Opinion
November 8, 1912.
Joseph H. Kohan, for the appellants.
Robert H. Ernest [ Raymond B. Stringham with him on the brief], for the respondent.
The trustee in bankruptcy of Wolf Sayetta alleges in separate counts two causes of action against the defendants, who were creditors of the bankrupt. The first is to recover the value of a stock of goods, which it is alleged the bankrupt, in furtherance of a conspiracy formed between him and one Taylor, who was acting as the agent of and representing the defendants, transferred with the advice and aid of defendants and in the presence and with the assistance of said Taylor in fraud of his creditors; and the second is for that part of the proceeds of the sale of the goods which came into the possession of the defendants within four months of the bankruptcy, upon the ground that it constituted an unlawful preference under the Bankruptcy Act, in that the defendants knew that the bankrupt was then insolvent, and fraudulently intended to give them a preference, and did prefer them. In the first count it is further alleged that the value of the goods was $5,500; that the bankrupt's indebtedness to the defendants was the sum of $513.21; and that they received that amount from the proceeds of the sale of the goods, and through their said agent distributed the balance among some of the creditors of the bankrupt in part payment of their claims, and have refused after due demand to pay to the plaintiff the amount so received. The plaintiff demands judgment under the first count for the value of the stock of goods, and under the second count for the amount received by the defendants.
The amended answer put in issue most of the material allegations of the complaint, and pleaded as a first defense that the second cause of action did not arise out of the same transaction as the first, nor out of a transaction connected with the same subject, and that the first cause of action is not consistent with the second, and that, therefore, causes of action have been improperly united. It is not necessary to consider the merits of that objection, for the basis for the objection, if any, appears on the face of the complaint, and the defendants might have demurred on the ground that causes of action have been improperly united therein (Code Civ. Proc. § 488), and by not demurring on that ground they waived it, for they could only take it by answer where the defect did not appear on the face of the complaint. (Code Civ. Proc. §§ 498, 499.) The case of Seamans v. Barentsen ( 180 N.Y. 333) merely holds, as is expressly provided in section 499 of the Code of Civil Procedure, that where the objection goes to the sufficiency of the cause of action it is not waived even though it be not taken by demurrer or answer. The demurrer to that defense was properly sustained.
It is alleged, as a defense to the first cause of action, that the defendants and said Taylor were jointly and severally liable on that cause of action, and that the plaintiff, as trustee in bankruptcy of said Sayetta, brought an action in the Municipal Court of the city of New York, borough of Brooklyn, fifth district, against said Taylor, and demanded judgment against him on the facts alleged in said first cause of action, and duly recovered judgment therein for the sum of seventy-three dollars and ninety cents, which was paid and duly satisfied of record by said Taylor, and that thereby the defendants have been discharged and released from liability on that cause of action. We are of opinion that the court erred in sustaining the demurrer to this defense, which was on the ground of insufficiency. It is well settled that while joint tort feasors are liable jointly and severally, if sued separately there can be but one satisfaction. ( Woods v. Pangburn, 75 N.Y. 495; Barrett v. Third Avenue R.R. Co., 45 id. 628; Gross v. Pennsylvania, P. B.R.R. Co., 65 Hun, 191.) The learned counsel for the respondent contends in this behalf that it is not sufficiently alleged that the recovery was on the same cause of action. This defense contains no denial of any of the allegations of the complaint, and it expressly refers to the facts alleged in the complaint as thus admitted, to show that the causes of action were the same, which is sufficient without realleging them; and on demurrer to a separate defense the allegations of the complaint to which the defense is pleaded as well as the allegations of the defense are to be taken as true. ( Schattman v. Maze Realty Co., 150 App. Div. 559; 31 Cyc. 215; Douglas v. Coonley, 156 N.Y. 521, 528.) It is quite true that the bare allegation that the defendants and Taylor were jointly and severally liable is not a statement of fact; but on examining the first count of the complaint it clearly appears that Taylor was the actor in the matter, and, therefore, his liability would be co-extensive with that of the defendants. The amount of the recovery against Taylor is quite immaterial. Of course, Taylor would not be liable for the failure of the defendants to pay over to the plaintiff the amount they received from the proceeds of the sale of the goods, but he was jointly and severally liable with them to the plaintiff for the value of the goods, and the first cause of action was evidently framed to recover that amount.
The defendants reallege these facts by reference as a defense to the second cause of action. In the second count of the complaint many of the facts alleged in the first count are realleged by reference. It is thus alleged that Taylor was the agent of the defendants at the time, but it is not alleged by reference or otherwise, that he conspired with Sayetta, or otherwise participated in the disposition of the stock of goods. It is merely alleged that Sayetta disposed of the goods with intent to defraud his creditors, with the knowledge and consent of the defendants, and out of the proceeds of the sale Taylor received the sum of $1,300, and within four months prior to the adjudication in bankruptcy, paid over $513.21 of the amount to the defendants in settlement of their claim against the bankrupt, who was known to the defendants to be insolvent, and that defendants received the money knowing that it was intended thereby to prefer them over other creditors, in that they knowingly received a greater proportion of their claim than the proportion received by other creditors, and that the return of the money has been demanded and refused. These allegations do not establish that the recovery of the judgment against Taylor was on the same cause of action as that alleged in the second count of the complaint, for they utterly fail to show the basis of the recovery against him; but the defense now under consideration does reallege by reference the fact that the recovery against Taylor was had upon the ground that he conspired with and assisted the bankrupt in so disposing of the stock of goods and in so doing was acting as the agent of the defendants. The trustee in bankruptcy may have had an election whether to sue the joint tort feasors jointly or severally or whether he would hold the defendants for the amount they received being part of the proceeds of the fraudulent sale as an unlawful preference, but he could not recover on both theories. Having had a satisfaction as to one of those jointly liable it is the same as if he had had satisfaction against all or against the defendants. If he had elected to hold the defendants as he did Taylor for the value of the goods he could not thereafter recover such value, viz., the proceeds of the sale of the goods if received by them on the theory that they thereby received an unlawful preference. In legal effect that is the situation here. It is precisely the same as if plaintiff had recovered the sum of $513.21 of the defendants on account of their having fraudulently conspired with the bankrupt to dispose of his goods in fraud of his creditors, for the amount sought to be recovered by the second count is alleged to be that part of the fruits of the conspiracy which came to them. It is the plaintiff's misfortune if he failed to prove or recover the full value of the goods in his action against Taylor.
The defendants pleaded as a further defense to the second cause of action that the "facts and matters stated in the second cause of action are the same facts and matters stated in the first cause of action," and that the plaintiff seeks to recover, in the first cause of action, the amount specified in the second cause of action. These averments constitute no defense. There is no denial of any material allegation of either cause of action alleged in the complaint, and no new matter is set up. The demurrer thereto was, therefore, properly sustained.
The defendants then pleaded, as a setoff to the complaint, the facts alleged as a defense to the first cause of action, namely, the recovery and satisfaction of the judgment against Taylor. I see no legal objection to pleading the facts thus pleaded as a defense, which we regard as a complete defense to both causes of action, as a setoff to both causes of action, but, of course, that was unnecessary, for pleading the facts in bar was more effective than interposing the judgment as a setoff, which limits its use to reducing a recovery. If, however, the defendants had not seen fit to plead a judgment in bar which was available as a complete defense, they were at liberty to use it as a setoff ( Knapp v. Roche, 94 N.Y. 329), and they are not deprived of pleading it as a setoff merely because they pleaded it in bar.
It follows that the interlocutory judgment in so far as it sustains the demurrer to the defense to the first and second causes of action and to the setoff should be reversed and the demurrer overruled, with leave to plaintiff to withdraw the demurrer on payment of costs of the demurrer and of the appeal and in all other respects it should be affirmed, without costs.
INGRAHAM, P.J., McLAUGHLIN, CLARKE and SCOTT, JJ., concurred.
Judgment reversed to the extent stated in opinion, and in other respects affirmed, without costs. Order to be settled on notice.