Opinion
November 11, 1908.
Charles H. Stoddard, for the appellant.
Henry W. Williams, for the respondent.
In an action brought by Jonathan M. Coolidge against Seneca R. Stoddard the plaintiff made a motion for a bill of particulars. This motion was denied, but upon appeal the order denying the motion was reversed, with ten dollars costs and disbursements of the appeal. ( Coolidge v. Stoddard, 120 App. Div. 641.) The costs were duly taxed at thirty-five dollars and nine cents. Thereafter an execution against the personal property of said Stoddard was issued and returned wholly unsatisfied. Upon the return of this execution an order was procured from the county judge of Warren county to examine the said Stoddard in supplementary proceedings. The motion to vacate this order raises the first question that is here for discussion.
While there are numerous grounds mentioned for vacating said order, the ground mainly relied upon is that the county judge had no jurisdiction to grant the same upon the return unsatisfied of an execution against personal property issued under section 779 of the Code of Civil Procedure.
The authority for the institution of this special proceeding is found in section 2432 of the Code of Civil Procedure. That section provides for the examination of a judgment debtor. In 1896 there was added to the section the following provision: "The party to whom costs are awarded in a special proceeding shall be entitled to the same remedies under this title, under the same circumstances, as near as may be, as a judgment creditor. And for the purposes of this title, the party to whom such costs are awarded shall be deemed a judgment creditor, and the party against whom they are awarded shall be deemed a judgment debtor." The conclusion of a special proceeding is expressed by a final order and not by a judgment. It will be noticed that neither in that section of the Code nor elsewhere, up to the time of this amendment, was there any authority for the examination of a debtor other than a judgment debtor, and up to that time it is not contended that there was any authority for the examination of one against whom an execution under section 779 of the Code had been returned unsatisfied. This amendment, however, made in 1896, refers simply to an order in special proceedings. It nowhere gives the right to this remedy to a creditor for costs given by an interlocutory order in an action. The necessary and reasonable construction, therefore, of this amendment of section 2432, in connection with the subject-matter of the section amended, would seem to give this remedy to a creditor for costs in a final order in special proceedings. It is not reasonable to suppose that the Legislature was intending to give this remedy to a creditor for interlocutory costs in a special proceeding where they had none for interlocutory costs in an action.
The respondent here seeks to uphold this order under section 2435 of the Code of Civil Procedure. In 1896 that section was amended so as to provide for the granting of the order for examination after the return of an execution against property issued upon a judgment, "or in case of an order issued in the same manner so far as the provisions of said section can be applied in substance." It is claimed that this enlarges the rights of the creditor and authorizes the granting of the order upon the return of an execution issued under section 779 of the Code. It would seem if it were the intent of the amendment of 1896 to enlarge the cases to which the proceeding might be made applicable, that the amendment would have been made to section 2432, which assumes to state in what cases the remedy may be applied for. But this amendment to section 2435 was made by chapter 176 of the Laws of 1896, the same chapter by which section 2432 was amended, and the provision made applicable to orders in special proceedings. This fact would seem to clear away all doubt as to what was intended by the amendment of section 2435, and would seem to make clear that the order referred to in section 2435 was the final order in a special proceeding, to which the remedy was extended by the amendment of section 2432. There is strong reason for denying this remedy to a creditor whose right is only to issue execution against personal property. A receiver could hardly be appointed if no personal property were found, provided the debtor had real estate. That receiver, as such receiver, certainly could not take real estate upon which the order granting the costs was not a lien. There is no authority anywhere for the appointment of a receiver for personal property only. The reasoning of the cases which deny the right of this remedy upon a judgment for less than twenty-five dollars strongly supports the construction which we have given. (See Mason v. Hackett, 35 Hun, 238.) In the case of Importers Traders' National Bank v. Quackenbush ( 143 N.Y. 567) it is held that this remedy is not available except after the return of an execution "effective to exhaust the remedy at law. * * * It is not enough that forms are observed by the return of an execution which is not effective to reach all of the debtor's property, and the right does not arise unless at the time of issuing the execution the creditor had a judgment which was a lien on the debtor's real estate and chattels real, so that the execution could reach them as well as his personal property." For the reason stated we cannot approve of the decision of the Erie Special Term in Matter of Sirrett ( 25 Misc. Rep. 89).
Upon the return day of the order for an examination the debtor appeared without counsel before the referee. Having answered certain questions he objected to going further without counsel. It appears that the attorney for the creditor insisted upon asking certain questions, however, before the adjournment. These were claimed to have been immaterial and only had reference to the fact as to whether he kept certain books; but upon that insistance and upon the compulsion of the referee, Stoddard asked if he might settle the whole matter. He was told that he might settle by payment of the costs and thirty-five dollars costs of the proceedings. This he attempted to do under protest, but the attorney for the creditor refused to accept the money under the protest of the said Stoddard, and the amount of seventy dollars and nine cents was finally paid. This amount included the thirty-five dollars and nine cents, the costs entered in the order, and thirty-five dollars costs of the proceedings. In the motion which has been denied the said Stoddard asked that the said Williams and his client Coolidge be required to repay these moneys, as having been obtained under duress of a void order. These facts appear substantially in the affidavit of Mr. Williams, and also in the report of the referee. At the close of the evidence given appears this statement: "Mr. Stoddard: `I want to ask if there is not any legal rights in this proceeding. I want to object or ask a postponement or something.' At this point, after some discussion, the proceedings were discontinued before the referee by judgment-creditorfn_ paying amount of the judgment and costs, amounting to $70.09." It seems to me clear that this constituted legal duress, however unimportant might be the questions which the creditor's attorney desired to ask of him. He was seeking an adjournment which was refused to him, unless those questions were allowed to be asked. He then sought to pay under protest, but was not allowed to pay under protest. His only remedy to escape the examination under this void order then was the payment of these moneys. The court should not allow moneys thus secured to be retained by the creditor or his counsel, and they should be directed to repay the same. The order of the county judge should, therefore, be reversed, with ten dollars costs and disbursements, and the motion made should be granted, with ten dollars costs.
Sic.
All concurred, except KELLOGG, J., dissenting in opinion.
By section 3347, subdivision 6, of the Code of Civil Procedure, section 779, which authorizes an execution to issue against personal property only to collect moneys directed by an order to be paid, applies to an order in special proceedings. Therefore the execution upon an order in special proceedings can issue only against personal property. Nevertheless, section 2432 of the Code of Civil Procedure permits proceedings supplementary to execution to be based upon such an order in substantially the same manner as upon a judgment. With respect, therefore, to such an order, the authorities holding that an execution issued only against personal property is not a proper basis for an order in supplemental proceedings are not applicable.
Section 3343, subdivision 20, of the Code of Civil Procedure defines the word "order" when used in the Code as referring to an order made in an action or special proceeding. Therefore, the provision permitting supplementary proceedings to be based upon an order in special proceedings relates to all orders for the payment of money in special proceedings, whether such orders are final or otherwise.
Section 2432 of the Code of Civil Procedure defines proceedings supplementary to an execution against property as consisting of three remedies, which it briefly describes. Each particular remedy is definitely defined and provided for in following sections. Section 2435 defines the first remedy to examine the debtor after the return of the execution; section 2436 defines the second remedy for the examination before the return of the execution, and section 2441 defines the third remedy for the examination of a third person having property of a judgment debtor. If a particular case comes within the specific definition of the section which provides for the particular remedy, the mere fact that such a case is not mentioned in the more general terms of section 2432 ought not to deprive the creditor of the remedy.
The object of these proceedings is to compel a reluctant debtor, after the decision of the court has passed against him, to pay his debt, and to enable an execution creditor, by examination of the debtor and otherwise, to find out if he has property which he is concealing or unjustly refuses to apply upon the execution. In principle, there is no reason why it should not apply to every person having an execution for it is a proceeding supplemental to and in aid of an execution, and the statute should be liberally construed so far as may be to give to every execution creditor the benefit of this remedy, which is designed to make the execution effective.
The Code provisions speak of judgment creditor. They, nevertheless, recognize that certain parties may have the proceedings, although not judgment creditors, if they are execution creditors. I think we better understand the proceedings, and give better effect to them, by considering the name which the statute has applied to them: "Proceedings supplementary to an execution against property." From this we naturally infer that the statute had in mind an execution creditor, and not a judgment creditor exclusively, and section 2435 of the Code of Civil Procedure shows clearly that such was the intent of the Legislature. It provides that "at any time within ten years after the return wholly or partly unsatisfied of an execution against property issued upon a judgment as prescribed in section twenty-four hundred and fifty-eight of this act, or in case of an order issued in the same manner, so far as the provisions of said section can be applied in substance, the creditor under such judgment or order upon proof of the facts" is entitled to the order. This shows that the creditor who may have the order is the execution creditor, and also that in case of an order it is entirely immaterial that the execution was not issued against real estate, for it cannot in any such case so issue. The suggestion that a receiver cannot be appointed of the real and personal estate of a debtor where the legal remedy against the real estate has not been exhausted has no real force for the reason that the receivership is not the principal end to be accomplished by such proceedings. The real benefit to the creditor from the proceedings is the ability to examine his debtor and other witnesses under oath and determine the financial condition of the debtor and whether he has or is concealing property which ought to be applied in satisfaction of the debt, and in many cases the receivership is not contemplated. As the judge has power to direct the application by the debtor or a third person of money or property to a debt, through the sheriff, a receivership is a mere incident and if property is found which cannot be reached by an execution, then the creditor is permitted to apply for a receivership, but the current of authority is that if property is found which is subject to execution or which may be directed to be paid directly upon the judgment, then a receivership is not the proper remedy to reach such property. In every case where a receiver is sought in supplementary proceedings the judge may or may not grant it. If a receiver ought not to be appointed where an execution has been issued only against personal property, the judge would so determine. The mere fact that in a certain case a receiver may not be appointed is no reason why the creditor cannot have supplementary proceedings. It is simply a reason why the particular relief resulting from a receivership is not granted him, but he is entitled to any other relief which may properly be granted to him in the proceedings.
It is difficult to see any reason why money directed to be paid by an order in the action should not carry with it all the remedies which may be had in the case of an order in special proceedings. I do not believe the Code has intended to discriminate against an order in the action and in favor of an order in a special proceeding. I think, therefore, the other provisions of the statute being complied with, an execution creditor is as much entitled to a supplemental order to collect the amount due upon an order in an action as upon an order in special proceedings.
I, therefore, favor an affirmance of the order.
Order of the county judge denying motion to vacate order in supplementary proceedings reversed, with ten dollars costs and disbursements, and motion granted, with ten dollars costs.