| N.Y. App. Div. | Feb 15, 1899
Lead Opinion
The action was brought by Richard Kelly to recover the amount paid in satisfaction of a judgment obtained in favor of one Shafer against him, and the sum of $570.25, expenses incurred in defending the action in which such judgment was recovered. The complaint alleges that the defendant executed and issued certain bonds of $1,000 each, secured by a mortgage upon its property;, that said bonds were dated June 9, 1880, bearing interest at six per cent, payable semi-annually; were under seal, and had annexed certain interest warrants or coupons for $30 each, payable on the first days of March and September in each year; that the first coupon was payable on the 1st day of September, 1880; that the plaintiff received from the defendant eight of the said first mortgage bonds, with the said coupons or interest warrants annexed, to be delivered on the 1st day of January, 1881, to the persons whose names should be inserted in a blank left for that purpose in two certificates or receipts for said bonds which had been prepared by the defendant and signed by the plaintiff, bearing date the 9tli day of June, 1880, one of which certificates or receipts was for six and the other for two of said bonds; that in the month of March, 1885,
The answer denied all the allegations of the complaint except the 1st paragraph thereof, which alleges the incorporation of the defendant and the making and issuing of the bonds, and sets up the six-year Statute of Limitations as a defense. After the commencement of this action Richard Kelly died, and the plaintiffs, as his executors, were substituted as plaintiffs. The case was brought on for trial at a Trial Term of this court, and the plaintiffs introduced in evidence the judgment roll in the action of Shafer against Richard Kelly. The complaint in that action alleged the issuing of the bonds of the defendant corporation ; that the said bonds belonged to the plaintiff, but were in the custody and possession of the defendant; that the plaintiff demanded from the defendant therein the said bonds and coupons annexed, but that the defendant refused to deliver them to the plaintiff; that the defendant offered to the plaintiff the said bonds and all the coupons, except eighty, of the denomination and value of thirty dollars each, “which had been by defendant improperly, wrongfully and unlawfully detached, cut off and removed from said bonds and retained and kept by defendant, and the defendant, after such offer, refused to deliver to the plaintiff any other bonds or coupons only as above set forth; ” that the plaintiff, after such
" New Yoke,--, 188 .
“ This is to certify that I hold (six) 6 First Mortgage Bonds of the Forty-second street, Manhattanville and St. Nicholas Avenue Railroad Company of the denomination of one thousand dollars ($1,000) each, which bonds are owned by E. B. Shafer, and are to be delivered by me to him or his order, on the first day of January, 1881, or prior thereto, if George N. Van Nort, Daniel D. Conover, Daniel D. Wylie and William J. Nichols shall request me in writing to do so.
“ New York, June 9, 1880. R. KELLY,
“ Trustee.”
There was a second receipt for two bonds which was identical in form. There were produced from the records of the railroad company the coupons which had been detached from the eight bonds delivered to Shafer, canceled and pasted by the railroad company in its book of canceled coupons, and evidence was offered tending to show that none of these coupons had been paid by the railroad company. IJpon this evidence the plaintiffs rested. The court dismissed the complaint, to which the plaintiffs excepted.
The coupons being in the possession of the defendant, they would be presumed to have been paid. That presumption, however, was rebutted by the evidence offered on behalf of the plaintiffs, by which it appeared that the defendant had not paid the coupons ; and Kelly,
These bonds having been delivered to Kelly and held by him under an agreement to deliver them to Shafer, upon the commencement by Shafer of the action against him for the damages sustained by the refusal to deliver the coupons which had been annexed to the bonds the question necessarily presented was whether Shafer was the owner of the coupons,- and whether the coupons were existing obligations of the defendant of which Shafer was entitled to the possession. Upon the commencement of that action against Kelly, notice was given thereof to the railroad company, and a copy of the summons and complaint delivered to it. To that notice the defendant made no reply. That action was subsequently brought on for trial, of which the defendant had notice and various of its officers appeared and testified; and after judgment against Kelly was entered, notice of the result of the trial and the judgment, and that Kelly had appealed from such judgment, was given to this defendant. The defendant having been notified of the commencement of this action against Kelly, and being the party against whom the “ ultimate liability ” for the payment of the coupons is claimed, it follows, that “ in so far as the issues actually litigated in that case are identical with the issues involved in this, the judgment is binding upon the defendant in the same way as if it had been a party upon the record.” (Carleton v. Lombard, Ayres & Co., 149 N. Y. 151.) In Castle v. Noyes (14 N. Y. 332) the court .say : “ In order to theestoppel it is not necessary that the parties on the record hi both suits should be the same. An estoppel by judgment includes all parties who have a right to appear and control the action and to-appeal from the judgment, although not a party to the record..
The questions involved in the suit of Shafer v. Kelly were as to, Shafer’s right to these particular coupons, and as to the value of the. coupons, their value depending upon whether or. not they were-existing obligations of the defendant in this action. Within the rule thus stated, the judgment was conclusive evidence of Shafer’s, title to the coupons, his right to the possession thereof, and that they were valid obligations of the defendant.
The only remaining question is as to the defense of the Statute of Limitations. The plaintiff in this action alleges that the defendant made, executed and issued certain bonds known as first mortgage bonds, which were secured by a first mortgage upon all of the defendant’s corporate property and franchises; that the said bonds, were of the denomination of $1,000 each, were under seal, and that, all of said bonds bore interest at the rate of six per cent per annum,, payable semi-annually, and had annexed certain interest warrants or coupons for" $30 each, which were annexed to, and formed a part
“ The Forty-second Street, Manhattanville and St. Nicholas Avenue Railway Company
“ Will Pay the Bearer
“at the office of the Union Trust Company of New York, on the 1st day of Septr., 1880,
“ Thirty Dollars,
“ for Six Months’ interest due on that day on its Bond No. 306.
“ DANL. D. WYLIE,
“Treasurers
The complaint thus alleges, and the answer admits, that the bonds were under seal. Each coupon recites, upon its face, that it was an ■obligation of the company for the payment of six months’ interest upon a certain bond therein described.
It seems to be settled in this State that such coupons are to be considered as a part of the bond, and to partake of its character. In McClelland v. Norfolk Southern R. R. Co. (110 N. Y. 475) that question was discussed, and after a review of the authorities it was held (citing with approval the cases in the Supreme Court of the United States in which the question was considered) that the coupons did not outlaw until the statutory time had run ■against the bond. The same principle is affirmed in the case of Bailey v. County of Buchanan (115 N. Y. 301) where the court •say : “ But the coupons, nevertheless, always have some relation to the bonds. Their force and effect and character may be determined by reference to the bonds. They are secured by the same mortgage, and although unsealed are specialties like the bonds and are governed by the same Statute of Limitations which is applicable to the bonds.” This is the settled rule of the Supreme Court of the United States. (The City v. Lamson, 9 Wall. 484; City of Lexington v. Butler, 14 id. 282; Clark v. Iowa City, 20 id. 583.) As the bonds are under seal the holder of the coupons was entitled to twenty years after they became due before his claim would be barred by the statute. As these coupons became due between the 1st day of September, 1880, and the 1st day of March, 1885, the six
We think, therefore, that the plaintiffs made out a prima faoie ■ case to recover for the amount of these coupons from the defendant and that it was error to dismiss the complaint.
The judgment should be reversed and a new trial ordered, with costs to the appellant to abide the event.
Van Brunt, P. J., O’Brien and McLaughlin, JJ., concurred j Patterson, J., dissented.
Dissenting Opinion
(dissenting):
I dissent. The case is treated by the majority of the court as if it were an action by one having title to the coupons to recover for their non-payment. They were negotiable instruments (having been cut off from the bonds) and were in the actual possession of the defendant when this action was brought, and had been so for a long time before. They had been surrendered to and canceled by it. The defendant must have obtained them directly from Kelly or from some transferee of his. It is not claimed or suggested that it obtained them wrongfully or fraudulently. One Shafer sued Kelly for the conversion of these coupons and recovered a judgment, which Kelly paid. The latter had parted with the coupons, but to whom, or for what consideration (if any) or under what circumstances does not appear. Whatever right Kelly has is derived from his payment of the judgment obtained against him by Shafer. I do not concur in the view that, by that fact alone, he acquired a cause of action against the defendant to recover the amount of the coupons he himself had surrendered or parted with, and which had found their way back to the party originally issuing them. It was for Kelly, or those claiming in his right, to show the circumstances under which he parted with the coupons, and which would entitle him equitably to recover in this action.- He does allege such circumstances in the complaint, but his allegations are denied and he totally failed to prove them. If it had been proven, as alleged, that Kelly received the bonds from the defendant, cut off the coupons and delivered them back to the defendant, I should not differ with the majority of the court, but there is not one word of proof that he did so. All that appears in the record on these matters is an
Judgment reversed, new trial ordered, costs to appellant to abide event.