Opinion
February 15, 1926.
Medina Sherpick, for the plaintiff.
Shearman Sterling, for the defendant Cortland Betts.
Graves, Miles Yawger, for the defendant Telfair W. Marriott.
Early in the year 1925 the administrators of Henry T. Keyser commenced an action in equity in which they sought the cancellation of a certain promissory note in the sum of $150,000, alleged to have been made by the decedent to the order of Catherine Genin Burke. It was claimed by them that the note was then not yet due and they averred (1) that it was executed at a time when Keyser was mentally incompetent, and (2) that it was made and delivered without consideration. The complaint also demanded judgment that the defendant Burke be enjoined from negotiating the note or from bringing any action to enforce its payment. A motion was thereafter made by the administrators for an injunction pendente lite, seeking the very relief in part that was demanded by the prayer of the complaint, which said motion was denied on the condition that the note be deposited in escrow pending the outcome of the action to cancel it, with a provision directing the escrow agent to produce the note on the demand of the defendant Burke on the trial of any action in which she might desire to offer it in evidence.
Soon after the note became due and during the pendency of the equity action in which, by the way, issue has not yet been joined, an action on the note was commenced by Miss Burke against the administrators. They now move in that very action (1) for an order staying all proceedings until the final determination of the equity suit, and (2) for an order dismissing the complaint on the ground that there is another action pending between the same parties for the same cause. In so far as they seek a dismissal of the complaint on the ground urged, they are entirely without merit, in view of the well-settled rule that the plaintiff in one action must be the plaintiff in the other, and the defendant in the one the defendant in the other. ( Westminster Church v. Presbytery of New York, 211 N.Y. 214; Cornell v. Bonsall, 176 A.D. 798.) In the Cornell case, however, the plaintiff in the second action had pleaded the identical cause of action as a counterclaim in the first action, and the court properly stated that the counterclaim in the first action was equivalent to another action pending on the part of the defendant there, who set up such counterclaim. The appropriate test for determining whether the defense in another action pending is sufficiently made out has been expressed in somewhat different form in the case of National Fire Ins. Co. v. Hughes ( 189 N.Y. 84). The Court of Appeals there pointed out that the defense of a prior action pending is not made out by showing merely that a judgment in favor of the plaintiff in the prior action would bar the defendant's action on his claim. The court (at p. 91) declared, citing Consolidated Fruit Jar Co. v. Wisner ( 38 A.D. 369), that "`It must further appear that a judgment therein in favor of the defendant therein, even if it were only a dismissal of the complaint on the merits, would be a bar to such new action by defendant. It is optional with the defendant whether he will set up a counterclaim or bring a cross action therefor.'" Applying that test to the instant case, we find that a judgment for the defendant in the equity action would not bar such defendant's action on the note since no counterclaim has been set up in that litigation. It is well established that there was no obligation on the part of the defendant Burke to counterclaim in such equity suit. ( Brown v. Gallaudet, 80 N.Y. 413; Consolidated Fruit Jar Co. v. Wisner, supra.)
That feature which seeks a stay of the action upon the note until final judgment in the equity cause, also falls foul of the authorities. No extended discussion is necessary in support of the proposition that an action will not be stayed merely because the plaintiff therein, had he so desired, might have set up the cause of action alleged in his complaint as a counterclaim in a prior action commenced by the defendant. Obviously, it is only where a decision in the action sought to be continued would finally determine all questions presented in the other action, that a proper case for the stay is presented. ( Dolbeer v. Stout, 139 N.Y. 486; Rosenberg v. Slotchin, 181 A.D. 137.) True it is that a judgment in favor of the plaintiffs in the equity action would constitute a bar to the further prosecution of the law action. But a judgment in favor of the defendant in the equity action would still leave the law action to be tried and determined, in which the administrators might set up, in addition to the defense constituting their cause, new defenses not averred in the equity complaint. It, therefore, follows that the final determination of the equity suit would not necessarily terminate the litigation between the parties. (See, also, Raymore Realty Co. v. Pfotenhauer-Nesbit Co., 139 A.D. 126; Walkup v. Mesick, 110 id. 326; Jones v. Leopold, 95 id. 404.) It may also be observed that mere priority in action is insufficient to entitle the prior plaintiff to stay the subsequent action against him. This follows as a corollary to the well-established principle, already adverted to, that a defendant may choose to set up his counterclaim against the plaintiff in a separate action brought by such defendant rather than as a counterclaim in the action instituted against him. ( Ogden v. Pioneer Iron Works, 91 A.D. 396; Rosenberg v. Slotchin, supra.) Under the circumstances the motion must be denied.