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October 23, 1968

IVOR B. CLARK CO., Inc., Plaintiff,
Moreland H. HOGAN, International Office Park, Inc., and International Park Corporation, Defendants. IVOR B. CLARK CO., Inc., Petitioner, v. Moreland H. HOGAN, International Park Corporation and James Talcott, Inc., Respondents

The opinion of the court was delivered by: TENNEY

TENNEY, District Judge.

 Petitioner, Ivor B. Clark, Inc. (hereinafter referred to as "Clark") moves this Court, pursuant to Rule 69(a) of the Federal Rules of Civil Procedure and CPLR §§ 5225(b), 5251, for an order adjudging respondents Moreland H. Hogan (hereinafter referred to as "Hogan"), International Park Corporation, of which Hogan is the President, (hereinafter referred to as "International") and James Talcott, Inc., third party in interest herein (hereinafter referred to as "Talcott") guilty of contempt of this Court for having violated the terms of certain restraining notices and requiring Talcott to deliver to petitioner, the judgment creditor in this action, certain monies received by Talcott from Hogan and International, the judgment debtors, to be applied in partial satisfaction of petitioner's judgment, said monies representing rents received by Hogan and International from certain of its lessees.

 Talcott cross-moves, pursuant to Fed.R.Civ.P. 69(a) and CPLR § 5240, for an order vacating the restraining notices served upon Delta Airlines, Inc. (hereinafter referred to as "Delta") and the Ford Motor Co. (hereinafter referred to as "Ford") insofar as they affect the rents owed by Delta and Ford under certain lease agreements with the judgment debtor on the ground that the right to the restrained rent monies had been assigned to Talcott prior to the entry of the judgment herein, and for damages.

 Briefly, the facts indicate that on December 1, 1965, Talcott lent to International the sum of $2,300,000.00 to be used for the development of certain real property. The loan agreement consisted of the following relevant documents: (1) a promissory note signed by Hogan on behalf of International providing that the principal amount of the note together with the interest accrued thereon would be due and payable on December 1, 1966; (2) a Deed to Secure Debt (hereinafter referred to as "the Deed") granting Talcott an assignment of the leases on the underlying property (including the leases of Delta and Ford) as additional security for the indebtedness; and (3) an Assignment of Rents and Leases (hereinafter referred to as "the Assignment") to further secure the payment of the note. The Delta and Ford leases were specifically included in the Assignment. However, under the terms thereof, International was permitted, pursuant to a license provision, to collect and receive the rents assigned, and to:

"* * * apply same, first to the payment of taxes upon said premises before penalty or interest are due thereon, secondly to the cost of such insurance and of such maintenance and repairs as is required by the terms of said Deed to Secure Debt, and thirdly to the satisfaction of all obligations under the said leases, and fourthly to the payment of interest and principal becoming due on the said Note and Deed to Secure Debt before using any part of the same for any other purpose." (Conviser Affid. of June 28, 1968, Exh. C at 5.)

 This Assignment was filed with the Clerk of the Superior Court, Fulton County, Georgia, and recorded on December 7, 1965.

 On June 13, 1966, Talcott subordinated its security interest in the properties of International, by an agreement executed and recorded on that date, to the interest of the Mutual Life Insurance Company of New York (hereinafter referred to as "MONY"), which company had, at that time, lent to International the sum of $2,165,000.00.

 On December 1, 1966, Talcott executed a further agreement with International extending the term of its note for one year and increasing the interest thereunder. This instrument was recorded in the Fulton County Court on December 22, 1966.

 In December 1967, International defaulted on both its loan agreements, in response to which and on January 26, 1968, it was agreed between International and Talcott at a meeting held in MONY's New York office, that Talcott, as subordinate creditor to MONY and by virtue of a power of attorney given to it by International (see Conviser Affid. of June 28, 1968, Exh. H), would take over the collection of the rents, pay the necessary expenses, make the scheduled payments on the MONY note, and, finally, apply the balance to the principal and accrued interest owed on the Talcott note.

 By letters dated January 30, 1968 (see Conviser Affid. of June 28, 1968, Exh. G), tenants under the lease agreements with International, including both Delta and Ford, were instructed to send their rental monies to a Post Office box registered in the name of "International Park Corporation -- Rental Account", which payments were now to be received and controlled by Talcott according to the aforementioned power of attorney. Delta and Ford paid their February and March rents in accordance with these instructions.

 On February 8, 1968, in a suit by Clark against Hogan and International, Judge Ryan of this Court entered a default judgment against Hogan and International, ordering the entry of final judgment against Hogan in the sum of $85,000.00 with interest thereon from July 1, 1965, and against Hogan and International jointly in the sum of $77,000.00 together with interest thereon from April 1, 1966. Judgment was entered on February 13, 1968 (see Friedman Affid. of July 30, 1968, Exh. A).

 On February 21, 1968, an amended final judgment was entered nunc pro tunc as at February 13, 1968, which provided for recovery against Hogan in the sum of $183,813.96 and against International in the sum of $85,537.76.

 On or about March 4, 1968, Clark served both Hogan and International with restraining notices, forbidding any sale, assignment or transfer, or interference with any property in which the judgment debtors possessed an interest. Similarly, the judgment creditor served Delta and Ford with restraining notices, forbidding their transfer of any property in their possession or control in which Hogan or International had an interest as well as any debts thereinafter to become due from either Delta or Ford to the judgment debtors.

 On March 6, 1968, Talcott was served with a Notification of Issuance of Restraining Notice informing the company of the action taken ...

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