Chapter 4 - § 4.2 • WHAT IS A RECEIVER?

• Jurisdiction: Colorado

§ 4.2 • WHAT IS A RECEIVER?

§ 4.2.1—Officer of the Court

It is often said that a receiver is an officer of the court. Possession by the receiver of property is possession by the court. McClain v. Saranac Machine Co, 94 Colo. 145, 28 P.2d 1009 (1934); Midland Bank v. Galley Co., 971 P.2d 273, 276 (Colo. App. 1998). The receiver's authority comes wholly from the power and authority of the court that appoints the receiver. Being an officer of the court does not mean the receiver is the court or binds the court. "A receiver is not . . . invested with judicial power." 2 Ralph Ewing Clark, The Law and Practice of Receivers § 355, at 611 (3d ed. 1992). Court clerks and bailiffs are officers of the court, but they do not have the authority to decide cases. The same is true of the receiver. The court is the ultimate decision-maker. See, e.g., Midland Bank, 971 P.2d at 277 ("[t]he Court has the duty to resolve disputed issues of law and fact pertaining to the receivership").

The touchstone for the specific powers and duties of the receiver is the order appointing the receiver. As discussed more completely in § 4.6.6, one of the most important parts of the job of the lawyer who seeks the appointment of a receiver is to craft an order that will permit the receiver the greatest flexibility and authority in the particular circumstances and that anticipates legal and practical issues the receiver might be expected to confront. There may be a risk to drafting a receivership order too broadly. In January 2017, a Jefferson County District Court judge denied a motion requesting the appointment of a receiver because the scope of powers granted to the receiver was overly broad.

Courts enforce the authority of a receiver through the powers of the court, generally contempt and the threat of incarceration. Clear Creek Power & Dev. Co. v. Cutler, 79 Colo. 355, 245 P. 939 (1926).

Judges differ as to how closely they identify the authority of the receiver with their own authority, and, therefore, they differ as to how quickly or freely they will enter contempt citations. It is generally not advisable to step on Superman's cape.

A lawyer representing a borrower who refused to turn over records to a receiver heard a judge start a hearing by stating the sole reason they were there was to determine how long the borrower would be in jail. The lawyer asked for a recess to discuss things with his client.

A receiver's acts may be the acts of the court. May a receiver's acts be deemed state action for constitutional law purposes? The Colorado Court of Appeals declined to reach this question in Spencer Inv., Inc. v. Bohn, 923 P.2d 140 (Colo. App. 1995). See § 4.9.1. Other courts have avoided the question just as neatly. See Easton v. Sundram, 947 F.2d 1011 (2d Cir. 1991). However, one court has ruled that a general receiver established by court order to oversee a child welfare agency was not a state actor for purposes of constitutional law. Drew v. Baktash, No. 00-1661, 2001 U.S. Dist. LEXIS 25857 (D.D.C. Sept. 18, 2001) aff'd, 2002 U.S. App. LEXIS 2478 (D.C. Cir. Jan. 25, 2002) (unpublished).

Does a receiver enjoy any immunity by virtue of being an "officer of the court?" Do not plan on it. Nonetheless, it is a possibility. In the case of In re Yellow Cab Cooperative Ass'n, 185 B.R. 844 (Bankr. D. Colo. 1995), the receiver asserted immunity from certain claimed breaches of fiduciary duty arising from actions or omissions occurring during the receivership. The court implied, without holding, that as long as the receiver acted within the scope of the authority granted by the state court judge in the receivership action, the receiver "may, indeed, be entitled to the protection of judicial immunity." Judge Brooks, with little further comment, concluded that the proper...