Glassman v. Hyder

• Decision Date: 12 December 1968
• Citation: 244 N.E.2d 259,23 N.Y.2d 354,296 N.Y.S.2d 783
• Parties: , 244 N.E.2d 259 Charles S. GLASSMAN, Appellant, v. Donald W. HYDER et al., Respondents.
• Court: New York Court of Appeals Court of Appeals

Page 783

296 N.Y.S.2d 783

23 N.Y.2d 354, 244 N.E.2d 259

Charles S. GLASSMAN, Appellant, v. Donald W. HYDER et al., Respondents.

Court of Appeals of New York.

Dec. 12, 1968.

Benedict Ginsberg, New York City, for appellant.

Arnold S. Schickler, New York City, for respondents.

BREITEL, Judge.

Involved on this appeal is the vacatur of an attachment of future rents to become due on New Mexico property. Plaintiff appeals from the vacatur and the consequent dismissal of his complaint for lack of jurisdiction.

Plaintiff Glassman, a New York resident, sued for real estate brokerage commissions. Defendants are the New Mexico owners of a building in that State. The tenant is an out-of-State corporation doing business in this State. In order to obtain quasi in rem jurisdiction over the nonresident defendants (N.Y. City Civil Court Act (CCA), § 405, subd. (c), counterpart to CPLR 314, subd. 3) plaintiff obtained a warrant of attachment and caused a levy to be made on the tenant in New York. Plaintiff also claims personal jurisdiction over defendants on the ground that the nonresident defendants transacted business in the State out of which the cause of action arose (CCA, § 404, subd. (a), par. 1, counterpart to CPLR 302, subd. (a), par. 1).

The Civil Court held that there was no jurisdiction (51 Misc.2d 535, 273 N.Y.S.2d 385); the Appellate Term reinstated the attachment and the complaint (52 Misc.2d 618, 276 N.Y.S.2d 453); and the Appellate Division, agreeing with the Civil Court, vacated the attachment and dismissed the complaint (28 A.D.2d 974, 283 N.Y.S.2d 419).

Because it is concluded that there was no jurisdiction over the defendants on either basis, the vacatur and dismissal should be affirmed.

Plaintiff, a licensed real estate broker, allegedly, through a series of telephone calls, letters, and a telegram, entered into a brokerage agreement with defendant owners, who were at no time physically present in New York, for the procurement of a buyer for the New Mexico property. A suitable buyer, he alleges, was found. The owners agreed to accept the buyer's offer, but subsequently refused to sign a written contract, and failed to pay the broker the agreed commissions.

I. Quasi in rem jurisdiction

The owners had in 1962 leased the land and building, the subject of the alleged brokerage agreement, to Firman's Fund Insurance Company, under a 20-year net lease expiring in 1983. Only the destruction or condemnation of the premises, or a breach of the covenant of quiet enjoyment, could materially affect the duty of the lessee to pay rent. The rent was reserved on a monthly basis, to be paid on the first day of each calendar month, commencing on the first day of the term. On December 20, 1965, broker obtained (pursuant to CCA, §§ 209, 801) an order of attachment, which was levied upon the tenant, Fireman's Fund, on December 21, 1965. Personal service on the defendants in New Mexico (pursuant to CCA, § 405) was made the first week in January and plaintiff was given additional time to file proof of service. At the time of the levy, the rent due December 1 had already been paid on December 3. No further rent was due until January 1. On January 3, tenant paid the rent then due, $1,398.10, to the Sheriff. The property was sold to another purchaser in January and no subsequent rent has been paid to the Sheriff.

CLPR 6202 provides that any debt or property against which a money judgment may be enforced under CPLR 5201 is attachable. There are three kinds of things subject to execution, and the same was to some extent true under the Civil Practice Act.

The first is a debt past due, or yet to become due, certainly, or upon demand, which is always an intangible (CPLR 5201, subd. (a)). The second is property, real or personal, tangible or intangible, which includes vested or unvested interests (CPLR 5201, subd. (b)). The third is income of various kinds, but subject to preconditions before it is available to levy by execution, and most often limited to garnishing of 10% (CPLR 5231, but compare 5226).

On any ordinary analysis, particularly any economic analysis, future rents might be treated either as a debt or as a form of income.

A debt to be attachable must be 'past due or * * * yet to become due, certainly or upon demand of the judgment debtor' (CPLR 5201, subd. (a)). Where a duty to pay is conditioned on the creditor's future performance, or upon contractual contingencies, there is no debt certain to become due (see Sheehy v. Madison Sq. Garden Corp., 266 N.Y. 44, 47, 193 N.E. 633; Herrmann & Grace v. City of New York, 130 App.Div. 531, 535, 114 N.Y.S. 1107, 1111, affd. 199 N.Y. 600, 93 N.E. 376). An obligation to pay rent, it has been held, is not a debt and is not certain to become due (see Matter of Ryan's Estate, 294 N.Y. 85, 95, 60 N.E.2d 817, 821). Thus, in the Ryan case, it was said, 'The 'covenant to pay rent creates no debt until the time stipulated for the payment arrives * * * It is not a case of debitum in praesenti solvendum in futuro. On the contrary, the obligation upon the rent covenant is altogether contingent.' In some coningencies the stipulated rent payable in the future by a lessee for the right to occupy leased premises might never become due.' (Matter of Ryan, supra, p. 95, 60 N.E.2d p. 821.)

Seider v. Roth, 17 N.Y.2d 111, 269 N.Y.S.2d 99, 216 N.E.2d 312, and Simpson v. Loehmann, 21 N.Y.2d 305, 287 N.Y.S.2d 633, 234 N.E.2d 669, relied on by plaintiff, are hardly applicable. Those cases depend upon the construction that an indemnitor's duty to defend is a present duty and, therefore, a current asset. Notably, in those cases, there was no special effort made by the majority to classify contractual duties as between debt and property, although, to be sure, it was said in the Seider case that 'as soon as the accident occurred there was imposed * * * a contractual obligation which should be considered a 'debt' within the meaning of CPLR 5201 and 6202.' (17 N.Y.2d p. 113, 269 N.Y.S.2d p. 101, 216 N.E.2d p. 314.) As to future rents, there is no present duty.

Although New York has never specifically held that future rents cannot be attached or garnished, most other jurisdictions have held that future rents are so speculative as not to qualify as debts certain to be due, or even as debts at all and hence are not garnishable (see United States Fid. & Guar. Co. v. Wrenn, 67 App.D.C. 94, 89 F.2d 838; Calechman v. Great Atlantic & Pacific Tea Co., 120 Conn. 265, 180 A. 450, 100 A.L.R. 302, and cases cited in Ann.--Garnishment of Tenant, 100 A.L.R. 307).

But, as noted, the New York rule in the general area fits the prevailing view, and such legislative history dealing with CPLR 6202 and 5201 (subd. (a)) as is available suggests that there was no intention to modify the generally accepted criteria for what is a debt certain. This is not surprising. Where the real property is located in the same State as the forum, the levying creditor has no problem. He levies against the real property in this State simply by filing a notice of levy in the appropriate county clerk's office (CPLR 6216; 7A Weinstein-Korn-Miller, N.Y.Civ.Prac., par. 6216.01 et seq.). It then becomes a lien against the real property and the owner is effectively restrained from disposing of the property without first discharging the lien. If it is necessary to reach the accruing rents, a simple form of receivership is available after judgment (CPLR 5228, subd. (a); 6 Weinstein-Korn-Miller, op. cit., par. 5228.01 et seq.). Consequently, there has been little or no practical necessity for a direct levy on future rents under the attachment and execution statutes. The exceptional situation which has arisen here is that, first, defendants are nondomiciliaries, second, the real property is outside the State, and, third, the rent-paying tenant is subject to jurisdiction.

The exceptional situation raises another conceptual question. Under traditional, even ancient law, rents were not personal obligations but rights and duties (however treated) associated with or 'emanating from' the land (see Bouvier's Law Dictionary (Rawle's 3d rev.), 'Rent'). On this view, the rents would be attachment only in the jurisdiction in which the land lay. It is hardly necessary to reach this issue in this case, if one accepts the view that the legislation on attachment and execution never purported to reach future rents, except as income, subject perhaps only to execution (compare CPLR 6202 with CPLR 5201 and 5231).

The broker indeed argues that the limiting language of CPLR 5201 must be read in connection with CPLR 5231, providing for execution against 10% Of recurring income (3rd Preliminary Report of Advisory Committee on Practice & Procedure (N.Y.Legis.Doc., 1959, No. 17), p. 101). It need not be decided whether the income execution provision is available as a basis for attachment, or whether future rents are covered by that provision. Income execution under CPLR 5231 (subds. (b), (c)) must first be served upon the judgment debtor, who must be given an initial opportunity to make the required payments of 10% Of the income against which the judgment is enforced. Only if he defaults may a third party, the source of the income, be served. The protection thus afforded the judgment debtor should not be abandoned if the income execution provision were to be deemed applicable to attachment. Attachment, therefore, even if otherwise authorized, was not properly levied in his case. The order of attachment was issued December 20, 1965, and the levy was attempted December 21, 1965. No attempt was made to notify the owners of the attachment or give them opportunity to avoid the levy on the lessee until after it had already been made.

Consequently, the levy was ineffective and quasi in rem jurisdiction was not obtained.

II. In personam jurisdiction

The broker also contends that, even if the attachment is invalid, in personam jurisdiction over the owners has been...