Court Opinion

ID: 5187578
Source: CourtListenerOpinion
Date Created: 2022-01-06 15:30:55.648692+00
Date Added: 2024-06-11T08:26:48.429600
License: Public Domain

McLaughlin, J. (dissenting):
I cannot agree to an affirmance of this judgment. The complaint being dismissed upon the opening of plaintiff’s counsel, it must be assumed that every material fact alleged in the complaint and stated in the opening is true. Starting with this assumption, the plaintiff not only had the right to bring the action in the form in which it did, but, I think, it was its duty to do so. The facts in brief are these: The Hoffman House of New Jersey (not this plaintiff) had outstanding, prior to the 18th of March, 1895, four hundred and twenty-five bonds of $1,000 each, payment of which was secured hy a mortgage upon its corporate property, of which bonds the defendant had three hundred. Proceedings were instituted to foreclose the mortgage and the same were prosecuted to judgment and a sale directed. For the purpose of purchasing the property covered by the mortgage, the defendant caused to be organized this plaintiff, Hoffman House, New York, of which corporation he owned substantially all the stock. This corporation with a small amount in cash and the three hundred bonds held by the defendant, purchased the property covered by the mortgage at the foreclosure sale, an order having been made which permitted the purchase price to be thus paid, provided the plaintiff gave to the referee a bond in the penal sum of $35,000 with sufficient sureties to be approved by the court to pay to the referee, “ his successors or assigns upon demand the cash value of the remain*172ing, to wit: One hundred and twenty-five mortgage bonds of said defendant corporation as soon as their value can be ascertained, and any further sum or sums which may be necessary to pay under the decree in the aforesaid action.” This bond was given by the plaintiff as principal with James D. Leary and Daniel J. Leary as sureties- and it is still in force. The one hundred and twenty-five bonds are still outstanding, and the plaintiff and his sureties on the bond which they gave are still liable to the referee to and for the amount, therein stated.
On the 18th day of March, 1898, one William E. D. Stokes held a judgment rendered in the Supreme Court in the State of New York, against the defendant for upwards of $30,000, which had been affirmed by the late General Term, from which an appeal had been taken and was then pending in the Court of Appeals. The defendant was also indebted at this time to one James D. Leary,, for money loaned in the sum of $25,000, and to indemnify this-plaintiff against any loss which it might sustain by reason of its. giving the $35,000 bond, and also to indemnify one McDonald and Leary against any loss which they might sustain by reason of becoming sureties for the defendant on the undertaking given by him on appeal to the Court of Appeals from the judgment recovered by W. E. D. Stokes, and as security for the loan which James D. Leary had theretofore made to the defendant in the sum of $25,000,. the defendant, on the 18th of March, 1895, executed and delivered to the plaintiff the following instrument:
“ This Agreement, made this 18th day of March, 1895,. Witmesseth:
“ That Edward S. Stokes, of the city, county and State of New York, has assigned and hereby does assign, transfer and set over unto Ronald T. McDonald, of the city of Fort Wayne and State of Indiana, the Hoffman House, a corporation organized under the Laws of the State of New York, and James D. Leary, of the city of New York and State of New York, aforesaid, all that certain judgment entered in the Supreme Court of the city and county of New York on the 27th day of February, 1894, in favor of said Edward S. Stokes and against John W. Mackay and Hector De Castro, being for the sum of ninety-four thousand and six dollars and fifty-three cents ($94,006.53), damages and costs, and the *173claim and demand represented by said judgment, together with all right of action thereon. This assignment, however, is given for the purpose of indemnifying the said above-mentioned assignees against loss or damage by reason of certain obligations entered into by them as bondsmen or sureties for and at the request of Edward S. Stolces. The said obligations are as follows:
“ (1) To secure the said Eonald T. McDonald and James D. Leary against any obligation or liability that they may now or hereafter be under by reason of their becoming sureties or guaranteeing sureties upon an undertaking or bond on appeal from a judgment of about forty-three thousand dollars ($43,000), entered in the Superior Oourt of the city of New York on or about the day of in a case in which Wm. E. D. Stokes was plaintiff and said Edward S. Stokes was defendant.
“ (2) 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.
. “ (3) As security, in addition to that now held, for the payment to James D. Leary of the sum of about twenty-five thousand dollars ($25,000), heretofore loaned by him to said Edward S. Stokes, in or about the month of May, 1894.
" The said judgment and claim is to be collected by, and the money received thereon to be paid over to the Hoffman House, and by it to be applied to the extinguishment of the said several liabilities above recited, and the surplus, if any, to be turned over to the said Edward S. Stokes, or his assigns or legal representatives.
“ The said Hoffman House is to apply these moneys for the purposes above mentioned and for the benefit of the said Eonald T. McDonald, the Hoffman House and James D. Leary, as their interest may appear at the time.
“ In witness whereof \ the said Edward S. Stokes has hereunto set his hand and seal the day and year first above written.
“E. S. STOKES.
“ Witness:
“ Daniel J. Leaby, “ O. O. Gould.”
*174The plaintiff, in pursuance of the foregoing agreement, proceeded to and did collect from the judgment debtors named in the agreement the amount of the judgment therein referred to, and out of the proceeds it paid to Leary the amount of his loan. Subsequently, the judgment held by W. E. D. Stokes was reversed and set aside, and thereupon the defendant, who then happened to be the president of the plaintiff, drew, as such president, a check to himself personally for the balance of the money held by the plaintiff, which it had collected upon the judgment referred to in the agreement, and this action is brought by the plaintiff to compel him to repay to the plaintiff the money thus alleged to have been wrongfully taken from it.
It seems to be conceded in the prevailing opinion, as it certainly must be, that the defendant had no right to this money, but it is said that the action must fail because the plaintiff cannot maintain it as a trustee. In the view which I entertain of the action, it matters not whether the plaintiff be called a trustee, an agent or a custodian of the fund for itself and the other parties named in the agreement of March eighteenth. It has an interest no matter what you call it which enables it to maintain an action against a wrongdoer for the purpose of procuring that which has been wrongfully taken from it.
The agreement authorized the plaintiff to collect the judgment and to apply it to the extinguishment of the liabilities specified in the agreement, and any surplus that might remain after such extinguishment it was to turn over to the defendant. A portion of the agreement has never been performed. There are still outstanding the one hundred and twenty-five bonds referred to, for which the plaintiff and his sureties on the bond which they gave are liable to the referee in the foreclosure action. To indemnify them against loss by reason of this liability, the judgment was assigned and the collection made by the defendant, and under this assignment the plaintiff had the right and it was its duty to hold the money until the liability had been extinguished. To this extent at least a trust was created — a trust for the purpose of collecting and disbursing in the manner specified in the agreement.
The plaintiff was rightfully in possession of the money collected upon the judgment, which collection it had made, if not at the request, certainly with the concurrence of the defendant and all of *175the other parties mentioned in the agreement of March 18, 1895. Being rightfully in possession, it could maintain in a representative capacity, for the benefit of all persons either directly or indirectly interested in that agreement, an action against any person who wrongfully took from it the money which it held.
It would be a sad commentary on judicial procedure if a person could forcibly or without legal authority take from another property to which he was not entitled, and then, when called upon to replace it, could shield or protect himself under the thin cover that the action was not properly brought. Any person who is entitled to the possession of property, no matter for what purpose, has sufficient interest therein to enable him to reclaim that which' has been illegally taken from him. It could just as well be contended that a lawyer who has made a collection for his client could not, as the representative of his client, maintain an action against a thief who had stolen the money from him, as it can in this case that the plaintiff cannot maintain this action against the defendant who took from the treasury of the plaintiff the money which he did.
For these reasons I am unable to concur in the opinion of Mr. Justice Baebett. I think the judgment should be reversed and a new trial ordered.
Judgment affirmed, with costs.