Phillips v. Hudson Film Co.

Guy, J. Respondent Kindgen is the receiver of the property of the Hudson Film Company. He was appointed under a City Court judgment recovered by the plaintiff Phillips against that corporation by confession. In May, 1913, in an action in the Supreme Court by the appellant Gordon as plaintiff against Phillips, the receiver Kindgen and others, it was adjudged, among other things, that the City Court judgment was confessed with intent to hinder, delay and defraud the appellant; that the receiver’s counsel in the court below acted as one of the attorneys in entering the fraudulent confession of judgment as well as other like confessions of judgment, though there was no finding that the receiver was a party to or was privy to any fraud. Because of the fraudulent acts of those instrumental in procuring his appointment it was adjudged “ that the moneys in possession of the defendant William J. [387] Kindgen as receiver of the defendant Hudson Film Company is and was held in trust for the said Milton J.- Gordon, the plaintiff herein, to the extent of the judgment in favor of said plaintiff ’ ’ for $3,,641.50: In disregard of this Supreme Court judgment the receiver has procured the entry of an order on August 21,1913, passing his accounts and decreeing the payment of $360 of the moneys which the Supreme Court judgment awarded to the appellant, to himself for commissions; $470.30 thereof to the counsel who entered the fraudulent confessions -of judgment, and $125 thereof to his counsel on this appeal for counsel fees. The Supreme Court judgment has been appealed from, but it still remains unreversed and in full force and effect. The counsel fee awarded to the receiver’s attorney, who participated in the entry of what the unreversed judgment of the Supreme Court holds to be fraudiv lent confessions of judgment, cannot be sustained in defiance of such judgment. Clapp v. Clapp, 49 Hun, 195, 200. So long as the Supreme Court judgment holding the appointment of the receiver fraudulent as against the appellant’s claim stands, the appellant is entitled to insist that as to him it should be deemed never to have been made, and the City Court cannot lawfully wrest from appellant what the Supreme Court adjudged and still adjudges to be the appellant’s property, which is now in the receiver’s hands, and direct the receiver’s commissions and counsel fees to be paid out of it, without the appellant’s consent. Moe v. McNally Co., 138 App. Div. 480, 483; Pittsfield Nat. Bank v. Bayne, 140 N. Y. 321, 329, 330; Weston v. Watts, 45 Hun, 219-222. As the final determination of the Supreme Court action may materially affect the receiver’s rights, there should be no accounting herein until the final determination of that action. [388] Order reversed, with ten dollars costs and disbursements, and application denied, with ten dollars costs, without prejudice to a renewal thereof in whole or in part upon the final determination of the Supreme Court action. Seabuby and Bijub, JJ., concur. Order reversed, with ten dollars costs, and application denied, with ten dollars costs, without prejudice to a renewal thereof in whole or in part.