Summary
The New Jersey Appellate Division held that a receiver in aid of execution may be appointed against an individual judgment debtor under N.J.S.A. 2A:17-66. The court concluded that the debtor’s denial of assets did not defeat the application where his substantial income, evasive conduct, and failure to account for funds strongly indicated concealed or available assets. The order denying the receiver was reversed and the matter was remanded for appointment of a receiver.
Topics
Practice areas
Questions Presented
- Whether a receiver in aid of execution may be appointed against an individual judgment debtor who denies owning assets but whose admissions and circumstances strongly indicate substantial income, concealed assets, or payments due from clients.
- Whether the availability of orders to pay and contempt proceedings, the age of N.J.S.A. 2A:17-66, or the debtor's assertion that he has only present income precludes appointment of a receiver.
- Whether the trial court mistakenly exercised its discretion by denying the receiver application after less severe collection remedies had failed.
Holdings
- A judgment debtor's denial that he owns assets does not by itself defeat an application for a receiver in aid of execution. When the record, including the debtor's own admissions and financial circumstances, creates a strong inference that property, income, accounts receivable, or other rights and credits exist or may become due, the court may appoint a receiver to investigate, obtain, liquidate, and apply those assets to the judgment.
- The statutory receivership remedy is not limited to corporate debtors or to specific, readily identifiable property; it may be appropriate against an individual debtor and may reach potential payments and continuing business income that are not yet technically subject to levy.
- The availability or prior use of orders to pay and contempt proceedings does not preclude appointment of a receiver in aid of execution when less severe remedies have failed and the debtor has persistently evaded discovery and enforcement.
Key quotations
“Though the debtors swear they have no property, yet, if the facts and circumstances disclosed by them raise a very strong presumption to the contrary, a receiver may be appointed” (514)
“Because of Kron's admissions, his assertion that he has no assets and few resources was not credible.” (515)
“We conclude that denial of the plaintiff bank's application for a receiver in aid of execution was, in the circumstances, a mistaken exercise of discretion.” (516)
Factual background
The bank held a 1978 unsatisfied judgment for $23,648 plus interest against Kron based on his default on a $20,000 promissory note. Despite repeated discovery efforts and enforcement orders, Kron was evasive, refused to produce tax returns and business records, and denied owning assets. He admitted substantial consulting income, including more than $100,000 from one client in 1980, while maintaining a comfortable lifestyle and failing to account satisfactorily for the disposition of his earnings.
Procedural history
The bank obtained an unsatisfied default judgment against Kron on a promissory note. After depositions to discover assets, writs of execution, contempt proceedings, and orders compelling production of financial records failed to identify or reach assets, the bank sought appointment of a receiver in aid of execution. The trial court denied the application for several reasons, including that Kron was an individual, claimed to have no assets, and had only present income. The Appellate Division reversed and remanded for appointment of a receiver.
Remand instructions
Reverse the order denying relief and remand for appointment of a receiver in aid of execution.