A. H. Alden & Co. v. New York Commercial Co.

Hotchkiss, J.: The petition alleges that at London, Eng., on January 23, 1913, A. H. Alden & Co., Limited, drew its three several drafts, payable to its own order, upon the New York Commercial Company, which drafts were drawn against several shipments of rubber aggregating 724 cases represented by bills of lading and shipping documents attached to the drafts. The drafts, with bills of lading, were immediately sold by Alden & Co., Limited, to the petitioner, to whom they were indorsed and delivered with the bills of lading and shipping documents. The drafts and accompanying papers were forwarded by petitioner to its agent in New York city, and were on February 3, 1913, accepted by the Commercial Company, and thereupon the agent surrendered to the Commercial Company the bills of [874] lading and other muniments of title to the rubber, relying upon the supposed solvency of the Commercial Company, which, as it is alleged, unknown to the agents, was then hopelessly insolvent, and took and received such muniments with the intent to secure possession of the rubber and not to pay the drafts. The rubber arrived in New York and was received by the Commercial Company on February fourth. On February fifteenth the appellant John Z. Lowe, Jr., was by the Court of Law and Chancery of the city of Norfolk, Va., appointed receiver of the Commercial Company in an action based upon the company’s insolvency, and on February 17, 1913, Lowe was appointed ancillary receiver of the company in this State in the action above entitled, and as such ancillary receiver has come into the possession of upwards of $33,000, representing the proceeds of a part of the aforesaid identical cases of rubber, and the same remains in his hands. ■ On April fourth the drafts were protested for non-payment. On the foregoing facts the petitioner asked for an order directing Lowe as receiver to pay over to it the moneys aforesaid. The answer of Lowe, as receiver, to the petition put in issue all of the material allegations of fraud. It further appeared by affidavits that on April 12, 1913, the Commercial Company was adjudicated a bankrupt by the United States District Court for the Southern District of New York, and that Lowe and two others were appointed trustees of the bankrupt’s estate and were such trustees prior to the date of the petition herein. Subsequent to the entry of the order appealed from the trustees were made parties to and substituted for the New York Commercial Company, defendant in the action in which this petition is entitled, and as such are appellants on this appeal. We may, for the purpose of this appeal, concede that the petition states facts sufficient to entitle the petitioner in a proper proceeding to reclaim the money in question. (Whitten v. Fitzwater, 129 N. Y. 626.) The argument of the respondent is substantially as follows: The trustees in bankruptcy have not taken possession of the assets of the Commercial Company; so long, therefore, as these assets remain under the control of this court it is its right and duty to deal with them without [875] regard for the bankruptcy proceedings. While it is unquestionably within the power of this court to entertain summary applications of this character under appropriate circumstances, it is purely a matter of discretion for it to do so, and it is by no means a matter of course for it to exercise such jurisdiction. Where the facts are simple or where only questions of law are involved, and the issue does not involve conflicting claims of third parties, such summary applications may properly be permitted, but where, as here, the contest involves an issue of fraud ordinarily triable by jury, the better practice is to decline jurisdiction. (Matter of North River Bank, 60 Hun, 91; People v. St. Nicholas Bank, 77 id. 159, 174.) We may also observe that, while it may be true that the trustees in bankruptcy have not yet acquired from the receiver possession of the assets of the bankrupt company, and that, therefore, as matter of technical right this court has the power to entertain the present application and to proceed therein until it shall have directed its receiver to attorn to the trustees .in bankruptcy (Matter of Watts, 190 U. S. 1), yet we must remember that the Bankruptcy Law is paramount and that, when properly moved by the trustees, it would be a matter of course for this court to pass the necessary order investing them with the assets in the hands of its receiver. We may assume that such an application will be made in due course; but, if not, the petitioner’s. right to bring a plenary action for the enforcement of his claim is in no way prejudiced. The order should be reversed, with ten dollars costs and disbursements, and the petition denied, with ten dollars costs. Ingraham, P. J., Laughlin, Scott and Dowling, JJ., concurred. Order reversed, with ten dollars costs and disbursements, and motion denied, with ten dollars costs.