McKechnie v. Spike — 5 N.Y. St. Rep. 150

Majority

p. 150

James McKechnie et al. v. Frank Spike, Edwin S. Gates, George Spike, Woodworth M. Perry and James Rackham. James Rackham v. Woodworth M. Perry.

(Supreme Court, General Term, Fifth Department,

Filed September, 1886.)

Headnote

1. Promissory rote — Default — Order opening — Proper case for.

The plaintiffs were the owners and holders of a note made by the defendants E. S., E. S. &. and G. S., payable to the order oí the defendant, W. M. P., who endorsed the same. The defendant, J. R., appears as the second endorser. A suit being instituted against all the makers and endorsers, and personal service having been made upon all except W. M. P., the makers having suffered a default, judgment was entered against them, and the action continued against the indorsers. W. M. P. being a non-resident, an attachment was procured against some of his property at this time. I. D. S. took an assignment of the judgment and note and released W. M. P's. property, and entering judgment against J. R., issued execution against his property. In the meantime personal service was made upon W. M. P., and J. R. having become the purchaser of the judgment and demand, entered judgment against W. M. P. upon his default in answering. Upon this judgment, suit was commenced against W. M. P. in the State where he resided. After the assignment of the judgment and note lo J. R., he procured an ex parte order substituting him as plaintiff, and he appeared as such in perfecting the judgment against W. M. P.

It appealing by the evidence that at the time of the assignment of the judgment and note to J. R. that the agreement was made that J. R. should not proceed against W. M. P. in the pending suit, but that it should be treated as if J. R. had paid up the note, and a suit should be commenced at once to determine whether J. R. could collect from W. M. P. as first indorser of the note, there being an agreement between J. R. and W. M. P. that the former should stand in the position of first indorser as between themselves. Held, that a case was made for opening the default of W. M. P., and that the circumstances disclosed constituted a sufficient excuse for not making the motion for that purpose at an, earlier date. That without determining whether it would be proper for J. R. to be substituted as plaintiff, good faith required him upon the application to state fully the history of the case.

2. Same — Extent of injunction contained therein.

The order setting aside the default contained a provision that the proceedings taken by J. R. to enforce said judgment so set aside or enforce the collection of the note were set aside and annulled, and that the plaintiff and his agents were restrained from taking steps for the collection of said demand by said judgment or in any manner enforcing the same. Held, that this was simply a restraint against the enforcement of the judgment entered by default.

An Appeal from an order of the Monroe special term, setting aside a judgment entered against the defendant Wood-worth M. Perry, on default for not answering, and also setting aside an order, substituting James Rachham, as plaintiff, in the action as first above entitled. The plaintiffs were the owners and holders of a note, dated February 25, 1885, for the sum of 1550, made by the defendants, Frank Spike, Geo. Spike and E. S. Gates, payable to the order of the defendant, Woodworth M. Perry, who endorsed the same as did also the defendant James Rackham, whose name appeared as the second endorser. The appellants commenced a suit thereon, naming all the makers and endorsers, as parties defendant, and procuring a personal service upon all excepting the defendant Perry. After the expiration of time to answer, the makers of the note having

p. 151

suffered a default, judgment was entered against them, and the action continued as against the endorsers. The defendant Perry being a non-resident, an attachment was procured against him, and some property in which he had an interest, was seized thereon. At this time Isaac D. Seeley purchased from the plaintiffs the judgment, and took an assignment thereof, and of the note upon which the action was founded, and released Perry’s property from the attachment, and caused judgment to be entered against Rackham on his default, and issued an execution against his property upon which a levy was made. In the meantime, personal service of the summons had been made upon Perry, and Rackham thereafter became the purchaser of the judgment against the makers, and of the demand, and Perry having neglected to answer, judgment was perfected against him by default, and an exemplified copy of the judgment was procured, and a suit commenced thereon against Perry in the courts of the State where he resided. After Rackham took an assignment of the judgment and of the cause of action, he procured on an ex parte application, an order substituting himself as the plaintiff, and in perfecting the judgment against Perry, his name appears as plaintiff.

Henry M. Field, for appl’ts; John Grillette, for the resp’ts.

The defendant Perry claims that judgment was entered against him in violation of an oral agreement made with Rackham after he became the owner of the judgment and the note in suit. Perry also claims, that as between himself and Rackham, the latter stands in the relation of first endorser, in pursuance of an agreement between themselves, and that his position is that of an accommodation endorser for Rackham, in whose interest the note was negotiated. In support of the first contention, we think the proofs and the circumstances are in a measure the strongest on Perry’s side of the question. It is obvious that Seeley intervened in the interest of Perry and took an assignment of the claim, that Perry’s property might be be released from,the attachment. When the negotiations were had with Rackliam for a sale of the judgment and the note, Perry was present, and he and Seeley both state in their affidavits that Rackham agreed not to proceed against Perry in the pending suit, and that with a view of determining the controversy whether Rackham could enforce the note against Perry, it should be treated as if Rackham had paid up the note, and he should commence a suit at once in the courts of this State to recover from Perry as the first endorser of the note, and in that manner determine the question in dispute. Perry and his attorney both say that it was the intention to have appeared in that action, and to contest the question whether a recovery could be had against him for the benefit of Rackham, who had become

p. 152

tbe owner of tbe demand. A suit was commenced by Rackbam on tbe very day be took an assignment, in which Perry appeared. In tbe assignment made by Seeley, there is a clause in these words, “ and it is further agreed that nothing herein contained shall be in anyway construed to effect, change, modify or release any of the rights or liabilities of any or either of the parties hereto.”

A case was made for opening the default. Notwithstanding the denial set forth in the opposing affidavits, we think the Special Term fairly used the discretion vested in the court in such matters, and we can find no satisfactory reason for reversing its action. The circumstance that Rackham had commenced an action upon the judgment in another State is no bar to granting the motion, and should have but little consideration in disposing of the case. The circumstances as disclosed, and the history of negotiations had between the parties, constitute a sufficient excuse for not making the motion at an earlier date. When Rackham applied to be substituted as plaintiff, good faith required from him a full statement of the history of the case, and to make mention that he had commenced a suit against Perry, and the object of that suit, that the court could better determine whether he should be substituted or not, as the plaintiff therein. In view of the form of the order which we shall make on affirming the order appealed from, we shall not at this time determine whether, upon all the facts as now disclosed, it would be proper to allow Rackham to be substituted as plaintiff.

The appellant claims that the order of the court setting aside the default, contains a provision in the nature of an injunction order, restraining Rackham from proceeding to enforce the note against Perry in the pending action, and bases the same upon the following clause of the order: “ that all or any proceedings taken by the said plaintiff Rackham, to enforce said judgment so set aside, or to enforce the collection of the note mentioned in the moving papers thereunder, be, and the same are set aside, vacated and annulled, and that said plaintiff and his attorneys, agents, and servants be, and are hereby restrained and enjoined from taking any steps for the collection of said demand, by said judgment, or from in any manner enforcing the same.” This is simply a restraint against the enforcement of the judgment entered by default, and we cannot believe that it was the intention of the court' to restrain a prosecution upon the note, and the language used is not susceptible of such construction in view of the nature of the question presented to the court for its adjudication.

The order appealed from is modified by striking from the same •the words following the word “ annulled,” including the words “ enforcing the same,” as modified, affirmed with $10 costs.

Smith and Bbaduby, JJ., concur; Haight, J., not sitting.