Pate v. Hoffman — 16 N.Y.S. 74

Majority

p. 74

Pate v. Hoffman.

(Supreme Court, General Term, First Department.

October 16, 1891.)

Headnote

Pledge—Rights of Pledgee—Receivers—Leave to Sue.

The lien of a pledgee, and his right to have the pledge sold and the proceeds applied to the payment of the debt secured, are not affected by therecovery of a judgment by him for such debt, nor by the extension of k receivership of the debtor's property, created in supplementary proceedings against the debtor by another creditor, to include the judgment obtained by the pledgee; and an application by the pledgee for leave to make the receiver a party to an action for such sale of the property sold and application of the proceeds should be granted.

Appeal from special term, New York county.

Action by William C. Pate against Augustus Hoffman, in which plaintiff recovered judgment against defendant, and in proceedings supplementary to execution on the judgment was appointed receiver of defendant’s property. Prior to such appointment, Henry H. Bowman, as assignee for benefit of creditors of one Louis R. Menger, having possession, as part of the assigned •estate, of a painting which had been pledged to his assignor, Menger, by defendant, Hoffman, also recovered a judgment against defendant for the debt secured by such pledge, and in proceedings supplementary to execution thereon, after plaintiff’s appointment as receiver, his receivership was extended to the judgment recovered by Bowman. Thereafter Bowman moved for leave to bring an action against plaintiff, as such receiver, and others, for a foreclosure of a lien, and a sale of the painting, and distribution of the proceeds among those entitled thereto. From an order denying the motion Bowman, as assignee, appeals.

Argued before Van Brunt, P. J., and Daniels and Ingraham, JJ.

Smith, Bowman & Close, (A. B. Smith, of counsel,) for appellant. Souther & Stedman, (C. E. Souther, of counsel,) for respondent.

The right of the appellant to hold possession of the property upon which he had a lien was not affected by the recovery of judgment for the amount of the indebtedness to secure the payment of which he had the property as security. It had the effect of settling the amount of the defendant’s liability to the petitioner, but did not affect the lien upon the security, or his right to have the same sold, and the proceeds applied to the payment of the amount due. Kor did the fact that a receiver of the debtor’s property, appointed on the application of another creditor, was extended so that the receivership would include the judgment obtained by the petitioner, affect the petitioner’s right to hold the security until his debt was paid. Petitioner had the right to take any proceeding to collect his judgment without resorting to the security. If his judgment had been collected, then he would have no further interest in the property held as security, and such property would belong to the receiver, and could be applied by him to the payment of

p. 75

the creditor at whose instance he had been appointed, but until such judgment was paid the lien upon the property was superior to the title of the receiver. Petitioner, having failed to collect his judgment by the proceedings instituted, had then the right to resort to the property upon which he had a lien to secure the payment of the debt, and for such purpose to commence an action to have the property sold, and its proceeds applied to the payment of his demand. To such an action the receiver in whom had vested the title to such property subject to the lien was a proper party, and he should have been allowed to make the receiver a party to such an action. We think, therefore, that the motion should have been granted. Order appealed from reversed, with $10 costs and disbursements, and motion granted. All concur.