Elwood v. Gardner — 10 Abb. Pr. 238

Majority

p. 238

ELWOOD against GARDNER.

Court of Appeals,

Again, May, 1871.

Headnote

Akbest.—Pleading.—Motion to set aside Execution.

Facts extrinsic to the cause of action, which are relied on as a ground of arrest, should not be alleged in the complaint.

Where the cause of action and the facts on which an order of arrest

p. 239

is granted are identical, the defendant need not move before trial to set aside the order of arrest, but may at the trial contest the facts relied on as a ground of arrest, and if they are not proved at the trial, an execution against the person cannot be issued.^[1]

p. 240

Where the summons is for relief, and the complaint alleges a contract to pay money, and fraud on defendant’s part in making the contract, and demands judgment for damages sustained by reason of the fraud, in a sum beyond the face of the contract, the action is to

p. 241

be deemed as sounding in tort and not in contract, and the averment of the contract is to "be deemed matter of inducement merely.

In such case defendant is not bound to move, before trial, to vacate an

p. 242

order of arrest;, and plaintiff cannot, by abandoning at the trial his averment of fraud, and obtaining judgment on proof of the contract alone, preclude the defendant from subsequently moving to set aside execution issued thereon against the person.

p. 243

Appeal from an order refusing to set aside an execution.

This action was brought by John B. Elwood against George S. Gardner.

p. 244

The complaint was as follows :

The plaintiff complains of the defendant, and alleges that on or about February 2, 1869, at the city of New York, he, the said plaintiff, purchased of the said

p. 245

defendant, at the instance and request of said defendant, a certain promissory note of the amount of one thousand dollars, made by Ephraim Steele and John D. Yoorhees, in their firm name of Steele & Yoorhees,

p. 246

they then composing a firm of that name, doing business at corner of Court and Sackett-streets, in the city of Brooklyn, dated December 18, 1868, payable to the order of themselves, nine months after said date, at the

p. 247

. Atlantic National Bank, and by them indorsed. That at and prior to the purchase thereof, and as inducement thereto, the said defendant represented and stated that the makers of said note were perfectly good and re-

p. 248

sponsible, and that said note would beyond all doubt be paid at maturity; that said makers were prompt and punctual men of the best of credit, and carried on the largest, or one of the largest, and most favorably

p. 249

known grocery establishments in Brooklyn, and that in addition to the capital they had in their store, the said Steele had also large amounts outside invested in real estate ; that as a still further inducement to said purchase, the said defendant stated that he also would indorse said note, which would make the same doubly good; that he was the owner of several pieces of real estate in Brooklyn of great value, and also held mortgages and notes of various amounts, several of which were enumerated by said defendant.

And the plaintiff further says, that he relied upon said representations so made by said defendant and believed them to be true, and upon the strength and by reason of them alone, he- did, upon said defendant indorsing said note, which he then and there did, take from him said note and pay him therefor.

And the said plaintiff further says, that on said note becoming due, it was duly presented for payment at said bank and payment, thereof demanded of the makers, but the same was not paid, and that the same was thereupon duly protested and notice of such non-payment and notice was given to said defendant, the expense of which was one dollar and twenty-four cents, and that said note and the whole thereof still remains due and unpaid.

p. 250

And the said plaintiff further says that said representations so made by said defendant on the sale of said note were false and fraudulent and in every respect untrue, and so known to be by said defendant at the time of making the same, and were made with a view and intent to cheat and defraud and obtain possession of the money so given for said note, without returning any equivalent therefor. That the said Steele & Yoorhees were not at said time good and responsible, but worthless, and in a very short time thereafter failed in business and closed their store at their said place of business aforesaid. That the said defendant did not at said time as by him represented, own real estate, but all so claimed to be held and owned by him was in the name of his wife instead of his own, in whose name it is still held; that he did not at said time, as said plaintiff is informed and believes, own said mortgages and notes so represented by him to be held and owned, and that whatever personal property was by him held has, in continuation and furtherance of his said fraudulent design, been transferred to his son, in whose name business is now carried on instead of defendant’s. That execution, not only against the said Steele & Yoorhees, but also against the said defendant, have been issued to the sheriff of the said county of Kings, and which, as plaintiff is informed by said sheriff and believes to be true, are wholly uncollectable, and some of which have been returned wholly unsatisfied, and that both said Steele & Yoorhees, as also said defendant, are now, as plaintiff is informed and believes, worthless and irresponsibleand that said debt cannot be collected of them or either of them by executions against their property or by the ordinary process of collecting debts.

And the said plaintiff further says that by reason of false and fraudulent conduct, acts and representations, on the part of said defendant, he, said plaintiff, has sustained damage to the amount of said note and

p. 251

interest thereon and costs of protest, and also of the costs, charges and expenses incurred in endeavoring to collect the same of said Steele & Yoorhees to the amount of fifty dollars, making in all the sum of one thousand and fifty-one dollars twenty-four cents and interest.

He therefore brings suit and demands judgment agaist said defendant foi the sum of one thousand and fifty-one dollars and twenty-four cents, with interest on one thousand dollars thereof from September 21, 1869, together with one dollar and twenty-four cents costs of protest, besides the costs of this action.

[ Verification. ] [Signature. ]

An order of arrest was granted on the following affidavit, which, together with the complaint, is given here in full, as the decision of the appeal turns upon the nature of the cause of action as set forth, and its identity with the grounds of arrest.

City and County of New YorTc, ss.

John B. Elwood, "of said city, being duly sworn, deposes and says, that he is the plaintiff in the above-entitled action, and that he has a good and sufficient cause of action against said defendant arising upon the following facts, viz: That on or about February 2, 1869, at the said city of Hew York, he, the said plaintiff, at the instance and request of said defendant, purchased of him, the said defendant, a certain promissory note of the amount of one thousand dollars, made by Ephraim Steele & John D. Yoorhees, in the firm name of Steele & Yoorhees, they then composing a firm of that name, doing business at corner of Court and Sackett-streets, in the city of Brooklyn, dated December 18, 1868, payable to the order of themselves nine months after said date, at the Atlantic Hational Bank, and by them indorsed. That at and prior to the time of said purchase, and as inducement thereto, the said defendant represented and stated that the makers of said note were abundantly good, and that the same

p. 252

would beyond all question be met at maturity ; that no more prompt and punctual men were to be found in the city of Brooklyn or New York than they; that the said Steele’s standing in Brooklyn was the very best, and that he was regarded amongst the heaviest men in said city, and that his standing there was the same or as good as A. T. Stewart’s in the city of New York. That said firm was the heaviest dealers in groceries in Brooklyn, and that moreover said Steele was the owner of large quantities of real estate. That he knew of a recent transaction in real estate .in which he, Steele, had paid twelve thousand dollars in cash, and in addition had taken a mortgage of seven thousand dollars on another place that he had sold.

As a further inducement to said plaintiff to purchase said note, said defendant also stated that he himself would also indorse said note ; that the same would then be doubly good. That he was perfectly responsible, that he was just then embarrassed by reason of some transactions in which he was engaged, but that he was abundantly good, and was thé owner of several pieces of real estate in Brooklyn, and also held several mortgages on real estate, one of one thousand dollars and one of three thousand dollars, and several others of a smaller amount, together with several promissory notes, ranging in amount from three hundred dollars upwards.

And deponent further says, that he relied upon said representations and statements so made by said defendant, and .believed them to be true, and upon the strength and by reason of them alone, he did upon defendant’ s indorsing said note, which he then and there did, take from him said note, and pay him therefor.

And this deponent further says, that on said note becoming due, it was duly presented for payment at said bank and payment thereof demanded of the makers, but the samé was not paid but protested, and that

p. 253

due notice of such non-payment and protest was given to said defendant, the expense of which was one dollar and twenty-four cents, and that said note and the whole thereof still remains due and unpaid.

And this deponent further says, that said representations so made by said defendant on the sale of feaid note were false and fraudulent and in every respect untrue, and so known to be by said defendant at the time of making the same, and were made with a view to cheat and defraud and obtain possession of the money so given for said note without returning any equivalent therefor.That the said Steele & Yoorhees were not at said time good and responsible, but worthless, and in a very short time thereafter failed and closed their store at their said place of business. That the said defendant did not at said time, as by him represented, own real estate, but all so claimed to be held and owned by him was in the name of his wife instead of his own, in whose name it is still held; nor did he own as this deponent is informed and believes said mortgages and notes so represented by him to be held and owned ; and that whatever personal property was by him held has, in continuation and furtherance of his said fraudulent design, been transferred to his son, and in whose name business is now carried on instead of his own. That executions not only against the said Steele & Yoorhees, but also the said Gardner, been issued to the sheriff of the said county of Kings, which, as deponent is informed by said sheriff and believes to be true are wholly uncollectable, and some of which have been returned wholly unsatisfied, and that both said Steele & Yoorhees as also Gardner are now, as deponent is informed "and believes, utterly worthless and irresponsible, and that said debt cannot be collected of them or either of them by execution against their property or by the ordinary process of collecting debts.

And the said deponent further says, that by reason

p. 254

of such false and fraudulent conduct, acts and representations on the part of said Gardner, he, the said deponent, has sustained damage to the amount of said note and interest thereon and costs of protest, and also of the costs, charges and expenses incurred in endeavoring to collect the same of said Steele & Voorhees to the amount of fifty dollars, making in all the sum of one thousand and fifty-one dollars and twenty-four cents and interest. That he is about to commence an action in the supreme court to recover said damages, and asks that an order of arrest herein be granted against the person of said defendant.

[Jurat.] [Signature.]

The answer alleged that defendant, being indebted to the plaintiff in a little more than three hundred dollars, obtained an additional loan of enough to make the sum one thousand dollars, less the sum of one hundred and fifty dollars, usurious interest, and delivered the note sued on, to the plaintiff as security and demanded judgment that the complaint be dismissed, and plaintiff be adjudged to deliver up the note described in the complaint.

On the trial, the plaintiff proved the note and computed the amount of interest, and recovered by direction of the court, a verdict for principal and interest, one thousand and thirty-five dollars and twenty-two cents, with costs and disbursements.

A motion of defendant’s counsel to dismiss the complaint, and for a verdict in favor of defendant, was denied.

From this judgment the defendant appealed to the court at general term, on the ground that the fraud alleged was not proved at the trial.

The argument at general term is reported in 9 Abb. Pr. IF. S., 99. The judgment was affirme'd.

After judgment, plaintiff issued execution against

p. 255

property, which was returned unsatisfied ; and thereupon he issued executions against the person, for the original judgment, and for the costs of appeal.

The defendant moved to vacate the execution issued against his person, which motion was granted at special term, as reported in 9 Abb. Pr. N. S., 99; and the order having been affirmed’at general term, the plaintiff appealed to this court.

John B. Elwood, for appellant, in person.

I. The motion is practically nothing more or. less than a motion to vacate the order of arrest after judgment; and the granting of it is in direct conflict with the Code, §§ 183, 204 (Barker v. Wheeler, 23 How. Pr., 193 ; Roberts v. Carter, 17 Id., 479 ; S. C., 9 Abb. Pr., 106 ).

II. The attempt to discriminate between a motion to vacate an execution under the circumstances, and an order of arrest, has no basis whatever to sustain it (Crowell v. Brown, 9 Abb. Pr., 107 ).

III. None of the cases are authority for vacating these executions (citing and commenting on Humphrey v. Brown, 17 How. Pr., 481 ; Pope v. Newcomb, 30 N. Y., 589 ; 7 Hill, 182 ; Smith v. Knapp, 30 N. Y.; Corwin v. Freeland, 6 N. Y. [2 Seld. ], 560-564; Lovee v. Carpenter, 3 Abb. Pr. N. S., 309, 310 ; Atocha v. Garcia, 24 How. Pr., 186 , 189 ; Wood v. Henry, 40 N. Y., 124 ).

IV. On the contrary, the last three are against it, while the cases in 2 Seld. and 30 N. Y., go still farther, and far beyond what is necessary for us in this case.

Y. The consequence of setting aside these executions would be not only to render the plaintiff liable to false imprisonment in a case where he had been in every respect regular and guilty of no fault, but also to open the courts to numberless applications to vacate executions based upon no higher grounds than the party’s or attorney’s ignorance or neglect.

VI. The enforcing of the executions operates as no

p. 256

injustice to defendant. They are only means and remedies to force him as a dishonest debtor to pay what he admits to be honestly due.

VII. The court had no power to make the order that it did, referring the matter to a referee to take the proofs. It should have been heard and determined by the judge (see opinion of Justice Ingraham, 1 Abb. Pr. N. S., 27, 28). Had we elected to take proof under the order, it would have been a waiver of our right to appeal from it for a review of the legal questions involved in it, as having accepted a condition given under it ( 17 Abb. Pr., 229 ; 4 Id., 468 ; 18 N. Y., 481 ; 16 How. Pr., 483 ).

VIII. Should this order be affirmed, the right to introduce proof on the merits should still be. reserved to plaintiff, and the order so modified as to restrain the defendant to the proofs now in, with the right to the plaintiff to controvert and answer them. This is asked simply as a matter of precaution, not doubting that the court will hold the law as we claim it, nor, indeed, scarcely fearing that upon the merits, as they now stand, upon the defendant’s own showing, they would be found with us,—1. For the reason that the allegations in plaintiff’s affidavit are not fully and squarely met and controverted,—2. Because the defendant admits that the representations charged by the plaintiff to have been made by defendant as to the standing and responsibility of Steele & Voorhees are true, attempting to justify himself only on the alleged ground that what he said he did not then lenow to be untrue ( 21 N. Y., 238 ).

Edwin G. Davis, for the defendant, respondent.

I. The supreme court had the power after judgment to vacate a ca. sa., although an order of arrest had been issued in the case, and no motion made to set it aside (Pope v. Newcomb, cited in 30 N. Y. 589 ;

p. 257

Smith v. Knapp, Id., 581; 7 Hill, 182 ; Humphrey v. Brown, 17 How. Pr., 481 ).

II. The defendant has clearly shown himself to be entitled to the benefit of the rule. It is conceded, for the purpose of this appeal, that there are no facts to justify the imprisonment of the defendant, as the plaintiff has not availed himself of the opportunity given him by the order of Justice Pratt (Discussing at length Smith v. Knapp and Corwin v. Freeland, 6 N. Y., [2 Seld.], 565 ; citing, also, Wood v. Henry, 40 N. Y., 124 ). Here the issue joined was clearly a question of fraud, and the defendant was prepared to meet it. The court, in allowing the plaintiff to recover, extended to him an indulgence. But it cannot be claimed that in so doing it left the defendant remediless.

This court, in Smith v. Knapp ( 30 N. Y., 581 ), held that if a motion to set aside an order of arrest is not made before judgment, the defendant may be imprisoned on a ca. sa. issued on the judgment. But if the judgment is recovered for a cause of action for which the defendant is not liable to arrest, he may then move to set aside the ca. sa., or to be discharged from imprisonment. In that case there were several causes of action set forth in the complaint, in some of which the defendant was liable to arrest, and in others not. Ah order of arrest had been obtained on the former, and judgment was taken for a cause of action for which the defendant was not liable to arrest. In such a case it is manifest that the court should relieve a party from imprisonment, otherwise he might be imprisoned for a cause not authorized by law, through the form of procedure.

Section 179 of the Code of Procedure authorizes the arrest of a defendant in certain actions, specified in the act, of a tortious character, and also in actions on contract when the defendant has been of certain

p. 258

wrongful acts affecting the cause of action or the consideration.

Subdivision 4 reads as follows : “ When the defendant has been guilty of a fraud in contracting the debt, or incurring the obligation for which the action is brought, or in concealing or disposing of the property, for the taking, detention, or conversion of which the action is brought, or when the action is brought to recover damages for fraud or deceit.”

Section 288 declares that “ no execution shall issue against the person of a judgment debtor, unless an order of arrest has been served, as in this act provided, or unless the complaint contains a statement of facts showing one or more of the causes of arrest required by section 179.”

An order of arrest may be obtained in both classes of cases,—in those cases where the cause of action is identical with the cause of arrest,-and in the actions where facts dehors the cause of action constitute the ground of arrest.

In the latter class of cases, unless an order of arrest is obtained before judgment, no ca. sa can issue.

This process is, in effect, prohibited by section 288, above quoted.

In such cases it is not necessary or proper to set forth the facts constituting the cause of arrest, in the complaint, because they constitute no part of the cause ■of action, and are not relevant to° it, and need not be proved on the trial. For instance, in an action upon ■contract to recover a debt, it would be improper to set forth that the defendant had been guilty of fraud in contracting the debt, or that he had disposed of his property'with intent to defraud his creditors. It is only proper to state in a complaint the facts necessary to the cause of action. In such a case, an order of arrest must be obtained before judgment, to entitle the plaintiff to a ca. sa. If obtained, and not set aside before

p. 259

judgment, a ca. sa. may issue without any further order or direction of the court; and the defendant, if he ' seeks to avoid the effect of the order, can move to set it aside at any time before judgment; and if he omits to do so, or if he is unsuccessful in a motion to set it aside, he is concluded after judgment from questioning the binding effect of the order.

But when the cause of action is one which gives plaintiff a right to an order of arrest, and the facts constituting it are identical with the facts constituting the cause of arrest, the defendant can contest the right to arrest upon a preliminary motion to set aside the order, and also contest the alleged cause of action, of course, upon the trial. In such a case it follows that he is not concluded by the order, or the decision upon the motion to set it aside : he may omit to make the motion altogether, as the trial upon the facts alleged in the complaint will furnish an opportunity to contest the facts in a form preferable to that of a motion. If the trial of such an action results in favor of the plaintiff, the record is conclusive in favor of the right to issue a ca. sa. ; and if for the defendant, the order is of course discharged.

The meaning of the latter clause of section 228, — providing that a defendant shall not be arrested unless the complaint contains a statement of facts showing one or more causes of arrest required by section 179,— is that the statement in the complaint must be of facts legitimately and properly in the complaint, such as are proper and necessary to be proved ; or, in other words, such as constitute a cause of action for which a party may be arrested. It would be absurd, in an action on a promissory note, to allow a party, after judgment, to issue a ca. sa. without having obtained an order of arrest, merely by incorporating into the complaint a statement of facts sufficient to have authorized the order upon a motion. Such facts have no legitimate place

p. 260

in a complaint unless they are pertinent to the cause of action, and if they are, they should be proved on the trial.

The case at bar was an action to recover damages for fraud and deceit, in obtaining money by false and fraudulent representations as to the pecuniary standing and credit of the makers of a note and the pecuniary ability of the defendant who indorsed and transferred it to the plaintiff. The complaint set forth the representations, their falsity, that the party relied upon them, and then says “that by reason of the false and fraudulent conduct, acts, and representations, on the part of the said defendant, the said plaintiff has sustained damages,” to the amount of the note and interest and fifty dollars costs incurred in prosecuting the makers, and demands judgment therefor. It is true that the facts in relation to the making, indorsement, and transfer of the note are set forth, but these are stated by way of inducement, and for the purpose of showing the occasion and materiality of the representations (Townsend v. Hendricks, 40 How. Pr., 143 ).

There is no claim to recover upon the note or against the defendant as indorser. On the contrary, it is claimed to recover fifty dollars more than the plaintiff would be entitled to against the defendant as indorser, and expressly for fraud.

All the allegations of fraud in the complaint were improper, unless they constituted a cause of action for fraud and deceit. Besides, the summons was for relief, showing that the plaintiff intended hot to commence an action upon the note, and the complaint shows conclusively that he carried out that intention.

This was a case, therefore, where the defendant had a right to omit making a motion to set aside the order of arrest, and contest the facts upon the trial. He had every legal reason for regarding this as an action

p. 261

founded upon tort, which the plaintiff was bound to prove, and which he could contest, upon the trial.

It seems that at the trial the plaintiff abandoned his action for fraud, and the court allowed him to take : judgment against the defendant as indorser of the note. It is unnecessary to determine whether this was error or not, as that question is not before us, but if it was not (and the plaintiff cannot question its correctness upon this motion), it must have been upon the ground that the complaint contained two causes of action, one upon contract, and the other for fraud, or that, under the liberal policy inaugurated by the Code, the plaintiff was entitled to winnow out from the complaint the facts stated, by way of inducement, and reconstruct them into an action on contract and recover thereon.

The case presented is this. The plaintiff commenced an action to recover damages for fraud and deceit, and procured an order of arrest, upon the identical facts constituting the cause of action as set forth in the complaint. The defendant omitted to move to set aside the order of arrest, relying upon his procuring a discharge therefrom by defending the action, and contesting the facts upon the trial. At the trial the plaintiff abandoned his cause of action, and procured a judgment upon contract, as if in an action in which the defendant was not liable to be arrested except upon extrinsic facts to be proved by affidavit, and now claims that the defendant is concluded by the order of arrest in the same manner as though the action had been brought on the contract, and the order of arrest had been procured upon outside facts stated in the affidavit.

This practice is too sharp. Whether intended or not, we can see that it might have operated as a fraud upon the defendant. If the actioti had been upon the note, as the recovery was, the defendant would have known that he could only contest the right to the order

p. 262

upon a motion to set it aside, but he had legal reasons for believing that he could do it at the trial.

He was deprived of that right by the action of the plaintiff. The consequence may be to enable the plaintiff to imprison his debtor contrary to law, and to deprive him of the opportunity to contest Ms right to do so.

It cannot be said that the defendant has lost the opportunity by his own laches. That would have been so, if the action and recovery had been for the same cause ; but it' was not negligent in the defendant to await the trial and meet the allegations of fraud upon which the order was obtained, in the' forum to which the plaintiff had invited him. The power of the court below to relieve a party under such circumstances is undoubted, within the ‘principle laid down in 30 N. Y. (supra).

Imprisonment for debt is abolished, except in certain specific cases; and if a party seeks to imprison his debtor, he must bring the case clearly witMn one of the enumerated exceptions, and prove it according to pre scribed practice.

The order must be affirmed.

Order affirmed, with costs.

The plaintiff subsequently applied for a rehearing of the appeal, or a modification of the order, which application he argued upon the following grounds; insisting that,

I. The point determined was not argued, and the fact that the general term had, by its judgment, authorized the executions, was overlooked.

p. 263

estopped from asking that the execution be vacated on the ground assigned.

III. That the practical effect of the decision was to deprive plaintiff of the benefit of the judgment, without his being heard in support of it; that the judgment might be sustained by authorities which he was prepared to adduce; and that the affidavit on which the order of arrest was granted alleged other and sufficient grounds of arrest, beside the fraud stated in the complaint ; and that the insertion of the averment of fraud in the complaint was not with a view to mislead defendant, but as a matter of precaution,—as the decision in Wood v. Henry ( 40 N. Y. 134 ), had not then been reported. That the form of the summons did not prejudice defendant; and that a reversal of the order would leave defendant to appeal from the judgment, which he ought to do if it were erroneous.

IY. That by affirming the order the court granted defendant relief as a favor, not as matter of right, because plaintiff had been strictly regular.

Y. If defendant be relieved at all, it should only be on condition of charging him with costs, and of requiring him to stipulate not to sue for false imprisonment; and to stipulate also that the judgment be vacated without prejudice to a new action, and the arrest of the defendant therein, for the alleged fraud.

YI. That unless this were done, plaintiff was stigmatized with having pursued discreditable practice, and subjected to undeserved liability and deprived of the means of the collection of his debt.

Edwin G. Earns, opposed.

The motion for re-argument or modification was denied, but without costs.