THE New York Supplement VOLUME 33. (12 Misc. Rep. 271.) WHITE v. FRANKEL et al.1 (Supreme Court, Special Term, New York County. April, 1895.) RECEIVERS LEVY ON GOODS IN POSSESSION OF. Where a temporary receiver of a limited partnership has been appointed in a suit for dissolution thereof, such receivership having been consented to by the general partners and by a large proportion of the creditors, it is improper to grant an ex parte order requiring the receiver to allow the sheriff to levy on the assets in the receiver's possession attachments procured by creditors who did not consent to the receivership, and such order will not be confirmed where it is reasonably certain from the facts disclosed by the moving papers that the receivership will ultimately be made permanent. At chambers. Action by Sarah A. White against Dionis Frankel and another to dissolve the firm of Frankel & Lansing,—a limited partnership. The application of Benoit Wasserman for an order authorizing a sheriff to levy attachments on the assets in the receiver's possession was granted, and the attaching creditors move to confirm said order. Denied. Ira Leo Bamberger, for the attaching creditors. Gayley, Baucus & Fleming (Hornblower, Byrne & Taylor, of counsel), for the receiver. Hirsch & Rasquin, for the sheriff. BEEKMAN, J. On the 20th day of March, 1895, Alexander Gulick was appointed by this court as reciever of the copartnership assets of the firm of Frankel & Lansing, in an action brought by the plaintiff, who was the special partner in said firm, the general partners being the defendants above named. The re ceiver in question gave the bond of $30,000 required in the order, which was approved by a justice of this court, and has been duly filed. Immediately upon his appointment, he entered into possession of the copartnership property, consisting of the Clarendon 1 Affirmed. See 33 N. Y. S. 1135. v.33N.Y.s.nu.1-1 Hotel, in the city of Brooklyn, which was held under lease by said copartnership, and was being run by the defendants. The complaint sets forth the copartnership relation, and also various acts of bad management, at least, on the part of the defendants; the utter insolvency of the firm; its indebtedness in an amount exceeding $173,000; and that, under the most favorable conditions, its property would not be sufficient to pay 50 cents on the dollar. The prayer of the complaint is that the limited partnership be dissolved; an account taken in respect to the business; that the property of the firm be sold, and the partnership debts and liabilities paid off; and that a receiver be appointed pending the action, and after judgment. Affidavits were presented in support of the complaint, showing that a large proportion of the creditors consented to the receivership, and the written consent of the defendants themselves was also produced, and filed with the moving papers, in the following words: "We hereby consent to the appointment of a receiver in this action, and of all the assets, as prayed for in the complaint, as may be determined in this action." It will thus be seen that the suit has been brought and is maintained in the interests of the creditors, and that the case is not one in which a receiver is sought of a solvent concern, owing to irreconcilable differences and quarrels between partners. On the 25th of March two attachments were sued out against the firm,-one by Peter J. Montague, and the other by Benoit Wasserman,-which were granted by Mr. Justice Brown, in the city of Brooklyn, on the ground that the defendants had assigned, disposed of, and secreted their property, with intent to cheat and defraud their creditors; Montague and Wasserman claiming to be creditors of the partnership. At the same time that the warrants of attachment were signed, Mr. Justice Brown made an order, based upon the same papers upon which the attachments had been granted, by which he required the receiver "to forthwith allow the sheriff of the county of Kings to forthwith levy the said warrants of attachment upon the goods, chattels, and property of the said Dionis Frankel and Edward B. Lansing, in the possession or under the control of the said receiver." This order was not a court order, nor was it made upon any notice to the receiver, or to any of the parties to the action in which the receiver was appointed; and the first intimation which the receiver had of its existence was when the sheriff presented himself at the hotel, took possession, and ousted him from his receivership. If this ex parte order is to stand, the whole object for which the receiver was appointed by this court will have been defeated; the receivership, in effect, will be dissolved; and any judgment which may be recovered in the action will be a barren one. It is impossible that such a proceeding as this should be sanctioned in any court of equity. It is contrary to reason and fundamental principles of justice. There is nothing in the papers which justifies the slightest inference that the action in which the receiver was appointed was a collusive one. On the contrary, the evidence is most satisfactory that the action is a timely and proper one, and that its purpose is to secure a liquidation of the copartnership affairs in a manner which shall be most favorable to the creditors. Furthermore, the papers show that substantially all of the creditors, excepting the attaching creditors, whose claims represent only a small propor tion of the aggregate indebtedness, have approved of the appointment of the receiver, and are desirous that the receivership shall continue, and the assets of the partnership applied to the liquidation of its debts. While the receiver was engaged in promoting this laudable purpose, he was served with the attachments in question, and put out of possession by the sheriff of the county of Kings, under the ex parte order made by a judge out of court, which is now the subject of this motion. If orders of this kind may be granted without notice, a new and extremely convenient method of dissolving receiverships, and depriving a court of equity of property which it has taken into the custody of the law through its duly-appointed officer, has been discovered by the learned counsel for the attaching creditors. But it is unnecessary to enter upon any extended argument for the purpose of showing the impropriety of the practice which has been adopted by the attaching creditors in this case. The thing speaks for itself. If the creditors who have sued out these attachments considered that it was their right to have them levied upon the copartnership property, notwithstanding the receivership, they should have applied to this court, on proper papers, for the relief which they sought, and after notice to the receiver and the parties to the action, when the question raised could have been properly considered, and the matter appropriately disposed of. The course adopted, however, is utterly inconsistent with anything like orderly procedure in the administration of justice, and calls for a prompt and unqualified reversal. The attorney for the attaching creditors, in meeting the motion made to vacate the ex parte order, has, in turn, made a motion before me to confirm the order in question,-a tardy recog nition of the duty which originally rested upon him, of applying to this court in the first instance for permission to make his levy. This brings up the question as to whether this court, after having appointed a receiver in an action which seeks the equal distribution of all of the assets of an insolvent partnership among the creditors, should permit the levy of attachments on the funds in court by a portion of the creditors only, where the effect of such permission is likely to result in the absorption of the greater part, if not all, of the fund. If this may be permitted, it is quite plain that the purpose of the action, and the object sought by the appointment of the receiver, will be utterly defeated. Substantially all of the creditors, with the exception of the two who have obtained these attachments, have rested with confidence upon the appointment of the receiver as sufficiently protecting their rights, and have not sought to secure preferences over one another by attachment. The position, therefore, of the attaching creditors, in this case, is not one which commends itself at all to the favor of the court; and, un |