Riker v. Gwynne

The order requiring the plaintiff, trustee in bankruptcy, to furnish security for costs, was obtained ex parte under' *11subdivision 4 of section 3268 of the Code of Civil Procedure, on the theory that such an 'order for security was of right. The action being brought to set aside conveyances claimed to be in fraud of creditors of the bankrupt, the cause of action is not one “arising before the assignment, the appointment of the trustee, or the adjudication in bankruptcy.” Code Civ. Proc. § 3268, subd. 4; Rielly v. Rosenberg, 57 App. Div. 408, 68 N. Y. Supp. 265; Schreier v. Hogan, 70 App. Div. 2, 74 N. Y. Supp. 1051; Kronfeld v. Liebman, 78 App. Div. 437, 79 N. Y. Supp. 1083. While in Rielly v. Rosenberg, supra, the court referred to the fact that in the application then considered it did not appear that a cause of action to set aside the transfer existed in creditors before the adjudication in bankruptcy, a circumstance affirmatively appearing in these papers, still the distinction thus sought to be availed of by the defendants upon this motion has apparently not been adopted.

The true question is, as the court noted in Rielly v. Rosenberg, whether a cause of action of the character set out in the complaint in the suit brought by the trustee was one inhering in some person prior to the adjudication in bankruptcy; and since the trustee may sue to set aside the transfers without the prior return of execution unsatisfied (Thomas v. Roddy, 19 Am. Bankr. Rep. 873, 122 App. Div. 851, 107 N. Y. Supp. 473, the particular cause of action which he asserts did not accrue to creditors, and because of its peculiar character did not arise before the adjudication in bankruptcy or the appointment of the trustee. In Kronfeld v. Liebman, supra, it appears that the general rule stated in Rielly v. Rosenberg was applied, notwithstanding that creditors of the bankrupt had recovered judgments upon their claims prior to the appointment of the trustee, and in Schreier v. Hogan, supra, the proposition that subdivision 4 of section 3268 of the Code of Civil Procedure does not apply to an action by a trustee in bankruptcy to set aside conveyances was apparently affirmed as an absolute rule of construction. I must therefore hold that the ex parte order sought to be vacated was beyond the right of the defendants to obtain, and the motion is therefore granted, with $10 costs.

Motion granted.