Burt v. Lustig — 60 N.Y. Super. Ct. 181

Majority

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BEATTIE BURT, as Administratrix, Etc., Plaintiff v. ARNOLD LUSTIG, et al., Defendants.

Headnote

Undertaking on appeal, action upon. Assignee of the judgment appealed ■ from entitled to recover thereon after the judgment is affirmed.

In January, 1885, Frederick A. Baldwin, and two others recovered judgment against Ira E. Doying and Thomas H. Beekman impleaded with Willet Bronson for $1,978.36, and in June, 1885, this judgment passed by assignment to William A. Davis. This judgment was affirmed on appeal to the general term, and judgment of affirmance entered March 4, 1SR6, with costs. On June 6, 1887, the two judgments were assigned by Davis to Alvin Burt. On October 12, 1889, the judgments were upon further appeal affirmed by the Court of Appeals with $122.75 costs. On the appeal to the Court of Appeals the defendants executed the undertaking

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(which is the subject of this action) whereby they undertook that in case of affirmance they would pay the judgments with all costs and damages upon the appeal. On the 27th of January, 1890, Alvin Burt, the assignee of the judgments, died, and on March 21, 1890, letters of administration issued to his widow, the plaintiff in this action, who seeks to recover the amount of the judgments, upon the undertaking.

Held, that Alvin Burt became the owner of the judgments and of all securities for their payment, the latter as incidents following the principal debt assigned, and thereby he became entitled to continue the action for his own benefit in the names of the original plaintiffs, and for all practical purposes became the plaintiff although not appearing on the record. The defendants by the execution of the undertaking to the Court of Appeals, stayed the action and the collection of the judgments by the owner, Mr. Burt, which was an injury to him alone and not to the nominal plaintiffs of record, and the sureties on the undertaking (the defendants in this action) were bound to pay the judgments to him only as the lawful owner thereof. The right of action on the undertaking passed to Alvin Burt as the assignee, and it vested in his administratrix after his death.

Before Freedman, P. J., McAdam and Gildersleeve, JJ.

Decided January 11, 1892.

Statement of the Case by the Court.

On January 19, 1885, Frederick A. Baldwin and two others recovered a judgment against Ira E. Doying and Thomas H. Beekman, impleaded with Willet Bronson for §1,978.36. On June 5, 1885, the judgment passed by assignment to Wm. A. Davis. The judgment was affirmed upon appeal to the general term, and judgment of affirmance entered March 4, 1886, for §96.94 costs. On June 6, 1887, the two judgments were assigned by Davis to Alvin Burt. The assignment transfers the judgments and all sums of money that may be had by means thereof, or any proceedings to be had thereupon. On October 12, 1889, the judgments were upon further appeal affirmed by the Court of Appeals, with §122.75 costs. On January 27, 1890, Alvin

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Burt, the assignee of the judgments, died, and on March 21, 1890, letters of administration were issued to his widow, the plaintiff herein. The defendants executed the undertaking on the appeal to the Court of Appeals, and undertook that, in case of affirmance, they would pay the judgments, with all costs and damages upon the appeal. The action was upon the undertaking to recover the amount of the judgments appealed from, with the costs awarded. At the trial, the presiding judge directed the jury to find a verdict in favor of the plaintiff for $2,926.45, the amount claimed with interest, and ordered that the exceptions be heard in the first instance at general term. Application is now made for judgment.

Clinton B. Gibbs, attorney, and J. F. Mosher of counsel, for plaintiff, argued:

I. The objection that the plaintiff had shown no title at the close of her proof was not well taken. At the time of the commencement of the original action, the plaintiffs therein, Baldwin, Davis and Beam, were the sole parties in interest. So far as plaintiff’s proofs disclosed, they so continued until after the entry of judgment on the referee’s report; when, by their agreement of dissolution of partnership, all the right, title and interest of Baldwin and Beam became vested in Davis, who became the sole owner of the judgment and cause of action. It was not necessary that he should be made the sole plaintiff of record. The action was properly continued in the names of the original parties. Code Civ. Pro., § 756. Indeed, Davis could not have required, as of right, that he be made the sole plaintiff. Had he made a motion for that purpose, it w'ould be in the discretion of the court to grant or deny his motion. Ford v. David, 1 Bosw., 569 , 600; Arnold v. Keyes, 37 Super Ct., 135; Senft v. Manhattan R. R. Co., 29 State Rep., 519; S. C., 57 Super. Ct., 418; Getty v.

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Spalding, 58 N. Y., 636 . It follows that the rights of Davis were in no wise affected by the continuance of the action in the names of all the original plaintiffs. Davis remained the sole owner of the claim and judgments until after the entry of judgment of affirmance at general term, and after the execution by the defendants of the undertaking on appeal to the Court of Appeals, which forms the subject of the present action. At the time of the execution of that undertaking, Davis alone was entitled to its benefit. It was not, in terms, a contract made with any specified person or persons. The allegations of its contents and provisions in the complaint are admitted. The defendants undertook that the appellants would pay (without saying to whom) all costs and damages on appeal, not exceeding $500, and that if the judgments so appealed from, or any part thereof, were affirmed, or the appeal dismissed, the appellants would pay (again without saying to whom) the sum or sums recovered or directed to be paid by said judgments, etc. This language conformed strictly to the Code, §§ 1326, 1327. If the title of the action appeared on the undertaking, it was only by way of description of the cause in which it was given. The sureties on the undertaking were bound to pay only the lawful holder of the judgment, irrespective of its form or title. Wehle v. Spellman, 75 N. Y., 585 , 586. The effect of the undertaking, unless it was void, was to stay the execution of the judgments. This was a loss to Davis alone, and not to Baldwin and Beam. See Snodgrass v. Krenkle, 49 How., 122 . After the execution, approval and filing of the undertaking, and on June 6, 1887, Davis assigned the original judgment, and the judgment of affirmance, to Alvin Burt, plaintiff’s testator. The undertaking passed under this assignment, although not expressly mentioned, provided, of course, it belonged to Davis to assign. Wehle v. Spellman, supra; Code, §§ 1910, 1912. A bond or undertaking given in an action or spe

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cial proceeding as prescribed in the Code, continues in force after the substitution of a new party in place of an original party, or any other change of parties ; and has thereafter the same force and effect, as if then given anew, in conformity to the change of parties. Code Civ. Pro., § 815. The broad language of this section covers both the case of a substitution on the record, and the case of a change without substitution. This section made no change in the law, but only declared what had been decided in Potter v. Van Vraken, 36 N. Y., 619 , 630; Throop’s Code, § 815, note. In the case cited, after the execution of an undertaking for re-delivery of property replevied, the original plaintiff died, and his administrator was substituted as plaintiff, and one of the original defendants also died. It was held that the undertaking continued in force in favor of the administrator.

II. The objection that the original judgment could not be satisfied of record upon a recovery by the plaintiff against the defendants, was not well taken, (a.) The assignment from Baldwin and Beam to Davis, and the assignment from Davis to Burt, if filed with the clerk of this court, would make such a “continuous change of title ” as would require the satisfaction of the judgment upon a certificate signed and acknowledged by plaintiff, as administrator of the owner of the judgment. Code, § 1260, subd. 2. (b.) There is nothing in the Code that requires the person entitled to enforce a judgment to record, or to have in form for recording, or to deliver upon payment of the judgment, any assignment, or any chain of successive assignments of the judgment to himself. All that he must do is to execute and acknowledge a satisfaction piece. Code, § 1261. If the judgment debtor will not pay, the owner of the judgment may proceed to execution, (c.) The defendants, as sureties, are not entitled to any assignment of the judgments as a condition precedent to pay

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ment by them. This was expressly decided by the general term of the Supreme Court in the Fourth Department, where sureties on appeal to the Court of Appeals tendered the amount due, and demanded such assignments before suit brought against them. Wadley v. Poucher, 29 State Rep., 622. Upon payment, sureties are, by law, and without express assignment, subrogated to all the rights and remedies of the holder of the judgment for its collection. Wehle v. Spellman, supra; Wadley v. Poucher, supra. They thus become the proper parties to execute a satisfaction piece.

III. The objection that the plaintiff must exhaust her remedy against the judgment debtors before she can maintain this action was not well taken. Heebner v. Townsend, 8 Abb., 234 ; Wood v. Derrickson, 1 Hilt., 410; Johnson v. Ackerson, 3 Daly, 430 ; Staples v. Gokey, 34 Hun, 289 , 290.

John C. Shaw, attorney and of counsel, and Gratz Nathan of counsel, for defendants, argued :—

I. The plaintiff did not show title to the cause of action set forth in the complaint, and the complaint should have been dismissed when the plaintiff rested. The plaintiff traces her title to the cause of action through the agreement dissolving the copartnership, executed by Baldwin, Davis & Beam, in which agreement the claims, demands, obligations and other assets of the firm were transferred to Davis. This agreement, dated June 5, 1885, does not refer to the judgment which had been theretofore recovered, to wit, on January 19, 1885. It of course could not refer to the general term judgment, which was not recovered until March 4, 1886, nearly a year thereafter; and, of course, it does not refer to the undertaking on appeal upon which this action was brought, which was not given until the 24th day of May, 1886. The assignment from Davis to Burt, dated June 6, 1887, does not refer to the under

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taking on appeal now in suit, although the undertaking was given nearly a year prior to the date of said assignment. It is a familiar principle of law that an assignment of a principal debt carries with it all the collateral securities for such debt then in existence which the assignor holds at the time of assignment, and this principle would carry to an assignee of a judgment an undertaking which had theretofore been given to secure the payment of the judgment. This was decided in the case of Wehle v. Spellman, 75 N. Y., 585 . The court, on page 587, said : “ The judgment being the principal debt, the right to collect that necessarily included the right to enforce the collateral security.” This rule of law would undoubtedly carry title to the judgment theretofore entered in favor of Baldwin, Davis & Beam, against the judgment debtor Doying under the agreement of dissolution, dated June 5, 1885, although not mentioned in the agreement. But it could not carry title to the judgment of the general term thereafter recovered, to vyit, March 4, 1886, in favor of the three; nor to the undertaking on appeal to the Court of Appeals, being the one now in suit, upon which the present action was brought, thereafter given, to wit, on the 24th of May, 1886, by the defendants in the present action to the three by name, for the reason which will be hereafter more particularly stated when we come to consider section 815 of the Code. The undertaking in suit is a contract to which the present plaintiff is not a party; and, unless she can show a title to it through an assignment, express or by legal implication, from Baldwin, Beam & Davis, she cannot maintain the present action. This needs no citation of authority to support it, and as we have seen, there is no assignment by Baldwin and Beam to Davis of this undertaking; nor could there well have been, as it did not come into being—was not in existence—at the time of the dissolution of copartnership and the transfer of the assets by the two other

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members of the firm to Davis. Nor could it pass to him as a collateral security, incident to the assignment of the claim in suit, for the same reason, namely, that it was not in existence. There are several ways in which the accuracy or the fallacy of this proposition can he determined. First. It must be conceded that the present sureties are entitled upon the recovery of a judgment in this action to an assignment of the judgment of January 19, 1885, and the judgment of March 4, 1886, of the general term, and the judgment entered upon the remittitur of the Court of Appeals of October 12, 1889. As sureties paying the debt of their principal debtor, they are entitled to an assignment of these several judgments and whatever evidences of title the plaintiff in this action possesses, so as to enable them to enforce the judgment against the principal debtor, and unless the plaintiff is able to put them in this position she cannot maintain this action against the sureties. This was decided in the case abové referred to, in which the court says: “ The sureties on the undertaking were bound to pay only the lawful holder of the judgment, and on such payment were entitled to subrogation to all the rights and remedies of the holder of the judgment for its collection.” Welile v. Spellman, supra. One of the things that a judgment debtor is entitled to upon paying a judgment is a satisfaction thereof. A party paying a judgment is in an entirely different position from a party paying any other debt. A party paying an ordinary debt is not entitled to a receipt or a release. A party paying a mortgage is not entitled to a certificate of satisfaction. But a party paying a mortgage is not entitled to a certificate of satisfaction. But a party paying a judgment is absolutely entitled to a satisfaction thereof. Section 1261 of the Code provides expressly “ that the person entitled to enforce a judgment must execute and acknowledge before the proper officer a satisfaction piece thereof at the request of the judgment

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debtor, or of a person interested in the property bound by the judgment, upon presentation of a satisfaction piece and payment of the sum due upon the judgment and the fees allowed by law for taking the acknowledgment of a deed.” The statute, in other sections, contains very definite provisions as to how a judgment shall be satisfied where it has been assigned. Second. There are other provisions of the Code which bear upon this subject which are of great importance in determining the right of the plaintiff to maintain this action. Section 755 of the Code provides that an action does not abate by any event if the cause of action survives or continues. Section 756 provides that in case of a transfer of interest or a devolution of liability the action may be continued by or against the original party, unless the court directs the person to whom the interest is transferred, or upon whom, the liability is devolved, to be substituted in the action, or joined with the original party as the case requires; and sections 760 and 453 of the Code provide how this substitution of parties may be effected, either upon the application of the new party himself, or upon the application of existing parties to the action. In this connection section 815 of the Code is of vital importance in enabling us to arrive at a correct determination of this question. It provides that “ a bond or undertaking given in an action or special proceeding as prescribed by this act continues in force after the substitution of a new party in place of an original party, or any ■ other change of parties, and has thereafter the same force and effect as if then given anew in conformity to the change of parties.” This section was necessary in order to entitle the substituted party to the benefit of a security theretofore given in the action to which he had succeeded, and in which he had availed himself of the provisions of the Code heretofore referred to for substituting himself in place of the original party to the action. This section recognizes

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also the common law rule referred to above, that no one can maintain an action upon a bond or undertaking except the party for whose benefit the same had been given; and a prior bond or undertaking only becomes effectual by the provisions of this section in favor of the substituted party after his substitution in the action.

II. The defendants have shown title to the cause of action in some one other than plaintiff.

III. The undertaking in suit is void for want of consideration. It was very early held, and will not be disputed, that an undertaking on appeal would be void for want of consideration were it not that the statute itself furnishes a sufficient consideration to support it, and it has been held that if not made in conformity with the statute it cannot be enforced as against the parties who executed it. The statute certainly does not furnish any consideration for an undertaking given to a party to a suit who has transferred all his interest in the cause of action, or support it in favor of a person not a party to the undertaking itself, but only in favor of a party to the record at the time the undertaking was given. If this was not so, then section 815 with reference to undertakings theretofore given was nonsense—absolutely useless.

Three results followed the assignment to Alvin Burt. First. He became the owner of the judgment, and of all securities for its payment, the latter as incidents following the principal, Thomas v. Hubbell, 35 N. Y., 120 ; Bowdoin v. Colman, 6 Duer, 182 ; Jackson v. Losee, 4 Sandf. Ch., 381 ; Morange v. Mudge, 6 Abb., 243 ; Campbell v. Birch, 60 N. Y., 214 . Second. He became entitled to continue the action for his own benefit in the names of the original plaintiffs, Code, § 756; Bolen v. Crosby, 49 N. Y., 183 . Third. He became liable for the costs as the party for whose benefit the action was thereafter

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prosecuted, Code § 3247. In other words, for all practical purposes the assignee became the plaintiff, although not so appearing on the record. The defendants, by executing the undertaking to the Court of Appeals, stayed its collection by the owner, Mr. Burt. This was an injury to him alone, and not to the nominal plaintiffs of record, Snodgrass v. Krenkle, 49 How., 122 . The sureties on the undertaking were bound to pay only the lawful owner of the judgment, irrespective of form or title, Wehle v. Spellman, 75 N. Y., 585 .

The right of action on the undertaking passed to Alvin Burt, as assignee, and it became vested in his administratrix after his death. The title of the administratrix was sufficiently proved. The general assignment made by T. Brooks & Company’s successors, offered in evidence by the defendants, was not pleaded by way of defence, nor did the defendants claim that the assignee named therein made any claim to the moneys demanded or was a necessary party to the action.. The judgment was recovered by the plaintiffs several months after the general assignment was made, and its admission at the trial proved nothing germane to the issues to. be there determined. The verdict was properly directed, and the exceptions taken are without merit. It follows that the exceptions must be overruled, and the plaintiff permitted to enter judgment on the verdict, with costs.

Freedman, P. J., and Gildersleeve, J., concurred.