14 N.Y.S. 322 | N.Y. Sup. Ct. | 1891
Prior to April 10, 1871, the plaintiff was the special partner in the firm of Merrifield & McDowell, doing business in the ¿ity of Yew York, of which firm the general" partners were Silas Merrifield, the brother of the plaintiff, and one William O. McDowell. On the 5th of February, 1871, John H. De Bevoise made his certain bond and mortgage to John De Bevoise to secure the payment of $15,000 and interest, who on the 17th of February, 1871, assigned the same to the said firm of Merrifield & McDowell, as security for an indebtedness of the said John De Bevoise to said firm. On the 28th of February, 1871, the firm of Merrifield & McDowell assigned the said bond and mortgage, with $10,000 of the indebtedness owing to them by said John De Bevoise, to the plaintiff, who by agreement dated March, 1871, covenanted to reassign when his liability as indorser of the notes and commercial paper of Merrifield & McDowell, and all other liabilities of himself as a member of the firm, or incurred by reason of such indorsement, should be extinguished, and the amount of his interest in the firm should be paid. On the 10th of April, 1871, the firm of Merrifield & McDowell terminated, and the plaintiff withdrew from the partnership the sum of $8,900, being $5,000, the special capital contributed by him, and $3,900, profits assumed to have been due to him. At this time the said firm of Merrifield & McDowell was indebted to the firm of Lawrence & Sons in the sum of $14,666,73. In September, 1871, the plaintiff reassigned the said bond and mortgage to Merrifield & McDowell, together with the said $10,000 of indebtedness due to them from John De Bevoise. On the same day Silas Merrifield, one of the general partners of Merrifield & McDowell, assigned to McDowell, the other general partner, for a nominal consideration of one dollar, all his right, title, interest, and estate of, in, and to the said bond and mortgage. Upon the next day the said McDowell assigned the said bond and mortgage to one Samuel Lawrence, who in the transaction acted for the firm of Lawrence &'Sons.- Yo present consideration was paid for the assignment of said bond and mortgage; and the same was received by Lawrence & Sons under an agreement with McDowell that said McDowell individually, and the firms of which he was a member, subsequent to that of Merrifield & McDowell, were to be credited with the proceeds of such mortgage against any sums of money in which they might be indebted to said firm of Lawrence & Sons. This bond and mortgage were foreclosed in the name of Samuel Lawrence in November, 1873, and over $16,000 cash was received thereon by Lawrence & Sons, and retained and applied by them to the individual indebtedness of McDowell, and the indebtedness of the subsequent firms of which he was a member. It was also found as a fact upon the trial that, if the amount realized upon said bond and mortgage by Lawrence & Sons had been applied on account of the indebtedness to them of Merrifield & McDowell, it would have paid such indebtedness. In the year 1874 the firm of Lawrence & Sons commenced an action in the superior court of this city against the plaintiff and his two partners, Silas Merrifield and William O. McDowell, as copartners doing business under the firm name of Merrifield & McDowell, to recover the said indebtedness alleged to be due from said firm of Merrifield & McDowell to Lawrence & Sons. The plaintiff herein defended said action upon the ground that he was a special partner, and also upon the ground that at or about the time of the dissolution of the firm of Merrifield-& McDowell, and before the commencement of the action, the firm of De Bevoise, McDowell & Co., for a good and reasonable consideration, assumed and agreed to pay all the debts of the firm of Merrifield & McDowell, and were accepted and substituted by said firm of Lawrence & Sons as their debtors, in lieu and place of said firm of Merrifield & McDowell, for all demands held by the said Lawrence & Sons against Merrifield & McDowell; and that said De Bevoise, McDowell & Co. made and delivered their promissory notes for the demand of said firm of Lawrence & Sons, and that said firm of Lawrence & Sons accepted said notes in payment and satis
It will thus be seen that this action is brought in equity to set aside a judgment duly obtained in this court, after a trial in which the present plaintiff had an opportunity to present any defense which he might have. It is the rule, which should not be departed from in cases of this description, that the party should show with reasonable certainty that, without any fault of his own, by fraud, by accident, by the wrongful act of the other party, he has been deprived of his defense; and that the use of diligence on his part would not have made him acquainted with the facts out of which it arose, so that it might have been interposed in the action the judgment in which it is sought to set aside. As is said in the case of Vilas v. Jones, 1 N. Y. 281, when a party goes into chancery after a trial at law, he must be able to impeach the justice and equity of the verdict, and it must be upon grounds which either could not be made available to him at law, or which he was prevented from setting up by fraud, accident, or the wrongful act of the other party, with
It is true that he alleges and claims to have established upon this trial that he discovered the facts upon which he now rests his cause of action subsequent to the trial of the action, and to the affirmance of the judgment by the court of appeals; and that such judgment was procured through the fraudulent agreement entered into between bis former partner, McDowell, and Lawrence & Sons. If this had been the fact,—if the plaintiff had no means of knowing of the fraudulent application of the assets of the firm of Merrifield &■ McDowell through an arrangement between McDowell & Lawrence, and he had discovered that fact after Lawrence & Sons or their assignees had obtained a judgment against him, as creditors of the firm of Merrifield & McDowell, when in fact they had in their possession assets which they were bound to apply on account of such indebtedness, and which would have extinguished the same,—it is probable that a cause of action would have been made out. But although we may not agree with the learned judge who tried this action below, in respect to some of the deductions which he drew from the evidence, there is one fact, which is uncontested, which is fatal to the plaintiff’s right to recover. It is not true that he did not discover the misapplication of the proceeds of this bond and mortgage to debts other than those owed by Merrifield & McDowell to Lawrence & Sons until after the affirmance of the judgment of this court by the court of appeals. It appears from the record in this case that he was present in the superior court when the suit in that court was being tried, and heard one of the Lawrences swear how they had applied tile proceeds of this mortgage which they had then collected, under the direction of McDowell. The plaintiff at that time knew that that mortgage had been assets in the hands of Merrifield & McDowell. He knew that such assets had been assigned to him as collateral security for the indebtedness of that firm to him. He knew that he reassigned it to the firm; and it transpired during the course of that trial that all that Silas Merrifield had assigned to McDowell was his right, title, and interest in that mortgage, which was nothing except that which might remain to him after the payment of the debts of Merrifield & McDowell; and that McDowell had assigned the mortgage to Lawrence & Sons, who had collected the same, and applied the proceeds upon indebtedness other than that due from Merrifield & McDowell, namely, indebtedness due from a succeeding firm to Lawrence & Sons, and the individual indebtedness of McDowell to said latter firm. He then was in possession of every fact necessary to defeat the action brought against him in the supreme court upon the basis of the judgment which had been obtained in the superior court. He knew then that this bond and mortgage were assets of Merrifield tB McDowell. He knew that McDowell had applied them to his individual uses, and he has not discovered anything else since.
The attention of the plaintiff’s counsel seems to have been exclusively engrossed with the defense that Lawrence & Sons had accepted the firm of De Bevoise & Co. as their debtors in the place of Merrifield & McDowell, and thus released the latter firm. It may be true that the learned judge below gave too much importance to the knowledge of the attorney of the plaintiff in respect to the proceedings in the former litigations. It may be true that Lawrence & Sons took the bond and mortgage with notice of the fact that they were assets of the firm of Merrifield & McDowell, and that McDowell had no right to appropriate it to his individual uses. But it is equally true that at the time of the trial of the first suit in the supreme court, in which the plaintiff was charged with the $8,900 withdrawn from the firm, he was as well aware of those facts as anybody else. He knew, of his own knowledge, that this bond and mortgage belonged to Merrifield & McDowell, and
