Clement v. White

Spring, J.: In July, 1906, the State Commissioner of Excise recovered a judgment by default against the defendant White for penalties for the breach of the conditions of a bond given by him in pursuance [94] of the provision's of the. Liquor Tax, Law. The defendant, the American Fidelity Company, was a surety on the bond, but no judgment was entered against it, although made a party defendant. It paid the amount of the judgment and the same was assigned to it by the State Commissioner of Excise. An execution issued upon the judgment after the assignment was returned wholly unsatisfied, and the usual order in proceedings supplemental to execution was granted ex parte by the county judge of Erie county, where the judgment was entered and where the judgment debtor resided. The order was subsequently vacated by the County Court upon the application of the judgment debtor. The judgment having been valid at the time it was transferred to ' the surety company, there must exist some cogent reason to justify the order appealed from. The Commissioner of Excise unquestionably might have pursued this remedy against the judgment debtor, and ordinarily whatever procedure is available, to the judgment creditor to aid in collecting his judgment may also be taken advantage of by the assignee of the judgment. . The defendant surety company is a. foreign corporation and was represented in Buffalo by local agents and the transactions of the defendant White were with these agents. It is his claim" that at the time the surety company gave the bond required by section 18" of the Liquor Tax Law* it entered into the following independent agreement with him: “ It is expressly understood and agreed, that if the bond applied for is issued by the American Fidelity Company, the applicant is not to be liable for any amount the said company may become chargeable with or may pay for. or on account of such bond, and that the American Fidelity Company shall pay to the applicant any amount the applicant may be compelled to pay for or on account of the bond.”- He states in his affidavit'that he paid five dollars additional premium for this agreement indemnifying him against liability on his bond, and that agreements of this kind were frequently made, by saloon keepers with the agents of the defendant in the city of Buffalo. . The defendant company disclaims any authority in its agents to enter , into any such agreement on its behalf, or that it knew of any such agreement, or that it ever received any additional premium on account thereof. The [95] defendant White in his affidavit further states that the agreement mentioned was indorsed upon his application which was sent td and retained by the company, but the officers of the latter deny that ■ it contained any such indorsement. It appears from the papers of the surety company used in opposition to the motion to vacate the order in supplementary proceedings that the violations of the Liquor Tax Law complained of in the action on the bond were that the defendant White kept and maintained a disorderly house and a place of “ public resort for lewd women and prostitutes.” The complaint in that action is not before us. If the charge and proof were that the servants or agents of the saloon keeper were, guilty of these violations and without his assent or knowledge the contract which he claims the surety company entered into with him might hav'e been designed to protect him against the unauthorized, acts of- such servants, or employees. If, on the other hand, it was intended to shield him from liability for any infraction of the Liquor Tax' Law, however flagrant, it may well be doubted whether such agreement would not be in contravention of-public policy. (Materne v. Horwitz, 101 N. Y. 469 ; Foley v. Speir, 100 id. 552; Dean v. Clark, 80 Hun, 80.) We are not passing upon these questions and refer to them simply for the purpose of fortifying and explaining our conclusion that they ought not to be determined upon a motion to vacate the order in supplementary proceedings. The controlling facts are in controversy, the construction of the alleged agreement, is not free from doubt on the facts contained in the record before us, and its legality is doubtful. With all these complications, both of law and fact, the parties should be left to their remedy by action. We think the authorities if any are needed, tend to support this position. (Robens v. Sweet, 48 Hun, 436 ; Rich v. Salinger, 11 Abb. Pr. 344; Smith v. Paul, 20 How. Pr. 97; Dresser v. Shufeldt, 7 id. 85.) If a judgment has been paid the court may upon motion set aside an order of this kind so that the judgment debtor will not be unjustly harassed, and. if for any reason it appears without dispute that the order was improvidently granted a like remedy may be available to the judgment debtor, and upon the motion a reference may be ordered to aid the court in deciding disputes' which may [96] arise. In the present case the questions raised, ar.e unusual, important and perplexing and should be disposed of in an action. The order appealed from should be. reversed, with ten dollars costs and disbursements of this appeal, and' the motion to vacate the order requiring the respondent to appear and be examined before a referee denied, with ten dollars costs, and the matter remitted to the county judge of Erie county to designate the time and place for the judgment debtor to appear before the referee. All concurred. Order reversed, with ten dollars costs and disbursements, and motion denied, with ten dollars costs, and the matter remitted to the county judge of Erie county to designate the time and place for the judgment debtor to. appear before the referee. Footnotes [*] See Laws of 1896, chap. 112, § 18, as amd. by Laws of 1903, chap. 486.— [Rep.