118 N.Y.S. 207 | N.Y. App. Div. | 1909
The. complaint alleges in substance that the plaintiff deposited With the defendant Zanolini $600 for transmission to a person in Italy, and that Zanolini converted it to his own use, has since been declared a bankrupt and has .absconded.
The action is brought to recover upon a bond given by Zanolini
First. It is contended that the complaint does not state facts sufficient to constitute a cause of action, because the statute (Laws of 1907, chap. 185) under which the bond was given is unconstitutional. That question has recently been considered by this court in Musco v. United Surety Co. (132 App. Div. 300), where it was held that the statute is constitutional, and it is unnecessary, therefore, to add anything to what was there said on that subject. It is true here the constitutionality of the statute is challenged upon somewhat different grounds than it was there, but we see no reason for reconsidering our former decision. Moreover, the complaint in the present case specifically alleges that the respondent received an annual premium of sixty dollars for the execution and delivery of the bond; that it was delivered with the purpose and intent that it should be filed in the office of the State Comptroller and become a public record, as was done; and that plaintiff and other creditors should, and.they actually did, rely on said bend in depositing money with Zanolini. It is at least exceedingly doubtful whether, under such circumstances, the respondent could escape liability upon its bond, even if the statute were unconstitutional; but it is unnecessary at this time to pass upon that question, and we do not place our decision upon that ground.
Second. The remaining question is whether the plaintiff can maintain the action in its present form. 'The undoubted purpose of the statute is to deter irresponsible parties from engaging in the business specified and to provide a fund to indemnify creditors. By requiring a bond to be given a fund is provided for the payment of such creditors. Such fund, I think, is not for one creditor, but for
The reason for the rule is well stated in Terry v. Little (sioprd) : “ The remedy must always be such as is appropriate to the liability to be enforced. * * * If the object is • to provide a fund out of which' all creditor's are to be paid, share and. share alike, it needs no argument to show that one creditor should not be permitted to appropriate to himself, without regard .to the rights of others-, that which is to make up the fund.” - And in Hirshfeld v. Fitzgerald (supra) it was said: “ The object of this statute was undoubtedly to furnish additional security to creditors, and is for the benefit of them all, and should be enforced by or on behalf of all.”
' It is sought to. distinguish these cases, in that there the liability was created by the statute, and the court was bound to enforce the liability in accordance with the legislative intent, which was to
As was said in Pfohl v. Simpson (supra): “ It is in cases where many persons have claims, and are prosecuting or about to prosecute" them at law against one defendant "x" * * liable in equal degree to all those persons and to others, and thus there arises the fact, or the probability, of a multiplicity of actions, that this jurisdiction of equity attaches.”
A similar question arose in the case of American Surety Co. v. Lawrenceville Cement Co. (96 Fed. Rep. 25), which was an action upion a bond given by a contractor to the United States for the due performance of his contract, pursuant to a statute which also provided that any person or persons who had f urnished labor or materials to such contractor, for which payment had not been made, might bring suit against the contractor and his sureties in the name of the United States, and it was said: “A more serious defect, however, exists in the statute, and that is its failure to declare * "x" * whether, in the event the bond is not sufficient to cover all the claims as to which the contractor is in default, the equitable rule of pro rata distribution exists between individual creditors, or whether priority can be acquired by first bringing suit, or first obtaining a judgment, againsi the surety.' As to both of these questions, we are so clear that the equitable ipile of pro rata distribution exists * 1 * * that we do not find it necessary to elaborate the proposi
In that case, as in the one now before us, each creditor’s claim was distinct and his cause of action accrued as soon as the default occurred. The statute provided that any creditor might bring an action, but notwithstanding that fact, the court held that the bond should be enforced by an action in equity to secure the, ratable distribution of the proceeds among all the claimants. Here, the respondent is liable upon its bond to the extent of $15,000. There are, as already stated, numerous creditors, and the sum named is insufficient to pay them in full. They have equal rights that their claims be satisfied from, /the proceeds of the bond, and the statute under which it was given undoubtedly contemplated that they should share equally. This result can only be obtained by an action in equity on behalf of all the creditors. •
My conclusion, therefore, is' that under the facts stated in the complaint, a court of equity is justified in assuming jurisdiction of the action and that the plaintiff is not only entitled to maintain the action on behalf of himself and all other creditors, but that he would be precluded from maintaining it in any other form.
The judgment, therefore,, must be reversed, with costs, and the demurrer overruled, with costs, witii leave to the respondent to withdraw its demurrer and to answer on payment of the costs in this court and iii the court below.
Ingraham, Laughlin, Clarke and Scott, JJ., concurred.
Judgment reversed,, with costs, and demurrer overruled, with costs,. with leave to respondent, to withdraw demurrer and to answer on payment of costs.-
