Cole v. Goldberger, Pedersen & Hochron

• Decision Date: 12 October 1978
• Citation: 95 Misc.2d 720,410 N.Y.S.2d 950
• Court: New York Supreme Court
• Parties: Application of Alan COLE, Petitioner, for a Judgment pursuant to § 5239 of the Civil Practice Law and Rules v. GOLDBERGER, PEDERSEN & HOCHRON, Attorneys at Law, Marine Midland Trust Company of Southern New York, and John J. Andrews as Broome County Sheriff, Respondents. Application of John J. REYNOLDS and Dara L. Reynolds, Petitioners, for a Judgment pursuant to § 5239 of the Civil Practice Law and Rules v. CARR AND ROWLANDS, Attorneys at Law, and Binghamton Savings Bank, Respondents.

Page 950

410 N.Y.S.2d 950

95 Misc.2d 720

Application of Alan COLE, Petitioner, for a Judgment

pursuant to § 5239 of the Civil Practice Law and Rules

v.

GOLDBERGER, PEDERSEN & HOCHRON, Attorneys at Law, Marine

Midland Trust Company of Southern New York, and

John J. Andrews as Broome County

Sheriff, Respondents.

Application of John J. REYNOLDS and Dara L. Reynolds,

Petitioners, for a Judgment pursuant to § 5239 of

the Civil Practice Law and Rules v. CARR AND ROWLANDS, Attorneys at Law, and Binghamton Savings

Bank, Respondents.

Supreme Court, Broome County.

Oct. 12, 1978.

Broome Legal Assistance Corp., Binghamton (L. David Zube, Binghamton, of counsel), for petitioner in both cases.

Goldberger, Pedersen & Hochron, pro se; Milton Goldberger, Binghamton, of counsel, for respondents.

Coughlin & Gerhart, Binghamton, for respondent Marine Midland Trust Co., etc.

Broome County Department of Law, County Attorney's Office, Binghamton (Lawrence Zimmerman, Senior Asst. County Atty., Binghamton, of counsel), for respondent John J. Andrews, Sheriff.

Office of Attorney General, State of New York, Regional Office, Binghamton, for both cases.

Carr & Rowlands, acting pro se; Michael J. Hannah, of counsel, for respondents.

Hinman, Howard & Kattell, Binghamton (Howard M. Rittberg, Binghamton, of counsel), for defendant Binghamton Savings Bank.

ROBERT E. FISCHER, Justice Presiding.

These separate special proceedings seeking declaratory and injunctive relief consolidated for purposes of this decision assert the invalidity of various post-judgment procedures provided by Article 52 of the CPLR, as violative of due process guarantees of the federal and state Constitutions. The Attorney General has been served in compliance with CPLR 1012(b), but has not appeared.

The underlying facts in each proceeding are undisputed. In Cole, the respondent law firm, Goldberger, Pedersen & Hochron, representing a physician obtained and entered a default judgment against the petitioner, Alan Cole, for $126.32 in February of 1977. After petitioner sent only small monthly payments in satisfaction, counsel delivered execution to the respondent Sheriff, John J. Andrews, who, on November 18 of that year, levied upon petitioner's personal checking account, held by the respondent Marine Midland Trust Company of Southern New York. Petitioner was advised of the levy two days later by letter from the bank, which issued a check for $21.35, the amount then in the account, to the Sheriff on November 20. Alleging that the funds levied upon consisted solely of Social Security disability benefits, petitioner commenced this proceeding pursuant to CPLR 5239 by our order to show cause. After oral argument, the Sheriff agreed to hold the funds pending a hearing, which counsel for the judgment creditor later waived. Thereafter an order was presented and signed on February 14, 1978 releasing the levied funds to the petitioner but reserving the constitutional issues presented.

In Reynolds, the respondent law firm of Carr and Rowlands obtained a default judgment in December of 1977 for $802.19 against the petitioner Dara L. Reynolds for breach of contract for services rendered by their client, the respondent Executive Spa for Men and Women, Inc. On January 12, 1978 after Mrs. Reynolds failed to heed counsel's letters requesting payment, counsel issued notice to the respondent Binghamton Savings Bank restraining the account held in the name of the Reynolds. Petitioners, upon first learning of the restraint over a week later when the Bank refused to permit a withdrawal of funds, commenced this CPLR 5239 proceeding by our order to show cause, alleging that the petitioners' sole income and source for the account was veteran's disability benefits awarded to petitioner John J. Reynolds. After issue was joined, respondents waived a factual hearing and permitted removal of the restraint on the account, with this court reserving on the constitutional issues.

The CPLR sections here challenged on due process grounds are 5222 (restraining notice), 5230 (execution) and 5232 (levy on personal property). Each provides for issuance of process by a clerk of the court or the judgment creditor's attorney once a money judgment has been obtained and is entered. Unlike section 5231 (income execution), no provision is made for notice to the judgment debtor before, during or following a restraint upon personal assets in the hands of a third party except for a public notice requirement before the sheriff sells assets in satisfaction of the debt (CPLR 5233, subd. (b)) unless the judgment creditor finds it necessary to commence a turnover proceeding against an otherwise recalcitrant debtor or garnishee, in which case notice to the debtor is specifically required (CPLR 5225, subd. (b), 5227).

Notwithstanding lack of notice, the restraining notice is effective against all current possession and future acquisitions of the debtor's property, precluding alienation to any but the sheriff for as long as one year, unless the garnishee chooses to withhold the cash equivalent of twice the amount due on the judgment (CPLR 5222, subd. (b)). Levy by service of execution requires the garnishee to deliver forthwith all of the debtor's property in possession and to pay all mature obligations to the sheriff, the levy being good against future acquisitions for ninety days (CPLR 5232, subd. (a)). Immediate levy by sheriff's seizure of personalty capable of delivery is likewise permitted (CPLR 5232, subd. (b)).

When or, under the notice provisions of the statute, if the judgment debtor becomes aware of the restraint "(p)rior to the application of property or debt by a sheriff . . . to the satisfaction of a judgment . . . " (CPLR 5239), he may commence a special proceeding such as these before us to vacate the execution and void the restraint or levy. Thus, petitioners maintain, no other method is provided for the debtor to assert his exemption, whether federal or state, except for a plenary suit by the debtor for interference with exempt property after the fact (see CPLR 5205, subd. (b)). Petitioners therefore maintain that lack of notice and meaningful opportunity to contest such deprivations of their property exempt but nonetheless restrained denies them due process of law.

We must address the issue of mootness at the outset, in that these petitioners have successfully challenged the post-judgment restraints upon their assets. However, their counsel, the Broome Legal Assistance Corporation, has submitted proof of reoccurrence of such post-judgment restraint of the exempt assets of their clients who are, or are thereby rendered, indigent (Affid. of Nedlik, M., sworn to November 21, 1977, pars. 3, 4). Under such circumstances, and where, as here, the issues are well briefed and articulated, we may proceed to determine them upon the authority of Blye v. Globe-Wernicke Realty Co., 33 N.Y.2d 15, 19, 347 N.Y.S.2d 170, 174, 300 N.E.2d 710, 713:

"(I)t is well settled that judicial reluctance to decide questions which need not be reached should yield when, as here, important constitutional issues are raised and the controversy is of a kind likely to recur."

Bearing in mind that the presumption of constitutionality of a state statute may only be rebutted by a clear showing which is beyond reasonable doubt (Frank v. State, 61 A.D.2d 466, 471, 402 N.Y.S.2d 860, 863), we begin with the general observation that the United States Supreme Court has consistently held that notice and hearing in some form must be provided an individual before final deprivation of a significant property interest (Mathews v. Eldridge, 424 U.S. 319, 333, 96 S.Ct. 893, 47 L.Ed.2d 18 (1976) and cases cited therein). Addressing, once again, the language of this State's highest court in Blye, supra, we are advised:

"Procedural due process requires notice and an opportunity for a hearing before the State may deprive a person of a possessory interest in his property . . . The protection is not limited to necessaries . . ., although the relative weight of the property interest involved may be relevant to the form of notice and hearing required by due process. Nor does the availability of the right turn on the relative degree of permanence of the deprivation, nor may it be defeated by provision for recovery of the property. Only an extraordinary or truly unusual situation will justify postponing notices and opportunity for a hearing . . . " (33 N.Y.2d at 20, 347 N.Y.S.2d at 175, 300 N.E.2d at 714; citations omitted)

Although these principles were articulated in the context of statutorily sanctioned, prejudgment quasi-judicial or self-help remedies, we note that the post-judgment takings authorized by Article 52 of the CPLR with the exception of income execution provide neither notice, judicial scrutiny, nor automatic hearing before the judgment debtor may be separated, temporarily or even permanently, from his personalty. Such supplementary proceedings in aid of enforcement of money judgments, until recently, have been protected from constitutional attack by the reasoning articulated in the 1924 decision of the United States Supreme Court in Endicott-Johnson Corp. v. Encyclopedia Press, Inc., 266 U.S. 285, 45 S.Ct. 61, 69 L.Ed. 288, wherein the rationale is succinctly stated:

"The established rules of our system of jurisprudence do not require that a defendant who has been granted an opportunity to be heard and has had his day in court, should, after a judgment has been rendered against him, have a further notice and hearing before supplemental proceedings are taken to reach his property in satisfaction of the judgment. Thus, in the absence of a statutory requirement, it is not essential that he be given notice before the issuance of an execution against his tangible property; after the rendition of the judgment he must take 'notice of what will follow' no further notice being 'necessary to advance justice . . .' (citing Ayres v. Campbell,...