
    Carrie E. Barnes, Plaintiff, v. Charles G. Courtright, Jennie Courtright and Charles E. Snyder, Defendants.
    (Supreme Court, Chemung Special Term,
    January, 1902.)
    Trust in personalty — When a receiver, under the trustee, is bound by it — Statute of Limitations — Receiver’s duty where there are rival claimants — Presumption of payment.
    A woman, who, after assigning an interest in a promissory note to a third party, puts the note in judgment and collects it through a receiver in supplementary proceedings, becomes as to the third party a trustee of his share in the fund; and, therefore, where she has never repudiated the trust the Statute of Limitations does not run against the claim of the third party, the receiver cannot lawfully reject it as barred by the statute and pay the woman the whole fund, and if he does this, the court will, although he has accounted and been discharged by an order, vacate it and permit the third party to prove his claim.
    A receiver, having notice of a claim to a fund in his hands, cannot escape liability as receiver by claiming that he has paid the fund over to another person in good faith; in such case he should apply to the court for instructions,
    No presumption of the payment of a claim arises where the debtor fails to prove that payments, alleged to have been made by mail, were sent to the creditor in letters complying with the Code requisites relative to the mail service of papers in an action, or that the letters ever came into the hands of the creditor.
    Motion to set aside an order of this court, granted January 26, 1901, passing the accounts of and discharging the receiver in supplementary proceedings instituted by the plaintiff under a judgment in her favor.
    Swartwood & Personius, for motion.
    Gabriel L. Smith, opposed.
   Fobbbs, J.

This is a motion to set aside1 an order granted by this court, on the 26th.day of January, 1901, passing the accounts of, arid discharging the receiver in supplementary proceedings instituted in this action by the plaintiff under a judgment in her favor. This motion was made to open said accounting; to set aside the order therein granted, and to adjust the contestant’s claim to a portion of the funds paid into the hands of the receiver upon said judgment.

I am satisfied, from the moving and the opposing papers, together with the testimony taken before a referee appointed by this court, that the contestant, Michael A. Kennedy, held and owned a valid assignment of a portion of the note out of which the fund in dispute arose, to the full amount of the claim which he presented to the receiver.

The transfer of said interest in said note, was made by the plaintiff, in said action, to said Kennedy, to reimburse him for moneys which were due from the plaintiff to said Kennedy.

The plaintiff, having proceeded, in her own name, to collect said note, by judgment and execution, and having collected and received thereunder the sum of $365.71, and the same having been paid over for her into the hands of the receiver appointed in the supplementary proceedings, to' apply on said judgment in the action, notice having been duly given to said receiver of the claim of said contestant Kennedy, and the receiver having rejected said claim as having been barred by the Statute of Limitations, this motion was made by said Kennedy, through his attorney, to determine his right to a portion of the fund in question, as between ' Carrie E. Barnes, the plaintiff in said action, and said Kennedy.

In my judgment, the contestant’s claim is not barred by the Statute of Limitations. When the sum of $365.71 came into the hands of the receiver, as the proceeds of said note and judgment, perfected by the plaintiff, the contestant had then, and now has, a lien upon said funds, and should be paid therefrom his claim in full.

I must hold that when the plaintiff proceeded to collect said note, by enforcing said judgment against the defendant in that action, having perfected said judgment, through regular steps and proceedings taken therein, and having received the funds in question, by placing the same in the hands of the receiver for her own benefit, as between said plaintiff and the contestant, said Carrie E.' Barnes became the trustee of said fund for said contestant.

That the statute interposed as a bar to said claim, as against the contestant, had not commenced to run. It is a well-established principle of law that the bar of the Statute of Limitations does not commence to run in favor of the trustee until the repudiation of the trust. Davis v. Davis, 86 Hun, 400; Reitz v. Reitz, 80 N. Y. 538; Zebley v. Farmers L. & T. Co., 139 id. 461; Mills v. Husson, 140 id. 99.

This rule applies where the fund is in the hands of any person who has knowledge of the trust. Collis v. Bull, 57 N. Y. St. Repr. 373; Matter of Hone, 153 N. Y. 522; Warren v. Union Bank, 157 id. 259.

The plaintiff has the burden of proof to show payment to the contestant.

I must, therefore, hold that the evidence is insufficient to satisfy me that payment of said claim, or any portion thereof, has been made by the plaintiff.

The plaintiff claims that two payments of twenty-five dollars each were transmitted, by mail, to said Kennedy, to apply upon his claim. The evidence is insufficient to raise the presumption that the contestant ever received any portion of said funds, since there is no evidence in the case to show that the letters, through which said payments are claimed to have been made, were ever duly deposited in a United States mail box, Or post-office, at the place where the plaintiff resides, inclosed in a securely-sealed wrapper, addressed to the contestant, at his place of residence, and the postage thereon was duly paid, or that the same ever came into the hands of said contestant to be applied upon said claim. There is no pretense of direct payment, and the presumption of payment, .therefore, and its receipt by mail, are not established. Hastings v. Brooklyn L. Ins. Co., 44 N. Y. St. Repr. 37; Ackley v. Welsh, 65 id. 721; Cooke v. McAleena, 18 Misc. Rep. 219; Ward v. Hasbrouck, 44 App. Div. 32.

The receiver, having had notice of the contestant’s right to a portion of said funds before the money was paid over to the plaintiff, he cannot be relieved from responsibility, as receiver, upon the theory that he acted in good faith. Collis v. Bull, 57 N. Y. St. Repr. 373, supra.

If there was any doubt about the justice of the claim, as an officer of the court, he should have applied for and taken instructions and directions from the court. The receiver probably had no right to act upon his own judgment, or even on the advice of counsel, without proof of any of the material facts in respect to the validity of said contestant’s claim. Matter of Van De Veer, 63 App. Div. 495.

The contestant’s motion herein is, therefore, granted, with ten dollars costs, and the disbursements paid to the referee.

Motion granted, with ten dollars costs and disbursements.  