Northampton National Bank v. Wylie — 59 N.Y. Sup. Ct. 146

Majority

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THE NORTHAMPTON NATIONAL BANK, Respondent, v. W. GILL WYLIE, Appellant, Impleaded, etc.

Headnote

Attachment — sureties upon an unclertaMng for.

The sureties upon an undertaking, given upon procuring an attachment, are not liable for general counsel fees incurred or for witness fees expended in tbe conduct of tbe action in wbicb tbe attachment is issued.

Qumre, whether such counsel fees are recoverable against sureties where they are incurred in direct proceedings taken for the purpose of vacating or setting aside ■ the judgment.

Where the attachment is levied upon a fund deposited in a bank, and the plaintiff does not succeed in the action, the owner of the fund thus deposited is entitled to recover such an amount as represents the excess of interest which he could ' have obtained for the money so levied upon, over and above the amount of interest allowed by the bank in which the deposit was, and where it remained during the time of the continuance of the levy.

Appeal by tbe defendant W. Gill Wylie from a judgment rendered upon tbe decision of tbe court, upon a trial before tbe court without a jury at a Circuit Court in tbe county of New York, and entered in tbe clerk’s office of that county on tbe 18th day of April, 1888.

George JT. Adams, for tbe appellant.

Peekham & Tyler, for tbe respondent.

• Tbe plaintiff is a national banking association, created under tbe laws of tbe Hnited States, located and carrying on its business in tbe State of Massachusetts. Tbe defendant commenced an action against it in tbe Superior Court of tbe city of New York, and obtained an attachment in that action wbicb was served upon tbe First National Bank in tbe city of New York. This bank was the depositary and correspondent of tbe plaintiff, and by tbe attachment $12,000 of tbe deposits was seized and held by tbe sheriff. Tbe money was not paid over by tbe First National Bank, but it was charged against tbe plaintiffs’ account as so much money subjected to tbe attachment. Tbe plaintiff appeared in that action and answered tbe complaint, wbicb was for tbe loss of bonds deposited •with it for safe-keeping by tbe plaintiff in tbe action in which tbe

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attachment was issued. Tbe bank appears to have been robbed and these bonds taken by the thieves, and they thereby have become lost to the owner. The bank, by its answer, put in issue the charges upon which its liability was made to depend, and defended the action without moving to vacate the attachment. Such a motion, however, would then probably have proved ineffectual for the reason that it was held by the courts of this State that the property, within this State, of a national bank, created and located in another State, might be seized under an attachment issued against it as a non-resident by virtue of the laws of this State. (Robinson v. National Bank of New Berne, 19 Hun, 477 ; affirmed, 81 N. Y., 387 .) And that continued to be the exposition of the law in this State until after the trial of the action brought against the plaintiff. Since then, however, full effect has been given to the language of the act of congress, in the case of the Pacific National Bank v. Mixter ( 124 U. S., 721 ), which has so restrained the State attachment laws as to exclude the right to issue an attachment under them against a national bank, located and doing business in any State.

After the^ suit had been commenced against the plaintiff in this manner, it was removed into the Circuit Court of the United States, at its instance, and upon a trial in that court a verdict and judgment was recovered in favor of the bank, and that was affirmed upon a writ of error taken to the Supreme Court of the United States. And it was after that affirmance that this action was brought by the Northampton Bank against the sureties in the undertaking, given upon the issuing of the attachment, to recover the damages which the bank had sustained by reason of the attachment. The undertaking was in the form prescribed by section 640 of the Code of Civil Procedure, and the costs recovered by the bank by means of the judgment have been paid. The undertaking conformed literally to this section of the Code, and the sureties undertook and obligated themselves, in case the defendant in the attachment recovered judgment, or if the warrant was vacated, that the plaintiff in that action would pay all costs which might be awarded to the defendant therein, and all damages sustained by reason of the attachment, not exceeding the sum specified in the undertaking. This section of the Code very plainly includes two subjects, clearly distinguishable from each other; one is the obligation to pay the costs awarded to

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the defendant, tbe other to pay the damages which may be sustained by reason of the attachment. TJpon the trial it was proved that the plaintiff, as defendant in that suit, had incurred and paid out considerable sums of money by way of expenses, in obtaining the attendance and evidence of witnesses in its behalf, and for counsel fees for the services of counsel rendered in the course of the litigation. The legal fees, however, of the witnesses, as well as of the deposition taken in the State of Massachusetts, were included in the costs and paid as a part of the sum recovered by the judgment.

Upon this part of the case, accordingly, the inquiry is limited to the right of the bank to recover against the sureties in the undertaking for any part of the moneys incurred and paid for counsel fees and these other expenses in the course of the litigation. The case of Northrup v. Garrett ( 17 Hun, 497 ) has been cited and was followed at the circuit as an authority authorizing such a recovery against sureties in the undertaking. But that case was not so far extended as to sanction and support such a recovery. The attachment there had been issued in the court of a justice of the peace, and the obligation arising upon the bond was very much the same as that entered into by the sureties in this undertaking. But all that was there recovered was the costs which had accrued in the action before the justice, and upon the prosecution of a writ of certiorari brought to review it in the County Court. They were held to be a proper charge against the surety in the bond; and, so far, the ease has followed the preceding authority of Ball v. Gard ner ( 21 Wend., 270 ), where it was held that all the costs included in the judgment might be recovered against the surety in the attachment bond.

But this term costs as it was used in the preceding statute, and has been employed in this section of the Code, has never been attended with that degree of significance as to allow it to include counsel fees incused and expended in the litigation. It includes the numerous items designated in the statute as costs, together with the fees of officers and witnesses, which may be recovered under its settled and well-defined provisions as a part of the judgment in favor of the successful party. Counsel fees are separate and distinguishable items from those entering into the signification of the word costs, as it has been employed in those and other statutes. And as part of the

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■costs of tlie action these counsel fees form no charge whatever against the sureties in the undertaking. Neither is the bank entitled to recover them as damages sustained because of the attachment for the reason that the counsel fees were in no degree incurred in any proceedings taken for the purpose of vacating or setting aside the attachment. As the law stood at the time no such proceeding could be successfully prosecuted, and the bank probably understanding that to be its position, acquiesced in the regularity of the attachment, made no effort or motion whatever to vacate or' set it aside. But its resistance was wholly directed to defeat the action itself by establishing the result that the plaintiff in the suit had no legal claim against the bank arising out of the abstraction and loss of the bonds. The services of counsel rendered and bestowed in the litiga^ tion were for this end entirely ; they were to support and maintain the position taken by the answer that the plaintiff, under the law, was exonerated from liability for the loss of the bonds. It is true that this resulted in vacating the attachment, but not from any effort or .attempt to set it aside, but because the action itself failed by establishing the truth of the answer and exonerating the bank from legal ability. Under this state of the case, which is fully sustained by the proof, as well as by the findings of facts, it can in no legal sense be affirmed that any part of these counsel fees, or other expenses, were incurred by yray of damages occasioned by the issuing and service of the attachment, and, so far as they have been included in the judgment recovered by the defendant, it is erroneous and should be reversed and set aside.

It appeared by the evidence that the bank kept on deposit with the First National Bank of New York a much larger amount than was subjected to the attachment, and that upon its deposits with the First National Bank it was entitled to interest at the rate of two and a half per cent when they exceeded the sum of $5,000. They did exceed that amount during the pendency of that action, and interest to tlíat extent was allowed upon the deposits to the Northampton Bank, while the $12,000 were held subject to the attachment. But it appeared by the evidence, as the fact might also be inferred from the statute of the State, that the moneys were capable of being used in discounting first-class paper, securing a return in the way of interest at the rate of six per cent. That was the rate

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both in Massachusetts and in this State for prime commercial paper during the year 1882. It is to be inferred from this evidence that if the bank had not been restrained from using this $12,000 by the attachment, that it might have secured this rate of interest for the use of its money. It would not have been obliged to have left it on deposit with the First National Bank, but might have withdrawn it and used it in the course of its own business, if it had not been for the restraint of the attachment. That it was prevented in this manner from doing, and there is reason to believe, therefore, that it lost interest at the' rate of three and a half per cent on this sum of $12,000 for the time it was kept in the First National Bank in subjection to the attachment. For that, under these circumstances, it was considered by the court, at the trial, that the bank was entitled to recover as interest in this action upon this sum; and the decision, to that extent, conformed to the obligation with which the. sureties charged themselves under this section of the Code of Civil Procedure, as well as the authorities before that, and the eases since then decided in this court. (Dunning v. Humphrey, 24 Wend., 31 ; Groat v. Gillespie, 25 Wend., 383 .) To that extent the bank did sustain damages by reason of the attachment. It tied up the fund and disabled the bank from using it, as it otherwise might have done, and from earning by its use this legal rate of interest. But, as already observed, as no part of the counsel fees and other expenses were incurred or expended, otherwise than in defense of the action and to support the position taken by the answer in exoneration of the bank from liability, the bank was not entitled to any allowance by reason of such expenditures, or because of ,a larger than the legal rate of expenditures in obtaining its evidence in the State of Massachusetts, or securing the attendance of witnesses from that State upon the trial. The amounts so incurred and paid were neither costs in the action nor damages sustained because of the attachment; and as the costs themselves were fully paid, the extent of the liability of the sureties in the attachment is for this rate of interest down to the time when it was discharged on the 1st of February, 1883.

The judgment should, accordingly, be reversed and a new trial ordered, with costs to the appellant to abide the event, unless within twenty days after notice of this decision the bank shall stipulate to

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reduce tlie recovery to tbe sum of $425.OT and interest thereon from February 1, 1883. And in case the stipulation shall be given, then the judgment will be modified by reducing the recovery to that sum, and the allowance to five per cent upon the amount, without costs of the appeal to either party.

Yan Brunt, P. J., and Brady, J., concurred.

Judgment accordingly. ,