Clark v. Vilas National Bank

Putnam, J.: The interest of the respondent in the mortgaged premises, or in the personal property of Newton & Co., cannot be affected by these actions until the plaintiff obtains judgment therein. If any of the defenses interposed are valid, the Vilas National Bank does not require any stay of proceedings, because on a trial it will prevent the obtaining of a judgment by the plaintiff. If none of the defenses are valid, and the plaintiff in fact is entitled to a judgment ; if she, as the owner of the bonds and mortgages described in the complaint, has valid and legal claims against the property in question, she should not be restrained by the order of this court from collecting her debt, unless for reasons hereinafter suggested, especially as it appears that there are prior mortgages on the same property on which foreclosure actions may be instituted, - and that the mortgagors are insolvent. As the Vilas National Bank applied for the order in question on the same facts as are set out in the answers as a defense to the actions, ordinarily the proper procedure for the parties would be to try the questions raised by the pleadings in the actions in the usual way, rather than on affidavits on a motion to stay proceedings. A stay of proceedings has, however, been sometimes granted in actions where a former action between the same parties is pending which will determine the issues raised in the latter. It has been held, however, that such a stay will not be directed where it appears that, whatever be the result of the first action, a trial of the second will be necessary. If only a portion of the questions involved in the last action will be settled in the first,, a stay will not be granted. (See 2 Rumsey’s Pr. 178, and cases cited ; The People v. Northern R. R. Co., 53 Barb. 98, 121; Burlingame v. Parce, 12 Hun, 149, 151.) Will the final judgment that may be rendered in the action brought by the Vilas National Bank against the plaintiff and others determine the issues in these actions ? The first defense in these cases puts in issue the execution and delivery of the bonds and mortgages in suit. Of course, the issue thus raised will not be determined in the first action. The second defense sets forth a conveyance of the mortgaged premises subsequent to the execution of the mortgages, by the owners of the equity of redemption, to the plaintiff, and that thereby the mort [608] gages became merged and extinguished. This issue also will not be determined by the judgment that may be entered in the first action. And it may be remarked that the respondent requires no stay of proceedings in order to properly present the defense last referred to on the trial of these actions. If the defense is valid, the defendant on the trial of the action will be able to prevent a recovery by the plaintiff. The third defense, not denying that the mortgages in suit are valid instruments, sets up a fraudulent transfer by the members of the firm of Newton & Co. to the plaintiff of the mortgaged premises and certain personal property described in the answer, to the plaintiff, and her conveyance thereof to Newton & Co., Incorporated; that the Vilas National Bank had commenced an action to vacate said transfers, and obtained, before the commencement of these actions, a judgment decreeing the said transfers to be fraudulent and void as to it, and that the plaintiff account to said bank" for the property taken, which amounts to several thousand dollars, and the answer avers that plaintiff is indebted to said bank for and on account of said property in an amount exceeding $6,000. It is probable that the claim which the respondent may be able to establish against the plaintiff on an accounting will be inconsiderable, as she received a conveyance of the property in question on May 20, 1891, and transferred said property to Newton & Co., Incorporated, on June eighth thereafter. But however that may be, the respondent does not set up such claim as a set-off or counterclaim. Had the respondent attempted to do so, it is not clear that, under the circumstances, it is a case where an equitable offset could be allowed. It is not claimed that the plaintiff is not amply responsible for any sum the respondent may recover or show due on an accounting. A set-off in equity in such a case is only allowed when there is some intervening equity which renders the interposition of a court of equity necessary to protect the creditor. (Elliott v. Smith, 77 Hun, 116; Pond v. Harwood, 139 N. Y. 111.) If the plaintiff is responsible, no such interposition is necessary, and no reason is apparent for restraining the plaintiff from proceeding in her actions until the amount of the plaintiff’s claim can be established. But, as suggested, the bank does not set up the claim to be established on an accounting as a set-off; does not ask to have it applied [609] on the mortgage in suit. Hence, it is not apparent why the facts set out in the third defense aver any ground for the order in question, or why the fact that the defendant has an unliquidated claim against the plaintiff to be established in the pending action arising out of her connection with the wrongful and unlawful scheme of Newton & Co. to transfer the property in question with intent to defraud creditors, avers any defense to these actions, in the absence of any claim that she is irresponsible for the damages that may be awarded against her in the former action, or of any demand that such damages when ascertained shall be applied as an equitable offset on the mortgages in suit. We presume that it will not be seriously contended that the facts stated in the fourth answer set out any defense to these actions. It is not averred therein that the plaintiff’s mortgages are invalid unless rendered so in consequence of the facts therein set forth. Nor does the pleading set forth any facts tending to substantiate the charge therein contained of fraud and conspiracy on the part of plaintiff in instituting actions to collect her valid mortgages. Assuming that the plaintiff, owning the mortgages in suit, entered into a fraudulent scheme with the owners of the equity of redemption to transfer the mortgaged premises and certain personal property from such owner to the plaintiff, and from her to Newton & Co., Incorporated, in consequence of which the respondent was injured, such scheme had no connection with, or relation to, her mortgage lien on said property existing long before it was formed, and could form no defense to her subsequent action to foreclose the mortgages. Nor if the plaintiff had a valid lien on the premises in question under her bonds and mortgages, was her motive or intent in commencing the actions material. N or is it apparent how the fact that a sale of the premises in question, under the foreclosure commenced by the plaintiff, will depreciate the value of the personal property thereon on which the defendant has a lien, can form a defense to the action. In the absence of any claim in the third part of the defendant’s answer for an equitable set-off of the sum that may hereafter be established as due from the defendant on an accounting in the first action, or of any allegations showing such a set-off to be proper, or showing any good reason why the plaintiff’s proceedings should be [610] restrained until such accounting shall be had, and under the facts alleged in the defendant’s fourth answer, it is not apparent that any defense is set forth in either of said answers. We, therefore, reach the conclusion that the order from which the appeal is taken cannot be sustained. All concurred. Order reversed, with ten dollars costs and disbursements, and motion denied, with ten dollars costs.