Gildersleeve v. Lester

Headnote

Contempt—Judgment directing payment op money—Corporations.

Where in an action, under §§ 1781 and 1782_ of the Code, against a* trustee of a corporation for misappropriation of its property, a receiver is appointed under § 1810, and a judgment rendered that the trustee pay to such receiver a certain sum,- contempt proceedings are proper under subd. 4, § 1241, upon his failure so to do.

Appeal from order adjudging defendant Lester in contempt.

The following is the opinion of the court below :

Patterson, ,7.—The plaintiff in this cause, being one of three trustees of the Nepera Park Land Company, sued his co-trustees under the permission given by §§ 1781 and 1782 of the Code of

Civil Procedure, to compel them to restore to the corporation certain moneys which they had received belonging to it, and the value of certain corporate property disposed of by them, but which they had failed to turn over or account for to it On the trial of the action it was found by the court at special term that the defendant Lester had obtained and wrongfully retained $46,000 of money belonging to the coi-poration, and that the defendants Lester and Brown were jointly liable to the corporation for $21,500, which they were required to restore. By the terms of the decree a receiver was appointed of the property of the corporation, and the defendants were thereby required to pay over to such receiver the amounts above mentioned. The receiver has duly demanded, payment of such amounts, refusal to comply therewith has been shown, and this motion is to punish the defendants as for a contempt in so refusing. The motion is strenuously resisted on the ground that the court was without jurisdiction, in a case of this character, to appoint a receiver, but I think that objection may be disposed of in a very few words. The plaintiff certainly had a right to maintain the suit The statute expressly gave it to him. The court found his allegations true, and the defendants were adjudged to make restoration of the moneys they had received, and of the value of the property they had misappropriated. How was such a judgment to be. enforced? Certainly the plaintiff was not personally entitled to the money, and it' is equally certain that it would have been a mere futility to direct its payment to the corporation of which the two defaulting defendants had control, for that would be simply putting it back into their own hands. It is difficult to see what other course could have been pursued than that of appointing a receiver to take possession of the moneys, and to whom the defendants should be required to pay it. He would hold it then under the direction of the court as to its final disposition, and it is not a practical question now, at least one not to be raised to embarrass the enforcement of the decree, how the court will ultimately direct that the money shall be applied to the uses of the corporation, or reach its treasury, or be disposed of for the benefit of its creditors or stockholders. I think the terms of § 1810 of the Code of Civil Procedure are broad enough to confer the right to appoint a receiver, as this action was brought in one of the cases authorized by article 2 of the title therein referred to, and that it was the only way to realize the money, as the two trustees, defendants, could not be removed in the action, nor otherwise than in a suit brought by the attorney general. Code Civ. Pro., § 1811.

But it is further claimed that process for contempt cannot issue against these defendants, for the reason that wherever money may be collected by execution that method of realizing is alone left open to the party entitled to it. Section 1241, Code Civ. Pro., provides for the enforcement of judgments by punishment as for contempt, and enacts that it may be done in a case where final judgment cannot be enforced by exception, or where the judgment requires the payment of money into court or to an officer of the

court, except where the money is due on a contract, express »or implied, or for nonperformance of a contract; and it is further provided that in such a case, “ if the judgment is final, it maybe enforced as prescribed in this section, either simultaneously with or before or after the issuance of an execution thereon, as the court. directs.” Here it is clearly provided in most explicit terms that where the right to the money resides in an officer of the court, and direction is given to pay it to him, the power to enforce a decree awarding it is independent of the issuing of an execution, if the court so directs. The cases cited by the learned counsel for the defendants do not quite meet this view of the case. Jacquin v. Jacquin, 36 Hun, 378 , was a case in which defendant failed to pay, under final decree, certain costs, etc., in a suit for separation. It was held contempt proceedings could not be resorted to, but, in commenting on the fourth subdivision of § 1241, the court said: “ What was probably designed by this subdivision was to include such judgments as should be recovered for moneys wrongfully withheld from the court or one of its officers by the defendant, which the court itself would be required to hold for or distribute among parties entitled to it; ” and such I conceive to be the nature of this case, and that the moneys come into the hands of the receiver as the officer of the court, to be held until the court itself, on proper application, can determine in what manner they are to be disposed of for the uses or benefit of the corporation. In re Hess, 48 Hun, 586 ; 16 St. Rep., 255 , was one in which an assignee was not held liable for contempt in not paying over money to a receiver after an assignment for creditors was set aside as fraudulent, but the effect of subdivision 4 of § 1241 is not considered in that case. Myers v. Becker, 95 N. Y., 486 , does not touch the point, for it was not a final judgment that was sought to be enforced. O'Gara v. Kearney, 77 N. Y., 423 , was stated in the opinion not to be a case coming under § 1241, for the judgment, when entered, would direct the payment of the money, not to the court or its officer, but to the party. None of these cases meet the direct and primitive terms of subdivision 4, § 1241. That contemplates and distinctly provides that in certain cases where money is to be paid into the court or into the hands of its officer, whether an execution may issue or not, contempt proceedings may be maintained, and even if in certain cases, as Geery v. Geery, 63 N. Y., 252 , an execution might issue in favor of a receiver that cannot nullify the express provision of law. Here the judgment requires the payment of money to an officer of the court, viz., its receiver, and a failure to comply with a proper demand renders the parties bound by the decree liable for disobedience. If that is not so, there is no meaning in the statute at all. Motion granted.