Keiley v. Dusenbury.

a house, which he owned here, and service of the summons by publication. After judgment had been obtained and execution issued, but before its return, an order was obtained for the examination of William B. Brown, a tenant of the defendant. On the examination it was discovered that he owed the defendant six months' rent at $75 per month. He claimed an offset of $75 for repairs, &c. Defendant also had an agent here, who claimed that the rent due should be paid to him. Application was thereupon made to the court for the tenant to pay to the plaintiff the rent due.

Adolphus T. Pape, for the motion.

Arnold, Elliot, & White, opposed.

BARRETT, J.-The third person claiming an offset substantially denies a part of the debt. Under section 299, such debt can only be recovered by action by a receiver. The plaintiff is entitled to an injunction until a sufficient opportunity is given to the receiver to commence an action. The other question discussed can also be better determined in such an action.

KEILEY v. DUSENBURY.

N. Y. Superior Court; Special Term, January, 1877. SUPPLEMENTARY PROCEEDINGS. NON-IMPRISONMENT ACT.-EVIDENCE OF FRAUD.

The testimony of a debtor, taken upon his examination in supplementary proceedings, cannot be used as evidence of his fraud, to obtain a warrant of arrest under the non-imprisonment act.

Supplementary proceedings being in the nature of a bill in equity, such answer of the person examined cannot be used in any other suit or proceeding, as evidence of his fraud.

Keiley v. Dusenbury.

Peter Morris and others, having recovered judgment against Selah Hiler, took proceedings supplementary to execution thereon, and examined the debtor under the Code of Procedure, and having procured William S. Keiley to be appointed receiver, Keiley, as receiver, brought an action in the superior court to set aside an assignment which the debtor had made to Charles Dusenbury as fraudulent and void.

The receiver, having recovered judgment setting aside the assignment, and charging the assignee personally on the ground that he had wrongfully intermeddled with the trust funds, issued execution thereon, and after its return unsatisfied as against Dusenbury, examined Dusenbury in proceedings supplementary to the execution. On such examination Dusenbury testified in respect to the disposal of certain real property by him subsequent to the decision of the action against him, but before the entry of judgment.

Thereupon plaintiff commenced the present proceedings under the non-imprisonment act, and Dusenbury, being arrested, controverted the allegations, and demanded a trial. Upon the trial plaintiff's counsel adduced, as evidence to substantiate the allegations, the judgment roll in the action against Dusenbury, and the examination of Dusenbury in the supplementary proceedings.

The evidence presented by the supplementary proceedings defendant moved to strike out, and to dismiss the present proceedings.

SPEIR, J.-The plaintiff, in order to avail himself of the requirements of the act of 1831, page 396, to obtain the warrant, was obliged to establish:

"That the defendant has assigned, removed or disposed of, or is about to dispose of, any of his property, with intent to defraud his creditors."

66

And that the defendant frauduently contracted

Keiley v. Dusenbury.

the debt, or incurred the obligation, respecting which such suit is brought."

For the purpose of accomplishing this, the plaintiff used the examination of the defendant in proceedings supplementary to execution under section 292 of the

Code.

Upon an examination of the statutes, I am inclined to the opinion that this evidence can not be used for this purpose, and must be rejected, and if such be the case, I think there is not sufficient evidence to sustain the warrant under the act to abolish imprisonment for debt, &c. Section 4. "No warrant shall issue, unless satisfactory evidence be adduced,

that there is a debt or demand due to the plaintiff, from the defendant, for which the defendant, according to the provisions of this act, can not be arrested or imprisoned." *

Under subdivision 4, section 179 of the Code, the defendant may be arrested when "he has been guilty of a fraud, in contracting the debt or incurring the obligation for which the action is brought," &c.t

In "an action to recover money, it matters not whether the remedy is in equity or at law, the defendant may be arrested provided the facts stated in the complaint as sworn to in the affidavit, bring the case within one of the subdivisions of section 179 of the Code" (Short v. Barry, 39 How. Pr. 315, S. C. General Term).

Now looking into the judgment roll in the original action, it is plain that the warrant herein should not have been granted, for the defendant could have been

*See the statute and its amendments collected in 3 R. S. 6th ed. 45. But some of the statutes included there, as amending expressly, or in effect the non-imprisonment act, are repealed by the repealing act of 1877. L. 1877, c. 417.

For the corresponding provisions of the new Code of Civil Pro., see § 550.

Keiley v. Dusenbury.

arrested in that original action, and if so, he can not be prosecuted under the act to abolish imprisonment for debt.

;

Section 292 of the Code provides, "No person shall, on examination pursuant to this chapter" (proceedings supplementary to execution), "be excused from answering any question on the ground that his examination will tend to convict him of the commission of a fraud but his answer shall not be used as evidence against him in any criminal proceeding or prosecution. Nor shall he be excused from answering any question on the ground that he has, before the examination, executed any conveyance, assignment, or transfer of his property for any purpose, but his answer shall not be used as evidence against him in any criminal proceeding or prosecution."

In Lathrop v. Clapp, 40 N. Y. 332, the court of appeals say, "This enactment was, undoubtedly, made to give a more full examination than could be obtained without it." The party was relieved from the pains and penalties to which his evidence might otherwise tend to subject him. The only criminal provisions as to frauds, the court suggest, that could reach a case like this, are those imposed by section 3, title 6, chapter 1, part 4, of the Revised Statutes (3 R. S. 971, and § 39, 2 R. S. 133), the latter being section 26 of the nonimprisonment act.

The act of 1831 provides, section 42 (29), that "No person shall be excused from answering any bill in equity, seeking a discovery in relation to any fraud prohibited by this act, or from answering as a witness in relation to any such fraud; but no such answer shall be used in evidence in any other suit or prosecution."

In People v. Underwood, 16 Wend. 546, BRONSON, J., says, referring to the last section, "The language of the section is very broad. defendant was bound to make discovery for the pur

The

Barthet v. Elias.

pose of advancing the remedy of the creditor; but the answer could not be used as evidence against him in any other proceeding. The court erred

in admitting the defendant's examination."

The supplementary proceedings referred to, fall within the purview of this section, for they are intended as a substitute for creditor's bills, and must be regarded as in the nature of those suits in equity. The evidence, therefore, of defendant's examination in supplementary proceedings relative to the many frauds prohibited by this act, cannot be used against him in this proceeding. I think the evidence obtained on the examination in the supplementary proceedings, being in the nature of a bill in equity, must be rejected; and without this evidence the warrant itself should not have been granted.

BARTHET v. ELIAS.

N. Y. Superior Court; Special Term, 1877.

DEFENSES IN FORECLOSURE.-DEED SUBJECT TO MORTGAGE.

It seems, that a demand in the answer that a bond and mortgage sued on be adjudged void for usury, is not a counter-claim which is admitted by failure to reply.*

Where the borrower conveys the premises by a deed, expressing that the grantee takes subject to the payment of the mortgage, the preclusion of the grantee from setting up usury in the mortgage becomes fixed; and the parties to the grant cannot, by substituting a new conveyance without such clause, on the ground that its insertion in the original conveyaz.ce was a mistake, enable the grantee to plead usury.

* Compare section 509 of the new Code of Civil Procedure.

For the cases on the effect of such a clause in a deed, see note at end of this case, and Collins v. Rowe, 1 Abb. New Cas. 97.