Jacobs v. Central Vermont Railway Co.

The defendant has appeared specially and has moved in each of these actions for judgment dismissing the complaint and to vacate the service of the summons on the ground that the court has jurisdiction neither of the subject of the action nor of the person of the defendant. Both actions were commenced on March 6, 1928, by the service of process on a director of the defendant in the city of New York. The plaintiffs are residents of Vermont and the causes of action arose near Williston, in that State, on the 24th of November, 1927. Defendant is a foreign corporation, and receivers were appointed of all its property on December 12, 1927, by the United States District Court for the District of Vermont, and on December 14, 1927, the same persons were appointed ancillary receivers of defendant’s property by the United States District Court for the Southern District of New York. The receivers were appointed upon the application of the Canadian National Railway Company with defendant’s consent. The former company owns more than two-thirds of the outstanding capital stock of defendant.

The actions in question are brought under the Federal Employers’ Liability Act. Under section 6 of this act, as amended in 1910 (35 U. S. Stat. at Large, 66, chap. 149, as amd. by 36 id. 291,

It seems to me that it cannot be seriously doubted that the defendant is a resident of the Northern District of the United States District Court for this State. It owns and operates a part of its railroad system into Rouses Point in Clinton county. In fact, in the suit in which the receivers were appointed it is alleged “ one branch of the main line of defendant extends a few miles into the State of New York.” Defendant admitted that allegation. This fact alone under the provisions of the Federal Employers’ Liability Act gives jurisdiction of the subject-matter and of the person of the defendant. (Stoddard v. Manzella, 207 App. Div. 519 ; Levey v. Payne, 200 id. 30; Polley v. Lehigh Valley R. R. Co., 138 id. 636; affd., 200 N. Y. 585 .) Service of process in these cases was made in the city of New York upon a person admittedly a director of the defendant residing in the State. This effectually disposes of the contention that the court has not jurisdiction of the person of the defendant. (Civ. Prac. Act, § 229, subd. 3; Tauza v. Susquehanna Coal Co., 220 N. Y. 259 ; International Text Book Co. v. Tone, Id. 313 .)

Defendant also contends that inasmuch as receivers have been appointed of its property they are vested with full jurisdiction and control over its affairs, and that consequently the defendant is no longer transacting business in this State. The appointment of receivers does not dissolve a corporation nor restrain the exercise of its corporate powers. The receivers’ functions are limited to the care and preservation of the property committed to their charge. They do not represent the corporation in its individual or personal character, nor supersede it in the exercise of its corporate powers except as to the particular property committed to them. The title to the property was not changed by their appointment. They acquired no title but only the right of possession as officers of the court. The title remained in the corporation in which it was vested when the appointment was made. (Sigua Iron Co. v.

I cannot escape the conclusion that the defendant was doing business in this State at the time of the commencement of these actions. Its property is still here; the railroad still runs into the State; the defendant’s trains and cars are operated thereon by its employees; freight and passengers are transported over the line; and whether the business is carried on by the defendant in its own name through its agents, officers and employees, or in the name of its receivers, is of no moment. It seems to me that it would be an unreasonable construction of the law to hold that an act of a Federal court in appointing receivers for. the railroad company should have the effect of placing the corporation beyond the pale of all statutes applying to the operation of railroads. Any other view would simply mean that the appointment of receivers for a railroad corporation would deprive injured employees of the benefits and the rights conferred on them by the laws of the United States and compel them to prosecute their claims in the forum where the receivers are domiciled. I am not willing to subscribe to that interpretation.