Case Name: JAMES GIBSON, Assignee of HUGH McCROSSAN, Respondent, v. WILLIAM v. HAGGARTY and OGDEN HAGGARTY, Appellants
Court: New York Court of Appeals
Jurisdiction: New York
Decision Date: 1868-01
Citations: 5 Trans. App. 143
Docket Number: 
Parties: JAMES GIBSON, Assignee of HUGH McCROSSAN, Respondent, v. WILLIAM v. HAGGARTY and OGDEN HAGGARTY, Appellants.
Judges: 
Reporter: Transcript Appeals
Volume: 5
Pages: 143–150

Head Matter:
JAMES GIBSON, Assignee of HUGH McCROSSAN, Respondent, v. WILLIAM v. HAGGARTY and OGDEN HAGGARTY, Appellants.
Assignment—Chose in Action—Payment by Debtor—Supplementary Proceedings—Debtor of Judgment-debtor.
The law protects the debtor or Defendants in paying their debt to their creditor, or to any one who comes clothed with such authority as the creditor can confer.
The assignee of a chose in action not negotiable may lose his title by omitting to give the requisite notice to the debtor of the assignment.
Appeal from an order of the Supreme Court at General Term in the First District, reversing a judgment for the Defendants at Special Term, and ordering a new trial.
The Defendants in some dealing with Hugh McCrossan reeeived from him a note, as security for his indebtedness to them. The note being paid, there remained a balance in their hands due to McCrossan.
Sturgis and others, judgment-creditors of McCrossan, instituted supplementary proceedings under § 294 of the Code, and procured an order requiring the Defendants to appear and answer concerning their indebtedness to McCrossan; and upon such examination the Judge made an order requiring them to pay the said balance on and towards the. satisfaction of the judgment, and they paid the same accordingly. The Judge made no order requiring notice to be given to McCrossan..
Therefore the present Plaintiff brought this action against the Defendants to recover the same sum, upon the ground that, prior to such order, the judgment-debtor, McCrossan, had assigned to the Plaintiff the claim against the Defendants, of which assignment the Defendants had no notice.
Upon the trial at Special Term the Judge held the Defendants protected by their payment, in pursuance of the order above mentioned, and judgment was accordingly rendered for the Defendants. The Plaintiff appealed to the General Term, when. the judgment was reversed, and a new trial ordered. The Defendants (giving the requisite stipulations) appealed to this Court.
JE. JT. Taft for the Appellants.
J. O. Dimmiek for the Despondent.

Opinion:
Woodruff, J.
I think the Plaintiff cannot maintain this action. He claims to be entitled to certain moneys due from the Defendants to his assignor, McCrossan.
Sturgis and others, judgment-creditors of McCrossan, have collected those moneys in right of McCrossan, and by virtue'of proceedings which gave to them all the authority, as against these Defendants, which McCrossan himself would have had if he had called on the Defendants and received the money. They having no notice of any assignment to the Plaintiff, a payment to McCrossan would have operated effectually to discharge the Defendants, and the Plaintiff's remedy for the collection of what was due to him, would have been an action or proceeding against McCrossan for so much money had and received, &e. That this would have been the relative position of the Plaintiff and the Defendants, had the latter paid the money to McCrossan, is clear beyond controversy or discussion.
If, then, the proposition above stated is correct, viz., that the supplementary proceedings and order of the Judge in question in this action, giving to the judgment-creditors of McCrossan an authority to collect the money from the Defendants, are available to the latter for their protection, as the authority, or rather, the power of McCrossan hirpself, then the Defendants are protected by the payment.
To the suggestion that the Plaintiff cannot be deprived of his property without due process of law, it must be answered, that the law protects the Defendants in paying their debts to their creditor, or any one who comes clothed with such authority as the creditor can confer, notwithstanding such payment would operate to deprive the assignee of the responsibility of the original debtor. The title of the assignee was but an equitable title, and if he would protect it he must use the means the law requires for its protection. The grantee of land may lose his title if he do not record his deed, and the assignee of a chose in action not negotiable may lose his equitable right to proceed against the debtor if he gives no notice of the assignment.
The Plaintiff had no reasonable nor equitable complaint to nake that notice of the proceedings was not given to him, when he liad given no notice apprising the Defendants that he had any interest.
It is suggested that notice might have been, and ought to have been given to the judgment-debtor, McOrossan. I think it ought always to be given (when notice can be served on him) before an order is made requiring the parties examined to pay over; but the statute makes it discretionary with the Judge. This omission to do so does not change or affect the legal operation of the proceed-lugs; and as.respects this Plaintiff, it would not affect my positian. McOrossan might not have regarded the notice.
The case stands (in reference to the argument that the section does not authorize the payment of the money to the judgment-creditor, because, having been assigned, it was not " due to the judgment-debtor ") just- as it would on the appointment of a receiver, and an action by him against the Defendants, recovery and payment by them to the receiver. There is no room to doubt that such payment would be a full defence.
If, before the Code, as now, a creditor's bill were filed and a receiver appointed, and such receiver had brought an action against the Defendants, and recovered the money, it cannot be questioned that payment on such a judgment would protect the Defendants against the Plaintiff (the assignee), of whom they had never heard;; and it is no less clear that a payment by them to such receiver, without suit, would have the same effect, and yet, in either case it might be said, with the same propriety as in the present, that the Plaintiff was deprived of his property without due process of law.
I am not able to perceive the force of the suggestion, that an order under § 292 must be first obtained, before the Judge can obtain jurisdiction to make the order for the examination of a debtor, of the judgment-debtor, and direct the payment of what he owes towards the judgment-debt. The terms of § 294 authorize a proceeding thereunder, whether the execution has been returned or only issued. It expressly leaves it in the discretion of the Judge to cause notice to be given, or to suffer the proceedings to be had without the presence of the party to the action. At a time when proceedings could only be taken under § 292 (then § 247, Laws of 1848, p. 543), after an execution had been returned, the subsequent sections provide (§ 248) that after the issuing of an execution, a person indebted might pay to the Sheriff.
And (§ 249) upon an affidavit that a person is indebted to the judgment-debtor, the Judge might require him to appear and be examined, and (§ 252) the Judge might order the property due to the debtor to be applied on the judgment.
I concur fully in the observations made in Sherwood v. The Buffalo and N. Y. City R. R. Co. (12 How. 139, and case cited), that to permit a proceeding under § 294, without any notice to the Defendant, and so without giving him an opportunity to appear and assert his rights, opens the door to injustice and fraud. The judgment, as there suggested, may have been paid, or there, may be other equitable, and even legal reasons, why it should not be enforced by the Plaintiff'.
These are considerations, however, which are addressed to the Judge who has the discretion to exercise, or to the Legislature which has conferred that discretion.
It is, however, pertinent to say, that notice to the judgment-debtor would not have been of any service to the present Plaintiff ; and he had voluntarily neglected to give the notice of assignment, which would have enabled, and made it the duty, of the Defendants to resist the order made upon them.
The order granting a new trial must be reversed, and the judgment of the Special Term affirmed.
All concur, except Baco», J.