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(CITE AS: 71 B.R. 953) 

                     In re John P. GALANIS, Debtor.

             Arthur J. GERSTL, Interim Trustee, Plaintiff,

                                  v.

           John P. GALANIS; Milton I. Schwartz; Misco, Inc.; 
           Armstrong Capital, S.A.; and Dayton Company, Inc., 
                                              Defendants.

                ARMSTRONG CAPITAL, S.A., Plaintiff,

                                  v. 

        FEINER, CURTIS, SMITH AND GOLDMAN, et al., Defendants.

                      Bankruptcy No. 5-80-00302.
                   Adv. Nos. 5-85-0024, 5-85-0025.  
                Civ. Nos. B-85-40(EBB), B-79-43(TFGD).
           United States Bankruptcy Court, D. Connecticut.
                            April 2, 1987.

Paul R. Grand, Diana Parker, Grand & Ostrow, New York City, 
for John P. Galanis.

William A. Phillips, More, Phillips & Hull, P.C., Greenwich, Conn., 
JOHN C. KLOTZ, New York City, for Armstrong Capital, S.A.

MEMORANDUM OF DECISION

ALAN H.W. SHIFF, Bankruptcy Judge. 

                                1.

BACKGROUND

                                A.

The matter before the court is an interpleader action to deter
mine the competing claims of John Peter Galanis ("Galanis"), 
Armstrong Capital, S.A. ("Armstrong"), Milton I. Schwartz and 
Misco, Inc. (Schwartz/Misco"), and the Dayton Company ("Dayton") 
to property held by the plaintiff upon dismissal of an involun
tary Chapter 7 petition which had been filed in this court 
against Galanis by Chase Manhattan Bank, N.A. on May 1, 1980. The 
plaintiff, Arthur Gerstl, was appointed interim trustee ("trus
tee") in that bankruptcy case, and in that capacity, on October 
1, 1980, instituted an adversary proceeding against 
Schwartz/Misco [FN1] to recover property allegedly belonging to 
Galanis's estate from the sale of Park City C.A.T.V. Associates, 
a Utah limited partnership, in which Galanis was the sole general 
partner. On April 28, 1981, Bankruptcy Judge Robert L. Krechevsky 
[FN2] entered an order that the estate was entitled to a fifty 
per cent interest in the net proceeds of the sale beyond the 
defendants' recovery of their capital outlay.


The defendants appealed and the plaintiff cross-appealed Judge 
Krechevsky's decision. Thereafter, the parties entered into a 
settlement, and on August 26, 1982, this court entered a stipu
lated order for judgment pursuant to which Schwartz/Misco and 
Park City C.A.T.V. Associates paid the trustee $240,000.00 plus 
interest from December 1, 1981 (the "settlement fund"), which 
represents a substantial portion of the interpleader fund at 
issue here. Under the terms of that order, the settlement fund 
was subject to a $170,000.00 lien in favor of Schwartz/Misco as 
security for their unliquidated claims alleged against Galanis, 
which amount was to be remitted to them in the event the involun
tary petition against Galanis was dismissed. The stipulated order 
further provided that if such dismissal occurred, nothing con
tained in this settlement order shall be construed as a waiver of 
the rights of John P. Galanis, outside of bankruptcy, to pursue 
Milton I. Schwartz and Misco, Inc. to recover in his favor 
against said parties, to the extent of the lesser of the amount 
of his proveable [sic] claim outside of bankruptcy or the remain
ing settlement fund paid by the Trustee to Milton I. Schwartz and 
Misco, Inc., pursuant hereto.

On November 9, 1984, this court granted Galanis's motion for 
dismissal of the involuntary petition for failure to prosecute, 
pursuant to Code '303(j)(3), [FN3] and ordered that, following 
court approval of the final accounting and applications for 
professional and other fees, "the balance of all assets of this 
estate [exclusive of Schwartz/Misco's interest established under 
the August 26, 1982 order] shall be paid to and revest in the 
debtor." [FN4] However, prior to any distribution to Galanis or 
Schwartz/Misco, two claims were made against those assets.

First, on December 18, 1984, Armstrong caused an execution, 
issued by the United States District Court for the District of 
Connecticut, to be personally served on the trustee [FN5] in an 
attempt to levy upon Galanis's personal property to satisfy a 
$510,579.00 judgment entered in its favor against Galanis on June 
10, 1976 by the United States District Court for the Southern 
District of New York, Armstrong Capital, S.A. v. Feiner, Curtis, 
Smith and Goldman, et al, Index No. 74 Civ. 3154 (the "Feiner" 
action). Armstrong had docketed that judgment in the United 
States District Court for this District on June 18, 1979 
(Misc.Civ. B-79-43). [FN6] The trustee did not surrender the 
funds in his possession, but acting in compliance with Connecti
cut Public Act No. 83-581, Sec. 9(a)(4)(C) [FN7], initiated the 
procedures required to give notice to Galanis that an execution 
had been served on him.

Second, on or about December 21, 1984, the trustee was served 
with an ex parte order issued in favor of Galanis by the Connec
ticut Superior Court, Judicial District of Stamford/Norwalk to 
garnish $170,000.00 in the trustee's possession. That order was 
obtained in connection with a breach of contract action Galanis 
instituted against Schwartz/Misco based on the rights he retained 
under the August 26, 1982 stipulated order to recover the pro
ceeds of the sale of Park City C.A.T.V. Associates as determined 
by Judge Krechevsky. On December 20, 1984, Dayton appeared at the 
final meeting of this bankruptcy case and claimed that it had not 
received notice of the November 9, 1984 order of dismissal. 
Dayton further asserted that its right to estate assets was 
superior to Galanis and Armstrong, and to Schwartz/Misco in the 
event that Galanis succeeded in his breach of contract action. On 
December 27, 1984, this court entered an order requiring the 
trustee to retain the funds remaining after payment of approved 
professional fees, "pending an Order for Distribution by the 
Bankruptcy Court." On January 16, 1985, Armstrong applied to the 
United States District Court for the District of Connecticut for 
an Ex Parte Order in Aid of Execution pursuant to Connecticut 
Public Act 83-581 Section 10. [FN8] On January 18, 1985, as a 
consequence of the conflicting claims of 1) Schwartz/Misco (for 
$170,000.00 based on the August 26, 1982 stipulated order); 2) 
Galanis, (based on the November 9, 1984 bankruptcy court order 
dismissing the petition and the state court garnishment); and 3) 
Armstrong, (based on the service of the execution of the Feiner 
judgment upon Galanis and the trustee), the trustee filed an 
interpleader action, pursuant to 28 U.S.C. '1335, in the United 
States District Court for the District of Connecticut, Gerstl v. 
Galanis, et al, Civ. No. B-85-40, which was referred to Judge 
Burns. At that time the trustee held approximately $255,000.00 
(the "interpleader fund"), of which $35,000.00 is attributable to 
sources other than the settlement fund.

On January 21, 1985, Chief Judge Daly ordered the trustee to turn 
over all funds to the sheriff, except the portion disputed by 
Galanis and Schwartz/Misco. On that same date, acting pursuant to 
28 U.S.C. ss 1332, 1441, and 1446, Schwartz/Misco removed the 
breach of contract action to the District Court, Galanis v. 
Schwartz, Civ. No. B-85-46 (TFGD). On February 1, 1985, Dayton 
filed motions to intervene in the interpleader action and the 
ancillary Feiner proceeding. In addition, Dayton sought to vacate 
the ex parte order issued by Chief Judge Daly in that Feiner 
matter. [FN9]

On February 7, 1985, Armstrong filed a Motion For And Consent To 
Reference in the ancillary Feiner matter and the interpleader 
action pending before Chief Judge Daly and Judge Burns respec
tively, requesting that this judge adjudicate these matters 
pursuant to F.R.Civ.P. 53. Armstrong's motions were granted on 
February 15, 1985. In addition, upon motion by Schwartz/Misco, 
Galanis's breach of contract action was referred to this judge by 
Chief Judge Daly, pursuant to 28 U.S.C. '157(c)(2), to be decided 
in conjunction with the interpleader and Feiner proceedings. On 
February 19, 1985, Dayton's motion to intervene and to vacate the 
ex parte order in the Feiner ancillary proceeding was also re
ferred to this judge by Chief Judge Daly for review and determi
nation. The referral included the authority to vacate the ex 
parte order. On March 12, 1985, Chief Judge Daly clarified the 
February 15, 1985 ruling to reflect that reference to the bank
ruptcy judge had been made with the consent of the parties pursu
ant to 28 U.S.C. '157(c)(2). [FN10]


On April 29, 1985, this court granted Dayton's motion to inter
vene and assert its claim in the interpleader action. Thereafter, 
on June 12, 1985, pursuant to 28 U.S.C. '2361, the trustee was 
discharged from any further liability to the parties arising out 
of the interpleader fund, and the bankruptcy court retained 
jurisdiction to determine the rights of the respective defend
ants.

On September 11, 1985, Galanis, Schwartz/Misco, Armstrong, and 
Dayton stipulated to a partial settlement granting Schwartz/Misco 
the right to receive $100,000.00 from the interpleader fund in 
consideration for withdrawing all claims to that fund. In return, 
Galanis withdrew his claim to any portion of the interpleader 
fund claimed by Schwartz/Misco and agreed to the dismissal of his 
breach of contract action. The parties also stipulated that if 
Armstrong prevailed over Galanis in this interpleader action, 
Armstrong would credit Galanis with an additional $120,00.00 on 
any remaining amount Galanis owed Armstrong. At an October 23, 
1985 status conference, the parties agreed that the conflicting 
claims of Armstrong and Galanis should be tried first. This court 
concurs, and with that objective in mind, vacates the ex parte 
order of the district court pursuant to Chief Judge Daly's Febru
ary 19, 1985 authorization.

                                B.

Origin of Armstrong's Claim

In order to assess the validity of their competing claims, the 
relationship between Armstrong and Galanis must be examined. 
According to the "Explanatory Memorandum Relating to the Sale of 
Shares of Common Stock of Armstrong Investors S.A.", [FN11] in 
1969, Galanis and Akiyoshi Yamada ("Yamada") were instrumental in 
the formation of two Panamanian Corporations, Armstrong and 
Armstrong Investors, S.A. ("Investors"), as vehicles through 
which individuals who were neither citizens nor residents of the 
United States were able to invest in the securities markets in 
this country. The voting stock of Armstrong was owned exclusively 
by Investors. Individual investors received shares of Investors, 
and the funds received for that stock were transferred to Arm
strong for investment. Neither Investors nor its shareholders had 
a direct interest in Armstrong. First National City Trust (Baha
mas) ("FNCT"), a subsidiary of First National City Bank ("Citi
bank"), performed various domiciliary and general functions for 
both corporations, and in addition, employees of FNCT served as 
officers and directors of Armstrong and Investors.


The Delfino Action

On January 26, 1971, three Venezuelan shareholders in Investors 
filed an amended civil complaint in the United States District 
Court for the Southern District of New York, Delfino v. Armstrong 
Investors S.A., et al, Index No. 70 Civ. 5242, seeking to recover 
$13.5 million in damages for the alleged depletion of their 
investment by the fraudulent, negligent and other tortious con
duct of Investors, Armstrong, Citibank, FNCT, various officers 
and directors of those entities, Everest Management Corporation 
(the investment manager for Armstrong) and its directors and 
officers, namely Galanis, Yamada, and Louis Zachary. The com
plaint specifically alleged that "500,000 shares of United Assets 
Group common stock were purchased for [Armstrong] by these de
fendants for a purchase price of $425,000." [FN12] Armstrong and 
Investors were served and answered. Galanis was not served nor 
did he appear in that action, which in May 1972, was settled and 
dismissed with prejudice as to Armstrong, Investors, Citibank, 
FNCT, and their officers and directors, and without prejudice as 
to Galanis, Yamada, Zachary, and Everest Management Corporation. 
Prior to reaching settlement with the Delfino plaintiffs, Citi
bank entered into settlement agreements with the non-litigating 
shareholders of Investors. Under the terms of all of the settle
ment agreements, Citibank purchased all outstanding Investors 
stock and was assigned the rights to all causes of action with 
respect to that stock. The settlement agreements also provided 
that Citibank would use its best efforts to pursue those rights 
by itself or by a nominee. [FN13] Citibank retained the same 
attorney who represented Armstrong to pursue those claims.


The Feiner Action


On April 2, 1975, Armstrong filed a second amended complaint 
against Galanis, Yamada, and others, alleging fraud in connection 
with the purchase and sale of 500,000 shares of United Assets 
Group, Inc. common stock. [FN14] Galanis was served and answered. 
Galanis's counsel was granted permission to withdraw on November 
10, 1975. On March 1, 1976, several co-defendants, not including 
Galanis, filed a motion to implead Citibank, Investors, and 
others, as the real parties in interest. Judge MacMahon denied 
that motion. The same parties filed an "Order to Show Cause and 
Petition for Writ of Mandamus to Honorable Lloyd F. MacMahon" in 
the Court of Appeals for the Second Circuit, which was similarly 
denied. The case thereupon went to trial before a jury, and 
Galanis appeared pro se. On July 27, 1976, Judge MacMahon direct
ed the entry of a verdict against Galanis stating that "[o]n the 
basis of his own testimony, own admissions, and the other evi
dence received, he's admitted his embezzlement of the $425,000 
from the plaintiff." [FN15] Judge McMahon thereupon entered a 
judgment in the amount of $510,579.00 against Galanis and a joint 
default judgment for the same amount plus costs against Yamada 
and three other defendants. [FN16] Galanis did not appeal the 
judgment or seek to have it amended or vacated. Yamada obtained a 
release from Armstrong in 1977 in exchange for his agreement to 
supply information and testimony with regard to pending litiga
tion to which Armstrong was a party. [FN17]

                            2.

DISCUSSION

The parties acknowledge that Galanis's right to claim entitlement 
to the interpleader fund is derived from the November 9, 1984 
dismissal of the involuntary petition, and Armstrong's right is 
derived from its judgment against Galanis in the Feiner action.

Galanis disputes the validity of Armstrong's judgment on the 
grounds that 1) Armstrong initiated the Feiner action as an 
assignee of the rights and interests of others and not as the 
real party in interest; 2) the assigned rights had previously 
been fully satisfied in the Delfino action; and 3) Armstrong was 
not entitled to use the Feiner action to seek contribution from 
Galanis since they were joint tortfeasors in the Delfino case. 
Furthermore, Galanis contends that notwithstanding the fact that 
he did not seek a determination of Yamada's equitable share at 
the Feiner trial, at the very least, this court should reduce 
Armstrong's judgment against him to reflect Yamada's equitable 
share pursuant to New York General Obligations Law '15-108 [FN18] 
because Yamada and Galanis were equally culpable and Armstrong 
released Yamada after judgment was entered. [FN19] In the alter
native, Galanis contends that Armstrong's attorney committed a 
fraud upon the Feiner court which precludes enforcement of the 
judgment rendered in that action. Armstrong on the other hand, 
asserts that it instituted the Feiner action on its own behalf 
and not as the nominee of Citibank, but nonetheless argues that 
the claims raised by Galanis are barred by the doctrine of res 
judicata and denies that there was any fraud upon the Feiner 
court.


Res Judicata

It is well settled that when a court of competent jurisdiction 
enters a final judgment based on the merits of a cause of action, 
res judicata prevents parties and their privies from litigating 
claims which were, or could have been, raised in that action. 
Commissioner v. Sunnen, 333 U.S. 591, 597, 68 S.Ct. 715, 719, 92 
L.Ed. 898 (1948); Cromwell v. County of Sac, 94 U.S. (4 Otto) 
351, 352, 24 L.Ed. 195 (1876). Res judicata precludes litigation 
in a subsequent suit of all grounds and defenses that were avail
able to the parties, whether or not they were actually asserted 
or adjudicated in the earlier proceeding. Brown v. Felsen, 442 
U.S. 127, 131, 99 S.Ct. 2205, 2209, 60 L.Ed.2d 767 (1978); Angel 
v. Bullington, 330 U.S. 183, 193, 67 S.Ct. 657, 662, 91 L.Ed. 832 
(1947); Chicot County Drainage Dist. v. Baxter State Bank, 308 
U.S. 371, 378, 60 S.Ct. 317, 320, 84 L.Ed. 329 (1940), NLRB v. 
United Technologies Corp., 706 F.2d 1254, 1259 (2d Cir.1983). 
"Public policy dictates that there should be an end of litiga
tion; that those who have contested an issue shall be bound by 
the result of that contest, and that matters once tried shall be 
considered forever settled as between the parties." Baldwin v. 
Iowa State Traveling Men's Ass'n, 283 U.S. 522, 525, 51 S.Ct. 
517, 517-18, 75 L.Ed. 1244 (1931).

Under the Federal Rules of Civil Procedure, the claims Galanis 
raises regarding the identity of the real party in interest, 
should have been asserted in the original action. Rule 9(a), 
F.R.Civ.P. provides in relevant part that:

[w]hen a party desires to raise an issue as to the legal exist
ence of any party or the capacity of any party to sue or be sued 
or the authority of a party to sue or be sued in a representative 
capacity, he shall do so by specific negative averment, which 
shall include such supporting particulars as are peculiarly 
within the pleader's knowledge. Similarly his failure to plead 
satisfaction, contribution and the determination of equitable 
shares should have been raised in the trial court. [FN20] Rule 
8(c), F.R.Civ.P. provides, in pertinent part that:


[i]n pleading to a preceding pleading, a party shall set forth 
affirmatively accord and satisfaction, ... payment, release, and 
any other matter constituting an avoidance or affirmative de
fense.

Galanis's failure to raise those defenses results in their waiv
er. See In re Fine Paper Litigation State of Washington, 632 F.2d 
1081, 1090 (3rd Cir.1980) (prior judgment must be invoked as 
affirmative defense); Audrieth v. Parsons Sanitarium, Inc., 588 
F.Supp. 1380, 1381 (S.D.N.Y.1984) (failure to raise the issue of 
equitable shares as an affirmative defense constitutes a waiver 
of the right to relief based on those equitable shares); Marx & 
Co., Inc. v. Diner's Club, Inc., 400 F.Supp. 581, 585 
(S.D.N.Y.1975) (accord precluding plaintiffs from raising claims 
must be affirmatively pleaded and may not be asserted following 
trial); 2A Moore's Federal Practice P 9.02 (2d ed. 1986). Moreo
ver, Galanis's reliance on New York General Obligations Law, '15-
108 [FN21] is misplaced, since that law is not applicable to 
post-judgment settlements where equitable shares have not been 
previously established by the trial court. See Rock v. Reed-
Prentice Div., 39 N.Y.2d 34, 41, 382 N.Y.S.2d 720, 723, 346 
N.E.2d 520, 523-24 (1976); Cover v. Cohen, 113 A.D.2d 502, 497 
N.Y.S.2d 382, 388 (2d Dept. 1985). Accordingly I find that the 
claims raised by Galanis in his attack on the Feiner judgment are 
barred by res judicata.

Fraud Upon The Court

As noted, Galanis alternatively claims that there was a fraud 
upon the Feiner court which provides grounds upon which this 
court may exercise its equitable powers to bar enforcement of the 
judgment obtained in that proceeding. Rule 60(b) of the Federal 
Rules of Civil Procedure establishes grounds upon which a court 
may grant relief from judgment and specifically preserves a 
court's inherent right to refrain from enforcing a judgment 
obtained through fraud upon a court. 7 Moore's Federal Practice P 
60.33 at 60-351 (2d ed. 1985). The saving clause in Rule 60(b) 
states that:

[t]his rule does not limit the power of a court to entertain an 
independent action to relieve a party from a judgment ... or to 
set aside a judgment for fraud upon the court.

Proper application of the rule effectively serves the ends of 
justice while retaining the integrity of the finality of judg
ments. House v. Secretary of Health & Human Services, 688 F.2d 7, 
9 (2d Cir.1982); Bankers Mortgage Co. v. United States, 423 F.2d 
73, 79 (5th Cir.) cert. denied, 399 U.S. 927, 90 S.Ct. 2242, 26 
L.Ed.2d 793 (1970).

The Court of Appeals for the Second Circuit has stated that the 
meaning of "fraud upon the court"

has not been much elucidated by decisions. Obviously it cannot be 
read to embrace any conduct of an adverse party of which the 
court disapproves; to do so would render meaningless the one year 
limitation on motions under F.R.Civ.P. 60(b)(3). See 7 Moore, 
Federal Practice P 60.33 at 511 (1971 ed.). Professor Moore 
submits that the concept should "embrace only that species of 
fraud which does or attempts to, defile the court itself, or is a 
fraud perpetrated by officers of the court so that the judicial 
machinery cannot perform in the usual manner its impartial task 
of adjudging cases that are presented for adjudication." Id. at 
515 (footnote omitted).

Kupferman v. Consolidated Research & Mfg. Corp., 459 F.2d 1072, 
1078 (2d Cir.1972). See also Travelers Indemnity Co. v. Gore, 761 
F.2d 1549, 1551 (11th Cir.1985). 

Generally a finding of fraud on the court will be supported only 
by evidence of "the most egregious misconduct, such as bribery of 
a judge or members of a jury, or the fabrication of evidence by a 
party in which an attorney is implicated." United States v. Int'l 
Telephone & Telegraph Corp., 349 F.Supp. 22, 29 (D.Conn.1972), 
aff'd mem. sub nom. Nader v. United States, 410 U.S. 919, 93 
S.Ct. 1363, 35 L.Ed.2d 582 (1973), citing Hazel-Atlas Glass Co. 
v. Hartford Empire Co., 322 U.S. 238, 64 S.Ct. 997, 88 L.Ed. 1250 
(1944). See also Bulloch v. United States, 763 F.2d 1115, 1121 
(10th Cir.1985) cert. denied, --- U.S. ----, 106 S.Ct. 862, 88 
L.Ed.2d 901 (1986); Pfizer, Inc. v. Int'l Rectifier Corp., 538 
F.2d 180, 195 (8th Cir.1976), cert. denied 429 U.S. 1040, 97 
S.Ct. 738, 50 L.Ed.2d 751 (1977). It is well established that the 
failure to disclose allegedly pertinent facts relating to a 
controversy before the court, whether to an adverse party or to 
the court, does not constitute "fraud upon the court" for purpos
es of setting aside a judgment pursuant to F.R.Civ.P. 60(b). 
Kerwit Medical Products, Inc. v. N. & H. Instruments, Inc., 616 
F.2d 833, 837 (5th Cir.1980) citing H.K. Porter Co., Inc. v. 
Goodyear Tire & Rubber Co., 536 F.2d 1115 (6th Cir.1976); Kupfer
man, supra, 459 F.2d at 1081; United States v. Int'l Telephone & 
Telegraph Corp., supra, 349 F.Supp. at 29. See also Rozier v. 
Ford Motor Co., 573 F.2d 1332, 1338 (5th Cir.1978); 11 Wright & 
Miller, Federal Practice & Procedure: Civil '2870, p. 254 (1973). 
Thus, where appropriate circumstances exist, an independent 
action may be maintained to provide relief from a judgment ob
tained through deliberate subversion of the judicial process 
which compromised the ability of the defendant to present his 
claim.

Galanis argues that Armstrong's counsel submitted two affidavits 
in 1976 to the Court in the Feiner action which affirmatively 
misled that court. In the first, James McIntyre, Esq., stated 
that in the [Delfino ] settlement agreement between Citibank and 
the investors, Citibank agreed "to prosecute the corporation's 
claims for fraud in the corporate name." (Arm Ex. K at 9)(empha
sis in original). He further specifically stated

The instant action is duly and properly brought in the corporate 
name, by a legitimate corporation, [Armstrong], in its own name, 
in its own right, and for its own benefit.

Id. at n. 2 (emphasis in original). In the second affidavit, Mr. 
McIntrye unequivocally stated that $510,770.84 was "justly due 
and owing to the plaintiff, no part of which has been paid...." 
(JPG Ex. 20) [Armstrong's] counsel at no time informed the Feiner 
court as to the true terms of the full settlement agreements or 
that [Armstrong] was litigating as Citibank's nominee and as 
assignee of the rights of the investors. [FN22]


Although Galanis would have this court believe that Armstrong 
concealed the Delfino settlements and other evidence from him, 
his co-defendants, and the Feiner court, a careful examination of 
the record in the Feiner action reveals that that evidence was 
available at the time of the Feiner action and in fact was pre
sented to the court by Armstrong's adversaries. The affidavit 
supporting their March 1, 1976 motion to implead Citibank and 
Investors, filed by several of Galanis's co-defendants, recited 
the facts of the Delfino action and settlements. [FN23] Further
more, prior to the March 19, 1976 deposition of a Citibank offi
cial, a copy of one of the settlements was produced for the 
defendants, and Werner Polak, Esq., counsel for Citibank, testi
fied that he informed the defendants that that sample agreement 
was not the only settlement agreement, but that all shareholders 
of Investors had executed virtually identical agreements. [FN24] 
Indeed, in their March 23, 1976 "Order to Show Cause and Petition 
for Writ of Mandamus to Honorable Lloyd F. MacMahon", the same 
co-defendants who had filed the March 1, 1976 motion, specifical
ly outlined the facts of the Delfino settlements and charged 
that, Citibank was the real party in interest [FN25] and that 
claims for contribution might exist. [FN26] Moreover, Galanis's 
name and address appeared on the master service list for the 
Feiner action giving him access to the information and documents 
available to his co-defendants.

It is therefore apparent that when Judge MacMahon entered judg
ment in the Feiner case, he was aware of the allegations that 
Armstrong was not the real party in interest but rather was 
pursuing claims assigned to Citibank by the shareholders of 
Investors which had been satisfied. It is also apparent that 
Armstrong and its counsel did not inhibit their adversaries from 
effectively pursuing their claims. Thus, while it is clear that 
Galanis's claims, if proven, would not rise to the level of fraud 
upon the court, see Kerwit, supra, 616 F.2d at 837; Kupferman, 
supra, 459 F.2d at 1078, here it is also obvious that those 
claims are invalid. Accordingly, I find there was no fraud upon 
the court.

Conclusion

For the foregoing reasons, there is no basis for this court to 
disturb the Feiner judgment. The registration of that judgment in 
Connecticut and execution upon the trustee as stakeholder of 
Galanis's personal property created a lien on the interpleader 
fund in favor of Armstrong. It is therefore determined that 
Armstrong is entitled to the interpleader fund subject to 
Schwartz/Misco's right to the $100,000.00 as provided by the 
September 11, 1985 stipulation [FN27] and the future determina
tion of Dayton's right.

FN1. In re Galanis, Chapter 7, Case No. 5-80-00302, Adv. No. 2-
80-0417 (Bankr.D.Conn.).

FN2. The office of the bankruptcy judge at Bridgeport, Connecti
cut was vacant at the time the trustee's complaint was filed. 
Therefore, the United States Bankruptcy Court at Hartford, Con
necticut heard this matter.

FN3. 11 U.S.C. '303(j)(3) provides in pertinent part that (j) 
Only after notice to all creditors and a hearing may the court 
dismiss a petition filed under this section--(3) for want of 
prosecution.

FN4. It is clear from the subsequent conduct of the parties, as 
discussed infra, that Schwartz/Misco's interest was not to be 
included in the assets ordered revested in Galanis.

FN5. Armstrong's execution was personally served on Galanis on 
December 17, 1984.

FN6. Under 28 U.S.C. '1963, a certified copy of a judgment en
tered by a United States District Court which has become final by 
appeal or expiration of time for appeal may be filed in any other 
district court. Upon registration, the judgment has the same 
effect as a judgment entered by the district court in which it is 
registered.

FN7. Conn.Gen.Stat. '52-356a(a)(4)(C)(1985) provides that: [w]ith 
respect to a judgment debtor who is a natural person, if such 
personal property, including any debt owed, is in the possession 
of a third person, the levying officer shall serve that person 
with two copies of the execution, required notices and claim 
forms. On receipt of such papers, the third person shall forth
with mail a copy thereof postage prepaid to the judgment debtor 
at the last-known address of record with the third person and 
shall withhold delivery of the property or payment of the debt 
due to the levying officer or any other person for twenty days. 
On expiration of the twenty days, the third person shall forth
with deliver the property or pay the debt to the levying officer 
provided (i) if an exemption claim has been filed in accordance 
with subsection (d) of section 52-361b, the property shall con
tinue to be withheld subject to determination of the claim and 
(ii) if a debt is not yet payable, payment shall be made when the 
debt matures if within four months after issuance of the execu
tion.

FN8. Conn.Pub. Act 83-541 Sec. 10 provided that: (a) If an execu
tion is issued, the judgment creditor may apply to the court for 
an ex parte order in aid of the execution directing the judgment 
debtor, or any third person, to transfer to the levying officer 
either or both of the following: (1) Possession of specified 
personal property that is sought to be levied on; or (2) posses
sion of documentary evidence of title to property of, or a debt 
owed to, the judgment debtor that is sought to be levied on. (b) 
The court may issue a turnover order pursuant to this section on 
a showing of need for the order. (c) The order shall be personal
ly served and shall contain a notice that failure to comply 
therewith may subject the person served to being held in contempt 
of court. (Codified as amended at Conn.Gen.Stat., '52-356b(1985).

FN9. The trustee and Galanis also filed motions to vacate this ex 
parte order.

FN10. 28 U.S.C. '157(c)(2) provides in pertinent part that: the 
district court, with the consent of all the parties to the pro
ceeding, may refer a proceeding related to a case under title 11 
to a bankruptcy judge to hear and determine and to enter appro
priate orders and judgments, subject to review under section 158 
of this title. 
FN11. Galanis Exhibit 1.

FN12. Galanis Exhibit 5 at P 20(d).

FN13. Galanis Exhibit 2.

FN14. Galanis Exhibit 9.

FN15. Armstrong Exhibit Q, sub-ex E.

FN16. Armstrong Exhibit A-1.

FN17. Galanis Exhibits 23 and 24.

FN18. See footnote 22 infra.

FN19. Galanis's Substituted Answer and Statement of Claim P 34; 
Post-Trial Brief at p. 28.

FN20. See p. 961 infra, for a discussion of the availability of 
evidence to Galanis to support these claims and defenses.

FN21. N.Y.Gen.Oblig.Law '15-108 (McKinney 1984) provides in 
pertinent part that a release of one tortfeasor releases joint 
tortfeasors: to the extent of any amount stipulated by the re
lease or the covenant, or in the amount of the consideration paid 
for it, or in the amount of the released tortfeasor's equitable 
share of the damages under article fourteen of the civil practice 
law and rules, whichever is the greatest.

FN22. Galanis Pretrial Memorandum at 17.


FN23. Armstrong Exhibit L Appendix.

FN24. Transcript I at 62, 67, 68.

FN25. Armstrong Exhibit L at P 8.

FN26. Id. at P 10.

FN27. See p. 957 supra. 


 
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