Hart v. A. L. Clarke & Co.

194 N.Y. 403 | NY | 1909

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.]

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] The general rule is well settled that until after the recovery of a judgment and the issuing of an execution thereon no equitable action can be maintained by an attaching creditor to set aside a fraudulent transfer. (Whitney v. Davis, 148 N.Y. 256. )

Where the summons in an action is served without the state or by publication pursuant to an order obtained for that purpose, and the defendant has not appeared in the action, it is provided by statute that the sheriff may in aid of an attachment maintain an action for the discovery of property belonging to the attachment debtor or he may maintain any other action that may be maintained by a judgment creditor. (Code of Civil Procedure, section 655.)

The plaintiff in an action may, by leave of the court or a judge thereof procured as described by statute, bring in the name of himself and the sheriff jointly any action that can be brought by the sheriff to recover property attached or the value thereof or for the purposes stated in said section 655. (Code of Civil Procedure, section 677.)

This action is not brought pursuant to such statutory authority. The plaintiff seeks to maintain this action upon the facts stated in the complaint as one within the general equitable powers of the court. There are some exceptions to the general rule that an action will not lie by an attachment creditor until the recovery of a judgment and the return of an execution thereon unsatisfied. The authorities relied upon by the plaintiff are instances of such exceptions to the general rule.

The Special Term granted the injunction upon the authority ofPeople ex rel. Cauffman v. Van Buren (136 N.Y. 252, 260). This was an equitable action analogous to a creditor's suit in which it was sought to postpone the lien of certain executions to the lien of the plaintiff's attachment. It was alleged that the judgment debtor had fraudulently confessed judgments to three of the defendants in the action to the amount of $17,000, and that immediately upon the confession of said judgments executions were issued to the sheriff of the county where the debtors resided and a levy was made upon their tangible property, and that the sheriff had advertised their property for sale. Such levy preceded the attachment and was an apparent lien on all the attached property. It appeared by the complaint that unless the action was maintained the attached property would be sold by the sheriff and the proceeds first applied upon the fraudulent judgments. The court in that case held that it was not without jurisdiction to intervene in aid of the attachment creditor, and said: "The jurisdiction of a court of equity to reach the property of a debtor justly applicable to the payment of his debts, even where there is no specific lien, is undoubted. It is a very ancient jurisdiction, but will be exercised only when special circumstances exist requiring the interposition of the court to obtain possession of and apply the property. Such circumstances, we think, are shown to exist here. The case would be different if executions had not been issued upon the fraudulent judgments. The mere existence of a fraudulent transfer would not be sufficient to authorize a court of equity to entertain an action at the suit of an attaching creditor to set it aside. But when it is sought to make use of such a transfer for the purpose of removing the attached property from the jurisdiction of the officer who has it in his custody, it is evident that nothing but the equitable arm of the court can prevent the consummation of the wrong."

This court in Whitney v. Davis (supra), referring to theCauffman case, say: "All that the Cauffman case decided was, that special circumstances might exist and if shown that they would authorize the granting of equitable relief at the instance of an attaching creditor, though prior to judgment and execution, in order to preserve the debtor's property in a condition where a recovery by the attaching creditor could be made effective. It was not intended to hold that an equitable action was within the power of the attaching creditor to maintain, ordinarily, prior to judgment and execution, nor to introduce any innovation upon the settled rule. It was considered, however, that where the debtor's property was about being transferred beyond the reach of the sheriff, in whose hands it was, a case was presented where the court might properly extend its equitable arm and stay the threatened transfer." (P. 261.)

In each of the cases cited by the appellant, among which areBates v. Plonsky (28 Hun, 112); Tannenbaum v. Rosswog (22 Abb. N.C. 346); Keller v. Payne (22 Abb. N.C. 352, n.);Moritz v. Kaliske (31 Abb. N.C. 49); Lopez v. Merchants F. Nat. Bk. (18 App. Div. 427) there were special circumstances and facts other than an alleged fraudulent transfer of the property that required equitable interposition to preserve the attached property to await the result of the action in which the attachment was issued.

In this case the complaint does not contain allegations of special circumstances bringing the plaintiff within any of the exceptions to said general rule that are recognized by the courts.

It does not show that the plaintiff is in any danger from the alleged fraudulent transfer of the attached property.

It is settled in this state that an attachment is a good defense in an action brought by a fraudulent vendee against a sheriff for seizing the property so attached. (Rinchey v.Stryker, 28 N.Y. 45; 31 N.Y. 140; Hess v. Hess, 117 N.Y. 306;Skilton v. Codington, 185 N.Y. 80; Mechanics' T. Bankof Jersey City v. Dakin, 51 N.Y. 519.)

It is not alleged that there is any outstanding process regular and lawful on its face by which there is a prior apparent although fraudulent lien on the attached property under which it may be taken from the possession of the sheriff and removed from the jurisdiction of the court, or disposed of by the sheriff, and the proceeds distributed in consummation of the fraudulent scheme.

By the express allegations of the complaint, the alleged fraudulent transfer was actually made subsequent to the attachment, and it is consequently subject to it. Even if it appeared that such alleged fraudulent transfer preceded the attachment, the possession by the sheriff of the attached property is, as we have shown, a defense against any claim by such fraudulent vendee. (Bowe v. Arnold, 31 Hun, 256; affirmed on opinion of DANIELS, J., 101 N.Y. 652.)

The order should be affirmed, with costs, and the question certified to us answered in the negative.

CULLEN, Ch. J., HAIGHT, VANN, WERNER, WILLARD BARTLETT and HISCOCK, JJ., concur.

Order affirmed.