Court Opinion

ID: 5194500
Source: CourtListenerOpinion
Date Created: 2022-01-06 15:41:14.581001+00
Date Added: 2024-06-11T08:27:01.843344
License: Public Domain

Hatch, J. :
• The appeal in this case presents but a single point. The action was br'ought by the plaintiff, as assignee of Thomas "W. Robertson, and Thomas J. Dunn, the then sheriff of the county of Few York, under section 67Y of the Code of Civil Procedure, in aid of an attachment, to recover upon three promissory notes, only one of which is presently enforcible, as the Statute of Limitations has run against two. The point which the appeal presents relates to the validity of a levy claimed to have been made under the attachment, it being claimed that the levy was invalid and ineffectual to secure any lien upon the promissory note in question or any of its proceeds.
It is averred in the complaint that the note claimed to have been levied upon was, at the time of such levy, in the possession of the Few York Produce Exchange Safe Deposit and Storage Company, which had arid claimed a lien thereon at the time of the levy. Upon this subject the complaint avers: “ That on October 3, 1894, in the above-mentioned action * * * a warrant of attachment was duly issued out of this court whereby the- then sheriff of the county of Few York was directed to attach and keep all. the property of said Ongley Electric Company, within the county of Few York, and that thereunder the then sheriff attached the said promissory notes hereinafter mentioned by leaving a certified copy of said warrant, and a notice showing the property attached with the said Few York Produce Exchange Safe Deposit and Storage Company within the county of Few York, and that thereafter the said Few York Produce Exchange Safe Deposit and Storage Company furnished a certificate to the then sheriff of the county of Few York stating that it had at the time of the levy under the warrant as aforesaid a lien- for unpaid storage on the property of the said Ongley Electric Company so deposited as aforesaid, a part of which was the promissory notes hereinafter mentioned, and that by the said levy the said sheriff acquired the title to the said promissory notes subject to the lien as aforesaid, and that the defendants herein had notice of the said levy.” The averment of the complaint as to the levy of the attachment was hot denied by the answer; *111consequently, if the acts therein alleged to have been done constituted a valid levy, then it was error for the court to dismiss the plaintiffs complaint. Section 649 of the Code of Civil Procedure provides how a levy under a warrant of attachment shall be made, subdivision 2 of which reads: “Upon the personal property capable of manual delivery, including a bond, promissory note or other instrument for the payment of money, by taking the same into the sheriffs actual custody.” The claim is that by virtue of this provision no valid levy of an attachment can be made upon a promissory note unless the officer at the time takes actual physical possession of the note. This undoubtedly is the rule where the property is that of the defendant and there is no intervening obstacle to prevent actual delivery of the instrument. Then it must be taken into the actual possession of the officer or no levy is made. (Anthony v. Wood, 96 N. Y. 180.) But where the note or other property mentioned in the subdivision of the Code, to which we have called attention, is subject to the intervening rights of third parties, which gives to such parties the legal custody of the security for the protection of a lien, or right, held by them, then the levy may be made upon the interest of the defendant in the security, and such levy will be effectual to vest in the attaching creditor all of the interest which the defendant has in and to the security, and he becomes entitled to the surplus, realized upon a sale of the property or collection. of the money secured to be paid by the instrument, even though the note at no time be taken into the actual custody of the officer. This rule is now well settled by authority in this State, and the question may not be regarded as an open one. In Warner v. Fourth National Bank (44 Hun, , 374) t he presiding justice of this court (then the presiding justice of the General Term), writing for the court, held that under the provisions of the section of the Code to which we have called attention no valid levy of an attachment upon a promissory note could be made unless the officer at the time of making the levy took the securities into his actual possession. In that case the levy of the attachment was made upon a promissory note in precisely the same manner as the levy was made in the present case, and the averment of acts constituting the levy in all substantial respects the same as in the complaint in this case. (See printed case on appeal.) There, as here, the *112bank having the custody of the property had a lien thereon, so that the officer could not compel a surrender to him of the note, and the learned presiding justice, in answer to the claim that the officer making the levy had done all that it was possible for him to do, said: “ The difficulty seems to be that it is not so denominated in the bond, and no argument can repeal the express wording of the statute.” That case and the present cannot be distinguished. They are exactly parallel cases, and if the doctrine of that decision was the law of this. State at this time, we should be compelled to affirm this judgment. Upon appeal to the Court of Appeals, however, the Wa/rner Case was reversed. (116 ,N. Y. 251), the court holding that the construction which had been placed upon the Code provision was too literal; that as the pledgee of the note had the right to its possession, and with it the right to collect the full amount of the sum secured to be paid thereby, it could exercise such right; but that the surplus over and above a sum sufficient to discharge the lien was the property of the defendant, and even though such interest was intangible, it was, nevertheless, the subject of levy by attachment within the Code provisions, and that the levy in form as made was sufficient to vest in the levying creditor under the attachment the interest of the defendant in the surplus of the proceeds of the note after the lien of the pledgee should be discharged. A similar question arose in Simpson v. Jersey Gitry Goniractimg Go. (47 App. Div. 17) which was a levy upon shares of the capital stock of a foreign corporation which had been pledged to a trust company in the-city of New York. Two questions were considered : First, whether the stock was the subject of a levy by attachment, and it was held under the circumstances presented that it was; second, whether a valid levy by attachment could be made of it without taking the actual custody of the stock by the officer making the levy. The last question the court did not determine. Upon that subject Mr. Justice Ingkaham, among other things, said : “ The sheriff has not attempted to' take possession of the stock from the trust company, but has simply served a notice required by the Code for the purpose of attaching the right of the defendant to the stock so far as that right is capable of levy under such attachment. That this is a proper proceeding where personal property is held by a pledgée as collateral security for a sum of *113money was settled, by Warner v. Fourth National Bank (115 N. Y. 251). By the service of the copy of this warrant of attachment upon the trust company there was either a valid levy, or the notice Xas ineffectual for any purpose.” Upon appeal to the Court of Appeals the court affirmed the order (165 1ST. Y. 193), holding that the levy of the warrant of attachment was good, even though the actual custody of the stock was not. taken. There was a division of the court in that case, arising out of the claim that the record did not show the pledgor’s assignment of the stock to the trust company and, therefore, that the stock of the corporation could not be said to have been transferred; biit there was no division in the court concerning the question we are now considering. Judge Landok, who delivered the dissenting opinion (with whom Judge O’Bbien1 concurred), in speaking of Warner v. Fourth National Bank (supra), said : “ That was the case of a levy upon the pledgor’s interest in certain promissory notes, pledged by a non-resident to a resident pledgee .as collateral to a loan. The levy was not upon the notes themselves, and thus the sheriff was not required to take' possession of them, but upon the pledgor’s intangible right to redeem the notes, or to receive from the pledgee the surplus in his hands after satisfying his lien upon them, and thus the levy was properly made — in the same manner as in the case before us— under subdivision 3 of section 649 of the Code, by leaving a certified copy of the Warrant, and a notice showing the property attached, with the resident pledgee.” (See, also, Clarke v. Goodridge, 41 N. Y. 210; Dun-lop v. Patterson Fire Ins. Co., 74 id. 145.)
' The defendants seek to distinguish Warner v. Fourth National Bank (supra) upon the ground that the levy of attachment, where there is an intervening lien, must be upon the intangible interests, as such, remaining in the defendants, the owners of the note; that in fact such a levy is not upon the note, but upon the intangible interest ; that the levy in the present case is not upon such intangible interest because in terms it is stated to be upon promissory notes' and nothing else. The answer to this claim is that the levy in that case was maide in precisely the same form and manner as was the levy in this. case. The naming of the thing levied upon is not controlling. The effect of the act itself attaches the lien of the attach*114ment to the interest of the defendant in the property. The distinction lies, not in naming the interest levied upon, but in the fact that the intangible interest exists and the security is not capable of manual delivery to the officer because it is subject to the legal custody of another. Under such circumstances, the lien attaches to the interest even though thé statement be that the note is levied upon. If we are correct in this conclusion, it follows that the judgment should be reversed and a new trial granted, with costs to the appellant to abide the event.
McLaughlin and Laüghlin, JJ., concurred; Van Brunt, P. J., and Ingraham, J., dissented.