Wemple v. Hauenstein — 19 A.D. 552

Majority

p. 552

John Wemple, Appellant, v. John J. Hauenstein and Others, Respondents, Impleaded with Others.

Headnote

Equitable assignment—a promise to pay a debt out of an estate when inherited,— election of remedies—the court will not make anew contract for the pa/rties— specific performance — a prior promise merged in a written agreement.

A promissory noté, by which the maker promises to pay a sum certain, with interest, "at the death of his father, and “to pay the amount due on said note out of any money or property that may come to me from the estate of my father,” provided any part of the note is then unpaid, “ upon the annexed conditions which are made a part of this nóte,” contained in another paper by which “the payee accepts said note in full satisfaction and payment” of the indebtedness of the maker and in full of all accommodation notes which he has executed for the maker, which he agrees to pay at maturity, does not create an equitable lien upon, nor constitute an equitable assignment of, the interest ■ of the maker in his father’s estate, available to the payee in preference to other claimants to the fund.

The fact, however, that the payee recovered judgment against the maker, after the death of his father, upon the absolute promise to pay contained in the note," and attempted to realize upon the judgment by the issue of an execution, did' not constitute an election of remedies which prevented him from seeking to enforce his alleged lien or equitable assignment.

Where a party agrees to pay a debt out of a fund or property when he gets it, no equitable lien or trust results or can be implied for the benefit of his creditor. ' . .

Where, after a debtor has orally promised a person that, if he will advance moneys, he shall be repaid by an assignment of the interest of the debtor in his father's estate, the parties enter into a somewhat inconsistent written agreement under which the advances are actually made, all prior negotiations are merged in the written agreement, and the creditor cannot- prove by parol the prior oral agreement nor procure its specific performance.

An action to reform a contract is not supported, by allegations which tend to show that, while the parties executed the agreement which they intended to make, they were mistaken as to its legal effect; particularly where the coup plaint contains no formal demand for á reformation.

Appeal by the plaintiff, John Wemple, from an order of the Supreme Court, made at the Albany Special Term and entered in the office of the clerk of the county of Albany on the 6th day of March, 189T, vacating a preliminary injunction restraining the defendant Andrew Vanderzee, as executor of John Hauenstein,

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deceased, from paying out certain moneys bequeathed to the defendant John J. Hauenstein by the will of said deceased.

The instruments, construction of which is sought in the complaint, are as follows:

“ Uote.

“ Albany, Oct. 16, 1878.

“For value received, I hereby promise to pay to John Wemple twenty-five hundred dollars, with interest, payable at the death of my father, John Hauenstein, and I further agree with the said John Wemple to pay the amount due on said note out of any money or property that may come to me from the estate of my father, the said John Hauenstein, provided this note or any part of the same remains unpaid at that time, and this note is executed by me and delivered to said Wemple and accepted by said Wemple upon the annexed conditions, which are made a part of this note.

“ (Signed.) JOHU J. HAÜEUSTEIU.”

“ The conditions referred to in foregoing note are as follows: That the said Wemple accepts said note in full satisfaction and payment to said Wemple of any and all debts owing by said Hauenstein to said Wemple, and of any and all promissory notes heretofore executed for the accommodation of said Hauenstein, and which promissory notes were duly indorsed and negotiated by said Hauenstein, and in consideration of the execution and delivery of the foregoing note, by said Hauenstein to said Wemple, the said Wemple agrees to and with said Hauenstein to pay said notes executed by said Wemple as aforesaid and indorsed by said Hauenstein as aforesaid at the maturity of the same, and to save the said Hauenstein harmless of and from all damages and costs which may arise by reason of said promissory notes.

“(Signed.) JOHU WEMPLE.

“Witness: JOHU J. HAÜEUSTEIU.

“ Scott D. M. Goodwin.” .

Edwin Countryman, for the appellant.

Eugene Burlingame and Peter A. Delaney, for the respondents.

In March, 1894, John Hauenstein died leaving a will in and by which he devised or bequeathed to his son, the defendant John J.

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Hauenstéin, certain property or moneys, and the defendant Yandex zee, as executor of the will, now has in his hands á fund which, by 'the terms of the- will, is payable to said John J. The plaintiff claims that, by virtue of certain transactions between him and John J., in October, 1878, he has an equitable charge or lien upon the fund for the payment of certain moneys then advanced by him to or for the said John J. This claim of the plaintiff is controverted by one or more of' the defendants, who have claims upon the fundi under transactions with John J. since, the death of his father. Tifia action is brought to establish the right of plaintiff to the fund in preference to the other claimants upon the theory that he has an equitable assignment thereof or lien thereon,

Two instruments were executed by John J. Hauenstein bearing date October 16,1878, and they are set.out in full in the complaint'. After the death of- the father, and on May 31, 1894, the plaintiff commenced in- the Supreme Court, an action against John J. In .the complaint in that action the execution and delivery of these two papers are alleged and they are set out in full. It is also alleged that subsequent to their date' the plaintiff paid and took up all the notes referred to in the conditions-in the papers, and that the moneys paid by him for -the same, together with the moneys for which the defendant John J. was indebted to him on the 16th of October, 1878, amounted' to. more than $2,500, no part of which had been' paid except the sum of one dollar paid October 15, 1894. It was also alléged that the .father, at his death in March, 1.894, left a will devising and bequeathing to John J. a legacy and property of an amount sufficient to pay the note. Judgment was demanded for the sum of $2,500, with interest from October 16,1878, less one dollar. The defendant put in an answer denying that plaintiff had taken up the notes referred to in the conditions, or that the defendant was indebted to plaintiff, in the sum of $2,500. The defendant also- set up the six-year Statute of Limitations. The ease went to trial and the plaintiff recovered the sum of $5,242.95 besides costs. An execution was issued on the judgment and under it the plaintiff levied upon and sold certain furniture specifically bequeathed to John J. in the will of his father, realizing, however, only a nominal sum. The- sheriff also, at the request of the plaintiff’s attorneys in the judgment, demanded-of the executor that he pay over to him, to be

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applied upon, the execution, all moneys and property in his hands belonging to John J. as legatee or devisee under the will. The executor refused. It also appears that the plaintiff claimed in. the Surrogate’s Court the right to receive upon the judgment the moneys in the hands of the executor, the proceeds of property willed to John J.

It is argued on the part of the defendants that the plaintiff, by bringing suit against John J. and recovering judgment and talcing the proceedings which he did under the judgment, is now estopped from claiming that he has any equitable assignment or lien, by virtue of the instruments of October 16, 1878; that he has treated the obligation as personal against John J., and the property as vesting in John J., and, therefore, cannot now ólaim a lien. The doetrine of election of remedies is sought to be applied.

The suit, upon the absolute promise of John J. to pay the amount, was not inconsistent with any remedy the plaintiff might have upon the “ further ” agreement stated in the paper. The latter was not involved in the action and no relief was sought thereon, A money judgment was only asked for or obtained, and it only operated to fix the amount of the debt for which he might enforce any security he might have. The agreement of the debtor to pay out of his. interest in his father’s estate, was only a security for the debt, as it. was contemplated that the debt might be paid before the death of the father. The fact that in trying to enforce the judgment the plaintiff may have claimed to reach the fund or the property of the debtor should not, at least at this stage of the case, interfere with any assertion by the plaintiff of an equitable lien or assignment. It is not apparent that the defendants have been injured by such claim, and the plaintiff, if he has a lien, was seeking only to obtain what he was entitled to have. The doctrine of estoppel or of election of remedies should not be applied.

The main question in the'case is whether, upon the facts alleged in the complaint, the plaintiff has an equitable assignment or lien. At the Special Term the rule was applied, which is to be regarded as the settled law of this State (Williams v. Ingersoll, 89 N. Y. 518 ; Thomas v. N. Y. & G. L. R. Co., 139 id. 163), that an agreement, either by parol or in writing, to pay a debt out of a designated fund, does not give an equitable lien upon the fund or operate as an.

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equitable assignment thereof. Talcing the instrument alone, I see no way of avoiding the application'of this rule. ' !

The plaintiff, however, claims that the intention of the. parties was that the plaintiff should-have an assignment or lien, and that if the instrument as executed does not give this, reformation should be had in this'action. The complaint was drawn evidently ripon the theory that reformation was not heeded or desired. It was not prayed for. The relief asked was. that the papers should be adjudged to be an assignment. It was alleged that when John J, applied to the. plaintiff for pecuniary assistance he “ represented that at the death of his said father he, the said defendant, John J. Hauenstein, would become possessed of one-half of his father’s estafe, and if plaintiff would assist him as requested, he would! assign to plaintiff his interest in said estate to an extent to be equal to pay the moneys, so advanced by plaintiff or to procure which plaintiff" should assist him and become responsible with interest. thereon, the-same not to be. due or payable until the death of said' John Hauenstein. This plaintiff consented so to dó in consideration of said assignment for the purpose above mentioned, and, as •security to plaintiff for the repayment to him of such moneys •advanced or procured, the said John J. Hauenstein made, executed and delivered to plaintiff at the time they bear date the two papers, of which the following are copies.” The papers are then set out in full,, and it is -then alleged that the plaintiff was “ ignorant of law and forms- of legal papers; that at the time said papers were executed and delivered he understood and believed, and still understands and believes* and is advised by liis said counsel, that said two papers are, to be construed together as one and constitute an assignment to plaintiff of the estate thereafter to be; and which has been, inherited by said John J. Hauenstein by devise in his father’s will to the amount and interest thereon of-moneys advanced and procured to be advanced by plaintiff'; that each and every said money advanced by plaintiff' as above was in pursuance of the agreement and promise of said John J. Hauenstein as contained in said paper and under- said understanding and belief and not otherwise.”

It is not alleged that there was any mistake in the drawing of tbe papers or that they were not in the form that both parties intended they should be or that there was any fraud in the matter. .

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The law as laid down in Pitcher v. Hennessey ( 48 N. Y. 415 , 424) seems to be applicable. It is there said : “ Sometimes it happens that parties agree, as in the case above cited from Peters, to carry out their agreement by an instrument which, by their mistake of the law, will not effectuate their intention. In such _ a case equity will not reform the instrument or substitute another instrument which will in law give effect to their intention, because they adopted and agreed upon the particular instrument, and equity will not compel them to execute an agreement which they never agreed to execute, and thus make an agreement for them.” (See, also, 1 Story’s Eq. Juris. § 113.)

The plaintiff is not, I think, under the allegations of his complaint, in a position to claim reformation.

It is further claimed that the written instruments are sufficient to create a trust in the property for the benefit of plaintiff. The case of Hirsh v. Auer ( 146 N. Y. 13 ) is cited as furnisliing an analogous rule. There the father of plaintiffs at his death held a policy of insurance on his life payable, and which was paid, to his sister. There was a parol agreement between the father and his sister that the latter, on receiving the money, would pay a certain portion thereof to the plaintiffs. It was held that the sister received the money impressed with a trust in favor of the plaintiffs which they could enforce. Here the case is different. It is that of a party agreeing to pay a debt out of a certain fund or property of his own when he gets it. If in such case there is no equitable lien or assignment, there is no trust.

There is another phase that may be considered. It is alleged that John J. Hauenstein, when he applied to the plaintiff for advances, agreed to assign to the plaintiff his interest in his father’s estate to an amount equal to the moneys advanced. This agreement has never been performed, and the question is whether the-plaintiff under his complaint is in a position to compel specific performance, and in that way work out an equitable lien. In Williams v. Ingersoll (supra, 519 ) it is said: “ If a contract to assign be good in itself and not inconsistent with public policy, it will take effect as an equitable assignment.” Such a contract, though by parol as the one in the present case evidently was, may be effectual. (S. C. 521; Risley v. Phenix Bank, 83 N. Y. 318 .) It is a maxim in equity

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that equity looks .upon that as done which ought to have been doné. (1 Story’s Eq. Juris. § 64g.) If the plaintiff had rested upon this agreement to assign, and made his advances in reliance upon it, it may be he would have been in a position to obtain relief. Instead • of that being the case, the parties went on and entered into a written agreement, complete in itself, and somewhat inconsistent with the prior agreement to assign. ■ Under this written agreement the advances were made. At least it is so alleged, and the addition of' ¡the statement that the paper or papers amounted to an assignment does not affect the present question. He relied on the written instrument, and it evidently expressed or was designed to express the final arrangement. That béing so, all prior negotiations would be deemed to be merged, and it would not be competent to show by parol any different prior arrangement (Thomas v. Soutt, 127 N. Y. 133 , 140; Eighmie v. Taylor, 98 id. 288) unless for the purpose of reformation, So that, as the case stands, I see ho way for the plaintiff now to take advantage of the agreement to assign made prior to the 'Written instrument. If the complaint contained allegations sufficient for reformation, other questions might arise that need not-be considered here. . ;

It follows that the order should be affirmed.

All concurred:

Order affirmed, with .ten dollars costs and disbursements.

Cases cited

Pitcher v. Hennessey 48 N. Y. 415 N.Y. Comm'n App. at 424 p. 557
Hirsh v. Auer 146 N. Y. 13 N.Y. 1895-04-23 p. 557
Risley v. Phenix Bank 83 N. Y. 318 N.Y. 1881-01-18 p. 557
Thomas v. Scutt 127 N. Y. 133 N.Y. 1891-06-02 at 140 p. 558