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December 1, 1943

PUGET SOUND CO., Inc., et al.

The opinion of the court was delivered by: KNIGHT

KNIGHT, District Judge.

This is an action of interpleader. The defendants, Puget Sound Company, Inc. (hereinafter called Puget), and Frank J. Maguire, as executor of the estate of Gertrude B. Zulauf, deceased, have each answered separately claiming title to the sum of $7,500 deposited with the court by the plaintiff, Globe Indemnity Company (hereinafter called Globe). The defendant, Nathan E. Blodgett, has not appeared.

Heretofore, upon plaintiff's motion, an order was made releasing the plaintiff from liability to either party defendant by reason of the deposit aforesaid, and judgment thereon was duly entered.

 One Josephine V. Blodgett died testate on or about October 25, 1924, and by her will thereafter duly probated, she named the defendant Frank J. Maguire as executor and trustee. On or about March 15, 1926, said Nathan E. Blodgett executed and delivered to Gertrude Zulauf (then Gertrude B. Blodgett) his promissory note for $3,000, payable at sight after such date. Certain payments in the aggregate of $180 were made on said note, and no question is raised that the note has not been outlawed. Gertrude Zulauf died in or about 1934, testate, and in and by her will named the defendant Maguire the executor of her estate. Thereafter, in 1940, proceedings were instituted in the Surrogate's Court for the settlement of the Accounts of Maguire, as executor and trustee of the estate of Josephine V. Blodgett, deceased, and litigation over such accounts continued from in or about 1940 till finally terminated in May, 1942, by a decision of the Court of Appeals (288 N.Y. 626, 42 N.E.2d 619) affirming an order of the Appellate Division (263 App.Div. 791, 32 N.Y.S.2d 779) adjudging that defendant Maguire, as executor and trustee of Josephine V. Blodgett, deceased, had overpaid Gertrude Blodgett, now Zulauf, who was a life beneficiary under the will of Josephine Blodgett, deceased, the sum of approximately $220,000, and surcharging Maguire with that amount. Nathan E. Blodgett was held to be entitled to one-fourth of that amount, or $55,000. The plaintiff, Globe, was surety on the bond of Maguire, as executor and trustee of the estate of Josephine V. Blodgett, deceased.

 On February 16, 1934, Maguire wrote to Nathan E. Blodgett advising him that he was executor of the estate of Gertrude Zulauf; that the aforesaid note was in her estate, and further stating: "When we get the settlement of the Blodgett estate arranged it would be convenient to settle the note at the same time if you will just authorize me to deduct from your share of the Blodgett estate the amount due to Mrs. Zulauf on the note." To that Blodgett replied on February 22: "Your letter of February 16 at hand regarding the note. You are hereby authorized to debuct the amount of the note from my share of the estate of Josephine V. Blodgett."

 Puget claims title to all of the interests of Nathan E. Blodgett in the estate of Josephine V. Blodgett, deceased, by virtue of a written instrument purported to have been executed June 9, 1941, and which recites that Blodgett sells and assigns to Puget all right, title and interest in the estate of Josephine V. Blodgett, deceased, which Blodgett has or may be entitled to receive. The validity of this assignment is challenged by defendant Maguire.

 In June, 1942, Maguire as executor under the will of Gertrude Zulauf, deceased, brought suit against Nathan E. Blodgett and Puget Sound Co., Inc., in the Supreme Court of the State of New York on the note aforesaid and procured a warrant of attachment which was served on the plaintiff Globe Indemnity Company. On motion the action was dismissed as to the defendant Puget.

 Negotiations were thereafter entered into for the settlement of the liability of Globe, as surety. On or about July 13-17, 1942, the remaindermen, excepting Nathan E. Blodgett, and his alleged assignee, Puget, executed an agreement in writing whereby, among other things, it was provided that Globe pay $208,000 in settlement of the liability as surety as aforesaid, to be divided equally among the four remaindermen, save that $7,500 out of the proportionate share of Blodgett, or his alleged assignee, Puget, was "to be paid to the Sheriff of New York County under writ of attachment heretofore served."

 The aforesaid agreement was modified by striking therefrom the quoted provision in regard to the payment of the said $7,500 and by inserting in place thereof a provision that: "If the Globe Indemnity Company shall be compelled by virtue of a valid writ of attachment or other process to pay any of the funds which would otherwise by payable to Nathan E. Blodgett or Puget Sound Company, Inc., a corporation, to the Sheriff of New York County, the amount of such payment so required to be made by the Globe Indemnity Company, not to exceed $7500.00, may be deducted from the proportion of the sum of $208,000.00 to be paid by the Globe Indemnity Company by virtue of the provisions of Exhibit 'A' hereof (agreement hereinbefore mentioned) and this agreement to the Puget Sound Company, Inc., a corporation. Nothing in this agreement or in Exhibit 'A' hereof shall be deemed to in any manner waive or impair any defense or objection which the Puget Sound Company, Inc. may have or assert to said above action, or to any attachment or other process issued therein, nor shall the payment of any funds to the Sheriff of New York County by virtue of the above provision divest the Puget Sound Company, Inc. of title to such funds but title to such funds so paid to said sheriff shall be and remain in the Puget Sound Company, Inc., a corporation, subject only to such right therein or thereto in others as may be acquired through valid attachment thereof." In August, 1942, following the making of said agreement, Puget brought suit against Globe in the State of Washington to recover the $7,500 held by Globe. Thereafter this action of interpleader was brought. In August Maguire obtained a judgment in the suit on the note in the sum of $6,477, execution was issued and served on Globe thereon. On September 1, 1942, Maguire procured by order of the Supreme Court of New York an extension of 60 days' time in which to proceed on his attachment, and on September 14, 1942, an order was made in the court authorizing Maguire to join with the sheriff of New York County in an action to recover the moneys claimed to have been attached. No such suit was ever brought, and the time within which it could have been brought expired prior to the commencement of this interpleader action. Sections 922 and 943 of the Civil Practice Act, New York.

 The position of Maguire, the executor of Zulauf, is confused and contradictory. He asserts an equitable assignment of Nathan Blodgett's interest in the Josephine Blodgett estate in the $7,500, by virtue of the letter purporting to authorize him to deduct the amount of the Blodgett note from the latter's share in the Josephine Blodgett estate. Long after such letter from Blodgett, Maguire brought the action against Nathan Blodgett to attach the $7,500. This action was based wholly on the note, and he recovered judgment in an amount upwards of twice the face of the note. Not only was this done but he entered into the stipulation with Globe, Puget and others providing that the title to the $7500 should remain in Puget "subject only to such right therein or thereto in others as may be acquired through valid attachment thereof." This stipulation did not revive the right to pursue the fund in the attachment suit.

 However, if there was an equitable assignement, what Maguire subsequently did in bringing suit and in entering into the stipulation did not affect the assignment itself. If the interest of Nathan Blodgett in the Josephine Blodgett estate was assigned to Maguire, as executor of Zulauf, an action thereafter brought by this executor on the note could not legally be maintained.

 It is believed that there was an equitable assignment of the interest of Nathan E. Blodgett in the Josephine Blodgett estate to the amount unpaid on the note with interest to the time of the assignment. It seems to me that the rule of determination is clearly stated in numerous cases. While there is a distinction between an equitable lien and an equitable assignment (In re Interborough Consol. Corp., 2 Cir; 288 F. 334, 351, 32 A.L.R. 932) as generally applied, it is believed that it is a matter of no difference in effect whether we call this an equitable lien or an equitable assignment. No rights of creditors or any other rights in the estate are affected. In that case it was said: "An equitable lien, while not a title, is available by way of charge. An equitable assignment gives the assignee a title which, although not cognizable at law, equity will recognize. * * * No particular form of words seems to be necessary to make a valid equitable assignment of a chose in action. A written or verbal declaration disclosing an intention to part with the ownership of the chose is all that is required." Gregory v. Morris, 96 U.S. 619, 24 L. Ed. 740; Hauselt v. Harrison, 105 U.S. 401, 26 L. Ed. 1075. In 19 Am. & Eng.Encyc. of Law, 2d Ed., p. 16, the above case is cited with approval, it being there said: "There must be an appropriation of the fund pro tanto, either by giving an order, or by transferring it otherwise in such a manner that the holder is authorized to pay the amount directly to the creditor without the further intervention of the debtor." Such is the situation here. "There is, of course, a vast difference in law between an order to pay a debt out of a particular fund and a promise to pay out of such fund. That the former, when accepted, is binding, is almost, if not quite, hornbook law. That the latter is not binding is well-nigh as well settled." B. Kuppenheimer & Co., Inc., v. Mornin, 8 Cir., 78 F.2d 261, 265, 101 A.L.R. 75. If the intention to transfer a present interest is clearly expressed, the transaction is an assignment. State Central Savings Bank v. Hemmy, 8 Cir., 77 F.2d 458. The test of whether an agreement to pay amounts to an equitable assignment is whether the debtor would be justified in paying the amount to the person claiming to be the assignee. East Side Packing Co. v. Fahy Market, 2 Cir., 24 F.2d 644. The test is whether the debtor would be authorized to pay. 5 C.J. 898, cases cited; 6 C.J.S., Assignments, § 41. Any benefit accruing to the assignor will be sufficient consideration to support an assignment. Kemp v. National Bank, 4 Cir., 109 F. 48; Westinghouse Electric & Mfg. Co. v. Brooklyn Rapid Transit Co., 2 Cir., 6 F.2d 960. No particularity is required to be necessary to effect an assignment. O'Connell v. City of Worcester, 225 Mass. 159, 114 N.E. 201. There must be a designated fund from which payment is to be made, and there is such here. It does not appear whether were funds in the hands of the executors which could be applied to the payment of the note, it does appear that there were such funds so sufficient held by the executor's surety, and at no time at least prior to the stipulation was the assignment questioned. However, equity will support assignments of things which have no present or potential existence, but rest in mere possibility. Kendall v. United States, 74 U.S. 113, 7 Wall. 113, 19 L. Ed. 85; Walker v. Brown, 165 U.S. 654, 17 S. Ct. 453, 41 L. Ed. 865; In re Dier, 3 Cir., 296 F. 816; 6 C.J.S., Assignments, § 61. Such assignment will come into being when the fund is ascertained and identified. Early & Daniel Co. v. Pearson, 5 Cir., 36 F.2d 732; Ferguson v. Larson, 139 Cal. App. 133, 33 P.2d 1061. The recognition of courts of equity of an assignment invalid in law is based on principles of natural justice. See also Christmas v. Russell, 81 U.S. 69, 14 Wall. 69, 20 L. Ed. 762; Link's Will, 173 Misc. 217, 17 N.Y.S.2d 634; and Adams v. Garzillo, 155 Misc. 358, 279 N.Y.S. 398.

 Here we have every element necessary to sustain the payment of the note out of the Josephine Blodgett estate: the admitted indebtedness of Nathan Blodgett; the intention to have the indebtedness paid; the order to deduct; a fund from which the indebtedness can be paid; the assignor retaining no further interest in that portion of the estate; no retained control or power of revocation; authority to the executor to pay without intervention; protection to the executor in payment.

 The several cases cited by defendant Puget are all either easily distinguishable or are not in conflict with the view here entertained. Some of ...

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