Winter 2006 • Issue 20, page 12
Can the plaintiff nominate the Receiver?
By Davidson, Peter*
Q: I have been asked to be a receiver and was thinking of having the
plaintiff nominate my corporation, rather than me, to take on that role.
Is this okay?
A: If you review the receivership sections in the Code of Civil Procedure,
starting at C.C.P. §564 et seq., or the Rules of Court relating to
receiverships starting at Rule 1900 et seq., you might assume that having
a corporation appointed as receiver would be okay; because there is no
express prohibition in those sections. However, buried in the Financial
Code there is a prohibition on a corporation acting as a receiver unless
it is qualified to engage in the trust business. Section 106 of the
Financial Code defines “trust business” as the “business of acting as
executor, administrator… receiver…under the appointment of any court, or
by authority of any law of this or any other state or the United States,
or as trustee for any purpose permitted by law”. Section 1500 of the
Financial Code provides no corporation shall engage in the trust business
unless it has qualified as required by that section. Therefore, unless
your corporation has qualified to act in the trust business, pursuant to
the provisions of Financial Code §1500, it cannot be appointed or act as a
receiver in California.
|