Case ID: abbn-cas_6/html/0307-01.html
Source: Caselaw Access Project
Author: {"author": "Halt, Ch. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

MATTER OF WILDS.
    
      N. Y. Common Pleas;
    
    
      Special Term, March, 1879.
    Supplementary Proceedings.—Receiver.—Trustee.— Substitution or Receiver as Plaintiff in Suit by Judgment Debtor.—Lien for Costs.
    The appointment of a receiver in supplementary proceedings vests in him all the property, real and personal, and rights of action of the debtor.
    If the debtor is plaintiff in a suit, and has an interest in its further prosecution, the receiver is entitled to be substituted in his place as plaintiff.
    If the receiver’s security is not sufficient, it can be increased before entry of an order of substitution as plaintiff.
    The court may also, in its discretion, direct that the order of substitution provide that the receiver shall make no change of attorney of record for the plaintiff without application to the court, showing a satisfactory cause therefor.
    Motion to substitute a receiver in supplementary-proceedings as plaintiff in an action, in place of the judgment debtor.
    This application was made by Howard Payson Wilds, Esq., as receiver in supplementary proceedings, of Mary E. Jobes, to be substituted as plaintiff in an action of said judgment debtor against John H. Parsons, then pending on appeal.
    It appeared in the course of the supplementary proceedings that the judgment debtor had assigned or transferred her judgment to Ovide Dupré, her attorney, to secure his claim for professional services, and for money loaned to her by him.
    Other facts sufficiently appear in the opinion.
    
      Austin Abbott, for the receiver and petitioner.
    I. A substitution is necessary to enable the receiver to perform his duty (Tracy v. First Nat. Bank, 37 N. Y. 525).
    II. Such a substitution is proper as a matter of course, when there is a transfer in invitum (as distinguished from a voluntary transfer) (Requa v. Holmes, 16 N. Y. 196).
    III. It cannot affect any equities of the claimants. It alters no right. A receiver is but part of the machinery for protecting the rights of all parties having any interest (Miller v. Bowles, 58 N. Y. 253, at p. 257 ; rev’g 2 Supm. Ct. [T. & C.] 568).
    IV. The circumstances require the substitution, to protect both claimants. All the facts tend to show the necessity. A. The alleged assignments to the attorney do not make a prima facie case. 1. It is obvious on the face of the papers that they relate chiefly, and perhaps wholly, to services that had been already rendered when the instruments were made. Hence, they are not sufficient without extrinsic proof of the services and their value. Section 803 of the Code does not apply to agreements for an interest in the recovery, in consideration of past services (Whitehead v. Kennedy, 69 N. Y. 462, 467, rev’g 7 Hun, 230). B. Although two of the alleged assignments purport to transfer a specified share in the judgment, they do not liquidate the attorney’s claim. Under such agreements the attorney must prove a quantum meruit (Brown v. Mayor, &c. of N. Y., 11 Hun, 27). O. The attorney cannot rest on the rule as to attorney’s lien; because—1. It expressly appears that a part of his claim is not for professional services, but for “other services.” 2. He has taken an assignment which merges his lien, if any, and he must stand on his assignments (Bishop v. Garcia, 14 Abb. Pr. N. S. 69).
    V. A growing lien, whether with or without assignment, cannot be sustained by any acts of either party, after the order in supplementary proceedings. The service of the order terminates the right of the client to give his property to the attorney for any subsequent services (Deposit Nat. Bank v. Wickham, 44 How. Pr. 421).
    VI. All the circumstances adduced on both sides fully confirm the conclusion that the receiver should be authorized to enforce and collect the judgment, and that. meanwhile the equitable rights which are to govern distribution of the fund, should be determined by action or reference.
    
      Ovide Dupre, for judgment debtor, opposed.
    I. The judgment heretofore recovered in the action of Mary E. Jobes against John H. Parsons, having been assigned to Ovide Dupré long prior to the appointment of the receiver, the said receiver cannot be substituted as plaintiff in said action, and be thereby placed in a position to receive, collect, and control said judgment, that now belongs, not to the judgment debtor, but to Ovide Dupré, the assignee (Rodman v. Henry, 17 N. Y. 482; Bostwick v. Menck, 40 Id. 383; Field v. Sands, 8 Bosw. 685 ; Conger v. Sands, 19 How. 8).
    II. Where the judgment debtor has made an assignment of his property, such assignment is to be deemed valid, and. is good as against the receiver, until it is set aside as fraudulent. In such cases, the only course left open to the receiver is to bring suit to have the assignment set aside as fraudulent (see cases cited above).
    III. The rights of Ovide Dupré, the assignee, are not allowed to be brought into litigation by proceedings supplementary to the execution, but only in a regular way, by suit in which he is defendant, and not plaintiff (Rodman v. Henry, 17 N. Y. 484).
    IV. In all cases where the judgment debtor has made an assignment of his property, the right of the receiver is restricted to an amount sufficient to satisfy the creditor on whose behalf he was appointed receiver, together with the costs and expenses of the proceedings, and no more. But in this case the receiver seeks to be substituted as plaintiff, and thus place himself in a position to secure, not merely an amount sufficient to satisfy the creditor whom he represents, but the whole proceeds of the judgment (Bostwick v. Menck, 40 N. Y. 383).
    V. The receiver ought not to be substituted in this case, because the opposing affidavits allege that he is a friend of defendant or of his attorney.
   Halt, Ch. J.

In this State, by statute, the appointment of a receiver vests in him all the property, real and personal, and rights of action of the debtor. He represents the interests of the creditor or creditors, and is a trustee for all parties in interest, and is bound to apply the effects of the debtor to those legally or equitably entitled to them, under the direction of the court, and if anything remains, to restore it to the debtor or his grantor (Porter v. Williams, 9 N. Y. 142; Laws of N. Y. 1845, 90, 91; Code of 1870, § 244, subds. 3, 4; Code of 1877, §§ 1713 to 1717). And one of his duties, under the Code, is to preserve the property of the debtor during the pendency of an appeal. Prior to these statutory provisions, a receiver could sue only in the name of the debtor; but since their enactment, he may sue in his own name as receiver.

If the plaintiff, therefore, has at present any interest in the further prosecution of this suit, the receiver is entitled to be substituted in her place as plaintiff. If the plaintiff had assigned all her interest to Mr. Dupré, her attorney, there would be no ground for such an application ; but it appears, alike by the admission of Dupré, and of the plaintiff, upon their examination, that the assignments given by her to him were simply to secure his claim for professional services, and for money loaned to her by him ; and under such an assignment she would be entitled to what might remain after the payment of Dupré’s claim, and the receiver, appointed in supplementary proceedings against her, is vested with that interest; to protect which and to secure it, for the discharge of the judgment under which he was appointed, he is entitled to be substituted in her stead, as plaintiff, unless there is some valid reason why he should not be.

The statements made, upon information and belief, in Dupré’s affidavit, as to acts and declarations of the receiver, in the presence of the plaintiff, and as to his being in co-operation with the defendant Parsons to defeat the suit, are all positively denied in the receiver’s affidavit, who swears that he is not even acquainted with the defendant; and no attempt is made in the affidavit of the plaintiff to confirm what is sworn to in Dupré’s affidavit merely upon information and belief. It moreover appears, from the affidavit of Mr. Ogden, the attorney of the judgment creditor, that the receiver has been acting only, and with his full concurrence, in the interest of the judgment creditor, in whatever he has hitherto done. There is no reason, therefore, why he should not, in virtue of his rights as receiver, be substituted as the party plaintiff. It can in no way affect the interests of Dupré, under the assignments made by the plaintiff to him; for the receiver could make no disposition of the money, if it should be recovered from Parsons, as he could make no disposition of it except under the order of the court; so that Dupré’s rights to a large proportion of the amount to be recovered, can be fully protected. The receiver has given security for the faithful discharge of the duty devolving upon him, and if the amount of that security is not sufficient, it can be augmented before the entry of the order substituting the receiver as the plaintiff in the action. As the receiver, when substituted, is still under the direction and control of the court where the action is pending and undetermined, it will further provide that he shall make no change of attorney in the prosecution of the appeal, unless upon application to the court, and upon showing a satisfactory cause therefor. Mr. Dupré hap, under the assignments, a larger interest in the amount sought to be recovered than the judgment creditor in whose interest the receiver has been appointed, and Mr. Dupré is therefore to be left undisturbed in the discharge of his duties as attorney and counsel in conducting the cause upon appeal.

With these restrictions, the application to substitute the receiver will be granted.