
    KLABER et al. v. TAYLOR et al.
    (Supreme Court, General Term, First Department.
    June 30, 1893.)
    Equitable Assignment of Fund—What does not Constitute.
    By agreement on a settlement between defendants, as executors of a mortgagee, and the mortgagor, defendants held $25,000 as security against certain claims on the mortgaged premises for» materials furnished to the mortgagor, which were in dispute, and if the defense to the claims was successful the money thus held was to be paid to O., wife of the mortgagor. Afterwards, O. authorized defendants, in writing, “to compromise, settle with, and pay to” plaintiff's, in full settlement of their claim, not to exceed a certain sum. This paper was given to defendants, but was never used, nor was a compromise with plaintiffs ever made or undertaken. Held not to constitute an assignment of a part of the sum held as security, so as to render defendants liable to plaintiffs for the amount they were authorized to pay as a compromise.
    
      Appeal from circuit term, New York county.
    Action by Simon Klaber and James Klaber, trading as Klaber & Son, against William Taylor, James Armstrong, and Carlton S. Gilson, executors of John Taylor, deceased. From a judgment for plaintiffs, rendered on a verdict directed by the court, defendants appeal.
    Reversed.
    Argued before VAN BRUNT, P. J., and FOLLETT and BARRETT, JJ.
    Gardner & Brown, (Hamilton Odell, of counsel,) for appellants.
    Wise & Lichtenstein, (Morris S. Wise, of counsel,) for respondents.
   BARRETT, J.

The defendants are the executors of John Taylor, deceased. Mr. Taylor, in his lifetime, held mortgages to a large amount upon an apartment house named “The Osborne,” which was built by one Thomas Osborne. The plaintiffs furnished certain marble work to be used in this building, for which there is still due them $1,000. Upon Taylor’s death an agreement was entered into between his executors (these defendants) and Mr. and Mrs. Osborne for a settlement of all questions with regard to Taylor’s mortgages. The material part of this agreement, as bearing upon the present action, is that between the defendants and Mrs. Osborne. It recites that Mrs. Osborne claims to have advanced to her husband, ■out of her separate estate, the sum of $30,000, “towards the erection of said Osborne apartment house.” For considerations not necessary to be detailed, the defendants agree to pay Mrs. Osborne $5,000 upon the signing of the agreement', and to hold $25,000 for her benefit, subject to certain terms and conditions. These terms and conditions are substantially as follows: Claims having been made against Taylor’s estate, growing out of the building in question, which were to be defended, the executors were to hold this $25,000 .as their security against such claims. In case of defeat the executors were to pay themselves out of the sum so withheld, but in case of success they were to pay Mrs. Osborne the proportionate part of the sum thus released. The agreement then provides as follows :

“This mode of procedure is to- be continued by the executors until the whole amount of such claims shall have been paid, or are finally disposed of, or until the whole of said balance shall have been exhausted, either by payment of claims, or payment to said Susannah Osborne. When exhausted in either way the executors are to be, and are hereby, released from any further liability or payment on account hereof.”

It appears that the plaintiffs’, claim, already referred to, was included in the list specified in the agreement, -and was consequently one of those as security for which the defendants were to hold the $25,000. The plaintiffs never proceeded against the defendants upon this claim. They charged the marble work to Mr. Osborne upon their books, and subsequently brought an action against him for the amount so due them, in which they recovered judgment on the 5th of March, 1890. Nor is the present action brought to recover upon the claim referred to in the agreement, but to recover a specific part of the $25,000 held by the defendants as security for that claim. The facts upon which the latter contention is based are briefly these: A little over a year after the agreement was made, Mrs. Osborne signed a paper in which she authorized and directed the defendants, out of the moneys remaining in their hands under the agreement, “to compromise, settle with, and pay to Klaber & Son, in full settlement of their claim, not to exceed the sum of $939.” This paper was received by the defendants, and retained by them, but they never acted upon it, further than that the defendant Gilson, as executor, drew a check for the amount, payable to the order of the defendant Armstrong, and sent it to Armstrong, who never used it. The defendants, in fact, never tried to “compromise or settle” with Klaber & Son, and the latter knew nothing of what Mrs. Osborne had done, and never heard of the order, check, or transaction until long afterwards. We can scarcely treat as serious the contention that, upon these facts, there was an equitable assignment of part of the sum reserved by the defendants. The moneys were not held by the defendants for the payment of the plaintiffs’ claim, or for the payment of any claim, but as security for the payment by them of such claims as should be established against them under the agreement. Mrs. Osborne had no more right to require the defendants to compromise and settle the plaintiffs’ claim than she had to compel the plaintiffs to accept less than their due. The plaintiffs had no possible claim against her, and consequently there was no basis for an appropriation to pay a debt of hers. But, even if she chose to appropriate her own money to the payment of her husband’s debts, she could only do so when she became entitled to the fund, by virtue of its release from the claims against the defendants, as specified in the agreement. She could not secure such release by forcing the defendants to pay $939 upon a claim which, as against them, they believed to be wholly unjust. Mrs. Osborne, therefore, had no fund in the defendants’ hands which she could presently appropriate, and consequently the order effected no such appropriation. It simply amounted to an expression of her wish that, the defendants should concede their liability to the extent suggested, and induce the plaintiffs to look at it in the same way; And, further, there was no delivery of the instrument to the proposed assignee, no agreement or understanding on the subject, and no knowledge, even, on the part of such assignee, that the instrument had been executed.

A suggestion is made that the defendants may be liable upon the doctrine enunciated in Lawrence v. Fox, 20 N. Y. 268. This celebrated case has been invoked in support of many vagaries, but none quite so farfetched as this. Mrs. Osborne assumes to direct the defendants to settle a claim against themselves made by a third person (which claim they dispute) for an amount which she arbitrarily fixes, and to pay the sum, in case the third person is willing to accept it, out of moneys which they hold for their own security. There is surely no possible analogy between this and a promise made by the defendants to Mrs. Osborne, upon a valuable consideration, for the benefit of the plaintiffs.

There is one other fact which should be mentioned: It appears that on an examination in supplementary proceedings, in another case, Mr. Armstrong submitted an account, in which Mrs. Osborne was charged with the amount of the check for $939, as; paid to Klaber & Son in settlement of the claim. This charge was a plain mistake. The fact was that the check was not delivered or used, and the. amount was not paid, in settlement or otherwise. This entry was simply an inaccurate statement made, by an oversight, to a stranger to the present suit,—a statement which misled no one, and of which neither Mrs. Osborne nor Klaber was aware. Such a statement certainly created no estoppel, nor did it in any wise affect the real facts of the case.

The conclusion is inevitable, from all the facts, that this action is without merit, and that the complaint should have been dismissed. The judgment must therefore be reversed, and a new trial ordered, with costs to the appellants, to abide the event. All concur.  