Q: My cousin, who is a lawyer, asked me to act
as receiver in a case where he represents the plaintiff. Is there some
prohibition on my doing so? Am I ineligible to act as receiver because of
our family relationship?
A: In California, Code of Civil Procedure § 566(a) sets forth who
is ineligible to be appointed a receiver. It provides: “No party, or
attorney for a party, or a person interested in an action, or related to
any judge of the court by consanguinity or affinity within the third
degree, can be appointed receiver therein without the written consent of
the parties, filed with the clerk.” As you can see, the prohibition for
familial relationships relates to the judge, not to attorneys or a party.
So long as you are not a party, the attorney for a party or a person
“interested in an action” and are not related to any judge of the court by
consanguinity or affinity within the third degree, you can be appointed
receiver. California Rules of Court, Rule 3.1177, also deals with who can
be nominated as a receiver, but places no similar restrictions. It simply
provides that each party appearing may, at the time of the hearing,
suggest in writing one or more persons for appointment or substitution as
receiver, stating the reasons. If you are being nominated by your first
cousin, I think it would be in everyone’s best interest if that was
disclosed up front, so the court can make an informed decision on who to
appoint. Even though you are not disqualified because of the familial
relationship, the court might not be pleased to discover that fact after
your appointment. The best thing to do in these types of situations is
disclose, disclose, disclose.
I always get confused as to exactly who is related by
consanguinity or affinity within the third degree. Two people are related
to each other by consanguinity if one is a decedent of the other, or they
share a common ancestor. Two people are related by affinity if they are
married to each other, or if one is related by consanguinity to the other
person’s spouse. As a result, consanguinity to the third degree includes
father, mother, son or daughter (and spouse), grandparents, grandchildren,
aunts and uncles, first cousins, nieces and nephews, brothers and sisters
and great grandparents, great grandchildren, great aunts and uncles,
second cousins, children of first cousins, and grand nephews and
grandnieces. Affinity to the third degree includes spouse, spouse’s
parents and children, grandparents, grandchildren, aunts, uncles, first
cousins, nephews, nieces, brothers, sisters, great grandparents, great
grandchildren, great aunt, great uncle, children of great aunt and uncle,
second cousin, children of first cousin, and grandnephew or niece.
There are different statutory restrictions if your
case is in federal court. 28 U.S.C. § 958 provides: “A person holding any
civil or military office or employment under the United States or employed
by any justice or judge of the United States shall not at the same time be
appointed a receiver in any case in any court of the United States.” The
statute which was originally adopted in 1896, and then amended 1948,
provides that no employee of the United States whether in a civil capacity
or military capacity can act as a receiver. It would seem, therefore, that
if someone is a reserve officer in one of the military services or is
employed in any other capacity for the United States government, that
person cannot act as a receiver. Interestingly, the statute, when it was
amended, eliminated the words “janitor of any Government building”, as
being covered by the words “person holding any civil or military office or
employment under the United States.” I guess back in 1896 there was a
problem having janitors appointed as receivers. While this statute was
enacted in 1896, there appear to be no reported cases. A related statute
28 U.S.C. § 957 provides: “A clerk of a court or any of his deputies shall
not be appointed commissioner, master, referee or receiver in any case,
unless there are specific reasons requiring such appointment which are
recited in the order of appointment.” There are a few reported cases where
this occurred. See U.S. v. Jacobs, 187 F. Supp. 630, aff’d.
298 F.2d 469 (D.C. Md. 1959), where the District Court appointed a clerk
as receiver of a check deposited in court to save the expense of an
outside receiver, where the only duty required of the receiver was to
endorse the check and deposit it into the registry of court.
While neither statute has the familial relationship
bar on the appointment of receivers, it is covered, tangentially, in 18
U.S.C. § 1910 which provides that it is a crime for a United States court
judge to appoint any person as receiver who is related to such judge by
consanguinity or affinity, within the fourth degree. The fourth degree
includes third cousins.
*Peter A. Davidson is a Partner of Ervin
Cohen & Jessup LLP, a Beverly Hills Law Firm. His practice includes
representing Receivers and acting as a Receiver in State and Federal
Court. |