Court Opinion

ID: 5459752
Source: CourtListenerOpinion
Date Created: 2022-01-09 19:31:28.681453+00
Date Added: 2024-06-11T08:32:43.852536
License: Public Domain

By the Court, Ingraham, J.
1. The title to a promissory note may be made by mere delivery, without any written assignment; and the delivery of the note in suit to the plaintiffs, by the authority of the Farmers and Mechanics’ Insurance Company, vested in the plaintiffs the legal title to the note. v
2. The object of the transfer was to place under the control of the plaintiffs, as trustees, a fund to be held by them in trust for the payment of all losses on insurances to be effected with the plaintiffs, as agents for the company. The object was to secure all subsequent insurances made by the- plaintiffs, and the pleadings admit that as such agents the plaintiffs effected numerous insurances.
3. The plaintiffs thereupon became trustees for all persons holding policies so effected, and were bound to respond to any person insured who should sustain loss. For this purpose, they were bound to hold the assigned property as well against the company as against all other parties.
4. It follows from these propositions, that until all insurances so effected were discharged, the company could not reclaim from the plaintiffs any 'of the securities assigned to them; and if the company could not reclaim them, no creditor of the company had any right to have his claim against the company paid from such notes or their proceeds.
The creditor could have no claim, until the company was in a condition, by the fulfillment of the trust, to demand from the plaintiffs a redelivery of the securities placed in their possession ; and until the trust was so fulfilled, the defendants having a claim against the company, even in judgment, could not obtain satisfaction out of this property. If these propositions are correct, then the defendants could not set up, as a counter-claim to the notes, a claim held by them against the company.
*536[Few York General Term,
December 13, 1859.
The note was transferred before maturity, and before the defendants had any claim against the company for a loss. The parties insured had, for a good consideration, obtained an interest in that note by way of security, which could not be divested by any subsequent act of the company, except cancelment of all insurances effected by the agents of the company ; and the counter-claim offered by the defendants was no defense thereto.
But, independent of these views, the defendants set up no matter constituting a counter-claim in this action. If the plaintiffs had a right to bring this action upon the note, the only counter-claim the defendants could set up was one against the plaintiffs. The code contemplates no other counter-claim ; because it provides that in all cases the action shall be brought, in the name of the party in interest, except in the case of an express trust, and in that case no provision is made for any counter-claim.
A defendant, having a demand against an assignor of a claim due at the time of assignment, may show such demand, on the trial, in order to prevent a recovery by the plaintiff against him, but none for an independent recovery against him. Denio, J., says, in Vassear v. Livingston, (3 Kernan, 248,) a counter-claim must contain the substance necessary to sustain an action on behalf of the defendant against the plaintiff, if the plaintiff had not sued the defendant.
All the benefit the defendant in such a case is entitled to, is under the 112th section, and that is limited to a defense existing at the time of the transfer. If none existed then, there is nothing shown on the trial to warrant the allowance of it afterwards.
The counter-claim was improperly allowed. The judgment must be reversed, and a new trial ordered; costs to abide the event.
Roosevelt, Clerke and Ingraham, Justices.]