author: Allen, J. Denio, Ch. J.

text:
    Whalin v. White.
    A tenant took a lease of one having control of the possession, but without title, agreeing that, if the lessors should cease to control or be the owner of the premises by process of law or otherwise, no rent should be paid to the lessor or his assigns, unless the person who should then control the premises should, in writing, confirm the lease. The owner accepted a confirmation executed by the owner, and paid rent to successive assignees of the lease, the last of whom, having purchased at a foreclosure sale, but not having received a conveyance, tendered a confirmation of the lease: Held, that, until the sale is consummated by deed, the rights of the parties as landlord and tenant are not affected by the judgment of foreclosure.
    The tenant, by holding under and paying rent to the successive assignees of the owner, is estopped from denying that they are assignees of his original lessor, and continues bound to pay rent to them in that character, or as having, by the instruments of confirmation, become new lessors.
    Appeal from a judgment entered against the plaintiff by the direction of the Superior Court of Buffalo, at general term, upon a submission pursuant to the 372d section of the Code of Procedure. The plaintiff claimed to recover of the defendant $344.40, with interest from February 1, 1860, for rent, due upon a lease made by him. The defendant claimed that the lease had become inoperative, and that the term thereby created had ceased, by virtue of the foreclosure ■ and sale of the demised premises.
    The lease bore date February 10, 1853, and was executed by Henry T. Meech and his wife to the defendant. The demised premises were stores in the city of Buffalo. The term was for ten years from May 1, 1853, and the rent was payable quarterly from that day. At the time the lease, was executed, the title of the demised premises was in Norman S. Washburn, subject to a mortgage to Charles Christmas. The lessor, Henry T. Meech, at that time controlled the possession of the premises, and was entitled to the rents and profits thereof. The lease contained the covenant, “ that in the event that the lessors should by any means cease to control or be the owners of the premises thereby demised, by process of law, or. otherwise, no rent should be paid, or demanded, by the lessors, or their assigns, unless the person who should then control the premises should, in writing, ratify and confirm the lease.” On the 22d October, 1853, Washburn executed-a confirmation of the lease to the defendant White.
    Subsequently to this, Mr. Washburn conveyed the title to the premises to Edward B. Wesley, who, on September 4., 1856, conveyed the same to Robert Meech, who, on the same, day, “ in pursuance of the covenants in the lease,” executed and delivered to the defendant a written confirmation of the lease. At the time the lease was executed, there was a mortgage upon the demised premises held by Charles Christmas, who, in the month of August, 1859, commenced an action to foreclose the mortgage, mating Mr. White and Robert Meech parties defendant. On November 12, 1859, a judgment of foreclosure and sale was entered in the action, to foreclose the Christmas mortgage. This judgment directed the defendants, or any person who, since the commencement of the action, had come into possession under them, or either of them, to deliver possession thereof to the purchaser, or purchasers, on production of the sheriff’s deed therefor, and a certified copy of the order corifirming the report of sale. On December 7, 1859, the demised premises were sold by the sheriff, in pursuance,of that judgment, and the plaintiff purchased them. Immediately after the sale, the plaintiff gave the defendant verbal notice that he should confirm the said lease. In reply to this the defendant said he considered himself discharged from the covenants, terms and conditions of the lease, by the foreclosure of the mortgage aforesaid and the sale of the premises, and should not occupy the premises longer under the same. The defendant, notwithstanding, continued in the undisturbed possession of the demised premises. The case further states that the defendant “ entered into the occupancy of the premises described in said lease, and continued in the occupation thereof under the provisions of said lease, until the 7th day of December, 1859, and that his occupation thereof since December 7th, ' 1859, has not been disturbed.” On the 6th of February, 1860, the plaintiff executed and delivered to the defendant a written confirmation of the lease, which had been regularly assigned to him. The defendant declined to receive this confirmation, on the' ground that the lease was terminated by virtue of the sale under the foreclosure aforesaid.
    The judgment was for the defendant, and the plaintiff appealed to this court.

      William W. Mann, for the appellant.

      A. P. Laning, for the respondent.
   Allen, J.

The rent in controversy became due, by the terms of the lease, from Meech and wife to the defendant, on the first day of February, 1860. On the 7th day of December, 1859, the plaintiff became the purchaser of the demised premises at a sheriff’s sale, under a judgment of foreclosure founded upon a mortgage given before the demise. The defendant was a party to the foreclosure suit, and, with the other defendants, was bound by the judgment, and foreclosed and barred of all claim under his lease. By the terms of the judgment, the purchaser was only entitled to be let into possession of the premises, and the defendant was only required to yield and deliver possession to such purchaser, on production by the latter of the sheriff’s deed and a certified copy of the order confirming the sale. It does not appear, by the agreed statement of facts, that the sale has been confirmed, or any deed been given by the sheriff. The title of the plaintiff has not, therefore, become perfect, and he not only has not evicted the defendant, but he has had no power to do so, and the defendant has not attorned to him as the purchaser;' and had he done so, it would have been without authority of law, and would not have excused the payment of rent. The attornment would have been void. (2 R. S., p. 744, § 8.) The lessor and his assigns were entitled to the rent that accrued and became due between the day of sale and the time when, by the terms of the decree, the purchaser became entitled to the possession of the premises. (Astor v. Turner, 11 Paige, 436.) There must be an eviction, actual or constructive, before the rent becomes due, or the tenant must have actually attorned to one who has acquired a title paramount and superior to that of the landlord, to defeat an action for the rent at the suit of the landlord or his assigns. (Evertson v. Sawyer, 2 Wend., 507.) In Ball v. Westwood (2 Campb., 11), which was an action for use and occupation, the evidence was that the plaintiff had forfeited his copyhold, which had been seized by the lord of the manor, to whom the tenant had since paid rent; and it was held inadmissible, unless the tenant had divested himself of the possession obtained of the landlord and commenced a fresh holding under another person; and as the tenant had not disclaimed holding of the plaintiff, his lessor, and entered afresh under the new landlord, judgment was given against him. It is enough to defeat an action for rent that the tenant was either evicted, or, upon a valid claim by a third person under title paramount, has yielded up or abandoned possession: but one or the Other is necessary to a defence. (Simers v. Saltus, 3 Denio, 214.) In that case, the defendant, on being requested by the purchaser to attorn to him, refused to do so, and left the possession of the premises. Fuller v. Van Geesen (4 Hill, 171), merely passed upon the effect of a master’s deed under a decree of foreclosure in chancery as against a wrongdoer, and the operation of the doctrine of relation to make the deed effectual from its date upon a subsequent confirmation of the sale by the order of the court. ' .But the case is authority that, until the deed, no title vests in the purchaser. To the same effect is Giles v. Comstock (4 Comst., 270); and the doubt in that case was whether the purchaser could evict the tenant, or require him to attorn after obtaining the deed and before the order of confirmation. The rent in that case was payable in advance, and was due before the sale of the premises, although the deed was given before the expiration of the quarter for which the action was brought. The court held that payment to the purchaser, upon his demand and upon the production of the deed, constituted no defence to the -action at the suit of the mortgagor and landlord. Clason v. Gorly (5 Sandf. S. C., 447), was a well-considered case, in which Judge Sakdford, with his usual care, examined the rights of purchasers at judgment sales under decrees of courts upon foreclosure of mortgages before and after the confirmation of the sale, and the rights and liabilities of tenants who were parties to the foreclosure suit and bound by the decree. ’ It was held in that case —Judges Düer and Bosworth concurring—that the owner of the equity of redemption in land mortgaged was entitled to the rents which became due down to the period when the purchaser under the decree of sale became entitled to the posses-sion of the land; which right accrued upon the production to 'the occupant of the premises of the master’s or sheriff’s deed and a certified order confirming the report of the sale after it became absolute. To this extent the principle of Asior v. Turner was merely adopted; and the same doctrine is decisive of this case. But the court applied the principle to the case of a purchase by the tenant himself, and held that, when the tenant 'became the purchaser at the sheriff’s'sale under .a decree of foreclosure on the 22d of March (during the running of a quarter ending on the 1st of May following), and complied with the terms of sale by a tender of the purchase-money on the 5th of April, the day mentioned in the terms of sale for the delivery of the deed, but, owing to the neglect of the plaintiff in the foreclosure suit to have the decree enrolled, the deed was not delivered until the 2d of May, the day after the rent became due, and the order of confirmation was not entered until the 24th of May, the tenant was liable to his landlord for the quarter’s rent becoming due on the 1st of May. By the mere sale under the judgment in the foreclosure suit, no change of title was effected. That could only be done-by the deed; and, as no deed had been given at the time the rent claimed became due, and the defendant remained in the undisturbed possession of the demised premises under his lease, he was, of course, liable to the lessor, or his assigns, for the rent, and the plaintiff has title as assignee of the lessor, and judgment should have been given for him. (Edgerton v. Page, 20 N. Y., 281.)

The judgment of the Supreme Court should be reversed, and judgment given for the plaintiff for the amount claimed, with interest.

Denio, Ch. J.

There may be other answers to the defence set up by the defendant besides the one which I am about to mentionbut as that seems to me quite conclusive, I have bestowed no thought upon the others which have been suggested.

The clause in the lease contemplates a case in which the estate of the lessee, as well, as that of the lessor, shall be extinguished. This will be obvious from a little reflection. It would be quite unnecessary to make such a provision to guard against the effect upon the lessee of the devolution of the estate of the lessor upon another party. The lessee would, in such a case, hold under the party succeeding to the estate of the lessor, who could not repudiate the demise made by his predecessor in the title. But the lessors, H. T. and Adeline Meech, were not the owners of the demised premises—they ^ belonging to one Washburn. It is not stated that this condi- ** tion of the title was unknown to the defendant, the lessee, when he took the lease. In the absence of such statement, he must be assumed to have known it. There is also a strong inference to the same purpose from the clause itself; for if the lessors were understood to be the unconditional owners, there could not have been, as I have stated, the least necessity for such a provision. Nothing which the lessors, being the owners, could do, .could prejudice the title of the lessees.

Any conveyánce by them would be subject to the lease, and the lessee, as has been stated, would hold under the substituted owner. It was to provide against apprehended disturbance from this imperfection of title of the .lessors that the clause was inserted; and this may have been as important to the lessors as to the lessees. The means agreed upon to prevent disturbance on that account was, as I understand its nature and design, that the lessee should, in the event of the extinguishment of the lessor’s title by the assertion of a paramount title, hold under the party establishing or acquiring such paramount title, upon the same terms as he held under the original lessors. Such paramount title was established by the foreclosure of the mortgage that Washburn had executed; and the plaintiff has become the owner under such title, and he has, by writing, consented to ratify and confirm the lease. This, by the explicit terms of the provision, qualifies the effect of the principle of law which would have extinguished the lease in an ordinary case. The defendant cannot, therefore, set up that principle of law to avoid the further payment of rent; for, modus et conventio vincunt legem. The arrangement is not liable to the objection that it was for'the benefit of a stranger. If that were so, probably the plaintiff would be defeated for want of privity. The covenant to pay rent was with H. T. and Adeline Meech, the original lessors, and ran to them or to their assigns. But Washburn was the owner of the demised premises; and whatever title the Meeches had, terminated before or in 1853. Washburn then executed a ratification ^ of the lease, which the defendant accepted, and he continued to enjoy the premises as lessee, and to pay rent. Robert Meech became the owner by mesne conveyances from Washburn in or prior to 1856, and he executed a confirmation, which the defendant received, and he continued to enjoy the premises and to pay the rent. By this instrument of confirmation, Robert Meech makes the lease and all its provisions obligatory on him. By accepting it and continuing in possession, the defendant became the tenant of Robert Meech, and he is concluded from denying that Meech is the assignee of the original lessors; or, if not such assignee, he has become virtually an original lessor by force of the new contract. The estate had ceased, and the defendant accepts Robert Meech as the lessor-in their stead. Then Robert Meech conveys to the plaintiff, and that conveyance carries with it the grantor’s right to the. rents. The defendant, had there been nothing more in this case, would have been bound to pay the rent, according to the original lease, to the plaintiff, as the assignee of Robert Meech. But then a mortgage, which was a paramount lien, is enforced, and the plaintiff becomes the purchaser of the premises at the foreclosure sale. Had the plaintiff been a stranger to the contract under which the defendant held the premises, then, inasmuch as the lessee, the defendant, was made a party to the foreclosure suit, he, as purchaser under the. foreclosure, and being thus invested with the paramount title, might have put an end to the tenancy. But he was the grantee of Robert Meech, the defendant’s lessor, by virtue of the instrument of ratification which Meech had executed, and which the defendant had accepted. He is, therefore, to be regarded in the same light as though he held under the Meeches, who executed the original lease, for he has placed himself in that position by his instrument of confirmation. Hence, he is not to be considered as a stranger, but as either the assignee of the original lessors, or as himself an original lessor, and is, therefore, entitled to the advantage which his purchase under the foreclosure had given him, and to ratify and confirm the defendant’s tenancy according to the provision to that effect in the lease; and having done so, the defendant cannot repudiate the lease under the principle which has been referred to. The judgment should be reversed, and judgment be given for the plaintiff.

Wright, Selden, Sutherland, Gould and Smith, Js., concurred.

Judgment reversed, and judgment for plaintiff


source: Caselaw Access Project

author: Wright, J.

license: Public Domain

text:
    Anable v. Conklin et al.

    A complaint, stating a promissory note, whereby the maker promised to pay the defendants named, “ trading and doing business under the partnership name or firm of O., I. & Co.,” and that said note was “ duly indorsed by said defendants by their said partnership name,” sufficiently avers the partnership: an answer, denying “the indorsement in the complaint alleged,” does not put the partnership in issue.

      Heldj accordingly, that evidence, offered by one of the defendants, that he was never a member of the firm of 0., I. & Co., was inadmissible.
    Appeal from a judgment of the Supreme Court. Action against the maker and indorsers of a promissory note. The complaint alleged that the defendants, The Forest and Agricultural Steam Engine Company, at the city of Brooklyn, made their certain promissory note in writing, bearing date on the 4th of August, 1858, wherein and whereby they promised to pay, three months after its date, to the order of the defendants, Henry FT. Conklin, Abraham Inslee, Stephen B. Conklin and David Harrison, trading and doing business at said city under their partnership name or firm of Conklin, Inslee & Co., the sum of $400, for value received, which said note was afterwards and before the same became due and payable, duly indorsed in writing by said defendants, by their said partnership name, and was afterwards, and before the same became due and payable,' duly delivered, so indorsed, to the plaintiff; and which said note was at its maturity duly presented and shown to the defendants, The Forest and Agricultural Steam Engine Company, the makers thereof, for payment, and payment demanded and refused; of all which the said Conklin, Inslee & Co. had due notice, yet the defendants have not paid the same or any part thereof.
    The makers of the note put in no answer. The defendants, Henry FT. Conklin, Abraham Inslee, Stephen B. Conklin and David Harrison, answered that they “ deny the indorsement in the said complaint alleged of the promissory note therein set forth, and also deny any knowledge or information sufficient to form a belief as to whether the said defendants were ever notified of the presentment and non-payment of the said promissory note, as in the said complaint is alleged.”
    The cause came on for trial at the New York Circuit, before Mr. Justice Allen and a jury, in May, 1859. In support of the allegations of the complaint, the plaintiff’s counsel produced a promissory note in the words and figures following, viz.:
    $400. • BrooJclyn, August 4i/i, 1858,
    Three months after date we promise to pay to the order of Conklin, Inslee & Co., four hundred dollars, value received.
    Forest and Agricultural Steam Engine Co. .
    H. N. Conklin, Treasurer
    No. 17 due Nov. 7th, 1858.
    (Indorsed.) Conklin, Inslee & Co.,
    18 to 36 Water st., Brooklyn.
    ' And having proved the making of the same by Stephen B Conklin, one of the defendants, and an indorsement thereof under the firm name of Conklin, Inslee & Co. (the firm name being indorsed by Henry N. Conklin, one of the firm), and having proved the interest, and the protest and notice of protest being admitted, rested his case.
    Whereupon the defendants’ counsel moved for a dismissal of the complaint, and the motion- having been denied by the court, duly excepted.
    The defendants’ counsel then offered to prove that the firm of Conklin, Inslee & Co., was not and never had been composed of the defendants, Henry N. Conklin, Abraham Inslee, Stephen B. Conklin and David Harrison, as alleged in the complaint, and that the defendant, Harrison, had never been a member of the firm of Conklin, Inslee & Co., which offer of the defendants’ counsel was overruled by ttie court, and said evidence excluded ; to which the defendants’ counsel excepted.
    The defendant’s counsel having then rested his case, the jury, under the direction of the court, found a verdict for the plaintiff; to which direction of the court, the defendants excepted. On appeal to the Supreme Court, the judgment was affirmed.

      William H. Scott, for the' appellant, argued that an unanswered allegation, which is to preclude a party from disproving a fact intended to be asserted by it, should be direct and positive. (Oechs v. Cook, 3 Duer, 161.) The statement in this complaint is not a direct allegation of the partnership of the defendants, but merely descriptive of the manner in which the note was originally drawn. Nor is it a material allegation of the partnership, if assumed to be direct and positive. The only material question in that respect is as to the existence of the partnership at the date of the indorsement to the plaintiff. But conceding the averments in the complaint to amount to a sufficient allegation of the partnership, then the material question is, are the defendants all liable as indorsers ? The mode in which the indorsement was made by them, whether as partners or otherwise, is immaterial. The answer denies “ the indorsement in the complaint alleged.” The substantial issue being as to the fact rather than to the mode of the indorsement, it was incumbent on the plaintiff to prove that all the defendants united in indorsing the note. The denial being general, following the language of the complaint and controverting the indorsement alleged therein, must be considered as possessing all the breadth and amplitude which can be attributed to the allegations of the complaint. (Wally. Buffalo Water Works, 18 N. Y., 122 ; Williams v. Hayes, 20 id., 58 ; Seeley v. Engell, 3 Kem., 542.) If the complaint alleged that Harrison, through representation as a partner, indorsed the note, then the answer denied it, and the proof offered that he was no partner was within the scope of the denial. If the answer were uncertain as to whether it was intended to apply to the fact or to the form of the indorsement alleged, the plaintiff’s remedy was by motion. -

      Edgar Van Winkle, for the respondent.
   Wright, J.

There is but a single question in the case, viz.: whether it was error to exclude evidence that the defendant, Harrison, had never been a member of Conklin, Inslee & Co. The action was against a manufacturing corporation as the maker, and the firm of Conklin, Inslee & Co., as indorsers of a promissory note. It was upon a partnership and not an individual indorsement of the persons named as constituting the firm. Unless the individuals named in the complaint were partners, the action would not lie. It was material', therefore, to allege a copartnership, and if the allegation was controverted by the answer, to prove.it on the trial in order to maintain the action. The complaint alleged that the note was made payable to the order of the defendants, the Conklins, Inslee and Harrison (who were trading and doing business at the city of Brooklyn, under their partnership name or firm of Conklin, Inslee & Co.), and that it was afterwards, and before it became due and payable, indorsed by them, by their said partnership name; and that the said firm of Conklin, Inslee & Co. had due notice of its presentment to and non-payment by the makers. This amounted to an express allegation that the note was indorsed by a firm doing business under the name of Conklin, Inslee & Co., and that the defendants at the time composed such firm. In the answer (Harrison, himself, appearing and joining in it, although not served with process) the allegation of partnership of the defendants was not controverted, or that they did not compose the firm of Conklin, Inslee & Co. • It merely denied the fact of indorsement of the note, and any knowledge or information sufficient to form a belief as to whether the defendants were ever notified of its presentment and non-payment. Bor the purposes of the action, therefore, the allegation of the partnership of the defendants was to be taken as true. (Code, § 168.) The denial in the answer of “ the indorsement in the said complaint alleged of the promissory note therein set forth,” is a mere denial of the writing, and not of the partnership, and was obviously1 so intended.

The defendants not having denied the allegations that the defendant, Harrison, was a partner or member of the firm of Conklin, Inslee & Co., it was too late at the trial to offer to prove it,.as no such issue was before the court. It was not ' error, consequently, to overrule the offer.

The judgment of the Supreme Court should be affirmed.

All the judges concurring,

J udgment affirmed.


author: Davies, J.

text:
    Leavitt v. Pell et al.

    A power to mortgage, reserved to a married woman in respect to land held . in trust for her separate use, will support a mortgage to secure her husband’s debt.
    . Appeal from a judgment of the Supreme Court at general term in the first district, affirming the validity of a mortgage executed by husband and wife, and the trustee of the latter, of land held in trust for her separate use. The facts are sufficiently stated in the following opinion:

      Richard S. Emott and Walter Rutherford, for the appellants.

      William C. Noyes, for the respondent.
   Davies, J.

This is an action by the receiver of the North American Trust and Banking Company to foreclose a mortgage executed to that' Company, dated December 20, 1838. Ferris Pell, the husband of the defendant, Mary Anna Pell, was indebted to the Company on his bond for the payment of the sum of $15,000. And to secure the payment of this bond the mortgage was executed by Mr. and Mrs. Pell, and by Mr. Selden, her trustee. ’ In. November, 1827, the defendant, Mrs. Pell (then the widow of Mr. Sturgess), being the owner of certain real and personal estate, executed, in' anticipation of her marriage with the deceased, Ferris Pell, an ante-nuptial settlement, to which her intended husband and De Witt Clinton, now deceased, were parties. By it, after reciting her intended marriage, she conveyed all her real estate to Mr. Clinton upon trust, for her sole benefit, “ and to permit her to take the rents thereof to her own use, free from the debts and control of her husband and, upon her decease, in trust for her heirs and assigns forever.” A triple power was reserved thereby to Mrs. Pell, as if she were a feme sole :

First. To sell and dispose of the premises as she should think proper.

Second. To devise the same among her children, .with her husband’s approval, in writing under his hand and seal, or to devise the same to him.

Third. To agree to a partition of any lands, which she might own jointly with others. And a power was therein reserved to Mr. and Mrs. Pell, of revoking or altering the uses therein limited, and to declare, limit and appoint such new or other uses, as they should jointly think fit. De Witt Clinton died in February, 1828, and on the 14th June, 1830, , Dudley Selden was appointed by the Court of Chancery, trustee under said indenture in the place of Mr. Clinton.

On the 6th of April, 1830, Ferris Pell, who was seised in fee of four of the six lots covered by the mortgage sought to be foreclosed by the present action, made, executed and delivered to Abraham Bancker, his bond for the payment of the sum of two thousand dollars. And on the same day, and at the time of the execution of the said bond, the said Pell and his wife made, executed and delivered to said Bancker a mortgage upon the said four lots, as' security for the payment of the money, mentioned in the said bond. On the 22d day of October, 1830, Alfred S. Pell and his wife, being seised in fee of said four lots of land, under a conveyance from the said Ferris Pell and his wife, subject to said mortgage to said Bancker, and of two other lots of land adjoining the same, did, by a certain indenture bearing date on that day, convey the same six lots of land above mentioned to the said Dudley Selden, subject as to four of said lots to said Bancker’s mortgage.

In May, 1851, Selden and wife executed a deed to Mrs. Pell, reciting the conveyance of the said six'lots to Mr. Selden, declaring that the same were conveyed to him as the trustee of Mrs. Pell, and thereby covenanting and agreeing to hold the same upon the trusts, terms and conditions, and for the purposes, as declared in the trust deed or marriage settlement, executed in November, 1827, between Mr. and Mrs'. Pell and De Witt Clinton.

On the 11th of March, 1854, another indenture was made and executed by and between Mr. Pell, of the first part, Mrs. Pell, of the second part, and Mr. Selden, of the third part, setting forth, among other things, the seisin of Mr. Selden of the six lots of land; that Mrs. Pell was desirous to have the trusts relating thereto revoked, and the thereinafter trusts limited and declared of and concerning the same; that the said lots were purchased with moneys which were of the separate estate of Mrs. Pell; and that it had been agreed between the parties that the then existing trusts in said lots should be revoked, and that the same should thereafter be held by the said Selden' upon the trusts thereinafter declared. And the parties thereto did therein and thereby revoke and annul the trusts, terms and conditions, upon which the said premises had theretofore been held, and did declare that the same should thereafter be held upon the trusts, terms and conditions therein expressed and declared, among other things, to receive the rents and profits thereof during the life of Mrs. Pell, and dispose of the same as therein directed.* And it was therein declared and agreed by and between all the parties thereto, .that it should and might be lawful for Mrs. Pell, notwithstanding her coverture, with the consent of her husband during his life, and alone after his death, at any time or times, by any deed or deeds, to mortgage, or to charge, or to make chargeable, the said lots of land, or any part thereof, with and for the payment of any sum or sums of money, to be paid and payable at any time or times, to any person or persons, with interest for the same, not exceeding the rate allowed by law.

By a stipulation made between all the parties to this suit, it was agreed that the defendants and appellants would, on the argument of this appeal to this court, admit that the mortgage in question was and is valid, if 'Mary Anna Pell and her trustee, with or without her husband, had power to give the said mortgage under any or all the instruments in evidence, as security for the bond mentioned in the mortgage, being for the personal debt of said Ferris Pell; and all other questions were by said stipulation expressly abandoned.

The only question, therefore, remaining for consideration, is, whether Mrs. Pell had authority, under the several instruments set forth, to mortgage these six lots of land for the payment of the bond of her husband to. the banking company. It is to be observed that these lots were not embraced in the original marriage settlement, but at the time of the execution of the deed between Mrs. Pell and her husband and Selden, in 1834, were held by Selden upon the same trust and subject to the same right and power of revocation and disposition, and to create new and other trusts, which she had declared and reserved in and by the marriage settlement of 1827.

By that settlement, as we have seen, Mrs. Pell, in effect, reserved the right and power to sell and dispose of her real estate, included in the settlement, as she should think proper, and as if she were a feme sole; and she also reserved the power to revoke the trusts therein contained, and to declare, new trusts by deed under the hands and seals of herself and her husband.

The deed of 1834, to which Mrs. Pell, her husband and Mr. Selden were parties, was a revocation of the .uses and trusts declared in the marriage settlement of 1827, in reference to the premises covered by the mortgage, set forth in the pleadings in this action, and contained a declaration ■ of the new uses and trusts upon which they were thereafter to be held, and among them was the power to mortgage the same with the consent of her husband. This consent is manifested by his joining with his wife in the execution of the mortgage, and the legal title to the premises passed by its execution by the trustee.

The power to execute the mortgage was thus reserved to Mrs. Pell, and she has executed the mortgage in accordance with the power thus reserved, and the only question remaining is, could she legally reserve and execute this power.

It would seem that there could not be much doubt on this subject. The language of the Revised Statutes is plain and unambiguous. Section 110 (1 R. S., 735), declares that a married woman may execute a power during her marriage, by grant or devise, as may be authorized by the power, without the concurrence of her husband, unless, by the terms of the power, its execution by her during marriage is expressly or impliedly prohibited. This court held, in Wright v. Tallmadge (15 N. Y., 307), that this section completely takes away the disability of coverture in respect to the execution of powers, and that a power, general or special, beneficial or in trust, may be reserved to a married woman by a marriage settlement, by which the entire legal estate is vested in trustees.

Mow the power to revoke the trusts of the marriage settlement, and to declare the new or different trusts, was duly and legally exercised, and with the concurrence of the husband as provided for in the marriage settlement. The new trusts were declared with the like concurrence, and the power to mortgage was executed also with his concurrence. There was no restriction in the power to mortgage as to the class or character of debts, to secure which she might execute a mortgage. The language used in creating the power is of the most general .character. It is to mortgage, or to charge, or make chargeable, the said lots, with and for the payment of any sum or sums of money, to be paid and payable at any time or times, to any person or persons. There is nothing in the power, therefore, to prohibit a mortgage for the debts of her husband, or any other person, or for a debt of her own contracting. And we do not see any reason why, in the execution of the power, she might not as well have given the mortgage for one purpose as the other. The only questions are, whether the power to mortgage could lawfully be reserved to a married woman, and whether the mortgage executed was within the terms of the power. Both of these questions must be answered in the affirmative, and it follows that the mortgage was in all respects legal and valid, and that the judgment of the Supreme Court must be affirmed, with costs.

Judgment affirmed.

       “ And apply them to her separate use free from the control, debts or engagements, of her then present, or any future, husband.”


author: Gould, J. Wright, J.

text:
    Smith, Receiver, &c., v. Townsend et al.

    A wife mortgaged her land as a continuing security for notes to be indorsed by her husband, or any renewals thereof: Held, that an agreement by the creditor to extend the time of payment for the debt due upon such notes, without a renewal thereof, discharged her liability as surety.
    Appeal from the Superior Court of the city of Buffalo. Action to foreclose a mortgage, dated May 28th, 1856, executed by Townsend, and his wife Jane, to Oliver Lee & Company’s Bank at Buffalo, upon several parcels of land, conditioned “ to pay, or cause to be paid, all checks, notes, drafts, overdrafts and acceptances, and all indebtedness of any kind whatsoever, which had theretofore, or should thereafter, be drawn, made or incurred, by the said Daniel J. Townsend, or by the Buffalo Car Company, and which then were, or might thereafter be held, or owned by the party of the second part (the bank), upon which the said Daniel J. Townsend, or the said the Buffalo Car Company, should be in any manner liable, either directly or contingently, either as drawer, maker, indorser, acceptor or otherwise, whenever the same, or any renewals thereof, or any part thereof, should fall due and become payable, with all costs and expenses thereon, or in anywise connected therewith.”

      The mortgage stated that it “ is executed as a continuing security for an amount not exceeding ninety-three thousand six hundred dollars.”
    The bank failed in September, 1857, and 'the plaintiff was appointed receiver. At the time the bank failed, the Car .Company owed it over ninety thousand dollars. On the 8th day of September, 1857, the bank recovered a judgment, on such indebtedness, against Townsend, as indorser for the Car Company, of $97,914.33.
    On the 15th day of April, 1857, the bank executed an instrument, in writing, agreeing to extend the payment of the debt due to it from the Car Company to the first day of June then next, and in case one thirty-third part of such debt and the interest on the entire debt was then paid, the bank, by this instrument, agreed to extend the payment of the balance of such debt to the first of July, &c. This agreement was expressed to be made on condition that certain creditors of the Car Company, therein named, agreed to an extension of their respective debts against the Car Company,' at least eipiial in time, to the extension thereby granted by the bank. The creditors did so agree.
    The Car Company was insolvent at the time of this extension. A portion of the premises embraced in the mortgage were owned by Mrs. Townsend in fee, at the time the mortgage was executed: but there was no evidence that the bank knew, or had notice, at the time it agreed to extend the time of the payment of the debt, that Mrs. Townsend'owned any portion of the premises in fee.
    The court decided that Mrs. Townsend’s inchoate right of dower in that portion of the premises embraced in the mortgage whereof her husband was seised in fee, was liable to the lien and operation of the mortgage, but that portion whereof she was seised in fee was discharged therefrom by reason of the agreement to extend the time for the payment of the debt to the bank. The plaintiff’s counsel excepted.
    A j udgment was entered in accordance with the decision of the court. The plaintiff appealed from that portion of the judgment which discharged the premises of which Mrs. Townsend was owner in fee, from the lien and operation of the mortgage.

      John Gamón, for the appellant. The mortgage given by the surety was “executed as a continuing security for an amount not exceeding ninety-three thousand six hundred dollars," and was, on its face, expressed to be for “ all indebtedness of any kind whatsoever which had theretofore, or should thereafter, be incurred by Daniel J. Townsend, or by the Buffalo Oar Company, or for any renewals thereof.” If notes had been given for the debt mentioned in the agreement for an extension, payable in thirty-three monthly installments, there cannot be any doubt that the mortgage of the surety would have been valid as security therefor, notwithstanding Mrs. Townsend’s relation to it There is nothing in the mortgage prescribing the form in which the debt shall be put, nor any limitation as.to the time of payment; and this debt, as extended comes within the purview and intendment of the condition.

      Lyman K. Bass, for the respondent.
   Gould, J.

So far as the facts are found in this case, we have nothing before us upon which we can say that, when the mortgage was given, the condition or possession of the mortgaged premises was such as to authorize the bank to suppose that the title to them was in Daniel Townsend, rather than in his wife. And in the absence of any such facts, we are thrown back upon the legal presumption that (nothing appearing to give a contrary color of title), the taker of a conveyance is held to take it according to the true title of the grantors, and with the knowledge of it.

It is, further, found in the case, and the mortgage on its face shows, that it was given as security for a debt which was not the debt of either Daniel Townsend or his wife; so that, upon the mortgage, both were sureties to the bank for the already incurred debt of a stranger, which was to be, and was, con-tinned as that stranger’s debt, and with this mortgage as collateral security thereto.

Thus, with the knowledge that the wife’s mortgage was not for her benefit, or even for that of her husband, and with the (leg^al) knowledge that part of the mortgaged premises belonged to her, as her separate estate, the bank extended the time of payment to the principal debtor, without the consent of one of the sureties; which act would release the separate interest of that surety. The fact that the consent of Daniel Townsend was procured to the extension shows that the bank understood the act they were doing to be one that required such consent to prevent his being released.

The plaintiff’s claim, that the mortgage was a continuing security for loans to be made and renewed, does not meet "the case; for the extension contract was one by which the bank was conditionally to receive part payment from time to time upon an already matured debt, the maturity and dishonor of which made the mortgage debt at once payable. The contract which was made altered the tenor of the indebtedness in such a way as to release a surety who did not consent thereto.

It is not inconsistent with these views to hold operative her release (by joining in the mortgage) of her inchoate right of dower in such part of the mortgaged premises as belonged to her husband; for the principal contract—that of suretyship — being his sole contract, and her concurrence in the deed touching inérely a contingent incident to his estate, her consent Would be held to follow his modification of the principal contract.

It would seem that the judgment of the Superior Court of Buffalo should be affirmed.

The claim that the mortgage is void, because not given to the president of the bank (Laws of 1838, chap. 260, § 24), is not properly taken by the defendants, as they do not appeal from the judgment below.

Wright, J.

At the time of the execution of the mortgage) Mrs. Townsend was seised in fee of specified parts of the mort gaged premises. She executed the mortgage without any consideration, and as surety to the bank for the payment by her husband and the Buffalo Car Company of the indebtedness secured to be paid thereby; and the bank had notice that she was a mere surety. The indebtedness for which the plaintiff seeks to enforce the mortgage was represented by ten promissory notes, amounting to upwards of $93,000, each of which was made by the Buffalo Oar Company and indorsed by Daniel J. Townsend. Eight of the notes bore date on the 22d January, 1857; one on the 10th March, 1857.; and another on 4th April, 1857. On the 15th April, 1857, the bank and the Buffalo Car Company entered into an agreement to extend the time of payment of this indebtedness'in such manner that the same should be payable in thirty-three equal monthly payments ; the first payment to be made on the 1st June, 1857. Daniel J. Townsend consented to this extension of time to the Buffalo Car Company, and agreed to continue his liability on its notes as indorser;. but such time of payment of the indebtedness of the company was extended without the knowledge or consent of the defendant, Jane S. Townsend.

On these facts, the case is a plain one. Mrs. Townsend was merely a surety for the Buffalo Car Company and her husband, and the bank knew it; and when, without her consent, the bank, by a valid and binding agreement, gave time to the principal debtor, those parts of the mortgaged premises of which she was seised in fee were released and discharged from the lien and operation of the mortgage. (Gahn v. Niemcewicz, 11 Wend., 312.) It is not argued by the plaintiff’s counsel that this would be otherwise, provided the bank knew, at the time of receiving the mortgage, that Mrs.' Townsend had mortgaged her separate property. As to this latter fact, it is said there is not any evidence or finding. I do not think, however, that it was necessary for Mrs. Townsend to have shown affirmatively on the trial that the bank had notice when it received the mortgage that a part of the property embraced therein belonged to her. It must be presumed that a mortgagee is cognizant of the title to the estate mortgaged, when there is no countervailing testimony.

The judgment of the Superior Court of Buffalo should be affirmed.

Judgment affirmed.


author: Allen, J. Selden, J.

text:
    Robinson, Receiver, &c., v. Plimpton et al.

    The sureties on an appeal from an order made at a special term of the Supreme Court, which was reversed at general term, are not thereby discharged, but are liable upon the affirmance of the first order by this court, on an appeal to which they were strangers.
    It is immaterial that the judgment of this court was made the judgment of the Supreme Court at a special and not at a general term.
    Appeal from the Superior Court of the city of Buffalo. The defendants demurred to the plaintiff’s complaint, upon an undertaking given under the 335th section of the Code, on appeal by one of the stockholders of the bank, to the general term of the Supreme Court, from an order of the special term, confirming the report of a referee apportioning the debts of the bank among the stockholders, and rendering judgment against the appellant for his share of such debts. The undertaking was in accordance with the statute, and provided that, if the judgment appealed from or any part of it should be affirmed, the appellant should pay the amount directed to be paid by the judgment, or the part as- to which it should be affirmed, if affirmed only in part, and all damages which should be awarded against the appellant on said appeal. The judgment at the special term was reversed at the general term; but on appeal to this court the judgment at the general term was reversed, and that of the special term affirmed, and the record and proceedings were remitted to the Supreme Court to be proceeded upon according to law. The judgment of the Court of Appeals was at special term made the judgment of the Supreme Court, and then upon the judgment so affirmed not being paid, this action on the undertaking was. commenced; the complaint stating the foregoing facts. The Superior Court "overruled the demurrer, and the defendants appealed to this court.

      Chauncey Tucker, for the appellants.

      John Ganson, for the respondent.
   Allen, J.

The appellant, for whom, the defendants were sureties, had the benefit of his appeal and of the stay of proceedings upon the judgment appealed from, as the result and in consequence of the undertaking in suit; and the question now is, whether the erroneous judgment of the Supreme Court, reversing the judgment appealed from, worked a release of the sureties, notwithstanding the error was corrected upon appeal to this court, and the original judgment ultimately affirmed. The undertaking was in the form prescribed by the Code (§§ 335, 348); and by it the defendants undertook that, if the j udgment should be affirmed, the appellant would pay the amount thereof. In terms, the undertaking does not restrict the liability of the defendants to the contingency of an affirmance of the judgment by the Supreme Court. The condition may as well refer to an affirmance by the judgment of any court to which the cause may go by appeal, or the final decision of the action in the court of last resort. There was no reason for making the undertaking effectual only upon the first appeal, and for the judgment of a court which was not necessarily final; and the statuté, and the undertaking given in pursuance of it, have respect to the final determination in the court of last resort, or the last court to which the parties may take it by appeal. The cause is the same in every court, and the question in each is the same, to wit, whether the first judgment—that appealed from by the defendants’ principal— was erroneous and should be reversed, or was right and should be affirmed. The condition is, in substance, for the ultimate affirmance of the judgment appealed from.

Upon the most literal and strict reading of the undertaking, the defendants became liable upon the filing of the remittitur from this court, and the entry of the proper judgment in the Supreme Court. The first judgment of that court became as if it had never been pronounced; and the judgment entered in pursuance of the decision of this court was one in affirmance of the judgment first appealed from. That the remedy of the plaintiff was suspended, or, rather, that the defendants’ liability was in suspense, pending the appeal to this court, does not affect the question. Uor is there anything in the suggestion that the defendants were not parties to the appeal to this court. They consented to become liable upon a contingency, which has happened, and for the result of an action of which they had no control and to which they were not parties, and are bound, not because they were parties to either appeal, but by the terms of their undertaking.

The principle is well settled in cases entirely analogous. The security given by a non:resident plaintiff on obtaining a warrant from a justice of the peace was held to extend to the final determination of the cause, when carried by appeal to the Court of Common Pleas, and that the sureties were not discharged-by a recovery before the justice which was reversed. (Traver v. Nichols, 7 Wend., 434.) The like decision was made in this court, in an action upon a bond given on the issuing of an attachment by a justice of the peace against a non-resident debtor, under section 33 of chapter 300 of the Laws of 1831. (Bennett v. Brown, 20 N. Y., 99.) To the same effect is Ball v. Gardner (21 Wend., 270); both cases holding that a bond given by a party, on suing out an attachment from a justice’s court, conditioned to pay all damages, &c., if he fail to recover, extends to the final determination of the cause. In Smith v. Crouse (24 Barb., 433), it was decided that when a party, on appealing to the County Court from the judgment of a justice of the peace, executed an undertaking, conditioned that, if a judgment shall be rendered against the appellant, &c., the obligees would pay the amount, &c., and the County Court reversed the judgment, and, on appeal to the Supreme Court, that court, reversed the County Court and affirmed the judgment of the justice, the sureties were liable upon their undertaking. That case appears to have been well decided, and the principle involved is decisive of this appeal!

The judgment should be affirmed.

Selden, J.

It is claimed by the defendants that the facts do not show any breach of the conditions of their undertaking, on the ground that the judgment has not been affirmed on their appeal. First: They insist that, on the reversal by the general term of the judgment of the special term, they were absolutely discharged, and could not be again made liable, without their assent, by the order of another court in an appeal to which they were strangers. Second: That the judgment has never been affirmed by the general term, to which the appeal was brought; and that neither the judgment of the Court of Appeals, nor the order of the special term carrying that judgment into effect, is such a judgment of affirmance as is contemplated by the statute or by their undertaking.

The judgment of the general term, reversing that of the special term, so long as it remained in force, was effectual as a bar to a suit on the undertaking; but it was a conditional, and not an absolute, discharge of the sureties. The general term itself might have seen fit to vacate its own judgment, and on rehearing might have affirmed the judgment appealed, from, and in that case the liability of the sureties could not be doubted. The substance of their obligation was, that if on the final termination of the appeal the judgment should be affirmed, in whole or in part, it should be paid, so far as affirmed, with daipages and costs. If the first judgment of the general term had been against the appellant, the defendants would not have been absolutely concluded by it, so long as they had any means of obtaining a contrary judgment, either by a direct application to that court, or by calling in the aid of a higher court to correct their errors, if they had committed any. They were holden to abide the final judgment, upon their appeal, and the judgment of the appellate court, produced by the mandate of a higher court, has the same effect as if it had been arrived at without the interposition of such higher court. It is the final judgment upon the original appeal. This disposes of the first objection, and it would dispose of the whole defence, if the order making the * judgment of the Court of Appeals thé judgment of the Supreme Court had been made at the general instead of the special term, as it no doubt might have been, being an order of course, and usually made on motion of the prevailing party without notice to the other party. (2 Cowen, 510; 1 Wend., 25; 7 Paige, 110.) The order by the special term, however, was in accordance with the usual practice^ and I think was as effectual to charge the defendants as if it had been made by the general term. If the statute had authorized an undertaking that the judgment should be paid if affirmed by the general term, and the undertaking had been, framed accordingly, I am inclined to think that the defendants’ objection, although technical merely, would be well taken. That, however, is not the substance of their engagement. It is, that if the judgment shall be affirmed “on said appeal.” It has been so affirmed, according to the regular course of ■ judicial proceedings, as they were usually conducted when the appeal was brought.

It is not necessary to decide the question, whether the judgment of the Court of Appeals, without the formality of making it the judgment of the Supreme Court, would have fixed the defendants’ liability.

The judgment of the Supreme Court should be affirmed.

All the judges concurring,

Judgment affirmed.


author: Smith, J.

text:
    Van Alstyne, Sheriff, &c., v. Cook, Receiver, et al.

    Until an order is made for the appointment of a receiver, the property of an insolvent limited partnership is liable to the execution of a creditor recovering judgment otherwise than by confession, and he may thus obtain a preference.
    The execution binds the partnership property, though the action is brought against the general partners only.

      Held, accordingly, that, where an action was commenced by one of the partners for the dissolution of the partnership and the distribution of its effects, and before the order for the appointment of a receiver the sheriff levied on partnership property the execution of a creditor who had obtained judgment by default, the title of the creditor to the avails of such property was not overreached by that of the receiver.
    Appeal from the Supreme Court. Action brought by leave of the court against the defendant as receiver, to reach a fund in his hands, which arose from the assets of a special partnership, composed of William B. Treadwell, John G-. Treadwell, John S. Perry and Edward Norton, general partners, and of John E. Rathbone, special partner. The firm, and all the general partners, on or before the 15th of May, 1860, became and were insolvent, and on that day the Artisans’ Bank of New York, recovered a judgment against the general partners for the sum of $17,273.94, for which an execution was that day issued and delivered to the plaintiff, who was the sheriff of Albany, who on the same day levied upon all the personal property of the copartnership. The judgment was duly recovered by default, and a transcript filed, but the record of judgment was not signed by the clerk. On the same day a suit in equity was commenced by one of the partners to dissolve and close up the partnership and distribute its assets among the creditors, in which action an injunction was obtained, and the defendant, Cook, duly appointed receiver. The cause was tried before Judge Hogeboom, without a jury. The judge found that the levy under the plaintiff’s execution was duly made at 5 o’clock, p. it., on the 15th of May, and that the receiver took possession the next day at 2 p. m. ; that the property was sold by the receiver, and the fund in his hands arose from such property, and was in deposit to the credit of the receiver in one of the Albany banks.
    The judge also found that the plaintiff demanded payment of the execution from the receiver before the commencement of this suit, and that for six months before the defendant’s appointment as receiver and down to that time, the firm of W. & J. Treadwell, Perry & Norton, was deeply insolvent and wholly unable to pay its debts. The judge found, as a conclusion of law, that the plaintiff was entitled to judgment for an amount sufficient to satisfy the execution so levied by him, with sheriff’s fees and costs, and judgment was rendered accordingly. The defendant duly excepted to the decision of the judge, and the judgment so rendered was affirmed at the general term of the third district. The defendant appealed to this court.

      William L. Learned, for the appellant.

      A. Prentice, for the respondents.
   Smith, J.

The omission of the clerk to sign the judgment' roll on entering up the judgment of the Artisans’ Bank against Treadwells, Perry & Norton, does not affect the validity of the judgment. It was a clerical error, and a - mere question of practice and of. regularity, which the Supreme Court could and should at any time have allowed to have been amended, nunc . pro tunc. And the levy made by the plaintiff upon the execution issued on said judgment was entirely regular and valid, and created a perfect lien upon the property levied on in favor of the plaintiff in the execution, if the property at the time was subject to levy and sale at the instance of any single creditor of the partnership-. The levy, if otherwise valid, undoubtedly bound the whole partnership property, although the judgment was in form only against the general partners. This is in conformity to the 14th section of the statute relating to limited partnerships, which expressly provides that “ suits in relation to the partnership may be brought and conducted by and against the general partners in the same manner as if there were no special partners.” Judgments in suits thus brought must necessarily have the same effect, so far as relates to partnership property, as if brought against all the partners. Such was the clear object and intent of the statute.

If the property levied on. by the sheriff was at the time subject to be taken by any single creditor of the partnership, as against ordinary partnerships, the rights of the judgment creditors in pursuance of such levy were complete -at the time of the levy, and they thereby acquired an absolute lien upon such property which they were entitled to hold and enforce in preference to other creditors, and the plaintiff’s right to maintain this action to enforce such lien is clear and unquestionable. This brings us to the only disputable question in the case, which is, whether the property of a limited partnership, after the insolvency of the firm, is subject to be taken on execution by any single creditor, like the property of private persons or of general partnerships, or constitutes a fund for the payment of all the partnership debts in ratable proportion, as in the case of insolvent moneyed corporations. This brings to this court now for the first time the question of the construction of sections 20 and 21 of the statute providing for the formation of limited partnerships. (1 R. S.,766.) Section 20 declares that “ every sale, assignment or transfer of any of the property or effects of such partnership, made by such partnership when insolvent or in contemplation of insolvency, or after or in contemplation of the insolvency of any partner, with intent of giving a preference to any creditor of such partnership, and every judgment confessed, lien created or security given by such partnership under the like circumstances and with the like intent, shall be void as against the creditors of such partnership.”

Section 21 in like manner declares that every sale, assignment or transfer of the individual property or effects of any general or special partner, when insolvent or in contemplation of insolvency, or after or in contemplation of the insolvency of the copartnership, with intent of giving to any creditor of his own or of the partnership a preference, and judgments confessed, or liens created, &c., as in section 20, shall be void as against the creditors of the partnership.

Under these sections the appellants claim that, whenever a limited partnership becomes insolvent, from that time its assets become trust funds for the benefit of all creditors; and no creditor, either by superior diligence or by the favor of the partners, can acquire any valid lien in preference to other creditors. This construction of this statute is based upon some passages in the opinion of the Chancellor in Innes v. Lansing (7 Paige, 583), where language to this apparent effect is used; and this case has been followed in Whitewright v. Stimpson (2 Barb., 379); Hayes v. Hayes (3 Sandf., 299); Jackson v. Sheldon (9 Abb., 127). Chancellor Walworth, in the case of Innes, says that he thinks “ the court is bound to carry out the principle of the statute, by treating the property of the limited partnership, after insolvency, as a trust fund for the benefit of all the creditors.” That, among creditors, equality is equity, is a favorite maxim in the courts of equity. The principle is a just and a sound one, and uniformly prevails where the courts of equity have control of the assets of insolvent persons or corporations, or of the manner of their distribution. Upon the insolvency of a moneyed corporation, j urisdiction is expressly given by the statute to the courts in equity to close up its affairs and distribute its assets; and the statute in respect to such corporations expressly declares that “no conveyance, assignment or transfer, nor any payment made, judgment suffered, lien created or security given, by any such corporation, when insolvent or in contemplation of insolvency, with the intent of giving a preference to any particular creditor over other creditors of the company, shall be valid in law;” and declares that any person obtaining such preference “shall be bound to account therefor to its creditors or stockholders, or their trustees, as the case shall require.”

Sections 20 and 24 of the statute in regard to limited partnerships are very different. They forbid all sales, assignments or transfers' of any of the property of the partnership, or of the individual partners, when such partnership is insolvent or in contemplation of insolvency; and also declare void any judgment confessed, lien created, or security given, under like circumstances and with like intent. They do not avoid payments made or judgments suffered, or require a creditor to account for anything received by the creditor of the partnership or of either of the partners. They declare void only judgments confessed or liens created—referring clearly to preferences expressly and voluntarily given by the partners, or one of them, fraudulently or in collusion with the creditor. These sections clearly do not inhibit, or apply to, judgments recovered against the members of a limited partnership in invitum, or suffered by them by default or otherwise. They merely render void judgments confessed. The members of a limited partnership, before or after insolvency, are just as lia-' ble to be sued for their debts as other natural persons. Their creditors are entitled to recover judgments against them, with the view to reach the individual property as well as the partnership property.

The judgment of the Artisans’ Bank was, therefore, regularly and lawfully recovered, and was a perfectly valid judgment. Having a valid judgment, it is difficult for me to conceive upon what principle it can be held to be unlawful for the bank to proceed to enforce such judgment at law. It seems to me it was perfectly lawful for the bank to cause execution to be issued on their judgment and delivered to the sheriff; and. it was entirely lawful for the sheriff to levy such execution, and° his duty to do so, upon any property in the actual possession of the judgment debtors, or either of them, subject to levy.

It is true the partnership property of a limited partnership is a trust fund for the payment of the partnership debts; but so is the partnership property of all partnerships, general or special. The only difference between the property of a general and a special partnership, in this respect, is such as is made in the said 20th and 21st sections, forbidding the giving of any «preference among the creditors of a special partnership as therein prescribed. A creditor of such partnership may acquire a lien upon the partnership property by procedure in invitum, just as much and as properly in one case as in the other. Such is the right of the creditor at law, and no statute forbids its exercise or takes it away. The Chancellor concedes this in the case of Innes v. Lansing ; he says: “It is evident, from these statutory provisions, that the legislature could not have intended that a creditor of such insolvent limited partnership should be compelled to proceed to judgment and execution at law, the necessary effect of which might le to give him a -preference over other creditors.” He then says any creditor may proceed at law for the recovery of his debt, unless, a decree has been obtained for the benefit of all the creditors, or the property has been transferred to a receiver for the purpose of a ratable distribution thereof. But the Chancellor holds, and such is the rule asserted in all the cases following his decision since, that the court of equity is bound to protect the assets for equal distribution pro rata among the creditors of the partnership, at the suit of either of the partners, or at the suit of any general creditor of the partnership, if the partners neglect to bring the proper suit for that purpose. I would not question, but admit, the correctness of this rule; but upon what principle is it based? Ho statute confers equity jurisdiction in such case, and such jurisdiction can only be referred to the general head of equity jurisdiction in cases of partnership.' Courts of equity have an established jurisdiction in cases of , partnership to dissolve the copartnership, to close its affairs and settle all matters involved in the liquidation of its affairs as among the partners themselves, and in respect to their creditors. As incident to the exercise of its control over the partners in compelling them to account and in the adjustment of all equities between them, it appoints a receiver of their assets, when proper, and distributes the assets. If the partnership is insolvent, it' makes such distribution upon its favorite rule that equality is equity, and it regards the property of the copartnership as a trust fund,for the payment of the partnership debts pro rata. It is in this sense and upon this principle that the assets of a limited partnership are trust funds. They are trust funds when the courts of equity are properly appealed to in behalf of the partners, or any partner or creditor, to protect and distribute the same upon equitable principles, and on such application assert the control oyer them. They are not trust funds in the hands of the partners, any more than ordinary partnership property. There is no rule in equity which makes them trust funds in any other sense, or which gives the court of equity any control over them, or which forbids any creditor of the copartnership or of any individual party from obtaining a lien on them by due process of law in any hostile proceedings.

The levy under the execution in favor of the Artisans’ Bank, therefore, created a valid lien, unless it was forestalled by the commencement of the suit by John Cr. Treadwell, which ' presents the remaining question for consideration.

The referee finds that this suit was commenced by the service of the summons on two of the defendants at 2 o’clock P. 11., of the 15th of May, 1860, and that the levy was made by the sheriff of Albany at 5 .o’clock of the same day: that the suit was so commenced before the filing of the transcript upon the judgment in favor of the Artisans’ Bank in Albany county and before the issue of the execution thereon; that after service of the said summons all of the defendants appeared in said suit on the said 15th day of May, and admitted notices of an application for the appointment of a receiver for the next day, and that an order for the appointment of such receiver was made on the 16th of May, and said receiver duly appointed and qualified and entered upon the discharge of his duties on that day, and at 2 p. M. took possession of the said partnership property so claimed to be levied on. The suit thus commenced by Treadwell was an action in equity, praying for an accounting among the partners and the closing up the affairs of the partnership and the distribution of its assets among all its creditors. The commencement of such suit, as between the parties thereto, created a Its pendens in respect to all the partnership property and necessarily gave the court exclusive control of such property for the liquidation of the partnership affairs. It was. in effect a suit in behalf of the general creditors of the partnership. But as against third persons or any private creditor pursuing his legal remedies .for the collection of his debt, it did not operate as a lien upon such property till the making of the order for the appointment of the receiver. When an order is made for the appointment of a receiver of particular property, it amounts to a sequestration by act and operation of law of such property, and when the receiver is subsequently appointed the title to such property vests by relation from the date of the order to the same effect as if such receiver was named in, and appointed by, such order. (Rutter v. Tallis, 5 Sandf., 610; Porter v. Williams, 5 Seld., 142; Fairfield v. Weston, 2 S. & S., 96.)

The levy in this case- upon the property of the partnership was made before the order for the appointment of the receiver, was not overreached by such order, and was valid. The subsequent appointment of a receiver could not deprive the plaintiffs in the execution of the rights acquired by such levy. It follows that the plaintiff, in the, enforcement of the rights acquired by such levy, was entitled to recover the amount of the execution in his hands as sheriff, and the judgment of the court below should be affirmed, with costs,

Denio, Ch. J., did not sit on the case; all the other judges concurring,

Judgment affirmed.


author: Denio, Ch. J.

text:
    Brainerd v. New York and Harlem Railroad Company.
    The bond of a railroad corporation, payable to A. B., or his assigns, is in • the nature of commercial paper, negotiable by delivery under an assignment in blank, and not a specialty, subject to equities between the corporation and the person named in the bond as the primary payee.

      This action was brought to recover the amount of five instruments in the form of single bonds, purporting to have been issued pursuant to a resolution of the defendant’s board of directors, and which were executed under its corporate seal, and signed by its president and treasurer, for the payment of one thousand dollars each. They were respectively dated on the first day of September, 1849, and were similar in their terms. , Each of them acknowledged the receipt of one thousand dollars from R. & G. L. Schuyler, and set forth that the corporation.thereby agreed to pay the said sum to George L. Schuyler, or his assigns, on the first day of August, 1859, with interest at the rate of seven per cent semi-annually, on the first day óf every February and August, until the principal should be paid, upon the presentment of certain interest warrants which were annexed. The complaint alleged that after the execution of the bonds, and before the maturity thereof, and before the commencement of the action, they came into the possession of the plaintiff, for value, and that he was then the lawful holder and owner thereof. The answer admitted the execution of the instruments, but denied that the plain-tiff was the lawful holder of them; and it claimed a right to set off an alleged indebtedness of R. & G. L. Schuyler to the defendants.
    On the trial before a referee, the only questions litigated were, first, whether the plaintiff had acquired a lawful title to the instruments; and, secondly, whether they were of the nature of commercial paper, or were to be- considered as specialties. -The defendant’s right to set off depended upon that question. The plaintiff gave the several instruments in evidence ; and the signature of George L. Schuyler, the payee, to a blank assignment printed under each of .the bonds, was not controverted. It was as follows:
    “For value received,-......assign .this obligation to.......
    ............. Witness......hand and seal this......of
    ..........IS...- . .
    “ George L. Schuyler.” [l. s.]

      The plaintiff was examined in his own behalf, and testified, in terms, that he purchased the bonds through a broker, at about their amount at par, in the fall of the year 1852 or the forepart of 1853, and that he was the owner of them. The cross-examination of the plaintiff, and'some other testimony introduced by the defendant, tended to show that the fund out of which the purchase price of the bonds was paid was one in which the plaintiff’s .father, mother and sister were interested with him, and that he had been accustomed to pay to these persons a portion of the interest received on the bonds while the company continued to pay interest.
    The defendant moved for a nonsuit, on the grounds that the plaintiff had not shown a legal assignment of the instruments; and that he had not made title-to them in any way; and that the evidence showed that they were the joint property of the plaintiff’s relatives mentioned in his cross-examination. The referee denied the motion. The defendant then offered to prove that R. & Gr. L. Schuyler were, in January, 1853, indebted to the defendant in a large amount. The plaintiff objected to the evidence, on the ground that he became the owner of the obligations before maturity, and without notice of the defence now set up. The referee sustained the objection, and the defendant excepted.
    The referee reported in favor of the plaintiff for the principal money secured by the obligations, and for one and a half year’s interest which was shown to be in arrear; and he found, as a conclusion of fact, that the plaintiff was the holder and owner of the obligations sued on.
    The judgment having been affirmed by the Supreme Court at general term, the defendant brought this appeal.

      Charles W. Sandford, for the appellant.

      Steam Chittenden, for the respondent.
   Denio, Ch. J.

The question of fact, whether the plaintiff ' was the purchaser of the instruments in question, or whether the purchase was by him in conjunction with certain of his relatives, was conclusively settled by the referee, whose judgment in that respect is not open to review by us. It cannot be said that a nonsuit should have been granted for a defect of proof on that part of the case; for the plaintiff swore distinctly that he made the purchase, and that the obligations were his property. It is, certainly, possible that, if the facts connected with the purchase were all disclosed, it might appear that other parties were interested in the purchase, and that they together took a joint title to the securities. This, if established,, would show a defect of parties plaintiff, and enable the defendant to prevail on a question of form; but the point, as has been remarked, has been settled against the defendant by the tribunal entitled to pass conclusively upon such questions.

The questions of law which the appeal presents are, whether the instruments are commercial paper, so as to be negotiable, and .whether they were legally negotiated by delivery under the blank assignment. These might, have been very grave questions in this State a few years ago. But they have been settled against the defendant in this State by a series of decisions which it is impossible, at this day, to depart from.

In The State of Illinois v. Delafield (8 Paige, 527), and the same case, on appeal, in the Court for the Correction of Errors (2 Hill, 159), it was held that the bonds of the State of Illinois, executed under the seal of that State, were negotiable securities in such a sense as that a purchaser would acquire a title superior to that of the party to whom they were originally issued,- and an injunction against transferring them was granted by the Court of Chancery, and sustained by that court and the Court of Errors on that precise ground. These cases were referred to with approval in this court in The Mechanics' Bank of New York v. The New York and New Haven Railroad Company (3 Kern., 599, 626). The Bank of Rome v. The Village of Rome, was an action brought on certain bonds issued under the defendant’s corporate seal, and they were held to be negotiable; and a defence sought to be set up against the plaintiff, who was a Iona fide holder, was excluded, though it would have been available against the original party. (19 N. Y., 20.) The instruments in question in the cases cited were not, it is true, the bonds of a railroad corporation, but they were under the corporate seal of the maker. No distinction can be made between such corporations and those which are created for governmental or municipal purposes. The point of objection,' when it is sought to bring such securities within the law of commercial paper, is that, being under. seal, they are deeds, and commercial instruments are simple contracts. But when such obligations are issued to secure the payment of ihoney upon time, and contain on their face an expression showing that they are expected to pass from one person to another, and thus to perform the office of bills and notes or of money, as the words “bearer,” or “assigns,” or “the holder,” or the like, the courts of this country, with a single exception, and those of this State, without any exception, have concurred in attaching to them the attributes of commercial paper. The case of White v. The Vermont and Massachusetts Railroad Company (21 How. U. S., 575), was an action to recover on a bond issued by a railroad corporation, the payee’s or obligee’s name being left blank. It was. held that the instrument was negotiable, and that the plaintiff, to whom it had been transferred, might insert his own name in the blank. The exceptional case, which has been alluded to, is Diamond v. Lawrence County (37 Penn., 351). The court held that a bond like the one before us, except that it was payable to bearer, was not negotiable; but the learned judge who delivered the opinion of the court admitted in express terms that all the courts, American and English, were'against him. " Whether this admission was not rather too broad as respects some of the English tribunals, nray be questioned; but as we feel bound to follow the ' judgment of the courts of this State, it will not be useful to criticise the cases which have been adjudged 'elsewhere.

Having come to the conclusion that the instruments are negotiable paper, in the nature of promissory notes, it follows inevitably that the blank assignment signed by the payee was a sufficient transfer of them, and that the plaintiff was entitled to insert his own name in the blank (Van Duzer v. Howe, 21 N. Y., 531; Edwards on Bills, 275); and also that the defendant could not be allowed a set-off against the payee without establishing that the plaintiff was not a bona fide holder. The result is, that the judgment of the Supreme Court must be affirmed.

All the judges concurring,

Judgment affirmed.