Kennis v. Sherwood

• Decision Date: 15 June 1981
• Citation: 439 N.Y.S.2d 962,82 A.D.2d 847
• Parties: Edward KENNIS et al., Appellants, v. Wilbur K. SHERWOOD, Sheriff of Orange County, et al., Respondents.
• Court: New York Supreme Court — Appellate Division

Page 962

439 N.Y.S.2d 962

82 A.D.2d 847

Edward KENNIS et al., Appellants, v. Wilbur K. SHERWOOD, Sheriff of Orange County, et al., Respondents.

Supreme Court, Appellate Division,

Second Department.

June 15, 1981.

McHugh, Leonard & O'Connor, New York City (Robert P. Whelan, New York City, of counsel), for appellants.

James G. Sweeney, County Atty., Goshen (Anthony G. Austria, Jr., Newburgh, of counsel), for respondent Wilbur K. Sherwood.

Hendler & Murray, New York City (Arthur N. Lambert and John Nocera, New York City, of counsel), for respondent The Aetna Casualty and Surety Company.

Kleinman & Saltzman, P. C., New City (Laurence D. Kleinman, New City, of counsel), for respondent Empire National Bank.

Before LAZER, J. P., and MARGETT, O'CONNOR and THOMPSON, JJ.

MEMORANDUM BY THE COURT.

Appeal by plaintiffs from so much of an order of the Supreme Court, Orange County, dated July 14, 1980, as denied that part of their motion which was (1) for summary judgment against defendant Empire National Bank, (2) to punish defendants Wilbur K. Sherwood and Empire for contempt and (3) for a default judgment against defendant Sherwood.

Order affirmed insofar as appealed from, without costs or disbursements.

Plaintiffs, purchasers of real property, obtained a money judgment on March 17, 1977 for breach of contract against the development company which sold them their property. They proceeded to enforce their judgment by issuing a garnishee's execution against defendant Empire National Bank on May 16, 1977, to be served by the defendant sheriff. The sheriff served the execution three days after receipt. Empire refused to transfer any assets to the sheriff, asserting a superior lien. (Ultimately the execution was returned unsatisfied on June 12, 1979.) Empire responded to the plaintiffs by letter dated May 24, 1977 stating that it had no account relationship with the judgment debtor other than a holdback security account which was established when it purchased the personal obligations of real estate purchasers from the development company.

Thereafter, plaintiffs commenced a turnover proceeding (see CPLR 5225, subd. 5227) to exclude the holder of an installment note given by the plaintiffs upon the purchase of the real property, from receiving any interest in the account and to direct Empire to satisfy the execution out of that account. Empire was never made a party to the turnover proceeding and, on March 14, 1978, an unopposed judgment was entered granting the relief requested. Armed with the latest judgment, plaintiffs requested the sheriff to proceed with the execution of the original money judgment. The sheriff informed plaintiffs that Empire's position had not changed and plaintiffs then commenced the instant action, asserting three causes of action against the sheriff for failing to execute the money judgment and for contempt for disobeying the turnover judgment; two causes of action against Empire for conversion and contempt; and one cause of action against defendant Aetna Insurance Company (later amended to Aetna Casualty and Surety Company) on its sheriff's performance bond.

During the pendency of the instant action, much confusion arose over which the surety company was liable on the sheriff's performance bond, and attempts to determine the correct surety delayed the action. In addition, venue of the action was changed, and the appeal that followed delayed the action further (see Kennis v. Sherwood, 72 A.D.2d 673, 420 N.Y.S.2d 527). Ultimately, plaintiffs brought the instant motion to join the appropriate surety, for a default judgment against the sheriff, for summary judgment against Empire, and to punish the sheriff and Empire for contempt. Special Term denied the motion except insofar as it granted leave to the plaintiff to amend the complaint and serve new parties.

Summary judgment against Empire is not appropriate because it is clear from the record that multiple questions of fact appear with respect to the relationships between the parties, the legal effect of the holdback account and whether it is subject to enforcement of a money judgment. In addition, the failure of the plaintiffs to commence the turnover proceeding against Empire or to join it as a party deprived the court of jurisdiction over it and rendered the turnover judgment ineffective as to Empire (see CPLR 5225, subd. 5227; Siegel, Practice Commentaries, McKinney's Cons. Laws of N. Y. Book 7B, CPLR 5225:5, p. 243).

A default judgment against the sheriff is also not appropriate. Although the sheriff did not interpose an answer to the complaint until plaintiffs' motion for a default judgment was denied on condition that he serve his answer within a specified period, the sheriff has demonstrated a reasonable excuse for his delay and a meritorious defense. The delay was caused by a combination of the County Attorney's request for an extension of time to answer on behalf of the sheriff, the confusion in trying to determine the correct surety and the change of venue motion and appeal. Based on the above, the County Attorney believed that the sheriff's time to answer had been suspended until the...