Turner v. Midland Railroad — 1 N.Y. St. Rep. 219

Majority

p. 219

Turner v. Midland R. R. Co. of New Jersey, Edwin Conant and others.

(Supreme Court, General Term, First Department,

Filed June 1, 1886.)

Headnote

1. Practice—Proper parties.

This action was brought to enforce a trust. Plaintiff was the owner of two bonds o the Mi land Railroad of New Jersey, which a comm ttee was to reorganize. After reorganization the railroad company was to issue new bonds to the holders < f the old bonds. Plaintiff, by direction of the committe >, deposite • the bonds in Central Tru t Company, in accordance with the plan. Later, plaintiff applied for new bonds, and defendant railroad company refused to deliver them because of the claim interposed by defendant Oonant to the same bonds, he alleging that he possessed receipts from Central Trus" Company evidencing toe deposit of said bonds by him. After the commencement of this suit the Midland Railroad was again reorganized, and continued under the name of N. Y. S. and W. R. R., and it was made a party defendant. On demurrer of defendant Oonant, the Central Trust Company was made a party defendant. Held, that all were proper parties to the suit in order to prevent a multiplicity of suits. Code Civil Procedure, §§ 446, 447, 452.

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2. Same.

Defendant Conant. was a proper party, as he claimed an interest in the bonds, and because the defendant railroad company was entitled to protection between the two combatants.

3. Same. e

In equity, all persons interested in the subject of a suit should be made parties either as plaintiff or defendant. This applies to all actions where the controversy could be ended by one hearing and adjudication.

4. Practice—One cause of action—Relief entitled to.

_ There is but one cause of action. The sole object is to secure the delivery of the two bonds. If plaintiff is entitled to the bonds he is also entitled to cancellation of defendant Conant’s certificate.

Appeal from an interlocutory judgment overruling demurrer to the complaint.

The points raised in the demurrer are

First. That the complaint fails to set forth a cause of action against the defendant, Edwin Conant.

Second. That two causes of action are improperly united.

This action is brought to enforce a trust. Plaintiff was the owner of two bonds of the Midland Railway Company of New Jersey, for $1,000 each, numbered respectively 1857 and 1858. He delivered these bonds in 1877 to a committee of the bondholders, appointed to carry into effect a plan for the reorganization of the road. By this plan the bonds were to be deposited with the Central Trust Company of New York, and upon the completion of the proceedings for reorganization, the new company was to issue its first mortgage bonds to the holders of the old bonds, to an amount equal to their former holdings.

Plaintiff’s bonds were, in accordance with this plan, deposited in the Central Trust Company, by which, after the reorganization was completed, they were delivered to the new company, the defendant, the Midland Railroad Company of New Jersey, which, and its successors, became, therefore, a trustee of the old bonds, and of the new ones to be issued in their place. The plaintiff, in 1880, applied for his new bonds, and the company refused to deliver them, in consequence of a claim interposed by the defendant Conant to the same bonds, grounded upon his alleged

Sossession of a certificate or receipt from the Central Trust ¡ompany, evidencing, as Conant claims, the deposit of the bonds Nos. 1,857 and 1,858 by him. The company threaten to issue the two new bonds to Conant, and this action is brought to restrain them from so doing; to compel them to issue the bonds to plaintiff, and, incidentally, for the cancellation of Conant’s certificate for bonds Nos. 1,857 and 1,858, if any such exists.

Subsequently to the commencement of this action the Midland Railroad Company was again reorganized under

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the statute by and under the name and style of the New York, Susquehanna and Western Railroad Company, by reason whereof it was made a party defendant herein, and in January, 1884, upon the application by demurrer or the defendant Edwin Conant, the Central Trust Company of New York, by the order of Justice Van Brunt of this court, was also made a party defendant.

Edward B. Hill, for appellants.

W. Q. Biddle, for respondent.

The learned justice in the court below was undoubtedly correct in the disposition he made of the demurrer. This is an action in equity, and the Code of Civil Procedure, by sections 446, 447 and 452, substantially declares that all persons interested in the subject of the suit shall be made parties, either as plaintiffs or defendants, in order to prevent a multiplicity of suits and to secure a final determination of their rights. Section 447 provides that any person may be made a defendant who has, or claims, an interest in the controversy adverse to the plaintiff, or who is a necessary party defendant for the complete determination or settlement of a question involved therein, except as otherwise expressly prescribed in the act.

The plan of reorganization, as will have been observed from the statement made, vests certain trusts in reference to bonds which were deposited subject to its terms, and the defendant company having received the bonds, accepted the trust. The plaintiff alleges that he deposited with the committee of bondholders to be by them deposited with the Central Trust Company, two first mortgage bonds of the New Jersey Midland Railroad Company, known and designated by the numbers 1857 and 1858, upon the agreement that he should receive, after the reorganization, two bonds of equal par value of the Midland Railroad Company of New Jersey, when it should be formed, and the necessary obligations to show that these bonds have been created and to' which, under the agreement, if established, he would be entitled. He also alleges, as will have been observed, that these bonds are claimed by the defendant Conant, and his action was brought for the purpose of - compelling the delivery of the bonds to him instead of to Conant, and the relief ad interim asked by injunction, to prevent the delivery of them to Conant and any act on the part of Conant by which his title should be interfered with in any way.

It cannot be well doubted that, under the provision of the Code to which reference has been made, Mr. Conant

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was a proper party, because he claims an interest adverse to the plaintiff and was a necessary party for the complete determination of the question involved, inasmuch as the defendant company was entitled to protection between the two combatants.

The duty of making a person or persons claiming adversely to the plaintiff in such a case a party or parties to the suit was determined in Derham v. Lee ( 87 N. Y., 599 ). The provisions of the Oode, it was there declared, are in harmony with the principle of equity by which all persons interested in the subject of the suit should be made parties, either as plaintiffs or defendants, and that these provisions applied to all actions where the controversy could be ended by one hearing and adjudication. See also, Fowler v. Mut. Life Ins. Co. ( 28 Hun, 195 ). The rule is' quaintly stated by Baron Abinger in Plumbe v. Plumbe (4 Y. & C., 345), as follows:

“ I take it that if a man claims an interest in the subject-matter of a suit by resisting the plaintiff in his possession, or otherwise, and this appears by the bill, in such case you are not bound to set out the particular claim which he alleges, to give it color.” See, also, Fullerton v. McCardy ( 4 Lans., 132 ).

The theory of the appellant as to this action is one which cannot be maintained, namely, that the complaint combines two causes of action, which is not the case, as we have already seen. The sole object is to secure the delivery of the two mortgages which the plaintiff claims, and against the accomplishment of which the defendants’ asserted interest and title seems to be the only obstacle. It is to remove that that the action was commenced.

■The appellant makes objection to the relief demanded by the cancellation of the certificate of the appellant Oonant, of which he predicates his right to the mortgaged bonds. But this was only a part of the judgment asked, which seems to be in harmony with the relief sought, for the reason that if the plaintiff be entitled to these mortgaged bonds, any certificate that may have been obtained by the appellant Oonant investing him with title to or authorizing him to receive them, must necessarily have been improperly or illegally issued, and, therefore, should be destroyed; and in that respect it is auxiliary to the object in view;

For these reasons, without any more elaboration, it is • quite apparent that the demurrer should not have been sustained, and that it was properly disposed of by the learned justice in the court below.

The judgment and order appealed from must, therefore, be affirmed, with costs.

I concur, Daniels, J.