Tiffany v. Norris — 28 Abb. N. Cas. 97

Majority

p. 97

TIFFANY v. NORRIS.

N. Y. Supreme Court, General Term, First Department ;

March, 1892.

Headnote

1. Injunction; action to restrain the enforcement of a judgment.J It seems that a complaint seeking to enjoin the enforcement of.' a judgment on a note, upon the ground that the party recovering the same had, since its recovery, put it out of his power to-perform his covenants of an agreement to dissolve a partnership, conditional on the note first being paid, states no cause of action ; in that it appears that the plaintiff has committed the first breach of the agreement by not paying the note, and has, therefore, no-right to enforce it against defendant.^[1]

2. Parties ; Receivers.] In an action to set aside a judgment—Heldi that all rights of action in respect to plaintiff’s property having vested in a receiver appointed in supplementary proceedings, the receiver should have been made a party.

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3. Demurrer to answer.] A demurrer to the defense in an answer that the plaintiff has an adequate remedy at law, should be overruled where the answer also denies the facts upon which equitable relief is sought. (On opinion of special term.)

Appeal from an interlocutory judgment overruling a demurrer to several defenses in an answer.

The action was brought by Walton C. Tiffany against. William M. Norris to restrain the enforcement of a judgment upon a note upon the ground that it had been given under an agreement to dissolve a partnership and that defendant had, since the recovery of the judgment, disabled himself from performing the agreement on his part.

The following is the material portion of the agreement for dissolution :

“And whereas the said Tiffany and Norris have accounted together concerning the affairs of the said late co-partnership of Walton C. Tiffany & Co., and there was found due the said William M. Norris from the said co-partnership as a compromise the sum of $5,900.

“ And whereas the said Norris agrees to accept this sum in lieu of all pecuniary interest in said co-partnership, and has received from said Tiffany his two promissory notes, one for $5,300, payable in two months, and one for $600, payable in one year. And upon payment of the first note for $5,300, at its maturity, the said Norris agrees to release the said Tiffany from all claims and demands he ever had, now has, or can or may hereafter have, against said Tiffany, by reason of said co-partnership, or for, or on account of, any and all matters or things connected with or growing out of the same, and to transfer to the said Tiffany all his rights, title and interest in and to the processes, property and assets of said co-partnership now owned or used by the co-partnership business or being perfected by said business, and also all claims to,the caveat for an improvement in a Tan Sweetener granted the said Norris on December 14, 1885,

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•and to all improvements made or owned by him, the said Norris, in the articles of said business. Until the payment by said Tiffany of said promissory note for $5,300, the right, title and interest of said Norris in and to the property and assets of said firm shall continue as security ■and exist in all respects as if the said partnership had not been dissolved or this agreement made.

“ It is distinctly understood that nothing hereinabove contained is to be construed as a release in any way of the •second note of $600 as hereinbefore described.

“ In consideration of the .release aforesaid, the said Tiffany hereby personally assumes the payment of and covenants and agrees to and with the said Norris to pay all outstanding and unpaid debts of and all just claims and demands against the said partnership, and hereby agrees •and covenants to hold the said Norris harmless at all times of and from all such claims, debts and demands.

“And the said Norris further covenants to and with the said Tiffany, that he has kept, and will keep secret, at all times, the secrets of said business, including the receipts for the making or use of the articles or doing the work now advertised by the business, and that he will not impart or communicate the same, or any part thereof, to any other person or persons whomsoever, without the written consent of the said Tiffany having been first obtained by him.

“And that said Norris further covenants and promises that he will not, at any time, engage in any trade or calling in opposition to, orto the detriment of, the business as herein described, to be continued and carried on by the said Tiffany, provided always that the said Tiffany shall keep and perform the obligations herein assumed by him.

“ And the said Norris further agrees that should he, at any time hereafter, make any discovery in an improvement or substitute for existing bates, he, the said Norris, will communicate with and duly inform the said Tiffany in

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writing, and give him the first opportunity to purchase or control it, at a price as favorable as would be concluded, with any other person or persons.

“ In consideration of the premises, the parties hereto declare all accounts pertaining to said co-partnership of Walton C. Tiffany & Co. fully adjusted and settled to-their entire satisfaction, and that the stock in trade and property of the late co-partnership will, upon the payment of said note of $5,300, become the sole property of Walton. C. Tiffany individually, subject only to the payments, aforesaid. [Signatures and seals.~\

The complaint, after setting forth the above agreement and alleging the recovery of a judgment by defendant on the note for $5,300, continued as follows :

“Fourth.—Upon information and belief that thereafter defendant on divers occasions divulged certain of the secrets of said business, without the written consent of the said Tiffany having been first obtained by him, and that defendant thereafter engaged in, and now carries on a trade or calling in opposition to and to the detriment of the business in said agreement described; and that defendant, on or about June 14, 1887, procured Letters Patent of the United States, No. 365,017, to be issued to-him upon an improvement or substitute for then existing-bates, and did not inform the plaintiff in writing thereof,, and did not give the plaintiff the first opportunity, or any opportunity whatsoever, to purchase or control it; and that in said particulars defendant has failed to keep and perform the said agreement on his part; and that in said particulars defendant has disabled himself from performing the said agreement on his part.

“ Wherefore plaintiff prays judgment herein that the defendant and his agents be perpetually enjoined from collecting, or in anywise enforcing said judgment; and that the same be deemed and declared to be void and of no effect, and that the costs of this action be awarded to. the plaintiff.’’

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The answer for a first defense denied the fourth paragraph in the complaint; and for a second, alleged that plaintiff had a complete remedy at law; and for a third, that the receiver of plaintiff’s property appointed in supplementary proceedings to the execution of the judgment upon the note, was a necessary party to the action.

Plaintiff demurred to the second and third defenses.

On the argument of the demurrer, the defendant claimed that the facts stated in the complaint did not constitute a cause of action.

The court overruled the demurrer, giving leave to the plaintiff to withdraw it and to bring in the receiver as a party; LAWRENCE J. rendering the following opinion :

“ The demurrer to the second and third defenses set up in the answer cannot be sustained. The plaintiff does not allege or claim that he has paid the note or the judgment, and he has, therefore, failed to carry out the agreement on his part. Under such circumstances the parties stand just where they would have stood if the agreement had not been made. The allegation that the defendant has engaged in or carried on a trade or calling in opposition to the plaintiff, and divulged certain of the secrets of the business without the plaintiff’s consent, is denied. Under such circumstances Ido not understand how a demurrer can lie to the seconff defense.

“ I am also of the opinion that the receiver of the plaintiff should be made a party to this action, and that, therefore, the demurrer to the third defense stated in the .answer cannot be upheld.

“ It results, therefore, that the defendant is entitled to judgment on the demurrer, with costs.”

Daniel D. Sherman for appellant.

I. The note and agreement should be construed together (Citing Rogers v. Smith, 47 N. Y. 324 ; Knowles v. Toone, 96 Id. 534).

II. Under the contract defendant could have his judgment on the note although nothing had been done

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or offered to be done by him. But when he disabled himself from fulfilling his covenants, he exercised his. right of election to rescind the contract upon plaintiff’s failure to perform his part of the agreement. Such election once exercised is final and no action to rescind the contract lies, as plaintiff has now a complete defense to. any action upon the contract or any part of it (Citing Kirtz v. Peck, 113 N. Y. 222 ; Bruner v. Meigs, 64 Id. 515).

Augustine R. McMahon for respondent.

I. The complaint does not allege or claim that plaintiff on his part has performed the least article of the agreement in any way, nor even that he is now willing or able or offers or claims the right to perform, or that the agreement ever became binding in any way on defendant.

II. A demurrer will not lie to the defense of a remedy at law (Citing Town of Mentz v. Cook, 108 N. Y. 504 Truscott v. King, 6 Id. 147).

III. The receiver is interested in the controversy and should be joined (Citing Barbour on Parties, 1st ed.. p. 321 ; Chapman v. Forbes, 123 N. Y. 532 ; Hammers. Barnes, 26 How. Pr. 174 ; Crook v. Findley, 60 Id. 375 ; Arnold v. Suffolk Bank, 27 Barb. 424 ; Cohen v. Ellis, 4 State Rep. 721).

This action was brought by the plaintiff to have declared void and of no effect a judgment recovered in this court against him by the defendant, the claim being that the judgment was obtained on a promissory note given by the plaintiff to the defendant upon the dissolution of a co-partnership, and that since the procurement of such judgment the defendant has violated certain of the provisions of such articles of dissolution and that he has disabled himself from performing the agreement on his part. The answer denied the breaches alleged on the part of plaintiff and set up for a

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second defense that the plaintiff had a complete remedy at law if any cause of action existed, and for a third defense that prior to the commencement of the action a receiver had been duly appointed of the real and personal property of the defendant who had duly qualified and entered on the discharge of his duties.

The plaintiff demurred to the second and third defenses on the ground that each of such defenses is insufficient in law upon the face thereof.

Upon the argument of this demurrer, it was claimed by the defendant that the facts stated in the complaint did not constitute a cause of action of any kind, and that it was radically and incurably defective. The demurrer having been overruled from the interlocutory judgment thereupon entered, this appeal is taken.

It seems to be sufificiént for the disposition of this appeal to call attention to the fact, that not only is there no allegation that the plaintiff has performed his part of the agreement, but it seems to be expressly admitted that he has not done so, as, although having given the note on which the judgment is obtained, it is admitted that he has not paid the same, which is as essential a part of the agreement upon the part of the plaintiff as anything that was agreed to upon the part of the defendant.

It is an elementary principle that in order to entitle a party to have any relief because of the breach of an agreement by the other party thereto, he must allege and prove that he is not in default himself. It appears upon the face of these papers that this plaintiff was the first to commit a breach of this contract, and notwithstanding such breach he claims to enforce it as .against the defendant.

The grounds upon which the demurrer was overruled are also tenable.

All rights of action in respect to the property of the plaintiff had been vested in the receiver who had been

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appointed and had entered upon the discharge of his duties.

We think, therefore, that the judgment was right and should be affirmed with costs.

Ingraham and O’Brien, J. J., concurred.

Cases cited

Rogers v. Smith 47 N. Y. 324 N.Y. 1872-01-30 p. 101
Kirtz v. Peck 113 N. Y. 222 N.Y. 1889-04-16 p. 102
Town of Mentz v. Cook 108 N. Y. 504 N.Y. 1888-02-28 p. 102
Chapman v. Forbes 123 N. Y. 532 N.Y. 1890-12-02 p. 102
Hammer v. Barnes 26 How. Pr. 174 N.Y. Sup. Ct. p. 102
Arnold v. Suffolk Bank 27 Barb. 424 N.Y. Sup. Ct. 1857-04-14 p. 102