Case ID: ad_15/html/0102-01.html
Source: Caselaw Access Project
Author: {"author": "\n      Bradley, J.:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Franklin Howell, Respondent, v. Anthony W. Dimock and Arthur V. Dimock, Appellants.
    
      Statute of Limitations—service upon one joint debtor defeats the statute as to both— a counterclaim must constitute a cause of action — sale of collateral, not obligatory — a delay gives no muse of action —proof of Wall street custom.
    
    Service upon one of two joint debtors or contractors within the time fixed by the Statute of Limitations is sufficient to defeat the statute as to both.
    The complaint in an action alleged the making by the defendants of a promissory note, which authorized the payee, upon default in payment, to sell certain collateral; that after default in payment the collateral was sold by the payee, realizing hut a small percentage of the face of the note.
    The answer of one of the defendants alleged that the payee was authorized to realize on the collateral in the event of its depreciation; that it negligently failed to do so until the collateral became nearly worthless, and that thereby “a loss of fifty thousand dollars was occasioned to the defendant,” which “he claims to be set-off and counterclaim against any recovery ” by the plaintiS.
    
      Held, that as it was not, charged that the payee undertook to sell the collateral or assumed any duty to that effect, and as the allegation that the payee in the note was authorized to sell the stock, did not necessarily require it to do so, nor charge it with any liability for failing to do so, the matter alleged in the answer did not constitute a counterclaim, in that the facts alleged did not constitute a cause of action against the payee;
    That in view of the fact that by the terms of the note the payee was only authorized to sell the collateral upon default in payment, evidence of a custom in Wall street with regard to the sale of pledged securities, for the purpose of realizing upon them, was properly'excluded;
    That for the same reason evidence tending to show that the payee was guilty of negligence in not selling the securities before default, was also properly excluded.
    Appeal by the defendants, Anthony W. Dimock and another, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of Hew York on the 12th day of June, 1896, upon the verdict of a jury rendered by direction of the court, and also from an order bearing date the 10th day of June, 1896, and entered in said clerk’s office, denying the defendants’ motion for a new trial made upon the minutes.
    This appeal was transferred from the first department to the second department.
    The action was brought against Anthony W. Dimock and Arthur Y. Dimock upon a promissory note made by them in their firm name of A. W. Dimock & Co., of which the following is a copy :
    “ §50,000. New York, Feb. 21, 1884.
    “ Eight months after date we promise to pay to Merchants’ and Mechanics’ Bank of Scranton, or order, fifty thousand dollars, for value received, with interest, at the rate of five per cent per annum, having deposited with them as collateral security, with authority to sell the same at the brokers’ board, or at public or private sale, or otherwise, at their option, on the non-performance of this promise and without notice, six hundred shares Bankers’ & Merchants’ Telegraph stock. A. W. DIMOCK & CO.”
    The plaintiff alleges default in payment; that thereafter the stock was sold by the bank and there was received as the net proceeds of the sale $1,777, and that thereafter the plaintiff became the lawful owner of the note. The defendant Anthony W. Dimock alone answered the complaint.
    
      B. C. Chetwood, for the appellants.
    
      Charles T. Haviland, for the respondent.
   Bradley, J.:

When the action came on to trial the defendant’s counsel moved for judgment, on what he termed a counterclaim, for want of a reply. The defendant did not allege in his answer any cause of action against the plaintiff, but did allege that the bank, the payee of the note, was authorized, in case of the depreciation of the stock, to realize on it; that the bank negligently failed to sell such stock until it had become nearly worthless, and that thereby a a loss of fifty thousand dollars was occasioned to the defendant,” which “ he claims to be set-off and counterclaim against any recovery ” by the plaintiff.

It is essential to a counterclaim that the facts alleged constitute a cause of action in behalf of the defendant, or in a proper case against the plaintiff, or in a proper case against the person whom he represents. (Code Civ. Proc. § 501.)

There is a failure to allege in the answer facts sufficient to constitute either. It is not charged that the bank undertook to sell the pledged securities, or assumed any duty to that effect. The allegation that the payee in the note was authorized to sell the stock did not necessarily require it to do so, nor charge the bank with liability for failing to exercise such authority.

It appeared that the summons and complaint were personally served on the defendant Arthur V. Dimock on August 11, 1890, and that the service on the other defendant was made January 16, 1894. The latter defendant having alleged the Statute of Limita, tions as a bar, moved for a dismissal of the complaint on that ground. The'exception to the denial of his motion was not well taken, as the defendants were joint debtors or contractors. The service upon one of them, within six years after the cause of action accrued, was effectual to defeat the Statute of Limitations as to both defendants. (Code Civ. Proc. § 398.)

The evidence offered by the defendant to prove the course of business in Wall street, or the custom there in regard to the sale and disposition of securities pledged for a loan, with a view to 3’ealizing from them, was properly excluded. The terms of the pledge, expressed in the note, were such as not to permit the bank to sell the stock before the default in payment; and, for the like reason, the exception was not well taken to the exclusion of evidence offered to charge the payee of the note with negligence for not selling the stock before the note became due. Until then the bank had, by the terms of the contract, no authority to sell it. The court expressly limited such ruling to evidence of that character to a date prior to the time before maturity of the note, and advised the counsel that he would be permitted to introduce evidence tending to prove such fact as of a time subsequent to the defendants’ default in payment of the note. This was as far as the court could legitimately be required to go.

There was no question for the jury. The verdict was properly directed for the plaintiff. Hone of the' exceptions were well taken.

As the defendant Arthur Y. Dimock was inadvertently joined in the notice as appellant, the appeal should be dismissed as to him, and as to the other defendant the judgment should be affirmed.

All concurred.

Judgment and order affirmed, with costs as to defendant Anthony W. Dimock; as to defendant Arthur Y. Dimock, appeal dismissed, without costs.