Court Opinion

ID: 3622627
Source: CourtListenerOpinion
Date Created: 2016-07-06 00:04:05.408497+00
Date Added: 2024-06-11T14:07:36.538781
License: Public Domain

The counsel for the respondent insists that the judgment is not a final determination of the controversy, and therefore not appealable to this court. The judgment determines that the plaintiff is entitled to the thirteen shares of stock, the subject of the litigation, and adjudges and directs the defendant, within five days after notice of its entry, to assign and deliver the same to the plaintiff, together with all evidence and papers relating to the title. It also determines that the plaintiff is entitled to recover costs of the defendant, and adjusts the amount thereof at $403.55, and awards execution therefor against the defendant; in these respects the judgment is final and the plaintiff can at once proceed to obtain satisfaction. But the judgment further determines that the defendant shall account for and pay over to the plaintiff all interest and dividends received by him upon such stocks, and appoints a referee to take and state an account thereof, and determines the manner in which such account shall be taken, and provides that upon the confirmation of this report the plaintiff shall have judgment for the amount so found to have been received by the defendant. In respect to this, the judgment is not final. The Code, section 11, provides that an appeal may be taken to this court from any actual determination made at a General Term of the Supreme Court and in a judgment in an action commenced therein or brought there from another court. In this case the judgment actually determines the title to the stock, and provides that the defendant shall within five days after notice of its entry, transfer the same to the plaintiff. It also awards execution against the defendant forthwith for the costs. In respect to the recovery of the interest and dividends received by the defendant, there appears to have been a severance and a separate and distinct judgment directed by the court therefor. This somewhat novel proceeding resulted from the award of final judgment by the General Term instead of ordering a new *Page 297 
trial upon the reversal of the judgment of the Special Term.Butler v. Lee et al. (3 Keyes, 70) and Adams v. Fox
(27 N Y, 640), are cited by counsel. In the former the judgment gave the plaintiff relief conditioned upon the performance by him of certain acts in a specified time, and, in case of his default, dismissed the complaint with costs to the defendant. It was no final judgment in favor of either party, and left it doubtful for which party such judgment would be given. The latter was an order for judgment for the defendant upon demurrer to the complaint, with leave to the plaintiff to amend upon terms. The appeal of the plaintiff therefrom, was dismissed for the reason that it was not final, but dependent upon the election of the plaintiff to amend or not upon the terms imposed. I think the judgment in the present case must be regarded as final, and that the question as to the interest and dividends must be regarded as severed, and a separate judgment in respect thereto provided for. The counsel for the respondent insists that the defence was not admissible under the answer. The complaint, in substance, alleged facts showing, as claimed by the plaintiff, that he was the owner of thirteen shares of stock in an incorporated stage company in New York, which had been transferred to one L.J. Weaver, for the plaintiff, which the latter had transferred to the defendant, as the defendant claimed, in payment of a debt due from the defendant to him, and prayed that the defendant might be adjudged to assign and deliver such stock to the plaintiff and pay him the dividends received thereon. The answer was a general denial. To establish a cause of action, the plaintiff was bound to prove that he was the legal owner of the stock or equitably entitled to the same as against the defendant under this answer; the defendant had the right to give evidence controverting any fact necessary to be established by the plaintiff to authorize a recovery, but not to procure a defence founded upon new matter. Upon the trial, it was proved by the plaintiff that one Finch had formerly owned the stock. That he assigned the same with other property to L.J. Weaver and one Hutchins, in trust for his creditors, *Page 298 
of whom the plaintiff was one. That Finch compromised with his creditors thereafter, and made an agreement with the plaintiff to take the stock in question, in satisfaction of the balance of his debt. That under this agreement the stock in question was transferred to L.J. Weaver, the son of the plaintiff, and in some matters his agent in New York, with intent to satisfy the plaintiff's debt. That the plaintiff was ignorant of the stocks being transferred to L.J. Weaver, or of the same being placed in his name upon the books of the company. That L.J. Weaver subsequently transferred the same to the defendant, who refused to transfer the same to the plaintiff, upon being requested so to do, or to account for and pay the dividends to the plaintiff. The facts proved showed that the legal title to the stocks was in L.J. Weaver. Finch, the former owner, had procured the same to be assigned to him by his trustee, without indicating any interest in any other person therein. It was registered in his name upon the books of the company; but the facts proved showed that, as between him and the plaintiff, the equitable title was in the latter, for whom L.J. Weaver held the stock as trustee. That L.J. Weaver transferred the stock to the defendant, who claimed the title by virtue thereof. This established the plaintiff's right to the stock as against the defendant, unless he was a bonafide purchaser from L.J. Weaver. (Crocker v. Crocker,31 N Y, 507.) To meet this case, the defendant offered to prove in substance that he was a bona fide purchaser of the stocks from L.J. Weaver. The Special Term held, overruling the plaintiff's objection, that this was admissible under the answer. This was error. Under the general denial the defendant could not introduce evidence tending to show a defence founded upon new matter, but such only as tended to disprove any fact that the plaintiff must prove to sustain his case. The plaintiff was not bound to prove, for this purpose, that the defendant was not a bona fide
purchaser for value of L.J. Weaver. It was enough for him to show his equitable title to the stock in the first instance, and then it was incumbent upon the defendant to show that this equitable *Page 299 
title was barred as against him. Showing that he was a bonafide purchaser from L.J. Weaver would bar this equity; but this was a defence founded upon new matter, and should have been set up in the answer, and then the plaintiff would, perhaps, have been prepared to meet it. Had the evidence been excluded by the Special Term, the defendant could, if so advised, have taken steps to procure an amendment of his answer, so as to make the defence admissible. Had the General Term reversed the judgment upon the ground that this defence was improperly admitted, a new trial should have been ordered to enable the defendant to procure such amendment, which the Special Term has power to grant, upon terms deemed reasonable. Had the General Term ordered a new trial and the defendant had appealed therefrom, the order must have been affirmed by this court, and judgment absolute for the plaintiff ordered. But the General Term did not order a new trial, but gave judgment absolute for the plaintiff. Such a disposition of the case can only be sustained when it is apparent that no evidence which the defendant can give, under any answer which the Special Term has the discretionary power to authorize, will establish a defence, when, as in the present case, the defendant has had no occasion to apply for the exercise of this discretion. (Griffin v. Marquardt, 17 N.Y., 28.) The facts found show that L.J. Weaver had the legal title to the stock; that he transferred this title to the defendant. The counsel for the respondent claims that the equitable title of the plaintiff was available against this title of the defendant, although acquired upon a bona fide purchase, for the reason that L.J. Weaver took the title without the knowledge and consent of the plaintiff. But the plaintiff never had the legal title to this stock. That was transferred to L.J. Weaver by the former owner, and his transfer of the same to a bona fide purchaser gave the latter this title and a right in equity equal to that of the plaintiff, and thus the case comes within the familiar principle that where the equity of the parties is equal, the legal title will prevail. This was the principle upon which Crocker v.Crocker *Page 300 
(supra) was decided. The length of time that the legal title had been held by the trustee, or whether taken in his name with the assent of the equitable owner, cannot affect the equities between such owner and a bona fide purchaser from the trustee. Where the trustee has the legal title and transfers it to a bonafide purchaser, the title of the latter, as to real estate, has always been held to prevail as against any equity to which the estate was subject in the hands of the trustee. The same is true as to stocks or any other personal property. This does not result from any idea of the negotiability of the property, whether real or personal, but from the principle above referred to that, where the equities are equal, courts of equity will not interfere to divest the legal title. (See McNeil v. Tenth National Bank,46 N.Y., 325.) The proof showed that the defendant was a bonafide purchaser. He paid for the stock in part by butter sold at the time, and the residue of the price was applied in payment of an existing account. (Brown v. Leavitt, 31 N.Y., 113;Seymour v. Wilson, 19 N.Y., 417.) I have examined the exceptions taken to other rulings upon the trial as to the competency of evidence, and think none of them well taken. The judgment of the General and Special Terms must be reversed and a new trial ordered, costs to abide event.
All concur in result, except CHURCH, Ch. J., not voting.
GROVER, J., dissents from opinion of ALLEN, J., that defendant is not a bona fide purchaser.
Judgment reversed. *Page 301