Schafer v. Tyroler , 158 N.Y.S. 1090 ( 1916 )

La Fetra, J.

The judgment creditor, having procured an order for the examination of the debtor, served the same on January 21,1916. This order contained the usual restraining clause under which the debtor was prohibited from disposing of his property. Subsequently the debtor appeared, submitted to examination and testified, among other things, that within a period of two weeks after the service of the order on him he received moneys in excess of the judgment herein for work done prior to the institution of the proceeding and disposed of the same in payment of wages to employees, rent, household expenses and other business and personal expenses. Thereupon the creditor brought this motion to punish the debtor for contempt, alleging the disposition of the moneys in question constituted a violation of the provision in the order enjoining the debtor from disposing of his property. The Code of Civil Procedure (§ 2468) provides: “ The earnings of the judgment debtor for his per-, sonal services, rendered within sixty days, next before the institution of the special proceeding; when it is made to appear, by his oath or otherwise, that those earnings are necessary for the use of a family, wholly or partly supported by his labor, ’ ’ are exempt from seizure and may not he interfered with. The exemption is of the earnings for personal services and not- of the proceeds of a business carried on by the debtor. Matter of Wyman, 76 App. Div. 292. But the courts have interpreted the exemption to apply to the net proceeds or profits of a business where the debtor’s services are the chief factors in it, even though such business is conducted with the assistance of others. McSkiman v. Knowlton, 20 Civ. Pro. 74; Sandford v. Goodwin, id. 276. The Court of Appeals has held (Kronold v. City of New York, 186 N. Y. 43) the returns from a business in which a party is engaged, when the investment of capital and the employment of labor are but mere incidents to the conduct of the same, and in which the element of personal earnings predominates, may be considered personal earnings. The debtor herein is engaged in business as an iron worker. He maintains a shop with forges, drills, electrical motors, machines and many appliances generally used in shops of like character. He has a motor truck used in his business. He employs three and sometimes more workmen. While it is true the exemption is prompted by humane instincts and should be liberally construed in favor of a debtor (Miller v. Hopper, 19 Hun, 394), still I am of opinion the moneys disposed of by the debtor represent income from his business as distinguished from personal earnings. See Mulford v. Gibbs, 9 App. Div. 490; Prince v. Brette, 21 id. 190. He is accordingly adjudged in contempt and fined the sum of seventy-five dollars, such fine to be paid in monthly installments of fifteen dollars each, the first payment to be made on March 6, 1916. Said fine when paid is to be applied towards the satisfaction of the judgment. Upon the failure of the debtor to pay the fine as herein directed a commitment may issue.

Motion granted.