Case ID: ad_111/html/0158-01.html
Source: Caselaw Access Project
Author: {"author": "Ingraham, J.:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Leo Schlesinger, as Receiver of The Federal Bank of New York, Appellant, v. Andrew Gilhooly, Respondent.
    First Department,
    February 9, 1906.
    Preferred cause—when action by receiver of corporation entitled to preference. . •
    The receiver of a bank suing on promissory notes should be granted a preference-on the calendar,. although there -has been delay in bringing action- and iii noticing the cause for trial, when the receiver has been, ordered to make a final accountirig/and the trial of the action-is necessary to enable the receiver to comply with the order of the court. ;
    Appeal by the plaintiff,, Leo Schlesinger, as receiver of the Federal Bank of Yew York, from an order of the Supreme Court, made at the Y.ew York -Trial Term arid entered in the office of the clerk Of the county of Yew York on the 26th day of ¡December, 1905, granting the plaintiff’s application for a preference.
    
      Stillman F. Kneeland, for the appellant.
    
      Ernest Hall, for the respondent.
   Ingraham, J.:

The plaintiff brought this action as receiver of the Federal Bank of Yew York to recover upon two promissory -notes made by the defendant, and applied to the Trial Term for a preference over other cases, on the calendar, upon the ground that he had been directed- by an order of the court to make a final accounting as receiver on March 15, 1906, and that to comply with this order it was necessary that pending actions to which the receiver was a party should be tried and finally disposed of prior to that time. • The plaintiff was awarded the preference allowed by subdivision 5 of section 791 of the Code of Civil Procedure, entitling him to have his case preferred over the cases noticed for tire same term, but his application for a further preference was denied.

The action was commenced on November 26, 1904. On the 26th day of January, 1905, the defendant served an answer admitting the making of the notes, but alleging that the same were altered after they were made and delivered, and further alleging that the notes were delivered in pursuance of a usurious agreement between himself and one Muirhead, and that he is without knowledge or information sufficient to form a belief as to whether said notes were discounted by the Federal Bank, The objection of the defendant to the granting of this application was a tender consideration for the rights of other litigants which may be affected by giving this action a preferencebut considering the necessity of a prompt settlement of the affairs of this insolvent corporation, and the peremptory order that has been granted requiring this plaintiff to file his accounts as receiver, we think the court might well have given to this case a preference. '

It would appear that the main question here is whether the bank is a bona fide holder for value before maturity of these notes. That question can certainly be disposed of without a protracted trial, so that the rights of Other litigants will not be seriously affected by allowing this action to be promptly disposed of. The delay of the plaintiff in promptly commencing the action and noticing the case for trial should not be given controlling influence in an action where the plaintiff sues as receiver. If the plaintiff were a private individual seeking to enforce his rights, I should be disposed to think that his failure to promptly notice the case for trial after it was at issue would be a sufficient reason for denying his application; but under the. circumstances, I do not think that the delay should defeat the right of the people to have the offices of this insolvent corporation closed up as soon as possible; and to accomplish this and to enable- the receiver to comply with the order of the court and render the final accounting at the time required, the order 'should' he reversed and the: plaintiff awarded a preference' on'the. Trial Term calendar, with ten dollars costs and disbursements of this áppéal, to abide the final event of the action.

O’Brien, P. J., Laughlin, . Clarke and Houghton, JJ., concurred. •

Order reversed and preference awarded, with ten dollars costs , and disbursements to abide event.