Case Name: BERGMANN v. LEAVITT et al.
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1906-05-18
Citations: 99 N.Y.S. 748
Docket Number: 
Parties: BERGMANN v. LEAVITT et al.
Judges: 
Reporter: West's New York Supplement
Volume: 99
Pages: 748–755

Head Matter:
BERGMANN v. LEAVITT et al.
(Supreme Court, Appellate Division, First Department.
May 18, 1906.)
1. Cbeditoes’ Suit—Pbopeety Subject—Statutes—Constbuction.
The words “in trust for a judgment debtor,” in Code Civ. Proc. § 1879, prohibiting the maintenance of a judgment creditor’s action to reach any property held “in trust for a judgment debtor” where the trust has been created by a person other than the debtor, have reference to trusts in which the debtor’s interest is that of a beneficiary, as distinguished from an interest in remainder.
2. Same.
Personal Property Law, Laws 1897, p. 508, c. 417, § 3, provides' that the right of the beneficiary in any other trust in personalty than one to receive the income thereof may be transferred. Code Civ. Proc. §§ 1871, 1873, 1879, authorize a judgment creditor to sue to compel the discovery of property held in trust for the debtor, direct the final judgment to provide for the satisfaction of the debt out of the property held in trust for the debtor, and prohibit the maintenance of a suit to reach property held in trust for the debtor where the trust has been created by a person other than the debtor. A testator gave a specified sum to a trustee in trust to invest, and apply the income for the use of his widow for life, and directed that on her death the capital should'be divided among Ms children. Reid, that a judgment creditor of a child was entitled to maintain, during the lifetime of the widow, a creditors’ suit to reach his interest in the fund.
3. Same—Jubisdiotion of Coubt—Complaint—Sufficiency.
The complaint in a creditors’ suit alleged that a testator, who died in New York, and whose will was probated there, gave a specified sum to a trustee to invest, and use the income for his wife for life, and then divide the fund among his children, one of whom was the judgment debtor; that the debtor died in a sister state, where he had resided for seven years, leaving a will which was probated there; that no ancillary letters were issued in New York; and prayed that the judgment be declared a lien against his interest in the fund. Held sufficient to give the court jurisdiction.
4. Limitation of Actions—Demubbeb Raising Defense.
An objection that the court has no jurisdiction because the statute of limitations has run against the cause of action does not present a jurisdictional question, though so worded, but interposes limitations as a defense, and such defense cannot be raised by demurrer to the complaint
5. Cbebitobs’ Suit—Pasties.
A testator gave a fund to a trustee to invest and use the income for the widow for life, and directed that on her death the fund should be divided between his two children. A judgment creditor of one of the eMldren brought a creditors’ suit to reach his interest in the fund. The fund had been set apart in securities under an agreement between the widow and children. It had been increased in value, and was susceptible of division for retention into two parts. Reid, that the other cMld was a proper party.
Ingraham and McLaughlin, JJ., dissenting.
Appeal from Special Term, New York County.
Action by George A. Bergmann against Frances L. B. Leavitt, individually and as executrix of Samuel G. Ward, Jr., deceased, and others. From a judgment overruling a demurrer to the complaint, defendants appeal.
Affirmed, with costs, on the opinion below, with leave to defendants to withdraw demurrer and answer.
The following is the opinion of Bischoff, J.:
' This is a judgment creditors’ action to reach the interest of the judgment debtor in the remainder of a trust fund of $50,000, created by a person other than the judgment debtor, and the main ground of the demurrer for insufficiency is that the statute (Code Civ. Proc. § 1879), which prohibits for maintenance of such an action to reach “any money, thing in action or other property held in trust for a judgment debtor where the trust has been created by or the fund so held in trust has proceeded from, a person other than the judgment debtor,” applies to an interest in remainder. In my opinion, the words “in trust for a judgment debtor,” as used in the statute, have reference only to trusts in which the judgment debtor’s interest is that of a beneficiary, as distinguished from an interest in remainder. The history of the rules which apply to creditors’ actions to reach trust interests is traced in a note to Tolies v. Wood (16 Abb. N. C. 1, at page 20), and the conclusion is expressed (page 27) “that the principal of a fund, real, personal, or mixed, held in a third person’s trust for the benefit of the debtor, cannot be reached in the trustee’s hands unless his interest in the principal is alienable by him, and then it is that interest, not necessarily the fund itself, that is to be reached.” From the authorities collated the soundness of this conclusion is apparent, and the meaning of the words “in trust for a judgment debtor” (Code, § 1879) is found to be restricted to the interest of a beneficiary of income, inalienable under the Personal Property Law, Laws 1897, p. 508, c. 417, § 3, and likewise inalienable before that enactment, through judicial extension of the statutes relating to trusts of realty. Graff v. Bonnett, 31 N. Y. 9, 88 Am. Dec. 236. No limitation has been placed by the statute upon the right to alienate expectant estates in personalty—a right which always existed at common law (Lawrence v. Bayard, 7 Paige, 70)—and it is contrary to the policy of the law to exclude a judgment creditor from the benefit of any property interest which the debtor could dispose of by assignment (Hallett v. Thompson, 5 Paige, 583, 586). My conclusion is that this interest is not “property held in trust for a judgment debtor” (Code, § 1879), and that the action is maintainable (Code, §§ 1871, 1873). The interest of the judgment debtor in this fund had vested in interest at the time of his death, which occurred in the state of New Jersey, and unless the court should take jurisdiction, and permit the action to be maintained against the foreign executrix (a defendant), the plaintiff would be without remedy. The facts alleged in the complaint disclose grounds of urgency quite sufficient to bring the ease within the rule stated in Montgomery v. Boyd, 78 App. Div. 64, 79 N. Y. Supp. 879, and the pleading is therefore proof against a demurrer upon the jurisdictional ground suggested. It is claimed, also, that the court has no jurisdiction because the 10-year limitation has run, but the statement of the point as a jurisdictional question does not alter its actual character, which is simply that a defense of a statute of limitations is disclosed by the averments of the complaint, and such a question cannot he raised by demurrer. Zebley v. Farmers’ Loan & Trust Co., 139 N. Y. 461, 468, 34 N. E. 1067. The defendant Marion Low, upon her separate demurrer to the sufficiency of the complaint, contends that she is not a proper party, in that her equal undivided interest in remainder in this fund of $50,000 cannot be affected by this litigation. It is alleged in the complaint that the fund of $50,000 was set apart in certain securities by agreement between the beneficiary, and the two remaindermen, the judgment debtor, and the defendant Marion Low; that the fund has increased in value as invested, and is susceptible of division for retention into two parts; and it is prayed that the persons holding the fund be directed to divide it, with the accretions, into two parts, and that the interest of the judgment debtor be sold. Since the fund has been kept in a certain form by agreement, to which the defendant Low was a party, and since there are accretions which should be measured and apportioned in order that the judgment debtor’s interest may be absolutely determined for a sale, it would appear that this defendant was properly joined. She has an interest in the subject of the action, which subject is not merely the judgment debtor’s interest in the fund of $50,000, but his further interest in unadjusted accretions to that fund—a matter which should be presently determined as between his executrix and the other party in interest, this particular demur-rant. The demurrers are therefore overruled, with costs of one demurrer, with leave to defendants to plead over on payment of costs within 20 days.
Argued before O’BRIEN, P. J., and McLAUGHLIN, INGRAHAM, CLARKE, and HOUGHTON, JJ.
Merle I. St. John, for appellants.
John M. Harrington, for respondent.

Opinion:
PER CURIAM.
Judgment affirmed, with costs, on the opinion of the court below, with leave to defendants to withdraw demurrer, and to answer on payment of costs in this court and in the court below.
INGRAHAM and McLAUGHLIN, JJ., dissent. '