673.07 and interest. There remained unsold the 100 shares of North American stock and the 100 shares of American Smelting & Refining stock which belonged to Fisher. After this sale had been made, the plaintiff, on June 3, 1914, served upon the bank and defendant Gilbert, as assignee of Stoppani & Hotchkin, a written notice that the United States Steel and New York City bonds were plaintiff's property, and that she claimed possession of them.

On June 2, 1914, the defendant Fisher, claiming to be the owner of the North American, United States Rubber, and American Smelting & Refining stocks, brought an action in the Supreme Court against the bank, the firm of Stoppani & Hotchkin, and its individual members, and the three corporations whose stock the plaintiff claimed, to recover possession of, and to establish title to, the stock certificates, claiming that the certificates had been fraudulently obtained from him by Stoppani & Hotchkin and had been wrongfully pledged by the latter to the bank, and demanded that the securities be delivered up to him as the original owner. This case was tried, and it was decided that the bank was entitled to hold the North American and American Smelting & Refining stock, and to liquidate the balance of the loan to Stoppani & Hotchkin (89 Misc. Rep. 587, 153 N. Y. Supp. 786) amounting to $6,435.92 and interest, out of such securities. The decision also held that Fisher was entitled to any surplus remaining after the sale and application of the securities, and awarded judgment in favor of Fisher against Stoppani & Hotchkin for $13,335.32. On April 28, 1915, judgment was entered on the decision. On May 3, 1915, Fisher moved to amend the judgment, and on June 7, 1915, an order was entered amending the judgment, and directing, among other things, that upon payment to the bank of the sum of $6,435.92, with interest from March 12, 1915, and costs, the bank deliver to Fisher the certificates for the North American and American Smelting & Refining stock, and that, if such stock were so redeemed, the North American Company and the American Smelting & Refining Company, upon surrender of such certificates, issue to Fisher in his name new certificates in place thereof. An appeal was taken by the bank from the order resettling the judgment, and was subsequently dismissed by order of the Appellate Division on February 11, 1916. 172 App. Div. 952, 157 N. Y. Supp. 1125.

It appears, from the motion papers and the decision on file in our clerk's office, that actions were brought by this plaintiff, which will be hereinafter mentioned, and the bank had not served its printed papers on appeal, because the pendency of these actions had made it impossible for the bank to determine whether the prosecution of the appeal was necessary for the protection of its rights, and requested that the appellant's time to serve the case on appeal be extended to February 25th, on condition that, if this appeal was not perfected by that time, appellant would consent to the dismissal thereof. In the decision it is stated that the judgment is wholly in favor of the bank, and the plaintiff has a vested interest against the bank by the judgment for the surplus stock, "and the judgment itself relieves the bank of all

(182 N.Y.S.)

responsibility for surplus upon delivering the same to plaintiff," and granted the motion to dismiss.

On May 24, 1915, this plaintiff instituted an action in the Supreme Court against the bank, Stoppani & Hotchkin, individually and as partners, and Gilbert, as trustee in bankruptcy of the firm and its members. The plaintiff demanded judgment that the defendants in that action be directed to deliver to her the United States Steel and New York City bonds wrongfully pledged by the firm, or, in the event of their failure to do so, the plaintiff have judgment against them for $10,000; that an injunction issue against the bank, restraining it from selling or disposing of the securities. On September 15, 1915, the plaintiff applied at Special Term for an order restraining the bank from paying over to Fisher the balance remaining in its hands after the satisfaction of the indebtedness of Stoppani & Hotchkin, pending the determination of the rights of the plaintiff to such fund, and restraining Fisher from taking any steps against the bank to enforce or collect his judgment, and to join Fisher as a party defendant in the action. The motion came on to be heard before the justice who tried the Fisher Case, and was denied by an order entered September 15, 1915.

On or about November 1, 1915, plaintiff moved for a reargument of the previous motion, and after a hearing it was denied. On December 27, 1915, an order was entered discontinuing the action on consent of all the parties thereto. The present action was commenced on or about December 27, 1915. The complaint alleges the facts of the loaning of the New York City and United States Steel Company bonds by plaintiff to defendants Stoppani & Hotchkin, and their agreement to return the bonds; the pledge of the bonds, without plaintiff's knowledge or consent, together with other securities, by Stoppani & Hotchkin to the bank, under the collateral loan agreement; the balance due the bank from Stoppani & Hotchkin on May 18, 1914, namely, $49.000; the value of the bonds, $10,000; plaintiff's discovery of the pledge to the bank on June 1, 1914, and the notice to the bank and demand for possession of the bonds; the sufficiency of the other security to pay Stoppani & Hotchkin's debt to the bank, without resorting to the bonds; that among such other securities were stocks deposited by Fisher with Stoppani & Hotchkin, or purchased by them for his account and pledged by them with the bank with Fisher's authority; the sale by the bank of all the collateral, except the North American and American Smelting & Refining stock, worth in excess of $20,000; the unpaid balance of Stoppani & Hotchkin's debt to the bank, amounting to $6,600; the commencement and trial of the Fisher Case; the judgment rendered therein; the appeal taken by the bank; the granting of a stay of proceedings; that the bank had not paid Fisher pursuant to judgment; plaintiff's lack of knowledge of the Fisher action until the findings were settled, in July, 1915; that any surplus remaining after the satisfaction of the debt of Stoppani & Hotchkin to the bank out of the pledged securities represented the proceeds of plaintiff's securities, and should be applied to the liquidation of plaintiff's claim;

the assignment of Stoppani & Hotchkin, and the subsequent bankruptcy proceedings, and the appointment of Gilbert as trustee.

The original answer of the defendant bank, after denying various allegations of the complaint, alleged as a separate defense the facts as to the loans by the bank to Stoppani & Hotchkin under the collateral loan agreement; the unpaid balance on May 18, 1914; the securities held by the bank as collateral therefor; the bank's reliance on the securities in making the loans; its lack of knowledge as to any alleged fraud practiced upon plaintiff by Stoppani & Hotchkin; its belief that Stoppani & Hotchkin were the owners authorized to pledge, transfer, or dispose of the securities; the sale of them by the bank pursuant to the loan agreement, except the North American and American Smelting & Refining Company stock, and the application of the proceeds; and the institution, trial, and judgment in the Fisher Case.

The answer of defendant Fisher, after putting in issue portions of the complaint, sets up several separate defenses, based upon allegations as to his ownership of the North American, United States Rubber, and American Smelting & Refining stock and the Brooklyn Rapid Transit bonds; the wrongful pledging thereof by Stoppani & Hotchkin to the bank; the bank's disposal thereof; and the proceedings and judgment in the action brought by him against the bank and others. In addition to the dismissal of the complaint, judgment is demanded for the delivery to Fisher by the bank of the North American and American Smelting & Refining stocks, "free and clear of all incumbrances," and for the sum of $6,846.96, and for the modification of the judgment in the Fisher action accordingly.

On January 11, 1916, plaintiff moved for an order staying all further proceedings under the decree in the Fisher action; restraining the bank from delivering the North American and American Smelting & Refining stock, or the proceeds, if they had been sold, to defendant Fisher; and restraining defendant Fisher from receiving or interfering with such stock, or the surplus which might arise after a sale thereof, until the further order of the court. The motion was heard, and on February 17, 1916, an order was entered restraining defendant Fisher from receiving the securities in question, except for the purpose of depositing them in court, subject to the decree to be made herein, or until the further order of the court, upon condition (1) that plaintiff consent to try the cause at the March term, and (2) that plaintiff within five days file a bond, with sureties to be approved by the court, in the sum of $5,000, to secure defendant Fisher from any damage he might sustain from the depreciation of the securities or otherwise, and also restraining the bank from disposing of the securities, until the further order of the court.

From this order plaintiff appealed to the Appellate Division, and on February 23, 1916, procured from this court an order directing defendant Fisher and the bank to show cause why so much of the order as required plaintiff to file a bond should not be stayed; why defendant Fisher should not be restrained from receiving the securities, except to deposit them in court, subject to the decree thereafter to be made; and why the bank should not be restrained from deliver

(182 N.Y.S.)

ing the securities to defendant Fisher, or disposing of them, until the determination of the appeal. The order to show cause also contained a similar injunction, pending the determination of the motion. After a hearing by the Appellate Division, plaintiff's motion was denied, and the stay contained in the order to show cause was vacated, by an order entered on March 7, 1916, and a copy of the order, with notice of entry, was served upon the attorney for the bank. Plaintiff failed to file the bond directed by the order of February 17, 1916. On April 24, 1916, this action came on for trial at Special Term. The justice holding said term thereafter rendered an opinion (95 Misc. Rep. 374, 158 N. Y. Supp. 869) in which he said:

"An examination of the record in Fisher v. Mechanics & Metals National Bank, 89 Misc. Rep. 587, 153 N. Y. Supp. 786, and the opinion of Mr. Justice Shearn, leads to but one conclusion-that whatever assets of Stoppani & Hotchkin remain in the hands of the bank under the collateral agreement are disposed of by the decree in that action. It is conceded by plaintiff herein that the assets that she desires to impress with her claim are those referred to in the judgment of Fisher against the Mechanics & Metals National Bank. While it is true that the plaintiff was not a party to the Fisher suit, yet this court, having determined the title to the assets remaining in the hands of the bank, disposes of plaintiff's claim thereto."

On June 16, 1916, a judgment was entered dismissing the complaint. 95 Misc. Rep. 374, 158 N. Y. Supp. 869. An appeal was taken to this court, and the judgment reversed, and a new trial granted. 176 App. Div. 507, 163 N. Y. Supp. 311.

It appears that up to the time of the second trial of this action the courts had acted upon the theory that the claims urged were by different persons to the pledged collateral, in the possession of the bank. The appeal by the bank in the Fisher Case was dismissed because the judgment was favorable to it on the main issue, and that payment under the judgment protected the bank. The decision of this court on the former appeal was based upon the theory, as clearly appears from the opinion (176 App. Div. 507, 163 N. Y. Supp. 311), that the only controversy was between the plaintiff and Fisher. The plaintiff conceded that, although Stoppani & Hotchkin were guilty of a wrongful conversion, as between herself and the bank the latter obtained good title as pledgees under the rule of McNeil v. Tenth National Bank, 46 N. Y. 325, 7 Am. Rep. 341, and kindred cases, but contended that as between herself and Fisher she was entitled to a judgment that the proceeds of Fisher's securities be first applied to the payment of the bank's claim, and that whatever sum might remain after satisfying the bank's claim in full be paid to her in preference to Fisher; the reason for this being that the hypothecation of Fisher's securities was lawful, having been made pursuant to his written authorization, while the pledge of the plaintiff's bonds was unlawful, having been made without her knowledge or consent, and without any authority whatsoever. The judgment was reversed, because the justice at Special Term dismissed the complaint; he considering that the judgment in the Fisher Case concluded the plaintiff. We held that the plaintiff, not having been a party to that action, was in no way bound by that judgment, nor was it conclusive on Fisher, as between him and the

plaintiff; if, therefore, he could show, upon a new trial, as he sought to do, but was not permitted, that for any reason his stock stood upon the same footing as that of plaintiff, he was entitled as between them to do so by appropriate proof.

[1] The judgment in the Fisher action conclusively determined all questions between Fisher and the bank, but it did not determine any question between Fisher and the plaintiff. Therefore, if at the time of the second trial the securities still remained in the possession of the bank, and Fisher had demonstrated no equity, equal or superior to that of the plaintiff, she would have been entitled to a judgment that Fisher's securities be sold and the balance of the debt be paid to the bank, and out of the surplus she be paid the value of her bonds, which was conceded to be $10,000, with interest, and that the remainder be paid to Fisher.

After the decision of the appeal the defendant bank served a supplemental answer, in which was set forth the dismissal of its appeal from the Fisher judgment, the bringing of the first action by plaintiff and the various motions therein and the discontinuance of that action, the bringing of the present action, the motion made and granted for the injunction pendente lite, upon condition of the giving of a bond by plaintiff, and the failure to give the bond, the trial of the action resulting in the dismissal of the complaint, and the delivery of the stock certificates of the North American Company and the American Smelting & Refining Company, to Fisher upon his payment of the amount due the bank, all pursuant to the judgment in the Fisher Case, and upon Fisher's demand.

These facts were proved. Unless there is something in these facts to materially change the relation of the parties, some act or default of the bank that would charge it with liability and relieve Fisher, in my opinion the case should be considered as it was on the former appeal, as being a question between the plaintiff and the defendant Fisher as to the order of the application of their securities to the payment of the indebtedness to the bank.

[2-5] While it is true that the judgment in the Fisher Case was not a binding adjudication on the plaintiff in this action, and therefore left her free to pursue any remedy she had against either the bank or Fisher, it also gave her no right against either which she did not theretofore possess. As was stated on the former appeal, the bank had a right to sell her bonds and apply them on the indebtedness of Stoppani & Hotchkin, for the reason that the bank took them in good faith and without the knowledge of the fraud of Stoppani & Hotchkin. The sole right that she had was to require that Fisher's securities, which had been rightfully pledged with his consent, should be applied in satisfaction of the indebtedness before recourse could be had to her bonds. Before she notified the bank of her claim, it had already sold her bonds and applied the proceeds to the indebtedness. For this she had no right of action against the bank. She did have, however, the right to seek to have the remainder of Fisher's securities applied to the payment of the balance due, and a prior right