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App. Div.]

First Department, December, 1920.

38 id. 579; City Bank of New Haven v. Perkins, 29 N. Y. 554; Gage v. Kendall, 15 Wend. 640.]"

In the instant case the S. S. Corporation alleges, among other things, that the alleged assignment is a fraud upon its creditors.

*

In City Bank of New Haven v. Perkins (29 N. Y. 554), cited in the Sheridan Case (supra), the action was based upon negotiable instruments in which the defendant claimed that the indorsement by the cashier of the Bank of Akron was not valid and binding upon that bank as between it and the plaintiff. The court said that the Bank of Akron was not a party to the action and that "the defendant claims no title to the paper and does not pretend to have any interest in it, except as a promisor, liable to pay to any proper holder. There is no party before the court [italics ours] who has any legitimate interest in questioning the plaintiff's title, or who has, as it seems to me, under the circumstances of this case, any right to be heard on that question. Upon what grounds, then, can the defendant, as a mere debtor, be permitted to defeat the action? It has been held that if a defendant can show that the plaintiff obtained the note by his own fraudulent act, he has a right to defeat the action on that ground, although he may be liable to pay the note to the true owner. (Talman v. Gibson, 1 Hall, 308.) OAKLEY, J., in delivering the opinion in that case, says: 'This proceeds on the general doctrine, that no man can acquire a right, by his own fraud, to sustain an action in any court; and it is a principle of general application.' In that case, however, it appears that the defense was set up for the defendant by one Hyslop, who claimed to be the true owner of the note and had demanded it of the plaintiff. The same principle was adopted by this court in Houghton v. McAuliffe, decided at the last December term (reported 26 Howard's Practice Reports, 270). The action was against the makers, who refused to pay on the ground of the illegality of the transfer to the plaintiff. It was held that the transfer of the note was contrary to the statute, and that the party who transferred it to the plaintiff was guilty of a criminal offense in obtaining the note, and could transfer no title to any one having notice that it belonged to another; and that the plaintiff, under the

First Department, December, 1920.

[Vol. 194.

circumstances, must be deemed to have notice that the note belonged to the company to which it was given, and not to the person of whom he purchased it."

It would seem to follow from the foregoing views that where a third party claims to be the owner of a pending cause of action and that the plaintiff therein is a pretender, the former may become a party to the action and litigate the basic issue of plaintiff's right to maintain the action.

It should be borne in mind too that in the case just quoted the court was considering the title to negotiable instruments, as to which the rule is stricter than where an assignment of a chose in action is involved. Hays v. Hathorn (74 N. Y. 486) is authority for the proposition that where in an action upon a note the answer sets up that the plaintiff was not the legal owner of the note, nor the real party in interest, the defendant under the issue created was permitted to prove the allegations of the answer. It is convincingly pointed out in the opinion of that case that in the leading case of Sheridan v. Mayor (supra) the assignment of plaintiff's claim therein referred to was expressly declared to protect the debtor paying the assignee against a subsequent suit by the assignor." The amended answer of E. L. Barnett, Inc., in this case pleads, among other things, payment of the debt to the S. S. Corporation prior to the notice to it of any valid assignment to plaintiff and also that the alleged assignment was executed for the purpose of giving a preference to one creditor over other creditors at a time when the S. S. Corporation was insolvent.

It should be borne in mind that in the cases where the courts hold that it is none of the defendant's business to inquire into the consideration of an assignment duly executed by an assignor, no issue was tendered upon his right to execute it, nor was there any allegation of any notice to the defendant of any infirmity in the assignment. In the present case as before stated the question of plaintiff's title to the cause of action is attacked by the defendant E. L. Barnett, Inc., which had notice that the S. S. Corporation claimed that the plaintiff's alleged assignment was invalid.

It seems to us that section 452 of the Code of Civil Procedure is peculiarly applicable under the state of facts here appearing. The S. S. Corporation is directly interested in the alleged

App. Div.]

First Department, December, 1920.

cause of action and, therefore, entitled to intervene to protect its right by defeating a recovery by the plaintiff. This conclusion is fortified by the fact, which is undisputed, that the debt upon which the cause of action rests has been paid to the petitioner by the defendant upon the delivery to it of a bond of indemnity given to it by the S. S. Corporation which thus succeeded to all the interests of the defendant in this action. Justice to both the defendant and the petitioner requires the granting of the motion.

The determination of the Appellate Term is reversed, with ten dollars costs and disbursements of this appeal, and the order of the City Court of the City of New York is reinstated, with ten dollars costs and disbursements of appeal at the Appellate Term.

CLARKE, P. J., LAUGHLIN, DOWLING and MERRELL, JJ.,

concur.

Determination reversed, with ten dollars costs and disbursements of this appeal, and order of City Court affirmed, with ten dollars costs and disbursements of appeal at the Appellate Term.

C. A. GAMBRILL MANUFACTURING COMPANY, Respondent, v. AMERICAN FOREIGN BANKING CORPORATION, Defendant, Impleaded with E. R. SHERBURNE COMPANY, Appellant.

First Department, December 17, 1920.

Injunction suit to restrain payment and receipt of money on letter of credit sufficiency of affidavit on motion for preliminary injunction — complaint verified by plaintiff's attorney not to be treated as affidavit — preliminary injunction not granted where rights of parties doubtful.

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Where in a suit to obtain an injunction to restrain the defendant bank from paying out money on a letter of credit and the defendant corporation from receiving it, the complaint was verified by the attorney for the plaintiff and the affidavit in support of a motion for a preliminary injunction, made by one of plaintiff's attorneys, stated the affiant's conclusions of alleged facts derived from persons, documents and papers

First Department, December, 1920.

[Vol. 194.

without disclosing the contents of the papers or the information or the substance thereof given to him, the motion should be denied.

On a motion for a preliminary injunction, although personal knowledge of the facts will not always be required where the person having such knowledge is not available, it is incumbent on the affiant for the moving party to set forth the alleged facts imparted to him by the individual having personal knowledge of the facts, and as to written papers on which he relies, they or extracts therefrom should be submitted. The complaint cannot be treated as an affidavit in support of the motion as it was verified by a member of plaintiff's firm of attorneys and not by the plaintiff.

The plaintiff is not entitled to a preliminary injunction since the motion is based on controverted affidavits and the rights of the parties under the contract in question are open to doubt and uncertainty.

APPEAL by the defendant, E. R. Sherburne Company, from an order of the Supreme Court, made at the New York Special Term and entered in the office of the clerk of the county of New York on the 24th day of November, 1920, granting plaintiff's motion for a preliminary injunction.

Godfrey Goldmark of counsel [Rosenberg & Ball, attorneys], for the appellant.

Leavitt J. Hunt of counsel [Robert McLeod Jackson, Ferdinand H. Pease and H. Victor Crawford with him on the brief], Hunt, Hill & Betts, attorneys, for the respondent.

GREENBAUM, J.:

The action is brought upon a state of facts quite analogous to those appearing in Frey & Son, Inc., v. Sherburne Co. (193 App. Div. 849) and Gambrill Mfg. Co. v. National City Bank (194 id. 894), in which this court during the November term, 1920, affirmed orders denying motions for injunctions which were sought to be obtained against the defendant Sherburne Company and the respective defendant banks. The injunction in the instant case was granted by the Special Term after the determination of the appeals just referred to and was limited to the defendant Sherburne Company. It seemed to us unnecessary upon the appeals just mentioned critically to analyze the contracts between the Sherburne Company and the Frey and Gambrill Companies respectively, for the reason that the papers upon which the motions were based were

App. Div.]
First Department, December, 1920.

insufficient to warrant the granting of injunctions against the Sherburne Company.

The complaint in this action alleges an agreement between plaintiff and the Sherburne Company for the sale and delivery to the plaintiff of 1,050 tons of white Java sugars, a copy of which is annexed to the complaint and reads as follows:

"C. A. GAMBRILL MFG. COMPANY,

--

"April 26, 1920.

"Baltimore, Md.

"Through: HENRY SLOTHOWER

"GENTLEMEN. We have this day sold to you for account of E. R. Sherburne Company, against and under their contract with their principals and contingent thereon, about three hundred fifty (350) tons, of 2240 lb. each, white Java sugars, July-August shipment seller's option, at 212c. net cash duty paid. About three hundred fifty (350) tons, of 2240 lb. each, white Java sugars, August-September shipment, seller's option, at 21c. net cash duty paid. About three hundred fifty (350) tons, of 2240 lb. each, white Java sugars, September-October shipment, seller's option, at 2012c. net cash duty paid. Net cash duty paid, ex-dock New York or ex-store New York, seller's option. Payment to be made net cash upon presentation of delivery order or warehouse receipt against irrevocable letter of credit to be opened by buyer immediately with some New York bank in favor of E. R. Sherburne Company for the full amount of the invoice, said bank to confirm same to E. R. Sherburne Company, 106 Wall Street, New York, immediately.

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Shipment: To be made by steamer or steamers from the Island of Java to New York during the months above specified, seller's option. Free from claims for non-delivery caused by 'force majeure,' fire, explosions, strikes, or by any contingencies beyond control of sellers, preventing the shipment or delivery of the goods. Should any unforeseen circumstances such as accidents, stress of weather, etc. prevent the steamer or steamers hereafter declared against this contract from clearing within the time specified above, and the sellers or their agents be unable to supply other tonnage of equal character and capacity, the buyer has the option of cancelling such portion of this contract as has not cleared within the

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