text:
    Story v. Furman.
    The act (ch. 361 of 1852) to secure the payment without preference of the debts of certain manufacturing corporations incorporated under the general law of 1811 does not impair the obligation of contracts, and is valid.
    The remedy to enforce the liability of stockholders under the act of 1811 is not so affected as to impair the obligation of the contract by the provision of the act of 1852 for the transfer to trustees of the right of action' in behalf of all the creditors, nor because such trustees are directed to resort to the assets of the corporation as the primary fund instead of the personal responsibility of the stockholders.
    The validity of certain proceedings to execute this act determined upon the construction of a finding of facts, discussed per Smith, J.
    Appeal from the Supreme Court. Action by a receiver appointed under the act of April 16, 1852, “ to facilitate the dissolution of manufacturing corporations in the county of Herkimer, and to secure the payment of their debts without preference.” On the trial before a referee, these facts appeared: Articles of association, under the general manufacturing act of 1811, were made and filed on the 24th of March, 1842, incorporating the Wool Growers’ Manufacturing Company, with a nominal capital of one hundred thousand dollars, of one thousand shares of one hundred dollars each, and with its place of business at Little Falls, in the county of Herkimer. Said company was duly organized, and proceeded with its business, until the 27th day of April, 1852. The articles of association provided that there should be nine trustees to manage the affairs of said company.
    On the 22d of March, 1852, a special meeting was held of the trustees of said company, attended by five trustees, at which resolutions were unanimously passed reciting that the agent of the company reported that he was unable to meet the liabilities of the company, that several of its large notes were lying under protest, that its credit was impaired, its liabilities large, and it was uncertain whether its means were sufficient to pay its debts without contributions from the stockholders, and directing the transfer books to be closed, and the agent to proceed to close up the concerns of the corporation and negotiate for a sale of its mills and machinery, subject to the approval of the trustees; and directing a copy of such resolutions to be served on all the stockholders and principal creditors of the company. It was proved that a printed copy of these resolutions was, immediately after their ■ passage, and on or about the 22d of March, 1852, sent by mail to each and all of the stockholders of said company, properly directed to each at his place of residence, and deposited in the post office at Little Falls.
    Another meeting of the trustees of said corporation was held on the 27th day of April, 1852, which purported to be attended by six trustees. In the minutes of the proceedings of this meeting, it appears that the minutes of the proceedings of the preceding meeting were read and approved. It was also reci.ted that William P. Hall, who was appointed a trustee of said company on the 12th of January, 1852, in the place of Reuben Churchill, having declined the appointment, it was resolved that' Martin W. Priest be, and he was thereby, appointed a trustee of said company to fill such vacancy. The said M. W. Priest, being present, accepted the appointment. Two resolutions were then offered in said meeting, one stating that they had become satisfied that the property and assets of the corporation were insufficient to pay its debts; and the second was as follows:
    “ Resolved further, that pursuant to the provisions of an act to facilitate the dissolution of manufacturing corporations in the county of Herkimer, to secure the payment of their debts without preference, passed April 16, 1852, the Wool Growers’ Manufacturing Company is hereby dissolved, and hereupon ceases to exist, and the property of said company is transferred to the trustees in trust for the creditors and, after the debts are paid, for the stockholders, pursuant to the provisions of said act.”
    It appeared from the minutes, that all of the said trustees, six in number, including the said Priest, voted in the affirmative upon the adoption of the said resolutions, and subscribed the same in the minutes.
    It was proved that this meeting was a special meeting, that notice to attend it was given in person to the trustees residing in Little'Falls, and .by mail to those residing elsewhere; that two trustees, Hiram Lewis of Madison county arid Friend Cook of Frankfort, did not attend. It was proved that upon the adoption of said resolutions, a printed copy of the same was immediately sent by mail to each and all of the creditors . and stockholders of said corporations, and a copy of the same immediately published in the Mohawk Courier, a newspaper printed at the said village of Little Falls, where the principal place of business of said corporation was located.
    The plaintiffs proved the recovery of two judgments in favor of the Herkimer County Bank against the said company, one for $3,029.08, recovered May 6, 1852, and the other for $3,021.77.
    The plaintiff then proved the commencement of a suit in the Supreme Court, founded upon said judgment by the said Herkimer County Bank against the trustees, praying for their removal and the appointment of a receiver pursuant to the provisions of the aforesaid act, and that such proceedings were thereupon had, that the plaintiff was duly appointed such receiver, and had been duly qualified as such.
    The order appointing said receiver directed him to collect and sell the property of the corporation and pay its debts, and, if such assets were insufficient for that purpose, authorized him to apply to the court for leave to commence an action against the stockholders for the recovery of such sum as will be sufficient to satisfy said debts.
    It was further proved that on the application of the plaintiff as such receiver, stating that the assets of said company were insufficient to pay its debts, it was ordered by the Supreme Court that he have leave and was directed to commence an action against the stockholders, to compel a contribution from them sufficient to satisfy the debts after applying such assets, not exceeding the amount of the stock held by such stockholders respectively. The plaintiff proved the discounting of two notes by the said Herkimer County Bank for said company, (for which two judgments were recovered,) one for $3,000, dated December 8, 1851, at four months, and one for $3,000, dated December 11, 1851, at four months, both of which were due and owing on the said 27th of April, 1852.
    The plaintiff then proved that the debts of the corporation on the 27th of April amounted to $145,699.29, and that the assets which came to such receiver on the 2d of May, 1863, amount to $44,437.00, and that the sum of $47,909.95 had been voluntarily paid to him by some of the stockholders, upon their liability as such, before the commencement of this suit, and that the balance due creditors was $69,000, on the 2d of May, 1852. The plaintiff proved that on the said 27th of April, the defendant, Furman, was a stockholder in said corporation, and owned twenty-two shares of its stock; and that the defendant, Morris, also was such stockholder, and owned, at the same time, fifty-three shares of its stock.
    Upon these facts, the referee found, among other things, that the said corporation was duly dissolved by the resolutions of the 27th of April, 1852, and that the plaintiff was duly appointed receiver, and as such, under the order appointing him, he became possessed of the exclusive right, title and legal capacity to sue and recover from the stockholders of said corporation, such sum not exceeding the amount of their respective statutory liability as, with the assets, would be sufficient to discharge the debts of the corporation, and to recover judgment against the several defendants for the amount of their respective shares of stock, with costs.
    At the close of the testimony, the defendant’s counsel-moved for a nonsuit (which was denied), upon fifteen grounds, specified in the case; among which were points claiming that the said act of 1852 was unconstitutional; and the defendant’s counsel duly excepted in respect to each of such points. The referee reported in favor of the plaintiff, and for judgment as above stated, and judgment was rendered accordingly. The defendant, after such report, filed exceptions thereto; among others, excepting to the finding of the referee that the corporation was duly dissolved by the resolutions of April 27, 1851; also, to the conclusion of the referee that the trustees became, on such dissolution, trustees for the creditors, and that the authority conferred by article 3 of title 4, chapter 8, of the Revised Statutes was vested in the plaintiff, and that the defendant is liable to the plaintiff for the deficiency, with various other exceptions, chiefly of the same character with the points presented in the motion for a non-suit. The defendant appealed to the Supreme Court, at general term in the fifth district, where the judgment rendered by the referee was reversed, and a new trial granted. From that judgment the plaintiff appealed to this court.

      Francis Kernan, for the appellant.

      Montgomery H. Throop, for the respondent.
   Smith, J.

In the discussion of this case here, the argument to sustain the reversal of the judgment rendered by the referee, was chiefly directed to the establishment of two fundamental propositions. All the questions raised on the motion for a nonsuit, before the referee, and upon the 'exceptions to his finding and report, depend upon or are involved in these two leading propositions:

1. That the act of April 16, 1852, providing for the dissolution of manufacturing corporations in Herkimer County, is in violation of that part of the Constitution of the United States which provides that, “ No State shall pass any law impairing the obligations of contracts.”

2. That the resolution of the 27th of April, 1852, purporting to dissolve the corporation, was not duly passed by a majority of the trustees of the corporation, at a regular or lawful meeting of said trustees, and was therefore void.

The plaintiff sues as receiver, and it is supposed and assumed to be essential to his title to maintain this- action, to establish both of these propositions. If the act Of April 16, 1852, is valid, upon this assumption, it was not properly executed by the persons claiming to be trustees, in the passage of the resolutions of the 27th of April, and the action cannot be maintained.

The plaintiff, it is true, was'appointed receiver in an action commenced by the Herkimer County Bank against the Wool Growers’ Manufacturing Company after the return of an execution unsatisfied, issued upon_ judgments duly recovered by said bank' against said company. The Supreme Court in such cáse, under the provisions of article 2, chapter 8, of the Sd part of the Revised Statutes, entitled “ Of Proceedings against Corporations in Equity,” was authorized to sequestrate the stock, property, things in action and effects of the corporations, and to appoint a receiver of the same. Such receivership, by the terms of the statute, would be necessarily limited to the property and effects of the corporation.

This clearly would not include the personal liability of .the stockholders for the payment of the corporate debts after the corporate effects are exhausted; for such liability clearly cannot be deemed the property of the corporation. This action is brought to enforce the personal liability of the stockholders of the Wool Growers’ Manufacturing Company, under the 7th section of the general manufacturing act of 1811 (3 R. S., 1st ed., p. 311), which provides as follows; that “for all debts which shall be due and owing by the company at the time of its dissolution, the persons composing such company shall be individually responsible to the extent of their respective shares of stock in said company.”

This act of April 16, 1852, in question, is obviously supplemental to the provisions of the Revised Statutes relating to the powers of receivers of insolvent corporations, and if it is a valid law and has been duly executed in the proceedings of the trustees to dissolve said corporation, the plaintiff is clearly vested with authority to enforce the personal-liability provision of the 11th section in the act of 1811, aforesaid, as against the stockholders of the said corporation, existing at the time of such dissolution.

It is therefore considered essential to the plaintiff’s title to maintain this action, that we should affirm the constitutionality of the said act of April 16, 1852, and this is the first question that meets us in limine in the examination of this case.

We come -then to the inquiry whether the act in question is not in conflict with that portion of the Constitution of the United States, which forbids the- states to pass any laws impairing the obligation of contracts.

It is objected that the liability imposed upon the stockholders of manufacturing companies under the 7th section of the act of 1811, for the incorporation of companies for manufacturing purposes, is not an obligation or contract within the intent and meaning of the Constitution. This view of the statute was taken by the learned judge who gave the opinion of the Supreme Court, in Walker v. Crain (17 Barb.), which was a case under this statute of April 16, 1852, and involved the precise questions presented to us upon this appeal..

But I think this view cannot be maintained. This statute of 1811, as was justly held by Judge Spencer, in Slee v. Bloom (19 Johns., 473), and Chancellor Sanford in Penniman v. Briggs (Hopk., 300), was designed to authorize, in effect, the formation of partnerships without the risks ordinarily attending them, to encourage internal manufactures.

The legislature authorized the association of individuals to organize in the form and by the name of a corporation, that it transact its business, sue and be sued by a single name, and might have succession, notwithstanding a change in its' stockholders. The partnership liability of the common law was modified only so far as was necessary to effectuate these objects. The partnership liability of all the associates for all the debts of the company was restricted to an amount equal to the share of each associate in the stock, and as such stock was made personal property and transferable as such, the personal liability which would attach to partners upon the contraction of any debts for the benefit of the copartnership, was made to follow and attend the transfer of stock to any assignee, so that each stockholder shall be liable upon the dissolution of the corporation for'an amount equal to his stock, for the payment of the debts of the company.

This obligation was assumed by every purchaser of stock upon any transfer from the original corporator, and followed the stock as incident to its ownership. Each new stockholder, by assignment, was to assume the liability of the original partners. He became an assignee of the stock by transfer, with all the liability which attached to it. So far the partnership liability of the common law was mqdified, but otherwise it remains.

The act is unlike that of the Rossie Galena Company, of 1837, which has furnished much litigation for the courts, in this, that by that act the stockholders are made jointly and severally liable for the payment of all the debts of the corporation." Under this act it was held in this court in Corning & Horner v. McCulloch (1 Comst., 47), that the' stockholders were liable as partners in unincorporated companies, that is, they are liable as principal debtors.

But the liability in this case as much as in that, according to the doctrine of that case, I conceive is the common law liability of retired partners,- except as expressly modified by the act. By force of the act one partner may retire and new partners come in, assuming their liability, and this was one of the chief designs of the act. The legislature clearly intended to modify the common law, in this manner and to this effect, in authorizing such associations. The persons becoming members of the corporation by original subscription to it or subsequent transfer of its stock must be deemed to assent to its terms, and all persons dealing with the .company must be deemed also to do so with knowledge of the rights and liabilities of the stockholders. Every person dealing with one of these manufacturing companies, organized under, the act of 1811, must also be held to trust to the personal liability of its stockholders to the extent specified in the act of its incorporation, and such liability is part of the contract'. The personal liability of the stockholders for the payment of the debts of the company to-the extent specified in the charter, as was held in this court in the case of Corning v. McCulloch, “ was one of the terms of purchase authorized by the statutes.” It became and was one of the terms of the sale to the company of any property, and constituted part of the security of the creditor for any debt contracted by the said company.

This doctrine that the common law of partnerships remains and applies in respect to all this class of corporations where a personal liability of the stockholders is retained to any extent, except as modified in the particular act, must be deemed, I think, the settled law of this State on this subject, since the decision of Corning v. McCulloch. The statute liability is part of the obligation of the contract and is under the protection of section 70 of article 1 of the Constitution of the United States. Such, I think, is the received opinion at the present day. (Conant v. Van Schaack, 24 Barb., 96; 7 id., 279; 26 id., 664.)

Assuming this statute liability therefore to be part of the obligation of the contract, the inquiry remains, does the act of April 16, 1852, impair such obligation ?

The obligation of the contract consists in the agreement or duty of the stockholder under this act to pay to the creditors of the corporation upon its dissolution an amount sufficient to pay its debts to the extent of the respective shares of each stockholder in the said company.

This is the contract of the stockholders, and this is its obligation.

This statute does not in any way take away or release or discharge their liability. It in no way acts upon the contract itself. It does not profess or propose to do so. On the contrary it clearly recognizes the binding force of the statute liability. It treats it as a subsisting and valid obligation.

But it is claimed that it impairs the face of the obligation by acting upon the remedy.

A distinction was early made in the United States Courts, whose decision upon questions of constitutional law under the United States Constitution are of paramount authority, and in all courts, between statutes which operate upon the contract and those which affect the remedy.

The lawfulness of acts of the latter description is generally conceded, so far as they fairly operate merely upon the remedy. Chief Justice Taney, in Remsen v. Kinzie (1 How. U. S., 316), states the rule as follows: “Whatever belongs merely to the remedy may be altered according to the will of the state, provided the alteration does not impair the obligation of the contract.” Although a new remedy may be deemed less convenient than the old, and may in some degree render the recovery of debts more tardy and difficult, yet it will not follow that the law is unconstitutional. This quotation, it seems to me, answers all the objections to the act of 1852, so far as they related to the remedy.

The objections to this act under this head are, first, that it takes from the creditor the cause of action against the stockholders which the statute of 1811 gave him, and transfers it to a trustee under different circumstances from those under which the Court of Chancery would previously have interfered with his enforcing it.

And, second, because the statutory trustee is first directed to resort to another fund as the primary fund for the collection of the demand, and to suspend the collection from the stockholder until the primary fund is exhausted.

The act of 1811 contains no provision relating to the remedy for the enforcement of the liability of the stockholder under the 7th section. The creditor was, therefore, necessarily left to the ordinary remedies afforded by the courts according to the laws and practice then existing.

It was held in accordance with this view that the creditor had two remedies to enforce this statutory liability. One, by action at law against any single stockholder. (Bank of Poughkeepsie v. Ibbotson, 24 Wend., 473; S. C., 5 Hill, 461.) Or second, by bill in equity against all the stockholders to recover from each his proportionate share of the amount necessary to discharge the debt. (Slee v. Bloom, supra; Penniman v. Briggs, id.; Cushman v. Shepard, 8 Barb., 113.)

But it was .held by the court of equity that this stockholder’s liability constituted a fund for the payment of all the corporate debts after its assets were exhausted, and if it was insufficient to pay all the debts, it must be distributed among the creditors upon equitable principles, and that as equality was equity, no single creditor would be allowed to acquire priority of, or exclusive payment, and that the court of equity would therefore restrain any single creditor for prosecuting at law and require the fund to be distributed ratably among the' creditors in equity.

This is the precise result sought to be accomplished by the act of 1852 in question, and it harmonizes completely with remedy of the party in equity, and instead of postponing the time of performance, it seems to me that the rights of creditors to payment are advanced and expedited by the act. By the act of 1811, the liability of the stockholder could not be enforced till after the dissolution of the corporation, for he was only liable for the debts existing at the time of the dissolution. What should constitute a dissolution of the corporation so as to give the creditors his remedy against the individual stockholder, was a question much litigated. It was held, finally, in Slee v. Bloom, and Penniman v. Briggs (supra), that when the corporation ceased to act, and suffered acts to be done, which destroyed the end and object for which it was organized, it was equivalent to a surrender of its rights. Judge Nelson (24 Wend., 479), states the rule thus: “That a corporation, having ceased to act, and being without funds, and indebted, is to be deemed dissolved, so far as to give the remedy to the creditor.” Before the corporation could be deemed dissolved, therefore, so as to give the creditor his remedy, under the act of 1811, independent of legislation since, the corporation must not only have ceased to act, but its property must be disposed of, and its power to further carry on its business determined.

In an action against a stockholder, it was necessary for the creditor to establish the fact of such dissolution. This, in many cases of real insolvency, would obviously be attended with much delay and embarrassment. All this is obviated by this act of 1852, allowing the trustees to declare the fact of insolvency, and, in effect, immediately to dissolve the corporation. Upon this being done, the affairs of the corporation are to be immediately wound up, the creditors paid as far as the assets will go, and the stockholders’ liability then to be resorted to, to make up the deficiency.

Without this act, the corporation could not be dissolved ad invitum, in favor of creditors, till its property and assets were all disposed of. It could not be held to be dissolved until its property was exhausted. The provisions of this act of 1852 expedite the dissolution, the closing up of the affairs of the corporation, and give the remedy against the stockholders, before given in equity.

I cannot see, therefore, how this act, in any essential particular, affects the remedy injuriously to the creditor; but if it does affect such remedy, it clearly does not go beyond the scope or degree of such variation of it, as is clearly within the rules of allowable alterations of State laws, as the same is stated by Judge Taney, in the quotation from his opinion in Remsen v. Kinzie, above given, and also as asserted in the Planters' Bank v. Sharp (6 How. U. S., 330), and in Crawford v. The Branch Bank (7 id., 282). The act of April 16, 1852, I consider, therefore, entirely constitutional and valid.

We come then to • the, second point or proposition: Were these resolutions of the 27th April, 1852, purporting to be passed by the trustees of the Wool Growers’ Manufacturing Company, duly and lawfully passed by said trustees so as to bind and dissolve the corporation ?

The first inquiry upon this point is, to determine precisely the facts upon which it depends. The referee, in his report, states that the “trustees named in said complaint were the sole and only trustees then in office, and that on the said 27th day April, 1852, the said company was duly dissolved by the said trustees then in office, in the manner in that behalf, stated and set forth in said complaint, under and in conformity to the act of the legislature therein mentioned, and passed April 16, 1852.”

In the complaint to which reference is thus had by the referee, it is stated, “ that the following named persons, to wit: James Monroe, Arphaxad Loomis, Martin W. Priest, John Beardslee, Joseph Hinds,' Warren Herkimer, Henry Lewis and Friend Cook, were the sole and only trustees of the said The Wool Growers’ and Manufacturing Company, at the time of the dissolution thereof by the said trustees, on the 27th day of April, 1852, as hereinafter stated, and the said plaintiff, upon information and belief, further shows that the said trustees, afterwards, to wit: at a regular meeting held by them at the office of the said company, in the village of Little Falls, within the county of Herkimer, on the 27th day of April, 1852, they, then and there, all being present at said meeting, unanimously adopted and passed a resolution by which they declared that they had become satisfied that the property and convertible assets of the said corporation, over and above its capital stock, was insufficient to pay its just debts, and that the business for which it was incorporated could not be longer carried on without loss to the stockholders or creditors, under and pursuant to the act entitled, An act to facilitate the dissolution of manufacturing corporations in the county of Herkimer, to secure the payment of their debts without preference, passed April 16, 1852;’ and thereupon the said corporation, according to the terms of the provisions of the said act, became dissolved.”

This part of the complaint, the referee, in substance and effect, finds and reports to be true. This is a distinct and explicit finding upon the facts that all the trustees were present at a regular meeting held by them at the office of the company, on the said 27th day of April, 1852; and then and there, at said meeting, all being present, unanimously adopted and passed the resolution dissolving the corporation.

Upon this finding upon the facts, the resolution was clearly properly passed, and no question of doubt or dispute in respect to it is left open. If it was passed at a regular meeting when all the trustees were present, and passed unanimously, all question in respect to the validity of the resolution, so far as the trustees could give it force and validity, is settled and foreclosed.

The judgment rendered by the referee was reversed by the Supreme Court at general term, upon the law alone. This court is therefore confined, upon this appeal, also to a review of the case upon the law; as it is not stated in the judgment, as required in article 272 of the Code, to allow us to review the judgment upon the facts, that the same was reversed on questions of fact. The referee’s report upon the facts upon this point was probably made upon the assumption that, all the trustees being notified to attend the meeting, must be deemed to be present, and the resolution might be considered as passed unanimously, inasmuch as no dissent or objection appeared.

If we are at liberty to review the facts of the case, I think we might hold upon the evidence that the meeting was so held, after due notice to all the trustees to attend.

Such a meeting, I think, would be clearly a lawful meeting of the trustees, under section 6 of title 3, part 1, of 2 Revised Statutes (5th ed., 597), which is as follows: “When the corporate powers of any corporation are directed by its charter to be exercised by any particular body or number of persons, a majority of such body or persons, if it be not otherwise provided in the charter, shall be a sufficient number to form a board for the transaction of business; and every decision of a majority of the persons duly assembled as a board shall be valid as a corporate act.”

This statute prescribes the rule for the conduct of the proceedings of all corporations, and must govern the action of the trustees of the Wool Growers’ Manufacturing Company, under the statute in question.

The statute allows the corporation to dissolve itself in a particular manner. It did not confer special powers upon the trustees, of a judicial or private character. It was general in its language, and applied to the trustees of all manufacturing companies in Herkimer county. It was not, I think, such a special delegation of power to the trustees as individuals as to bring them within the provisions of section 29, of chap. 8, part 5, title 17, of the Revised Statutes (vol. 3, 5th ed., 869), which declares that “ when any power or authority is duly confided by law to three or more persons, or when three or more persons or officers are authorized or required by law to perform any act, such act may be done, and such power or authority, or duty may be exercised and performed by a majority of such persons and officers upon a meeting of all of the persons or officers, so entrusted or empowered, unless special provision is otherwise made.”

This provision obviously does not apply to corporations. It never has been held that, to make valid the acts of corporate bodies, all the trustees, directors or corporations entitled to vote in determining its action, must meet to authorize the corporation to do a valid act. Chief Justice Eyre, in Grindly v. Barker (1 Bos. & Pul., 236), states the rule, as I think it is now generally received, as follows: The cases of corporations go further, and then it is not necessary that the whole should meet; it is enough if notice be given, and a majority or a lesser number, according as the charter may be, may meet, and when they have met, they become just as competent to decide as if the whole board met.” If therefore all the trustees are notified to meet, as is proved by the witness Bruce, and might have been specially found by the referee, I think the meeting of the trustees on the 27th of April a lawful meeting, entitled to act under the statute in question, and that their acts áre valid.

But if there be any doubt on this point, it seems to me that the plaintiff is precluded from objecting in this suit to the action of the trustees at that time. A clear majority of the trustees was, in fact, present, and acted. ¡No one, either trustee or stockholder, at that time or afterwards, before the commencement of this suit, dissented from the resolution then passed. The corporation was, in fact, clearly and palpably insolvent. That fact had been virtually'declared in a resolution by the trustees passed March 22, previously, when the resolution was passed, closing the transfer book and directing the agent of the corporation to close up its business, sell off the stock and goods on hand, and negotiate for a sale of the mills and machinery-of the corporation, and directing that a copy of such resolution be immediately served on all the stockholders and the principal creditors.

It was proved that a printed copy of these resolutions were, immediately after their passage, sent to all the stockholders. Such stockholders were therefore fully advised of the con? dition of the corporation and were all prepared for the resolu tion passed on the 27th of April, afterwards for the dissolution of said corporation. These.resolutions could not have been a surprise upon any of the stockholders. It is proved that they too were immediately served upon all the stockhplders and published in a newspaper at Little Falls, where this corporation did its business.

The resolutions were acquiesced in and the corporation dissolved in fact, according to the rule applicable to this class of corporation, as declared in Slee v. Bloom, and Penniman v. Briggs (supra), its business was stopped, its property disposed of, and its affairs closed up. Judgments were recovered against it and executions issued and returned unsatisfied, and a suit in equity commenced against the trustees to close up its concerns and enforce the statute liability of its stockholders, and,finally, with the sanction and direction of the Supreme Court, this suit was instituted for that purpose in the month of September afterwards.

During this period it does not appear that any of the trustees or stockholders dissented from the action of the trustees of the 27th of April. No one took any steps to arrest or intercept the dissolution of said corporation or claimed or asserted or could claim that it was not utterly insolvent and unable to continue the business which it organized, and such resolutions entirely proper.

Under such circumstances even if the resolutions of the 27th of April was irregularly passed, and at a meeting not duly called or held under the charter, I think the stockholders must be deemed to have assented to such resolution, and should be estopped from questioning their validity in this suit. They were certainly passed by an actual majority of the trustees, and if any question at the time had been made in respect to their regularity or propriety, the same could have been immediately repassed at a valid meeting.

I think’the same rule should be applied in such case to the acts of trustees of a corporation who are but agents of the stockholders which would apply to the acts of any other class of agents acting for their principals and in their business. If such agents exceed their powers their principals must act promptly to disaffirm the act upon being informed of it, or they will be deemed to affirm and adopt the same. This is a sound and proper rule, and should be applied in this case as against these defendants and all other of the stockholders of this corporation.

Another point made by the counsel for the respondent is, that the receiver’s right to sue the stockholders accrues under the statute after the trustees have closed the business of tlie corporation and disposed of its property, and that this must occur before the stockholders can be “ assessed for deficiencies.” This objection, I think, is untenable, for the reason that it distinctly appears from the complaint and the referee’s report, that the whole amount of the stockholders’ liability will be required to pay the debts, and will be insufficient for that purppse. Ho assessment can be necessary when the whole amount of the liability of the solvent stockholder will be entirely inadequate to pay the debts, as is quite apparent upon the complaint and report of the referee.

Independently of these views, which relate chiefly to the arguments addressed to us on the hearing, I should be prepared to reverse the judgment of the court below and affirm the judgment of the referee upon another distinct ground. I cannot see why the order appointing the plaintiff receiver did not vest him with ample authority to enforce the stockholders’ liability under the statute. Such liability is clearly a fund in equity for the payment of the debts of the corporation. The receiver was appointed in a suit instituted by creditors, and in behalf of all the creditors of the corporation. He was expressly authorized, by the order of the Supreme Court, made in such suit, to commence an action against each and all of the stockholders of said corporation who are solvent for the recovery of such a contributory sum from each solvent stockholder, not exceeding the whole amount of the stock owned by them, as will be necessary to satisfy any deficiency that might exist in payment of the debts of the said corporation.

I do not see why this order was not entirely within the authority and jurisdiction of the Supreme Court as a court of equity, as an original equity power at common law. The appoint ment of a receiver was the only appropriate mode to reach and. collect this equitable fund, the personal statute liability of the stockholder's, for distribution among the creditors. The remedy of the creditors was in equity before the passage of the act of 1852, when there was a deficiency, and I have no doubt the court possessed ample power to give to them full and ’appropriate relief, in the mode adopted in this action, through the instrumentality of a receiver. I think the plaintiff, therefore, fully entitled to institute and maintain this action, and that the judgment of the court below should be reversed and that of the special term afiirmed, with costs.

SELDEN and ALLEN, Js., took no part in the decision; all the other judges concurring,

Judgment reversed.


source: Caselaw Access Project

author: Denio, Ch. J.

license: Public Domain

text:
    Adams v. Van Alstyne.
    There may, it seems, be a valid prescription binding the owner of land to maintain perpetually the fence between him and the adjoining proprietor.
    In such case, the fence viewers have no jurisdiction under our statutes.
    ' The maintenance of a fence by one of the adjoining proprietors exclusively for more than twenty years, when he might have compelled the other to maintain part, -warrants the presumption of a grant or covenant compelling him to do so.
    But no such prescription can be established in respect to part of a boundary line by the maintenance for any length of time, since our statutes . requiring fencing, of the fence thereon by one of the adjoining proprietors, while the other maintained an equal length on another portion of the boundary.
    The presumption in such case is that each maintained what had been found by agreement to be his just proportion of the fences, in discharge of his own duty, and not in exoneration of the other.
    Such a division, it seems, is binding upon the parties while they remain conterminous possessors; but new obligations arise when, by suhdivision or otherwise, there is a change in the extent to which one of the adjoining proprietors borders upon the other.
    The statute empowering fence viewers to fix the just proportion of fence to be maintained refers to the state of things existing when they are called upon to act, and has no relation to any former, ownership of the adjoining possessions.
    This action originated in a court of a justice of the peace of Columbia county, where the plaintiff sued the defendant in trespass, for driving certain cows and cattle of the plaintiff into his (defendant’s) yard, and keeping them there for a certain length of time. Answer, that the animals were found on the defendant’s field, doing damage to his crops, &c. The answer also averred that the plaintiff and defendant were the owners of adjoining closes, and that the. said cattle, being in the plaintiff’s close, escaped and came upon the defendant’s close, by means of the defect of fences between the two closes, which fences the plaintiff was, by prescription, bound to maintain, repair and amend, &c.; wherefore he drove the cattle into his yard to keep until the plaintiff should come and take them away. The plaintiff replied, denying the allegations of the answer, and averring that in the spring of the same year, the fence viewers of the town of Ghent, in which the premises were situated, were duly called out, and divided the partition fence between the parties, and that the cattle escaped and came upon the defendant’s land through that portion of the division fence, which, by the determination of the fence viewers, the defendant was bound to maintain. There was another cause of action set out in the pleadings, but it depended upon the same questions as the issue above stated.
    The'case was tried before the justice without a jury, who gave judgment for the plaintiff for $1 damages and the costs. The judgment having been affirmed in the County Court and the Supreme Court, the plaintiff appealed here, pursuant to an allowance by the general term. The case was submitted on printed arguments. The facts are sufficiently stated in the opinion of the court.

      John K. Porter, for the appellant.

      John H. Reynolds, for the respondent.
   Denio, Ch. J.

The facts set out in the justice’s return, though not very clearly stated, seem to be substantially as follows: The plaintiff and the defendant were in possession of adjoining farms; that of the plaintiff was a part of a farm formerly owned by Jacob Loop, and the defendant’s farm formerly belonged to John C. Hogeboom. The two farms of Hogeboom and Loop were divided by a line running nearly east and west, that of Hogeboom being on the southerly, and that of Loop on the northerly side of this line, and being, it would appear, of equal width on the division line. A portion of the distance, at the westernmost end of the division line, the land on either side was unenclosed, and had never been fenced, . but for the residue of the distance, it was enclosed and cultivated land. It was admitted that from time immemorial, the western portion of the fence, being about one-half thereof, was kept and maintained by John 0. Hogeboom and his predecessors, in the title of his farm, and that the remainder, being the eastern part thereof, had, during the same time, been kept and maintained by Jacob Loop and his predecessors, in the title of the farm which he owned. The dividing point between the two parts of the line was marked upon a diagram annexed to the return.

John C. Hogeboom died in 1840, having, by his will, divided his farm between his two sons, Peter and Henry. The part falling to Peter, abutted upon the western end of the division line between the two original farms, the fence upon which had been immemorially maintained, as has been mentioned, by Loop and his predecessors, while the portion of Henry, the other devisee, abutted partly upon the same portion, but for the greater part upon the portion of the line, the fence upon which had been so maintained by J. -C. Hogeboom, and those under whom he claimed. About 1844, the defendant purchased the part of the original farm of Hogeboom, which fell to Henry Hogeboom, and the part devised to Peter was purchased by one Gilbert. The plaintiff became the owner of Loop’s farm in 1848. ISTo change was made respecting the division fence until 1849, when Gilbert caused the fence on that part of the line between him and the plaintiff to be divided by the fence viewers of Ghent. In March, 1854, the plaintiff made application to the fence viewers to divide the fence between him and the defendant upon that part of the original line where the defendant’s farm adjoined a portion of the plaintiff’s. The defendant chose a fence viewer, but protested against any new division of the line, except as to the portion that had not theretofore been fenced. The fence viewers, notwithstanding, divided the fences upon that part of the original line which ran between the plaintiff’s and the defendant’s respective possessions, marking the point of division on a diagram. The cattle escaped from the plaintiff’s land into the defendant’s, though the portion of the fence which belonged to the defendant to maintain, according to the decision of the fence viewers.

The three courts, which have passed upon the case; have determined that the fence viewers had jurisdiction to divide the fences notwithstanding the alleged prescription, and that the duties of the parties in respect to the burden of maintaining the division fences were legally fixed théreby.

I shall assume that there may, be a valid prescription, by which the owner of land may become bound to maintain perpetually the whole of the division fence between himself and the adjoining proprietor. The cases referred toby the defendant’s counsel, and some others which I have examined, seem very satisfactorily to establish this position. (13 Vin. Ab., 164, tit. Fences, E. 1; id., p. 166, E. 14; Binney v. The Proprietors, &c., in Hull, 5 Pick., 503; Starr v. Rookesby, 1 Salk., 335.) Nor do I entertain any doubt but that when such a prescription is established, it fastens itself upon the land charged with the burden, and in favor of the tenements benefited by it It is the usual case of a servitude in lands, the law concerning which has been adopted by the common law from the civil law; and. every part of the premises charged with the burden, called the servient tenement, is as much bound as the whole of the original premises were, and every part of the dominant tenement is entitled to claim the benefit of the charge against the premises bound. (Hills v. Miller, 3 Paige, 254; Child v. Chappell 5 Seld., 246.)

There is another question about which the counsel for these parties differ, upon which I am of opinion with the defendant. If such a prescription as that upon which the defendant insists were established, I do not think it could be affected by any decision which the fence viewers could make. The only disputes which these officers are empowered to settle are such as respect the proportion or particular part of the fence which is to be maintained or made by the respective owners of adjoining lands. (1 R. S., 353, § 33; Laws 1850, ch. 319.) The act in the first place provides that when two or more persons shall own lands adjoining each other, each of them shall make and maintain a just proportion of the division fence, unless the owner of one of them elect to let such land lie open. (Id., § 30.) It is only in administering this provision that the agency of the fence viewers can be invoked. If the case be such that one of the parties is bound by grant, covenant, prescription, or in any other way, to build the whole .of the division fence", the statute does not apply, and the assessors have, I conceive, no jurisdiction of the case.

But I am of opinion that there was no prescription in the present case. The original proprietors of the Hogeboom farm are one side and of that of Loop on the other, were once bound each to maintain his just proportion of the division fence. The respective proportions belonging to each to maintain, might have been settled by agreement or by the intervention of fence viewers, if such an office existed at the early period when the farms were first settled. As there is no evidence of a determination of fence viewers, we may assume that the fence was divided by agreement. There is no evidence, nor any reason to believe that the division was in any respect unequal; or that during the course of years that ensued either of them did any thing more than that which it was his duty to do, How a prescription supposes something originally adverse to the rights and interests of the party who is to be concluded by acquiescence and lapse of time. If one of two proprietors will, for a period of time sufficient to establish a prescription, maintain a fence for the benefit in whole or in part of the adjoining proprietor, the law will presume a grant or covenant by which he became legally obliged to do so. It is the fact, that the party having the original right, has acquiesced in doing or suffering that which he could have prevented if he had chosen to do so, that the law lays hold of to found a presumption against him. These former proprietors were each bound to maintain his just proportion of the division fence, and they could have been compelled to do so. But they elected to do voluntarily what the law would have obliged each of them to do on the application of the other. There was no acquiescence by either in any encroachment upon the rights of the other, and consequently neither can be said to have slept upon or waived their rights, or to have acquiesced in any infringement of them. There is no ground for presuming a grant or covenant .on the part of Hogeboom or his grantor, that the particular half of the line fence which they are shown to have maintained, should be perpetually kept up at the cost of the owner of that part of his farm, and so of the other part of the fence; for the existence of the division line, and the law respecting the duties of adjoining proprietors sufficiently explains all that has been done by them respectively. I am unable to see that lapse of time can have any just influence upon such a case as this. We are to presume that the original parties divided this fence in the manner which was done because the law required that each should maintain his just proportion of the fence, and they had no difficulty in defining the share of each. There is no reason which I can perceive why such a division should not be just as effectual immediately after it was made, as it would be in twenty or in fifty years thereafter. There is no doubt but that it would be binding upon them while their respective possessions continued to be coterminous and where there was no other change of circumstances to make the division unequal or unjust.

The principle, that to establish a title by prescription, there must be some infringement or usurpation of the right of the party to be concluded, and an acquiescence therein for the required period, will be found well stated in the opinion of the court in Parker v. Foote (19 Wend., 309), where several other cases of the same tendency are referred to.

■ But I concede that' a division of fences by agreement, with or without a subsequent lapse of time, is of the same force as a decision by fence viewers pursuant to the statute. The statute implies that these are only different methods of establishing a division, for it gives the fence viewers jurisdiction only where the parties are unable to agree upon the respective proportions of the fence to be maintained by each. But it would lead to very absurd consequences to hold that the action of ' these officers, proceeding as they must do in a summary -way, would attach for all coming time upon the respective parcels of land which they charge or exonerate mutual servitudes or easements,- whatever change of boundaries might take place. In the constant traffic in lands which is going on, and the changes which are every day taking place by which large farms are converted into small ones, and the contrary, by divisions and subdivisions and consolidations, these rights and obligations respecting fences would very soon cease to -have any relation to present coterminous possessions; but a system of easements would grow up, not adapted to existing circumstances, but founded upon original and distant agreements and divisions by fence viewers, which would be extremely inconvenient in practice, and quite inconsistent with the spirit and intention of the statute. That provides for the case of “persons having lands adjoining,” and charges each with the obligation of maintaining his just proportion of the fences. This proportion is of course changed whenever a change takes place in the extent which each owner has in the lands which he adjoins, and then a new adjustment of course becomes necessary. The statute refers to the state of things which shall exist when the viewers are called upon in a given case, and has no reference to any former ownership of adjacent possessions.

The precise point arose in Connecticut, and was decided by the Supreme Court of Errors in that State, in accordance with the foregoing views. (Wright v. Wright, 21 Conn., 329.) The case of Rust v. Low (6 Mass., 90), relied upon by the defendant’s counsel, did not present the present question. There are, it is true, expressions in the opinion of Chief Justice Parsons which look as though he considered an assignment by fence viewers equivalent to an obligation imposed by prescription; but he was not speaking of the permanency of one or the other of these titles, but only as to its effect for the time being. I think the question we are now considering was not presented to the mind of the learned judge.

My conclusion is, that the judgments under review were not erroneous.

All the judges concurring,

Judgment affirmed.


author: Smith, J.

text:
    Lowery v. Steward et al.

    A letter to the consignee of cotton by the consignor, stating that he has drawn on the former for $500, payable to a third person, when the cotton should be sold, is a specific appropriation to the use of the latter, payable on presentation of the consignor’s order.
    The consignee, upon receiving such letter, having promised the consignor and the payee to honor the draft from the proceeds of the cotton, is bound to retain the proceeds for that purpose.
    The draft not coming to the hands of the payee for several months, the consignor and consignee in the meantime agreed upon a new appropriation of the fund for the benefit of the latter: Held, that the obligation of the consignee to the payee was not discharged.
    Appeal from the Superior Court of the city of New York. On the trial before a referee these facts appeared: In the year 1853, the defendants, composed the firm of John Steward, Jr., & Co., in the city of New York. The plaintiff was also a merchant, doing business in the same city. The firm of Strippieman & Boyce, of Columbus, in Texas, had dealings with the defendants and was also indebted to the plaintiff.
    On the 28th day of March, 1853, the defendants received from Strippleman & Boyce a letter, dated March 1st, 1853, inclosing a bill of lading of 24 bales of cotton, in which letter they say, “ Inclosed, pleased find bill of lading for 24 bales of cotton, shipped to you, which you will please sell to the best advantage. We have written to Messrs. Lowery & Co., New York, inclosing a draft on your house for $500, payable when the above cotton is sold.”

    On the 28th day of March, the clerk of the defendants replied to Strippleman & Boyce: “We are in receipt of your esteemed favor of the 1st inst., with bill of lading for 24 bales cotton, which shall have our best attention when it reaches us. Your draft in favor of A. H. Lowery •& Co., shall be honored from, the proceeds of the cotton.”

    On the next day after this letter was written (the 29th of March), the plaintiff also received a letter from Strippleman & Boyce, also dated on the 1st day of March, 1853, in which they say: “We inclose draft on J. Steward, Jr., & Co., for $500, tohich you will please credit on our note.”

    On the same day the plaintiff’s clerk took this letter to the defendants’ store and handed it to the defendants who read it and said, “ That they had not received the draft, but they had received a letter from Strippleman & Boyce, with a bill of lading for 24 bales of cotton, and stating that they had drawn on them for that amount; that it was all right, that the draft would he paid out of the proceeds of the cotton when sold.”

    The cotton was afterwards received by the defendants, and sold. The proceeds of the sales were received in September, 1853, and amounted to $825.28, over and above all charges.
    No further application was made by the plaintiff until January 10th, 1854, when the plaintiff’s clerk again went to the defendants’ store and presented the draft which had just come to their hands, of which the following is a copy:

      “ $500.00. “ Columbus, Mapch Is#, 1853.
    “ Messrs. John Steward, Jr., & Co.:
    “ Please pay to the order of Archibald EL Lowery the sum of five hundred TnT°- dollars on account of 24 bales cotton shipped to you, as per bill of lading, by steamer Colorado, inclosed to you, in letter. ‘ “ Strippleman & Boyce.”
    The defendants refused to pay it, having appropriated the proceeds of the cotton to the payment of their account against Strippleman & Boyce by the direction of the latter given in August, 1853.
    The delay in presenting the draft for payment was accounted for by an oversight in the drawers in sending it forward.
    The referee found for the plaintiff the amount of the draft and interest from January 10th, 1854.
    From the judgment entered on this report the defendants appealed to the court at general term, where the judgment was affirmed, and they appealed to this court.

      Waldo Hutchings, for the appellants.

      John Sessions, for the respondent.
   Smith, J.

The letter of Strippleman & Boyce to the defendants, dated March 1, 1853, accompanying and inclosing a bill of ladjng of the twenty-four bales of cotton, expressly advised them that they (Strippleman & Boyce) had written to Messrs. Archd. EE. Lowery & Go., 121 Front street, Mew York, inclosing a draft on their (defendants’) house, for $500, payable when the said cotton was sold. This was a clear and explicit appropriation of $500 of the proceeds of said cotton, when sold, to the use of A. H. Lowery & Co., payable upon the presentation of the said draft. The defendants obviously so regarded it at the time, for in their letter of the date of March 28, acknowledging the receipt of the bill of lading, they say: “Your draft in favor of A. H. Lowery & Co. shall be honored from the proceeds of the cotton,” &c., and the statement of the defendants, by their clerk, in the presence of one of the defendants, that “ it was all right, and that the draft would be paid out of the proceeds of the cotton,” is to the same effect. The draft was not a bill of exchange requiring acceptance to bind the drawers, but a specific draft or order upon a particular fund. (Story on Bills of Exchange, 86.) It was equivalent to an assignment in equity to Lowery & Co., of so much of the proceeds of the cotton. (Morton v. Naylor, 1 Hill, 584.) So far as the defendants are concerned, in the sale of this cotton, they were bound to keep $500 of the proceeds to meet this draft. What their rights and liabilities would have been, if the draft had not been presented to them for payment, it is unnecessary to consider, for the draft .was, in fact, presented for payment before they had parted with the' funds. It may be that the plaintiff could not have maintained an action for the money without the production of the draft, or proof of its delivery and loss. The promise of the defendants to them, and to Strippleman & Boyce was, not to pay Lowery & Co. the money, but to pay the draft from the proceeds of the cotton. The money received from the sale of the cotton, to the extent of $500, they were bound, I think, to keep, as upon special deposit in their hands, for the benefit of the plaintiff, to. meet this draft. It was equitably their property, and was to be held for them till called for, by the production of the draft. (Bentley v. Taylor, 5 Hill.) Ho question could be made in respect to the correctness of this view of the draft; if it had, in fact, been inclosed in the letter of Strippleman & Boyce to Lowery & Co., of the date of March 1st, 1853. The case does'not contain the special findings of fact as required by section 267 of the Code, and we must, therefore, if need be, presume such facts found by the referee, as will sustain the judgment. (Grant v. Marsh, 22 N. Y., 323; Carman v. Pultz, 21 id., 547.) But if it was necessary so to find, I am inclined to think the referee might have found upon the evidence that the draft was delivered to Lowery & Co., at the date of the letter of Strippleman & Boyces to. them. (March 28, 1853.) Such was their clear intention, which equity would effectuate to protect the title of Lowery & Co., if necessary, certainly as against the defendants, who had full and distinct notice ot such equity. They could not be allowed to appropriate the fund to their use, or to any other use, after such notice, and their positive agreement to hold the funds for Lowery & Co., certainly not to the payment of their own precedent debt against Strippleman & Boyce. The proceeds of this cotton, it appears from the account rendered by the defendants, was $825.28. Deducting from, this sum the draft of the consignees of August 8, 1853, for $353.04, accepted by the defendants, and they had $472.24 applicable to the payment of the plaintiff’s draft, and which upon no pretense, as shown in the case, could the defendants retain or refuse to apply upon plaintiff’s draft. But I think they are liable for the payment of the whole draft, upon the ground above stated, that, of the proceeds of the said twenty-four bales of cotton, $500 were, at the time of its receipt by the consignees, distinctly, in legal effect, set apart and appropriated for the use and benefit of the plaintiff, and that as soon as the money came to their hands from the sale of the said cotton, it was money had and received by them on special deposit for the use and benefit of the plaintiff, which they could not use, or appropriate, or apply to any other purpose. They were bound to keep it to meet this draft, which they were informed had been drawn upon it, in favor of the plaintiff. If, instead of sending cotton to the defend-' ants for sale, part of the proceeds to be paid to the plaintiff, Strippleman & Boyce had sent to them $500 to be paid to plaintiff, to be applied on their debt to him, on production of an order sent for that purpose; can it be doubted that the money would be received and held in trust for the plaintiff, at least in equity, and that he might affirm the. trust and demand the money if the draft did not come to hand or was lost. In this case, the money was to be applied upon the debt of Strippleman & Boyce to the plaintiff. In the letter to Lowery & Co., of March 1st, they said: “We inclose, draft on J. Steward & Co., for $500, which you will please credit on our note.” Plaintiff then held their note for $1,476.50, due February 6th previously. The appropriation of the fund was complete as soon as the cotton came to the defendants’ hands. They were the trustees of the cotton and its proceeds for the plaintiff’s benefit, to the amount of $500. The draft or order was necessary only for a voucher. They were not bound to accept the draft; acceptance was entirely unnecessary.

I think the judgment below should be affirmed.

Denio, Ch. J., Davies, Sutherland and Gould, Js., concurring,

Judgment affirmed.


author: Selden, J. Denio, Ch. J.

text:
    Thomas v. Beebe.
    The allegation in a complaint that the defendant “falsely and fraudulently represented," is a sufficient statement of the scienter.

    In an action for deceit in the sale of land, evidence of statements by the defendant, after the deed was 'put into the plaintiff’s hands and before the parties had separated, is admissible either as bearing upon the question of good or bad faith in similar representations made before the deed was . drawn or upon the question whether the delivery of the dee d was complete. When the fraudulent representations relate to the quantity of the land, it is immaterial whether tlie sale is in gross or by the acre.
    Appeal from a judgment of the Supreme Court. The complaint alleged that, on a day named, the defendant “ in consideration that the plaintiff would buy of him a farm of land, situate in the town of Chatham, in the county of Columbia, and pay unto him the sum of nine thousand dollars, by transfer of other real estate and other securities for the same, falsely and fraudulently represented and alleged that said farm contained ninety acres of land.” It is then alleged that the plaintiff, relying on this representation, purchased and paid for his farm: that the representation was untrue, and that the farm contained only seventy-eight and a half acres of land, and that the plaintiff had sustained damages to $1,500. The answer denied the allegations of the complaint.
    On the trial, before Mr. Justice Could, the defendant, after the plaintiff had closed his evidence, moved for a nonsuit, which was denied, and the defendant excepted.

      To prove the alleged false representation, the plaintiff had .called a witness who proved that during the negotiations which led to the sale, the defendant stated to the plaintiff that there were ninety acres of the farm according to the survey of Joseph G. Read, and he, the defendant, thought a trifle more. Another of the plaintiff’s witnesses testified to a confession of the defendant, after the sale and conveyance of the land, that he had represented to the plaintiff that there were ninety acres of land according to Read’s survey. Another witness, Benjamin R. Thomas, was then examined on the part of the plaintiff, who testified to being present at an interview between the plaintiff and defendant, at the house of W. R. Beebe, who had prepared the deed of the farm from the defendant to the plaintiff, and who, as city judge, on the occasion of that interview, took the acknowledgment of the defendant and his wife of the execution of that conveyance. The witness testified that the deed was signed and acknowledged in the back room of Judge Beebe’s house: the parties immediately came into the front room: the plaintiff, having the deed'in his hand, then said to the defendant: “You know, of course, I have had no opportunity to examine the deed or the survey bill, now I want to know if the quantity of land, as set forth there, is all right;” that the defendant in reply said: “ You may be assured it is all right.” The case states that the above testimony “ as to what was said after the parties came into the front room was objected to by the defendant’s counsel, and the objection overruled, to which the defendant excepted.”
    The plaintiff gave evidence showing that there was less than eighty-one acres of land in the farm ; and other evidence tending to show that Read’s survey made it less than that number of acres, and that the defendant was aware that it contained only about that quantity. The defendant gave evidence on the subject of representations made during the negotiation, and also evidence tending to show that he was ignorant of the true contents of the farm and might have supposed that there were ninety acres.

      The deed which the defendant executed to the plaintiff, described the farm by metes and bounds, the figures being quite irregular, and concluded thus: “containing about ninety acres, be the same more or less.” There was a preliminary contract for the purchase of the farm executed under the hands and seals of the parties a few days before the conveyance to the plaintiff. It made no mention of the number of acres.
    The judge charged the jury that, in order to sustain the action, it must appear that the defendant had falsely represented the contents of the farm: that the plaintiff in concluding the bargain, relied upon these representations; and that they were untrue to the knowledge of the defendant. “ As to the rule of damages,” he said, “ should you find for the plaintiff the price of the farm, though called so much by the acre, is always fixed by taking into consideration the improvements on the farm.” There was a general exception to the charge, which was not relied upon by the defendant.
    There, were several requests on the part of the defendant to .charge particular propositions, only one of which was relied on, namely, that the judge should instruct them “ that the transaction was a sale in gross and not one by the acre,” which instructions the judge declined to give, and the defendant’s counsel excepted. There was a verdict for the plaintiff for $500; the judgment was affirmed at a general term and ’ the defendant brought this appeal. • The case was submitted on printed points.

      Gilbert Dean, for the appellant.

      John H. Reynolds, for the respondent.
   Selden, J.

This action is for a fraudulent representation by the defendant, in the quantity of land sold by him to the plaintiff, and not upon a warranty. It is stated in the coifiplaint that the defendant “ falsely and fraudulently represented and alleged that the farm contained ninety acres,” and that the farm actually contained less than eighty acres. It is not stated that the defendant knew that the farm did not contain ninety acres. The complaint was doubtless sufficient (2 Johns., 550), but assuming that it may have been defective, the cause was tried without objection on that account, both parties introducing evidence bearing upon the question whether the misrepresentation was willful, and the case must be considered now, as if the scienter had been fully alleged, assuming such allegation to be necessary.

The only objection to the introduction of testimony taken on the trial, was the following: Immediately after the parties had exchanged deeds, the plaintiff, holding his deed in his hands, said to the defendant, “You know, of course, I have had no opportunity'to examine the deed, or the survey bill; I now want to know if the quantity of land, as set forth there, is all right” The defendant, in reply, said, “ You may be assured it is all right.” Exception was taken to the evidence of this conversation, and it is now insisted that it was improper, because it took place after the delivery of the deed. Evidence of fraudulent representations of the quantity of land, after the contract was consummated, however clear, would not be sufficient to sustain the action, and perhaps this representation may be considered as coming too late for that purpose; but the evidence was admissible to show that the plaintiff relied upon the defendant’s statement, and not upon his own knowledge, as to the quantity of land, and as bearing upon the question of the good or bad faith of the defendant in representations of a somewhat similar character, which were shown to have been made before the deed was drawn. The evidence, if too late to be admitted as a part of the contract (and whether it was or not, need not be decided), was proper as an admission of the defendant, bearing upon the character of the contract. (Broom on Com. Law, 353, 354.)

The motion for a nonsuit, on both occasions when it was made, was properly denied. The.action, as has been said, was based upon the fraud of the defendant, and not upon any warranty or contract on his part, in regard to- the quantity of land. The doctrine, therefore, of the merger of all previous negotiations and representations in the written contract, and of the merger of the contract in the deed, has no application to the case. Fraud cannot be so merged. (Johnson v. Miln, 14 Wend., 195.) No ground on which the motion for a nonsuit was asked, appears to. have been stated on the trial, and none is urged now, but the above. Very clearly, there was some evidence bearing upon the question of fraud, which it was proper to submit to the jury.

The defendant’s general exception to the whole charge raises no question which can be considered here. (Caldwell v. Murphy, 1 Kern., 416.)

The only remaining exception, is to the refusal of the court to charge that the sale was in gross, and not one by the acre. I think the defendant’s counsel was clearly right ip his position, that the sale was in gross, and .not by the acre. This question does not depend upon the oral testimony, but upon the written contract, which we are to look to as the only evidence of what the bargain was, aside from the question of fraud. It was a question of law merely, depending upon the interpretation of the contract; and it is not one that admits of any doubt. The farm was sold with the personal property upon it, for $13,000, and no reference whatever was made to the quantity. It was, therefore, a sale in gross. (Faure v. Martin, 3 Seld., 210.) If this point was material, it would be fatal to the judgment; but it is wholly immaterial. The liability of the defendant for a fraudulent representation, is as clear, if the sale of the farm was in gross, as if it was by the acre. The representations of the defendant may have induced the plaintiff to enter into the contract for the purchase in gross, instead of by the acre, and there would be great injustice in depriving him, on that account, of his remedy for the fraud. Possibly the measure of damages might be different in the two cases, but no question on this subject was made at the trial; and this refusal of the judge to charge as requested, could not have injured the defendant in this respect.

The judgment should be affirmed.

Denio, Ch. J.

The defendant’s counsel does not deny that there was sufficient evidence to be submitted to the jury, pro-Tided this were properly an action for a deceit; but he maintains that it should be considered as an action upon a contract, and that the motion for a nonsuit ought to have been granted, because the contract for the purchase of the land was in writing, and there was no covenant or agreement in writing respecting the quantity of land in the farm. The position that the action was not brought for a deceit is based upon the absence of any distiuct allegation in the complaint that the defendant knew that the farm did not contain as many acres of land as it is alleged he represented it did, whence it is argued' that no fraud is legally set out. The complaint does, however, state that the defendant falsely and fraudulently represented and alleged that the farm contained ninety acres of land. This has always been considered a sufficient allegation of a scienter in this class of action. The subject underwent a good deal of discussion in Bayard v. Malcom, in the Court of Errors (2 John., 550), and. in the same case in the Supreme Court (1 id., 453). It was an action brought to recover for alleged untrue representations as to the business and patronage of a newspaper, upon the sale of it by the defendant to the plaintiff. The declaration alleged that the defendant made certain affirmations concerning the premises, the truth of which was negatived; and it was added, “ and so the said plaintiff says that he, by reason of said affirmation, was falsely and fraudulently deceived,” &c. The plaintiff had a verdict, but the Supreme Court reversed the judgment on the want of a sci-enter. The defendant’s counsel and the judges who concurred in reversing the judgment, however, stated that if it had been alleged that the representations were falsely and fraudulently made, the declaration would have been good, but they considered that the averment that the plaintiff was falsely and fraudulently deceived was not an equivalent allegation. But the Court of Errors held the declaration good, especially after verdict, and reversed the judgment of the Supreme Court. It will be seen, by perusing the arguments of counsel and the opinions of the Chancellor and Senators, that there was never any doubt that the-words, “falsely and fraudulently,” when used to qualify the defendant’s animus, in making the representations, were equivalent to the formal statement of a scienter-.

But besides, this case was tried without allusion to the pleadings, and if the complaint was defective in the particular referred to, no objection could be now taken for that cause, the defect not having been brought to the attention of the Supreme Court.

If this were an action on a warranty of the contents of the farm, no doubt the plaintiff ought to have been nonsuited for the reasons urged by the defendant’s counsel; for, not only were all the prior stipulations merged in the written contract, and in the deed, but there was no contract proved, oral' or written, as to the quantity of land in the farm. What was said by the defendant was of the character of representations, for the good faith of which he was responsible, though they did not constitute terms of a contract. But the evidence on the part of the plaintiff was quite sufficient to make out a case of fraud for the consideration of the jury. That which was produced by the defendant, though well worth considering, was not of a character to raise a question of law, which would enable the court to take upon itself the disposition of the case.

There remains two rather sharp exceptions to be considered. It is very clear that the plaintiff could not rely upon representations made to him by the defendant after the land had been conveyed, to make out the gravamen of the action. If there was not, prior to that time, any contract as to the quantity of the land, as we have seen there was not, nor any representations of the defendant upon that subject, the plaintiff was without remedy. But in such an action as this, the defendant’s intentions were in issue. He must have made the representations with a view to deceive the plaintiff, and to induce him to take the premises at the price mentioned, under the belief that they contained the quantity of ninety acres; What was said at Judge Bailey’s house was at the interview when the deed was put into the plaintiff’s hand. He declared he had not examined it. It is possible, though not clear, that if the defendant had refused to give the assurance which he did give, that the transfer was so far consummated that the plaintiff could not recede. But that would not be the natural understanding of parties situated as the plaintiff and defendant were. The plaintiff’s question evinced solicitude about the quantity of land, and his remark that he had had no opportunity to examine the conveyance carried the idea that he considered that he could return it, if the defendant should fail fully to satisfy him upon that point. The defendant, if he made the answers attributed to him, acted as one would be expected to act, who had, before that time, represented the land to contain the larger quantity mentioned, and was desirous of consummating the bargain without any demur on the part of the purchaser. Besides, the delivery of a conveyance is an act in pais, to be proved by witnesses. It does not certainly follow that the deed was delivered, because the plaintiff had taken it into his hands. If, for instance, he took it to read or examine, to ascertain whether it was correct, and was led to forego such reading or examination by the positive assurance of the defendant that it conformed to the verbal representations as to the number of acres, the delivery was not complete until after that explanation had been made, and the delivery acquiesced in. It is quite probable, from the circumstances proved, that this was the true state of the case. The defendant was entitled to an instruction, to the effect that any representations made by the defendant after the delivery of the deed, could not be taken into account to prove the main point of the issue, if such an. instruction had been asked for.. But I am of opinion that the evidence objected to was strictly competent.

As to the exception to the refusal to charge: I think the judge had substantially stated that the sale was one in gross, and not by the acre. There was certainly no evidence that it was of the latter character, that is, that it was sold for a specific sum per acre. It was sold for a certain amount, in other laud, and in securities for money, for the whole, and that was the substance of the judge’s remarks on that point. But the point itself was not material. There was not, confessedly, any guaranty as to the number of acres, and if the parties, in agreeing upon the aggregate consideration, understood the land as containing a certain number of acres, as was proved to have been the case, the rule of damages would have been the same as though no such estimate had been made. Upon the whole I do not see that the judge’s opinion, one way or the other, upon the point on which the instructions were asked, could have influenced the verdict in any way. Moreover it was not a question of law, but a matter of fact, depending upon the evidence which was before the jury.

I think the judgment ought to be affirmed.

All the judges concurring,

Judgment affirmed.