Smith v. Belden — 35 Misc. 113

Majority

p. 113

Lewis P. Smith, Trustee in Bankruptcy of Alvin J. Belden et al., Plaintiffs, v. Alvin J. Belden et al., Defendants.

(Supreme Court, Onondaga Special Term,

May, 1901.)

Headnote

Bankruptcy — Parties to action by trustee to reach the" surplus of a trust fund.

A judgment creditor of a bankrupt is not a necessary party to an action by the trustee to reach the surplus, as it accrues, of the income of a trust fund created for the bankrupt’s benefit, in the absence of any allegations that the trustee is not proceeding with good faith and diligence; and even where the creditor claims that he has a lien on the surplus and that the trustee has none, he will not permitted to become a party as he will not be bound or injured by the judgment rendered.

One Brown, claiming to be in the position of a judgment creditor of the defendant Belden, applies, under section 452, Code, to be joined as-a party defendant in this action which is brought by plaintiff, as trustee in bankruptcy of said Belden, to reach an alleged surplus as it accrues in the income of a trust fund created for his benefit under the will of his father.

George D. Chapman, for application.

Mackenzie & Wade, for plaintiff, opposed.

W. P. Goodelle, and Fowler & Crouch, for defendants, opposed.

The application is denied for the following reasons: If, as claimed by the present parties to this action and as held in Matter of Baudouine, 3 Am. Bank. Reg. 55, the plaintiff has become vested with the right to reach any surplus' in the income of the trust fund in question, the petitioner has no legal title to or interest in the subject-matter of this suit and is not in any way a necessary party to its prosecution or determination. His only interest is that .of a general creditor in the successful prosecution -of the .action and in the disposition of its fruits. It

p. 114

is settled that on account of such interest he should not be made a party in the absence, as is the case upon this motion, of any allegations touching the good faith and diligence of the trustee •for the creditors. Davies v. Fish, 47 Hun, 314 .

Even if it should be held that this court had the power to order petitioner to be made a party, I do- not think it should be done in this case until there is some indication of negligence of bad faith upon the part of plaintiff.

If petitioner is right in his claim that he has acquired a lien upon any surplus which may arise in the income of the trust fund, and that the plaintiff upon the other hand has not acquired any right thereto, I still do not see that it is necessary to grant this motion. Petitioner is not a party to, and cannot be, bound or injured by any judgment in this action. It is not necessary that he should be brought in here to protect his interests and claims if they are as he asserts them to be. White’s Bank of Buffalo v. Farthing, 101 N. Y. 344 , 348.

The motion is, therefore, denied, with ten dollars costs.

Motion denied, with ten dollars costs.

Cases cited

White's Bank v. Farthing 101 N. Y. 344 N.Y. 1886-01-26 at 348 p. 114