Case ID: ny-st-rep_53/html/0766-01.html
Source: Caselaw Access Project
Author: {"author": "Barrett, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Simon Klaber et al., Resp’ts, v. William Taylor et al., App’lts.
    
      (Supreme Court, General Term, First Department,
    
    
      Filed June 30, 1893.)
    
    1. Assignment—Monets held by defendants simply as security fob such
    CLAIMS AS SHOULD BE ESTABLISHED AGAINST THEM.
    Plaintiffs furnished certain material for a building upon which defend- • ants’ testator held a mortgage. By a subsequent agreement between defendants and the mortgagor and his wife, in relation to the mortgage, defendants agreed to pay to the wife, who claimed to have advanced moneys from her personal estate toward the erection of the building, a certain sum and hold the balance of the amount claimed by her as security against claims made in connection with said building which were to be defended, including plaintiffs’, to reimburse themselves in case of defeat, and in case of success to pay the proportionate part released to the mortgagor’s wife. Plaintiffs proceeded against the mortgagor, but subsequently his wife, without plaintiffs’ knowledge, sent a paper to defendants, authorizing and directing them to compromise, settle and pay to plaintiffs in full settlement not more than a certain sum. This paper was not acted on further than to draw a check, which was not used. Held, that this did not constitute an equitable assignment of part of the sum retained by defendants.
    2. Same—Estoppel.
    An inaccurate statement, made by oversight in an account made to a stranger to the action, and which was not known to the parties in interest, creates no estoppel.
    Appeal from a judgment in favor of the plaintiffs, rendered upon a verdict directed at circuit.
    
      Hamilton Odell, for app’lts; Morris S. Wise, for resp’ts.
   Barrett, J.

The defendants are the executors of John Taylor, deceased. Mr. Taylor, in his lifetime, held mortgages to a large amount upon an apartment house named “ The Osborne,” which was built by one Thomas Osborne. The plaintiffs furnished certain marble work to be used in this building, for which there is still due them $1,000. Upon Taylor’s death an agreement was entered into between his executors, these defendants, and Mr. and Mrs. Osborne for a settlement of all questions with regard to Taylor’s mortgages. The material part of this agreement, as bearing upon the present action, is that between the defendants and Mrs. Osborne. It recites that Mrs. Osborne claims to have advanced to her husband, out of her separate estate, the sum of $30,000 “toward the erection of said Osborne apartment house.”

For considerations not necessary to be detailed, the defendants agree to pay Mrs. Osborne $5,000 upon the signing of the agreement, and to hold $25,000 for her benefit, subject to certain terms and conditions. These terms and conditions are substantially as follows: Claims having been made against Taylor’s estate, growing out of the building in question, which were to be defended, the executors were to hold this $25,000 as their security against such claims. In case of defeat, the 'executors were to pay themselves out of the sum so withheld, but in case of success they were to pay Mrs. Osborne the proportionate part of the sum thus released. The agreement then provides as follows :

This mode of procedure is to be continued by the executors until the whole amount of such claims shall have been paid, or are finally disposed of, or until the whole of said balance shall have been exhausted, either by payment of claims or payment to said Susannah Osborne ; when exhausted in either way, the executors are to be and are hereby released from any further liability or payment on account hereof.”

It appears that the plaintiffs’ claim already referred to was included in, the list specified in the agreement, and was, consequently, one of those as security for which the defendants were to hold the $25,000.

The plaintiffs never proceeded against the defendants upon this claim. They charged the marble work to Mr. Osborne upon their books, and subsequently brought an action against him for the amount so due them, in which they recovered judgment on the 5th of March, 1890. Nor is the present action brought to recover upon the claim referred to in the agreement, but to recover a specific part of the $25,000 held by the defendants as security for that claim.- The facts upon which the latter contention is based are briefly these: A little over a year after the

agreement was made Mrs. Osborne signed a paper, in which she authorized and directed the defendants, out of the moneys remaining in their hands under the agreement, “ to compromise, settle with and pay to Klaber & Son, in full settlement of their claim, not to exceed the sum of $939."

This paper was received by the defendants and retained by them. But they never acted upon it further than that the defendant Gilson, as executor, drew a check for the amount payable to the order of the defendant Armstrong, and sent it to Armstrong, who never used it. The defendants, in fact, never tried to “ compromise or settle ” with Klaber & Son, and the latter knew nothing of what Mrs. Osborne had done, and never heard of the order, check or transaction until long afterwards.

We can scarcely treat as- serious the contention that, upon these facts, there was an equitable assignment of part of the sum reserved by the defendants. The moneys were not held by the defendants for the payment of the plaintiffs’ claim, or for the payment of any claim, but as security for the payment by them of such claims as should be established against them under the agreement. Mrs. Osborne had no more right to require the defendants to compromise and settle the plaintiffs’ claim than she had to compel the plaintiffs to accept less than their due. The plaintiffs .had no possible claim against her, and, consequently, there was no basis for an appropriation to pay a debt of hers. But, even if she chose to appropriate her own money to the payment of her husband’s debts, she could only do so when she became entitled to the fund by virtue of its release from the claims-against the defendants as - specified in the agreement She could not secure such release by forcing the defendants to pay $939 upon a claim which, as against them, they believed to be wholly unjust. Mrs. Osborne, therefore, had no fund in the defendants’ hands which she could presently appropriate, and, consequently, the order effected no such appropriation. It simply amounted to an expression of her wish that the defendants should concede their liability to the extent suggested, and induce the plaintiffs to look at it in the same way. And, further, there was no delivery of the instrument to the proposed assignee, no agreement or understanding on the subject, and no knowledge even on the part of such assignee that the instrument had been executed.

A suggestion is made that the defendants may be liable upon the doctrine enunciated in Lawrence v. Fox, 20 N. Y., 268. This celebrated case has been invoked in. support of many vagaries, but none quite so far-fetched as thia Mrs. Osborne assumes to direct the defendants to settle a claim against themselves made by a third person (which claim they dispute) for an amount which she arbitrarily fixes, and to pay the sum, in case the third person is willing to accept it, out of moneys which they hold for their own security.

There is surely no possible analogy between this and a promise made by the defendants to Mrs. Osborne upon a valuable consideration for the benefit of the plaintiffs

There is one other fact which should be mentioned. It appears that, on an examination in supplementary proceedings, in another case, Mr. Armstrong submitted an account in which Mrs. Osborne was charged with the amount of the check for $939 as paid to Klab'er & Sons in settlement of the .claim. This charge was a plain mistake The fact was that' the check was not delivered or used, and the amount was not paid in settlement or otherwise. The entry was simply an inaccurate statement, made by an oversight to a stranger to the present suit; a statement which mislead no one, and of which neither Mrs. Osborne nor Klaber was aware. Such a statement certainly created no estoppel, nor did it any wise affect the real facts of the casa

The conclusion is inevitable, from all the facts, that this action is without merit, and that the complaint should have been dismissed.

The judgment must, therefore, be reversed' and a new trial ordered, with costs to the appellants to abide the event.

Van Brunt, P. J., and Follett, J., concur.