Case Name: George S. Hubbard, as Receiver, etc., of Henry M. Todd and Bertram W. Brown, Respondent, v. The J. P. Lewis Company, Appellant
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1908-11-11
Citations: 128 A.D. 416
Docket Number: 
Parties: George S. Hubbard, as Receiver, etc., of Henry M. Todd and Bertram W. Brown, Respondent, v. The J. P. Lewis Company, Appellant.
Judges: 
Reporter: Appellate Division Reports
Volume: 128
Pages: 416–419

Head Matter:
George S. Hubbard, as Receiver, etc., of Henry M. Todd and Bertram W. Brown, Respondent, v. The J. P. Lewis Company, Appellant.
Fourth Department,
November 11, 1908.
Debtor and creditor — supplementary proceedings — effect of appointment of receiver on debts owed to judgment debtor — extension of receivership —• proceedings by other creditors.
Where an order appointing a receiver in proceedings supplementary to execution has been served upon a person indebted to the judgment debtor and thereafter, pursuant to a prior agreement with the judgment debtor, lie pays portions of his indebtedness to Various creditors of the judgment debtor, the receiver can recover only to the extent of the original judgment upon which the supplementary proceedings were founded, and although his receivership is extended to separate supplementary proceedings brought by other judgment creditors subsequent to said payments by the person indebted, he cannot recover for th'eir benefit.
Under section 2469 of the Code of Civil Procedure the. receiver’s title to the judgment debtor’s property relates back to the date of the service of the order for the judgment debtor’s examination only for the benefit of the judgment cred- . itor in whose behalf the proceeding was instituted. It does not relate back to that date for the benefit of other judgment creditors for whom the receivership is subsequently extended. .
Appeal by the defendant, The J. P. Lewis Company, from a judgment pf the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of Lewis on the 13th day of January, 1908, upon the report of a referee.
W. B. Van Allen, for the appellant.
H. M. Wilbur, for the respondent.

Opinion:
Robson, J.:
Plaintiff was appointed receiver of the property of Henry M. Todd and Bertram W. Brown by an order duly granted, which was filed and entered in Lewis county clerk's office February 14,1905, and on the fifteenth of that month he duly qualified as such receiver. This appointment was made in proceedings supplementary to execution upon a judgment recovered by Edgar Jones et al. against the said Todd and Brown, January 30, 1905, for the sum of $198.56. Copy of the affidavit and order in these supplementary proceedings was served upon the judgment debtor, Brown, February 2, 1905, and upon Todd, the other debtor, February 6, 1905. A copy of this order and affidavit was also served upon the J. P. Lewis Company, the defendant in this action, February 3, 1905. By subsequent orders, plaintiff's receivership was duly extended in separate proceedings supplementary to execution upon three other' judgments against Todd and Brown. These orders were granted about February 24, 1905, and the proceedings in which they were granted were begun not earlier than February 21, 1905.
The referee has found upon sufficient evidence that at the time the copy of papers in proceedings supplementary to the execution on the Jones judgment was served upon Brown and the J. P. Lewis Company, there was due from and payable by the J. P. Lewis Company to Todd and Brown the sum of $.749.83. This amount was the balance unpaid on a contract for cutting timber which Todd and Brown had at that time substantially completed. Between the date of the service of copy of the affidavit and order in the supplementary proceedings on the Jones judgment on Brown and the J. P. Lewis Company, before recited, and the 8th day of February, 1905, the J. P. Lewis Company paid out for Todd and Brown to creditors of the latter, sums aggregating $693.57. These amounts were charged to Todd and Brown's account by the J. P. Lewis Company, and were paid apparently in continuance of an agreement between the parties, which had been followed for some time prior to that date, by which the Lewis Company'agreed to pay Oil like orders the wages of persons who were employed for Todd and Brown on this timber contract, or for supplies furnished for Todd and Brown in connection therewith. There are included in this total amount paid by the Lewis Company two items, one of thirty dollars and one of fifty dollars, which are not for wages or supplies or paid on the direct order of Todd or Brown. But the evidence shows that all items charged to their account were paid by the Lewis Company for their benefit and pursuant to the prior understanding and agreement of the parties. The referee has declined to allow the Lewis Company credit, for any of these payments, and has held.that plaintiff is entitled to recover of the defendant the full sum found by him to have remained unpaid on the contract at the date of the service of the order in supplementary proceedings on the execution issued on the Jones judgment.
The title of. a receiver, appointed in such proceedings, to the property of a judgment debtor and the time when it vests is specified and governed by sections 2468 and 2469 of the Code of Civil Procedure. By section 2468 the property of a judgment debtor is, with two exceptions not now material to consider, vested in a receiver, who has duly qualified, from the time of filing the order appointing him or extending his receivership as the case may be. As provided in the following section, when the receiver's title to personal property has become vested, as prescribed in the'preceding section, it also extends back by relation for the benefit of the judgment creditor in whose behalf the special proceeding was instituted, so as to include the personal property of the judgment debtor at the time of the service of the order requiring him to attend and be examined. At the time the order appointing plaintiff receiver was filed defendant had paid out pursuant to agreement with' Todd and Brown in satisfaction of the latter's indebtedness all bnt about fifty-six dollars of the amount which defendant owed Todd and Brown on the timber contract at the time of the service of the order for their examination in the Jones suppleméntary proceedings. From the fact that a copy of the affidavit and order in these proceedings was served on the defendant prior to these payments it may be that as to the claim on the Jones'judgment defendaiit had notice thereof, and that these payments may not be considered as made in good faith and without notice so far as the rights of the owners of that claim are concerned. But they were all made before any proceedings supplementary to execution were begun on any of the other judgment claims against Todd and Brown. We fail to find in the record any evidence that defendant knew of these other claims, except possibly the Buckley judgment, and no evidence whatever that the payments by defendant on the account of Todd and Brown were not made in good faith and without notice as to these claims. The mere fact that a debtor is aware that his creditor is indebted, even largely, or that judgments have been obtained against him, should not affect the good faith of payments on his own indebtedness made by him either directly to his creditor, or upon his creditor's, order ; unless, at least, it was shown that such payments were made for the purpose of defeating some right of the debtor's creditors to this particular claim, which the latter had acquired and of which the debtor had notice.
Under section 2469 the receiver's title to the judgment debtor's property extends by relation back to the date of service of the order for the latter's examination, not for the benefit of all creditors who may subsequently have such receivership extended for their benefit, but, as the section expressly provides, it is for the benefit of the judgment creditor in whose behalf the special proceeding was instituted.
We conclude, therefore, that .the receiver in this action was at most entitled to recover judgment against defendant only to the extent of the claim upon which the proceedings were instituted in which he was first appointed, together with the proper costs and allowances therein.
All concurred.
Judgment reversed and new trial ordered before another referee, with costs to appellant to abide event upon questions of law and fact.