LEO OPPENHEIMER, as Trustee in Bankruptcy of the Estate of FRANK SQUIER, Respondent,
CARABAYA RUBBER AND NAVIGATION COMPANY, Appellant. (No. 1.)
APPEAL by the defendant, Carabaya Rubber and Navigation Company, from an order of the Supreme Court, made at the New York Special Term and entered in the office of the clerk of the county of New York on the 17th day of March, 1911, directing that the issues raised by the pleadings herein be sent to the Special Term for trial and denying the said defendant's motion for a stay.
William M. Bennett, for the appellant.
Abram I. Elkus, for the respondent.
This action by the trustee in bankruptcy of Frank Squier is brought to recover the amount of a promissory note executed by the defendant corporation to the order of itself and indorsed by it. This note came into the possession of plaintiff among other assets of said Squier, who died soon after the appointment of his trustee in bankruptcy. The defense to the note consists of what are apparently merely formal denials designed to put plaintiff to his proofs. The defendant, however, sets up in various forms an equitable counterclaim by way of set-off
to whatever sum may be found to be due upon the note. The facts upon which these counterclaims rest are alleged to be the following: That from the time of the organization of defendant in August, 1904, and until July 14, 1908, the said Frank Squier was treasurer of defendant and took an active, leading and influential part in its management and was implicitly trusted by said defendant, its stockholders and officers; that said defendant was the owner of and entitled to certain properties in the Republic of Peru, consisting, inter alia of certain rubber forest concessions; that in 1905 defendant and its stockholders and directors determined to sell said properties, and to that end the defendant in 1906 created said Squier its attorney in fact to sell said properties; that in the year 1906 one Turner, without disclosing for whom he was acting, proposed to purchase said properties for £40,000 sterling in cash and a like amount in stock of a company thereafter to be formed; that defendant accepted this proposition not knowing, what was the fact, that said purchase was made by said Turner as the agent of and for the benefit of said Squier; that thereupon said Squier, still being treasurer of defendant, made an agreement in England with one Sir George Newnes for the creation of an English company to take over the properties of defendant, together with other properties, and that any profits, after paying the agreed purchase price for said properties, should be divided equally between said Sir George Newnes and said Squier. It is further alleged that this agreement was carried out; that a corporation known as 'The Inambari Para Rubber Estates, Limited,' was organized, which undertook to pay to defendant the price at which said defendant had agreed to sell its properties to said Turner, and to divide a large sum in cash and stock between the said Sir George Newnes and said Squier. It is said that a considerable part of this profit, alleged to be upwards of $48,000, has already been paid to said Squier, and that more remains due. The contention of course is that Squier having been intrusted with the sale of the property as defendant's agent, could not lawfully become the secret purchaser thereof, and that, having done so, defendant is entitled to the benefit of his operations. This action was begun in July,
Fogarty, 134 A.D. 500.) It was entirely proper to send the equitable issues to the Special Term for trial. (Goss v. Goss & Co.,126 A.D. 748; Cohen v. American Surety Co., No. 1, 129 id. 166-176; Code Civ. Proc. § § 966-973.) The defendant insists, however, that it was erroneous to transfer the issues raised by the complaint and denials to the Special Term for trial. Strictly speaking, this contention is right, although in the present case it appears to be unlikely that any question will arise for determination by a jury. A more serious question arises out of the appeal to the discretion of the court to stay the trial of any of the issues in this action until after the trial and decision of the English action. If that action was pending in a country in which the system of jurisprudence was not so closely analogous to our own, we should not be disposed to entertain the application at all, but, as it is, we may be assured that the decision in the English Court of Equity will proceed upon the same rules and principles that obtain in the courts of this State. Under such circumstances it is not a complete answer to the application that one of the actions is pending in another jurisdiction. (Allentown Foundry & Mach. Works v. Loretz,16 A.D. 72.) It is an important circumstance, and one entitled to much weight, that Squier's estate is insolvent, and it is of no moment that the claim sought to be set off arises out of a different transaction and is unliquidated. (Central Apalachian Co. v. Buchanan,90 F. 454; Assets Realization Co. v. City of Buffalo,118 A.D. 571.) It is also an important consideration in the present case that the defendant's entire claim cannot be enforced in this action, and that most of the transactions involved in the controversy took place in England, and that most of the witnesses reside there. It is true, as is pointed out by the respondent, that this ...