Robinson v. Columbia Spinning Co.

49 N.Y.S. 4 | N.Y. App. Div. | 1897

Lead Opinion

Rumsey, J.:

The Columbia Spinning Company was a foreign corporation organized under the laws of. the State of Massachusetts. . On the 15th day of April, 1897, an action was begun in. that State by certain stockholders and directors of that company to dissolve the corporation, and on that day receivers were appointed of the property of the corporation who took possession of all its property in that State. On the saíne 15th day of April, 1897, the Merchants’ National Bank of the city of New York brought an action against, the Columbia Spinning Company to recover a debt due^ from that company to it, and on that day obtained a warrant of attachment against the property of the defendant corporation. On. the same day the deputy sheriff, in whose hands the warrant had been placed for service, went to- the place of business .of the firm of O. H. Sampson & Co. in the city of New York, and stated to one-of the members of the firm that he had in his possession the warrant of attachment against the property of the Columbia Spinning-Company under which he had come there to levy upon its property which was then, as he supposed, in the possession of the firm,, and requested Sampson to tell'him what property of the defendant, the said firm had in their possession and under their control.' Sampr son, to whom the application was made, denied that the firm had. any property of the defendant. On the nineteenth of April the= deputy sheriff went to the office of Catlin & Co., and, applying to-on e of the members of, that firm, said to him that he held a warrant of attachment against the property of the Columbia Spinning Company, under which he desired to make a levy on the property of the defendant in their possession, and asked him whether the . firm of Catlin & Co. had any of the property of the Columbia Spinning Company in its possession. By them also he was told that they had no property of the company in their possession and under their control. Acting upon the information thus conveyed, the deputy sheriff took no further steps to levy the attachment upon the property of the defendant in the possession of either of those firms. Subsequently the sheriff demanded of each firm a certificate specifying .the amount, nature and description of the property of the defendant which they held, and a certificate was furnished on the 5th day .of May, 1897, by Sampson & Co. No certificate seems ever to have been furnished by the firm of Catlin Co. At the time of making the application to these two firms, respectively, the sheriff delivered to each of them a certified copy of the warrant and the papers upon which it was granted, and a notice advising them of the intention of the sheriff to levy upon the property in their hands, and requiring them to deliver all that property to him. and .to furnish, a certificate. At the time when the above inquiries were made' of these two firms, respectively, they had in their possession a considerable amount of personal property capable of manual delivery, which was owned by the Columbia Spinning Company, and there is no doubt that when they informed the sheriff that they had no such property, they told him what was not the truth, although they supposed the statement to be true. Subsequently, and on the 28th of April, 1897, the plaintiff Charles L. Robinson brought an action against the Columbia Spinning Company in this court in which he set up the pendency of the action in Massachusetts, and the. appointment of receivers in that State, and asked for the appointment of auxiliary receivers in the State of New York to take the property of the corporation in this State, and. hold it subject to the order of the court here. That application was granted, and receivers were appointed and qualified on' the twenty-eighth of - April, and took possession of the property. Up to that time no certificate had been procured by the sheriff and no levy under the attachment had been made, and none had been attempted except by the application o-f the.deputy sheriff to the members of these two firms as is mentioned in the former part of this opinion. After the receivers had been appointed'and had taken the property into their possession, an application was made to the court to permit the sheriff to complete his -levy under the attachment. This application was resisted by the receivers, and was.' denied, and from the order denying it this appeal is taken.

The right to issue .a warrant of attachment as a provisional'remedy is one that depends upon the statute, and has no existence outside of the statutory provisions. The cases in which it can be granted, as well as the procedure necessary to make it effective, are prescribed by the statute, which must be followed to make the remedy effective. (Blossom v. Estes, 84 N. Y. 614.) Among these provisions is one prescribing the way in which an attachment must be levied in order to complete the lien. (Code Civ. Proc. § 649.) It directs that upon personal property capable of manual delivery,, the levy must be made by taking the same into the sheriff’s actual custody. There is no other provision than that for making a levy on property like that sought to be taken here. Nothing else will constitute the levy, and until the officer has obtained the actual custody he has made no levy and can make none. (Anthony v. Wood, 96 N. Y. 180, 187.) The lien of an attachment arises only by the making of a levy, and in that respect it differs from an execution as to. which.the law prescribes that the personal property of the debtor is bound by the delivery of the execution to the sheriff to be executed; but there is no such provision in regard to an attachment, and, therefore, no lien is acquired by the delivery to the sheriff of the warrant,, nor does one come to exist until the levy is actually made, under the warrant, in the precise .manner prescribed by the statute. (Burkhardt v. Sanford, 7 How. Pr. 329; American Exchange Bank v. Morris Canal & Banking Company, 6 Hill, 363.) It is not claimed that any such levy was made in this case as the statute prescribes, but the claim is that, because of the statement made to the deputy sheriff by the agent of the ■ defendant, the sheriff was prevented from completing the levy which he would otherwise have made, and acquiring the lien which he would otherwise have acquired; and in the exercise of its equitable powers, the court, should perfect the lien which the sheriff was precluded from making. If it could be said that there was any power in the court to-complete a lien which was left imperfect because of. the failure of the sheriff to complete it for any reason, which is very doubtful, this is not that case. It cannot be said here that • the sheriff took steps to make a levy which he left incomplete. He did nothing of the sort. The only way in which the levy could be made was by taking possession of the property, and until that was done there was no more a levy upon the property which gave the attachment priority than existed when the attachment was given to the sheriff, and before he had taken any steps to make the levy. The question is not a question of equitable right, but a pure question of law, whether the thing is done which the law says is necessary to be done to create a lien that did not exist until the particular act had taken place. So far as the legal rights of the parties are concerned, the case is precisely upon the same footing as any other case in which there is a race between two diligent creditors. The one who first completes the act which entitled him to his relief, in the nature of things, gets the priority. The only way in which it could be claimed that the court had the right to interpose in this matter was because of the false statement of the agent of the defendant. But that statement operated to prevent the doing of the act which alone could constitute the lien, and there is no provision of the statute which gives to the court the right to interpose its equitable powers and free a person who has attempted to secure a legal lien from the effect of any mistake which makes his attempt unavailing. The sheriff, in this case, might have taken steps to discover the truth. Had he done so, undoubtedly, he could have made a levy upon this property before the appointment of the receivers, and, if he had done.that, the levy would have been perfect and the lien complete. But the trouble with the appellant’s case is that there is no possibility of making a levy unless the officer does the precise thing which the statute requires, and there is no statutory provision for completing the levy which the officer has failed to make in the-way the statute requires.

For this reason, the order of the court- denying the motion was correct and must be affirmed, with ten dollars costs and disbursements,

Van Brunt, P. J., and O’Brien, J., concurred.; Ingraham and Patterson, JJ., dissented/

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Dissenting Opinion

Ingraham, J.

(dissenting):

The motion made to the court below was to allow the petitioner, the Merchants’ National Bank,, which liad obtained a warrant of attachment against the property of the defendant, a foreign corporation,- to levy upon certain property belonging to the said defendant in the possession of the firms of Gatlin & Co. and O. H. Sampson & Co. The motion was denied in the court below, upon the ground that the attachment granted to the appellant had been vacated. As the order vacating the attachment has been reversed, and the attachment reinstated, the reasons assigned by the court below do.not now exist, and the question is whether, upon the papers presented to the court, the petitioner should be allowed to complete the levy upon his attachment. It appears that on the 15tli day of April, 1897, the appellant commenced an action against the defendant, a foreign corporation, and obtained an attachment. On the nineteenth day of April the sheriff served a copy of it'upon amembér of the firm of Gatlin & Co., and also upon a member of the firm of 0. IT. Sampson & Co. Upon calling oil the firm of Gatlin"& Co. a Mr, Park, a member of the firm, was served with a copy of the warrant of attachment, and the sheriff said that he desired to levy the attachment on the property of the defendant. Mr. Park referred the sheriff to a Mr. Cowdrey, who was standing by, and to whom the said Park handed the papers served on him by the sheriff, and said that Mr. Cowdrey had authority to speak for the firm. The sheriff then asked Mr. Cowdrey whether he or said firm had in. their possession, or under their control, any property belonging to the defendant. Mr. Cowdrey replied that they had none. Relying upon this statement, the sheriff made no further effort to levy upon any particular property. On the 15th day of April, 1897, the sheriff applied to the firm of 0. H. Sampson & Co,, in the city of New York, and saw a Mr. Eugene H." Sampson, a member of the firm. A certified copy of the warrant of attachment was then delivered to Mr. Sampson, with a statement that the sheriff desired to levy upon any property of the defendant in his possession, or in the possession of the firm. Mr. Sampson said that he did not know of any property of the defendant in his possession, or under the control of the said firm. The same statement was made by both of these firms to a clerk of the plaintiff’s attorney, who, about that time, made inquiries as to the property of the defendant. Subsequently, and on the twenty-eighth day of April, the plaintiff in this action, a stockholder of the defendant corporation, commenced an action in this court against the corporation. The defendant corporation voluntarily appeared in that action, and, on consent, receivers were appointed of all property of the defendant in this State. These receivers were'given power to take possession of all the goods, chattels and property of" the defendant, and no further directions were ■contained in the order, except to receive the property.

The complaint in this action alleges the appointing of the receivers of the property in Massachusetts, demands judgment that the Massachusetts receivers be appointed receivers of the property of the defendant in this State, with the authority to receive the same and to convert the same into money under the direction of the court, and restraining all creditors of the corporation from interfering with the receivers of such property. Neither in the action commenced in Massachusetts nor in the action commenced in this State is any demand made for the dissolution of the corporation, or for a distribution of its property among its creditors. Nor does either the order granted in this State or the order granted in the State of Massachusetts, provide for such disposition of the receivers’ property. The orders appointing the receivers, both in this State and in the State of Massachusetts, appear to be devised simply for the purpose of holding the property of this foreign corporation so as to prevent the creditors in this State from obtaining liens upon it, and having it for the benefit of the stockholders of the corporation. There is no statement in the complaint in the action commenced in this State that there is not sufficient property in this State to pay all creditors of the corporation here. On the contrary, it appears that there was property of the corporation here to the value of upwards of $75,000; and the only statement of the creditors of the corporation in this State is, that the defendant is indebted to the petitioner, the Merchants’ National Bank, in the sum of $13,964.49, and to the National Broadway Bank in the sum of $18,657.35. Sundry other creditors are spoken of, but it does' not appear that the aggregate amount of their claims exceeds in value the property in this State. It is further alleged that the receivers in Massachusetts are authorized to continue the business of the corporation for the purpose of realizing the greatest possible value out of the assets thereof; that, in order to protect the corporation and stockholders of the corporation, it is necessary that the business. of the corporation should be-continued; that receivers should be appointed to take possession of, and control, the property in said State, and that under the order of this court the receiver should co-operate with said receivers-so appointed in Massachusetts in the disposition of the said prop-, erty, and in the doing of all acts that may be necessary for the-protection of the said assets and the realization of the full value thereof.

We have thus a case where a New York creditor, having'obtained-a warrant of attachment against a foreign corporation, is prevented by the false statements of the agents of that corporation from levying upon its property until the corporation, in an action commenced by stockholders and upon the consent of the corporation, can procure the appointment of a receiver for the benefit of the stockholders, who will prevent the .New York creditors from obtaining liens on the property to secure their demands. I do not- think that the-interests of foreign corporations, and the stockholders of foreign corporations, should be protected at the expense of our citizens, who-are creditors of the corporation. Upon the granting of this warrant of attachment the action against this corporation was commenced,, and the court accpiired jurisdiction over the property of the foreign corporation within this State. (Code, § 416.)

By section 644 of the Code it was the duty of the sheriff to immediately execute the warrant of attachment by levying upon so much of the property of the defendant as would be sufficient to pay the-demand of the plaintiff, and by section 649 of the Code a levy under a warrant of attachment must be made by taking the personal property capable of manual delivery into the--sheriff’s actual custody. In the discharge of this duty he waited upon those having-the custody of the defendant’s property and was informed that they had no property of the defendant in their custody. There was no-intimation to the sheriff, or to the attaching creditor, that this statement was false until a stockholder of the corporation, in collusion with the officers of the corporation, had obtained the appointment, of these receivers. Thus, by a false statement, intentional or unintentional, made to the sheriff by an agent of the corporation, the corporation and its officers were enabled by means of this process of the court to prevent the sheriff from levying upon property of the corporation, which it was his duty to levy upon, and which it was the right of the attaching creditor to have levied upon, to secure the payment of any judgment that he should obtain. The property is in the. hands of the court, held by its receivers, not' for the benefit of creditors, but subject to the order of the court. The power of the court to allow the sheriff to make the levy, notwithstanding the possession of the receiver, is undoubted, and I think this is a case in which the court should protect the creditor who, by diligence, had obtained a position which entitled him to a lien upon the property of the corporation, á,nd should allow the sheriff to complete his levy, which would have .been effectual.but for the misrepresentations of the agents of the corporation.

I think, therefore, that the order appealed from should be reversed and the receivers in-this action directed to allow the sheriff to levy upon the property of the defendant corporation in his possession ;. and that, upon such levy being made, the title of the receivers to the property of the defendant corporation, in the possession of the firms of Gatlin ¡fe Co. and O. H. Sampson & Co., when the warrants of attachment were served upon these firms, he subordinate to the levy made by the sheriff in execution of this warrant of attachment, and that the sheriff have permission to take such property, or sufficient thereof, to properly execute the warrant—with costs of this appeal, and ten dollars cosis of the motion in the court below to the appellant.

Patterson, J., concurred.

Order affirmed, with ten dollars costs and disbursements.