Ward v. Chelsea Exchange Bank

Clarke, J.: The plaintiffs are the committee of all the property within this State of William R. Ward, an incompetent person. The complaint alleges that a commission in the nature of a writ de lunático inquirendo was duly issued hy the Court of Chancery of the State of New Jersey, December 28, 1907, to inquire into the lunacy of William R. Ward; that upon inquisition and by the jurors it was duly found that said Ward was at the time of taking said inquiry a lunatip and of unsound mind, and did not enjoy lucid intervals, so that he was not sufficient for, or capable of the government of himself, his lands and tenements, goods and chattels, and that he had been in that same state of lunacy and unsoundness of mind from at least the 1st day of May, 1904; that said proceedings were duly confirmed and that plaintiffs were appointed a committee and duly qualified; that they were subsequently duly appointed a committee of all the property within this State of said Ward; that said Ward is the owner of certain described bonds and stocks, of which the plaintiffs are entitled to possession by virtue of a special property therein, arising out of their appointment as committee; that at divers times during the year 1907 the defendant obtained possession from said Ward of said chattels; that plaintiffs have duly demanded said chattels but defendant refused to deliver the same, alleging it had received them from Ward during 1907, at a time when he was a depositor with it as security for money claimed to have been advanced upon promissory notes claimed to have been signed by said Ward and promissory notes claimed to have been indorsed as accommodation indorser by said Ward; and at the time or times defendant claims the said Ward made or indorsed said notes and the same were delivered to defendant, Ward was — 640 — a lunatic and incompetent person, and that neither he nor his estate, or have the plaintiffs, received any consideration or benefit from the alleged making, or alleged indorsing, or alleged delivery of the said notes from defendant or any other person; that these plaintiffs are willing to return and hereby offer to return any consideration or benefit that the defendant can establish moved to the said Ward or his estate; that the defendant also received, between the 11th day of December, 1906, and the 1st day of December, 1907, when the said Ward was a depositor and such lunatic, other bonds and certificates of stock besides those described in paragraph III, without any consideration or benefit to said Ward or tó his estate. These plaintiffs do not know what were such bonds and certificates of stock' and have no means of ascertaining what they' were, unless said defendant be compeEed to account herein therefor. That between December 11, 1906, and December 1, 1907, defendant also received certain shares of stock, set forth, as alleged security for money claimed to have been advanced to said Ward upon promissory notes claimed to have been signed by him; that he was such lunatic and incompetent person when the said defendant so received them from him; that neither the said lunatic nor his estate has received any consideration or benefit from such chattels; that said defendant has sold and disposed of the said chattels, receiving therefor divers sums of money, the amounts of which these plaintiffs do not know and have no way of ascertaining except that defendant account herein therefor; that during the time that defendant held said chattels mentioned and described in the paragraphs III, Yin and IX of the complaint, said defendant collected certain of the coupons attached to the bonds therein mentioned, but how much and what coupons these plaintiffs do not know and have no means of ascertaining except the defendant account therefor; that "between January 28, 1907, and August 12, 1907, and while said Ward was such lunatic, the said defendant received divers sums of money (setting forth seventeen separate transactions aggregating $170,390.49) and divers other sums, the amount of which the plaintiffs do not know, and that neither Ward nor his estate has received the benefit of or consideration therefor; that the plaintiffs have — 641 — duly demanded that the defendant account for the moneys received and the amounts realized from the sale of the chattels received by it that it has sold or disposed of and for the coupons or amounts realized from the coupons and bonds aforesaid, but that the defendant has refused to account therefor. Plaintiffs have demanded that defendant return several chattels mentioned in the 3d paragraph which are almost all securities local in character and with a very narrow market, which cannot be disposed of at anywhere near their actual value except under favorable conditions in small amounts to persons knowing the business of the company issuing them and are interested in securities of that character; that each of the certificates of stock mentioned stands on the books of the companies mentioned in the name of said Ward and that each of the certificates now held by defendant has a power of attorney either indorsed thereon or annexed thereto purporting to be signed by said Ward, which was executed at a time when he was a lunatic and incompetent person; that the said Ward is well known to those persons likely to become" purchasers of said securities to be a lunatic and to have been a lunatic at each and all of the times heretofore mentioned; that the sale of such securities held by the defendant is- bound to result in irreparable loss and the actual value of the securities cannot possibly be realized on any sale by the defendant, and the value of the chattels will not be under such circumstances ascertained by a sale. The complaint further sets up that these plaintiffs had commenced an action in replevin to recover the chattels described in the 3d paragraph of the complaint, but had failed to obtain possession thereto and that the defendant prior to the com'encement of this action, had given notice that it would seE he chattels described in paragraph 3 at public, auction, and hreatens and is now threatening to sell such securities. The omplaint demands judgment decreeing whether there was any onsideration or benefit moving to said Ward or his estate from he said defendant for the promissory notes or for the pledge of hé several securities as aforesaid, and if the court determines here was no such consideration or benefit, that it adjudge said otes null and void as to said W ard and that they be delivered — 642 — up to the court for cancellation; that the plaintiffs aré entitled to the 'possession of the chattels mentioned in paragraph 3; that the defendant account for all coupons on the bonds therein mentioned realized on .by it; that it account for'. all sales, moneys received on sales of any chattels receiyedt.by it from said Ward while such lunatic and incompetent '•person, and that'it be restrained from selling or otherwise disposing Of any chattels or securities or selling or transferring any of the said promissory notes pending the determination of the action... ■ In its amended answer, for a further third, separate and distinct defense, the defendant alleged .that the plaintiffs herein, prior to the commencement of this action, and on or about the 27th day of November, 1911, commenced .an action in the New York Supreme Court, New York county, wherein these plain tiffs are plaintiffs and this defendant is the defendant, which said action was an action in replevin and in which the plaintiffs "claim title and right to possession of the chattels mentioned and described in paragraph 3 of the complaint herein; that with knowledge of all the facts in connection with this action and said chattels, the plaintiffs have duly elected to proceed at law in said replevin action, and cannot now, after such election, bring this action in equity. The defendant further answering the amended complaint, for a further fotirth and separate and distinct defense alleges that the plaintiffs herein have, a full, adequate and complete remedy "at law for any and all the matters alleged in the complaint in this action brought by them in equity. To these two defenses the plaintiffs interposed demurrers on the grounds that the same were insufficient in law upon the face thereof. The said demurrers having been ■ overruled plaintiffs appeal. The third defense, that the plaintiffs have instituted an actio: for replevin, and, therefore, have duly elected to proceed at la and cannot, after such election, bring this action in equity, not alleged to be a partial defense. That it is a partial defens to the cause of action set up in the complaint, if any defense a all, is apparent. Its statement as to the replevin action i¡ limited. It is that such action was brought under a claim o: title and right to possession of the chattels mentioned and described in paragraph 3 "of the complaint herein. The com| — 643 — plaint covers many other matters besides the chattels mentioned and described in. said paragraph. This defense cannot, upon demurrer, be treated and tested as a partial defense because it is not alleged to he a partial defense in accordance with the provisions of section 508 of the Code of Civil Procedure. As a complete defense it is insufficient in law upon the face thereof. The demurrer to the fourth' separate and distinct defense should also have been sustained. This complaint is in equity; the relief demanded is that which can only be administered by a court of equity in an equitable action. In Golden v. Health Department (21 App. Div. 420) there was a demurrer to a defense of adequate remedy at law. Mr. Justice Rumsey said: “ Neither of these defenses contains any general or special denial, but each one is confined simply to the statement of new matter which is relied upon to constitute a defense. In such a case, where a demurrer is interposed to an affirmative defense consisting of new matter entirely and containing no denial, all the allegations of the complaint are admitted for the purposes of the demurrer, as though the defense demurred to was only the defense set up in the answer. * * * There can be no doubt that the plaintiff has set up in this complaint an equitable cause of action, and that upon the facts stated he has not an adequate remedy at law. * * "x" The 3d paragraph of the answer, constituting a separate defense, is, therefore, not sufficient, and the plaintiff was entitled to judgment upon his demurrer to that defense.” Edmonds v. Stern (89 App. Div. 539) was an action for the cancellation of certain contracts. Among other defenses the answer set up that the plaintiff has an adequate remedy at law which was demurred to as insufficient. Mr. Justice O’Brien said: “ The question presented is not, so far as this court is concerned, a new one, it having been expressly passed upon in Golden v. Health Department (21 App. Div. 420). The Appellate Division of the Second Department followed that case and held that it was controlling where the same uestion arose in Olivella v. N. Y. & H. R. R. Co. (51 App. iv. 612). The opinion of the Special Term in this latter case * * will be found in 31 Miscellaneous Reports, 203, — 644 — wherein it was held (head note), ‘A separate defense, interposed in an action in equity, alleging only a pure conclusion of law, i. e., that the plaintiff has an adequate remedy at law, ‘ consists of new-matter5 within the meaning of section 494 of the Code of Civil Procedure, and may properly be demurred to under that section upon the ground that it is insufficient in law upon the face thereof. ’ These cases are authority for the proposition which has been sustained by both departments, that to a complaint which is purely equitable in its nature arid in which only equitable relief can be afforded, a defense that the plaintiff has an adequate remedy at law is insufficient and its insufficiency can be raised by demurrer.” This was followed in Friedman v. Columbia Machine Works (99 App. Div. 504). In Holland v. Grote (193 N. Y. 262) Hisoock, J., said: “The second defense ‘ that the plaintiff has an adequate'and complete remedy at law ’ likewise is insufficient. In the absence of other allegations this answer must be construed and interpreted by reference to the material allegations of the complairit as they stand. It does not allege any additional facts showing that an adequate remedy at law does exist, but simply asserts that on the complaint as framed such remedy does exist. An inspection of the complaint shows that on the material and substantial facts as there alleged the plaintiff must necessarily resort to equity and cannot secure sufficient relief elsewhere; unless he completely changes his cause of action he must seek equitable relief.” The interlocutory judgment sustaining plaintiff’s demurrer was affirmed. It follows, therefore, that the order appealed from overruling the demurrers to the third and fourth defenses should be reversed, with costs and disbursements to the appellants, and that said demurrers be sustained, with costs, with leave to defendant to amend its answer within twenty days on payment óf costs in this court and in the court below. Ingraham, P. J., McLaughlin, Scott and Dowling, JJ., concurred. Order, so far as appealed from, reversed, with ten dollars costs and disbursements, and demurrers sustained, with ten dollars costs, with leave to defendant to serve amended answe on payment of said costs.