Swartout v. Schwerter

The Surrogate. Certain judgments were recovered against one Kavanagh, prior to April 15, 1876. On that day, one Swartout was appointed receiver of Kavanagh’s property,, in proceedings supplementary to execution upon these judgments. At the time of this appointment, there subsisted a claim and demand, in behalf of Kavanagh, against the executors of the decedent, for services which Kavanagh had rendered him in his life-time. One-half of this demand had been assigned by Kavanagh under circumstances not necessary to be here considered. This demand constituted a chose in action, to one-half of which Kavanagh, at the time of the receiver’s appointment, was entitled, against decedent’s executors. In May, 1876, Kavanagh recovered judgment against them. In August, 1876, one Schwerter recovered a judgment against Kavanagh, who subsequently, in January, 1877, in pursuance of an order made in proceedings upon such judgment, assigned to Schwerter the one-half of the judg [499] ment he himself had recovered against Poillon’s executors. The judgment so assigned was subsequently set aside, but another was obtained, upon the same demand, against the same parties, in February, 1880. It is that one-half of the judgment against the executors of the decedent which is the bone of this contention. In May, 1880, Kavanagh obtained his discharge in bankruptcy, from all his indebtedness prior to December 27,1877. It is claimed that this discharge swept away the judgments touching which the receiver was appointed, and such interest, if any, as he had obtained thereunder ; but that it left unimpaired the assignment to Schwerter, and the rights which he had thereby acquired. And it is insisted that Schwerter’s claim to the one-half of the judgment now in question is still iff force. If the title to one-half of Kavanagh’s demand passed . to the receiver, it is manifest that the judgment creditors, on whose motion he was appointed, are entitled to have the same and the avails thereof applied upon their judgment, notwithstanding the proceedings in bankruptcy which resulted in Kavanagh’s discharge (see cases cited hereafter). The assumption that the title did not so pass seems to me to ignore entirely the effect of section 298 of the former Code of Procedure, pursuant to which the receiver was appointed. It is now settled that such a receiver who had duly qualified became, by virtue of such appointment and qualification, even without any assignment to him by the judgment debtor, completely vested with the title of the personal property of the debtor, and with all his right and interest therein, for the benefit of those at whose instance he was appointed (Chautauqua Co. Bank v. Risley, 19 N. Y., 375 ; Porter v. Williams, [500] 9 Id., 142 ; Bostwick v. Menck, 40 Id., 383; Wing v. Disse, 15 Hun, 190). We have seen that the demand, upon which the judgment was obtained by Kavanagh, was a chose in action existing at the time of the receiver’s appointment, to one-half of which Kavanagh was then legally entitled. As the receiver was appointed and had qualified before the assignment to Schwerter, he became thereby entitled, for the benefit of the judgment creditors, as against the assignee, to one-half of that'demand, and as a consequence to one-half of the judgment procured thereon. This interest of the receiver and of the creditors was not affected by the proceedings taken in bankruptcy two years later, nor by the discharge therein of Kavanagh. No assignee appointed in such proceedings could disturb the title which the receiver had acquired to the judgment in question, nor the interest therein of the judgment creditors whom he represented, at least so far as such judgment or its avails were necessary to enable the receiver to satisfy the judgment (Wilson v. City Bank of St. Paul, 17 Wall., 473 ; Mays v. Fritton, 20 Id., 414; Doe v. Childress, 21 Id., 643 ; Marshall v. Knox, 16 Id., 551; Yeatman v. Savings Institution, 95 U. S., 764; 101 Id., 738; Sedgwick v. Menck, 1 Nat. Bank. Reg., 675). I have reason to believe that the cases above cited were not called to the attention of my predecessor, or of the referee in this proceeding; else a different disposition might have been made of this matter. As I agree with the referee that a certain other assignment, made by Kavanagh in January, 1876, was invalid, and as the aggregate amount of the judgments to which the receiver [501] Swartout is entitled, exceed the one-half part of the judgment in question, I think that such one-half part should be awarded to the receiver. The referee’s report may be so modified, and a decree entered accordingly.