Summer 2012 • Issue 44, page 19
Can a creditor with a judgment levy on receivership estate funds?
By Davidson, Peter*
Q: I am a receiver for a partnership. A
creditor with a judgment has threatened to levy on funds I have collected.
Can she do that?
A: No. Remember you are the court’s agent and property you hold as
receiver is actually in the custody of the court–sometimes referred to as
“in custodia legis.” As a result, the property in your possession cannot
be levied on, garnished, or attached without the consent of the
receivership court. Robbins v. Bueno, 262 Cal.App.2d 79 (1968)
(“Property in the custody of a receiver is generally not subject to
garnishment or attachment without the court’s consent. Because the
receiver is appointed by the court, he becomes an officer of the court;
thus his custody is actually the custody of the court. (citations
omitted)”); City of Los Angeles v. Knapp, 22 Cal.App.2d 211, 212
(1937) (“The general rule is the property in custodia legis is not
subject to garnishment.”). The one exception is, if a person is entitled
to a definitive distributive share of the fund being held, one of his
creditors may garnish it after the court has ordered the receiver to pay.
Knapp at 212 (“If a party has a right to a certain distributive share of a
fund in custodia legis, the officer having custody of the fund may
be effectively garnished by a creditor of the party entitled to such
*Peter A. Davidson is a Partner of Ervin
Cohen & Jessup LLP a Beverly Hills Law Firm. His practice includes
representing Receivers and acting as a Receiver in State and Federal