Opinion
May 26, 1911.
Henry A. Rubino [ Finis E. Montgomery with him on the brief], for the appellant.
George K. Jack, for the respondent.
The plaintiff appeals from a judgment of the Municipal Court for the defendant. The ground of its appeal is that such judgment affords affirmative equitable relief in a court that has no equitable jurisdiction. The action is in replevin to recover a liquor tax certificate and damages for detention. The certificate was issued to the defendant. The plaintiff's claim of title rests upon a written assignment and power of attorney executed in its favor. The defendant pleaded that the delivery of such assignment and power of attorney (together with a note for $975 as evidence of indebtedness) was for collateral security for the payment of that sum which the plaintiff had lent to the defendant to pay for the certificate, that the note had been paid, whereupon the defendant had become entitled to a return of it and of such assignment and power of attorney, cancellation thereof, and to the certificate. He demanded judgment that the complaint be dismissed, the certificate (taken by proceedings herein) be returned, and for damages.
The defendant was entitled to demand judgment for the return of the chattel. (Mun. Ct. Act [Laws of 1902, chap. 580], § 117.) He could avail himself in that court of the defense that the assignment and power of attorney were delivered as collateral security, and in seeking to establish such plea he did not invoke the exercise of equitable jurisdiction. ( Koehler Co. v. Duggan, 49 Misc. Rep. 100 and case cited; cited in Electrical Audit R. Co. v. Greenberg, 56 id. 517; Cushman v. Family Fund Society, 13 N.Y. Supp. 428, 432.) The interposition of an equitable defense does not transform a legal action into an equitable one. ( Rodgers v. Earle, 5 Misc. Rep. 167.)
I think that the testimony is sufficient to establish the contention of the defendant that the assignment and power of attorney were delivered for collateral security and that the note was delivered as evidence of the defendant's said indebtedness. And I think that the evidence justified the conclusion that such indebtedness was discharged in full by a payment of $68.75. It appears that certain persons, on September 7, 1910, called upon the treasurer of the plaintiff to inquire how much money was due on the license, that they were informed that there was due $68.75, whereupon that sum was paid to the plaintiff. The plaintiff applied $50 of such sum to the license account, and the balance, $18.75, upon an independent indebtedness of the defendant to the plaintiff. It does not appear that such an application by the creditor was then or at any time thereafter made known to the defendant. I think that the court was justified in a conclusion that this payment of $68.75 was made with a direction for specific application to discharge the balance of the debt of $975. ( Pattison v. Hull, 9 Cow. 747, 765; Stone v. Seymour, 15 Wend. 19; Goodman v. Snow, 81 Hun, 225.) A direction for application of payment need not be express, but may be implied, as when, e.g., the payment exactly equals in amount one of several existing debts. ( Stone v. Seymour, supra; Robert v. Garnie, 3 Caines, 14.)
I think that the defendant does not stand with a judgment for affirmative relief gained upon equitable grounds. The court gave judgment for the defendant. The effect of that judgment is to determine that the certificate is the property of the defendant, although damages are not assessed and the value of the property is not found. In such case the chattel is awarded to the defendant, who may enforce that judgment by execution. ( Hammond v. Morgan, 101 N.Y. 186; Johnstone v. Weibel, 131 App. Div. 166. ) This judgment may rest upon the finding that the defendant has discharged the debt for the money advanced to him to pay for the certificate, and that the assignment and power of attorney delivered were collateral, and that the note delivered as evidence of the debt has been fully paid. The relief afforded to the defendant is not affirmative. The judgment but finds that the title to the chattel is in the defendant. The replevin of the chattel was not essential to the action. (Mun. Ct. Act, §§ 96, 130.) The plaintiff was bound to show that it had a right to the delivery of the property at the time of the commencement of the suit. ( Wood v. Orser, 25 N.Y. 351.) And if, incidental to the replevin suit, the plaintiff took the defendant's chattel, the judgment which determines that the ownership is that of the defendant does not afford affirmative relief.
The judgment must be affirmed, with costs.
THOMAS, CARR, WOODWARD and RICH, JJ., concurred.
Judgment of the Municipal Court affirmed, with costs.