208 Misc. 225 | N.Y. Sup. Ct. | 1955
The facts submitted and the authorities cited were many. Upon analysis, I find that the motions project but one fundamental problem of law — in turn dependent upon very few salient facts, which alone are operative in the premises, and which are substantially undisputed. Let me endeavor to put the basic facts and issues simply.
In January, 1954, Horizon Enterprises, Inc., sued United Artists Corporation in this court, alleging that United was indebted to Horizon in the sum of about $90,000. United denied that any sums were due and owing to Horizon, claiming in fact that Horizon was indebted to United in about $250,000, for
To obtain an attachment, a plaintiff must aver that the defendant is indebted to the plaintiff in a stated amount over and above any offsets or counterclaims known to or acknowledged by the plaintiff (Civ. Prac. Act, § 903). The plaintiffs here make much of the assertion that certain accountings between the parties showed United to be indebted to Horizon; and that by way of secret, collusive arrangements between them, United and Horizon have sought to defeat the plaintiffs’ efforts to collect their claim against Horizon. The charge, meaning and effect are all denied by United. Be that as it may, the fact as to the first point is that when Horizon sued United, the latter counterclaimed for more against Horizon than the amount of Horizon’s claim. Therefore, United is obliged to pay nothing to these plaintiffs if United owes nothing to Horizon, or, if, as a result of settlement negotiations between United and Horizon, United is obligated to pay nothing to Horizon — and the net result may even be a debt from Horizon to United, and not the reverse. And, as to the second point, I know of no statute or precedent authorizing a remedy such as that invoked here in aid of the plaintiffs’ attachments. If, as the plaintiffs claim, their warrants reach the fund, the attachments in themselves have all the protection the plaintiffs need. If acts are done by Horizon, United or the Sheriff in violation of the legal efficacy of the plaintiffs’ attachments, then each is responsible to the plaintiffs for its or his acts. And any alleged unlawful conspiracy between United and Horizon or others to defeat the attachments, while not triable on these motions, remains independently actionable. No reason appears therefore why, in these actions, the process, conduct or disposition of the action of Horizon v. United should be interfered with. What an attachment does should not be confused with a fraudulent dealing with an attached fund or debt. It seems to me that the plaintiffs now are seeking an advantage or a protection which they already have by their own contentions, if right, or cannot secure here because their contentions are wrong. Whether they are wrong or right depends upon the function and effect of the attachments — that of Horizon against United, and those of Republic and Reich against Horizon. These will now be considered.
Of course, when the attachment processes were served by the plaintiffs on United, Horizon and the Sheriff, the claim of Hori
Thus stated, the issues are clarified. In determining whether the plaintiffs (Republic and Reich) are entitled to prevent the Sheriff’s return to United of the fund in question, it must first be ascertained whether the warrants of attachment (of Republic and Reich) could effectively be levied upon this fund. It is not disputed that the fund itself, in the Sheriff’s hands, is not the property of Horizon, but on the contrary title to that fund was at all times, and remains, in United. Obviously, under the warrants in these actions the plaintiffs cannot attach property that belongs to United. It follows that the fund as such was not affected by the plaintiffs’ levies. It still belongs and will belong to United, until the Horizon action is disposed of; in which event, because of the attachments levied against the chose in action, United (or the Sheriff) would, if Horizon prevails, be required to pay over pro tonto to these plaintiffs. It therefore follows further that the plaintiffs’ attachments in these actions do not reach the property of United in the fund. They reach, of course, the alleged debt of United to Horizon or Horizon’s cause of action against United; and, if they reach anything more, it must only be the “ interest ”, if any, of Horizon in the attached fund.
One question is, therefore, whether the attachments of these plaintiffs (levied, as they were, upon Horizon’s claim against United) also reach Horizon’s attachment against United. Another question is, whether, by virtue of Horizon’s attachment against United, Horizon has such an “ interest ” in the United fund levied upon by Horizon that this interest is itself attachable by the plaintiffs on the basis of their respective claims against Horizon. These questions are quite related in their fundamentals. Put in another, way, can there be an “ attachment upon an attachment ’ ’ ? While the thought is of no aid in
It is well to be reminded at this point that attachment is an extraordinary remedy, that it permits the seizure of a defendant’s property prior to an adjudication of the plaintiff’s claim and a determination of the defendant’s liability, that it runs counter to the fundamental common-law concept that before depriving a party of his property, opportunity for hearing should be offered (Rowles v. Hoare, 61 Barb. 266, 270-271), and that in consequence the right to make such seizure should be, and is, carefully circumscribed. “ Owing to the statutory origin and harsh nature of this remedy the section in question should be construed, in accordance with the general rule applicable to statutes in derogation of the common law, strictly in favor of those against whom it may be employed ” (Penoyar v. Kelsey, 150 N. Y. 77, 80).
Let us then examine the applicable statutes. Section 902 of the Civil Practice Act provides that a warrant of attachment may, in a proper case, be granted “ against the property of one or more defendants ”. Section 912 states that the Sheriff must execute the warrant by levying upon “ the property of the defendant ”. The rule is that property sought to be levied upon must belong to the defendant-debtor. (10 Carmody-Wait Cyclopedia of New York Practice [1954], p. 135.) Accordingly, unless it appears that the Sheriff holds what constitutes 1 ‘ property ” of Horizon, it cannot be attached by the plaintiffs. Section 916 is the claimed statutory authority for the attachments levied by the plaintiffs. Referring generally to intangible property, the section in all of its provisions expressly limits a levy to a “ debt ”, a “ cause of action ’ ’ and to the ‘ ‘ right or interest ” of the defendant in the estate of a decedent or in property held by a fiduciary or in a partnership.
If, in the suit of Horizon against United there were no attachment, then there would exist merely Horizon’s chose in action against United. United’s fund is not a chose in action in any sense and is not part of Horizon’s chose or cause of action against United. Nor did the fund represent the debt owing from United to Horizon. The attached fund was but security for the payment of the debt if one existed (Penoyar v. Kelsey, 150 N. Y. 77, 80, supra). If, upon the trial of the action of
The plaintiffs cite Haebler v. Myers (132 N. Y. 363), and there is some language in the opinion which gives credence to the plaintiffs’ reliance. But, upon analysis, it is clear that the case is quite inapplicable. Using (for convenience) the names of the present litigants instead of the names of the parties involved in Haebler v. Myers (supra), the facts and procedures in that case were these: Horizon caused to be issued an attachment against United. The Sheriff received certain moneys from United by virtue of the levy. The plaintiffs were subsequent lienors of United. They procured an order of the court restraining the Sheriff from paying over the fund to Horizon. - Later, the plaintiffs also procured an order vacating the attachment. Thereupon the Sheriff paid over to the plaintiffs, as subsequent lienors, the fund received by him on the Horizon attachment against United. On appeal, the order vacating the attachment was reversed. In the meanwhile, Horizon had recovered judgment in its favor against United, but was unable to collect thereon. Horizon demanded restitution from the plaintiffs, and, upon refusal, Horizon sued the plaintiffs to compel restitution.
“ When they [the plaintiffs in the cases at bar — Republic and Reich] accepted the money that was paid over in consequence of the order that they procured, they knew that if the order should be reversed and their motion denied, they would no longer be entitled to it, and could not in fairness retain it. They also knew that if, in the meantime, the plaintiffs [Horizon] perfected judgment [against United] and issued execution, their [Horizon’s] right to the money, if not paid .over, would lie complete upon a reversal of the order. As they [the plaintiffs 1 acted with knowledge of all the facts, it would be inequitable for them to retain money received under such circumstances * * *. But to whom did the implied promise [to make restitution] run! Obviously to those who would have been entitled to the money upon the reversal of the order, provided it had not been paid to the defendants [the plaintiffs]. It was so held in Camerton v. McCarkle (15 Grat. 177), which is precisely in point. The law implies the promise for the benefit of the injured party, and if the situation were the same as it was when the money was paid, repayment to the sheriff would be required, because he would be entitled to possession of the fund under the restored attachment. (Pach v. Gilbert, 124 N. Y. 612.) But the situation is changed, as the plaintiffs [Horizon] have become entitled to the money by virtue of their judgment and execution. They, and they alone, therefore, can avail themselves of the implied promise, which is plastic in character and for the benefit of whom it may concern. The law implies a promise because in equity and good conscience the defendants [the plaintiffs] ought to have promised, and it will not permit them to say that they did not. It would be an anomaly to hold that the law will imply a promise in favor of one having title, but not in favor of one holding the first lien, when through the action of agencies known by the parties to be in operation and in the ordinary course of legal procedure, the lien would have ripened into a title, but for the erroneous order. The defendants [the plaintiffs] procured the order and acted upon it, and thereby obtained money that did not belong to them, and, under such circumstances, the law presumes that they engaged to do what reason and justice require them to do. They are, therefore, under an obligation to restore the money.
With these facts and holding and reasoning as a background I cannot accept as mandatory authority applicable to the instant case the dictum of the court in Haebler v. Myers (132 N. Y. 363, p. 368, supra), and so stoutly presented by the plaintiffs, that “ a lien is property in the broad sense of that word, and although it has no physical existence it exists by operation of law so effectively as to have pecuniary value, and to be capable of being bought and sold.” On the contrary, I am of the view that the required strict construction of the attachment statutes prohibits the extension of the meaning of the word 61 property ’ ’ to include Horizon’s interest. (Cf. Sheehy v. Madison Square Garden Corp., 266 N. Y. 44, and Fredrick v. Chicago Bearing Metal Co., 221 App. Div. 588.) In New York, as in California, “ Numerous contingencies might arise that would prevent the [Horizon] attachment lien from ever becoming perfected by a judgment awarded and recorded. Thus the attachment lien is contingent or inchoate — merely a lis pendens notice that a right to perfect a lien exists.” (United States v. Security Trust & Sav. Bank, 340 U. S. 47, 50.)
In sum, I hold that Horizon’s interest by way of its attachment is not itself attachable — that here “ there cannot be an attachment engendered upon an attachment. ” But while I deem this view to be correct, I shall (for purposes of further consideration of the problem) not be dogmatic about it — I shall assume, arguendo, that, by virtue of its attachment, Horizon has gained some kind of property right, which is itself subject to attachment by the plaintiffs, as creditors of Horizon.
There are other issues presented (unrelated to the basic problem) but I need not pass upon them. The application of the plaintiffs to restrain the Sheriff from returning the remaining fund to United is denied, and Republic’s application to vacate the order dated August 26, 1954, is likewise denied. Settle separate orders, upon notice to all the parties and to the Sheriff of the City of New York, and reciting all of the appropriate filed papers in the three actions involved.
The precise problem seems not to have been studied by the Law Revision Commission. (See Legis. Doc. No. 65L, “Act, Recommendation and Study relating to the Levy of Execution Against a Debt ”, 1952 Report, Recommendations and Studies, p. 355, at pp. 383-386, 394-396.)