Opinion
12-14-1908
HARRIS v. HIBBARD et al.
Samuel D. Oliphant, Jr., for petitioner Walter I. McCoy. Samuel C. Kulp, for petitioner William Johnston.
Action by Charles F. Harris against Omri F. Hibbard, as receiver, and others. On application for the payment of moneys in court. Application for present distribution denied.
Samuel D. Oliphant, Jr., for petitioner Walter I. McCoy.
Samuel C. Kulp, for petitioner William Johnston.
WALKER, V. C. On April 18, 1900, Will Ham Johnston, of Trenton, N. J., filed a petition in this cause, in which he averred that on October 31, 1899, he recovered against William S. Harris in the Supreme Court of the state of New York a judgment for $1,533.91, debt and costs, and caused an execution to be issued thereon, and that afterwards the defendant Omri F. Hibbard was, by the Supreme Court of New York, appointed receiver in supplementary proceedings in aid of the execution which was issued on that judgment; that on October 25, 1900, the defendant William S. Harris conveyed, subject to the inchoate right of dower of his wife, the defendant Elizabeth J. Harris, all his right, title, and interest in and to a certain lot of land and premises in the city of Trenton; that on December 11, 1901, Charles F. Harris, only brother of William S. Harris, filed a bill for the partition of the same lands and premises of which William S. Harris conveyed his interest to Mr. Hibbard as receiver; that on July 2, 1902, Mr. Hibbard, as receiver, filed a petition in this cause, and thenceforward participated therein for the purpose of protecting the rights of the petitioner, Mr. Johnston, in the premises conveyed; that by the final decree in this cause it was adjudged that the complainant, Charles F. Harris, and the defendant Omri F. Hibbard, the receiver, were each seised of, in and to the fee, and entitled to, the undivided one-half part of the premises above mentioned, and that the undivided one-half part thereof to which the receiver was entitled was subject to the inchoate right of dower of Elizabeth J. Harris, wife of William S. Harris; that on June 23, 1902, the premises were sold by virtue of the decree of this court and brought the sum of $2,150, of which sum, after deducting costs and expenses, one half was paid to Charles F. Harris and the other half was deposited in this court, where it yet remains, waiting the final order of this court; that the order requiring the sum of $978.87, being one-half of the net proceeds of such sale, to be deposited in this court, was made upon the strength of the representation that before the sale in partition the right, title, and interest of the defendant William S. Harris was on October 24, 1900, attached by virtue of a writ of attachment out of the Supreme Court of this state at the suit of Eugene M. Coffield, trustee, against William S. Harris; that, beyond causing the interest of Mr. Harris in the premises to be attached, neither Mr. Coffield as trustee nor any other person for him or on his behalf in any way or manner prosecuted the attachment suit, but, on the contrary, has been and is in such laches as entirely to lose his lien under the attachment; that the conveyance by William S. Harris to Omri F. Hibbard, as receiver, was for the benefit of the petitioner William Johnston and that the sum so depositedin this court, and which but for the attachment would have been turned over to the receiver for the petitioner to be credited as a payment on his judgment and execution against William S. Harris, is justly the petitioner's and of right should be paid over to him; that Mr. Hibbard, as receiver, has neglected and failed to make any effort to have the sum withdrawn from this court for the petitioner's benefit, and he therefore prays that an order be made directing the clerk to pay to him, Mr. Johnston, the sum of $978.87, with its accumulations, or such other order as shall seem proper.
Upon the filing of this petition, an order was made upon all of the defendants, being Omri F. Hibbard, receiver, William S. Harris and Elizabeth J. Harris, his wife, to show cause why the prayer of the petition should not be granted. In the meantime Walter I. McCoy, Esq., an attorney and counselor at law of the state of New York, residing in this state, filed a petition in this cause, in which he avers that the judgment, execution, supplemental proceedings, order of the Supreme Court of New York appointing Omri F. Hibbard receiver, and compelling the execution and delivery of the deed by William S. Harris to him, the receiver, were all procured and brought about by the petitioner as a practitioner at law of the Supreme Court of New York at the expense of much time and labor; that just before the delivery of the deed referred to the defendant William S. Harris, or those acting in his interest and for his benefit in the name of his wife, Elizabeth J. Harris, acting through Mr. Coffield, her sister's husband, procured out of the Supreme Court of this state as a means of defeating the order to convey the writ of attachment referred to in the petition of Mr. Johnston, under which writ the right, title, and interest of William S. Harris in the property referred to was attached; that for the purpose of procuring the judgment of the Supreme Court of New York and the orders and deed made thereunder, and to compel Mrs. Harris to discontinue the attachment suit, brought as a pretense for her benefit, but really for the purpose of defeating the orders and deed mentioned, the petitioner, Mr. McCoy, instituted, carried on, and brought to a successful conclusion proceedings in the Supreme Court of New York to attach Mrs. Harris for contempt of that court; that the matter was referred to a referee of that court to take proofs and report his conclusions; that it became necessary to take a large amount of testimony before the referee to controvert and disprove the testimony of Mrs. Harris and her husband and others, to the effect that the attachment suit was brought by her without knowledge on her part of the judgment and order thereunder of the Supreme Court of New York; that the fraud thus perpetrated upon the order of the Supreme Court of the state of New York was one so cunningly conceived and executed that its disclosure was a matter of great difficulty to the petitioner, and involved the expenditure of a very large amount of study, time, and proofs, and the raising of novel and difficult questions of law; that the report of the referee upon the proofs was duly confirmed, and the Supreme Court of New York made an order July 28, 1902, holding Mrs. Harris guilty of contempt of its order of July 11, 1900, and fining her the amount of the judgment and various costs and expenses of the contempt proceedings, amounting in all to the sum of $1,908.08, and further ordering that she be committed until she pay the fine or until she pay all of the fine except the amount of the judgment and vacate the attachment; that all proceedings taken by the petitioner Mr. McCoy in obtaining and protecting the judgment and the orders of the Supreme Court of New York and the deed of Mr. Harris to Mr. Hibbard, receiver, under which Mr. Johnston now claims the fund in this court, were taken by the petitioner as attorney at the instance and employment of Mr. Johnston and for his benefit; that the petitioner has received from Mr. Johnston over and above his necessary disbursements in the proceedings the sum of $30.32, and has received no other fee for or on account of his services, and he prays that he may be made a party to this cause for the purpose of his application, and that he may be permitted on the hearing of the petition of Mr. Johnston to make proof of the nature and value of his services, and that he may be decreed to have a lien for the payment of his services in procuring the fund in court upon any and every part of the fund that may be found to be payable to Mr. Johnston, and that an order may be made that such amount be paid by the clerk to him or to his solicitor. Upon the filing of this petition an order was made upon William Johnston to show cause why the prayer of Mr. McCoy's petition should not be granted, and both petitions came on to be heard together.
The petition of Mr. Hibbard, filed on July 2, 1902, avers that the master to whom the cause was referred reported that he, Mr. Hibbard, had only a life estate in the premises sought to be partitioned, because of the omission of words of inheritance in the deed to him, and the use in the conveyance after the petitioner's name of the words "successors and assigns"; that under the laws of the state of New York where the deed was drawn, executed, and delivered, and under the well-settled practice of attorneys having to do therewith, the words of limitation of the estate, which are properly used to convey all the estate, including one of inheritance, of a judgment debtor to a receiver appointed in proceedings supplemental to execution, are those used in the deed to the petitioner; that the order of the Supreme Court of New York in the proceedings supplemental to execution required Mr. Harris to convey his entire estate in the premises to the petitioner, andthat it was in obedience to that order that the deed was made; that to the best of the knowledge and belief of the petitioner both parties to the deed fully intended that it should convey, and fully believed that it did in fact convey, to the petitioner the entire estate of Mr. Harris in the premises, and he prays that he have leave to show that under the deed as it stands he is entitled to one-half of the proceeds of sale subject to the inchoate right of dower of Mrs. Harris, and that, if under the deed it should be determined that he is not so entitled, he have leave to take proper proceedings to reform the deed so as to carry out what may be shown to have been the purpose and intention of the parties to it, and for further or other relief. On the filing of this petition, an order was made that the complainant show cause on July 7, 1902, why the relief prayed should not be granted.
The decree for sale, which was filed on May 22, 1902, confirmed the master's report, and ascertained, adjudged, and declared that the rights and interests of the parties to this suit in the premises sought to be partitioned were as follows: The complainant was seised in fee of an equal undivided one-half part of the premises. The defendant Omri F. Hibbard, receiver, was seised of a life estate in an equal undivided one-half part of the premises, subject to the inchoate right of dower of the defendant Elizabeth J. Harris, wife of William S. Harris, therein. The defendant William S. Harris was seised of an equal undivided one-half part of the premises, subject to the life estate of the defendant Omri F. Hibbard, receiver, therein, and also subject to the inchoate right of dower therein of his wife, and the defendant Elizabeth J. Harris was seised of an inchoate right of dower in an equal undivided one-half part of the premises. On July 9, 1902, an order was made that the defendant William S. Harris show cause on July 15, 1902, why the abovementioned decree should not be opened and amended so that the right and interest of the defendant Omri F. Hibbard, receiver, should be by final decree ascertained, adjudged, and declared to be that he was seised in fee simple of an equal, undivided one-half part of the premises subject to the inchoate right of dower of the defendant Elizabeth J. Harris, the wife of William S. Harris. This order to show cause and also the one last above mentioned it would seem were heard together on July 15, 1902, and on that date an order was filed in which it was adjudged and decreed that the report of the master stand ratified and confirmed, except as to the rights and interests of the defendants Omri F. Hibbard, receiver, and William S. Harris, and that the complainant, Charles F. Harris, and the defendant Omri F. Hibbard, receiver, were each seised of an undivided one-half part of the premises, and that the undivided one-half to which Mr. Hibbard was entitled was subject to the inchoate right of dower of the defendant Elizabeth J. Harris therein, and the decree was thereby opened and modified to the extent indicated, and no further. The order amending the decree in this cause operated, in effect, to reform the deed given by the defendant William S. Harris to the defendant Omri F. Hibbard, receiver; the actual reformation of the conveyance being entirely unnecessary because the land had been sold by virtue of the decree and a good title made to the purchaser, the proceeds of sale taking the place of the land for the purpose of distribution, and in making that distribution the question of the character of the title of Mr. Harris, as it stood at the time of the sale, was only incidentally, though necessarily, involved. On the hearing before me counsel for Mr. McCoy, who, in turn, is counsel for Mr. Hibbard, pressed for an order that the fund be turned over to Mr. Hibbard. This contention in my opinion is sound, and should prevail. Mr. Johnston cannot complain of it, as by his own sworn petition it is made to appear that Mr. Hibbard was appointed in his behalf, in aid of his execution, issued upon his judgment, recovered against Mr. Harris in the state of New York. Mr. McCoy, as I understand it, does not object to this disposition of the matter, as he is the attorney of both Mr. Johnston and his receiver, Mr. Hibbard; his, Mr. McCoy's petition having been filed as a precautionary measure for the purpose of protecting himself, and having this court adjudge what he is reasonably entitled to have and receive by way of compensation for his services to Mr. Johnston in the New York Supreme Court, and to have it awarded to him by this court out of the fund in case it be ordered to be distributed directly to Mr. Johnston without the intervention of the New York receiver.
The view I take of this matter renders it unnecessary for me to find what upon the testimony is the value of Mr. McCoy's services, or how much Mr. Johnston paid him on account of services and expenses in the New York proceedings. I would not hesitate for one moment to make this ascertainment and adjudication as between Mr. McCoy and Mr. Johnston, were it not for the fact that I am firmly convinced that the law of this state recognizes Mr. Hibbard, receiver, as the person entitled to administer the fund which is in this court in this cause; and that, too, under the direction of the court that appointed him, namely, the Supreme Court of the state of New York.
In Bidlack v. Mason, 26 N. J. Eq. 230, it was held that on principles of comity the aid of this court will be extended to a receiver of a foreign corporation seeking to obtain possession of property of the corporation here, as against the officers of the company, who may be endeavoring by fraud or subterfuge to withhold it. In the case just cited a suit had been brought in the Supreme Court of New York and an order made enjoiningthe company and appointing a receiver. Chancellor Runyon remarked, at page 233 of 26 N. J. Eq., that it was apparent that the defendants Mason and Fleming were contriving to protect Mason in the possession of the property of the company as against the receiver and those whom he represented, namely, the creditors and stockholders. Mr. Johnston, in the case under consideration, is not endeavoring surreptitiously to possess himself of the property to which the receiver is entitled. He is openly demanding the fund as his, and he certainly has the beneficial interest in it; but it is the property of the New York receiver who has a right to take it into his possession and administer it under the laws of the state of New York. He is bound to make a report to the court appointing him and obtain his discharge in that court, and on the state of facts here presented it would, in my judgment, be a great violation of interstate comity and of the respect due from one court to another for this court to distribute this fund. In Frazier v. Barnurn, 19 N. J. Eq. 316, 97 Am. Dec. 666, it was held that an assignment of an annuity, though due from parties and property out of the jurisdiction of this court, made by the person to whom it belongs to a receiver here under the direction of the court, is good, and would enable the receiver to collect it in a foreign state. The principle thus enunciated is entirely apposite to the facts of the case at bar. Chancellor Runyon in that case remarked at page 318 of 19 N. J. Eq. (97 Am. Dec. 666) that an assignment of a chose in action by the person to whom it belongs, even if by compulsion of the law of the place where made, is good everywhere. Therefore it follows that the conveyance made by William S. Harris to Omri F. Hibbard, the receiver appointed by the Supreme Court of the state of New York by the compulsory order of that court, is good here, and by comity will be enforced here. In Orient Ins. Co. v. Rudolph, 69 N. J. Eq. 570, 61 Atl. 26, it was held that, where property belonging to a resident of New Jersey is garnished in another state by valid proceedings taken in that state, the title of the receiver based thereon may be asserted in this state. In Falk v. Janes, 49 N. J. Eq. 484, 23 Atl. 813, it was held that a foreign receiver will not be refused recognition as a suitor in our courts, even if a claim of one of our own citizens be injuriously affected thereby, if the receiver prosecutes solely in behalf of a party who is also a citizen of this state. Now this is entirely pertinent. Here the foreign receiver, Mr. Hibbard, is prosecuting solely in behalf of Mr. Johnston, a citizen of Trenton. This case of Falk v. Janes was reversed in Janes v. Falk, 50 N. J. Eq. 468, 26 Atl. 138, 35 Am. St. Rep. 783, but not upon the point just exploited, and therefore the law on this question is that stated by Vice Chancellor Emery in the case in this court.
Having reached the conclusion that Mr. Hibbard, as receiver, is entitled to the money in court, namely, the proceeds of the sale of the undivided interest in the land which was conveyed to him by Mr. Harris, the judgment debtor, I am confronted with the practical difficulty that an attachment, in form at least, appears to be a lien upon the fund, because of the levy of the writ upon the interest of the defendant William S. Harris in the land the day before he conveyed it to the receiver, Mr. Hibbard, and the attaching creditor is not before the court. The order of the New York Supreme Court requiring Mr. Harris to convey is in evidence before me, and it contains a provision forbidding Mr. Harris, his agents, servants, and attorneys, and all others, from making or suffering any transfer or other disposition of, or interference with, the property of the judgment debtor, except in obedience to the order until further direction. It is under this clause doubtless that the proceedings for contempt were taken against Mrs. Harris for her alleged fraudulent conduct in causing the attachment to be issued by Mr. Coffield, as her trustee, against the premises in question, to defeat, as it is said, the claim of the complainant, and in which contempt proceedings she was condemned.
The interest, if any, which Mr. Coffield, as trustee for Mrs. Harris, has in the proceeds of the sale, by virtue of his attachment, has not been settled. Mr. Coffield is not a party to this cause at all, and any rights which he may have would not be affected by any order or decree made on the petitions which I have been considering. His laches may be entirely inexcusable, and, aside from laches, the claim on which the attachment was issued may be entirely unfounded; but surely I cannot summarily and in collateral proceedings adjudge his claim to be invalid, and that is what, in effect, I would have to do if I made an order distributing the funds in court without Mr. Coffield being a party. Furthermore, it should be stated that the evidence before me shows that Mr. Hibbard gave a bond in the sum of $200 only in New York when appointed receiver by the Supreme Court of that state. The security was doubtless sufficient at the time the bond was given; but, as it now appears that he is entitled to receive a sum approximating $1,000, he should be required to enter into bond in at least the sum of $2,000 in this state before receiving the money, assuming that it will ultimately go to him.
The situation with reference to the pleadings and the parties being as above set forth, the matter is not in a posture in which an order distributing the fund in court can properly be made at this time. Unless Mr. Hibbard shall within 30 days after the filing of these conclusions apply by appropriate pleading in this cause or by original bill, as he may be advised, for the relief to which I have indicated he is entitled, I will entertain a renewal of the applications of Mr. Johnston and Mr. McCoy for an order distributing thefund. While I hold that, on the record before me and the arguments made, the fund should go to the receiver, the question must not, as it cannot legally, be considered settled against any one not before the court and consequently unheard. As to such a party the question is an open one. And it may be, too, that the attachment will have to be vacated in the court out of which it issued. These suggestions are for the consideration of counsel.