152 N.Y.S. 363 | N.Y. App. Div. | 1915
Plaintiff is the trustee in bankruptcy of Clarence E. Hopkins, who was adjudged bankrupt in the District Court of the United States for the Eastern District of Hew York. The bankrupt property consisted principally of this warehouse with the storage business there carried on. It was subject to a first mortgage of $15,000 to the Williamsburg Savings Bank, and had been further incumbered by conveyances and assignments executed by the bankrupt before his failure.
Plaintiff as such trustee came into this court suing in equity to set aside these conveyances made by the bankrupt. He applied for appointment of a receiver pendente lite. This court at Special Term, on December 2, 1914, appointed a receiver “ during the pendency of this action and until the entry of judgment herein,” giving him power to continue the business, and to collect all accounts and moneys due or to become due in connection with this storage warehouse business. On December fourth the receiver qualified and took possession. The suit came on for trial in January, and resulted in a judgment in favor of plaintiff, in which the court set aside the transfers attacked, adjudging also that this warehouse building, with all the personal property used in connection with it and all accounts receivable, were the property of the bankrupt on the date of the trustee’s appointment; also that plaintiff as
On the same day the Federal court made an order authorizing the plaintiff to continue the business under the defendant’s trade name. On January twenty-third the receiver appears to have demanded from plaintiff’s attorney the return of the cash so taken. A regretable conflict has ensued between the two courts, each maintaining a present possession of this property of the bankrupt. In view, however, of the limits on the receiver’s appointment, which was only pendente lite and until the entry of judgment, followed by the provision of such judgment directing all persons in possession of said premises to surrender and deliver the same to the plaintiff, the respective rights and duties were plain. Where' a receiver has personal property and a decree is made authorizing a party to have it, the Supreme Court of the United States has declared the orderly procedure. A demand should he made with a certified copy of the decree requiring the receiver to surrender the property upon giving a receipt to he filed so as to show exact performance of the decree. (Very v. Watkins, 23 How. [U. S.] 469.) Here this money was appropriated under the general terms of the judgment, without first communicating with the receiver. This was irregular, and the Special Term rightly directed its return, which has since been done.
But the bankruptcy statutes are the law for the State courts and not alone for the Federal courts in so far as relates to the
After plaintiff had taken possession of the warehouse property under the judgment, the receiver was not thereafter to resist the adjudged rights of the trustee in bankruptcy, since the receiver’s custody and control had been ended by the judgment. The outlays and liabilities disclosed by the affidavits did not entitle the receiver to demand to retake the real estate and property from the plaintiff. His duty was to turn over possession, file his accounts, and not obstruct the administration of the bankrupt’s estate; or if he had substantial ground to take a precautionary attitude by reason of liabilities incurred in his trust, then he should have applied to modify the judgment. Had he expended a large sum, or involved himself in future liabilities, which the affidavits show is not the case here, this court might stand on its right to secure its officer beyond the cash in his hands before directing delivery of possession.
The order should be affirmed, so far as it requires the return of moneys taken from the receiver’s custody, and directs the settlement in the Supreme Court of the receiver’s accounts;
Jenks, P. J., Burr, Carr and Stapleton, JJ., concurred.
Order affirmed, so far as it requires the return of moneys taken from the receiver’s custody, and directs the settlement in the Supreme Court of the receiver’s accounts; otherwise reversed, and the receiver’s motion to continue his possession of the other property theretofore held by him as receiver denied, without costs.