Hyperlawhypertext legal database Mercantile Trust Co. v. Gimbernat 143 A.D. 305

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Mercantile Trust Co. v. Gimbernat

143 A.D. 305 Court First Department, Decision date 1911-03-10 English

Decision Majority — Miller, J.: · Dissent — Laughlin, J. (dissenting in part):

Contents

Majority

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The Mercantile Trust Company, as Trustee under the Last Will and Testament of Jules R. Gimbernat, Deceased, Plaintiff, v. Jules R. Gimbernat, Respondent, Impleaded with Henry M. Black, Appellant, and Clara L. Gimbernat and Others, Defendants.
First Department,
March 10, 1911.

Headnote

Pledge — assignment of chose in action to secure debt — party — right of assignor to contest distribution of fund — successive assignments of same fund — failure of assignee to appear — court — jurisdiction over funds in its custody.
An assignment of a chose in action, or of an interest therein, as security for the payment of a debt, is a mere pledge and the assignor still retains an interest which he can assert in a suit.
Hence, where an assignment of an interest in a trust fund has been adjudged void for usury and the assignor has-made á subsequent assignment thereof to secure a debt, he has a right to insist that the fund be applied to the payment of the debt to the second assignee, although she has not appealed from a decree rendered on a former trial declaring the first assignment to he valid. Even if it be assumed that only the second assignee has the legal right to the fund, still the assignor has an equitable interest which entitles him to he heard.
Where on a first trial both assignments were held to be valid, but on a new trial the first assignment was declared to be void, the second assignee became entitled to the fund perforce of the former judgment.
The court will not knowingly direct tlie payment of money in its custody to a person not entitled thereto merely because the person adjudged to be entitled to it has not remained in the action to see that the adjudication is respected. The Appellate Division has inherent jurisdiction to do on its own motion what the Special Term should have done in the first instance if the provisions of the former judgment had been called to its attention, that is to say, to conform the present judgment to the former judgment, so far as it was unreversed. Laughlin, J., dissented, in part.
Appeal by the defendant, Henry z. Black, from a judgment of the Supreme Court in favor of the defendant Jules R. Gimbernat, entered in the office of the clerk of the county of Hew York on the 2d day of April, 1910, upon the decision of the court rendered after a trial at the Hew York Special Term.
The residuary estate of Jules R. Gimbernat, deceased, was bequeathed to his executors and trustees in trust, one-fourth thereof to be paid to his son, the defendant Jules R. Gimbernat, upon his attaining the age of twenty-five years; one-lialf of the balance upon
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his attaining the age of thirty years, and the remainder upon his attaining the age of thirty-five years. The said defendant attained the age of twenty-five years on the 2d day of December, 1904. At that time the plaintiff, the substituted trustee, paid claims and charges which had theretofore been created by said defendant, and whose priority and validity were unquestioned, thereby reducing said one-fourth share then payable to the' sum of $11,000. The defendant Black, as assignee of Bichard M. Bell, held three assignments, of this fund, aggregating the sum of $10,000, dated, respectively, Flay 27, 1901, January 31, 1902, and March 5, 1902. Prior to June 7, 1902, the said defendant Jules B. Gimbernat had delivered an assignment to the defendant Banes, as trustee, to secure the payment of the sum of $10,000 on December 2, 1904, of which sum, it was alleged in the complaint, $4,600 remained unpaid. On the 5th day of August, 1902, an assignment was made to the defendant Clara L. Gimbernat to secure the payment of $4,000, with interest thereon from the 2d day of December, 1904; and on the 16th day of February, 1903, another assignment was made to her to secure the payment of $3,500, with interest from the 2d day of December, 1904. The other defendants were alleged to be judgment creditors of the said Jules B. Gimbernat. The plaintiff asked to be permitted to pay the sum of $11,000 into court, and that the defendants interplead each with the other to determine their respective rights thereto. The defendant Jules B. Gimbernat answered, alleging that the assignments to Bell were given as security for usurious loans and asking that they be declared void and that the rights of the other defendants to the fund be ascertained. The defendant Clara L. Gimbernat answered, also asking that the assignments to Bell be declared void, and that so much of the fund as might be necessary to satisfy the assignments to her be paid to.her. The defendant Black answered, praying for the recovery of the sum of $10,000 and interest from December 2, 1904. The defendant Banes appeared but made default in pleading. The action was discontinued as to the defendant Marsellus, Pitt & Co. The other defendants answered, setting up their claims to the fund. On the first trial it was adjudged that the assignments to Bell were valid, and that the defendant Black was entitled to be paid the sum of $10,000, together with the accrued interest on
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said sum at the rate allowed by the city chamberlain; that the assignments to the defendant Clara L. Gimbernat were valid, and that she should be paid the sum of $1,000, with accrued interest on said sum, and that the defendants Kaskel, Thorley, Wetzel and Hogan had no interest in the fund. The defendant Jules B. Gimbernat appealed from so much of the judgment as decreed that the defendant Black was entitled to the payment of the sum of $10,000 with accrued interest. The judgment was reversed and a new trial granted. ( 134 App. Div. 410 .) On the new trial the defendants Black and Jules B. Gimbernat alone appeared and a judgment was rendered decreeing that the said assignments to Bell were usurious and void, and directing the city chamberlain to pay over to the defendant Jules B. Gimbernat the sum of $10,000, with accrued interest, from which judgment the defendant Black appeals.
Benjamin JY. Gardozo, for the appellant.
Harry JEcIchard, for the respondent.

The appellant contends that the respondent Gimbernat is not entitled to the fund in any event; that the other defendants, not having appealed, are concluded by the former adjudication that the assignments to Bell were valid (citing St. John v. Andrews Institute, 192 N. Y. 382 ), wherefore the former appeal ivas futile; that, even if the appellant cannot rely upon the former adjudication as against the only parties really interested in the fund, still the court will not order a fund to be paid to one party, with knowledge that others, not before the court, hold assignments of it, wherefore the court will at least direct that the other defendants be again brought into the action; and that the appellant has the right to raise the point for the reason that in equity, if the subsequent assignees attack his assignment, he can at least insist, as between him and them, on the payment of the principal sum loaned, with legal interest; that he has a right to insist that the attack upon his assignments shall come from those really interested in the fund in view of the fact that the relief awarded in such case will be more favorable to him.

The argument is ingenious, and it was pressed with earnestness and marked ability by the learned counsel for the appellant. The

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vice of it is in the assumption that the respondent Gimbernat has no such interest in the controversy as entitles him to be heard. We may lay to one side the assignment to Banes and the claims of alleged judgment creditors. Banes was made a party to the action and had an opportunity to assert his interest in the fund, if he had any. It is unnecessary to summon him in again. The former judgment adjudged that the alleged judgment creditors had no interest in the fund, and that part of the judgment stands unreversed. There remain only the two assignments to Clara L. Gimbernat, aggregating $7,500. But they were not absolute assignments. Undoubtedly if they were they would operate pro tanto to pass legal title to the fund. But they were made as security for a debt, and an assignment of a chose in action, or of an interest therein, as security for the payment of a debt, is a mere pledge. The assignor still retains an interest which he can assert in a suit. (long v. Eagle Fire Co., 12 App. Div. 39 ; Simson v. Satterlee, 64 N. Y. 657 ; Peek v. Forks, 75 id. 421.) Even if it be granted, as the appellant assumes, that the defendant Clara L. Gimbernat has the legal title to $7,500 of the fund, still the respondent would have an equitable interest which would entitle him to be heard. If, as between him and the appellant, the latter’s assignments are void, he has a right to insist that the fund shall be applied to the payment of his debt to the defendant Clara L. Gimbernat, and that he have what remains. The appellant is, therefore, not interested in the distribution of the fund among the other defendants.

. While the appellant has no interest in the question, his appeal calls our attention to the fact that the judgment directs the payment of money out of court in disregard of the provisions of the prior judgment, which stand unreversed. We have held that the defendant Jules Gimbernat had a right to appeal from the former judgment for the purpose, if for no other, of insisting that the fund be applied' in payment of his debt to the defendant Clara L. Gimbernat. As between him and her, the "former judgment established the validity of her assignments, and he did not appeal from that part of the judgment. She might rest, as she did, upon that adjudication and leave it to him to contest the validity of the prior assignments to Bell. When those assignments were adjudged void, she became entitled to $7,500 of the fund perforce

Dissent

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of the former judgment. Thus the case is plainly distinguishable from St. John v. Andrews Institute (supra). If this judgment stands unmodified, there will be two inconsistent judgments in the same action, one adjudging that Clara L. Gimbernat holds valid assignments of $7,500 of the fund in court, the other directing the payment of all but $1,000 of the fund to J ules Gimbernat. Shall the court knowingly direct the payment of money in its custody to a person not entitled to it. merely because the person adjudged to be entitled to it has not remained in the action to see that that adjudication is respected? We think that this court has inherent jurisdiction on its own motion, the case being now in this court and the matter having been called to our attention, to do what the Special Term would doubtless have done in the first instance if the provisions of the former judgment had been called to its attention, i. e., to conform the present judgment to the former judgment, so far as it was unreversed.

Of course, it may be that the said Clara L, Gimbernat has ceased to have any interest in the matter. But, at any rate, the court will not be in the position of directing two inconsistent judgments in the same action, and of decreeing the payment of a fund in its custody to a person not entitled to it upon the record.

The judgment should be modified so as to conform to the provisions of the former judgment not reversed, and to provide for the payment to the defendant Clara L. Gimbernat of the amount of her assignments with such interest as has been earned on the fund in the hands of the chamberlain, and to the respondent Jules Gimbernat of the balance of said sum of $11,000 with like interest, and as thus modified the judgment should be affirmed, with costs to the respondent..

Ingraham, P. J., McLaughlin and Scott, JJ., concurred.

I concur with Mr. Justice Miller, except as to modification, which, not being involved in the appeal, I think is not authorized and should be left to an application at Special Term. (See Waldo v. Schmidt, 200 N. Y. 199 .)

Judgment modified as directed in opinion, and as modified affirmed, with costs to respondent. Settle order on notice.

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