Grey, for defendant Bodine.
Bill to foreclose. On motion to strike out parts of the answer. On the 29th day of December, 1882, the defendant company, by authority given by its board of directors, authorized the issuing of bonds to the amount of $40,000. These bonds were secured by a mortgage given by it to the Guarantee Trust & Safe Deposit Company of Philadelphia. The complainant, Ryan, is the holder of $32,000 worth of bonds; and as the company went in the hands of a receiver in 1884, and has never been able to pay said amount, Ryan now files a bill to foreclose the mortgage and sell the property,—he making Bodine, the receiver, a party thereto. The receiver filed an answer, to which complainant excepted.
J. J. Crandall, for complainant. S. H. Grey, for defendant Bodine.
BIRD, V. C. Bodine had been appointed receiver of the defendant company, and, judging from the pleadings, had so far discharged his trust as to deem it sate to allow the complainant, who had become the owner of all the claims against it, to take charge of the railroad of the defendant company, over which he had been given command, and also of all the assets of the said company. He not only thus surrendered everything by his acquiescence, but proceeded to treat with the complainant with respect to the payment of his costs and his compensation, and actually entered into an agreement covering all these matters. Now, while in this position, the complainant, who treated with Bodine as receiver, calls upon him to answer, after he had rescued from him all that he could possibly hold in that capacity, except some indescribable, or as yet indefinable, show of title; and Bodine, the receiver, who had thus relieved himself of all the property transferred to him in trust, as far as he could without the aid of the court, undertakes to make such answer.
1. It is said Bodine has no interest except as receiver, and, as such, he has no interest that justifies him in answering. Then why make him a party, and call upon him to answer? It was his duty to answer, if only by way of disclaimer. True, if no case was made against him, he might have demurred, but he could not safely keep silent.
2. But, since he does answer, what is required? Is it enough to say, in response to a material allegation, that, "having no personal knowledge thereof, leaves the said complainant to make such proof as he may be advised"? I think that this is no answer at all. He would have been as fully protected had he omitted to mention the subject-matter. It is not enough to say that he has no knowledge, since he may have information or belief of very strong character. And this is especially applicable in this case, when it is considered what position the receiver has occupied. Reed v. Insurance Co., 36 N. J. Eq. 146; Stew. Dig. supp. 250, pl. 451. If bills may be thus answered, then answers had better be dispensed with.
I think the first and second exceptions to the answer are well taken.
3. So much of the answer is excepted to as denies that there is anything due on the bonds secured by the mortgage, and avers that they were made or issued without authority of law; and that no consideration was ever given therefor, by the complainant or any other person; and that they are void, and should be surrendered for cancellation—First, because the answer does not set forth the facts which, if true, would make it clear that the bonds were issued without warrant; second, because it does not show how the complainant became possessed of the bonds without consideration; third, because it presents no facts showing fraud or collusion on his part; and, fourth, the receiver discloses no interest in himself to justify such a defense. If the last reason assigned be sufficient, then, perhaps, all the rest would stand; but, in my humble judgment, until the receiver is discharged by the order of the court, the court is obliged to listen to him, as the representative of the interests which the court appointed him to guard and superintend, especially when he is called upon to speak with reference to a matter which affects such interests in the whole, and in every part. Having a right to answer on this head, the question recurs, is this third exception well taken? In my judgment it is not, in all respects, and therefore must fall. Without considering the other branches of the proposition, it is enough to say that the allegation that no consideration was ever paid by any one therefor is broad enough to give the defendant a standing on that issue. Can the court bind a corporation hand and foot, and turn it over to the care of a receiver, taking from it all capacity, for the time being, to perform any of its ordinary functions, and then, when an alleged creditor prosecutes a large claim, and shows that he has possibly lulled the receiver into indifference by an agreement, forbid the receiver making an answer to a point that affects the whole consideration of the claim? While he is such receiver he has a most high and solemn duty to discharge, and the court can do no less than aid him. If, in truth, his duties be all performed, then let him be discharged in due course; and then it may be that others, having rights or interests, will desire to be heard; and, if so, it cannot be said that a receiver or the court of chancery stands in the way.
4. The seventh paragraph of the answer avers that the complainant is interested in the lands on the line of the railroad, and sets up the agreement between the complainant and the receiver, by which it appears that the receiver was to hold the road for the benefit of the complainant, and the complainant was to pay all the receiver's costs and expenses, which, it is said, he has not done; and all of this is excepted to, and I think properly. It may be a very interesting disclosure to the interested, but it has nothing to do with the validity of the mortgage or the question of consideration. And, since it does not appear that the agreement intended to go so far as to secure to the receiver the right to set off his fees and costs against the amount due on the mortgage, such set-off cannot be allowed, under our practice; supposing it were possible to inject the receiver into the place of the debtor, the defendant company, for any such mere matter of convenience.
I think the first, second, and fourth exceptions are well taken, but not the third.
Counsel for defendant pressed the point that, since the answer was asked for without oath, there could be no exceptions to it, it being without oath. This ought not to prevail. The only innovation the legislature made was to permit the complainant to call for an answer without oath. It did not go further, and say that, if the complainant does so, he shall not be permitted to except to the answer filed in response thereto; and, besides, the practice continues as of old. The complainant is entitled to costs.