Hills v. Flynn

Clarke, J.:

On August 23, 1894, George E. Sill of Hartford, Conn., loaned $3,385.45 to Hubert K. Wood and received from him the following instrument:

“Hartford, Conn., August 23rd, 1894.

“ On demand after date I promise to pay to George Eliot Sill or order the sum of Three thousand three hundred and eighty-five A/V dollars, with interest at the rate of "six per centum per annum from date.

“ To secure the payment of the above amount and any accumulated interest I hereby assign and set over to the said George Eliot Sill all my right, title and interest in and to a certain trust created by the will of my late grandfather George Wood of Hew York City; which trust is now held by Frederick Wood of Morristown, H. J., as trustee for the benefit of Julia Wood of Morristown, H. J., and my proportion of which trust is payable to me or my order at the death of the said Julia Wood. Provided that any balance remaining after the payment of the above amount and any accumulated interest shall be paid over to me.

“HUBERT K. WOOD.”

The will of George Wood, admitted to probate by the Surrogate’s Court of Hew York county Hovember 10, 1862, created a trust of certain real property for the benefit of Julia Wood *129for life. The United States Trust Company was appointed substituted trustee of said trust by a decree of the Surrogate’s Court, January 23, 1896. Said trust on September 3, 1909, was represented by a fund upwards of $30,000, held by said company as substituted trustee for the benefit of Julia Wood and remaindermen and the said Hubert K. Wood is one of said remainder-men. Julia Wood died April 5, 1913, and the said trust became then distributable. The share of H. K. Wood in said fund amounted to $5,153.51. Prior to June 7, 1901, George Eliot Sill died intestate. George G. Sill was duly appointed administrator and on said date as administrator recovered a judgment in the Superior Court of Hartford county, Conn., against Hubert K. Wood upon the aforesaid note, which judgment was duly docketed and was for the amount of $5,605.73 damages and $26.45 costs. Thereafter George G. Sill died and Harry M. Burke of Hartford was duly appointed administrator de bonis non of the estate of George Eliot Sill. Upon the death of George G. Sill, the sole beneficiaries of the estate of George Shot Sill were and still are William E. Sill and Helen Sill Wood, a sister, who are now the sole surviving next of kin of the said George Eliot Sill and George G. Sill.

On September 3, 1909, said Hubert K. Wood executed and delivered an instrument to Charles B. Barkley by which he granted, bargained and conveyed all his right, title and interest in and to the said trust fund to the full extent of $4,000, together with interest at the rate of six per cent thereon, from the date of the death of said Julia Wood, and appointed the party of the second part his true and lawful attorney for his own benefit, to make demand, sue for and collect said amount. In said instrument he expressly subordinated his assignment to the estate of George E. Sill to this assignment to Barkley. Prior to the said transfer to Barkley, the said Burke, as administrator, with the consent of the hens at law and next of kin of said George Eliot Sill, released, to the extent of $4,000 and interest, the said assignment made' by Hubert K. Wood to George Eliot Sill, and so informed the United States Trust Company.

On February 14, 1913, the Nestor Manufacturing Company, *130a New York corporation, duly recovered judgment against Hubert IÍ. Wood in the Municipal Court, borough of Manhattan, and a transcript was duly docketed in the office of the county clerk for $431.63. Thereafter an execution was duly issued and returned wholly unsatisfied. On April 9, 1913, an order in supplementary proceedings was made thereon. Wood appeared and was examined. On May 14, 1913, an order was made and duly served upon the trust company to appear as a third party for examination in supplementary proceedings upon said judgment, and in said order there was a provision. enjoining the trust company from disposing of any property belonging to said Wood then in its possession.

On October 16, 1913, the defendant Flynn was duly appointed receiver in supplementary proceedings and the order was duly filed and Flynn duly qualified. On October 8, 1913, the plaintiff Hills was duly appointed administrator in the place of Burke in the Probate Court of Hartford.

The injunction contained in the order of May fourteenth was modified by a stipulation executed by Nestor Manufacturing Company, Wood, Flynn as receiver, and the trust company, and an indenture executed by said parties and Hills, Barkley and William E. Sill and Helen Sill Wood. Pursuant to said instruments.the trust company holds the sum of $650 of the share of Wood in said trust fund, subject to the adjustment of the claims thereto of his creditors, Nestor Manufacturing Company and the estate of George Eliot Sill, deceased, his assignee.

Pursuant to said instruments the trust company has paid out the balance of Woods’ share, $4,603.51, to Barkley and Hills as administrator. No action was ever brought in the New York courts upon the said judgment recorded in the State of Connecticut, and the said assignment from Wood to Sill was never filed in the office of the clerk of the county of New York.

Notice of the assignment from Wood to Sill was given to the trust company prior to the assignment to Barkley. The said Wood was a resident of Connecticut until the first half of the month of September, 1907, and since has been and is now a resident of New York. No part of the said judgment and note *131has been paid. Said assignment from Wood to Sill was in good faith, for valuable consideration. In Connecticut there is no limitation, by statute or otherwise, setting the time during which an action upon a judgment recovered in that State, or any other State, shall be brought.

This agreed statement of facts is without prejudice to the running of the Statute of Limitations, if the same has run against the said assignment from Wood to Sill or the indebtedness secured thereby.

Plaintiff demands judgment decreeing that the defendant United States Trust Company pay to him as administrator de bonis non of George Eliot Sill, deceased, the said sum of $550 on account of said assignment.

Defendant Flynn prays for judgment decreeing that the company pay said sum to him as receiver in supplementary proceedings upon the judgment recovered by ¡Néstor Manufacturing Company against Wood.

The defendant trust company prays for judgment decreeing to whom it shall pay out the said sum.

The plaintiff-claims that the note and assignment as security constitute a pledge; that it is a chose in action and that the pledgee may retain or sell the pledge, though the debt to secure which the pledge was given is outlawed.

The question involved is what interpretation shall be given to the instrument Exhibit “A.” It was an unsealed promissory note, dated August 23, 1894, containing an assignment of so much of Wood’s vested remainder in a trust estate limited on the life of Julia Wood, the cestui que trust, as would pay the amount thereof. As against the note itself the Statute of Limitations has run, but judgment was obtained on the note in Connecticut before the running of the statute. The entry of judgment does not affect the assignment. “A party who holds property under a pledge' to secure a debt of the pledgor does not destroy the pledge or affect his rights under it by prosecuting his debt to judgment. The pledge still remains the security for the judgment debt, or so much of it as it was originally made to secure.” (Sickles v. Richardson, 23 Hun, 567. See, also, Fisher v. Fisher, 98 Mass. 303; King v. Hutchins, 28 N. H. 561.)

*132As appears "by Exhibit “C,” the grandfather of Hubert K. Wood by his will devised to his executors in trust certain real estate to apply to the use of his daughter, Julia Wood, for and during her life and after her death the trust is to cease, and upon her death the testator gave the said trust estate with appurtenances to her children, if any, then living or to the issue of any child then deceased. The said will further made his two sons George and Frederick his residuary legatees, and gave to' them all the rest and residue of his real and personal estate in equal shares to hold to them and to their heirs. George Kip Wood, the father of Hubert Kip Wood, one of the residuary legatees and devisees under said will, died in or about the year 1873, leaving him surviving George E. Wood, Louise M. Wood, Allen G. Wood and Hubert K. Wood, his children and only heirs at law. Thereafter Allen G. Wood died intestate, unmarried and without issue. Therefore, at the time of the execution of the assignment in question Hubert K. Wood as one or the three surviving heirs of his father was possessed of a remainder in one-sixth of the trust estate left by his grandfather to his aunt, Julia Wood, subject to be divested upon her having issue. She was then seventy-seven years of age and unmarried. She died April 5, 1913, unmarried and without issue, and as Hubert K. Wood survived her he became absolutely vested as remainderman in one-sixth of said trust estate.

In National Park Bank v. Billings (144 App. Div. 536; affd. on opinion below, 203 N. Y. 556) Mr. Justice Miller said: “The will of Chester Billings, deceased, does containa gift to appellant, not in express words, but in a direction to trustees to divide and pay; wherefore futurity is annexed to the substance of the gift, the same as though there were express words of gift with futurity annexed to the substance thereof by express words. * * * The appellant then acquired upon the death of his father, not a bare possibility merely, but the right to the possession and enjoyment-of one-half of his father’s estate in the event that he should attain the age of twenty-five years and survive his mother, and that right was not subject to the will of a third party. The question is whether such a right or interest is property .within the meaning of section 1871 *133of the Code of Civil Procedure. * * * It has heen assumed by this court in this and the Second Department that a future contingent interest in personal property is alienable, the same as a contingent remainder in real property. (See Stringer v. Barker, 110 App. Div. 37; Cohalan v. Parker, 138 id. 849.) * * * If the said interest was a contingent remainder in real property, there can be no doubt that it would be alienable (Real Prop. Law [Consol. Laws, chap. 50; Laws of 1909, chap. 52], §§ 36-40, 59); * * *.

“ For what reason or upon what principle can it be said then that a future contingent interest in personal property is not assignable at law as well as in equity ? Hot because such right or interest does not exist, because we have seen that it is a present right, which cannot be defeated by the act of a third party, and which will ripen into an estate in enjoyment upon the happening of a contingency. * * * In this case there is no uncertainty of the person; the appellant is named as the donee; he will take only upon the contingency of his surviving his mother, but his being then in existence is no part of the description of him, as donee. His survivorship being one of the contingencies, his contingent interest is of course not transmissible to his personal representatives; whereas, if the contingency were some other event, it would be transmissible. (Kenyon v. See, 94 N. Y. 563.) But that fact does not militate against its assignability, as shown by Woodruff, J., in Moore v. Littel [41 N. Y. at p. 86]. Surely an interest which is transmissible to personal representatives is a property interest and should be held to be assignable as well in law as in equity. A contingent interest is always subject to be defeated, else it would not be contingent; the nature of the interest, as a species of property, is not affected by the contingency upon which it will vest in possession; there being no uncertainty as to the person. If the survivorship of the donee be the contingency it will not he transmissible to his personal representatives, but it may still be assignable, the assignee of course taking subject to the chance that it may never vest in possession.”

It is clear, therefore, that the interest of Wood in the trust estate created by his grandfather’s will was alienable by him. *134It is also clear that he assigned so much thereof as was needed to pay the debt evidenced by the note, and that due notice of the assignment was given to the trustee long before the trust ter-' ruinated. While alienable, the portion of the remainder assigned could not be presently reduced to possession, but, after the notice, the trustee held such portion of the remainder as trustee for the assignee, and, upon the falling in of the life, estate, it was the trustee’s duty to pay it to its owner, said assignee. At the time the judgment was obtained by the Nestor Manufacturing Company, execution issued and a receiver appointed, the portion of the share of the remainder as theretofore assigned to Sill had ceased to be the property of Wood and was owned by Sill’s estate. Although being property and so owned, said estate was not and did not need to be in the actual possession thereof. It was in possession of the assignment, which was enough. It was not the property of Wood, and, therefore, his receiver did not and could not acquire any right, title or interest therein in hostility to the assignee.

In House v. Carr (185 N. Y. 453) Chief Judge Cullen said: “ A pledgee may retain or sell the pledge, though the debt to secure which the pledge was given is outlawed. (Jones v. Merchants’ Bank of Albany, 6 Robt. 162; Jones on Pledges, § 582.) This is not on the theory that by lapse of time title has vested in the pledgee, for the law is otherwise (Jones on Pledges, § 581), but because the statute bars merely the remedy by action.”

I cannot see how any Statute of Limitations can be held to have run against this claim. The assignee had done all that he was called upon to do by filing notice with the trustee. It was impossible for any one to collect during the lifetime of the cestui que trust. If we should look at the assignment as a pledge no duty devolved upon the assignee to sell his claim. He had a right to hold it until it was collectible.

In Hulbert v. Clark (128 N. Y. 295) Judge Earl said: “It is a general rule recognized in this country and in England that when the security for a debt is a lien on property, personal or real, the lien is not impaired because the remedy at law for the recovery of the debt is barred.”

The plaintiff as the administrator of the assignee Sill is enti*135tied to judgment decreeing that the United States Trust Company shall pay to him the sum of $550, without costs to any party.

Ingraham, P. J., Laughlin, Scott and Hotchkiss, JJ., concurred.

Judgment ordered for plaintiff as directed in opinion, without costs. Order to be settled on notice.