Cox v. Stillman — 132 A.D. 433

Majority

p. 433

James R. Cox, Appellant, v. James Stillman, Respondent.

Fourth Department,

May 5, 1909.

Headnote

Pleading — suit to rescind assignment — complaint stating cause of action — restoration of benefits received. ■ •

Suit in equity to rescind an assignment of a claim on the ground of fraud. The complaint alleged that the plaintiff had rendered services as an attorney at law in acquiring title to lands in the State of Texas which had been condemned by the Federal government; that the owner died before Congress made an appropriation to pay for the lands, but his administrator approved the plaintiff’s claim stating,, however, that he had no funds to pay the same until the Federal'appropriation was turned over; that prior to the presentation of the claim, the owner had cpnveyed an undivided half of the lands to one S. and empowered him to deduct from the moneys obtained, from the Federal government the costs and expenses of acquiring the title; that, said S. .died and the defendant qualified as his executor and acquired the right, .title and interest of his testator in the lands and undertook to carry out the testator’s obligations; that the plaintiff having recovered against the administrator of the original owner assigned his judgment to the defendant for fifty per cent of its face value relying on a representation that the defendant had no property in Ms hands belonging to the estate, which representation was false owing to the fact that the administrator of the original owner had collected and turned over to the defendant a large sum of money which he held at the time of making • the misrepresentation. The complaint asked a rescission of the assignment and offered to restore to the defendant the moneys received therefor or any sum that the court should adjudge equitable. On demurrer,

Held, that the complaint stated facts constituting a cause of action and that a demurrer should not be sustained upon the ground that it was an action for an accounting of moneys belonging to an estate in Texas, of which our courts would have no jurisdiction;

In a suit in equity for the rescission of the contract, it is sufficient that the plaintiff offers in his complaint to return what he has received and makes tender of it on trial.

McLennan, P. J., dissented.

p. 434

Appeal by the plaintiff, James B. Cox, from an interlocutory judgment of the Supreme Court in favor of the defendant, entered in the office of the clerk of the county of Cayuga on the 24th day of October, 1908, upon the decision of the court, rendered after a trial at the Cayuga Special Term, sustaining the defendant’s demurrer to the amended complaint.

E. C. Aiken, for the appellant.

Frederic E. Storke, for the respondent.

The complaint shows that the plaintiff, an attorney, had a claim for professional services and disbursements in clearing up the title, of one Maria Josefa Cavazos, a Mexican,-to certain lands situate in the State of Texas, which had been condemned by the United States government for military purposes, and Congress made an appropriation of $160,000 to pay therefor.

' The owner died before the appropriation was. made. An administrator of his estate was apjiointed by the Probate Court of Texas. The plaintiff rendered his bill to the administrator in January, 1891, showing a balance due him of $6,923.30, which' was approved by the administrator, with notice, however, to the pliantiff that he liad ■no funds with which to pay the same until the government should pay the amount of the appropriation.

Before the presentation of the claim,, Maria Josefa Cavazos had made a deed of conveyance to one Charles Stillman, of Mew York city, of an undivided half of the lands and the avails thereof, and authorized Charles Stillman to deduct from any moneys obtained from the United States government the costs and expenses of maintaining the title to the property, and of prosecuting her claim.

Thereafter Charles Stillman died, leaving a.will, and the defendant, his son, was appointed and qualified - as the executor thereof, and eventually acquired all the right, title and interest of his father in the property and the avails thereof, and -undertook to carry out and perform his father’s obligations and duties in respect of the same.

In January, 1896, the plaintiff commenced an action -in the

p. 435

Supreme Court against the administrator of the. estate of Maria Josefa Cavazos, and obtained judgment thereon. That action seems to have been commenced by substituted service of the summons and attempted seizure, under an attachment, of the moneys in the hands of the defendant belonging to the said estate, but the defendant here certified that he had no property of the defendant in that action. Whether that judgment was valid as against the foreign administrator, and whether the money, if any, in the hands of the defendant was subject to the attachment it is unnecessary to decide. We may assume that such attempted seizure was not effective, and that the judgment has no binding force as against the administrator. That the plaintiff had a valid claim for the amount stated against the Cavazos estate clearly appears by the complaint.

After the plaintiffs bill had been approved by the administrator of the Cavazos estate, and before he commenced his .action in January, 1896, and on or about the 22d day of March, 1893, the plaintiff assigned to the defendant his said claim as collateral security for money which the defendant had advanced to the plaintiff, and for any future indebtedness or advancement which the defendant might make to the plaintiff, and authorized the defendant to collect the claim, the defendant agreeing to hold, collect and enforce the same, and to account and pay over to the plaintiff all that he might collect, after satisfying his indebtedness and interest. The moneys so loaned and advanced to the plaintiff by the' defendant aggregated the sum of $1,650.

The complaint further alleges that after the making of the certificate of January 10, 1896, in which the defendant certified that he had no property of the Cavazos éstate, the defendant having sued the plaintiff for the loan and advances which he had theretofore made to the plaintiff, the defendant proposed to purchase the judgment against the said estate for fifty per cent of the face value thereof, and stated to-the plaintiff that he had little or nothing of money or property in. his hands belonging to the said estate; that the plaintiff, relying upon these representations and the said certificate, and induced thereby, executed an assignment of the judgment, and the defendant paid to the plaintiff the sum as agreed upon; that said representations made, by the defendant were false and untrue, and made with the intent to induce the plaintiff to execute

p. 436

the assignment; that in fact the administrator of said estate had collected, on or about May 4, 1895, the said sum of $160,000, and that the said administrator had paid over to the defendant $100,000, which was received soon after the said administrator received the same, and that the defendant had the same in his possession at the time the representations were made; that the plaintiff did not discover the fraud until December, 1905.

Various allegations are then made relating to these moneys, after they were received by the .defendant, which need not be set forth in detail, and the plaintiff then alleges that the defendant has received and collected the full amount of the plaintiff’s said claim. ■The plaintiff disaffirms the settlement made in March, 1896, when he made an absolute assignment of Ms claim to the defendant, and offers to return any moneys received thereunder that the court shall adjudge equitable, and asks that upon an accounting the defendant pay to the plaintiff the moneys collected upon the claim,, less the amounts advanced by the defendant to the plaintiff.

The learned justice at Special Term held that the complaint failed to state facts sufficient to constitute a Cause of action, and sustained the demurrer.' That conclusion seems to ■ have been reached upon the theory that the action is brought for an accounting of moneys in the hands of the defendant, as custodian, belonging to the Oavazos estate, out of which the plaintiff claims he is entitled to be paid, which are subject to administration by the Texas court. It was, therefore, held that our courts are without jurisdiction to compel the defendant to disburse these moneys, in the absence of any decree, by the Texas court, to which the personal representative of the estate was a party ; that this case is not one where a court of equity obtains jurisdiction of property, and then to prevent a. failure of justice brings in a foreign administrator. We have, however, reached the conclusion that this action is not-of that nature.

The foreign administrator is not concerned with the accounting between the defendant, and the plaintiff, it appearing that the plaintiff’s .claim has been paid in full. The nature of the action, as we conceive it, is for a rescission of the assignment of the plaintiff’s claim to the defendant upon the ground of fraud. If such' rescission shall be decreed, then the parties are left in the same situation as they were when the assignment was made, as collateral security,

p. 437

and the accounting relates to the moneys which the defendant has collected and applied upon the claim.

In an action in equity, brought for the rescission of a contract, it is sufficient if the plaintiff offer in his complaint to return what he has received, and make a tender of it on the trial. (Davis v. Rosenzweig Realty Co., 192 N. Y. 128 .) In this case, however, it would seem that the rights of the parties can he equitably adjusted without the return by the plaintiff to the defendant of any money, since it appears that the defendant has collected the claim in .full, which is more than the amount of the defendant’s loans to the plaintiff.

A decree compelling the defendant to pay the difference between what he has collected and the amount of the loans and advances seems just and equitable. But the precise relief to which the plaintiff is entitled, if any, can better be determined when all the facts are before the court. We only decide now that the plaintiff’s complaint states a good cause of action.

The interlocutory judgment should be reversed, with costs, and the demurrer overruled, with the usual leave to the defendant to plead over upon payment of - costs.

All concurred, except McLennan, P. J., who dissented.

Interlocutory judgment reversed, with costs, and demurrer overruled, with costs, with leave to the defendant to plead over within twenty days upon payment of the costs of the demurrer and of this appeal.

Cases cited

Davis v. William Rosenzweig Realty Operating Co. 192 N. Y. 128 N.Y. 1908-05-19 p. 437