231 A.D. 428 | N.Y. App. Div. | 1931
Plaintiff brought this action to require defendant to transfer to plaintiff fifty-one per cent of the shares of the capital stock of a corporation known as Brownie’s Block Prints, Inc., which plaintiff alleges defendant agreed to post as collateral security for the payment of an indebtedness alleged to be owing by defendant to plaintiff. The pertinent facts upon which this case arose are as follows: Plaintiff and defendant are brother and sister. Prior to January 1, 1930, plaintiff and defendant were engaged as copartners in business in designing, printing, assembling, selling and generally dealing in greeting cards, stationery and similar articles under the firm name and style of Brownie’s Block Prints, having their principal place of business at 112 East Nineteenth street, in the borough of Manhattan, New York city. By mutual consent said copartnership was dissolved on January 1, 1930, by the withdrawal of plaintiff from said firm, and the sale to defendant of the assets and all plaintiff’s right, title and interest in said business. On January 29, 1930, a dissolution agreement in writing was made and entered into by plaintiff and defendant wherein it was agreed that defendant should pay plaintiff for his interest in the business the sum of $15,500, $5,000 of which was paid upon the execution of said dissolution agreement. The dissolution agreement provided that
It is the present contention of respondent that, notwithstanding the judgment dismissing plaintiff’s complaint for the balance of the notes unpaid, plaintiff, nevertheless, may compel defendant to deliver possession of the collateral agreed to be posted, but which, in fact, never was posted, as security for the payment of a debt which has been extinguished. In so far as the maker of the notes was concerned, neither of said notes was due at the time of the commencement of said action to recover thereon. The action was brought solely by virtue of the provisions of the dissolution agreement entered into between plaintiff and defendant whereby, upon defendant’s default in the payment of the stated installments, the entire indebtedness immediately, by virtue of the acceleration clause, became due. The whole difficulty seems to have arisen from the erroneous conception by the court below that defendant was an indorser of the notes in question. As matter of fact, the defendant was never technically an indorser of said notes. The notes were signed by her by using the name of the corporation which was to be formed and which was to take over the business theretofore carried on by plaintiff and his sister, she, at the same time, writing her name across the back of each of said notes. Under well-settled law, the defendant did not thereby become an indorser of said notes, all of which were, by their terms, non-negotiable and non-interest bearing, but, at most, assumed a relation of maker or guarantor of payment of the moneys represented by the notes, upon default in the payment of either on the date when the same, by its terms, was made payable. (Richards v. Warring, 1 Keyes, 576; McMullen v. Rafferty, 89 N. Y. 456; Cromwell v.
The learned court below seems to have regarded the appellant as an indorser, secondarily hable, and that the maker of the notes was primarily hable. Such, however; is not the case. The maker of the notes was never hable for any of the notes not by their terms then due. Nevertheless, the whole accelerated debt did become due as against appellant. It is, therefore, clear that the collateral herein was to be apphed only against the accelerated debt. Such accelerated debt having been wiped out through the act of plaintiff in splitting his cause of action and suing for a part only thereof, there can be no claim made for the collateral which was agreed to be posted as security for the payment of said indebtedness. Indeed, the complaint in the present action makes the appellant’s accelerated debt the sole basis upon which the delivery of the collateral is asked. No other debt is alleged, and the only party sued herein is the defendant, appellant. In our opinion the difficulty has arisen through the error of the learned court below in holding that the collateral can be applied to satisfy the several obligations of the maker and indorser upon distinct notes. The defendant was never an indorser, but, at most, was a guarantor or surety for the payment of the notes. The memorandum filed by
The learned judge below held the reply sufficient, holding that plaintiff could obtain the same relief against defendant, appellant, upon another cause of action based upon the debt of another. There is no allegation of any debt on the part of any one, save the defendant, appellant, and there was no other indebtedness. It is stated in the memorandum of the learned justice below that the reply denied the payment of $1,500 in connection with the judgment obtained in the City Court action. However, in the reply of plaintiff, respondent, to the fourth defense, plaintiff admits payment of the $1,500. In the reply of plaintiff, respondent, to the sixth defense alleged in the answer, that the amount sued for in
In Dahlstrom v. Gemunder (198 N. Y. 449) the Court of Appeals stated (at p. 455): “ Even if it should be held, as I am strongly convinced that it should not be, that this denial was of some force, plaintiff made affirmative admissions of enough in the answer to destroy the effectiveness of his reply and to support the order which was made.”
The rule is stated in 49 Corpus Juris, 676, as follows: “A party is entitled to judgment on the pleadings where his cause of action or defense is admitted and no facts are alleged which would defeat the admission, and a denial, when accompanied by admissions sufficient to establish the cause of action or defense, is insufficient to prevent judgment.”
No facts were alleged by respondent which in any way overcome the admission in the reply of the facts alleged as constituting the fourth defense.
The reply to the sixth defense alleged in the answer herein was clearly sham, and should have been stricken out upon motion of defendant. The pleadings' clearly indicate that the plaintiff, respondent, is seeking to compel defendant, whose indebtedness has been discharged, to surrender alleged collateral to satisfy a debt which does not exist. The complaint alleges an indebtedness, but the admissions contained in the reply show that such indebted
It is also urged by respondent that the alleged collateral, not withstanding the extinguishment of the debt, may be recovered by the respondent on the ground that it constitutes a pledge, and that a pledge may be used to enforce actual payment. The difficulty with such position is that the present action is not one on a pledge. At most, only an agreement to pledge is alleged. The shares in question, constituting the alleged pledge, were never delivered or specifically appropriated, and were never in the possession of plaintiff, respondent, and he never acquired any right of property therein.
In our opinion the order below, so far as appealed from, should be reversed, with ten dollars costs and disbursements. The reply of the plaintiff, respondent, to the sixth defense should be stricken out as insufficient in law, and judgment on the pleadings should be granted defendant, appellant, dismissing the plaintiff’s complaint, with ten dollars costs.
Dowling, P. J., Martin and Sherman, JJ., concur; O’Malley, J., dissents.
Order so far as appealed from reversed, with ten dollars costs and disbursements, and motion granted, with ten dollars costs.