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Day v. American Telegraph & Cable Co.

53 N.Y. Super. Ct. 218 21 Jones & S. 218 Court N.Y. Super. Ct. Decision date 1886-05-03 English

Delivered by Ingraham, J.

Contents

Majority

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HENRY DAY, Respondent, v. THE AMERICAN TELEGRAPH AND CABLE CO., Appellant.

Headnote

Parties.—Postponing Piñal of one action until after determination of another.
Where an action is based on acts alleged to have been done by the defendant wrongfully as to the plaintiff, and in violation of his rights and the defendant’s duty to him, his rights prior to such acts being unquestioned, persons who claim, or may claim against the defendant a liability arising out of such acts are not necessary parties ; nor is it error to refuse to postpone the trial of such action until after the defendant can procure a determination of his liability to such other parties in an action brought by him in the nature of an action for an interpleader against the plaintiff and such other parties.
Before Freedman and Ingraham, JJ.
Decided May 3, 1886.
Appeal by defendant from a judgment entered after a trial at special term.
The facts appear in the opinion.
Dillon & Swayne, attorneys, and Roger Swayne, of counsel for appellant,
on the questions considered in the opinion, argued :—I. The trial of this action should have been postponed until the interpleader suit had been determined.
1. Some of the transferees claim title by legitimate transfers, and threaten suits as against the defendant to enforce their alleged rights to dividends on the shares, which dividends Day also claims. Their claims, therefore, are manifestly conflicting, and it is sufficient to maintain a bill in the nature of an interpleader that the defendant is in danger of being molested by conflicting claims (Prudential Ass. Co. v. Thomas, L. R., 3 Ch. Ap. 74 ; Dr. C. Reid v. Commercial Ins. Co., 32 La. Ann. 546 ; Richards v. Salter, 6 Johns. Ch. 445 ; State Ins. Co. v.
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Monks, 1 Conn. 691 ; Salsbury Mills v. Townsend, 109 Mass. 115 ; Birch v. Corbin, 1 Cox Ch. Cases 144). That Day claims the shares is obvious—that the parties who caused the transfers to be made insist that Day does not own the shares is alleged. This controversy is not a shadowy, but substantial one. If the powers are forged, no title passed out of Day (Davis v. Bank of England, 2 Bing. 393 ; Swan v. N. B. & A. Co., 2 H. & C. 175 ; Taylor v. Midland R. Co., C. Juris. N. S. 595), and if no title passed out of Day, then the parties who caused the transfers to be made are liable to Day (Marsh v. Keating, 1 Bing. N. C. 198), or to the plaintiff (Sims v. Am. Tel. Co., L. R. 5 Q. B. Div. 175 ; Richardson v. Boston & A. R. R. Co., 135 Mass. 473 ; Brownell v. Howard F. I. Co., 42 Md. 384 ; Hambleton v. C. & O. R. R. Co., 44 Ib. 551; Canal Bank v. Bank of Albany, 1 Hill, 287 ). That the defendant has an interest, and calls upon the court to define and protect its rights, and to point out what they are, does not affect the status of the action (Charmley v. Dunsaney, 1 Sch. & Lef. 137; 2 Id. 710 ; Mohawk & Hudson R. R. R. Co. v. Clute, 4 Paige, 384; Parks v. Jackson, 11 Wend. 443 ; Bedell v. Hoffman, 2 Paige, 299 ; City Bank v. Bangs, 2 Paige, 570). An injunction goes, as of course, in an action properly framed for an interpleader (Snell Prin. Equity [5 Ed. ch. 12] 591). 2. The suit of interpleader was well brought as one to prevent a multiplicity of suits (Third Av. R. R. Co. v. Mayor, &c., 54 N. Y. 159 ; Story’s Eg. J. §§ 852, 854, 901, and notes ; Howe v. Tenants of Broomgrove, 1 Vern. 22 ; Mayor v. Pilkington, 1 At. 282 ; Carroll v. Stafford, 3 How. [U. S.] 463 ; N. Y. & N. H. B. R. Co. v. Schuyler, 17 N. Y. 573 ). The defendant’s right to maintain the suit is perfectly made out, notwithstanding this action, and the pendency of this suit adds to the defendant’s equity (McHenry v. Hazard, 45 N. Y. 581 ). Even if there is a good defense at law by the defendant to this action, that does not prevent nor interfere with the granting of the equitable relief sought by interpleader (Scott v. Onderdonk, 14 N. Y. 14 ;
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Ward v. Dervey, 16 Ib. 522; Wood v. Seeley, 32 Ib. 113 ; McHenry v. Hazard, 45 Ib. 580; Fowler v. Palmer, 62 Ib. 534). It has been suggested that the remedy of the Cable Company is in the exercise of the right to give notice to other parties to come in and defend the original action. The reply to this suggestion is, that the right to give' such notice has always been open to the option of a defendant in an original action such as the present ; but the right to file a bill of interpleader, or a bill in the nature of an interpleader, and to restrain the original suit pending a determination of the entire controversy between all the parties, is a right which' cannot now be denied, because another course is, as it has always been, still open to selection. The two rights have existed together too long for one to be now held the exclusive remedy. Besides, the right to give notice to come in and defend, secures merely the negative advantage of estoppel, while we are entitled to ask a decree, affirmatively fixing the rights and liabilities of all the parties (Prudential Assurance Co. v. Thomas, L. B. 3 Ch. App. 74). 3. The bill of interpleader lies to prevent irreparable injury (Brown v. Pacific Mail S. S. Co., 5 Blotch. 525; Doe v. Earl Derby, 1 Ad. & E. 783 ; 2 Smith’s Lead. Cas. Notes* 669 et seq.). If the original transfers from Day are tainted with crime or fraud, there may be a strong presumption that the infection continues, and if it be so, the instruments should be surrendered and canceled. Under such circumstances, equitable relief is granted (Springport v. Teutonia Savings Bank, 75 N. Y. 397 ; Power v. Village of Athens, 19 Hun, 165 ). Town of Venice v. Woodruff ( 62 N. Y. 462 ), is not an authority against the views of the defendant. In that case, there were no claims of different persons to the same right, and it is distinguished in Springport v. Teutonia Savings Bank (supra) Neither is Buffalo Grape Sugar Co. v. Alberger ( 22 Hun, 349 ) an authority against the defendant. On the contrary, it is an authority in favor of defendant upon the circumstances exhibited in the interpleader bill.
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The suggestion that the defendant might call upon those who presented the certificates of Day for transfer, to come in and defend this suit, cannot affect the jurisdiction and right of a court of equity to afford relief in a proper case. Besides, it is a matter of very grave doubt as to whether the giving of notice to a surety will bind him by a judgment unless he has in terms covenanted to be bound by such a judgment upon notice to him to come in and defend (National Fire Insurance Co. v. McKay, 5 Abb. N. S. 448; Thomas v. Hubbell, 15 N. Y. 407 ).
F. B. Lord, attorney, and John E. Parsons, of counsel for respondent,
on the questions considered in the opinion, argued :—I. The holders of the certificates issued upon the surrender of the certificates belonging to the plaintiff and certificates issued upon their subsequent surrender, were not necessary parties to the suit; nor was the defendant entitled to have the trial of this action delayed until the disposition of a suit brought by the defendant to have those persons interpleaded with the plaintiff. That this is so is res adjudicaba in this court. The defendant did, subsequent to the commencement of this suit, commence an interpleader action. In that action the defendant obtained an injunction restraining the prosecution of this suit. The plaintiff moved to vacate. The motion was denied pro forma by Mr. Justice Freedman at special term; an appeal was taken to the general term. There the order was reversed and the injunction vacated, the general term holding that the interpleader action would not lie (The American Telegraph & Cable Co. v. Day, impleaded, &c., 52 Super. Ct. 128).

By the Court.

Plaintiff was the owner of seven hundred shares of the capital stock of the defendant corporation, of the par value of one hundred dollars each, and defendant had issued to plaintiff, as such owner, seven certificates of one hundred shares, each of

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which certified that plaintiff was the owner of one hundred shares of such capital stock, transferable only on the books of the company at its office in the city of New York, by the said stockholder in person, or by attorney, on surrender of the certificate. Between March 1 .and September 1, 1883, the defendant transferred the stock represented by the said certificates to several persons, received and canceled the plaintiff’s certificates, and issued new certificates to the persons to whom such stock was transferred.

Plaintiff asked judgment in this action, that it be adjudged that he is the owner of the said shares of stock; that said certificates or others of the same form and tenor may be delivered to him; and that the dividends that have been declared on said stock may be paid to him with interest. It is not claimed that the plaintiff transferred the stock in person, but defendant produced the seven certificates, and on the back of each certificate is a bill of sale of the stock mentioned in the certificates and a power of. attorney, authorizing a person named to transfer the stock on the books of the company, and which purported to be signed by the plaintiff. Plaintiff claims that the signatures to the powers of attorney were forged, and that the certificates had been stolen from his safe by one Scovil, who was in his employ, and disposed of by Scovil. The question of the genuineness of the plaintiff’s signatures to the powers of attorney was sharply litigated at the trial, and the trial judge found that the signatures to said powers of attorney, purporting to be the signatures of the plaintiff, were forgeries. We have examined the testimony on that question, and are of the opinion that such finding was abundantly sustained by the evidence.

The other question relied on at the argument, by the counsel for defendant, was that there was a defect of parties defendant, and the trial judge erred in not' adjourning the trial of the action until after the trial of another action commenced by the defendant, The Amer

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ican Telegraph & Cable Co., in the nature of an action of interpleader, in which action plaintiff and the person to whom the stock had been transferred, the persons who were the present holders of the stock, and the persons who presented the stock to the defendant for transfer, were parties, and in which judgment was asked that plaintiff be compelled to litigate in that action his claim to the said stock, and if it be adjudged that plaintiff is the owner of the stock, that the persons in possession of the certificates issued in the place of the said shares of stock deliver the same to defendant to be canceled, or pay over the value thereof to Day or to the company.

A temporary injunction having been granted in that action, restraining Day from prosecuting this action, the plaintiff here appealed to the general term of this court, and on that appeal the injunction order was reversed by the general term, the court there holding that although the defendants in that action other than Henry Day would not be liable, unless it appeared that Day’s signatures to the powers of attorney annexed to the stock certificates were forgeries, that fact did not determine such other defendants’ liability to the corporation ; that although the signature of Day was a forgery, it did not follow that the stock in the hands of the persons to whom it had been transferred, or who were then the owners of the stock, and in possession of the certificates issued on the forged signature of Day, was void, or that such defendants were hable either to the company or to Day; that if the stock owned by Day and standing in his name on the books of the company had been transferred by the said company without his consent, he was entitled to maintain his action for the recovery of the stock, and for the dividends declared thereon; that it was perfectly immaterial to Day as to whether or not the company was hable to the persons to whom it had wrongfully issued Day’s stock ; and that Day should not be compelled to wait for the relief that the finding of the court in this case shows he was entitled to, until the company could

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determine its liabilities to other parties with whom Day had nothing to do.

We have carefully examined the brief submitted by the learned counsel for the appellant, and see nothing therein, or in the cases cited by him, to change the views before expressed by this court. There is a clear distinction between the case of McHenry v. Hazzard ( 45 N. Y. 580 ), and like cases, and the case at bar, for in that case the plaintiff claimed that the agreement that was the foundation of the claim made against him by the several defendants, was obtained by fraud, and that he was not liable to either of them, and asked to have the instrument delivered up and canceled; and that case simply held that a court of equity had jurisdiction in such an action to order an instrument obtained by fraud to be canceled. In this case, however, Day’s title to the stock, prior to its wrongful transfer by defendant, is not questioned. On the facts as found by the trial judge, Day never was divested of his ownership of the stock; it still belongs to him, and he is entitled tó it, and the proposition that before he can obtain it he must wait until the defendant, who has committed the wrong, shall try and recover from other wrongdoers the stock or money to pay Day for the wrong it has done him, is a proposition without authority. None of the cases cited by counsel for the appellant authorize such a proceeding.

We do not decide that the action commenced by defendant cannot be sustained, but simply hold that the facts stated do not justify the court in holding that plaintiff can not recover his stock, of which he has been wrongfully deprived by the corporation, until it can be determined who, if any one, shall pay to the corporation the damages it has sustained in righting the wrong it has done to plaintiff. As was said in Robinson v. National Bank of New Berne ( 95 N. Y. 637 ), “what occurred, vested in Hope, as between him and the defendant, the entire legal and equitable title in the shares, as perfectly as if the transfer demanded had been made. The defend'

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ant corporation cannot set up its wrongful act to defeat the title which passed. After as well as before the sale to the Bank of Raleigh, Hope remained the owner, as between him and the Bank of New Berne, and entitled to have and receive the dividends declared upon sixty shares, and what the bank did, or what obligations it incurred to the Bank of Raleigh, in no respect altered its duty and liability to Hope” ; and on page the court says, “The condition the defendant may find itself in, we need not consider. There are always consequences of a wrong to a wrongdoer. ”

We have examined the other objections to the judgment made by. the learned counsel for the appellant, and do not think that they require discussion. The judgment appealed from was right, and should be affirmed, with costs.

Freedman, J., concurred.

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