John R. Philip, Inc. v. Langella

285 A.D. 1038, 140 N.Y.S.2d 151, 1955 N.Y. App. Div. LEXIS 6597

Opinions

Per Curiam.

The trust fund remedy prescribed by section 36-a of the Lien Law is not exclusive (Lien Law, § 76) and does not prevent a creditor from pursuing his ordinary remedies. Moreover, in this instance, the money was not effectively transferred beyond the control of the debtor. The judgment creditors’ rights in the fund in the receiver’s hands should, as a matter of discretion, be determined in such further proceedings herein as they may be advised to take. This will allow the other creditors who may have been misled into relying on the escrow agreement to make such claims as they can. They may well not have any effective way of asserting such claims, but on that we do not now pass.

Accordingly, the order should be modified to strike (1) the direction that the fund be held by the receiver subject to distribution in accordance with section 36-a of the Lien Law, and (2) the denial of the request that the fund be first applied to satisfy the judgments of the judgment creditors and, as so modified, affirmed, with $20 costs and disbursements of this appeal to appellant. Settle order.