Court Opinion

ID: 5239626
Source: CourtListenerOpinion
Date Created: 2022-01-06 17:22:37.950206+00
Date Added: 2024-06-11T08:27:47.119233
License: Public Domain

Page, J.:
The plaintiff brought an action for $140,000 and recovered judgment for $124,000, with interest, as a preferred claim. An appeal was taken to this court and the judgment was modified to allow the plaintiff to recover as an unpreferred creditor. (167 App. Div. 32.) Both parties appealed to the Court of Appeals, the plaintiff appealing from so much of the judgment as modifies or orders the modification of the judgment as theretofore entered. The Court of Appeals affirmed. (215 N. Y. 733.)
The plaintiff’s time never having been limited by the service of a copy of the judgment with notice of entry, he now appeals from so much of the judgment as fails to allow the claim of the plaintiff for $140,000 instead of $124,000. I am of the opinion that this appeal can be maintained. The subject-matter of this appeal could not be considered on plaintiff’s appeal to the Court of Appeals, because he had not appealed from the judgment of this court. He has accepted no benefit of the judgment nor done anything that could be held as a waiver of the right to appeal. A very similar case (Monnett v. Merz, 28 J. & S. 256) was decided by the General Term of the Superior Court and affirmed without opinion in the Court of Appeals *145(131 N. Y. 646). That case was tried before a referee who reduced plaintiff’s claim, but awarded judgment for plaintiff. Defendant appealed and judgment was affirmed and plaintiff entered judgment of affirmance. Defendant again appealed to the Court of Appeals and judgment was affirmed with slight modification. Judgment was then finally entered and paid in full. Plaintiff then took an appeal for the purpose of reviewing the action of the referee in reducing his claim. On motion to dismiss the appeal it was held that the acceptance of payment of judgment for a less amount was not inconsistent with plaintiff’s right to appeal for the purpose of increasing the amount; and it not appearing that plaintiff’s time to appeal had expired, he could not be deprived of the right to review the action of the referee in reducing his claim.
Upon the merits of the appeal, in my opinion, the judgment should be sustained.
C. A. Moore, Jr., and the Merchants and Manufacturers Securities Company each delivered .to the Nineteenth Ward Bank a demand promissory note for $70,000, with interest at six per cent, and the proceeds were deposited with the Carnegie Trust Company, which agreed to use the amount so deposited to purchase stock of the Carnegie Trust Company, Nineteenth Ward Bank and Twelfth Ward Bank, at prices specified in the letter evidencing the agreement. The Oarnegie Trust Company further agreed to hold the above collaterals so purchased in trust for the Nineteénth Ward Bank, or any trustee named by it, whatever part of the above amount was not employed in the purchase of the above stocks to be subject to the order of the Nineteenth Ward Bank. No part of this money was used to purchase said stocks. Thereafter, pursuant to an order of the Superintendent of Banks, $16,000 was paid by the Merchants and Manufacturers Security Company to the Nineteenth Ward Bank, and in equal amounts applied to the reduction of each of said notes. Thereafter the said notes by mesne assignments became vested in the plaintiff, who brought this action as above stated. It has been determined that the Oarnegie Trust Company received the $140,000 under the trust set forth in the letter above mentioned to hold, the fund or the stock as *146security for the payment of the notes, but that the trust was not of such a character as to give the plaintiff a right to preference over other creditors. {Madison Trust Co. v. Carnegie Trust Co., 167 App. Div. 16; 215 N. Y. 483.) The sole question involved in this appeal is whether the court below erred in refusing to allow the plaintiff’s claim in the entirety for $140,000, and in finding that the plaintiff could only recoveithe amount of the debt due him on the notes, to wit, $124,000.
A case on all fours with instant case it would be difficult to find, for the reason that cash is rarely deposited as collateral security for payment of a loan and it was not the • intention of the parties to this agreement that it should be done, but stocks were to be purchased and held by the Carnegie Trust Company as collateral security. There was no provision in the agreement between the plaintiff’s assignor and the trust company as to what should be done in case of default. Ordinarily the securities are pledged with the lender, and on default he reduces the securities to cash, pays the loan, and if there is a surplus, pays it over to the pledgor. In this case the security for the loan is deposited in the hands of a third person, and, being in the form of cash, we may reason by analogy and treat it on the supposition that the stock had been sold and the $140,000 was held by the Carnegie Trust Company as the avails thereof. In such case the lender could only recover from the depository the amount of the debt for the payment of which the security was pledged, and the depository would be liable to the owner of the collateral for any surplus remaining. I am, therefore, of the opinion that the plaintiff can only recover the $124,000 that was due on the notes. The fact that the Carnegie Trust Company is insolvent, and that for that reason the amount of the debt should be increased in order that the dividends may more nearly pay the amount of the debt, is an argument that the plaintiff should be to that extent granted a preference, a right to which it has been finally adjudicated he is not entitled..
The judgment should be affirmed, with costs.
Clarke, P. J., McLaughlin and Scott, JJ., concurred; Laughlin, J., dissented.