Case ID: misc_65/html/0005-01.html
Source: Caselaw Access Project
Author: {"author": "Seabury, J. \n      Lehman, J. (dissenting).", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Abraham Ehrlich, Respondent, v. Hyman Sklamberg and Sam Salman, Appellants.
    (Supreme Court, Appellate Term,
    November, 1909.)
    Attachment — Bond to release attachment — Liability on bond—As affected by failure to file bond; By failure of marshal to deliver property.
    Where one who claims to own property, seized by a marshal '. under a warrant of attachment issued against the property of another person by the Municipal Court of the city of New York, executes an .undertaking conditioned that he will establish his ownership, as provided in section 85 of the Municipal Court Act of the city of New York, and serves a copy of the undertaking on the plaintiff’s attorney who approves its form and the sufficiency of the sureties; but the undertaking is retained by the claimant’s attorney and is not filed as required by the Act, and immediately thereafter, the defendant having been adjudicated a bankrupt, the property is delivered by the marshal not to the claimant but to the defendant’s trustee in bankruptcy upon the latter’s demand, the sureties are liable upon the undertaking as a common-law obligation upon their failure to establish ownership by the claimant according to the condition of the undertaking, although the claimant, to obtain the property from the trustee in bankruptcy, gives the trustee another bond with similar conditions.
    Lehman, J., dissents.
    Appeal by the defendants from a judgment in favor of the plaintiff, rendered in the Municipal Court of the city of ISTcw York, second district, borough of Manhattan.
    Schenkman & Brown, for appellants.
    Charles Traubel, for respondent.
   Seabury, J.

This is an action upon an undertaking. The plaintiff brought an action against one Rinzler and in that action obtained a warrant of attachment under which the property therein described was seized by a marshal of the Municipal Court. The defendant Salman, claiming to be the owner of this property, signed with his codefendant an undertaking which contained the following clause: “ that if in an action upon the bond commenced within.three months thereafter the said claimant, Sam Salman, will establish that he was the general owner of the property claimed at the time of seizure; or if he fails so to do that he will pay to the said Abraham Ehrlich the value thereof with interest, then the obligation to be void, otherwise to remain in full force and virtue.”

The attorney for the defendant Salman served on the plaintiff’s attorney, on September thirtieth, a copy of this undertaking together with a notice that, pn October second, the bond would be presented to a justice of the Municipal Court for approval and justification of sureties.

The attorney for the plaintiff made the following indorsement upon the undertaking: “ I hereby approve of the within undertaking both as to the form thereof and as to the sufficiency of the sureties therein named.” The original bond was delivered to the attorney for the defendant Salman, who did not cause it to be filed as required by section 85 of the Municipal Court Act. Whether the bond was ever approved by a justice of the Municipal Court does not appear from the record which is now before us. On October first, Rinzler, the defendant in the action in which the plaintiff obtained the attachment, was adjudicated a bankrupt; and at this time the property seized was still in the possession of the marshal. A receiver of the bankrupt’s property having been appointed, that officer demanded the possession of the property from the marshal. Pursuant to this demand the marshal delivered the property to the- receiver. Subsequently the receiver released all his right, title and interest in the property as receiver to Salman, upon the latter executing and delivering to him a bond for his protection as receiver.

The learned court below found as a fact: “ That Salman was a party to a fraud to conceal the goods from the creditors of Rinzler and that the goods in question were taken from Rinzler’s premises and hidden in the basement of 167 Essex street, owned by a relative of his, which basement Salman claims to have hired, but which is far removed from the regular place where he conducts business.”

The present action, was commenced within the three months prescribed in the bond, and the court below has rendered judgment for the plaintiff.

As I understand the argument which is made in favor of the reversal of this judgment, it is based primarily upon the view that there was no delivery of the bond because only a copy was served on the attorney for the plaintiff and approved by him, and the original was not filed and approved as required by section 85 of the Municipal Court Act. It is, of course, true that a bond is not perfected until it is delivered. It is necessary, therefore, to determine whether there was a delivery of this bond upon which this action is brought. “ The essence of the question whether or not there has been a delivery consists in the intent of the obligor to perfect the instrument and make it at once the absolute property of the obligee.” 5 Cyc. 740.

An instrument may be delivered by words without acts; or by acts without words; or by both acts and words. The opinion delivered in the instructive case of Folly v. Vantuyle, 9 N. J. L. 153, reviews the authorities upon the question of what constitutes a delivery and makes it clear that any acts or words evincing an intent to deliver, provided such intent has reference to the present time, is sufficient to constitute a delivery. The action of Salman in serving or actually delivering a copy of the bond which had in fact been signed and sealed by the obligors, and the service of the notice of justification of sureties, and obtaining from the attorney for the plaintiff his approval of the bond, are clear, unequivocal acts, which were intended to denote and did denote that the obligors were firmly bound upon the bond. ¡Nothing further remained to be done but the formal act prescribed by the statute, that the claimant should file the bond. This statutory requirement was certainly not intended for the benefit of the obligors upon the bond, but for the protection of the obligee. The failure of the obligors, either through neglect or fraud, to give the obligee this additional protection to which by statute he was entitled did not forfeit the rights of the obligee under the bond. The action of the defendants in reference to this bond constituted a complete delivery of it to the obligee.

The failure of Salman to file the bond and the delivery by the marshal of the property seized to the receiver of Rinzler, rather than to the claimant, Salman, may and perhaps does prevent us from regarding this bond as a valid statutory bond. The fact, however, that this bond is not valid as a statutory bond does not impair its validity as a contract, nor prevent its enforcement as a common law obligation. Ryan v. Webb, 39 Hun, 435, 437; Toles v. Adee, 84 N. Y. 222, 237, 238.

As was said in Toles v. Adee, supra:When the plaintiff’s attorneys consented to the proposition and accepted the undertaking, it became operative and binding, not as a statutory obligation, but as a common law agreement between the parties, for the breach of which an action would lie as upon any other assumpsit.”

The presence of a seal upon the undertaking removes any question as to its being founded upon a sufficient consideration. When the bond was signed, sealed and served by the defendant upon the plaintiff’s attorney and accepted and approved by the latter, it was a complete contract; and the fact that it was not approved by a justice of the Municipal Court and was not filed as required by section 85 of the Municipal Court Act did not make it any the less a contractual obligation. The requirement of section 85 of the Municipal Court Act that .the claimant may “ execute and file with the clerk a bond to the plaintiff, etc.,” is provided not for the benefit of the obligors, but for the protection of the plaintiff, if the claimant failed to prove that he was the owner of the property. Haywood v. Townsend, 4 App. Div. 246.

The bond was not conditional upon its being filed or approved by a justice of the Municipal Court; and the defendant Salman, who is one of the obligors upon the bond, ought not to be permitted to take advantage of the fact that he did not cause it to be filed or approved by a justice of the Municipal Court. To permit him to do so is to enable him to take advantage of his' own wrong. Under the terms of the bond the defendants are liable unless they establish, in an action upon the bond, that Salman was the general owner of the property claimed, at the time of the seizure.” This fact the defendants utterly failed to establish, and, consequently, the court below properly held them liable upon the bond. The evidence shows and the trial court has found that Salman was a party to a fraud; and his failure to file the bond and cause it to be approved was, I think, an effort to reap the benefit of the fraud and to enable him to repudiate the obligation of his contract which was expressed in the bond.

The fact that the marshal did not deliver the property to the claimant, but delivered it to the receiver in bankruptcy of Binzler who in turn delivered it to the claimant, in no way relieves Salman from his obligations under the bond which he executed. After the bond was executed and a copy thereof delivered to the plaintiff’s attorney and the defendant Salman had noticed it for approval, the plaintiff was justified in looking solely to the bond and was not required to look after the property which, up to that time, had been securely held hy the lien of his attachment. The fact that the marshal delivered this property to the receiver and that the receiver, after taking a bond for his own protection from Salman, delivered it to the latter, does not- enable Salman to repudiate the obligation he contracted when he signed the bond and delivered a copy thereof with the intention that it should discharge the property. The roundabout way in which Salman acquired the property was a mere subterfuge which is so transparent as to clearly reveal Salman’s effort to get the property and at the same time avoid his liability upon his undertaking. This purpose being apparent, and Salman having gotten the property which under the law he could take only in the event of his giving a bond, the court ought not to be astute to hold that, because Salman obtained the property from the marshal indirectly through the receiver instead of directly from the marshal and failed to file the bond as he was required by law to do, he may, therefore, keep the property and at the same time repudiate the obligation of his bond, although he has not proved his title to it. While the circumstances that Salman obtained the property circuitously instead of directly may perhaps make it impossible to hold him upon the statutory bond, it does not in any way impair the force of his common law obligation.

ISTor does the fact that Einzler, the defendant in that action in which the plaintiff obtained his attachment, was adjudicated a bankrupt avoid the obligation of these defendants upon the bond, or in any way affect the question involved in the controversy between this plaintiff and these defendants. The liability which the plaintiff is seeking to enforce arises out of the bond and is dependent upon this common law obligation.

The question of fact to be determined in this action is whether Salman was the owner of the property at the time of its seizure. The fact that the receiver in bankruptcy of Einzler claimed the property, or that such receiver subsequently transferred any title that he had in the property to Salman, was not material upon the question as to whether Salman was the owner of the property at the time of the seizure. The contentions now urged by Salman are inconsistent. If the receiver or Einzler was the owner of the property, then Salman had no right to claim it in the attachment proceeding and was not its owner; and, under the bond, the defendants are liable to the plaintiff. If the receiver was not the owner of the property, this fact did not establish that Salman was its owner - and, Salman having failed to prove this fact, the defendants were properly held liable upon the bond.

The defendants’ undertaking was conditioned only upon Salman proving his ownership of the property. The burden of proving ownership was upon fíalman. Éisenbud v. Gellert, 26 Mise. Eep. 367; Goldstein v. Goldman, 74 App. Div. 356. This burden was not sustained.

The court below has properly found upon the evidence before it that Salman was not the owner of this property, but merely a party to a fraud designed to enable Einzler to put the property out of the reach of his creditors who were honestly entitled to it.

The judgment should be affirmed, with costs.

Gildersleeve, J., concurs.

Lehman, J. (dissenting).

It does riot appear from the record whether the bond upon which this action is brought was ever approved by a justice of the Municipal Court, but it does appear that the bond was never filed. It further appears that on the first day of October, the day intermediate between the service of the notice of justification and the time set for justification, the defendant in the attachment action was adjudicated a bankrupt and a receiver was appointed of the bankrupt’s property, who made a demand on the marshal for the goods. The marshal thereupon transferred title to the goods, which were in storage, to the receiver. The claimant Salman, still claiming to be entitled to the property involved in the suit and mentioned in his undertaking given to the attaching creditor, claimed it from the receiver and made a demand on him for the property. The receiver, upon some evidence presented to him by Salman of his alleged ownership, released whatever right he had to the goods in question upon Salman’s executing to him a bond for the protection of the receiver. Upon receiving such bond, the receiver directed that the goods, which were in the storage warehouse and title to which had been transferred to the receiver as above mentioned, be delivered to the claimant Salman. Ho order was made by the United States court directing this to be done. The receiver acted upon his own responsibility for what he deemed the best interests of the estate, feeling that he was secured by the bond given to him. Thereupon Salman obtained possession of the property.

I have taken this statement of the facts verbatim from the opinion of the learned trial justice, and upon these facts he has held that the plaintiff herein may bring an action upon the bond signed by the defendants herein to secure the release of the goods from the marshal. Obviously, the action can be sustained only upon proof of the delivery of the bond and of the breach of its condition.

The bond was in form a statutory bond, intended to be made in conformance with section 85 of the Municipal Court Act for the purpose of securing the goods previously attached by the plaintiff. This section requires that the claimant execute and file with the clerk a bond to the plaintiff with one or more sureties, approved by the marshal or by a justice. The statute provides further that “ the marshal must thereupon deliver the property claimed to the claimant.” The filing of the bond was not only for the benefit of the plaintiff but also for the benefit of the debtor who could bring an action upon the bond if the attachment should thereafter be vacated. It had no efficiency until it was filed, because under the statute the marshal had no right to deliver the goods until the filing and the approval were complete.

Nor do I believe that there is any force in the contention that, aside from the statutory liability upon the bond, it may be enforced as a common law obligation. Delivery to the plaintiff is essential to such a liability. As Mr. Justice Seabury aptly points out in his citation (5 Oye. '¡T40) : The essence of the question whether or not there has been a delivery consists in the intent of the obligor to perfect the instrument and make it at once the absolute property of the obligee.” In all the cases where the filing of the bond has been considered a formality not essential to the validity of the obligation, it seems to me that there was a delivery of a bond with the intention that the bond should immediately be considered a perfect instrument and that in all the cases the bond could be acted upon and was in fact acted upon without further acts or formalities. In the case under consideration, the copy of the bond was delivered to the obligee, but not to the person who was intended to act under that bond, with a notice of justification two days thereafter; and I must consider this notice as a clear expression of intention that the bond was not to be regarded as perfected until that time. It seems to me that the citation of Mr. Justice Seabury from the opinion of Toles v. Adee, 84 N. Y. 222, shows the distinction between the two cases: “ When the plaintiff’s attorneys consented to the proposition and accepted the undertaking, it became operative and binding,” etc. In that case the plaintiff’s attorneys waived the requirements of the statute and consented to accept a bond not complying with the formalities of a bail bond as sufficient to obtain the release of the defendant upon an order of arrest. They understood and agreed that the bond was to become immediately effective. In the case under consideration, the attorneys did not consent to any proposition, and the bond did not in fact become operative and binding and was in fact never acted upon. In the case of Haywood v. Townsend, 4 App. Div. 286, the court summarizes the facts. “ The defendants, it appears from the testimony, knew what the bond was for; that without it the trustee, Robert M. Townsend, could not acquire possession of the money that was left by the testatrix for the benefit of the legatees; they signed and executed the bond for the purpose of enabling him to get the money; when they delivered it to him and left it with him, after having executed it, it was, so far as any act of theirs necessary to be done to fix their liability upon the bond, complete * * *. At the time he delivered a sworn copy of it as a voucher of his authority and right to receive the trust fund the bond executed by the defendants was in existence, and its subsequent destruction after the trustee, upon the faith of its execution and existence, had secured the legacies, cannot alter the liability of the defendants.” If in the case under consideration the bond had been delivered to the marshal and he had acted upon it without filing, then the cases would be analogous; but the bond herein was never filed and was never, as far as appears in the record, delivered or shown to the marshal.

In Russell v. Freer, 56 N. Y. 67, as cited in Haywood v. Townsend, supra, the rule is clearly set forth (4 App. Div. 250) : “ Having, by signing the bond and giving it to the principal, placed it in the power of the principal to secure the money, and he having done so, it has, so far as the principal and sureties are concerned, served its purpose, and the defendants should not be permitted to repudiate the bond to the detriment of the parties it was apparently given to secure.”

Conceding, however, for the sake of argument, that there was a delivery of the bond, I fail to find in the record any proof of the breach of the condition or of any possible detriment to the plaintiff. The condition of the bond is in the form required by section 85 of the Municipal Court Act and for the purposes provided therein, i. e., to obtain possession of the property attached. While the condition of the bond is that the claimant, in case of failure to establish that he was the general owner of the property claimed, shall pay to the plaintiff the value thereof, with interest, yet this condition must be read and interpreted in connection with section 86 of the Municipal Court Act, which provides that “A judgment for the plaintiff, in an action upon a bond, given as prescribed in the last section, must award to him the value of the property seized and delivered to the claimant, with interest thereupon from the time of the delivery.” The condition, therefore, is not to pay the value of the property claimed, but the value of the property “ seized and delivered ” by the marshal to the claimant. The marshal has, however, never delivered any goods to the claimant upon this bond; he delivered the goods to the receiver in bank•ruptcy before this bond was filed or could have been filed. The receiver did, thereafter, deliver the goods to the claimant, but took a new bond from him. After the receiver in bankruptcy was appointed, the plaintiff herein had absolutely no interest in these goods; if they belonged to the debtor, the adjudication in bankruptcy destroyed the lien of his attachment; if they belonged to the claimant, then the claimant was entitled to them. The learned trial justice has found that the claimant was fraudulently attempting to obtain these goods. I think that his finding is amply supported by the evidence, but that fraud should entitle the receiver to recover upon the bond accepted by him and should not entitle the plaintiff to recover upon this bond. The failure to file the bond herein was the result neither of neglect nor of fraud. The defendant’s attorney destroyed the bond after the adjudication of bankruptcy, because at that time the obligee of the bond had no further interest in the goods and the bond was of no further use.

Judgment should be reversed.

Judgment affirmed, with costs.