Opinion
Submitted February 9, 1978
Decided March 21, 1978
Appeal from the Appellate Division of the Supreme Court in the First Judicial Department, THOMAS J. HUGHES, J.
Sherman P. Rothman for appellant.
Robert K. Ruskin and Jeffrey L. Liddle for respondent.
MEMORANDUM.
The order of the Appellate Division should be affirmed, with costs.
After obtaining an original order for attachment in the amount of $30,000, the validity of which was upheld by the Appellate Division ( 48 A.D.2d 1017), plaintiff obtained a supplemental order of attachment in an additional amount of $56,000. On a motion to vacate or to modify the second attachment, vacatur was denied but the issue of "whether or not the amount prescribed by the supplemental attachment is excessive" was referred to a referee to hear and report with recommendations. Following five days of hearings which consisted of testimony by certified public accountants for both parties and by plaintiff's president and produced over 800 pages of transcript and 43 exhibits, the referee reported in a summary description of the accounts between the parties that "as of March 31, 1975 [the day before issuance of the second attachment], the maximum amount of the claim of PPX for attachment purposes proven before me is $17,638." On that basis he recommended that the supplemental order of attachment be vacated. Supreme Court granted defendant's motion to confirm the report of the referee, vacated the supplemental order of attachment and also reduced the amount of the original attachment from $30,000 to $17,638. The Appellate Division modified by deleting the reduction of the first attachment on the ground that the validity and amount of that attachment had not been before Supreme Court or the referee, and otherwise affirmed.
On the appeal to us, plaintiff does not challenge the details, analysis or computation of the accounting reported by the referee. Rather plaintiff asserts that the reference should have been limited to inquiry and report as to the "good faith" of plaintiff's claim and that it was therefore error on the part of the referee to give a nonbinding advisory opinion on the merits of the controversy without opportunity for pretrial discovery and production of witnesses.
The record fails to disclose any objection by plaintiff to the generality of the reference to the referee, any application to the court or to the referee to make the terms of the reference more specific, or any attempt prior to receipt of the report of the referee to limit the scope of the reference as it is now contended should have been done. In these circumstances we conclude that the contention of error, if any, presently advanced has not been preserved for appellate review.
I dissent and vote to reverse and reinstate the supplemental attachment.
Concededly, the reference to the Special Referee was solely to determine whether the supplemental attachment was excessive. Possible constitutional strictures derivable by implication from Carey v Sugar ( 425 U.S. 73) were not, and are not, applicable to this case, because of Special Term's determination in the order of reference that, pursuant to the agreements, trust funds were involved. Indeed, the referee in his report stated that he was bound by the holding that trust funds held for the benefit of plaintiff were involved provided they had been received.
The underlying claims involve running accounts, not only between plaintiff and defendant, but between defendant and its overseas licensees. What was owed and what was received were sharply disputed, as disputed as are the briefs submitted on this appeal. It may even be agreed that, as to many of the items, plaintiff, credibility aside, failed to establish by a preponderance of the evidence that it would succeed. On the other hand, as to such disputed issues, and particularly as to those claims where the referee juxtaposed the contradictions between plaintiff's former principal, Chalpin, and defendant's principal, Goff, it cannot be said that in the action yet to be tried plaintiff must fail (see Regnell v Page, 82 Misc.2d 506, 510-511 [FEIN, J.], decided after the holding Sugar v Curtis Circulation Co., 383 F. Supp. 643; see, generally, 7A Weinstein-Korn-Miller, N Y Civ Prac, par 6223.01 et seq., discussing New York's attachment statutes in the light of the cloud cast on them by Sugar v Curtis Circulation Co., supra, and Carey v Sugar, supra, especially pars 6223.01, 6223.05, 6223.09).
The point is, as appellant has argued apparently in vain, that the reference was not to determine the case on the merits but, in effect, only to determine whether the attachment was excessive in amount, or, as appellant states it, perhaps mistakenly, whether the attachment was in "good faith". In so determining, the referee and the courts below should have been sensitive to the preliminary nature of this determination under CPLR 6223; the action had not progressed; there had been no discovery; and complicated interdependent running accounts were involved as to many or most of which plaintiff would be without knowledge of the facts until they had been further explored. An attachment will be of limited use as a provisional remedy if an attaching creditor must, on motion to vacate the attachment, summarily establish his case as if it had been fully tried and determined. That trial and determination was not the referee's function. He was only to determine whether the supplementary attachment was excessive because the support for it was baseless and plaintiff's claim must inevitably have failed. Instead, the referee granted the equivalent of summary judgment in a case where there were disputed issues of fact and no pretrial discovery.
It is true that on this appeal plaintiff has argued that the reference was to determine its "good faith" in obtaining the supplemental attachment. That misuse of words of art, of course, is an unfortunate characterization of the reference to determine excessiveness. In fact, however, an intentionally excessive attachment is one taken in "bad faith". Plaintiff's linguistic imprecision, if that it be, should not becloud the real issue.
Accordingly, I dissent and vote to reverse and reinstate the supplemental attachment.
Judges JASEN, JONES, WACHTLER, FUCHSBERG and COOKE concur; Chief Judge BREITEL dissents and votes to reverse in a separate opinion in which Judge GABRIELLI concurs.
Order affirmed, with costs, in a memorandum. Question certified answered in the affirmative.