Court Opinion

ID: 3620812
Source: CourtListenerOpinion
Date Created: 2016-07-06 00:02:38.200491+00
Date Added: 2024-06-11T13:53:12.183373
License: Public Domain

There are two questions presented on this appeal and both arise on the pleadings. The first is whether the complaint set forth a good cause of action against the defendant, the second whether that cause of action had been released previous to the institution of the suit. If either of these questions was decided against the plaintiff it would have been unreasonable for the trial court to proceed with the trial, for in such event there could be nothing to try.
The complaint was dismissed at Trial Term on the ground that the plaintiff sued as trustee, while the cause of action set forth in the complaint was in favor of the plaintiff individually. The Appellate Division by a divided court has on this theory affirmed the action of the Trial Term. In this view I do not concur. It is true the title of the summons and that *Page 357 
of the complaint state the name of the plaintiff as "Hoffman House, New York, as Trustee," but as trustee for whom or for what is not stated. The complaint sets forth the instrument under which the judgment recovered by the defendant against Mackey and others was assigned to the plaintiff; it states the collection of the judgment by the plaintiff and the subsequent appropriation of the fund by the defendant, who was at the time an officer of the plaintiff and in control of its management, and it prays judgment that the defendant pay "to the plaintiff Hoffman House, New York," the sum of thirty-five thousand dollars with interest, being the amount for which the plaintiff was liable on a bond which it had previously given. Thus the complaint stated all the facts, and if from those facts there arose a good cause of action in favor of the plaintiff individually it was entitled to recover in its own right, despite its description as trustee in the title of the summons and complaint. (Litchfield v. Flint, 104 N.Y. 543; see cases there cited.) This would seem to have been the notion of the pleader who drew the answer, for in that answer there are alleged both a personal release from the plaintiff and a counterclaim against the plaintiff individually. That the complaint stated a good cause of action in favor of the plaintiff either in one capacity or the other cannot be questioned.
To the allegation of the release the plaintiff replied by denying that it thereby discharged the defendant from any cause of action which it as trustee had against him, and it also set up in bar of the defendant's counterclaim the same settlement, alleging that thereby the plaintiff released the defendant from all causes of action against him in favor of the plaintiff in its individual capacity, and that in consideration thereof the plaintiff was discharged from all liability to the defendant. It is, therefore, clear that by the pleadings it appeared that all personal claims or demands against the defendant had been discharged, and there remains the sole question whether the claim of the plaintiff to a portion of the proceeds of the assigned judgment was in its own right or for *Page 358 
the benefit of others. It seems to me unnecessary to consider whether by the instrument of assignment the plaintiff was created a trustee or not. The first and third of the liabilities as indemnity against which the Mackey judgment was assigned had been discharged by the defendant. He had succeeded in setting aside the judgment for which McDonald and Leary were sureties on appeal. He had paid Leary the debt of twenty-five thousand dollars specified in the assignment. The only purpose still outstanding was the second: "To secure the said Hoffman House against any liability heretofore incurred or which it may be under by reason of its being a surety or liable in a proceeding in which the Farmers' Loan  Trust Company, as trustee, was plaintiff, and the Hoffman House of New Jersey was defendant, which obligation was for about thirty-five thousand dollars ($35,000), originally." It is the sum of money requisite to discharge this obligation and only this sum that the plaintiff seeks to recover. If this obligation inured to the benefit of the plaintiff alone, it is plain that the claim against the defendant for the conversion of the fund was the personal claim of the plaintiff, and it is admitted that all such claims held by either party to the action against the other were released and discharged by the settlement of September 25th, 1897. If a recovery is had in this action and the money applied to the satisfaction of the bond it will inure directly to the advantage of plaintiff, who will obtain thirty-five thousand dollars from the defendant, although the parties agreed to release their several demands. The theory on which such result is sought to be accomplished is that the plaintiff is a trustee, not only for itself, but for the persons who became sureties on the bond it gave in regard to the liabilities specified in the assignment. That a party cannot well be trustee for himself is settled by the decision of this court in Greene v. Greene (125 N.Y. 506). Though if the contrary were the law I do not see how it would affect the question. So far as the plaintiff was a beneficiary under the assignment, even if the assignment had been made to another as trustee, it could release the defendant from any conversion *Page 359 
of the trust fund; and if the plaintiff was the sole beneficiary its release would be a bar to any action by the trustee. The controversy, therefore, becomes further narrowed to the single question whether the assignment was for the benefit of the sureties of the plaintiff and created a trust in their favor. It would seem that even a casual reading of the instrument disposes of such a contention. The purpose of the assignment is said to be "to secure the said Hoffman House against any liability." It is not stated to be for the purpose of indemnifying the sureties. There is no reference to the sureties, nor does it appear from the instrument that there were any such sureties. The final clause of the assignment does not in any way extend or amplify the objects before specified. The learned prevailing opinion is erroneous where it is stated that the assignment provides that the plaintiff is to apply the moneys collected on the judgment "for the benefit of the sureties (naming them) `as their interest may appear.'" The provision is that the moneys shall be applied "for the benefit of the said Ronald T. McDonald, the Hoffman House and James D. Leary as their interest may appear at the time." McDonald was not a surety on the bond given by the plaintiff. James D. Leary was one of such sureties, and Daniel J. Leary was the other, but the name of the latter nowhere appears in the assignment. If it was the intention, by this clause, to indemnify the plaintiff's sureties, why was not Daniel J. Leary mentioned as well as James D. Leary, and why was McDonald mentioned at all? The specification of McDonald, the Hoffman House and Leary was, however, entirely accurate on the assumption that the assignment was intended to secure only the parties named in it against the liabilities therein specified, for McDonald and James D. Leary were the sureties on the appeal bond, the Hoffman House was principal on the bond given in the foreclosure suit and James D. Leary was a creditor of the defendant for the sum of twenty-five thousand dollars. There is this further suggestion to be made: If the plaintiff recovers this claim as trustee for its sureties, will that relieve the plaintiff from its primary obligation *Page 360 
to pay its own bond, or if the recovery is applied toward the satisfaction of that bond in exoneration of the sureties, will the defendant be subrogated to the claim of those sureties against the plaintiff?
The judgment appealed from should be affirmed, with costs.
BARTLETT, HAIGHT and VANN, JJ., concur with O'BRIEN, J.; PARKER, Ch. J., and WERNER, J., concur with CULLEN, J.
Judgment reversed, etc.