Locke v. Mabbett

By the Court.

Davies, Ch. J.

[After stating the facts above.] — It is objected that the executrix cannot properly appeal from this order, as she is not a party to the proceedings before the officer who made the order transferring the money claimed to be in her hands, belonging to the judgment debtor. If the order is obligatory upon her, it is difficult to perceive why she is not a party to the proceeding, and why she should not be heard in all courts, to contest its lawfulness. An absolute order has been made on her or her agent, to pay over to the plaintiff in a judgment a certain sum of money. She is compelled by the terms of the order to make • the payment, whether or not she has any moneys of the judgment debtor in her hands or under her control. The order is absolute, and compliance can be enforced against her by process to punish her as for a contempt. I am clearly of the opinion, therefore, that she can be heard in opposition to the order.

It may be regarded as very doubtful, since the decision of this court, in Graff v. Bonnett, 31 N. Y. 9, whether property held in trust for the debtor, and for his benefit, may be reached through the agency of a court of equity, and applied to the satisfaction of his debts; but there can be no doubt, if we are prepared to sanction the doctrine of the opinion in that case, that property held in trust for him upon a trust, or arising out of a fund, proceeding from a third person, designed to secure to the debtor personally a support, cannot be so reached or taken by a judgment creditor. In the present case, the moneys sought to be reached and applied to the satisfaction of the judgment against Mabbett are the incomes of real and personal property held in trust, proceeding from a third person, and which income was to be applied by the trustee to the support of the cestui que trust. The present case, therefore, falls directly within the principle of that case, and if it had been decided upon. that point, it would have been conclusive authority for the position, that the income of the fund held by this trustee could not be appropriated for the payment of the debts of the cestui que trust.

But this court did decide in that case, that if the income could be reached at all, it was only such surplus thereof, as might remain after setting aside sufficient thereof, for the support and maintenance of the beneficiary, and that this could only be done through the instrumentality of a court of equity. The learned judge who delivered the prevailing opinion of this court, in Graff v. Bonnett, said that nothing could be reached even by a receiver, unless there should be a surplus over and above the inalienable right of a judgment debtor to a support, and this surplus, it has been held, is not properly ascertainable under supplementary proceedings to discover and appropriate the debtor’s property to the satisfaction of the judgment, but only in a suit or proceeding, where the issue is directly made upon the amount necessary for a debtor’s support, and to which the trustees and cestui que trust are parties.” This is decisive of the present proceeding, and must lead to a reversal of the orders made, and to a dismissal of the application.

The present case affords an illustration of the soundness and propriety of the rule laid down in Graff v. Bonnett. There is a controversy, whether, in fact, any surplus exists. The person holding the fund does not admit the existence of any such surplus, and the provisions of section 297 of the Code of Procedure were never intended to be applicable, except to a case where the party admitted, or it was most clearly established^ that the party upon whom the order was to be made, had in his hands property of the judgment debtor, or was indebted to him. These facts were not established on the present investigation, and, therefore, the order made was improvidently granted. A receiver should have been appointed, under section 298 of the Code, and an application should have been made to the court for leave to institute an action against the trustee and cestui que trust, to ascertain if there was any surplus of income over and above what was necessary for the support and maintenance of the cestui que trust. The fact of any surplus could only be ascertained upon an accounting, and whether, if any existed, it could be so applied, would depend upon the facts developed, and the principles of equity applicable thereto. If the reasoning and views of the leading opinion in Graff y. Bonnett are sound, it would follow, that as the trust fund proceeded from a third person, the income of it, being designed to secure to the debtor, personally, a support, could not be sequestered for the payment of his debts.

Without, however, definitely passing upon this point, we are clearly of the opinion that the orders appealed from must be reversed, and the proceedings dismissed, with costs.

All the judges concurred.

Orders reversed, and proceedings dismissed, with costs.