
    William H. Ellis, Respondent, v. Polly Ellis Cole and Ida Ellis Hutches, Appellants.
    
      Decree in a creditor’s suit—how far its provisions, directing that payments he made from certain rents and profits of land to certain of the defendants, a,re conclusive as between them and their codefendant, the judgment debtor.
    
    On March 4, 1894, William H. Ellis, being then the owner of a farm incumbered by a §2,000 mortgage and also the owner of a life estate in a house and lot, the fee of which was in his two children, entered into a contract with his children, whereby he conveyed the farm and the house and lot to such children, the latter agreeing to pay him the rents and profits of the premises conveyed after deducting certain taxes and expenses of care and maintenance, including the interest on the §2,000 mortgage. It was further agreed that in case the premises should be sold, the money should be applied in payment of the §2,000 mortgage or be invested in bond and mortgage and that the interest should bo paid for Ellis’ support and maintenance.
    The children sold the house and lot for §1,900 and satisfied the mortgage on the farm with such $1,900 together with §100 advanced by them. Thereafter one Havens, a creditor of Ellis, brought an action to set aside the conveyance from. Ellis to his children, as made in fraud of his creditors. The creditor’s action, to which Ellis and his children were parties, resulted in a decree appointing a receiver of the rents and profits of the premises in question, who was directed to receive the income to which Ellis was entitled.
    The decree further directed such receiver to pay to Ellis’ children the interest upon the §2,000 paid for the discharge of the mortgage. Pursuant to such decree, the receiver, for several years, paid to Ellis’ children the interest upon such §2,000.
    In an action brought by Ellis against his children to recover the payments of the interest upon the §2,000 mortgage, so made to the latter by the receiver, it was
    
      Held, that the complaint should be dismissed upon the merits;
    That the action was barred by the decree in the judgment creditor’s action, as the necessary eifect of such decree was to adjudicate that Ellis’ children and not Ellis were entitled to the interest on the §2,000 represented by the bond and mortgage;
    . (Per Hrscocx and Spring, JJ.) That Ellis could not maintain the action for the further reason that, if the moneys sought to be recovered were part of the rents and profits of the farm, the receiver appointed in the judgment creditor’s action was entitled thereto, rather than Ellis.
    McLennan, P. J., and Williams, J., dissented.
    Appeal by the defendants, Polly Ellis Cole and another, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of Tates on the 1st day of August, 1904, upon the decision of the court rendered after a trial before the court without a jury at the Tates Trial Term.
    
      M. A. Leary, for the appellants.
    
      H. C. Harpending and H. B. Harpending, for the respondent.
   Stover, J.:

The plaintiff is the father of the defendants. Plaintiff was the owner of a farm and, at the time of the making of the contract under which the cause of action arises, had a life estate in a house and lot, the estate in remainder being in the defendants. At the time of making the contract there was a mortgage of $2,000 upon the farm.

On the 5th of March, 1894, the contract in question was entered into between the plaintiff and the defendants, by which the plaintiff ■conveyed the farm and the house and lot to the defendants, the defendants agreeing to pay from time to time, as collected or received by them, the rents and profits of the premises conveyed, after deducting therefrom the interest on the $2,000 mortgage,-and taxes and expenses of all kinds incurred in the care, preservation and management of the premises. It was further agreed that in case the premises should be sold the moneys should be applied in payment of the $2,000 mortgage, or be invested in bond and mortgage,, and the interest paid for the maintenance and support of the-plaintiff.

The defendants sold the house and lot for $1,900, and on March 28, 1896, took up the mortgage on the farm with the purchase-money of the house and lot, and by the additional 'payment of $100 by the defendants the mortgage was satisfied and discharged of record.

After the conveyance of the farm and the house and lot by the-plaintiff to the defendants, an action was commenced in the Supreme Court by a creditor of the plaintiff to set aside the conveyance from, the plaintiff to the defendants as in fraud of creditors. A decree was entered in that action in February, 1899, in and by which a receiver of the rents and profits of the premises was appointed, with direction to receive the income to which the plaintiff in this-action was entitled, and further directions as to the disposal of funds which might come into his hands as the proceeds of the life-estate of the plaintiff herein. The decree further directed that said receiver should pay to Ida Hutches and Polly Cole, the defendants, in this action, the interest upon the $2,000 invested by them in the bond and mortgage, or the legal rate of interest; the adjudication thereby being, necessarily, that these defendants, and not the plaintiff here, were entitled to the interest upon the $2,000 represented by the bond and mortgage.

This action is brought to recover the interest upon the $2,000-mortgage for six years from April 1, 1898, being the sums paid to defendants by the receiver under the decree in the creditor’s action.

A summary of the situation at that time was this : The property having been disposed of under the contract, the question then arising between the plaintiff here and his creditor, it was adjudicated that the plaintiff here or his judgment creditor were not entitled to the interest upon the bond and mortgage, but that these defendants, had become the owners, and entitled to the interest or income arising from the bond and mortgage. The court in that action must have necessarily found that the plaintiff here was not the owner of the proceeds of the mortgage, and that his daughters, the defendants here, were such owners, in order to have decreed in the creditor’s action that the defendants were entitled to the interest on the bond and mortgage.

This decree, we think, was binding upon all of the parties, and was a final and complete adjudication of their rights in the property in question. They were all parties to the record, and a complete adjudication was had as to the ownership of the fund now brought in question in -this action. This plaintiff may perhaps have been willing that in that action the title should have been adjudged to be in his daughters and thus prevent the payment of the claim of his creditor; but whether willing or otherwise the adjudication was definite and binding upon all of the parties to the action.

The decree was properly pleaded and proven and, we think, it was a complete bar to the maintenance of this action, and the complaint should have been dismissed upon the merits.

Spring, J., concurred ; McLennan, P. J., and Williams, J., dissented.

Hiscook, J. (concurring):

I concur in the conclusion reached in the opinion of Mr. Justice Stover, that the judgment rendered in the case of Havens against the plaintiff and defendants in this action is a bar to such a recovery as has been allowed to the plaintiff in this action, and that, therefore, the judgment appealed from should be reversed.

By the statement of admitted facts in this action, it appears that these defendants realized $1,900 upon the sale of the house and lot conveyed to them by the plaintiff, and that it was with the proceeds of said sale that they took up the mortgage for $2,000 upon the farm, and as and for interest upon which the $720 sought in this ease by plaintiff has been paid to them. From these facts it would naturally appear that defendants Had no claim against plaintiff for repayment to them of interest upon $1,900 used in taking up said "bond and mortgage. But we do not have before us the evidence which was produced in the judgment creditor’s action, and when the decree in that action adjudged that these defendants were entitled to have repaid to them the interest upon the moneys used in taking up the bond and mortgage upon the farm, we assume that there was some evidence which justified this provision, and that there must have been some reason why the $1,900 proceeds of the sale of the house and lot used in taking up the mortgage did not belong to the plaintiff in this action, and that defendants were entitled to this interest.

But at any rate, I do not see how plaintiff can so avoid the provisions of the decree in the creditor’s suit as to recover the moneys sought in this action. He was a party to the creditor’s suit. The rights of himself, of his judgment, creditor and of these defendants were all necessarily involved in that action, and without any objection so far as appears the decree passed upon them. In this action plaintiff is compelled to refer to the former judgment as the authority and cause for payment to the defendants of the very moneys which he seeks to recover. In order to trace his alleged title to the moneys now held by defendants he is compelled to admit or show that they received them under the provisions of said judgment, and when he refers to said judgment as the source of payment to defendants of the moneys which he seeks, I do not think that he can escape the other provisions in said judgment which specify the purpose for which said moneys were so paid to said defendants, and which latter provisions affirmed the legal right of defendants thereto.

It seems to me that there is still another obstacle to the recovery by plaintiff of his judgment in this action. As between plaintiff in this action and the judgment creditor (plaintiff in the former action) the latter was entitled to all of the proceeds of the farm until her judgment and costs were paid. Whatever payments were directed in that former decree to be made to these defendants were taken from the judgment creditor rather than from the plaintiff. In that action a receiver was appointed “ of the interest of the said William H. Ellis in the rents and profits of the said premises,” and said receiver, after payment of the sums directed to these defendants and certain taxes and expenses, was directed to pay the balance to the plaintiff until her judgment of $959.56 with interest and costs was ail paid. As stated, the receiver is still in office, and apparently her judgment is unpaid. Therefore, it follows that if the moneys sought from defendants are, as alleged by the plaintiff, part of the rents and profits of said farm and the defendants are not entitled thereto, the said receiver rather than the plaintiff is entitled to the same. It seems to me quite clear that the plaintiff cannot in this action, to which neither the judgment creditor nor the receiver is a party, have a new adjudication of his rights with the defendants, which modifies and reverses the former adjudication, to which he and all of the interested persons were'parties.

Spring, J., concurred.

McLennan, P. J. (dissenting):

Upon the admitted facts the plaintiff is entitled to recover the amount found to be due by the learned trial court, unless the judgment recovered in an action brought by one Lydia Havens against the plaintiff and defendants in this action is a bar to plaintiff’s right of action against the defendants, his codefendants in the Havens action.

The plaintiff is the father of the defendants. On and prior to March 5, 1894, the plaintiff was the owner of a farm upon which there was a $2,000 mortgage. He was also the owner of a life estate in a house and lot of which his wife owned the fee at the time of her death.

On the 5th day of March, 1894, by a deed, duly executed and delivered on that day, the plaintiff conveyed to the defendants the said farm and also his life estate in the house and lot of which his wife died seized. On the same day, in consideration of such conveyance by the plaintiff, the defendants executed an agreement by which they agreed to pay over to this plaintiff during the term of his natural life the net income of the property so conveyed, after deducting the interest on the $2,000 mortgage, which interest they agreed to pay. The defendants further agreed in and by said contract that in case they sold the house and lot they would apply the proceeds in payment of the said $2,000 mortgage on the farm, or that they would invest the said proceeds on bond and mortgage, and that they would pay the interest accruing therefrom to the plaintiff. The defendants were also given the right to sell the farm, but only upon condition that the avails of such sale, if made, should also be invested in bond and mortgage, and that the income therefrom should be paid to the plaintiff.

On the 12th day of April, 1895, the defendants sold the house and lot conveyed to them by the plaintiff as aforesaid, and received therefor the sum of $1,900. They added to the sum so received $100 of their own money and with it paid off and procured a satisfaction and discharge of the mortgage upon the farm. In that situation clearly the plaintiff, under the agreement between himself and the defendants, was entitled to receive from the defendants the net income of the farm, and they were not entitled to deduct anything on account of interest on the $2,000, except the interest on the $100 advanced by them, because, as we have seen, $1,900 of such mortgage was paid with the proceeds of the sale of the house and lot conveyed to them. Such was held to be the proper interpretation of the contract and the rights of the parties thereunder by this court in an action between the same parties. (Ellis v. Cole, 86 App. Div. 233.)

After the plaintiff had conveyed the property to the defendants and the contract above referred to had been executed, one Lydia Havens, a judgment creditor of the plaintiff, commenced an action, in the Snpréme Court against the plaintiff and defendants in this action to set aside the deed as fraudulent as against her. So far as appears no issue was raised in that action as between the defendants therein. No cross answer was served by either defendant upon the others and the rights of the respective defendants, as between themselves, were in no manner pleaded, raised or litigated in that action. Thereafter a decree was entered in the Havens actio.n which adjudged that the deed from this plaintiff to these defendants was valid as to the plaintiff in this action, and that the land conveyed was' not subject to payment of the judgment recovered by Lydia Havens against the plaintiff in this action, William H. Ellis. It was further adjudged that William H. Ellis, this plaintiff, was the owner of a life estate in the farm above referred to, subject to the lien of the $2,000 mortgage, which it was found had been taken up and' paid by these defendants. It was further adjudged that a receiver be appointed “ of the- interest of the said William H. Ellis (this plaintiff) in the rents and profits of the said premises,” and that the receiver pay out of the net income the sum of $120 annually during the con■tinuance of said receivership to the defendants in this action, Ida Hutches and Polly Cole, “ being the interest upon said two thousand dollars invested by them in said bond and mortgage, or legal rate of .interest; that after such payments have been made, the said receiver pay the balance which shall come into his hands after paying all taxes and expenses of every kind necessarily incurred,” etc., to said Lydia Havens, the plaintiff in that action.

Pursuant to such decree the receiver paid the defendants during the years 1899, 1900, 1901, 1902 and 1903, the sum of $720 in the ■aggregate, making two payments of $120 each in the last-mentioned year, and it is to recover such sum of $720, with interest thereon, that this action is brought.

As we have already seen, the defendants, as against their father, this plaintiff, are not entitled to retain such moneys, because the mortgage had been satisfied and discharged with the proceeds of the sale of a portion of the property conveyed to them by the plaintiff, and the contract expressly provided that such proceeds should be so applied, and, therefore, the defendants were not entitled to receive from the receiver moneys with which to make such payments. It is urged, however, that the decree in the Havens action, which directed that the moneys be paid to these defendants, is binding and conclusive as .against this plaintiff, and, therefore, that this action cannot be maintained.

We think that the decree in the Havens action m no manner affected the rights of the parties to this action as between themselves. They were not. adversary parties in that action. There was no issue as between them which they asked to have determined or adjudicated.

In Freeman on Judgments (4th ed. § 158) the rule is stated as follows: Parties to a j'udgment are not bound by it in a subsequent controversy between each other, unless they were adversary parties in the original action.” ■ .

In Ostrander v. Hart (180 N. Y. 406) the court said (pp. 412, 413): “ While a judgment may determine-the ultimate rights of the parties on' the same side, as between themselves (Code C. P. §' 1204), the judgment in question did not purport to do so, but simply determined certain issues between the plaintiff m the action and the defendants Hart. Neither in form nor effect did it determine the ultimate rights of those defendants and the assignee, as between themselves, nor could such a determination have been required by any defendant unless he had not.only so demanded in his answer, but had also served a copy thereof upon the attorney of each defendant to be affected by the determination, who had appeared, and personally upon each defendant so to be affected, who had not appeared. (Code C. P. § 521.) A judgment in favor of one defendant against another cannot be entered upon the default of the latter, unless he has had. notice and an opportunity to defend as against his co-defendant. (Edwards v. Woodruff, 90 N. Y. 396; Albany Gity Savings Inst. v. Burdick, 87 id. 40.)

“ A judgment against a plaintiff in favor of a defendant determines nothing between the latter and a co-defendant, because,. although both are parties to the action, they are not 1 adversary parties,’ as that phrase is applied to the subject of former adjudication.” (See, also, Herman Estop. [2d ed.] § 138.)

To the same effect is Mahoney v. Prendergast (35 N. Y. St. Repr. 197); Woodgate v. Fleet (9 Abb. Pr. 222).

Unless the defendants contest an issue with each other, either upon the pleadings between them and the plaintiffs, or upon cross-pleadings between themselves, it will not be res adjudicata in a litigation between themselves. (Van Fleet Form. Adj. § 256; Beveridge v. N. Y. E. R. Co., 112 H. Y. 1; O'Connor v. N. Y. & Yonkers Land Co., 8 Misc. Rep. 243, 245; 2 Black Judg. [2d ed.] § 599.)

As before stated, there was no attempt in the Havens action to either plead, raise or litigate any rights of the defendants therein, as between themselves, and, therefore, under the authorities, neither the plaintiff nor the defendants herein are bound or affected m any manner by the final judgment in that case.

It follows that the judgment should be affirmed, with costs.

Williams, J., concurred.

Judgment reversed and new trial ordered, with costs to the appellant to abide event.  