Case ID: ny-super-ct_52/html/0128-01.html
Source: Caselaw Access Project
Author: {"author": "By the Court.—Sedgwick, Ch. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

THE AMERICAN TELEGRAPH & CABLE CO., Respondent, v. HENRY DAY, Impleaded, Appellant, and BYRON G. De WOLF and S. H. SWAN, Respondents, et al.
    
      Action of interpleader, or in that nature.—Bill of peace.—Multiplicity of actions.•—Stock certificate, acceptance of.\ surrender, and issue of new on forged powers—injunction as to.
    
    Where the perplexity and danger upon which the plaintiff founds his action of interpleader, or one in that nature, arises out of an act done voluntarily and advisedly hy him, it does not arise without his fault, and the action will not lie.
    One charged witli a tort in the conversion of property cannot interplead the party making the charge with others claiming adversely to him, under whom the party charged acted.
    Multiplicity of actions will not, of itself, constitute an equity on which to found an equitable action. The anticipated issues between the plaintiff in the equity action and the various defendants thereto must be ad idem.
    
    The plaintiff accepted the surrender of certain certificates of its stock, and issued new ones upon alleged forged powers of attorney, and the owner of the surrendered certificates brought an action against it, praying that the surrendered certificates or others of the same form and tenor be delivered to him, and all dividends earned be paid to him, and that he be adjudged the owner of the shares represented by the surrendered certificates, and that the company be adjudged to recognize him as such owner; thereupon, the plaintiff commenced an action against him, and the persons who procured, and those who then held certificates for the stock which had been before represented by the surrendered certificates, praying, among other things, for an injunction against such owner prosecuting his action, and against the other defendants commencing any action against it based upon claims of ownership of the stock which had been represented by the surrendered certificates, or of dividends declared thereon. An injunction order in conformity with this prayer was granted.
    
      Held, under the foregoing principles, that plaintiff was not entitled to the injunction.
    
      Before Sedgwick, Oh. J., O’Gorman and Ingraham, JJ.
    
      Decided May 25, 1885.
    Appeal from order denying a motion to vacate an injunction.
    Mr. Day, the appellant, was the owner of seven hundred shares of the plaintiff’s capital stock, represented by seven certificates, each for one hundred shares, standing in his name and transferable on the plaintiff’s books by Mr. Day or his attorney, on the surrender of the certificates. The complaint alleges that the certificates were, between April 25, 1883, and October 30, 1883, surrendered to the plaintiff, with powers of attorney indorsed purporting to be executed by Mr. Day, authorizing the transfer of the stock on the plaintiff’s books, and that in accordance therewith the stock was transferred by it. Mr. Day alleges that the certificates were wrongfully taken from his possession ; that his signatures to the powers of attorney were forgeries ; that he never transferred or authorized the transfer of the stock; and that any attempted transfer was fraudulent as to him. To compel the plaintiff to recognize him as the owner of his stock, Mr. Day sued the plaintiff in this court, praying as stated in the head-note. After the action became at issue, the plaintiff moved, at special term, to compel Mr. Day to join as parties, certain persons to whom it claimed that it had issued stock upon the forged powers of attorney. The court denied the motion upon the ground that such parties were neither interested in nor parties to the controversy between the plaintiff and Mr. Day.
    Thereupon the plaintiff brought this action, joining as defendants—(1) Mr. Day; (2) -The firms of Denslow, Easton & Herts and De Wolf & Swan, as to whom the complaint alleges that they presented Mr. Day’s certificatest with the forged powers of attorney, to the plaintiff, certified to the genuineness of Mr. Day’s signatures, and demanded new certificates; (3) Henry W. Putnam,. Thomas Emory’s Sons, George D. Patten, Jr., Work, Strong & Co., William Whitewright and John B. Gale, who now hold certificates for the stock which the plaintiff alleges that it issued in place of Mr. Day’s certificates ; and asking that Mr. Day be compelled to litigate his claim to his seven hundred shares in this action; that it be determined as between him and the other defendants, who has the right to the possession of the certificates for the shares ; that the claims of the other defendants to the shares, and to the certificates issued therefor, and to the dividends on the shares, may be litigated in this action ; and that Mr. Day may be enjoined from prosecuting the action commenced by him ; and that all the defendants be enjoined from commencing any action against the plaintiff based upon claims of ownership of the said shares or dividends declared or earned thereon. The complaint further asked that, if Mr. Day were adjudged to be entitled to his stock, the defendants holding new certificates might be compelled to deliver them up, or to account to Mr. Day or to the plaintiff for the value, etc.
    Upon the complaint and an affidavit of general verification, plaintiff obtained an injunctive order, in conformity with the prayer of the complaint. Mr. Day thereupon moved to dissolve the injunction, which motion was denied, and an order made accordingly, from which this appeal is taken.
    
      Franklin B. Lord, attorney, and John E. Parsons, of counsel for appellant Day, argued:
    I. If Mr. Day establishes in' his action that he is the owner of his stock ; that it has never been transferred by him or by his authority ; and that the powers of attorney upon which the plaintiff issued new certificates, were forgeries,—he is entitled to judgment in his favor, compelling the plaintiff to recog-' nize him as a stockholder with all the rights belonging to him as such (Pollock v. National Bank, 7 N. Y. 274 ; Telegraph Co. v. Davenport, 97 U. S. 369 ; Pratt v. Taunton Copper Co., 123 Mass. 110 ; Midland Railway v. Taylor, 8 
      H. L. Cas. 751). This is none the less so that the plaintiff has, upon the forged powers of attorney, issued new certificates (cases supra). Mr. Day’s certificates are in possession of the plaintiff. It holds them as Mr. Day’s property. If Mr. Day’s certificates were outstanding in the hands of a third person, who, as against the plaintiff, claimed to own them, that person would be a proper, if not a necessary party, to Mr. Day’s action against the plaintiff (Cottam v. Eastern Counties R’y Co., 1 Johns. & Hem. 243 ; Marsh v. Keating, 1 Bing. N. C. 198 [House of Lords]; Stone v. Marsh, 6 B. & C. 551). But that is not this case. Mr. Day’s certificates are not outstanding. They are in the possession of the plaintiff. There is no adverse claim to Mr. Day’s certificates ; and in the controversy between him and the company no third person is interested. . *
    II. If Mr. Day fails to establish what he has alleged in his action against the company, there must be judgment in that action dismissing his complaint. Certainly no third person is a party to a controversy which is to bring about that result.
    III. The controversy between the plaintiff and the defendants, other than Mr. Day, on the basis that Mr. Day shall succeed, is entirely different to that between Mr. Day and the company. (1) If the plaintiff has any claim against Denslow, Easton & Herts, and DeWolf & Swan, upon whose request the stock was transferred, and who surrendered to the plaintiff Mr. Day’s certificates with the forged powers, that claim is correctly asserted by the plaintiff in his complaint. They are responsible in damages for any loss which may result to the plaintiff (Brown v. Howard Fire Insurance Co., 42 Md. 384; Lowry v. Bank, Taney C. C. R. 310). Ho title to Mr. Day’s stock could pass to these defendants through the forged powers {Story Bills, § 111 ; Hambleton v. R. R. Co., 44 Md. 551; Thomson v. Bank of B. N. A., 45 Super. Ct. 1; aff’d, 10 W. Dig. 477). (2) Any relation of these defendants to the plaintiff is that of guarantors. The case is the same as that of one who has warranted the title of a defendant in ejectment. The plaintiff is not compelled, in the interest of the defendant, to make him a party to his suit (Pratt v. B. & O. R. R. Co., 126 Mass. 443 ; Cottam v. Eastern Counties R’y Co., 1 Johns. & Hem. 243 ; Taylor v. Bank of England, 28 Beav. 287 ; aff’d, H. L. Cas. 751; Sloman v. Bank of England, 14 Sim. 475 ; Dalton v. Midland R’y Co., 12 C. B. 458). (3) The only other class of defendants is those to whom stock has been issued upon the surrender of the first certificates issued in place of Mr. Day’s stock. The plaintiff must either make good to them their stock, or must compensate them in damages for any loss which they have sustained in relying upon the plaintiff’s certificates (N. Y., N. H. R. R. Co. v. Schuyler, 34 N. Y. 30 ; Davis v. Bank of England, 2 Bing. 293 ; Ashby v. Blackwell, 2 Eden, 299 ; Pratt v. Taunton Copper Co., 123 Mass. 110 ; In re Bahia & San Francisco R’y Co., L. R. 39 B. D. 584). With such action Mr. Day has nothing to do.
    IV. Some of the defendants assert that Mr. Day authorized the transfer of his stock. If he did, he will be beaten in his suit. He can only maintain his suit by proving what he has alleged—that the stock was wrongfully taken and that his signatures to the powers were forged.
    V. What really the plaintiff desires is to try six or eight lawsuits in one. Mr. Day is only interested in the suit which he himself has brought. He should not be embarrassed by being compelled to participate in the trial of other actions with which he has no concern. So far as concerns the present holders of the new certificates, they are neither parties to a controversy with Mr. Day, nor is one a party to a controversy between the plaintiff and any other. Each of Mr. Day’s certificates was separately surrendered to the company on an occasion when no other certificate was surrendered, and a new certificate was issued to a party to whom no other party has any relation. And furthermore, even if Mr. Day succeeds, the present holders in good faith of the new certificates, can none the less succeed against the plaintiff. For indemnity, the plaintiff must rely upon the defendants who guaranteed the genuineness of Mr. Day’s signatures. With the enforcement of that guarantee neither Mr. Day nor either of such holders has any concern. He brought Ms smt; it is in a court of competent jurisdiction; it will be determined upon correct legal principles ; it will be controlled by the facts which shall be established. He ought not to be prevented by his defendant, a wrongdoer as to him, from trying his own claim in his own sMt.
    
      Dillon & Swayne, attorneys, and John F. Dillon, Roger Swayne and Edward Patterson, of counsel for respondent, argued:
    I. The jurisdiction which equity had and has of this cause is threefold. 1. As upon a bill in the nature of an Mterpleader; 2. To prevent multiplicity of suits ; 3. To prevent irreparable damage. There are two subjects of cognizance in the action, (a) The seven hundred shares of stock and the claims thereto. (5) The dividends earned and not paid over, and the claims thereto.
    The plaintiff has actually been sued by Day. Some of the defendants claim title by legitimate transfers, and threaten suits as against the plaintiff to enforce their alleged rights to dividends on the shares, wMch dividends Day also claims. The claims of the defendants, therefore, are manifestly conflicting, and it is sufficient to maintain a bill in the nature of an interpleader, that a plaintiff is M danger of being molested by conflicting claims (Prudential Ass. Co. v. Thomas, L. R. 3 Chy. Ap. 14; Reid v. Commercial Ins. Co., 32 La. Ann. 546 ; Richards v. Salter, 6 Johns. Ch. 445 ; State Ins. Co. v. Monks, 1 Conn. 691; Salsbury Mills v. Townsend, 109 Mass. 115 ; Birch v. Corbin, 1 Cox Ch. Cases, 144). That Day claims the shares is obvious—that the parties who caused the transfers to be made insist that Day does not own the shares, is alleged. This controversy is not a shadowy, but substantial one. If the powers are forged no title passed out of Day (Davis v. Bank of England, 2 
      Bing. 393 ; Swan v. N. B. & A. Co., 2 H. & C. 175 ; Taylor v. Midland R. Co., 6 Juris. N. S. 595). And if n© title passed out of Day, then the parties who caused the transfers to be made are hable to Day (Marsh v. Keating, 1 Bing. N. C. 198), or to the plaintiff (Sims v. Am. Tel. Co., L. R. 5 Q. B. Div. 175 ; Davenport v. Boston & A. R. R. Co., 135 Mass. ; Brownell v. Howard F. I. Co., 42 Md. 384; Hambleton v. C. & O. R. R. Co., 44 Md. 551; Canal Bank v. Bank of Albany, 1 Hill, 287). Both the holder of the old certificate and the new claim the rights of share owners in the fund as it existed prior to the transfer. Necessarily the claims of both relate to the same share of the fund, and it is equally obvious that each cannot be the exclusive owner of the share. The conflicting rights and interests therefore become patent. And in equity the plaintiff has a right to call upon them to settle that question between or among themselves, and at the same time to settle its own rights by a bill in the nature of. a bill of interpleader. That the plaintiff has an interest and calls upon the court to define and protect its rights, and to point out what they are, does not affect the status of the action (Charmley v. Dunsaney, 1 Sch. & Lef. 137; 2 Ib. 710 ; Mohawk & Hudson R. R. R. Co. v. Clute, 4 Paige, 384 ; Parks v. Jackson, 11 Wend. 443 ; Bedell v. Hoffman, 2 Paige, 299 ; City Bank v. Bangs, 2 Ib. 570 ; Story's Eq. Jur. § 824). An injunction goes, as of course, in an action properly framed for an interpleader (Snell Prin. Equity [5 ed.], ch. 12, p. 591).
    II. The action is well brought as one to prevent a multiplicity of suits. All the claims and rights and interests have the same starting point. They come from the transfer of shares once standing in Day’s name and now claimed by him. Those rights and relations which give rise to suits or threatened suits are : 1. Day’s claim to ownership. 2. The claims of the parties who caused the transfers to be made, that Day’s powers are genuine or were authorized. 3. The claims of the present holders of shares—involving considerations of the bona fides of their respective titles, and their freedom from the original fraud in transferring out of Day’s name, if there were such fraud. 4. The claims of the plaintiffs that if the powers are forged, those presenting the forged powers are liable ; or, 5. That if the transfers are merely colorable, and the present holders of shares have no title or a title affected by notice, they must surrender the certificates. All these various claims and rights would necessitate numerous actions if they are to be administered and adjudicated separately. Equity will bring in all parties and have all claims adjudicated in one action (Third Av. R. R. Co. v. Mayor, &c., 54 N. Y. 159 ; Story’s Eq. J. §§ 852, 854, 901, and notes ; Howe v. Tenants of Broomgrove, 1 Vern. 22 ; Mayor of York v. Pilkington, 1 At. 282; Carroll v. Stafford, 3 How. U. S. 463 ; N. Y. & H. R. R. Co. v. Schuyler, 17 N. Y. 573). That a suit is already pending by Day against plaintiff, on his particular claim, adds to the plaintiff’s equity (McHenry v. Hazard, 45 N. Y. 581). Even if there is a good defense at law by the plaintiff to Mr. Day’s suit, that does not prevent nor interfere with the granting of the equitable relief sought by this bill (Scott v. Onderdonk, 14 N. Y. 14; Ward v. Dervey, 16 Ib. 522 ; Wood v. Seeley, 32 Ib. 113 ; McHenry v. Hazard, 45 Ib. 580 ; Fowler v. Palmer, 62 Ib. 534). It has been suggested that the remedy of the Cable Company is in the exercise of the right to give notice to other parties to come in and defend the original action. This right, and the right to file a bill of interpleader, or a bill in the nature of an interpleader, and to restrain,, etc., have existed together too long for one to be now held the exclusive remedy. Besides, the right to give notice to come'in and defend, secures merely the negative advantage of estoppel, while we are entitled to ask a decree, affirmatively fixing the rights and liabilities of all the parties. The case of Prudential Assurance Co. v. Thomas (L. R. 3 Ch. App. 74), is-an authority against the suggestion.
    III. The bill lies to prevent irreparable injury. “ A case of irreparable injury to the plaintiff, and one where no such injury can be produced to the defendant, is one eminently of equity jurisdiction ” (Brown v. Pacific Mail S. S. Co., 5 Blatch. 525). The irreparable injury likely to ensue, if Bay’s suit is not enjoined, is readily pointed out. If Day proceeds to judgment against the plaintiff on the ground of the alleged forgery of the powers, or the alleged fraudulent practices by which the title to the shares was diverted from him, and then the plaintiff seeks to recover against the parties who caused the transfers to be made, those parties would not be bound by the judgment in Day’s suit (Doe v. Earl Derby, 1 Ad. & E. 783 ; 2 Smith’s Lead. Cas., notes,* 669, et seq.). Certain of the defendants herein claim and insist that the powers are genuine. If they prove that as against the plaintiff, then the plaintiff would lose twice, and it is exposed to that peril, to prevent which the injunction is asked. In addition to that, the loss of all the costs and expenses of contesting all the various claims that are made to the stock and dividends, and of the institution and defense of the suits the company would have to bring or to resist to maintain its rights, are substantial elements of apprehended and actual damage. Part of the relief prayed for is that if it be adjudged that the shares were transferred on forged powers, such of the defendants as hold certificates so transferred, be required to surrender and deliver them up. This is prayed for in addition to other relief. How far the present holders are bona fide holders for value the plaintiff cannot determine. If the original transfers from Day are tainted with crime or fraud, there may be a strong presumption that the infection continues, and if it be so the instruments should be surrendered and canceled. Under such circumstances equitable relief is granted (Springport v. Teutonia S. Bank, 75 N. Y. 397 ; Power v. Village of Athens, 19 Hun, 165). The cases of Town of Venice v. Woodruff (62 N. Y. 462), and Buffalo Grape Sugar Co. v. Alberger (22 Hun, 349), are not authorities against the plaintiff. The suggestion that the plaintiff, might call upon those who presented the certificates of Day for transfer to come in and defend Day’s suit, cannot affect the jurisdiction and right of a court of equity to afford relief in a proper case. It is true that certain of the defendants are, by implication of law, guarantors of the genuineness of Day’s signature to the powers of attorney—-but a court of equity, in the exercise of its jurisdiction, is not restrained by any such consideration, and this would be especially so in a case like the present, in which so many sides are presented of inevitable contest. Besides, it is a matter of very grave doubt as to whether the giving of notice to a surety will bind him by a judgment, unless he has in terms covenanted to be bound by such a judgment upon notice to him to come in and defend (National Fire Insurance Co. v. McKay, 5 Abb. N. S. 448 ; Thomas v. Hubbell, 15 N. Y. 407).
    
      Bergen & DyJsman, attorneys, and Benjamin F. Tracy and Wm. IV". DyJsman, also argued on behalf of respondents, DeWolf and Swan.
   By the Court.—Sedgwick, Ch. J.

I am of opinion that the order appealed from should be reversed. The defendant Day, in bringing the action against the plaintiff, exercised a legal right. The action should not be stayed, unless the plaintiff discloses some equity in its favor.

/ There is no such equity as is based upon principles that sustain actions of interpleader or in that nature. For the alleged perplexity as to the defendant to whom the right, supposed to be in question, belongs, or the danger of being obliged to satisfy the claims of opposing parties, has not arisen without fault on plaintiff’s part, but has arisen from an act done voluntarily and advisedly by itself. Its duty towards defendant Day, not to issue a certificate of his shares to another without authority, was absolute. When it did, it is supposed that it was in possession of all the proofs that were necessary to show without doubt that its action was justified: If it omitted any care or caution, or did not use means it legally might, the consequences should equitably fall upon itself. The plaintiff should not now seek a determination as to whether it was right or wrong, by compelling Day to litigate with the other parties. Indeed, there could be no such litigation, for first and last, so far as Day is concerned, the litigation would be between him and the plaintiff.

In accordance with like considerations, a party charged with a tort in the conversion of property, cannot, except a statute provide for it, interplead the person making the charges with others claiming adversely to him, under whom the party charged acted.

There is not shown to be any danger of vexatious actions or suits in the proper sense of that term. In fact, the complaint does not show that those defendants whose claims are alleged to be at variance with the claim of Day, threaten the plaintiff with any suit whatever. Those defendants are in possession. They are content with things as they are. Perhaps the contingency may never arise, that would make it for their interest to bring any action. They certainly would not bring any action if the plaintiff can justify its action in transferring its shares, and as has been said, it is legally bound to be prepared to justify if it can. It would seem that there could arise no litigation, until the plaintiff is forced to the position of having violated a duty as to Day. Therefore, there is no equity based upon the avoidance of a multiplicity of actions, if that of itself constituted an equity, which it does not.

I am of opinion also that the supposed differences or anticipated issues, between the plaintiff and the various defendants, are not ad idem. The plaintiff has, and under the complaint will have the stock, shares in which belong either to Day or to some of the other defendants. The defendants do not claim that stock, and the plaintiff claims no interest in the shares. Thedefendant- Day makes only the claim that the plaintiff shall return to him as his property, the certificate' which the plaintiff took when it transferred his shares apparently, and shall recognize him as shareholder. The other defendants may, at some time, resist the plaintiff’s refusing to recognize them as shareholders, or its endeavor to cancel their certificate of ownership. The issues, whenever made, will not regard the same thing, although a controlling piece of evidence may be the falsity or genuineness of Day’s signature to the authority to transfer. I therefore think that the complaint is multifarious.

The order should be reversed, with costs.

O’Gorman and Ingraham, JJ., concurred.