Vilas v. Plattsburgh & M.R. Co.

• Decision Date: 02 December 1890
• Citation: 25 N.E. 941,123 N.Y. 440
• Parties: VILAS et al. v. PLATTSBURGH & M. R. CO. et al.
• Court: New York Court of Appeals Court of Appeals

123 N.Y. 440

25 N.E. 941

VILAS et al.

v.PLATTSBURGH & M. R. CO. et al.

Court of Appeals of New York.

Dec. 2, 1890.

These are appeals from orders of the general term of the third department affirming orders of the special term denying motions to vacate a judgment of the special term in this action against George B. Chase for the sum of $52,803.73, rendered June 4, 1880, and also the judgment of the general term affirming said judgment, rendered July 21, 1883, and to set aside and vacate an appearance in said action for said Chase by John N. Whiting as his attorney therein. One motion is made by Chase to vacate the judgments on the ground that the appearance by Whiting was unauthorized. The other motion is made by the sole executrix, devisee, and legatee of John N. Whiting, now deceased, to permit the appearance by him to be withdrawn, and also to set aside and vacate the judgment on the ground that his appearance was made upon the representation of John B. Page, one of the defendants, that he was authorized by Chase to employ an attorney to appear for him, and that the appearance was made in good faith, although without actual authority. The action was commenced June 24, 1875. The defendant, Chase, was, at the time, and has ever since been, a non-resident of this state, and he was never served with process in the action, nor was any jurisdiction ever acquired over him therein, unless by virtue of the appearance of Whiting. The facts upon which the action was based are very complicated. They are set forth in the report of the case, on appeal to this court, in 106 N. Y. 440, 13 N. E. Rep. 743. In general terms, it may be stated that the action was brought to enforce an alleged lien in favor of Samuel F. Vilas upon the railroad, rolling stock, and property formerly of the Plattsburgh & Montreal Railroad Company, but which had become vested in the Delaware & Hudson Canal Company, as lessee, under a perpetual lease. The several corporations which, from time to time, had succeeded to the rights, property, and franchises of the Plattsburgh & Montreal Railroad Company were made defendants in the action, as were three individuals, viz., John B. Page, Peter Butler, and George B. Chase. The individual defendants were joined as parties upon the theory that in certain dealings between themselves and parties interested in the property upon which the lien was claimed, they had bound themselves to pay the lien debt in case the lien should be established, which obligation inured, as was claimed by Vilas, to his benefit, and was enforceable in his favor, although he was not a party to the transaction. Briefly stated, the transaction relied upon to establish the personal liability of the individual defendants was this: Page, Butler, and Chase, on the 13th of September, 1867, after the foreclosure and sale of the Plattsburgh & Montreal Railroad, and the purchase thereof by the first mortgage bondholders, but before a conveyance had been made, pursuant thereto, entered into an agreement with the holders of the bonds by which they became the owners thereof, and substituted to the rights of the original bondholders, and which agreement provided for the organization of a new corporation, to which the property should be conveyed. The judgment in the foreclosure suit left open the question as to the title of Vilas to certain rolling stock of the Plattsburgh & Montreal Railroad Company, which he claimed under an execution sale, and that question, although in litigation in the foreclosure action, was undecided when the agreement of September 13, 1867, was made. If Vilas should establish his title in the foreclosure action, then, by an arrangement made as early as 1858 between the parties to the foreclosure and the receiver, Vilas was to have a lien on the property for an amount fixed, with interest, representing the value of rolling stock purchased by him, which was in the possession of the receiver. In view of this contingency, the agreement of September 13, 1867, provided: ‘The purchasers [Page, Butler, and Chase] are to assume the prosection of that suit, [the Vilas litigation in the foreclosure action,] and to abide its result and judgment, and, if there should be any recovery in said Vilas' favor, the purchasers agree to indemnify the said parties of the first part and said Platt, as receiver, against the same.’ The Vilas branch of the foreclosure suit was finally determined in his favor in 1873, and his title was sustained, (54 N. Y. 314,) but no personal liability was adjudged against the receiver or the vendors of the bonds. It was mainly upon this clause in the agreement that Vilas relied in the present action to sustain the contention that the individual defendants were personally liable for his debt.

The plaintiff, on the trial of the present action at special term, had judgment in his favor establishing his debt at the amount of $52,803.73, and adjudging that the individual defendants were, as between themselves and the corporate defendants, primarily liable therefor, and judgment was rendered against them for that amount, with a subsidiary judgment subjecting the railroad and property of the Plattsburgh & Montreal Railroad Company in the possession of the defendant the Delaware & Hudson Canal Company to a lien for the same debt. The general term having affirmed this judgment, an appeal was taken therefrom by all the defendants except Chase to this court, and here the judgment was reversed as to the defendants Page and Butler, and affirmed as to the corporation defendants. The substance of the decision was that the individual defendants had incurred no personal liability, but that the property was chargeable with a lien for the debt due to Vilas. Chase not having appealed to this court, the judgments of the special and general terms, as against him, stood in form unreversed, charging him with a very large indebtedness, from which the other individual defendants, standing under the same liability, and no other, had been relieved. The moving papers show- First, that, when the action was commenced, Chase resided in Massachusetts, and was, and ever since has been, a non-resident of this state; second, that he was never served with process in the action, and had no knowledge or information whatever as to the existence of the action or of any judgment against him until February, 1881, when an action on the judgment of the special term, rendered June 4, 1880, was brought by Vilas against him in the courts of Massachusetts; third, that he never directly or indirectly authorized Whiting to appear for him in the action; he neither knew Whiting, nor had ever seen or heard of him prior to the commencement of the suit in Massachusetts; nor did he give any authority to Page to employ an attorney to appear for him. The explanation of the conduct of Whiting is furnished in the affidavits. He was employed by Page to defend the action, and entered his appearance for Chase by his direction, believing him to have authority to act for his co-defendants. The affidavits show that the relations between Page and Chase were at that time very hostile, and so continued. Relief was denied by the special and general terms merely on the ground of laches on the part of Chase in making the application.

The following is a brief statement of the facts presented bearing upon the point of laches: As has been stated, the first notice or knowledge Chase had of the suit was in February, 1881, when the action on the judgment was commenced in Massachusetts. He immediately employed an attorney, who went to New York and saw Whiting, who informed him of the circumstances under which he had appeared for Chase. At this time, the case had been appealed by Whiting to the general term in the name of all the individual defendants, and the appeal was then pending. The agent of Chase informed Whiting that Chase had never authorized an appearance for him in the action, and notified Whiting that Chase gave him no authority to prosecute the appeal to the general term taken in his name, and that, if he went on with it, he would do so with out authority from Chase. Chase put in an answer in the Massachusetts suit which, among other things, averred that the New York court never had or acquired jurisdiction of his person or property so as to render a valid judgment against him. The case stood for trial for about the period of two years, the defendant meanwhile urging it on, when the plaintiff applied to be nonsuited, and a nonsuit was granted. The affidavit of Mr. Dabney, the attorney for Chase in the Massachusetts suit, states that the attorneys for the plaintiff in that case understood that the defense was that Chase had not been served, and that Whiting's appearance for him was unauthorized, and that the attorneys for Vilas informed him that they were nonsuited because they could not induce Page to go to Boston to testify in that case, and there is no denial of these facts. In 1883, after the judgment of the special term in this action had been affirmed by the general term, Mr. Whiting wrote to Chase, asking him if he desired an appeal on his behalf to be taken to the court of appeals, and Chase replied that he did not recognize the right or authority of Mr. Whiting to appear for him in the action, and therefore did not wish any appeal to be taken for him. The moving affidavits charge, upon facts stated in connection therewith, that both Vilas and the Delaware & Hudson Canal Company were informed soon after the judgment was rendered at special term that Chase claimed that he was never served, nor authorized any appearance in the action, and the opposing affidavits make no averment or denial on the subject. The judgment of the court of appeals was rendered in October, 1887. Subsequently, the Delaware & Hudson Canal Company, the lessee of the property charged with the lien, paid the amount thereof, and took from the plaintiffs an assignment of the judgment...