Bergmann v. . Lord

Chase, J. This is a judgment creditor’s action. Article I, title 4, chapter 15 of the Code of Civil Procedure, relating to a judgment creditor’s action, provides : “ When an execution against the property of a judgment debtor, issued out of a court of record, * * * has been returned wholly or partly unsatisfied, the judgment creditor may maintain an action against the judgment debtor, and any other person, to compel the discovery of any thing in action, or other property belong-I ing to the judgment debtor, and of any money, thing in action, | or other property due to him, or held in trust for him; to prevent the transfer thereof, or the payment or delivery thereof, to him, or to any other person; and to procure satisfaction of the plaintiff’s demand * * (Sec. 1871.) “ This article does not apply to a case * * *. Mor does it authorize the discovery or seizure of, or other interference with, * * * any money, thing in action, or other property, held in trust for a judgment debtor, where the trust has been created by, or the fund so held in trust has proceeded from, a person other than the judgment debtor * * (Sec. 1879). Among the facts found by the trial court are that George Cabot Ward died a resident of the state of Mew York May 4, *73 1887, leaving a will which was duly admitted to prohate, in which, among other things, he provided: “ Out of my own individual estate, real or personal, exclusive of that held in trust for me as aforesaid, I give and bequeath to the said George De Forest Lord and Daniel Lord as trustees the sum of Fifty Thousand Dollars, or so much thereof as my said estate shall suffice to pay, in trust to invest and reinvest the same as hereinafter authorized and to collect and apply the net rents, issues and income thereof to the use of my wife (if she shall survive me) for and during her natural life and upon and after her death I give and bequeath the capital of said fund unto such of my children ns shall survive.me and to the issue of any who shall die before me, leaving, issue me surviving.” That said George Cabot Ward left him surviving a widow who is still living and two children, the defendant Marian Low and Samuel G. Ward, Jr. The trustees named in the will duly qualified and entered upon the discharge of their duties as such trustees, but both have since died and the defendants Lord and Yan Duzer were duly substituted as trustees under said will. The trustees named in said will had set apart to them certain securities of the value of fifty thousand dollars and there is now in the hands of said Yan Duzer, the surviving substituted trustee, the principal fund of fifty thousand dollars together with certain accretions, amounting in the aggregate at the time of the judgment herein to $83,359.03. On the 27th day of October, 1894, the plaintiff duly recovered in this state a judgment against said Samuel G. Ward, Jr., for $4,355.06, which judgment was duly entered and docketed in the office of the clerk of tile city and county of New York on that day. On the same day execution was issued thereon as provided by section 1872 of the Code of Civil Procedure, which was on the 3d day of December, 1894, returned wholly unsatisfied. On the 16th day of November, 1900, said Samue¡ G. Ward, Jr., died a resident of the state of New Jersey, leaving a will which was duly admitted to probate in the Orphan’s Court of Essex county in said state, and in and by said will he gave to his wife, Frances L. B. Ward, now Frances L. B. *74 Leavitt, all of his property, real and personal, and she was named therein as an executrix and has since duly qualified as the sole executrix under said will. All of the defendants are residents of the state of Hew York and said principal fund is held by said substituted trustee in this state. The plaintiff is the only judgment creditor of the said Samuel G. Ward, Jr., and the only creditor residing in this state. The defendant Leavitt moved from Hew Jersey to the state of Hew York soon after the death of her late husband. Before the commencement of this action the plaintiff demanded of her that she make application for and have issued by a Surrogate’s Court of this state ancillary letters testamentary on the will of her late husband, but she has failed, neglected and refused to have such ancillary letters issued. This action was commenced Hovember 21, 1904, and the plaintiff seeks to have the interest of said Ward in the fund so held in trust for the benefit of the mother of said Ward sold to satisfy his said judgment. The appellant insists that the plaintiff cannot maintain this action: (1) Because of the provisions of said section 1879 of the Code of Civil Procedure, and (2) because the action was not commenced within ten years after the docketing of said judgment. The gift to the children of the testator, George Cabot Ward, who survived him, vested immediately on his death, subject to the same being held in trust for the use of his wife during her natural life. The language of the will, viz., “Upon and after her (the wife’s) death I give and bequeath the capital of said fund unto such of mv children as may survive me,” so far as it relates to the time when the legacy is to be received in possession by the surviving children, is not of the substance of the gift, and does not prevent the remainder vesting absolutely and immediately, (Smith v. Edwards, 88 N. Y. 92; Stringer v. Young, 191 N. Y. 157.) The interest of Samuel G. Ward, Jr., in-the fund so held in trust for his mother, was and is at all times transferable by assignment or otherwise. (Stringer v. Young, supra.) It is provided by the Personal Property Law, see. 3 (Chap *75 ter 417, Laws of 1897, as amended by chapter 87, Laws of •1903), that “ The right of the beneficiary to enforce the performance of a trust to receive the income of personal prcperty, and to apply it to the use of any person, cannot be transferred by assignment or otherwise. But the right and interest of the beneficiary of any other trust in personal property may be transferred.” The widow of George Cabot Ward is the beneficiary of the trust to receive the bicorne thereof, and she cannot transfer her interest therein by assignment or otherwise, but such prohibition does not extend to the persons vested with the fund subject to the performance of the trust to receive the income and apply it to the use of the widow. The remainder so vested in the children of George Cabot Ward is like an expectant reversionary estate or remainder in real property, which is by express provision of statute descendible, devisable and alienable in the same manner as an estate in possession. (Real Property Law, section 49.) It was said in substance by the chancellor in Lawrence v. Bayard (7 Paige, 70) that nobody ever doubted that a remainder which was vested in interest could be transferred both at law and in equity. (Ham v. Van Orden, 84 N. Y. 257.) Where a person has a vested interest in a fund held in trust for another, and lie can transfer the same by assignment or otherwise, it can be reached by his creditors. The only property held in trust for a debtor which cannot be reached by a creditor’s bill against it is that which is held in trust to receive the rents, profits and income thereof, and to apply such rents or income to the support of the cesfod que trust / that is, an interest in trust property which the cestui que trust has no power to alienate by any sale or assignment executed by him. (Degraw v. Clason, 11 Paige, 136.) The court in the Degraw case say: “ Neither law nor sound policy will allow an absolute or unconditional right to property to be vested in a person, which he may use and dispose of as he ’ pleases, by anticipation or otherwise, but in relation to which property he may set his creditors at defiance.” (Palmer v. *76 Halloock, 94 App. Div. 485; Hallett v. Thompson, 5 Paige, 583.) Section 1879 of the Code of Civil Procedure, from which we have quoted, was not intended to prevent an action under said article to reach a vested remainder interest in a trust fund but to prevent the interest of a person for whose benefit the property is held in trust to be so taken. (Graff v. Bon nett, 31 N. Y. 9 ; Tolles v. Wood, 16 Abb. N. C. 1, note 20.) Unless the intention of the legislature is shown by clear and certain language, it would be a strange conclusion if we should decide that the legislature intended to withhold from a judgment creditor property vested in such debtor simply because the legal title to the fund in trust is in a trustee for the benefit of some other person for life, and the time when the debtor can obtain the remainder in possession is postponed. The appellant urges that the legal title to the principal fund vests in the trustee, and that the persons entitled to the fund subject to the'trust cannot obtain the same except by an action for an accounting after the death of the person for whose benefit it is held. The legal title to the trust fund is of little importance in determining this controversy. There is a distinction between the legal title to the securities in which the trust fund is invested and the legal title to a vested interest in the remainder. The trustee may have the legal title to the securities in which the trust fund is invested while at the same time the defendant Leavitt individually and as executrix has the legal and equitable title to one-half of the vested remainder. The Code of Civil Procedure does not prohibit the maintenance of a creditor’s action to reach a vested remainder in a fund held in trust to receive the income and apply it to the use of a person other than the debtor. The time for .the commencement of a judgment creditor’s action not being specially prescribed in titles 1 and 2 of chapter 4 of the Code of Civil Procedure, it is included in the general limitation contained in section 388 of the Code as follows : “ An action, the limitation of which is not specially prescribed in this or the last title, must be commenced within ten *77 years after the cause of action accrues.” The cause of action accrues by the express terms of said section 1871 when “ An execution against the property of a judgment debtor, issued out of a court of record * * . * has been returned wholly or partly unsatisfied.” (See, also, section 415.) At the time the action was commenced it was not barred by the Statute of Limitations. (Crapo v. City of Syracuse, 183 N. Y. 395.) The respondent also contends that the running of the time in which he could have brought the action was suspended for at least some period by reason of the absence of Samuel G. Ward, Jr., from the state and also by reason of his death. In addition to the facts already stated herein it was found by the trial court that the defendant Leavitt claims that she is the absolute owner of all property left by the judgment debtor including one-half of the remainder in said $50,000 legacy and of all accretions thereon, and that after qualifying as executrix in the state of Hew Jersey she removed to this state and remained continuously without the jurisdiction of the. courts of that state and that she has not rendered an account as executrix. It is a general rule that an action will not lie against a foreign executor, but there are exceptions to the rule. (Slatter v. Carroll, 2 Sand. Ch. 630; Lyon v. Park, 111 N. Y. 350; Montgomery v. Boyd, 78 App. Div. 64.) In actions in equity where it is necessary to prevent a failure of justice, jurisdiction will be assumed at least so far as the relief to be secured relates to property in the jurisdiction of the court. In this case all of the defendants are out of the jurisdiction of the courts of Hew Jersey. The plaintiff is the only judgment creditor of the deceased debtor. So far as appears there are no other creditors, but even if there are creditors, plaintiff’s judgment is entitled under our statute (Code Civil Procedure, sec. 2719) to a preference in payment over general creditors. The original trustees appointed by the will of George Cabot Ward are dead, and the fund held in trust is in the control of our Supreme Court, The defendant Leavitt individually is the *78 sole equitable owner of the interest therein which was vested in her late husband. The plaintiff exhausted his legal remedy and his jndg. ment remained wholly unpaid and unsecured. He brought this action nearly ten years after the execution on his judgment had been returned wholly unsatisfied. Even now the appellants insist that the plaintiff has lost his right to obtain satisfaction of his judgment from said vested remainder by reason of his delay in bringing the action. The court has jurisdiction of the subject-matter and of the person of all the defendants. The interest of the defendant Leavitt as executrix is apparently nominal. The circumstances are exceptional and justified the court at Special Term in assuming jurisdiction of the action for the benefit of the plaintiff, a domestic creditor, and in directing the satisfaction of the sum due the plaintiff out of the property of the deceased judgment debtor in this state. The courts of this state are not wholly without power to protect a resident creditor under such circumstances. It also appears by the findings of the trial court'that an agreement was entered into by and between the trustees, the defendant Low, and the judgment debtor in his lifetime, by which particular investments were set apart for the trust fund, and by reason of such investments and the subsequent reinvesting thereof the amount held in trust as the principal fund has largely increased. ISfo personal claim is made in this action against the defendant Low, and her presence as a defendant will settle possible questions relating to the rights of the individual owners of the undivided vested remainder and aid the sale of the interest of the deceased judgment debtor. Section 1873 of the Code provides “ The final judgment in the action must direct and provide for the satisfaction of the sum due to the plaintiff, out of any money, thing in action, or other personal property, belonging to, or due to the judgment debtor, or held in trust for him, which is discovered in the action; whether the same might or might not have been *79 originally taken by virtue of an execution.” The form and detail of the judgment directing and providing for the satisfaction of the plaintiff's judgment was in the discretion of the court at Special Term. The judgment should be affirmed, with costs. Gulden, Oh. J., Edward T. Bartlett, Haight, Vann, Werner and Hiscook, JJ., concur. Judgment affirmed.