oel R. Brandes
DIVORCE LAWYERS TEND to be a docile lot these days with
displays of strong emotion, good or bad, rare. What a surprise, then, to hear
the great howl of rage that greets one when one learns her client's property
has been sequestered in or prior to the divorce proceedings.
1923 New York Legislation
Spurred by New York legislation in 1923, the remedy of
pre-commencement sequestration is an often overlooked extraordinary remedy
which provides an effective method of acquiring limited "personal"
jurisdiction over a non- resident or non-domiciliary spouse where there are
insufficient contacts with New York to authorize "long-arm" [FN1]
jurisdiction. It is a creature of statute found in Domestic Relations Law s233
permitting sequestration of a defendant's property in an action for divorce,
separation, or annulment where the defendant cannot be personally served with
process within the State of New York. The statute provides, in part, that
where it "appears to the court that the defendant is not within the state, or
cannot be found therein, or is concealing himself therein, so that process
cannot be personally served upon him," the court may sequester his property
within the state and acquire quasi in rem jurisdiction to apply it and its
income to the payment of maintenance, child support and counsel fees. [FN2]
This ancient statute was enacted as CPA 1171-a which accounts
for its antiquated form. It was drawn prior to the enactment of our
matrimonial "long arm" statute; when husbands paid alimony to wives; before
there was an Equitable Distribution system in New York; and prior to the
requirement that alimony and maintenance laws be gender neutral. Despite the
admirable plight of its sound concepts, the statute is properly susceptible to
criticism in certain areas. Say, for example, its pre-gender-neutral vestiges
authorizing the court to appoint the wife (but not the husband), as receiver.
The Court of Appeals in defending its goals in Goldman v. Goldman, [FN3]
justified its purpose:
The powers conferred by statute upon the court to require the
husband in the action for divorce to make suitable provisions and the drastic
remedies provided for the enforcement of such agreement or direction are
justified by the public concern that wife and children shall not be left
without suitable provision for support and for education.
To fill a void, the Legislature enacted this statute in the
nature of the provisional remedy of attachment since attachment was
unavailable in matrimonial actions. CPA 1171-a (the forerunner of Domestic
Relations Law 233) became the attachment statute in matrimonial actions and
has been wholly preserved since that time.
In an early and landmark decision, the Court of Appeals in
Matthews v. Matthews, [FN4] stated:
What the Legislature evidently intended to provide for was the
case where a husband had property within the state and was concealing himself
or else had disappeared so that personal service could not be made upon him.
- - - -
This section 1171-a attempted to provide a remedy in the
nature of an attachment whereby upon the commencement of an action the
husband's property could be seized and held for judgment or for order after
notice.
In Geary v. Geary, [FN5] the statute, which provides for both
notice and an opportunity to be heard, was held to be constitutional. [FN6] It
permits a receiver of the property of the defendant be appointed without
notice. It limits the receiver to taking possession of the property. As a
check and balance of the receiver's actions, a separate order or judgment is
required prior to applying the income or assets sequestered, to the payment of
the sums awarded by the court. By doing so, the statute affords the defendant
more than adequate notice and an opportunity to be heard before the property
can be subjected to the payment of sums awarded by the Court.
In Geary, the order of sequestration appointed the receiver to
take and hold the defendant's property until further order of the court. The
Court of Appeals reasoned no constitutional improprieties were committed by
DRL s233. The seizure or application of the seized property anticipated by the
statute is preceded by inquiry and adjudication as to the award of alimony,
granting the defendant an opportunity to be heard before loss of property.
Effect of DRL Sequestration Order
The Domestic Relations Law, Section 233, seeks to provide a
remedy in the nature of an attachment. Where the defendant in a matrimonial
action is not in the state or cannot be found, or is concealing himself so
that he or she cannot be personally served with process, it authorizes seizure
of his or her property for application to the payment of alimony, maintenance,
child support and counsel fees. [FN7] The sequestration transfers the property
in New York to the custody of the court and enables the court to apply its
proceeds, as it may deem necessary by proper award for the support and
maintenance of the spouse or children of the marriage. [FN8] The transfer
forms the necessary basis for a future award of maintenance and counsel fees
and compensates, to the extent of the value of the property in the state, for
the court's lack of in personam jurisdiction of a defendant outside the state.
[FN9]
The courts, in construing this statute, have assimilated the
practice to attachment proceedings, since the two remedies are similar in
nature and both aim to seize and hold property found in this state belonging
to a nonresident or a person who cannot be found within the state, to await
the further order and judgment of the court. [FN10]
After the sequestration of a defendant's property and the
appointment of a receiver, any attempt by the defendant-owner to convey the
property is ineffective, and does not affect the sequestration or the
receiver's title. [FN11]
A final judgment in a matrimonial action does not terminate a
sequestration proceeding, since the sequestration may be for the purpose of
assuring payment of sums directed by order or judgment during the pendency of
the action or at its termination. [FN12]
Sequestration is a drastic remedy in which only the applicant
establishing a case which brings himself or herself squarely within the
requirements of the statute will succeed. To prevail, a party must
unequivocally prove facts sufficient to draw such a conclusion. [FN13]
Sequestration is, in effect, an attachment, and an attachment will be vacated
where no basis in fact or in point of law exists for its issuance either as to
a cause of action or provisional remedy. [FN14]
While the court will, in a proper case, unhesitatingly grant
an order of sequestration to protect a spouse, likewise it will unhesitatingly
vacate one which has issued when it appears or is demonstrated to the
satisfaction of the court that no factual or legal basis exists for its
issuance. [FN15] Implicit in the right to invoke s233 of the Domestic
Relations Law is a concomitant requirement that the remedy which it permits is
sought in good faith and that the issuance of the order is warranted and
required upon the record. [FN16]
The statutory requirements for sequestration must strictly be
adhered to. The Court in Rubinstein v. Rubinstein, [FN17] vacated an ex parte
order where the defendant was available for process within the jurisdiction,
holding:
Sequestration is a highly drastic remedy and is to be allowed
only where the applicant makes out a case bringing herself clearly within the
requirements of the statute and the application must rest on facts of an
evidentiary nature and not on insinuation, conjecture and conclusions, as
here.
In Ledbetter v. Ledbetter, [FN18] the court followed the
Rubinstein case by holding: [FN19]
In the case at bar, the summons and complaint and order to
show cause were served on the defendant at a Brooklyn address. The defendant's
whereabouts have not been concealed. The plaintiff in her affidavit in support
of this motion has concluded that the defendant intends to move to Florida.
Assuming that the plaintiff is correct in her premises, the statute does not
indicate that sequestration will be granted if the defendant intends to remove
himself from the jurisdiction of this court. [FN20]
Before an order for sequestration and appointment of a
receiver will be issued, it must appear that the defendant is either absent
from the state, or that he or she cannot be found in New York, so that process
cannot be personally served upon him or her. [FN21] Thus, in a matrimonial
action where the defendant's absence from the state is admitted, there is
sufficient basis for the granting the plaintiff's request for sequestration
and appointment of a receiver. [FN22] But where the moving papers on an
application for an order of sequestration do not reveal what specific attempts
the moving spouse made to locate the defendant, and there are no affidavits
from persons knowing his or her whereabouts, but only an allegation that the
defendant went to a certain state, relying solely on the chitchat of others to
a spouse, the application must be denied. [FN23] Sequestration will not be
granted on the basis of an affidavit that the defendant intends to remove
himself or herself from the jurisdiction. [FN24] Moreover, it has been held
that where the defendant is domiciled in New York so as to be subject to
service of process sufficient to support a personal judgment against him or
her, his or her mere temporary absence from the state is insufficient to
render s233 applicable. [FN25] In contrast, where a defendant is continuously
travelling outside the state and the plaintiff has no personal knowledge where
the defendant will be from day to day, an order sequestering the defendant's
property located within the state is authorized. [FN26]
Sequestration is a provisional remedy and it is well
established that to be entitled, it is essential that it be shown by the
applicant that, prima facie, a meritorious cause of action exists. [FN27]
Thus, where the wife's likelihood of success in a separation action was highly
problematical and remote, which left the inference that the action was without
merit, she was not entitled to an order of sequestration. [FN28]
The right to sequester property pursuant to Domestic Relations
Law s233 is limited to that property which belongs to the defendant spouse
without any reasonable question, [FN29] and which is located within the state.
Under Domestic Relations Law s233, sequestration of the property of a
nonresident defendant is limited to property which, beyond any reasonable
question, belongs to the defendant. Although a spouse owns all the stock of a
corporation, its funds and assets may not be reached by sequestration, since
the corporation is a separate entity which may have creditors and which has
tax obligations. Until the "corporate-veil" is pierced and it is shown that
the corporation has no business substance or purpose and is being used by
defendant simply as a shelter, the corporate entity cannot be disregarded.
[FN30]
In Fordyce v. Fordyce, [FN31] a wife separated by a judgment
of legal separation sought to enforce her alimony arrearages by sequestration
and garnishment. The court held that she was not entitled to reach by
garnishment the retained principal of her husband's retirement pension plan to
which he made voluntary contributions, despite the fact the plan was a
self-settled trust, since the husband had no interest in the principal. The
court, however, held that the statutory exemption shielding up to 90 percent
of "the income or other payments" of otherwise exempt trusts from the reach of
creditors, would yield to claims for alimony and child support, and thus
installment payments could be reached by the wife.
The sequestration statute has been given a broad application
so as to reach the defaulting spouse and his or her assets. Thus, a cause of
action arising under or on account of a contract which may be prosecuted by
the defaulting spouse in this state, is attachable. [FN32]
Monthly payments due the defendant under insurance policies
may be reached by sequestration, [FN33] and so too may weekly payments from a
corporation where they are to continue as long as he or she remains a
stockholder. [FN34] Where an employee's interest in a profit-sharing plan has
a present value, that interest is subject to sequestration even though any
payments to the employee are to begin in the future. [FN35] But where an
employee's interest in a pension fund is contingent upon his or her being
employed by the same company at the time he or she reaches retirement age, the
interest is not subject to sequestration, [FN36] unless where he or she has a
present interest in the fund. [FN37] A spouse's future earnings may not be
reached by way of sequestration. [FN38] Although future income from a trust in
which the defaulting spouse is the beneficiary may be sequestered. [FN39]
Shields may act as swords. A spouse must be cautioned to
beware of ill conceived notions of "fair play." Terminating one's interests in
property to avoid sequestration will never do. Any attempt by a spouse to
preclude sequestration through a bad faith transfer of his or her property
will fail. So where a husband transferred his property to his sister shortly
before the trial of his wife's action against him for separation, the wife,
who obtained a judgment against him for support, was held entitled to the
appointment of a receiver in an action to sequester his property and to set
aside the transfer to his sister. [FN40] It bears repeating, however, that
where a spouse falls short of showing the existence of property which belongs
to the defaulting spouse beyond any reasonable question, he or she is unable
to sustain the burden of showing the necessity for the appointment of a
receiver. [FN41]
The court is not authorized to determine upon affidavits the
title to property or the right to collection of disputed debts, since as a
general rule property rights must be determined in an action and not summarily
upon affidavits where they are substantially disputed. [FN42] Thus, in a
matrimonial action, where an order is made sequestering the property of a
spouse, if there is a reasonable or arguable controversy as to that spouse's
present right to certain property, the question cannot be determined upon
affidavits, but must be decided by a trial court in an appropriate action.
[FN43]
Substitution of Security
Section 233 authorizes a spouse to substitute security for any
property held under an order of sequestration. [FN44] The court is authorized
to permit the substitution of a bond, commensurate in amount with the value of
the property sequestered, for the sequestered property. [FN45]
FN1. See CPLR 302(b) enacted by Laws of 1974, Ch. 859 which
authorizes "long- arm" personal jurisdiction over a non-resident or a
non-domiciliary spouse where the party seeking support is a resident of or
domiciled in this state at the time such demand is made, provided that New
York was the "matrimonial domicile of the parties before their separation, or
the defendant abandoned the plaintiff in this state or the claim for support,
alimony, maintenance, distributive award or special relief in matrimonial
actions accrued under the laws of this state or under an agreement executed in
this state."
FN2. DRL 233 provides
Where in an action for divorce, separation, annulment or
declaration of nullity of a void marriage it appears to the court that the
defendant is not within the state, or cannot be found therein, or is
concealing himself therein, so that process cannot be personally served upon
him, the court may at any time and from time to time make any order or orders
without notice directing the sequestration of his property, both real and
personal and whether tangible or intangible, within the state, and may appoint
a receiver thereof, or by injunction or otherwise take the same into its
possession and control. The property thus sequestered and the income therefrom
may be applied in whole or in part and from time to time, under the direction
of the court and as justice may require, to the payment of such sum or sums as
the court may deem it proper to award, by order or judgment as the case may
be, and during the pendency of the action or at the termination thereof, for
the education or maintenance of any of the children of a marriage, or for the
support of the wife, or for her expenses in bringing and carrying on said
action and the proceedings incidental thereto or connected therewith; and if
the rents and profits of the real estate, together with the other property so
sequestered, be insufficient to pay the sums of money required, the court,
upon such terms and conditions as it may prescribe, may direct the mortgage or
sale of sufficient of said real estate to pay such sums. The court may appoint
the wife receiver or sequestrator in such cases. The court may authorize the
wife to use and occupy, free of any liability for rent or use and occupation
and otherwise, any house or other suitable property of her husband as a
dwelling for herself and her children, and may likewise turn over to her for
the use of herself or herself and her children any chattel or chattels of her
husband. The relief herein provided for is in addition to any and every other
remedy to which the wife may be entitled under the law.
FN3. 240 NY 296, 302, 26 NE2d 265
FN4. 240 NY 28, 32 147 NE 237
FN5. 272 NY 390, 6 NE 67 (1936)
FN6. Geary v. Geary, 272 NY 390, 6 NE2d 67 (1936)
FN7. Matthews v.Matthews (1928) 247 NY 32, 159 NE 713.
Matthews v. Matthews (1925) 240 NY 28, 147 NE 237. Legler v. Legler (1935) 244
App Div 55, 278 NYS 804. The purpose of the statute is to provide a means of
enforcing an alimony order where defendant cannot be served personally and
there is property belonging to him in the state. Rennebaum v. Rennebaum (1959)
22 Misc 2d 614, 194 NYS2d 653.
FN8. Pochna v Pochna, (1959) 15 Misc 2d 521, 18 Misc 2d 413,
183 NYS2d 231. Brocklesby v. Brocklesby (1951, Sup) 104 NYS2d 340.
FN9. Pochna v. Pochna (1959) 15 Misc 2d 521, 18 Misc 2d 413,
183 NYS2d 231. Brocklesby v. Brocklesby (1951, Sup) 104 NYS2d 340.
FN10. Matthews v. Matthews (1925) 240 NY 28, 147 NE 237 held:
"Similar statutes enacted for the purpose of avoiding similar evils and
affording similar remedies should have uniformity of application and of
construction."
FN11. Reese v. Reese (1961, Sup) 213 NYS2d 100.
FN12. Re Berkowitz' Estate (1939) 170 Misc 334, 10 NYS2d 279.
FN13. Pochna v. Pochna (1959) 15 Misc 2d 521, 18 Misc 2d 413,
183 NYS2d 231; Ledbetter v. Ledbetter (1952, Sup) 118 NYS2d 160; Rubinstein v.
Rubinstein (1948) 191 Misc 325, 79 NYS2d 289.
FN14. Rubinstein v. Rubinstein, supra.
FN15. Rubinstein v. Rubinstein, supra.
FN16. Rubinstein v. Rubinstein (1948) 191 Misc 325, 79 NYS2d
289.
FN17. 191 Misc. 325, 79 NYS2d 289, 291
FN18. 118 NYS2d 160
FN19. At page 161-162
FN20. See also, Greff v. Havens, 188 Misc. 742, 66 NYS2d 691
FN21 Dom Rel L s233. Although New York Law makes no provision
for appointment of a conservator of the property of one who disappears and
cannot be proved dead, a comparable result was achieved where the husband
disappeared under such circumstances, the wife suing for separation, invoking
the sequestration provisions of Dom Rel L and being appointed received in
sequestraion upon condition that she file satisfactory proof that she would
answer to him or his estate for any neglect or wrong in administration of his
estate for any neglect or wrong in administration of his affairs. German v.
Germain (1961) 31 Misc 2d 401, 220 NYS2d 1013.
FN22. Schaefer v. Schaefer (1959) 17 Misc2d 36, 184 NYS2d 791.
Barzilay v. Barzilay (1947, Sup) 75 NYS2d 428.
FN23. Menchillo v Menchillo (1947) 188 Misc 528, 68 NYS2d 459.
FN24. Ledbetter v. Ledbetter (1952, Sup) 118 NYS2d 160.
FN25. Rubinstein v. Rubinstein (1948) 191 Misc 325, 79 NYS2d
289.
FN26. Boessenkool v. Boessenkool (1964) 42 Misc 2d 945, 249
NYS2d 253, affd (2d Dept) 21 App Div 2d 855, 252 NYS2d 252. Seaman's absence
from the state for months at a time while at sea warranted granting
sequestration order and the fact that he did not leave state to avoid process
is not ground for vacating it. Rennebaum v. Rennebaum (1959) 22 Misc 2d 614,
194 NYS2d 653.
FN27. Rubenstein v. Rubinstein (1948) 191 Misc 325, 79 NYS2d
289. If papers upon which order of sequestration is based make out a good
prima facie cause of action for plaintiff, motion to vacate order of
sequestration will be denied. The merits of the action cannot be determined on
such a motion. Pochna v. Pochna (1959) 15 Misc 2d 521, 18 Misc 2d 413, 183
NYS2d 231.
FN28. Rubinstein v. Rubinstein (1948) 191 Misc 325, 79 NYS2d
289.
FN29. Rosenberg v. Rosenberg (1932) 259 NY 338, 182 NE 8;
Neidorf v. Neidorf (1964) 43 Misc 2d 710, 252 NYS2d 354; Esposito v. Esposito
(1960, Sup) 202 NYS2d 531; Eckhaus v. Eckhaus (1958) 15 Misc 2d 686, 181 NYS2d
570; McKendry v McKendry (1951) 200 Misc 835, 103 NYS2d 183, app dismd (App
Div) 108 NYS2d 1006.
FN30. In an action against a nonresident served by
publication, the court has no jurisdiction to order the sequestration of the
defendant's stock in a foreign corporation even though the corporation is
doing business in the state, unless the stock certificates are found within
the state. Dyer v. Dyer (1931) 231 App Div 453, 247 NYS 540.
FN31. (1974) 80 Misc 2d 909, 365 NYS2d 323.
FN32. Morris Plan Industrial Bank v. Gunning (1946) 295 NY
324, 67 NE2d 510. Godbout v. Irwin (1947) 272 App Div 1020, 73 NYS2d 565.
FN33. In an action for separation, where plaintiff wife moved
to direct insurer to pay receiver the monthly payments due defendant husband,
held, monthly payments due defendant under insurance policies are debts of the
insurer which could be collected by beneficiary in an action in New York and
such payments constitute property of the defendant "within the state" subject
to sequestration under Dom Rel L s233, and Personal Property Law s15 does not
protect such payments from being applied to satisfy needs of dependents of the
beneficiary under order for temporary alimony and support. Cross v. Cross
(1964, 4th Dept) 22 App Div 2d 1013, 254 NYS2d 804. See Fordyce v. Fordyce
(1974) 80 Misc 2d 909, 365 NYS2d 323.
FN34. Weekly payments to be made by corporation to husband
where property belonging to him where his right to the payments was to
continue as long as he remained a stockholder, and were subject to
sequestration, although plaintiff would not be entitled to entire sum if
defendant husband made application to exclude a portion thereof, in the light
of his own or his dependent's requirements. Neidorf v. Neidorf (1964) 43 Misc
2d 710, 252 NYS2d 354.
FN35. Fox v. Fox (1949) 276 App Div 859, 276 App Div 917, 93
NYS2d 620. See Alexander v. Alexander (1965) 46 Misc 2d 523, 259 NYS2d 926,
holding that the court by sequestration could reach an interest in a pension
fund and a stock bonus plan set up by the employer, a foreign corporation that
merely maintained branch offices in New York. The defendant-employee was a
nonresident and the funds in question were administered and kept on deposit in
Pennsylvania. Wife's motion granted to sequester husband's interest in pension
fund where husband was in default with support payments and had resigned his
job and applied for a pension under New York City Employees' Retirement
System. Epstein v. Epstein (1957) 10 Misc 2d 572, 169 NYS2d 946.
FN36. Fox v. Fox (1949) 276 App Div 859, 276 App Div 917, 93
NYS2d 620.
FN37. La Hondere v La Hondere (1939) 256 App Div 942, 9 NYS2d
918. The pension of a retired policeman is not exempt from sequestration for
payment of alimony, since such pension money is intended for the support of
the policeman and his family. Weigold v. Weigold (1932) 236 App Div 126, 258
NYS 348. Pension funds due nonresident husband from nonresident insurer are
subject to sequestration since he could maintain an action here against
insurer to collect them. Albert v. Albert (1960, Sup) 199 NYS2d 766.
FN38. Patterson v. Patterson (1937) 251 App Div 272, 296 NYS
311.
FN39. Scott v. Scott (1927) 219 App Div 451, 220 NYS 93, app
dismd 247 NY 527, 161 NE 169. Whedon v. Whedon (1941) 176 Misc 504, 27 NYS2d
689.
FN40. McCarter v. McCarter (1960) 27 Misc 2d 610, 208 NYS2d
876, vacated in part on other grounds (Sup) 227 NYS2d 608.
FN41. Esposito v. Esposito (1960, Sup) 202 NYS2d 531. Senese
v. Senese (1953, Sup) 121 NYS2d 498.
FN42. Rosenberg v. Rosenberg (1932) 259 NY 338, 182 NE 8.
Esposito v Esposito (1960, Sup) 202 NYS2d 531. McKendry v. McKendry (1951) 200
Misc 835, 103 NYS2d 183, app dismd (App Div) 108 NYS2d 1006.
FN43. McKendry v. McKendry, supra. Safie v. Safie (1948) 273
App Div 866, 77 NYS2d 1; Rosenberg v. Rosenberg (1932) 259 NY 338, 182 NE 8;
Grinberg v. Grinberg (1961) 27 Misc 2d 450, 212 NYS2d 565. The trial court
committed error in a divorce action when it determined that defendant husband
possessed a one- half interest in a partnership and provided for the
sequestration of certain partnership property, and directed that if and when
such property is sold, one- half of the sale's proceeds should be turned over
to the wife. The Appellate Division held since the defendant's partner was not
a party to the action, the trial court had no authority to determine the
relationship between the defendant and his partner; specific partnership
property is not subject to attachment by a personal creditor of a partner and
there is no basis or authorization for such sequestration in this matter.
Smith v. Smith (1978, 2d Dept) 65 App Div 2d 757, 409 NYS2d 764. Golub v.
Golub (1979, 2d Dept) 73 App Div 2d 591, 422 NYS2d 129, held that where a
reasonable question was raised in a matrimonial action as to defendant
husband's ownership of property sought to be sequestered by the wife, a
plenary hearing should be held to determine the issue, which should not be
decided on the basis of conflicting affidavits.
FN44. Faldi v. Faldi (1959) 20 Misc 2d 93, 197 NYS2d 640. The
defendant husband was given extended time to file a bond and thereby terminate
the receivership, upon condition that the bond be an undertaking for $7,500 by
defendant, with corporate surety, to pay any alimony, support and allowances
which he had been directed and which he hereafter be directed to pay. Hughes
v. Hughes (1965, 2d Dept) 23 App Div 2d 570, 256 NYS2d 463.
FN45. Pochna v. Pochna (1959) 15 Misc 2d 521, 18 Misc 2d 413,
183 NYS2d 231.
Dr. Doris Jonas Freed is of counsel to the law firm of
Brandes, Weidman & Spatz P.C. in Manhattan. Joel R. Brandes and Carole L.
Weidman are partners in the firm, which has offices in New York City and
Garden City. Dr. Freed and Mr. Brandes are co-authors with the late Henry H.
Foster of Law and the Family, New York (Lawyers Cooperative Publishing Co.,
Rochester, N.Y.) Ms. Weidman is a co-author with them of the annual
supplements.
7/27/93 NYLJ 3, (col. 1)
END OF DOCUMENT
