[111 NJSuper Page 83] This is a motion for payment of surplus monies from a fund paid into court.
In the underlying suit, Jerold Burg sought a partition of a certain tract owned by him and defendant Edmondson as partners.
Judgment was entered determining that partition was not equitable and ordering that the land be sold. The proceeds of the sale were to be distributed between plaintiff and defendant according to a formula not material to this motion. Defendant's share was to be applied to the liens of seven specified creditors, who were made parties to the suit and filed their claims therein.
By an order dated May 2, 1969 this court directed Burg to sell the land in question and deposit Edmondson's share with the Superior Court Clerk, to be withdrawn upon application to this court "by the judgment creditors of Patrick J. Edmondson and Joanne Mary Edmondson, his wife, * * *."
Nothing further was heard in this matter until May 21, 1970, when the attorney for James W. Hamilton, Jr. brought the motion now before the court requesting an order directing payment of the funds of Edmondson held by Burg. Apparently, unbeknownst to the court or the other creditors, Burg did sell the land in question, thereby realizing Edmondson's share. This sum has since been deposited with the clerk of the court. Hamilton was not one of the seven creditors named in the complaint or the amended order; however, he brings this motion to establish his priority to the surplus funds.
It is undisputed that judgments against Patrick J. and Joanne Mary Edmondson were docketed in the following order. On May 3, 1968, Lincoln National Bank; on July 11, 1968, First Pennsylvania Banking and Trust Co.; on July 24, 1968, Accredited Consumer Discount Co., Inc.; on August 19, 1968, Philadelphia National Bank, and on February 25, 1970, James W. Hamilton, Jr. The only creditor who levied on the land in question was James W. Hamilton, Jr., on April 16, 1970.
The issue now is to determine the order of priority of the judgment creditors. Petitioner Hamilton relies on the rule that priority among judgment creditors is determined by order of levy of execution, or the date of entry of judgment if no execution was issued. This rule gives a judgment junior in time priority of lien over a senior judgment by first levying upon the land under an execution issued on the judgment. That this is the general rule of law in this State cannot be questioned. N.J.S.A. 2A:17-39, as interpreted by Clement v. Kaighn , 15 N.J. Eq. 47 (Ch. 1862), and followed consistently -- see Silver v. Williams , 72 N.J. Super. 564, 567 (App. Div. 1962); Western Savings Fund Society of Philadelphia v. Goodman , 103 N.J. Super. 307, 312 (Ch. Div. 1968); Vineland Savings & Loan Ass'n v. Felmey , 12 N.J. Super. 384 (Ch. Div. 1950).
Out of this general rule arose the issue of whether a levy on monies held in custodia legis should also be entitled to priority. The first case which dealt with this issue was Fredd v. Darnell , 107 N.J. Eq. 249 (Ch. 1930). That case involved a levy on surplus monies held by a court-appointed special master in a partition suit. The issue was squarely presented of whether a levy on funds in custodia legis gave a subsequent judgment creditor priority over a prior judgment creditor who had not executed on his judgment. The court upheld the levy and priority, stating the law to be as follows:
It is a general rule that money or other property in the hands of an officer of a court is regarded as being in custodia legis , and in consequence ordinarily cannot be reached by execution in the absence of legislative authority. That rule appears to be based upon a necessity, incident to orderly judicial procedure, for any court which has acquired primary jurisdiction over property to continue the exercise of that jurisdiction free from embarrassments or conflicts with other courts arising from subsequent claims against the same property. Since a levy ordinarily embodies the elements of dominion and control of the property, levies upon property in custodia legis may seriously interfere with orderly administration by the primary tribunal. Accordingly the test of immunity of property in custodia legis may in general be said to be whether substantial confusion or embarrassment
to the initial jurisdiction would result from the enforcement of process against the property by another ...