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In re the General Assignment of Rutaced Co.

137 A.D. 716 Court First Department, Decision date 1910-04-08 English

Delivered by Laughlin, J.:

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In the Matter of the General Assignment of The Rutaced Company, Respondent, to Ralph Wolf, etc. Maurice Salomon and Samuel Salomon, Appellants.
First Department,
April 8, 1910.

Headnote

Debtor and creditor — general assignment — effect on supplementary proceedings.
A general assignment for the benefit of creditors neither stays nor suspends the remedies of the assignor’s creditors.
Although a judgment debtor makes a general assignment for the benefit of creditors, the judgment creditor is still at liberty to examine him in supplementary proceedings as to any property he’may-have and to discover the circumstances under which he transferred it, including the general assignment.
Appeal by Maurice Salomon and another, judgment creditors of The Rutaced Company, from an order of the Supreme Court, made at the New York, Special Term and entered in the office of the clerk of-the county of New York on the 7th day of December, 1909, enjoining,. on the application of the assignor, proceedings'on behalf of the appellants supplementary to an execution oh a judg
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ment recovered by them in the City Court against the Eutaced Company on the 18th day of Maj, 1909.
Sol. J. FreucLenheim, for the appellants.
Saul S. Myers, for the respondent.

On the 4th day of June, 1909, the Eutaced Company made a general assignment for the benefit of its creditors to one Wolf after the appellants recovered the j udgment against it in the City Court, on which their proceedings supplementary to execution have been stayed by the order now under review. The order for the examination of the assignor in proceedings supplementary to execution was served on the 24th day of September, 1909. It thereupon applied to the Special Term setdng forth merely the general assignment; that schedules had been duly filed and claims advertised for; that the assignee had duly qualified, and the order and the affidavit upon which it was givanted. Ho other basis was shown for the order from which the appeal is taken. ■ ■

A general assignment neither stays nor suspends the remedies of creditors of the assignor. It does not appear that the appellants have waived their right to the remedy afforded by the statute[1] to examine the judgment debtor in proceedings supplementary to execution. Counsel for the respondent contends in support of the order that the only right which the appellants now have to examine the assignor is under section 22 of the Debtor and Creditor Law (Consol. Laws, chap. 12; Laws of 1909, chap. 17). The provisions of that section were taken from section 21 of chapter 466 of the Laws of 1877, known as the General Assignment Act, and it was well settled that the examination thereby authorized was only in aid and furtherance of the assignment, and that while, as an incident to such examination duly authorized to ascertain the property subject to distribution and the creditors to whom distribution should be made, evidence might be adduced tending to show that the assignment was made in fraud of the rights of creditors, still the examination could not be had for that purpose. (Matter of Holbrook, 99 N. Y. 539 , 546; Mat

* See Code Civ. Proe. §8432 et seq.— [Rep.

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ter of Sickle, 52 Hun, 527 ; Matter of Workingmen's Pub. Assn., 62 App. Div. 604 ; Matter of Goldsmith, 10 Daly, 112 ; Matter of Wilkinson, 36 Hun, 134 .) And if a creditor came in and participated, in the assignment proceedings' and pursued any remedy thereunder, he waived, or ran a serious risk .of waiving any right to attack the assignment for fraud. (Matter of Holbrook, supra; Mills v. Parkhurst, 126 N. Y. 89 , 93.) The same rules of construction still obtain. The assignment is wholly voluntary. The law permits it as a means for a distribution of the property of ..an insolvent debtor among.his creditors, and if the assignment be made in conformity with the statute and without fraud on the part of the assignor; it will be sustained, but if it be made by . the assignor in fraud of-the rights of. creditors or-in violation, of the statute, then a creditor may, in disregard of the assignment, pursue Ms legal, remedies against., the property thus assigned, or may bring a suit in. equity to set the assignment aside. (Mills v. Parkhurst, supra ; Austin v. Bell, 20 Johns. 442 ; McConnell v. Sherwood, 84 N. Y. 522 ; Clark v. Taylor, 22 Wkly. Dig. 295 ; Ocean National Bank v. Olcott, 46 N. Y. 12 ; Matter of Kapelovich, 22 Wkly. Dig. 13 ; Bishop Insolv. Debt. §§ 203, 204, 206, 223.) The appellants, were, therefore, at liberty, notwithstanding the assignment, to discover by-examination on the proceedings supplementary to execution, any property of the judgment debtor, and' the circum.-stances, under which he had transferred his property, including the general assignment thereof. (Matter of Sickle, supra ; Seligman v. Wallach, 16. N. C. 317; Schneider v. Altman, Id. 312; Matter of Rindskopf, Id. 316, note. See, also, Lathrop v. Clapp, 40 N. Y. 328 .) And if the remedies-specially available-'to. him as a judgment creditor prove fruitless and the. assignment he not set aside he may ultimately come into .the assignment proceeding and ■participate with other, creditors in the distribution of the assigned estate. (Mills v. Parkhurst, supra.)

•It follows that the., order should be reversed, with ten dollars costs and disbursements, and motion denied, with ten- dollars, costs. .

Ingraham, P. J„ Clarke, Scott and. Miller, JJ., .concurred.

Order reversed, with ten dollars costs and disbursements,, and motion denied,-with-ten dollars costs.-

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