Majority
p. 350THEODOSIA ANN FINK, Plaintiff and Respondent, v. THOMAS P. ALLEN and BRIDGET, his wife, Defendants and Appellants.
Headnote
I. Another Action pending.—Section 122 op the Code.1. A party defendant cannot be compelled by a co-defendant to settle in the action to which they are hoth defendants a controversy existing between them which does not spring out of the adjustment between them of the joint claim against them made by the plaintiff in .the action.
1. Therefore the pendency of an action in which one defendant, by his answer therein, attempted to force a co-defendant to settle therein a controversy respecting the right of such co-defendant under a certain instrument cannot be pleaded in bar or abatement, as another action,pending, to an action subsequently commenced on said
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instrument by such co-defendant against the defendant who so answered in the first action. a. Instance.
S. held a mortgage made by A. to her on certain premises for $1,500. Subsequently A. executed to F. a mortgage on the same premises for $4,000, and received on that mortgage from B., the agent of F., who was also the agent of S., $4,000, less the principal and interest due on the mortgage of S., under certain representations of B., that he would discharge the mortgage of S. of record. S.’s mortgage was not discharged of record, nor was the money retained out of the $4,000 paid over or accounted for to her by B.
S. commenced an action against A. and F., to foreclose her mortgage; A. answered, setting forth the above facts, and claiming that S.’s mortgage was thereby paid and discharged, or if it should be adjudged that the same was not paid and discharged, then claiming that he was only liable to F. for the amount of her mortgage less the amount of S.’s mortgage, and that F.’s mortgage should in that event be adjudged to be a valid debt and lien for such balance only, and prayed that F. might be interpleaded in said action, and that she might answer the same as if defendant A. had commenced an action against (for the interpleader of) S. and F., and that defendant A. might have judgment dismissing the complaint. F. did not answer said apswer of A., or the complaint of S., nor was she interpleaded. In this action brought by F. against A. and his wife, A. pleaded the pend-ency of the action brought by S., and that S. was a necessary party.
Held,
That the answer constituted no defence.
II. Parties under Section 122 of the Code.
1. Who not necessary.
a. In the case put above S. is not a necessary party to an action by F. to foreclose her mortgage.
HI. Principal and Agent.
1. Attorney employed by F. to loan for her money on unencumbered property, and by A to procure for him, a loan on certain property on which there was a mortgage.
1. That the attorney was the agent of A. to remove the encumbrances.
2. Therefore money retained by him out of the loan made by F. to A. for the purpose of paying off the encumbrance, but not applied by him to that purpose, could not be deducted from the principal sum secured by the mortgage from A. to F., either as a payment or failure of consideration to that extent.
p. 352Before Monell and Sedgwick, JJ. Decided November 29, 1873.
Appeal from judgment.
The action was to foreclose a mortgage made "by the defendants to the plaintiff. The defence was partial payment and the pendency of another action.
Upon the first defence it was alleged that at the time of the execution and delivery of the mortgage in suit, Susan B. Stevenson was the holder of a prior mortgage upon the same premises, made "by the defendants, for the sum of fifteen hundred dollars. That one Smith Barker was the attorney and agent of said Stevenson, in the management of her finances, and had the custody of part of her securities, and was authorized to receive payment thereof. That said Stevenson, on or before the execution and delivery of the plaintiff’s mortgage, either delivered her said mortgage to said Barker, or said Barker then had it in his possession, with a certificate of satisfaction of the same duly acknowledged "by her, for said Barker, to receive payment thereof out of the moneys to be loaned by the plaintiff upon the mortgage in suit. It was further alleged that said Barker was also the attorney and agent, of the plaintiff in the management of her finances, and was such agent at the time of the making the mortgage to her. That the defendant applied to said Barker for a loan of $4,000, and stated that out of it he intended to pay the Stevenson mortgage. That said Barker informed the defendant that the plaintiff would make the loan, and that he, said Barker, acting as her agent, would out of the loan pay and discharge the Stevenson mortgage, and procure it to be satisfied of record.
That thereupon the defendant executed and delivered the said mortgage to the plaintiff, said Barker at the time representing, that he then had a satisfaction
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piece of the Stevenson mortgage, duly acknowledged by said Stevenson, and that he would deliver the same to the register and have said mortgate discharged of record. That relying upon such representations of said Barker, agent of said Stevenson and of the plaintiff, the defendant left the plaintiff’s mortgage with said Barker, who gave the defendant his check for the balance of said loan, after deducting and retaining the principal and interest due on the Stevenson mortgage, and which sum so deducted and retained was never paid to said Stevenson, nor to said defendants, nor was said Stevenson’s mortgage discharged of record.
Upon the second defence, it appeared that an action was pending, to foreclose the Stevenson mortgage, in' which the plaintiff and defendant in this action are parties defendants, and in which the defendant in this action has alleged the facts set up in this action, and has claimed that the Stevenson mortgage was thereby paid and discharged, or if it should be adjudged that the same was not paid and discharged, then that he was only liable to said Fink for the amount of her mortgage less the amount of the Stevenson mortgage, and that said Fink’s mortgage should in that event be adjudged to be a valid debt and lien for such balance only, and has prayed that said Fink might be interpleaded in said action, and that she might answer the allegations of the answer the same as if defendant Allen had commenced an action against (for the interpleader of) said Stevenson and Fink, and that said Allen might have judgment dismissing the complaint. • Fink did not answer said answer of Allen to the complaint of Stevenson, nor was she interpleaded. Defendant Allen pleaded to the complaint in this action the pendency of the action brought by Stevenson, and that Stevenson was a necessary party to this action.
This action was tried by the court without a jury, and the following facts found:—“ That the plaintiff
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placed four thousand dollars in the hands of Smith Barker, Esq., an attorney, to loan for her. The same attorney was also acting in that capacity for Susan E. Stevenson in loaning money for her, and as such had loaned for her $1,500 to the defendant, which was secured by a mortgage on the premises in question, executed and recorded previously to the one made by the defendants to the plaintiff. He had also for many years been employed by the plaintiff in making loans. He had been employed by the defendants as their attorney in examining the title to the premises in question, and in procuring for them both of the loans.
'‘ That it was arranged between the defendants and this attorney that the mortgage of fifteen hundred dollars should be paid from the new loan of four thousand dollars, he stating to them that it could not be procured otherwise, and that it must be on unencumbered property. . When the defendants executed the mortgage to the plaintiff to secure the four thousand dollars, he produced a satisfaction piece duly executed of the fifteen hundred dollar mortgage, and stated that it was paid, and, after deducting the amount of it with interest, and his charges for examining the title, he paid the balance of the four thousand dollars—viz., twenty-four hundred and eight dollars and sixty-two cents—to the defendants.
“ That the defendants continued to pay the interest on the four thousand dollars until they discovered, on November 1,1872, that the mortgage of fifteen hundred dollars on the property remained unsatisfied of record, and was in fact unpaid. The attorney died in June, 1872, having himself, without defendant’s knowledge, continued to pay the interest on the fifteen hundred dollar mortgage. Susan E. Stevenson commenced an action in the Supreme Court to foreclose the mortgage to her of fifteen hundred dollars, in January, 1873, making the plaintiff in the present suit, and the defendants herein, Allen and wife, parties defendant to her suit in the Supreme
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Court. The plaintiff and defendants in this action appeared in said recited action before the commencement of this action; that the said plaintiff did not answer. The defendants answered the complaint, and therein alleged substantially the same facts as are set forth in their answer in this action as to the bonds, mortgages, the representations and acts of the said attorney, his agency, the deduction by him from the four thousand dollars of fifteen hundred dollars, and interest, for the discharge of said Susan E. Stevenson’s mortgage, their ignorance of the fact, of its not being discharged, etc., and praying that the said plaintiff and said defendant in said recited action might interplead, and for other relief, and as set forth in their answer in this action. That a copy of said answer was served on the attorney of said defendant, Theodosia A. Fink; that such answer in said action, except as to payment of said fifteen hundred dollar mortgage, was struck out by order of the court, and such order affirmed on appeal; that the said action came on for trial before the Supreme Court, and judgment was rendered that the said mortgage for fifteen hundred dollars was not paid, and for the foreclosure thereof, and sale of said property.
" That the evidence fails to show that the attorney was the agent of the plaintiff for the purpose of paying off the fifteen hundred dollar mortgage, but it shows that she entrusted him with the four thousand dollars to invest for her. She understood that it would be loaned on unencumbered property. Such had been his practice in making loans for the plaintiff during a long series of years. There was no express agreement between them that the four thousand dollars should be loaned in this way. The plaintiff never heard that there was a mortgage prior to hers on the premises until after she had made her loan.
" The plaintiff employed the attorney to loan the money on mortgage. She gave him no authority to do or to
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omit to do anything in respect to the Stevenson mortgage. She knew nothing about it at that time, and was under no obligation to clear the title of encumbrances, and assumed none. Neither was it within the scope of the authority conferred by her upon the attorney to assume any such obligation.
■ ‘ ‘ That the said attorney was the agent of the defendant to clear the- title of this encumbrance of fifteen hundred dollars.
‘ ‘ That the plaintiff never authorized the attorney to pay the prior mortgage or to get it off. The defendants told him to do so, and they acquiesced in his retaining the amount, and also the satisfaction piece, and he acted on their behalf and as their agent for that purpose.
“ That the parties were alike ignorant of the wrongful act of the attorney in appropriating the money so deducted to his own use, and omitting to discharge the mortgage of record.”
Upon these facts the defence was overruled, and judgment entered for the plaintiff.
The defendants excepted to the findings, and appealed from the judgment.
Francis Byrne, attorney, and of counsel for appellants, urged:
First.—Mr. Barker was the agent of the respondent in procuring the loan (Williams v. Walker, 2 Sand. Ch. R. 325; Arnold v. Robertson, 3 Daly, 298 ; Condit r. Baldwin, 21 N. Y. R. 219).
Second.—The respondent was bound to have her rights determined in the first action : § 274 [as amended by act 1862], § 118 [as amended by act 1867], § 122 [as amended by act 1851]); and the pendency of the same is a bar to this action, and the complaint should have been dismissed, as moved for. (Code, §§ 144, 147; Groshon n. Lyon, 16 Barb. 461 ; Woodworth v. Bellows, 4 How. Pr. 24 ; Norbury v. Seely, 4 How. Pr., 73 ;
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Tower v. White, 10 Paige, 395; Kay v. Whittaker, 46 N. R 565, etc., at p. 576).
Jacob F. Miller, attorney, and of counsel for respondent, urged:
First.—The plea of a former action pending is not available (Kelsey v. Ward, 16 Abb. 98 ; Mallory v. Horan, 49 N. Y. 116 ; Whitcomb v. Williams, 4 Pick. 228 ; King v. Chase, 15 N. H. Reports, 13; Mathew v. Duryee, 4 Keyes, 538; Goddard v. Benson, 15 Abb. 191 ; Matter of Sipperly, 44 Barb. 371 ).
Second.—The plaintiff in this action could not have a judgment of foreclosure of her mortgage in the first action in which she was defendant (Mechanics’ & Traders’ Ins. Co. v. Roberts, 29 1 Abb. 381 ; 39 How 6 ).
Third.—The court could not adjust the equities between the defendants in the former action. It could adjust them only as they relate to the plaintiff1 s claim therein. The plaintiff herein could therefore expect no benefit from the former action (Tracy v. N. Y. Steam Faucet Co., 1 E. D. Smith, 349 ; Wells v. Smith, 7 Abb. 263 ; Stephens v. Hall, 2 Rob. 676 ; Wright v. Delafield, 25 N. Y. 268 ; Kay v. Whitaker, 44 N. Y. 565 , 576).
Fourth.—The plaintiff has a legal right to enforce her contract in court (King v. West, 10 How. 333 ).
Fifth.—This is not a case for interpleader. The person claiming an interpleader must himself bring the action. He must be an actor; he cannot have it as defendant (Atkinson v. Manks, 1 Cowan, 703 ; Cooper’s Eq. Plead. 456 ; Harrison’s Ch. Pr. 96; Mad. Ch. 172, 173).
Sixth.—Mr. Barker was the agent of the defendants for everything connected with the Stevenson mortgage (Bank of United States v. Davis, 2 Hill, 462 ; Story on Agency, 131; Jeffrey v. Bigelow, 13 Wend. 521 ).
Seventh.—An agent can bind 'his principal only when acting within the scope of his real or apparent authority
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(Sherman and Redfield on Negligence, § 212; Bowman y. Tallman, 2 Robertson, 385).
Uponi the delivery of the bond and mortgage by defendants to Mr. Barker for this plaintiff, the money became, in judgment of law, the property of Mr. Barker as its custodian or as trustee. .The money was held subject to Mr. Allen’s order. If Mr. Barker failed to comply with Mr. Allen’s order, Mr. Allen has a just claim against his estate for the money retained, but he has not an offset against the plaintiff’s bond and mortgage (Sanford v. Handy, 23 Wend. 267 ; Colvin v. Holbrook, 2 Comst. 129; Scott v. McGrath, 7 Barb. 55 ;. Condit v. Baldwin, 21 N. Y. 220 ; Blake v. Ferris, 5 N. Y. 49 ; Spraight v. Hawley, 39 N. Y. 448 ; New York Life Ins. and Trust Co. v. Beebe, 7 N. Y. 369 ; Martin y. Farnsworth, 40 N. Y. 555 ).
Eighth.—The defendants are estopped from denying the validity of the plaintiff’s claim. They have recognized it, by paying the interest for three years and upwards (Parsons on Contracts, vol. 1, p. 49; Bridenbecker v. Lowell, 32 Barb. 19 ; Cairns vc. Bleecker, 12 Johns. 300 ).
Ninth.—Assuming that the parties to this action are equally innocent, still the defendants should suffer the loss, inasmuch as they by their authority or indiscretion enabled Mr. Barker to commit the act which occasioned the loss (Henry v. Wilkes, 37 N. Y. 565 ).
The defence of another action pending was an attempt by the defendants to avail themselves of a provision of law which would seem, perhaps, to allow it. It is provided that the court may settle any controversy between the parties before it (Code, § 122), if it can be done without prejudice to the rights of others.
I have no doubt that in the foreclosure suit of Mr. Stevenson, it was within the power of the court, upon a
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proper issue "between the plaintiff in this action and the mortgagor in that, to have tried and determined the controversy "between those parties. The foreclosure suit could have gone on, and need not have "been delayed "by the side issue. The determination of the controversy, if in favor of the mortgagor, would have affected the plaintiff’s claim to the surplus, had there "been any, to the extent of the money detained "by Barker, and nothing more.
This might have "been done. But as it was a controversy solely between the plaintiff and defendant in this action, in Avhich the plaintiff in the other action had no interest whatever, it required at least the consent of all parties concerned in the controversy.
Had Mrs. Fink taken issue in that action to the claim Allen made, such issue might have been determined in that action; but it would have been in effect an independent action between those parties.
I do not understand the law referred to, to mean that parties defendants can be allowed, in an action where they are made defendants, to settle any controversies they may have, unless it is done by their voluntary submission. A defendant cannot be compelled to litigate , under such circumstances ; and if he refuses to do so, he will not be estopped or debarred of his cause of action or defence.
The plaintiff in this action did not accept the challenge of the defendant to settle their differences in the other action; and nothing was or could be settled without his submission.
But the section of the Code referred to means no more than that defendants who have appeared and answered respecting the plaintiff’s claim may, as a part of the adjustment of that claim, have the equities between themselves, in respect to such joint claim, adjusted in that action (Kay v. Whittaker, 44 N. Y. R. 565, 576).
Such a state of things does not exist in this case. The
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controversy sought to have been brought into the former suit was apart from, and wholly independent 'of, the plaintiff’s claim in that action, and therefore could not, at least without the consent of both the parties, be determined in that action.
The defence of another action pending was correctly overruled.
The other defence, of part payment or of partial failure of consideration, rests solely upon whether the plaintiff is to be held responsible for the acts of Barker.
Upon the evidence, the learned judge has found that Barker was the defendant’s agent “to clear the title of this incumbranceand was not the plaintiff’s agent for any such purpose; his finding in that regard being, that Barker had no ‘ ‘ authority to do or omit to do anything in respect to the Stevenson mortgage.”
It is apparent that the defendant, when he left the amount of the Stevenson mortgage in Barker’s hands, was led to do so by the representation of Barker that he already had the satisfaction piece, and by his promise to deliver it to the register, and have the mortgage cancelled of record. But I cannot find that in making such representation and promise, Barker was acting for or on behalf of the plaintiff. Certainly there is no evidence that it was within any authority which the plaintiff had given him. As the learned judge says in' his findings, the plaintiff “knew nothing about the Stevenson mortgage at that time ; was under no. obligation to clear the title of the incumbrance, and assumed no such obligation.”
These findings of fact, are, I think, abundantly supported by the evidence, and are destructive of the defence.
The judgment should be affirmed, with costs.
Sedgwick, J., concurred.
Cases cited
- Groshon v. Lyon 16 Barb. 461 p. 356
- Woodworth v. Bellows 4 How. Pr. 24 p. 356
- Kay v. Whittaker 44 N. Y. 565 at 576 p. 357
- Cairnes v. Bleecker 12 Johns. 300 p. 358