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(88 Misc. Rep. 718)

GROSS et al. v. LOUIS METZGER & CO.

(City Court of New York, Trial Term. January 5, 1915.) COMPOSITIONS WITH CREDITORS C20-CREDITORS Not ASSENTING_PAYMENT

IN FULL-RIGHTS OF DEBTOR.

Where F. signed a composition agreement with his debtor and other creditors on a basis of 40 per cent., without specifying the amount due him, and where the debtor, though knowing that F. had assigned portions of his account to others, did not secure the signatures of such others to the composition agreement, and in consequence thereof was forced to pay the full amount of their claims, instead of merely 40 per cent. thereon, the debtor was not entitled to set off against a subsequent assignee of that portion of the account retained by F. the sums in excess of the 40 per cent. which the debtor was forced to pay to the other as signees.

[Ed. Note. For other cases, see Compositions with Creditors, Cent. Dig. $$ 38–49; Dec. Dig. 20.]

Action by Albert B. Gross and others, copartners as Gross, Engel & Co., against Louis Metzger & Co., to recover an unpaid balance due under a composition agreement of the defendant's creditors. Judgment for plaintiffs.

Benjamin Berger, of New York City, for plaintiffs.

Olcott, Gruber, Bonynge & McManus, of New York City (Irving L. Ernst, of New York City, of counsel), for defendant.

RANSOM, J. The plaintiffs are entitled to judgment herein for $600.39, with interest. On October 31, 1913, defendant made a general assignment for the benefit of its creditors. During the preceding summer, Edward Friedman, assignor of the plaintiffs, had sold merchandise to the defendant, on account of which $3,778.42 remained unpaid on October 31st. Prior to that date Friedman had assigned to various firms items representing all except $1,500.95 of defendant's indebtedness to him, and defendant had received due notice, by registered mail from the assignees and by conversations with Friedman, of such assignments. On November 22, 1913, Friedman signed a composition agreement with the defendant and its creditors, on a 40 per cent. basis, without specifying therein the amount due him, although in a statement of account sent in by Friedman to the defendant, at the latter's request a day or two after October 31st, Friedman set out all of the transactions and “business relations" between himself and defendant, and did not indicate on the face of this statement that, as he had advised defendant orally, portions of the indebtedness remaining from such transactions had been assigned by Friedman. Despite its knowledge, and due notice of these assignments, defendant did not have the 40 per cent. composition agreement signed by the firms to which Friedman had assigned portions of the account and did not list or schedule these assignees as creditors. The latter accordingly sued defendant for the full amount of their respective claims, rather than merely 40 per cent. thereon, and defendant had no alternative but to pay these claims in full. Defendant now asserts the right, in this suit

For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes

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by the assignees of the $1,500.95 (which Friedman assigned after the composition agreement was signed), to offset the amount which it paid in settlement of these claims in full, over and above what would have been paid, had they been brought in under the composition agreement, against the plaintiffs' claim to 40 per cent. upon the $1,500.95 which was unassigned at the time of the composition agreement and was in fact represented by Friedman's signature thereto.

I do not find that Friedman or his subsequent assignees are in any way estopped from asserting against the defendant Friedman's right to receive, under the composition agreement, 40 per cent. on the sum at that time remaining due to him from the defendant. The fact that the defendant, through its own failure to list proper claims of which it had due notice, and failure to procure the signatures of such debtors to the composition agreement, was obliged to pay such claims in full, rather than on a 40 per cent. basis, gives no right to recoup such losses out of Friedman's dividend on the amount remaining due him. Harloe v. Foster, 53 N. Y. 385, does not impress me as an authority to the contrary, inasmuch as that case dealt with the effects of fraud and misrepresentation and the creation of a secret preference, through the fraudulent acts of one participant in the composition. The creditor fraudulently put his signature to the composition agreement for a claim which he had previously transferred, and he did this without either the debtor or the other creditors knowing of such transfer. In the case at bar Friedman did not sign the composition agreement for any specified amount of indebtedness, the defendant undoubtedly had full knowledge of the assignment of all except $1,500.95 of the original indebtedness, and it appears from proceedings relative to the bankruptcy receivership that the other creditors had or were chargeable with notice, prior to November 22d, that Friedman's claim was not $3,778.42, but some sum approximating $1,000.

Judgment for the plaintiffs is directed accordingly.

In re FAILE'S ESTATE.

OF

(Surrogate's Court, New York County. March 18, 1915.) EXECUTORS AND ADMINISTRATORS 21 — LETTERS ADMINISTRATION

RIGHT TO.

Code Civ. Proc. $ 2603, which contains an enumeration of the persons entitled to letters of administration with the will annexed, provides that they shall be issued to one or more of the residuary legatees, and section 2588 is made applicable. That section prorides that letters of administration may be granted to one or more competent persons jointly with a person not entitled, upon consent of all persons entitled to share in the estate. Upon the consent of all interested, a decree that letters of administration should issue to a residuary legatee and two persons not interested in the estate was entered. Before the letters were issued, the residuary legatee died. Held, that the persons not entitled to share in the estate could not thereafter demand the issuance of letters.

Ed. Note. For other cases, see Executors and Administrators, Cent.
Dig. $$ 106-115; Dec. Dig. 21.)
For other cases see same topic & KEY-NUMBER in and Key-Numbered Digests & Indexes

In the matter of the estate of Thomas H. Faile. Application by Henry K. Pomeroy and another for the issuance of letters of administration with the will annexed. Application denied.

Brush & Crawford, of New York City, for petitioner.

FOWLER, S. This is an application for letters of administration with the will annexed. On the 9th of February, 1915, an order was made directing that letters of administration with the will annexed issue to Henry K. Pomeroy, H. Arthur Pomeroy, and Mary E. Pomeroy upon their executing a bond with sufficient sureties in the sum of $45,000. Mary E. Pomeroy was a residuary legatee under the will of the testator. Henry K. Pomeroy and H. Arthur Pomeroy were not legatees and had no interest in the estate. Subsequently to the entry of the decree, and before letters were issued to the persons therein mentioned, Mary E. Pomeroy died. Henry K. Pomeroy and H. Arthur Pomeroy now ask that letters of administration with the will annexed issue to them upon their complying with the provisions of the decree of February 9, 1915.

Section 2603 contains an enumeration of the persons entitled to letters of administration with the will annexed. It is there provided that letters shall issue to one or more residuary legatees, and section 2588 is made applicable to a proceeding brought under section 2603. Section 2588 provides that letters of administration may be granted to one or more competent persons jointly with, and upon the application of, a person entitled to such letters, “or to a competent person or persons not entitled, upon the consent all the persons entitled to take or share in the estate.” The moving papers contain the consent of all the persons entitled to share in the residuary estate that Mary E. Pomeroy, a person entitled to share in the estate, Henry K. Pomeroy, and H. Arthur Pomeroy, receive letters of administration with the will annexed; but there is no consent of such persons that letters of administration with the will annexed shall issue to Henry K. Pomeroy and H. Arthur Pomeroy, independently of their connection with Mary E. Pomeroy.

The decree heretofore entered was based upon the petition of a legatee who was entitled to letters of administration. Before letters were issued this legatee died. Therefore the decree became ineffective, because the necessary allegations upon which it was granted were fundamentally changed by the death of the petitioner. Those persons who were not entitled to share in the estate, but to whom the decree directed that letters issue in conjunction with the petitioner, are not now entitled to such letters. In order to entitle them to letters, it will be necessary for them to file a petition containing the consent of all of the persons entitled to take or share in the estate who are within this state and competent.

COOK V PEOPLE'S MILK CO.

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(Supreme Court, Special Term, Erie County. April 6, 1915.) 1. DISCOVERY 41-EXAMINATION OF ADVERSE PARTY-APPLICATION FOR OR

DER

That plaintiff may have an order for examination before trial of defendant's managing agent, it must appear that the testimony is necessary and material to the cause of action.

[Ed. Note.—For other cases, see Discovery, Cent. Dig. 8 54; Dec. Dig. Cum 41.] 2. DISCOVERY 41 - EXAMINING ADVERSE PARTY – MATERIAL MATTERS

PLEADING,

Plaintiff, by alleging in his complaint matters immaterial to his cause
of action, may not have an examination before trial of defendant's man-
aging agent as to such matters, for the purpose of being prepared to meet
any possible defense.
(Ed. Note.-For other cases, see Discovery, Cent. Dig. § 54; Dec. Dig.

41.)
3. DISCOVERY 41—EXAMINING ADVERSE PARTY–MATTERS MATERIAL.

The actionable negligence of defendant milk company, by whose milk, purchased from a retailer, plaintiff was poisoned, was in placing on the market poisonous milk; and how it was poisoned by it is not part of his case, as regards his right to examination before trial of its agent.

[Ed. Note.- For other cases, see Discovery, Cent. Dig. § 54; Dec.
Dig. Omw41.)
Action by Julia E. Cook against the People's Milk Company. Heard
on motion by plaintiff to compel examination of a witness before trial
and to produce books and papers. Motion denied.

Ralph S. Kent, of Buffalo, for the motion.
Harry D. Williams, of Buffalo, opposed.

WOODWARD, J. The plaintiff, by an order to show cause, moves this court for an order to compel one Fred P. Husted, alleged to be the managing agent of the defendant, to submit to an examination before trial, and to produce certain books, papers, records, cards, etc., at such examination.

[1] There has been a modern disposition to enlarge the powers of the court in the direction of giving adverse parties an opportunity to examine before trial, and the old-time technical rules have been largely swept aside. Cherbuliez v. Parsons, 123 App. Div. 814, 108 N. Y. Supp. 321. It is, however, still necessary that the party moving the court should present the necessary facts to justify the order, and primarily it must be made to appear that the "testimony is necessary and material" to the cause of action. The petition before this court, which sets out practically the same facts alleged in the complaint, in attempting to comply with this requirement of the statute, says:

"That among other allegations id complaint it was alleged that the injuries sustained by your petiti re caused solely by the negligence and carelessness of the defendan hasing bottles therefor, washing and cleaning same, guarding and

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among other things, the above allegations of said complaint," and that the petitioner “has no personal knowledge of the matters above set forth," and that she is advised by her attorney "that it will be absolutely necessary that the testimony of officers and employés of the defendant company, having per: sonal knowledge of the facts relating to the issues above set forth, be taken before trial, before a referee, in accordance with the statute in such case made and provided, in order that said issue may be properly prepared and tried, and that the ends of justice be met."

[2] We may assume that, if it was made to appear that these alleged issues were necessarily involved in the plaintiff's cause of action, it could be spelled out of the above allegations that the plaintiff intended to use the testimony thus elicited on the trial of the action, although it is certainly not clearly set forth. The suggestion is that the plaintiff desires the examination to prepare for the trial, rather than that the testimony is necessary and material to the establishing of the cause of action. There is no direct allegation that the testimony of Fred P. Husted, the secretary and treasurer of the defendant is "necessary and material” to the establishing of the alleged cause of action. We are told that the complaint alleged certain matters, and that the defendants have interposed an answer "putting in issue, among other things, the above allegations of the complaint"; but, if these allegations are immaterial to the cause of action asserted, it cannot be that the Legislature has intended that by merely overpleading a cause of action the plaintiff can be permitted to go into the details of the defendant's business for the purpose of being prepared to meet any possible defense which the defendant may be able to assert. It becomes necessary, therefore, to look into the real issues presented by the pleadings, for upon these must depend the determination of whether these allegations are material, and if they are found not to be material, then the mere allegation that "it will be absolutely necessary that the testimony of officers and employés of the defendant company

* be taken before trial" does not comply with the statutory requirement.

[3] The complaint alleges : That the defendant is a domestic corporation, "engaged in the preparing, bottling, selling, and distributing of milk and milk products for immediate consumption in the city of Buffalo, and did, and does now, hold itself out to be specially equipped, prepared, and qualified for that purpose and for the purpose of preparing, bottling, selling, and distributing for sale only pure, clarified, and perfectly pasteurized sweet milk and cream for immediate consumption; that the defendant leaves with divers and local grocers and mer. chants in said city quart bottles of such milk, so prepared, for sale and distribution among, and immediate consumption by, the persons in their respective localities"; that “on or about the 26th day of January, 1914, the defendant left such milk, so prepared, at the store of Darwin F. Emens, 217 De Witt street, in said city ; such milk was sealed with defendant's seal and bottled in defendant's bottles at defendant's plant, and delivered to said Emens by defendant for delivery by him to customers and others for immedi. ate consumption, by human beings."

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1

The defendant admits all of the material allegations so far, except in so far as the complaint alleges that this milk was for immediate consumption. Indeed, its admissions are rather broader than the allega. tions of the complaint, for it admits that it "sold and delivered to one Darwin F. Emens

such milk, purified, clarified, and perfectly pasteurized, sealed with defendant's seal and bottled in defend

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