Agate v. Sands , 8 Daly 66 ( 1878 )

Joseph F. Daly, J.

The plaintiff did not raise upon the trial the question which he discussed on the argument of his appeal—whether a mere advance by the defendants of money to the company, without proof that the money had been used in paying debts of the company, would protect the defendants against the claims of creditors of the corporation (Garrison v. Howe, 17 N. Y. 458 ; Tallmadge v. Fishkill Iron Co., 4 Barb. 882; Bank of Poughkeepsie v. Ibbotson, 24 Wend. 473 ; Briggs v. Penniman, 8 Cow. 387). Had that question been raised at the trial, evidence might have been offered to show that the defendant’s advances were actually used in paying the company’s debts. We are not, therefore, at liberty to discuss the point now raised for the first time. The following questions were the only ones upon which plaintiff asked to be allowed to go to the jury:—

I. Was the discounting of the company’s $10,000 note by defendants a bona fide transaction, or was it a mere contrivance to protect them in their purchase of the stock of the company ?

II. If the discounting of that note was bona fide, was not the judgment obtained thereon satisfied in the transaction with Cox, and left open for the purpose of the defence?

As to the first point, there was no evidence in the case upon which the jury could have found that the discounting of the company’s note by defendants was a contrivance to protect them, and not a bona fide transaction. As to the second point it is sufficient to say that whether the transaction with Cox operated as a discharge and satisfaction of the judgment against the company or not, it was a question of law for the court, and not a question of fact for the jury. The paper, assumed by the witnesses to be a release, was offered in evidence and appears in the case, and is no release, but simply a receipt for Cox’s note with collaterals, and an agreement that when paid they shall be in satisfaction of the judgment.

The only remaining question is, whether defendants were entitled to a dismissal' of the complaint, or whether plaintiffs were entitled to equitable relief in this action with respect to the collaterals held by defendants under their agreement with Cox. The court permitted plaintiff to prove, if he could, that the defendant’s claim against the company had been paid in whole or in part by the avails of the collaterals, which he was unable to do. It may be that in the proper form of action the plaintiff would be entitled to enforce the collection of these collaterals, but the pleadings in this case warrant no judgment to that effect. (Wright v. Delafield, 25 N. Y. 266.)

The judgment should be affirmed with costs.