Case Name: John Kelly, sheriff, &c., appellant agt. William G. Lane, and others, respondents
Court: New York Supreme Court
Jurisdiction: New York
Decision Date: 1864-09
Citations: 28 How. Pr. 128
Docket Number: 
Parties: John Kelly, sheriff, &c., appellant agt. William G. Lane, and others, respondents.
Judges: 
Reporter: Howard's Practice Reports
Volume: 28
Pages: 128–139

Head Matter:
SUPREME COURT.
John Kelly, sheriff, &c., appellant agt. William G. Lane, and others, respondents.
It must now tie considered as settled by the court of appeals in Rinchey agt. Stryker (26 How. Pr. R. 75), that the title of a sheriff to property seized under an attachment may be maintained against any action brought by the assignees for the benefit of creditors of the defendant in the attachment suit, notwithstanding that no judgment has been recovered in the attachment suit.
ÍJnder section 232 of the Code, a sheriff holding an execution on a judgment in an attachment suit unsatisfied, may maintain an action in Ms own name ns sheriff, to sot aside as fraudulent and void an assignment of the judgment debtor’s property, which has been converted into money by the assignees and deposited with a banking company so as to create the relation of debtor and creditor between the assignees and the company (Sutherland, J., dissenting).
New York General Term,
September, 1864.
Before Leonard, Clerke and Sutherland, Justices.
Appeal by the plaintiff from a judgment at special term on a motion for a new trial.
Thomas H. Rodman, for appellant.
Jeremiah Larocque, for respondent.

Opinion:
By the court, Leonard, J.
The only property of the debtors in the attachment suit upon which service could be made by the sheriff, passed under an assignment from them to Wiley & Lawrence, made in trust for the benefit of creditors. This assignment was assumed by the learned justice before whom this action was tried, to be fraudulent as to creditors, and no facts were found by him upon the issues made by the pleadings in that respect, but the complaint was dismissed upon the sole ground of the want of authority in the sheriff to maintain this action. It will be assumed, therefore, in considering the appeal herein, as it was by the justice below, that the assignment was and is fraudulent as to creditors.
Had the assigned property, consisting of merchandise, the proceeds of which in cash, are deposited in the United States Trust Company, to the credit of the said assignees, remained in the hands of the said assignees as merchandise, at the time the attachment was issued to the sheriff, it cannot be disputed that it might have been seized, and that the sheriff might have maintained his title under the attachment against any action brought by the assignees to recover its possession or value, upon the ground that the title of the assignees was fraudulent and void as to creditors, of whom the sheriff would stand as the representative. And this defence would be open to the sheriff notwithstanding no. judgment had yet been recovered in the attachment suit. These principles are now settled after considerable conflict of legal authority, by the court of last resort in this state, all the judges of that court concurring (Rinchey agt. Stryker, 26 How. P. R. 75).
It has been held in this action by the judgment at special term in substance, that the attachment issued on behalf of creditors against their debtors, cannot be made effectual to reach the property of these debtors so assigned, notwithstanding the fraudulent character of the assignment, because the property is no longer tangible, but has been converted by the assignees into money, and so deposited in the trust company as to create the relation of debtor and creditor between the assignees and the said company in respect to the fund. If this proposition is correct the judgment must be affirmed, otherwise the plaintiffs will be entitled to a new trial.
It is made the duty of the sheriff to collect and receive into his possession all debts, credits and effects of the defendant against whom an attachment has been issued (Code, § 232). The sheriff is to make such collections, subject to the direction of the court or judge, and it is not probable that he would be allowed to collect any greater sum than would be sufficient to satisfy the demands for which the process in his hands had been issued, and perhaps he might not be permitted to collect debts, &c., in case there was tangible property upon which the attachment could be levied. Clearly the sheriff would be permitted in a proper case to maintain an action to recover money due from any person to the debtor in the attachment, upon open account, bond, bill, note, check, &c.
What significance is to be given to the word " effects," contained in section 232 ? It is used to mean something in addition " to debts and credits." Is money or other effects fraudulently disposed of by a debtor, and attempted to be concealed from his creditors, to be held beyond the reach of an action by the sheriff under this section, on the ground that the relation of debtor and creditor does not exist between the defendant in the attachment and the fraudulent possessor ? The money or other effects fraudulently concealed or disposed of, would, as to judgment creditors, be considered the property of the debtor in the attachment. It is true the fraudulent assignor could maintain no action to recover his money or property so disposed of. As against him the fraudulent title may be valid. The objection as against a, creditor is very different. A judgment creditor having an execution returned unsatisfied, can maintain his action in a court of equity to have any fraudulent disposition of his debtor's money or other property set aside on the ground of fraud, and applied to the satisfaction of his judgment. This relief is granted under the equitable power of the court, without any lien on the part of the creditor. Here it is the assignment only that prevents the money deposited by the fraudulent assignees from being considered assets of the debtors, in the attachment at common law.
It cannot be said that the sheriff must be denied all relief in the courts under section 232, except that which is usually denominated of a common law character. Unless we are to adopt such a rule, there can be no good reason for holding that a sheriff may not come into a court of equity to break down a fraudulent barrier that prevents him from collecting the effects of the debtor in an attachment by a common law action, and having taken cognizance for that purpose, proceed to administer that justice which the case may require on the merits.
There is no distinction in principle between the rule which permits the sheriff to impeach the title of a fraudulent assignee of a debtor in an attachment, in order to maintain his seizure of property belonging to such debtor in an action brought against the sheriff, and permitting the affirmative assertion of fraud in an action brought by the sheriff to recover debts, credits or effects of the debtor in the attachment held by an assignee of the debtor under a title fraudulent as against creditors. The moment the assignment from these debtors shall be declared fraudulent as to their creditors by a court of competent jurisdiction, the money deposited to the credit of their assignees becomes credits or effects of the debtors, liable to be recovered' by the sheriff in an action under section 232.
The true and liberal construction of this section of the Code requires us to hold that debts, credits or effects, held under a fraudulent title from a debtor in an attachment, are to be considered as the debts, credits or effects of the debtor, when the question is between the party holding under such fraudulent title and an attaching creditor, or the sheriff who represents such creditor. This principle is necessarily to be implied from the provisions of the Code in relation to the remedy by attachment, and the decision of the court of appeals before adverted to. It is the application of a principle analogous to the relief afforded by a court of equity in removing an impediment which prevents a creditor from obtaining satisfaction by a levy and sale on an execution.
The principle insisted on by the learned counsel for the respondents, and recently applied by this court in another case, by which the trust company was denied the right to interplead the attaching creditors and their depositors, Wiley & Lawrence, assignees of Lane, Boyce & Co., in respect to the fund in question has no application here.
While it may be true that the trust company could not be permitted to call in question in a court of justice the right of their depositors to the money deposited with the company to their credit, it by no means follows that a creditor, or the sheriff representing a creditor under an attachment, may not impeach the title of the depositor to the same fund. The theory of that decision was, that it was the business of the creditor to enforce his rights, and not for the trust company to volunteer for the purpose of raising a litigation which the creditor might not think proper to encounter. It was suggested at the argument that the attaching creditors if successful here would obtain an advantage over prior actions by judgment creditors which had been commenced, to have the assignment in question declared to be fraudulent and void. No such fact appears from the papers in this case, but if there are such suits, the result anticipated need not follow. The determination of the present action affects only the parties to it. Whenever other parties shall make it appear to the court in a proper proceeding for that purpose, that they have prior or better rights to the fund in question, the judgment in the present case can be no obstacle to their obtaining it. We adjudge only upon the rights of the parties before the court in the present action.
The judgment should be reversed and a new trial ordered, with costs to abide the event.