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District Court of Appeal, First District, Division 2, California.


Civ. 9661.

Decided: November 15, 1935

Gavin McNab and Schmulowitz, Wyman, Aikins & Brune, all of San Francisco, Milton M. Cohen, of Los Angeles, Albert A. Kidder, Jr., of Hollywood, and Edward E. McCullough, of Los Angeles, for appellant. Marcel E. Cerf, Henry Robinson, Marcel E. Cerf, Robinson & Leland, and Herbert A. Leland, all of San Francisco, for respondent.

This is an appeal by defendant from an “order appointing receiver in aid of execution.”

The action was originally brought by Josephine Park Tearle to recover a judgment for unpaid alimony due her under the terms of a New York decree. She recovered judgment in excess of $9,000 and defendant appealed. During the pendency of the appeal said Josephine Park Tearle died. Her administrator was substituted and the judgment was thereafter affirmed. Bruton v. Tearle, 117 Cal. App. 696, 4 P.(2d) 623. It is unnecessary to set forth the various efforts made to obtain satisfaction of said judgment. Suffice it to state that despite all of these efforts the judgment was only partially satisfied in the sum of approximately $5,000. When defendant returned from an extended trip abroad, he was served with summons in an action brought by Josephine Park Tearle in her lifetime in Los Angeles county in which action judgment was sought for the alimony accruing under the New York decree after the period covered by the judgment in this action. It was also sought by said action to set aside certain alleged fraudulent conveyances. Thereafter a written agreement was entered into in 1932, whereby defendant and his present wife acknowledged that defendant was indebted upon the judgment herein and for alimony subsequently accrued in a total sum in excess of $13,000. They agreed to pay said sum by the payment of 10 per cent. of the earnings of either or both of them and they further agreed that, if their earnings in any semi-annual period should exceed $3,000, they would pay one-half of said earnings in excess of $3,000. There were numerous provisions in said agreement, but only a few of them need be mentioned here. the defendant and his wife further agreed to procure the execution of a deed of trust by the record owner of certain real property in Los Angeles county to secure their promises. It was also agreed that as long as said parties performed all of the covenants of said agreement, the Los Angeles action would not be brought to trial and that no steps would be taken in the present action to execute the judgment herein or to institute proceedings supplemental to execution.

Thereafter defendant Tearle engaged in theatrical work in New York and earned in excess of $24,000 up to the end of 1933. He made the payments required only for a short time after the agreement was made, said payments totalling the sum of $1,560. He ceased making payments in February, 1933. He was in default at the end of 1933 under the terms of the agreement in the sum of approximately $8,500, and no payments were forthcoming. In February, 1934, defendant made a contract with RKO Studios to appear in a picture in which he worked for 27 days at $250 per day or a total of $6,750. He started work on February 14. On February 20, pursuant to a writ of execution issued in the present action, a notice of garnishment was served upon RKO Studios in response to which the garnishee answered that it was indebted to defendant in the sum of $1,243.75. On February 23 defendant was examined in proceedings supplemental to execution and it appeared that he had made an arrangement with RKO Studios after the above-mentioned garnishment whereby he was to receive his salary each day in advance, thereby making it impossible for his earnings to be levied upon. It also appeared that defendant had withdrawn his money in the bank in order to prevent a levy thereon. While notice of garnishment had been served on RKO Studios each morning from February 20 to March 1, these services proved futile, as there was no money due. Defendant collected the sum of $2,250 from RKO Studios during this period.

On February 28, 1934, application was made in the present action for the appointment of a receiver in aid of execution and also for a restraining order. An affidavit was filed with said application setting forth the facts and showing that execution had been returned only partially satisfied and that said defendant refused to apply his earnings to the satisfaction of said judgment. It was alleged therein that defendant, his manager, and RKO Studios had entered into a conspiracy to defeat the collection of said judgment and that defendant had stated to counsel for respondent that he would not apply any of his earnings to the payment of said judgment. The trial court issued an order to show cause and a restraining order. The hearing was had on March 9, 1934, and other affidavits were filed by the parties. Testimony was taken and the transcript of the testimony on supplementary proceedings was admitted in evidence pursuant to stipulation. On said date, the trial court made an order granting injunction, but continued the hearing of the application for a receiver until March 12. On the last-named date the matter was submitted and on March 16 the trial court made its “order appointing receiver in aid of execution,” from which order this appeal was taken.

Appellant contends “that said court was without jurisdiction in making the orders of February 28, 1934, March 9, 1934, and March 16, 1934, and that the showing made by said plaintiff did not entitle him to any of said orders.” We find no merit in this contention. The order of February 28 was the restraining order and order to show cause. The order of March 9 was the order granting injunction. Appellant argues that the trial court was without jurisdiction to issue either the restraining order on February 28 or the order granting injunction on March 9, but we are not called upon to pass upon these questions. These orders were appealable orders (Code Civ.Proc. § 963: 14 Cal.Jur. 294), and no appeal was taken therefrom. The only appeal before us is the appeal from the order of March 16, which was an “order appointing receiver in aid of execution,” and we shall therefore confine our discussion to the points raised with respect to the last-mentioned order.

In our opinion the trial court had jurisdiction to make the order of March 16 appointing a receiver. Section 564, subd. 4, of the Code of Civil Procedure, provides that a receiver may be appointed “after judgment * * * in proceedings in aid of execution, when an execution has been returned unsatisfied, or when the judgment debtor refuses to apply his property in satisfaction of the judgment.” See, also, Habenicht v. Lissak, 78 Cal. 351, 20 P. 874, 5 L.R.A. 713, 12 Am.St. Rep. 63; Pacific Bank v. Robinson, 57 Cal. 520, 40 Am.Rep. 120; 11 Cal.Jur. 155, 156. Appellant cites numerous authorities, but we find none of them in point. This was not an attempt to bring an independent action in the nature of a creditor's bill, but respondent here proceeded strictly in accordance with the statutory provisions for proceedings supplemental to execution. That the trial court had jurisdiction to appoint a receiver in such proceedings is clearly indicated in one of the authorities cited and relied upon by appellant. McCutcheon v. Superior Court, 134 Cal.App. 5, 24 P.(2d) 911. We further believe it clear from a reading of the Code section above quoted and the recital of the facts above set forth that the showing made by respondent was sufficient to justify the making of the order in question.

Appellant further contends that he was denied the opportunity to be heard on his claim of exemption of the money to be collected by the receiver. This contention is without merit as to the earnings which had become due to appellant up to the time of the making of the order appointing the receiver. Appellant's claim of exemption was made an issue before the trial court and appellant had a full opportunity to be heard thereon. There was ample evidence that the earnings affected by the order as hereinafter modified were not necessary for the support of appellant's family and the trial court properly concluded that said earnings were not exempt. Code Civ.Proc. § 690, subd. 10.

The further claim is made that the trial court erred in ordering the receiver to collect so-called future earnings as well as those already earned. In this connection, appellant contends that the receiver should not have been authorized to collect any salary earned after the issuance of the order to show cause on February 28 and particularly should not have been authorized to collect any salary which had not been earned at the time of the appointment of the receiver on March 16. In support of his contention he cites certain authorities which hold that a garnishment does not serve to impound “future earnings.” We are here concerned, however, not with the question of what may be reached by garnishment, but what may be reached by proceedings supplemental to execution. Appellant also cites certain authorities from other jurisdictions, most of which deal with exempt earnings, and in some of which it is indicated that no salary earned or other property acquired after the issuance of the order of examination or order to show cause may be reached in such supplementary proceedings. We believe that the rule, indicated by such authorities is not based upon sound reason in the light of the obvious purpose of the statutory provisions for proceedings supplemental to execution. If the judgment debtor acquires nonexempt property of any kind between the time of the issuance of the order of examination or order to show cause and the time of the hearing thereof, we know of no reason why such property should not be held to be reachable in the proceedings then pending. We therefore conclude that the trial court did not err in ordering the receiver to collect the money representing the salary of the judgment debtor earned up to the time of the appointment of the receiver on March 16, which money had been found by the court to be not exempt from execution. But the receiver was also directed to collect and forthwith pay over to respondent all earnings “to become due” to appellant under his agreement with RKO Studios until said judgment had been fully satisfied. The order further directed certain named persons, “and all other persons having in their possession or under their control any money or earnings of said judgment debtor now due or belonging to said judgment debtor, including the moneys above referred to, or who shall hereafter have in their possession or under their control any money or earnings of said judgment debtor at a time when said money or earnings are due and owing to said judgment debtor, shall forthwith deliver the same to said H. F. Ramacciotti, as such receiver, until said judgment, together with costs and accruing costs shall have been satisfied.” (Italics ours.) It will thus be seen that certain portions of the order directed the taking of the entire future earnings to become due to appellant until the judgment was fully satisfied.

Appellant strenuously insists that this was error while respondent claims that said portions of the order were proper because the judgment was one for alimony and not an ordinary money judgment. Respondent apparently concedes that said portions of the order would have been erroneous if made in the enforcement of an ordinary money judgment and in our opinion the judgment before us must be treated as an ordinary money judgment. While the original judgment for alimony in New York was the basis of the judgment before us, the wife, during her lifetime, sought an ordinary money judgment here in this action at law for the unpaid balance due upon the New York judgment. The judgment herein was therefore not a judgment for alimony, but was an ordinary money judgment. See Creager v. Superior Court, 126 Cal.App. 280, 14 P.(2d) 552; In re Williams' Estate (Sur.) 118 N.Y.S. 562. In the last-named case the court said at page 565 of 118 N.Y.S.: “From these authorities it would appear that when the claimant saw fit to transfer her claim, which was in judgment in the state of South Dakota, to a suit at law in the state of New York, and recover judgment thereupon, the judgment obtained was simply a mere money judgment, and said judgment was enforceable, not as a judgment in alimony, as the original judgment in South Dakota could be enforced, but simply as a money judgment, similar to a judgment ex contractu.”

We have found no authority for the taking of the entire future earnings of the judgment debtor for the purpose of satisfying a judgment under any circumstances, and certainly there is none sanctioning such procedure in the enforcement of an ordinary money judgment. Future earnings may or may not be earned, and, if earned, such earnings may or may not be exempt. It would appear that any rule which would permit the trial court, in enforcing an ordinary money judgment, to direct the collection of the entire future earnings of a judgment debtor would result in wholly depriving the debtor of his means of livelihood and would be against public policy. The language of the court in Mutual Service Corporation v. Hugren, 225 Ill.App. 216, seems to support this view. It was there said at page 221 of 225 Ill.App.: “Debts ought in justice to be paid, but the creditor ought not to be permitted to seize the means whereby the laborer lives while earning that wherewith to pay, and the State is vitally interested that such injustice should not be permitted.” We are therefore of the opinion that the order appealed from should be modified so as to eliminate therefrom the directions to the receiver to collect the earnings to become due to appellant after the date of the appointment of the receiver.

Lastly, appellant apparently contends that the judgment could not be enforced against him until the security furnished pursuant to the agreement of 1932 by way of a deed of trust had been exhausted. He cites and relies upon Bank of Italy, etc., Ass'n v. Bentley, 217 Cal. 644, 20 P.(2d) 940. In our opinion, this contention is without merit. The agreement made in 1932 was clearly an agreement of forbearance and the judgment was not merged therein. The deed of trust was not given to secure the judgment as such, but was given to secure the promises made by appellant and his wife in said agreement. By the express terms of the agreement, the promise to refrain from enforcing the judgment was to be binding only “as long as the said Tearles shall perform all of the covenants herein provided to be performed by them.” Upon their failure to keep their promises made in said agreement, we believe that respondent was entitled to proceed with the enforcement of the judgment and that the rule set forth in Bank of Italy, etc., Ass'n v. Bentley, supra, has no application to the facts before us.

The order appealed from is modified by eliminating therefrom all portions thereof referring to earnings of the judgment debtor to become due to the judgment debtor after the time of the making of said order on March 16, 1934, and, as so modified, said order is affirmed. The parties will bear their own costs on this appeal.

I dissent. I am not in accord with the suggestion as to the harshness of the decree in this case. The appellant has played ducks and drakes with the courts over a long period of years. He failed and refused to pay the alimony when it became due and compelled the wife to obtain a judgment for the sums in arrears. He appealed from that judgment on grounds which were obviously frivolous, but which were sufficient to delay its enforcement during the life of the wife. He entered into a written contract for the settlement of these claims and promptly repudiated his contract when payments became due. In collusion with his employer he arranged for advance payments of his daily salary in order to defeat execution. The respondent appealed to the equity side of the court for the appointment of a receiver and that seems to be the only way that the court could proceed in order to protect itself as an effective instrument of the law against the trickery of the appellant.

To my mind the question before us is one of power alone–must the court confess its impotence to enforce a valid judgment when opposed by the collusion and fraud of one of the parties. The power to appoint a receiver in a case of this kind cannot be denied; it is expressly authorized by statute. If the court is convinced by the conduct of the appellant that his future earnings must be impounded to prevent further fraudulent practices, such an order should not be disturbed in the absence of a showing of an abuse of discretion and such has not been shown here.

It may be conceded that, as a general rule, future earnings of the judgment debtor do not ordinarily vest in the receiver. But no authorities have been cited holding that, in the absence of a statute to the contrary, a court of equity may not direct the receiver to collect such earnings if the facts warrant it. The appellant relies on the fact that there are no statutory provisions expressly authorizing such procedure. To my mind the case is controlled by the fact that there is no statute to the contrary and that a court of equity is therefore authorized, under its inherent powers, to take such steps not prohibited by law to make it a court of equity in fact as well as in name.

The main opinion supports a reversal of the order because it sought to impound the “entire” future earnings of the appellant. The argument is that since the order was so drastic the court was without power to impound any of the future earnings. This feature was, at the most, an abuse of discretion, but power and jurisdiction cannot be determined by a single act which is an abuse of discretion. If the appellant had come into the court with clean hands, it is fair to assume that his claims of exemptions would have been given full consideration and there seems to be no reason why that cannot now be done under the order as it reads. But if there be any doubt on this score, a modification of the order expressly reserving in the trial court the power to hear such claims and to release a portion of these earnings would be the proper result of this appeal rather than the elimination from the order of all matters relating to future earnings.

SPENCE, Justice.

I concur: STURTEVANT, J.

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