Merritt v. Sparling ( 1895 )

MAYHAM, P. J.

The case discloses that the defendant Sparling was, on the 20th of June, 1890, appointed receiver of the crops and fruits growing on a farm, for the recovery of possession of which John E. Van Etten was at that time prosecuting an action of ejectment against this plaintiff, which farm she held under a contract of purchase; and that such action was subsequently prosecuted to judgment against this plaintiff in favor of Van Ettén, and in such judgment it was, among other things, adjudged that the plaintiff in such action recover the crops and fruits upon the premises, gathered and put in by the receiver, which were therein adjudged to be the property of the plaintiff in that action. After the plaintiff herein was ejected and dispossessed in that action, she commenced and prosecuted this action against the defendant, as receiver, to recover on an alleged assigned account for services rendered for the receiver in gathering crops on the farm, and boarding hands while engaged in harvesting thereon. On the trial of this action, the judge directed the jury to find a verdict for the plaintiff, against the defendant, for $125, subject to the opinion of the court. . On that verdict the plaintiff entered judgment for the sum of $236.99, recovery and costs. The defendant having failed or neglected to pay this judgment, the special term, on the 17th day of November, 1894, made the following order:

“Ordered and adjudged that the defendant, Derrick W. Sparling, as receiver, pay or cause to be paid to the plaintiff the judgment recovered by her on the 29th of May, 1893, for $236.99, with interest thereon from the last-mentioned date, with $10 costs of this motion, within 20 days from the entry of this order and notice thereof; and that, in default thereof, the said defendant be held as in contempt of this court.”

By the recital in this order, the judge found that:

“There was received into the hands of the receiver of the produce of the farm, of which he was appointed by the court receiver, sufficient money out of which to pay and discharge the plaintiff’s said judgment.”

The defendant, in his affidavit in opposition to this motion, positively denies that he took possession of any crops, employed any hands to gather the same, or promised or agreed to pay the plaintiff for boarding hands engaged in harvesting or gathering the same. Prom the order above recited the defendant appeals. The appellant insists that the application to compel him, as receiver, to pay this judgment, was not made in the proper action; that, as he was appointed receiver in the action wherein John Van Etten was plaintiff and Isabella Merritt and Jacob De Witt were defendants, the application to compel him to pay any moneys in his hands as receiver could only be made in that action.

There is great force in this contention, both in principle and upon authority. While we must assume that this action, which was prosecuted with the leave of the court, was properly brought; and, for the purposes of this motion, that the judgment therein is valid as against the receiver, as such, and correctly fixed his liability to the plaintiff; and that execution thereon, while it could not be levied on property in the hands of the receiver, as the same was constructively in the possession of the court, through its receiver,—the court could, in that action, in which he was receiver, make ah order which would properly reach any trust estate in his hands as receiver. Walling v. Miller, 108 N. Y. 177, 15 N. E. 65. But as he was not receiver in this action, it is difficult to see upon what principle he can be punished as for contempt, and subjected to fine and imprisonment for the failure to pay a judgment, in an action in which he is not a receiver, and for the payment of which he has no trust funds. Doubtless, as an officer of the court, he would be amenable to the order of the court for the performance of the duty imposed upon him in the action in which he was appointed; but to hold him guilty of a contempt of court for failure to pay any and all judgments recovered against him as receiver would be imposing upon him liabilities which he could not foresee when he accepted the trust, and which do not arise out of the trust itself. But this question seems settled upon authority of many well-considered cases. In Walling v. Miller, 108 N. Y. 177, 15 N. E. 65, the rights of a party having a lien by judgment and execution on property in the hands of a receiver were clearly pointed out, where the lien of the execution had attached before the appointment of the receiver, and the court say:

‘•The lien of the execution was not destroyed by the appointment of the receiver, but the right and' interest of all parties to the property were thereafter to be adjusted by the court which appointed the receiver, and the property could not be taken, out of the possession of the receiver, and sold upon the execution, without leave of the court The execution creditor could bring his lien to the attention of the court in the action in which the receiver was appointed, and ask to have the execution satisfied out of the proceeds of the property.”

Such a course would be manifestly just to all parties claiming an interest in the property, as, in that action, Van Etten, who, by the judgment in ejectment, was adjudged entitled to the property; the defendant in that action, who is now claiming the proceeds of the property of the receiver; and the receiver, who, as the officer of the court, stood indifferently between the claimants, liable to hand the proceeds of the property to the one entitled to the same,—would all be before the court, to do and receive what might be adjudged for or against them, respectively. In no other way could the rights of Van Etten, Bennett, and the receiver be fully adjusted as to all the parties. Clearly, if, by the judgment in the ejectment case, any property in the constructive or actual possession of the receiver was adjudged to belong to the plaintiff in that action, the receiver should not in this action be compelled to pay it over to the defendant, or to account and pay over to her the proceeds or value of the same; and all the parties to that action, as well as the receiver, should be before the court in a motion in that action for a complete determination of the rights of all the parties. In Rinn v. Insurance Co., 59 N. Y. 148, the pláintiff brought an action against the defendant on a policy of the defendant, and, pending the action, the defendant became insolvent; and, in an action in equity by another party, a receiver was appointed. Subsequent to the appointment, the plaintiff recovered a judgment against the defendant, and thereafter moved in his action to compel the receiver who had been appointed in the equity action to pay the judgment. Andrews, J., in delivering the opinion of the court of appeals reversing the decision of the general term granting such motion, uses this language:

“Without considering or passing upon the question whether the plaintiff has a remedy, or was or is entitled to a distributive share o£ the farm which came to the hands of the receiver, we reverse the order of the general term, on the ground that her remedy, if it exist, must be sought by application to the court in the district in which the receiver was appointed, and in the action in which the appointment was made.”

In Re Mallery, 2 N. Y. Supp. 437, Dwight, J., says:

“The rule seems to be well established that, for the purpose of reaching funds in his hands, the application must be made in the action in which the receiver was appointed.’’

We have been referred to no adjudication which breaks the force of the decisions above referred to, and are of opinion that in principle they are analogous to the case at bar.

It is urged by the learned counsel for the respondent that the defendant, as receiver and an attorney, is an officer of the court, and must obey its orders; but the answer to that seems to be that, as receiver, he is not an officer of the court in this action, and as an attorney of the court he sustains no fiduciary relations to this plaintiff, and as such holds no trust funds belonging to her. Without considering the other questions raised by the appellant, we think the order of the special term, for the reasons above suggested, was erroneous, and should be reversed.

Order reversed, with $10 costs and printing disbursements. All concur.