James v. Powell

• Decision Date: 18 January 1966
• Parties: Estate JAMES, Plaintiff-Respondent, v. Adam Clayton POWELL, Jr., and Yvette Powell, Defendants-Appellants.
• Court: New York Supreme Court — Appellate Division

Page 245

266 N.Y.S.2d 245

25 A.D.2d 1

Estate JAMES, Plaintiff-Respondent, v. Adam Clayton POWELL, Jr., and Yvette Powell, Defendants-Appellants.

Supreme Court, Appellate Division, First Department.

Jan. 18, 1966.

Henry R. Williams, New York City, for defendants-appellants.

Raymond Rubin, New York City (Raymond Rubin and Joseph A. Wolfert, New York City, on the brief), for plaintiff-respondent.

Before McNALLY, J. P., and STEVENS, EAGER, STEUER and WITMER, JJ.

STEUER, Justice.

Plaintiff sued four defendants: Adam and Yvette Powell, and Gonzalo and Carmen Diago. The first cause of action is against defendants Powell only. It is that cause of action which is the subject of the motion to dismiss.

The allegations of this cause of action are that plaintiff obtained a judgment against defendant Adam Powell in the sum of $46,739.35, which judgment is unsatisfied except to the extent of $1,557.32; that at the time of the entry of judgment said defendant owned real estate in Puerto Rico of a value in excess of the amount of the judgment; and that thereafter, through the defendant Yvette Powell as attorney-in-fact, he transferred the property to the defendants Diago for the purpose of hindering and defrauding the plaintiff in the collection. It is further alleged that, as a consequence plaintiff has been unable to collect her judgment. We take these allegations to mean that the defendants connived to make the purported transfers with the intent and object of depriving plaintiff of the opportunity to issue execution against the property. We are not now concerned with whether plaintiff will be able to prove such an intent or purpose.

The argument made on behalf of the moving defendants makes no distinction between them. In brief, this argument is that no relief an be had because, under article 10, Debtor and Creditor Law, plaintiff, having no lien on the property conveyed, has no cause of action. However, while the complaint is no model of the pleader's art, it is quite clear that relief is sought not under the statute but at common law.

At common law, whoever by improper means interfered with the execution of a judgment was liable for the damage he caused to the judgment creditor (Mott v. Danforth, 6 Watts 304 (Pa.); Collins v. Cronin, 117 Pa. 35, 11 A. 869). The right of action has been recognized and discussed at length by the United States Supreme Court in Findlay v. McAllister, 113 U.S. 104, 5 S.Ct. 401, 28 L.Ed. 930, and is undoubtedly part of the common law of this state (Quinby v. Strauss, 90 N.Y. 664). In the Quinby case an action for damages was held maintainable against a judgment debtor and his attorney who conspired to put chattel mortgages on certain of the debtor's personalty to prevent those items from being subject to execution. Whatever question may have arisen can be traced to the following sources: cases dealing with the rights of the judgment creditor against transferees of property from the judgment debtor; the effect of the Debtor and Creditor Law; and the paucity of authority, particularly recent authority, on the subject.

The Quinby case in this state was followed by Braem, et al. v. Merchants' National Bank, 127 N.Y. 508, 28 N.E. 597. In that case a judgment debtor to the plaintiff confessed a judgment in favor of the defendant. The latter was also a bona fide creditor of the debtor. The defendant succeeded in issuing execution before the plaintiff did. The court held that, as defendant was a legitimate creditor, it had a perfect right to proceed against the debtor, and the fact that the dector cooperated did not affect its right and denied recovery. In other words, any interference with plaintiff's effort to collect on the judgment was not tortious. And the opinion points out (127 N.Y. p. 514, 28 N.E. p. 598) that were this not the fact the rule of the Quinby case would apply. And it has continued to be the law that where the recipient of property from a judgment debtor has come by it honestly, no common law cause of action lies against him (Northville Dock Corp. v. Aller, 15 N.Y.2d 498, 254 N.Y.S.2d 109, 202 N.E.2d 556). That this has no bearing and certainly no adverse effect on the proposition that a cause of action lies for a tortious interference with the collectibility of a judgment appears cleary from the discussion in Findlay v. McAllister, supra. The court discussed its earlier decision, Adler v. Fenton, 24 How. [65 U.S.] 407, 16 L.Ed. 696 a case generally relied on where recovery is denied following a transfer by a debtor. Mr. Justice Woods pointed out that as in the Adler case it was found that there were no tortious acts by the transferees, that decision did not preclude recovery where such acts appear.

That the Debtor and Creditor Law does not affect the relief sought in this complaint is quite clear. The purpose of the relevant sections is to provide complete and speedy relief to a creditor against a fraudulent debtor. It increases rather than restricts the instances where relief may be had (see American Surety Co. of New York v. Conner, 251 N.Y. 1, 7, 166 N.E. 783, 785, 65 A.L.R. 244). And it specifically provides (§ 280) that in any case not provided for, the rules as to the effect of fraud shall govern. By no means can this statute be interpreted to take away from a creditor a remedy he had at common law.

Lastly, we are required to take note of a situation which applies to the defendant Adam Powell alone. It is the rare and exceptional case where a judgment creditor who has been frustrated in his efforts to collect his judgment will again sue that debtor in a further effort to collect the same debt. Generally, it would be a futile gesture, as the creditor already has what he would hope to gain by the suit, namely, a judgment. And there would be little reason to believe that he could obtain satisfaction of the second judgment where he had failed in regard to the first. However, the fact that such a procedure is for very good reason seldom initiated neither means nor implies that it may not be done. In Quinby, supra, recovery against the judgment debtor as one of the conspirators in a tortious conspiracy to interfere with the execution was allowed.

It is true that there are dicta in two cases (Goldberg v. Korman, 257 App.Div. 990, 13 N.Y.S.2d 708, and Kimmelsman v. Bishop, 251 App.Div. 724, 295 N.Y.S. 601) that a second recovery is not permissible. We believe these to be unfortunate expressions. The situation is not to be confused with two pending actions for the same relief. There is, of course, a distinct and absolute prohibition against collecting on two judgments for a single debt. But there appears to be no valid reason why an uncollected judgment should be a bar. The holder of an unsatisfied judgment is expressly allowed to sue on the judgment itself wherever he can show a good reason for so doing (CPLR 5014, subd. 3).

In any event, this is neither a suit on the judgment nor for the same relief, and not even specifically to collect it. It is for damages resulting from a tort. The amount of the judgment is not the measure of the damages; it is rather the loss or expense caused by the interference (Penrod v. Mitchell, 8 Serg. & R. 522 (Pa.)). Conceivably, this could embrace the judgment itself (see Quinby v. Strauss, supra), in which event satisfaction of the judgment so obtained would also operate to satisfy the original judgment.

The order denying the motion to dismiss the first cause of action should be affirmed.

Order entered on September 29, 1965, denying defendant's motion to dismiss the complaint affirmed with $30 costs and disbursements to abide the event.

All concur except STEVENS and WITMER, JJ., who dissent in an opinion by WITMER, J WITMER, Justice (dissenting):

I cannot agree that a cause of action at law exists in this State in favor of a judgment creditor, having no lien on specific property, against his judgment debtor and another for disposing or aiding in the disposition of the judgment debtor's property so as to hinder and impede, and possibly defeat, collection of the judgment. There are two aspects of the cause of action before us, to wit, (1) the action by the judgment creditor against the defendant Adam Clayton Powell, Jr., the judgment debtor, and (2) the action by the judgment creditor against the co-defendant wife, Yvette Powell. Of course, the statute (CPLR 5014) expressly forbids an action upon a money judgment by the judgment creditor against his judgment debtor, except for limited purposes not here pertinent. Thus, as the majority holds, the action is not specifically to collect the judgment, but it is for damages many times in excess of the amount of the judgment, to be measured, say the majority, by the loss or expense caused by the interference, and conceivably embracing the judgment itself, 'in which event satisfaction of the judgment so obtained would also operate to satisfy the original judgment.'

It is not too early in this discourse to point our practical difficulties in that ruling, and to ask what happens in the event of partial satisfaction of the new judgment, assuming (1) that the payment is less than the original judgment and that the new judgment includes the judgment creditor's special losses and the expenses of securing it, (2) that the payment is in the same amount as the original judgment, but the new judgment includes the judgment creditor's losses and expenses of obtaining it, or (3) that the payment is greatly in excess of the original judgment but not a complete satisfaction of the new judgment? Legislation on judicial decision could make provision for the measure of damages and the effect of payments (see General Obligations Law, § 15-103); but the present holding leaves much in doubt. ^*

The law of this State and many other states has long denied a right of action at law by a general creditor or a judgment creditor, having no lien on specific property, against his debtor or others for...