Case Name: BREARLEY SCHOOL, Limited, v. WARD
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1910-06-10
Citations: 123 N.Y.S. 614
Docket Number: 
Parties: BREARLEY SCHOOL, Limited, v. WARD.
Judges: 
Reporter: West's New York Supplement
Volume: 123
Pages: 614–619

Head Matter:
BREARLEY SCHOOL, Limited, v. WARD.
(Supreme Court, Appellate Division, First Department.
June 10, 1910.)
1. Constitutional Law (§ 90 )—Impairment of Vested Rights.
The amendment of Code Civ. Proc. § 1391, by Laws 1908, c. 148, allowing levy of execution on an income derived from a trust fund, though the judgment was not recovered for necessaries or for work performed as a domestic, etc., has reference to a change in Code Civ. Proc. §§ 1389-1404a, governing exemptions from execution, and does not impair the value of a vested estate or deprive any one of a vested property right; an exemption from execution being a gratuity and not a vested right.
[Ed. Note.—For other cases, see Constitutional Law, Cent. Dig. § 204; Dec. Dig. § 99.*]
2. Constitutional Law (§ 120*)—Obligation of Contracts—Exemption Statute as Contract.
A statute of exemption from execution is not a contract between the state and the judgment debtor.
[Ed. Note.—For other cases, see Constitutional Law, Cent. Dig. §§ 292, 302; Dec. Dig. § 120.*]
Ingraham, P. J., and McLaughlin, J„ dissenting.
Appeal from Appellate Term.
Action, by the Brearley School, Limited, against Beverly Ward. An order of the City Court of New York, denying a motion for an order under Code Civ. Proc/ § 1391, was affirmed by the Appellate Term (Í21 N. Y. Supp. 691), and plaintiff appeals.
Reversed.
Argued before INGRAHAM, P. J., and McLAUGHLIN, SCOTT, CLARKE, and DOWLING, JJ.
Grenville Clark, for appellant.
William G. Chittick (Louis W. Dinkelspiel, on the brief), for respondent.
For other cases see same topic & § number in Dec. «fe Am. Digs. 1907 to date, & Rep’r Indexes

Opinion:
DOWLING, J.
Plaintiff obtained a judgment against the defendant in the City Court of the city of New York on September 17, 1909,' for the sum of $727.63, which was duly docketed and the execution issued thereupon was returned unsatisfied. Having ascertained that defendant was in receipt of an income from, a trust estate created under the last will and testament of Montagnie Ward, deceased (admitted to probate September 6, 1879), plaintiff applied to the City Court on December 7, 1909, for an order for a special execution against said income pursuant to the provisions of section 1391, Code Civ. Proc. It is not questioned that the application complied in all respects with the requirements of the .section. It was denied upon the ground that the amendment of the section which went into effect on September 1, 1908 (Laws 1908, c. 148) and by which a special execution against trust income as well as against wages, debts, earnings, and salary, was authorized where a judgment for any cause had been recovered (thus extending the prior authority for such an execution only in the case of a judgment for necessaries), did not apply to trusts created before the passage of the act. The Appellate Term (121 N. Y. Supp. 691) held that the legislation was retroactive, and that, as the section must be so construed and held to be applicable to income from trusts created prior to its enactment, it was unconstitutional. From this determination the present appeal is taken.
At the outset it may be said that the amendment of section 1391 does not impair the value of a vested estate, nor deprive any one of a vested right in property. It has reference to a.change in the provi-, sions of law governing exemptions of property from levy and sale by virtue of an execution, which are found in title 2, art. i, Code Civ. Proc. § 1389-1404a, inclusive. It is well settled that a statute of exemption from levy under an execútion is not a contract between the state and the judgment debtor. Such an exemption is a gratuity, not a vested right, and it may be changed as circumstances may dictate. Myers v. Moran, 113 App. Div. 427, 99 N. Y. Supp. 269. "Of course, it could not be said that if a man purchased a farm, and at the time it was exempt from execution by levy by creditors, the Legislature would have no right thereafter to remove or alter that exemption." Kittel v. Domeyer, 70 App. Div. 139, 75 N. Y. Supp. 153. As was said in the case of Harris v. Glenn, 56 Ga. 94:
"Debtors have no vested right not to pay their debts. What they have and what they acquire the state may subject to legal process for the satisfaction of creditors. If the state will furnish the process and allow it to run, nothing the debtors own is beyond its reach. Exemption of property from levy and sale for the payment of debts is but a privilege for the time being—mere grace and very dependent upon the will of the state. An exemption which exists by statute may be reduced or withdrawn by statute."
"Statutory exemption of a debtor's property from levy and sale for the payment of his debts is a mere privilege for the time being, dependent upon the will of the state, and not a vested right, and, in the absence of constitutional restrictions, the Legislature may modify or wholly repeal exemption laws, even as to existing property and debts. Modification or repeal of an exemption does not impair the obligation of any contract as to creditors, but, on the contrary, it enlarges their remedy. And it is not objectionable as impairing the obligation of contracts as regards the debtor, for there is no contract giving him an exemption." 12 Am. & Eng. Ency. of Law (2d Ed.) 74.
The exemption from having his income from the trust estate reached by execution which the defendant has heretofore enjoyed is a favor granted by the state, for which neither he nor the testator gave any consideration, and which may be limited or removed by the state as freely as it was originally created.
The distinction seems clear between transfer tax cases, where by subsequent legislation it was sought to tax estates and rights which had theretofore vested, as in Matter of Pell, 171 N. Y. 48, 63 N. E. 789, 57 L. R. A. 540, 89 Am. St. Rep. 791, and the case at bar. In the former instance a part of the property was taken directly from the .person taxed and applied to a public and general use. In the latter no part of the income sought to be reached by execution is divested to a general use, but the debtor is compelled to use a portion of his funds in installments to satisfy a just debt which he has contracted, and which he would be compelled to pay at once in full, were it not that the state has given him as to that fund an immunity from the seizure under execution which it deems wise to limit and retrench. There never was any contract between the debtor and the state that the original immunity from levy would be preserved, as there never was any contract between the testator and the state that existing laws at the time of his'decease should remain unchanged so far as affected the interests of those for whom he created a trust. The legislation by which the exemption of wages and trust income from levy under an execution was first abridged to the extent of 10 per cent, when a judgment for necessaries had been recovered, and then similarly abridged in the case of any judgment, was purely remedial in its nature. As was said in Laird v. Carton, 196 N. Y. 174, 89 N. E. 823, in reference to this very section:
"The amendment to section 1391 like the whole section as it stood before the amendment relates to proceedings in a lawsuit—i. e., the execution or final process—hence it is a statute dealing with a legal remedy. It applies to all cases which have reached the intermediate stage between judgment and execution. As has been pointed out, the phraseology of the amendment does not require us to construe it as applicable only to future judgments. It matters not that when the judgment was recovered an execution could not issue thereon against wages, earnings, or salary; it is enough that such an execution has subsequently been authorized. The statutory authorization for its issuance does not impair the obligation of any contract or affect any vested right. It merely furnishes the judgment creditor with a broader and more effective remedy than the law gave him before. To this there is no constitutional objections. Such an application of the statutes is not so much retroactive, as active upon an existing condition of things, to wit, existing judgments which are yet to be enforced by execution."
See, also, Myers v. Moran, 113 App. Div. 427, 99 N. Y. Supp. 269; Morse v. Goold, 11 N. Y. 281, 62 Am. Dec. 103.
It follows, therefore, that the order of the City Court and the determination of the Appellate Term must be reversed, with costs to appellant' in all the courts, and the application for leave to issue a special execution granted, with $10 costs.
CLARKE and SCOTT, JJ" concur.