Court Opinion

ID: 5494736
Source: CourtListenerOpinion
Date Created: 2022-01-10 02:50:38.893673+00
Date Added: 2024-06-11T08:33:46.487875
License: Public Domain

Landón, J.,
(dissenting.) The complaint alleges that the plaintiff was a general creditor of John McDonnell, who died intestate, and of whose estate-the defendants are administrators; that a portion of plaintiff’s debt has been paid by the administrators, in part from the personal property, and in part from the sale by the surrogate of the real estate of the intestate; that the intestate in his life-time transferred to the defendant Lucy McDonnell certain property in fraud of his creditors, and that all of his assets have now been applied towards the payment of his debts, except the property thus fraudulently transferred to the defendant Lucy McDonnell; that she claims to own such property, and refuses, though requested, to apply the same, or to pay the balance of the debt due the plaintiff; that the plaintiff has requested defendants to bring an action to set aside such conveyances, which they decline to do; that the only property applicable to plaintiff’s debt is that thus transferred by the intestate to the defendant Lucy McDonnell. The complaint does not allege that plaintiff recovered any judgment against the intestate or the administrators. The prayer for relief is the usual one in a creditors’ bill, except that the amount realized be distributed among all the creditors who-come in, etc. Upon the trial the plaintiff offered to prove the facts set forth in his complaint, and to prove the decree of the surrogate’s court directing the sale of the intestate’s real estate, not including that described in the complaint, to pay his debts, the sale, the application of the proceeds, and the-balance unpaid upon the plaintiff’s claim, and that a large amount of other debts of the intestate were not fully paid. The court, upon the objection of' defendants’ counsel to the evidence as insufficient to establish1 a cause of action against the defendants, and upon their motion that the complaint and facts offered to be proved did not constitute a cause of action against them,, dismissed the complaint; the court holding that the plaintiff, as a general creditor, without judgment and execution, could not maintain the action.
*87We think the court erred in supposing that the principles applicable to creditors’ bills, or actions in the nature of creditors’ bills, governed this case. The single question presented is whether a general creditor of an intestate, all of whose property has, in the due course of administration, been applied to the payment of his debts, except the property which it is charged that he transferred to defraud his creditors, can, under chapter 314 of the Laws of 1858, upon the refusal of the administrators to bring the action in behalf of the creditors of the intestate to set aside such fraudulent transfer, himself bring the action in behalf of himself and the other creditors, joining the administrators as parties defendant. We think he can. The statute cited confers the right upon the administrator to bring the action “for the benefit of creditors.” The authorities are conclusive that this means creditors at large, not merely judgment and execution creditors. Southard v. Benner, 72 N. Y. 424; Potts v. Hart, 99 N. Y. 168,1 N. E. Rep. 605. The right to bring the action is not merely given by the statute, but the duty is enjoined. Lichtenberg v. Herdtfelder, 103 N. Y. 302, 8 N. E. Rep. 526. The administrator is the trustee of the creditors for the purpose of enforcing such rights and remedies in their favor as may be needful to protect them. Bate v. Graham, 11 N. Y. 237. If the administrator, as such trustee, refuses to do this duty upon request of the creditor, the latter may bring the action making the trustee a party. Id.; Bates v. Bradley, 24 Hun, 84; Overton v. Village of Olean, 37 Hun, 48; Sands v. Codwise, 4 Johns. 536, 601; Crouse v. Frothingham, 97 N. Y. 114; Bank v. Leggett, 51 N. Y. 554; Dewey v. Moyer, 72 N. Y. 70,78. The relation of trustee and cestui que trust existing between the administrator and the creditors, equity has plenary jurisdiction to enforce the proper performance of the trust. Bate v. Graham, supra. It seems incongruous to insist that the general creditor must, before he can resort to such a remedy, obtain judgment, and proceed to execution thereon, when the statute which gives this remedy gives it in favor of creditors at large. It is further incongruous, for the reason that the remedy is given in favor of all creditors alike, not in favor of the vigilant or execution creditor. Lichtenberg v. Herdtf elder, supra. If the argument in defense of the necessity of becoming a judgment creditor is valid, it is valid only as to form; for if one creditor obtains his judgment, and proceeds to execution, he can pursue this remedy in behalf of himself and of other creditors who remain creditors at large. It is obvious that, since the general creditor would be entitled to share in whatever assets the administrator might realize by such an action, his claim or right to promote the action cannot be enhanced or improved by exhausting his legal remedies in other directions. The statute gives this remedy in favor of the general creditor. He therefore need not cease to be such before he can resort to it. It is a manifest mistake to suppose that the mere incident of some of the actions under this statute is a condition precedent to all of them. Lichtenberg v. Herdtfelder, is cited in opposition. But that action failed because the plaintiff brought it for himself alone, and did not make the administrators parties. The case recognizes the principles upon which this action is based. The court, however, in the discussion of a question not before it, remark that the surrogate has ample power, under section 2481 of the Code of Civil Procedure, to compel the administrators to bring such an action. Ho doubt that is true; but the power given by the Code to direct the action of administrators in this respect is not exclusive of that general jurisdiction of trusts which the constitution confers upon the supreme court.
The judgment should be reversed, new trial granted; costs to abide the event.