Court Opinion

ID: 3591593
Source: CourtListenerOpinion
Date Created: 2016-07-05 23:40:07.820796+00
Date Added: 2024-06-11T07:42:10.737243
License: Public Domain

On February 16, 1933, a judgment was entered against the appellants. On June 18, 1938, the assignee of this judgment procured an order under section 684 of the Civil Practice Act permitting the levy of execution upon income from a trust fund of which the appellant J. Ebb Weir was the beneficiary. Execution issued June 28, 1938. Following this, each of the appellants filed a voluntary petition in bankruptcy on September 2, 1938, and each listed the above judgment in the schedules as a debt. On January 18, 1939, an order was entered by the referee in bankruptcy by which the respondent and his attorneys were enjoined from taking any further proceedings to collect the aforesaid judgment, except in bankruptcy, until the granting or denial of discharge. That order also enjoined the trustee of the trust from paying over to the sheriff any portion of the income of the trust. By a modifying order the trustee was restrained from paying any income which accrued subsequent to adjudication.
Each of the bankrupts was discharged in bankruptcy on January 22, 1941, and thereafter moved in this proceeding for an order under the Debtor and Creditor Law, section 150, for the discharge of the judgment and of the execution against the income of the trust, and for an order directing the trustee to pay to J. Ebb Weir the moneys which it held under said execution. At Special Term this motion was denied and on appeal to the Appellate Division the order was modified by directing the discharge of record of the judgment, providing, however, that such discharge should not affect the lien of the execution against the trust income.
Pursuant to the stay orders of the bankruptcy court there has been accumulated in the hands of the trustee of the trust the sum of approximately $1,200, all prior to the date of discharge. These stays were not effective after that date, but on that date the respondent's judgment was discharged in bankruptcy and the bankrupt became entitled to an order under section 150 of the Debtor and Creditor Law completely discharging of record the execution as well as the judgment. This, however, did not entitle the discharged bankrupt to receive payment of the fund from the trustee which was accumulated prior to his discharge. This fund is an asset of the bankrupt estate, still subject to *Page 300 
administration there, notwithstanding the fact that the former trustee in bankruptcy has been discharged and that the estate presumably has been closed. (Stephan v. Merchants CollateralCorp., 256 N.Y. 418; see, also, Matter of Irving Trust Co.,267 N.Y. 102, cert. denied 296 U.S. 539.)
The order appealed from should be modified by directing the cancellation and discharge of record of the judgment entered February 16, 1933, and the cancellation of every right, lien or levy upon the income from the trust due or to become due to appellant J. Ebb Weir acquired by respondent by virtue of the garnishee order and execution, subject, however, to the orders heretofore issued in bankruptcy by the United States District Court for the Eastern District of New York.
The order should be modified in accordance with this opinion, and as so modified affirmed, without costs.
LEHMAN, Ch. J., LOUGHRAN, RIPPEY, LEWIS, CONWAY AND DESMOND, JJ., concur.
Ordered accordingly.