Dryer v. Shevalier

Headnote

Discontinuance—When court will set aside.

Mrs. S., as administratrix of her husband’s estate recovered judgment against defendant in another state, and for the purpose of suing thereon without taking out letters here assigned it to plaintiff, who brought the action on being indemnified by her. He afterwards settled and discontinued the action on payment of a nominal sum. Held, that the court has inherent power to control all the proceedings in an action, and will not allow a manifest fraud to be perpetrated on another, even though that other is not a party to the record, and that the present was a proper case for the exercise of that power.

Appeal from order vacating a settlement and discontinuance of the action.

Clara Shevalier, as administratrix of her husband’s estate, appointed by the court in the state of Illinois, recovered a judgment in that state against this defendant, John Shevalier, for the sum of $1,639.65. John Shevalier is a resident of this state, and in order that she might sue upon such judgment in the courts of this state, without taking out ancillary letters here, she assigned it to this plaintiff, Charles A. Dryer, who commenced this action to recover upon the same.

Dryer paid her nothing for the judgment, and as between himself and her, claims no interest in it. She gave him a bond indemnifying him against any costs and expenses incurred in this action, and he agreed to pay over to her all moneys by him collected thereon.

The assignment, however, from her to this plaintiff is absolute on its face, and purports to transfer to him all her title, right and interest in such judgment, and the action is brought in his own name, and seeks to recover the amount of the judgment in his own right and for his own benefit. He does not bring it as trustee for her, but avers in the complaint that he is the lawful owner and holder of the same.

The defendant answers in the action, setting up several alleged defenses thereto, and the issues joined were noticed for trial at the Cortland circuit.

While the action was so pending, the plaintiff Dryer and the defendant, entered into a written agreement, under seal, settling the action, releasing and discharging the defendant from all liability thereon, and providing that an order of discontinuance be entered without costs to either party.

A motion was then made, on behalf of the plaintiff Dryer and his attorney, and of Clara Shevalier, to vacate and set aside such settlement and stipulation, on the ground that plaintiff had no authority to make it, and that it was in fraud of all the moving parties.

The following is the opinion at special term:

Parker, J.—I cannot but be convinced, by the affidavits used in this motion, that no fraud was practiced by the defendant upon the plaintiff, in procuring the settlement and release in question.

Neither was it the result of a mistake, or misunderstanding on the part of either. It was an arrangement deliberately entered into by both of them, whereby, for a trifling consideration paid to the plaintiff, the real owner of the judgment, Clara Shevalier, was defrauded out of the amount of it.

But I am also convinced that the defendant knew of the equities which existed between plaintiff and his assignor. He evidently knew that the settlement made was a wicked betrayal of the plaintiff’s trust, and (if we assume that the judgment was a valid claim, as I think we must on this motion) a serious loss' and injury to his assignor.

The plaintiff now seems to have repented of his conduct towards his assignor, and seeks to remedy the evil by a motion to vacate the whole settlement, and to be allowed to proceed with the action.

If the plaintiff’s interests were alone to be considered, I could find no reason to grant the order, but it is so plain that his conduct has worked a great injury to Mrs. Shevalier, the defendant knowing and acquiescing in it, that I think he should be allowed an opportunity for repentance, and to carry out the arrangement which he made with her.

The court has an inherent power to control all the proceedings in an action, and will not allow a manifest fraud to be perpetrated upon another, even though that other is not a party on the record. Lowber v. The Mayor, etc., 5 Abb. Pr., 487 ; Ferris v. Crawford, 2 Den., 595 ; Becker v. Lamont, 13 How. Pr., 23 ; Barry v. M. L. Ins. Co., 53 N. Y., 540 .

' The principals referred to in the case first above cited seem to me sufficient reason for vacating this settlement, and allowing the plaintiff to proceed with this action.

The defendant should, however, be put in the same position in which he was before the settlement was made. Whatever amount he paid to the plaintiff should be repaid to him, with interest. And no costs are allowed to either party upon this motion.

An order may be entered vacating and setting aside the settlement and discontinuance, and allowing the plaintiff to proceed in this action, on condition that he repay to the defendant, within twenty days after the entry of this order, the whole amount that he received from the defendant as a consideration for the settlement, with interest thereon.