514 F.2d 607 (7th Cir. 1975), 73-1957, Rosenfeldt v. Comprehensive Accounting Service Corp.

Docket Nº:73-1957.
Citation:514 F.2d 607
Party Name:David B. ROSENFELDT and Diane Rosenfeldt, Plaintiffs-Appellants, v. COMPREHENSIVE ACCOUNTING SERVICE CORPORATION et al., Defendants-Appellees.
Case Date:April 11, 1975
Court:United States Courts of Appeals, Court of Appeals for the Seventh Circuit
 
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514 F.2d 607 (7th Cir. 1975)

David B. ROSENFELDT and Diane Rosenfeldt, Plaintiffs-Appellants,

v.

COMPREHENSIVE ACCOUNTING SERVICE CORPORATION et al.,

Defendants-Appellees.

No. 73-1957.

United States Court of Appeals, Seventh Circuit

April 11, 1975

Argued Jan. 16, 1975.

Page 608

Gerald F. Munitz, Sheldon Engel, Chicago, Ill., for plaintiffs-appellants.

Thomas A. Mass, Edward L. Foote, Chicago, Ill., for defendants-appellees.

Before CLARK, Associate Justice, [*] HASTINGS, Senior Circuit Judge, and STEVENS, Circuit Judge.

STEVENS, Circuit Judge.

David B. and Diane Rosenfeldt, plaintiffs below, 1 seek review in this consolidated appeal of three separate interlocutory orders entered by the district court, respectively, on October 19, 1973, January 7, 1974, and June 20, 1974. We conclude that any controversy arising out of the only portion of the first order that is appealable is moot, and that neither the second nor the third order is appealable. Accordingly, we dismiss the appeals.

On October 19, 1973, the district court granted Comprehensive Accounting Service Corporation's Motion to Enforce Right to Possession of Property pursuant to its counterclaim against plaintiffs for payment of certain collateral notes and for breach of contract. Judge Perry ordered plaintiffs to deliver to Comprehensive all accounts/clients delivered by

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Comprehensive to plaintiffs together with all after-acquired customers and accounts receivable, all books, records, files and work papers relating thereto, and to cease soliciting, performing work for, and collecting fees from such clients, and restrained plaintiffs from instituting bankruptcy or other court proceedings that would interfere with the fulfillment of the terms of the order.

On January 7, 1974, the district court, after making findings of fact of Rosenfeldt's failure to comply with the October 19 order, held Rosenfeldt in contempt and sentenced him to serve a 90-day jail term and to pay a $1,000 fine. We subsequently denied Rosenfeldt's Application for Stay, but granted him leave to file a Motion for Reconsideration if the 90-day term was not totally vacated by the district judge upon the completion of a pending "good faith cooperation" hearing. On May 3, 1974, the district judge vacated both the jail term and the $1,000 fine.

On June 20, 1974, after taking further evidence of Rosenfeldt's lack of cooperation, the district court granted Comprehensive's amended Petition for a Rule to Show Cause and ordered Rosenfeldt to pay a fine of $47,259.08, the amount by which it found Comprehensive had been damaged by Rosenfeldt's "willful, wanton and malicious acts of contempt."

I. Order of October 19, 1973

The agreement entered into between the parties provided, in pertinent part:

If the purchaser defaults in the payment of any one or more installments payable under this Agreement, the entire sum shall immediately become due and payable at the option of the seller, and the seller may retake possession and control of the clients and the accounts receivable accrued on all accounts delivered, in addition to any and all further accounts acquired by the purchaser, together with the books and records of the accounts.

The Motion to Enforce Right to Possession of Property filed by Comprehensive was, in effect, a petition for a writ of attachment or replevin, pursuant to Fed.R.Civ.P. 64. It was so treated by the parties and by Judge Perry. See Transcript of Proceedings on October 12, 1973, at 9, 22, 24-26, 38.

There are two possible theories under which we might have jurisdiction to review an order granting a writ of attachment, replevin or sequestration. First, as counsel for the Rosenfeldts argued orally before us, such an order might be viewed as an interlocutory order "granting, continuing, modifying, refusing or dissolving" an injunction within 28 U.S.C. § 1292(a)(1). Alternatively, the order might be deemed a "final decision" within the meaning of 28 U.S.C. § 1291 as interpreted by the Supreme Court in Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541, 69 S.Ct. 1221, 93 L.Ed. 1528, and Swift & Co. Packers v. Compania Colombiana Del Caribe, S.A., 339 U.S. 684, 70 S.Ct. 861, 94 L.Ed. 1206.

In this circuit it is clear that an order granting a writ of attachment is not deemed to fall within § 1292(a)(1). As we said in American Mortgage Corp. v. First National Mortgage Co., 345 F.2d 527, 528 (7th Cir. 1965):

The distinction between attachments and injunctions has been so long recognized that we are convinced that Congress would have provided for interlocutory appeals in cases such as this had it deemed such appeals desirable. 2

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Nor do we think that because portions of Judge Perry's order restrain future actions of Rosenfeldt with respect to the accounts, in addition to requiring that the tangible collateral be delivered to Comprehensive, the October 19, 1973, order is appealable under § 1292(a)(1). The Uniform Commercial Code provides those secured parties whose loans are secured by accounts and other intangible collateral the same rights to "enforce the security interest by any available judicial procedure." See Ill.Rev.Stat.1973, ch. 26, § 9-501(1). Thus, the portions of the district court order requiring Rosenfeldt to cease collecting fees from, or performing services for, certain accounts are the functional equivalents of a writ of attachment or replevin; their appealability is therefore also governed by American Mortgage Corp. We do not view those portions of the order as an independent preliminary injunction, the grant of which would, of course, be appealable pursuant to § 1292(a)(1).

Moreover, we do not believe an order granting a writ of attachment constitutes a final "collateral" order within the meaning of Cohen. 3 In Swift, decided during the term following Cohen, the Supreme Court held that an interlocutory order vacating an attachment was final and appealable under § 1291.

Appellate review of the order dissolving the attachment at a later date would be an empty rite after the vessel had been released and the restoration of the attachment only theoretically possible.

339 U.S. at 689, 70 S.Ct. at 865.

Justice Frankfurter, speaking for the unanimous Court, went on to note, however, that far different considerations are involved when the order is one granting an attachment.

The situation is quite different where an attachment is upheld pending determination of the principal claim. Such was Cushing v. Laird, 107 U.S. 69, 2 S.Ct. 196, 27 L.Ed. 391, which is urged on us. In such a situation the rights of all the parties can be adequately protected while the litigation on the main claim proceeds.

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