182 A.D. 846 | N.Y. App. Div. | 1918
Lead Opinion
The Mexican Packing Company was a corporation created by the laws of Mexico. Its plant was situated in Mexico. It issued $3,000,000 of bonds and secured the same by a mortgage executed to the defendant, the Central Trust Company of New York. Temporary bonds were first issued, to be thereafter exchanged for definitive bonds to be thereafter issued. Plaintiff is a holder of $100,000 of these temporary bonds. Thereafter $2,900,000 of definitive bonds were issued, separately numbered, which were sent to the company to be exchanged for temporary bonds of a corresponding number. This excluded this $100,000 temporary bond, which was owned by the plaintiff. Under the instructions, the Central Trust Company was authorized to exchange these $2,900,000 of definitive bonds for all the other temporary bonds that were out. The plaintiff has brought this action, alleging that the trust company has in its possession some of these definitive bonds and demanding that $100,000 of these definitive bonds be delivered to him by the trust company in the place of his $100,000 temporary bond. He alleges that only $2,900,000 of the definitive bonds were issued by reason of a fraudulent conspiracy to cheat him out of the benefit of his $100,000 bond, and that this was known to the trust company. The relief asked is equitable relief, that the trust company take $100,000 of these definitive bonds, which were given to it to replace other temporary bonds of like number, and deliver the same to plaintiff for the plaintiff’s temporary bond. Now this
This certificate was dated the 23d day of December, 1914, and recited the meeting as having been held on the 6th day of July, 1914. Assuming this certificate to be evidence of the facts therein stated, it falls far short of proving that the lien of the plaintiff’s mortgage security had been divested, or that the guaranty placed by the Mexican government upon this $2,900,000 of definitive bonds was the full compensation for the property taken, or any compensation therefor. In fact the plaintiff recognized this difficulty and made an application for a commission to issue to examine a witness in Mexico to take proof of these very facts. The Special Term granted the plaintiff’s motion, but the order was reversed by this court upon the ground that the evidence sought was not included in the issues raised by the pleadings. (173 App. Div. 927.) This is the order included in the notice of appeal as sought to be reviewed at this time upon the appeal from the judgment.
An examination of the complaint discloses no reference whatever, either to the fact that any of these definitive bonds were guaranteed by the Mexican government, or to the fact that the Mexican government had taken over either the business or the property of the Mexican Packing Company, or had given to the Mexican Packing Company or to the defendant trustee anything of value as compensation for any business or property appropriated, and the complaint itself alleges that the only property, of which the said packing company “ is possessed, is the property covered by the said mortgage given to secure the said bonds, including the plaintiff’s bond, which property is situated in the Bepublic of Mexico.” If the Mexican government had not appropriated this mortgage security and had not guaranteed these bonds, it would seem clear that the plaintiff’s remedy would only be to have further definitive bonds issued by the packing company, for which
Assuming for the argument, however, that this finding of the trial court referred to was based upon sufficient evidence, nevertheless the rule is well settled that a recovery must be had secundum allegata. Even if the evidence came into the case without objection, there was no amendment of the complaint upon the trial which would present that issue for determination, and this court is without power to amend the pleadings here to conform to the proof. In Steinam v. Strauss (44 N. Y. St. Repr. 380) Presiding Justice Van Brunt, writing for the court, said: “ Two questions are raised upon this appeal. The first is whether the judgment was void upon its face, and the second whether as matter of fact and from proof of extraneous circumstances, it was invalid. The latter proposition it is not necessary to consider. No such issue was presented by the complaint and although evidence was taken in respect thereto and the learned judge
It follows from a lack of sufficient pleading to present the issue, that we are not allowed to consider the equities arising from any act of the Mexican government, either in appropriating the business of the packing company or in placing its guaranty upon these other definitive bonds, and without considering such equities, we are of opinion that no reason is presented to justify a decree to compel the defendant trust company to appropriate any of the definitive bonds specified for the redemption of the plaintiff’s temporary bond.
The judgment and order should, therefore, be affirmed, with costs.
Clarke, P. J., and Dowling, J., concurred; Laughlin and Shearn, JJ., dissented.
Dissenting Opinion
The effect of the judgment appealed from, although it is nominally in favor of the plaintiff, is to deny the plaintiff any relief from an obvious fraud, to which the defaulting Mexican National Packing Company, Ltd., was a party, and as result of which the plaintiff’s bond of the par value of $100,000 has been rendered practically worthless. This result has been worked out notwithstanding the finding of fact: “ That the defendant Packing Company and its president, John W. DeKay aforesaid, intending to defraud the plaintiff and any holder of said bond of and from the security
The trouble with the plaintiff’s case from the start has been the absence of parties without whose presence a complete determination of the controversy could not be had, namely,. the holders of the balance of the bond issue. When the case was before this court (167 App. Div. 897) on an appeal of the defendant trust company from an order granting an injunction pendente lite, restraining the trust company from delivering the definitive bonds in its possession in exchange for temporary bonds theretofore issued, the court said, Scott, J., writing for the reversal of the order: “ For some reason, not disclosed by the moving papers, the mortgagor corporation has not deposited with the trust company permanent bonds
When the case was tried, however, the reason was disclosed why the mortgagor corporation had not deposited with the trust company permanent bonds to be exchanged for plaintiff’s temporary receipt. The reason was that the packing company and DeKay, as found by the Special Term, had perfected a scheme to defraud the plaintiff and render his bond practically worthless by turning over to the Mexican government all the packing company’s property in exchange for a guaranty of all of the company’s bonds except the .bond of the plaintiff. Of course the Mexican government, as a matter of law, took the property subject to the lien of the mortgage and, theoretically, the plaintiff might be able, if aided by his government, to procure a foreclosure and a sale of the property to pay his bond at maturity, but, as a practical matter, it is readily apparent that there has been effected a substitution of the Mexican government’s guaranty in the place of the mortgage security, and as that guaranty doe's not inure to the benefit of the plaintiff, his bond is practically worthless. As it is impossible to require the Mexican government to guarantee plaintiff’s bond, the plain equity of the situation is that, as between the packing company and its bondholders, the plaintiff is entitled to share ratably with the other bondholders in the security of the guaranty, substituted for the mortgaged property. Certainly this is so as to any bondholders who were either parties to or had notice of the fraud. But it is equally clear that no bondholder could be required either directly or indirectly to forego any of his rights in the guaranty for the benefit of the plaintiff without having his day in court. To require the trust company to deliver to the plaintiff in exchange for his temporary bond an equal
Therefore, I think that the judgment should be reversed and a new trial ordered, and that the plaintiff should be directed to bring in as defendants the holders of all of the outstanding bonds and holders of temporary receipts for bonds exchangeable for definitive bonds. •
The circumstances warrant further relief to the plaintiff pending such new .trial. It appears that when the temporary bonds were originally issued, they were delivered to DeKay as president of the packing company and that they were all delivered to him. It does not appear by whom the surrender was made of all such temporary bonds as were delivered to the trustee to be exchanged for the definitive guaranteed bonds, but as 628 of the guaranteed bonds are still in the possession of the trustee, uncalled for, it may well be that these 628 bonds belong to the packing company,
. Laüghlin, J., concurred.
Judgment affirmed, with costs