
    Edward A. Hendrickson, Respondent, v. Empire Trust Company, Appellant.
    Supreme Court, Appellate Term, First Department,
    June, 1916.)
    Assignments — unconditional — to trust company of shares of stock — order by decree of Surrogate’s Court — contracts — negotiable instruments.
    By a decree of the Surrogate’s Court executors were ordered to assign and transfer to a designated trust company a certain number of shares of stock which, at the value found by the appraiser appointed to fix the value thereof and which constituted the bulk of the estate, together with a small amount in cash, made a total of $10,400 with interest, the claim therefor being based not upon any contract between the parties as evidenced by a note of $10,400 but upon the apparently unconditional assignment of an interest in the estate to the trust company. Held, that said decree simply fixed the extent of the interest of the trust company in the estate and in that respect was as binding on the trust company as upon the assignor and definitely determined what that interest was, and the share of the 'assignor remained as collateral in the hands of the trust company when transferred to it subject to all the conditions of the contract between it' and said assignor, and that the value of the stock as between them was to be determined according to the terms of the note.
    
      Appeal from a judgment of the City Court of the city of New York in favor of plaintiff after a trial by the court without a jury.
    Barber, Watson & Gibboney (Charles E. McMahon, of counsel), for appellant.
    Paul Jones, Jr., for respondent.
   Philbin, J.

The facts involved were agreed upon at the trial. The respondent’s assignor, Lucia P. Tucker, borrowed $12,000 from the Windsor Trust Company, to whose rights and interests appellant succeeded by merger of the two companies.

The loan was made in August, 1910, and, as collateral security, there was then given a deed of some real estate in New Jersey, and an assignment of the interest of Mrs. Tucker to the extent of $12,000 in the estate of one Edward P. Hatch, then deceased. The loan was later reduced by a payment to $10,400, and the assignment of the interest in the Hatch estate was reduced to that amount. The new note, given by Mrs. Tucker for the latter sum, recites that she has deposited with' said company, as collateral security for the payment thereof, an assignment, bearing date the 29th of August, 1910, of all her right, title and interest under the will of Edward P. Hatch, deceased, and the deed to the real estate in New Jersey, with power' to the company to sell, without notice and without demand of payment, any of said securities at public or private sale; and that if the collateral thereto should be unsatisfactory to the company, through depreciation or otherwise, the maker of the note would forthwith make such payment on account or deposit such additional collateral as should be satisfactory to the payee. The note was dated the 30th of November, 1910, and was payable on demand.

Thereafter the executors of the Hatch will filed their account in the Surrogate’s Court and the Windsor Trust Company, as such assignee, was made a party to the proceedings that ensued and appeared therein and offered proof of its claim under the assignment. While the proceedings were pending a mortgage on the New Jersey property, so pledged by the plaintiff’s assignor, was foreclosed and, out of the surplus proceeds of sale, there was paid to the appellant $2,714.28 and the same was duly credited on the above note for $10,400.

The referee in the Surrogate’s Court proceedings found that the Windsor Trust Company was entitled to share in the interest of Lucia P. Tucker in said estate to the extent of $10,400, and interest from the 30th of November, 1910. Thereafter, on or about the 25th of May, 1914, upon an application made under section 2744 of the Code, an appraiser was appointed to fix the value of the stocks which constituted the bulk of the estate. No objection was made by the Windsor Trust Company to the appraisal proceedings nor to the value fixed by the appraiser’s report. The decree of the surrogate, entered on the 6th of August, 1914, confirmed the report and directed, among other things, that the executors assign and transfer to Windsor Trust Company a certain number of shares of stock, which, at the value so found by the appraiser, and a small amount of cash, made up the total claim of $10,400 with interest. The decree further provided that such transfer and payment was in full satisfaction and discharge of the claim of Windsor Trust Company against Lucia P. Tucker, the estate or the executors above mentioned. No objection was made by the appellant trust company to the decree nor has any appeal been taken therefrom. On the 16th of December, 1914, the stock and cash were received by the appellant. The securities, so received, were later sold by the appellant at public auction and failed to yield sufficient to pay the amount due on the loan to Mrs. Tucker.

Upon the foregoing facts, the plaintiff, as assignee of Lucia P. Tucker, brought this action in conversion to recover the balance which he claims remained in appellant’s hands because of the receipt by it of cash and securities from the Hatch estate, the value of which exceeded the amount then due on the note. This is based upon taking the value of the securities as fixed by the appraiser in the Surrogate’s Court proceedings. The appellant claims that the securities and cash obtained from-the estate were not received as payment of the debt due it, but only as collateral, and that the securities having realized less than the amount owing on the loan, instead of there being a balance in respondent’s favor, there is still due the appellant a part of the debt of Mrs. Tucker. The respondent relies in support of his contention upon the wording of the surrogate’s decree, above mentioned, and statements made by representatives of the appellant which, he claims, indicated an intention to accept the securities in payment at the value fixed by the appraiser. The decree of the surrogate was based, not upon the contract made between the parties, as evidenced by the note for $10,400, but upon the apparently unconditional assignment of an interest in the estate to the Windsor Trust Company. It simply fixed the extent of that interest and, in that respect, was fully as binding upon the trust company as upon Mrs. Tucker. It had the effect of definitely determining what that interest was, and the share of the plaintiff’s assignor, as thus determined, remained as collateral in the hands of the company when transferred to it, subject to all the conditions of the contract between it and Mrs. Tucker. The value of the stock, as between them, was to be determined according to the terms of the note.

The attitude taken by the appellant throughout the proceedings of the Surrogate’s Court cannot be regarded as in any respect inconsistent with this view. Its status with Mrs. Tucker was fixed by the terms of the note, and the surrogate could only make an adjudication so far as the relation of the company, as assignee, to the decedent’s estate was concerned.

The letters written on behalf of the appellant and the statements made by its representatives do not furnish adequate evidence of an intention to accept the securities, at the appraised value, in payment of the indebtedness. They are entirely consistent with the view that the appellant simply accepted the decree of the surrogate and the delivery of the securities as a change in the form only of the collateral.

The judgment should be reversed, with costs, and complaint dismissed, with costs.

' Gtuy and Bijur, JJ., concur.

Judgment reversed, with costs.  