Application of Mar-Tex Realization Corporation
| Decision Date | 14 February 1944 |
| Docket Number | No. 83206.,83206. |
| Parties | Application of MAR-TEX REALIZATION CORPORATION. Matter of MAR-TEX OIL CO. |
| Court | U.S. District Court — Southern District of New York |
Milbank, Tweed & Hope, of New York City (John A. Kelly and Thomas P. Farley, both of New York City, of counsel), for Mar-Tex Realization Corporation.
Meyer Dvorkin, of New York City (Julius Lerner, of New York City, of counsel), for Erwin S. Wolfson.
This is a motion by the petitioner, Mar-Tex Realization Corporation, successor through reorganization to the Mar-Tex Oil Company, the above named debtor, for an order staying one Erwin S. Wolfson from further proceedings in connection with the prosecution of an action instituted by him in the New York Supreme Court, New York County, pursuant to the orders and decrees of the United States District Court for the Northern District of Texas.
The facts are as follows: In September, 1937, Wolfson commenced an action in the New York Supreme Court, New York County, against the Mar-Tex Oil Company, the above named debtor, to recover $12,199.67 on an alleged contract claim. In this action a warrant of attachment was issued, under which a levy was made upon $4,770.34 held in a deposit account in the debtor's name in a New York bank. This sum was thereafter turned over to the sheriff of New York County, and is now being held by his successor, the sheriff of New York City.
Before the action came on for trial, a petition under Chapter X of the Bankruptcy Act, 11 U.S.C.A. § 501 et seq., was filed by the Mar-Tex Oil Company in the District Court for the Northern District of Texas, and on November 20, 1940, an order was entered by that court staying further proceedings in connection with the prosecution of the action in the New York Supreme Court "until final decree, or the further order of this court". This order was recognized by the New York Supreme Court, which, on November 25, 1940, stayed the trial of the action.
Thereafter, Wolfson filed a proof of claim in the Chapter X proceedings in the Texas court for the same amount and based on the same facts alleged in the New York action. This claim was heard by a special master appointed by the Texas court, and disallowed. Wolfson then filed exceptions to the master's report disallowing the claim, and these exceptions were overruled by the Texas court.
Wolfson and the sheriff were advised of the action taken by the Texas court, and the sheriff was requested to turn over the fund in his hands to the trustee of the debtor. The sheriff failed to honor this request, and in proceedings thereafter taken by the trustee in the Texas court a turn-over order was entered, which later resulted in the entry of a contempt order against the sheriff by the Texas court. This contempt order was obtained over the opposition of Wolfson and the sheriff.
On May 1, 1943, the Texas court entered an order in aid of the consummation of the amended plan of reorganization of the debtor, which vested in the petitioner all of the "rights, title and interest" of the debtor and its trustee in the fund held by the sheriff, and authorized the petitioner to take any necessary steps for recovery, but specifically reserved jurisdiction thereof. Pursuant to this order, the trustee made a formal assignment of the fund to the petitioner.
On June 19, 1943, after the approval of a plan of reorganization of the debtor, a final decree was entered by the Texas court closing the estate of the debtor and discharging the trustee. This decree discharged the debtor from all debts and liabilities, and perpetually enjoined and stayed all creditors and claimants from pursuing any proceedings against the debtor based on any claim existing at the time of the filing of the Chapter X petition. It also reserved jurisdiction to take any necessary action with respect to the claim against the sheriff of New York City.
In August, 1943, Wolfson made a motion in the state court to vacate the order of that court of November 25, 1940, staying the trial of the action, to enjoin the sheriff from turning over the funds held under the attachment, and to enjoin the debtor and its successor from taking any steps to enforce the contempt order against the sheriff made by the Texas court. This motion was opposed by the petitioner on a full showing of the above facts, but the motion was granted, and an order was entered vacating the stay,...
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Mar-Tex Realization Corporation v. Wolfson
...final adjudication against appellant, and the order below as in proper aid of this decree. This view was accepted by the District Court, 54 F.Supp. 593. Appellant relies on several cognate points to the effect that the relief in any event was misconceived, since at best appellant could be e......