Case ID: abbn-cas_22/html/0312-01.html
Source: Caselaw Access Project
Author: {"author": "Lawrence, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

C. RIESSNER & CO. v. COHN.
    
      N. Y. Supreme Court, First District, Chambers ;
    
    May, 1888.
    1. Creditor's actioni\ After an assignee for the benefit of creditors has refused to bring an action to set aside judgments confessed, which are alleged to be a part of the assignment, and claimed to be void under the statute, as exceeding the amount allowed for preferences —a creditor at large may, in aid of the assignment and to protect the trust fund, sue to set aside such confession of judgments.
    
    2. Injunction.] In such a case the creditor may obtain an injunction to prevent the sheriff, in whose hands the property of the assignor has come by levy under executions issued upon the judgments confessed, from paying the proceeds thereof to the alleged judgment creditors.
    
    Motion for an injunction.
    
      From the complaint in this action it appeared in substance that Amelia Fies made an assignment for creditors to Charles L. Cohn; that on the same day she confessed, judgments to Louisa I. Sehilt, Meyer Goodman and Samuel Blumenthal; that executions were issued on the judgments •and property of the assignor was levied upon and taken into the custody of the sheriff; that the plaintiffs, C. Biessner & ■Go., a domestic corporation, was a creditor of Amelia Fies, and further alleged that if the proceeds of the goods levied upon under the executions should be distributed to the alleged judgment creditors, the general creditors of Amelia Fies would suffer irreparable loss, etc. Besides demanding that the judgments be adjudged fraudulent and void, and that the property in the hands of the sheriff be considered a part of the trust fund, the demand for relief asked for an injunction restraining the sheriff from turning over to the judgment creditors, or to any other person, any part of the proceeds of the goods seized under the executions.
    The plaintiff, upon the complaint and' affidavits, obtained an injunction, and now moved to continue the. injunction pendente lite in accordance with the prayer in the complaint.
    
      Hasten c& Nichols, for the plaintiff and the motion.
    
      Henry J. Qoldfogle, for the judgment creditors, opposed.
    
      
       See note on fraudulent preferences on p. 327 of this volume. See, also, the preceding and two following cases.
    
    
      
      In Third National Bank v. Clark (N. Y. Supreme Court, First District, Chambers, May, 1888, Lawrence, J.) the same rulings were made in an action-by a general creditor to • set aside judgments con-, fessed as being a part of the assignment; but upon an affidavit of the assignee that the proceeds of the judgments were by an agreement' ¡between him and the judgment creditors of the confessed judgments' deposited in the Union Trust Company, to be withdrawn only upon the joint order of the attorneys for the said judgment creditors and the assignee, without prejudice, etc., and that thereafter he had commenced actions to contest the validity of the, judgments confessed—an injunction in behalf of the general creditors to restrain the sheriff from paying over the proceeds of the judgments to the, judgment creditors was denied.
    
   Lawrence, J.

If this is to be regarded as an action in the nature of a creditor’s bill, as the plaintiffs have no judgment, the motion for an injunction should be denied (Southard v. Benner, 72 N. Y. 426, 427; s. c. as Southard v. Pinckney 5 Abb. N. C. 184). It is claimed, however, that the action is to be regarded as one ' brought by á beneficiary under a trust to protect the trust fund and prevent its illegal disposition, . pending an inquiry into , the rights of the various parties, to share in .such fund. The plaintiffs cite the remarks of Dakfobth, J., in the case of Crouse v. Frothingham, (97 N. Y. 105, 113), in support of their position, that they can maintain this action. In speaking of the duties of an assignee, the learned judge says : “ If such an assignee refuses, in a proper case, to proceed and get ... in the assigned property, the creditors ’ collectively, or one in behalf of all who may come in and 'join, may compel the execution of the trust in equity. . . . . No doubt the creditors might also sue if the assignee ’ improperly refused to do so.” In that case the plaintiffs were, however, judgment creditors, and the precise point made in this case did not therefore arise. The same may be said of Richardson v. Thurber (104 N. Y. 606), that action being brought by a judgment creditor to have the assignment declared void. The plaintiffs also rely upon the case of Preston v. Spaulding, (120 Ill. 251), where the court permitted a creditor at large to intervene by suit for the protection and preservation of the fund, the assignee having neglected to take proper proceedings for that purpose. Preston v. Spaulding was a very well considered! case, and the reasoning of the court commends itself to my mind. The right of a beneficiary under a trust, where the trustee refusesno protect his interests, to proceed by action in his own name has been established in a variety of cases other than those relating to assignments (Weejan v. Vibbard, 5 Hun, 265, and cases cited at p. 267, by Daniels, J.; Western R. R. Co. v. Nolan, 48 N. Y. 513). It is distinctly averred in this case, that the assignee has refused after demand, to bring actions to set aside judgments alleged to have been confessed in violation of the statute of 1887, and this allegation is not denied. The act of 1887 has not been the subject, so far as the reports disclose, of thorough judicial! examination and decision. As it is a remedial statute it should be liberally construed (See Richardson v. Thurber, 104 N. Y. 606, where the act of 1884, of which the act of 1887 is an amendment, was under consideration). Assuming then that a creditor at large can intervene for the protection of the trust fund, and regarding this not as a creditor’s bill, but rather as an action in aid of the assignment and for the protection of the trust fund, I think I ought, under a liberal application of the principle enunciated in the cases above cited, to continue the injunction until the cause can be tried. The order will be settled on notice. 
      
       This act is set forth on p. 308 of this volume.