Mazzuka v. Bank of North America
| Decision Date | 05 May 1967 |
| Citation | 280 N.Y.S.2d 495,53 Misc.2d 1053 |
| Parties | John MAZZUKA, Plaintiff, v. BANK OF NORTH AMERICA, Defendant. |
| Court | New York City Court |
Arthur W. Lonschein, Kew Gardens, for plaintiff.
Livingston, Livingston & Harris, New York City, for defendant (Ernst L. Bendix and Sayward Mazur, New York City, of counsel).
Plaintiff's motion (No. 21) and defendant's cross-motion (No. 22) have been considered together. Each party seeks summary judgment against the other.
The material facts that gave rise to this controversy are not in dispute. In sequence, this is what occurred.
On September 13, 1966, on Edward I. Chirlin, who maintained an account at a branch of defendant-Bank, made out a check in the sum of $2,000 payable to the order of one Markowitz. Chirlin thereupon caused the check to be certified by the Bank.
On October 7, 1966 plaintiff recovered a judgment against Chirlin in the amount of $13,197.10.
On October 10, 1966, plaintiff served a Restraining Notice on the branch of the defendant Bank where Chirlin maintained his account. A copy of the notice thus served in the form prescribed by CPLR Section 5222 is annexed to the moving papers.
On the same day--October 10, 1966--the Assistant Manager of defendant's branch Bank wrote to Chirlin advising him that his account at the Bank had been attached with the Restraining Notice and that: 'Accordingly, we are unable to honor any further checks drawn against your account.' (Exhibit D annexed to defendant's papers).
On the following day--October 11, 1966--Chirlin went to the main office of the defendant Bank, and presented the previously certified check for $2,000 which was still in his possession. Chirlin sought to have the check cancelled and receive cash therefor. To accomplish his purpose, Chirlin was advised by one John W. Beattie, an employee of the Bank, to endorse the certified check with the legend 'Not used for the purpose intended.' The check was thereupon redeposited to the credit of Chirlin's account; simultaneously Chirlin drew another check to his own order for $2,000; the check was immediately cashed and Chirlin was thus able to obtain $2,000 from his account. Beattie states that before permitting the transaction in question he telephoned the branch of defendant's Bank where Chirlin maintained his account and that he (Beattie) 'was advised that the account was free.' (See Beattie's affidavit and Exhibits A, E and F, annexed to defendant's papers).
On November 4, 1966, pursuant to a Sheriff's levy and execution, defendant remitted to the Sheriff the sum of $432.11 as the porported balance remaining in Chirlin's account.
There followed the institution of this action wherein plaintiff alleges that he has been damaged and asks for judgment against the Bank in the sum of $2,000 'because of the illegal and wrongful act of the defendant in transferring and paying over the sum of $2,000 to Edward I. Chirlin, which was contrary to the restraining notice served upon it (defendant Bank)= (Par. Tenth of Complaint). Stated differently, plaintiff claims that but for the Bank's wrongful payment of $2,000 to the judgment-debtor Chirlin, the plaintiff as judgment-creditor would have realized on account of his judgment the sum of $2,432.11 instead of only $432.11.
The questions before the court are two-fold:
(1) Does the Restraining Notice extend to the proceeds of the previously certified but unused check of $2,000 which sum was deposited to the credit of Chirlin's account on the day following the service of the Restraining Notice?
(2) If the first question is answered in the affirmative, may the plaintiff maintain an action for damages caused by the Bank in violating the Restraining Notice? Stated differently, is the plaintiff's sole nd exclusive remedy an application to punish the Bank for contempt?
Perforce of its prior certification, the Bank argues that the amount of the check ($2,000) was thereafter rendered immune from the claims of Chirlin's judgment creditors. As a generalized proposition this would be true. But as applied to the facts in this case the Bank's argument lacks substance. It glosses over the realities of the situation. When the Bank indulged in the transaction of October 11th whereby the certified check was vitiated, the funds in Chirlin's account were then increased by $2,000. Having knowledge of the Restraining Notice served just one day earlier, the Bank nevertheless permitted the judgment-debtor Chirlin to withdraw $2,000 from his account. And this in the face of the Bank's own written advice to Chirlin on October 10th that they would be unable to honor any further checks drawn against his account. Obviously, the Bank was then mindful of the restraint printed on the Restraining Notice that 'this notice also covers all property in which the judgment debtor has an interest hereafter coming into your possession or custody, and all debts hereafter coming due from you (the Bank) to the judgment debtor.' The quoted part of the notice is consistent with the relevant restraining provisions contained in CPLR Section 5222(b), the full text of which was also printed on the face of the Restraining Notice.
Both ont he law and the facts, this court concludes that the proceeds of the $2,000 check admittedly deposited on October 11, 1966 to the credit of the judgment-debtor Chirlin were subject to the provisions of the Restraining Notice served on October 10th. This result follows whether the $2,000 thus deposited or credited to the debtor's account be deemed a debt owing from the Bank to its depositor Chirlin or property in the possession or custody of the Bank in which the debtor is known to have an interest.
The court proceeds to a consideration of the other branch of defendant's argument that in any event the sole and exclusive remedy available to plaintiff is to punish the Bank for contempt.
After considering all of the relevant statutory provisions including pertinent Legislative Studies and Reports and the Practice Commentaries under the CPLR* coupled with a research of decisional law, the court holds that plaintiff is not circumscribed by or limited to the remedy of contempt.
It may be noted here that the kind of conduct contemplated as the basis of a contempt for violation of a Restraining Notice under Article 52 of the CPLR is a 'refusal or willful neglect' to obey the Notice. This is expressly provided in CPLR Sec. 5251, as amended L.1965, Chapter 773, effective September 1, 1965. That is not the situation here. Plaintiff makes no pretense that the Bank's conduct was contumacious. Plaintiff does insist, however, that the Bank is not immune from its own negligence in failing to observe the provisions of the Restraining Notice. To that end plaintiff seeks damages from the defendant.
Defendant's argument boils down to this. While urging that plaintiff's sole remedy lies in contempt, the Bank is also quick to assert that the purported remedy of contempt will avail the plaintiff nothing because the Bank's conduct was not contemptuous. It is another way of saying that although the plaintiff was wronged by the acts of the Bank, nevertheless, for all practical and realistic purposes, the wrong committed is without a remedy. At best, the remedy of contempt, if it be here invoked, is surely illusory. The argument is repugnant to the very essence and true concept of the judicial process. Undeniably, the Bank was under a statutory duty owing to plaintiff as a judgment creditor to obey the Restraining Notice. That duty was mandated by the Legislature as an effective aid in the enforcement or collection of a money judgment. For a breach of the duty caused by the negligence of its employees, the Bank must be held accountable.
In its memorandum (pages 5--6), defendant states that 'Counsel for the Bank have extensively researched the law and have not been able to find a case which imposes such liability' of the kind here sought to be imposed upon the Bank. Based on its own research, this court concludes that by analogy of reasoning, judicial authority supports the holding that, apart from the remedy of contempt authorized by the CPLR, a Bank may be held liable to a judgment-creditor...
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