Bryant v. Grant — 67 N.Y. St. Rep. 639

Majority

p. 639

Emma Bryant, App’lt, v. Louis J. Grant et al., Resp’ts.

(Supreme Court, General Term, Second Department,

Filed May 13, 1895.)

Headnote

1. Supplementary proceedings — Receiver.

A claim of the judgment debtor for unliquidated damages is property in such a sense as to authorize the appointment of a receiver in supplementary proceedings.

2, Same.

_ A receiver in supplementary proceedings should not sell a claim for unliquidated damages in favor of the judgment debtor, to recover which an action by him is pending, but should prosecute it to judgment.

Appeal from an order substituting the purchaser upon a receiver’s sale in place of the original plaintiff.

Alfred C. Cowan, for app’lt; William A. Sweetser, for resp’t,. Sterling Wallace.

This is an appeal from an order substituting Sterlling Wallace as plaintiff in this action in the place and .stead of Emma Bryant. A brief historical recitation will facilitate our approach to the question involved in the appeal. In the forepart of the year 1892 the plaintiff commenced an action in the supreme ■court against Louis J. Grant, Townsend FT. Shotwell, Thomas P. Payne, and Mary E. Payne for conspiracy, fraud, and deceit in relation to the exchange of certain real property in city of Brooklyn, and claimed damages therefor in the sum of $8,000. The cause was tried at the circuit before a jury, and a verdict was rendered in favor of the plaintiff against the defendant Grant, against the plaintiff in favor of the other defendants. A judgment has been entered against the plaintiff in favor of the defendants who succeeded against her at the trial for the sum of $538.81, and the verdict in her favor against Grant has been set aside by the court. Thereafter the cause was again placed upon the calendar for trial, .and inquest was taken against the defendant Grant, in favor of the plaintiff for $6,000. A motion, subsequently made, to set aside the inquest, remains undetermined, so far as the appeal papers show. On the 10th day of January, 1894, the plaintiff- was examined in the proceedings supplementary to execution which had been issued against the property of the plaintiff upon the judgment against her in this action in favor of some of the defendants as already stated. Upon that examinad on the plaintiff said she had this claim of $8,000 against Grant, and that the claim was then in suit. She stated further that she had no other property. Thereupon a receiver of the property of the plaintiff was appointed, who was authorized by an order of the court to sell at public auction the claim of the plaintiff against the defendant "Grant. In accordance with such order of sale, the claim was sold at public auction to Sterling Wallace, who made a motion to be substituted as plaintiff in this action in the place of Emma Bryant, and his motion was granted. The appeal is from that order, as already stated. Such is the record before us, and it manifests an unmistakable design to perpetrate a fraud upon the law and a fraud up-' •on the court. The evident purpose of the proceeding for the appointment of a receiver was to circumvent the plaintiff, and deprive her of the power to prosecute her claim against Grant, and it is not too much to say that the success of the scheme would be •a reproach to the administration of justice. Fortunately, however the effort must teminate in failure, In the first place, the facts disclosed upon the examination of the plaintiff were entirely in-, sufficient to authorize the appointment of a receiver. The claim of the plaintiff for unliquidated damages is not property in any sense, and no order for the appointment of a receiver can be made until property applicable to the payment of the judgment has been discovered. Hancock v. Sears, 93 N. Y. 81 . Indeed, these defendants, instead of being entitled to an order apppointing a, receiver, were liable to pay the plaintiff costs of the proceeding for a failure to discover property applicable to the payment of their judgment. Code Civ. Proc. § 2456. In second place, if the •claim is property in any sense, it is neither in the possession nor

Dissent

p. 641

under the control of the plaintiff, and it is substantially disputed. Supplementary proceedings were inaugurated and regulated by the original Code of Procedure as a substitute for a creditors’ bills in the old court of chancery. They are in the nature or an equitable action, based upon a judgment, and new facts in addition thereto. They furnish a simple and summary method for the collection of a judgment from property which cannot be reached by execution. Griffin v. Dominguez, 2 Duer, 658 ; Allen v. Starring, 26 How. Pr. 59 ; Lynch v. Johnson, 48 N. Y. 27 . But neither these proceedings nor the old judgment creditors’ suit were designed to reach a cause of action for a tort. They authorize the pursuit of nothing but property. The affidavit upon which the proceedings are based must state the judgment debtor has “property” which he refuses to apply to the satisfaction of the judgment How can that allegation be perdicated upon a mere claim for damages ? Then, if it appears that the judgment debtor has such “property,” a judge may make an order requiring him to appear, and answer respecting his “property.” Then, if “property” is discovered, a receiver may be appointed of such “property.” Therefore nothing but property can be affected in these proceedings, and a claim for 'damages for a tort may not be even a cause of action. In no view is it property within the meaning of the statute relating to proceedings supplementary to execution. 10 Abb. Dig. p. 717, No. 134, and cases cited. Moreover, as we have seen, these supplemental proceedings are in the nature of an equitable action, and therefore nothing inequitable should be permitted therein. Yet it would be not only inequitable, but unjust, to deprive the plaintiff of her right to prosecute her action for damages against the defendant. She claims $8,000, and she has secured a recovery twice. The record before us discloses the perpetration of a'gross fraud upon the plaintiff, and her recovery must not be jeopardized, or her proceedings embarrassed. She must proceed with her suit untrammeled by interference. There will be ample time and opportunity for the court to direct the payment of the judgment against the plaintiff from the judgment in this action when it is recovered. Justice can thus be wrought to all parties.

The order should be reversed, with $10 costs and disbursements, and the motion should be denied, with $10 costs.

I dissent from so much of the opinion of my associate as holds that the claim in this action for a tort "to her estate is not property that would pass to a receiver. But I am clear that a fraud on plaintiff’s right has been effected here. Her claims for damages should not have been sold out, but have been prosecuted, and the debt paid out of any recovery. This was held to be the duty of a pledgee of promissory notes, Wheeler v. Newbould, 16 N. Y. 392 , and justice requires the application of a similar rule in this case. It was discretionary in the court whether to grant the substitution. I think the order should be reversed, and motion denied, in order that plaintiff may have an opportunity to apply to vacate both the order the receiver to sell and also the

p. 642

sale made under the order, without costs to either party, and with leave to petitioner to renew the application in case plaintiff fails. to obtain such relief. ,

Brown, P. J., concurs with Cullen, J.

Cases cited

Lynch v. Johnson 48 N. Y. 27 N.Y. Comm'n App. p. 641
Wheeler v. Newbould 16 N. Y. 392 N.Y. p. 641