Ruvolo v. Long Island R. Co.

• Decision Date: 27 January 1965
• Citation: 256 N.Y.S.2d 279,45 Misc.2d 136
• Parties: Mary RUVOLO, Petitioner, v. The LONG ISLAND RAIL ROAD COMPANY, Respondent.
• Court: New York Supreme Court

Page 279

256 N.Y.S.2d 279

45 Misc.2d 136

Mary RUVOLO, Petitioner, v. The LONG ISLAND RAIL ROAD COMPANY, Respondent.

Supreme Court, Special Term, Queens County, Part I.

Jan. 27, 1965.

William J. Murphy, East Williston, for petitioner.

George M. Onken, Jamaica, for respondent (James T. Gallagher, Jamaica, of counsel).

Henry H. Sternberg, New York City, pro se and for Vincent Ruvolo.

Sidney Posner, Long Island City, Counsel to Sheriff of City of New York (Lawrence Meyer, Long Island City, of counsel).

FITZPATRICK, Justice.

Petitioner Mary Ruvolo moves to confirm the report dated December 9, 1964, of Honorable Samuel S. Tripp, the Special Referee of this court, and for judgment in accordance therewith and the supporting affidavit of her attorney William J. Murphy, Esq. The respondent The Long Island Rail Road Company likewise moves for the confirmation of said report conditioned, however, 'upon (1) Petitioner effecting proper personal service of the notice of petition, Referee's report and stipulation of settlement in this proceeding on Household Finance Company, Chase Manhattan Bank, Busch Jewelry Company and Chambers Loan Company; and (2) upon Petitioner filing 'proof of such service with this Court; and (3) upon passage of a reasonable time for those served to be heard'.

Inasmuch as this litigation involves an area in which there is a dearth in this State of clarifying decisional law, the material portions of the learned Special Referee's report are herewith set forth in full:

'By an order dated July 3, 1964, made by Honorable Daniel E. Fitzpatrick, an Acting Justice of this court, 'all matters encompassed by the above-entitled Special Proceeding' were referred to the undersigned 'to hear and report as to the proper claimants in funds now held by the Respondent to the credit of Vincent Ruvolo or whether the Petitioner is entitled thereto'.

'The foregoing order was made in a special proceeding instituted pursuant to CPLR 5225(b) by Mary Ruvolo. It appears from her petition, verified May 21, 1964, that she had obtained in this court a judgment of divorce from Vincent Ruvolo, which became final on October 25, 1961 (Queens County Clerk's Index No. 445-1961). This judgment awarded the custody of the two children of the parties to the petitioner with alimony and child support of $45 a week. On September 26, 1961, petitioner obtained an order permitting her to docket a money judgment against her former husband for $1490 plus interest, representing unpaid arrears of alimony and child support, and on December 26, 1962, she obtained another order for leave to docket a money judgment for further arrears of $2,835, plus interest.

'On February 13, 1963, petitioner filed, in the office of the Sheriff of the City of New York, Queens County Division, two executions pursuant to section 687-a of the Civil Practice Act to satisfy the foregoing judgments and Sheriff's fees by leaving on an alleged debt owed by the Long Island Rail Road Co. to her former husband. Again, on March 1, 1963, she filed two new executions with said Sheriff to satisfy the aforesaid two judgments out of the indebtedness of the Long Island Rail Road Co. to her said former husband Vincent Ruvolo. On the filing of the executions on both occasions copies thereof were served personally upon the general attorney for said railroad at its office in Jamaica, New York.

'The alleged indebtedness of the Long Island Rail Road Co. is based upon an action that petitioner's former husband, Vincent Ruvolo, brought in the United States District Court for the Eastern District of New York for personal injuries sustained in the course of his employment with the railroad on August 20, 1960. He was represented in that action by an attorney named Henry H. Sternberg, Esq. The case came on for trial in February, 1963, and was finally settled on February 21, 1963, for the sum of $8,500. It is this fund which is the subject of the instant proceeding to determine the rights of the petitioner under her judgments and to direct the Long Island Rail Road Co. to pay over to the Sheriff, or to her, such part of the fund in its possession which this court determines is rightfully hers.

'This matter was noticed for a plenary hearing before me on October 19, 1964. The Long Island Rail Road Co., by its representative, stated on the record that it 'is only a stake holder in these proceedings. The Rail Road seeks a protective order before paying out the amount of settlement. The Long Island Rail Road requests notice of all subsequent hearings.'

'It appeared at said hearing that Vincent Ruvolo had filed a petition in bankruptcy in the United States District Court for the Southern District of Florida and that neither Walter A. Hoffman, the duly appointed trustee in bankruptcy, nor certain judgment creditors had been given notice of the hearing before me, or had all claimants who were given notice appeared in court to make proof of their claims. Accordingly, I adjourned the hearing for all purposes to December 7, 1964, at 9:45 A.M. I also directed the attorney for the petitioner to give written notice of the adjourned hearing to said trustee in bankruptcy and all claimants and judgment creditors of Vincent Ruvolo, which notice was to contain a summary of the issues presented in this special proceeding.

'At the opening of the hearing on December 7, 1964, there was received in evidence (Pert.'s Ex. 1) the notice of hearing dated October 23, 1964 with proof of service of copies upon the persons named in the affidavit of service by certified mail, sworn to on November 25, 1964. The attorney for the Rail Road stated on the record that all persons who had filed claims to the fund were included in the foregoing affidavit of service as having been mailed the notice of hearing on December 7, 1964.

'I find that the summons and complaint in the action against the Rail Road was served on May 23, 1961; that this was an action under the Federal Employers' Liability Act to recover damages for personal injuries sustained by Vincent Ruvolo on August 20, 1960 as the result of the negligence of the Rail Road; that this action was contested; that settlement negotiations between the plaintiff's attorney, Henry H. Sternberg, Esq., and representatives of the Rail Road culminated in an offer of $8,500 on August 16, 1961 which Vincent Ruvolo rejected unless he received such amount 'net to himself'; that this offer was never withdrawn by the Rail Road and was finally accepted by Mr. Ruvolo on February 21, 1963, on which date the action was marked 'settled'. Mr. Ruvolo executed a general release on that date (Petr.'s Ex. 5), as well as an affidavit (Petr.'s Ex. 3) stating: 'I am the plaintiff in the above captioned action which is being settled for the sum of Eight Thousand Five Hundred ($8,500.00) Dollars and agree and consent to such settlement.' Thus it is clear that it was not until February 21, 1963 that Mr. Ruvolo's pending untried action in negligence was terminated by his acceptance of the Rail Road's offer of $8,500 and it is this sum which on that date became a 'debt' within the purview of CPLR 5201.

'On August 2, 1963 Vincent Ruvolo filed a voluntary petition in bankruptcy in the United States District Court for the Southern District of Florida (Petr.'s Ex. 4) and Walter A. Hoffman was duly appointed Trustee. By order to show cause dated June 25, 1964, in ancillary proceedings instituted in the United States District Court for the Eastern District of New York, Vincent Ruvolo sought an order requiring the Rail Road to turn over to Walter A. Hoffman, the Trustee in Bankruptcy, the foregoing settlement, stating in his petition sworn to June 24, 1964 that his action against the Rail Road 'came on for trial in February of 1963, and on February 21, 1963, was settled for the sum of $8,500.00.' By order dated September 10, 1964 this relief was denied and the stay granted in the order to show cause vacated upon the ground that any application in ancillary proceedings had to be instituted by the duly appointed Trustee and not the bankrupt (Petr.'s Ex. 6). I find that to this date no such proceedings were ever instituted by said Trustee although he and his attorney were given notice of the proceedings in this court.

'It has been held that when a lien is obtained more than four months prior to the filing of a petition in bankruptcy, it is not only not to be deemed null and void on adjudication in bankruptcy but its validity is recognized. When a lien is obtained within four months, the property is discharged therefrom. (Metcalf v. Barker, 187 U.S. 165, 174 [23 S.Ct. 67, 47 L.Ed. 122]; In re Continental Midway Corporation, [D.C.] 185 F.Supp. 867.) In other words, valid liens obtained more than four months prior to bankruptcy are valid and enforceable and a trustee in bankruptcy succeeds in title to the bankrupt's estate only to the extent that such assets have not been previously subjected to such valid liens, and paragraph (e) of section 107 of Title 11 of the United States Code provides: 'For the purpose of any recovery or avoidance under this section, where plenary proceedings are necessary, any State court which would have had jurisdiction if bankruptcy had not intervened and any court of bankruptcy shall have concurrent jurisdiction.'

'I find the following liens to have been duly obtained more than four months prior to Mr. Ruvolo's petition in bankruptcy on August 2, 1963:

'1. The attorney's lien of Henry H. Sternberg, Esq., who is the attorney of record in the negligence action which resulted in the settlement. Mr. Sternberg was retained by Mr. Ruvolo on February 2, 1961 on the basis of 30% 'of the sum recovered, whether recovered by suit, settlement or otherwise' (Respt. Sternberg's Ex. A). Mr. Sternberg had out-of-pocket disbursements totaling $478.50 necessarily expended in the prosecution of the action. Thirty per cent of the balance of the settlement remaining after deducting the...