I agree with the opinion of the learned Appellate Division that this action can be maintained under sections 1781 and 1782 of the Code of Civil Procedure. I also agree that the receiver of the D.G. Yuengling Brewing Company, although formally discharged, was a necessary party to this action, either as plaintiff or defendant, under the rule that a demurrer admits all facts stated and such inferences as can be fairly drawn from them. It is true that there is no direct allegation that the receiver was a party to the conspiracy charged, although the inferences point strongly to such a conclusion. I am further of opinion, however, assuming the receiver is not to be regarded as a co-conspirator, that nevertheless his presence as a party to the action is necessary.
The complaint while exceedingly prolix, alleges a conspiracy *Page 161 that contemplated the winding up of the brewing company and the appointment of a receiver in order to place its property in the possession of the defendant in fraud of creditors. It appears that the brewing company was seized of real estate valued at half a million dollars, subject to a mortgage, the foreclosure of which divested the company of title, it being fraudulently arranged that the defendant should bid in the same without competitive bidding for as low a price as possible. The company was also the owner of personal property valued at a half million dollars, the ownership of which, according to the alleged corrupt scheme, was to pass under voluntary dissolution proceedings into the hands of the receiver and the defendant was to acquire title thereto upon a fraudulent receiver's sale without competitive bidding and at as low a figure as possible. It is alleged that this result was accomplished to the very great injury of the creditors of the brewing company.
If the allegations of the complaint can be sustained by proof, it follows that the receiver's sale and final discharge were all a part of a fraudulent conspiracy. To successfully attack the fraudulent title of the defendant, the order for the sale of the property, and the judgment of discharge following the final accounting of the receiver, must be vacated. The discharge of a receiver as a part of a fraudulent conspiracy, of which the court had no knowledge when entering judgment to that effect, is in law no discharge and will be set aside when it is advised of the situation. If it be the fact that the receiver acted in entire good faith throughout, there is no reason why he should not appear as plaintiff herein; and if he refuses to assume the burden he is a necessary defendant.
I am of opinion that the foregoing facts distinguish this case from those cited by counsel, to the effect that a discharged receiver cannot be sued. Archambeau v. Platt (173 Mass. 249) and McNulta v. Lochridge (141 U.S. 327) were negligence actions against the receivers of railway companies. In the Massachusetts case the receiver had been discharged; in the second case it was held that an action would lie against a *Page 162 receiver for causes of action accruing under his predecessor in office. In N.Y. W.U. Tel. Co. v. Jewett (115 N.Y. 166) the action was to recover the rent of a telegraph line, against the discharged receiver of the Erie Railway Company. Neither of these cases involves the question here presented.
In the case at bar a part of the necessary relief is to vacate the discharge of the receiver, the sale of the property to defendant, or his representatives, and, if necessary, set aside his appointment; and, if it be found that he was acting in collusion with the conspirators, name his successor.
The order appealed from should be affirmed.
CULLEN, Ch. J., HAIGHT, VANN and CHASE, JJ., concur with WILLARD BARTLETT, J.; GRAY, J., dissents on ground that complaint does not state a cause of action; EDWARD T. BARTLETT, J., reads dissenting memorandum.
Order reversed and judgment ordered for plaintiff on demurrer, with costs in all courts, with leave to defendant to withdraw demurrer and serve answer within twenty days on payment of costs.