Case ID: ny-st-rep_41/html/0581-02.html
Source: Caselaw Access Project
Author: {"author": "Daniels, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Humphrey H. Leavitt et al., Resp’ts, v. John L. Dodge, App’lt.
    
      (Supreme Court, General Term, First Department,
    
    
      Filed November 13, 1891.)
    
    1.- Trial—Direction of verdict—Exception.
    An exception to the direction of a verdict is not waived by a subsequent request to submit propositions to the jury to be. considered in reaching that verdict.
    2. Same.
    Where the right of a party depends upon the testimony of an interested witness, the court has no authority to direct a verdict in his favor.
    3. Pleading—Pasties.
    Where the complaint alleges that the plaintiffs have" succeeded to the rights of other persons originally interested in the claim, the defendant on taking issue upon such allegation may set up in the answer a defect of parties plaintiff by not joining such other persons, as the defect did not appear on the face of the complaint.
    4. Attorneys—Settlement oe disputed claim.
    On a claim being made by plaintiffs’ firm for services rendered to a receiver appointed in supplementary proceedings instituted on a judgment recovered by defendant, the latter claimed that they were rendered under an agreement that the fee was to be contingent and paid from the moneys received. A settlement was made by which the bill for services to the receiver was to stand to be paid out of moneys to be paid defendant out of the estate in the hands of the receiver. Reid, that the settlement of the disputed claim was a good consideration for the agreement to restrict the demand to the moneys in the receiver’s hands; that plaintiffs could only look to the receiver for their compensation, and could make no personal claim against the defendant so long as he did not obstruct or prevent resort to the receiver.
    5. Same.
    Defendant received a check from the receiver, but upon objection of plaintiffs returned it to the receiver. Reid, that this did not deprive plaintiffs of their remedy against the receiver and thus make defendant liable.
    Appeal from a judgment recovered on the verdict of a jury, and from an order denying a motion for a new trial.
    
      R. Burnham Moffat, for app’lt; Charles W. Brooke, for resp’ts.
   Daniels, J.

The action was brought by the plaintiffs to re- ' cover the sum of $448.56, and interest thereon, upon a settlement, or stated account, made on or about the 6th of January 1888. The plaintiffs, together with Harry M. Peters, James A. Turnbull and Henry S. Whitaker, were copartners in business at the time when this settlement took place. And it was alleged in the complaint to have been made between the defendant and this firm, and that the plaintiffs, upon a dissolution of the firm, which afterwards took place, had succeeded to all its rights, title and interest in this demand. A claim was also made for services afterwards performed for the defendant in the course of legal proceedings, but for which the court at the trial held the plaintiffs were not entitled to recover. But upon the close of the proof a verdict was directed in their favor for this balance, together with interest from the 6th of January, 1888. And the defendant excepted to this direction. And reliance is placed upon that exception to sustain the appeal taken from the judgment and order. It has, however, been insisted on behalf of the plaintiffs that the defendant is not in a position to maintain this exception even though the case was one which should have been submitted to the jury. For after the court had decided to direct a verdict in favor of the plaintiffs, the counsel for the defendant requested the court to charge certain propositions to the jury to be observed by them in the consideration of their verdict. But there was no request made on behalf of the defendant to direct a verdict in his favor, and consequently no waiver of the exception taken to the decision of the court to direct a verdict against him. The case is not one where each party requested the court to direct • a verdict, and thereby presented it as involving only legal prepositions, but it is a case in which the court decided in substance that there was no question of fact to be submitted to the jury, and that a verdict should be directed in favor of the plaintiffs. And the exception taken to the decision presents the-question whether the case was or was not one upon which a verdict could in this manner be directed by the court. Sheffer v. Harmon, 20 St. Rep., 792; Citroen v. Adam, 24 id.. 263.

By the answer of the defendant, the allegation that the plaintiffs had succeeded to the right, title and interest of the firm to this balance was put in issue by a denial. And it was further averred that Harry M. Peters, Henry S. Whitaker and James W, Turnbull should have been joined as plaintiffs in the action. And this was a matter of fact which could be set up as a defense-by the answer, for the reason that it did not appear upon the face-of the complaint that there was any defect of parties plaintiff as the action had been' brought. It did appear that these persons-were members of the firm at the time when the settlement took place. But it was alleged that the plaintiffs had succeeded to-their interests in the demand, and for that reason the complaint showed no defect of parties within subd. 6, § 488 of the Code of Civil Procedure. And this objection was regularly taken by answer.

Whether the plaintiffs had succeeded to the interest of the firm' in this demand depended wholly upon the testimony of Edwin R.. Leavitt, one of the plaintiffs. But he did not testify that any agreement had been made between the plaintiffs and either of these other members of the firm by which they relinquished their interest in the demand to the plaintiffs. But the utmost that his evidence tended to establish was that they had gone out of the business and left it in the hands and under the control of the plaintiffs. The position was also taken that by art 9 of the partnership agreement the plaintiffs were entitled to maintain the action for the recovery of this balance, for the reason that it was for legal services which they had performed during the existence of the firm. But this article does not appear to be capable of so extended a construction as to include this balance. For the utmost which is done by it is to provide that each of the parties in the firm should retain for himself, or themselves exclusively, any and all business that he or they had, or might have, and that none of the other parties were to have or be entitled to any share whatever in the profits of such business, or to have anything to do-with the manage ment" thereof.

This demand was not within this section of the articles. For the business out of which the balance arose'was not the business which the plaintiffs had or afterwards acquired, but it was the business of the firm itself, secured through the action of Mr. Peters, one of its other members. Whether the plaintiffs were entitled to maintain the action therefore depended upon the acquisition of their right or interest as successors of the other members of the firm after its dissolution. And that, in the most favorable view for the plaintiffs, depended upon the inference to be drawn from and supported by the facts stated by this witness. It was accordingly a question for the jury to consider and decide, and not for the court. And it was error for the judge under this state of the evidence obtained from a party to direct a verdict in favor of the plaintiffs. Kavanagh v. Wilson, 70 N. Y., 177; Honegger v. Wettstein, 94 id., 252, 261; Cleveland v. New Jersey Steamboat Co., 25 St. Rep., 666.

These authorities abundantly sustain the proposition that where the right of the party depends upon the testimony of an inested witness, the court has no authority to direct a verdict in favor of that party.

It further appeared by the evidence of this witness .that the services for which this balance was claimed and the verdict was directed were rendered for a receiver in supplementary proceedings under a judgment recovered by the defendant. The amount of their services was not denied, but it was claimed by the defendant that they had been rendered under an arrangement with Mr. Peters, one of the members of the firm, upon a contingent fee to be satisfied out of the proceeds of the litigation. This was denied by the plaintiffs. And the settlement, which was made on the 6th of January, was for the adjustment of this controversy. That there, was a dispute appears from the testimony given by this witness. And its existence is also conceded in the letter written by Leavitt and Whitaker to the defendant on the 9th of January, 1889, in which it is stated that the defendant disputed the claim to the surprise of the plaintiffs, “ upon the ground that Mr. Peters, our then partner, had represented to you at the outset of the litigation that it would be taken upon a contingent fee basis. ” And it was one of the objects of the settlement which was made to adjust and determine this dispute. And it was adjusted between the firm and the defendant by the agreement that this claim of the plaintiffs was to be satisfied out of the proceeds obtained by the receiver in the course of his proceedings.

In the paper subscribed by the firm it was stated that the firm had, “Beceived this day from Mr. John L. Dodge, check for $245,38 as per settlement of bill this date. Bill against receiver to stand and be paid according to letter of December 30, 1887, to Mr. Dodge, and the. said check to be in full settlement of the rest of said bill.” And the letter in this manner referred to expresses with equal, if not greater, clearness that the plaintiffs’ demand for this balance was restricted to their ability to have it satisfied out of the moneys which should be obtained" by the receiver. On this subject it is stated in the letter that “We will allow the bill for services rendered the receiver to stand to be paid out of any moneys that may hereafter be paid you on your claims out of the estate in the hands of the present receiver, and upon that contingency, and we will accept the difference, $404.38. This, in fact, cuts down our bill total to nearly one-half, leaving the rest of our work to be paid for upon contingency of collection, which we certainly never anticipated.”

The settlement of the controverted question whether the defendant was personally liable to the firm, or its right to compensation for these services depended upon the contingency in this manner referred to, formed a good consideration in law for this restriction of the demand to the moneys which should pass into the hands of the receiver. For the settlement or compromise of a disputed claim is a good consideration for an agreement entered into upon the basis of its adjustment. Wehrum v. Kuhn, 61 N. Y., 623 ; Feeter v. Weber, 78 id., 334, 337.

And it was also so considered and held in Babcock v. Hawkins, 23 Vt., 561. And the agreement which in this manner was entered into between the firm and the defendant excluded the right to resort to him personally for the payment of this indebtedness. For the only inference which the receipt and the letter in their statements sustain is that the right of the firm to recover this balance was intended to be restricted to the moneys passing under the control of the receiver from which that payment could be made. And the remedy was thereby restricted to the receiver as long as the defendant aid not afterwards obstruct or prevent its enforcement. Morehouse v. Second Nat. Bk., 98 N. Y., 503.

It was the case of an agreement accepted by the firm in satisfaction and adjustment of the preceding controversy. And the remedy for its enforcement was that which was in this manner prescribed by its terms. Babcock v. Hawkins, supra.

It did appear by the evidence that the defendant had received a check from the receiver for the sum of $349, as a dividend declared by him. And it was proposed by the defendant to withhold this check from the plaintiffs and to make a different disposition of it. But upon the plaintiffs making a claim against the check to the receiver, the defendant returned it to him and thereby restored his control over the disposition of this fund.

The court, in its charge to the jury, considered this to be an unauthorized act of the defendant, rendering him liable for the balance declared by the settlement. But if the act had been unauthorized by which the check was returned to the receiver instead of being delivered to the plaintiffs, it did not justify the direction of a verdict in their favor for nearly one hundred dollars exceeding the amount mentioned in the check. But it appeared by the evidence of the defendant himself that the check was returned to enable the receiver to control the disposition of this dividend. Xo claim was made to it by the defendant, and he testified that he had no interest in it beyond seeing that it was paid to the right party. And if that was the motive by which he was actuated, he interposed no obstacle or resistance in the way of the plaintiffs’ right to this dividend, and did not prevent them from receiving the money for which the check had been drawn. By its restoration to the receiver they were placed at liberty to enforce their •claim, against him to this extent under the settlement which had been made. They lost nothing and were deprived of no right to .secure the payment of their demand in the manner in which that had been provided for by the settlement And the court could not certainly, on account of the action of the defendant relating to this check, direct a verdict against him for the balance which it was agreed should be satisfied out of the moneys obtained by the receiver. The case in all its points as they were presented by the evidence was one for the jury, and not for a direction of a verdict by the court. The exception taken to that direction should, therefore, be sustained, and the judgment and order reversed and a new trial directed, with costs to the defendant to abide the event

Lambert, J., concurs.