Case Name: Daniel Donovan, Respondent, against Robert G. Cornell, Appellant
Court: New York Court of Common Pleas
Jurisdiction: New York
Decision Date: 1885-12-07
Citations: 13 Daly (N.Y.) 339
Docket Number: 
Parties: Daniel Donovan, Respondent, against Robert G. Cornell, Appellant.
Judges: 
Reporter: Daly's Common Pleas Reports
Volume: 13
Pages: 339–347

Head Matter:
Daniel Donovan, Respondent, against Robert G. Cornell, Appellant.
(Decided December 7th, 1885, and May 3d, 1886).
The complaint in an action in the City Court of New York alleged, in substance, that defendant was a commission merchant, and as such sold certain property of plaintiffs, for a specified price in cash, of which, after deducting defendant’s commission, there remained due to plaintiff a sum stated, which plaintiff demanded of defendant, but defendant refused . to pay the same or any part thereof, and converted it to his own use; and asked for judgment for said sum, with interest and costs. Upon an affidavit containing averments of the facts stated in the complaint, except the allegation of conversion of the money, an order for the arrest of defendant was granted, for the conversion of money received in a fiduciary capacity, and was executed. Defendant served an answer, and moved, upon the pleadings and affidavits, to vacate the order of arrest, which wras denied by the City Court, upon the ground that the cause of action and the cause of arrest were identical, and that the question of the right to arrest could not be intelligently decided in advance of the trial. Held, that this was error, and that the order denying the motion should be reversed, and the motion heard upon its merits.
Upon the subsequent hearing, on the merits, of the motion to vacate the order of arrest, it appeared that the dealings of the parties were in accordance with a general custom of the trade, by which the commission merchant mingled the proceeds of the sale, whenever made, indiscriminately with his own funds, and paid by his check on Saturday for all merchandise delivered during the week, whether the same was then sold or unsold. Beld, that the relation of the parties was not a fiduciary one within the meaning of subdivision 3 of section 550 of the Code of Civil Procedure, but the ordinary one of debtor and creditor, and that the order of arrest should be vacated.
Appeal from an order of the General Term of the City Court of New York affirming an order of that court denying a motion to vacate an order of arrest.
The complaint alleged the delivery, between March 30th and April 3d, 1885, by plaintiff to defendant, “who during that time was a commission merchant,” of 170 sheep and lambs to be sold for plaintiff for cash, and after deducting defendant’s commissions of 20 cents a head, to pay the bal anee of the price to plaintiff; that defendant sold the sheep and lambs for $724.35, which he received; that his commissions amounted to $35.40, leaving due to plaintiff $688.95, which plaintiff demanded, but which defendant refused to pay, “ and converted to his own use.” The order of arrest was granted upon an affidavit of plaintiff stating the facts of the complaint and omitting the allegation of conversion.
Defendant moved upon affidavits and an answer denying in part the allegations of complaint and plaintiff’s affidavit, and setting up new matter. He alleged that he received no goods from plaintiff, but that all his dealings were with Richard Donovan, plaintiff’s father, upon an agreement by which the latter was to consign sheep and lambs to defendant to be sold on commission; that under the custom of commission merchants in his line of business, he accounted to his consignee every Saturday, giving his individual check for the amount of sales, irrespective of his having realized the proceeds, and dating the checks ahead for his accommodation ; that he gave his checks, after January, 1883, to the order of plaintiff, at the request of Richard Donovan; that on April 4th, 1885, he gave his check (post dated April 8th, 1855), to plaintiff’s order for $913.26, in full of sales since the previous Saturday, which check was paid; that between April 6th and. 9th he received the sheep and lambs alleged, which he sold partly for cash, but mostly on terms of credit as theretofore; that on April 9th he made an assignment for the benefit of creditors, because he could not meet his check given to one Odenheimer, due April 9th, for $3,423, owing to his failure to realize on sales made by him, including those made for plaintiff, or Richard Donovan.
The motion to vacate the order of arrest was denied. The judge at Special Term, in his opinion, considered the question presented by the pleadings and affidavits, viz., whether the fiduciary relation existed between the plaintiff and defendant, or whether the defendant was authorized to mingle the money collected with his own and so became a mere debtor to plaintiff for the amount due; but the judge would not decide the question, deeming it a proper one for the jury on the trial of the action.
The order denying the motion to vacate the order of arrest was affirmed at the General Term of the City Court, the opinion rendered stating that the cause of action and the cause of arrest were identical; that the complaint alleged that defendant received plaintiff’s moneys in a fiduciary capacity; that in tins view of the case the order of arrest should not be vacated at Special Term, except upon evidence so clear as to leave no possible doubt in the mind of the court upon the questions presented; that this was not such a case, and even assuming that the order of arrest was granted upon extrinsic facts, the justice at Special Term was correct in refusing to vacate; and for these reasons and the grounds stated in the opinion of the Special Term, the order must be affirmed.
From the order entered upon this decision defendant appealed to this court.
Horace Secor, Jr., for appellant.
The cause of action and the ground of arrest are not identical. It has been repeatedly held by the Court of Appeals that an agent or person acting in a fiduciary capacity is not subject to an action for tort, for not paying over money due ; and in an action against him for not paying over a balance due, the plaintiff does not, by alleging that the defendant has converted the money to his own use, convert the action into one for tort; that allegation is mere surplusage, and the action is ex contractu (Segelken v. Meyer, 94 N. Y. 473; Greentree v. Rosenstock, 61 N. Y. 583; Prouty v. Swift, 51 N. Y. 594; Wood v. Henry, 40 N. Y. 124).
The Special Term erred in holding that the question whether the defendant acted in a fiduciary capacity or not must be determined by the jury. The allegation in the complaint as to the alleged fiduciary capacity in which defendant acted, is not traversable, and does not constitute any part of the cause of action (see cases above cited).
Defendant did not act in a fiduciary capacity, and the re lations between the parties were those of mere debtor and creditor (Wallace v. Castle, 14 Hun 106; Duguid v. Edwards, 50 Barb. 300, 301 Morange v. Waldron, 6 Hun 529; Robbins v. Falconer, 43 N. Y. Super Ct. [11 J. &. S.] 363; Alliance Ins. Co. v. Cleveland, 14 How. Pr. 408; Grover & Baker S. M. Co. v. Clinton, 5 Biss. 324; Woolsey v. Cade, 15 Nat. Bankr. Reg. 238; Ownsley v. Cobin, Id. 489).
Joseph C. Wolff, for respondent.
Defendant acted in a fiduciary capacity and was liable to arrest (Holbrook v. Horner, 6 How. Pr. 86; Turner v. Thompson, 2 Abb. Pr. 444; Frost v. McCarger, 14 How. Pr. 131; Schudder v. Shiells, 17 How. Pr. 420; Ostell v. Brough, 24 How. Pr. 274; Barrel v. Gracie, 34 Barb. 20; Duguid v. Edwards, 50 Barb. 288; German Bank v. Edwards, 53 N. Y. 541; Kelly v. Scripture, 9 Hun 283; Trunninger v. Busch, 7 Daly 124; Wallace v. Castle, 14 Hun 283; King v. Arnold, 84 N. Y. 668; 12 N. Y. Weekly Dig. 30).
The cause of action and the grounds of arrest are the same. In such cases the court will not vacate the order of arrest on motion (Mexico v. Arangoiz, 5 Duer 634; Geller v. Seixas, 4 Abb. Pr. 103; Barret v. Gracie, 34 Barb. 20; Frost v. McCarger, 14 How. Pr. 131; Levins v. Noble, 15 Abb. Pr. 475; Lorillard Fire Ins. Co. v. Meshural, 7 Robt. 308.; Swift v. Wylie, 5 Robt. 680; Gibbs v. Hichborn, 12 Hun 480.; Merritt v. Heckscher, 50 Barb. 451).
The granting or denying of the motion to vacate the order of arrest rested in the discretion of the City Court, and the order is not reviewable in the Common Pleas (Clarke v. Lourie, 82 N. Y. 580, and cases there cited).

Opinion:
J. F. Daly, J.
[After stating the facts as above].—The complaint alleged a cause of action upon contract. The allegation of conversion of the proceeds of sale was mere surplusage. On the trial such allegation will be disregarded and plaintiff allowed to recover upon contract (Conaughty v. Nichols, 42 N. Y. 83). Even if the complaint alleged that the defendant received the proceeds in a fiduciary'ca pacity, no proof of that allegation' would be essential to plaintiff's recovery ; a ground of arrest, based upon a claim that defendant acted in a fiduciary capacity, is extrinsic to the cause of action. It is not necessary to make such an allegation in the complaint in order to sustain an order of arrest. Where such allegation is contained in the complaint, but no order of arrest has been granted, the defendant would not be subject to execution against the person (Segelken v. Meyer, 94 N. Y. 473).
It follows from these authorities that the cause of action here and the cause of arrest are not identical, and that the jury, upon the trial of this action, will not have to pass upon the questions which are involved in the arrest of defendant. It was the duty of the court to decide -upon the pleadings and affidavits whether the relation between plaintiff and defendant was one of personal trust and confidence in the latter, or that of consignee and commission merchant as alleged in the answer (Fuentes v. Mayorga, 7 Daly 103; and see on this subject Merrill v. Thomas, 7 Daly 395; Clark v. Pinkney, 50 Barb. 226; Duguid v. Edwards, 50 Barb. 288; Sutton v. De Camp, 4 Abb. N. S. 483; Stoll v. King, 8 How. Pr. 298).
The City Court did not examine the question presented by the affidavits in the light of this duty, but referred it to the jury on the trial. This is the express decision of the Special Term; and the General Term, while it does state that " assuming that the order of arrest was granted on extrinsic facts, we are of opinion that the justice was correct in refusing to vacate," finally concludes that, for those reasons and " upon the ground stated in the opinion of the court at Special Term," the order must be affirmed. This puts the affirmance upon the ground that, in the language of the Special Term opinion, " the jury will be called upon to weigh and determine, when the cause is tried," the question of right to arrest, " which cannot be intelligently decided in the present instance in advance of the trial." Under the decision in Segelken v. Meyer (above cited), this view appears to be erroneous, and the order should be re versed, to the end that the motion to vacate the order of arrest may be heard upon its merits.
Horace Secor, Jr., for appellant.—As
a matter of strict law, upon the undisputed facts, defendant did not act in a fiduciary capacity. Plaintiff's own affidavits, as well as those used by defendant, show that defendant paid for the goods each Saturday, and did not account to plaintiff for the identical proceeds of the sales ; and consequently, the relations between the parties were those of mere debtor and creditor (cases cited on this point on previous appeal, ante p. 341). The single fact that defendant was in the habit of giving his post dated checks, alone changed the strict relations of principal and factor into those of mere debtor and creditor (Alliance Ins. Co. v. Cleveland, 14 How. Pr. 408). The case of Moore v. Hillabrand (37 Hun 491), in no way conflicts with the decisions cited, under which, on the undisputed facts, the order of arrest should be vacated.
Van Hoesen, J.
This action is not for the conversion of personal property, and an order of arrest could not be granted under» section 549. The action is for money had and received by a factor, and the only authority for an order of arrest is the third subdivision of section 550. The facts authorizing an arrest should not be set out in the complaint, nor is proof of them within the issues that the jury are to try. A jury could never, therefore, pass upon the question which Chief Justice McAdam said, in his opinion, he would leave to them for decision. The question is not to be decided by a jury, but by a judge at the Special Term, and therefore I concur with Judge J. F. Daly in reversing the order.
Larremobe, J., dissented.
Order reversed.
In accordance with the foregoing decision, the motion to vacate the order of arrest was remitted to the City Court to be heard upon its merits. Upon the hearing at the Special Term of that court, the motion was again denied. From the order denying the motion defendant appealed to the General Term of the City Court, which affirmed the order; and from that decision defendant again appealed to this court.
The order is appealable. There is no dispute as to the facts. Even the Court of Appeals will review an order denying a motion to vacate an order of arrest, in a proper case (Morris v. Talcott, 96 N. Y. 100; Clarke v. Lourie, 82 N. Y. 580). It is not sought to review the exercise of any discretionary power by the City Court, but the appeal is based upon legal rights on the undisputed facts.
Joseph C. Wolff, for respondent.
Appeals from the General Term of the City Court to the Court of Common Pleas are assimilated in practice to that governing appeals to the Court of Appeals (McEteere v. Little, 7 Abb. N. C. 374). The granting or refusing an order of arrest is discretionary with the court, and the exercise of that discretion is not reviewable in this court (Sartwell v. Field, 68 N. Y. 341; Clarke v. Lourie, 82 N. Y. 580; Allen v. Meyer, 73 N. Y. 1). This court will not examine the facts (Liddell v. Paton, 67 N. Y. 393; Allen v. Meyer, 73 N. Y. 1). This court will assume that the Special Term of the City Court, in denying the motion to vacate the order of arrest, and the General Term, in.affirming that order, found the facts in favor of the plaintiff (Liddell v. Paton, 67 N. Y. 393; Allen v. Meyer, 73 N. Y. 1; Townsend v. Nebenzal, 81 N. Y. 644; Douglas v. Haberstro, 82 N. Y. 572).
The justice, upon the papers presented, found that the relations of debtor and creditor did not°exist, and that the papers showed that the defendant had received the proceeds of the sale of the sheep and lambs in a fiduciary capacity, and that it did not appear that the plaintiff knew of or assented to the intermingling of the proceeds of. sale by the defendant, with money of his own to be used in the defend ant's business, so as to imply a credit to the defendant on his financial ability to pay (Duguid v. Edwards, 50 Barb. 301; Moore v. Hillabrand, and cases cited, N. Y. Daily Reg. Dec. 1st, 1885). The right to arrest the factor for not paying over proceeds of property placed in his hands to be sold for his principal, is one of the safeguards the law has provided for the protection of the confiding (cases supra).
Larremore, Ch. J.
When this case was before the General Term of this court before, it was held that the papers used on the application for the order of arrest did not disclose a cause of action for conversion. It was also held that the City Court at Special Term and General Term erred in deciding to allow a jury to pass upon the question whether a fiduciary relation or one of mere debtor and creditor existed between the parties, and such question was remitted to the City Court to be decided by a judge thereof at Special Term.
The Special Term of the City Court, after hearing the application upon its merits, has again refused to vacate the order of arrest; its order was affirmed by the General Term of that tribunal, and from such order of affirmance this appeal is taken.
The question how far we are bound by the allegation of the complaint as to the theory of the action, having been determined on the former appeal, and it having been then decided that a cause of action for conversion is not therein set forth, and that the cause for arrest, if any, is extrinsic to and not identical with the cause of action, it seems clear that this order must be reversed.
Defendant alleges a general custom of the trade of which the plaintiff was aware and in which he had acquiesced in all dealings betweén the parties for many years. The factor mingled the proceeds of sales, whenever made, indiscriminately with his own funds, and paid, by his check, on Saturday, for a)! merchandise delivered during the- week, whether the same was then sold or unsold. Plaintiff does not deny the existence of the usage, or that his dealings had been, in accordance with it. Indeed he expressly admits some of the more important facts averred. The relation of the parties was not, therefore, a fiduciary one within the meaning of subdivision 3 of section 550; but an ordinary one of debtor and creditor (Wallace v. Castle, 14 Hun 106; Duguid v. Edwards, 50 Barb. 300; Grover & Baker S. M. Co. v. Clinton, 5 Biss. 324; Alliance Ins. Co. v. Cleveland, 14 How. Pr. 408).
According to the facts alleged in defendant's answer and affidavit, and which are not denied, we think the present case comes within the principle laid down by the Court of Appeals in Morris v. Talcott (96 N. Y. 100); and that the order appealed from should be reversed, with costs.
J. F. Daly and Van Hoesen, JJ., concurred.
Order reversed, with costs.