Lynch v. Conger , 181 A.D. 221 ( 1917 )

Sewell, J.:

This is, in form, an action to determine that the plaintiff had an equitable lien on or ownership as equitable assignee of the funds constituting the final estimate to the extent of $5,000 and to compel the defendants Willis N. Conger and Benn Conger to account and pay over to the plaintiff $5,000, his proportional part of the fund taken and converted by them to their own use, with interest thereon.

We think that the facts found authorize the conclusion that the agreement between the plaintiff and the Owego Bridge Company operated as an equitable assignment to the plaintiff to the extent of $5,000 of the fund of $16,856.30, constituting the final payment to the Owego Bridge Company under its contract with the city of New York.

Were it not that the trial court held that they did not we would have hardly supposed such a conclusion susceptible of reasonable doubt.

The best authorities on the subject of equitable assignment hold that no particular form of words is necessary; that any writing, words or act which indicate the intent of the assignor to make an appropriation of a fund, or a part of it, and from which an assent by the assignee to receive may be inferred, will, in equity, be enforced as an assignment, if sustained by a sufficient consideration.

It is unnecessary to refer to authorities for this general principle. It is to be observed that the language used in the present case does not show a mere executory agreement to pay a debt out of a designated fund, but a purpose, on the one hand, to set aside and transfer a fixed portion of a specific fund, in or to come into the hands of a third party, and an assent to receive it on the other. It shows an agreement to divide the fund into two parts, one of $5,000, and one of the balance, and that the $5,000 portion shall be paid to the plaintiff, not by the contractor, or out of the moneys to be received by it, but by the city itself.

That the parties understood that this was an actual application of the fund pro tanto and conferred a complete and present right on the plaintiff to that part, is apparent from the fact that after the agreement was made he was requested to consent to the payment of the whole amount to the contractor and refused.

We think this case is covered by the decision in Williams v. Ingersoll (89 N. Y. 508) where certain attorneys were employed to transact the legal business required in the prosecution of certain claims, under an agreement that they were to be paid for their services out of the money that should be obtained from the suits or proceedings, and should have a lien thereon for all sums that might be due for their services which lien should be superior to any rights the plaintiff might have, and it was held that the agreement operated as an equitable assignment to the attorneys of the moneys obtained, and that a notice to the debtors was not necessary to make the assignment valid.

In Fairbanks v. Sargent (117 N. Y. 329) Judge Finch, speaking of an agreement of this character, said: “ The contract was either a simple agreement for compensation to be enforced against Underwood, or it was an equitable assignment of a definite share of the proceeds of the claim against Zabriskie. Obviously it is something more than and quite different from a mere agreement for compensation measured by results. That would have given to Fairbanks only a personal claim against Underwood, and scarcely served to induce on his part further services and expenses upon a credit already precarious; and not compensation in general, but a specific share in a specific fund or specific property was the exact and material point of the contract upon which the rights of both parties hinged. * * * There could be no

legal assignment of a fund not in existence or proceeds not realized, but equity treats them as if existing or realized, and the contract for their receipt by Fairbanks as an equitable assignment of the stipulated share to him, and, as a consequence, makes him the equitable assignee of so much of the debt or demand as is represented by his share of the proceeds. I think we have never failed to hold this doctrine on a similar state of facts. We discussed the subject somewhat in Williams v. Ingersoll (89 N. Y. 508), and there said: ' It is a rule in equity that anything which shows an intention to assign on the one side, and from which an assent to receive may be inferred on the other, will operate as an assignment if sustained by a sufficient consideration.’ ”

In Holmes v. Evans (129 N. Y. 140) the defendants entered into an agreement with plaintiffs by which they were to undertake the collection of certain claims and were to receive upon settlement or recovery a specified percentage of such recovery or settlement as their compensation. Judge Andrews stated the legal effect of the agreement in the following language: “ This was not an agreement to pay the plaintiffs out of the fund to be recovered. It was an agreement in effect that they should have a share in the claims, and that when realized, the fund should be divided between the parties in the proportions indicated.”

In Harwood v. La Grange (137 N. Y. 538) an attorney rendered services in an action under an agreement that he should receive his compensation out of the proceeds thereof, and the court said: “That the agreement gave the plaintiff an equitable lien on or ownership as equitable assignee in the proceeds of the action, is not open to doubt.” In each of these cases the facts were vastly weaker than those in the present case. We are, therefore, constrained to hold that the contract operated as an equitable assignment by the Owego Bridge Company to the plaintiff and, by it plaintiff became an equitable assignee of his stipulated share of the last payment. That being so, it must also be held that the defendants Willis N. Conger and Benn Conger incurred a personal liability when they converted it to their own use. In judgment of law the contract between the plaintiff and the bridge company created a trust for the benefit of the plaintiff, his portion of the payment constituting a trust fund set apart for his .benefit. If the city of New York still had the money, no one would dispute that the plaintiff could maintain an action to get his share of it. It came into the hands of Willis N. Conger and Benn Conger impressed with the obligations of the trust, and they, without right or authority, with full knowledge of the right that the plaintiff had acquired, took the trust fund with the design of preventing him from obtaining it. The Owego Bridge Company is insolvent. Under these circumstances, it would be strange indeed if these defendants did not incur a personal liability for a breach of the trust. Having willfully and fraudulently violated a duty which equity and good conscience laid upon them, there is no good reason why the plaintiff may not recover of them the damages he has thereby sustained. It follows that the judgment appealed from should be reversed and a judgment entered in favor of the plaintiff and against the defendants Willis N. Conger and Benn Conger for $5,000, with interest thereon from the 27th day of June, 1916, with costs against them in this court and in the court below.

All concurred.

Judgment reversed and judgment directed in favor of the plaintiff and against the defendants Benn Conger and Willis N. Conger for $5,000, with interest thereon from the 27th day of June, 1916, with costs against them in this court and the court below.