O'Connor v. Mechanics' Bank

O’Brien, J. In April, 1886, Lewis S. Chase recovered a judgment against Herbert F. Beecher, and in proceedings supplementary to execution the plaintiff was appointed receiver of the property of the judgment debtor. Thereafter, upon the written request of Chase, and solely for his benefit, the plaintiff, as receiver, brought suit against the Mechanics’ Bank of Brooklyn to recover the amount of a certain check which had been drawn by the executors of the estate of Henry Ward Beecher, deceased, upon the bank to the order of 320 the judgment-debtor. In this action, after two trials, the plaintiff was defeated, and a judgment for costs was entered in favor of the defendant. This judgment for costs was assigned to the executors of Beecher, and they make this motion to compel the judgment creditor, Chase, to pay the costs awarded by the judgment; and from the"order refusing to grant such motion this appeal is taken. In Ward v. Roy, 69 N. Y. 96, 99, it is held: “If a creditor, at whose instance a receiver has been appointed, and especially if he is solely interested, instigates and conducts a prosecution for his own benefit through the receiver, the obligation to pay costs created by the statute is equitably as binding upon him as if the legal machinery was not employed.” We do not understand that any fault is found with this rule, which, in the absence of other facts, would require that Chase, the judgment creditor, whp instigated the suit which was brought by the receiver against the bank, should pay such costs. Had this motion been made by the bank, therefore, we fail to see what defense or reason could have been interposed ag'ainst the granting of the motion. The question, however, is presented as to whether the assignee of a judgment for costs is in any worse position, or whether the circumstance that the assignees in this case happen to be the executors of Beecher, deceased, in any way militates against or destroys the rights which otherwise the assignee of a judgment would acquire by virtue of the assignment of such judgment to him. As we understand the respondent, while admitting, if the receiver had now in" his hands sufficient funds belonging to his receivership wherewith to pay these costs, that he would be obliged to pay them, or, if the receiver had no funds, that then, under Ward v. Roy, supra, the defendant might resort to the creditor, still such a motion should be granted until it should finally appear that the receiver would not be able to pay such costs. In other words, respondent’s position is that, inasmuch as certain proceedings have been taken by the receiver in the surrogate’s court which may eventually result in placing in the hands of the receiver an amount sufficient not only to pay these costs, but also the judgment of the creditor, Chase, this motion is premature, and should not be granted until proper opportunity and time are afforded the receiver, and ail efforts have been exhausted, to collect an amount sufficient to pay the judgment for costs out of" the judgment debtor. This assumes that, as against the judgment debtor, the plaintiff is entitled to receive not only an amount sufficient to pay the judgment which has been obtained against the debtor, but also an amount sufficient to pay the costs of an unsuccessful litigation waged by the receiver against a third party without the consent or knowledge of the judgment debtor.. ‘ It seems to us reasonably clear that in a case like this, where no other than the creditor, Chase, is interested in the receivership, the judgment debtor would have a right, on offering the amount of the judgment obtained against him, together with interest and costs, to have the same satisfied, and the receiver discharged. • This would not include, nor could the receiver insist upon the judgment debtor paying in addition, the costs of an unsuccessful litigation waged against a third party in an action to which the judgment debtor was in no sense a party, and of which he had no notice. We do not think that any distinction can be made between the rights which the defendant, the Mechanics’ Bank, had and those which flowed to the executors to whom the judgment for costs was assigned; and therefore they are in the same position to enforce the judgment for costs as the bank would have been in had not the assignment of the judgment been made. It has been made to appear that the receiver is now engaged in an endeavor to recover from the executors the amount of the judgment out of the property of the judgment debtor now in their hands. If successful in discovering such property and in obtaining an order from the surrogate or otherwise that the amount of the judgment should be paid by 321 the executors out oí the property of the judgment debtor, they would in 'jome form undoubtedly be entitled to offset or deduct from such recovery the amount of the judgment for costs which they now hold by assignment against the plaintiff. The executors have in open court offered to pay the difference between the judgment for costs assigned to them and the amount of the Chase judgment, the payment of which the receiver is seeking to enforce against the property of the judgment debtor. We regard this proposition as eminently fair, and as giving him all that he could obtain as the result of prolonged proceedings. If the receiver thinks that some law can be found to sustain his position that he is eventually entitled to recover from the judgment debtor not only the amount of the Chase judgment, but also the costs of the unsuccessful action against the Mechanics’ Bank, no good reason is presented why in the mean time the executors should be prevented from receiving the amount due them by reason of the claim which they have against Chase by virtue of the assignment of the judgment from the bank. We are of opinion, therefore, that the proposition is eminently fair and just which is made by the appellant to offset the judgment for costs against the Chase judgment, the executors paying the difference, and holding their claim as against the judgment debtor; and that, upon the failure to accept this proposition, the executors are entitled to the order applied for, requiring the judgment creditor, who was unsuccessful in a litigation against a third party, to pay the costs thereby resulting, where it has been shown, as here, that the receiver is unable to pay them. We think, therefore, that the order appealed from should be reversed, and, unless the respondent accepts the offer of the appellant in regard to offsetting the claims, that the motion should be granted. Order reversed accordingly, with $10 costs and disbursements, and motion granted, with costs. All concur.