60 F.2d 16 (1st Cir. 1932), 2675, Raphael v. Monroe

Docket Nº:2675.
Citation:60 F.2d 16
Case Date:June 27, 1932
Court:United States Courts of Appeals, Court of Appeals for the First Circuit

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60 F.2d 16 (1st Cir. 1932)




No. 2675.

United States Court of Appeals, First Circuit.

June 27, 1932

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Appeal from the District Court of the United States for the District of Massachusetts; James Arnold Lowell, Judge.

Mark M. Horblit and Benjamin Goldman, both of Boston, Mass., for appellant.

Andrew J. Aldridge and Carl F. Schipper, Jr., both of Boston, Mass., for appellee.

Before BINGHAM, WILSON, and MORTON, Circuit Judges.

BINGHAM, Circuit Judge.

The is an appeal from an order entered December 7, 1931, in the District Court for Massachusetts in connection with receivership proceedings brought against The Monroe Stores, Inc., enjoining the appellant, Louis Raphael, from further prosecuting a certain suit in the superior court of Suffolk county, Mass., except that he might proceed in said cause to judgment, but no further.

The receivership bill was brought against The Monroe Stores, Inc. (hereafter called The Stores), on July 14, 1930, by J. B. Hirshfield & Co., Inc., and other creditors, and later, on July 23, 1930, George B. Monroe of Quincy, Mass., who was the treasurer of The Stores, was appointed receiver. In compliance with an order of the District Court requiring all persons holding claims against The Stores to present their proof to the receiver for allowance on or before September 30, 1930, Louis Raphael, a citizen and resident of Connecticut, presented his proof of claim on September 25, 1930, and on or about February 9, 1931, it was duly proved and allowed in the sum of $35,000.

Shortly prior to November 26, 1930, one Harold F. Dempsey made an offer to purchase from the receiver all the assets of The Stores, and by the terms of the offer as interpreted and agreed to by the parties he was to pay its creditors 30 per cent. of their claims within thirty days after they had been duly proved and allowed; also to pay within thirty days after allowance the liabilities of the receiver and his expenses. With this offer a bond was filed running to the United States of America and signed by Harold A. Dempsey, as principal, and Louis F. Buff and Clifford S. Drake, as sureties. This bond was in the penal sum of $100,000 and conditioned on compliance 'with all the conditions and items of said offer.' The bond was duly approved, the offer accepted, and on November 27, 1930, the assets of The Stores were turned over to Dempsey by the receiver.

The amount to be paid Raphael under this offer was $10,500. On March 23, 1931, more than thirty days after his claim against The Stores had been proved and allowed and after having been paid $1,200 thereon by Dempsey, Raphael 'as creditor of said Monroe Stores, Inc.,' filed a petition for leave to institute proceedings on the bond and, on the same day, leave was granted by the court.

April 9, 1931, Raphael brought suit on the bond in the superior court of Massachusetts in which he 'obtained and now has attachments

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ments upon the property of said defendants Drake and Buff, and injunctions restraining the transfer by them of certain property to secure the payment of the amount justly due him.' In hearings in the state court before a master, to whom the case was referred, both the receiver and his counsel testified. This case was prosecuted by Raphael to a point where, on November 13, 1931, it was ripe for the entering of a final decree against the signers of the bond and in favor of Raphael.

In the meantime, on April 16, 1931, the receiver filed in the receivership proceedings an ancillary bill of complaint against Dempsey, Buff, and Drake, as obligors on the bond, and on May 4, 1931, an interlocutory injunction issued enjoining them from transferring or incumbering their property 'until the further order of this court.' On July 16, 1931, after notice and hearing, and all parties to the bill consenting, a decree was entered in which it was 'ordered, adjudged and decreed that judgment for the plaintiff in the sum of $33,026.83 together with costs be entered against the defendants' Drake, Buff, and Dempsey, jointly and severally, and that execution issue forthwith. In this sum of $33,026.33 the claim of Raphael was included, but he was not a party to and did not participate in the proceedings and did not authorize the receiver to act for him therein.

The receiver obtained nothing on the execution and on October 7, 1931, filed in the District Court a petition for contempt as to defendants Buff and Drake on various grounds. The hearing on this petition resulted in an order directing Buff and Drake to pay the receiver $1,000 on the 20th of October, 1931, and a like sum on the 20th of each month thereafter until the execution issued on the judgment was satisfied; the final disposition of the matter being held pending further order of the court.

On November 27, 1931, the receiver, appellee here, filed in the original receivership proceedings a motion seeking to have the order of March 23, 1931, granting Raphael leave to bring suit on the bond, modifed and that Raphael be enjoined from further prosecuting his cause of action in the Massachusetts court 'except insofar as to reduce his claim to judgment.' A preliminary injunction against Raphael and an order of notice to show cause was issued, which was served on Raphael's attorney. On December 3, 1931, Raphael appearing specially filed a plea in which he set out the facts in connection with his suit in the state court in detail, asserting that the receiver had no legal interest or standing to entitle him to an order interfering with the state court proceeding; that he was not a party to the proceeding either individually or as receiver; that he had no interest in his (Raphael's) claim; that the receiver in no way represented Raphael and had at no time been authorized to...

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