Case ID: nys_29/html/0373-01.html
Source: Caselaw Access Project
Author: {"author": "PARKER, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

HARDT et al. v. LEVY et al.
    (Supreme Court, General Term, First Department.
    June 15, 1894.)
    No. 72.
    Receivers—Vacating Appointment—Laches.
    An order appointing a receiver of partnership will not be vacated more than two years afterwards, on the motion of one of the partners, where it appears that the moving party, at the time the receiver was appointed, knew the facts on which the motion was based, but did not oppose the appointment, and that the receiver during the whole time has been actively engaged in discharging the duties of his office, a.nd has necessarily expended large sums of money therein.
    Appeal from special term, New York county.
    Action by William A. Hardt and others against Moses S. Levy, impleaded. From an order requiring the receiver to account, and refusing to vacate the order by which he was appointed, defendant Moses S. Levy appeals.
    Affirmed.
    
      Argued before FOLLETT and PARKER, JJ.
    Benjamin N. Cardozo, for appellant.
    George Zabriskie, for respondent.
   PARKER, J.

We held at the October term of 1893 (25 IT. Y. Supp. 248) that, while an action by the general creditors of a firm for the appointment of a receiver and the disposition of its assets is maintainable against a limited partnership, it is not against a general partnership; that the record disclosed the existence of a general, and not a limited, partnership by and between these defendants; and reversed the judgment .which the special term had granted to the plaintiffs. The suit was commenced May 18, 1891, by the service of summons and complaint on the defendant Augustus H. Levy. On the same day an order to show cause, accompanied by affidavits, was served upon him, directing that the defendants show cause at chambers, May 21, 1891, why a receiver of the property and assets of the said limited partnership should not be appointed, and a temporary injunction granted. There was no appearance in opposition to the motion, which resulted in plaintiff’s favor, Henry Winthrop Gray being appointed receiver of all the property, assets, and effects of defendant’s firm, Levy Bros. & Co. In due course the receiver gave his bond, which was approved, and entered upon the discharge of the duties of the office. At the outset he found the sheriff in possession .of the store occupied by the defendants, and of certain merchandise and other property therein. One of the coroners was also in possession of merchandise of considerable value. One Benjamin Croner, claiming to be a receiver appointed in proceedings supplementary to execution issued on a judgment entered in the county of Kings, also claimed possession of the merchandise and property of which Gray was appointed receiver. Understanding it to be his duty to take all necessary proceedings to get possession of the property, he promptly took the necessary steps in that direction, and in the end was successful. He also took proceedings to collect the accounts and turn the assets of the property into cash, in the doing of which he was obliged to employ counsel, clerks, and assistants, necessitating the expenditure of considerable sums of money. During all this period of time this defendant knew that the receiver was in possession as an officer of the court, performing services and expending money for the benefit of the estate, but neither he nor his codefendants took any steps to have him discharged as receiver. Hearly two years later the plaintiffs obtained a judgment against the defendants in accordance with the prayer of their complaint, which, as we have already remarked, was reversed at the end of the following October term. After that, this appellant made a motion to dissolve the injunction and to vacate the order appointing the receiver, and he insists upon this appeal from the order denying his motion that such a result logically and necessarily followed from the prior decision of this court.

Were it not for the conduct of the appellant for over two years and a half, during which time the receiver was employing his skill and expending money for the benefit of the estate, we should feel constrained to recognize the correctness of his contention. But the defendant made no motion to dissolve the injunction and discharge the receiver, although he knew, at almost the hour of the original appointment, of the facts upon which the motion was based. Certain of the affidavits referred to on this motion were made May 25, 1891,—four days after the temporary receiver was appointed. September 12, 1891, Moses S. Levy verified his amended answer to the complaint, so that he must have appeared at least some days before September 12th, and in his answer he denied that the defendants’ firm was a limited partnership. Without more of detail, it should be said that the defendants had full knowledge of all the facts upon which this motion was founded, and that, having it, they did not appear to oppose the appointment of the receiver; and, having it, they saw him take possession of the estate of the partnership, and witnessed his struggle with the sheriff, coroner, and the receiver in proceedings supplementary to execution for the" possession of portions of the property, all of which they well knew entailed upon him, as an officer of the court, much of labor and expense. Bow, after all this lapse of time, they seek to strip this officer of the court of all the moneys in his possession, treat him as a trespasser, and leave him to personally bear the burden of expense necessarily and in good faith incurred by him while attempting to carry out the orders of the court. They were silent when they should have spoken, and now will not be heard to insist that the receiver shall not be permitted to render an account of his proceedings, and make such disposition of the money in his possession as to the court shall seem in accordance with law and justice. The order should be affirmed, with $10 costs, and printing disbursements.