Case Name: In the Matter of the Application of WILLIAM HERBST and Another for Leave to Sue HENRY WINTHROP GRAY, as Receiver of the Firm of LEVY BROS. & CO.
Court: New York Supreme Court, General Term
Jurisdiction: New York
Decision Date: 1892-02
Citations: 70 N.Y. Sup. Ct. 247
Docket Number: 
Parties: In the Matter of the Application of WILLIAM HERBST and Another for Leave to Sue HENRY WINTHROP GRAY, as Receiver of the Firm of LEVY BROS. & CO.
Judges: 
Reporter: Supreme Court Reports (Hun)
Volume: 70
Pages: 247–253

Head Matter:
In the Matter of the Application of WILLIAM HERBST and Another for Leave to Sue HENRY WINTHROP GRAY, as Receiver of the Firm of LEVY BROS. & CO.
Receiver — leave to sue him — lien for work — not made the subject of an independent action.
In an action brought by Hardt and others against the firm of Levy Bros. & Co., Henry W. Gray was appointed a receiver of the goods, etc., of that firm. Before the failure of Levy Bros. & Co. the firm of Herbst & Morrison had received from them certain coats which were to be made up under an agreement that Herbst & Morrison were to have a general lien upon the coats for their labor.
Not having been paid for their labor thereon Herbst & Morrison refused to surrender the coats to the receiver, and applied for leave to sue the receiver upon this claim. The receiver had already begun a proceeding, in the action in which he was appointed receiver, to punish Herbst & Morrison for contempt.
Held, that the property of Levy Bros. & Co. was deemed to be in the possession of the court; that the claim of Herbst & Morrison, whether equitable in its nature or a claim by them as pledgees, was a claim which should be disposed of in the receiver’s action, and that their application for leave to bring an independent action was properly denied. (Van Brunt, P. J., dissenting.)
Appeal by the petitioners, William Herbst and Morris Morrison, who were partners, from an order, made on the 23d day of November, 1891, denying their application to sue Henry Winthrop Gray, as receiver of the firm of Levy Bros. & Co., in order to foreclose a lien upon certain property of Levy Brothers & Co.
Abram Klvng, for the petitioners, appellants.
G. Zabriskie, for the receiver, respondent.

Opinion:
O'Brien, J.:
William Herbst and Morris Morrison applied at Special Term for leave to sue Henry W. Gray, a receiver of the firm of Levy Bros. & Co., or to interplead Mm as one of the defendants in a suit to be brought to foreclose a lien upon chattels.
By their petition the appellants claim that they performed work, labor and services as tailors, in the manufacture of certain clothing, to the value of $2*576.80, at the request of Levy'Bros. & Co.; that the said firm agreed that they should have a general lien upon 315 coats, delivered to them to be made up ; that they did the work on the coats, but have not been paid. In a suit brought by Hardt and others against Levy Bros. & Co. and others, Gray was, by an order of this court dated May 21, 1891, appointed the receiver of the said copartnership firm, and claims all the property by reason of such appointment. The affidavit which accompanies the petition states that a proceeding is now pending in this cdurt to punish the petitioners for contempt for failure to turn over to the receiver the same goods and chattels on which they claim a lien, and that the motion is made in the action of Hardt against Levy, in which the receiver was appointed. It is, upon these facts, insisted by petitioners, that nothing appears to justify the order made by the justice below, and that the denial of petitioners' application was a refusal to allow them having a legally undisputed claim to prosecute the remedy which the law prescribed, and from seeking in the courts an enforcement of their legal and constitutional rights.
The receiver, in his affidavit, shows that the object of the action in which he was appointed receiver is to prevent multiplicity of actions, and to ascertain and adjudicate in that suit the claims of all persons in respect to the property attached by the sheriff or held under claim of lien. In respect to the delivery of receivership property to the receiver, or the surrender of receivership property by the receiver, many applications have been made by this receiver in the suit in which he was appointed, and the court, in the exercise of its discretion, deemed it wiser to retain all such questions for settlement in the principal suit, and not to require or permit other actions to be brought. With respect to the property held by the appellants, such an application was made by the receiver, and to forestall the decision of the court the appellants made their motion for leave to bring an independent action to foreclose their lien. Such an action as proposed is equitable in its nature, and one which can be established and enforced by a court of equity, or the court can, Iii an equitable proceeding, require tbe claimant to submit his claim in the principal suit, and can therein give such relief to the petitioner ns he may show himself entitled to.. Upon these applications at Special Term, the court has held that, even with regard to claims of a legal nature triable by right by jury, it will, in its discretion, permit such an action to be brought. This rule has not, however, been extended to actions such as this one, which is of an equitable nature, for the reason, as stated, that any claim or lien can be disposed of in the principal suit without injury to any of the claimant's legal or constitutional rights, and thus secure the object of the principal action by preventing a multiplicity of suits. The theory upon which such action of the court is based is that where the court lias taken possession of property and appointed a receiver, it has power to try all adverse claims in the principal suit. Such a disposition of adverse claims- is in accordance with the former equity practice, which has not been taken away nor superseded by statute. And it appearing by the record that a proceeding has actually been brought by the receiver to have the claim of petitioners determined, it ivas proper for the court, in the exercise of its discretion, to deny the leave to sue the receiver, which was applied for.
We think that the order appealed from should be affirmed, with ten dollars costs and disbursements.
Patterson, J.:
I concur for the reason that it is utterly unnecessary to sue the receiver. The petitioners hold the goods as pledgees, and they have only to apply to the court on notice to the receiver for leave to sell, or if their right is disputed, for a reference to determine it. There is no propriety in putting the receiver to the expense and delay of an action when the whole matter can be disposed of by a reference in the main action, as was the practice in chancery, and as I understand it is now, for there being no provision in the Code of Civil Procedure as to applications of this- character, rule 85 of the general rules of practice should apply.
Van Brunt, P. J.:
I*n the above memorandum Mr. Justice Patterson bases his decision upon the ground that the petitioners hold the goods as pledgees, whereas the fact is beyond question that they do not hold the goods as pledgees, but as bailees and pledgees. If they held the goods as pledgees, they could sell the goods without coming into court, but being also bailees they cannot.
There never was any practice in the Court of Chancery or any other court which attempted to or could compel an utter stranger to the questions to be litigated in an action, to come into that action and try a cuestión which was entirely separate and distinct.