In re the City of New York

165 Misc. 309, 299 N.Y.S. 736, 1937 N.Y. Misc. LEXIS 1870
CourtNew York Supreme Court
DecidedJune 11, 1937
StatusPublished
Cited by5 cases

This text of 165 Misc. 309 (In re the City of New York) is published on Counsel Stack Legal Research, covering New York Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re the City of New York, 165 Misc. 309, 299 N.Y.S. 736, 1937 N.Y. Misc. LEXIS 1870 (N.Y. Super. Ct. 1937).

Opinion

Lockwood, J.

At the time title to the property acquired in this proceeding vested in the city, Thomas Stavrakos was the owner of fixtures included in damage parcels 139 to 143, inclusive.

In the final decree, entered on November 20, 1936, an award of $600, plus $192.50 interest, was made for such fixtures.

A warrant dated January 29, 1937, drawn to the order of Thomas Stavrakos in the sum of $802.40, is now being held by the comptroller subject to the following adverse claims :

(1) Attorney’s lien for legal services rendered in this proceeding, $200.60.

(2) Third-party order served upon the comptroller December 4, 1935, based upon a judgment for $150 in favor of Lillian Kushelewitz, assignee of Louis I. Rothenberg, trustee in bankruptcy of R. F. Hall, Inc., against Thomas Stavrakos.

' (3) Third-party order served March 23, 1936, based upon a

judgment for $160.50 in favor of Shore, Fisk Co., Inc., against Thomas Stavrakos.

In addition, the award, is subject to the lien of the city of New York for unpaid water charges, interest and penalties in the sum of $72.21.

- On May 9, 1936, Thomas Stavrakos filed a petition in bankruptcy, and on the same day was adjudicated a bankrupt. The ‘ petitioner herein is his duly qualified trustee in bankruptcy. He contends that the aforementioned judgments were based upon goods sold and delivered to the bankrupt prior to his filing of the petition in bankruptcy, that such judgments were not incurred through fraud, embezzlement, or in a fiduciary capacity, that the claims of the judgment creditors are included in the schedules filed in the bankruptcy proceeding, and that proofs of debt based on the judgments have been filed by the judgment creditors with the referee in bankruptcy.

Petitioner asks that the award be applied, first, to payment of unpaid water charges; second, in satisfaction of the attorney’s lien; and the balance to the petitioner as trustee in bankruptcy.

The judgment creditor, Lillian Kushelewitz, contends that she acquired a lien on the award by virtue of the third-party subpoena; that, while a debt is affected by bankruptcy proceedings, a lien is [311]*311not, and that her lien, acquired on the award over four months prior to the bankruptcy proceeding, is valid and subsisting.

Pursuant to the subpoena for examination as a third party, the comptroller of the city of New York, by its representative, appeared for examination and stated that the comptroller had not received the final decree in this proceeding, and that the third-party order would be recorded against any award made or to be made to the judgment debtor, and that such moneys would be held subject to further order of the court or stipulation by the attorneys releasing it.

In Matter of Vantine’s Retail Stores, Inc., ([D. C.] 43 F. [2d] 870) it was held that the mere service of a third-party order with the ordinary restraining provisions did not create a lien either equitable or otherwise in favor of the judgment creditor. The court there pointed out that noi receiver had been appointed in the supplementary proceeding and, under the New York law, none could have been, because the judgment debtor was a domestic corporation; that the supplementary proceeding could never, therefore, have developed beyond the stage of the third-party order and the examination under it, and the State court could not, in that proceeding, have ever made a disposition of the deposit.

The District Court further commented that in Becker v. Torrance (31 N. Y. 631) it was held that the mere service of a third-party order with the usual restraints did not give rise to a lien, but after the decision of that case the Code of Civil Procedure was amended so as to provide that the title of a receiver appointed in supplementary proceedings would relate back to the beginning of the proceeding, and, upon the basis of that amendment, the Court of Appeals, in McCorkle v. Herrman (117 N. Y. 297), enunciated principles which were applicable to supplementary proceeding in which receivers had been appointed, but which had no bearing upon a case where such receiver not only was not appointed but could not have been appointed.

In Edmonston v. McLoud (16 N. Y. 543, at p. 544) the court stated: “ By the commencement of the proceedings supplementary' to execution against his judgment debtor, the plaintiff acquired an inchoate lien upon his interest, whatever that may have been, in the lot purchased of Woods. But to perfect this lien and secure the benefit of his ¿proceedings, it was necessary that he should obtain an order under the two hundred and ninety-seventh section of the Code, directing the property of his debtor to be applied in satisfaction of his judgment, and also procure the appointment of a receiver to carry that order into effect. Such orders would have had the effect to divest the debtor of his interest in the property, and to vest it in the receiver for the benefit of the plaintiff.”

[312]*312It was held in Becker v. Torrance (supra, at p. 641): “ The right of the defendant, when he had perfected his appointment by the filing of his bond, only related back to the date of the order appointing him. The issuing and service of the order requiring the judgment debtor to appear and be examined touching his property, created no lien or interest ■ in the property discovered by such examination, in favor of the party who instituted and carried on the proceeding, as against other creditors who might in the meantime discover property liable to execution, and cause the same to be actually seized by such process.”

In Lynch v. Johnson (48 N. Y. 27, at p. 33): Proceedings under sections 292 and 294 of the Code are parts of the same scheme for the collection of debts inaugurated by the Code. These sections furnish a simple substitute for the creditor’s bill, as formerly, used in Chancery. The commencement of the creditor’s suit in Chancery gave the creditor at once a hen upon the equitable assets of the judgment debtor. (Storm v. Waddell, 2 Sandf. Ch. 494; Brown v. Nichols, 42 N. Y. 26.) He was rewarded as a vigilant creditor, the commencement of his suit being regarded as an actual levy upon the equitable assets of the debtor. Under sections 292 and 294, the service of the order takes the place of the .commencement of the suit under the old system, and should give the judgment creditor the priority of a vigilant creditor, and a lien upon the equitable assets of his debtor.”

In McCorkle v. Herman (supra, at p. 302), Andrews, J., wrote: “ Section 2469 is a new provision, not found in the former Code, and appears to have been inserted to change the rule declared in Becker v. Torrance (31 N. Y. 631), to the effect that no equitable lien was acquired by a creditor on the property of his debtor by the commencement of supplementary proceedings, and that when a receiver is appointed his title relates to the date of his appointment, and is subject to any lien on the debtor’s property acquired by third persons intermediate the commencement of the proceedings and the appointment of the receiver.”

And at page 305:

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Bluebook (online)
165 Misc. 309, 299 N.Y.S. 736, 1937 N.Y. Misc. LEXIS 1870, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-the-city-of-new-york-nysupct-1937.