Case Name: BUFFALO LOAN, TRUST & SAFE DEPOSIT CO. v. MEDINA GAS & ELECTRIC LIGHT CO. et al. In re FITZGERALD
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1902-01-07
Citations: 74 N.Y.S. 486
Docket Number: 
Parties: BUFFALO LOAN, TRUST & SAFE DEPOSIT CO. v. MEDINA GAS & ELECTRIC LIGHT CO. et al. In re FITZGERALD.
Judges: 
Reporter: West's New York Supplement
Volume: 74
Pages: 486–496

Head Matter:
(68 App. Div. 414.)
BUFFALO LOAN, TRUST & SAFE DEPOSIT CO. v. MEDINA GAS & ELECTRIC LIGHT CO. et al. In re FITZGERALD.
(Supreme Court, Appellate Division, Fourth Department.
January 7, 1902.)
1. Contempt—Appeal Bond—Falsb Affidavit as to Responsibility.
Code Civ. Proc. g 14, provides that a court of record may punish, by fine and imprisonment, a neglect or violation of duty, or other misconduct, by which a right or remedy of a party to a civil action may be defeated or prejudiced, in the following cases:. (2) A party to an action for putting in fictitious bail or surety; (8) in any other case where a proceeding to punish for contempt has usually been adopted to enforce a civil remedy of a party to an action, or to protect the rights of a party. Held! that a surety on an appeal bond, who made a false affidavit as to his responsibility in order to deceive the court,—there having been an adjudication that by such misconduct he had prejudiced the rights of a party,—was punishable for contempt.
2. Same—Fine—Amount.
Code Giv. Proc. § 2284, provides that where “actual injury has been produced to a party to an action” by the misconduct of a person adjudged to be in contempt, and an action for damages is not specially prescribed, a fine sufficient to indemnify the aggrieved party shall be imposed on the offender, and paid over to the aggrieved party. A surety on an appeal bond given in a foreclosure suit made a false affidavit as to his responsibility, in order to obtain a stay of proceedings, and thereby delayed the sale over 14 months. The undertaking was conditioned to pay costs and expenses, not exceeding $500, and also any deficiency resulting from the sale, not exceeding $5,000. A deficiency judgment was afterwards entered for $6,688, and judgment procured against the surety for $5,121. He was insolvent, and the bond worthless. Helé, that the amount of the judgment procured against the surety determined the amount of the fine to be imposed on him,—that being the loss occasioned by his misconduct,—and that a fine of $6,000 was unauthorized.
3. Same—Reduction on Appeal.
The court on appeal has the power, in an appropriate case, to make a reduction in the amount of a fine imposed on a person for contempt.
Williams, J., dissenting.
Appeal from special term, Orleans county.
Action by the Buffalo Loan, Trust & Safe Deposit Company against the,Medina Gas & Electric Light Company and another, in which Cornelius Fitzgerald, assignee of an appeal bond executed pending the controversy, applied for an order adjudging John F. Moffett, surety on the bond, in contempt for having falsely represented his financial ability, and for other deceit. From an order adjudging Moffett to be in contempt, and imposing a fine of $6,000, Moffett appeals.
Modified.
This action was brought by the plaintiff, as trustee, to foreclose a mortgage upon certain premises located in the village of Medina, Orleans county, which was given to secure the payment of 10 negotiable bonds of the Medina Gas & Electric Light Company, of which company the appellant was at one time a large stockholder, and subsequently the receiver. Issue was joined in the action, and, after the trial thereof, judgment of foreclosure and sale was rendered in favor of the plaintiff, as such trustee, in and by which judgment it was determined that the amount due upon such bonds was the sum of $16,532.88. An appeal was in due time taken to the appellate division, where the judgment appealed from was modified by deducting from the amount due the sum of $1,293.04, and as thus modified the judgment was in all things affirmed. 12 App. Div. 199, 42 N. T. Supp. 781. From the latter judgment an appeal was subsequently taken to the court of appeals, and, in order to procure a stay of proceedings pending such appeal, an undertaking, in the usual form, was duly executed by the appellant, Moffett, and one Hodgkins, in and by which they jointly and severally undertook that the appellants would pay all costs and damages which might be awarded against them on such- appeal, net exceeding $500, and also that in the event the judgment so appealed from Should be affirmed, or the appeal dismissed, the appellants would “pay any deficiency which may occur on the sale in discharging the sum to pay which the sale is directed, with interest and costs and expenses chargeable against the proceeds of the sale, not exceeding the sum of five thousand dollars.” Attached to this undertaking was an affidavit executed by Moffett on the 12th day of January, 1899, in and by which he swore that he was a freeholder of the county of Jefferson, in this state, and worth the sum of $10,000 over and above all debts and liabilities. A similar affidavit was likewise made by Henry C. Hodgkins, the other surety to the undertaking. Thereafter the judgment so appealed from was affirmed by the court of appeals (162 N. Y. 67, 56 N. 15. 505), and the judgment of that court was made the judgment of this court on the 14th day of March, 1900. Thereupon the premises covered by the mortgage in question were sold- at public auction, and upon the sale a deficiency of $6,688.95 arose, for which amount judgment was duly entered against the Medina Gas & Electric Eight Company; and subsequently an action was brought upon the undertaking by one Cornelius Fitzgerald, to whom • the same had in the meantime been assigned, and this action resulted in a judgment against Moffett and Hodgkins for the sum of $5,121.82, which represented the amount of such deficiency as limited by the condition of the undertaking, together with interest and costs. Thereafter Fitzgerald caused an execution to be issued to the sheriff of Jefferson county against the property of the appellant, Moffett, which in due course of time was returned to the clerk of that county wholly unsatisfied. In the meantime Moffett had removed to the state of Massachusetts, and in February, 1901, an action upon such judgment was brought in that state, and a recovery had, whereupon Moffett was examined in the poor debtor session of the municipal court of the city of Boston, which proceeding is virtually the same as that authorized in this state supplemental to execution; and upon such examination, which was extended and exhaustive, he testified that at the time of executing the undertaking he owned no real estate in Jefferson county, and that he had been wholly insolvent since 1898. Upon the evidence thus taken, together with the affidavits appearing in the record, an order was obtained requiring the appellant to show cause at a special term of the supreme court why he should not be punished for contempt; and upon the return of that order, and after hearing counsel for the respective parties, the order appealed from was granted.
Argued before ADAMS, P. J., and McLENNAN, SPRING, WILLIAMS, and HISCOCK, JJ.
S. E. Filkins, for .appellant.
C. J. Shearn, for respondent.

Opinion:
ADAMS, P. J.
That the appellant, when he declared under oath that he was a freeholder of the county of Jefferson, and worth $io,ooo, over and above all his debts and liabilities, committed a deliberate and willful falsehood, is too clearly established to admit of discussion. That such false swearing was committed for the express purpose of deceiving the court, .and inducing it to adopt a course of procedure which would not otherwise have been adopted, is equally plain. And it having been adjudged by the court at special term that this misconduct upon the part of the appellant was of such character as to defeat, impair, impede, or prejudice a right or remedy of a party to a civil action or special proceeding, it follows that he has been guilty of a civil contempt, which subjects him to punishment, and requires that he be dealt with as summarily as a proper regard for legal procedure will permit. Code Civ. Proc. § 14, 2266, 2287; Boon v. McGucken, 67 Hun, 251, 22 N. Y. Supp. 424; In re Hay Foundry & Iron Works, 22 App. Div. 87, 47 N. Y. Supp. 802; Association v. Kuhn, 51 App. Div. 583, 64 N. Y. Supp. 933.
With the preliminary feature of the case thus disposed of, it remains only to determine whether the punishment inflicted by the court below is within the rule prescribed by the law of this state. In passing to a consideration of this question, it is to be noted that it is a civil, and not a criminal, contempt, of which the contemner in the present instance has been found guilty; and while in either case the court is interested in dealing summarily with those who defy its authority, or change the course of its procedure by any fraudulent device or scheme, yet in a proceeding for a civil contempt the party more immediately concerned is the one who has suffered some injury or loss by reason of such misconduct. It is mainly for his protection and indemnity that the punishment is inflicted, and it was doubtless with this design that the legislature enacted section 2284 of the Code of Civil Procedure, which provides that:
"If any actual loss or injury has been produced to a party to an action or special proceeding, by reason of the misconduct proved against the offender, and the case is not one where it is specially prescribed by law, that an action may be maintained to recover damages for the loss or injury, a fine sufficient to indemnify the aggrieved party must be imposed upon the offender, and collected and paid over to the aggrieved party, under the direction of the court. Where it is not shown that such an actual loss or injury has been produced, a fine must be imposed, not exceeding the amount of the complainant's costs and expenses, and two hundred and fifty dollars in addition thereto, and must be collected and paid in like manner. "
This provision, therefore, must be our guide in determining the question under consideration.
In view of the undisputed facts of the case, it will not, we assume, be seriously contended that the contemner's misconduct has not resulted in some actual loss or injury to the plaintiff in the action, and to the petitioner, as its assignee. In the most favorable view which can possibly be taken of Moffett's conduct, it must be admitted that it caused a delay in the sale of the mortgaged premises of more than 14 months, which circumstance, of itself, it is fair to infer, had something to do with the amount of the deficiency which subsequently arose. There was also the additional expense incidental to the appeal, and which in all probability would not have been incurred but for the stay of proceedings which the undertaking in question made possible, so that it is apparent that this is not a case which calls simply for a fine of $250 and costs, as provided in the last paragraph of the section above quoted. On the contrary, it necessarily follows, as we think, that, with the contempt established, the only fine which could have been legally imposed was one which should be sufficient in amount to fully indemnify the aggrieved party for the actual loss or injury sustained by him, or at least for such portion thereof as was embraced within and covered by the condition of the bond. The special term has found that such loss was the amount of the deficiency arising upon the sale of the mortgaged premises, and this finding, subject to the modification hereinafter mentioned, meets with our approval. In proceedings of this nature it is not always easy to ascertain the actual loss sustained in consequence of the misconduct of a party which amounts to, and has been adjudged to be, a contempt of court; but, like any other claim for damages, it is something which must be established by proof. Moffat v. Herman, 116 N. Y. 131, 22 N. E. 287; Dejonge v. Brenneman, 23 Hun, 332. The present case, however, is relieved of the embarrassment ordinarily attending efforts of this nature by the action of the contemner himself; for he not only undertook to pay all costs and damages which might be awarded against the appellants in the action in which the appeal was taken, but he also, in express terms, and as a condition of obtaining a stay of proceedings in the foreclosure suit, obligated himself to pay any deficiency which might arise upon the sale of the mortgaged premises, not exceeding $5,000. Manifestly the undertaking in this form was required by the court solely as an indemnity to the plaintiff in the action. Without it no stay of proceedings would have been granted, and when the stay was granted the undertaking became, in effect, an additional security in the hands of the plaintiff, and one which was absolute in its terms, and dependent upon nothing for its compensatory quality save the existence of a deficiency and the responsibility of the obligors. Consequently when it turned out that the sureties had sworn falsely, and that their obligations were worthless, it seems quite clear that the actual loss sustained by the plaintiff was the amount the undertaking was supposed to secure, namely, the deficiency arising upon the foreclosure sale, and that nothing less than this would fully indemnify the aggrieved party. It is conceded that for so much of that sum as was covered by the undertaking, together with costs, judgment was subsequently obtained against Moffett in an action thereupon; and, in our opinion, both principle and precedent furnish ample reason for holding that such judgment established a correct basis upon which to determine the amount of the plaintiff's loss, and consequently the amount of the fine which might be properly imposed. In re Hay Foundry & Iron Works, supra; King v. Flynn, 37 Hun, 329; In re Hopper, 9 Misc. Rep. 171, 29 N. Y. Supp. 715 ; Martin Cantine Co. v. Warshauer, 7 Misc. Rep. 412, 28 N. Y. Supp. 139; Diamond v. Knoepfel, 3 N. Y. St. Rep. 291; Hull v. L'Eplatinier, 5 Daly, 534.
By some process which is not made entirely clear to us, the court below reached the conclusion that Moffett's misconduct resulted in a loss or damage to the petitioner of at least $6,000, and it consequently imposed a fine for that amount. We are inclined to think that this was error, but, inasmuch as a reduction of the fine may undoubtedly be made in appropriate cases' by the appellate court (Clark v. Bininger, 75 N. Y. 344; Dejonge v. Brenneman, supra), the error is one which can be easily corrected by reducing the fine to the amount of the recovery in the action upon the bond, viz., $5,121.82, and the order should be modified to that extent.
This is not a case in which the court should struggle to relieve the appellant from the difficulty in which he has placed himself. The contempt with which he stands charged was flagrant in the extreme, and without any mitigating circumstances. As was said by Ingraham, J., in a somewhat similar case:
"It is time that parties who engage in such an attempt to deceive the court, and induce it to adopt a course which results in defrauding one whom the court is bound to protect, should be summarily dealt with, and taught that, if such a scheme is successful, it involves consequences much more serious than the payment of the amount of which a party is defrauded.'' In re Hay Foundry & Iron Works, supra.
This language is not inappropriate to the case in hand.
Order modified by reducing the amount of the fine imposed to the sum of $5,121.82, and as thus modified affirmed, without costs of 'his appeal to either party. All concur, except WILLIAMS, J., dissenting in an opinion.