Pistchal v. Durant — 168 A.D. 100

Majority

p. 100

Henry Pistchal, Respondent, v. Janet L. Durant, Appellant.

First Department,

June 4, 1915.

Headnote

Execution — income from trust fund — notice to trustee essential — garnishee order should cover only debtor’s interest.

A motion for a garnishee order directing execution to be issued against the income of a trust fund of which a judgment debtor is beneficiary, must be made on notice to the trustee, but notice to the debtor is not essential.

Where a trust fund has been created, income payable to the settlor’s divorced wife for the support of herself and their three children, a garnishee order issued on the debt of the wife should be directed only against one-quarter of the income from the fund and should not cover the whole thereof.

Appeal by the defendant, Janet L. Durant, from two orders 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 1st day of May, 1915. The first order denied the defendant’s motion to vacate a garnishee order herein, and the second directed a trustee to pay over to the sheriff certain income from a trust fund in satisfaction of a garnishee execution. The notice of appeal states that one Basil N. Durant also appeals from said orders.

Warren McConihe, for the appellant.

Max Perlman, for the respondent.

On January 5, 1911, plaintiff recovered a judgment against the defendant for the sum of $219.83. After the return of an

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execution unsatisfied, and an examination in proceedings supplementary to execution, plaintiff obtained on September 6, 1911, an order for an execution tobe issued against the income of a trust fund of which defendant was one of the cestui que trust. This order was obtained ex parte without notice either to the defendant or the trustee. Under an arrangement with the sheriff the trustee has retained in his hands ten per cent of the income derived from the fund, and now holds more than sufficient to pay plaintiff’s judgment.

The first order appealed from denied defendant’s motion that the garnishee order of September 6, 1911, be vacated, or in the alternative that it be modified so as to be applicable to only one-quarter of the income from the trust fund. The second order directed the trustee to pay plaintiff, out of the accumulated income, the amount of the judgment, with interest, poundage, etc.

The fund, the income of which is sought to be reached, was created as follows: On July 18, 1895, defendant and her husband, W. West Durant, entered into an agreement with reference to a steam yacht Utowana, upon which he had executed a mortgage for $55,000. By this agreement it was provided that the income from that sum should be “used towards the support and maintenance ” of defendant and her children, (three in number) and that in the event of a separation or divorce between the parties such income should continue to be used, and should be applied and should be considered as a part of whatever alimony or allowance might be given to the defendant.

On October 30, 1897, a supplementary agreement was made between W. West Durant, defendant, and the Continental Trust Company. The steam yacht had been sold and the mortgage satisfied. Under this agreement, in order to carry out the provisions and stipulations of the former agreement, the sum of $55,000 was paid to the trustee, upon a trust to pay over the net income to defendant “ in accordance with the terms of the agreement hereinabove referred to, ” and upon the further trust, at the death of defendant, to divide the principal among the children. The original agreement was annexed to and by reference was made a part of this supplementary agreement.

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There was a second agreement dated February 1, 1898, between the same parties under which W. West Durant agreed to pay (and subsequently did pay) $20,000 to the trustee for the support and maintenance of defendant and her children, who he agreed should thereafter reside with and remain in and under the custody and control of defendant. There was a provision that when any child became twenty-one years of age, it might be paid, upon its application, one share of the income, the whole fund to be divided between the children at the death of defendant.

On September 26,1909, Edward Chase Crowley was substituted as trustee. Of the $75,000 deposited with the trustee, $20,000 has been paid by order of the court for the benefit of the children. It does not appear that this was specially taken out of either fund.

In 1898 defendant was divorced from her husband. The decree is not printed and there is nothing to show what provision, if any, was made as to alimony.

The garnishee order should have been vacated as having been granted without notice to the trustee. {King v. Irving, . 103 App. Div. 420 .) Section 1391 of the Code Civil Procedure, as now amended, dispenses with the necessity of notice to the ■ debtor, but not to the trustee. Furthermore in any event no more than one-quarter of the income, which is now $2,800 per annum, should have been garnisheed.

The order denying defendant’s motion must be reversed, with ten dollars costs and disbursements, and the motion granted. The order directing the trustee to pay over a part of the accumulated income to the sheriff must be reversed, with ten dollars costs and disbursements, and the motion denied.

Ingraham, P. J., Clarke, Dowling and Hotchkiss, JJ., concurred.

The first order reversed, with ten dollars costs and disbursements, and motion granted.

The second order reversed, with ten dollars costs and disbursements, and motion denied.