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Knox v. Hexter

42 N.Y. Super. Ct. 496 10 Jones & S. 496 Court N.Y. Super. Ct. Decision date 1877-06-25 English

Contents

Majority

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CHARLES KNOX, Plaintiff and Respondent, v. DAVID HEXTER, Defendant and Appellant. Action No. 1.[3] DAVID HEXTER, Plaintiff and Appellant, v. CHARLES KNOX, Defendant and Respondent. Action No. 2.*

Headnote

I. EXECUTION.
1. STAY OF, TO ENABLE THE JUDGMENT-DEBTOR IN A CROSS ACTION BROUGHT BY HIM AGAINST' THE JUDGMENT CREDITOR, TO RECOVER JUDGMENT SO AS TO OFFSET IT AGAINST THE JUDGMENT ON WHICH THE EXECUTION IS ABOUT TO BE ISSUED.
(a) Power of the court to grant.[2]
1. It has such power.
(b) Exercise of power, when.
1. Where the party against whom the stay is asked is protected and secured, while the other is in peril and exposed to loss, and the subject matters of the two actions are such as justly call for a settlement without further trial of issues of fact, and the effect of the order will be to finally adjust the rights of the parties without gaining advantage or suffering harm from the fact that one judgment is prior in point of time to the other, a proper case for the exercise of the power is presented.
Before Speir and Freedman, JJ.
Decided June 25, 1877.
Appeal from an order staying execution in second above-entitled action.
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It seems proper, with a view to giving all the facts upon which the decision of the court is based, to particularly set forth the stipulations referred to in the opinion, and the facts out of which they arose.
After judgment had been entered on the verdict, in Knox v. Hexter, defendant appealed to the general term and obtained an ex parte order staying plaintiff’s proceedings. On a motion to vacate this stay, it appeared that judgment had been recovered by the plaintiff, in the case of Hexter v. Knox; that defendant had appealed from that judgment to the general term, where it had been affirmed, and an appeal from the general term decision to the court of appeals was pending, and thereupon the court, on denying the motion to vacate, required Hexter to enter into the following stipulation:
“It is stipulated by the defendant above named, that the judgments in the action heretofore brought by the present defendant against the present plaintiff, now pending on appeal in the court of appeals, have not been assigned or incumbered by him, nor has either of them ; and that he will not hereafter make or execute any assignment or incumbrance thereon, by which the right of the plaintiff, if any, to offset the amount of the judgment in this action against the amount of the said judgments recovered by him against the said Knox, should be defeated or impaired.”
“ Dated November 8th, 1875.”
After this, Knox was about to foreclose a chattel, mortgage, given to secure another quarter’s rent falling due since that sued for in Knox n. Hexter.
Thereupon Hexter commenced an action in the supreme court" against Knox, and obtained an injunction against said foreclosure.
Thereafter, the following stipulation was entered into:
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Superior Court of the City of New York.
David Hexter
Judgment for Plaintiffs $18,163.18. Doclceted May 15, 1874.
against
Charles Knox.
“The above-mentioned judgment having (on the appeal therefrom by said Knox) been affirmed by the court of appeals, it is stipulated and agreed between the parties to this action that the quarter’s rent of the Prescott House premises, due on the first day of November last from said Hexter to said Knox, with interest to this date, amounting to five thousand seven hundred and eighteen 96-100 dollars, shall be allowed as an offset against the said judgment in this action.
“And the said Knox having this day paid the sum of seventy thousand one hundred and forty-six 36-100 dollars in cash, on account of said judgment and costs of appeal therein, leaving a balance of principal and interest due thereon amounting to seven thousand and seven hundred and eleven 71-100 dollars,[3] it is stipulated and agreed (the sureties for said Knox consenting) that no proceedings shall be taken under said judgment to enforce payment of the said balance, or the interest to accrue thereon, until the expiration of thirty days after the entry of judgment on an appeal now pending to the general term of this court, from a judgment recovered by said Knox against said Hexter for the sum of seven thousand and five hundred and fifty-seven dollars and forty-one cents, on October 9, 1875; and that if said Hexter shall, within said.thirty days, commence an appeal to the court of appeals from
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the judgment of said general term on the appeal now pending, all proceedings on the aforesaid judgment in this action shall be further stayed until the decision of the court of appeals on such last mentioned appeal; but no security shall be required from said Hexter, except an undertaking in the sum of five hundred dollars, the balance of the judgment in this action left unpaid, pursuant to this stipulation, being deemed and taken to be in lieu of all security which might be required from said Hexter to obtain a stay of proceedings on the appeal now pending from the said judgment against him, or on any appeal thereon to the court of appeals.
“In the case of the decision of said appeals being in favor of said Knox, then the balance of the aforesaid judgment against him now left unpaid is to be accepted in discharge of his judgment against said Hexter and interest thereon, and both of said judgments to be satisfied and discharged; and in case the judgment against said Hexter shall be reversed, he shall be at liberty to collect and recover said balance from said Knox and his said sureties, together with interest thereon. All other actions and proceedings now pending between said Knox and said Hexter are to be discontinued, without costs to either party.
“ Dated Hew York, January 26, 1876..
“ Buckhah, Shales & Walker,
‘ ‘ David Hexter. Plaintiff’s Attorneys.
“ W. MoDerhot,
“C. Knox. Defendant’s Attorney.”
The sureties given by Knox on his appeals to the general term and court of appeals consented to this stipulation.
On the execution of this stipulation Knox surrendered and cancelled his chattel mortgage, which he swore he would not have done if he had not understood and believed that by the stipulation all proceedings by
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both parties were intended to be stayed until determination by the court of appeals in the action commenced by him, of his right to recovery of the judgment entered in his favor, no matter whether the appeal to the court of appeals was required tobe taken by Hexter or himself.
Buckham Smales and Walker, attorneys, and Stephen A. Walker, of counsel, for appellant, urged :
I. The justice cites Chitty Pr. vol. 1, p. 667, as sole authority for the proposition that though a common law court cannot set off unliquidated claims against a judgment, it can stay execution upon a judgment with a view to enable a defendant to obtain a judgment in a cross action. The proposition in Chitty is not supported by the authority of the single case cited in support of it, Masterton v. Malin (7 Bing. 435). Mr. Chitty’s interpretation of the decision of the case is as follows: “The court will sometimes even stay execution in an action till judgment has been obtained by the defendant therein, viz., a cross action, so as to enable the latter afterwards to obtain such set-off.” Fisher and Harrison (Dig. 7,774) state the same case in the following language : “A plaintiff having been non-suited and costs taxed for defendant, the court refused to allow the plaintiff to set them off against costs to be - taxed for him in an ejectment in which he had obtained a Verdict, but which defendant had obtained a rule nisi to set aside and. enter a nonsuit.” With two directly counter interpretations of the same case, and with Judge Sedgwick’s citation of it as sole authority for his decision in the present case, it is well petere fontes —and see the case itself, which will be found to be a mere practice motion, and not stated with absolute correctness by any of the learned gentlemen. Whatever else it is, it is not the slightest authority for the position taken by its latest interpreter. Its remoteness and
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obscurity is sufficient evidence that cases which support the view taken in the order appealed from are difficult to find.
II. But if there were authority for such a ruling, Mr. Knox is in no position to claim this relief. He withdrew the counter-claim (the subject-matter of Knox v. Hexter) at the last moment of the trial in Hexter v. Knox. The opportunity of adjudicating all matters in controversy by one verdict he voluntarily repudiated nearly three years ago. This course on his part precludes him from asking relief from the'consequences of his desire to continue rather than end litigation.
III. The court, however, has undertaken to make, by an order, what is in effect a judgment in an injunction suit upon a misconstruction of a private agreement between the parties, viz., the stipulation. Such action by a common law court is without jurisdiction. . Further than this, the interpretation of the instrument is erroneous. The stipulation provides that no proceedings shall be taken by Hexter to enforce payment of the balance left in Knox’s hands until the expiration of thirty days from the determination of the appeal to the general term; and that, if Hexter shall appeal therefrom to the court of appeals, proceedings shall be further stayed until the decision of the court of appeals. And it also expressly provides that the balance of the judgment against Knox is to be in lieu of all security which might be required from Hexter to obtain a stay of proceedings in two cases : 1st. On the appeal then pending in the general term. 2nd. On any appeal by Hexter thereon to the court of appeals. Also, that in case the judgment against Hexter is reversed he shall be at liberty to collect and recover said balance from Knox and his sureties. The judgment being reversed, Hexter is entitled to collect the balance.
IV. The whole tenor of the stipulation shows the balance left in Knox’s hands was a mere substitute for
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the statutory undertakings which would have been required by Hexter on his appeal to the general term, and in case of a decision adverse to him in that appeal, in lieu of a similar undertaking on appeal by him to the court of appeals. There is not a single expression or word in the stipulation giving Knox any right to retain the money in case of an appeal by him ; such an appeal is not even referred to in the stipulation, and it is not competent to the court to delay Hexter’s proceedings by a forced construction not warranted by the agreement of the parties. There is now no judgment against Hexter, and he is entitled to collect the balance due to him from Knox.
Wm. McDermott, attorney, and John M. Scribner, Jr., of counsel for respondent, among other things, urged:
I. Nothing contained in the stipulation precluded Knox from making the application which he made at special term. There was a distinct provision for two appeals by Hexter ; and although, by its precise terms, it does not appear to guard against the contingency of a reversal of Knox’s judgment at the general term, yet, as a whole, the stipulation was manifestly intended to create an armistice until the court of appeals should decide whether Knox was entitled to his quarter’s rent, after the verdict obtained by Hexter in the other case, which, at the general term of this court, and in the court of appeals, was upheld as an indemnity to which Hexter was entitled, for want of possession of the demised parts of the new buildings.
II. Even if it should come to the conclusion that the stipulation, in its strict language, is not broad enough to cover the appeal by Knox, the court, for the promotion of justice, should not hesitate to reform it, or give it such an equitable construction as will prevent injustice, especially in a case where no harm can result to the appellant. Knox has exhibited confidence in
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the merits of his suit by giving stipulation for judgment absolute, if he is defeated on appeal, and he ought not to be denied the benefit of such appeal, which would be the effect of a reversal of Judge Sedgwick’s order, in view of the alleged (and substantially undisputed) want of responsibility on the part of Mr. Hexter. It was sufficient at special term, and is sufficient now, to maintain the order, that the undisputed facts disclosed that Hexter was protected and secured; that Knox, on the contrary, was in peril. Justice and equity, therefore, required the interposition of the court, to the end that neither party should be allowed an unjust advantage.
III. The court has power to grant the stay (Ferry v. Roberts, 15 How. Pr. 65 ; Durkin v. Vanderburgh, 1 Paige, 622; People v. N. Y. Com. Pleas, 13 Wend. 649 ; Baker v. Hoag, and Macy v. Stott; 6 How. Pr. 201 ; Smith v. Towden, 1 Sandf. 696 ; Cole v. Grant, 2 Caines, 105; Dewy v. Bower, 3 Johns. 247 ). Assignment does not cut off the right (Chamberlain v. Day, 3 Cow. 353 ; Insurance Co. v. Power, 3 Paige, 365; Graves v. Newsbury, 4 Hill, 559 ). Equities between the parties are paramount to attorney’s lien for costs (Roberts v. Carter, 24 How. 44 ; Mohawk Bank v. Burrows, 6 Johns. Ch. 317 ; De Figaniere v. Forrey, 2 Robert. 670; Nicoll v. Nicoll, 16 Wend. 446 ; Brooks v. Hanford, 15 Abb. Pr. 342 ).

The defendant Hexter appeals from an order staying his proceedings to collect by execution the unpaid balance of a judgment recovered. by him against Mr. Knox, which was left unpaid under a stipulation between the parties.

Hexter first obtained a judgment for damages for being kept out of possession of certain leased premises. Knox shortly after procured his judgment against Hexter for rent of the premises, part of which he had

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not put into the possession of Hexter. This latter judgment has been reversed by the general term, on the ground that Hexter is liable only for the use of that part of the premises actually occupied by him, but is liable for the part so occupied. Knox has appealed to the court of appeals, and given a stipulation for judgment absolute if he be defeated on appeal, claiming to be entitled under the lease to a quarter’s rent. Should Hexter be allowed to collect from Knox the balance of his judgment under the decision of the trial term, he would still owe Knox for use of the premises actually occupied by him, even though Knox should not be entitled to recover the full quarter’s rent. Knox ought not to be denied the benefit of such appeal which would result from the order made at special term, and especially so in view of the alleged want of responsibility on the part of Mr. Hexter. It is therefore sufficient to sustain the order by the facts disclosed that Hexter was protected and secured, while Knox, on the contrary, was in peril and exposed to loss, and that the effect of the order under the stipulation will finally adjust -the rights of the parties between themselves.

It is claimed by counsel that the court had not the power to make the order. The rule as laid down in Chitty’s General Practice, vol. 1, page 666, is that the superior courts favor the equitable mode of adjusting-accounts between the same parties at common law, if there be cross-actions, or suits, and allow one judgment to be set off against the other, and sometimes even stay executions ' in an action till judgment has been obtained by the defendant by a cross-action so as to enable the latter afterwards to obtain an off-set (Masterman v. Malin, 7 Bing. 435). It is claimed that this authority cited by the elementary writer does not sustain the rule. It is true the case shows the rule obtained to support the motion for the set-off was discharged by the court; but not until the court had de

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termined to make the rule absolute by granting it, and so communicated its decision to counsel, whereupon the counsel furnished an affidavit proving that the judgment in the suit sought to be stayed had actually been levied under a ca. sa. The reporter was consequently authorized to announce the rule as stated by Mr. Philips. On these priúciples relief has been granted in all the courts (Terry v. Roberts, 15 How. Pr. 65 ). It is the equitable control which they are authorized to exercise over the parties and proceedings in causes before such courts to promote equity and prevent injustice. The late chancellor of this State has said this power of a court of chancery to set off on motion, is the same as that of a court of common law, but that the jurisdiction of the court of chancery is more extensive than that of the common law court (Duncan v. Vandenburg, 1 Paige, 622). If no possible injury results to the parties by a stay of proceedings, it seems difficult to perceive why a stay of execution on a judgment for a brief period should not be granted, until a judgment has been obtained by the defendant, in a cross-action to enable him to make an off-set.

The subject matters of the two actions are such as justly call for a settlement, without further trial of issues of facts.

If, therefore, the order of the court below staying the proceedings on execution until the decision of the question of law involved will finally adjust the rights of the parties without gaining advantage or suffering harm from the fact that one judgment is prior in point of time to the other, the order should not be set aside.

The order appealed from must be affirmed with costs.

Freedman, J., concurred.

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