Hinkle Iron Co. v. Kohn

• Decision Date: 01 June 1920
• Citation: 229 N.Y. 179,128 N.E. 113
• Parties: HINKLE IRON CO. v. KOHN.
• Court: New York Court of Appeals Court of Appeals

229 N.Y. 179

128 N.E. 113

HINKLE IRON CO.

v.KOHN.

Court of Appeals of New York.

June 1, 1920.

Action by the Hinkle Iron Company against Otto M. Kohn. From an order of the Special Term, denying defendant's motion for judgment on the pleadings, defendant appealed to the Appellate Division, which reversed, with leave to plaintiff to amend (184 App. Div. 181,171 N. Y. Supp. 537), and plaintiff appeals.

Judgment reversed.

Appeal from Supreme Court, Appellate Division, First Department.

James W. McElhinney, of New York City, for appellant.

C. Bertram Plante and Harry Edwards, both of New York City, for respondent.

COLLIN, J.

A brief, yet adequate, statement of the facts alleged in the complaint is: A contractor corporation assigned to the plaintiff November 10, 1915, by the hand of the defendant, its and as its president, the sum of $4,500 out and a part of a designated payment to become due the corporation under a contract between it and the city of New York. The assignment was not filed. The corporation, at the hand or with the knowledge of the defendant, received between December 31, 1915, and January 20, 1916, the payment in a check or warrant, which the defendant properly indorsed and caused to be deposited in the bank to the credit of the corporation. The corporation paid the plaintiff $2,500, and no more, on account of the assigned sum. The defendant, with knowledge of the facts, ‘fraudulently, wrongfully, unlawfully, and in violation of his duty and obligation as trustee of said corporation, and as to said plaintiff, and also of his promise to said plaintiff, drew and signed the checks of the corporation, whereby all of the balance of said eighth (the designated) payment was drawn out and applied to the use and benefit of said defendant and the said’ corporation. The corporation was about September, 1917, adjudicated a bankrupt, and its assets will not be sufficient to pay the balance due the plaintiff. A due demand and refusal preceded the commencement of the action. The defendant demurred to the complaint upon the ground that it failed to state a cause of action. The Special Term judgment overruled the demurrer. The Appellate Division by a nonunanimous decision reversed the judgment and directed judgment dismissing the complaint.

[1] The facts alleged constitute a cause of action. The designated fund-the eighth payment by the city-while an expectancy, was not a mere possibility coupled with no interest. The performance of an obligatory contract would produce it. It is sufficient that there be a reasonable expectancy that the debt will be earned and the fund come into existence. The instrument of assignment was not an agreement by the contractor to pay its debt to the plaintiff out of the designated payment. It consisted of words of transfer rather than of contract. It, as between the parties to it, operated as an equitable assignment, and in equity created an ownership in the plaintiff of so much of the designated fund, when created, as was specified and assigned in it. Field v. Mayor, etc., of New York, 6 N. Y. 179, 57 Am. Dec. 435;Stover v. Eycleshimer, 42 N. Y. 620;Kimball v. Farmers' & Mechanics' National Bank of Buffalo, 138 N. Y. 500, 506,34 N. E. 337,20 L. R. A. 497;Crouch v. Muller, 141 N. Y. 495, 36 N. E. 394.

[2][3] Under the law of this jurisdiction the creation of such ownership did not depend upon the consent of the city to, or the filing of, the assignment. Nor was it affected by the fact that the debt was to be created and the payment was to become due, or that the assignment was of a part only of the designated payment. The test of an equitable assignment is the inquiry whether or not an assignment makes an appropriation of the fund, so that the debtor would...