
    Frederic W. Rhinelander, Jr., Appellant and Respondent, v. The National City Bank of New York, Respondent, Impleaded with Mark T. Cox, as Assignee for the Benefit of Creditors of Charles Sands and Joseph Bond, Composing the Firm of Samuel S. Sands & Co.; Sarah de Courcey Parrish and Frederick Ayer, Respondents and Appellants.
    
      Pledge of customers’ stodlcs by a firm which thereafter makes an assignment for creditors — relative rights of customers whose stock is, and, of those whose stock is not, pledged to the firm —what is not an election of remedies.
    
    In marshaling the claims of an assignee and three other parties to a balance arising from the sale of securities by a hank, to which they had been pledged for an indebtedness by a firm which afterwards made an assignment for the benefit of its creditors, the claim of one of the parties, other than the assignee, based upon- the fact that he was the absolute owner of certain of the stocks, unincumbered by any lien in favor of the firm, which held them merely on deposit for sale and until sold for safe-keeping, cannot be said to be superior to that of the other two claimants whose stock was held by the firm as pledgee, where ' it appears that, upon the failure of the firm, all that was due to it from the . two latter claimants was duly tendered, and that neither the firm nor its "assignee could deliver the specific shares or an equivalent number ;• as, upon the tender, demand and refusal thé pledgee’s right to the securities was lost, and they being released from the lien of the pledge, their proceeds in the hands of the bank were also released from any claim of the pledgee firm.
    In such a case the three parties stand in equality of right, the fund is distributable among them proportionately, and the assignee takes nothing.
    The preparation, by an attorney for a claimant of a fund, of an affidavit in anticipation of an action for conversion, does not, in the absence of proof that such action was ever commenced, constitute an election of remedies which would bar the claimant from pursuing the fund in a different proceeding.
    
      Semble, that the mere fact of the presentation of a naked claim to an assignee of an insolvent firm, unaccompanied by any further or other proceeding on the part of the claimant, is not, under all circumstances, to be construed as binding such claimant to the assignment.
    . Appeal by the plaintiff, Frederic W. Rhinelander,- Jr., and by the ■defendants Mark T. Cox, as assignee for the benefit of creditors of •Charles Sands and Joseph Bond, composing the firm o'f Samuel S. Bands & Co., and Sarah de Courcey Parrish, from so much of a judgment of the Supreme Court, entered in the office of the- clerk ■of the county of New York on the 27th day of July, 1897, upon the report of a referee, as awards payment to the defendant Ayer •of any portion of the fund, and does not award payment to the' ■plaintiff and to the defendant Parrish of the full amounts- claimed, by them respectively, and does not award payment to- the defendant"•Cox of the balance of the fund over and above said payments to the plaintiff and to the defendant Parrish.
    Also, an appeal by the defendant Frederick Ayer, from so much •of said judgment as directs payment to the plaintiff, Frederic W. Rhinelander, Jr., and to the defendant Sarah de Courcey Parrish, of .any portion of the fund in said judgment mentioned; and also from 'so much of said judgment as does not award to him the entire amount ■of said fund over and above the costs and expenses of the action.
    
      F. C. Huntington, for the plaintiff, appellant and respondent.
    . George H. Adams, for the appellant Ayer.
    
      Frank K. Pendleton, for the appellant and respondent Parrish.
   Patterson, J.:

The suhject-matter of this action is the ownership of a fund in the possession of the National City Bank of New York, as to-which that bank makes ho claim, but of which it is the custodian. Four claimants assert rights in and to the fund. It consists of a balance of moneys arising from the sale of various securities which were pledged by Sands & Co., a firm of stock brokers, to the bank for an indebtedness of the pledgors; such sale having been made-on the default of the pledgors in payment of their debt to which the securities were collateral. Among the securities thus pledged and sold were certain stocks belonging to the plaintiff Rhinelander,, certain others to the defendant Parrish, and certain others to the defendant Ayer. The claim of each of those parties is based upon the proposition that in equity the balance held by the National City - Bank of New York must be regarded as the proceeds of the particular securities belonging to them respectively; but the defendant Ayer claims priority. Sands & Co. made an assignment for the benefit of creditors to the defendant Cox, who claims only in sub-, ordination to the plaintiff and the defendant Parrish. The precise-situation of the parties and their claims'is the following : The fund amounts to $3,477.65. The plaintiff claims $2,100 thereof, the-defendant Parrish claims $637.50 thereof, and the assignee Cox claims-the remainder. The defendant Ayer claims the whole amount on the ground that the proceeds of his securities pledged by Sands & Co. and sold by the National City Bank of New York exceeded largely the-whole of the fund in contest, and that he is preferentially entitled thereto. The referee before whom the trial was had, decided that the-fund was distributable among the plaintiff Rhinelander, the defendant Parrish and the defendant Ayer proportionately ; that the latter had no prior or superior equity, and that the defendant Cox, the assignee, should take nothing. All parties appeal from the judgment entered on that decision, and their several positions are now as follows:

First. The defendant Ayer .claims the whole fund, and appeals from so much of the judgment as declares him to be entitled only ■ to share therein with the defendant Parrish and the plaintiff.
Second. The plaintiff and the defendant Pari’ish claim that the defendant Ayer is not entitled to share at all in the fund, and, therefore, they appeal from so much of the judgment as awards them ■only a certain fractional part of the fund, claiming that they should be allowed more.
Third. The defendant Cox, the assignee, claims that there is a balance after the payment of the claims of the plaintiff and the defendant Parrish, to which he is entitled, and appeals substantially from that' part of the judgment which allows participation in the fund by Ayer.

It will thus be observed that the case turns altogether upon the right of the defendant Ayer to participate in the distribution of this fund ; and two questions are presented in tliat relation: (1) Is he .entitled to claim at all % (2) If he is so entitled, to what extent ? It is urged as against the defendant Ayer that he is excluded • from any right in or to the fund because he elected to pursue remedies incompatible with the specific right of following the proceeds of .his stocks into the hands of the National City Bank. It is asserted that he instituted an action against Sands & Co. for the conversion of his stocks :and that thus he selected that remedy; but there is no proof that such an action was ever brought. All tliat appears is, that in the testimony of the defendant Ayer some reference is made to an affidavit which seems to have been prepared by his attorney in anticipation of an action being brought for conversion; but there is no proof that such an action was brought, or that ,a summons was served or .any further step whatever taken. It cannot be said that a remedy has been resorted to simply because it may have been in the contemplation of a party at some time to avail himself of that yemedy. But it is further urged that the defendant Ayer elected to claim under the assignment of Sands & Co. to Cox, and the argument is strenuously made that he has bound himself to the assignment by. filing a proof of claim with the assignee, and it is insisted that, under the ruling in Le Marchant v. Moore (150 N. Y. 218), the ■defendant Ayer has precluded himéelí from looking to anything .else than the assigned estate. It was held in that case that where, with full knowledge of all the facts, a person proves .and files a claim against an assigned estate for an amount of indebtedness arising out of a broker’s unauthorized use. of a customer’s stock, the customer cannot claim the stock, or follow the proceeds in his original right 'as owner; he elected to treat the stock broker as his creditor and has bound himself to the assignment. The facts upon which that particular ruling was made in Le Marchant v. Moore are not' fully stated in the report of the ease, but an examination of the record shows that the owners of the shares as to which that ruling was made not only filed a claim in insolvency, but were represented in the selection' of an assignee, authorized an appearance for them in the proceeding ■ by attorney, and that that attorney signed a receipt in blank for a dividend out of the assigned estate. That case does not hold, and we certainly are not prepared to hold, that the mere fact of the presentation of a naked claim to an assignee with no further or other proceeding on the part of the claimant, is under all circumstances to be. construed as binding such claimant to the assignment; but that question does not arise here, for the simple reason that the document which in this action is called a claim under the assignment, is is no sense under the assignment, but is plainly in antagonism thereto except as to certain specified shares. Although the paper is entitled, “ In the Hatter of the Assignment for the Benefit cf Creditors made by S. S. Sands & Company to Mark T. Cox,” yet its contents disclose that Mr. Ayer was making a claim for his shares of stock in specie, which was simply saying that they were not assets of the assigned estate. The paper also contained the alternative demand that if Ms stocks could not be given to Mr. Ayer, then he insisted upon his right to the value thereof preferentially to everybody otherwise entitled to share in the assigned estate, except as to a balance of $1,651 on one particular kind of stock, in respect of which he does say that he is entitled to share with other creditors. The whole value of his stock in the hands of Sands & Co. was $43,376 after making all allowances. We do not think the notice served upon the assignee can in any reasonable or just sense be regarded as binding Mr. Ayer to the assignment, unless it may be to the one item above referred to, and that item is quite distinct from and in nowise affects the stock involved in this action.

We are then to consider to what extent Mr. Ayer is interested in the fund in suit. His claim to priority stands upon the fact that he was the absolute owner of his stocks unincumbered by any lien of Sands & Co., who held them merely on deposit for sale and 'until sold, for safe-keeping. At the time of the failure of Sands & Co., the plaintiff’s stock and the Parrish stock were .held as'.collateral security, the situation being that, when Sands & Co. pledged the shares of these three parties to the National City Bank, they held the Parrish stock and the plaintiff’s stock with a lien of some kind thereon as pledgees, but the Ayer stock was free. In the marshaling of these claims the equity of Ayer cannot he said to be superior to that of the two other claimants, because it is shown that, upon the failure of Sands & Co., all that was due to that firm from the plaintiff and from Parrish was duly and properly tendered, and that neither ■Sands & Co. nor the assignee was able to deliver either the specific shares or an equivalent number. Upon the tender and demand and refusal, the right to retain the stock pledged ceased at once, and as to those stocks the plaintiff and Parrish stood in exactly the same relation as Ayer stood to his stock. The plaintiff’s stock and the Parrish stock were only collateral security. “ A pledgee of stock certificates as collateral security has no more right to retain them after the principal debt is tendered than a bank has to retain notes offered for discount and refused, or no more than if upon the stock being offered as collateral security for the payment of principal notes, discount of the notes is refused.” (Ooleb. Col. 4:59.) The pledgees’ right to these collateral securities being lost, and they being released from the lien of the pledge, the proceeds in the hands of the National City Bank were also released from any claim of Sands & Co. If the stock had been still in the hands of Sands & Co. when the tender and demand were made by the plaintiff and by Parrish, and the refusal was made to accept the tender, the stocks of those two parties would have ranked in the same category as the stock of Ayer. That is to say, Sands & Co. would have had no lien as pledgee on any of the stocks. The question here is not as to an adjustment of indebtedness of either of the parties to Sands & Co. or the assignee. It is as to the right of the parties to certain collateral securities or their proceeds, and in ascertaining those rights the referee was correct in adjudging that the three parties stood i'n equality of right, and that the fund was distributable among them in the way pointed out in his decision.

The judgment appealed from must be affirmed, without costs to either party.

Van Brunt, P. J., Barrett, Rumsey and Ingraham, JJ., concurred.

Judgment affirmed, without costs to either party.  