Becker v. Romanzo

Rhodes, J. In 1933 Fitzgerald Bros. Construction Company, Inc., was the general contractor under a contract for the construction of a highway for the State of New York. The contractor sublet the work for the trucking of sand and stone to one Sam Romanzo. In September, 1933, Romanzo abandoned his subcontract, at which time there was due him thereon from the general contractor a considerable sum. There is no dispute that the general contractor shortly thereafter received from the State, and held in its hands said sum of money due from it to the subcontractor. The plaintiff herein having obtained a judgment against said subcontractor and an execution thereon having been returned unsatisfied, obtained an order on September 30, 1933, for the examination of the general contractor in proceedings supplementary to execution. The order for examination contained the usual clause restraining the general contractor from making any transfer or other disposition of the property of the judgment debtor in the hands of said general contractor. At that time there were no hens filed against said fund. Upon the examination pursuant to said order it developed that the general contractor owed said subcontractor over $1,200, and an application was thereupon made in behalf of plaintiff herein for the appointment of a receiver of the property of said subcontractor. An affidavit in opposition was presented, sworn to by the president of the general contractor, whereby it appeared that certain hens had been filed against the moneys to the credit of the general contractor, which hens arose out of contracts between the henors and the said subcontractor, the first of said hens having been filed on October 5, 1933, the last one having been filed on [187] March 15,1934, the aggregate amount of said liens claimed being over $2,500; that on or about the 21st day of May, 1934, an action had been brought by one of the henors to foreclose bis said hen in which action the State of New York, the general contractor and the said subcontractor were named as defendants; that upon motion of the general contractor an order had been made at Special Term about August 31, 1934, directing the bringing in of certain other henors as parties defendant; that pursuant thereto said henors had been made parties defendant and that said action was at issue and on the calendar for trial. Upon these facts the court below denied the apphcation of plaintiff for the appointment of a receiver and from such order of denial this appeal comes to us. The filing of notices of hens by the respective henors did not, of course, establish the correctness or validity of such asserted hens. The general contractor and the subcontractor, as parties to the foreclosure action, had the right to attempt to controvert these claims. Clearly, the general contractor and the subcontractor were proper parties to such an action. (Lien Law, § 44.) The commencement of supplementary proceedings by the plaintiff herein gave him an interest in the nature of a hen upon the equitable assets of his debtor. (Reynolds v. Ætna Life Ins. Co., 160 N. Y. 635.) Upon the appointment and qualification of a receiver in supplementary proceedings herein, the title of the receiver would have extended to the personal property belonging to the subcontractor in the hands or under the control of the general contractor; such receiver’s title would have related back to the time when the order of examination was served in the supplementary proceedings, and the equitable hen then established would, by his appointment, have vested in him, title to the property of the judgment debtor, subject, of course, to any valid hens thereon. (Civ. Prac. Act, § 810, subd. 2; Ward v. Petrie, 157 N. Y. 301; Armstrong v. McLean, 153 id. 490; Wrede v. Gilley, 132 App. Div. 293.) If a receiver had been appointed, it would have been proper to permit him to intervene as a party to the foreclosure action, and defend his title to the funds against the asserted hens. Undoubtedly this right of intervention would have been his irrespective of statute, and is now plainly indicated by the provisions of section 44 of the Lien Law. The plaintiff, as a judgment creditor, apparently has exercised diligence in attempting to enforce his claim. He should not be deprived of the means of effectively asserting and htigating his right to the fund in question. Without the aid of a receiver herein, [188] plaintiff is deprived of the advantages as to title and method of procedure with which he properly should be armed and equipped. The order denying the application for the appointment of a receiver should be reversed on the law and facts, with costs, and the application granted, with costs. Hill, P. J., McNamee, Crapser and Heffernan, JJ., concur. Order reversed on the law and facts, with ten dollars costs and disbursements, and motion granted, with ten dollars costs.