Freeman v. Rich — 19 N.Y.S. 498

Majority

p. 498

Freeman v. Rich et al.

(Supreme Court, General Term, Fifth Department.

June, 1892.)

Headnote

«Claims against Decedent’s Estate—Assignment of Accounts.

A claim against a decedent’s estate was based on a note executed to plaintiff by decedent and bis wife. This note was accompanied by a writing, signed by the same parties, by which it was agreed that the title of all accounts remaining unpaid on decedent’s ledger should remain in plaintiff’s hands until the note was paid, and that, if such accounts were settled by notes, plaintiff was to take them, if he so desired, and apply their value to the payment of his note. Held, that plaintiff was entitled to have paid to him in satisfaction of his note the money collected by the administrators on the accounts outstanding at the date of the note.

Appeal from special term, Monroe county.

Action by Franklin B. Freeman against John S. Rich and others, administrators of Weldon C. Freeman, deceased. From so much of an order as demies confirmation to a portion of the report of a referee, in a reference, under «the statute, of a disputed claim against the estate of the deceased, plaintiff appeals.

Reversed.

Argued before Dwight, P. J., and Macomber and Lewis, JJ.

L. M. Horton, for appellant. J. Welling, for respondents.

The claim referred embraced several items, among which was one which arose upon a promissory note for $1,000. The decedent was ;a country merchant, and the plaintiff was a clerk in his store. Three months ¡before he died, the deceased borrowed $1,000 of the plaintiff, for which he ¡gave him his promissory note, to which his wife also attached her name, ■without professing to charge her separate estate, of which, indeed, she had mane. The note was accompanied by an instrument in writing in the follow-fin g terms:

“$1,000. Marion, March 26, 1890.

“On or before January 1, after date, we promise to pay F. B. Freeman, or ■order, one thousand dollars. Value received, with use.

“W. C. Freeman.

“Mrs. Emma Freeman.

“This being for collateral security for note as above described.

“And it is hereby stipulated and agreed that the title of all accounts remaining unpaid on said W. C. Freeman’s ledger shall remain in said F. B. Freeman’s hands until this note is fully paid; and, if such accounts are settled by note, said F. B. Freeman has full power to take same and indorse on note, if he so desires, or feels insecure, and apply its value towards the ¿payment of this note until this note is fully paid.

“ Signed this 26th day of March, 1890. W. C. Feeeman.

“Mes. Emma Feeeman.”

The same relation between the parties continued down to the time of the ■death of the decedent, which occurred only three months after the note and •■agreement were signed. The books of account were never formally delivered to the plaintiff, but from the nature of his employment it may be assumed that he had the same access to them as the deceased, and that they ■continued to be used in the business, by both of them, until the death of the latter. At that time the plaintiff had received nothing on the accounts, but shortly afterwards the defendants, as administrators, took possession of the ¡books, and declined to give them up to the plaintiff on his demand. At the ¡time of the trial they had collected on the accounts existing at the date of the note the sum of $1,023.66, while there was due on the note at the same time 'the sum of $1,105.33, and the conclusion of law of the referee which the ■court at special term refused to confirm was to the effect that the plaintiff ■was entitled to receive from the defendants the amount so collected on the ac■eounts in question, and that the same should be indorsed on the note. We

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"think the conclusion was entirely correct, and that it should have been confirmed. The contention on the part of the defendants is that the instrument which accompanied the note was either a chattel mortgage, and so void for not being tiled, or a pledge, and so void for want of a delivery of the thing pledged. We do not see that it is necessary to pronounce it either the one or the other. The instrument is not artistically drawn. It is true that it declares itself to be collateral for the note described, but at the same time it declares that the title to the accounts is in the plaintiff, and shall remain so until the note is paid. How, it is apparent that it was not intended that the accounts should remain uncollected until the 1st of .January, 1891, when the note was to fall due. By its terms the note was to be paid on or before the 1st of January, 1891. If in the mean time persons owing the accounts should offer payment, payment was not to be refused; and, if paid, who was entitled to the money but the plaintiff, in whom title to the accounts was vested to the extent of satisfying his note? So, too, it was expressly provided that, if parties should settle their accounts by note, he might, if he chose, take the notes so given, and apply them on the note held by him. The transaction, therefore, seems to have been a sale or assignment of the accounts to the plaintiff to the extent of the satisfaction of his note; the avails thereof, so far as paid in cash or settled by note, to be received by the plaintiff and applied on his note. As a sale or assignment of the accounts the transaction was evidenced by “a note or memorandum in writing, subscribed by the party to be charged thereby,” which completely satisfied the requirements of the statute of frauds. 2 Bev. St: p. 136, § 3, (Birdseye’s Ed., p. 1235, § 13.) But, even if the instrument were to be regarded as a mortgage, it was not void for want of filing, because it was a mortgage of dioses in action, and the provisions of the statute in respect to filing have no application to mortgages of that character, but only to mortgages of goods and chattels. Booth v. Kehoe, 71 N. Y. 341 ; Harrison v. Burlingame, 48 Hun, 212 . So, too, if the transaction were to be denominated a pledge, it was, for a like reason, not void or ineffectual for want of the delivery of the subject of the pledge. In the case of Wilson v. Little, 2 N. Y. 443 , it is distinctly held that incorporeal things, “like debts, money in stocks, etc., which cannot be manually delivered,” may yet be the proper subjects of a pledge; and the court in that case say: “There seems to be no reason why any legal or equitable interest whatever in personal property may not be pledged, provided the interest can be put by actual delivery or written transfer into the hands or within the power of the pledgee, so as to be available to him for the satisfaction of the debt. * * * And debts and dioses in action are capable, by means of a written assignment, of being conveyed in pledge.” And in Fairbanks v. Sargent, 117 N. Y. 332 , 22 N. E. Rep. 1039 , the court say; “If the property consists of a thing in action, the pledgee may sue upon it, and collect or receive voluntary payment from the debtor. The pledgee may require such payment, and the debtor cannot resist his title. To the extent of his debt the pledgee may appropriate the proceeds to his own use, and hold the balance, if any, in trust for the pledgor.” Under the doctrine of these cases it would seem clear that the plaintiff by the transaction in question acquired either an absolute title to these accounts, to the extent of satisfying the note held by him, or such a valid lien thereupon, which followed them into the hands of the defendants as administrators of the deceased, as entitled him to receive the money collected by them thereupon to the same extent. So far as Rny charge of actual fraud in the transaction is concerned; there is no finding in the case upon which such a charge can be based. It does appear that there are creditors other than the plaintiff, but not that the estate is insolvent, or insufficient to pay all creditors in full without resort to assets which had been turned out by the intestate in payment of or as security for an honest debt. We think the conclusion of law of the referee to the effect that the plaintiff is

p. 500

entitled to have the moneys collected by the defendants on the accounts out-» standing on the 26th day of March, 1890, paid to him towards the satisfaction of his note was well based upon the findings of fact, and that the report should have been, and should now be, in all things confirmed, and judgment directed for the plaintiff accordingly.

So much of the order as is appealed from reversed, the report of the referee in all things confirmed, and judgment directed for the plaintiff accordingly, with costs of this appeal. All concur.

Cases cited

Booth v. Kehoe 71 N. Y. 341 N.Y. 1877-12-04 p. 499
Wilson v. Little 2 N. Y. 443 N.Y. p. 499