Buffalo Loan, Trust & Safe Deposit Co v. Medina Gas & Electric Light Co.

Adams, P. J.: That the appellant, when he declared under oath that he was a freeholder of the county of Jefferson and worth $10,000, 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, 2267; Boon v. McGucken, 67 Hun, 251; Matter of Hay Foundry & Iron Works, 22 App. Div. 87; Socialistic Co-op. Pub. Assn. v. Kuhn, 51 id. 583.) 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 an 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 [418] aggrieved party mnst.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 fourteen 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 under^ taking 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 clause 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 otheibclaim for damages, it is. .something which must be established ■’ by proof. (Moffat v. Herman, 116 N. Y. 131; Dejonge v. Brenneman, 23 Hun, 332.) [419] 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. (Matter of Hay Foundry & Iron Works, supra; King v. Flynn, 31 Hun, 329; Matter of Hopper, 9 Misc. Rep. 171; Martin Cantina Co. v. Warshauer, 7 id. 412; Diamond v. Knoepfel, 3 N. Y. St. Repr. 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), [420] ■the error is tine which can be easily corrected by reducing the fine ■io the amount of the recovery in the action upon the bond, viz., t$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 as this 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.” (Matter of 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 slim of $5,121.82, and as thus modified affirmed, without costs of this appeal to either party. McLennan, Spring and Hisoook, JJ., concurred; Williams, J., dissented in an opinion.