Court Opinion

ID: 5460867
Source: CourtListenerOpinion
Date Created: 2022-01-09 19:35:57.792985+00
Date Added: 2024-06-11T08:32:52.548953
License: Public Domain

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 and Lawrence, made in trust for the benefit of creditors. This assignment was assumed by the learned justice before whom the action was tried, to be fraudulent, as a conclusion of law, 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 now 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 can not be disputed that it might have been seized, and that the sheriff could 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 defense would be open to the sheriff notwithstanding no judgment had been yet 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. *607all the judges of that court concurring. (Rinchey v. Stryker, 26 How. Rr. Rep. 75.)
It has been held, in this action, by the judgment at special term, in substance, that the attachment issued on behalf of the creditors against their debtors can not 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 position is correct, the judgment must be affirmed; otherwise the plaintiff 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 defendants 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 were 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 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 *608considered 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 can not 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 the 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 the justice which the case may require upon 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 creditors shall be declared fraudulent as to their creditors, by a court of competent jurisdiction, the money deposited to the credit of their assignees becomes *609credits or effects of the debtors, liable to be recovered by the sheriff, in an action under § 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 and Lawrence, assignees of Lanes, 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 *610in this case; but if there are such suits, the result anticipated need not necessarily 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.
Clebke, J. concurred.