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OSTROFF v. JOHNSON

July 27, 1948

OSTROFF
v.
JOHNSON et al.



The opinion of the court was delivered by: MADDEN

There are two motions made in the above matter by the defendants, Johnson and Taub. First, to dismiss the complaint filed herein by plaintiff and second, to vacate a preliminary injunction granted by the court upon such complaint, supporting petition and affidavits.

For the purposes of this motion the allegations of plaintiff's complaint

 The complaint, in substance, alleges that on June 20th, 1944, the defendant, William L. Taub, executed a note in the sum of $ 3,500 to the order of one Riker & Company, which note said defendant Taub had plaintiff Ostroff endorse as an accommodation endorser. Said note was subsequently negotiated to the Modern Industrial Bank in New York City. Said note was not paid and suit was instituted by the holder against Taub and Ostroff, in the Common Pleas Court of Atlantic County, New Jersey. Judgment was entered against them and Taub appealed, filing the necessary appeal bond. The surety on this bond was the Home Indemnity Company. As security for this appeal bond, Taub placed $ 4,000 in a savings account in the Manufacturers Trust Company of New York and assigned the same to the Home Indemnity Company. The appeal was lost and the surety, Home Indemnity Company, paid the judgment receiving an assignment of the same from the plaintiff therein. Home Indemnity Company then called upon Taub for payment. He complied by turning over to the Home Indemnity Company the savings account hereinbefore mentioned together with personal funds in the amount of $ 71.18, but instead of having the judgment canceled, he had made or made an assignment of the same from the Home Indemnity Company to the defendant, Florence Osbeck Johnson. Florence Osbeck Johnson has had execution issued by the Clerk of the Court (Atlantic County Court of Common Pleas) and a levy made upon funds in the hands of the Chelsea Title and Guaranty Company belonging to plaintiff. The complaint alleges that defendant, Florence Osbeck Johnson, has paid no money for such assignment of judgment; that it was paid for by defendant Taub, the original debtor for whom Ostroff was an accommodation endorser; that Johnson is an agent or nominee of Taub for the purpose of fraudulently attempting to collect such judgment from Ostroff.

 Complaint, therefore, seeks an injunction prohibiting Johnson from proceeding wit said execution and levy; that the assignment be declared a nullity and that the defendants be ordered to cancel the judgment of record.

 The motion to dismiss the complaint is supported by four arguments and as understood by the court they are as follows:

 (a) Plaintiff has an adequate remedy at law.

 (b) The same action is pending in another court.

 (c) That Home Indemnity Company is not a proper party.

 (d) That the suit involves a res in the possession of another court and therefore cannot be maintained in this court.

 The motion to vacate the preliminary injunction is based upon the argument that it is forbidden by Title 28 U.S.C.A. 379.

 In relation to the first and second arguments of defendant that plaintiff has an adequate remedy at law and a similar action is pending in another court, the court has examined the statutes cited, namely, the Negotiable Instruments Act, N.J.S.A. 7:2-119, and 7:2-120, and the Judgment Act, N.J.S.A. 2:27-309, 2:27-310, 2:27-311 and can find no provision in such statutes or the cases cited thereunder for relief to plaintiff if he can prove his allegations of fraud. The mere fact that a state court may have concurrent jurisdiction does not preclude plaintiff from seeking equity at the hands of court if he meets the jurisdictional requirements, namely, that there is diversity of citizenship and the amount in controversy exceeds $ 3,000 exclusive of interest and costs. This principle is so well settled it needs no discussion.

 The defendants, Taub and Johnson, say that the Home Indemnity Company is not a proper party. The Home Indemnity Company has said nothing though served through the Banking and Insurance Commissioner of the State of New Jersey. Be that as it may, the court feels that the defendant, Home Indemnity Company, is a proper party.

 We now come to the fourth argument, namely, that the suit involves a res in the possession of another court. If this were so, the court would naturally follow the directions of the United States Supreme Court in Toucey v. New York Life Insurance Company, 314 U.S. 118, 62 ...


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