Ohio Match Sales Co. v. Everhard

126 Misc. 23 | N.Y. Sup. Ct. | 1925

Levy, J.

In this action the plaintiff seeks to restrain the defendant from transferring or otherwise disposing of certain shares of stock alleged to belong to it, and to set aside the transfer of such stock from the defendant’s late husband to her, on the ground that it was in fraud of the rights of creditors. In February, 1925, a previous action was commenced by this plaintiff against the defendant and three corporations, whose stock also constitutes the subject of this litigation. There, a preliminary injunction was sought on the ground that the husband of this defendant, while in charge of the affairs of the plaintiff in New York, embezzled large sums of money belonging to it, and in order to make restitution he determined to transfer the shares of stock referred to in the complaint to the plaintiff. Thereupon, he deposited these in the latter’s safe over which he had sole control, without, however, imparting any knowledge whatever to the plaintiff of either the embezzlement or of the act of restitution. These facts did not develop until his death in January, 1925, and while the alleged defalcation occurred in 1918, he continued to draw dividends on this stock. The motion for that injunction came on to be heard before Mr. Justice Ingraham, who. denied it for the reason that as the question of the ownership of the stock was much disputed, relief of that far-reaching character should not be granted in advance of the trial. (See 126 Misc. 21.)

The plaintiff then instituted this action in which it joins with the former cause one based upon section 19 of the Personal Property Law against the defendant individually and as executrix of the estate of her husband and in which it presents this application for an injunction pendente lite. In connection with the argument upon this, there were also presented two other motions, one by the plaintiff to discontinue the prior action and the other by the defendant to dismiss this action on the ground that there is another action pending, and it might be well to treat and dispose of them all in this memorandum.

While it is perfectly true that the complaint here deals with the same subject-matter as does the corresponding pleading in the first action, it is nevertheless different as to the parties litigant and contains an additional cause. The court is not convinced that this might have conveniently been accomplished by way of amendment, and the imputation of bad faith on the part of the plaintiff in this respect cannot, therefore, at this time be sustained. Consequently, the motion in behalf of the defendant to dismiss this action should be denied, and the motion in behalf of the plaintiff to discontinue the prior action should be granted on condition that the latter pay all taxable costs to date to the defendant.

Objection is urged that causes of action have been improperly united, but the court is not impressed by this. Both arise out of the same subject-matter and they are as closely related as the causes of action seem to be in Rogers v. Wheeler (89 App. Div. 435). True it is that the remedies demanded are not entirely consistent, but there seems to be no need at present in any event for an election. The further objection is made that this action is brought by the plaintiff in its individual capacity instead of on behalf of all creditors similarly situated. In the absence of a showing that there are other creditors, the plaintiff may sue for itself alone and the validity of its claim may then be established. If there appear to be other creditors, under section 19 of the Personal Property Law, the result necessarily will inure to the benefit of all.

This brings us to perhaps the most important consideration in issue, the right of the plaintiff to a temporary injunction. The disposition of the former motion under the first action was due in large measure to the uncertainty of plaintiff’s rights as equitable owner of the stock in question. The present application may be deemed to be predicated upon rights arising out of the grievances of a creditor. It is obvious that if the defendant is permitted to dispose of the stock, a trial may prove idle as very likely it will be utterly difficult to reach the assets of the estate, especially if it become insolvent, as she is serving as executrix without bond. On the other hand, by the restraining order she can suffer no injury which may not be compensable by a proper undertaking. The motion for an injunction will, therefore, be granted. Settle order. Respective counsel are at liberty to suggest what the amount of the undertaking shall be.