Court Opinion

ID: 3594779
Source: CourtListenerOpinion
Date Created: 2016-07-05 23:42:32.373602+00
Date Added: 2024-06-11T07:44:25.868620
License: Public Domain

This action was brought to have the defendants declared to be the trustees of certain bonds of the District of Columbia, for the benefit of the plaintiffs, and that the plaintiffs have a lien upon and a right to such bonds, etc. This action was brought on the 16th day of April, 1884. The answer, among other things, alleges that the cause of action did not accrue within six years prior to the commencement *Page 145 
of this action. The trial court sustained this defense and dismissed the complaint.
This action was brought against the defendant's testator, John Elliott, who alone was served with process. The other defendants were the surviving partners of Riggs  Co. In the month of June, 1873, one Augustin R. McDonald entered into an agreement with the plaintiffs, by which they were to aid him in the prosecution of a claim which he then had pending before the mixed commission on British and American claims, under the treaty of May 8, 1871, for the value of a large quantity of cotton. Under the agreement the plaintiffs were to receive, as compensation, a sum equal to twenty-five per cent of any amount that was allowed on the claim, which was to be made a lien thereon, and upon any draft money or evidence of indebtedness which might be paid or issued thereon. In the month of September, 1873, an award was made upon the claim, for the sum of $197,190 in gold, to be paid by the government of the United States. In October, 1874, the plaintiffs filed their bill in equity in the Supreme Court of the District of Columbia, against McDonald and one White, to whom McDonald had assigned the award, in which bill the plaintiffs asked to have their claim established at the sum of $49,297.50 in gold, and that it be declared a lien upon the claim and upon the certificate of the amount allowed thereon, and upon all moneys which might become due in respect thereto. In February, 1875, an order was made, by consent of the parties, under which one-half of the award was paid over to White, under the assignment made to him by McDonald, and the other half of the award was paid over to George W. Riggs, as receiver, for him to hold subject to the claims, liens and rights of the plaintiffs and of one Phelps, as assignee, to be determined by the court. Riggs, as receiver, under an order of the court, invested the funds so received by him, in 3-65 bonds of the District of Columbia. The defendants in that action, having demurred to the bill of complaint, the Supreme Court of the District of Columbia, on the 24th day of June, 1875, made a decree, in and by which it was *Page 146 
ordered, adjudged and decreed that the demurrer be sustained, and that the bill be dismissed, with costs, and on the twenty-eighth day of June, thereafter, the same court made another decree, in which the receiver was directed to pay the funds belonging to the case, in his hands, to the defendants, McDonald and White, and that thereupon the receiver should be discharged. McDonald thereupon applied to Riggs, the receiver, for a surrender and delivery to him of the bonds held by Riggs, as receiver, and thereupon Riggs, the receiver, made personal application to the judge holding the court at which the decree was made, for instructions as to the delivery of the bonds to McDonald, and was informed by the judge that the delivery should be made. Thereupon Riggs, the receiver, did deliver the bonds to McDonald. Upon the same day McDonald sold the bonds to the firm of Riggs  Co., of Washington, of which firm George W. Riggs, the receiver, and John Elliott, the defendant in this action, were members. The firm of Riggs  Co. paid full market value for the bonds, and thereafter took them to the treasury of the United States and surrendered them to the treasury department, and, subsequently, other and new bonds were issued in their place, to the firm of Riggs  Co., and thereafter and in the month of December, 1875, the firm of Riggs Co. sold the re-issued bonds in the market, and the same parted from out of their possession and were dispersed among the purchasers thereof. Appeals having been taken from the decrees sustaining the demurrer and directing the receiver to deliver the funds over to the defendants, the General Term of the Supreme Court of the District of Columbia, on the 4th day of March, 1876, made a degree reversing the judgments or decrees of the 24th day of June, 1875, and of the 28th day of June, 1875, and ordered that the cause be remanded to the Special Term, with leave to the defendants to answer the complainant's bill. The defendants in that action having answered, the court, on the 5th day of May, 1876, made a further order requiring the defendants in that action to pay into court the sum of $49,297.50 in gold, and, subsequently the defendants in that action were adjudged *Page 147 
guilty of a contempt in having failed to obey such order, and, as punishment therefore, their answer was stricken out and removed from the files of the court; thereafter, and on the 12th day of February, 1878, the court made an order that the bill of complaint of the plaintiffs in that action be taken proconfesso against the defendants, and on the seventeenth day of April thereafter, a decree absolute was made, in which it was adjudged and decreed that the defendants, McDonald and White, pay to the complainants the sum of $49,297.50 in gold, and that the complainants have a lien upon the claim of Augustin R. McDonald against the United States, as awarded by the mixed commission on British and American claims, and upon any draft, money, evidence of debt or the proceedsthereof, with legal interest from that day.
The first question which it becomes necessary for us to determine is as to the nature of the remedy or the kinds of relief that the plaintiffs have against the defendants. In considering this question, we shall assume that the lien of the plaintiffs extended to the bonds in the hands of Riggs  Co., that the firm having purchased them pendente lite, with knowledge of the fact that they were the subject of the litigation. We shall assume further that the original bonds having been surrendered to the Treasury Department and new ones issued in the place thereof, that the lien of the plaintiffs extended to such re-issued bonds. The referee has found as a fact that they were non-negotiable. It is, therefore, possible that the plaintiffs could follow the bonds into the hands of purchasers in good faith without notice of the lien and still maintain their lien. But the plaintiffs, having sold them in open market, to strangers, it would doubtless, be difficult, if not impossible, to trace them, and the lien must, therefore, be deemed as practically terminated or destroyed. The firm of Riggs Co. sold the bonds in market, for full value, and received the money therefor. That firm was the owner of the bonds, but held them subject to the lien of the plaintiffs, and having practically destroyed the lien by making it difficult or impossible for the plaintiffs to pursue the bonds farther, must be held liable to the plaintiffs, in some form. *Page 148 
In this action the plaintiffs seek relief in equity. In their complaint they allege that they had no knowledge of the purchase of the bonds by Riggs  Co. until the 17th day of June, 1878. Aside from the statute of limitations, we shall not question the right of the plaintiffs to maintain this action although it is now apparent that no equitable relief can be granted; for the rule doubtless is, that where a party, in good faith, without knowledge of the happening of the event which renders equitable relief no longer possible, brings his action for such relief, equity will retain jurisdiction and award him the damages he may be entitled to. But if he brings an action for equitable relief with knowledge of the facts that such relief is no longer possible, the complaint will ordinarily be dismissed and he will be remitted to his remedy at law. (Hatch v. Cobb, 4 John. Ch. 559; Kempshall v. Stone, 5 id. 193; Morss v. Elmendorf,
11 Paige, 287.)
If, therefore, the plaintiffs brought the action in good faith, believing that the bonds were in the possession of Riggs  Co., without knowledge of the fact that they had been sold and disposed of, a court of equity may properly retain jurisdiction of their action to award them such relief as they are entitled to. But what relief can they have? The bonds are gone and can be no longer reached. Prior to the sale of the bonds, Riggs  Co. were under no obligation to the plaintiffs and no judgment inpersonam could be recovered against them. They held the bonds subject to the lien. But after the sale the relations of the parties was changed. The bonds were converted into money and Riggs  Co. held the money, in the place of the bonds, and, having the money, must account to the plaintiffs for the value of their lien. But the lien covered only a portion of the bonds. It did not cover their entire value, and, consequently, only a portion of the money received upon the sale could be claimed by the plaintiffs. But this portion cannot be separated or identified from the rest of the money, so that we cannot determine that the lien attached to any particular part or portion of the money received; and it does not appear that it has ever been kept separate and distinct *Page 149 
from other moneys, so that any particular fund or money can be proceeded against in rem. We must, therefore, treat it as money had and received, for which Riggs  Co. are liable to account to the plaintiffs for the value of their lien. It consequently appears to us that the only relief that could be given would be a money judgment for the amount of the lien. Might not this relief have been obtained by an action at law? The defendants had an interest in the bonds as owners. The plaintiffs had an interest in them as lienors. Both parties were interested. They were not tenants in common or joint owners and yet their relations after the sale were in some respects similar to a case where one joint owner had disposed of the entire property and had received the proceeds thereof. It may have been disposed of under circumstances which would constitute a conversion, or it may have been disposed of under circumstances in which the seller recognized the joint ownership, and received the proceeds as the agent or trustee of such joint owner. In either case, the joint owner had the right to treat the sale as made for his benefit and on his account and recover in an action of assumpsit the amount of his interest. Riggs  Co. sold the bonds in the open market to strangers, for full value, under circumstances making it difficult, if not impossible, to further trace them. The plaintiffs' lien was thereby made unavailable and was in effect destroyed. Riggs  Co., having received the full value, must be deemed to have received the plaintiffs' interest and to hold it for and on their account. It might be called a constructive trust or perhaps it would be more accurately described as analogous to a trust in which the law implied a promise to pay, and an action in assumpsit would lie therefor as for money had and received. (Pierson v. McCurdy, 33 Hun, 520; affirmed, 100 N.Y. 608; 3 Pomeroy Eq. Jurs., § 1234.)
It is also contended that the transfer of the bonds destroyed the plaintiffs' lien, and that an action on the case for such destruction could be maintained. (Yates v. Joyce, 11 Johns. 136; Lane v. Hitchcock, 14 id. 213; Van Pelt v. McGraw,4 N.Y. 110; Manning v. Monaghan, 23 id. 539; Hale *Page 150 
v. Omaha Nat. Bank, 49 id. 626; 64 id. 555; Husted v.Ingraham, 75 id. 259.)
But we do not care to consider this question, for, under our views of the case, it becomes unimportant. Our conclusions are that, if an action in equity can be maintained at all, it can be only for a money judgment to the amount of the plaintiffs' claim, and that an action at law may be maintained for the same relief, and that the remedies are concurrent.
Prior to the adoption of the Code of Procedure it was provided by the Revised Statutes that "whenever there is a concurrent jurisdiction in courts of common law and in courts of equity, of any cause of action, the provisions of this title limiting a time for the commencement of a suit for such cause of action in a court of common law shall apply to all suits hereafter to be brought for the same cause in the court of chancery." (2 R.S., 301.)
The adoption of the Code did away with this provision of the statute, but it was not intended to change the law in this respect. The court of chancery has been abolished, and it was not necessary to continue this section in the Code, for the provisions of the Code were so framed as to include all actions not excepted, and prescribed uniform rules declaratory of the time within which they might be brought. And the limitations of actions in equity follow that prescribed in actions at law of concurrent jurisdiction where the remedy at law is complete and effectual. (Pierson v. McCurdy, supra; Butler v. Johnson,111 N.Y. 204.)
The trial court and the General Term appear to have reached the conclusion that the plaintiffs' lien was property and that the sale of the bonds in the market was a destruction of the plaintiffs' lien, and that it constituted an injury to property within the meaning of subdivision 3 of section 382 of the Code. We do not consider or question these conclusions, for if we are right in the view which we have taken, that there was an implied promise to pay, and that an action in assumpsit would lie thereon, the case would be controlled by subdivision 1 of section 382, which prescribes a limitation of six years in *Page 151 
an action upon a contract, obligation or liability, expressed or implied, except a judgment or sealed instrument. There is no no pretence that this case is brought within the exceptions mentioned. It consequently remains to be determined as to when the statute commenced to run. Ordinarily an action for money had and received, accrues as soon as the defendant has received the money. It is contended, however, that in this case no cause of action accrued to the plaintiffs until they obtained their decree in their action against McDonald and White in the Supreme Court of the District of Columbia, which was on the 17th day of April, 1878; but we do not understand that the plaintiffs' lien was created by the decree in that action. It was created by the contract which the plaintiffs made with McDonald to prosecute his claim before the commission, and has existed ever since by virtue of that contract. When the money was paid over to the receiver, to be invested in bonds, the lien was, by the contract and agreement of the parties, transferred to such bonds. The decree of the court adjudged and determined that there was such a contract and lien existing. It was not necessary for the plaintiffs to delay the bringing of this action until that action was determined. They were at liberty to prosecute the defendants immediately upon their disposing of the bonds. All the facts in reference to the making of the contract, the obtaining of the award, the existence of the lien, could have been shown in this action as well as in that. It is possible that the plaintiffs would have been prejudiced by the decrees entered upon the sustaining of the demurrer during the time that those decrees were in force, unreversed. But those decrees were reversed on the 4th day of March, 1876, more than eight years before the commencement of this action. The plaintiffs claim that they did not know of the sale; but ignorance of the fact that they had a cause of action against the defendants does not prevent the running of the statute in cases of this character. The provisions of subdivision 5 of the section of the Code under consideration, have no application to actions brought upon implied contracts to pay. *Page 152 
We are, consequently, of the opinion that the statute of limitations had run at the time this action was brought, and that the judgment should be affirmed, with costs.
All concur with BRADLEY, J., except FOLLETT, Ch. J., HAIGHT and BROWN, JJ., dissenting.
Judgment reversed.