Court Opinion

ID: 3624209
Source: CourtListenerOpinion
Date Created: 2016-07-06 00:05:13.771805+00
Date Added: 2024-06-11T13:44:17.626424
License: Public Domain

No question arises in this court as to the fraudulent character of the assignment. I think only two questions are presented for consideration: 1st. The rejection of the payment by Menck to Pfieman; and 2d. The amount Menck should pay over to the receiver.
As, between themselves, the assignment from Beiser to Menck was valid; it passed the title to all the property named, for the uses and trusts therein declared. It was only *Page 388 
as to creditors of Beiser that the assignment was fraudulent. By that instrument Menck was directed to pay certain sums to Pfieman; by accepting the trust, he agreed to perform, and he did so before this action was commenced. This sum may not have been honestly due from Beiser to Pfieman; but, if not, Menck could not set up the fraud. He had been invested with means to pay this sum; had accepted the trust, and it did not lie with him to question its honesty or refuse performance. The creature could not set at defiance the will of his creator.
The judgment ordered Menck to pay over to the receiver such money as had come to his hands, in virtue of said assignment, except such as had been paid out or distributed to the creditors of Beiser, pursuant to the directions of the assignment, before the commencement of the action. It was clearly shown that the payment to Pfieman, which was rejected, had been made before. By the terms of the order, every item paid in pursuance of the assignment before the commencement of the action, should have been allowed. Nothing was said about sums paid to bona fide
creditors. The referee was not authorized to inquire into the validity of the debts which had been paid; but only to ascertain what had been paid before the action commenced. Therefore the rejection of this item of $2,650 paid to Pfieman was erroneous.
I am also of the opinion that the judgment, the report of the referee under the order, and the allowance of extra costs were wrong in theory and amount. The plaintiff was a receiver appointed in proceedings supplementary to execution under the Code (§§ 292, 298). Such a receiver can only be appointed after judgment, execution issued to the proper county and returned unsatisfied in whole or in part; and then only for the purposes of that particular judgment. If other judgments have been recovered against the debtor, on application founded on proper proceedings, the court may extend the receivership for the benefit of such other judgment. But the proceeding in each case is separate and distinct, and the creditors take priority according to the date of *Page 389 
their several proceedings. It is true that a receiver so appointed is declared vested with the property and effects of the judgment debtor from the time of filing and recording the order of his appointment, but it is only for the purpose of satisfying the judgment in which the proceedings were had and his appointment made, or those over which the receivership has been extended, and the costs arising therefrom, not to sequestrate the debtor's whole estate, unless necessary to satisfy such judgments.
The bail required from such a receiver is not regulated by the debtor's property, unless, on examination, it appears to be less than the judgment. If more than the judgment, the bail is usually double the amount of such judgment; and if the receivership is afterwards extended by proceedings under other judgments, additional bail is, or may be required. In this case the undertaking of the receiver was only $500; the money ordered to be paid over to him exceeded $15,000.
The Code (§ 298) declares that the receiver of a judgment debtor shall be subject to the direction and control of the court; and when application is made, the court will direct according to the facts and circumstances of each particular case. And though the debtor may have property not in the hands of the receiver, yet, if the receiver has sufficient in his hands to satisfy the particular judgment and costs in the proceeding under which he was appointed, and if extended to those demands also, the court will order an accounting and direct payment to the creditor or creditors in such proceedings; the surplus, if any, brought into court and the receiver discharged from the trust. The theory of the New York Common Pleas, as stated in this case (10 Abb., Pr. Rep. 197,) that "a receiver in supplementary proceedings is not a trustee alone for the parties at whose instance he was appointed, but for all the creditors of the judgment debtor," is not correct. (See Becker v. Torrance,31 N Y Rep., 641). It was not the purpose of this provision of the Code to seize upon and sequestrate the judgment debtor's estate for the *Page 390 
benefit of all his creditors; its purpose was to furnish a cheap and easy mode of discovering the concealed property of a judgment debtor and applying it to the satisfaction of the judgment or judgments in which proceedings were taken. When property enough to satisfy such judgment or judgments is reached, the purpose of the appointment of a receiver is accomplished; that officer owes no duty to other creditors of the debtor.
In this case the plaintiff had been appointed receiver in but one case. The averment in the complaint, and the admission of Beiser, of other judgments against him, did not conclude Menck. He had denied the allegations of the complaint, and the existence and amount of such judgments was to be proved as against him; but, if otherwise, the amount of such other judgments were not stated in the complaint, and in this proceeding were not known.
It follows from these views, that the judgment of the General Term should be reversed; that the order for an extra allowance of costs discharged, the costs re-adjusted and judgment of the Special Term modified, so that on defendant Menck paying plaintiff, as receiver, a sum sufficient to satisfy the judgment in which he was appointed receiver, with interest, costs of appointment, commissions, and costs of this action up to the report of the referee, he, Menck, should be discharged from all further proceedings in this action and the same satisfied of record.
DANIELS, J., also read an opinion in which he arrived at the same result, and which contained a condemnation of the validity of an order for extra allowance of costs and of the correctness of the account stated by the referee below; but the last question was not passed upon by the court.
HUNT, Ch. J., WOODRUFF, MASON and LOTT, JJ., concurred in the opinion of GROVER, J.
Judgment reversed and new trial, unless the plaintiff consents, within thirty days, to reduce the recovery to the *Page 391 
amount of the Dolan judgment and expenses and costs, and in that case, the judgment affirmed without costs of appeal and without the extra allowance granted below.