§ 5222.Restraining notice.

(See also Advisory Committee notes preceding § 5201, under subheading “Enjoining transfer of debtor’s assets.”).

This section is based upon parts of CPA §§ 773, 775(1), 779(1), 779(4), 781, 783(1), 783(2), 799 and 799-a in the article on proceedings supplementary to judgment. It also replaces parts of former §§ 687-a(2), 687-a(7) and 795.

Some of those former provisions provided for restraints on the transfer of a judgment debtor’s property: § 775(1) allowed a restraining provision in an order for the examination of a judgment debtor; § 779(1) was a similar authorization for third-party examination order; § 781 took effect when a subpoena for the examination of a judgment debtor or third party, indorsed with the section, was served. Section 799 permitted the court to make an injunction order restraining any person, “whether a party or not a party to the special proceeding,” and § 799-a provided that the judgment debtor’s transfer of property subject to restraint was void against the creditor, even though the debtor was not restrained himself. Section 795 provided for a restraint when an action was brought against a judgment debtor’s debtor and § 687-a provided for a similar restraint when such a debt was levied upon. The remaining provisions related to duration of the restraint and methods of service.

It has been suggested that the judgment itself should contain a restraining provision. Report of the Commission on the Administration of Justice in New York State 354 (1934); Zwerdling v Hamman Building Corp. 145 Misc 471, 473–74, 259 NY Supp 593, 596 (Sup Ct 1932). In 1932, the Committee on Practice and Procedure in the City Court of the New York County Lawyers’ Association recommended:

[I]t would be advantageous to have the judgment automatically operate as a restraining order prohibiting the judgment debtor from disposing of his property without a fair consideration, unless the judgment were bonded. To effect such restraint, however, it would be necessary (1) that the action be commenced by personal service of a summons accompanied by a notice to the effect that the judgment entered would restrain the defendant from disposing of his property. (2) If a complaint were served, a prayer for such relief should be incorporated and (3) the judgment itself should contain such a restraining order and be served upon the judgment debtor or his attorney. [Yearbook, New York County Lawyers’ Association 284 (1932).].

If the service of the judgment is to be required, there appears to be no advantage to be gained by including the restraining provision in the judgment and there may well be practical disadvantages. Moreover, the notice accompanying the summons and complaint contemplated by the Committee of the County Lawyers’ Association, might well be interpreted by the prospective judgment debtor as notice to dispose of his assets prior to the entry of judgment. Section 5229 provides greater protection than the New York County Lawyers’ Association proposal. If the judgment creditor has grounds to believe that he will have difficulty in collection, he can obtain a restraint when the decision is handed down. Some prior protection is available through provisional remedies.

This section provides a simple method for restraining the judgment debtor from disposing of any of his non-exempt property until the judgment is satisfied, vacated, or the time limited for commencing an action upon the judgment expires. Under former law, restraint of transfer was generally treated as an adjunct to examination and to application by the judgment creditor of discovered assets to the satisfaction of the judgment. In practice, however, a restraining notice was sometimes used as an enforcement procedure by itself. There is no substantial reason for the former restriction which permitted restraining notices without a court order only where an examination was sought. This section contemplates independent use of a restraining notice where desirable. If the judgment debtor does not have any non-exempt assets, the restraining notice will not affect him; if he does, he should be required to apply those assets to the satisfaction of the judgment, before the restraint is released. The burden is placed where it should be—upon the judgment debtor.

Since the restraining notice is an enforcement procedure, where the judgment debtor obtains a stay for purposes of appeal pursuant to § 5519, the prohibition against disposition of assets will be suspended. The court should continue the restraint, however, as it may do pursuant to § 5519(b), where a stay is obtained without security.

Similarly, the court may impose a restraint upon the judgment debtor at the conclusion of trial pursuant to § 5229, pending the giving of security.

Subd (a) of this section is new. It permits a restraining notice to be utilized as an independent enforcement device. Issuance parallels the provision for issuance of a subpoena of CPLR § 2302(a), except that no provision is here made for issuance by “the judge where there is no clerk,” because all of the enforcement courts listed in § 5221(a) have clerks. Service is prescribed in the same manner as a summons or by registered or certified mail, return receipt requested. Since failure to comply with a restraining notice is punishable as a contempt of court (see § 5251; cf. CPA § 801), service should be in a manner calculated to insure actual receipt of the notice. Cf. CPA § 783. The provision requiring a statement in the notice of the “amount then due” on the judgment is required by the last sentence of subdivision (b) permitting a garnishee to dispose of any property and money if he withholds twice the amount of money due on the judgment. A similar provision in former § 781 ambiguously referred to the “amount claimed” by the judgment creditor in the subpoena; the subpoena is required only to include a statement of the total amount of the judgment. See CPA § 775(2). The restraining notice may be served on the debtor as well as on any garnishee or suspected garnishee. Cf. CPA § 781. While independent use of a restraining notice is permitted by this section, there is no intent to disapprove its use in connection with other enforcement devices. It may be served simultaneously with a subpoena, for example, as under former practice. The restraining notice should be captioned in the court in which a proceeding could be brought. See CPLR rule 2101(c) § 5221(b).

Subd (b) of this section is based upon CPA § 781. It also replaces the provisions with respect to the effect and duration of a restraint contained in §§ 773, 775, 779, 799 and 799-a. Under the second sentence of this subdivision the restraining notice is effective against persons other than the judgment debtor only if they know or have reason to believe at the time of service that they are indebted to, or have property of, the judgment debtor. This provision is based on former § 781 which provided that the restraining provision in a subpoena was not effective unless the third party had property of the judgment debtor at the time of service. The restraining provision in an order for examination under § 779 did not contain the limitation in § 781 but the order was issued only upon “a showing by affidavit that the judgment creditor or his attorney has reason to believe that any person or corporation has, property of the judgment debtor exceeding ten dollars in value, or is indebted to him, in a like sum.” This limitation, in both this subdivision and former § 781, is designed to relieve persons who may have no connection with the judgment debtor from the burden of imposing a continuing check upon all funds or property which may subsequently be received during the effective period of the notice. Thus, if the judgment debtor has no account or safe deposit box in a banking institution at the time of service, the institution has no further obligation, even if the judgment debtor thereafter opens an account. Under any other rule, the burden upon such institutions would be excessive. The term “knows or has reason to believe” is used to avoid hardship where a garnishee who has property of the judgment debtor at the time of service is unaware of the true owner—as in the case of a bank account maintained in a different name. Cf. Cotnareanu v Chase Nat’l Bank, 271 NY 294, 2 NE2d 664 (1936). Unlike CPA §§ 775(1) and 781, which limited the period of restraint to two years from the time of service, this subdivision provides that the restraining notice remains in effect against a judgment debtor until the judgment is satisfied or vacated or until the expiration of one year after the notice is served upon him, whichever event first occurs. Under former § 781, the period of restraint might have been extended beyond the two-year period by “order of the court for good cause shown.” An order for a new examination of the judgment debtor might have been obtained, however, upon a showing that the judgment was at least partly unsatisfied and either that one year had elapsed since the judgment debtor was last examined or that “there is reason to believe” that the judgment debtor had property or income, and a new restraint for an additional two-year period might have been effected thereby. CPA § 775(1). Prohibiting the judgment debtor from freely disposing of his assets until the judgment is satisfied is neither unreasonable nor an excessive hardship; if the judgment debtor has assets they should be applied to the satisfaction of the judgment; if he has none, the restraining provision will have no effect. Section 5240 permits modification of the time provision and the imposition of any conditions deemed desirable by the court. CPA §§ 779(1) and 781 provided the same two-year period of restraint for third parties as was provided for judgment debtors. A judgment debtor who finds a restraint too harsh always has the power to terminate it by satisfying the judgment, but a garnishee may not have such an option; the effective period of the restraint as to garnishees is therefor limited by this subdivision to one year. This shorter period should encourage prompt action by the judgment creditor; it affords adequate time for examination and application of property to the satisfaction of the judgment. If more time is required in an unusual case, the judgment creditor may obtain an extension pursuant to § 5240 or leave to serve a new restraining notice pursuant to subd (c) of this section. This subdivision continues the provision of former § 781 permitting the garnishee to dispose of any excess money or any other property of the judgment debtor in his possession or control, if he withholds money equal to twice the amount due on the judgment. See notes to subd (a). Twice the amount is required to insure that there will be a sum adequate to cover costs and interest. The third paragraph of former § 781, and the identical provision in § 779(1), are replaced by the provision in this subdivision that the person served must “know” or have “reason to believe” that property belongs to the judgment debtor and by the provision that the restraining notice may specify the property subject to the restraint. The latter provision is based upon a similar provision in § 6214(b) with regard to attachment. See notes to § 6214(b). The restrictions of § 792 are omitted as unnecessary since property and debts exempt from application to the satisfaction of a money judgment are not included in the definitions of property and debt in CPLR § 105, and the judgment therefore cannot be enforced against them. CPA §§ 775(1), 779(1), 795 and 799 provided for restraints by court order, while that of § 687-a operated upon a levy by the sheriff. Since violation of a restraining notice is punishable by contempt under CPLR § 5251, the provisions of this section for an attorney-issued restraint would appear to be sufficient for all purposes. Abuse would be brought to a court’s attention under § 5240, but the court’s intervention seems unnecessary to the imposition of a restraint. A provision has been added for liability of the judgment creditor to the real owner of property that the judgment creditor has specified as belonging to the judgment debtor. Words “belonging or owed to” have been substituted for “due” in the last sentence more clearly to express the intent.

Subd (c) of this section is new. Although the last paragraph of former § 781 provided for extensions of a restraint only upon “good cause shown,” a new two-year restraint would have been contained in an order for a subsequent examination, which could have been obtained by a mere showing that one year had elapsed since the last examination. CPA §§ 779(1), 779(4). This subdivision is designed to require that the judgment creditor show his need for a new restraint, whether or not he seeks an examination. He may show such matters as that he was unaware of certain property despite diligent attempts to ascertain its existence and location during the earlier restraining period or that he was unable to apply property discovered to the satisfaction of the judgment during that period. To prevent undue harassment of third parties, the subdivision requires leave of court whether or not the judgment has been assigned to a new judgment creditor. Because a restraining notice served upon a judgment debtor is effective under subd (b) for the life of the judgment, subd (c) is only applicable to notices served upon persons other than the judgment debtor. See notes to subd (b).

Add, L 1962, ch 308, eff Sept 1, 1963; amd, L 1963, ch 544, § 1; L 1968, ch 743, § 2; L 1969, ch 1137, § 1; L 1982, ch 882, § 1; L 1991, ch 314, § 1; L 1993, ch 59, § 13, eff July 1, 1993; L 1994, ch 35, § 1; L 2000, ch 409, § 1, eff Sept 29, 2000; L 2008, ch 575, §§ 2, 3, eff Jan 1, 2009; L 2009, ch 24, § 3, eff May 4, 2009; L 2021, ch 107, § 2, effective May 13, 2021; L 2021, ch 831, § 6, effective April 30, 2022.