Case Name: McKay, Administratrix, &c., v. Draper
Court: New York Court of Appeals
Jurisdiction: New York
Decision Date: 1863-06
Citations: 27 N.Y. 256
Docket Number: 
Parties: McKay, Administratrix, &c., v. Draper.
Judges: 
Reporter: New York Reports
Volume: 27
Pages: 256–268

Head Matter:
McKay, Administratrix, &c., v. Draper.
The bailee of money deposited with him under a written agreement between A and B that it should be paid over to B upon a third person, 0, expressing his satisfaction with certain documents, cannot defend an action for the deposit by'B, on the ground that 0, who waived the performance of the condition, was the mere agent of another person and had no interest in the matter of the agreement or in the money, and that such waiver was fraudulently made to enable B to obtain money to which he was not entitled.
The way for the bailee to protect the interest of the real principal is to bring an action of interpleader, or, after an action has been commenced against himself, to apply to have the principal substituted in his place as defendant, under § 122 of the Code.
Appeal by the defendant from a judgment of the Supreme Court. The action was brought to recover the sum of five hundred dollars alleged to have been deposited with the defendant, by one Hunneville Vincent, to be paid over to the plaintiff’s intestate upon the event, mentioned in the agreement in the following words:
“This agreement, made the 16th day of August, 1858, between James McKay, of the city of New York, and Hunneville Vincent, of the same place, witnesseth that, in consideration of good and valuable considerations, the said Vincent shall deposit with Simeon Draper the sum of five hundred dollars, to remain in his hands, as trustee for all the parties hereto, and which is to be drawn out of his hands at the end of forty days, when O. L. Baker, the attorney of the respective parties, shall examine the papers in the matters transacted this day, and shall be satisfied that such papers are correct, and as represented by said McKay; and that when said Baker is thus satisfied, he shall sign an order for said McKay to get the money from said Draper. Dated August 16th, 1858.
“ H. Vincent,
“James McKay.”
The complaint alleges, and the fact was proved, that, after the expiration of the forty days, namely, on the 29th September, 1858, Vincent signed an instrument, waiving, in terms, that part of the agreement which required the order of Baker, and consenting and agreeing that Draper should pay over the money to McKay, the intestate, of which the defendant had notice; a,nd that McKay and Vincent afterwards called, together upon the defendant, and requested him to pay the money to McKay, which he declined to do. The answer was a general denial to the complaint.
On the trial, before a referee, the defence set up seems to have been that Vincent had no personal interest in the subject' of the agreement or in the money which was deposited, but acted therein as the agent of Moody M. Hall or of Anson Blake, and that Blake furnished the money; that the reference to Baker was intended for the protection of the interest of the real parties, and that it was fraudulently waived by Vincent for the purpose of enabling McKay to get the money to which he was not entitled. The defendant also attempted to show that the .interest of Hall or Blake, and the motive of the arrangement, were made known to the defendant when he received the deposit. The agreement appears to have been signed by Blake, under the names Vincent and McKay, but whether it was originally placed there or was subscribed afterwards was a controverted point on the trial; and upon the other questions there was a large amount of contradictory testimony.
It appeared that McKay was possessed of certain abstracts of title and other papers, making what was called a search, respecting the title to ninety-eight building lots in the Central ■Park in the city of Hew York. Hone of these lots belonged .to any of the parties above named, but it was supposed that the papers showed title in those premises in certain other parties from whom they might be purchased by Hall; and with a view to the advantages to be derivéd from such a purchase, he was desirous of obtaining the papers which McKay had. But Hall was on bad terms with McKay, who, it was assumed, would not deal with him; and it was therefore arranged by Blake, as the friend of Hall, and Baker, who was the counsel of Blake, and Vincent, that the latter should act ás the contracting party in the purchase of the papers from McKay. McKay’s price, for his interest in them, was $1,000; and a further sum of $400 or $500 was claimed by one Fancher, who, it was said, had an interest in them. In pursuance of this agreement, Blake advanced the amount claimed by Fancher, and also $500 which was paid to McKay on account of the $1,000 which he asked. The remaining $500 was deposited with the defendant, under the agreement, in order that the character of the papers should be ascertained before this balance was paid over to McKay, and in order that it might be withheld if they did not appear to be what he had represented them to be; and this was to be determined by an examination to be made by Baker. The papers were handed over to Baker, when the agreement was signed. Baker had never approved of the papers, and the defendant offered to show that they were not what McKay represented them to be, but were defective and worthless for the purpose for which they were wanted; but the evidence was excluded, and the defendant excepted. The money mentioned was advanced by Blake for the benefit of Hall, who gave security for its repayment by way of lien on his expected interest in the lots. The testimony is very incoherently stated in the case, which seems to be a copy of hasty minutes taken on the trial; and some of the matters above stated were controverted by portions of the testimony.
The finding of the referee stated the existence of the agreement between McKay and Vincent, as above set forth, and that the $500 was deposited with and received by the defendant, with knowledge of and pursuant to such agreement, and that he refused to pay it to McKay, when, after the expiration of the forty days, he was shown .the paper signed by Vincent, waiving the agency of Baker, and when it was demanded of him. As to the signature of Blake to the instrument, the finding said that he appeared to have signed it under the signatures of Vincent and McKay, but that the weight of evidence seemed to show that his name was placed there after these persons had signed it; but the referee said he preferred to place his decision, as to the effect of Blake’s signature, upon the ground that he was not a party to the agreement, and that his signature did not make him a party to it or interested in it. He found that the money, which was paid and deposited, was furnished to Vincent by Blake, and that the latter was present when the agreement was executed.' The finding further stated that the referee rejected a large amount of testimony offered by the defendant, to show the incorrectness of the papers referred to in the agreement, because the defendant had not sought to interplead, under section 122 of the Code, and because the pleadings do not set out any interest of Blake in the deposit or in the transaction referred to, and that he had not deemed it important to determine whether Vincent was acting as the agent of another party, or not, or whether the plaintiff knew it, because it appeared on the face of the agreement that Vincent was a principal. After stating that Vincent did not obtain the money from Blake unlawfully, the finding, as to the facts, concludes: “Under these circumstances, no connection being alleged or shown betweeen the defendant, the bailee of the money, and Mr: Blake, I am clearly of the opinion that the defendant would not only have been justified in paying over the money as Vincent directed, but was, moreover, bound to do so.” As matter of law, he found that Blake was not a party to the agreement, or interested in the transaction ; that Vincent was authorized to waive the agency of Baker, and that the plaintiff was entitled to recover the amount with interest. Ho exception was taken to the decision of the referee. McKay, who was the original plaintiff, died during the pendency of the appeal to the Supreme Court at gen eral term, and his administratrix was substituted. The judgment on the report having been affirmed at the general term, this appeal was brought by the defendant.
Samuel G. Glassey, for the appellant.
J. H. Reynolds, for the respondent.

Opinion:
Marvin, J.
There is no exception to the findings or decisions of the referee; but there are numerous exceptions to the rejection-of evidence offered to show the consideration of the agreement between the-plaintiff and Vincent: that Vincent .was a mere agent of Blake, or Blake and Hall: that the money belonged to Blake: that Vincent acted in fraud of Blake's rights in giving the order for the money; and that the plain: tiff cooperated in such fraud, without connecting Draper with these' facts. Such offered evidence was properly excluded. There was no privity between the defendant and Blake, or any persons other than McKay and Vincent, and the defendant could not set up title in any other person in defence so long as he retained the "money, or make himself a party to controversies between his bailors and third persons. It is a general rule that an agent cannot defend against the action of his principal by setting up the title of others, so long as he retains the property. If he chooses to take the responsibility of delivering the property to a third person who claims it, and such person has a legal right to the property, he may do so, and show this in defence. (1 Pars. Cont., 677, et seq., and cases cited in the notes.)
In a proper cáse, an action of interpleader can be maintained. And the Code' has provided a more simple remedy, by which the defendant in this case, after the action was commenced, and before answer, could have applied to the court for an order to substitute Blake in his place, and discharge him from liability on depositing in court the money. The court, in its discretion, can make such order. (Code, § 122.)
There is another answer to this appeal. There was no issue made by the pleadings under which the defendant was entitled to make the defence claimed to be valid. The judgment must be affirmed.
Davies, Wright, Selden, Emott and Balcom, Js., concurred.