Case ID: ad_149/html/0299-01.html
Source: Caselaw Access Project
Author: {"author": "Rich, J.:", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Matthew Coleman, Appellant, v. James McClenahan, Respondent.
    Second Department,
    February 2, 1912.
    Contract — agreement to furnish information on which recovery on a judgment may be secured.
    An estate of which the defendant was executor held a judgment against a certain company which became insolvent and was dissolved and its property sold by a receiver, including that upon which the judgment was a hen. Plaintiff's brother also held a judgment against the same company and after the receiver’s sale brought an action to test the lien of his judgment, and the Court of Appeals sustained his contention that the receiver’s sale was subject to the judgment liens.
    Immediately thereafter the plaintiff entered into a written contract by the terms of which the defendant agreed to pay the plaintiff one-half the amount recovered on the judgment held by the estate, providing such recovery was the result of facts and information furnished by the plaintiff to the attorney for said estate. The full amount of the judgment was thereafter recovered through the information imparted by the plaintiff and his attorneys, and the property was purchased by the defendant, but before the time to redeem expired a mortgage on the property, known to the defendant to be a prior lien, was foreclosed, thereby cutting off defendant’s rights under the execution sale. In an action upon the contract,
    
      Held, that the rights of the plaintiff thereunder were in no manner affected by the mortgage foreclosure or sale thereunder and that a dismissal of the complaint was error.
    Woodward, J., dissented, on opinion at Special Term.
    
      Appeal by the plaintiff, Matthew Coleman, from a judgment of the Supreme Court in favor of the defendant, entered in the office of the clerk of the county of Kings on the 30th day of April, 1910, upon the decision of the court, rendered after a trial at the Kings County Trial Term, both sides having moved for the direction of a verdict at the close of the case, dismissing the complaint upon the merits.
    
      John A. Dutton, for the appellant.
    
      Thomas J. Farrell, for the respondent.
   Rich, J.:

This appeal is from a judgment dismissing plaintiff’s complaint upon the merits at the close of the evidence, and upon the request of both parties for a direction of a verdict. The action is upon a written contract, by the terms of which the defendant undertook and agreed to pay to the plaintiff one-half of the amount recovered by the estate of David Stevenson, of which the defendant was an executor, upon a judgment owned by said estate against the Mutual Brewing Company, providing such recovery was the result of facts and information furnished by the plaintiff to the attorney for said estate. At the time this contract was made there were outstanding and unsatisfied judgments against the Mutual Brewing Company aggregating several thousand dollars, which were liens upon real property of the judgment debtor. ■ The first was owned by Denis Coleman, a brother of the plaintiff; the second judgment in priority was in favor of the defendant and his coexecutor for $2,744.07. The last judgment was recovered on or about July twenty-sixth following. Thereafter the brewing company became insolvent and was dissolved in an action brought by the Attorney-General for that purpose, and a receiver was appointed who sold all of its property, including that upon which the judgments were liens. It was assumed by the judgment creditors (except Coleman) that this sale cut off the judgment liens. Coleman, however, commenced a proceeding to test the lien of his judgment, and the Court of Appeals in April, 1903, sustained his contention that the receiver’s sale was subject to the judgment liens. (Matter of Coleman, 174 N. Y. 373.) Immediately thereafter the plaintiff entered into an agreement to furnish information on which a recovery of the money unpaid on said judgment might be made, as follows:

“Estate of David Stevenson,
“Office 521 10th Avenue,
“ Telephone No. 353-38. “New York, May 25, 1903.
“ Mr. Matthew Coleman,
“71 First .Place, Brooklyn, N. Y.:
“Dear Sir.—The Estate of David Stevenson having a judgment for $2,744.07 entered June 13th, 1893, against the Mutual Brewing Co., and you having stated to me that you thought you could recover some part or all of said judgment with interest, I hereby agree to give you fifty per cent of amount recovered, you to furnish the facts and such information to our counsel, Wm. Gr. McCrea, without cost to above estate.
“Yours Eespty
“JAMES McCLENAHAN, Ex”

The plaintiff thereupon informed the defendant and Mr. McCrea of the Court of Appeals decision, which, as he understood it, made the judgment good. McCrea thereupon proceeded to act upon the information; he procured a modification of the existing injunction restraining the creditors from proceeding against the brewing company, issued execution upon the judgment and placed it in the hands of the sheriff before the day upon which the sale of the realty under the Coleman judgment was advertised. Two sheriff’s sales were made, one under the execution issued on the Coleman judgment, at which the property was bid off by McCrea for $24,000, which was advanced by the defendant. The money was paid to the sheriff, who executed and delivered a certificate of such sale to McCrea, who immediately assigned the same to the defendant. This sale included the Stevenson judgment. At the other sale, made under executions issued on other judgments, the property was bid off by the defendant for $4,400 and the money paid by him to the sheriff, who executed and delivered a certificate of such sale to the defendant. Out of the money realized on the first sale the sheriff paid to McCrea as attorney for the Stevenson executors the full amount of the Stevenson judgment, and the attorney paid the same to the defendant, who received it as one of- the executors. The execution was thereupon returned fully satisfied and the judgment was satisfied of record. Before the time to redeem had expired a mortgage on the property, which was a prior lien to that of the judgments, was foreclosed, the property sold and the judgment liens, as well as the rights in the property of the defendant under his certificates, cut off and extinguished. Upon these facts the learned trial justice held that the Stevenson judgment was not recovered nor any part thereof collected hy or in behalf of said estate within the intent or meaning of the contract between the parties and upon that ground dismissed the complaint. In this conclusion I think the trial court erred. The test is whether there was a recovery within the meaning of that word in the contract by the Stevenson estate and not whether the defendant profited or lost through his advancement of the money and speculative purchase of the property. It is undisputed that the property upon which the judgment was a lien was sold to the defendant and paid for by him, and that out of the avails the Stevenson judgment was paid in full. The contract is plain and unequivocal; the full amount of the Stevenson judgment was actually received and retained by the executors of that estate and the judgment satisfied and extinguished; this was accomplished through the information imparted by plaintiff and his attorneys to the defendant and the attorney of the Stevenson executors in the performance of the contract. The defendant knew of the existence of the mortgage subsequently foreclosed when he purchased the property at the sheriff’s sales. The property sold was a brewing plant. The defendant was the president of a large plant of the same kind and character and was conversant with the value of that kind of property. He considered its value considerably greater than the mortgage debt, and testified that his object in purchasing was that Mr. Coleman and himself might make something out of the judgments. He might have protected himself at the foreclosure sale by bidding the property in. He did not see fit to do this, however, and the fault, if there was any, was his own. I am unable to see that the rights of the plaintiff under his contract were in any manner affected by the mortgage foreclosure or sale thereunder, and it follows that the judgment must be reversed and a new trial granted, costs to abide the event.

Jerks, P. J., Hirschberg and Thomas, JJ., concurred; Woodward, J., dissented on the opinion of Mr. Justice Scudder at Special Term.

Judgment reversed and new trial granted, costs to abide the event.