Smith v.

4 Edw. Ch. 653, 1845 N.Y. LEXIS 519, 1845 N.Y. Misc. LEXIS 18

Opinion

The Vice-Chancellor :

The plea in this case is a good plea to show that the defendant is personally exonerated and discharged from the debt and the judgment.

But that is not the question. The question is, whether it is a good plea to exonerate the particular fund or sum of money which it was the object of the bill and injunction in this cause to reach and have applied to the complainant’s judgment. By filing the bill on the first day of November, the complainant acquired a lien in equity upon the money. It was a quarter’s salary which had then been earned and b.ecome due and payable and, as such, was liable to this creditor within the principle recognized in Browning v. Bettis ; and a judgment creditor, having acquired this equitable lien, cannot be divested of it by the debtor’s subsequent proceedings in bankruptcy. This point I understand to be conceded by decisions made in the United States Court.

(a) True, in this case the defendant’s petition in bankruptcy was filed two or three days before this bill was filed : but the filing of the petition did not divest the petitioner of his property and right of property. It is “ from the time of the decree” declaring him a bankrupt that he is to be deemed divested of his property and the assignee to be vested with it: § 3 of the bankrupt law. I see nothing in this law to favor the doctrine of rotation to the time of committing an act of bankruptcy or of filing the petition so as to defeat the claim of the judgment creditor under circumstances like the present.

However, if this creditor’s claim is to be overreached on such ground, the general assignee, in whom the property and right of property is vested, is the person to take measures for that purpose and not the debtor who can no longer have any interest in the question whether the fund shall go to a particular creditor or be distributed among all the creditors. Considering the nature and object of this bill, being rather a proceeding in rem than in personam, it seems to me that the plea is wrong in attempting to meet the whole bill, when the effect of it is only to exonerate the defendant from any further personal liability.

It must, therefore, be overruled, with costs—giving leave to the defendant to set up the same matter in an answer.

See Conkling, J., in The matter of Allen, 5 Law Reporter, 362.