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(158 N.E.)

Where, in rendering declaratory judgment, as provided by Civil Practice Act, § 473, on note, court had declared validity of note to be governed by laws of sister state, hence not rendered void by statute against usury, it erred in further declaring the extent to which plaintiffs' rights could be enforced in the sister state, courts having no power beyond territorial limits.

2. Action 6-In rendering declaratory judg- | at the rate of 10 per cent. per annum, payable ment, court erred, after stating rights under quarterly, in advance, until said principal note, in declaring extent of enforcement of sum is paid whether at or after maturity, all such rights in sister state (Civil Practice Act, installments to bear interest at the rate afore§ 473). said until paid." As collateral security for the payment of the note Van Rensselaer assigned to the payee his interest in a trust fund established under the fifth clause of the will of Frances M. Hoyt, deceased. Under the terms of that will Van Rensselaer was entitled to the principal of that fund upon the death of his mother. Other assignments of his interest in this property have been made thereafter by the defendant Van Rensselaer to secure indebtedness to other persons. The principal of the note has never been paid, and no interest has been paid since September, 1907. It has been assigned to, and is in the possession of, the plaintiff. The plaintiff has brought this action in which it asks for a declaratory judgment that it has a prior and paramount lien upon the defendant Van Rensselaer's interest in the property in the trust fund for the sum of $14,000, with interest at 10 per cent. since September 1, 1907, com

3. Constitutional law 70(1)—In interpreting declaratory judgments statute, court could not limit by construction a power unlimited by Legislature (Civil Practice Act, § 473).

In interpreting Civil Practice Act, § 473, relative to declaratory judgments, court could not limit, by construction, a power which the Legislature had conferred without limitation.

4. Courts 19-Right in foreign collateral security for note, could be enforced only in state where situated.

Where the collateral security of a promis-pounded quarterly in accordance with the sory note was situated in another state, right in collateral, being in rem, could be enforced only in the state where situated.

Crane and Andrews, JJ., dissenting.

terms of the note made by Van Rensselaer. The plaintiff in its complaint also prayed for judgment of foreclosure of its alleged lien upon this property, but at the trial withdrew the prayer for such relief.

All parties who might have any claim to Appeal from Supreme Court, Appellate Di- the note or to the interest of Van Rensselaer

vision, Second Department.

in the property, transferred as collateral se

Action by the Westchester Mortgage Com-curity for the notes, were made parties depany against the Grand Rapids & Ionia Railroad Company, John A. Van Rensselaer, and others. A judgment of the Special Term for defendant Van Rensselaer (126 Misc. Rep. 534, 213 N. Y. S. 593) was, on plaintiff's appeal, modified and affirmed by the Appellate Division, Second Department (219 App. Div. 733, 219 N. Y. S. 695), and plaintiff and defendant Van Rensselaer file cross-appeals. Judgment modified, and, as modified, affirmed.

Jonathan Holden, of New York City, and Alphonso V. Brisson, of White Plains, for plaintiff.

Aaron H. Marx and Walter E. Godfrey, both of New York City, for Van Rensselaer. Herbert Barry and Henry W. Proffitt, both of New York City, for Marian R. Kennedy et al., as executors.

fendants. In their answers the defendants also asked for a declaration of their rights in accordance with claims they set forth. Upon this appeal we need consider only the issues raised by the defendant Van Rensselaer, who asked for a declaration that the note and assignment are usurious and void and that any cause of action based on either of them is barred by the statute of limitations, under the laws both of New York and Rhode Island.

[1] After a trial of the issues, a judgment was rendered at Special Term declaring that the note is owned by the plaintiff, but that it is usurious and void. Unquestionably the note is usurious if it was made in the state of New York, and is governed by the laws of this state. The Appellate Division has made findings and conclusions to the effect that the

Charles Rush, of New York City, for Flor-note was made and delivered in Rhode Island, ence H. Hurd et al., as executors.

and its validity must be determined by the laws of that state. It also found that:

LEHMAN, J. In May, 1906, John A. Van "It is the law of Rhode Island that the legal Rensselaer executed and delivered to James rate of interest is 6 per cent., but any rate may J. Phelan a note payable at Newport Trustable, in which case the agreement is unenforcebe agreed upon, except the rate be unconscionCompany, Newport, R. I., one year after date, for the sum of $14,000, “with interest thereon

able and will not be upheld except to the extent of enforcing the payment of the principal

of the note in question with 6 per cent. simple, court decided that the construction and the interest thereon."

legal effect of the note and the assignment, as collateral security, of the defendant Van Rensselaer's interest in the trust fund created under the will of Frances M. Hoyt are governed by the law of Rhode Island, and that the loan transaction is not rendered void by our statute against usury, it should not have made any further declaration of the extent to which the rights of the plaintiffs may be enforced in the state of Rhode Island. Section 473 of the Civil Practice Act provides that:

The "Supreme Court shall have power in any action or proceeding to declare rights and other legal relations on request for such declaration, whether or not further relief is or could be claimed, and such declaration shall have the force of a final judgment."

The court thereupon adjudged that the promissory note and assignment executed by the defendant Van Rensselaer is a "good, valid and existing lien against the trust established by the fifth clause of the will of Frances M. Hoyt, deceased; to the extent of $14,000, with interest at the rate of 6 per cent. per annum." The defendant Van Rensselaer appeals from the decision that the note is not usurious and void. The plaintiff appeals from the decision that the note cannot be enforced according to its tenor, for the full amount of principal and stipulated interest. The parties to the original loan have given unmistakable evidence that it was their intention that the transaction should be governed by the law of Rhode Island. All the instruments that passed between the parties In other jurisdictions where the courts were drawn by a Rhode Island lawyer. The possess similar power, there have been at note was dated in Newport. Before any times attempts to define the occasions when moneys were paid to Van Rensselaer he made the courts may properly exercise the power an affidavit before a notary public in Rhode conferred upon them. See Guaranty Trust Island, who also witnessed his signature to Co. of New York v. Hannay & Co., 1915, 2 K. the assignment. The borrower received the B. 536. We may not limit by judicial conproceeds of the note in the form of a check struction a power which the Legislature has drawn on a Rhode Island bank, and the note conferred without limitation. We may not was payable in Rhode Island. The property define the bounds within which that power assigned to the lender as collateral security may be exercised, except as we find such was situated in Rhode Island and subject to bounds implicit in the statute, read in the the Laws of that state and the jurisdiction of light of established public policy. The courts its courts. Since the essential provisions of of this state may command only in matters the contract were to be performed in Rhode where this state is sovereign. The powers Island and enforced, if necessary by appeal to of our courts do not extend beyond the terthe courts of that state, the parties might ritorial limits of the state, and our courts make their contract with such reference to the proceed with circumspection when they are laws of that state that the latter will govern called upon to give command even to a party its construction and effect. Manhattan Life whose person is subject to our own jurisdicInsurance Co. v. Johnson, 188 N. Y. 108, 80 N. tion, if such command might possibly conflict E. 658, 9 L. R. A. (N. S.) 1142, 11 Ann. Cas. with the sovereign power of another state. 223. Even if the terms of the loan had been Niagara Falls International Bridge Co. v. agreed upon in New York before the written | Grand Trunk R. Co. of Canada, 241 N. Y. 85, instruments were actually signed and deliv- | 148 N. E. 797. The same considerations which ered, no conclusive inference can be drawn from that fact, that the intent to have the law of Rhode Island govern the validity and effect of the contract was merely an intent to evade our statute of usury. Seeman v. Philadelphia Warehouse Co., 47 S. Ct. 626, 71 L. Ed. 1123. The intent to have the law of Rhode Island govern the construction and effect of a contract, which in many of its essential features was to be performed in that state, might well exist even if no statute of usury had existed here. It cannot be said here that the form in which the transaction was clothed was merely a means or subterfuge for the accomplishment of an illegal act. On this point we agree with the findings and conclusions of the Appellate Division.

[2, 3] We are of the opinion that after the

limit the courts of equity in their determination of where they can or should give commands which may have effect beyond the territorial limits of our state must likewise limit them in their determination of when they can or should make a declaratory judgment which would have similar effect. Such limitations may not be disregarded in spite of the general language of the statute.

In the present case the Appellate Division has declared the extent to which the courts of Rhode Island will enforce the contract of loan. We may assume that the decisions of the courts of Rhode Island show, as the Appellate Division has found, that under the laws of Rhode Island parties may by agreement fix any rate of interest, but that a court of equity will give relief against a contract

(158 N.E.)

which fixes a rate of interest which is uncon- | erty within that state as to preclude the parscionable. When appeal is made to our courts ties from again litigating in that state an for relief in a matter of which they have ju- issue already determined here. Even if that risdiction, they may, of course, determine as be the result of the judgment rendered in this a question of fact what is the law of a foreign case, the fact still remains that the courts jurisdiction and then decree relief in accord- here have determined that issue without any ance with the law so found. Here, after the purpose of granting relief here, and not as Supreme Court has determined that the plain- part of a declaration of "rights" which may tiff is the owner of the note, and has a lien be made effective here without resort to the upon the interest of Van Rensselaer in the courts of a foreign sovereignty, or of “legal property in Rhode Island, it can grant the relations," with consequential result here beplaintiff no further relief. The plaintiff's tween persons within the jurisdiction of our rights to such property are not merely deter- own courts. The plaintiff's rights against the mined by the law of Rhode Island, but can be property in Rhode Island are rights in rem. enforced only in the courts of Rhode Island. They can be enforced solely by the courts of Only by resort to the courts of that state may Rhode Island. The Supreme Court has been the lien upon the property in Rhode Island asked to declare what the plaintiff's rights be foreclosed. The defendant Van Rensselaer are. It has not been asked by the defendant has not asked the Supreme Court for relief Van Rensselaer to declare any rights he may against a contract which he claims is uncon- have to redeem or kindred rights. The decscionable or for a declaration that he has a laration of the extent to which the courts right to redeem his interest in the property of Rhode Island will enforce the plaintiff's assigned as collateral security for the note, rights has no purpose or effect, unless it be to upon payment of the principal of the loan remove to the courts of this state an issue with 6 per cent. interest. We do not pass which is properly determinable in an action upon the possible effect of a prayer for such to enforce rights in rem of which the courts of a judgment. Rhode Island have exclusive jurisdiction.

If the courts of one jurisdiction have the power to declare rights which can be made effective only by appeal to the courts of another sovereignty, it is a power which in the interests of comity must be sparingly exercised. British South Africa Co. v. Companhia De Mocambique, 1893 App. Cas. 602. Perhaps where question of the law of this jurisdiction may be the determinative factor in an action in a foreign jurisdiction, our courts might declare the law of this jurisdiction as an aid to the foreign court. The Manar, Northern Trust, Ltd., v. Strachan Bros., 89 L. T. (N. S.) 218. (1903). Doubtless there may be other circumstances where a declaration of legal rights here might serve a useful purpose, though enforcement of these rights might rest exclusively in the courts of another jurisdiction. We do not now decide whether power to make such a declaration exists, and if so, its possible limitations. We decide only that even if the courts of this state have the power to declare rights arising under a foreign law and enforceable only by the courts of a for

When in this action the court declared that the plaintiff's lien upon property in Rhode Island under the laws of that state was enforceable to the extent of the principal and 6 per cent. interest only, its declaration, according to the statute, had "the force of a final judgment," yet the plaintiff must still resort to the courts of Rhode Island for the enforcement of the lien we have declared. Until then the declaratory judgment would be without practical effect. If our courts had declared that the lien of the plaintiff was, under the laws of Rhode Island, enforceable in accordance with the rate of interest fixed by the contract, such declaration could hardly fetter the conscience or the powers of a court of equity in that state when called upon to enforce the lien upon property situated in that sovereignty. It might still determine that it would not lend its power to the enforcement of a contract which it believed was unconscionable. We infringe upon the exclusive jurisdiction of courts of Rhode Island if we assume to dictate to them the extent to which they should enforce a lien upon property with-eign jurisdiction, it was error to exercise that in that state. If that is the purpose and effect of the declaration made in this case, then it would seem clear that such a declaration should not have been made.

power in this case for the purpose of determining in advance the action which the conscience of the court of equity of Rhode Island should dictate it to take when appeal is made to that court.

[4] It may perhaps be said that the purpose and effect of the declaratory judgment is not The judgment should be modified by strikso much to bind the courts of the state of ing out from the judgment all reference to the Rhode Island in the determination of the ex- extent to which the plaintiff's lien is enforcetent to which they may enforce a lien on prop-able, and, as modified, affirmed without costs.

CARDOZO, C. J., and POUND, KELLOGG,, one denying injunction would not permit deand O'BRIEN, JJ.,

concur.

CRANE and ANDREWS, JJ., dissent.

Judgment accordingly.

(246 N. Y. 203)

DICKINSON et al. v. SPRINGER et al. Court of Appeals of New York. July 20, 1927. 1. Appeal and error -870(5)-Order denying motion to strike parts of answer held not reviewable on appeal from final judgment dismissing complaint.

On appeal from final judgment dismissing complaint, order denying motion to strike defense of res judicata and counterclaim from answer, from which no appeal was taken, is not reviewable.

2. Appeal and error 358-No appeal lies from Appellate Division's decision affirming interlocutory direction for trial, without permission.

fendants in the other to enforce penalty of bond, given when temporary injunction was served, since denial of injunction referred only to time of trial.

Appeal from Supreme Court, Appellate Division, First Department.

Action by Frederick S. Dickinson and another against John Springer and others. complaint was affirmed by the Appellate DiviJudgment of the Special Term dismissing the sion (218 App. Div. 831, 219 N. Y. S. 799), and plaintiffs appeal. Reversed on condition.

Edward F. Clark, Leonard J. Reynolds, and Oscar B. Lowman, all of New York City, for appellants..

George W. Bristol and John S. Wise, Jr., both of New York City, for respondents.

LEHMAN, J. The plaintiff brought this action in April, 1922, for the purpose of ob

Where direction for trial is only interlocu-taining an injunction against these defendtory, no appeal lies from decision of Appellate ants, prohibiting them from selling or disDivision affirming such direction without per- posing of certain capital stock of the plaintiff mission of Appellate Division. Dickinson Cord Tire Corporation, which, according to the allegations of the complaint, belonged to the plaintiff Frederick S. Dickinson, and, without authority from him, came

3. Judgment 822(3) Where actions in different states were based on same claim, judgment in one is conclusive between parties as to all matters which might have been liti-into the possession and control of the defendgated.

Where complaints in actions in different states, though different as to certain allegations, are both based on same alleged claim or cause of action, judgment in one is conclusive adjudication between parties, not only as to all matters litigated, but as to all matters which might have been litigated therein.

4. Injunction 123-In suit for injunction, only issues are those determining right to relief at time of trial.

In suit for injunction to restrain sale of stock, only issues that could be litigated were those which would determine right to injunc

tive relief at time of trial.

5. Equity 41-Where it was shown that no ground for equitable relief existed in injunction suit, court was not bound to pass on question of money damages.

Where complaint in suit for injunction to restrain sale of stock included demand for damages, equity was not bound, after it was shown that no ground for equitable relief existed, to pass on question whether plaintiff had right to money damages on claim cognizable at law, but it might in its discretion relegate parties to action at law.

6. Injunction 243-Judgment denying injunction in one of two suits based on same claim will not permit defendants in the other to enforce penalty of bond accompanying temporary injunction.

Where suits for injunction were brought in two states based on same claim, judgment in

ant John Springer. The action was commenced by the service of the summons and complaint and an order to show cause, together with supporting affidavits and injunction bonds, upon the defendants Steelman and Birkins who are alleged to be the brokers of the defendant Springer, and upon the defendant George Bristol, a lawyer retained by him. These defendants answered the complaint. The defendant Springer was not served at that time. It appears that the order to show cause, served upon the defendants Steelman & Birkins and Bristol, contained a temporary injunction or stay which was vacated upon the return of the order to show cause. In September, 1922, the plaintiffs began a new action in New Jersey against the defendant Springer alone. The complaint asked for substantially the same relief. In that action a temporary injunction was obtained which restrained Springer from disposing of the stock in his possession until the trial of the action. No bond was given or required upon the granting of that injunction.

The action in New Jersey resulted after trial in a judgment in favor of the defendant Springer on the merits. After his successful defense in the New Jersey action, Springer appeared voluntarily in the New York action and pleaded as an affirmative defense the prior adjudication in New Jersey. In his answer he also set up a counterclaim for

(158 N.E.)

$250,000. In this counterclaim Springer alleged that the plaintiff had wrongfully prevented him from disposing of the stock owned by him, while there was a market for such stock; that the actions in New York and New Jersey were brought maliciously and based upon false allegations; that the temporary injunction in the order to show cause in the New York action and the injunction | pendente lite in the New Jersey action were procured by means of false affidavits; and that, in the interim between the time when the injunction in the New York action was vacated and the injunction pendente lite granted in the New Jersey action, the plaintiffs maliciously circulated false stories among possible prospective purchasers of Springer's stock to the effect that the stock was stolen.

upon the appeals from the judgments, it was not brought to that court for review by proper notice in accordance with section 580 of the Civil Practice Act. The order denying the motion striking out the defense of res adjudicata did not "necessarily affect the judgment" dismissing the complaint, for the plaintiffs might still urge upon the trial that the proofs did not establish a defense. Ansorge v. Kane, 244 N. Y. 395, 155 N. E. 683.

[2] No judgment has finally determined the issues raised by. the counterclaim and the reply, and the direction for a trial is concededly only interlocutory. No appeal lies from the decision of the Appellate Division affirming that direction, without permission of the Appellate Division. Indeed, no appeal has been attempted in regard to that branch of the decision. Even if there should be doubt as to whether Springer may set up such a counterclaim in this action, we may not upon this appeal resolve that doubt either way.

The complaint in the action is somewhat voluminous. Its allegations may be summar

The plaintiffs thereupon made a motion to strike out the defense of prior adjudication on the ground that it was insufficient on its face, and to strike out the counterclaim on the ground that the counterclaim is not one which may be properly interposed in this ac-ized briefly as follows: The defendant tion. The motion was denied, and the plaintiffs did not appeal to the Appellate Division from the order of denial.

Springer has in his possession and is endeavoring to sell certain stock of the Dickinson Cord Tire Corporation. Though the stock stands in Springer's name, it in fact is the property of the plaintiff Frederick S. Dickinson, and was never delivered to Springer. The stock was placed in Springer's name upon his express agreement that it would not be offered for sale until the treasury stock of the corporation had been sold and the pro

When the case came to trial, records in the New Jersey action were offered in evidence. The justice at Special Term held that these records showed a prior adjudication in New Jersey which constituted a bar to the prosecution of the same cause of action in New York, and directed judgment in favor of the defendants, dismissing the complaint. Judg.ceeds paid into the corporation treasury as ments were entered separately in favor of the separate defendants. The judgment in favor of the defendant Springer orders and adjudges that the complaint should be dismissed and that the issues raised by the counterclaim and the reply thereto should be tried before a jury. The judgments in favor of the other defendants who had pleaded no counterclaim finally determined the litigation as to them. The Appellate Division has unanimously affirmed the judgments. Separate judgments of affirmance were again entered, and the plaintiffs appeal from these final judgments by permission of this court.

[1] The only question which we may review upon this appeal is whether the records in the action in New Jersey which were introduced at the trial show a binding adjudication of all the issues in this case. The plaintiffs have sought by their notice of appeal to this court to bring up for review the order of the Special Term denying their motion to strike out from the answer of the defendant Springer the defense of res adjudicata and the counterclaim. No appeal was taken to the Appellate Division from this order, and,

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capital. In addition to other relief an injunction is asked against a sale or offer for sale by Springer or his agents of this stock, on the ground that the stock does not belong to Springer and that in any event it may not be offered for sale or sold until the treasury stock is sold.

[3] The allegations of the complaint or bill in the New Jersey action are somewhat dif ferent, but the relief asked is likewise an injunction which would prohibit Springer or his agents from selling or offering for sale the stock standing in his name, on the ground that the stock belongs to Frederick S. Dickinson and was never delivered to Springer, and that Springer had agreed that he would not sell or offer the stock for sale until the corporation should have received the sum of $500,000 from the sale of its treasury stock. In spite of some differences in the allegations of the complaints in the two actions, it is plain that they are both based upon the same alleged claim or cause of action. It follows that the judgment in the New Jersey action is conclusive adjudication between the parties, not only as to all matters litigated, but as to all matters

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