Case ID: misc_24/html/0577-01.html
Source: Caselaw Access Project
Author: {"author": "Laughlin, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Arthur Starke, Plaintiff, v. Ellen Myers, Defendant.
    (Supreme Court, New York Special Term,
    September, 1898.)
    1. Set-off — His individual liabilities cannot be set off against an executor.
    Claims against an executor or administrator as an individual cannot be offset against claims which exist in his favor in his representative capacity.
    
      Z, Counterclaim — Conversion of pledged securities — Effect of tender — Party not in possession of securities.
    In an action brought by an assignee upon an- agreement compromising certain claims, the answer alleged as a counterclaim that when the agreement was made the defendant assigned to the plaintiff’s assignor and to certain trustees certain securities as collateral; that the plaintiff’s assignor agreed upon payment to return the securities ánd certain releases of the debt; that after the commencement of the action the defendant tendered to the plaintiff the amount of the debt and demanded the securities and releases; that this was refused and that the plaintiff had converted the securities. The answer did not allege that the securities ever came into the hands of the plaintiff.
    Held, that the counterclaim arose out of the transaction set forth in the complaint, and was connected with the subject of the action.
    That, had the tender been alleged to have been kept good,, the counterclaim would have constituted a defense.
    That the rule that a tender, although not kept good, would release collateral securities and make one who thereafter refused to surrender them liable for a conversion, did not apply where it was not alleged that the plaintiff had ever had the possession or control of the securities.
    Issues of law arising oh demurrers to two counterclaims.
    John A. Garver, for plaintiff.
    E. Luther Hamilton, for defendant.
   Laughlin, J.

This case presents issues of law arising on demurrers to two counterclaims. The complaint alleges that John Cameron, as executor of Michael Solomon, had certain claims against the defendant which they compromised, fixed and adjusted at £500 by a written agreement on September 30, 1894, and that the defendant paid £2,500 thereof and agreed to pay thé balance six months after the death of testator’s widow, Adelaide Solomon, and interest semi-annually on the first days of April and October, at the rate of 5 per cent.

It is further alleged' that Adelaide Solomon died August 20, 1896; that the interest which fell due since October, 1896, has not been paid, and that snch executor on September 20,-1896, assigned said contract and all his claims thereunder as executor to the plaintiff. The answer denies the malting of the agreement as alleged and avers that the agreement was made by John Cameron, as such executor of the first part, the defendant individually and as- executrix of her deceased husband, Elijah Myers, of the second part, and E. Luther Hamilton and Altamont de Cordova, as trustees of the third part. The answer also puts in issue the assignment, and the rate of exchange on interest and principa,!.

The third count of the answer alleges as a eóiinterclaim without a demand for affirmative relief that before the- assignment John Cameron, plaintiff’s assignor, received and collected for the use of the defendant upwards of $16,000, moneys belonging to- the defendant and which the defendant demanded before the commencement of this action, and which said Cameron still holds and refuses to pay over.

The plaintiff demurs to this counterclaim on the ground that it is insufficient in law on the face thereof.

The counterclaim is against Cameron individually while the claim which he held and assigned to the plaintiff was in - favor of the estate of the testator. He, as executor, merely took a new agreement for an old debt due to the testator.

It is well settled that claims against an executor or administrator individually cannot be offset against the claims in his favor in a representative capacity as trustee for the estate. Code of Civ. Pro., §. 502, subd. 3; Weeks v. O’Brien, 25 App. Div. 207, 208; Thompson v. Whitmarsh, 100 N. Y. 35; Sperb v. McCoun, 110 id. 605; Hood v. Hayward, 124 id. 24.

This demurrer is, therefore, well taken and it must be sustained.

' The fourth count of the answer alleges as a counterclaim that' at the time of making the agreement the defendant assigned and transferred to plaintiff’s assignor, and to said trustees securities of the value of $16,000 as collateral'security for the payment of said indebtedness, and that after the commencement of this action the defendant tendered to the plaintiff the whole amount claimed in the complaint, together with the accrued interest and costs, and demanded of him a return of such securities which was refused, and that the plaintiff converted the securities, to his own use to the defendant’s damage in the value thereof. It is alleged that two of the-securities, a bond and mortgage for $5,500, were so assigned to the trustees, and that the remaining securities, consisting of a claim in favor of the defendant as executrix of the will of Elijah Myers for a legacy under the will of said Michael Solomon, and of a claim in favor of defendant as such executrix, for commissions of said Elijah Myers, as executor of said last-named will, were assigned to the plaintiff’s assignor. It is not alleged that such securities ever came into the hands of the plaintiff, and it appears that the bond and mortgage were to remain in the hands of the trustees, but it is alleged that it was part of the agreement that the plaintiff’s assignor was to return the securities together with releases in forms agreed upon, of all claims with respect to the indebtedness, and that the plaintiff failed and refused so to do.

The plaintiff demurs to the counterclaim on three grounds, namely, (1) insufficiency in law; (2) facts’ stated not sufficient to constitute a cause of action; (3) not of the character allowed by law because not arising out of the transaction set forth in the complaint nor connected with the subject of the action, nor is it an action on contract existing at the commencement of the action.

I think this counterclaim if it were otherwise good arises out of the transaction set forth in the complaint, and connected with the subject of the action. It arises out of the very contract sued upon.

The defendant was entitled to have the securities returned to her and to receive the-releases provided for in the agreement on paying the indebtedness, interest and costs, and she was not obliged to make the payment until the plaintiff was prepared to return the securities and deliver the releases and had she kept her tender good and alleged that fact in her answer, that would have constituted a complete defense to the action. Halpin v. Phenix Ins. Co., 118 N. Y. 166-177; Becker v. Boon, 61 id. 317.

The defendant contends that this counterclaim can be sustained under the rule of law that a tender even though not kept good and made after suit brought on a contract of indebtedness will release securities pledged as collateral for the debt and that a failure thereafter to surrender up and return the securities will constitute a conversion which may he properly pleaded as a counterclaim in the action. Cass v. Higenbotam, 100 N. Y. 248; Exchange Fire Ins. Co. v. Norris, 74 Hun, 527; Norton v. Baxter, 4 L. R. Ann. 305.

There could, however, he no conversion of the pledged securities by the plaintiff unless he had possession or control thereof, and the defendant’s failure to. allege these essential facts render this rule of law inapplicable to the case at bar.

The plaintiff took the assignment of the contract subject to all the equities between the parties, and all their rights and liabilities arising out of the contract should be settled here. Of course, in this action brought by an assignee of a claim the defendant would only he ^entitled to the benefit of the counterclaim in case the ■ plaintiff establishes a cause of action against her, and only to that extent and as an offset thereto, and no affirmative judgment can he allowed, for it is^not alleged that the plaintiff assumed all the liabilities of his assignor under the contract. Code Civ. Pro., § 50-2, suhd. 1.

I am of the opinion that no proper counterclaim is sufficiently set forth in the answer, and the demurrer must he sustained. The defendant should, however, he permitted to amend her answer so as to present properly any defense or counterclaim she may have in the premises.

The issues of law arising on the demurrer in the action between the same parties designated number two and submitted on the arguments ■ and briefs in this action are, in all respects, similar to those here considered and are disposed of in like manner.

The' demurrers in this action are sustained with leave to the defendant to amend her answer within twenty days, on payment of one bill of costs of the demurrer and the demurrers in action number two are sustained, with costs to abide the event, and with leave . to the defendant to serve an amended answer within twenty days.

Ordered accordingly.