55 N.Y.S. 229 | N.Y. App. Div. | 1898
The suhject-matter of this action is the ownership of a fund in the possession of the National City Bank of New York, as to-which that bank makes ho claim, but of which it is the custodian. Four claimants assert rights in and to the fund. It consists of a balance of moneys arising from the sale of various securities which were pledged by Sands & Co., a firm of stock brokers, to the bank for an indebtedness of the pledgors; such sale having been made-on the default of the pledgors in payment of their debt to which the securities were collateral. Among the securities thus pledged and sold were certain stocks belonging to the plaintiff Rhinelander,, certain others to the defendant Parrish, and certain others to the defendant Ayer. The claim of each of those parties is based upon the proposition that in equity the balance held by the National City - Bank of New York must be regarded as the proceeds of the particular securities belonging to them respectively; but the defendant Ayer claims priority. Sands & Co. made an assignment for the benefit of creditors to the defendant Cox, who claims only in sub-, ordination to the plaintiff and the defendant Parrish. The precise-situation of the parties and their claims'is the following : The fund amounts to $3,477.65. The plaintiff claims $2,100 thereof, the-defendant Parrish claims $637.50 thereof, and the assignee Cox claims-the remainder. The defendant Ayer claims the whole amount on the ground that the proceeds of his securities pledged by Sands & Co. and sold by the National City Bank of New York exceeded largely the-whole of the fund in contest, and that he is preferentially entitled thereto. The referee before whom the trial was had, decided that the-fund was distributable among the plaintiff Rhinelander, the defendant Parrish and the defendant Ayer proportionately ; that the latter had no prior or superior equity, and that the defendant Cox, the assignee, should take nothing. All parties appeal from the judgment entered on that decision, and their several positions are now as follows:
First. The defendant Ayer .claims the whole fund, and appeals from so much of the judgment as declares him to be entitled only ■ to share therein with the defendant Parrish and the plaintiff.
Second. The plaintiff and the defendant Pari’ish claim that the defendant Ayer is not entitled to share at all in the fund, and, therefore, they appeal from so much of the judgment as awards them*14 ■only a certain fractional part of the fund, claiming that they should be allowed more.
Third. The defendant Cox, the assignee, claims that there is a balance after the payment of the claims of the plaintiff and the defendant Parrish, to which he is entitled, and appeals substantially from that' part of the judgment which allows participation in the fund by Ayer.
It will thus be observed that the case turns altogether upon the right of the defendant Ayer to participate in the distribution of this fund ; and two questions are presented in tliat relation: (1) Is he .entitled to claim at all % (2) If he is so entitled, to what extent ? It is urged as against the defendant Ayer that he is excluded • from any right in or to the fund because he elected to pursue remedies incompatible with the specific right of following the proceeds of .his stocks into the hands of the National City Bank. It is asserted that he instituted an action against Sands & Co. for the conversion of his stocks :and that thus he selected that remedy; but there is no proof that such an action was ever brought. All tliat appears is, that in the testimony of the defendant Ayer some reference is made to an affidavit which seems to have been prepared by his attorney in anticipation of an action being brought for conversion; but there is no proof that such an action was brought, or that ,a summons was served or .any further step whatever taken. It cannot be said that a remedy has been resorted to simply because it may have been in the contemplation of a party at some time to avail himself of that yemedy. But it is further urged that the defendant Ayer elected to claim under the assignment of Sands & Co. to Cox, and the argument is strenuously made that he has bound himself to the assignment by. filing a proof of claim with the assignee, and it is insisted that, under the ruling in Le Marchant v. Moore (150 N. Y. 218), the ■defendant Ayer has precluded himéelí from looking to anything .else than the assigned estate. It was held in that case that where, with full knowledge of all the facts, a person proves .and files a claim against an assigned estate for an amount of indebtedness arising out of a broker’s unauthorized use. of a customer’s stock, the customer cannot claim the stock, or follow the proceeds in his original right 'as owner; he elected to treat the stock broker as his creditor and has bound himself to the assignment. The facts upon which that particular ruling was made in Le Marchant v. Moore
We are then to consider to what extent Mr. Ayer is interested in the fund in suit. His claim to priority stands upon the fact that he was the absolute owner of his stocks unincumbered by any lien of Sands & Co., who held them merely on deposit for sale and 'until sold, for safe-keeping. At the time of the failure of Sands & Co., the plaintiff’s stock and the Parrish stock were .held as'.collateral security, the situation being that, when Sands & Co. pledged the
The judgment appealed from must be affirmed, without costs to either party.
Van Brunt, P. J., Barrett, Rumsey and Ingraham, JJ., concurred.
Judgment affirmed, without costs to either party.