Federal Deposit Ins. Corp. v. Congregation Poiley Tzedeck

• Decision Date: 31 December 1946
• Docket Number: Docket 20399.,No. 100,100
• Citation: 159 F.2d 163
• Parties: FEDERAL DEPOSIT INS. CORPORATION v. CONGREGATION POILEY TZEDECK et al.
• Court: U.S. Court of Appeals — Second Circuit

159 F.2d 163 (1946)

FEDERAL DEPOSIT INS. CORPORATION v. CONGREGATION POILEY TZEDECK et al.

No. 100, Docket 20399.

Circuit Court of Appeals, Second Circuit.

December 31, 1946.

Victor Levine and M. Leonard Shapero, both of Syracuse, N. Y., for appellants Congregation Poiley Tzedeck, Meyer Voit, Solomon Spector, Hyman Rosenbloom, Max Rosenbloom, Harry Weiner, and Barnet Simon.

Benjamin M. Gingold, of Syracuse, N. Y., for appellants Israel Gingold, Bessie Gingold, and Jacob Engel.

W. Chase Young and Francis L. McElroy, both of Syracuse, N. Y., for appellee.

Before L. HAND, AUGUSTUS N. HAND, and CHASE, Circuit Judges.

L. HAND, Circuit Judge.

This is an appeal from a judgment entered in an action brought to procure a declaration of the plaintiff's rights in a parcel of land in the City of Syracuse, and against some of the defendants, as guarantors of a bond and mortgage upon the same parcel. The judge found the facts as follows. On December 4, 1922, Jacob Weiner and Israel Gingold, who were record owners of the parcel in question, and their wives, conveyed it to Congregation Poiley Tzedeck, a New York religious corporation, by a deed in which the Congregation covenanted not to use the premises "for any purposes other than synagogue purposes or pertaining directly to the benefit and welfare of a synagogue only. And it is expressly understood that the said covenant shall attach to and run with the land. This deed shall embody a certain agreement made and entered into this day between the Congregation Poiley Tzedeck and the Society Chevra Kadisha of Poiley Tzedeck, pertaining to the land herein conveyed." The agreement, so incorporated into the deed, recited that the Society was the owner of the parcel and wished to give it to the Congregation, which was willing to accept it upon the condition that Weiner and Gingold, the record owners, should execute a deed in the same terms as the covenant just recited. Some three years later, on February 6, 1926, the Congregation executed a bond for $25,000 to the plaintiff's assignor, the First Trust and Deposit Company of Syracuse, secured by a mortgage upon the parcel, which did not mention either the restrictive covenant in the deed from Weiner and Gingold, or the agreement between the Congregation and the Society, both of which were, however, on record in the county clerk's office of Onandaga County, where the land was situated. Twenty-five individuals executed a guarantee to accompany the bond, each guarantee being limited to $1000; and the individual defendants, other than Gingold and his wife and Weiner's wife, were among these guarantors. The Congregation defaulted upon payments under the bond, and the plaintiff wishes to foreclose.

An action for a declaratory judgment was brought in August, 1944, and a judgment was entered June 8, 1945, in which the court made three declarations: (1) That a judgment, earlier recovered by the plaintiff for unpaid interest and taxes, did not bar an action for the principal and interest of the mortgage, or for later taxes; (2) that the covenant in the deed to the Congregation, restricting the parcel to use as a synagogue was invalid; and (3) that the guarantors were severally liable for $1000 with interest from the date of their defaults. The cause came on for trial on January 18, 1945, at a time when none of the defendants had filed an answer. However, Engel — a guarantor — and Gingold and his wife appeared by attorney, the plaintiff put in some evidence, and the case went over to March 23, 1945. Meanwhile on February 7, 1945, Engel, the two Gingolds and four of the guarantors — not including Jacob Weiner — filed answers, and on the adjourned day they appeared by attorney, together with the Congregation, two other guarantors and Jacob Weiner and his wife. The judge opened the defaults of all these, and they put in evidence on the adjourned day; he filed his opinion on April 23, 1945, his findings on May 25, 1945, and his judgment on June 8, 1945 — as we have said. The Congregation filed an answer on April 15, 1946, almost a year after entry of the judgment. On July 10, 1945, five of the guarantors who had answered, filed notices of appeal; so did the Congregation and a sixth guarantor, who had not answered. Engel and Gingold and his wife filed notices of appeal on April 15, 1946; Jacob Weiner has never filed one. The appellants allege in their reply brief that Gingold and Weiner "served a notice" (a notice of appeal) "on counsel for the appellee on time," and that it was not returned; and we shall assume that this is true. They assert that this was adequate compliance with Federal Rules of Civil Procedure, Rule 73(a), 28 U.S.C.A. following section 723c. None of the appellants challenge the first of the three declarations made in the judgment.

The first question is whether the appeal of Gingold and Engel, taken by merely serving a notice of appeal upon the appellee, can stand under Rule 73(a). Before the advent of the New Rules — and the same thing still remains true in the admiralty — some allowance of an appeal by a judge was a condition upon the transfer of the cause to the upper court;¹ and, even though the strictness of this requirement was somewhat relaxed in Georgia Lumber Co. v. Compania de Navigacion Transmar,² which treated a notice of appeal filed in the district court as an application for allowance, nevertheless it had to be followed by actual allowance, although that might be after the time to appeal had expired. This has been followed in The Tietjen & Lang No. 2;³ Cohen v. Casey;⁴ and In re Granada Apartments.⁵ The reasons given for requiring any allowance of an appeal, as they were stated in Alaska Packers Association v. Pillsbury, supra (301 U.S. p. 177, 57 S.Ct. 683), were "that there may be some assurance that the suit is one in which there may be a review * * *. In this way improvident and unauthorized appeals are prevented." A mere notice to the appellee was not an equivalent, because no judge might ever have allowed the appeal. Now that the last remnant of judicial supervision over the allowance of appeals — which had indeed always been in practice only a formality — has been swept away, the question arises whether mere notice — even though not filed, but only served upon the appellee — will not satisfy all practical requirements. In Reconstruction Finance Corporation v. Prudence Securities Advisory Group,⁶ the court held that the failure to make timely application in the circuit court of appeals for leave to appeal — which was a condition upon appealing from the order then in question — was not fatal to the appeal in a case where the appellants had filed notices of appeal in the district court. Douglas, J., said that "the court has discretion, where the scope of review is not affected, to disregard such an...