Livingston v. Eaton — 90 A.D. 251

Majority

p. 251

Robert F. Livingston, as Receiver of All the Debts, Property, etc., of Arnold L. Eaton, Respondent, v. Fred W. Eaton and Others, Appellants, Impleaded with Charles Gross and Others, Defendants.

Headnote

Evidence of a, gift by a judgment debtor of a mortgage sought to be foreclosed by a receiver of his property, where the answer does not allege such gift — it makes competent proof that the gift was fraudulent and void, although that fact was not alleged in the complaint—objection that the receiver's bond was not properly executed—it is not available to a third person — what omission in the bond is merely an irregularity.

The objection that the bond given by a receiver, appointed in proceedings supple-' mentary to execution, was not executed in the form required by the statute, is not available to defeat an action brought by the receiver to collect a debt due from a third person to the judgment debtor.

In such a case the remedy of the third person is by a motion to require the bond to be made to comply with the provisions of the statute.

The omission from the bond of a certificate, to the effect that the person who took the acknowledgment of the surety upon the bond was a notary public isa mere irregularity and such bond may properly be received in evidence.

In an action brought by a receiver appointed in supplementary proceedings to foreclose a mortgage executed to the judgment debtor, the answer of the-defendants denied that the plaintiff was the owner of the mortgage and alleged that the amount, if any,, due thereon, had been paid prior-to the plaintiff’s appointment.

Upon the trial the defendants were permitted to give evidence tending to establish a gift of the mortgage by the judgment debtor to the mortgagor, although such gift was not alleged in the answer.

p. 252

Held, that the plaintiff was properly allowed to show that the'alleged gift was fraudulent, void and of no effect, although the complaint did not allege the fraudulent character of the gift;

That the defendants’ allegation .of payment was. in no sense equivalent * to an allegation of a gift of the mortgage.

Appeal by the defendants, Fred W.- Eaton and others, from ad-judgment ofthe Supreme Court in favor of the plaintiff, entered in the-office of the clerk of the county of Herkimer on the 1st day of July, 1902, upon the report of a referee.

The action was commenced in December, 1889, by the plaintiff, as receiver of the property of Arnold L. Eaton, appointed on the 6th day of October, 1899, in proceedings supplementary to execution, to foreclose A mortgage for $2,000 upon certain premises situate in the city of Little Falls, in the county of Herkimer, N. Y., which was made by the defendant Fred W-. Eaton, the son of - said Arnold • L.. Eaton, and which was executed and delivered to. said Arnold L., Eaton as part of the consideration of premises sold by him to his son. 1

The appellants, by their briefs,- raise two points, upon which it is urged that the judgment should be reversed. The first-point is that the trial court committed reversible error in receiving, against defendant’s objection, the bond of the plaintiff, as receiver, because, asis-claimed, “there wasno proof of its execution- by the. Surety ; and that there was no proof of the official character or authority of the Notary Public who purported to have taken the acknowledgment of the execution by the Surety.; and that there, was no proof that.he was a Notary Public.” The second point is.that the, court committed error in permitting the plaintiff to introduce evidence tending to rebut the proof made by the defendant, to the effect that the mortgage in suit was transferred by gift from Arnold L. Eaton to the defendant Fred Vf. Eaton about Christmas time, 1896, and before the appointment of the plaintiff as receiver; which evidence, offered , by the plaintiff and received by the court, tended to show that such alleged gift was fraudulent and void., There was no allegation of such gift in the complaint or answer, and no allegation in the complaint of its fraudulent character.

Eugene E. Sheldon, for the appellants Fred W. Eaton and Jessie S. Eaton.

p. 253

Myron G. Bronner, for the appellant Arnold L. Eaton.

C. J. Palmer, for the respondent.

It appears that on the 27 th day of February, 1896,. Arnold L. Eaton was the owfier of a parcel of land in Little Falls, called in the record the icehouse property, and that on that day he conveyed the same to the defendant Fred W. Eaton, and as a consideration for such conveyance the defendant Fred W. Eaton, among other obligations, assumed to execute the mortgage in question to Arnold L. Eaton. Arnold L. Eaton became financially embarrassed, and in proceedings supplementary to execution on the 6th day of October, 1899, the plaintiff was appointed receiver of his property by an order made by the county judge of Herkimer county. Such order contained the usual provisions, and also provided that before entering upon the discharge of his duties as such receiver he should execute a bond in the penalty of $500 for the faithful discharge of his duties. Such bond was executed. It was presented to'the county judge and was approved by him. The bond so approved does not contain a certificate to the effect that the officer or notary public who took the acknowledgment of the surety upon such bond was a notary public. We think such omission was simply an irregularity, and’is not available to the appellant upon this appeal (Wright v. Nostrand, 94 N. Y. 31 , 45); and that, notwithstanding the failure to -obtain such certificate, the bond was properly received in evidence. But independent of the question as to whether or'not the bond Was properly executed, we think .the right of the receiver to maintain the action must be sustained in this proceeding, even if the execution of the bond was defective; that the validity of the bond or its execution cannot be raised collaterally in defense of an action of this kind. The plaintiff was appointed receiver of the property of the judgment debtor, Arnold L: Eaton, in proceedings supplementary to execution, and was charged with the duty of collecting and applying in payment upon the debts of such judgment debtor any property of which he was seized or possessed at the time of such appointment. We think it is not available to a creditor of such debtor to assert, in answer to a claim sought- to be enforced by the receiver, that such receiver has not given a bond

p. 254

in the form required by the statute (See Code Civ. Proc. § 715), but that the remedy of such debtor is by motion to require such bond, if defective, to be made to comply with the provisions of the statute.

In the case at bar the plaintiff was duly appointed receiver of the property of Arnold L. Eaton. He took possession of such property and entered upon the discharge of his duties as such receiver, and, attempted-to . enforce the obligations in favor of the estate which, lie, tinder the law, was charged with the duty of protecting. The court having jurisdiction to appoint such receiver, we think tlie objection that there was some informality in the execution of the bond required to be given by such receiver is not available to a creditor in an action of this character. We, therefore, conclude that the first point raised by the appellants should not be regarded as sufficient to require a reversal of the judgment appealed from.

As to the second point raised by the appellants: The plaintiff alleged a perfect cause' of action in his complaint, and made proof before resting of such facts as entitled him to the relief demanded. The defendants by their answer, so far as it is important to note denied that the plaintiff was filie owner of the mortgage set forth in the complaint, and alleged that the amount, if any, due upon such obligation, had been fully paid and discharged before the appointment of the plaintiff as receiver, and before the commencement of this action. It was not suggested in the answer of either appellant that the mortgage in suit was surrendered or transferred as a gift to the defendant Fred W. Eaton by his father Arnold L. Eaton, the mortgagee therein named, before the appointment of the receiver or. before the commencement of the action, but notwithstanding the failure to allege such gift the defendants were permitted, by cross-examination of plaintiff’s, witness,'Arnold L. Eaton, to give evidence tending to establish such gift. Thereupon the plaintiff was permitted to show that the alleged gift of such mortgage to Fred W. Eaton was void, fraudulent and of no effect. We think such evidence was entirely competent, and that its reception was in no manner prohibited by the fact that the plaintiff had not alleged the fraudulent character of such gift, when the plaintiff, by his complaint was, in effect, maintaining that no such gift had been made, and when, by the answer of the appellant,

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no such gift was alleged. The defendants’ allegation of payment was in no sense equivalent to an allegation of gift of the obligation upon which recovery was sought.

The trial court found that on the 23d day of January, 1899, the time when the order in proceedings supplementary to execution was granted, and on the 6tli.day of October, 1899, the time when the plaintiff was appointed receiver of the property of Arnold L. Eaton, the said Arnold L. Eaton was the ownér of the mortgage described in the complaint and sought to be foreclosed in this action, and that such mortgage at such time was in the actual possession of said Eaton. We think the evidence fully supports such finding, and that no error was committed by the trial court in the reception of the evidence objected to by the appellant, and which is urged as a ground for the reversal of the judgment appealed from.

It follows that the judgment should be affirmed, with costs.

All concurred!

Judgment affirmed, with costs.

Cases cited

Wright v. Nostrand 94 N. Y. 31 N.Y. 1883-11-20 at 45 p. 253