Corn Exchange Insurance v. Babcock — 8 Abb. Pr. 256

Majority

p. 256

[No. 2 of this Name.]

CORN EXCHANGE INSURANCE COMPANY against BABCOCK.

Supreme Court, Third District; General Term,

September, 1867.

Headnote

Remedy on Principal and Collateral Obligation.

In general, remedies upon the primary debt and the collateral security may be prosecuted at the same time, though but one satisfaction can be had.

An action on the original demand is not necessarily barred by judgment obtained, without satisfaction, on the collateral, even though one of the defendants in that judgment is the sole defendant m the action on the original demand.

The test is,—has satisfaction been had ? If not, both proceedings may be continued.

Appeal from a judgment.

This action was brought by the Corn Exchange Insurance Company against Edward Babcock.

The judgment appealed from was entered upon the

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report of a referee dismissing the complaint, with one hundred and fifty-nine dollars and nine cents costs.

The action was "brought upon a check made "by the defendant, duly stamped, dated December 21, 1863, for four hundred and twenty-one dollars and fifty-four cents, payable to the Corn Exchange Insurance Company, or order, at the Merchants’ & Mechanics’ Bank, Troy.

The answer, among other issues, alleged that Stephen E. Babcock gave the plaintiff- a chattel mortgage upon the boat “Neptune,” as collateral security for the payment of the check, and other paper. That the plaintiffs had converted the boat to their own use; that its value was about two thousand dollars; and that the boat, at the time of its seizure under the mortgage, was worth more than the amount due on the check, including the other paper, so that said check was thereby paid.

The action was referred to a referee, who reported in favor of the defendant.

On the trial the execution of the check in suit, and its dishonor and notice thereof to the defendant, were proved, without objection, and were found by the referee.

At the same time this action was brought the plaintiffs also commenced another action in this court against the three Babcocks aforesaid, upon three promissory notes : one of which was made by Stephen E. Babcock, for one thousand dollars, dated December 30, 1863, and indorsed by this defendant and his wife Armina; the second, for seven hundred dollars, was made and indorsed in the same manner ; and the third, for six hundred dollars, was made by this defendant, and indorsed by Stephen E. and Armina Babcock. The indorsements by Mrs. Babcock were special, and in terms purported to charge her separate estate with the payment of those three notes.

Tlie other action was also referred to the same referee:

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and the pleadings and facts found by the referee therein were made a part pf this case. The answers in the other suit were verified, and each alleged specifically the consideration of those three notes.

It was nowhere claimed in the pleadings in the other suit, that any of those notes were collateral to this check. It was, however, distinctly alleged that six hundred dollars of the note of one thousand dollars was a part of the purchase price of a certain boat called the “Nettie Van Oercook,” bought by Stephen E. Babcock ;■ and that the remaining four hundred dollars of such note was collateral security for a check of the same amount, given by Edward Babcock to the plaintiffs.

It was proved, and not controverted on the trial of each of said actions, that six hundred dollars of the note of one thousand dollars was a payment towards the “Nettie Yan Oercock,” and that the remaining four hundred dollars of the said note was collateral security to the check in the case at bar. The referee in his report made no allusion to this note being collateral to the check, but the undisputed proof establishes the fact.

No other, further or different proof was produced on either trial in respect to the execution, consideration and purpose of this check and the note of one thousand dollars, litigated in the" other action.

The chattel mortgage mentioned in the report of the referee in each case, was given as collateral to the three notes in the other suit, and so found by the referee. The mortgaged property, was taken by the plaintiffs under the mortgage, and the referee decided in the other action that the plaintiff was chargeable with the value thereof in that action, and accordingly the sum of one thousand two hundred and twenty-six dollars was allowed to the defendants in reduction of the plaintiffs’ claims in that action. And for the balance of such claims, amounting 'to seven hundred and nine dollars

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* and eighty cents, judgment was directed in favor of the plaintiffs therein;

There was no allegation or proof that such judgment, or any part thereof, had been paid or satisfied, and the fact may perhaps be assumed to be otherwise, as the other case was now before the court for review on the appeal of Armina Babcock.

R. A. Parmenter, for the plaintiff, appellant.

J. A. Millard, for the defendant, respondent.

Although the referee has not found the fact, yet the uncontradicted proof establishes it, and the referee would doubtless have found it upon request, that the note prosecuted in the other action, so far as it covered four hundred dollars of the amount prosecuted for in this suit, was given as merely collateral thereto, and as additional security therefor, and not in payment or satisfaction thereof, or as a substitute therefor. As a general if not a universal proposition, remedies upon the primary debt and upon the collateral security may be prosecuted at the same time, even to judgment and execution, though but one satisfaction can be obtained therefor (Davis v. Anable, 2 Hill, 339 ; Hawks v. Hinchcliff, 17 Barb., 492 , 504; Butler v. Miller, 1 N. Y. [1 Comst. ], 496, 500, 501).

If an attempt be made to collect the judgment both upon the original and the collateral secúrity, that can always be prevented or remedied by the order of the court.

This seems to be the only question in the case, and to have been momentarily confounded with an attempt to collect at the same time the same debt in two different actions.

Although it most generally happens that the remedies upon the primary and the collateral security are not simultaneously pursued, yet I see no legal objection

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to their being so pursued. Nor is it in my opinion an s effectual bar to the obtaining of a judgment upon the original demand, that the suit upon the collateral has been first put in judgment, and that one of the defendants in that judgment is the _soie defendant in the action upon the original claim." If the actions were properly commenced at the same time, the accidental fact that the action upon the collateral has first culminated in a judgment, cannot render nugatory the proceedings in the other action; and although the defendant Edward Babcock has not appealed from the judgment upon the collateral security, he may yet’ do so ; or for various other reasons, it may happen that satisfaction of the debt will never be obtained in that action. The true test is,—has satisfaction been had ? If so, all other proceedings will be stayed; if not, they will be allowed to be continued.

No question arises upon the pleadings. They do not contain, as originally they could not have contained, a statement of the judgment in the collateral action; but- they could have been properly amended, or supplemental pleadings allowed, to justify the introduction of the subsequent evidence; and as it was introduced without objection, it will be regarded as admissible under the pleadings, or the pleadings amended for such purpose.

I think the judgment should be reversed, and a new trial granted, with costs to abide the event.

Millek, J., concurred.