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Demuth v. New York Life Insurance & Trust Co.

165 A.D. 77 Court Second Department, Decision date 1914-12-18 English

Delivered by Stapleton, J.:

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Jeannette Demuth, Respondent, v. New York Life Insurance and Trust Company, Appellant.
Second Department,
December 18, 1914.

Headnote

Supplementary proceedings — action at law by creditor against trustee to recover portion of income from trust funds — receiver of creditor not a proper party defendant.
A creditor in an action against a trustee which, has failed to pay over a percentage of the income from trust funds, as directed by the court under section 1391 of the Code of Civil Procedure, is not entitled, after issue joined, to an order making a receiver of her property appointed in proceedings supplementary to execution a party defendant. This because the action is one at law in which the rights of other judgment creditors are not involved.
Appeal by the defendant, New York Life Insurance and Trust Company, from an order of the Supreme Court, made at the Kings County Special Term and entered in the office of the clerk of the county of Kings on the 30th day of September, 1914, bringing in Santiago P. Cahill, receiver, as a party defendant herein.
Alexander S. Andrews [John Larkin with him on the brief], for the appellant.
James S. McDonogh [Francis X. McDonough with him on the brief], for the respondent.

The plaintiff alleges in her complaint that income accruing from trust funds was due her judgment debtor by the defend

p. 78
ant corporation, and that upon such income she obtained a lien, to the extent of ten per centum thereof, by the presentation to the defendant of an execution issued as directed by the court, pursuant to the provisions of section 1391 of the Code of Civil Procedure. She also alleges that the defendant failed or refused to pay over to the officer presenting the execution the percentage of indebtedness. She brings the action to recover a sum of money only. 'It does not appear that the rights of other judgment creditors are involved.

The plain provisions of the section cited give to a judgment creditor a right of action against the trustee who so acts. After issue joined, the plaintiff obtained an order making the receiver of her property, appointed in proceedings supplementary to execution against her, a party defendant in the action. This is the order from which the appeal is taken.

The cases in which persons who were not original parties may be introduced into an action are defined, and the additional defendant here is not within the class described. (Gittleman v. Feltman, 191 N. Y. 205 .) One of the purposes of the amendment of section 1391 of the Code of Civil Procedure by chapter 148 of the Laws of 1908[1] was to measure the quantum of the income of the trust fund which a beneficiary is compellable to apply to the discharge of his judgment debts. (Brearley School v. Ward, 201 N. Y. 358 , 375, 376.) The necessity is thus avoided of resorting to equity jurisdiction to ascertain the amount “beyond what is necessary for the suitable support of the debtor and those dependent upon him, in the manner in which they have been accustomed to live.” (Williams v. Thorn, 70 N. Y. 270 , 278.)

It is unnecessary to decide whether the rule which denied to a receiver appointed in proceedings supplementary to execution the right to maintain a creditor’s suit to reach the surplus of a trust fund created by a third person (Campbell v. Foster, 35 N. Y. 361 ) applies to this statutory action. That question is not before us. The plaintiff and the receiver cannot coexist as parties plaintiff. , They have no joint interest in the result. The receiver is not jointly

* See, also, Laws of 1911, chaps. 489, 532; Laws of 1914, chap. 352.— [Rep.

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or severally liable on the claim of the plaintiff, and he has no connection with the other defendants. He, therefore, has no place as a party defendant in an action at law. The action is not brought to adjust conflicting claims to the same fund, conceded to be due to one or more of the claimants; it is brought to recover damages pursuant to a statute.

Any difficulty which is presented by the existence or conduct of the receiver is surmountable, and any argument based upon those facts is not persuasive.

I advise that the order be reversed, with ten dollars costs and disbursements, and the motion denied, with ten dollars costs.

Jenks, P. J., Burr, Thomas and Rich, JJ., concurred.

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

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