
    Excelsior Needle Company, Respondent, v. Globe Cycle Works, Defendant. Morgan & Wright, Appellant; Edward P. Beals and Others, Respondents.
    
      Bxeeution — its purpose — when rendered dormant and ineffective as to later executions by directions given to the sheriff not to enforce it.
    
    An execution is a process intended tp enforce payment of a judgment, and not a security for such payment, under which the execution creditor may allow the judgment debtor to use the property levied! upon in the prosecution of his business regardless of the lien of the execution:
    Judgment creditors of a manufacturing corporation, whose executions had been levied upon its stock, tools, chattels, machinery and fixtures, in reliance upon ■ the promise of the corporation’s attorney to pay their judgments and his representation that he had sufficient money for that, purpose, in order to enable the corporation to continue its business, forbade the sheriff to interfere -with the corporation in “the possession of their premises for the use of the machinery and fixtures,” and subsequently issued directions to him to release the .levy except as to the machinery and fixtures, audio withdraw his deputies from the premises, enjoining him, however, to retain his levy upon the machinery and fixtures, hut stating", “you are hereby relieved from all responsibility for the safe-keeping of said machinery and fixtures.” The corporation continued to transact its business, of manufacturing and selling for a period of over ten months, during"which time another creditor of the corporation obtained judgments against it and delivered executions to the sheriff which were levied upon the machinery, fixtures, stock, tools, etc.
    
      Held, that the prior levies had been rendered inoperative by the interference of the judgment creditors, and that the subsequent levies were prior in effect;
    That the direction to the sheriff to retain his levy upon the machinery and fixtures did not prevent the prior levies from becoming dormant as to that portion of the property, as the corporation was given absolute possession of such property, the sheriff’s possession of it being a mere fiction. - ■
    
      Appeal by Morgan & Wright, judgment creditors of the defendant, from so much of an order of the Supreme Court, made at the Erie Special Term and -entered in the office of the clerk of the county of Erie on the 18th day of October, 1899, as holds and decides that Edward P. Beals, Pascal P. Beals and William R. Gass, judgment creditors, whose execution was issued on July 2, 1898, upon a judgment for $110.80 damages and costs recovered in favor of said Edward P. Beals and others, judgment creditors above named, against said Globe Cycle Works, above named, and delivered to the sheriff of Erie county on that day, have and are entitled to a prior and first right, claim, interest and lien upon the proceeds of the sale of the property of the above-named defendant made by the sheriff of Erie county, under executions on June 14, 1899, arid are entitled to be first paid from the proceeds of said sale the amount due upon their execution.
    And from so much of said order as holds and decides that at all times thereinafter to the date of said sheriff’s sale, and also at the .time when the two executions were issued and delivered to said sheriff upon the two judgments mentioned and described in said order, recovered by the Excelsior Needle Company against said Globe Cycle Works, and at the time of the levy made by the sheriff upon the property of said Globe Cycle Works under said two executions in favor of Excelsior Needle Company, and at all times since the' execution of Morgan & Wright was issued and delivered to the sheriff of Erie county, on June 24,1898, upon a judgment recovered against said Globe Cycle Works on that day in;favor of Morgan & Wright for $3,343.47, such executions were, and each and all of them are, dormant and ineffectual as against the execution of Edward P. Beals, Pascal P. Beals and William R. Gass and their said execution, and as .against the said judgment creditor, Excelsior Needle Company, and its two executions.
    And from so much of said order as decides and holds the said executions of the Excelsior Needle Company subject to the rights of the said Edward P. Beals, Pascal P. Beals and William R. Gass, and next after them and their said rights under their said execution as aforesaid, the Excelsior Needle Company, whose two executions issued on the 4th day of May, 1899, upon its two judgments, one for $1,314.77 damages and costs, and one for $775 damages and costs, which were recovered in favor of said Excelsior Needle Company against said Globe Cycle W orks and delivered to the sheriff of the county of Erie on that day,' and that said last-mentioned two executions have and are entitled to a prior and first right, claim, interest and lien, after the payment of said Beals and others of the amount due upon their said execution as aforesaid, upon the balance of the proceeds of the sale of the property of the said Globe Cycle Works under various executions made by the said sheriff on June 14, 1899, and are entitled to be first paid from the proceeds of said sale the amount due upon their two said executions.
    And from so much of said order as holds and decides that the. attorneys for the judgment creditor, Excelsior Needle Company, and the attorney for the judgment creditors, Beals and others, are entitled each to ten dollars costs of the motion.
    And from so much of said order as authorizes, directs and requires the sheriff of Erie county to first pay to Edward P. Beals, Pascal P. Beals and William R. Gass, or their attorneys, from the proceeds of said sale, the amount due upon their execution against said Globe Cycle Works in favor of Edward P. Beals, Pascal P. Beals and William R. Gass, issued and delivered to said sheriff on the 2d day of July, 1898.
    And from so much of said order as authorizes, directs and requires the sheriff of Erie county after payment to said Beals and others, execution creditors, of the amount due upon their said execution, to first apply and pay to the said Excelsior Needle Company, or its attorneys, from the balance of the proceeds of said sheriff’s sale, the amount due upon each of the two executions in favor of the Excelsior Needle Company, issued and delivered to the sheriff of Erie county on May 4, 1899.
    And from so much of said order as authorizes and directs and requires the sheriff of Erie county to pay to Edward P. Beals and others, or their attorney, any motion costs hereinbefore allowed, and to pay to the Excelsior Needle Company, or its attorneys, from the balance of the proceeds of said sale the motion costs therein allowed.
    On the 24th of June, 1898, Morgan & Wright, a foreign corporation, recovered a judgment in the county of Erie against the Globe Cycle Works, the defendant in this action, for $3,343.47, damages- and costs. On the same day an execution was issued to the sheriff of that county on said judgment and a levy was made at once on the stock, tools, chattels, machinery and fixtures in the manufacturing plant and store occupied by the said defendants in the city of Buffalo. On the same day eight other executions on judgments-that day recovered and docketed against' the defendant were also-delivered to the sheriff and like levies were at once made by him in. pursuance of the said several executions.
    On the 1st day of July, 1898, said execution creditors united ini the following direction to the sheriff which was signed by their respective, attorneys:
    “ To the Sheriff of Erie Comity:
    
    “You are hereby directed to release your levy under the executions issued to you by the undersigned, upon all property of the Globe Cycle Works, except machinery and fixtures; you are to retain your levy under said executions upon the machinery and fixtures only, for the present, but the Globe Cycle Works are not to be interfered with in the possession of their premises for the use of the machinery and fixtures.
    “ Dated July ls¿, 1898.”
    A week later they joined in another direction to the sheriff, also over the signatures of these attorneys, as follows :
    “ To the Sheriff of Erie County:
    
    “You are hereby directed to withdraw your deputies from the premises occupied by the Globe Cycle Works, at Xo. 108 Broadway, and also from the Main Street store; you are, however, to retain your levy upon the machinery and fixtures of the Globe Cycle Works, but you are hereby relieved from all responsibility for the safe-keeping of said machinery and fixtures, and this shall be your authority in the premises.
    “ Dated July 8th, 1898.”
    In pursuance of these directions the sheriff withdrew his deputies who were in charge of the property levied upon. The sheriff’s fees on these executions, amounting to $260, were paid by the attorneys, for the defendant. The cycle company continued to run its manufactory and its store, selling its goods as they were manufactured,, until its personal effects were nearly all disposed of and the entire, .property, including the plant and manufactory, only brought on the "¡public sale' $4,000, although it is claimed at the time of the levy -the plant alone was worth $60,000.
    On the 4th day of May, 1899, the plaintiff recovered two judgments against the defendant aggregating $2,089.77, which were on '■that day docketed in Erie county. On the same day an execution "was delivered to the sheriff of that county on each of the said judgments, and upon the following day the sheriff levied upon the stock, wheels, tools, machinery, etc., of the defendant, and later in that month additional levies. were made by virtue - of these executions. The sheriff took possession of this property under these executions and sold the same at public sale on the 14th of. J une, 1899, for :$4,000, although it does not appear that this was done under any ¡special execution. The sheriff took possession of the fund, declining to pay until the rights of the execution creditors had been adjusted. A judgment was recovered July 2, 1899, by Edward P. Reals and others for $110.80, and the execution was issued on the same day and a levy made. There was no interference with the sheriff in his execution of this process by the judgment creditors or their attorneys. Morgan & Wright'alone appeal. Other.facts appear in the opinion.
    
      C. A. Dolson, for the appellant.
    
      Merton S. Gibbs, for the respondent, the Excelsior Needle Company.
    
      August Becker, for Beals and others, respondents.
   Spring, J.:

A. motion was made by the plaintiff in this action, after the public auction, to compel the sheriff to pay the plaintiff’s executions from ¡the avails of the sale. Notice of this motion was served upon the mine judgment creditors, under whose directions the sheriff had ¡relinquished the possession of the property to the defendant, and ¡some of these judgment creditors appeared, asserting their right to the proceeds of the auction sale. There is very little contradiction in the affidavits. The interference which it is alleged destroyed the lien of their levy is based upon the two directions to the sheriff quoted above, supplemented as they were by the surrender of ¡possession and apparent ownership to the defendant and the withdrawal of the sheriff’s force, which was in custody of the property. The very obvious purpose was to permit the defendant to continue unmolested its manufacturing industry. While this was based upon the promise of the attorney for the defendant to pay these judgments, and the statement that he had sufficient money to make this payment, they afforded no justification for directing the sheriff, in effect, to release his levy unless they were willing to trust to the ability of the defendant to meet its obligations, or upon the promise of its attorney to pay them. The fact that their purpose was praiseworthy does not lessen its effect.

The law is quite clear that the object of the execution is to enforce payment of the judgment debt, and not to convert such execution into a security upon the property and still allow the judgment debtor to prosecute his business regardless of the lien of the execution. As was said in Freeman on Executions (§ 206): In other words it is not the mere issuing or delivery of the writ which creates a lien ;; but an issuing and delivery, for the purpose of execution. The execution of a writ for the purpose of making or keeping it effective-as a lien cannot stop with a mere levy upon the property. If the officer is instructed by the plaintiff not to sell till further orders, the lien of - the execution and levy becomes subordinate to that of any subsequent writ placed in the officer’s hands for service.”

In Storm v. Woods (11 Johns. 110) the property, after the- levy by execution, was allowed to remain in the hands of the judgment debtor for nearly a year, with the acquiescence of the owners of the-judgment. The debtor used 'the property in all respects as before, the levy, and this unrestricted dominion over it continued until a. levy was made by virtue of the second execution. There was no-suggestion of intentional fraud in the conduct of the owners of the-judgment. They were actuated by the laudable object of giving-the debtor time to meet the judgment, and believed there was no-interruption in the lien of their levy. The court, however, held that: their execution had become dormant by this remissness on their-part, and that the second execution was the prior lien.

In Sage v. Woodin (66 N. Y. 578) the plaintiff had obtained! a judgment by default against one Qase. Execution was issued and: a levy made. December 24,1866. In January, following, the plaintiff’s attorney, at the request of the attorney for Case, opened the» default, permitted an answer to be served, and, in accordance with. the stipulation of the parties, “ directed -the sheriff to suspend all further action or proceedings upon the execution until -otherwise ordered.” The plaintiff, a year later, .obtained a judgment in the action and the sheriff was directed to collect the execution on the original judgment. During the pendency of the action, after the opening of the default, the judgment debtors had handled the property, which comprised a stock of goods, as if they were the absolute owners. The court held that this intervention of the execution creditor destroyed the life of the execution, saying (at p. 584): “ The plaintiff put himself in a position where he could not enforce the writ for an indefinite period, and whether it could ever be enforced was uncertain, depending on the contingency of his obtaining, a second judgment in his favor. Meanwhile, the firm was allowed to go on selling the goods levied on and dealing with the public and each ■other as if no execution had been issued. To hold, under these ciroumstances, that the execution remained in life so as to defeat the title of an intermediate bona fide purchaser of the property would operate as a fraud. It is not necessary that the execution creditor should have acted in bad .faith or with an intention to defraud in ■delaying the execution of the writ to make it dormant as to third persons. An unreasonable delay directed by the plaintiff in the ■execution, although from motives of humanity, will let in and give precedence to a subsequent execution.” Smith v. Erwin (77 N. Y. 466); Everingham v. Nat. City Bank of Ottawa (124 Ill. 527); Benjamin v. Smith (12 Wend. 404), and Kimball v. Munger (2 Hill, 364), are all along the same line.

The law, therefore, seems to be settled that any direction by the ■execution creditor to the sheriff, which suspends the1 lien or delays the enforcement of the levy, renders the execution dormant against ■subsequent creditors or bona fide purchasers. However veiled may be the direction; however much it may be founded on a humane desire to protect the debtor; if it is tantamount to a mandate or instruction to the sheriff to withhold the execution of his process during the interim that he accedes to this 'demand, the levy ceases to be effective. That doctrine rests on public policy and is necessary to prevent fraud and it should receive a fairly rigorous enforcement.

At the time of the direction to the sheriff the personal property under levy comprised the various parts of a large number. of bicycles in process of manufacture, which it was believed if manufactured would be adequate to meet all unsecured claims against said defendant. The purpose of this direction was to release the levy upon all the property of the defendant except the machin,ery and fixtures. The expectation probably was that the defendant could work up these uncompleted wheels and possibly pay its debts. The direction, in order to consummate its object, inhibited the sheriff from interfering with the defendant in its “ possession of their premises for the use of the machinery and fixtures.” The occupation of the real estate by the defendant was undisturbed, and the only construction that can be given to this ingenious phraseology is that the defendant was to have the exclusive use and control of the machinery and fixtures, and the levies were to be suspended until the execution creditors saw fit to revive them. JSTot satisfied with this.intervention, these creditors, a week later, united in a further direction to the sheriff requiring him to withdraw his deputies, and relieving him from any responsibility for the safe-keeping of the machinery and fixtures, still seeking, however, to cure- this unrestricted committal of the property to the custody of the judgment debtor by cautioning the sheriff to retain his levy upon the machinery and fixtures. The sheriff is the public official whose peculiar duty it is to dispose of proj)erty by execution, and whose levy thereunder results in the absorption of the property levied upon by the judgment creditor. In this instance this official was expected to beep alive the liens created by his levy, but was to be relieved unqualifiedly of the custody of the property while the judgment debtor was reinstated in its possession and ownership as unequivocally as if no levy had been made. These attorneys apparently had in mind the danger to their clients of an interruption to the sheriff at their direction, and sought to hedge against that by requiring him to retain the levy on the machinery and fixtures. The vice in their position in view of what followed is that the retention of the levy by the sheriff was perfunctory and nominal, and was so designed to be. They wished the defendant to be secure and undisturbed in its use and control of all the property, and still keep their grip on it if occasion required the restoration of their liens. The law does not tolerate such interference with the sheriff in the performance of -his duty. It was left to the defendant not alone to manufacture these wheels, but to' sell and apply the proceeds of the sales to whatever it saw fit, and the machinery and fixtures were necessary to the defendant to accomplish this purpose. The project was carried out, so that a practical interpretation was given to these two directions to' the sheriff. The cycle company managed its business without let or hindrance from the sheriff or the execution creditors for ten months, and apparently it was only after the levies made in pursuance of the plaintiff’s judgments that they began to infuse life into these dormant executions. They were too late, as the plaintiff had obtained levies which were prior in effect to those rendered inoperative by these directions.

It is contended on behalf of the appellant that there was no objection on the part of the respondents to- selling the property in bulk, and even if there had been a release of the levy on the stock by the action of the judgment creditors it would not be available to these subsequent lienors. This position -would be tenable except that the conclusion is inevitable that the levies became dormant as to the machinery and fixtures. While in terms the levy was to continue upon this class of the property7, in reality the effect of the instruction was to transfer not simply the passive control of the property to the judgment debtor, but also the right to its use as owner without restriction. The sheriff’s possession was a mere fiction, and the authority of the cycle company was absolute. : If the sale was had in pursuance of the nine executions it is evident that Morgan & Wright regarded the loose property as much subject to their liens as the machinery and fixtures; for, although represented at the sale, there was no instruction to the sheriff to sever the-property or any claim made that the defendant’s lien related solely to the machinery and fixtures. This may be a circumstancbfindicating that its attorney supposed its levy covered the entire property owned by the defendant.

The owners of the Beals judgment apparently did nothing to-release their levy, so their lien has remained intact.

The order is affirmed, with ten dollars costs and disbursements to each respondent.

All concurred.

Order affirmed, with ten dollars costs and disbursements.  