New York Law Review

Tag: Liens

  • Kidney v. Kolmar Laboratories, Inc., 65 N.Y.2d 343 (1985): Voluntary Payments Do Not Defeat Social Services Lien

    Kidney v. Kolmar Laboratories, Inc., 65 N.Y.2d 343 (1985)

    Voluntary advance payments made by an insurer on behalf of its insured to an injured party prior to a judgment or settlement do not constitute “the payment of any moneys” under Social Services Law § 104-b and do not defeat a social services agency’s lien for medical treatment payments.

    Summary

    This case addresses whether voluntary advance payments from an insurer to an injured party nullify a social services lien. The New York Court of Appeals held that such voluntary payments do not constitute “the payment of any moneys” under Social Services Law § 104-b. Thus, they do not defeat a social services agency’s lien for payments made for the injured party’s medical treatment. This decision underscores the importance of protecting public funds and preventing double recovery by plaintiffs at public expense by ensuring that the social services lien remains valid despite these advance payments.

    Facts

    William Kidney, Jr. was seriously injured on Kolmar Laboratories’ property. Liberty Mutual Insurance Co., on behalf of Kolmar, made voluntary advance payments of $30,000 for William Jr.’s medical treatment. The Orange County Department of Social Services (DSS) also made payments totaling $27,503.33 for William Jr.’s medical treatment. Subsequently, William Jr. and his father, William Sr., received a judgment of $637,500 and $37,500 respectively in a lawsuit against Kolmar and another defendant. Kolmar’s share of the judgment payable to William Sr. was $22,500.

    Procedural History

    After the judgment, DSS filed a notice of lien for $27,503.33. The plaintiffs moved to vacate the lien, while DSS cross-moved for an order directing the plaintiffs to pay the full value of the lien. The District Court upheld the DSS lien, concluding that the award to William Sr. included payment for his son’s medical expenses. Kolmar appealed, and the United States Court of Appeals certified a question to the New York Court of Appeals regarding the interpretation of Social Services Law § 104-b (2).

    Issue(s)

    Whether money advanced by an insurer on behalf of its insured to an injured party, prior to settlement or judgment of a tort action, is “the payment of any moneys” within the meaning of section 104-b (2) of the New York Social Services Law.

    Holding

    No, because “the payment of any moneys” as used in Social Services Law § 104-b (2) refers to payments made as a matter of obligation, not voluntary advances.

    Court’s Reasoning

    The Court of Appeals reasoned that interpreting “payment” to mean performance of a duty or obligation supports the legislative purpose of Social Services Law § 104-b, which is to facilitate recoupment of public funds by social services agencies. The court stated that reading “the payment of any moneys” to mean any transfer of money would allow tortfeasors to defeat the agency’s lien through minimal voluntary advances, rendering the statute meaningless. The court noted that “[interpreting payment as occurring after the resolution of a dispute defends the public weal from plaintiffs who would seek to turn an accident into a windfall…This sort of double recovery at public expense is exactly what the several parts of § 104 are designated to prevent.” The court explicitly rejected the argument that this interpretation would discourage insurers from making voluntary advances, stating that any alteration to this construction must come from the Legislature, not the judiciary.

  • Harold Moorstein & Co. v. Excelsior Insurance Co., 25 N.Y.2d 651 (1969): Assignments of Future Rights and Priority Over Lienors

    25 N.Y.2d 651 (1969)

    An assignment of after-acquired proceeds of a claim is generally considered an assignment only of a future right, and therefore, the assignment does not give the assignee priority over lienors who have attached before the proceeds have come into existence.

    Summary

    This case addresses the priority of an assignee’s rights to the proceeds of a claim versus the rights of attaching lienors. The Court of Appeals affirmed the Appellate Division’s order granting summary judgment based on the unanimous intent of the parties regarding an assignment. However, the court clarified that an assignment of after-acquired proceeds of a claim constitutes an assignment of a future right, meaning it does not grant the assignee priority over lienors who attached before the proceeds existed. This decision underscores the limitations of assigning future rights when competing with existing liens.

    Facts

    The specific facts of the underlying transaction or dispute that generated the claim are not detailed in the memorandum opinion. The central fact is that there was an assignment of proceeds from a claim, and a dispute arose regarding the priority of that assignment in relation to attaching lienors.

    Procedural History

    The case originated with a motion for summary judgment. The Appellate Division issued an order, which was appealed to the Court of Appeals of New York. The Court of Appeals affirmed the Appellate Division’s order but clarified a point of law regarding the priority of assignments.

    Issue(s)

    Whether the assignee of after-acquired proceeds of a claim has priority over lienors who have attached before the proceeds came into existence.

    Holding

    No, because the assignment of after-acquired proceeds of a claim is generally considered an assignment only of a future right and, therefore, does not take priority over lienors who have attached before the proceeds came into existence.

    Court’s Reasoning

    The court based its reasoning on the principle that an assignment of after-acquired proceeds is an assignment of a future right. The court explicitly disagreed with the dictum in the lower court’s opinion which misinterpreted Stathos v. Murphy. The Court of Appeals stated: “As was pointed out in the opinion in Stathos (at pp. 503-504), the assignment of after-acquired proceeds of a claim is generally considered an assignment only of a future right and, therefore, the assignment does not give the assignee priority over lienors who have attached before the proceeds have come into existence.” The court emphasized that lienors who have already attached have a superior claim to those who are assigned future rights to proceeds that do not yet exist. This protects the interests of existing creditors over those claiming rights to future, uncertain assets. The court’s decision ensures that existing liens are not easily defeated by subsequent assignments of future interests. The memorandum opinion did not contain any dissenting or concurring opinions.