
    Constance B. Price, App’lt, v. De Witt C. Holman et al., Resp’ts.
    
      (Supreme Court, General Term, Third Department,
    
    
      Filed July 3, 1888.)
    
    1. Judgment—Code Civil Procedure, § 1204—What relief may be GRANTED UNDER—To WHAT CASES SECTION APPLICABLE.
    Under the provisions of the Code of Civil Procedure, the court is authorized to adjust the rights of all the parties who have appeared in the action, not only between the plaintiffs and the defendants, but between any of the parties represented. The provision of section 1204, Code of Civil-Procedure, is peculiarly applicable to this ca«e, as all the rights of the parties spring from the same transaction. And it is entirely proper that the rights and interests of all the parties, legal and equitable, should be adjusted in this action, to the end that a multiplicity of actions may he avoided.
    8. Same—Payments—Application of.
    It is a legal proposition that where a creditor accepts from a debtor the principal of a debt, that he cannot afterwards maintain an action to recover the interest which is a mere incident thereto. But it must very ■clearly appear that the sum received is understood to he principal and not a payment generally upon the entire debt, including interest as well as principal.
    Appeal by the plaintiff from a judgment entered in favor of the defendants, after a trial at the circuit, by the court without a jury.
    
      John L. Hill, for app’lt; M. A. Sheldon, for resp’ts.
   Ingalls, J.

Theview which we take of this case does not Tender it necessary to trace, with particularity, the history of this controversy which has extended through years, as the statement in a general way of a few of its features will suffice to present such view. The first action commenced hy the plaintiff was based upon the theory that Walter W. Price, her husband, being possessed of the sum of $10,000 which belonged to the plaintiff, included the same in a loan, which was secured by a mortgage for $50,000, executed to him by Theophilus and Theophilus E. Eoessle. The mort.gage did not show upon its face that the plaintiff had any interest therein. And the purpose of that action was to establish the fact that she was interested in said loan and in ;said mortgage to the extent, as she claimed, of $10,000. It was determined therein that she possessed such an interest, hut only to the amount of $5,000 of principal, besides interest "thereon. The second action seems to have been sanctioned by the court, as appears by the opinion which was delivered upon the decision by the general term of the motion by the plaintiff for leave to file a supplemental complaint, and which motion was denied, and such opinion contains the following: “It would be more in accord with legal and regular proceedings for the plaintiff, after entering her judgment, to the effect that she is the owner of $5,000 of the mortgage debt, and interest, to the protection of the mort.gage, etc., to undertake to establish the liability of the defendants’ executors for moneys collected and received by them, with such interest as the facts shall show she is entitled to. The learned justice who tried such action .recognized and acted upon such decision, as appears by his opinion, in which he says : The defendants claim that the judgment in the former suit, establishing the plaintiff’s claim in the mortgage to be $5,000, and the interest thereon from the date of the mortgage, fixes the ultimate liability of defendants to the plaintiff, and is a bar to this action. I do .not think I am at liberty to so hold, in view of the decision of the general term, practically reversing that portion of the order of the special term directing a discharge of defendants’ liability and a discontinuance of this action upon payment of the sum of $5,000, and interest thereon from the date of the mortgage.

The effect of such modification, is that the plaintiff is, or was, at the time of such modification, at liberty to prosecute this action for the purpose of establishing a liability beyond the amount of the loan of $5,000, and simple interest thereon, from the date of the mortgage. The condition of this litigation therefore, presents these two questions, whether the receipt of the $17,000 and interest annually,, upon the entire sum remaining undue upon the mortgage, and the treatment and management of the sum so received by Price, in his life-time, and by his executors since his death equitably impose upon the defendants, and give the plaintiff the equitable right to recover of the defendants, as such trustees, any sum beyond the amount of plaintiff’s loan of $5,000, and the interest thereon from the date thereof beyond the legal rate; and what the effect of plaintiff’s taking the sum ordered to be paid by defendants into court, which, comprised the $5,000 and legal interest thereupon, from the date of the mortgage to the time it was deposited in court under its order. ' •

This action was instituted by the plaintiff to carry into* effect such adjudication in the first action and to secure the fruits thereof, by compelling an accounting in regard to the-trust thus established, which embraced the principal sum of $5,000, money of the plaintiff which was loaned by the said Walter W. Price, to the Eoessle’s. And also in regard to the interest which her said husband received upon such loan during his life-time. And the interest which the said defendant, the executors and trustees, have received since-his decease. And also to charge them respectively with-compound interest, in consequence of their improper management of the fund, and their neglect to pay over such interest to the plaintiff. The complaint contained the following allegation:

“Sixth. And the plaintiff further alleges, upon information and belief, that after the said mortgage had been made and delivered to the said Walter W. Price, he received divers sums of money from the defendants, Theophilus and Theophilus E. Eoessle, by which about $17,000 of the principal sum, secured by said bond and mortgage, were paid, together with the interest thereon, and the interest upon the balance of said principal; and thereafter, and after the death of said Walter E. Price, the defendants, who are hie executors and executrix received and collected the interest with substantial regularity upon said bond and mortgage, and that such interest is nearly all paid, but how much, if any, more of either the principal or interest has been paid, the plaintiff does not know and cannot state. The prayer for relief contained in such complaint seems to be sufficient, and if it were not so, as the parties have appeared, the court could allow it to be made so. Under the provisions of the Code of Civil Procedure, the court is authorized to adjust the rights of all the parties who have appeared in the action, not only between the plaintiff and defendants, but between any of the parties represented. Section 1204, provides as follows: “ Judgment may be given for or against one or more plaintiffs, or for or against one or more defendants. It may determine the ultimate rights of the parties on the same side, as between themselves; and it may grant to a defendant any affirmative relief to which he is entitled.” Derham v. Lee, 87 N. Y., 599; Barker v. Cocks, 50 id., 689.

In this case, such provision of the Code is peculiarly applicable, as aU the rights of the parties spring from the same transaction. And it is eminently proper that the rights and interests of all the parties, legal and equitable, should be adjusted in this action, to the end that a multiplicity of actions may be avoided. It appears that Walter W. Price, received of the principal of such mortgage $17,000, and the interest annually upon the mortgage debt.

By the order of the court the executors were empowered to pay into court the sum of $12,864.82 in discharge of the judgments recovered by the plaintiff which included the $5,000 and simple interest thereon, and the costs awarded to her. There was deposited pursuant to the order with the treasurer of Washington county by the executors of Walter W. Price, the sum of $12,984.91; we do not understand how the amount was increased to that sum, and it is not necessary that we should, as there is no dispute in regard to the identity of the fund. Subsequently the said money was drawn at the instance of the plaintiff.

The plaintiff insists that as her hnsband Walter W. Price, received annually the interest upon the $5,000 and retained the same, minghng the money thus received, with his own funds, that she is entitled to recover interest upon, such interest moneys, from the time such payments were made respectively upon the theory that as between her husband and herself, the interest thus received, and retained by him, became principal in such sense as to entitle her to interest thereon, that the money thus received by him, was received for her benefit, and in equity and good conscience, he was bound to pay the same to her, which he not only neglected to do, but denied that she was entitled either to the principal or the interest.

Under such circumstances, it would-seem that the plaintiff would have a valid claim against the estate of her deceased husband, or in the fund created by the mortgage, as a part of such estate, to the extent of her claim of interest, upon such annual payments of interest. It does not seem io be a valid answer to her claim, that she did not prove upon the trial, that she demanded such interest money, from time to time, as it was the duty of the husband to pay it over, and certainly the attitude which he assumed in regard to her right thereto, should deprive him of any such -defense to her claim, and equally bind those who represent his estate. The views expressed by the members of this •court, in deciding the appeal from the order of the special term granting leave to said executors to pay the money into ■court, as appears by their opinions seem to favor the theory advanced by the plaintiff in regard to her claim.

Justice Learned in his opinion remarks, “It will thus be ;seen that, so far as the action secondly commenced sought to recover the $5,000 and interest, it was unnecessary. The plaintiff had been adjudged to have a hen on the bond •and mortgage, and to be entitled to the benefit of any judgment thereon. Until there was a refusal on the part of the executors to pay that hen upon demand, an action such as was secondly commenced was unnecessary, and perhaps •could not be sustained. This remark does not apply to the ■demand for annual rests.

The order appealed from directs that on the payment into court of the moneys above mentioned, this action secondly commenced and first above entitled, shall be discontinued, and either party may enter an order to that effect. In this respect we think the order should be reversed. Possibly some other modification of language may be necessary, especially as to the part which discharges the •executor from ah liability in respect to the bond and mortgage,_ and requires from the plaintiff and others a release. In brief, we think that the executors are entitled to satisfy the judgment in the action first commenced by paying the .amount into court, and thereupon receiving the proper discharge as to that judgment. As to the other action we think it cannot be discharged by our compulsory order. Justice Landon states as follows: “I concur with the presiding justice in the result. The defendants in the first action are entitled to satisfy the judgment and extinguish plaintiff’s lien upon the mortgage. But if the mortgagee received moneys as trustee for the plaintiff and converted them to his own use, then as to the increment of those moneys, whether arising from the actual profits therefrom ■or by law chargeable against him, he may be' found to be the debtor of the plaintiff, not as to the proceeds of the bond and mortgage, but as the penalty of his conversion of ■such proceeds to his own use. The complaint in the second .action proceeds upon this theory, and the plaintiff cannot, ■be compelled to abandon it, except upon trial upon the merits, unless the defendants pay into court the full amount -demanded. We do not intend even to intimate that the ■executors have been guilty of any improper conduct in regard to the fund in question. But if upon further investigation it should be made to appear that the estate of Walter W. Price should be charged with the payment of the claim asserted by the plaintiff, the executors may be required to pay the same out of moneys in their hands, derived from such bond and mortgage, or from some other source. The learned justice who tried this case at the circuit seems to have been of the opinion that the plaintiff by withdrawing from the court the money so deposited had concluded 'herself from asserting the claim which she then made, and now here insists upon. His decision in this case contains .the following conclusions of law, which were excepted to by the plaintiff. That the judgment in the former action to which this is supplemental in a certain sense, having been paid and satisfied, this action cannot be maintained after plaintiff and her attorney’s acceptance of the moneys from the treasurer (see 41st exception). That the whole of the principal debt claimed having been paid to and voluntarily received and accepted by plaintiff, she cannot maintain this action to recover interest, upon the facts proved and found in this case. (See 42d exception.)

_ That the whole of the principal involved in this action, with interest thereon, having been paid to and voluntarily accepted by the plaintiff, she cannot maintain this action to recover more interest upon the facts proved and found in this case. See 43d exception. That the only sum or amount for which defendants, as executors, ever since said judgment were liable to account to plaintiff by reason of any trust referred to in the complaint herein, was •said sum of $5,000 and interest. See 44th exception. We -are unable, in view of the facts of this case, to assent to the legal proposition upon which the learned justice seems to have disposed of this case adversely to the plaintiff. This -court greatly modified the order of the special term, which authorized the depositing of such moneys by the executors with the treasurer. And such modification carried with it, we think, such a restriction in regard to the effect of such •payment into court, as fairly to convey the impression that such order was not intended to prevent the plaintiff from asserting a claim to an additional amount against the estate -of her husband. Nor do we think that the drawing of the money thus deposited in court by the plaintiff, concluded her from asserting such claim, and if established by compe"tent evidence, from recovering the same. Such decision of .the learned justice was material and clearly prejudicial to the plaintiff’s case. We do not intend to deny the legal, proposition that where a creditor accepts from a debtor the principal of a debt, he cannot afterwards maintain an action to recover the interest which is a mere incident thereto. But it must very clearly appear that the sum received was-understood to be principal and not a payment generally upon the entire debt, including interest as well as principaL This case, upon the plaintiff’s theory, is not brought within the principle above stated. The interest, when received by Walter W. Price, according to plaintiff’s contention, became principal, as has been before remarked, and, therefore, the payment of the $5,000 would not have the effect to cancel the plaintiff’s claim to such compound interest. We conclude that an error was committed at the trial which calls for a reversal of the judgment, and a new trial, which, should be had, with costs to abide the event.

Learned, P. J., and Landon, J., concur.  