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WHEELER, J. The action is brought upon a certain promissory note made by the defendant, the Leavenworth Apartment Company, and indorsed by the other defendants in the action. The note was made payable to the plaintiff.
In the answer of the defendants Roberts and Stanley, to which the plaintiff demurs, the defendants admit the making and indorsement of the note in question, but allege that the Leavenworth Apartment Company had a contract with the National Construction Company for the construction of an apartment house for the Leavenworth Apartment Company, and that the plaintiff had undertaken and agreed to furnish certain material and supplies for use in the erection of said building, but that the plaintiff had failed to fulfill the terms of the agreement with the construction company in full or in part, and a controversy and disagreement between the plaintiff and the construction company had arisen because of the failure of the plaintiff to furnish the material for said building as ordered. The answer then contains the following clause:
"7. The said defendants further allege, upon information and belief: That on or about the 6th day of March, 1912, the plaintiff, the defendant Leavenworth Apartment Company, and the National Construction Company entered into an agreement, in and by the terms of which it was, among other things, agreed that in consideration of the execution and delivery of the note set forth in the complaint herein by the Leavenworth Apartment Company, and certain indorsers thereon to the plaintiff, that the plaintiff would immediately comply with the demands of the National Construction Company, and would immediately ship additional materials for said building, and replace materials formerly shipped by the plaintiff which had been rejected upon said building, in order that the said building might be rushed to completion within a very short time. That relying upon the promise and agreement of the plaintiff herein to furnish proper and suitable materials immediately for the completion of said building, including the 50 doors which had been returned to the plaintiff and rejected, the defendant Leavenworth Apartment Company made, executed, and delivered to the plaintiff the note set forth in the complaint."
The answer then alleges the plaintiff, in violation of the agreement, failed to comply with its terms, and failed to supply the materials required, and that by reason thereof the completion of the building was delayed, and the Leavenworth Apartment Company prevented from taking possession and renting the same, and suffered damage in an amount in excess of the amount of the note. The answer then alleges:
"That, by reason of the breach of said contract by the plaintiff, the Leavenworth Apartment Company is not at this time in any way indebted upon said note or otherwise to the plaintiff herein, and that, the said note being in the hands of the original payee thereof, these defendants are not liable upon said note, or, if any liability exists, such liability is only as a guarantor of any indebtedness vhich may be found due and owing from the Leavenworth Apartment Company to the plaintiff upon the trial of this action, and that as between the plaintiff and these defendants there has been, by reason of the foregoing, a complete and total failure of consideration for the said note set forth in the complaint herein."
To this answer the plaintiff demurs, as being insufficient in law. It is urged by counsel for the plaintiff that the contract to furnish sup
plies and material was between the plaintiff and the National Construction Company, and not between the plaintiff and the apartment company. Such appears to have been the original dealing; but the clauses quoted allege the subsequent agreement, resulting in the giving of the note in question, was between the plaintiff, the construction company, and the apartment company. The answer, in effect, alleges a special interest of the apartment company in the fulfillment of the contract, and an agreement by the plaintiff with it. It may be the facts will not bear out the allegations when developed on the trial, but for the purposes of this demurrer we must accept the allegations as true in law.
It is to be noted in this connection that there is no allegation that the note in question did not in fact represent an indebtedness due and owing the plaintiff. Nor is it alleged that the note in question represented the price of material to be furnished under the alleged agreement of March 6th. When the answer is analyzed, it amounts to just this: That the plaintiff agreed to furnish certain material, and failed to do so, whereby the defendant Leavenworth Apartment Company suffered damage, and has a cause of action by way of counterclaim against the plaintiff. The cause of action set forth in the answer is an independent cause of action in favor of the apartment company against the plaintiff, the payee of the note sued on. The simple question, therefore, presented is whether these defendants, as indorsers of the note of the apartment company, can avail themselves of this counterclaim in favor of their codefendant as a defense and offset against their liability as indorsers on the note.
Under the statute the maker and the indorsers of the note in question are jointly and severally liable on the instrument, though sued as jointly liable. In the recent case of American Guild v. Damon, 186 N. Y. 360, 78 N. E. 1081, it was held that, in an action to foreclose a mortgage executed by a husband and wife to secure the payment of their joint and several bond, the husband might under section 501 of the Code of Civil Procedure, counterclaim and set off a claim existing in his own favor, and the allowance thereof inured to the benefit of both defendants, and the fact that the action is in form joint does not affect the principle.
In this very action the Leavenworth Apartment Company has interposed an answer setting up substantially the same facts alleged in the answer of the defendants Roberts and Stanley, save that in the answer of the apartment company the claim for damages is set up aś a counterclaim, rather than as an offset. If the apartment company succeeds in the alleged defense, then whatever reduction is thus obtained on the plaintiff's claim inures just to that extent to the benefit of the indorsers on the notes. Why, then, may not the indorsers, by answer, claim for themselves the benefit of such a reduction by offset against liability upon pleading the same facts?
In the case of American Guild v. Damon, 186 N. Y. 360, 78 N. E. 1081, the court, in its opinion, cites with approval the case of Parsons & Wales v. Nash, 8 How. Prac. 454, where the opinion was written by Mr. Justice Marvin. In that case the action was on a
joint and several promissory note made by Hinkle, Nash, and Payne. Nash and Payne were sureties of Hinkle. The defense was a set-off of a judgment recovered upon contract by Hinkle against the plaintiffs for an amount equal or larger than the amount of the note, and it was held the defense was proper.
As was said in the case of American Guild v. Damon, 186 N. Y. 365, 78 N. E. 1082, “the plaintiff has but one claim, and but one cause of action," and "payment by anybody liable thereon, whether jointly or severally, would necessarily satisfy it.” The defendants, therefore, have an equitable defense, of which they should not be deprived, especially as their codefendant is asserting it for its own benefit, and it necessarily inures as well to their own benefit. A defendant, sued at law, may now, under our practice, set up both legal and equitable defenses.
In the case of Bathgate v. Hawkins, 59 N. Y. 533, the court held that in an action to foreclose a mortgage given as security for a joint bond executed by the mortgagor and another as his surety, in which action both obligors were made defendants and judgment was prayed against them for any deficiency, a debt due the mortgagor from the plaintiff might be set up by way of counterclaim, as the action was one in which a several judgment might be rendered under the Code. Discussing the right of set-off the court said:
"While as a general principle, courts of equity will follow the rules of law in enforcing set-offs, they exercise an original jurisdiction over the subject, and in cases of peculiar equity and under special circumstances will enforce a set-off in cases not within the letter of the statute. 2 Story's Eq. Jur. $ 1437; Smith v. Felton, 43 N. Y. 419; Lindsay V. Jackson, 2 Paige, 591. It is in accordance with natural equity that mutual debts should be held to apply, one against the other, and the balance only should be recovered. In this case the plaintiffs are seeking to enforce their mortgage against the land of the defendant Haskins, and to recover judgment on the bond for any deficiency against the defendants, one of whom is a mere surety for the debt. It is manifestly just that they should apply what they owe to Haskins in reduction of the mortgage.”
And the court continued, and held that it had the legal right so to do. In this case the defendants Roberts and Stanley sustain the relation of mere sureties on the note of the apartment company, a fact alleged to have been known to the plaintiff when the note was given. As sureties they had a peculiar equitable right that any indebtedness owing their principal should be set off as against their obligation on the note, perhaps even against the wishes of their principal. Sureties are favorites of the courts, and the courts are jealous to protect their interests.
In the case at bar it is alleged in the answer demurred to that the counterclaim of their principal grew out of the very transaction inducing the giving of the note with their indorsements. We have, too, the additional fact that the Leavenworth Apartment Company, in a separate answer, sets up the same facts by counterclaim, and joins in the prayer that the damages alleged to have been sustained by it for a breach of the contract be set off against the amount of
This appears by the separate answer of that company handed to the court on this argument by plaintiff's counsel for its
information and consideration. Therefore under the peculiar circumstances of this case, presenting peculiar features calling for the interposition of the equitable powers of the court for the protection of the defendants' interests, we think a case here presented where we must hold the answer interposed good.
The demurrer is therefore overruled. Let a decision be drawn accordingly.
(76 Misc. Rep. 573.)
FLYNN V. PRUDENTIAL LIFE INS. CO. et al. (Supreme Court, Appellate Term, Second Department. May, 1912.) INSURANCE (8 665*) --ACTION ON POLICY-RIGHT OF ASSIGNEE--NEW TRIAL.
An administrator having sued to recover the proceeds of a policy on decedent's life, D. intervened, claiming the policy under an assignment. D.'s evidence in proof of the assignment could have been excluded as incompetent, and there was corroborative evidence consistent with the theory that the policy was deposited with him as security for an indebtedness and further payment of premiums, and that decedent on his deathbed believed that he still owned the policy. Held that, judgment having been rendered in favor of the assignee, plaintiff was entitled to a new trial, so that he might recover the proceeds of the policy; the assignee being left to the presentation of the claim against the decedent's estate for the money due him.
[Ed. Vote.-For other cases, see Insurance, Cent. Dig. 88 1555, 17071728; Dec, Dig. § 665.*] Appeal from Trial Term, Kings County,
Action by Herbert A. Flynn, as administrator of Edward Flynn, deceased, against the Prudential Life Insurance Company, in which Raymond F. Dyer interpleaded. From a judgment in favor of Dyer, plaintiff appeals. Reversed, and new trial ordered.
Argued before KELLY, JAYCOX, and CLARK, JJ.
PER CURIAM. The evidence of an assignment of the policy is very meager. As far as defendant Dyer is concerned, it was brought out by cross-examination entirely; whereas, the administrator could have excluded it all by objecting under section 829 of the Code. The corroborating testimony of the witness Mapp is entirely consistent with the theory that deceased deposited the policy with Dyer as security for his indebtedness and for further payment of premiums, while the evidence of the witness Mrs. Ross clearly shows that on his deathbed the deceased believed he still owned the policy. Thereior, while we are slow to interfere with a judgment on the ground that it is contrary to the evidence, it would appear that justice requires a reversal of this judgment, to the end that the administrator may recover the amount of the policy, that Dyer may present whatever claim he has for money loaned or premiums advanced, and that the administrator may pay the undertaker's bill.
Judgment reversed, and new trial ordered, with costs to abide event.
*For other cases see same topic & $ NUMBER in Dec. & Am. Digs. 1907 to date, & Rep'r Indexes
DAVIDGE V. WIGGINS et al.
(Supreme Court, Special Term, Orange County. August 30, 1912.) 1. PERPETUITIES ($ 6*)—TRUSTS-SUSPENSION OF POWER OF ALIENATION.
The statute against unlawful suspension of the power of alienation and ownership of property is violated by a will giving property in trust to pay half the income to each of testator's two daughters till she is 41 years old, and then to pay her half the principal, and in case either or both die before reaching that age to pay the income and principal to her or their children at the times the same would be paid to them if living.
[Ed. Note.-For other cases, see Perpetuities, Cent. Dig. $$ 447, 49
53, 56; Dec. Dig. 8 6.*]
The scheme of a will being to make testator's wife and bis two daughters equal beneficiaries, and the part creating a trust, chiefly for the daughters being void, the part making an absolute gift to the wife will also fail.
[Ed. Note.-For other cases, see Wills, Cent, Dig. $$ 201, 202; Dec. Dig. $ 81.*] 3. WILLS (8 487*)—CONSTRUCTION-EVIDENCE.
A paper in the handwriting of testator, attached to his will, is not competent on the question of the will violating the statute of perpetuities.
[Ed. Note.-For other cases, see Wills, Cent. Dig. 88 1023, 1026_1032; Dec. Dig. $ 487.*] Action by Alice Wooster Davidge against Mary Edna Wiggins and others for construction of a will. Will held invalid.
Bacon & Rorty, of Goshen, for plaintiff.
Francis Rooney, of New York City, Russell Wiggins, of Middletown, and Ralph Royal, of New York City, for defendants.
TOMPKINS, J. This is an action by the widow of Edson G. Davidge, deceased, for a construction of the last will and testament of her deceased husband, and to have it adjudged that the provisions of said will creating certain trusts are illegal and void, and that the said testator died intestate as to all his property, except a legacy of $25,000 given to her by the will, which plaintiff claims was a valid bequest.
Edson G. Davidge died on the 22d day of December, 1908, leaving a last will and testament, dated the 24th day of April, 1893, and admitted to probate on the 5th day of February, 1909. The essential provisions of the said last will and testament are as follows: “I give and bequeath to my wife, Alice Wooster Davidge, twenty-five thousand dollars in money or solvent securities, to be paid and delivered to her as she shall need the same within five years after my decease, with interest from the date of my decease, which sum of ($25,000) twenty-five thousand dollars and interest shall be the absolute property of my said wife for her sole use and benefit forever.
"All the rest and residue of my property and estate, real, personal and mixed, of whatsoever kind and nature, and wheresoever situated, give, devise and bequeath unto my brothers, James Davidge, Sherwood B. Davidge, Samuel P. Davidge and George Gifford Davidge, and the survivors and surFor other cases see same topic & $ NUMBER in Dec. & Am. Digs. 1907 to date, & Rep'r Innexes