Michigan Associates v. Emigrant Sav. Bank

• Decision Date: 31 May 1973
• Citation: 74 Misc.2d 495,345 N.Y.S.2d 329
• Parties: MICHIGAN ASSOCIATES, Petitioner, v. EMIGRANT SAVINGS BANK, Respondent, Villard Joseph, Defendant and Judgment Debtor.
• Court: New York Supreme Court

Page 329

345 N.Y.S.2d 329

74 Misc.2d 495

MICHIGAN ASSOCIATES, Petitioner, v. EMIGRANT SAVINGS BANK, Respondent, Villard Joseph, Defendant and Judgment Debtor.

Civil Court of the City of New York, Queens County, Special Term, Part 1.

May 31, 1973.

[74 Misc.2d 496] Murray Seeman, Jamaica, for petitioner.

William R. White, for respondent.

Mark H. Spires, Jr., Jamaica, for judgment debtor.

DECISION

CHARLES H. COHEN, Judge.

This a special proceeding brought by petitioner, a judgment creditor of Villard Joseph (referred to herein as the 'defendant' or 'judgment debtor') directed against the respondent bank. Following an interim order of the Court, petitioner in its petition sought, as stated in the accompanying notice of motion, pursuant to CPLR 5225 and 5227, '. . . an order directing the respondent . . . to turn over to plaintiff (sic) the full amount of the judgment . . . in the amount of $1,191.80, together with appropriate interest to the date of the turnover or so much thereof as may be determined by the Court to be properly held in the possession of said bank in the name of the judgment debtor, or in lack thereof, for the entry of a judgment against the said respondent in favor of the plaintiff (sic) for said amount . . .' (Since this matter involves a deposit of money in a bank, which deposit constitutes a debt owing by the bank to its depositor (In Re Trevor's Estate, 309 N.Y. 389, 393, 131 N.E.2d 561), CPLR 5227, providing for a special proceeding '. . . against any person who it is shown is or will become indebted to the judgment debtor', appears to be the applicable statute).

The judgment debtor, who was served with the notice of motion instituting the proceeding as required by CPLR 5227, moved to intervene and to vacate a restraining notice served by petitioner upon respondent, based upon a claim that the judgment is not absolute but merely stands as security. Both CPLR 5225(b) and 5227 provide that the Court 'may permit the judgment debtor to intervene.' If in fact the judgment is not absolute but is one which merely stands as security, there might be good reason to grant the judgment debtor's motion. On the other hand, if the judgment is absolute, there would be no purpose in doing so since the judgment debtor would seem to have no further interest in this debt which he claims was owing to him.

The judgment was entered on default on February 16, 1971. After the defendant moved to vacate the judgment a traverse was held after which the Court entered an order dated October 28, 1971, sustaining the service of process but giving the defendant leave to serve and file an answer. On July 20, 1972, the Appellate Term affirmed the order of October 28, 1971, but modified it to the extent of providing that the judgment stand as security. There seems to have been some question as to whether defendant thereafter timely served and filed an answer. By order dated October 24, 1972, the judgment was 'considered as reinstated' although its enforcement was stayed. By order dated December 5, 1972, a motion to vacate the judgment was granted on certain terms which, among others, stated that the judgment 'shall stand as security' and that defendant pay certain costs; and 'upon failure of the defendant to comply with the foregoing, motion is denied.'

With respect to the payment of costs, the judgment debtor claims that $305 paid to petitioner from the bank account, pursuant to an order of this Court dated October 31, 1972, relating to another judgment, was improper. He then argues that the costs (which were less than $305) were therefore paid and, accordingly, there was compliance with the order of December 5, 1972, so that the judgment merely stands as security. The difficulty with this argument is that this Court cannot recognize a collateral attack on the October 31, 1972 court order. Jacobowitz v. Metselaar, 268 N.Y. 130, 197 N.E. 169; Tomasello Bros. Inc. v. Friedman, 57 Misc.2d 817, 293 N.Y.S.2d 688, aff'd 32 A.D.2d 652, 301 N.Y.S.2d 436; Kology v. Maplewood Homes, Inc., 36 A.D.2d 538, 318 N.Y.S.2d 566; see also Parker v. Rogerson, 33 A.D.2d 284, 291, 307 N.Y.S.2d 986, 993, app. dis., 26 N.Y.2d 964, 311 N.Y.S.2d 7, 259 N.E.2d 479 stating 'that one judge should not reconsider, disturb or overrule an order in the same action of another Judge of coordinate jurisdiction.' Surely this Court cannot disturb that order made in another action. If there is a dispute between petitioner and the judgment debtor concerning the turnover of the sum of $305, that dispute is not before this Court in this proceeding. Having found that the costs were not paid and, therefore, that the judgment in question does not merely stand as security, there is no basis for intervention by the judgment debtor. The motion to intervene and to vacate the restraining notice is denied.

After entering judgment against the judgment debtor on February 16, 1971, in the amount of $1191.80, there was served upon respondent, on behalf of petitioner, a Restraining Notice to Garnishee and an Execution with Notice to Garnishee, each making reference to Account No. 116,833--2. The restraining notice was served on March 3, 1971 and the execution on March 11, 1971, on which dates that account had a balance of $850.15. After the restraining notice was served and after the levy was made by a marshall by serving the execution upon the respondent, the latter permitted withdrawals against this account on the dates and in the amounts indicated (aside from the $305 paid pursuant to court order as previously mentioned):

                March 15, 1971     $ 87.00
                April 12, 1971       87.00
                April 15, 1971      140.81
                April 19, 1971      100.00
                May 10, 1971         87.00
                December 27, 1972    81.70
                

Respondent was forbidden to '. . . pay over or otherwise dispose of' the debt owing to the judgment debtor '. . . until the expiration of one year after the notice' was served by virtue of the restraining notice (CPLR 5222(b)) and for 90 days (unless extended by court order) by virtue of the execution (CPLR 5232(a)). See Matter of Sumitomo Shoji v. Chemical Bank, 47 Misc.2d 741, 744, 263 N.Y.S.2d 354, 357, aff'd 25 A.D.2d 499, 267 N.Y.S.2d 477. The withdrawal of December 27, 1972, may be disregarded since it was made after the one year and 90 day periods had expired. However, the other withdrawals, assuming they were made from an account owned by the judgment debtor, were permitted to be made in violation of the restraining notice and execution and would give rise to a claim for damages by petitioner against respondent. Nardone v. Long Island Trust Co., 40 A.D.2d 697, 336 N.Y.S.2d 325; Matter of Sumitomo Shoji v. Chemical Bank, supra; Mazzuka v. Bank of North America, 53 Misc.2d 1053, 280 N.Y.S.2d 495.

The account was entitled 'Villard Jean Joseph i/t/f Luce Joseph', a form of deposit usually called a 'Totten Trust'. See Matter of Totten, 179 N.Y. 112, 71 N.E. 748. Respondent questions whether the debt represented by this account was owing to the judgment debtor or to Luce Joseph. It argues that since it was not certain that the debt was owing to the judgment debtor, it was not legally bound by the restraining notice and execution and could ignore them. The Court disagrees. The Court further finds that this is a belated attempt to avoid liability after having permitted the withdrawal of funds despite the service upon it of the restraining notice and execution issued upon an outstanding judgment.

On March 23, 1971, in response to the execution, respondent then declared that it had no knowledge of the interest of the beneficiary, that payment 'has been stopped on said account', that it has no interest in the account and will pay it to 'the persons justly entitled to receive same in such manner as will fully discharge it from future liability' and that it is 'taking the position of stakeholder until a plenary action is maintained, and a final determination made, as to the ownership of the funds in said account . . .'

In Dumpson v. Taylor, 38 Misc.2d 118, 237 N.Y.S.2d 871, in connection with a motion made by a judgment creditor to recover the proceeds of a savings account held in the form of a Totten Trust, the Court stated (at 120--121, 237 N.Y.S.2d at 875):

'The effect of such form of deposit is generally thought to create the presumption that the depositor intended to establish a revocable or tentative trust which would become irrevocable and pass to the named beneficiary upon the death of the depositor (Matter of Totten, 179 N.Y. 112, 71 N.E. 748). That is correct, but it is indeed more than that, and certain circumstances may have an important impact upon the legal rights of the parties even during the lifetime of the depositor. That is to say, it 'is a tentative trust merely, revocable at will' not only 'until the depositor dies' but also until he 'completes the gift in his lifetime by some unequivocal act or declaration, such as delivery of the pass book or notice to the beneficiary' (Matter of Totten, supra, 179 N.Y. at p. 126, 71 N.E. at pp. 752, 753; 1 Scott, Trusts (2d ed.), § 58.2).'

A question arises, then, as to whether the named beneficiary was the person entitled to the bank account. This would hinge upon whether the trust had become irrevocable by the depositor (judgment debtor) completing the gift in his lifetime by some unequivocal act such as the delivery of the passbook. Yet, although respondent has had an opportunity to submit evidentiary facts raising this issue, it has failed to do so even though the Court, pursuant to CPLR 409(a), required the submission of certain additional proof. All respondent has done is to raise a question as to whether or not the beneficiary was entitled to the bank account. It does not actually claim that the beneficiary was so entitled.

Keeping in mind that this matter is before the Court in effect as a motion for summary judgment (See CPLR 409(b)), respondent, if it has a defense, must, in order to defeat the motion, show...