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Produce Bank v. Morton

40 N.Y. Super. Ct. 328 8 Jones & S. 328 Court N.Y. Super. Ct. Decision date 1876-01-03 English

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THE PRODUCE BANK OF THE CITY OF NEW YORK, Plaintiff, v. JOSEPH MORTON, LEON WEIL, ALPHONSE WEIL, and AUSTIN BALDWIN, Assignee, Etc.

Headnote

I. FRAUDULENT ASSIGNMENT OF PARTNERSHIP PROPERTY.
1. Action by a judgment ceeditob, on his own behalf and BEHALF 03? ALL OTHEE JUDGMENT CBEDITOBS, TO SET ASIDE,FOB A DECEIVES OF THE ASSIGNED PBOPEBTY, —AND FOB THE PAYMENT OF HIS DEBT.
(a.) When not maintained.
1. Where there were three partners who made an assignment, and the judgment obtained by the creditor was so obtained on a service of the summons on but two, and was in form against those two only, and the execution was issued against all three, and returned unsatisfied,
Held,
the action could not be maintained, because the remedy at lane, by judgment and execution returned unsatisfied against the three, had not been exhausted.
II. Amendment, what will not cube the defect.
(a) An amendment granted at the trial amending the judgment nunc pro tunc by adding the name of the third partner, as one of the parties against whom judgment was rendered, will not.
n. NEW TRIAL.
1. Motion fob, at geneeal teem, undeb § 367 of code.
3. Final judgment, what does not constitute.
(a) One setting aside a transfer as fraudulent and void, appointing a referee to take the accounts of the transferee, and a receiver to whom the transferee shall deliver and pay according to the report of the referee, and directing that the receiver pay to the plaintiff his claim out of what shall come into his hands, and hold the residue, if any, to abide the further orders of the court, is not.
3. Judgment.
1. Not a bar to a motion for a new trial. Laws of 1833, chap. 138.
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Before Monell, Ch. J., and Curtis, J.
Decided January 3, 1876.
Motion by the defendants for a new trial, on a case and exceptions, under section 268 Code, subdivision 1.
The defendants, Joseph Morton, Leon Weil, and Alphonse Weil, co-partners, made an assignment of their property, in trust for their creditors, to the defendant Baldwin, February 4, 1874. The plaintiff sued the defendants Joseph Morton, Leon Weil and Alphonse Weil on a promissory note, June 22, 1874, The summons and a copy of the complaint were served only on the defendants Morton and Alphonse Weil, and judgment was entered against them only, by default, July 14, 1874, and docketed against them alone, in this court, and in the office of the clerk of the city and county of Mew York, after the filing of a transcript.
An execution was issued, apparently, upon this judgment, January 17, 1875, against the property of'all three defendants, including Leon Weil, who had not been served, and against whom judgment had not been entered. The execution was returned wholly unsatisfied, February 4, 1875, and thereupon this action was commenced to set aside the assignment as invalid, and to reach the assets assigned to the defendant Baldwin by the other three defendants.
At the trial, after the defendants’ objections to the various proceedings in the suit at law had been overruled and excepted to, and after the defendant had moved to dismiss the complaint, the plaintiff obtained an amendment nunc pro tunc of the judgment and docket by adding the name of Leon Weil. The judge found, that the proceedings at law were sufficient, and decided that the assignment was invalid, and ordered an accounting before a referee, and gave directions with respect to the confirmation of the report. He
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also directed that the disposition of any residue that there might be of the fund should abide the further order of the court, and granted leave to either party to apply for such other or further judgment as might be just.
The defendant excepted to the decision.
Fransioli, Tilney, and Mosher, of counsel for defendants, in support of the motion, urged, upon the points discussed and decided by the court:
I. The proper course to obtain a review by the general term of the findings and of the rulings on the trial, at the present stage of this case, is by motion for a new trial (Code, sec. 268; Church v. Kidd, 3 Hun, 254 ; S. C., 5 Thomp. & Cooke, 454; Douglass v. Douglass, 5 Hun. 140 ; Stanton v. Miller, 65 Barb. 58 ; S. C., 1 T. & C. 23 ; Mundorff v. Mundorff, 1 Hun, 41 ; S. C., 3 T. & C. 170); 1. The decision filed under section 267 of the Code directs that the defendant Austin Baldwin ac count before a referee for all the property and effects or the proceeds thereof, received or held, by him pursuant to the assignment, and that a receiver be appointed to take charge of such property and effects, The plaintiff alleges that the defendant has received over three thousand dollars, and that the assigned property is of the value of nine thousand dollars or over. On the other hand, the defendants allege that the assignee has distributed all of the money except three hundred and sixty dollars and ninety-four cents. No evidence in support of these allegations was offered by either side on the trial; and it would have been premature to do so. Therefore, until the accounting shall be had, it will be uncertain how much money or property is to be delivered to the receiver, or what questions may arise on the accounting, and the judgment is not final (Prentiss v. Machado, 2 Robt. 660 ; Lawrence v. Farmers’ L. & T. Co., 15 How. 57 [Sup'r. Ct. G. T.]; Wood v. Hunt, 38 Barb. 302 , 311 [
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Dist.) ; Swarthout v. Curtis, 4 N. Y. 415 ; Chittenden v. Missionary Society, 8 How. 327 [Ct. of App.]; Catlin v. Grissler, 57 N. Y. 363 , 370). 2. The findings direct the receiver to pay to the plaintiff out of the property and effects to be placed in his hands the costs of this action, and the amount of the plaintiff’s original judgment, with interest. The plaintiff’s original judgment is four hundred and fifty-eight dollars and fifty cents. If the plaintiff should succeed in charging the defendant Baldwin with three thousand dollars, or nine thousand dollars, according to the allegations of the complaint, what is the receiver to do with the surplus % On this point the findings are wholly silent. But the order or judgment entered thereon expressly directs him “ to hold the residue, if any there be, to abide the further order off this court.” The plaintiff’s action is brought on behalf of itself and all other judgment creditors. The residue remains to be disposed of, and therefore the decision does not authorize a final judgment (Code, sec. 268 ; Tompkins. Hyatt, 19 N. Y. 534 ).
II. The plaintiffs failed to show that they have exhausted their remedy at law. 1. The judgment in the common law action was entered and docketed only against Joseph Morton and Alphonse Weil, the two debtors who had been served with process; therefore it could not be enforced against the joint property of Joseph Morton, Leon Weil and Alphonse Weil (Code, sec. 136, subd. 1; Northern Bank v. Wright, 5 Robt. 604; Lahey v. Kingon, 13 Abb. Pr. 192 ; Stannard v. Mattice, 7 How. Pr. 4 ; Pardee v. Haynes, 10 Wend. 630 ; Nelson v. Bostwick, 5 Hill, 37 , 41). The defect is not merely formal, but is one of substance (Nelson v. Bostwick, supra). 2 . Viewing the plaintiff’s case in the most favorable light, they simply had the ability to enter judgment against Leon Weil, and failed to do so. In other words, Leon Weil is in the position of a defendant in default, against whom judgment has not yet
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been entered. But it has never been pretended that the plaintiff could issue execution or commence a creditor’s suit against a defendant in default, without perfecting judgment. 3. The difficulty is not obviated by the amendment of the judgment and docket made nunc pro tunc after the trial of this action (Farnham v. Hildreth, 32 Barb. 277 ).
David J. Newland, attorney and of counsel for plaintiff, in opposition to the motion urged, on the points discussed and decided:
I. This is not a case within the provisions of section 268; and therefore the defendants are not entitled to the provisions of that section. For, 1. Such a motion is only allowable where the decision 'filed under section 26? of the Code does not authorize a final judgment (sec. 268, Code). 2. But the decision in this cause, the findings by court, does authorize a final judgment. 3. The accounting and reference provided for in the decision was not to obtain any fact to be used for or requisite to the entering of final judgment, nor was the entry of the judgment subject to the reference. 4. The decision of the court found all the facts requisite for, and therefore authorized, a final judgment. As (a) That the assignment was null and void as to the plaintiff, (b) That the plaintiff was entitled to the payment out of the property or proceeds in the hands of the assignee, Baldwin, belonging to Morton, and the Weils, the assignors, of its judgment against said assignors, to wit, of four hundred and fifty-eight dollars and fifty cents, and interest, and the costs of this action. This was all a certain, definite sum. (c) And the accounting provided for in the decision was intended to occur, and actually began, after final judgment, and its only object was to place the moneys held by Baldwin, who, after the decision, is a mere stakeholder, a mere stranger without any title or interest in the fund, in the hands
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of the court, by its receiver, to satisfy the plaintiff’s judgment. 6. The only cases decided, cited below, since the amendment to section 268 of the Code, in 1867, allowing this practice, show and hold that this section applies only to cases in equity where what was formerly known as an interlocutory decree was entered (Stanton v. Miller, 65 Barb. 58 ; Church v. Kidd and ors., 3 Hun, 254 ; Bolles v. Duff, 38 How. 504 ). (a) But an interlocutory judgment, as formerly known, “was one sounding in damages, and where the issue is an issue of law, or when an issue of fact, not tried by a jury, is decided in favor of the plaintiff, then the judgment is, that the plaintiff ought to recover his damages without specifying their amount; for, as there has been no trial by jury in the ease, the amount of damages is not yet ascertained” (Bouviers Law Dict. 678, sec. 25).
II. Even if the decisions allowed defendants to make this motion under sec. 268, they are too late in making the motion. For, 1. In analogy to all the practice on motions for a new trial under the Code, and well settled before the Code, motions for a new trial on a case could only be made before entry of judgment. 2. A stay should have been obtained in which to make the motion in this action, if the defendants desired to preserve their rights under the practice. 3. Or after judgment, the defendants’ only remedy was by appeal.
III. 1. As to the judgment and transcript not showing a judgment against the three defendants: (a) The complaint shows that the three defendants were co-partners. (5) The postea or judgment entered by default was made and entered by the clerk of the court in point of law. And no detriment should come to plaintiff from the clerk’s omission, (c) The execution was issued against the three defendants regularly, (id) And by an order of the court the judgment and transcripts in the original action were amended on
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April 16, 1875, and made to conform to the facts, and to agree with the execution. And during the trial of this cause, and on April 19, 1875, the judgment and transcripts, as amended, were admitted in evidence. This was perfectly proper and regular, and in the discretion of the court under sec. 173 of the Code (Walsh v. Kelly, 27 How. 359 ; S. C., affirmed, 40 N. Y. 556 ). So that the judgment is against the three defendants, Joseph Morton, Leon Weil, and Alphonse Weil, from its entry, July 14, 1874. 2. The execution was issued against the three defendants, and the judgment and transcript are against the same.

The relief sought in this action is the same that was prayed for in the case of Haddon v. Spader ( 20 Johns. 554 ). It was to establish and declare the great principle decided in that case by the court for the correction of errors, the chancellor says, in Gleason v. Gage (7 Paige, 123), that led the revisers and the legislature to establish the statutory provisions upon the subject of creditor’s bills. The statute thus enacted (2 R. S. 174, secs. 38 and 39), is unrepealed, except that portion that authorizes a discovery, and the remedy remains as before (Dunham v. Nicholson, 2 Sandf. 636 ).

The plaintiff, to sustain the present action, must show that previous to its commencement, he had complied with the requirements of the statute, both by a recovery of a judgment against the debtors, and by the exhaustion of the remedy against their tangible property through the return of an execution against them unsatisfied. The courts have unswervingly held the creditor, who sues for relief as a judgment creditor, to a strict observance of each of these pre-requisites. It has been the wise policy of the administration of justice, that the remedy at law should be exhausted before equity could be resorted to-.

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Have these statutory requisites been complied with by the plaintiff? It appeared during the trial of this action, that Leon Weil, one of the three defendants sued as judgment debtors, and composing the firm of Weil Brothers & Company, and whose assets the plaintiff seeks to reach, had not been served with process in the original suit, nor had the judgment been entered against him, as alleged in the complaint, and put in issue by the answer. The statute was apparently complied with by the issue and return unsatisfied of an execution not specially endorsed, and in which his name is mentioned as one of the three judgment debtors. It was obvious that the requirements of the statute to sustain the suit had not been complied with, and after the plaintiff rested, the case was re-opened, on the application of the plaintiff, and an order was made directing the amendment mine pro tuno of the judgment and docket in the original action, by adding the name of the defendant Leon Weil as one of the parties against whom judgment was rendered.

This amendment, even if within the power of the court, which need not now be decided, fails to give that force and vitality to the judgment and execution which the framers of the statute must have contemplated as a preliminary to the creditor’s suit. The amendment did not validate the issuing and return of an execution against the defendant Leon Weil, who had not been served with process, and against whom no judgment existed to sustain the execution. Neither could the amendment make this execution enforcible or valid against the joint property of the three debtors, after it had been issued and returned unsatisfied, upon a judgment that did not authorize it.

If a creditor’s suit can be, by amendment, made effectual against a defendant who was not a judgment debtor at its commencement, and against co-defendants who are judgment debtors, without having had the full

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remedy at law exhausted against them, then this form of action must be sustained on some other basis than that upon which the courts have heretofore administered it (Child v. Brace, 4 Paige, 309).

The amendment can not make that a full execution of the judgment which was not so before, and the most that it can do is to place the plaintiff in a position where he may be enabled at law to duly execute it (Farnham v. Hildreth, 32 Barb. 277 ).

The plaintiff objects that this is not a case within the provisions of section 268 of the Code, and that the defendant is not entitled, at the present stage of the action, to obtain a review, at the general term, of the findings and rulings on the trial by a motion for a new trial. Section 268 provides that when the decision filed under section 267 does not authorize a final judgment, but directs further proceedings before a referee or otherwise, either party may move for a new trial at general term upon a case or exceptions. The decision filed under section 267, in the present case, specifically directs further proceedings before a referee, among other things an accounting before him, and then provides how either party may review his report preliminarily to confirmation, and, after directing the residue of the fund, if any, to abide the further order of the court thereupon, expressly authorizes any of the parties to “ apply to the court for such other or further judgment or decree as may be just.” This seems to bring the case precisely under the salutary provision of the Code which was intended to relieve litigants from the labor, delay, and expense of this class of proceedings before a referee, which previously had to be incurred, and the judgment made complete and final, before a review could be obtained at general term upon some question, which, if it could have been presented after the filing of the decision, under section 267, would have saved the parties from this useless

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burden. Where the rights of the parties to suits in equity are determined upon the hearing, but a complete disposition of the case requires accounts to be settled, this has always been done, both under the former practice and under the Code, by an interlocutory decree or judgment, as in the present case, declaring such rights and the manner of the accounting, and directing a reference to a master or- referee. The proceedings before the latter, -and the confirmation of the report, have always been considered as steps necessary and preliminary to authorizing a final judgment, unless the court saw fit to go on and take the accounting necessary to a final judgment after passing upon the rights of the parties (Mundorff v. Mundorff, 1 Hun, 42 ; Kane v. Whittick, 8 Wend. 242 ; Bolles v. Duff, 38 How. Pr. 505 ; Stanton v. Miller, 65 Barb. 58 ; Church v. Kidd, 3 Hun, 254 ).

The plaintiff also objects, that even if the defendants have the right to make this motion, they are too late, and that they should have procured a stay, and made the motion before the entry of judgment, if they desired to preserve their rights under the practice. Whatever views may have been held in regard to entertaining motions for a new trial after judgment, it is now settled that the court has power under the act of 1832 (Laws of 1832, p. 188, chap. 128) to grant a new trial on motion even after judgment (Raphaelsky v. Lynch, 12 Abb. N. S. 224; Folger v. Fitzhugh, 41 N. Y. 228 ; Tracy v. Altmyer, 46 Id. 598).

If the conclusions arrived at that the plaintiff failed to present a case entitling him to relief, and that the defendants are right in their mode of moving for a new trial, then no occasion arises for considering the other questions presented on the argument, and the defendant’s motion for a new trial should be granted with costs to the defendant to abide the event.

Monell, Ch. J., concurred.

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