Case Name: SWART v. OAKLEY
Court: New York Supreme Court
Jurisdiction: New York
Decision Date: 1888-11
Citations: 22 Abb. N. Cas. 125
Docket Number: 
Parties: SWART v. OAKLEY.
Judges: 
Reporter: Abbott's New Cases
Volume: 22
Pages: 125–129

Head Matter:
SWART v. OAKLEY.
N. Y. Supreme Court, First District, Special Term ;
November, 1888.
1. Lien ; funds in the hands of a depositary.] The commencement of an action to set aside an alleged fraudulent conveyance of premises which had been previously mortgaged, does not create a lien on-surplus moneys derived from a sale under foreclosure of the mortgage as against a depositary, and deposited under an order of, court.
2. Trust company; protection for payment of deposit by order of court.] A trust company or other depositary of such moneys is protected on a payment thereof pursuant to an order of the court, even after service upon him of a summons and complaint in the creditor’s suit, wherein he was made a defendant.
3. Lis pendens; service of summons, etc., on depositary.] Service of the summons and complaint upon the depositary does not restrain his compliance with the order of the court directing the payment such an effect could only be had by a restraining order.
Action by judgment creditor to declare a conveyance ■fraudulent and void.
The plaintiff, Clarence F. Swart, as assignee of a judg- . ment recovered by George Putnam Smith, brought this action against Emily B. Oakley • and others, to declare fraudulent and void, a conveyance of realty by Emily B. 'Oakley, as having been made without consideration, when indebted to Smith, who subsequently obtained a judgment against Emily B. Oakley for the debt.
The alleged fraudulent conveyance, which was made on J uly 13, 1883, conveyed a life estate to the grantor’s father and mother, with remainder over after the survivor’s death to their children then living, and to the heirs of those ■deceased.
Prior to this conveyance, the premises had been mortgaged, and a suit to foreclose the mortgage was instituted on March 12, 1885. Judgment of foreclosure and sale was entered in that suit on April 25, 1885, pursuant to which a sale of the premises was had, resulting in a surplus of $1,211.95, which was claimed by the father and mother of the defendant Oakley and the children, including herself.
The father and mother each were paid a portion of this surplus as their share, and the balance was, in pursuance of an order entered in the action on August 19, 1885, deposited on August 21, 1885, with the Central Trust Company of New York, which was made a defendant in this action.
That order provided that the referee, after retaining his fees, pay the balance “ to the Central Trust Company to the credit of this action, to be held on deposit at the rate paid by said Trust Company for the benefit of the children and grand-children of the said defendants [names] who shall be living at the time of the death of the said [names].”
On November 30, 1887, an order was entered directing payment of the money so deposited, to the children of the life tenants under the conveyance, or their attorneys, and on December 3, 1887, a certified copy of -the order was served upon the defendant, Central Trust Company of New York, who, on the same day, paid the money to the attorneys of the children.
This action was begun by the service upon the Central Trust Company of a summons and complaint on November 26, 1887, and upon the other defendants after payment to them of the funds deposited.
The defendants failed to answer the complaint, and thereupon the plaintiff moved for judgment against the defendants.
George Putnam Smith, for the plaintiff.
Adrian H. Joline (Butler, Stillman & Hubbard, attorneys), for the Central Trust Co.
George C. Lay, for the defendant, Martin.
Compare United States Life Ins. Co. v. Jordan, 21 Abb. N. C. 330, 345, where it was held that creditors of a decedent, whose claims-against the proceeds of his real estate in litigation are protected by a deposit of a part thereof in court, under stipulation that the fund is to be held to answer for any deficiency in his assets to pay the debts for which his real estate may be liable, may maintain an action against the adverse claimants, joining the depositary as stakeholder, and joining the heirs of the deceased, for the purpose of obtaining judgment for payment out of the fund, and of recovering any deficiency from the heirs, to the extent .of their liability as such, for the decedent’s-debt.
Compare, also, Ward v. Kilpatrick, 85 N. T. 413, 418, where it was. held that in an action to foreclose a mechanic’s lien, it is unnecessary to file a lis pendens after the lien upon the real estate is discharged by a party depositing in court the amount of the debt, to abide the result of the lien.
In Albert v. Back (52 Super. Ct. [J. & S.] 550; aff’d, without opinion, in 101 N. Y. 656), the service of a summons without the. complaint upon assignee for benefit of creditors in which the assignee was named as a co-defendant was held to constitute notice to the assignee, of the pendency of an action to set aside the assignment, so as to disentitle him to credit for the amount of a preferred debt under the assignment, thereafter paid by him.
As to the relative rights of the parties to a deposit in court of money in lieu of an undertaking required respecting a personal remedy, see note in 18 Abb. N. C. 323.

Opinion:
Beach, J.
The plaintiff, assignee of a judgment against •defendant, Emily B. Oakley, brings suit to declare fraudulent and void, a conveyance of realty by said defendant as having been made without consideration, when indebted to plaintiff's assignor, who subsequently obtained a judgment for the debt. Emily B. Oakley had mortgaged the property. The mortgagees foreclosed, and upon a sale the surplus moneys were, by order of the court, deposited with defendant, The Central Trust Company, presumably to the credit of the action, and to be disposed of under the court's order. The conveyance attacked, conveyed a life estate to-grantor's father and mother with remainder over after survivor's death to their children then living, and to the heirs-of those deceased. The.sum found due those having a life estate was calculated and paid out to them. Thereafter the-defendant Trust Company under, and by virtue of an order-of the court, paid the balance to the children in remainder,., including the defendant, Emily B. Oakley. Before this-payment was made,- the Trust Company had been served-with a copy of the summons and complaint in this action.
The plaintiff contends that the defendant Company should not have paid over the fund, even in obedience to-an order of the court, having notice of his claim by service-of the summons and complaint, and did so at its peril. I have examined the authorities cited, and find none going further than holding that the plaintiff in a creditor's bill by beginning suit, acquires an equitable lien upon the-debtor's choses in action as between himself and the debtor,, who cannot' assign save subject to the lien (Roberts v. Albany & West Stockbridge R. R. Co., 25 Barb. 662; Storm v. Waddell, 2 Sand. Ch. R. 494). Granting that a lien exists, I cannot see how it could attach to any part of the fund, except Emily B. Oakley's. To give it wider scope, would make beginning the suit of equal potency-with a decree adjudging the deed void, and the fund the-property of defendant.
But I am of opinion that the order of the court protects the defendant Trust Company. It was the depositary of the court, bound to obey its order without question. The-fund was in custodia legis and the court could not permit a-violation of its order by the custodian holding expressly subject to and under it. Besides, no reasonable cautious-depositary would thus receive funds, exposed, on the one hand, to punishment for contempt, and on the other to the-serious burden of double payment, all because of being-made defendant in a litigation, which if successfully prosecuted would affect the fund. The bringing suit, would in- such case operate as an injunction pendente lite. This view appears to be sustained by People ex ret. Morris v. Randall (73 N. Y. 416), where the chamberlain paid over moneys deposited as in the case at bar. It is quite true the point was not directly involved, but the payment by the chamberlain was a fact pertinent to the decision, and the court say ; " But the chamberlain had the right to pay out this fund fpr another reason. The order of the court of common pleas of January 7, 1874, ordering him to pay the fund, is a sufficient protection to him. He had nothing to do with its procurement, and was in no way responsible for the manner in which it was procured. As to him, it was a valid order, and superseded the prior restraining order made by the same court." What the plaintiff claims was affected by service of the summons and complaint, could not have been, in my opinion, without a restraining order of the court, operative upon the defendant company and duly served.
A decree is directed dismissing the complaint upon the-merits with costs as against the defendant Trust Company, and for plaintiff against the individual defendant with, costs.