Utica City National Bank v. Penwarden

103 Misc. 103
CourtNew York County Courts
DecidedMarch 15, 1918
StatusPublished
Cited by3 cases

This text of 103 Misc. 103 (Utica City National Bank v. Penwarden) is published on Counsel Stack Legal Research, covering New York County Courts primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Utica City National Bank v. Penwarden, 103 Misc. 103 (N.Y. Super. Ct. 1918).

Opinion

Hazard, J.

The' judgment roll, offered in evidence by defendant and received, shows that this plaintiff has, as is claimed by the answering defendant, brought an action against his co-defendant herein and former partner, and that a judgment was taken therein. There can hardly be room for doubt but that the indebtedness upon which that action was founded and upon which this one is founded is identical. This is practically admitted by the plaintiff herein, who claims however that that judgment is not a bar to this action. An examination of the judgment roll in the former action, which was received in evidence herein as defendant’s Exhibit 1, shows that the complaint alleged that on or about September 7,1916, the defend[105]*105ant (Penwarden) presented to jdie plaintiff the note set forth in the complaint in this action, and requested plaintiff to discount it. It alleges that the defendant represented that it was the note of Penox Roofing Company, Inc., which was a corporation, and that it bore the genuine signature of Harry A. Fox; that such representations were false in that the Penox Roofing Company, Inc., was a't no time a corporation but was a fictitious name under which Penwarden was doing business and that the signature of Fox on the note was a forgery; that these representations were known by defendant to be false, and that they were made with intent to deceive; that the plaintiff relied upon such representations and believed them to be true and thereupon discounted the note; that the note was not paid at maturity and remains unpaid; that “ by reason of the premises ” the plaintiff has been damaged to the extent of the amount of the note and interest and protest fees and judgment is demanded accordingly. That action was undoubtedly in tort based upon the theory that the defendant had damaged the plaintiff bank by procuring the discount of a note purporting to have been made by a corporation which did not exist, and also by the forged indorsement of Fox. The present action, while concededly founded upon the same note, is upon contract and is based upon the theory that the note in question was the note of these defendants as copartners; that the name Penox Roofing Co., Inc.,” was in fact their copartnership name; and all this is admitted by the answer of the contesting defendant in this action.

The question is thus presented as to whether the judgment in the action in tort against Penwarden is here available as a defense to his partner Fox in this action against the firm upon the note. The general rule is, that a judgment against one of the several

[106]*106joint debtors, in an action against Mm alone, is a bar to an action against Ms co-joint debtors. There are involved in this, questions of election of remedies, of estoppel, and of merger and bar. Undoubtedly as to the note in suit here, the defendants are joint debtors; but it does not appear that Fox was involved or implicated in the tort which was the basis of the former action. It is inaccurate to say, as defendant’s attorney does in his brief, that the tort action was ‘ ‘ founded upon the same note.” That action was founded upon the tort, the fraud, in which, apparently, Pen-warden only was involved. It is true that the note was employed or involved in the tort, but incidentally only and as a means of perpetrating the wrong. Under these circumstances it seems clear to me that the facts established in this case take it out of the general rule and make this case exceptional. It is difficult to see why Fox should be permitted to' avoid the legal liability on his firm’s note, because Ms partner had employed that note in perpetrating a fraud. If Pen-warden did, as is established by the judgment in the tort action, procure some money from the plaintiff by representing that the note he offered for discount was the note of a corporation, when no such corporation in fact existed, and also by a forged indorsement of Fox, that is a matter personal with Penwarden and in which he solely is liable in tort. If after prosecuting that action to judgment plaintiff discovers that the note was in fact that of a firm, it would not seem that the plaintiff should be barred from prosecuting a civil action against the firm. The doctrine of estoppel and of election of remedies both involve a conscious selection, a choice and a determination entered into by the party barred with full knowledge of the facts involved. Albany Hardware & Iron Co. v. Day, 11 App. Div. 230; Remmel v. Townsend, 83 Hun, 353; [107]*107Heckemann v. Young, 134 N. Y. 173 ; Candee v. Smith, 93 id. 351.

Nothing of that sort occurred in connection with the bringing of the former action, for it is alleged therein that Penwarden falsely represented that the Pen ox Boofing Company, Inc., was a corporation and that the plaintiff acted in reliance upon that statement.

It seems to me that the legal principles involved are not to be differentiated from those set forth in Morgan v. Skidmore, 3 Abb. N. C. 92, where the questions involved herein are discussed at length by Judge Rapallo. It seems to me that upon the authority of that case the plaintiff should prevail here. There is not wanting other authority to the same general effect, as the case of Morgan v. Skidmore seems to be regarded as controlling authority and is followed as such.

In Goldberg v. Dougherty, 7 J. & S. 189, defendant, a member of a firm, hád made certain false representations concerning the value of certain bonds, which plaintiff relied on, and purchased the bonds with an agreement that the vendors, defendant’s firm, would purchase at same price at any time within six months. It was alleged that an action had been brought upon said agreement and a judgment recovered which remained unpaid. This action was to recover damages for fraud. A demurrer was overruled and this was affirmed by the New York Superior Court on appeal.

In Johnson v. Luxton, 9 J. & S. 486, it is said: ‘ ‘ The fact that fraud is committed in inducing a person to become bound by a contract, does not destroy a legal liability in damages for fraud, while the liability upon the contract also is unimpaired.”

In Cohn v. Goldman, 11 J. & S. 445, it is said that “ It is only in the case of partners, where one procures credit for his firm by false and fraudulent representa[108]*108tions, that a recovery on contract against the members of the firm jointly is considered no bar to an action against the individual partner to recover the damage sustained by his fraud.”

In Matter of Pierson, 19 App. Div. 487, the court said: “ The election of one remedy against the firm may preclude the other, and so the election of one remedy against the individual may preclude the other. But the election against the individual is here made for the first time and is in tort.”

Walden National Bank v. Birch, 130 N. Y. 221, was an action to recover from defendants as sureties on a cashier’s bond the value of certain securities alleged to have been converted by him. A judgment had been obtained by the plaintiff bank upon certain notes involved in the cashier’s transactions, which judgment was unpaid. Held, that the plaintiff had two causes of action against the cashier, one on the note and the other for misappropriating the security collateral to the note. Held, that these remedies were concurrent and not inconsistent.

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Bluebook (online)
103 Misc. 103, Counsel Stack Legal Research, https://law.counselstack.com/opinion/utica-city-national-bank-v-penwarden-nycountyct-1918.