Case ID: ad_90/html/0477-01.html
Source: Caselaw Access Project
Author: {"author": "Stovek, J.: Spring, J. (dissenting):", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

John F. Clark, Respondent, v. Edward P. Smith and Others, Appellants, Impleaded with Others.
    
      Action on a promissory note—entry of judgment on the note after payment thereof — action by the defendant against the plaintiffs and. their attorney to vacate the judgment and for damages—damages as an incident to equitable relief.
    
    
      . A check for eighty-three dollars and forty-three cents given hy one Clark to the firm of Smith, Kinney & Co. not having been paid on presentation, the latter firm placed it in the hands of a collecting agency, which, in turn, delivered the check to an attorney for collection. The attorney brought an action upon the check on June twelfth, andion June fifteenth, on his own motion, wrote Clark that judgment would be entered in the action on July third, and that the costs would be nineteen dollars and sixty-two cents. Clark did not reply to the letter, but on June thirtieth sent the letters of the attorney and of the collecting agency together with one hundred and three dollars and five cents in currency to Smith, Kinney & Co. by registered letter.
    The money sent to Smith, Kinney & Co. was received by their bookkeeper on July first. The active partners of the firm were then away and had no actual knowledge of the sending or receipt, of the money until on or after July twelfth.
    The attorney, acting in good faith and without knowledge of the sending of the money to Smith, Kinney & Co., entered judgment for one hundred and five dollars and forty-three cents on July third. Shortly after the entry of the judgment, the attorney learned of the payment to Smith, Kinney & Co. and made no attempt to enforce the judgment.
    August sixth the attorney wrote Clark stating that on payment of two dollars and twenty cents the judgment would be satisfied. Clark made no demand for the satisfaction of the judgment, and on August twelfth brought an action against the attorney and the members of the firm of Smith, Kinney & Co. to vacate the judgment as a cloud upon the title to his real property and to recover the damages sustained by him.
    September eighteenth the attorney satisfied the judgment on his own motion. The action' resulted in a judgment against all of the defendants declaring that the plaintiff was entitled to nominal damages in the sum of twenty-one dollars and costs.
    
      Held, that the complaint should have been dismissed upon the merits as to all the defendants;
    Spring and Hiscock, JJ., dissented.
    That all of the defendants having acted in good faith under a mistake of fact induced by the action of the plaintiff, and the plaintiff having made no demand upon the defendants for the satisfaction of the judgment, he was not entitled to equitable relief (per McLennan, P. J., and Stover, J.;);
    That, not being entitled to equitable relief, the plaintiff could hot recover any damages sustained by him as the award of damages is an incident to the enforcement Of equitable rights, and cannot, of itself, sustain a judgment in an equitable action (per McLennan, P. J., and Stover, J.).
    Appeal by the defendants, Edward P. Smith and others, from a judgment of the Supreme Court in favor of the plaintiff entered in the office of the clerk of the county of Oneida On the 4th day of August, 1903, upon the report of a referee.
    The action was brought to vacate a judgment and to recover damages. It resulted in a judgment against all the defendants for twenty-one dollars damages and for costs.
    
      S. Mack Smith, for the appellants Edward P. Smith and others.
    
      Edward E. Clark, for the appellant S. Mack Smith.
    
      M. H. Powers, for the respondent.
   Stovek, J.:

Plaintiff made his check, dated May 15, 1902, for eighty-three dollars and forty-three cents to pay his indebtedness to defendants Smith, Kinney & po. The check was not paid on presentation, and on May twenty-fourth was placed with R. G. Dun & Co., at Binghamton, for collection. Plaintiff resides, in Florence, Oneida county, and defendants in Binghamton, Broome county. The agent of Dun & Go. (Parsons) wrote to plaintiff requesting payment of the check, and receiving no response, gave the check to defendant S. M. Smith, an attorney at Binghamton, for collection. An action was brought upon the check on June twelfth. On June fifteenth the attorney, of his own motion, wrote plaintiff that the time to enter judgment would be July third, and that the costs would be nineteen dollars and sixty-two cents. Plaintiff did not reply to this letter, but on June thirtieth sent the letters of the attorney and of Parsons and one hundred and three dollars and five cents in currency to the defendants Smith, Kinney & Co., at Binghamton, by registered letter. The attorney, having no knowledge of the sending of the money, entered judgment by default on July third. It is found that the attorney acted in good faith. He is in no way related to or connected with the other defendants. The money sent by registered letter was received by the bookkeeper of the defendants Smith, Kinney & Co. on July first. At that time Kinney had left the city and did not return until the twelfth. Defendant Smith, his partner, was absent in the Adirondacks during all of July, and the other defendant Smith, a woman, gave no personal attention to the business. None of the defendants’ firm had actual knowledge of the sending or receipt of the money until on or after July twelfth.

Judgment was entered in Broome county July third, and a transcript filed in Oneida county for $105.43 on July fifth, but the deputy sheriff, calling on plaintiff, being told that this claim had been paid, took no proceedings to enforce the judgment. On July tenth the attorney, then for the first time learning of the payment, withdrew the execution and wrote plaintiff that the money sent by plaintiff was received by the bookkeeper in the absence of the members of the firm, and that the judgment would not have been entered if it had been sent to the attorney.

On August fifth the sheriff requested his fees from- the attorney, and on the sixth the attorney wrote plaintiff stating the fact that on payment of the balance of two dollars and twenty cents the judgment would be satisfied.

On August twelfth this action was brought against the attorney , and the members of the firm, and on September eighteenth the judgment was satisfied by the attorney on his own motion. No demand for the satisfaction of the judgment was ever made. The referee found that plaintiff was entitled to nominal damages of twenty-one dollars and costs.

The plaintiff was not entitled to recover, either at law or in equity. No cause of action was proven against the attorney. He had no knowledge, of payment and was not chargeable with any knowledge of the defendants or their agent or servant. He was bound in the discharge of his duty and for his own protection to enter judgment upon the failure of the defendant (the plaintiff here) to appear in the action. No argument should be needed to establish the attorney’s freedom from liability. This action being in form one in equity to remove a cloud upon title, plaintiff was bound to do equity himself, and could not hold the defendants responsible for a mistake which occurred through his own careless-less or willful act. It is quite evident that the judgment was entered without knowledge on the part of the attorney or of the agent of R. G. Dun & Go. who had the direct management of the collection of the claim that any sum had been paid. If the plaintiff had followed ordinary and usual business methods he would have sent the money to the attorney, or at least notified him of having sent it to the defendants; this would undoubtedly have prevented the entry of judgment.

It is true, perhaps, that defendants’ firm were bound by the acts of their agent, but a tender of the amount to the. bookkeeper would not have been a good tender. The bookkeeper had no knowledge, of the suit, and in the absence of instructions awaited the return of his principal. Were this condition brought about by the negligent or willful act of the defendants, they might be said to be ‘acting in bad faith, but no such charge is made, and it must be conceded that all of the defendants acted in good faith, but under a mistake of facts. Plaintiff himself, having brought about the condition, cannot charge defendants with the result. He was bound to do all within his power to. rectify his mistake. He could not, until a demand had been made upon the defendants to satisfy the jjudgment, and a refusal on their part to do so, charge them with bad faith, or any inequitable invasion of his rights. Plaintiff, failing in his right to equitable relief, cannot recover the damages if any were sustained. The award of damages is an incident to the enforcement of -equitable rights, but cannot of itself sustain a judgment in an equitable action. The equities falling the action must fail.

There was no evidence upon which to base a finding of damage. The referee finds the damages nominal (twenty-one dollars). An examination of the evidence satisfies us that there was no competent evidence upon which this finding could be based. But the referee has found that damages were only nominal. Therefore, the equities being against the plaintiff, the judgment already having been satisfied and the cloud upon the title removed, there was nothing for the referee to pass upon, and the complaint should have been dismissed upon the merits.

McLennan, P. J., concurred; "Williams, J., concurred in result; Spuing, J., dissented from that part of the decision which reverses the judgment as to all the defendants, except S. Mack Smith, in an opinion, in which Hiscock, J., concurred.

Spring, J. (dissenting):

I concur in that part of the prevailing opinion which reverses the judgment as to S. Mack Smith, but dissent from the residue thereof.

The plaintiff in the present action, upon ascertaining the amount of the claim, with costs, sent a check for the same to the plaintiffs in the action against him. He accompanied it with his own letter explaining for what purpose the check was sent, and also inclosed a •letter from the plaintiff’s attorney in the action stating the amount of costs, and also one of Mr. Parsons, the agent of the collecting Agency, pertaining to the claim. While technically Mr. Clark should have sent the check to the attorney in the action, there is no indication that he was acting maliciously. The fact that he sent the correspondence and the full amount of the claim and costs shows that he was simply seeking to pay the obligation against him.

The bookkeeper of the plaintiffs in that action received the check, . but did not advise the attorney thereof, although he resided in the same city as the plaintiff. Later one- of the members of the firm," who was absent at the time, received the check, ratifying the trans.action. In.the meantime judgment was entered by the attorney, as we must assume, in good faith, and an execution issued against Mr. Clark. This judgment was, of course, a lien upon his land. He ■conceived that his credit had been impaired and that he had sustained other damages by the entry of this judgment and the issuanee-of the execution. He was a grocer, buying goods, with outstanding obligations against him, and..very naturally might, have suffered damage as he claims. ¡

I think two remedies were open to Mm : In the first place, he could make a znotion in that action to open the judgment which had been entered against him by default. That Would not have enabled hizn td recover the damages which he contended lie had sustained. The action against him was one at law and the daimages which he claims to have sustained arose subsequent to the cqmmenceznént of the action. He also had another remedy —- that was an equity action to set aside the judgment as a cloud or lien upoii liis real estate. (Barker v. Laney, 7 App. Div. 352; Van Etten v. Hasbrouck, 4 N. Y. St. Repr. 803; Buffum v. Forster, 77 Hun, 27; Clapp v. McCabe, 155 N. Y. 525, 533; Shaw v. Dwight, 16 Barb. 536; Pom. Eq. Juris. § 1362 et seq.)

This- remedy was especially available to him as he sought to recover damages by reason of the iznproper entz-y of this judgment and also., to'restrain .its enforcement. He might, therefore, in the one action obtain the setting aside of the judgment and incidentally thereto recover the daznages to which he was entitled.

The referee in his repoz-t designates the daznages which he awards to the plaintiff as a nominal sum.” It- is uniziiportant how he characterizes the amount, for he states the sum tjo be twenty-one dollars.

After the commencement of the action the judgment was satisfied Vohmtarily at the instance of the judgznent creditors. There was iio offer or suggestion upon their part that they’ were willing to pay any damages or to have the action diseonfcizzued, or' that the satisfaction should in any. way affect the pending action. There' was ho other course, therefore, open to the present plaintiff except to prosecute the action. This was the situation when it was presented to the refez’ee, and it being an equity actibn, although the damages awaz’ded were small, he allowed costs to the plaintiff, which he was. justified in doing. At the tizne of the cbznznencement of the action the judgznent was a lien, so that the action Was pznperly commenced',, and it was necessary for the present defendants to take, the initiative if they desired to be reliéved in any way by the satisfaction of the judgment.

The attorney for the judgment creditors was insisting upon the payment of a further sum before satisfying the judgment. It was, consequently, unnecessary to demand the satisfaction and the payment of the damages before commencing the action. In any event the only bearing of a demand was upon the question of costs, and that subject was within the discretion of the referee.

The judgment should be affirmed, with costs as to all the defendants except S. Mack Smith.

Hiscock, J., concurred.

Judgment reversed and new trial ordered, with costs to the appellants to abide event, upon questions of law only, the facts having been examined and no error found therein.

DETERMINED IN THE THIRD DEPARTMENT IN THE APPELLATE DIVISION, %umxm:Klf 1904.