text:
    SAMUEL P. TRAIN and EDWARD S. SMITH, Respondents, v. JOHN L. TAYLOR, Appellant, Impleaded with HUGH F. KENDALL and Another.

      Conspiracy — a verdict against one defendant, and in favor of another, when■ irwpi'oper•— evidence.

    In an action for conspiracy, where the members of a copartnership arc alleged to have conspired with a third party, with a view to, and for the purpose of, indue ing others to furnish goods to the copartnership, upon the faith of false- and fraudulent representations to be made by such third party, a verdict cannot be rendered against the members of the copartnership, and in favor of the third party who is alleged to have conspired with them.
    The competency of evidence as to statements made to a commercial agency two years before the alleged conspiracy, as to the prices at which goods were purchased and could be purchased, and as to declarations made by a witness before the trial, considered.
    Appeal by the defendant Taylor from a judgment against him, entered April 27, 1887, upon the verdict of a jury, for $5,771.75, recovered at the New York Circuit.

      B. F. Tracy, for the appellant.

      F. C. Barlow, for the respondents.
   Van Brunt, P. J.:

This action seems to have been tried upon the theory that a verdict for the plaintiffs might be sustained against one defendant while another defendant could have a verdict in his favor. And this theory seems to have led to,various serious errors in the admission of evidence, which call for a reversal of the judgment. We do not understand that in an action of this character, being an action for conspiracy, and nothing else, a verdict can be rendered against one defendant in favor of the plaintiff, and another defendant succeed. It is impossible for a man to conspire with himself, and so it was impossible for Kendal Brothers to conspire with itself so that a verdict for conspiracy between it and Taylor might be sustained upon proof showing that it or its members had been guilty of fraud in which the defendant Taylor in no manner participated. Therefore, these rulings in this case, which proceed upon the theory that a recovery might be had in this action for fraud against Charles B. Kendal, the only member of tlie firm of Kendal Brothers who was served with process, even though the plaintiff should fail to prove the conspiracy charged in the complaint, are clearly erroneous. That the case ivas tried upon this theory is apparent from the admission of evidence, as against Kendal Brothers alone, which was clearly incompetent in respect to his co-defendant Taylor. And upon the points of the learned counsel for the respondents, the proposition is urged that whether a conspiracy was proven or not, whether there was any actual, conscious combination or plot between the defendant Taylor and either or both of the other defendants, is immaterial; and that if the defendant Taylor knew that they were hopelessly insolvent and could not pay for the purchases which they were making, and, with this knowledge, aided them in making these purchases and induced them to pay their indebtedness to him by means of these purchases, then the defendant Taylor having consciously inflicted a loss upon the plaintiff for the purpose of escaping from the loss himself, he is liable in damages whether the defendants Kendal, or either of them, actually conspired with him or not.

An examination of the complaint shows that all its allegations proceed upon the ground of a conspiracy between the Kendals and Taylor. The allegations are that it was then and there agreed between them that they should buy goods upon credit from such persons as could be induced to sell them, which said defendants’ firm could not and did not intend to pay for, and that the firm should sell for cash or promissory notes a part of the goods thus fraudently obtained, and procure the promissory notes to be discounted, and with the proceeds thereof, and with the cash to be realized from said sale, and with the remaining portion of the merchandise to be purchased, as aforesaid, should pay in full their indebtedness to Taylor. The complaint also alleges that it was further agreed, and as a part of said conspiracy, that in order to enable said firm to make such purchases on credit as would effect the propose of said conspirators, the defendant Taylor should sustain the credit' of the firm, and should so sustain it until the said indebtedness to him had been paid in full, either in cash or by the transfer of merchandise.

This cause of action is clearly a fraudulent combination between these defendants by which they undertook to defraud those persons from whom Kendal Brothers should purchase merchandise, for the purpose of benefiting the defendant Taylor. This cause of action must be made out or the plaintiff must fail.- It is undoubtedly true that the declarations of co-conspirators, when the conspiracy has once been established, may be taken in evidence against each other. But it is necessary, in the first place, that the conspiracy should be established in order to make such evidence competent; and, then, that the declarations made should have some relation to the carrying out of the conspiracy itself. Without in any manner discussing or expressing an opinion in this case as to whether the evidence* was sufficient to establish any conspiracy, and there are grave doubts upon that point, and without in any manner expressing an opinion as to whether there was sufficient evidence to justify the denial of the motion to dismiss the complaint upon the whole case, as against the defendant Taylor, because of the want of such proof, we will consider for a moment a few of the objections taken to evidence and which were overruled. The first objections to which it is necessary to call attention are those to the evidence as to the representations made by Kendal to the commercial agencies. It is true that no exception was taken by the defendants to the first of this evidence, although their objection was overruled; but it does appear that evidence was given of representations made to the commercial agencies as early as December, 1880, which was duly excepted to, when there is no allegation in the complaint .of any conspiracy or understanding between these parties prior to the 1st of August, 1882. Now, it is clear that as far the defendant Taylor was concerned, and as far as this action was concerned, representations made to a commercial agency two years before the alleged conspiracy could not be evidence against either of the parties. This evidence was admitted as against the defendant Kendal, but it naturally affected the defendant Taylor; and, therefore, its admission was error, because it was too remote from the time of the alleged conspiracy to have any relevancy thereto.

The same may be said of the evidence in regard to the interview in March, 1882, and also of the evidence as to fhe representations made in July, 1882. The representations made, prior to the forming of this conspiracy, by the Kendals to the mercantile agencies may very well have been competent in an action against them for obtaining goods upon fraudulent representations, but they had nothing whatever to do with this fraudulent conspiracy, and their declarations made prior to the formation of the conspiracy could in no manner affect the defendant Taylor. The exception to the exclusion of, the evidence as to the price at which the defendant Taylor could have imported the goods procured from the Kendal Brothers was clearly well taken. One of the questions upon which it was claimed that the element of knowledge upon the part of Taylor was to be established was because he purchased the goods at lower prices than Kendal paid for them. To rebut that presumption the defendant Taylor had a right to show that he got the goods at prices greater than they would have cost him had he been able to import them. The evidence tended to jirove that there was nothing in the price of the goods which would go to show that there was any fraudulent combination between Taylor and the Kendals; and as the whole of the evidence by which this alleged conspiracy is sought to be supported is circumstantial, the defendant Taylor had a right to establish this fact in order to disprove any unfair and unjust inferences which might be drawn from the fact that he purchased the goods from the Kendals at less prices than they paid for them.

The exception taken also to the declarations of the witness Johnson, claimed to have been made by him to various parties before the trial, consistent with, his evidence upon the trial, was well taken. This witness had testified upon liis direct-examination to a certain statement which had been made by the Kendals to him a considerable time before their failure; and upon cross-examination he was asked whether lie had before the failure mentioned these facts to anybody, and he said he had not. The defendants offered proof tending to show that this Johnson had attempted to blackmail a firm who had business transactions with the Kendals, but were not parties to this action, and that he had made application for accommodation to Mr. Taylor, and had been refused. The plaintiffs’ counsel stated, upon these questions being objected to, that inasmuch as the defendant claimed that the testimony of Johnson was given under the motives of anger and revenge, caused by his failure to succeed in his effort to blackmail the defendants and the firm of Cohn, Lazarus & Co., and as defendants had given evidence tending to show such effort on the part of Johnson, the plaintiffs had the right to show that' Johnson had told the same story before such efforts were made. The court overruled the objections of both defendants, and exceptions were duly taken. It is doubtful whether, under any circumstances, the statements contained in this offer would justify the introduction of the evidence. But there was no proof in the case whatever that the defendants had offered evidence tending to show that Johnson had attempted to • blackmail them. They did show that he attempted to blackmail a firm who were not parties to this action, and, therefore, the very ground which was given to support this 'evidence does not, in fact, exist.

It is urged, upon the part-of the respondent, that after this statement was made no disclaimer was vouchsafed upon the part of the defendants that they had. offered such proof. We do not know that the appellant is bound to disaffirm every statement that may be made by counsel during the trial of an action which he does not assent to. If the ground upon which the respondents seek to sustain the ruling is not found in the record, then the exception raises the question. And, furthermore, in the case at bar, the witness Johnson had been examined, and upon his cross-examination he stated that he had never told anybody before. It was not competent for the plaintiffs to prove, by his previous declarations, that the witness Johnson had lied in this particular, and thus attempt to bolster up his testimony. As has been urged upon the part of the appellant, the only cases in which such evidence has been admitted (and certainly the rule should not be extended, because this is evidence of the most dangerous character which can be admitted by a court of justice) have been those in which the relations of the witness to the subject-matter, or to the party in whose behalf he has testified, have become- so changed as to make it for his interest to falsify his testimony, which is not the proof in the case at bar.

There are other exceptions to which our attention has been called in which an erroneous rule seems to have been followed; but sufficient has been said in respect to the exceptions which have been discussed to make it necessary to order a new trial in this action.

The judgment should be reversed and a new tidal ordered, with costs to appellant to abide the event.

Beady and Macombeb, JJ., concurred.

Judgment reversed and new trial ordered, with costs to appellant to abide event.


source: Caselaw Access Project

author: Van Brunt, P. J.:

license: Public Domain

text:
    RICHARD S. NEWCOMBE, Assignee of ISAAC J. SELIGMAN, CHARLES M. MAY and ISAAC N. STERN, for the Benefit of Creditors, Respondent, v. IRVING NATIONAL BANK, Appellant.

      Right of a debtor, whose property has been levied, on under several different executions, when various indemnitors home agreed to indemnify the sheriff, to maintain an action to have his rights determined—a tempora/ry injunction restraining the creditors from enforcing the executions may be granted.

    Upon an appeal from an order granting an injunction, pendente Hie, restraining the defendant, a judgment-creditor of the plaintiff’s assignor, from enforcing its judgment by means of executions against certain property claimed by the plaintiff to be a part of the assigned estate, in an action brought by the plaintiff to have an assignment for the benefit of creditors declared valid.

      Reid, that, as it was alleged in the complaint that the property had been levied upon under different executions upon which there were various indemnitors of the sheriff, and as it was impossible to tell with any degree of certainty what part of the property was seized under each particular execution, and as a debtor under such circumstances, since the amendment of section 1419 of the Code of Civil Procedure, by chapter 98 of 1888, has no adequaté remedy at law, it was necessary that this particular proceeding should be entertained by a court of equity, so that the plaintiff’s rights might be fixed, having before the court all the parties who claimed an interest in the property by reason of the levies made by the sheriff.
    Appeal from an order of injunction, entered in the clerk’s office of the city and county of New York on September 6, 1888, whereby the defendant, a judgment-creditor of the plaintiff’s assignor, was enjoined from enforcing its judgment by means of executions upon certain property claimed by the plaintiff to be a portion of the assigned estate.
    The complaint, which formed a part of the moving papers below, set forth that the plaintiff was the assignee of Seligman, May & Co. for the benefit of creditors under a general assignmént; that he had qualified by giving a bond. That prior to July twenty-seventh the plaintiff had sold a portion of such merchandise at a profit; that the defendant had recovered and entered certain judgments against the assignors, and had “ indemnified the sheriff against the claim of the plaintiff; ” that if said assigned estate was sold by the sheriff under executions the same will not, “ as plaintiff is informed and believes,” realize.more than $125,000; and that if the same is sold “ said plaintiff cannot recover adequate damages against the sheriff or his indemnitors if it is ultimately determined that he was entitled to hold said assigned estate; ” that othei judgment-creditors than the defendant have also indemnified the sheriff to about the amount of $140,000; “ that, as said plaintiff is informed and believes, it is claimed by the defendant that by reason of some formal omission in said assignment the same is void, but that the plaintiff insists that the said assignment is a valid one; and that all the assigned estate is lawfully in his possession by virtue thereof; ” the plaintiff then prays for a judgment that upon his depositing in this court a sum of money equal to the amount of the defendant’s judgments, subject to a final determination as to whether or not said assignment is void, the said defendant may be enjoined and restrained from enforcing the executions in the complaint mentioned, and from selling or procuring to be sold the property therein mentioned; that a temporary injunction may be granted, and that by this action the assignment shall be declared to be valid, and it shall be adjudged that the plaintiff is entitled to hold the said assigned estate and apply the same to the purpose declared in the assignment.

      Stern & Myers, for the appellant.

      Charles Donohue, for the respondent.
   Van Brunt, P. J.:

The order appealed from is certainly a novel one, but the circumstances under which it was applied for, are equally novel. The rule is well established that a court of equity will not interfere by injunction where an adequate remedy at law exists; and in cases of trespass by the sheriff prior to this new legislation (whereby one man is made responsible for the trespass of another), the person against whom the trespass was committed had an ample remedy at law because he could maintain his action, against the sheriff for such trespass and recover the damages which he had sustained. If such trespass had been directed by any other person, as by an indemnitor, he had the right also to join in such action such indemnitor. Under this condition of the law there was no uncertainty in regard to the remedy of the party injured. He had a complete and effectual one against the sheriff and his aiders and abettors. When the legislation took effect which authorized the court to substitute indemnitors in the place of the sheriff certain discretion existed in the court; and if the rights of the parties injured would be in anywise impaired by such substitution, the court had the right to refuse the same, and .it has been held under this legislation that where there were a variety of indemnitors and the sheriff was proceeding under a variety of executions, this was a sufficient ground for the refusal of substitution, because it was impossible for the injured party to know as to what part of the trespass each indemnitor was liable; and as such indemnitor was not liable for the whole trespass, it made his remedy uncertain, and, as a consequence, the sheriff should not be relieved, but should remain liable for the whole trespass as he had been previous to this legislation. By the amendment of 1888 no discretion •is_ vested in the court. If the judge finds, upon examination, that the indemnitors are responsible, he is bound to indorse his approval upon the undertaking, and thereupon the sheriff is released and discharged from all further liability by reason of the levy, detention and sale of the property seized. This legislation produced a state of things which is entirely new and has never existed before. The party whose property is seized under various executions, where the sheriff has been indemnified by various indemnitors, cannot present to the court the fact that he cannot know whom to proceed against for this levy as a reason why substitution should be refused, because the judge is bound to appove the undertaking, if the sureties are sufficient, and the sheriff, as matter of law, thereupon becomes discharged, and the person whose property has been seized under the execution must thereafter look to the indemnitors for satisfaction for the trespass committed by the sheriff. As has already been suggested, each indemnitor is not liable for the whole trespass unless all the goods were taken under the execution which lie has indemnified against, and the sheriff may make successive levies under the different executions, and the indemnitors under each execution are only liable for the levy made under that particular execution.

Under these circumstances, unless the owner of the property is present at the time of the levy, and is informed by the sheriff as to what he levies upon under each execution, and he takes pains to inform himself upon the subject, it is impossible for him to tell as to what property each indemnitor is liable; and then, when he comes to try his action at law, it depends upon his testimony, where, perhaps, he is contradicted by the person making the levy under the execution, and he is thereby thrown into a sea of uncertainty as to whom he is to look for satisfaction. An action brought under such circumstances, against divers individuals, would certainly be a very inadequate remedy; and it is because of the fact that, by his action for damages, the owner of the property seized under these circumstances cannot secure adequate and certain relief that the aid of a court of equity is asked.

As has already been stated, it is an unusual application, and the circumstances under which it is made are equally novel. The debtor, under circumstances such as these, has no adequate remedy at law, and it is necessary that this particular proceeding should be entertained by a court of equity; because of the change in the relations between the owners of property and the persons who trespass upon them, wrought by this legislation.

We are of opinion, therefore, that the plaintiff was entitled, in view of the fact that his property had been levied upon under different executions, upon which there were various indemnitors, and in view of the fact that it was impossible to tell, with any degree of certainty, what part of the property was seized under .each particular execution, to the order granted, whereby the plaintiff’s rights might be fixed, having before the court all the parties who claimed an interest in the property by reason of the levies made by the sheriff.

The order should, accordingly, be affirmed, with ten dollars costs and disbursements.

Daniels and Bartlett, JJ., concurred.

Order affirmed, with ten dollars costs and disbursements.


author: Van Brunt, P. J.: Bartlett, J.

text:
    JOSEPH STERN and Others, Executors, etc., of ELIZA EISNER, Deceased, Respondents, v. SAMUEL L. EISNER, Appellant.

      Witness, interested in the event of the action, competent to testify to a conversation ■ between a decedent and a third pa/rty.

    The change made, hy the enactment of section 839 of the Code of Civil Procedure, in the language of the Code of Procedure, precluding a witness interested in the event of the action from testifying in regard to personal transactions with a deceased person, has not changed the rule which allows a witness, under such circumstances, to testify as to a conversation, had between such deceased person and a third party, overheard by the witness.

      Lobdell v. Lobdell (36 N. Y., 333) followed.
    Appeal from a judgment entered March 23, 1888, in New York county, upon the verdict of a jury, rendered by the direction of the court, at the New York Circuit, and from an order denying a motion for a new trial.

      G. P. Avery, for the appellant.

      G. W. Carr, for the respondents.
   Van Brunt, P. J.:

This action was brought by the plaintiffs, as executors of the will of Elizabeth Eisner, deceased, to recover from the defendant the sum of $1,000, money loaned by the deceased in her lifetime to the defendant, such loan being evidenced by the promissory note set up in the complaint. The answer denied any loan or indebtedness. Upon the trial of the action the defendant was examined as a witness on his own behalf, and he was asked whether he had ever been present when his mother, the deceased, was having a conversation with anyone else about this claim, and he answered “Yes;” he was then asked: “ State what you heard her say and to whom; that is, not yourself, but anyone besides yourself ? ” This was objected to as conflicting with the provisions of section 829 ; the objection was sustained and exception taken. He was then asked: “ What conversation did you hear your mother have with your sister Mary about it?” Objected to on the same ground; objection sustained and exception taken. This seems to have been error.

In the case of Lobdell v. Lobdell (36 N. Y., 333), where a similar question was asked of a party who was testifying, it was expressly held that such a question did not come within the language of the section, and that, under such circumstances, the transaction or communication in question was not between himself and the deceased person, but between the deceased and a third person, and for that reason did not come within the provisions of the section. It is true there is a slight change in the language of the Code as it existed at the time of that decision,-but there does not seem to have been any change which renders the reasoning of that case inapplicable to the section of the present Code above referred to. The change of the language seems to have been only another instance of the many which are found in the present Code, where, for some unexplained reason, language well understood, and which had been interpreted by numerous decision, is altered to satisfy the whim or caprice of the codifier, for no other reasonable ground can be given for making it.

The judgment should be reversed and a new trial ordered, with costs to appellant to abide event.

Daniels, J., concurred.

Bartlett, J.

(dissenting):

After the exception was taken which has been deemed fatal to the judgment by a majority of the court, the defendant was examined further in regard to the circumstances of the conversation between his mother and sister, and was allowed, under objection, to give a full account of the interview. This testimony ivas subsequently stricken out on the plaintiff’s motion, and the defendant duly excepted. The evidence thus taken and stricken out was very important in its bearing upon the question whether the court was right or not in excluding the testimony of the defendant as to the conversation between his mother and sister, and it leaves no doubt in my mind that such testimony was properly excluded.

While it is doubtless true that an interested person, who is a mere listener, is not prohibited by section 829 of the Code from testifying to a conversation which he overheard between a decedent and a third person, a party interested in the event cannot testify to such a conversation if he participates therein. Such is the construction very recently given to this provision of the Code in the case of Holcomb v. Holcomb (95 N. Y., 316, 326), which was a unanimous decision of the Court of Appeals, and in which Judge Dakfobth expressly says: “ If the proposed witness has asked a question of the decedent and it is answered, it is a conversation; if, while the decedent is conversing with a third person, the witness, by word or sign, participates in it, or is referred to, his evidence of what occurred cannot be received.” If there is anything in the case of Lobdell v. Lobdell (36 N. Y., 327) in seeming conflict with this view, it must be regarded as limited or overruled by the latter decision.

In the present case it distinctly appears that the conversation concerning which the defendant was interrogated was a talk in which his mother, his sister and himself, all took part. He says, in so many words, that it was a general conversation in which he spoke about the annoyance and trouble and work he had had; that his sister said he had done a great deal of work, and his mother then made the remark to her which is relied upon as showing that the money represented by the instrument in suit was intended to be a gift to the defendant.- In my opinion, a statement made by the decedent under these circumstances, comes both within the letter and spirit of the prohibition prescribed by section 829 of the Code.

For these reasons I am unable to concur in the conclusion reached by my associates in this case.

Judgment reversed and new trial ordered, with costs to appellant to abide event.


author: Van Brunt, P. J.: Macomber, J.

text:
    HUGH McCULLOCH, JOHN PULESTON, FRANCIS H. EVANS and WILLIE RUSHTON, Successor to EDWIN M. LEWIS, as Trustee, Plaintiffs and Respondents, v. CHAUNCEY VIBBARD and ALEXANDER P. FISKE, Defendants and Appellants, and EMERSON FOOTE.

      In an action, brought by several plaintiffs, the defendants cannot set up a counten'-claim that does not apply to all of the plaintiffs, or one which affects other persons not parties to the action—the counter-claim cannot be set up against the assignee in bamlcruptcy of the pan-ties against whom it exists—it may be used as am offset in an action brought by him — the defect of pan-ties in 'such case need not be set up in the rbply.

    Upon an appeal from a judgment dismissing a counter-claim set up by the defendants, in an action brought by the firm of Jay Cooke, McCulloch & Co., against the defendants, as members of the firm of Vibbard, Foote & Co., to recover certain moneys claimed to be due from the defendants, and for certain other relief, the complaint alleged that the plaintiffs McCulloch, Puleston and Evans, together with the individual members of the firm of Jay Cooke & Co., were copartners, carrying on business in London under the firm name of Jay Cooke, McCulloch & Co.; that the members of .the firm of Jay Cooke & Co., doing business in New York, were adjudicated bankrupts under the provisions of the act of congress, and that the plaintiff Lewis was appointed trustee, under such act, of all their property and assets, and that, at the time of the commencement of this action, he was still such trustee. The individual members of the firm of Jay Cooke & Co. were not parties to the action, and no objection was taken by the pleadings to their absence, it being assumed that Lewis, as their assignee in bankruptcy, represented their interest in the firm of Jay Cooke, McCulloch & Co.
    The defendants Vibbard and Fiske answered setting up a counter-claim against Jay Cooke, McCulloch & Co., and asking an affirmative judgment, by way of counter-claim, for the value of certain securities alleged to have been hypothecated and disposed of by the said firm, to which the plaintiffs put in a reply denying the allegations setting up the counter-claim.
    Upon the trial of the action before a referee the plaintiffs submitted to a nonsuit, and the defendants offered certain proof to establish their counter-claim, which was rejected upon the ground that the proper parties were not before the court, and that no counter-claim could be established in this action as against the plaintiffs.

      Held, that his decision should be affirmed.
    That, in an action brought by several plaintiffs, the defendants cannot set up as a counter-claim a cause of action which they have against one or two of such plaintiffs, but can only set up, by way of counter-claim, a cause of action which they have against all the plaintiffs, nor, in a case where there is an individual plaintiff, can the defendants set up, as a counter-claim against him, a cause of action, which, they have against the plaintiff and another person who is not a party to the action.
    That, as in this case, Vibhard, Foote & Co., claimed to have a cause of action against Jay Cooke, McCulloch & Co., and only three of the many members of the firm of Jay Cooke, McCulloch & Co. were plaintiffs in this action, it was an attempt to enforce a counter-claim against these three plaintiffs alone, when there were various other persons, who were not parties to the action, who were jointly liable with them; and that it could not he sustained.
    That a claim that the assignee in bankruptcy of Jay Cooke & Co. was a party plaintiff and represented the absent parties, and that, therefore, there was no defect of parties, could not he sustained, as the assignee in bankruptcy could not be sued, and as, if this had been an action brought by the defendants against Jay Cooke, McCulloch & Co., the assignee in bankruptcy would not have been a proper party thereto.
    That, as the assignee in bankruptcy was the assignee of these individual parties, and represented their interests which had been assigned to him, he was a proper party to the action to enforce the rights which those individual members had in the cause of action which it was sought to maintain; and as far as the cause of action, set up in the answer, might he treated as an offset, the defendants had the right to maintain it against the assignee, and to use the same for the purpose of an answer to the claim made by him against them.
    It was urged that because the plaintiffs in their reply did not raise the objection that there was a defect of-parties, in that the individual members of the firm of Jay Cooke & Co. were not parties, it was waived.

      Held, that such an allegation by the plaintiffs would have been of no avail, as the alleged counter-claim was properly set up as an offset. (Macomber, J., dissenting on the ground that the defect of parties should have been set up in. the reply.)
    Appeal from so much of a judgment, entered in the office of the clerk of the city and county of New York on May 16, lSST, as dismissed a counter-claim interposed by the defendants to the complaint.

      B. F Tracy and H. Brodhead, for the appellant.

      William Man, for the respondent.
   Van Brunt, P. J.:

This was an action brought by the firm of Jay Cooke, McCulloch & Co. against the defendants, as members of the firm of Vibbard, Foote & Co., to recover certain moneys alleged to he due from the defendants to them, and for certain other relief. The complaint alleged that the plaintiffs, Hugh McCulloch, John IT. Puleston and Francis H, Evans, together with the individual members of the firm of Jay Cooke & Co., were copartners carrying on business in London under the firm name of Jay Cooke, McCulloch & Co.; that the members of the firm of Jay Cooke & Co. doing business in ¡New York were adjudicated bankrupts under the provisions of the act of congress, and that the plaintiff Lewis was appointed trustee, under such act, of their property and assets,, and at the time of the commencement of this action was still such trustee. The plaintiffs were the said Hugh McCulloch, John H. Puleston, Francis H. Evans and Edwin M. Lewis. The individual members of the firm of Jay Cooke & Co. were not parties to the action, and no objection was taken by the pleadings to their absence, it being seemingly assumed that Lewis, as their assignee in bankruptcy, represented their interests in the firm of Jay Cooke, McCulloch & Go.

The defendants Vibbard and Fiske answered, setting up a counterclaim against Jay Cooke, McCulloch & Co., and asking an affirmative judgment by way of counter-claim for the value of certain securities alleged to have been hypothecated and disposed of by said Jay Cooke, McCulloch & Co. It is not apparent, from the answer, against whom this judgment is demanded, but it is presumably against Jay Cooke, McCulloch & Co. The plaintiffs put in a reply denying the allegations setting up a counter-claim. The case, by consent, was referred, and coming on to be heard before the referee the plaintiffs submitted to a nonsuit; and the defendants offered certain proofs to establish their counter-claim, such proof being objected to upon the ground that the proper parties were not before the court, and that no counter-claim could be established in this action as against any of the plaintiffs. At the end of the defendants’ case, the referee sustained the objection and dismissed the counterclaim for want of necessary parties to determine the merits, to wit, by reason of the absence of the members of Jay Cooke & Go. From the judgment thereupon entered this appeal is taken. Although, at first, the question to be determined upon this appeal seems to be involved in considerable difficulty and obscurity, yet when we consider the difference between offsets, as they were .formerly called, and counter-claims, and when we consider the nature of the cause of action set up by the defendants by way of counter-claim, a satisfactory solution of the questions involved seems to be easily reached.

In order to sustain a counter-claim it must be a cause of action which the defendants have a right to enforce against the plaintiff or plaintiffs. In an action brought by several plaintiffs the defendants cannot set up as a counter-claim a cause of action which they have against one or two of such plaintiffs, but can only set up by way of counter-claim a cause of action which they have against all the plaintiffs. FTeither, in case there is an individual plaintiff, can the defendant set up as a counter-claim against this individual plaintiff a cause of action which he has against this plaintiff together with some other person who is not a party to the action. Applying these principles to the case at bar, Yibbard, Foote & Co., the defendants, claim to have had a cause of action" against Jay Cooke, McCulloch & Co. Only three members of the many of the firm of Jay Cooke, McCulloch & Co. were plaintiffs in this action; and, therefore, it was an attempt upon the part of Yibbard, Foote & Co. to enforce a counter-claim against these three plaintiffs, when there were various other persons who are not parties to the action who were jointly liable with them. This, it is clear, under the rule which has been' suggested, and which has been supported by the Court of Appeals in the cases of Cummings v. Morris (25 N. Y., 625) and Waddell v. Darling (51 id., 331), cannot be done. It may be urged that the representative of the other members of the firm of Jay Cooke, McCulloch & Co., namely, the assignee in bankruptcy of Jay Cooke & Co., is a party plaintiff and represents the absent parties, and, therefore, there is no defect of parties. But as the assignee in bankruptcy cannot be sued, and as, if this was an action brought by the defendants against Jay Cooke, McCulloch & Co., the assignee in bankruptcy would not be a proper party, his presence in no way removes or remedies the difficulty. The assignee in bankruptcy is the assignee of these individual parties and represents their interests which have been assigned to him. He, therefore, is a proper party to an action to enforce rights which those individual members have in the cause of action which it is sought to maintain; and as far as the cause of action set up in the answer may be treated as an offset, the defendants have the right to maintain it against the assignee, and to use the same for the purpose of an answer to the claim made by him against them. But it can have no further effect. There cannot be any affirmative judgment against the assignee. All that the claim in question set up by defendants in their answer can be used for, is to offset the claim made by the assignee and by the other members of the firm of Jay Cooke, McCulloch & Co. Here we see the distinction between the offset and the counterclaim. The offset may be used for the purpose of extinguishing the claim of the plaintiff; but it can afford no basis for an affirmative judgment. The counter-claim, upon the other hand, is a cause of action existing in favor of the defendants against the plaintiffs, and upon which an affirmative judgment can be rendered.

It has been suggested that because the plaintiffs in their reply did not raise the objection that there was a defect of parties in that the individual members of the firm of Jay Cooke & Co. were not parties, that, therefore, it is waived. Such an allegation by the plaintiffs in their reply would have been of entirely no avail. The alleged counter-claim was properly set up as an offset. The fact that the individual members of the firm of Jay Cooke & Co. were not parties to the action did not affect its validity as an offset. It is only when it is urged as a counter-claim that the necessity for their presence appears. And, therefore, it having been alleged in a manner in which it might be considered as an offset, there was not apparent upon the face of the answer any' defect of parties which made the pleading defective.

It would appear, therefore, that the ruling of the referee which was finally made, although at a pretty late date considering the promptitude with which the objection was taken, was correct.

The judgment should be affirmed, with costs.

Van Brunt, P. J., and Brady, J., concurred.

Macomber, J.

(dissenting) :

I find myself unable to concur in the opinion of the presiding justice in this case. The answer set up, distinctly and unequivocally, a large counter-claim against the old firm of Jay Cooke, McCulloch & Co., composed of ten or a dozen persons, three of whom only are among the plaintiffs. It was incumbent upon the plaintiffs to reply to this counter-claim, which they accordingly did, but they did not in such reply allege that there was a defect of parties, in that all of the persons against whom the counter-claim was made were not before the court nor any other reply in the nature of a plea in abatement. Notwithstanding this, however, the referee has overruled or dismissed the counter-claim upon the ground that all of the old firm of Jay Cooke, McCulloch & Co. were not among the plaintiffs.

In my judgment this conclusion is clearly erroneous. The particular purpose of the Code of Civil Procedure in respect to counterclaims and the issues to be framed thereon, is adjusted as nearly as possible to the rights and duties of a defendant in pleading any defense to the plaintiff’s original cause of action. If the defendant set up a cause of action against the plaintiff by way of counterclaim, and the plaintiff does not reply thereto by interposing a plea in abatement, that is to say, that the defendant ought not to have or .maintain his counter-claim because the proper parties are not before the court, the plaintiff must be governed by the same rules precisely as govern the defendant who, under like circumstances, fails to interpose this objection to a right of recovery. As the objection that the defendants have copartners who ought to be called upon to respond jointly with them, is a defense which must be specially alleged, so the corresponding objection as a defense to a counter-claim must likewise be alleged, which was not done in this case.

The judgment should be reversed and a new trial granted, costs to abide the event.

Judgment affirmed, with costs.


author: Brady, J.:

text:
    CHARLES A. CLEGG, Appellant, v. THE NEW YORK NEWSPAPER UNION and Others, Respondents.

      The rules governing motions for a new trial, on the ground of newly-discovered evidence, stated, and held to require that a new trial he granted in this case.

    Upon an appeal denying a motion for a new trial on the ground of newly-discovered evidence, in an action brought to recover damages sustained by the plaintiff by reasonof thebreach of the contract, by which the defendants, the publishers of a number of newspapers, agreed to advertise for the plaintiff, a publishing agent, it appeared that the complaint was dismissed for the reason that the plaintiff had failed to perform his part of the contract, among other things in that while by it the advertising was to be subject to the usual rules and regulations, one of which was that the plaintiff should collect from his patrons the price or rate from time to time fixed by the defendants and published by them, in fact he had not done so. The referee, before whom a motion was made to reopen the case so that additional evidence might be given as to the effect of the words “usual rules and regulations,” in deciding the question against the plaintiff, held that the testimony tended to corroborate the plaintiff’s evidence, and that he was satisfied that even with the additional evidence his decision would be precisely the same.

      Jit Id, that, while the referee might have arrived at the same conclusion had he opened the case, yet the rights of the plaintiff were not entirely dependent upon the judgment of the referee, inasmuch as his findings were the subject of ' review by this court, which might differ from him in its conclusions.
    Upon the hearing of the motion it was stated in the affidavits presented by the plaintiff that the trial was conducted with some haste, and that the plaintiff, during its progress, was ill and was prevented by that and other circumstances from giving as much attention to the case as might have been expected in the prosecution of so large a claim; that the defense, based upon the phrase in the contract referred to, was not set up in the answer; that up to the time of the trial no such claim was ever mentioned; and that in a suit which he had brought against the defendants and another, arising out of advertising contracts, which had been thoroughly tried, and in which judgment was recovered in his favor, no such defense was made or claimed to exist.
    Evidence of upwards of fifty persons engaged in the advertising business, was presented, all of whom stated that the phrases “usual rules and regulations, ” only related to the character'of the advertisements, type and mode of insertion and the like; the agent having the right to dispose of the space secured under his contract at whatever price he could get, and being under no restriction in that regard.

      Held, that the circumstances under which the trial was conducted, the condition of the health of the plaintiff and the probable results from such testimony, and the further consideration that the affirmance by this court, of a judgment before rendered in this action,was based upon that issue, called upon the court for the favorable exercise of its discretion in regard to the granting of a new trial, and that the order denying the plaintiff’s motion should bo reversed.

      Wilcox Silver-Plate Company v. Barclay (48 Hun, 54) followed.
    Appeal from an order denying a motion for a new trial, made on the ground of newly-discovered evidence and perjury, entered in the office of the clerk of the city and county of New York on February 8, lSSL

      John E. Parsons, for the appellant.

      Philip Carpenter, for the respondents.
   Brady, J.:

This action was brought to recover damages sustained by the plaintiff for the breach of a contract by the defendants, by which the latter were to advertise for him, they being publishers of a. number of newspapers and the plaintiff being an advertising agent. The issues were tried by a referee and the complaint dismissed, for the reason that the plaintiff had in two particulars failed to perform his contract. One of them was that by it the advertising was to be subject to the usual rules and regulations, one of which was that the plaintiff should collect from his patrons the price or rate, from time to time, fixed by the defendants and published by them. The judgment entered upon the report of the referee was the subject of an appeal to this court where the judgment was affirmed, upon the ground that the plaintiff had, by charging advertisers less than the-rates from time to time established by the. defendants, failed to-perform his contract.

Upon the trial the issue as to what was meant by the words “ subject to the usual rules and regulations ” contained in the contract, was the subject of investigation and witnesses were examined by the respective parties. It was claimed that the agent of the defendant, lcnew of the plaintiff’s rates, and neither took exception to their-adoption nor expressed dissatisfaction.

There is no doubt that this was an important factor in the controversy, and that it was made the subject of argument, perhaps elaborately, before the referee by counsel for the plaintiff, and was presented in points made and submitted for his consideration.

It may be said, from the affidavits submitted, that the trial was conducted with some haste, and that the plaintiff during its progress-was ill and was prevented by that and other -circumstances from giving to the case as much 'devotion as might be expected in the prosecution of so large a claim. The defendant met the application by showing some of the facts already stated, and that the testimony which the plaintiff sought to use was cumulative, and thus arrayed against the procedure perhaps the most important element that could be invoked to defeat it.

The rules governing motions of this character are well stated, and the authorities collated and applied in Bailey on New-Trials and Appeals; and one of them is that the newly-discovered evidence must not be merely cumulative, and should be so decisive in its-character that there is no reasonable certainty that on another trial it would change the result. It must also appear that the evidence could not have been obtained on the former trial by the exercise of reasonable diligence, and that it was discovered since the trial. It is further said that where all these facts' appear and the court is satisfied that the ends of justice will be promoted by allowing the moving party an opportunity- to present the newly-discovered evidence, the motion will be granted. (See pp. 524, 525, 526.) But it is also said that in the cases falling within the principle laid down by the authorities, although the courts will follow established rules, they are not of such universal application as to be decisive of every case however much it may differ in circumstances from every other. No arbitrary rule can be laid down which will determine in every case whether a party exercised diligence in procuring evidence, nor whether the evidence which the party desires to offer would be likely to change the result, nor whether the defendant used due diligence in making the motion, but to a certain extent each case will depend upon its own peculiar circumstances. (P. 529.) And it seems that motions for new trials, based upon the weight of evidence, surprise or newly-discovered evidence, are addressed to the sound discretion of the court, not an arbitrary but a legal discretion; and this view is illustrated by a series of cases which, when examined with reference to the rules in regard to cumulative evidence, would seem to have been departed from.

The learned referee before whom a motion was made to reopen the case, to enable the plaintiff to give additional evidence as to the effect of the words “ usual rules and regulations,” in deciding the motion against the plaintiff touching the testimony proposed to be given, while some of it certainly tended to corroborate the plaintiff’s evidence, and, if the question turned upon the number and credibility of witnesses, might be very important, he thought some of it tended also to support the defendant’s contention. But the difficulty was, that he had decided the case, so far as this point was concerned, not upon the evidence of living witnesses alone, but upon the documentary evidence presented, and was satisfied that, even with the additional evidence in, he would still have resort to the same documentary proof, and his decision would be precisely the same. And the learned justice, in deciding the motion, applied the rigorous rules to which attention has been called, and said: “New trials on the ground of newly-discovered evidence are not granted, except where it appeared that, in the exercise of ordinary diligence on the part of the applicant, the evidence could not be secured; ” and he thought that the facts alleged were not such as would justify the court in granting the motion. Whether it was a case which presented peculiar and extraordinary circum stances for consideration, was not discussed by him, and was, apparently, not brought to his attention. Here it appears that the defense predicate of the phrase in the contract referred to is not set up in the answer, and the plaintiff asserts that, up to the time of the trial, no such claim was ever mentioned-; but, on the contrary, that a suit which he had brought against the defendants and another, arising out of advertising contracts, had been thoroughly and tediously tried, in the course of over five years; more than 1,600 pages of testimony having been taken without anything of the sort appearing, and in which judgment was given in his favor; and that it was only since the judgment in this suit was decided that the defendants had caused the other to be reopened, for the purpose of employing the same defense which was successful in this, alleging that they had only just learned, from his testimony, what rates he actually charged to his customers.

The plaintiff presents the affidavits of upwards of fifty persons engaged in the advertising business, some of them proprietors similar to the defendants, all of whom stated that the phrase “ usual rules and regulations ” only related to the character of the advertisements, type and mode of insertion and the like, the agent having the right to dispose of the space secured under his contract at whatever prices he could get and was under no restrictions in that regard. Indeed, one of the affidavits is made by the president of a corporation called the Western Newspaper Union, and another by Mr. Norton, who, in 1812, became a stockholder and director of the defendant, and continued as such, having charge of its collections and correspondence for about two years. These affidavits include Mr. St. John, publisher of the Evening Post; Mr. Whitelaw Reid, of the Tribune; Mr. Laffan, of the Sun; Mr. Jones, of the Times; Mr. Bridgman, of Erank Leslie’s publications; Mr. Hibson, of the Commercial Advertiser, and Mr. Siegfried, of the Chicago Daily News. This extraordinary array of seemingly authoritative witnesses on the question of what obligations were imposed by the phrase in question ; the circumstances under which the trial was conducted; the condition of health of the plaintiff; the probable results from such testimony; and the further consideration that the affirmance of this court was predicate of the issue to wliich the new testimony relates, seem to eminently call upon the court for a favorable exercise of its discretion in regard to the new trial asked for. With due deference to the learned referee, it makes no difference that he would have arrived at the same conclusion had he opened the case for the receipt of the evidence. The rights of the plaintiff are not entirely dependent upon his judgment, inasmuch as his findings are the subject of review by this court, which might have differed from him in its conclusions. At all events, the plaintiff would have had all the benefit which might have been derived from the testimony of the numerous witnesses, upon a review of his finding, if an appeal had been taken. And the learned justice who heard the motion, impressed with the apparent violation of the rules governing these motions, if he had granted it, was not impressed with the consideration which should be paramount on applications of this kind, namely, the exercise of a discretion in granting them when there is reason to believe that justice would be promoted by such a result.

In Wilcox Silver-Plate Company v. Barclay (48 Hun, 54) Justice Dabtibls said: “The rule or principle requiring the denial of a motion for a new trial on the ground of the evidence, newly discovered, being cumulative, does not rest upon any just or solid foundation. It is simply the dictate of authority which has been followed without much consideration of its foundation. It is not one to be extended to cases not falling directly within its language. For there is the same propriety and necessity for giving a party a new trial who can vindicate himself, or sustain his cause of action by cumulative evidence, as there is for any other reason.”

A consideration of the whole case has led, therefore, to the conclusion that the arbitrary rules which are supposed to prevail and control this class of motions should not be applied here, and that a new trial should be granted, it appearing that substantial justice will be more thoroughly administered by sutfh a course.

The plaintiff must, however, pay the costs of the last trial as a condition and a reasonable sum as a counsel fee, to be determined upon the settlement of the order.

Van Brunt, P. J., and Daniels, J., concurred.

New trial granted on condition that plaintiff pay the costs of the last trial and a reasonable sum as a counsel fee, to be determined upon the settlement of the order.


author: Brady, J.: Daniels, J.:

text:
    WILLIAM J. INGRAM, Appellant, v. CHARLES T. ROOT and FRANKLIN H. TINKER, Respondents.

      Malicious prosecution — an action therefor, is pi'oper after/' an order of a/rrest has been ’vacated on the merits, if no appeal is taken —pleading.

    After an order of arrest has been vacated upon the merits, the party against whom the action is brought is not obliged to wait until such action has been decided in his favor, before instituting an action for malicious prosecution based upon such arrest.

      Searll v. McCracken (16 How., 262) followed; Nebenzahl v. Townsend (10 Daly, 232) distinguished.

      Semble, That the rule would be otherwise, where such order vacating the order of • arrest is appealed from, pending such appeal.
    That the burden of showing that no appeal was taken from the order rests upon the plaintiff, and his cause of action is not complete unless the complaint contains an averment thereof.
    Appeal from a judgment of the New York Special Term sustaining a demurrer interposed to the complaint entered March 9, 1888.

      L. L. Kellogg, for the appellant.

      Theron G. Strong, for the respondents.
   Brady, J.:

This action was one for malicious prosecution and based upon an arrest by virtue of an order authorizing it, obtained, as alleged, upon a false affidavit concealing designedly from the court a circumstance which, if it had been revealed, would have prevented the granting of the order.

The complaint alleges that the defendant, maliciously intending to injure the plaintiff without probable cause, and with full knowledge that the same was false and untrue, made an affidavit in which he falsely and maliciously alleged certain facts, which it is not necessary to spread out in detail, and which, if true, warranted the order of arrest; that he also, maliciously intending to injure the plaintiff, without probable cause and with full knowledge that the same was untrue, falsely and maliciously made and verified a complaint alleging, substantially, the same facts alleged in said affidavit; that all of said affidavits and complaint were made in an action then brought, to wit: July 29, 1885, against this plaintiff, by these defendants, in the Court of Common Pleas for the city and county of New York; that the statements made by these defendants, upon which said order of arrest was granted, were false and untrue, and were known to the said defendants to be false and untrue; and that thereafter, and on the 8th day of August, 1885, on motion of this plaintiff, the said order of arrest was vacated and set aside by said Court of Common Pleas, upon the ground, as appeared by the plaintiff’s affidavits and documentary evidence used and read upon the motion for that purpose, and which were not contradicted or explained, that the defendants had no cause of action against the plaintiff.

The defendants demurred upon the ground that it appeared upon the face of the complaint that it did not state facts sufficient to constitute a cause of action. The learned judge before whom the demurrer was argued rendered judgment in favor of the defendants upon the ground that there was no allegation in the complaint that the action in the Court of Common Pleas had been tried, or that final judgment had been entered therein ; his proposition being that, in order to sustain the action for malicious prosecution, the rule was imperative that the prosecution must be at an end or the action or special proceeding complained of finally determined in favor of the defendant.

The propriety of this view is now presented for our consideration, and the question is, whether, after an order of arrest has been dismissed upon the merits, the injured party is obliged to wait until the action in which the order is obtained has been decided in his favor. It will be observed here, in passing, that the order of arrest may depend upon extrinsic facts which it is not necessary to allege in the complaint, and vice versa. There can be no doubt that when the order of arrest is dependent for its propriety upon facts de hors the complaint, an action for malicious prosecution may be maintained if the facts otherwise warrant it after the order of discharge, inasmuch as such discharge of the order is, unless appealed from, necessarily a final judgment thereon in favor of the arrested party. This was the view expressed in Searll v. McCracken (16 How., 262). The plaintiff there sought damages against the defendant on the ground that the latter had maliciously and falsely obtained an order of arrest against him in another action, and the complaint was demurred to. The learned justice who disposed of the demurrer expressed no doubt about the right of action, but said that the complaint was defective because it did not state that the order of arrest, which was alleged to have been falsely and maliciously obtained, had been vacated, or that judgment had been rendered for the defendant.

Upon demurrer, it must be borne in mind the plaintiff comes into court with a confession by the defendant of all the facts alleged in the complaint. The general doctrine, however, of the case is as stated by the learned justice in the court below, and as contended for by the counsel for the respondents. “ When a party,” as said by Earl, J., in Marks v. Townsend (97 N. Y., 590), has a final judgment in his favor upon a trial, the prosecution is so far terminated that he may sue for malicious prosecution. If an appeal be taken from the judgment, that may furnish a reason for staying the trial of the action for .malicious prosecution until the decision of the appeal.” The complaint in that case alleged two causes, one for malicious prosecution and another for false imprisonment; and the gist of the action was in procuring an order of arrest by the defendants under the Stillwell act, so-called, and the arrest of the plaintiff. The warrant was dismissed and the plaintiff discharged from arrest. There was an appeal to the General Term, where the order of discharge was affirmed, and then an appeal to the Court of Appeals, pending which an action was brought, and upon that ground the plaintiff was defeated. The court said: “ A party commencing such an action, while an appeal from the decision in his favor is pending, simply takes the risk of an adverse decision upon appeal, and thus suffering defeat in the action.” There is no suggestion that an action might not be maintained if there had been no appeal taken from the order by which the plaintiff secured his discharge.

In Dusenbury v. Keiley (85 N. Y., 383), the plaintiff was arrested, as in the previous case, under the Stillwell act. He was discharged and the proceedings were removed into the Supreme Court, where an order was made, after due hearing, directing a reversal, and that the proceedings under the Stillwell act be revived and restored. The plaintiff failed to succeed for the reason that his action was barred by the statute of limitations. The right to maintain an action on the discharge of the order was not disputed.

In Smith v. Smith (26 Hun, 516), a case upon which both parties to this action rely, was brought to recover damages for maliciously and without probable cause filing a notice of Us pendens, and a complaint affecting land belonging to the plaintiff. The demurrer was sustained upon the ground that it was not averred that the (action had been in any form terminated, or that it was maliciously and without probable cause prosecuted against the plaintiff. It will be perceived that this case, assuming it to have any application, is entirely different for the reason that it is here alleged that the affidavit upon which the order of arrest was obtained was falsely and mahciously made. It might well be that there was no such determination of the propriety of the Us pendens in that action as would justify the commencement of a suit, which was not the case with regard to the order herein, which was disposed of on its merits.

A class of cases has been referred to which would seem, at first, to sustain the proposition that there was no such determination of the process under which the arrest was made as would justify the commencement of the action. One of these cases is Nebenzahl v. Townsend (10 Daly, 232). In that case the warrant was granted by a justice of the Supreme Court for the arrest of the plaintiff and another under the provisions of the Stillwell act. They were discharged," and from the order declarative of that result an appeal was taken to the General Term, which affirmed the order, and a further appeal was then taken to the Court of Appeals, and while the latter appeal was pending an action was brought by the plaintiff. The action was held to be premature in consequence of that appeal. It is true that the learned justice said that no action for malicious prosecution was maintainable until the proceeding or suit in which the party had been prosecuted and imprisoned had been finally terminated by his acquittal and discharge, or a verdict in his favor; and he cited what was said in Parker v. Langley (10 Mod., 209), that it was a proper answer to show that the action was pending, which it certainly is when there has been an appeal from the judgment which has not yet been decided. So far, therefore, as this case has any application whatever to the controversy in hand it does not affect the right of action asserted.

In Swartwout v. Dickelman (12 Hun, 358), a case relied upon by the respondent, it appeared in the complaint that the plaintiff had been committed to jail by a.justice of the peace to await the action of the grand jury, before the meeting of which he was discharged on a writ of habeas corjgus, and then brought his action. It was held that the discharge was not a determination of the plaintiff’s innocence, and that the prosecution was not determined until the grand jury met and the case was presented and ignored, or there was a failure to prosecute. That is not a case bearing upon the question herein considered, and does not seem to have any application.

In Peak v. Hotchkiss (52 How., 226), also relied upon by the respondent, it was held that an action for seizing property under an attachment was prematurely brought if an appeal was pending-from the order dismissing the attachment, and this decision is in accord with those to which reference has been made, and which establish the proposition that if an appeal be taken from the order of arrest.,' and an action be brought- pending the appeal, it cannot be maintained, inasmuch as there is no final disposition of the process under which the arrest was made.

A consideration of all these authorities leads to the conclusion that, in a case like the present, and particularly where the averments of falsity and malice are so sweeping, and it appears that no appeal was taken from the order vacating the order of arrest, the action may be maintained. Assuming that the cause of action was one for which an order of arrest could be made, nevertheless, the Code (§§ 567, 568) provides that a motion may be made to vacate it. That section does not distinguish between such arrests and those dependent upon facts and -circumstances other than the cause of action, abstractly considered; and this court has decided that an order of arrest, even when made in cases where the cause of action from its nature authorizes it, may be assailed on motion and disposed of on the merits.

The plaintiff, however, in such a case, may, under the provisions of the Code, resort to the remedy of arrest, before or after judgment. When he anticipates the judgment and obtains the order, he subjects the right to that process, however, to examination and determination which was made and had in the action, and according to established rules. He was beaten upon the merits. He could have waited until judgment obtained by him, if he were successful, and have secured liis right to arrest the defendant from such success, and immunity, also, from the use of it. He cannot, however, have the privilege of issuing process for the arrest of the defendant before and after judgment, resorting to the latter after the use of the former, and the defendant’s discharge necessarily on the merits. He may make his election, but he takes the chances, and must sustain the right asserted, if employed before judgment, when it is questioned and on motion. If, then, it be decided against him, it must be on the merits, and his asserted right is overthrown. And this, unless an appeal be taken, is a final determination of the invalidity of the process without reference to the continuance of the action. This is all that it is deemed necessary to say on the subjects discussed, although the object in view herein is to show that an order of discharge, such as was made in the action against the plaintiff, is a final determination of the right of arrest, and authorizes an action like this, provided no appeal is pending from the order. The authorities considered seem to result in the necessity of averring the converse of the condition suggested, placing the burden on the plaintiff of showing that no appeal was taken from the order. His cause of action is not complete without it. And this springs from the rule requiring, at least, as already shown, a final determination of the right of arrest. The plaintiff has failed to make the averment suggested, and the' judgment pronounced must for that reason be sustained.

Ordered accordingly.

Wait Bbunt, P. J., concurred in result.

Daniels, J.:

The order discharging the order of arrest is not conclusive evidence of the termination of the right of arrest. The facts may yet be proven upon the trial subjecting the defendant to arrest; until that shall have taken place, and the suit determined in favor of the defendant, by a failure there, the action is premature. The case was rightly disposed of at the trial and an affirmance of the judgment must follow.

Judgment affirmed.


author: Brady, J. :

text:
    ARTHUR H. MASTEN, as Receiver, etc., of RICHARD AMERMAN, Respondent, v. RICHARD AMERMAN, ELEANOR AMERMAN, FRANCES H. WALKER, Appellants, Impleaded with the EQUITABLE LIFE INSURANCE COMPANY OF THE UNITED STATES.

      High t of a creditor to a lien on the excess of premiums, paid by a husband on a policy of insiurance on his life, talcen out by his wife under chapter 277 of 1870—a receiver of the husband appointed in supplementary proceeding cannot enforce it — it will not be enforced by the court when the husband’s interest is contingent and dependent upon the payment of premiums.

    Upon an appeal from a judgment overruling a demurrer to the complaint, it appeared that on March 21, 1871, the defendant Eleanor Amerman, by herself and in her name, caused to be insured by the defendant, the Equitable Life Insurance Company, for her sole use, the life of her husband, defendant Richard Amerman, in the sum of $20,000 for the term of his life. The policy issued by the insurance company stipulated to pay the amount of the insurance to the wife for her use if living, and if not living to the children of the said Bichard or their guardian for their use, or if there were no such children surviving then to the representatives of Richard. The defendant Frances H. Walker is the daughter of Richard Amerman. Premiums upon the policy have been paid out of the husband's property in excess of $500 per annum, the total of such excess amounting to $4,917.86.
    In an action brought by the plaintiff, who was in March, 1887, appointed a receiver of all the property and effects of the said Richard Amerman in proceedings supplementary to execution issued on a judgment recovered against him in November, 1886, to reach any interest the said Richard might have in said policy:

      Held, that, assuming that, under the act chapter 277 of 1870, where the amount of annual premiums paid out of the funds of the principal of the husband was over $500, the lien of the creditor might attach to the excess of premiums so paid, the plaintiff was not entitled to recover for the reason that he was not a creditor within, the meaning of the statute as interpreted by the decisions in this State.

      Dubois v. Cassidy (75 N. Y., 298); Browning v. Bettis (8 Paige, 568); Williams v. Thorn (70 N. Y., 270); Underwood v. Sutcliffe (77 id., 58) and Farnsworths. Wood (91 id., 808) followed.
    That as the plaintiff, by virtue of his appointment as receiver, could only become vested with such property as the judgment-creditor had at the time of the commencement of the supplementary proceedings, and as, at the time of the commencement of this action, there was no vested interest in the policy, or growing out of the policy, in Richard Amerman, he could not maintain an action for any purpose founded upon it.

      It seems that, at Amerman’s death, his estate would have no interest in the policy unless in the contingency of the death of his wife and child.
    That, as the interest secured by the policy at best was only a contingent interest, and the trust, regarding it as such, created by the policy, was one of which all parties might lose the benefit in case of a failure to pay the premiums necessary for its continuance, the court should refuse to interfere, as one of the parties might nullify its action through the exercise of a discretion which the contract vested him with.
    Appeal from an interlocutory judgment, entered in the office of the clerk of the city and county of New York on April 3, 1888, overruling a demurrer interposed to the complaint.

      D. Wilcox, for the appellant.

      J. M. Van Cott, for the respondent.
   Brady, J. :

It appears that on March 21,1871, the defendant Eleanor Amerman, by herself and in her name, caused to be insured by the defendant, the Equitable Life Insurance Company, for her sole use, the life of lier husband, the defendant Richard Amerman, in the sum of $20,000 for the term of his life. The policy stipulates to pay the amount of the assurance to the Avife for her use if living, and if not living to the children of said Richard Amerman or their guardian, for their use; or if there be no such children surviving, then to the representatives of Richard Amerman. The defendant Frances H. Walker, is a daughter of Richard Amerman. In November, 1886,-a judgment was recovered in this court against Richard Amerman, and in March 1887, in proceedings supplementary to execution, the plaintiff was appointed receiver of all his property and effects. Premiums upon the policy it appears have been paid out of the husband’s property in excess of $500, per annum and the total of such excess amounts to $4,917.36.

Assuming that the effect of the act of 1870 (chap. 277) was that the policy was to be exempt from creditors unless the amount of annual premium exceeded the sum of $500, and where the amount paid out of the funds or property of the husband was over $500 the lien of the creditor might attach to the excess of premiums so paid, as indicated by the adjudication in Baron v. Brummer (100 N. Y. 376, 377), nevertheless the plaintiff is not entitled to recover for the reason that he is not a creditor within the meaning of the statute as interpreted by the decisions in this State. The plaintiff, by virtue of his appointment as receiver, could only become vested with such property as the judgment-debtor had at the time of the commencement' of the supplementary proceedings. (Earl, J., in Dubois v. Cassidy, 75 N. Y., 298, 303.)

In Browning v. Bettis (8 Paige, 568) it was held that a receiver 'of a judgment-debtor’s property takes no right to coimpensation for the debtor’s uncompleted services where, by the terms of employment, they are not payable until the completion of the services, because the debtor himself would have no legal or equitable right to demand any compensation whatever for what he had already done, if he should neglect to go on and complete his services. And where moneys are held in trust for a judgment-debtor at the instance of another, a receiver in supplementary proceedings has no actionable or other interest in them, while the judgment-creditor may have. (Williams v. Thorn, 70 N. Y., 270; McEwen v. Brewster 17 Hun, 223.)

The question, therefore, in determining the status of the plaintiff who seeks, in this action, to secure a prior lien upon the excess to which reference has' been made is, whether Richard Amerman had any interest which could be reached through the receiver in an action of this kind. Whatever rights may accrue to the creditor under the statute of 1870 may be enforced by him and by him only. In Underwood v. Sutcliffe (77 N. Y., 58) it was held that a receiver, appointed in supplementary proceedings, could not maintain an action to enforce the trust created by 1 Revised Statutes (728; § 52) in favor of the creditors of one paying the consideration for lands which are conveyed to another.' And, in Farnsworth v. Wood (91 N. Y., 308), it was determined that the receiver of a corporation organized under the general manufacturing act of 1848 was not vested with a right of action given by that act (§ 10, chap. 40) to creditors of the corporation. against the stockholders thereof. Rapallo, J., said : “ The rights of certain creditors to prosecute their claims against certain of the stockholders never were the .property of the corporation nor rights of action vested in it, nor is there any provision of the statute which transfers these rights of action from the creditors to the receiver.” The same observation applies to the act of 1870, vdiich gives to the creditor a right of action for the excess over and above the annual payment of $500 upon the policy. At the time of the commencement of this action there was no vested interest in the policy, or growing out of the policy, in Richard Amerman. He could not maintain an action for any purpose predicate of it, and it seems to be settled by authority that, at his death, his estate would have no interest in the policy, unless in the contingency of the death of his wife and child.

The interest secured by the policy, at best, was only a contingent interest for the estate of the assured, dependent upon the death of the wife and children; and the trust, regarding it as such, created by the policy, is one of which all parties might lose the benefit in .case of a failure to pay the premiums necessary for its continuance. •It is said in Fry on Specific Performance (§ 72) that the court will not enforce a contract which is, in its nature, revocable by the defendant, for its interference in such a case would be idle, inasmuch as what it had done might be instantly undone by one of the parties. And in Rust v. Conrad (47 Mich., 449) the court, on reversing a decree for specific performance, said it would refuse to interfere in any case where, if it were to do so, one of the parties might nullify its action through the exercise of-a discretion which the contract or the law invested them with. The principle of this case seems to be eminently applicable here in regard to the contingent interest of the ‘estate of tlie assured in' the proceeds of the policy, if paid. The interest sought, it the trust were not continued by the proper payments, would be lost, so far as anything to the contrary appears on the record.

The judgment appealed from should be reversed, and the demurrer sustained, with costs.

Van Brunt, P. J., and Daniels, J., concurred.

Judgment reversed and demurrer sustained,- with costs.