Cumming v. Middletown, Unionville & Water Gap Railroad

131 N.Y.S. 710 | N.Y. App. Div. | 1911

Carr, J.:

The plaintiff is one of two trustees under a mortgage executed and delivered by the defendant, the Middletown, Unionville and Water Gap Railroad Company, as security for a series of bonds amounting in all to the sum of $250,000. The bonds and the trust mortgage became finally due on December 1, 1910, and no part of the moneys secured by the said mortgage and bonds has been paid.

This action has been brought by the plaintiff alone in his own name as trustee to foreclose the mortgage. The cotrustee, one John G. McCullough, is not a party plaintiff, but has been made a party defendant. The mortgagor defendant has demurred to the complaint on the ground that there is a defect of parties plaintiff, in that the cotrustee, McCullough, has not been joined as a plaintiff. A motion was made by the plaintiff for judgment on the pleadings on the ground that the demurrer was insufficient. This motion was granted, but with leave to the demurring defendant to withdraw the demurrer and to answer the complaint. From an order entered accordingly the defendant mortgagor now appeals.

The question of law involved arises under section 448 of the Code of Civil Procedure, which provides impart as follows: “Of the parties to the action those who are united in interest must be joined as plaintiffs or defendants, except as otherwise expressly prescribed in this act. But if the consent of any one, who ought to be joined as a plaintiff, cannot be obtained, he may be made a defendant, the reason therefor being stated in the complaint.”

. The plaintiff herein alleges in his complaint that the reason why the cotrustee, McCullough, was made a party defendant is that said trustee is a director of the defendant mortgagor company, and that thereby he is not qualified to represent the bondholders in an action to enforce their obligations against his company. There is no allegation that McCullough was requested to be a party plaintiff and that he refused his consent.

It is the ordinary rule of law that trustees cannot act separately and that all must unite, as they constitute in law but one person and must join in bringing the action. (Thatcher v. Candee, 3 Keyes, 157, 160). This rule is subject to exceptions. Where a cotrustee has taken a position hostile to his trust it is not necessary that he should join in an action to enforce the trust, and because of such hostility he may be made a party defendant, even without having been requested to join in. the action as a party plaintiff. (Wallach v. Dryfoos, 140 App. Div. 438.) The complaint herein does hot allege that the cotrustee, McCullough, has openly taken a position of hostility to the enforcement of the mortgage, but it does allege that McCullough has dual interests in the subject-matter of the action which are not harmonious but are in many respects adverse, and hence he is disqualified to act as a plaintiff in this action. So far as the plaintiff and McCullough are trustees of the mortgage for the benefit of the bondholders, they are “united in interest.” But McCullough, being a director of a defendant corporation against which it is sought to enforce the mortgage, has another interest in which the plaintiff trustee is not united, but which interest is adverse to that in behalf of which the action is sought to be maintained. It is not the intention of section 448 of the Code of Civil Procedure that finder such circumstances he must be joined as a party plaintiff unless he refuses his consent to be a plaintiff. The duty of the trustees of the mortgage in question is not merely to bring an action to enforce the mortgage, but likewise to prosecute it speedily and intelligently to judgment and solely with an eye to the interest of the bondholders who are the real parties in interest. To perform such duty, it is necessary that the party plaintiff should be the master of the action, with no interest in any way adverse, hostile or out of harmony with the interest of the bondholders. Under the circumstances of this case, the plaintiff was not obliged to request his cotrustee to join with him as a plaintiff; in fact a proper performance of his duty would require him to refrain from so doing in order to avoid the possibility of such conduct of the case as might hamper or delay or circumvent the proper, enforcement of the rights of the- bondholders. Any construction of section 448 of the Code of Civil Procedure which would work out a contrary result would sacrifice the intent and spirit of the statute to the mere letter thereof.

The order should be affirmed, with ten dollars costs and disbursements, but with leave to the appellant to withdraw its demurrer and to answer the complaint within twenty days on payment of the costs fixed in the order appealed from.

Jenks, P. J., Hirschberg, Thomas and Rich, JJ., concurred.

Order affirmed, with ten dollars costs and disbursements, but with leave to the appellant to withdraw its demurrer and to . answer the complaint within twenty days on payment of the costs fixed in the order appealed from.