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Morgan v. Von Kohnstamm

9 Daly (N.Y.) 355 Court N.Y.C.P. Decision date 1880-12-06 English

Delivered by Charles P. Daly, Chief Justice.

Contents

Majority

p. 355
Minnie L. Morgan, Respondent, against Anna Von Kohnstamm, now Anna R. Verdalle, Appellant.
(Decided December 6th, 1880.)

Headnote

Upon the examination, in proceedings supplementary to execution, of a third party alleged to have property of the judgment debtor, an order
p. 356
appointing a receiver cannot be made without notice to the judgment debtor.
An injunction should not be granted in proceedings supplementary to execution to restrain trustees from making any disposition of a fund held by them upon trust to apply the income to the use of the judgment debtor, during life. All that can be reached to be applied to the satisfaction of the judgment is the surplus beyond what is necessary for the judgment debtor’s support, and this only by an equitable action, to which the judgment debtor and the trustees must be made parties.
Appeal from an order of this court, made in proceedings supplementary to execution, appointing a receiver of the property of the judgment debtor, and restraining executors and trustees from disposing of property held by them in trust for the use of the judgment debtor.
The facts, so far as material, are stated in the opinion, i"
Thornton, Earle & Kiendl, for appellant.
John Chetwood, for respondent.

This was the examination, by order, of a third party, in a proceeding supplementary to execution; in which proceeding an order was made, without any notice to the judgment debtor, appointing a receiver, and enjoining the executors of a trust fund under a will from making any disposition of the property so held by them in trust. The trust created .by the will, was to apply the rents, issues and profits of the sum of $13,000, which the executors were directed to invest, to the use of Hannah Y. Kohnstamm, the judgment debtor, during her natural life.

There was no authority under the former Code for the appointment of a receiver in a proceeding for the examination of a third party, alleged to have property of or to be indebted to the judgment debtor. A receiver could be. appointed only in a proceeding instituted for the examination of a judgment debtor. It was so-held in several reported cases; and has been held in a comparatively recent case (Holbrook v. Orgler, 40 N. Y. Super. Ct. 33 ; 49 How. Pr. 289 ), in which the question

p. 357
was carefully considered by Chief Justice Monell, at special term, and afterwards by the general term, upon appeal, and in which case the prior decisions were all reviewed. By the provisions of the new Code, § 2464, a receiver cannot be ap-_ pointed before an order or- warrant to be examined is served upon the judgment debtor, without two days’ notice to the judgment debtor, unless he cannot, after due diligence, be found in the state.

In addition to this, the injunction restraining the executors from applying the proceeds of the trust to the use of the cestmi qui trust, for such was its effect, was improper. All that could be reached, to be applied to the satisfaction of the judgment, would be a surplus beyond what was necessary for the judgment debtor’s support; and this could be done only by an equitable action, in which the judgment debtor and executors would have to be made parties, as in Williams v. Thorn ( 70 N. Y. 270 ).

The order should be reversed.

J. F. Daly and Van Hoesen, JJ., concurred.

Order reversed.

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