A motion in Federal Court for the appointment of a receiver
should be granted only under the extremist of circumstances. In
Connolly v. Gishwiller, 162 F.2d 428 our Seventh Circuit Court of
Appeals, although affirming the lower court's appointment of a
receiver stated: "It is true, of course, the power to appoint a
receiver is a drastic, harsh and dangerous one and should be
exercised with care and caution". (Connolly p. 435) See also
Mintzer v. Arthur L. Wright Co., 263 F.2d 823; Chambers v.
Blickly Ford Sales, Inc., 2 Cir., 313 F.2d 252.
Also, where as here, state law provides adequate means for
affording sufficient protection of assets, federal courts should
be most hesitant to assert themselves by way of receivership.
Pennsylvania v. Williams, 294 U.S. 176, 55 S.Ct. 380, 79 L.Ed.
841; Fulia v. Warranty Bldg. and Loan Assn., D.C., 5 F. Supp. 952.
Plaintiffs' complaint, briefs and most importantly their
affidavits allege nothing less than fraud on the part of the
present liquidators, those over whom or in lieu of a court
appointed receiver would act. On the basis of plaintiff's
allegations the present liquidators are either corrupt,
inefficient or both. To this extent the circumstances here might
be distinguished from Pennsylvania v. Williams cited above.
However, as is most often the case, these allegations are for the
most part general and not specific. Although possibly susceptible
of proof at an extended hearing or trial, these geneal
allegations do not warrant my granting the extraordinary relief
sought, especially where as here I am in the first instance
proceeding upon legally tenuous jurisdictional grounds. Rather
than compound the legal uncertainty of my rulings I must deny the
present motion for appointment of a receiver. As already stated
this determination is further indicated by the necessary
elimination of what I expressed to have been the overriding
salutary purpose of my prior rulings; the expeditious resolution
of the investors' claims.
Accordingly, I deny plaintiffs' motion for the appointment of
a receiver. Recognizing the consequences of this ruling I do
hereby certify that my order denying this motion "* * * involves
a controlling question of law as to which there is substantial
ground for difference of opinion and that an immediate appeal
from the order may materially advance the ultimate termination of
the litigation * * *" (Title 28 U.S.C. § 1292(b))
Further, on my own motion and for the reasons detailed above I
now certify that my Order of January 17, 1966 assuming
jurisdiction over this case and in effect holding that
withdrawable capital shares in a savings and loan association are
securities within the meaning of the Exchange Act also "* * *
involves a controlling question of law as to which there is
substantial ground for difference of opinion and that an
immediate appeal from the order may materially advance the
ultimate termination of the litigation * * *". (Title 28 U.S.C. § 1292(b))
Pending resolution of what I anticipate will be immediately
filed appeals, this court in no way restrains the liquidation
proceedings presently pending or hereafter commenced in the State
Court. Should, however, this court be sustained in its
jurisdictional ruling those proceedings will, of course, be most
carefully reviewed and analyzed in detail.
In its present posture I express the hope that my ruling on the
main issue concerning the scope and meaning of the term
"security" will be reviewed and the law of this Circuit
determined by our Seventh Circuit Court of Appeals. Should that
learned court agree with my resolution of this issue I can then
entertain another motion for appointment of a receiver, assuming
such relief is still available. (See Esbitt v. Dutch-American
Mercantile Corp., 2 Cir., 335 F.2d 141) Should it determine I am
in error in such resolution then all issues herein, including
that seeking appointment of a receiver become moot.
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