Ridgway v. Bacon

FOLLETT, J. This is a very simple and common equitable action brought to have it adjudged that a lien exists on a specific fund in the hands of one of the defendants, for its enforcement out of that fund, to determine the rights of the two rival claimants to the lien, and for the recovery of a judgment for any deficiency against the person who gave the lien as security for the performance of his promise to pay a definite sum of money. Such an action may be maintained in a court of equity. Fletcher v. Morey, 2 Story, 555; Jones, Liens, §§ 43, 93; Pom. Eq. Jur. §§ 169, 170, 1237. It is alleged that by final judgments of the courts of this state and of the supreme court of the United States,1 there is a fund in the hands of the defendant Boardman, which belongs to the defendant Fiske, who, September 4, 1889, executed and delivered to defendant Bacon an assignment, of which the following is a copy: “In consideration of legal services and money expended by Charles P. Bacon, now of the city of New York, in the action relating to the estate of the foregoing Jennie McGraw Fiske, which is now pending in the supreme court of the United States, I, Willard Fiske, of Ithaca, New York, temporarily sojourning in Florence, Italy, do hereby assign and transfer unto said Bacon thirty per cent, of any and all moneys which may become due to and directed to be paid to me by any judgment in said action, or in any proceedings in the above-entitled matter in the surrogate’s court of Tompkins county: provided, however, that the said Bacon shall pay and satisfy any and all counsel fees and expenses incurred in my behalf in said litigation. “Dated, September 4, 1889. Willard Fiske.” [653] It is farther alleged that on the 24th of September, 1889, the defendant Bacon made and delivered his promissory note to William L. Muller, by which, for value received, he promised to pay Muller or order $25,000 six months after date, at the Farmers’ & Mechanics’ Bank, at Elmira, N. Y., and that for the purpose of securing the payment of said note said Bacon executed and delivered to said Muller the following assignment: “Whereas, an action is now pending on appeal in the supreme court of the United States in relation to the estate of and to the last will and testament of the above named Jennie McGraw Piske; and whereas, I am the attorney of record in said action for Willard Piske, one of the parties thereto; and whereas, I am indebted unto William L. Muller for legal services rendered in said action, and for money advanced by him to me: Now, therefore, in consideration thereof, I do hereby assign, transfer, and set over unto said William L. Muller, the sum of twenty-five thousand dollars out of the amount coming to me in said action in pursuance of my agreement with said Willard Piske in relation thereto, (a copy of which said agreement and of the whole thereof is hereto annexed.) And I hereby authorize and direct the executor of said estate, or the surrogate of Tompkins county, New York, or such other proper person or officer, to pay over to the said Muller or his assigns, out of any moneys due and owing from said estate to said Willard Piske, said sum of twenty-five thousand dollars. And I hereby authorize and direct said Muller to execute a receipt for said sum in his own name, which I do hereby declare shall be received by said executor or surrogate or other proper person, and accepted by me as such attorney or assignee as a voucher and payment of said sum of twenty-five thousand dollars on account of any moneys out of said estate directed to be paid to Willard Piske, or to me as his attorney or assignee, the same as though executed by said Willard Piske, or by me as his attorney or assignee. “Dated, New York, Sept. 24th, 1889. Charles P. Bacon.” It is also alleged that on September 24, 1889, said Muller made Ms promissory note, whereby he promised to pay to the order of defendant Lewis M. Smith $5,000, six months after date, which was indorsed by the payee for the accommodation of the maker, and was discounted for the latter at said Farmers’ & Mechanics’" Bank. That when said last-mentioned note was made and indorsed said Bacon executed and delivered to said Smith the following statement: “I have given to W. L. Muller, for full and valuable consideration, my note-dated September 24, 1889, payable to his order for $25,000, due in six months from said date, and as collateral thereto have executed to said William L. Muller the foregoing assignment Now, therefore, in consideration of L. M. Smith, of Elmira, indorsing the note of said Muller for $5,000 and interest, dated September 24, 1889, and due in six months from its date, and receiving from said Muller my said note for $25,000, and said assignment as collateral security for said indorsement by said Smith, I do hereby declare that my said note to said Muller was given for0 full value, and that there are no offsets or defenses thereto; and further, that I have not made or executed any other-transfer of any of my interest in said contract with said Piske. “Dated, New York, September 24, 1889. Charles P. Bacon.” It is also alleged that said Muller, to secure said Smith for Ms said indorsement, delivered to him said' note made by Bacon for $25,000, and said assignment from Bacon to Muller, and that .said note for $5,000 has been paid, and that the note of Bacon for $25,-000 has not, which, with said assigmnent, said Smith now holds, and refuses to surrender on the ground that he has a further lien [654] on them. These facts constitute a good cause of action against Bacon for the enforcement of the lien and the recovery of a judgment for the deficiency, and the fact that Smith holds or claims to hold the note and assignment as collateral to some promise or liability of Muller is not a good defense in favor of Bacon. It has been long settled that one who has assigned a lien as collateral security may, if he have an existing interest in it, maintain an action for its enforcement, and that the assignee is a necessary party to such an action. Norton v. Warner, 3 Edw. Ch. 106; Simpson v. Satterlee, 6 Hun, 305, affirmed 64 N. Y. 657; Burlingame v. Parce, 12 Hun, 149; Jones, Mortg. § 1375 et seq.; Wilts. Mortg. Forec. §§ 14, 15, 79. The fact that the promise which the lien was given to secure the performance of is negotiable instead of nonnegotiable, is no defense to the action. There is but a single cause of action set forth in the complaint, and all of the parties are necessary ones. The learned counsel for the appellant urges that his client has no interest in the controversy between the plaintiff and Smith. That is clear, and it is equally plain that his only interest in this litigation is to delay or escape payment of his debt. If he owes the debt, as he admits by his demurrer, he can escape all liability and trouble by paying the amount into court, and let the other parties go on with their contest. If he have any defense it can be interposed, and the presence of the other parties to the action will in no way embarrass him. The original lien was created by Fiske, and the instrument by which it was created contains conditions, the nonperformance of which may defeat the lien wholly or partly, and so he is a necessary party for the determination of all of the rights of the parties. The executor of the estate of Jennie McGraw Fiske is the custodian of the fund on which the liens are asserted to exist, who should be bound by the judgment to pay the sum to the rightful owners. This action gives him knowledge of the claims of the parties, and he should have, and undoubtedly desires, the judgment of the court as to whom the fund belongs. What we have written seems to us elementary law, and the only question is whether a party interposing a demurrer so plainly frivolous should be permitted to plead anew. However he may have some defense, total or partial, and so the judgment should be affirmed, with costs, and the demurrant given leave to answer on the payment of the costs included in the interlocutory judgment and the costs of this appeal, within 20 days after notice of the entry of the order on this decision. All concur. Footnotes [1] See 45 Hun, 354, 19 N. E. Rep. 233, 10 Sup. Ct. Rep. 775.