New York County NyArchives Court.....Northampton, Nat'l Bank Vs. W Gill Wylie 1889
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Source: Reports Of Cases - New York
Written: 1889

First Department, March Term, 1889.

THE NORTHAMPTON NATIONAL BANK, Respondent, v. W. GILL WYLIE, Appellant, 
Impleaded, etc.

Attachment — sureties upon an undertaking for.

The sureties upon an undertaking, given upon procuring an attachment, are not 
liable for general counsel fees incurred or for witness fees expended in the 
conduct of the action in which the attachment is issued. 
Quoere, whether such counsel fees are recoverable against sureties where they 
are incurred in direct proceedings taken for the purpose of vacating of setting 
aside the judgment.

Where the attachment is levied upon a fund deposited in a bank, and the 
plaintiff does not succeed in the action, the owner of the fund thus deposited 
is entitled to recover such an amount as represents the excess of interest which 
he could have obtained for the money so levied upon, over and above the amount 
of interest allowed by the bank in which the deposit was, and where it remained 
during the time of the continuance of the levy.

Appeal by the defendant W. Gill Wylie from a judgment rendered upon the decision 
of the court, upon a trial before the court without a jury at a Circuit Court in 
the county of New York, and entered in the clerk's office of that county on the 
18th day of April, 1888.

George H. Adams, for the appellant.

Peckham & Tyler, for the respondent.

Daniels, J.:

The plaintiff is a national banking association, created under the laws of the 
United States, located and carrying on its business in the State of 
Massachusetts. The defendant commenced an action against it in the Superior 
Court of the city of New York, and obtained an attachment in that action which 
was served upon the First National Bank in the city of New York. This bank was 
the depositary and correspondent of the plaintiff, and by the attachment $12,000 
of the deposits was seized and held by the sheriff. The money was not paid over 
by the First National Bank, but it was charged against the plaintiffs' account 
as so much money subjected to the attachment. The plaintiff appeared in that 
action and answered the complaint, which was for the loss of bonds deposited 
with it for safe-keeping by the plaintiff in the action in which the
attachment was issued. The bank appears to have been robbed and these bonds 
taken by the thieves, and they thereby have become lost to the owner. The bank, 
by its answer, put in issue the charges upon which its liability was made to 
depend, and defended the action without moving to vacate the attachment. Such a 
motion, however, would then probably have proved ineffectual for the reason that 
it was held by the courts of this State that the property, within this State, of 
a national bank, created and located in another State, might be seized under an 
attachment issued against it as a non-resident by virtue of the laws of this 
State. (Robinson v. National Bank of New Berne, 19 Hun, 477; affirmed, 81 N. Y., 
387.) And that continued to be the exposition of the law in this State until 
after the trial of the action brought against the plaintiff. Since then, 
however, full effect has been given to the language of the act of congress, in 
the case of the Pacific National Bank v. Mixter (124 U. S., 721), which has so 
restrained the State attachment laws as to exclude the right to issue an 
attachment under them against a national bank, located and doing business in any 
State.

After the suit had been commenced against the plaintiff in this manner, it was 
removed into the Circuit Court of the United States at its instance, and upon a 
trial in that court a verdict and judgment was recovered in favor of the bank, 
and that was affirmed upon a writ of error taken to the Supreme Court of the 
United States. And it was after that affirmance that this action was brought by 
the Northampton Bank against the sureties in the undertaking, given upon the 
issuing of the attachment, to recover the damages which the bank had sustained 
by reason of the attachment. The undertaking was in the form prescribed by 
section 640 of the Code of Civil Procedure, and the costs recovered by the bank 
by means of the judgment have been paid. The undertaking conformed literally to 
this section of the Code, and the sureties undertook and obligated themselves, 
in case the defendant in the attachment recovered judgment, or if the warrant 
was vacated, that the plaintiff in that action would pay all costs which might 
be awarded to the defendant therein, and all damages sustained by reason of the 
attachment, not exceeding the sum specified in the undertaking. This section of 
the Code very plainly includes two subjects, clearly distinguishable from each 
other; one is the obligation to pay the costs awarded to the defendant, the 
other to pay the damages which may be sustained by reason of the attachment. 
Upon the trial it was proved that the plaintiff, as defendant in that suit, had 
incurred and paid out considerable sums of money by way of expenses, in 
obtaining the attendance and evidence of witnesses in its behalf, and for 
counsel fees for the services of counsel rendered in the course of the 
litigation. The legal fees, however, of the witnesses, as well as of the 
deposition taken in the State of Massachusetts, were included in the costs and 
paid as a part of the sum recovered by the judgment.

Upon this part of the case, accordingly, the inquiry is limited to the right of 
the bank to recover against the sureties in the undertaking for any part of the 
moneys incurred and paid for counsel fees and these other expenses in the course 
of the litigation. The case of Northrup v. Garrett (17 Hun, 497) has been cited 
and was followed at the circuit as an authority authorizing such a recovery 
against sureties in the undertaking. But that case was not so far extended as to 
sanction and support such a recovery. The attachment there had been issued in 
the court of a justice of the peace, and the obligation arising upon the bond 
was very much the same as that entered into by the sureties in this undertaking. 
But all that was there recovered was the costs which had accrued in the action 
before the justice, and upon the prosecution of a writ of certiorari brought to 
review it in the County Court. They were held to be a proper charge against the 
surety in the bond j and, so far, the case has followed the preceding authority 
of Ball v. Gardner (21 Wend., 270), where it was held that all the costs 
included in the judgment might be recovered against the surety in the attachment 
bond.

But this term costs as it was used in the preceding statute, and has been 
employed in this section of the Code, has never been attended with that degree 
of significance as to allow it to include counsel fees incurred and expended in 
the litigation. It includes the numerous items designated in the statute as 
costs, together with the fees of officers and witnesses, which may be recovered 
under its settled and well-defined provisions as a part of the judgment in favor 
of the successful party. Counsel fees are separate and distinguishable items 
from those entering into the signification of the word costs, as it has been 
employed in those and other statutes. And as part of the costs of the action 
these counsel fees form no charge whatever against the sureties in the 
undertaking. Neither is the bank entitled to recover them as damages sustained 
because of the attachment for the reason that the counsel fees were in no degree 
incurred in any proceedings taken for the purpose of vacating or setting aside 
the attachment. As the law stood at the time no such proceeding could be 
successfully prosecuted, and the bank probably understanding that to be its 
position, acquiesced in the regularity of the attachment, made no effort or 
motion whatever to vacate or set it aside. But its resistance was wholly 
directed to defeat the action itself by establishing the result that the 
plaintiff in the suit had no legal claim, against the bank arising out of the 
abstraction and loss of the bonds. The services of counsel rendered and bestowed 
in the litigation were for this end entirely; they were to support and maintain 
the position taken by the answer that the plaintiff, under the law, was 
exonerated from liability for the loss of the bonds. It is true that this 
resulted in vacating the attachment, but not from any effort or attempt to set 
it aside, but because the action itself failed by establishing the truth of the 
answer and exonerating the bank from legal ability. Under this state of the 
case, which is fully sustained by the proof, as well as by the findings of 
facts, it can in no legal sense be affirmed that any part of these counsel fees, 
or other expenses, were incurred by way of damages occasioned by the issuing and 
service of the attachment, and, so far as they have been included in the 
judgment recovered by the defendant, it is erroneous and should be reversed and 
set aside.

It appeared by the evidence that the bank kept on deposit with the First 
National Bank of New York a much larger amount than was subjected to the 
attachment, and that upon its deposits with the First National Bank it was 
entitled to interest at the rate of two and a half per cent when they exceeded 
the sum of $5,000. They did exceed that amount during the pendency of that 
action, and interest to that extent was allowed upon the deposits to the 
Northampton Bank, while the $12,000 were held subject to the attachment. But it 
appeared by the evidence, as the fact might also be inferred from the statute of 
the State, that the moneys were capable of being used in discounting first-class 
paper, securing a return in the way of interest at the rate of six per cent. 
That was the rate both in Massachusetts and in this State for prime commercial 
paper during the year 1882. It is to be inferred from this evidence that if the 
bank had not been restrained from using this $12,000 by the attachment, that it 
might have secured this rate of interest for the use of its money. It would not 
have been obliged to have left it on deposit with the First National Bank, but 
might have withdrawn it and used it in the course of its own business, if it had 
not been for the restraint of the attachment. That it was prevented in this 
manner from doing, and there is reason to believe, therefore, that it lost 
interest at the rate of three and a half per cent on this sum of $12,000 for the 
time it was kept in the First National Bank in subjection to the attachment. For 
that, under these circumstances, it was considered by the court, at the trial, 
that the bank was entitled to recover as interest in this action upon this sum; 
and the decision, to that extent, conformed to the obligation with which the 
sureties charged themselves under this section of the Code of Civil Procedure, 
as well as the authorities before that, and the cases since then decided in this 
court. (Dunning v. Humphrey, 24 Wend., 31; Groat v. Gillespie, 25 Wend., 383.) 
To that extent the bank did sustain damages by reason of the attachment. It tied 
up the fund and disabled the bank from using it, as it otherwise might have 
done, and from earning by its use this legal rate of interest. But, as already 
observed, as no part of the counsel fees and other expenses were incurred or 
expended, otherwise than in defense of the action and to support the position 
taken by the answer in exoneration of the bank from liability, the bank was not 
entitled to any allowance by reason of such expenditures, or because of a larger 
than the legal rate of expenditures in obtaining its evidence in the State of 
Massachusetts, or securing the attendance of witnesses from that State upon the 
trial. The amounts so incurred and paid were neither costs in the action nor 
damages sustained because of the attachment; and as the costs themselves were 
fully paid, the extent of the liability of the sureties in the attachment is for 
this rate of interest down to the time when it was discharged on the 1st of 
February, 1883.

The judgment should, accordingly, be reversed and a new trial ordered, with 
costs to the appellant to abide the event, unless within twenty days after 
notice of this decision the bank shall stipulate to reduce the recovery to the 
sum of $425.07 and interest thereon from February 1, 1883. And in case the 
stipulation shall be given, then the judgment will be modified by reducing the 
recovery to that sum, and the allowance to five per cent upon the amount, 
without costs of the appeal to either party.

Van Brunt, P. J., and Brady, J., concurred.

Judgment accordingly.

Additional Comments:
Reports of Cases Heard and Determined in the Supreme Court of the State of New 
York. Marcus T. Hun, Reporter. Volume LIX, 1889, HUN 52. Banks & Company, 
Albany, NY. 1901.

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