Case ID: nys_12/html/0494-01.html
Source: Caselaw Access Project
Author: {"author": "Daniels, J. Brady, J.,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Metropolitan Concert Co., Limited, v. Sperry et al.
    
    
      (Supreme Court, General Term, First Department.
    
    December 29,1890.)
    Costs—Bond to Secure—Proceedings against Sureties.
    Sureties on an undertaking to obtain an order of arrest, by which they bound themselves, if defendant should recover judgment, that plaintiff would pay all costs awarded to defendant, obtained leave, after default by plaintiff, to prosecute the action, and they proceeded therewith; but defendant recovered judgment for costs. Held, that the sureties were not transferees of the cause of action, or beneficially interested therein, within Code Civil Proe. N. Y. § 3247, making such transferee or other person so interested liable for costs; and defendant’s remedy for the costs against the sureties was not by order directing their payment, under that provision, but by action on the undertaking. Bradt, J., dissenting.
    Appeal from special term, New York county.
    Action by the Metropolitan Concert Company, Limited, against Howard A. Sperry and Bobert W. Beid. Defendants appeal from an order denying a motion to require Theodore Heilman and Emil Carlbach, sureties on an undertaking given to obtain an order of arrest in the action, to pay the costs recovered by defendants on the judgment in the action. Code Civil Proc. N. Y. § 3247, provides: “Where an action is brought, in the name of another, by a transferee of the cause of action, on by any other person, who is beneficially interested therein; or where, after the commencement of an action, the cause of action becomes, by transfer or otherwise, the property of a person, not a party to the action,—the transferee or other person so interested is liable for costs, in the like cases, and to the.same extent, as if he was the plaintiff; and, where costs are awarded against the plaintiff, the court may, by order, direct the person so liable to pay them.”
    Argued before Van Brunt, P. J., and Brady and Daniels, JJ.
    
      Howard A. Sperry, for appellant. Eugene Seligman, for respondents.
   Daniels, J.

The action was commenced by the plaintiff to recover the value of certain property, and an order of .arrest was made under which the defendants, or one of them, certainly, was held to bail. This order was afterwards vacated, and the complaint in the action was finally dismissed for the want óf prosecution. ' These two sureties after that applied to the court to set aside the default, and to permit them to prosecute the action. That order was made, and they proceeded from that time with the prosecution of the suit. It finally reached the court of appeals, where it was held that the plaintiff was not entitled to recover, and a judgment for the costs was recovered in the action. 23 N. E. Rep. 1152, mem. The plaintiff was then insolvent, and this motion was made to require these two sureties to pay the costs which had been recoverd, under the authority of section 3247 of the Code of Civil Procedure. But the motion was denied, for the reason that the cause of action had not been transferred to them, and they did not become beneficially interested therein. And that appears by what had taken place to have been their situation. No transfer of the cause of action, or any interest in it, was made to them. They did not become beneficially interested in it in any form; nor did it, by transfer or otherwise, become their property. And it is only when the action may be carried on by a party sustaining one of these relations to it that this section of the Code has subjected him or them to liability for the costs. By no fair construction of the language of any part of the section can it be held to include the case of these sureties. What they did in the w'ay of prosecuting the action was to protect themselves against liability on their undertaking, and not to secure any advantage or interest whatever in the recovery. The remedy of the defendants, if they are entitled to recover these costs from the sureties in the undertaking, must, therefore, be by an action upon that instrument. It was given in compliance with section 559 of the Code of Civil Procedure, and it bound these sureties, if the defendants should recover judgment, to the effect that the plaintiff would pay all costs which might be awarded to the defendants. And if the plaintiff shall fail to pay, as it is probable it may, because of its insolvency, then, according to this section, the defendants may have an ample remedy against the sureties upon the undertaking. That is the provision that has been made in their favor, and it is under that, if they can secure indemnity at all, that they must proceed for the recovery of these costs. The order, therefore, was right and it should be affirmed, with $10 costs, and the disbursements.

Van Brunt, P. J., concurs.

Brady, J.,

(dissenting.) An order of arrest appears to have been granted in this case, and Theodore Heilman and Emil Carlbach were the sureties on the undertaking given on obtaining the order. On March 24, 1885, the complaint was dismissed on the default of the plaintiff to appear, and judgment was taken against him in April following. In November, 1885, proceedings were commenced by the sureties to set aside the default; the attorney representing them, and who made the application, affirming that he was acquainted with the facts in the case, and verily believed it could be successfully prosecuted. The result was an order that the motion be so far granted as to permit the sureties to try the issue raised by the pleadings, upon certain conditions. Messrs. Seligman were by the order substituted for the plaintiff’s attorney, and they noticed the cause for trial as attorneys for the plaintiffs and sureties. The trial resulted in a judgment for the plaintiff, which on appeal was reversed by the general term, and a new trial ordered, (44 Hun, 630, mem.;) and, the respondents having appealed to the court of appeals by their attorneys, judgment absolute was directed in favor of the defendants, which was duly made the judgment of this court, and the costs taxed at $354.59, being those which accrued from the time of the order granting the sureties leave to try the issue. Upon these facts the defendants made an application for an order directing the sureties to pay the costs of this action, and that an execution should issue against them on the judgment for costs just mentioned.

The learned justice before whom the motion was argued thought that under section 3247 of the Code the motion could not be granted. His view was that the sureties were neither plaintiffs nor transferees, and that the action-was not brought or continued by any other person beneficially interested therein. It is true that the sureties were not original parties. It is also true-that the cause of action, if any existed, was not transferred to them; but it seems to be an erroneous view that they were not beneficially interested im the cause of action. The learned justice said in the course of his opinion that, the plaintiff commenced the action for its own benefit, and that the sureties would receive no advantage if the plaintiff had succeeded. This is an error. If the plaintiff had succeeded, (the plaintiff being insolvent,) they would have-been protected by the judgment in its favor; and it was with that design the application was made when they applied for leave to prosecute it. As before-suggested, it was stated by one of the attorneys for the sureties that he was-acquainted with the facts of the case, and verily believed it could be legally prosecuted. There is little room for doubt that, if the action had been successful, the sureties, on a proper application, would have been protected in. reference to any responsibility assumed by them by an appropriation of so-much of the judgment as was necessary for that purpose. They were beneficially interested, therefore, in the prosecution of the action, and, being beneficially interested, were clearly liable for the costs which accrued from the-time they took charge of and continued the controversy. In Ward v. Roy, 69 N. Y. 96, it was decided that in an action brought in the name of another by an assignee of any right of action, or by any person beneficially interested in the recovery in such action, such assignee or person would be liable for the costs. And it was then said, resting upon authority, that when an action has been virtually carried on by a creditor in the name of the receiver, he has-been held liable, and j’ustly so. In this case the plaintiff appears to have suffered a default, and the sureties, apparently in hostility to its act, and alleging that it was insolvent, made application for leave to prosecute, and on an, assertion that success could be attained.. Section 3247 of the Code expressly provides that when the action is brought in the name of another by a transferee of the cause of action, or by any other person who is beneficially interested, he should be liable for costs that may be awarded against the plaintiff in name; and this was clearly intended to include the person who, after the cause of action was commenced and was substantially abandoned by the plaintiff, interposes as a substitute, insisting upon the validity of the cause of action set forth in the complaint. And it is equally clear that in any action marked by such circumstances as have been disclosed affecting this case the sureties are, for the purposes of the action or its continuance, to be justly and properly regarded as beneficially interested. If this be not so, then there is no person from whom the costs can be collected, because it is manifest that the plaintiff had nothing whatever to do with the proceedings which originated with and were conducted by the sureties. No such construction as. this should be put upon section 3247 of the Code unless it was absolutely compulsory, inasmuch as it would cause injustice by depriving the successful party of the costs awarded, and which were intended should be paid by the unsuccessful litigant. For these reasons the order appealed from should here versed, with $10 costs, and the motion granted.