Ditmas v. McKane

92 A.D. 344, 86 N.Y.S. 1083
Appellate Division of the Supreme Court of the State of New York·Decided March 15, 1904·Published·Cited by 1 cases

Opinion

O’Brien, J. :

This is an appeal from a judgment in plaintiff’s favor setting aside ■ certain deeds of property belonging to John T. McKane, now deceased, as fraudulent. Brior to the bringing of this action John T. McKane, who was then living, had the title in fee to many distinct parcels of real estate which are particularly described in the complaint, some of which were transferred to his brother, James McKane, and some to George W. Roderick. The parcels thus separately deeded had, at the time of the commencement of this action, by mesne conveyances, in the making of which the appellants were concerned, come into the possession of Fanny McKane, wife of John T. McKane.

[346]*346When the original transfers were made John Y. McKane was indebted to Henry C. Ditmas, deceased, in the sum of '$25,000, which was represented by a promissory note for that amount. ' The plaintiff herein, . Abigail Ditmas, having together with Johanna Ditmas, applied for letters of administration of the estate of Henry C. Ditmas, deceased, and not having furnished a bond in an amount sufficient to entitle her to receive and obtain possession and control •of the entire assets, the surrogate, pursuant to the provisions of the Code of Civil Procedure to which we shall advert, issued letters of administration to .them, but directed that the possession and custody of the note in question should not pass to the administratrix, but that the note should be deposited with a trust company. Without thereafter obtaining any order or direction from the surrogate, and while the note was thus in the custody and possession of the trust company, the plaintiff, as surviving administratrix (Johanna Ditmas having died) brought .an action against John. Y. McKane, who was then in prison, and subsequently entered a judgment against him for the full amount of the note and interest. Thereupon the plaintiff issued execution, and it having been returned unsatisfied, she has now brought this action for the purpose of setting aside the conveyances made in favor of the several defendants, which, it is alleged, were made in fraud of her rights as a creditor.

It will be noticed that this is a judgment creditor’s action, the basis of which is necessarily the obtaining of a valid judgment against the debtor and the return of an execution against his property unsatisfied. If, therefore, the plaintiff had no right to sue upon the note and obtain a judgment, or, having the right to obtain a judgment, had no right to issue an execution to collect it-against the property of the debtor, then it would follow that she had no right to institute this judgment creditor’s action.

Section 2595 of the Code of Civil Procedure provides that in a case where “ the value of the estate or. fund is so great that the surrogate deems it inexpedient to require security in the full amount prescribed by law, he may direct that any securities for the payment of money belonging to the estate or fund be deposited with him, to be delivered to the county treasurer or be deposited subject to the order of the trustee, countersigned by the surrogate, with a trust company duly authorized by law to receive thé same. After such [347]*347a deposit has been made the surrogate may fix the amount of the bond with respect to the value of the remainder only of the estate or fund. ■ A security thus deposited shall not be withdrawn from the custody of the county treasurer or trust company, and no persons other than the county treasurer or the proper officer of the trust company shall receive or collect any of the principal or interest secured thereby, without the special order of the surrogate entered in the appropriate book. Such an order can be made, in favor of the trustee appointed, only where an additional bond has been given by him, or upon proof that the estate or fund has been so reduced .by payments or otherwise, that the penalty of the bond originally given will be sufficient in amount to satisfy the provisions of law relating to the penalty thereof, if the security so withdrawn is also reckoned in the estate or fund.”

Pursuant to this provision, the note was deposited with a trust company which was alone entitled to “receive or collect” any of the property or interest secured thereby; and we have been unable to find any warrant for the step taken by the plaintiff, while it thus remained in the custody of such trust company; in suing upon a nofe which was not in her possession and to which she had not obtained the title.

It may be suggested that in analogy to limited letters of administration, which are issued to collect death claims based upon negligence, a distinction is to be observed between the right to sue and the1 right to collect. By reference, however, to the statute under which such limited letters are issued (Code Civ. Proe. § 2664) it will be noticed that while the right to collect is withheld, the right to sue is expressly given. Under section 2595 of the Code, no such right to sue is given; and although the surrogate might, by subsequent order, have conferred such right, which we do not decide, because unnecessary, it is not contended that any such order in the present instance was granted. Even if there were a doubt upon this subject, which we do not entertain, holding as we do that the plaintiff could not without the permission of the surrogate sue upon the note while it remained in the custody of the trust company, there cannot be the slightest, doubt upon the further proposition that the plaintiff had no right to issue an execution upon the judgment, because that is expressly forbidden by the section.

[348]*348Although the letters of administration granted to the plaintiff were general in form, they were necessarily limited by section 2595 of the Code which deprived the plaintiff of the custody and control of the note and, to that extent, therefore, they were, by the very language of the section, limited so as to exclude from the administration of the plaintiff the particular security which had thus been ■ impounded and which as. directed was deposited with the trust company. ' By the grant of letters of administration, therefore, no right or authority was conferred upon the plaintiff to sue upon this particular note, because, by order of the surrogate, it had been deposited with the trust company ; and we fail to see by what right the plaintiff could proceed to do so without first obtaining the consent of the surrogate. .That the statutory requirements must be complied with and that the conditions precedent must appear before a judgment creditor’s action can be maintained,' has been so frequently decided that the citation of authority would seem to he unnecessary; but as illustrative of the principle involved two cases among others to which we may refer are Prentiss v. Bowden (145 N. Y. 342) and Dittmar v. Gould (60 App. Div. 94).

We do not think, moreover, that a payment to the plaintiff, if made after the deposit of the note with the trust company, would have discharged the obligation of John Y. McKane upon it, particularly without his having obtained repossession of the note. This, however, the plaintiff could not give him and as long as she had no power or authority to get the note for the purpose of surrendering it, she was not in a position to ask, demand or receive payment. As she could not, therefore, legally receive payment from the debtor and discharge him, it is difficult to see upon what theory she could sue for and obtain a judgment against him and thereafter issue execution to collect it.

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Ditmas v. McKane, 92 A.D. 344, 86 N.Y.S. 1083 (N.Y. Ct. App. 1904).

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