Opinion
June, 1935.
Appeal from Supreme Court, Warren County.
Appellants, beneficiaries under a trust created in the will of George H. Parks, deceased, appeal from an order denying their motion to intervene as parties defendant. This suit is brought to foreclose plaintiff's lien upon stocks and bonds held by it as collateral to the notes of the defendant Grace M. Parks, widow of George H. Parks, deceased, and one of the two trustees named in his will. The defendant bank is the substituted trustee under the will. The widow Parks pledged for her indebtedness to plaintiff certain shares of stock. These belonged to her individually. She had converted and wrongfully taken from the trust funds bonds issued by the Baltimore and Ohio Railway and others issued by a building corporation. These she had likewise pledged to plaintiff. In an earlier action it has been decided that the plaintiff in this action is the bona fide holder for value of the bonds pledged to it by the widow Parks but which she had purloined from the trust estate. The proposed answer presented by the appellants seeks to litigate anew the issue decided in the earlier action. For that reason the motion to intervene was properly denied. If the indebtedness of the widow Parks to the plaintiff exceeds the total of all the securities, the marshalling of the assets by the plaintiff in satisfying its debt would be an empty formality. However, if the value of all of the securities, those belonging to the widow Parks and those which she purloined and pledged exceeds the amount of her debt to the plaintiff, then as between this plaintiff and trust estate, the individual property of the widow Parks should first be exhausted before recourse is had to that which she converted from the trust estate. The Emerson National Bank of Warrensburg, the substituted trustee, is a necessary party in this foreclosure suit. The appellants, beneficiaries under the trust, are proper parties, if there be an issue to litigate. However, they should not be permitted to intervene and litigate issues already decided.
Order affirmed, with costs. The affirmance is without prejudice to the making of a new application accompanied by an answer which raises only the unlitigated issue.
Hill, P.J., Rhodes, Crapser and Heffernan, JJ., concur; Bliss, J., dissents with a memorandum.
I must respectfully dissent from the decision for affirmance and vote to reverse the order below and to grant the appellants leave to intervene. My reasons are as follows:
Section 193, subdivision 3, of the Civil Practice Act provides "Where a person not a party to the action has an interest in the subject thereof, or in real property the title to which may in any manner be affected by the judgment, or in real property for injury to which the complaint demands relief, and makes application to the court to be made a party, it must direct him to be brought in by the proper amendment."
This section is mandatory. The court below had no discretion. The statute provides that the court " must direct him to be brought in by the proper amendment."
Of course, these appellants are the real parties in interest. They have been quite generally disregarded up to this point. Their moneys have been stolen, as they state in their application to intervene, "at the suggestion of an officer of said bank, to wit: A.W. Sherman, then cashier or president thereof, for the sole purpose of giving color of ample security for the loans to said Grace M. Parks, and with full knowledge that said bank received no actual title thereto." It is quite true that this plaintiff in an abortive effort to confirm its possession of the trust bonds brought an action against the substituted trustee for a declaratory judgment and that in such action it was found that the plaintiff bank was a bona fide holder for value and in due course of these bonds. The plaintiff, however, apparently was not satisfied with this holding and judgment in its favor obtained in an action to which these petitioning interveners were not parties. It now starts a new action in which it alleges not that it was the owner and holder in good faith of these trust bonds, not that it had title to them or was the owner of them, but that it held them as a pledgee. It is not, as is stated in the decision, the appellants who seek to litigate anew the issue decided in the earlier action, but rather it is the plaintiff bank. It apparently realizes the weakness of its position. Its present contention is entirely inconsistent with its rights as declared under the declaratory judgment.
Nor do I think that we may attach conditions to the rights of these appellants to intervene. Either they have the right to come in and defend or they have no such right. The statute by positive language gives them the right to intervene. Once they are in, the sufficiency of their answer may be passed upon, but I know of no right lodged in this court to attach conditions to their statutory right of intervention.
I vote to reverse the judgment and order appealed from and to grant appellants' motion to intervene as parties defendant.