Sverd v. Mostel

Bergae", J. The judgment creditor is the judgment debtor’s former wife; the third-party appellant who has been adjudged guilty of a contempt in proceedings supplementary to execution is the judgment debtor’s present wife. The judgment debtor is an actor whose earnings are large but irregular. The basis for the order adjudging her in contempt is that after the third-party subpoena had been served on her and she thereupon became enjoined by operation of section 781 of the Civil Practice Act from transferring or making any disposition of the judgment debtor’s property in her possession or paying over any moneys belonging to him, she nevertheless proceeded to pay out the debtor’s money in her bank account in plain disregard of the restraint imposed on her by operation of the statute. The theory of her claimed right to continue to dispose of the property in her possession in avoidance of the restraint imposed by the subpcena is that this money was used by her for the necessities of the husband and thus was exempt from the judgment creditor’s seizure or interference. (Civ. Prac. Act, § 792, subd. [c].) If we assume that the protection of the funds she held is available to the third party on the basis of the judgment debtor’s necessities, the third party was nevertheless under some obligation to apply to the court, to release the fund by appropriate application at an appropriate time; and she was not at liberty to disregard the restraint and dispose of the fund as though the subpcena had no significance. A party who decides to take the chance that process served on him may be entirely void, and hence not dangerous if disregarded, must be prepared also to take the consequence that follows if the judicial ruling on validity of process ultimately goes against him. No system of law would remain workable if everyone had the right to exercise a safely independent judgment whether he would pay attention, or not, to the force of judicial process. It is true enough that punishment will not follow if the process is void and is issued without jurisdiction. In Hancock v. Sears (93 N. Y. 79) the debtor was upheld by the court in his decision to apply his earnings to his necessities notwithstanding a restraining order of the County Judge in supplementary pro [130] ceedings. But this was because the court decided that the restraint could not in the circumstances of that case attach to the judgment debtor’s own earnings which he used to obtain necessities to sustain himself and his family. The case was decided on narrow grounds and on the failure of the judgment creditor to follow statutory safeguards in obtaining the injunction but rather by an evasion of those safeguards (p. 81). The third-party appellant here has not shown, as she has the plain burden of showing in justification of her disregard for the injunctive process, that the very funds she controlled fall so clearly and indisputably within the protection of section 792 of the Civil Practice Act that the process which reached her did not reach the money she controlled. It could perhaps be found that she expended all or substantially all of the $3,168.05 of the debtor’s money in her bank account for necessities for the debtor and his family between September 23, 1952, the day of service of the subpoena on her, and December 31st of that year. But this alone would not protect her, or render the process invalid. The mere fact that this part of the debtor’s earnings was allocated to necessities does not throw around this specific money the exemption from “ seizure of, or other interference with” earnings under section 792 of the Civil Practice Act. A man might in this guise put beyond the reach of creditors all his earnings except those which he left visible enough to be available to buy necessities. The statute affords its protection in no such scope as this. Earnings and other resources for necessities cannot always be separated in such air-tight compartments. The earnings must, as the section says, be made “ to appear to the court ” to be necessary for the reasonable requirements of the debtor or his family. The debtor, or a third party who seeks to rely for his protection on the exemption of the debtor’s property in his hands must satisfy the court of the necessity for the use of the funds for which he seeks the statutory exemption. Here the debtor earned a gross sum of $25,065 from January to August, 1952. In the previous year he had earned a gross income of $34,000. A short time before the subpoena was served, the debtor was earning $2,500 a week. During the period here in dispute (September to December, 1952) the proof was that he earned only $1,100 gross, but in the five months immediately after this period, from January to June, 1953, he earned $12,600 gross. [131] The third party has not fairly established on this record that the money which she spent was the only financial resource that was available for necessities or could have been made available to debtor in the light of his general earnings before and after this period; and hence that this precise fund was necessary for his family’s requirements under the exemption created by the statute. Having been wrong in the decision she took to disobey the injunction without application to the court she incurs the usual risk of such a choice. The order should be affirmed and the period for compliance extended consistently with the time periods provided by the Special Term in the order appealed from.