Berry v. Midtown Service Corporation

• Decision Date: 29 May 1939
• Docket Number: No. 307.,307.
• Citation: 122 ALR 1341,104 F.2d 107
• Parties: BERRY v. MIDTOWN SERVICE CORPORATION et al.
• Court: U.S. Court of Appeals — Second Circuit

122 ALR 1341, 104 F.2d 107 (1939)

BERRY v. MIDTOWN SERVICE CORPORATION et al.

No. 307.

Circuit Court of Appeals, Second Circuit.

May 29, 1939.

Tyson & Tyson, of New York City (Harold R. Medina and Frank L. Tyson, both of New York City, of counsel; I. Sidney Worthman, of New York City, on the brief), for appellant.

Kaufman & Weitzner, of New York City (Samuel H. Kaufman, Emil Weitzner, and Harold S. Lynton, all of New York City, of counsel), for appellees.

Before SWAN, CHASE, and CLARK, Circuit Judges.

SWAN, Circuit Judge.

The present action was brought against Midtown Service Corporation to recover damages for the wrongful death of the plaintiff's husband caused by an accident in an amusement park operated by the defendant. The trial resulted in a judgment for the plaintiff which was entered on June 30, 1938. The defendant was represented by the attorney of its insurance carrier who after rendition of the verdict, asked for a stay of execution to allow time to determine whether to appeal. After some discussion between the court and counsel a twenty day stay was granted. During the period of such stay the judgment debtor denuded itself of substantially all its assets by transferring them to various affiliated corporations. Thereafter the plaintiff obtained an order requiring the transferor, the transferees and their several officers, to show cause why they should not be fined as for a civil contempt of court to the extent of the damages sustained by the judgment creditor. The matter was heard by Judge Inch, who had granted the stay, upon supporting and opposing affidavits. He denied the motion, with the statement "On the facts here, the remedy, if any, is not by proceeding to punish for contempt." From the order of denial, the plaintiff has appealed.

Although the appellees strenuously assert that the transactions by which the judgment debtor parted with its assets were not motivated by a purpose to defeat collection of the plaintiff's judgment, we shall assume the contrary for purposes of decision. Thus the question presented is whether a judgment debtor who obtains a stay of execution without giving bond and during such stay makes himself execution proof, commits a contempt of court. The plaintiff lays some stress upon the colloquy which occurred when the stay was granted. At that time her counsel objected to the usual thirty day stay and stated that he had been informed that the defendant was "financially irresponsible." Counsel for the defendant replied that he did not "know about responsibility, but they will be in business for thirty days anyhow. They won't close Luna Park in the summer time." We regard these remarks as no more than a prediction that the defendant would be likely to stay in business for the reason stated. They were not a stipulation made in court that it would do so; although it may well be doubted whether the result would be different if they were so construed. See Ex parte Buskirk, 4 Cir., 72 F. 14. Furthermore, there is no proof that any of the appellees knew of the colloquy, although some of them knew of the judgment, and the judgment debtor at least is chargeable with knowledge of the stay obtained by the attorney representing it upon the trial. Accordingly, we put nothing upon the colloquy and pose the question broadly as stated above.

In terms the stay restrained the judgment creditor only. She contends that by implication it also ordered the judgment debtor to do nothing intended to impair her rights under the judgment; that transfers rendering the debtor execution proof were a violation by it of such implied order and that the transferees aided and abetted in such violation; with the result that all the appellees committed a contempt of court. These contentions find some support in New York cases. Advance Piece Dye Works, Inc. v. Zeller, 150 Misc. 908, 270 N.Y.S. 487; Silverman v. Seneca Realty Co., 154 Misc. 35, 276 N.Y. S. 466; Jedeikin v. Long, 154 Misc. 835, 278 N.Y.S. 464. But such decisions must be read in the light of section 753 of the Judiciary Law (Consol.Laws, c. 30) which defines civil contempts in very broad language. In any event New York cases cannot be controlling upon the federal courts whose power to punish for contempt is limited by a federal statute.

The relevant provisions of the federal statute, now 28 U.S.C.A. § 385, read as follows: "The said courts shall have power * * * to punish, by fine or imprisonment, at the discretion of the court, contempts of their authority. Such power to punish contempts shall not be construed to extend to any cases except the misbehavior of any person in their presence, or so near thereto as to obstruct the administration of justice * * * and the disobedience or resistance * * * by any party, juror, witness, or other person to any lawful writ, process, order, rule, decree, or command of the said courts." This section, and the earlier statutes from which it is derived, have been construed to restrict within the limits of the statutory language the contempt powers of the district court. Ex parte Robinson, 19 Wall. 505, 510, 511, 22 L.Ed. 205; Bessette v. W. B. Conkey Co., 194 U.S. 324, 326, 24 S.Ct. 665, 48 L.Ed. 997; In re Probst, 2 Cir., 205 F. 512.

It is plain that the conduct complained of as a contempt in the case at bar is not misbehavior in the presence of the court "or so near thereto as to obstruct the administration of justice." It is true that the wilful removal beyond reach of the court of the subject matter of a pending suit or its destruction pending an appeal may constitute a contempt. Lamb v. Cramer, 285 U.S. 217, 52 S.Ct. 315, 76 L.Ed. 715; Merrimack River Savings Bank v. Clay Center, 219 U.S. 527, 31 S.Ct. 295, 55 L. Ed. 320, Ann.Cas.1912A, 513; United States v. Shipp, 203 U.S. 563, 27 S.Ct. 165, 51 L.Ed. 319, 8 Ann.Cas. 265; Clay v. Waters, 8 Cir., 178 F. 385. But decisions such as these do not control the case at bar, since the present action was not concerned with any specific property; nor would an appeal be defeated or impaired by the judgment debtor's transfer of its assets after rendition of the money judgment. Hence contempt, if contempt there be, must turn on the final clause of the statute.

As already noted the stay of execution contained no express order or command directed to the judgment debtor. In the case of In re Probst, 2 Cir., 205 F. 512, this court dealt with an analogous situation. There Probst, against whom an involuntary petition in bankruptcy had been filed, obtained from the bankruptcy court an order staying prosecution of an action which was pending against him in the City Court. In applying for the stay Probst stated that he was in possession of all the assets listed in his bankruptcy schedules and was holding them subject to the orders of the court. During the period of the stay he disposed of some of these assets and used the proceeds thereof for living expenses. Upon these facts the creditors applied to the bankruptcy court for an order adjudging him to be in contempt. The district judge so held and imposed a fine, which this court reversed, saying, 205 F. at page 513: "* * * Our attention has been called to no writ, process, order, rule, decree, or command of the court which he has disobeyed. * * * This may be a highly technical ruling; but where Congress has been so industrious to restrict the natural inherent powers of a federal court, scrupulous attention to the limitations it has imposed would seem to be the proper course."

Whether a different result might not have been reached on the theory that the bankrupt's assets were within the custody of the court and his conduct amounted to a removal of the subject matter of the litigation pending before it, we need not say. Cf. Clay v. Waters, 8 Cir., 178 F. 385. However that may be, the Probst case stands as an authority for the proposition that the granting of a stay of prosecution at the request of the defendant does not impliedly order him to refrain from disposing of his assets during the pendency of the stay. We can see no basis for distinction between a stay of prosecut...