text:
    Charles Butler, survivor, &c. v. David Colden Murray and others.
    The master of a vessel is for most purposes the agent of the owner of the ship or cargo; but that agency does not extend to a sale of either, unless there is a necessity at the time for so doing.
    As to the degree of the necessity which must he shown to have existed, in order to justify a sale of the ship or cargo.
    In order to justify the sale of a cargo at an intermediate port, several things must concur: 1st. There must be a necessity for it arising from.the nature or condition of the property, or from an inability to complete "the voyage by the same ship, or to procure another. 2d. The captain must have acted in good faith. 3d. He must, if practicable, consult with the owner before selling.
    Where there is a question for the jury, on the facts as to the necessity for a sale of the cargo,-the court should submit the case to the jury, instead of ordering a verdict for the plaintiff.
    And if the jury should believe from the testimony, that judging from the condition of the cargo at the port where sold, it could, if re-shipped by any vessel and sent to its port of destination within a reasonable time, be so damaged as to be practically valueless, the master in an action against him to recover the value, will be entitled to a verdict.
    And where the master of a vessel conveying a cargo of hides, found the cargo at an intermediate port, to be in a bad and perishing condition, and summoned three respectable men, dealers in, and shippers of hides, to examine the cargo, and declare what it was proper for him to do, under the circumstances, who advised a sale, and the hides were sold accordingly. Held, that although this advice was not conclusive, yet that it should he taken into consideration by the jury in determining the question as to the necessity of á sale, and was entitled to very considerable weight.

      Appeal from the Superior Court of the city of New York.

    This action-was commenced Tby N. Rogers' & Co., against D. Golden Murray and others, owners of.the schooner Pedee, to recover the value of a quantity of hides shipped on board the Pedee, at Aspinwall, consigned to the plaintiffs at New York. The defendants set up, that the vessel having been forced to put into the port of Carthagena, in distress, the hides were discovered to be in a perishing condition, and that the master, acting in good faith, and in the exercise of a sound discretion, to prevent further loss, had ordered them to be sold at auction; and that they were so sold; and that the defendants had tendered the proceeds to the plaintiffs, after deducting certain amounts due for general average and expenses. The issues came on to be tried before Justice Snossoif, and a jury, on the 28th day of May, 1857, and a verdict was rendered for the defendants. The plaintiffs appealed to the general term, where the judgment was reversed and a new trial ordered, on the ground that the verdict was not only against evidence, but should have been for the plaintiffs. The cause was again tried before Justice Slosson and a jury, on the 8th day of February, 1859, and that judge-charged the jury, that pursuant to the decision at general term, they must find for the plaintiffs, and the only -question for them to decide, was the amount of damages. The jury found a verdict for the plaintiffs for $881.38. Judgment being entered, the defendants having taken exceptions to the charge, appealed to the general term, where the judgment was affirmed October 25th, 1859. From that judgment the defendants appealed to this court.
    The facts substantially are that the schooner Pedee, be-, longing to the defendants, sailed from the port of Aspinwall for New York, via the port of St. Jago de Cuba, on the 6th day of July, 1855, having on board a cargo of hides and skins, old iron, copper, rigging and ivory nuts. The plaintiffs held a bill of lading for part (about one-half) of the hides and skins, the iron, copper and rigging shipped by A. M. Price & Co., and another bill of lading for the ivory nuts shipped by E. Duckworth & Co. The schooner was well manned and equipped. On the second day out from port, the first mate was taken sick with the Chagres fever, and within two or three days the master, Captain James Y. Carr, the second mate, and the rest of the crew, were taken down with the same disease. o The two mates and one of the crew died. The master and the rest of the crew were unable, from sickness, to navigate the vessel, and for nearly sixty days she was almost entirely at the mercy of the wind and waves. About the 31st of July she was blown ashore near Darien on the coast of the Spanish Main, and considerably injured, losing her false keel, spars, &c. On the 1st of September she got into the port of Carthagena, distant some five hundred miles from Aspinwall, in distress. Upon her arrival it was discovered that the hides and skins were overrun, and being eaten up and destroyed by worms and bugs, which attack hides in tropical climates. A survey of the hides was called by the master, acting under the advice of the United States Consul. This survey was made by three respectable American merchants, who declared and reported that the hides and skins were generally very much injured by worms, that a great portion of them were so much eaten up as to be almost valueless, and that in their opinion none of the hides and skins could be taken to New York, and that they ought to be sold “on account of whom it might concern, in order to save further loss.” The master, acting under the survey and under the advice of the Consul, and having taken the opinions of respectable merchants engaged in.the trade, and knowing the condition of the hides; considering them as perishing; that he was unable to take them into his own vessel as they would be utterly destroyed; and unable to transship them to be forwarded by another vessel, as they could not be transshipped unless they were first cleaned and dressed; and as he had no funds for this purpose, and had not necessary facilities for so doing, and had no skill or experience in such business, and as there was much doubt of the propriety of his attempting the experiment, he, after having the hides cleaned as well as he could, ordered them to be sold at public auction. Due and ample notice of the sale was given, and the hides and skins were sold by the government auctioneer at the Arsenal wharf at Carthagena, on the 27th day of October, 1855. After the sale a letter was received by Foster & Horner, at Carthagena, from E. Duckworth, the shipper at Aspinwall of ' the ivory nuts consigned to the plaintiffs, and also a partner of A. M. Price, the shipper of the hides, expressing his satisfaction that the hides were to be sold, and requesting them to look after the hides, &c. The hides and skins of the plaintiffs brought $344.66. The defendants having deducted general average on the entire shipment to the plaintiffs, including the ivory nuts, iron, &c., tendered the balance to the plaintiffs before action brought. The hides and skins were purchased by Messrs. Foster & Horner, American merchants at Carthagena, and after being thoroughly beaten, cleaned, immersed in sea-water, &c., were shipped by the brig Abrasia to New York, and were there sold, February 2d, 1856, at private sale, for about nine hundred dollars, after deducting charges. The schooner Pedee was repaired, left Carthagena on the 21st of November, 1855, and sailed to St. Jago de Cuba, and thence to New York, where she arrived March 3d, 1856.

      John Sherwood, for the appellants.
    I. The general rules of law applicable to this case are perfectly well settled that, in cases of necessity, the master is by law created the agent of all parties concerned—the owners of the cargo as well as of the vessel. His acts, done under these circumstances, in the exercise of a sound discretion, are binding upon all parties in interest. (The Gratitudine, Sir Wm. Scott, 3 Eob. Ad., Phila. ed. 211— other editions 240; Miston v. Lord, 1 Blatch. C. C. R. 354.) That where the cargo is perishable and perishing, so that it will become worthless, it is the duty of the master, exercising in good faith a sound discretion, in the absence of instructions from the shipper, to sell the cargo, and the owners of the vessel will be discharged from all liability. (The Gratitudine, supra; Miston v. Lord, supra; The Ann D. Richardson, 1 Blatch. C. C. R. 458; and, especially, Smith v. Martin, opinion of Chief Justice Tilghmait, 6 Biuney, 266.) See, also, 1 Arnold on Insurance, page 187, showing distinction between the English and American cases; that, by the American law, not only the right of selling perishable cargo is conceded, but the duty is enjoined upon the master. (See also Jordan v. The Warren Ins. Co., 1 Story C. C. R. 352-3.) That though the cargo may have been delivered at its destination in specie, still, if it would have become worthless, it is the duty of the master to sell. (Jordan v. Warren Ins. Co., supra; 2 Smith's Leading Cases, 695-6.) Nor need the necessity be actual in order to justify the master in making the sale. The necessity must be estimated and determined from all the facts then within his means of knowledge. This is enough, though subsequent events prove that the cargo might have arrived with safety at the port , of destination. (1 Parsons on Contracts, 66, and cases cited; The Barque Gentleman, 1 Blatch. C. C. R. 201; Smith v. Martin, sup.; Maas v. The Schooner Pedee, sup.) A survey by competent surveyors is the most important element in determining the character of the emergency, and, especially, the good faith of the master. (The Henry, 1 Blatch. & Howland, 465.) The opinions of respectable, reliable merchants, engaged in business at Carthagena, who saw the hides and knew the circumstances of the case, to establish the good faith and proper exercise of discretion on the part of the master, are entitled, to the greatest weight. (Fenwick v. Bell, 1 Car. & Kir. 312; 1 Phil, on Ev. 290.) The testimony relating to the sickness of the master and crew, on her voyage from Aspinwall to Carthagena, was proper to show the character of the emergency, the necessity that occasioned the injury to the vessel, and the necessity for seeking the port of Carthagena. And further, to show the distress that resulted in the loss for which the defendants seek to recover the proportion of general average. And so of the testimony in respect to the condition of the vessel and difficulties of the voyage before her arrival.at Carthagena.
    II. The questions then being, whether .there was a necessity for the sale of the hides., according to the facts as they appeared at Carthagena, .whether the master acted honestly and in good faith, and whether he exercised prudence and sound discretion in taking the course he did; the judge at the trial should have submitted those questions to the jury. The judge directed the jury to find for the plaintiffs, only leaving them to determine the question of the amount of damages. .The defendants’ exceptions to this ruling were well taken. These questions are questions of fact for the jury to determine. (Smith v. Martin, supra.) Questions of necessity, of negligence, of care and diligence, and of the prudence and discretion to be exercised by the master of the vessel, are questions to be submitted to a jury. (Aymar v. Astor, 6 Cow. 266; Patríele v. Hallett, 1 J. R. 241; Moore v. Westervelt, 21 N. Y. R. 103; Bell v. Smith, 2 J. R. 98; Sherwood v. Ruggles, 2 Sand. 58; Child v. The Sun Mutual Insurance Company, 3 Sand. 26; Minturn v. Allen, 3 Sand. 50—approved on appeal, 3 Selden, 220.) To admit a positive instruction to find for a particular party, is allowable only where the evidence leaves no reasonable doubt of the facts in issue. (St. John v. The Mayor of New York, 6 Duer, 315-17.) To warrant an unqualified direction at the trial in favor of one or the other party, the evidence must be undisputed, or the preponderance must be so strong as to admit of no reasonable doubt. (Crawford v. Wilson, 4 Barb, 504-18; Rich v. Rich, 16 Wend. 663.) Negligence is in all instances a question of fact, and it is only where a question of fact is entirely free from doubt, that the court has a right to apply the law without the action of the jury. (Bernhardt v. Rensselaer & Saratoga Railroad Company, 32 Barb. 165— 9—approved in the court of appeals, 23 Howard Pr. 166.) To determine what a man of ordinary care and prudence would do under circumstances involving more or less conjecture, is a question which can only be settled by a jury. (Same case; Harris v. The Northern Indiana R. R. Co., 20 N. Y. R. 232; Mangam v. Brooklyn City R. R. Co., 36 Barb. 230; Williams v. Vanderbilt, 29 Barb. 504—affirmed on appeal December, 1863.) The evidence in this case is contradictory. 1st. As to the actual perishability of hides attacked by worms. 2d. As to the true condition of the hides at Carthagena. 3d. As to the true ability of the master to raise funds, to cure, clean and tranship the hides.
    III. If there is no contradiction upon these points, the jury should have been directed to find for the defendants. The evidence of what occurred at Carthagena would have authorized that direction, certainly, if the evidence of subsequent events had been disregarded. The court cannot, for the purpose of directing a verdict for the plaintiffs, assume that the defendants’ witnesses are not to be believed. (Merritt v. Lyon, 3 Barb. 110.) The court below would not, unless they disbelieved most of the witnesses, or overlooked their 'testimony, have found facts which would authorize the direction given to the jury.

      J. Edgar, for the respondents.
    I. The master possessed no authority to sell the goods, on account of their perishable nature.
    1. The possibility of the hides becoming Valueless from bugs, was a danger inherent to their nature, and not a danger of the sea. It was a clanger assumed by the owners of the hides when they were shipped, and foreseen by the master; and it was the duty of the master to preserve them as well as possible by the means within his reach, and deliver them in specie to the consignees according to the bill of lading. (Elliott v. Russell, 10 John. R. p. 1; Kemp v. Coughtry, 11 John. 107; McArthur v. Sears, 21
      Wend. 190; Parsons v. Hardy, 14 Wend. 215; DeMott v. Laraway, id. 225; Gould v. Hill, 2 Hill, 623; Van Natta v. The Mutual Security Insurance Co., 2 Sand. S. C. R. 490; Bark Gentleman, 1 Olcott’s Ad. R. 110; Hazard's Administrator v. New England Mutual Ins. Co., 8 Peters (U. S.) Rep. 537.)
    2. He could, not be certain that they would prove a total loss to the owners, if carried further, and it was not within his province or duty to decide that the interest of the owners would be promoted by a sale at Carthagena. (See case of Ann D. Eichardson, 1 Abbott’s Admiralty Eep. 499, [506].)
    3. Such a doctrine would give the master a wide field for speculating with his cargo, which it is his duty only to protect and transport.
    n. But if the master could, in any event, be justified in selling the goods on account of their perishing condition, then the necessity for such a sale on that account must be proved to have been absolute; and if it afterwards appeared that no such absolute necessity did exist, then the master and owners of the vessel are liable for the goods so sold. In this case no such necessity did exist. (3 Kent, 7th ed. 222, 223; 13 Pickering, 543; 1 Abbott’s Ad. Eep. 499, [306]; Myers v. Baymore, 10 Barr [Pa.] Rep. page 114.)
    1. The fact that the hides, after the sale, arrived in New York in a tolerably good condition, considered with the reasons given by the master and surveyors for the sale, and the actual cost of cleaning, afford conclusive evidence that there had been no necessity for the sale.
    2. The master might have sold a part of the hides, if absolutely necessary to raise funds to clean the balance, but he had no authority to sell the whole.
    III. It was the duty of the master to have cleaned the hides and brought them to New York by the Pedee, or to have forwarded them, if possible, by some other vessel. He could have sent them to their place of destination by the Abrasia. (Abbott on Shipping [4th American eel.], p. 241 to 244; Schieffelin v. New York Ins. Co., 9 John. p. 21, &c; Treadwell v. Union Insurance Co., 6 Cowen, 270; Palmer v. Lorillard, 16 John. 348; Parsons v Hardy, 14 Wend. 215; 3 Kent’s Com. 213; Saltus v. The Ocean Ins. Co., 12 J. R. 107.)
    IV. If the master had re-shipped the hides in another ■ vessel for New York, immediately upon or shortly after his arrival at Carthagena, they might have arrived here before the time they were actually sold at Carthagena; and the defendants have not shown, as «they were bound to show (see 9 John. 28), that such reshipment could not have been-made.
    • V. The owners of the vessel are liable for an error of judgment, as well as 'misconduct of the master, although he may have acted in good faith. (Angell on Com. Car., §§ 182, 185, 520; 3 Kent, 7th ed., 222, 223; Purviance v. Argus, 1 Dallas, 131, 184, 185.)
    VI. The superior court, at general term, upon the first appeal, having decided that the verdict for the defendants at a former trial of this action was contrary to law and evidence (see-3 Bosworth, 357), and no new evidence being adduced upon the second trial, the judge was right in directing a verdict for the plaintiff, as a legal result of the facts proved, and leaving only the question of the amount of damage, less general average, &c., to the jury. The case was fairly submitted to the jury, as far as they had any province1 in the matter. Besides, there was no conflict of evidence, and no dispute about the facts of the case, except as to the amount of damage, and therefore the conclusion to be drawn from these facts was a question of law. (Pratt v. Foote, 5 Seld. 463.)
    VII. If the judge had stated to the jury, at the second trial, the determination of the court at general term upon this first appeal, but had left it with them to find otherwise, it would have been error; and if the jury had then again found for the defendants, the court again, on appeal, would have ordered a third trial, as a new trial will always be ordered where the jury “ manifestly disregard the determination of the court.” The chance of such a delay in bringing the action to a conclusion was properly avoided by the direction of the judge to the jury at the second trial. But if the direction of the judge to the jury was erroneous, and this court see that the verdict was such as should have been found from the facts proved, after a proper charge, then the verdict should not be disturbed. It is enough for the court to see that justice has been done, and a new trial will not be granted, where it should produce the same result.
    VIII: None of the defendant’s exceptions are well taken, and the judgment should be affirmed.
   Mullin, J.

The master of a vessel is for most purposes the agent of the owners of the ship and cargo; but that agency does not extend to a sale of either, unless there is a necessity, at the time, for so doing. (Abbott on Shipping, 365 et seq. in notes.)

The degree of the necessity which must be shown to have existed in order to justify a sale of ship or cargo has been differently stated by different judges and writers on maritime law. In 1st Parsons on Cont. 66, it is said: “He (the master) may sell the property entrusted to him in a case of extreme necessity, and in the exercise of a sound discretion. Nor need this necessity be actual in order to justify the master and make the sale valid. If the ship was in peril which, as estimated from all the facts within his means of knowledge, was imminent, and made it the most prudent course to sell the ship as she was, without further endeavors to get her out of her dangerous position, this is enough, and the sale is justified and valid although the purchasers succeed in saving her, and events prove that this might have been done by the master.”

In 2d Smith’s Leading Cases, 576, the author of the notes says, “In order to make out a case for a sale without express authority, it would appear necessary to show that the property at risk has been placed in a position of such imminent danger that it may be destroyed or materially injured, before recourse can be had to those to whom it belongs; unless the intervention of other means is resorted to than those which can be commanded by the master.” Chancellor Kent, in his Commentaries (vol. 3, 173, 4), says, “ But if the voyage be broken up by ungovernable circumstances, the master in that case may even sell the ship and cargo, provided it be done in good faith for the good of all concerned, and in a case of supreme necessity which sweeps all ordinary rules before it.”

Lord Ellenborough, in Campbell v. Thompson (2 E. C. L. 480), says, “ The master can only sell the cargo in case of urgent necessity.” • . •

Abbott, Chief Justice, in Trumen v. East India Co. (7 E. C. L. 339), says there must be an apparent necessity. In the same case, Bayley, Justice, says, “ It must be a case of absolute necessity.” Park, J., in Skeen v. McGregor (8 E. C. L. 309), says, “A sale can only be made in a case of inevitable necessity.”

In Massachusetts, the court says, “ there must be a necessity, or, as it is sometimes expressed, a legal necessity, before the master can- sell.” (Bryant v. Commonwealth Ins. Co., 13 Pick, 543, 551.)

The difficulty lies not so much in finding the rule as in applying it in a given case.

There is no doubt but that, in order to justify the sale of a cargo at an intermediate port, several things must concur.

1. There must be a necessity for it, arising either from the nature or condition of the property, or from the inability to complete the voyage by the same ship or to procure another.

2. The captain must have acted in good faith.

3. He must, if practicable, consult with the owner before selling. (Abbott on Shipping, 447 and notes; The New Eng. Ins. Co. v. Brig Sarah, 13 Peters, 387; Bryant v. Commonwealth Ins. Co., 13 Pick. 543.)

No question as to the good faith of the captain, or of his inability, under the circumstances, to consult with the owners, is raised. But it is insisted that a necessity for the. sale is not proved, for two reasons: 1st. Because the pro-, perty, although injured, could by a moderate outlay have been put in order so as to be carried to New York without further material injury; and 2d. The master should have sent forward the property by another vessel.

Neither the master nor owners were answerable for the delay which had occurred after leaving Aspinwall. It was caused by a visitation of Providence, against which human foresight could not guard.

The damage to the hides arose from their own inherent properties and the heat of the climate in which the voyage was made. Before unloading the hides at Carthagena, the worms that caused the damage were discovered on the deck of the vessel—when the hides were taken from the hold and put on the deck—the hair was found eaten off and holes eaten in them; and, if permitted to remain in the vessel, it is not denied but that they would have been utterly ruined. The captain caused them to be beaten while on the deck, which it is shown is one means of removing, in whole or in part, the vermin that was causing the injury. The vessel was found not to be in a condition to continue the voyage, and another ship might have been procured to carry the hides to New York, as the purchasers of them at the master’s sale chartered a vessel which brought them to New York.

If the hides were then in a condition which justified a sale in order to prevent total loss, it would seem to follow that it Avould have been folly to have hired another vessel to bring to New York property that Avould be ruined before it arrived.

The question then comes to this: Was the master justified in selling the property at Carthagena? or, in other words, Avas the condition of the property such that it Avas necessary to sell it in order to prevent a total loss? It does not appear that the captain had any acquaintance with the means of preventing injury to hides by vermin, other than is possessed by every person in the community. He was called on to deal Avith the property as it then Avas, without any peculiar skill as to the best mode of protection or cure. It was quite obvious the property must be removed from the hold, and the master did it. Beating the hides was a mode in which the worms could be removed for the time being, and that Avas done. There is no evidence that the master knew that Avashing in sea Avater Avould be any greater protection than the means he had already employed. Under these circumstances, he summoned three respectable men, dealers in hides and the shipment thereof from AspinAvail to Carthagena and from the latter place to New York, to examine the hides and declare what it was proper for him to do under the circumstances. They advised a sale, and the hides were sold, and, as Avitnesses, they swear that the advice was given in good faith. This advice wras not conclusive; but the question is whether, on vieAv of the facts then lmoAvn to the parties, it Avas apparently necessary to sell the hides. The remarks of Parker, Ch. J., in Gordon v. Massachusetts Fire and Marine Insurance Co. (2 Pick. 263), in regard to the weight which should be given to a survey of a vessel made after injury, in order to determine Avhat it is the duty of the master to do with her, apply-with great force to the point under consideration. He says, when a vessel has been so far injured by a peril of the sea as to make a survey necessary, and the master, with perfect good faith, calls such a survey, and the persons appointed to take it are competent in point of skill and wholly disinterested, and they, after a full and sufficient examination of the vessel, find her essentially injured, and come to a fair conclusion that, from the high price of materials and of labor, or the difficulty of procuring them, the expense of repairing will be more than the worth of the vessel after she is repaired, and therefore they advise, for the interest of all concerned, that the vessel be sold,—in such a state of things as this, it seems to me that a moral necessity is imposed on the captain “to act according to their advice.” The jury, in passing on the question of necessity, must take into consideration the opinion of these persons thus called on to aid the master by their advice, and that opinion is entitled to very considerable weight. “If,” say the court in the opinion just cited, “they acted fairly and the captain acted fairly, his acts, in conformity with their opinions, will be justified unless it shall be made to appear by those who contest the loss that the facts on which they founded their opinion were untrue, or the inferences they drew from those facts were incorrect; and the burden of proof should be on those who would impeach their proceedings.”

But it is said that the persons who gave the opinion that the cargo ought to be sold, assumed, as part of the groundwork of their opinion, that the hides were to remain on the Pedee and be carried to New York in her, instead of being sent forward by another vessel, as it was the master’s duty to do.

The survey, as it is called, does say that the vessel, having to be repaired in Carthagena, and then go to St. Jago de Cuba, before the hides could reach New York, it was almost certain that1 not a single hide would arrive at that place. But in the evidence of these witnesses they go much further than this survey, or rather it is stated as their opinion that the property was in "such a condition that it ought not to have been re-shipped. Horner testifies that it was his opinion that the hides ought to be sold. Hanabergh says the sale was proper and necessary, owing to the condition of the hides; Foster that a large portion of the hides were only fit for glue—they would become worse daily until totally destroyed. Before examining the hides he thought the best course would be to re-ship them; but, on examination, he was of opinion that the master’s only and best course was to sell them. Sanchez, one of the surveyors, testifies that the re-shipment involved the actual loss of the hides. Barros says the hides were too much damaged to be kept any longer without danger of a total loss.

Other witnesses qualify their opinions by saying that the hides would be a total loss if re-shipped on the Pedee, to be by her carried to New York.

I have referred to the opinions of the witnesses to show that there was a question for the jury on the facts, as to the necessity of the sale, and that it was wholly improper, in view of this evidence, to render a verdict for the plaintiff. If the jury should believe, from the evidence of the witnesses, that, judging from the condition of the hides as they were when found on the wharf at Carthagena, that if re-shipped by any vessel, and sent to New York within a reasonable time, they would be so damaged as to be practically valueless as hides, the defendants would be entitled to a verdict.

Although it has happened that the hides did arrive in New York, and were sold -for a much larger price than that received in Carthagena, and although it is competent to prove those facts, and for the jury to consider them in ■determining the question of necessity, yet the question, after all, must be determined upon the facts existing at the time when the sale was made.

In every aspect in which I have examined the caso, a case is presented which made it necessary to submit it to the jury; and because it was not. done, the judgment of the supreme court must be reversed and a new trial ordered, costs to abide event.

All the other judges coucurring, except Weight, J., who did not vote, judgment reversed.


source: Caselaw Access Project

author: Wright, J. Hogeboom, J.

license: Public Domain

text:
    Charles York v. Isaac B. Allen and others.
    It is extremely doubtful whether one commissioner appointed under the act of the legislature “authorizing a loan of moneys to the citizens of this State,” passed April 11, 1808, can demand the principal sum due on a mortgage given to the commissioners, so as to put the mortgagor in default for non-payment, and justify a sale of the mortgaged premises. Per Weight, J.
    But it is very clear that a notice and sale by one commissioner only, is a nullity, and a conveyance executed by him to the purchaser at such sale a void act.
    In 1849 and 1850, there being hut one loan commissioner under the act of 1808, in the county of Chenango, the person appointed in 1849 refusing to qualify .or act, the sole commissioner proceeded to notify mortgagors that the payment of the amount due on their mortgage would be required November 1, 1849. On that day he caused a notice to be first published of a sale of the premises embraced in such mortgage on the 7th of February, 1850. . This notice was signed by him as “ loan commissioner,” and was published once in each week for twelve weeks. On the day appointed he put the premises up at public auction, and sold the same to B., the highest bidder, and afterwards gave him a deed not in conformity with the statute, and not having the seal of office of the commissioners affixed, nor two witnesses thereto. Held, that the whole proceeding was a nullity; the sole commissioner having no authority either to sell or ' convey.
    It is the commissioners of loans in their corporate capacity, that the statute provides, in case of default in payment of principal or interest, shall be seized of an absolute, indefeasible estate in the lands, 8cc. mortgaged to them; they are required to give the notices and make the sale; and they only, under their seal of office, can convey to the purchaser.
    Where a grantor covenants in his deed that he is the lawful owner of the premises conveyed, and that the same are free from all legal claims and incumbrances, it is no defence to an action to foreclose a mortgage given for the purchase money, that the premises were at the time subject to the lien of a loan office mortgage, where there has been no eviction of the purchaser, or disturbance of his possession.
    If there is any breach of the covenant against incumbrances, the purchaser has his remedy by action. He cannot voluntarily yield up the premises to one having no title thereto, and then ask that his equity of redemption shall not be foreclosed, or he be made personally to respond for any deficiency.
    Although the statute declares that in case of default in payment of a mortgage to loan commissioners when demanded, the commissioners shall be seised of an absolute, indefeasible estate in the lands, &c., this will not entitle them to maintain ejectment in such a case.
    Nor does the statute seem to contemplate that they are to enter into and take possession of the lands, until after a failure at public sale to obtain a bid or the amount due on the mortgage, or, having obtained such bid, there shall be an omission to pay.

      Appeal from a judgment of the Supreme Court, modifying and affirming a judgment entered on the direction of a single judge in a foreclosure suit.'

    On the 19th day of March, 1842, the plaintiff, York, and Esther, his wife, for the consideration of twelve hundred dollars, executed and delivered to the defendant, Allen, a deed of conveyance in fee simple, with full covenants of warranty, of.the lands in controversy in this suit—the grantors covenanting among other things, that they were the true and lawful owners of the said premises, and that the same were free from all legal claims or incumbrances whatever. In consideration of said deed, and the covenants therein contained, the defendant, Isaac B. Allen, executed the bond, and he and defendant, Betsey, his wife, executed the mortgage mentioned in the complaint, for the whole purchase money of said premises; which mortgage the plaintiff seeks to foreclose. On the 13th day of June, 1808, one Russel Steward, the then owner of the premises, and through whom the plaintiff derived his title, executed to the commissioners for loaning money of the county of Chenango, a mortgage of the same premises, to secure the payment of the sum of twenty-six dollars loaned to him, Steward, by said commissioners. This loan mortgage was a valid and subsisting lien upon said premises, at the time York’s deed to Allen bears date. In February, 1850, this loan mortgage was- foreclosed, and the premises sold by Laman Ingersoll, Commissioner of Loans—there being but one commissioner, at the time—and were bid off by the defendant, Ansel Brown, for the sum of $43.83, and Ingersoll, as commissioner, executed to him a deed; and on the first day of April, 1850, Brown took possession of the premises and has remained in possession ever since. In December, 1851, the defendant, Brown, mortgaged the premises in question to the defendant, Wells, to secure the payment of $500. York never has paid, or offered to pay the loan mortgage, but seeks by this suit to foreclose the mortgage given by the defendants, Allen and wife, and to make Allen pay the deficiency—the whole amount being some $1800. The cause was tried before Justice Mason, at a special term of this court, held in Chenango county, in August, 1858, and the plaintiff had judgment for the relief demanded in the complaint, and also that the loan mortgage be first paid out of the proceeds of the sale. The defendants, Allen, Brown and Wells, appealed to the general term, and in May, 1859, the judgment was affirmed, with a certain modification expressed in. the order of affirmance. The defendants, Allen, Brown and Wells, appealed to this court.

      R. K. Bowne, for the appellant Allen.

      S. S. Merritt, for the appellants Brown and Wells.

      W. Newton, for the respondent,
   Wright, J.

The action was to foreclose a mortgage given in March, 1842, by the defendants, Allen and wife, to the plaintiff, to secure the-payment of the sum of $1200 in six annual installments, with interest annually from 1st of April, 1842. The mortgage was upon two parcels of land; the one of principal value being a lot described as containing twenty-five acres and upwards. Allen paid the interest up to April, 1848, and a part of the principal, but paid nothing afterwards. Brown and Wells were made defendants as claiming to have some interest in, or lien upon the mortgaged premises, or a part thereof, which interest or lien it was alleged accrued subsequently to the lien of the olaintiff’s mortgage.

The mortgaged premises were sold to Allen in March, 1842, and he gave back to the plaintiff his bond and the mortgage in question to secure the payment of the purchase money. In April, 1850, Allen voluntarily surrendered the possession of the twenty-five acre lot, parcel of the mortgaged, premises to the defendant, Brown, the latter claiming title thereto under'a deed from one Ingersoll, as commissioner for loaning moneys in the county of Chenango, under the act of April 11, 1808, entitled “An act authorizing a loan of moneys to the citizens of this State.” It was proved that the amount due and unpaid' on the defendant’s bond and mortgage was $1807.82.

Under these circumstances it is difficult to perceive what possible defense Allen, the mortgagor, can have. It is said that the plaintiff covenanted in his deed of the premises that he was the lawful owner thereof, and that the same were free from all legal claims or incumbrances whatever’. But suppose .he did. It is not dispirted that he was seised of the premises; and if there was any breach of the covenant against incumbrances, the defendant had his remedy by action. He could not voluntarily yield up the premises to one who, it will be seen hereafter, had no title whatever thereto, and ask that his equity of redemption shall not be foreclosed, or he made personally to respond for any deficiency. It is urged that the commissioners could have maintained ejectment against him the moment the default in the non-payment of the loan office mortgage occurred; and that he was therefore right in giving up the possession to save himself from the costs of a litigation at the suit of the commissioners, in which he was sure to be beaten. To this there are conclusive answers.

First. It is by no means clear that the commissioners could have maintained ejectment immediately upon the default occurring, or at all. The act, it is true, provides that in case of default in payment of interest or principal, when demanded, the commissioners “shall be seised of an absolute indefeasible estate in the lands, tenements or hereditaments thereby mortgaged to them, their successors and assigns, to the uses in this act mentioned.” (Laws of 1808, chap. 216, § 15.) This would not entitle them to maintain ejectment; although, the mortgagor would have no legal title that he could directly enforce against the law itself. The uses in the act mentioned are to sell the lands at public vendue, after notice given, to the highest bidder, and from the proceeds of the sale, to retain in the hands of the commissioners the moneys due on the mortgage, with the expenses of the sale, paying over to the mortgagor, his heirs or assigns, any surplus. (§§ 19, 20.) If there .are no bids at the time appointed for the sale, or if the person to whom the property has been struck off, shall not pay for the same, the commissioners can enter into and take possession of the lands, and let them on the best terms they can for the benefit of the State, until the third Tuesday in April then next, and on the latter day (having given at least six weeks notice), again to offer them at public vendue to the highest bidder. If upon such sale no person shall bid,-or offer to give for the lands the sum of money for which the same were mortgaged and remaining unpaid, with the interest then due thereon; or if any person to whom they shall be struck off shall not pay for the same, then the commissioners are to purchase and hold the same for the benefit of the people of the State; but if the mortgagor, or his or her heirs or assigns, shall at or before the sale of the mortgaged premises, pay to the commissioners all such sums as shall be payable on such mortgage, for principal and interest, together with the charges for advertising the same, then the commissioners are to accept the same, and permit the owner or his heirs or assigns to take possession of the mortgaged premises, and to hold the same until defaidt shall be made in payment of any further sum on the mortgages. (§ 19.) Thus the statute provides for reimbursing the State for the moneys loaned on the lands, either by public sale of them to the highest bidder, or by payment by the mortgagor after default and before sale, or by purchasing them in, under certain circumstances, for the benefit of the State. The commissioners cannot maintain an ejectment; nor does the statute seem to contemplate that they are to enter into and take possession of the lands, until after a failure at public sale to obtain a bid for the amount due on the mortgage, or having obtained such bid, there shall be an omission to pay. If the commissioners make a legal sale and conveyance of the premises, as the act prescribes, the .title vests in the purchaser; if they purchase them in, it vests in the State."

Second, There was no eviction of the defendant; nor was any threatened; nor did they take any steps to enter into and dispossess the defendant summarily or otherwise. Indeed there are strong grounds to suspect collusion between Allen and Brown in the matter of the pretended sale and purchase under the mortgage to the loan commissioners. They were partners, doing business on the premises covered by the mortgage, and to which Allen had title. The payment was demanded of a mortgage taken by the commissioners of loans in 1808, for the trifling sum of twenty-six dollars, in which one Steward was the mortgagor, and which covered the twenty-five acre lot. It is found that it was properly demanded, and it is to be inferred that not only the mortgagor, but his assignee in possession of the premises, had notice. The interest had been paid on the mortgage up to June, 1849, so that only the principal sum of twenty-four dollars was due. Instead of discharging this trifling lien on property valued at over $1200, and lookiug to the plaintiff’s covenant against incumbrances for indemnity, or at least notifying the plaintiff that the principal of the mortgage had been demanded, Allen, the owner of the premises, allows them to be sold to his partner, Brown, for the sum of $43.83, and then voluntarily surrendered their possessionto the latter.

Nor did the defendant Brown establish any defense. The Steward mortgage for $26 was given in June, 1808, in pursuance of the act of that year, entitled “ an act authorizing a loan of moneys to the citizens of this state.” That act provided for the appointment of two commissioners in each of the counties of the state, to discharge the trusts and' duties under it. (§ 3.) The commissioners in the several counties were to be bodies politic and corporate, in fact and in law, by the name and style of “the commissioners for loaning money of the county,” of which they were respectively commissioners, with full power to every of the said bodies politic to have .and use a common seal, and, under the same seal, and in the name of the same bodies politic, to give receipts, to take mortgages, and to execute releases and conveyances of the mortgaged premises, and to sue and be sued, and generally with all such powers as are necessary for the due execution of the trusts reposed in them by this act.” (§ 6.) All the powers conferred were upon this quasi corporation, and the trusts and duties prescribed by the act could only be discharged by the commissioners as such. It is extremely doubtful whether one commissioner could demand the principal sum due on a mortgage, so as to put the mortgagor in default for nonpayment, and justify a sale of the mortgaged premises. But, however this may be, it is very clear that a'notice and sale by one commissioner would be a nullity, and a conveyance executed by him to a purchaser at such sale a void act. In this case, the interest was paid on the Steward-mortgage given to the loan commissioners in 1808, up to the 5th June, 1849. The principal was not called for by the comptroller until .the 1st August, 1849, and then payment was required to be made on the 1st November following. In 1849 and 1850 there was but a single loan commissioner under the act of 1808 in the county of Chenango, the person appointed in 1849 refusing to qualify or act. The commissioner proceeded-to notify the mortgagors (Steward included) that payment of the amount due on their mortgages would be required on the 1st November, 1849. On the latter day he caused a notice to be first published in a newspaper printed in the county of Chenango, of a sale of the premises embraced in the Steward mortgage, on the 7th February, 1850. This notice was signed “Laman Ingersoll, loan commissioner,” and was published in the newspaper once in each week for twelve weeks successively. On the 7th of February, 1850, he attended in pursuance of the notice, and the premises were put up by him at public auction, and sold to the defendant and Brown for $43.83, he being the highest bidder. Whether this was the amount due on the mortgage, and the expenses of the sale, or whether Brown, in fact, paid his bid, does not appear. Ingersoll, however, after the sale, gave Brown a deed of the premises, not in conformity with the act of 1808, or executed as that act required. The parties to the deed are Laman Ingersoll, commissioner for loaning money of the county of Chenango, and Ansel Brown. Ingersoll acknowledges the receipt of the consideration money instead of the commissioners. The grant is by him and not by the commissioners, and does not convey (as the statute prescribes), all “ the estate, right, title, interest, claim and demand whatsoever ” of the commissioners, and their successors, to the premises. The seal of office of the commissioners is not affixed to the deed, nor were there two witnesses thereto, as required by the act. (Laws of 1808, chap. 216, § 23.) The deed was subscribed “Laman Ingersoll, loan commissioner,” with his seal attached, and there were no witnesses thereto.

The whole proceeding, therefore, by which Brown was invested with any claim or title to the mortgaged premises, was a nullity. Ingersoll had no authority either to sell or convey. (Powell v. Tuttle, 3 Comst. 396; Olmsted v. Elder, 1 Seld. 144.) It is the commissioners, in their corporate capacity, that the statute provides, in case of default in payment of principal or interest, shall be seised of an absolute indefeasible estate in the lands, tenements and hereditaments mortgaged to them; 'they are required to give the notice and make the sale, and they only, under their seal of office, can convey to the purchase^. The statutory system is complete in all its parts. The commissioners are created a body politic and corporate., As such they aré to loan the public moneys, taking mortgages in their name of office. If the borrower make default in payment, the statute vests an indefeasible estate in the lands in the commissioners, and their successors and assigns, and forecloses and bars all equity of. redemption of the mortgagor in the mortgaged premises. The commissioners are then, after notice, to sell the premises at public vendue, to the highest bidder, if such bid shall be equal to the sum of money for which the lands were mortgaged, and the interest thereon, and the purchaser shall pay the same (and not otherwise), the commissioners are to convey the lands to him by deed, affixing their seal of office, and subscribing their names to the instrument in the presence of two witnesses; and the statute declares that such purchaser “shall and may hold and enjoy the said lands, for such estate as was conveyed to the commissioners by'the mortgage executed by the mortgagor, clearly discharged and freed from all benefit and equity of redemption, and all other incumbrances made and suffered after the execution of such mortgage by the mortgagor, his heirs or assigns.” It is very plain that all that was done by Ingersoll, either in giving notice or selling under the Steward mortgage, or in conveying the'lands to the defendant Brown as purchaser, was nugatory, and Brown acquired no title thereby.

The defendant Weils has no defense. In December, 1851, Brown mortgaged to him the premises in question to secure the payment of four hundred dollars. This mortgage is no lien on .the premises,-as against the plaintiff’s-mortgage.

I am of the opinion, therefore, that the judgment of the supreme court should be affirmed. In that judgment, as modified by the general term, the mortgage executed by Steward to the commissioners of loans of Chenango county was treated as a subsisting lien, and the amount due thereon directed to be deducted from the amount due on the plaintiff’s mortgage, and applied to its redemption and payment; and that the plaintiff have leave to redeem, pay and dis- ' charge the said mortgage by paying the amount due thereon. This was all that the defendant Allen was legally entitled to ask. The deed under which Brown claimed to hold was void, and of no effect; and Wells’ mortgage was void as against the plaintiff’s mortgage, and as a lien upon the premises covered by such mortgage.

All the other judges concurred, except Selden, J.—who expressed no opinion—and Hogeboom, J., who was for reversal, for the reasons given as follows:

Hogeboom, J.

Assuming the judgment of the court below to be right in substance, I think there is a substantial defect of parties, which will prevent its having complete legal effect. The complaint sought to foreclose Allen’s mortgage, and to set aside Brown’s deed and his mortgage to Wells. Both the special and general term held the foreclosure of the loan office mortgage invalid, and consequently ineffectual, but nevertheless allowed á foreclosure of the plaintiff’s mortgage on payment of.the loan office mortgage out of the proceeds of the sale; or, as modified at general term, on payment of the latter mortgage to the loan commissioners. Prior to this suit the loan office mortgage had become due, and a default had occurred in the payment of the principal and interest moneys secured thereby. The loan office commissioners, or the people of the state, had in consequence become vested with a redeemable or irredeemable estate or'interest in the premises. This interest remained in them if the loan office sale was' invalid. They—that is the people or the loan office commissioners—were necessary parties to a suit for the foreclosure of the plaintiff’s mortgage, at least if it were attempted thereby, as is done by the decree in this suit, to cut off their .rights and to pass a perfect title to the purchaser under that decree. It is not an answer to this to say that the commissioners are protected because payment of the loan office mortgage is required to be made to them. The objection remains, that they are not parties to the suit; that they have a right to be heard, and may possibly set up a state of facts which will preclude any relief to the plaintiff. There is no more dangerous practice than to condemn or foreclose parties unheard.

I regard this as an effectual objection to the affirmance of this judgment, unless the case can be disposed of by a .modification of the decree in question, leaving the loan office mortgage, and the rights attempted to be acquired under it, untouched. But I do not well see how this can be done. According to the decision of this court in the case of Pell v. Ulmar (18 N. Y. R. 139), the utmost right which the plaintiff or the assignee of the mortgagor has is not a general equity of redemption, but a special right to redeem. He does not in his complaint, and did not at any stage of the trial, attempt the enforcement of any such right. He does not claim to redeem from the loan office mortgage, or offer to pay the sum due upon it; but simply to set aside the loan office sale, apparently treating all the interest of the loan office commissioners as having passed to the purchaser at that sale.

If it be said, this suit may nevertheless be treated as simply a foreclosure of the plaintiff’s mortgage, and the decree modified accordingly, I think there are several objections to such a proceeding. 1. The complaint seeks much broader relief, and the litigation has been conducted with a view to it; and it would change the whole scope and character of the proceeding to give such an aspect to it-at this time. 2. One of the leading objects of aforeclosure suit is to make a perfect title to the premises sold, and to make all persons parties to the foreclosure who have the remotest interest in the premises. An exception is sometimes made in favor of a prior mortgage, but then the complaint asks and the decree provides that the foreclosure and sale are subject and without prejudice to such prior mortgage. 3. The plaintiff no longer has any such effectual mortgage upon the promises as is set forth in the complaint. He has lost many of his rights and some of his remedies by the default which has occurred in the payment of the loan office mortgage. If the sale under that mortgage had been conducted according to law, his rights would have been forever lost, and this suit must have been dismissed with costs. As it is, he has, as already stated, but a special (if any) right of redemption, and it is that right which should have been attempted to be enforced in this action. The defendant Brown, having acquired peaceable possession through the forms of the loan office sale, and peaceable surrender from Allen, can not, according to the case of Pell v. Ulmar, be treated as a mere intruder, but as clothed with some rights under the loan office mortgage from the combined action of the loan office commissioner and the defendant Allen. How far these rights may be successfully displaced by the plaintiff’s action, must be determined by subsequent litigation.

Whatever equities, therefore, in view of some of the facts of this case, the plaintiff may be deemed to have as against some of the parties to this action, he is not in a condition to assert them, by reason of a radical defect of parties, and of substantive allegations in his complaint.

I am of opinion that the judgment of the court below should be reversed, with costs to abide the event, and with leave to the plaintiff to apply to the supreme court, on such terms as that court thinks proper, for permission to amend his complaint and add new parties to the action. .

Judgment affirmed.


author: Davies, J. Mullin, J.

text:
    Nelson J. Beach, receiver &c. v. George W. Smith.
    S. subscribed for $500 of stock in a railroad company, upon the understanding that the first ten per cent required by law to be paid' in cash on subscribing, should be paid by his services in procuring subscriptions and right of way. He subsequently presented an account against the company for services, from which it appeared that at the date of the subscription the company was indebted to him in an amount greater than the cash payment required, in which account he applied and credited fifty dollars for ten per cent upon his subscription, and fifty dollars for the first call made thereon. The account was allowed by the company, and the balance paid to S. Held, that this was a sufficient compliance with the statute, in respect to the payment of the first ten per cent, and made the subscription obligatory, upon S.
    This action was brought by the plaintiff as receiver of the Ogclensburgh, Clayton & Borne Bailroad Co., to recover the balance due to that company upon the defendant’s subscription to the capital stock thereof. The facts found by the judge who tried the cause are: That the company was duly incorporated under the laws of this State, and its articles were duly filed on the 16th of April, 1853; that afterwards, on the 2d day of July, the defendant subscribed the subscription book and articles of association, and by said subscription agreed to pay said corporation the sum of five hundred dollars, being for five shares of the stock, as the same should from time to time be called for; that the defendant did not at the time of subscribing, make any payment upon said subscription to said corpora^ tion, and had no funds of said company in his hands; that afterwards, and about October 31, 1853, the directors of said corporation made four calls of ten per cent upon the subscriptions to the capital stock of the said company, payable respectively February 1, 1854, May 1, 1854. August 1, 1854, and November 1, 1854; and that about the 26th day of October, said directors made two other calls upon the subscriptions to said capital stock, payable respectively February 1, 1855, and November 1, 1855, of all which calls the defendant had due notice; that on the 25th of February, 1854, the defendant presented his accounts for services for said company in procuring subscriptions and right of way as agent of said company, subsequent to said subscription, from April 1, 1853, and which was dated February 25, 1854, and amounted to-the sum' of $410. And upon said account applied and credited several sums of cash received by him subsequent to his said subscription, for subscriptions of various persons to the capital stock of the company,' and also- credited therein fifty dollars for ten per cent upon his said subscription, and also fifty dollars for the first installment or call upon his subscription, payable February 1, 1854, and leaving after the application of such payments and credits, the sum of two hundred dollars due to said defendant by the company, which balance was paid to said defendant by the company; and that it was the agreement and' expectation and design of the defendant and of the company’s agent, at the time of subscribing, that the first ten per cent required to be paid in cash on subscribing, should be paid by the defendant’s services thereafter, and was in fact paid in that maimer only, in pursuance of such agreement. The judge held as matter of law, that the application of the defendant’s account for services, upon his said subscription, was a sufficient compliance with the statute in respect to payment of the first ten per cent,,and made the said subscription obligatory upon him. Judgment upon the trial was given • for the balance due upon said subscription, and the same was affirmed at the general term, and the defendant appealed to this court.

      G. W. Smith, appellant, in person.
    I. The ten per cent, not being paid at the time of making the subscription, the attempted contract was illegal and void, and no action can be maintained upon it. (1 B. S. 1222, § 4, 4th ed.; Laws of 1850, chap. 140, §4; Crocker v. Crane, 21 Wend. R. 211; Jenkins v. Union Turnpike Company, 1 Caines’ Ca. 86; Angell & Ames on Corporations, chap. 8, § 12; Safford v. Wyckoff, 4 Hill, 444-7.)
    1. The .contract is illegal and void because it is against the express prohibition of the statute. The statute is not merely directory. It first says that the ten per cent, shall be paid at the time of subscribing, and then that the subscription shall not be received or taken unless the ten per cent, be so paid. Negative words in a statute are imperative. (7 Wend. B. 31, and cases cited p. 34.) It is believed no case can be found where an action has been sustained, which goes in affirmance of an illegal contract, when its object is to enforce the performance of an engagement prohibited by law.” (20 J. B. 397; Smith on Stat. 780; Broom’s Legal Maxims, 350; Rex v. Leicester, 7 Barn. & Cress. 12; Bank of United States v. Dandridge, 12 Wheat. Rep. 878.) Where it is held that a by-law requiring a cashier to give “ approved securities,” &c., is directory, but where it is conceded that “if the statute had prescribed that the cashier should not be deemed for any purpose in office until such approval, his acts would have been utterly void.” Without the cash payment in this case there is no subscription, as in the case above there would be no officer. “In deciding whether a corporation can make a particular contract, we are to consider, in the first place, whether its charter, or some statute binding upon it, forbids or permits it to make such a contract,” &c. (Ang. & Ames on Corp. 234.) “It is a first principle, not to be touched, that a contract, in order to be binding, must be lawful.” (Belding v. Pitkin, 2 Caines’ R. 149.) “ Where a contract which is illegal remains to be executed, the court will not assist either party in an action to recover for the non-execution of it.” (Shiffner v. Gordon, 12 East, 304; White v. Franklin Bank, 22 Pick. 184.)

      II. The transaction being a violation of a statute declaratory of a public policy, and prohibitive upon the company, it is incapable of ratification or affirmance by either, or both, of the parties.
    1. The legal virtue of an affirmance, or ratification, or adoption of a contract, is to supply an assent, or authority, where they are wanting, and the parties have power to supply them. But here is an original want of power on the contracting party. The company had no power, but was prohibited to take a subscription without the payment of ten per cent, in cash at the time of subscribing. The company had no right to set aside that condition. It is a gross misnomer to call the attempt to do so a “ waiver." Parties can only waive conditions introduced or existing in favor of, or securing to them some benefit or right. This condition is in favor of the public. No act of recognition or affirmance on the part of the subscriber could supply the defect of power on the part of the company; only the legislature could take off the prohibition and restore the power. To say that an act of a subscriber, itself falling, short of the legal requirement, (in not being a cash payment,) can give legal vitality to void acts on the part of the company, looks like a double absurdity. (Hodges v. City of Buffalo, 2 Denio, 112-13; Boom v. Utica, 2 Barb. S. C. 111; Thayer v. Boston, 19 Pick. 511.)
    2. The invalidity is not to be supplied by ratification, because it arises from want of compliance with a statutory injunction binding upon the parties, and introduced for the benefit of the public. Only the legislature can “ waive ” it. Neither party can ratify, because neither can' dispense with the condition precedent. (Story on Agency, §§ 240, 241; Coke on Litt. 295 [b]; Dawes v. North River Insurance Company, 7 Cow. 462.)
    3. So long as , the prohibition stands it bars all contracts that violate its terms, and the taint of illegality remains and extends through all renewals or changes of the original contract. (Story's Equity Jur. § 307.)
    4. The obvious intent of the statute is to utterly withhold a legal sanction from any subscription not accompanied by the cash payment of the ten per cent. The object of the statute would be defeated by allowing enough of legal vitality to inhere in the transaction to render it capable of ratification. What force would this prohibition have if companies were allowed to employ subscribers paying nothing in cash, or otherwise, at the time of subscription, and afterwards to treat the cash ten per cent as being paid by an account for services? By this course, the fund intended to be raised as a cash basis and guaranty of a solvent undertaking, is only imaginary, and there is substituted for it the services of agents employed to recommend the enterprise to the public. The provision for the cash fund could, in this way, be entirely nullified. Such a construction ought to be put upon the statute as will not suffer it to be eluded. (Bouvier’s Bacon, I. 7, 10; Ang. & Ames on Cor.' 229, note.)
    5. The statute denies to such a transaction any legal existence whatever. It says each subscriber shall pay ten per cent “in money ” at the time of subscribing, and that “no subscription shall be received oí1 taken without such payment.” It is difficult to see how a subscription which the statute says shall not exist at all, can have any standing, so that it may be ratified or affirmed. (Smith v. Saratoga Mutual Insurance Co. 3 Hill, 511, and cases cited.)
    6. It must be admitted that up to the time of rendering the account and applying thd credit for the ten per cent and succeeding installment, the contract was void. There was nothing for confirmation or ratification 'to work upon. If it should be held that there was a sufficient payment then, though not in money, still there was no signing. The term subscription has acquired a definite legal meaning, which the legislature must be presumed to have had in view. It means the manual act of subscribing the name; and this act must concur with the payment in money, else the contract prescribed by statute is not made. . See opinion of Paige, J. as to statute of frauds, showing that an oral agreement for sale of property void, under the statute, might become a valid contract by a subsequent acceptance of property, for the reason that the words “ at the time,” were stricken out of the section as reported by the revisors; otherwise the delivery must have been concurrent. (McKnight v. Dunlop, 1 Seld. 542-3.)
    7. The express requirement that the ten per cent be paid “in money,” is as imperative as the requisition of pre-payment itself, and excludes all other modes of payment. The provision is in pursuance of-the same policy which dictated the requirement of ten per cent “in cash ” upon the amount of stock mentioned in section two, for securing a money payment of ten per cent upon the whole amount subscribed. Both provisions have the same object, are-couched in equivalent terms, and should receive the same "construction. Without the payment of the cash amount required by section two, there could be no valid organization. Without the ten per cent in' money, pursuant to section four, there is no valid subscription after organization. Would it be pretended that the projectors of the enterprise could have taken receipted bills for agents’ services in lieu of the ten per cent required by section two? (Bouvier’s Bacon’s Abridgment [g], 235; Lake Ontario Railroad v. Mason, 16 N. Y. R. 456; Ang. & Ames, p. 229-33, §§ 10-12; Dawes v. North River Insurance Company, 7 Cow. 462; 2 Johns. R. 114; 2 Cranch, 127; The Life and Fire Insurance Company v. Mechanics' Fire Insurance Company, 7 Wend. R. 31.)
    8. The dictum of Justice Bacoh in his opinion, that “ payment in money eo nomine at the time of subscribing is not necessary,” as applied to this case, has no authority to support it. Checks drawn upon cash funds, promissory notes paid in cash at maturity, may be sufficient quoad the money payment. Such instruments have been decided to be “ money ” for many purposes, but whether they are so for the purposes of this statute, is yet to be settled. But work and labor have never yet been deemed money, or the appropriate elements for mailing up a cash fund and basis for a financial enterprise.
    III. The suggestion in the opinion, that an act done in disregard of the express prohibition of the statute is not void, unless so declared in the statute prohibiting it, is opposed, it is believed, by all authority. Acts, contracts, and undertakings in violation of statutory prohibitions, or of public policy, are void by a universal rule and operation of law. It is enough that they are forbidden by statute or a clear public policy. (Broom’s Legal Maxims, p. 350; Bouvier’s Bacon stat. (I.), 7, 10; P. 256 id. (G.), p. 235; Tracy v. Talmage, 14 N. Y. R. 180; Sackett’s Harbor Bank v. Codd, 18 id. 246: Safford v. Wyckoff, 4 Hill, 444-47.) In Wheeler v. Russell (17 Mass. R. 281), it is said, “no principle of law is better settled than that no action will lie upon a contract made in violation of a statute, or of a principle of the common law. (See also Griswold v. Waddington, 16 J. R. 486, per Kent; Brady v. Mayor of New York.)

    1. For example, contracts to do any act on the Sabbath, prohibited by statute to be done on that day, are wholly void, on the ground of the prohibition merely. The prevailing doctrine throughout the United States is, that such contracts are wholly void and incapable of being made valid by a subsequent recognition, neither conferring rights nor imposing obligations upon either party. (New Am. Cyc. art. “Lord’s Day.”) '
    IY. Corporations must acquire their franchises and exercise their powers in strict pursuance of the statute or charter creating them. Having no original capacity like natural, persons to make contracts, when their mode of contracting is prescribed by the statute, it must be followed. The statutory regulation is their peculiar law of contracting, as to essence, mode and form, and unless they conform to that law, no valid contract is made. (Head v. Providence Insurance Company, 2 Cranch. 127; Ang. & Ames on Corp. 278, § 6; Union Bank v. McDonough, 5 Louisiana R. 63.) “An act which is an attempt to evade the provisions of a charter confers no fight on him who attempts it.” (Beatty v. Marine Insurance Company, 2 J. R. 109; Safford v. Wyckoff, 4 Hill R. 444-47.) See also The Life and Fire Insurance Company v. Mechanics’ Insurance Company (7 Wend. R. 31), where it is held that where a particular form of security is prescribed, every other form,, as well as the contract itself, is void.
    Y. The case shows that the note was given and the subscription was received with a view to evading or disregarding the statute, and all that was done was in pursuance of that illegal attempt. The company, in order to swell its apparent cash subscription, undertook a dispensing power as to the requirement of payment at the time of subscribing, and of the payment of cash at all. The company intended a violation of the law, and the agreement by the subscription wrought out that intent. The. subscription was but the instrument for effecting a fraud upon the law, and is only a portion of an entire illegal agreement. The evidence objected to was not given to vary the terms of the written agreement, but to show that it was involved in an illegal design. The court will leave parties to illegal contracts as it finds them, except where it interferes to relieve one not in pari delicto. The defendant is not, at any rate, bound beyond actual execution; and partial execution of a mutual illegal agreement has never been held to bind the party to complete performance, much less where the only party upon whom the prohibition is laid, is the party demanding the aid of the court. (Norris v. Norris, Adm’r, 9 Dana’s R. 317; In notes, 4 Hill, 428; Nellis v.
      Clark, 4 Hill, 429; White v. Franklin Bank, 22 Pick. 189.)
    VI. The clause in question is a statutory prohibition upon the company, and it alone is in fault. The defendant is not in pari delicto. He had a right to accept the stock on consideration of performing’ services afterwards. The statute, in the language of the cases, has marked the company as the criminal. (Tracy v. Talmage, 4 Ker. 162; Curtis v. Leavitt, 1 Smith, 9, 95; The Sackett's Harbor Bank v. Codd, 18 N. Y. R. 244; White v. Franklin Bank, 22 Pick. R. 181; The Life and Fire Ins. Co. v. Mech. Ins. Co., 7 Wend. R. 31.)
    1. The defense is the disaffirmance of the illegal, executory contract, and will be sanctioned by the court to vindicate the law. As to the part of the contract not executed, the law will not aid in the enforcement of a contract illegal in its inception. (2 Com. on Cont., cited 22 Pick. Eep. 184.)
    VII. Conceding that .some valid contract was got into being by the pretended ratification, then what was ratified? It must be the actual contract. If the company adopt the act of their agent, they must adopt it in all its parts, as well the stipulations favorable to the defendant, as those beneficial to the company. The ratifying act is in pursuance of the terms of the agreement alleged by the defendant, and must have force, if at all, by way of affirming the whole of that verbal contract. It can not be said that the execution of that contract, so far, is a constructive . adoption of another contract which he really never made. When the company dispense with the defendant’s services, he must, be permitted to decline the stock. He never agreed to pay cash for stock. Nor is the company injured by the refusal of the defendant to proceed further with his contract. He gets no stock, and the company has the benefit of the defendant’s services to the extent of some $200 for nothing.
    1. The proof shows that the real contract was to pay for the stock in services. The defendant so swears explicitly; and the agent, Doty, does not deny this; he only says: “I did not consider that I made any agreement," and upon cross-examination further says: “I undoubtedly said to the defendant, at the time of subscribing, that the whole amount of his subscription and more would be required in services for the company.” It is not to be supposed the defendant would have taken the stock on any other consideration.
    2. The company adopting the act of its agent, Doty, so far as to consider him a subscriber upon the terms verbally stipulated, and paying the defendant $410 in pursuance of ' that contract, can not now repudiate it as to the residue. (Story on Agency, § 250.) The contract ratified is the contract to take stock and pay for it in services. Confessedly the action can not stand on the written contract alone; the ratification is the sole reliance for giving it life. But the ratification can not take place otherwise than according to the intention of the party. A ratification is a new contract or a new element of assent added to a defective transaction in order to make a complete contract. In either case it can have effect only according to the meaning and intent of the party ratifying. The legal effect of 'a ratification is to disclose the intent, to supply authority, to manifest an assent. Now the act of the defendant was clearly intended for no other purpose except to pursue and execute the contract for services to be rendered for stock. His agreement was not to pay money; the fact is so found in regard to the first $50; the next two installments are also paid in services, and $270 is also exacted in further payment of services. If the first installment which is expressly required by statute to be paid in cash, was agreed to be paid by work and labor, and the two following were paid in the same manner, these facts are strong corroboration of the defendant’s defense. Another $100 is paid in the same way, and while the company pay the defendant cash, none i§ required of him. Can it be pretended that this transaction is a ratification of a contract to pay cash on the subscription? It is submitted that the whole evidence shows clearly that nothing was intended to be ratified except the verbal contract to render services for stock,'and that the defendant signed only upon that consideration. This was the only arrangement in contemplation of either party when the bill was rendered and allowed.
    VIII. The company can not ratify the act of their agent if they could not in the first place dispense with the cash payment of the ten per cent, oil the subscription. If the company could not make such a contract, the subscriber could not be bound. It is the illegal act of the agent in taking the subscription in violation of law that needs to be aided, and that can not be cured. (Hodges v. Buffalo, 2 Den. 113; Thayer v. Boston, 19 Pick. 511; Boom v. Utica, 2 Barb. S. C. R. 111.)
    IX. The agreement as to payment for services, the first ten per cent, being paid, would then be valid. It was the agreement acted upon, and the company cannot now claim anything but the, stipulated services. (McKnight v. Dunlop, 1 Seld. R. 542-3.)
    X. The company has parted with nothing, and suffers no injury by a disaffirmance of the contract. In various cases where corporations, having a general power to loan, money, &c., unlawfully take a particular security, prohibited by law, "they have been allowed to recover for the money loaned, on the equity of the case, and on the ground that only the security was avoided, and not the contract of loaning. But in this case the entire act was specifically prohibited, both as to the form and substance of the transaction. No equity existing in behalf of the company, the court will not be astute in providing a means or theory of recovery, by supposing a sort of floating and contingent contract illegal in the start, and awaiting future adoption and recognition. (Life and Fire Insurance Co. v. Mech. Ins. Co., 7 Wend. 34, and cases cited; Philadelphia Loan Company v. Towner, 13 Mass. R. 249.) The charter of the life and fire insurance company (above) provided that $250,000 might be invested by the company by means of loans on bond and mortgage, “ and in no other way whatever,” but the contract or security upon a prohibited loaning was not expressly avoided. The mere prohibition was held to make the whole contract illegal. (Laws of 1822, chap. 51, § 9.)
    XI. The class of cases which hold that a corporation making contracts not authorized by statute, nor within its proper powers, may still recover for property parted with, money loaned, &c., affords no authority for sustaining this transaction. Here the contract is not merely ultra vires, or such as authorizes the animadversion of the legislature only. It violates an express prohibition, operating both affirmatively and negatively, and a prohibition directed against a particular act. The only public policy contravened by acts ultra vires, is that which dictates the restraining of corporations generally to their proper scope and the legitimate purposes of their creation. There is a clear ground of distinction upon which contracts which are a mere excess of authority may not be declared void, while those which violate express prohibitions must be, unless the courts shall assume the power of controling the legislative will.

      John H. Reynolds, for the respondent.
    I. The defendant’s subscription was not originally invalid. It is provided by section 4 of the general railroad act, relating to subscriptions for stock after the corporation has been formed, that “ at the time of subscribing every subscriber shall pay to the directors ten per cent, on the amount of his subscription, in money, and no subscription shall be received or taken without such payment.”

      1. It is not declared that a subscription shall be void which is not attended with the payment of ten per cent, in money. The directors are forbidden to receive a subscription without the payment of ten per cent, in money, but if they do receive it without exacting the payment of the money it is not declared that the contract of subscription is void.
    2. The contract of subscription is not void, but may be enforced against the subscriber although the directors receive it without the actual payment of ten per cent, in cash.
    3. There is no principle of policy, public or private, pro.moted or preserved by declaring such a subscription invalid; on the contrary, great wrong to creditors and stockholders might follow from releasing a subscriber under such circumstances from all liability.
    4. The provision requiring the payment of ten per cent, was obviously intended for the benefit of the corporation and all who might become interested in its affairs, and it may be waived at the request of the subscriber without impairing his legal obligation arising out of his subscription.
    5. The reception, by the directors, of a subscription without the payment of ten per cent, in money does not constitute an illegality which enters into and forms a portion of the contract of subscription. It is rather incidental and collateral and is not inherent in the contract, and docs not form a part of the consideration. (Story on Contracts, § 621; Wetherell v. Jones, 3 Barnw. & Adolph, 624; Ferguson v. Newman, 5 Bing. N. C. 84; Johnson v. Hudson, 11 East, R. 180.)
    6. If the directors commit a breach of duty in receiving a subscription without the payment of money, they may be punished as for a misdemeanor, and are liable in damages to the party injured by the breach of duty. So far as the subscriber is concerned, his obligation to pay arises when he subscribes, and it remains until it is discharged by payment. (2 Rev. S. p. 696, § 39; Town of Milfred v. Town of Worcester, 7 Mass. R. 48; Parton v. Harvey, 1 Gray, 119; 2 Kent’s Com. 90, 91; 2 Greenleaf Ev. § 460; Mott v. U. S. Trust Company, 19 Barb. 568; Chester Glass Co. v. Deary, 16 Mass. 94; Palmer v. Lawrence, 3 Sandf. S. C. R. 161; The Steam Nav. Co. v. Weed, 17 Barb. 378.)
    7. Furthermore, the provisions of the statute in respect to the payment of the ten per cent, in money is to be regarded as directory and not prohibitory. (Story on Con. § 623; Brooks v. Ryan, 2 Story R. 542; Johnson v. Hudson, 2 East, 180; Warren v. Manf. Ins. Co., 13 Pick. 518.)
    II. The defendant is estopped from alleging the inva-. lidity of the contract on account of his own wrong or omission of duty in not paying the ten per cent, in cash when he subscribed. His associate stockholders, as well as the creditors of the corporation, are interested to estop him; and if the statute imposed upon either the directors or the subscriber anything in the nature of a public duty in requiring the payment of the ten per cent., the defendant cannot set up his own wrong.to get rid- of his obligation. .(The Steam Navigation Co. v. Weed, 17 Barb. 378; Henry v. Vermillion R., 17 Ohio, 187; Wright v. Selby R. R. Co., 16 B. Monroe, 5; Redfield on Railways, 86, 87, 88; The Vicksburgh, &c., R. R. Co. v. McKean, 12 Louisiana Rep. 638.)
    HI. A contract is not void as against a statute ttnless founded upon an illegal consideration which enters into and forms a part of the contract, or unless it provides for the doing of something distinctly forbidden. (2 Parsons on Cont. 542.)
    1. In the present case, neither of these illegal elements exist in the contract sought to be enforced. It is lawful to subscribe and pay for railroad stock. It is the duty of the directors to exact, and of the subscriber to pay ten per cent, of the amount at the time of subscribing; but if this be omitted, the contract remains unaffected, and the obligation to pay still exists, as the only thing forbidden is the omission to exact payment of the ten per cent, at the moment of subscription.
    2. A careful examination of adjudged cases will show that there is no reliable authority for the proposition that a subscription such as is involved in this case is void. (Union Turnpike v. Jenkins, 1 Caines’ R. 381; Same case, 1 Caines’ Cases in Error, 86, 96; Goshen Turnpike v. Hurtin, 9 Johns. 217; Highland Turnp. Co. v. McKean, 11 Johns. 98; Rensselaer and W. Plankroad Company v. Barton, 16 New York R. 457, per Selden, J.)
    IY. But it is not material whether the subscription without the actual payment of ten per cent, in cash, was originally binding or not; it was certainly binding upon him from the time it was paid, and that was in February, 1854. The transaction by which the company had credit for $210, on his account, which included ten per cent, on his subscription, and the first' call of ten per cent, was in legal effect, the same as if he had paid the amount of his ten percent in gold coin. (See Bacon, J. pages 20, 21 to 24; Black River & Utica. R. R. Co. v. Clark, 25 N. Y. R. 208.)
    The judgment should be affirmed.
   Davies, J.

The subscription of this defendant was made under similar circumstances to that of Clarke, in the case of Black River and Utica Railroad Company v. Clarke, (25 N. Y. 208). We then said that the intent of the section of the general railroad act,' requiring the payment of ten per cent, in cash on the amount of the subscription, to be made in cash at the time of subscribing, doubtless was that no subscription should be valid until ten per cent, was paid thereon, and not that it should be invalid if a short interval should occur between the actual subscription and the payment of the money. The subscription and the payment of the ten per cent, must both concur to make a valid subscription. The subscription one day, with payment the next, would satisfy, the. statute; and so would actual payment at any period after subscription, with intent to effectuate and complete the subscription. The writing of the name in the subscription book should be deemed but part of the transaction, and provisional or conditional till the ten per cent, is paid. But after the payment, and as was said in that case, certainly after the payment of forty per cent, on the subscription, the statute requirement on this point must be deemed fully complied with by the defendant. There is nothing to distinguish the case now under consideration from that just referred to. It is apparent that the defendant commenced acting for the company as early as April, 1853, and his subscription was not made until July 2d of that year. It is fairly inferrible, from the amount of his account, that the company, at the date of his subscription, was indebted to him in an amount greater than the cash payment of $50, required on his subscription. It would have been an idle ceremony for the company to have handed him the amount due, and for him to have paid it back to the company on his subscription. It is, how-' ever, sufficient, under the authority of the case just cited, that ten per cent., or first amount to b‘e paid, has been sub? sequently paid, to render the. subscription valid and binding upon the defendants. On the 25th of February, 1854, he in fact not only paid this ten per cent., but the first installment called for of ten per cent, payable on the first day of that month. He had, therefore, on that day paid twenty per cent, on the amount of his subscription, and he can not now be permitted to allege that it was invalid because he did not, at the time of subscribing, pay the ten per cent, in cash. The charging himself with, and the allowance by the company in the settlement with the defendant, of both of these installments, was a voluntary payment of them by this defendant to the company, quite ás much so as if the company had handed to him in cash the whole amount of his account, $410, and he had immediately handed back the.sum mentioned therein, amounting to the sum of $200. The allowance by him to the company of these sums, and the payment of the balance, was a payment of them by the defendant to the company.

The judgment must be affirmed, with costs.

Mullin, J.

I am not prepared to hold that a subscription for the stock of a railroad company organized under the general law is valid, if the ten per cent, required to be paid at the time of subscribing, is not paid. It seems to have been the opinion of the chancellor in Jenkins v. Union Turnpike Company (1 Caines’ Case in Error, 86), that a subscription for stock without the payment of the five dollars required to be paid on each share at the time ■ of subscribing, was void when the subscription was made to the stock before the organization of the corporation, but if made after, it might be valid. The statute under which the subscription in question is made, not only requires ten per cent, to be paid, but it forbids the subscription to be received without such payment. It seems to me that a subscription taken.in violation of this prohibition is not' binding.

But this court has held'that the subscription may precede the payment of the ten per cent., and that when the ten per cent, is paid, the • subscription is valid from that time. (Black River and Utica Railroad Company v. Clarke, 25 N. Y. 208.)

The only remaining question is, whether the ten per cent, has been paid?

The payment was in services performed under a contract with the company. ISTo price was agreed on for the services before they were rendered. The price must have been ascertained before there could be an application of them on the stock.. When the account was rendered and allowed, the defendant was owing the company that portion of the stock which had been called for by the directors, and the company owed him for services. The payment by each to the other was effected by the company crediting the services on the stock. Was it necessary for any purpose, that the ceremony of paying money by the company to the defendant, and by the defendant of the same money back again, should be gone through with? It seems to me not.

Concede the agreement to take pay for the ten per cent, in services as illegal and void, yet the services were actually rendered. The company could have resisted payment by setting up the illegal agreement. It was optional with the defendant whether he would pay anything on the stock; but he did pay by allowing a portion due him for services to be credited on the stock.

I think this was a ratification .of the subscription, and a payment of the ten per cent.

The judgment should therefore be affirmed.

All the other judges being for affirmance, except Selden, J., who was inclined to reverse, judgment affirmed.


author: Davies, J.

text:
    Robert Young v. Guy Davis and others.
    An order of the supreme court, setting aside a verdict as being against the weight of evidence, and on payment of costs, is not reviewable on appeal by this court.
    It is the invariable practice of this court not to review orders made by the supreme court, granting new trials, on the ground that the verdict was either against evidence or against the weight of evidence.

      Appeal from an order made at a 'General Term of the ■ Supreme Court, affirming an order of the Special Term, setting aside a verdict and granting a new trial on terms, on the ground that the verdict was against the weight of evidence.

      N. B. Smith, for the appellant.

      Gardner & Burdick, for the respondents.
   Davies, J.

This action was commenced to recover the amount of a promissory note. The defense was usury. The action was tried at the Onondaga circuit, in October, 1858, and a verdict rendered for the plaintiff. No exceptions were taken to the charge by either party, and subsequently the judge who tried the case, upon the minutes, set' aside the verdict and ordered a new trial. On appeal this order was affirmed at the general term, and the plaintiff now appeals to this court, and stipulates, if the order is affirmed, that judgment absolute may be rendered. The verdict was set aside as being against the weight of evidence, and on payment of costs by the defendants. Such an order is not reviewable, on appeal, by this court, and we have frequently so decided. The appeal presents no question of law for. the determination of this court. A review of the correctness of the order made at the special term granting the new trial, on the ground that the verdict was-against the weight of evidence, would necessarily involve an examination of such evidence by this court. In Oldfield v. New York and Harlem Railroad Company (14 N. Y. Rep. 310), we said that the question of setting aside the verdict as against the weight of evidence was properly addressed to the supreme court, which could reverse the judgment and grant a new trial on those grounds. But this court has no such power. It is invariably our practice not to review orders made by the supreme court. granting new trials, on the ground that the verdict was either against evidence, or against the weight of evidence. In the present case no question of law is presented upon the admission or rejection of evidence, or the charge or refusal to charge of the judge, but the question is simply whether the order made by him granting the new trial upon terms as against evidence, was or was not properly made. His action in that regard is not subject to review in this case in this court.

Mullin, J., also read an. opinion in favor of dismissal. And all the other judges concurring, and agreeing that the judgment was right on the merits, appeal dismissed.