Summary
In Wolf, a creditor sought a $170,000 portion of a lottery winner's $285,715 annual lottery payment pursuant to a security agreement.
Summary of this case from Midland States Life Insurance Co. v. HamidehOpinion
July 24, 1997
Appeal from the Supreme Court, New York County (Emily Jane Goodman, J.).
We agree with Supreme Court that appellant failed to raise any defenses to the note in issue ( see, Mariani v. Dyer, 193 A.D.2d 456, 457, lv denied 82 N.Y.2d 658; Bank Leumi Trust Co. v. Rattet Liebman, 182 A.D.2d 541), including the corporate obligor's bankruptcy and the claim that appellant was defrauded by the payee on the note into giving the latter a security agreement pledging $170,000 of appellant's $285,715 annual lottery prize installment as security for the loan. Accordingly, respondent was properly granted summary judgment on its cross claim against appellant on the note. However, in the context of the interpleader action, we agree with appellant that the security agreement is void insofar as it pledges future installments on appellant's lottery prize. Tax Law § 1613 (a) requires that lottery prizes be paid only to the holders of winning tickets unless there is an "appropriate judicial order" authorizing payment to another person, and 21 NYCRR 2803.11 provides that "[n]o right of any person to a prize shall be assignable * * * except that any person, pursuant to an appropriate judicial order, may be paid the prize to which the winner is entitled" ( see, McCabe v. Director of N. J. Lottery, 143 N.J. Super. 443, 363 A.2d 387; Converse v. Lottery Commn., 56 Wn. App. 431, 783 P.2d 1116).
While the proscription against assignment renders the pledged collateral defective, it does not operate to impair the validity of the note, which may be enforced against appellant's assets. Lottery proceeds are an obligation of the State subject to attachment (CPLR 6202) and are not "exempt from application to the satisfaction of the judgment" (CPLR 5201 [a]). An order of attachment is "an appropriate judicial order" within the meaning of Tax Law § 1613 (a) and may be enforced against payments due or to become due. We have considered appellant's remaining arguments and find them to be without merit.
Concur — Rosenberger, J. P., Nardelli, Rubin, Williams and Mazzarelli, JJ.