Landau v. Vallen, 88 CIV. 1622 (LBS)
| Decision Date | 19 October 1989 |
| Docket Number | 88 CIV. 2749 (LBS).,No. 88 CIV. 1622 (LBS),88 CIV. 1622 (LBS) |
| Citation | 723 F. Supp. 218 |
| Parties | Solange LANDAU, Plaintiff, v. Toni VALLEN, Haas Securities Corp., Eugene K. Laff, Stanley Aslanian, Jr., Mark Burgess, L.F. Rothschild & Co., Inc., Robert Schoenthal, Mathew R. Deane, Francois Mayer, Robert R. Errico, Andrew Berger, Joel Miller, Kuhns Brothers, Laidlaw, Inc. f/k/a Laidlaw Adams & Peck, Inc., Walter Baur, Henry Lorin, Henlor Capital, Ltd., Joelle Harris a/k/a Mrs. Joelle Lorin, Enn Kunnapas, Linda Kunnapas, Maureen Steffenson, Dr. Irwin Zandman, Capital Shares, Inc., Lawrence C. Caito, H. Clinton Pollack, Frank Shannon, Yarrimup (A Corporation), J.T. Moran & Co., Inc., John T. Moran, Paul R. Miano, Jacques M. de Stadelhofen, Legal Assistant Corporation and John Does I-IX, Defendants. R. Graig OVERTURF, Plaintiff, v. HAAS SECURITIES CORP., Eugene K. Laff, Stanley Aslanian, Jr., L.F. Rothschild & Co., Inc., Robert Schoenthal, Mathew R. Deane, Francois Mayer, Robert R. Errico, Andrew Berger, Joel Miller, Henry Lorin, Henlor Capital, Ltd., Joelle Harris a/k/a Mrs. Joelle Lorin, Enn Kunnapas, Linda Kunnapas, Toni Vallen, Maureen Steffenson, Dr. Irwin Zandman, Capital Shares, Inc., Lawrence C. Caito, H. Clinton Pollack, Frank Shannon, Yarrimup (A Corporation), J.T. Moran & Co., Inc., John T. Moran, Paul R. Miano, Jacques M. de Stadelhofen, Legal Assistant Corporation and John Does 1-10, Defendants. |
| Court | U.S. District Court — Southern District of New York |
Gusrae, Kaplan & Bruno, New York City, for plaintiffs Solange Landau and R. Craig Overturf; Mark J. Astarita, of counsel.
Rosenman & Colin, New York City, for defendant Frank Shannon; Gilbert S. Edelson and Diane da Cunha, of counsel.
Plaintiffs allege that the defendants violated the 1933 and 1934 Securities Acts and the Racketeer Influenced and Corrupt Organizations statute (RICO), and committed statutory and common law fraud in connection with securities investments made through Haas Securities Corporation and other broker dealers. After filing two amended complaints, plaintiffs moved for an order of attachment against the assets and property in which Defendant Frank Shannon, an alleged member of a related conspiracy to manipulate stocks, had an interest.
At the time of the attachment motion, Shannon was free on bail awaiting sentencing for his conviction on a one count information charging that he had falsely and fraudulently filed a form 13D with the Securities Exchange Commission. Shannon's bail, which was originally set at $10 million, of which $3.5 million was in cash, was subsequently reduced to $350,000 in cash. On June 27, 1987 Shannon was given a suspended sentence and fined $10,000. Transcript of August 23, 1989 oral argument at 5. Plaintiffs now seek to include Shannon's bail within the scope of the order of attachment.
Plaintiffs sought and were granted an ex parte temporary restraining order enjoining the Clerk of this Court from transferring any of Shannon's assets pending decision on this motion. Were it not for the temporary restraining order, the Clerk of the Court would have been authorized to release the cash deposit held for Shannon's bail after his sentencing. The issue to be decided by this Court is whether cash deposited by a criminal defendant with the Clerk of the Court as bail can be attached by a private party seeking to collect upon a judgment. It appears that no Second Circuit court has considered this issue.
Early cases established the rule that funds in the registry of the court are generally not subject to attachment to satisfy judgments against the owner. See e.g. The Lottawanna, 87 U.S. (20 Wall.) 201, 22 L.Ed. 259 (1873). In Bucher v. Vance, 36 F.2d 774 (7th Cir.1929), a plaintiff who had recovered a state court judgment against a defendant sought to seize funds deposited by the defendant in federal court as part of a different suit. The Court noted that the "trend of federal decisions" was "quite strongly against the right to subject such a fund to control by the process of another court," id. at 775, and held that absent federal statutory authorization, the fund could not be subjected to "seizure on behalf of creditors of the owner." Id. at 776.
Despite the general rule established in these cases, courts have nonetheless carved out two exceptions. At least one federal court has held that attachment or garnishment can take place "after the purposes of the law's custody have been accomplished ..." Bankers' Mortg. Co. of Topeka, Kan. v. McComb, 60 F.2d 218 (10th Cir.1932); See also Bank of Hawaii v. Benchwick, 249 F.Supp. 74, 81-82 (D.Haw.1966) (). Since the purpose of bail is to secure the presence of a criminal defendant, Stack v. Boyle, 342 U.S. 1, 5, 72 S.Ct. 1, 3, 96 L.Ed. 3 (1951), the rule set out by these cases would permit attachment of bail after a criminal defendant has appeared.
A number of courts have rejected the Bankers' Mortgage exception on a variety of different grounds. See American Exch. Life Ins. Co. v. Putnicki, 510 F.Supp. 19, 20-21 (W.D.Tex.1980) (); Corporation Co. of Miami v. Mikelis, 467 F.Supp. 826, 827 (S.D.Fla.1979) (); Reed Marketing Corp. v. Diversified Marketing, Inc., 419 F.Supp. 125, 126 (N.D.Ill.1976) ().
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Landau v. Vallen
...preliminary injunction to continue the same relief because it held that attaching bail would undermine its purposes. Landau v. Vallen, 723 F.Supp. 218, 220 (S.D.N.Y.1989). The district court's holding was consistent with several other decisions in which courts have denied attachment. See, e......