In my opinion the complaint in this action does not state facts sufficient to constitute a cause of action for equitable relief. My brother Laughlin has presented a careful analysis of the complaint, which will render it necessary to present only some of the salient allegations in this opinion. As he states, the determining factor is the contract between the plaintiff and the defendant Mario Tapparelli fu Pietro of America, Inc. (hereinafter called Tapparelli, Inc.). The demurrer admits the contract but does not admit the conclusion of the pleader as to its legal effect, and where there is a variance between the- terms of the contract and the legal effect thereof alleged in the complaint, the contract controls. (Rubin v. Siegel, 188 App. Div. 636, 638.) The contract is evidenced by a letter written by Tapparelli, Inc., to the plaintiff, dated December 13, 1917, which stated that in consideration of the postponement of the delivery of four shipments of five cars each of caustic soda, “ We will leave on deposit with the Irving National Bank $20,000 which is to be withdrawn in the following manner: $5,000 as part payment of the January shipment, $5,000 as part payment of the February shipment, $5,000 as part payment of the March shipment and the balance of $5,000 as part payment of the April shipment *582* * *. We shall duly authorize the bank to make the said payments pursuant to this letter. In the event that you fail to make deliveries in any of the months mentioned above, we shall then have the right to immediately withdraw from the bank whatever portion of the $20,000 still remains on deposit.” Pursuant to this letter Tapparelli, Inc., deposited with the Irving National Bank $20,000 par value of four per cent United States Liberty bonds. Thereafter plaintiff and Tapparelli, Inc., agreed that the five carloads tendered for delivery in December, 1917, should be deemed to be delivered in January, 1918, and said carloads were resold on that date at a loss of $3.56 per 100 pounds and Tapparelli, Inc., authorized the Irving National Bank to pay to the plaintiff the proceeds of $5,000 par value of the bonds on account of the January delivery and the said bank on or about February 13, 1918, paid to the plaintiff $4,833.67. Thereafter on February 25, 1918, the plaintiff tendered for delivery five carloads of said goods, and demanded payment of the agreed price from Tapparelli, Inc., which was refused and plaintiff then demanded of the Irving National Bank the proceeds of $5,000 of the Liberty bonds, which was refused. Plaintiff claims that by reason of this breach of the contract it became entitled to the immediate delivery to it by the Irving National Bank of the remaining $15,000 of said Liberty bonds. It is further alleged that on March 2, 1916 (1918), Tapparelli, Inc., notified the plaintiff that it canceled the contract; that the plaintiff was ready, willing and able to perform the contract on its part and that by reason of the defendants’ refusal to perform the contract on their part the plaintiff has sustained damages in the sum of $63,574.52. The plaintiff alleges it has no adequate remedy at law and demands judgment: First, that it be adjudged that its damages exceed the sum of $15,000 and that said damages be assessed and determined. Second, that the $15,000 in Liberty bonds now held by the Irving National Bank be adjudged to be equitably assigned to the plaintiff and be turned over to it in part satisfaction of payment of its damages. Third, that for the purpose of satisfying its damages the plaintiff be declared to have a lien on said bonds; that the value thereof be determined and if manual delivery is impracticable that they be sold by and under direction of *583the court, and that the proceeds be applied to the satisfaction of plaintiff’s damages, and that plaintiff have judgment for the balance against the defendants Tapparelli and Tapparelli, Inc., or that the judgment provide that it shall not be a bar to an action at law to recover the remainder of its damages.
Unless the Irving National Bank was authorized to pay the proceeds of the bonds directly to the plaintiff without the intervention of Tapparelli, Inc., there was not an equitable assignment. An agreement to pay out of a designated fund is not sufficient. (Bacon v. Schlesinger, 171 App. Div. 503; affd., 224 N. Y. 690.) The words in the contract “ we will leave on deposit ” and “ we shall duly authorize the bank to make the said payments ” and the absence of any words tending to show that the bank held the funds in trust for the plaintiff indicate, in my opinion, that the agreement was for the bank to pay only upon the authorization of Tapparelli, Inc., at the time-' of the acceptance of each shipment. That was the practical construction of the parties. When the first five carloads were resold to the plaintiff, the defendant Tapparelli, Inc., authorized the bank to pay the proceeds of the $5,000 bond to the plaintiff. When the plaintiff made a tender of the February delivery and demanded the payment of the $5,000, the bank refused. That Tapparelli, Inc., was to retain control over the fund is further shown by the last clause of the agreement, reserving to Tapparelli, Inc., the right to withdraw from the Irving National Bank any portion of the $20,000 remaining on deposit immediately upon the failure of the plaintiff to make any one of the deliveries of caustic soda.
The facts, not being sufficient to show an equitable assign- j ment, do not establish an equitable hen. As was said by-Judge Earl: “ Whatever the law may be elsewhere, it must., be regarded as the settled law of this State that an agreement, either by parol or in writing, to pay a debt out of a designated ¡ fund does not give an equitable lien upon the fund, or operate as an equitable assignment thereof.” (Williams v. Ingersoll, 89 N. Y. 508, 518.) This agreement to deposit the bonds was not a part of the original contract of sale whereby the plaintiff in reliance upon this credit entered into the contract. By its terms a certain amount was to be directly paid after each delivery and acceptance thereof. The plaintiff has not brought *584its action for a specific performance of the contract nor does it keep its tender of delivery good. It seeks to recover damages for a breach of the contract of sale, which would be an action at law, and to have this fund applied in reduction of damages. But the contract does not provide for the application of this fund to damages but to a portion of the purchase price. The plaintiff contends that the reason it is entitled to resort to equity is that these bonds have since been assigned to third parties. If this be a fact then unless these third persons are made parties, the plaintiff could not enforce its lien. There being no appropriation of this fund to the payment of the damages, there would be no equitable lien established. (Gibson v. Stone, 43 Barb. 285, 291; Wright v. Ellison, 1 Wall. 16, 22.) Viewed in any light the cause of action of the -plaintiff would be one at law for damages and not in equity. Where a complaint is framed in equity and equitable relief is demanded, and a demurrer interposed for insufficiency, if the facts do not show the plaintiff is entitled to equitable relief the demurrer should be sustained even though the court might spell out a cause of action at law. This is now well settled and the reason for such decision is fully discussed in Spring v. Fidelity Mutual Life Ins. Co. (183 App. Div. 134, 139). (See, also, Consolidated Rubber Tire Co. v. Firestone Tire & Rubber Co., 135 App. Div. 805; affd., 199 N. Y. 536; Low v. Swartwout, 171 App. Div. 725; Logan v. Fidelity-Phenix Fire Ins. Co., 187 id. 153,154.) For the foregoing reasons, in my opinion, the order should be reversed, with ten dollars costs and disbursements, and plaintiff’s motion for judgment on the pleadings denied, with ten dollars costs, with leave to plaintiff to serve an amended complaint on payment of said costs.
Dowling and Merrell, JJ., concur; Laughlin and Smith, JJ., dissent.