Chafee v. Quidnick Company

By decrees of this court entered on the 3d and 10th days of September, 1881, C.B. Farnsworth, Esq., was appointed special receiver of the personal property of the Quidnick Company, and directed, among other things, to collect a balance due to it from Messrs. Harding, Colby Company, its selling agents in New York.

The respondents were counsel for the Quidnick Company in that matter, and were not only before the court at the time the order was made, but assented to it, in behalf of the Quidnick Company, and assisted in its preparation.

The receiver entered at once upon his duties, and has collected, from time to time, on account, portions of the debt above mentioned, a large sum however still remaining in the debtors' hands in New York.

On the 3d day of October, 1881, while the suit against the Quidnick Company was still pending in this court, and the receiver was still executing the duties of his appointment, the funds of the Quidnick Company, in the hands of Harding, Colby Company, were attached upon a suit brought by one of the respondents, Gen. Pryor, in behalf of himself, Butler, and Patton, for a debt alleged to be due from the Quidnick Company for fees for legal services rendered by them, amounting to $21,000.

Thereupon the receiver presented his petition to this court, setting forth the facts and asking for instructions; and the complainants in the suit also presented a petition that the attachment and suit in New York might be enjoined, and these respondents adjudged to be in contempt.

The elements of the matter then are these: one of the respondents has attached funds which the receiver was ordered to collect; the property attached is outside the jurisdiction of the court; it had not come into the hands of the receiver; two of the respondents, Gen. Pryor, who is plaintiff in the attachment, and Gen. Butler, though counsel in the suit before us, are not counsellors of this court nor residents of this State.

Under these facts what is the power and duty of the court? That every court must see to it that its orders and decrees are respected and obeyed, no one can question. Without this judicial proceedings would cease to have power or significance, and courts could no longer, in any efficient sense, be regarded a part of the government. We but echo the universal doctrine when we say that, to the utmost limit of the jurisdiction and authority of this court, its orders shall neither be interfered with nor disobeyed. But it is here claimed that the appointment of a receiver has no effect beyond the jurisdiction of the court appointing him.

That is true. A receiver is the hand of the court to take and hold property in dispute until it can be determined to whom it belongs. That hand can reach no farther than the arm of the court extends. A receiver, as such, has no power or standing in the courts of other States but that which a purely discretional comity may grant, and decisions in this country upon the question whether even this privilege can be recognized have been diverse.

See Booth v. Clark, 17 How. U.S. 322; Hunt v.Columbian Insurance Co. 55 Me. 290; Taylor v. ColumbianInsurance Co. 14 Allen, 353; Runk v. St. John, 29 Barb. S.C. 585; Hoyt v. Thompson, 5 N.Y. 320.

In Booth v. Clark, cited by the respondents, Mr. Justice Wayne says: A receiver "has no extra-territorial power of official action; none which the court appointing him can confer, with authority to enable him to go into a foreign jurisdiction to take possession of the debtor's property."

Relying upon this well-settled law, the respondents contend that they have been guilty of no contempt because they have attached no property over which the receiver had control.

The argument of the respondent does not touch the real point of the matter.

The debtors in New York had notice of the receiver's appointment, and had so far recognized his authority as to make large payments to him on account.

It does not appear that they would not have paid the balance remaining due, if this attachment by the respondent had not been made, which now, whatever their willingness, prevents such payment. The question, then, is not whether the order of the court can operate, ex proprio vigore, outside of its jurisdiction; nor whether the receiver would have authority in New York to compel a payment of these funds to him. It is, have the respondents, by their action, interfered with and obstructed him in doing that which the court directed him to do; or have they intercepted funds and prevented them from coming to his hands, when otherwise he might have received them? That this has been done by one of the respondents is admitted. Does it then amount to a contempt of the order of the court? That it would be a contempt if the thing were done in this State, and as to property already under the receiver's control, is beyond question. Is the case then any different because the funds attached are outside the jurisdiction of the court, and due to, but not in, the possession of the receiver?

In Langford v. Langford, 5 Law Journal N.S. Eq. 60, where a court in England had appointed a receiver of estates in Ireland, it was held "that though the court had no power of sending its officers to Ireland to enforce its decrees, yet if they be resisted by a party to the cause, such party is guilty of contempt."

In Ames v. Trustees of Birkenhead Docks, 20 Beav. 332, Lord Romilly says, p. 353: "There is no question but that this court will not permit a receiver, appointed by its authority, and who is therefore its officer, to be interfered with or dispossessed of the property he is directed to receive, by any one, although the order appointing him may be perfectly erroneous; this court requires and insists, that application should be made to the court for permission to take possession of any property of which the receiver either has taken or is directed to take possession, and it is an idle distinction, which could not be maintained if it were attempted, that this rule only applies to property actually in the hands of the receiver. If a receiver be appointed to receive debts, rents, or tolls, the rule applies equally to all these cases; and no person will be permitted, without the sanction or authority of the court, to intercept or prevent payment to the receiver of the debts, rents, or the tolls, which he has not actually received, but which he has been appointed to receive."

The case of Vermont Canada Railroad Co. v. VermontCentral Railroad Co. et al. 46 Vt. 792, is exactly in point.

The Vermont Central Railroad Company had been appointed receiver of both roads, and as such had operated them and other roads under lease.

Funds were due from corporations and parties in other States, and the Vermont and Canada Railroad Company brought a suit in Boston against the Vermont Central Railroad Company, summoning the parties holding said sums of money as trustees of the defendant, "for the purpose of locking up said funds in the hands of the trustees, who were in doubt whether they could safely pay the balances" to the receiver.

It was held to be contempt. Referring to and quoting the rule cited above from Ames v. Trustees of Birkenhead Docks, Chancellor Royce adds: "The necessity for this rule is obvious; for if a party to the suit can wrest the possession of the property from the receiver or manager, he may in this way defeat the purpose of the appointment. The petitioner would not have been permitted to attach the funds of the petitioner in the courts of this State, and he can obtain no superior equity in the courts of another State. And it is competent for this court to restrain by injunction, parties within its jurisdiction, from doing those acts in another State which would subject them to that process if done here."

Upon this authority it is clear that a party who interferes with funds which a receiver is directed to collect, though outside the jurisdiction of the court, is guilty of contempt.

But it may be urged that even if this is the law as to a party to a suit, it does not affect an attorney in such suit. This objection cannot be admitted. An attorney and counsellor is an officer of the court; he is presumed to understand its orders, and is sworn to obey them; above all others he should be alert in supporting its decrees and authority, rather than in seeking devices to elude them. Can it be then that a court will permit in its officers what it denies to a suitor? Clearly not. Two of the respondents are not counsellors of this court, but are members of the bar in other States. This can make no difference in the matter before us. By comity they are permitted to appear in this and other kindred cases. In three causes still pending before the court they are of counsel on the record.

With their own hands they assisted in framing the very decrees under which the receiver was appointed. For this case at least they must be regarded as officers of the court, and subject to its jurisdiction, to be dealt with in the same manner as those who are regularly enrolled upon our list. The accident of residence is unimportant. Thomas v. The State, 58 Ala. 365, 368.

To this we may add that Gen. Butler in his argument expressly disclaimed, for himself and Gen. Pryor, any different relations to the court than those of our own bar; stating that they have by courtesy and for the time what our members have permanently and by right; and he requested the court to consider them as fully within our jurisdiction as those who are resident in the State. And this we have done.

Only one other thing remains to be considered. The suit is brought in New York by Gen. Pryor as plaintiff, in behalf of himself, Gen. Butler, and Mr. Patton, who have assigned their claims to him; from which it would appear that though he was the nominal plaintiff, yet that all three were really parties in interest, and actual, though not nominal, co-plaintiffs.

If this were so, all would stand in the same plight before the court. But Messrs. Butler and Patton say they have sold their claim to Gen. Pryor, and have no control over the suit in New York, in which he alone is plaintiff.

We must accept this as true, because, save the recital in the writ or complaint, which may be merely formal, nothing is shown to the contrary; and further, we cannot believe that respectable counsel would openly state to the court that they had sold a claim which they had merely transferred to the name of another for the purpose of enabling him to make an attachment in New York in their interest, which, as non-residents, they could not do in their own names; nor can we believe that honorable gentlemen would seek through a technicality to evade a common responsibility in a common cause, or that they would desert an associate when he was called to answer for what he had done on their behalf.

As the matter stands, therefore, Gen. Pryor, on his own responsibility, has intercepted by attachment funds which the receiver is entitled to collect; this act is in derogation of our order; by virtue of Gen. Pryor's relation to the court, we have jurisdiction and may require obedience at his hands.

We therefore order that he be enjoined from further prosecution of said suit as against the parties who have been garnished, and the funds which have been attached; that within five days from the entry of this order, he shall release and discharge in writing the persons garnished and each of them, from all claim which he has in said funds by reason of said attachment, and effectually discharge them from all liability to answer in said suit for any of the funds which were in their hands at the time of the attachment.

The receiver having been instructed in his petition to answer the suit in New York to prevent a judgment by default, needs no further advice at present.

TILLINGHAST, J., concurred.