Musman v. Modern Deb, Inc.

66 A.D.2d 719, 411 N.Y.S.2d 330, 1978 N.Y. App. Div. LEXIS 14005

• Court: Appellate Division of the Supreme Court of the State of New York
• Decided: December 21, 1978
• Status: Published

Opinions

Judgment, Supreme Court, New York County, entered May 11, 1978, confirming the report of the Special Referee and finding in favor of the petitioner against respondent First Republic Corporation of America, compelling the turnover of the proceeds of a certificate of deposit, reversed, on the law and the facts, vacated the turnover order denied, and the petition dismissed, with $75 costs and disbursements of this appeal payable to appellants by petitioner. The facts regarding the underlying action are recited in our previous memorandum decision (Musman v Modem Deb, 50 AD2d 761). Relevant to the present appeal is the fact that the judgment at Trial Term was entered against Modern Deb, Inc., and the First Republic Corporation of America. We modified the judgment to the extent of dismissing the action against First Republic. Prior to the perfection of the appeal in that action, a stipulation was signed providing, inter alia, that a certificate of deposit in the amount of $60,000 would be held in escrow as security to stay enforcement of the judgment. It further provided that if the judgment appealed from was affirmed or the appeal dismissed, the judgment would be paid from the proceeds of the certificate of deposit. A disagreement arose among counsel as to whether the escrow provided was to stay execution against First Republic alone or against both First Republic and Modern Deb. A direction by Special Term that the resolution of the ambiguities in the stipulation be sent to a Special Referee to hear and report was affirmed by this court (Musman v Modem Deb, 56 AD2d 752). This court also held that the ambiguities must be resolved by evidence dehors the words of the instrument itself (Musman v Modem Deb, supra, p 753). The Special Referee reported to the court, and Special Term confirmed the findings of the Referee. Judgment was awarded in favor of Musman against First Republic directing the turnover of the proceeds of the certificate of deposit to Musman. We would reverse and direct judgment in favor of First Republic. The stipulation in pertinent part provided: "whereas the defendants, feeling aggrieved by the said judgment, have appealed therefrom to the Supreme Court, Appellate Division, First Department, and defendants intend the herein described property as security upon said appeal and for staying enforcement of the judgment pending the appeal; now, therefore, we, the undersigned, counsel for plaintiff and defendants do hereby stipulate and agree that for the purpose of staying and enforcement of the judgment pending appeal, a renewable 90 day Certificate of Deposit in the sum of $60,000. issued by the European American Bank and held in escrow by said Bank, shall constitute good and sufficient security. If the judgment appealed from, or any part thereof, is affirmed, or the appeal is dismissed, the defendant will pay the sum recovered or directed to be paid by the judgment, or the part thereof as to which it is affirmed, from the proceeds of the above described Certificate of Deposit.” The testimony at the hearing before the Referee came from the mouths of the attorneys involved in the litigation of the main action. The attorney for First Republic stated unequivocally that there was never an intent to provide security for the judgment against Modern Deb. Counsel for Musman never stated directly at the hearing that the clients intended to secure the judgment against Modern Deb, nor was any other evidence adduced warranting that conclusion. We note further that the failure to call the young attorney who drafted the stipulation in order to ascertain the intent of the parties cannot be held against First Republic. That attorney was not a party to the conversations embodying the agreement, and his function was merely that of scrivener. Logic would also impel the conclusion that the parties intended not to secure the judgment against Modern Deb. Modern Deb was concededly insolvent and no useful purpose would be served by providing security for it. Furthermore, First Republic’s position on the initial appeal to this court was to cast liability on Modern Deb and away from itself. That position, which was accepted by this court on appeal, would of necessity continue to cast Modern Deb in liability and assure affirmance of the judgment against it while relieving First Republic of liability. First Republic could logically, therefore, not intend to post security on behalf of a defendant which it reasoned would remain liable, since the terms of the stipulation would then require it to turn over the escrow posted to Musman. In sum, the conclusion of the Referee was against the weight of the credible evidence adduced at the hearing. Judgment should be entered in favor of the defendants. Concur—Kupferman, Lane and Sullivan, JJ.