On appeal from the Supreme Court.
For the defendant-appellant, Orlando & Kisselman.
For the plaintiff-respondent, McKirgan & Gilson.
The opinion of the court was delivered by
BODINE, J. A judgment was recovered against the borough of Mount Ephraim. Execution was levied upon moneys on deposit with the Mount Ephraim National Bank carried in the savings, current, water department and bond and interest
accounts. By stipulation, the levy was withdrawn from the current and water department accounts. The Supreme Court refused to vacate the levy on the savings and bond interest account. The present appeal brings before us the propriety of this ruling.
The record discloses that the ratables of the borough are but twice its bonded debt of $1,000,000. The money in the savings account was a sinking fund for the retirement of bonds while the money in the bond interest account was used to meet interest payments.
In this state, the scheme of municipal finance is to raise money by taxation to meet definite needs for which appropriations have already been made. Municipal funds before receipt are allocated to definite public use.
The problem is whether a creditor may, by execution against a particular municipal fund, take that which has not been appropriated to the payment of his debt.
In Lyon v. City of Elizabeth, 43 N.J.L. 158, and in the more recent case of Township Committee of Piscataway v. First National Bank of Dunellen, 111 N.J.L. 412, it was decided that neither the property of a city used in the exercise of its function of government nor the funds in its hands appropriated for a public purpose could be seized in satisfaction of a judgment. The creditor who reduces his claim to judgment usually issues execution only as a foundation for mandamus proceedings to compel the raising of sufficient revenue by taxation to satisfy his claim. The fundamental needs of government require that municipalities be free from the seizure of lands and personal property used in the exercise of a governmental function. The money set apart to liquidate bonds and pay interest thereon cannot be seized at the suit of a creditor without irreparable harm to the municipal credit and without a preference of one creditor over another.
The judgment creditor in this case was the holder of defaulted bonds; if he may seize funds which are to be devoted to the payment of bonds generally he secured by his vigilance ...