Summary
In Amalgamated Bank, the court took Direct Merchants' reasoning as to the limited effect of the nonjudgment debtor respondent's default a step further.
Summary of this case from Velocity Investments, LLC v. KawskiOpinion
00088/04.
Decided April 9, 2004.
Malen Associates, Attorney for Petitioner, Westbury, NY., Gaspard and Mirlande Germain, pro se.
Petitioner moves unopposed for the turnover of funds belonging to the judgment debtor, Respondent Gaspard Germain, in the possession of Respondent Fleet Bank in joint accounts in the name of Respondents Gaspard Germain and Mirlande Germain. Service of the Petition was made by substituted service on both Gaspard Germain and Mirlande Germain.
This Court has previously entered a judgment in the amount of $8,585.33 in favor of the Petitioner against the Respondent Gaspard Germain. The Petition asserts that no payments have been made, leaving an outstanding balance of $8,585.33, with interest from date of entry. The Petitioner has restrained accounts at Respondent Fleet Bank in the joint names of Mirlande and Gaspard Germain, with a total on deposit of $627.99. With regard to the respective ownership interests of Gaspard and Mirlande Germain in those funds, the Petition alleges only that, "upon information and belief, [Gaspard Germain] is the owner of or entitled to the full and complete use and benefit of all funds in the accounts restrained herein."
The question thus arises whether the Petitioner is entitled to turnover of all of the funds in the accounts, or only half. On that issue, other judges of this Court have issued two conflicting opinions. In Ford Motor Credit Company v. Astoria Federal et al., 189 Misc. 2d 475, 733 NYS2d 583 (2001), Judge Fairgrieve held that the judgment creditor was entitled to all of the funds in the account. In support of his ruling, Judge Fairgrieve recited the fact that personal service had been made on the non-judgment-debtor respondent, and he considered that respondent's default in appearance constituted an admission of the unverified allegations of the petition.
To the contrary, Judge Gartner has relied on a long-established rebuttable presumption of 50% ownership in a joint account. In Direct Merchants Credit Card Bank v. Greenpoint Bank, 2003 NY Slip Op 50784(U), he held that the judgment creditor must present actual evidence of disproportionate ownership in the restrained funds before the Court can order a turnover of more than 50%, even when the respondents default leaving the "information and belief" allegations of the petition unchallenged.
The undersigned finds the Direct Merchants ruling to be more persuasive. While it is correct that a default constitutes an admission of the allegations of the petition, the question still remains of what evidence a court must require before a default judgment is entered. In the case of an ordinary complaint in a civil action, there must be an affidavit of a party verifying the essential elements of a claim before a default judgment can be entered. CPLR 3215(f). For the same reason, to rebut the long-standing presumption of 50/50 ownership, there must be a verification in this case, based on personal knowledge, to establish that the judgment debtor has a disproportionate ownership in the restrained funds. That is particularly true when service was made by substituted service, as it was in this case.
The burden which the judgment creditor bears under the Court's ruling today is not an impossible one. With artful use of information subpoenas on a respondent bank, it ought to be possible for a judgment creditor to establish proper evidence of disproportionate ownership, at least in a case where more is at stake than in the present proceeding.
The Petition is granted in part. Respondent Fleet Bank shall turn over to Petitioner's counsel, Malen Associates, P.C., 123 Frost Street, Westbury, NY 11590, the sum of $314 within ten days after service of this order, with notice of entry, upon the Respondents. The amount so paid shall be in partial satisfaction of the judgment in the sum of $8,585.33.