
    John S. Muller et al., Resp’ts, v. Charles H. Ferry, App’lt.
    
      (Supreme Court, General Term, First Department,
    
    
      Filed November 7, 1889.)
    
    Former adjudication—When not a bar—Evidence.
    In an action brought by assignees of a claim, the defendant set up as a counter-claim a demand against the assignor existing at the time of the assignment and based upon an agreement to account and an accounting alleged to have been had thereunder. Evidence to prove these facts was rejected because of a decree made subsequent to the assignment in an action between defendant and the assignor in which it was held that no accounting had been had. Held, error; that the assignees not being parties or privies to the former action, the decree was not binding^ upon them, and hence that defendant was not barred thereby from setting up and proving against them the accounting and liquidation of the demand.
    Appeal from a judgment rendered at special term in favor of the plaintiffs.
    
      David Willeox, for appl’t; James M. Hunt, for resp’ts.
   Barrett, J.

The main question presented by this appeal arises upon the defendant’s counter-claim. The plaintiffs are the assignees of one Mittimore with respect to a certain agreement whereby the defendant covenanted, upon a contingency which qas happened, to give Mittimore certain shares of stock.

The plaintiffs as such assignees established their right to recover the value of these shares. Thereupon the defendant attempted to set off a demand which he claimed to have against Mittimore at the date of the latter’s assignment to the plaintiffs. The evidence offered by the defendant in support of this set off was ruled out, the alleged counter-claim consequently was not proved, and judgment against the defendant upon the assigned claim followed.

This counterclaim was founded upon a contract entered into between Mittimore, the defendant Ferry and two Illinois corporations. The contract provided for an accounting with respect to certain transactions, not necessary to be here enumerT ated, and for the liquidation of the balance found due as follows: Mittimore was to execute and deliver his four promisory notes for the sum of $5,000 each, dated the 10th day of February, 1885, payable to the order of the present defendant, Ferry, one year from date, in all $20 000. Any sum found due in excess of this $20,000 was to be paid by Mittimore to Ferry on or before the 10th day of January, 1886. The answer set up the performance by Ferry of all the conditions of this- contract upon his part; and that an accounting was had thereunder, upon which the balance due by Mittimore was ascertained to be $24,472.92. On account of this latter slim it is further alleged that Mittimore gave his promissory note to Ferry’s order for $20,000, and also agreed to pay the balance on or .before the 10th day of January, 1886, all in accordance with the terms of the contract. Evidence offered in support of these allegations was ruled out, apparently upon two grounds. First, because of a decree made by an Illinois court in an action between Mittimore, Ferry, and the two corporations, in which it was held that the accounting provided for in the contract in question had never leen had; and second, because such an accounting could not now be had without the presence of Mittimore and the two corporations as parties- The Illinois decree was, in our judgment, inadmissible as between the parties to this action. That judgment was rendered long after the assignment, by Mittimore to these plaintiffs, of the present cause of action. The plaintiffs took the claim in suit subject to existing equities and subject to any lawful set-off existing in favor of Ferry against Mittimore at the date of the assignment. The latter date was the 29th of October, 1886; and the defendant’s contention is, that Mittimore then owed him, under the contract in question, a liquidated sum largely exceeding the claim assigned to the plaintiffs. It is quite plain that Ferry had a right to prove the existence of this liquidated demand at the date when the plaintiffs acquired the cause of action set up in their complaint. It is equally plain that an adjudication, subsequent to that date, in an action to which the assignees were neither parties nor privies was not binding upon them. Campbell v. Hall, 16 N. Y., 575; Masten v. Olcott, 101 id., 161.

They would not have been estopped or concluded thereby. And, further, the Illinois adjudication had no relation to the assigned cause of action. It follows, that as an estoppel by judgment must be mutual, Lawrence v. Campbell, 32 N. Y., 455; Moore v. City of Albany, 98 id., 409, the defendant is not barred from setting up as against the plaintiffs an accounting had prior to the assignment, and as a result thereof the liquidated demand existing at the date of such assignment.

The other ground upon which the defendant’s evidence is supposed to have been excluded is also untenable. The defendant prayed, it is true, for an accounting, but he was not bound by that prayer. He had a right to prove the facts set forth in his answer, and thereupon to ask for an appropriate judgment. If he had been permitted to prove those facts he would have been entitled to the relief afforded by subdivision 1 of § 502 of the Code of Civil Procedure. For he would have proved not merely a right- to an accounting, but a liquidated demand existing in his favor against the assignor of the agreement sued upon at the time of the assignment of such agreement to the plaintiffs.

He could have proved this demand without the presence of Mittimore or the two corporations, for his claim and offer were to establish the accounting provided for in the contract, and the liquidation thereupon of the sum sought to be so set off as a demand against Mittimore personally. If the defendant had been permitted to proceed without regard to the Blinois judgment, and had then failed to show an accounting under the contract and an ascertained balance due to him by Mittimore, the question whether he could have such an accounting in this action without the presence of Mittimore or the corporations would have been presented. There can be but little doubt on that head. See Cummings v. Morris, 25 N. Y., 625, opinion of Allen, J. But it need not now be decided, as the defendant is entitled to a new trial because of the admission of the Blinois judgment and the exclusion of evidence tending to show a liquidated demand, which was the proper subject of counterclaim.

The judgment should be reversed and a new trial ordered, with costs to appellant to abide the event.

Van Brunt P. J., and Daniels, J., concur.  