Case ID: ad_161/html/0712-01.html
Source: Caselaw Access Project
Author: {"author": "Scott, J. :", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Alfred J. Schwabe and William R. Chaine, Formerly Copartners Doing Business under the Firm Name and Style of Alfred J. Schwabe & Co., in the City of London, England, Appellants, v. Aladar Walter Herzog, Respondent.
    First Department,
    March 13, 1914.
    Judgment — action upon foreign judgment — answer — defenses — agreement not to enforce judgment — collateral attack upon judgment— champertous agreement between plaintiffs and their attorneys — allegations of conclusions of law — counterclaim.
    In an action upon a foreign judgment obtained against the defendant upon personal service of process, an answer, alleging as a first defense, that the defendant allowed the judgment to be entered against him under an agreement that it should not be enforced until he should be financially able to pay it, and that he is not now able; as a second defense, that the amount of the judgment is larger than it should have been; as a third defense, that the plaintiff and defendant had been mutually interested in certain transactions, and that upon a proper accounting a considerable sum would be found due to defendant; as a fourth defense, that the present action is prosecuted under a ehampertous agreement between plaintiffs and their attorneys, and realleging the third defense as a counterclaim, is insufficient.
    The first and second alleged defenses are insufficient because they constitute an attempt to impeach collaterally the judgment sued upon. The third defense, also realleged as a counterclaim, is insufficient because it alleges only conclusions of law. The fourth defense, alleging a ehampertous agreement between plaintiffs and their attorneys, is ■ not a defense. The second counterclaim is an attempt to impeach the judgment collaterally.
    Appeal by the plaintiffs, Alfred J. Schwabe and another, from an order of the Supreme Court, made at the Hew York Special Term and entered in the office of the clerk of the county of Hew York on the 7th day of January, 1914, permitting defendant to interpose an answer.
    
      Theodore K. McCarthy, for the appellants.
    
      Barnett L. Hollander, for the respondent.
   Scott, J. :

The action is upon a judgment obtained against defendant, upon personal service of process in the Court of Kings Bench Division of the Supreme Court of Judicature of England on Hay 6, 1907.

The defendant heretofore served an answer, which was-demurred to, and held to be insufficient in law, but leave was given to apply at Special Term to be allowed to serve an amended answer upon presenting to the court an answer which sets up some defense to the complaint. (See 159 App. Div. 899.) The defendant has presented an answer which the Special Term has given him leave to serve, and the question now is whether it does present any defense. The proposed answer consists of four separate defenses and two counterclaims.

The first defense alleges that he disputed the amount of his indebtedness to plaintiffs, but finally allowed judgment to go against him for the amount of the recovery under an agreement with plaintiffs that he should be under no obligation to pay the same, and that plaintiffs would not take any steps to enforce it until defendant should be financially able to pay it, and that he is not so able. It is clear that this attempted defense is insufficient in law. (Dunstan v. Higgins, 138 N. Y. 70; Greene v. Hallenbeck, 32 Hun, 469; McElroy v. Board of Education, 158 App. Div. 219.) The second defense repeats the first with the addition of allegations purporting to show that the amount for which judgment was recovered was larger than it should have been. This defense is also insufficient, not only under the authorities above cited, but also because it is an attempt to impeach collaterally the judgment sued upon. This cannot be done. (Dunstan v. Higgins, supra.) The third defense commences with the following allegation: “XXX. Upon information and belief that from the 19th day of July, 1905, and from the 6th day of May, 1907, to the day of the date hereof various and substantial transactions were had and carried on by plaintiffs consisting of the buying and selling of securities as brokers, lending money thereupon and the collection thereof and transactions in the buying and selling of securities generally in which defendant was mutually interested with plaintiffs some part of which was for the account of defendant and a portion of the proceeds of which should have been to his credit and in connection with which substantial sums of money became due to the defendant from the plaintiffs. ” Then follow allegations that the books and accounts are kept by plaintiffs and that defendant has no knowledge of" their con- ■ tents, and that upon a proper accounting a considerable sum will be found due to defendant.

Obviously this is not a defense. The same allegations are, however, repeated as a counterclaim, and it is necessary to examine them in that light. The difficulty with it is that it alleges only conclusions and not facts. It may be that plaintiffs have carried on certain transactions “in which defendant was mutually interested with plaintiffs some part of which was for the account of defendant and a portion of the proceeds of which should have been to his credit,” but there is no allegation of any contract between plaintiffs and defendant, nor any facts whatever from which the court can see that defendant was entitled to an interest in any of plaintiffs’ transactions or to any part of the proceeds thereof. As a counterclaim, therefore, the allegations state no cause of action. The second counterclaim seeks to re-examine the transactions between plaintiffs and defendant which were liquidated and finally settled by the judgment sued upon and is confined to transactions taking place prior to the recovery of the judgment. This, again, is an attempt to impeach the judgment collaterally.

The fourth defense alleges that the present action is prosecuted Under a champertous agreement between plaintiffs and their attorneys. This is not a defense. (Story v. Satterlee, 13 Daly, 169; Hall v. Gird, 7 Hill, 586.)

In my opinion, therefore, the proposed answer contains no sufficient defense or valid counterclaim. The order appealed from should, therefore, be reversed, with ten dollars costs and disbursements, and the motion denied, with ten dollars costs.

Ingraham, P. J., McLaughlin, Clarke and Hotchkiss, JJ., concurred.

Order reversed, with ten dollars costs and disbursements, and motion denied, with ten dollars costs.