In re Beiny

164 A.D.2d 233, 562 N.Y.S.2d 58, 1990 N.Y. App. Div. LEXIS 14090
CourtAppellate Division of the Supreme Court of the State of New York
DecidedNovember 29, 1990
StatusPublished
Cited by10 cases

This text of 164 A.D.2d 233 (In re Beiny) is published on Counsel Stack Legal Research, covering Appellate Division of the Supreme Court of the State of New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Beiny, 164 A.D.2d 233, 562 N.Y.S.2d 58, 1990 N.Y. App. Div. LEXIS 14090 (N.Y. Ct. App. 1990).

Opinion

[235]*235OPINION OF THE COURT

Per Curiam.

The underlying proceeding herein is for judicial settlement of an accounting of two trusts (the Wynyard trusts), of which petitioner is the beneficiary and respondent was, until June 1, 1989, a trustee, along with David Beiny, her husband, and John Sowray. These trusts own, respectively, 45% of the voting and nonvoting shares of intervening petitioner-respondent, The Antique Company of New York (ACNY), which is the owner of, and a dealer in, a very valuable collection of antique porcelains, antique furnishings and other works of art. The remaining shares of ACNY are owned by two trusts of which respondent is the sole beneficiary, and respondent is ACNY’s sole active and chief operating officer. While it has been under respondent’s control, a large number of ACNY’s sales have been made through APC, Ltd. (APC), a London based company which is owned by a trust for the equal benefit of petitioner and respondent and of which respondent is the sole managing director. Among the claims against respondent in this action are allegations by petitioner that he has received no income from his beneficial ownership of shares of either of these companies. He alleges that respondent has caused APC to charge ACNY inflated commissions for sales of ACNY assets made through APC and has used APC’s assets to pay for her own and her family’s expenses, rather than distributing its earnings to its shareholders. During the course of the underlying proceeding in 1985 and 1986, Surrogate’s Court issued orders restraining respondent from moving or disposing of the assets of ACNY as well as the assets of two trusts, known as the Densur and Porola trusts, of which respondent is the sole beneficiary (the Liechtenstein trusts). The court also ordered that respondent make arrangements for petitioner to inspect all the property and assets held by the Liechtenstein trusts or by their operating company, Internationale Finanz und Kunsthandel A.G. (IFK). The court-ordered discovery and the restraints imposed upon the Liechtenstein trusts were in response to petitioner’s allegations that respondent had used these trusts to improperly dispose of assets belonging to ACNY. By the terms of the court orders, respondent was permitted to sell ACNY assets in the ordinary course of business as long as the sales were reported to petitioner and the proceeds deposited in a New York bank. [236]*236Respondent was also permitted to use ACNY funds to pay for ordinary and necessary business expenses.

In February 1987, petitioner moved to hold respondent in contempt, for, inter alia, allegedly transferring assets in violation of the court’s orders. A hearing was held at which respondent appeared. During the course of the hearing, a temporary receiver was appointed over the assets of ACNY and its affiliates. Although the final date on which testimony was taken was March 30, 1987, the hearing was adjourned until June 19, 1989. The apparent reason for this substantial delay was intervening litigation involving other matters, including the disqualification of petitioner’s counsel, during which time both parties retained new counsel. (See generally, Matter of Weinberg, 129 AD2d 126, rearg denied 132 AD2d 190, lv dismissed sub nom. Matter of Beiny, 71 NY2d 994.) When the hearing recommenced on June 19, 1989, respondent, who had left the country, failed to appear, and the court thereafter issued the order which is the subject of this appeal.

We find, after a review of the record, that respondent was afforded a full and fair hearing and that the evidence overwhelmingly supports the trial court’s findings that respondent committed numerous and flagrant violations of its orders.

The remaining questions for this court’s consideration concern the propriety of the punishments inflicted for those violations. Where a party is able to show that he or she has suffered an actual loss or injury as a result of a civil contempt, a fine may be imposed in an amount sufficient to indemnify the aggrieved party. (Judiciary Law §§ 753, 773.) While such amount need only have a "reasonable basis” of computation (Matter of Rothko, 43 NY2d 305), it is clear that the purpose of such a civil contempt fine is not deterrence or punishment but is, rather, the compensation or indemnification of the complainant. (State of New York v Unique Ideas, 44 NY2d 345.)

Here, the court properly fined respondent in the amount of $209,835, payable to ACNY, representing the 50% commissions paid by ACNY to APC on sales made during the period the orders were in effect. The court also properly fined respondent the amount of $252,998.83, payable to ACNY, for expenditures made by ACNY during the period the court’s orders were in effect and which were not ordinary and necessary business expenses, including numerous expenditures for the living expenses of respondent and her family.

[237]*237Moreover, the court was well within its discretion in ordering the return to New York of ACNY’s assets (see, SCPA 2214), as well as requiring respondent to pay the costs necessitated by this transfer along with the costs associated with an action brought in England to appoint a receiver over those assets. The action brought in England and the transfer of the assets back to New York were directly due to respondent’s violations of the court’s orders. Similarly, respondent’s behavior to the date of the hearing demonstrated that, if left in London, ACNY’s assets were at risk of being dissipated. Thus, all of the costs associated with preventing such contingency must also be found to be directly related to respondent’s violation of the court’s orders. Accordingly, the court’s imposition of the amount of these expenses upon respondent personally cannot be said to be punitive. Rather, it was designed to remedy the harm she had caused and was therefore appropriately assessed under Judiciary Law §773. (See, Moran v Village of Philmont, 147 AD2d 230.)

In distinction, the record does not support the imposition of a fine upon respondent in the amount of $1,000,000 payable directly to petitioner for respondent’s violation of the court’s orders dated August 20, 1985, September 12, 1985, and November 6, 1986, restraining transfers of assets held by the Liechtenstein trusts. There is no question that respondent did indeed violate these orders, since the evidence shows that properties belonging to the trusts were moved from Zurich to Geneva and then to Liechtenstein, and that sums totaling approximately $1,021,000 were transferred from the accounts of the trusts to those of IFK. The evidence also demonstrates that respondent, though not the trustee, had such control over the handling of the trusts’ assets that she may be held responsible for the violations of court orders which were clearly committed with her knowledge. (Cf., Citibank v Anthony Lincoln-Mercury, 86 AD2d 828.) There is no merit to respondent’s argument that the evidence was insufficient to show that she violated the orders merely because petitioner allegedly failed to establish that her actions put these assets completely out of the control of the Liechtenstein trusts. Petitioner was required to show only that the transfers were made in violation of the court’s orders, which they clearly were, and the Surrogate’s finding that respondent was in contempt of the court’s restraining orders is affirmed. With respect to the amount of the fine, however, petitioner did not demonstrate actual damages resulting from these transfers. [238]

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Cite This Page — Counsel Stack

Bluebook (online)
164 A.D.2d 233, 562 N.Y.S.2d 58, 1990 N.Y. App. Div. LEXIS 14090, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-beiny-nyappdiv-1990.