Case ID: ad_55/html/0181-01.html
Source: Caselaw Access Project
Author: {"author": "Smith, J. :", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Walter C. Witherbee and Annie E. Witherbee, his Wife, Plaintiffs, v. Frank S. Witherbee and Others, Defendants. George T. Murdock, as Receiver of the Partnership Property of Witherbee, Sherman & Company, Appellant; Witherbee, Sherman & Company, Respondent.
    
      Bond to one as receiver and as executor and testamentary trustee—it is not a compliance with an order that it be given to “ executors ” — a receiver refusing under such bond to pay over property is not guilty of contempt — interference with his possession not punished.
    
    A receiver appointed in an action to wind up the affairs of a partnership, who was also one of the executors and trustees named in the will of a deceased partner, was directed to turn over the property in his hands as receiver to a corporation upon the delivery to him of a bond, “ conditioned that said corporation will pay to said executors upon demand any damage or recovery that may he had against said executors on account thereof or on account of the rents, issues and profits.” ,
    
      Held, that a bond running to him as receiver and as executor and testamentary trustee conditioned that the corporation “shall well and truly pay, or cause to he paid, to said obligee upon demand any damage or recovery that may he had against said obligee on account thereof, or on account of the income thereof,” was not in strict compliance with the order, as a recovery against the obligee as executor and testamentary trustee alone would hardly come within" its protection;
    That the receiver was not guilty ot contempt in refusing to deliver the property to the corporation upon receipt of such bond, even though it had been approved by the justice who made the order;
    That it could not he said that the Special Term abused its discretionary power in refusing to punish the corporation for its contempt in taking possession of the property without permission of the court upon the refusal of the receiver to ' turn the property over to it.
    
    Appeal by George T. Murdock, as receiver of the partnership property of Witherbee, Sherman & Co., from an order of the Supreme Court, made at the Saratoga Special Term and entered in the office of the clerk of the county of Essex on the 11th day of September, 1900, adjudging him guilty of contempt for refusing to deliver the property of said partnership to the corporation of Witherbee, Sherman & Co., p ursuaiit to an order of the Supreme Court dated July 14, 1900, and also from an order made at the Saratoga Special Term and entered in the office of the clerk of the county of Essex on the 11th day of September, 1900, denying his motion to punish the corporation of Witherbee, Sherman & Co. for contempt in interfering without authority with his possession as receiver.
    This action was brought by the plaintiffs against the defendants to wind up the copartnership affairs of Witherbee,, Sherman & Co., and for a sale of the property of the firm and a distribution of the proceeds among the owners, and was begun in September, 1896. On the 6th day of Bovember, 1895, George R. Sherman, a member of said firm and the owner of one-third part of' the partnership property, died. By his will he devised his one-third interest in the partnership property to his executors, his wife Jane H. Sherman, George ' D. Sherman and George T. Murdock, in trust with authority to continue the partnership. This will was admitted to probate and the executors qualified. Upon September 30, 1898, Jane H. Sherman died, leaving George JD. Sherman and George T. Murdock as executors and trustees under the will.
    In December, 1896, George T.• Murdock, the appellant, was-appointed receiver of the copartnership business and property of which he at once took possession. Thereafter the claims of the respective parties were litigated resulting in a decree determining the same. Upon application and consent of all the parties to the action except the ajrpellant Murdock, an. order was made that the appellant, as receiver, deliver over to the corporation of Witherbee, Sherman & Co., all of -the property which he held as receiver except about $80,000 in cash which under the order he might retain until his commissions and expenses were ascertained and paid, upon the delivery to him by said corporation of a bond in the penal sum of $150,000 approved by a justice of this court “ Conditioned that said corporation will return and deliver to George T. Murdock and George D. Sherman, as executors under the will of George R. Sherman, deceased, the two-ninths interest or share of George K. Sherman, John R. Sherman and Charles S. McLaughlin, the trustee in bankruptcy of said George K. Sherman, of, in and to such personal property, if the return thereof be finally adjudged herein, or will pay to said executors the value thereof, if such delivery cannot be had; and also conditioned that said corporation will pay to said executors upon demand any. damage or recovery that may be had against said executors on account thereof or on account of the rents, issues and profits of the two-ninths share of George K. Sherman, John R. Sherman and Charles S. McLaughlin, as trustee in bankruptcy of said George K. Sherman, of, in and to the real property of said late firm of Witherbee, Sherman & Company.”
    This order was entered in the Essex county clerk’s office upon the 8th day of August, 1900, and was upon that day served upon the appellant. At the same time there was tendered him a bond dated July 20, 1900, executed by Frank S. Witherbee, Wallace T. Foote, Walter C. Witherbee, George D, Sherman and Witherbee, Sherman & Co. This bond was executed to “ George T. Murdock, as receiver in the above entitled action, and as executor and trustee under the will of George R. Sherman, in the penal sum of one hundred and fifty thousand dollars, to be paid to the said George T. Murdock, as receiver and as testamentary trustee as aforesaid, or to his executors, administrators, successors or assigns.” It then recited, the order of Juiy fourteenth, and the condition was in the following language : “ If the said corporation of Witherbee, Sherman & Company shall well and truly return, or cause to be returned, to said obligee the aforesaid two-ninths interest in said personal property, if the return thereof be finally adjudged herein, or will pay to said obligee the value thereof if such delivery cannot be had, and shall well and truly pay, or cause to be paid, to said obligee upon demand any damage or recovery that may be had against said obligee on account thereof, or on account of the income thereof, or of the rents, issues and profits of the two-ninths part or share of the said John R. Sherman and George K. Sherman and his trustee in bankruptcy, Charles S. McLaughlin, in the real property of the said late copartnership, then this obligation be' void.” At this time a demand was made upon the appellant for said property, which was refused. Upon the lYth day of August, 1900, an order was granted that this appellant show cause why he should not be punished for contempt in not having delivered over the property as required by the order. Thereafter, and upon the 28th day of August, 1900, another bond was served upon the receiver and another demand for the property, which was refused. The second bond bore date August 24, 1900, and was executed by the corporation Witherbee, Sherman & Co. and by Walter C. Witherbee and Wallace T. Foote, Jr. Both bonds were approved by the justice who made the order. The second bond tendered by the respondent ran as did the other one,, to George T. Murdock, as receiver and as executor and trustee under the will of George R. Sherman, and the final condition reads: That the obligors “■ shall well and truly pay, or cause to be paid, to said obligee upon demand any damage or recovery that may be had against said obligee.” After the service of this second bond a second order was obtained, returnable at .the same time as was the first order, requiring the appellant to'show cause why he should not be punished for contempt in refusing to deliver over the property which .he held as receiver.
    After the refusal of the receiver to deliver the property upon demand, he discharged the employees of the company and abandoned the transaction of any business. It seems that there were contracts outstanding which were liable to be forfeited. Thereupon the corporation took possession of certain of the property of which the receiver then held possession without the permission of the receiver. At the instance of the receiver an order was granted returnable at the same date as were the other orders' to show cause requiring the corporation to show cause why it should not be punished for contempt in interfering with the possession of the receiver.
    
      Edgar T. Brackett, for the appellant.
    
      F. A. Rowe, for the respondent.
    
      
       See Witherbee v. Witherbee (ante, p. 151).
    
   Smith, J. :

The appellant justifies his refusal to deliver over the property upon the demand of the respondent upon the ground that the bond' tendered to him did not comply with the order. By the terms of the order he was entitled to a bond, ■“ conditioned that said corporation will pay to said executors upon demand any damage or recovery that may be had against said executors on account thereof, or on account of the rents, issues and profits,” etc. Both bonds ran to the. appellant both as receiver and testamentary trustee, and were conditioned that the said corporation shall well and truly pay, or cause to be paid, to said obligee upon demand any damage or recovery that may be had against said obligee on account thereof, or on account of the income thereof,” etc.

This bond, was not, we think, in strict compliance with the order. The obligee was named both as receiver and as executor and testamentary trustee. A recovery against Murdock as executor and testamentary trustee alone would hardly come within the protection of the bond, which must be construed strictly. Hor is the respondent aided by the approval of the justice who presided at the court when the order was made. In approving the bond he had no power, though he had intended, to modify the terms of the order. The claim that the appellant has waived a bond in strict compliance with the order is not tenable. There nowhere appears any intention to waive any rights which he might have, even if he were by law authorized to make such waiver, and such authority is not clear. The order cannot be justified on the ground that lie still exercised control over the property, as the control is rightfully with him until the property be delivered to his successor. Mor, again, can it be justified on the ground that he is unlawfully interfering with the property because the order states no acts of interference constituting a contempt, nor are any such acts. shown by the affidavits.

If the property was to be delivered over to the corporation of Witherbee, Sherman & Co. only upon the production of the bond required by the order, its possession of necessity remained with the receiver until such bond was delivered. An interference with that possession is unquestionably a contempt of court. Whether the offender shall be punished, however, must rest largely in the discretion of the court. The offense may be technical. It may have appeared to the court that there were strong moral grounds for an interference which was without its permission. We cannot say that, under the circumstances of this case, the Special Term was not justified in its discretion in forgiving the respondent for the contempt committed. As the order does not state upon what ground the motion was denied, it must be sustained if justified upon any ground.

The order punishing the appellant for contempt, from which the first appeal is taken, should be reversed, with ten dollars costs and disbursements.

The order refusing to punish the respondent for contempt in interfering with the possession' of the appellant as receiver should be affirmed, without costs of' this appeal to either party, with leave to the appellant to apply to the Special Term for a-restitution of the said property, unless ' a bond be given in compliance with the order" of the court made upon the 14th of July, 1900.

All concurred.

Order reversed, with ten dollars, costs and disbursements, and motion denied, with ten'dollars costs.

Order affirmed, without costs either to party, with leave to the receiver to apply to the Special Term for a restitution of the property, unless a bond be given in compliance with the order of the court.