Adams v. Ball — 24 A.D. 69

Majority

p. 69

William R. Adams, Respondent, v. Edward H. Ball (the name Edward being fictitious, defendant’s correct name being unknown to plaintiff), Individually and as Assignee of E. B. Cuthbert & Co., Appellant.

Headnote

Pledge of stoclcs — injunction to prevent the assignee of the pledgee from paying the proceeds, in excess of the debt, to preferred creditors of the pledgee.

The owner of stocks who has pledged them for an unpaid portion of their purchase price is entitled, where such stocks have passed into the hands of the general assignee of the pledgee and have been sold by him, to an injunction, in an action brought by such owner against the assignee to recover the proceeds of the sale over and above the unpaid purchase price, restraining the assignee from paying out such proceeds to preferred creditors of the assignor, to the exhaustion of the entire assets of the pledgee, as such an act on the part of the assignee would, within the meaning of section 640 of the Code of Civil Procedure, tend to render the judgment demanded by the pledgor ineffectual.

p. 70

Appeal by the defendant, Edward H. Ball, individually and as assignee of E. B. Cuthbert & Co., from an order of the Supreme Court, made at the blew York Special Term and entered in the office of the clerk of the county of blew York on the 6th day of October, 1897, restraining the defendant, as assignee of E. B. Cuthbert & Co., from disposing of the property of the assigned estate to the extent of $4,212.50, during the pendency of an action brought by plaintiff to recover that amount, and also from an order entered in said clerk’s office on the 24th day of September, 1897, which was modifiéd by said order entered on the 6th day of October, 1897.

Julius H. Seymour, for the appellant.

John C. Judge, for the respondent.

The action was brought to recover the proceeds of a sale by defendant assignee of certain stocks alleged to have been the property of tile plaintiff. The assignment was made August 31, 1897, and gave preferences to a considerable amount; and if the assignee were allowed to apply the assets in his hands upon these preferred debts, there would be no assets remaining to meet plaintiff’s judgment, if he recovered one. The claim made by plaintiff was that, at the time of the assignment, the assignor had in his possession the stocks in question belonging to plaintiff; that these stocks were held subject to a lien in favor of the assignor for the purchase price thereof, less $5,000 paid thereon by the plaintiff; that after the assignment the assignee sold the stocks, and realized upon such sale, over and above the amount remaining unpaid by the plaintiff for the purchase price of the stocks, the amount in question, $4,212.50, which moneys came into his hands, and were the proceeds of the sale of plaintiff’s stock and belonged to the plaintiff; and that the plaintiff was entitled to recover the same without reference to the other assets of the assigned estate or the claims of creditors payable therefrom. The plaintiff made an application to the court to compel the assignee to pay this money over to him. The assignee did not controvert the facts made to appear by the plaintiff’s papers. The court apparently doubted its power to make the order applied for, but did grant the injunction upon the application of the plaintiff. The

p. 71

usual undertaking was given. The case came directly within section' 604 of the Code, as it appeared that the defendant was about to do an act, viz., pay to the preferred creditors the money realized from the-sale of plaintiff’s stock, tending to render the judgment demanded ineffectual. The injunction was very properly granted to restrain the disposition of these moneys until it could be determined in this action whether the plaintiff was entitled to recover these moneys as the proceeds of the sale of stocks belonging to him and to which the preferred and other creditors had no right whatever.

The order appealed from should be affirmed, with costs.

Van Brunt, P. J., Patterson, O’Bbien and Ingraham, JJ., concurred.

Order affirmed, with costs.