Case Name: The Western Union Telegraph Company, Respondent, v. Augustus D. Shepard and Others, Appellants, Impleaded with Russell Sage and The Manhattan Railway Company, Defendants
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1902
Citations: 72 A.D. 108
Docket Number: 
Parties: The Western Union Telegraph Company, Respondent, v. Augustus D. Shepard and Others, Appellants, Impleaded with Russell Sage and The Manhattan Railway Company, Defendants.
Judges: 
Reporter: Appellate Division Reports
Volume: 72
Pages: 108–112

Head Matter:
The Western Union Telegraph Company, Respondent, v. Augustus D. Shepard and Others, Appellants, Impleaded with Russell Sage and The Manhattan Railway Company, Defendants.
. Reservation in a deed of ait claim for injury to the premises .caused by an elevated railroad■—-a subsequent grantee, who obtains a judgment against the railway therefor, required to pay the same into court pending a determination whether he holds the same as trustee for the original grantor.
The Western Union Telegraph Company conveyed property located in the city • of New York to one Tubbs, subject to the following reservation: “ The party of the first part hereto reserves all claim or right of action against the Metropolitan and Manhattan Elevated Railway Companies, or either of them, for any and ail injury or damage done to the aforesaid property, or to the value or uses thereof, in the past, present or future, .by reason of the construction and operation of the elevated railroad in front of the said premises, as it is now constructed and operated.” .Thereafter the property was conveyed to one Shepard by a deed which contained the following clause: “Damages to said premises arising by reason of the elevated railroad as now constructed and operated in front of said premises have been reserved to the Western Union Telegraph Company, a former owner.” Shepard, after acquiring title, brought an action against,the elevated railway company to recover for the injury done to the property by the operation of the road, and recovered a judgment in excess of §100,000, which judgment required the railway company .to pay to Shepard ■the sum- of money awarded, and required Shepard, on receipt of such sum, to deliver to the railway company a conveyance of the property rights appropri- . ated by it.
The Western Union Telegraph Company then brought an action against Shepard to procure an adjudication that, in the prosecution of the action against the elevated railway company, Shepard acted as trustee for the Western Union Telegraph Company, and that it was entitled to the recovery had in the action. The complaint was dismissed by the trial court, but, upon ah appeal to the Court of Appeals, that court adjudged that the telegraph company’s contention was correct. Thereafter the telegraph company obtained an order requiring Shepard to execute a satisfaction of the judgment recovered by him against the elevated railway company and to give the releases therein provided for, and requiring the railway company, on receipt of such satisfaction and releases, to pay the amount of the recovery, to the chamberlain of the city of New York.
Held, that the order should be modified by requiring the telegraph company to give to Shepard an undertaking to the effect that it would pay to him interest ' upon that part of the award, if any, which it might finally he determined that the Western Union Telegraph Company was not entitled to, and also to pay any and all damages that Shepard might sustain by reason of the injunction, if it should be determined that the Western Union Telegraph Company was not entitled to.the relief sought, and that as so modified the order should be affirmed.
Appeal by the defendants, Augustus D. Shepard and others, from an order of the Supreme Court, made at the New York Special Term and entered in the office of the clerk of the county of New York on the 27th day of February, 1902, directing the defendant Shepard to execute a satisfaction of a judgment recovered by him in an action against the Manhattan Railway Company, and to execute certain releases and deliver the same to the said railway company within a time specified after receiving notice that the railway company, pursuant to the directions of said order, has deposited with the chamberlain of the city of New York the amount of the said judgment.
William G. Peclcham, for the appellants.
Bush Taggart, for the respondent.

Opinion:
McLaughlin, J.:
This appeal is taken from an order which requires, among other things, that the defendant Shepard satisfy a judgment recovered by him against the defendant railway company and execute and deliver to it certain releases provided in the judgment, and that on receiving the same the railway company, within a specified time, deposit with the chamberlain of the city of New York the amount of the judgment, together with the interest thereon.
The facts set out in the papers upon which the order was made — and such facts were not disputed — were as follows : On the 4th of of May, 1872, the plaintiff in this action became the owner of certain real estate situate in the city of New York, and continued to be such owner until the 4th of June, 1888, when it conveyed the same to the defendant Tubbs, subject to the following reservation : The party of the first part hereto reserves all claim or right of action against the Metropolitan and Manhattan Elevated Railway Companies, or either of them, for any and all injury or damage done to the aforesaid property, or to the value or uses thereof, in the past, present or future, by reason of the construction and operation of the elevated railroad in front of the said premises, as it is now constructed and operated."
By mesne conveyances the title to this real estate vested in J. N. & L. N. Levy, who, on the 29th day of March, 1889, conveyed it to the defendant Shepard, and in his deed of conveyance the following clause or reservation was inserted : " Damages. to said premises arising by reason of the elevated railroad as now constructed and' operated in front of said premises have been reserved to the Western Union Telegraph Company, a former owner." The defendant Shepard, after he acquired title, brought an action against the railway company to recover the damages alleged to have • been sustained by him by reason of the impairment of the easements of light, air and access to said premises. The action was . prosecuted to and resulted in a judgment in his favor in excess of $100,000, which was affirmed by the Court of Appeals (Shepard v. Manhattan Railway Co., 169 N. Y. 160). This judgment required the railway company to pay to Shepard the sum of money awarded, on receipt of which he was required to deliver to the railway company a release or conveyance of the property rights appropriated by it.
Sometime subsequent to the commencement of the action by Shepard the Western Union Telegraph Company commenced this action, the object of which, among others, was to have it judicially determined that Shepard, in the action brought by him, was acting in the capacity of a trustee for its benefit, and that if a recovery were had therein to impress .a trust on such- recovery and* compel him to pay the same to it. The action coming on for trial, the complaint was dismissed, and on appeal the same was affirmed by this court (Western Union Telegraph Co. v. Shepard, 49 App. Div. 345), but on appeal to the Court of Appeals the judgment of the Trial Term and the order of affirmanfee by this court were • reversed and a new trial ordered (169 N. Y. 170), that court holding, as we understand the decision,- that while conveyance from the Western Union Telegraph Company to Tubbs carried with it all the easements and the right to recover .damages for an invasion thereof, yet the reservation of such daniages, in case a recovery was had therefor, belonged to the grantor, the Western Union Telegraph Company; that Shepard, the owner of the fee, took title subject to such reservation, and in the prosecution of the action by him he simply occupied the position of a trustee for the Western Union Telegraph Company, and that in equity his recovery belonged to it; that it was competent for the Western Union Telegraph Company to agree with Tubbs as a part of the consideration for the conveyance that any recovery thereafter had, either for past, present or future damages, should belong to the grantor. In this connection, the court, referring to the reservation, said : " In its letter, it is a reservation of all ' claim or right of action ' against the railroad companies for damages past, present or future. Both parties thereby intended to agree that the plaintiff should have' the benefit of the claim for damages and the reservation of the cause of action for them was intended to give the plaintiff the remedy or means of securing them. It is manifest that as between the parties to the deed, the claim to the damages was to remain and did remain with the plaintiff, although as between the grantee and the railroad company the right to the cause of action to recover them passed tc the grantee. Upon the facts, the defendant Shepard ex aequo et bono has no right to withhold the proceeds of his recovery from the plaintiff. If he receives the proceeds he does so as trustee for the plaintiff."
After the decision by the Court of Appeals in this and the Shepard action, the plaintiff herein obtained an order requiring Shepard to execute a satisfaction of the judgment recovered by him against the railway company and to give the releases therein provided, and requiring the railway company, on receipt of the same, to pay, within a specified time, the amount of the recovery to the chamberlain of the city of New York. It is from this order that the present appeal is taken. The law as laid down by the Court of Appeals on the appeal from the judgment dismissing the complaint in this action is the law of the case. It is not only binding upon this court, but fixes and determines for all time to come, upon the facts as then presented, the rights of the respective parties, and unless the facts established upon the first trial be materially changed on the second trial ordered, the plaintiff herein is entitled to Shepard's recovery on the theory that Shepard has, in the prosecution of his action, been acting simply as its trustee. If this be true, then he ought not to be permitted to receive against its objection and protest the amount recovered. Nor ought the railway company to be compelled, while Shepard and the telegraph company ' are settling their differences, to pay interest upon the recovery or be deprived of the releases to which it is entitled. Under such circumstances, it is eminently proper that the railway company should be permitted to pay the amount of the award and have the judgment recovered against it satisfied, and that Shepard should give the releases directed. But this payment ought Uot to be' made to the prejudice of either of the parties to this action. It is^ therefore, equally proper that such, payment should be made to the chamberlain of the city of New York, to be held by him until after the determination of the issues involved in this action. But inasmuch as Shepard has a final judgment in the action brought by him which entitled him to receive the money, and the telegraph company has no judgment'—-but simply rests its claim upon the assertion that it is entitled to one — we think that the telegraph company should give to Shepard an undertaking to the effect that it will pay to him interest upon that part of the award, if any, which it may be finally determined that the telegraph company was not. entitled to, and also for any and all damages'that he may sustain by reason of the injunction, if it .likewise be determined that it was not entitled to the relief asked in this action.
The order appealed from, therefore, must be modified as indicated in this opinion, and as thus modified affirmed, without costs to either party. ' •
Yan Brunt, P. J., O'Brien and Lau&hlin, JJ., concurred; Patterson, J., concurred in result-.
Order modified as directed in opinion, and as modified affirmed, without costs to either party.