author: Selden, J.

text:
    Hitchcock v. The North Western Insurance Company.
    The conveyance of a vessel, accompanied by a reconveyance by way of mortgage, does not work a transfer or termination of the mortgagee’s ■ interest, within the meaning of a marine policy providing that it should become void if the insured assigned his interest in the property without the consent of the insurer.
    Action commenced in the Superior Court of Buffalo, by the respondent, as assignee of 'William H. lathrop & Co., upon a policy of insurance, issued by the defendant to William H. Lathrop & Co., on the 1st of May, 1855, by which it insured the schooner Samuel Strong, to the amount of $2,000, against the perils of navigation on the lakes, from the date of the policy until the 1st of April, 1856. The policy contained this clause, viz.: “ The interest of the assured in this policy, or in the property insured thereby, is not assignable unless by the consent of this corporation, manifested in writing, and in case of transfer or termination of any such interest of the assured, either by sale or otherwise, without su’ch consent, this policy shall from thenceforth be void and of no effect.”
    At the time of the execution of the policy, Wm. H. Lathrop & Co. were owners of the vessel, and afterwards, and before the loss, they executed a bill of sale of the vessel to Alvord, Bell & Bean, for $5,000, who at the same time executed to the vendors a bill of sale, b.eing a reconveyance of the same vessel, conditioned to become void on payment of $4,000 to such vendors, in four equal sums, with interest, on September 1st, November 20th, 1855, and July 1st and November 20th, 1856, which sum was part of the purchase money of the property. The vendors did not assign the policy, but retained it as security for the payment of the $4,000. The defendants were not notified of the sale. Alvord, Bell & Bean, at the time of their purchase, received possession of the vessel, and continued in such possession, and run her for their own profit, until the, 21st of October, 1855, when she was totally lost by means of one of the perils insured against After the loss, William H. Lathrop & Co. assigned the policy, and their claim on account of the loss, to the plaintiff.
    The only question presented on the trial was, whether the policy became void by the sale of the vessel, under the circumstances above stated, to Alvord, Bell & Bean. It was held by Mr. Justice MasteíT, at the special term, that the policy remained in force, and the plaintiff obtained judgment. That judgment was affirmed at the general term, and the defendant appealed to this court.

      Ashur P. Nichols, for the appellant.

      E. C. Sprague, for the respondent.
   Selden, J.

It is only by force of the special clause* prohibiting an assignment of the interest of the assured in the policy, or in the property insured, without the consent of the insurers, that a forfeiture of the policy is claimed to have occurred. In the absence of such provision, an assignment of property and policy, in marine- insurances (however it may be in regard to fire policies), is valid, and the policy remains in force for the benefit of the assignee, although there is no notice of the assignment given to the insurers. ( Wakefield v. Martin, 3 Mass., 558; Earl v. Shaw, 1 John. Cases, 313; Powles v. Innes, 11 M. & W., 10; 3 Kent’s Com., 261-275; 2 Am. Leading Cases, 1st ed., 309-314.)

As the special clause relied upon operates by way of forfeiture, it is to be construed strictly, and the “transfer or termination ” of interest in the property, in order to make void the policy, must be a transfer or termination of the whole insurable interest of the assured in such property. Any change of the title which does not deprive the assured of insurable interest, does not work that result. (Lazarus v. The Commonwealth Ins. Co., 5 Pick., 76; Strong v. Man. Ins. Co., 10 id., 43, 44; Stetson v. Mass. Mut. Fire Ins. Co., 4 Mass:, 330; Jackson v. Silvernail, 15 John., 278; 3 Kent’s Com., 261, note a.) “A sale or assignment of the property will only defeat the recovery of the assignor on the policy when and so far as it strips him of insurable interest, without regard to whether the interest which survives the conveyance be of the same nature or character as that which existed before it was made.” (2 Am. Leading Cases, 1st ed., 316.) This proposition relates to the question of insurable interest remaining in the assignor under an ordinary policy, not containing the special clause in regard to forfeiture. But the questions are the same. Mo transfer of interest will, work a' forfeiture under that clause which does not so entirely deprive the assignor of insurable interest as to prevent his recovering on the policy for his own benefit, if that clause were not contained in it. To take away the cause of action in one case, and to render void the policy in the other, equally requires a transfer or termination of the entire insurable interest. So long as the assured retains such an interest that he may be a sufferer by the loss, the policy remains valid to protect that interest. This construction does not, as is claimed by the defendant’s counsel, render the clause in question nugatory. It leaves it effectual to make void the policy in the hands of an assignee of the whole interest, in property and policy, which, as has been shown above, would be otherwise valid.

The bill of sale of the vessel executed by the assured in this case, by no means transferred or terminated their insurable interest. Standing alone, it would have had that effect; but that instrument.must be construed in connection with the counter bill of sale or mortgage, executed to them at the same time. The two “ are to be considered as parts of the same ' contract, as taking effect at the same instant, and as constituting but one act.” (Stow v. Tifft, 14 John., 463.) Thus considered, the legal effect of the two instruments, looking at the substance of the transaction, is not that the- seller parts with the title absolutely, for any space of time, however short, but his title, before absolute, is made defeasible. This interpretation accords with the obvious intention of the parties. In no such case did the seller ever intend to part with his entire interest, even for an instant, until the purchase money should be paid; nor is the language of the instruments such, when construed as one act, as to prevent courts from giving them effect according to such intention, especially under the oft-commended rule that judges should be astute “to invent/ reasons and means to make acts effectual according to the just intent of the parties.” (Hob., 277, b; Willes, 675-684; 22 Wend., 489.) But if the title passed out of the assured, otherwise than conditionally, it did so subject to a right in, or power over, the property which they retained, to defeat the title of their grantees on default in payment of the purchase money. That right, however, was rather a condition than a power, because it operated to defeat the interest of the purchasers -absolutely, at law, on their making default, without any act on the part of the sellers. (2 Denio, 170; 1 Comst., 500.) The right thus retained, by whatever name it may be called, was an insurable interest in the property. “ A man is interested in a thing to whom advantage may arise or prejudice happen from the circumstances which may attend it; and whom it importeth that its condition as to safety or quality should continue.” (1 Arn. on Ins., 230; Lucena v. Crawford, 5 B. & P., 302; Trumbull v. Portage Co. Mut. Ins. Co., 12 Ohio, 305.) Chief Justice Spencer, in the case of Stow v. Tifft, (supra), states the rules applicable to like instruments relating to land, as follows: “ The substance of a conveyance, where land is mortgaged at the same time the deed- is given, is this: The bargainor sells the land to the bargainee on condition that he pays the price at the stipulated time, and if he does not, that the bargainor shall be reseized of it, free of the mortgage ;■ and whether this contract is contained in one and the same instrument, as it well may be, or in distinct instruments executed at the same instant, can make no difference. It is true that courts of equity have interposed to relieve the mortgagor against the accident of his non-payment of the price, at the stipulated period. It is. also true that courts of law have considered the interest of the mortgagor as liable to be sold on execution. This, however, does not interfere with the question as to how the contract between the original parties is to be viewed, as between themselves, when the equity of redemption is gone and forfeited.” It is, I think, owing more to the conditional character of the purchaser’s seisin in such cases, as stated by Chief Justice Spenceb, than to its instantaneous character, that the right of dower and the lien of judgments do not attach upon it except subject to the mortgage; although the latter is usually assigned as the reason. (Tallman v. Farley, 1 Barb., 280; Cunningham v. Knight, id., 399; 4 Kent’s Com., 39.) This principle has been applied by the Supreme Court of Massachusetts to a case not materially different from the present. The action was upon a fire insurance policy, where the plaintiff after obtaining his policy, conveyed one-half of the building insured, reserving a term of seven years, and received a mortgage back for the purchase money. He then demised the premises to the mortgagor and. another for seven years, reserving rent, after which the premises were destroyed by fire, his tenants being in possession. Sewall, J., delivering the opinion of the court, says: “ A sale and reconveyance by mortgage to secure the purchase money, executed at one time, are, for many purposes, to be regarded as one instrument. And taking all the writings together, the actual sale of the property insured, as to the moiety affected by these contracts, was substantially, and in answering a question of the interest of the plaintiff, to be considered as a conditional sale after the expiration of seven years.” And again, “ his interest in a part remains the same, and, for the purpose of repelling this objection, is to be considered as. unaltered in the whole of the premises insured.” (Stetson v. Mass. M. F. Ins. Co., 4 Mass., 336.) This case shows that a deed and mortgage back for purchase money do not deprive the seller of an insurable interest; and if the interpretation above given to the policy in the present case be correct, it shows that the policy was not defeated by the sale to Alvord, Bell & Bean.

The case of Adams v. Rockingham Mutual Fire Insurance Company (29 Me., 292) does not conflict with, but rather tends to confirm this view. The decision in that case was put mainly on the ground of the loss of a lien upon the insured premises as security for the assessments, which the court held was affected by the conveyances; the interest of one of the parties having - passed to an assignee in bankruptcy, and that of the other having been conveyed by an absolute deed, subject to a written defeasance, without seal, which had been cancelled, but whether before or after the fire did not appear. The court held that “ if the cancelling was since the loss, there was at the time of the fire a remaining, interest in the grantor; if otherwise, the alienation was completethus sustaining the view which I have taken.

The case of Titlemore v. Vermont Mutual Insurance Company (20 Vt., 546), tends also to confirm my position. The charter of that Company contained a clause declaring that when any house or building insured “ shall be alienated by sale or otherwise, the policy shall thereupon be void.” -The plaintiff, during the life of his policy, conveyed the insured premises by a common warranty deed, and received from his grantee, at the same time, a like deed of the same premises, with a condition that the deed should be void on payment of $2,000 in three years, the grantee to hold possession until payment. It was held that this was not an alienation within the statute. The reasoning of Davis, J., who delivered the opinion of-the court in reference to the effect of the two instruments, so fully confirms what I have said in regard to the conditional character of the sale in the present case, that I ventüre to prolong this opinion by one more quotation. He says: “ Both instruments, being executed simultaneously, may well be regarded as constituting one entire contract, to be construed precisely as it would be, were a similar condition inserted in the deed from the plaintiff to Yandewater. In the one case the payment of the money would constitute a condition precedent, without which no title would pass; in the other, the reconveyance is perfect in form, subject only to be rendered inoperative by a condition subsequent. It is a mere matter' of formal arrangement. In substance there is no difference.” * * “ I do not regard a conveyance and reconveyance, when simultaneous, as divesting the plaintiff of title at all: there was no alienation, which, by the terms of the statute could vitiate the policy.” It is, to be sure, said in the case that the conclusion of the court would have been different if there had been a personal obligation on the part of the last grantor to pay the $2,000, which would have converted his deed into a mortgage. That opinion, however, is confessedly based upon the popular idea of a mortgage, regarding the mortgagor as the owner, contrary to the rule in this State, especially in reference to mortgages of chattels (1 Comst., 486), and is, therefore, deprived of all force, even as a dictum,, against the construction which I have given to the conveyances in the present case.

It is insisted by the defendant’s counsel that the special clausedn the policy was, in part, based upon the confidence which the Company had in the assured personally, and that the transfer of the vessel, with the rights of possession and control to strangers, was a violation of the condition on which the continuance of the policy depended. If it was the design of the insurers to compel the assured to retain the absolute ownership of the whole vessel, and to keep the possession of it entirely under their own control during the life of the policy, they have failed to use language which can accomplish such object. They have, however, succeeded in preventing a trans- ' fer of the policy for the benefit of any other person, without their consent; and that probably accomplishes all that was expected from the clause in question. So obviously insufficient are the terms of the restriction to secure what is 'claimed for them, by any rational interpretation which could be given to them, that I cannot believe such to have been their design.

The judgment of the Superior Court should be affirmed.

Allen, J., did not sit in the case; all the other judges concurring,

Judgment affirmed.


source: Caselaw Access Project

author: Denio, Ch. J., Davies, Wright, Gould and Smith, Js., were for affirming the judgment. Allen, J., (dissenting.)

license: Public Domain

text:
    The Buffalo and Allegany Railroad Company v. Cary, Administrator, &c.
    Where a railroad corporation, attempting to organize under the general law, has filed papers having color of compliance with the statute, but so defective as to be incapable of supporting the incorporation a.s against The People, it may yet, as against a subscriber to its capital, be held a corporation de facto, upon proof of the feeblest nser^,
    An incorporation thus established upon no other proof of user, prior to subscription, than the election of officers by the persons calling themselves directors: this, against the representative of a subscriber in June who died in September, and such other acts of user as were proved, were not fixed more definitely as to time than that they were after the election of officers, which preceded the subscription one week
    Appeal from the Superior Court of Buffalo. Action upon the subscription of the intestate to the capital stock of the plaintiff. The plaintiff undertook to become incorporated under the general railroad act of 1850. In May, 1853, its articles of association were filed, and the intestate, June 8th thereafter, became a subscriber for one thousand dollars of the capital stock, and paid ten per cent at the time of subscribing, and died in September, 1853. The directors, after his death, made seven calls upon the stock of one hundred dollars each, and for this seven hundred dollars, claimed to be due, this action was brought. The affidavit indorsed upon and filed with the articles of association was conceded to be defective ; it containing no statement of an intention in good faith to construct or operate the road mentioned in the articles. In 1858 a law was passed by the legislature of this.State authorizing the plaintiff to sell its property and effects to another railroad company; and, by the second section of the act, the plaintiff was declared to be a valid corporation, duly organized under the act to authorize the formation of railroad corporations and to regulate the same, passed April 2d, 1850, and the several acts amending the same, notwithstanding any error, informality, insufficiency, act or omission, on the part of such company or any of its stockholders in the proceedings to become incorporated, and the said corporation and all the proceedings of its stockholders and officers were thereby legalized and confirmed. By another section, it was provided that nothing contained in this act should affect any suit before then commenced in any court. Upon the trial, the plaintiff offered in evidence certified copies of the articles of association filed with the county clerk and comptroller, and they were objected to, on the ground of the defect in the affidavit. The plaintiff then read in evidence the act of 1858, and thereupon the court overruled the objection, and the articles of association were read in evidence, and the defendant excepted. The plaintiff then gave evidence of the election of directors and officers, June 1, 1858, and the purchase of the route of the proposed road after such election, and that contracts were made for its construction, and that the contractors entered upon the work and that money was paid on various subscriptions to the capital stock and expended on the road, and liabilities incurred in the construction. Evidence was given of the various calls for payment upon the stock, counted upon in the complaint. At the close of the evidence the defendant moved for a nonsuit, on the ground that the plaintiff had failed to prove its corporate existence at any time prior to the passage of the act of 1858, if at all; and that the defendant was not liable on the subscription of the intestate. The motion was denied, and the defendant excepted. Judgment was given for the plaintiff for the full amount claimed, which was affirmed at general term, and the defendant appealed to this court.
    The case was submitted to the court upon printed briefs and points by

      Ashur P. Nichols, for the appellant.
    No one appearing for the respondent.
   Denio, Ch. J., Davies, Wright, Gould and Smith, Js., were for affirming the judgment.

Their reasons were not put in writing. Those of the court below were delivered by Masten, J., as follows:

The defendant contends that the plaintiff’s organization is defective, because the'affidavit' annexed to the articles of association does not contain the allegation required by the statute, “ that it is intended in good faith to construct or to maintain and operate the road mentioned in the articles of association,” and that it is not therefore a corporation. The articles of association are in due form, and the affidavit annexed to them, while it does not come up to- the requirement of the statute in the particular specified, is colorable. The articles and affidavit were filed and recorded in the office of the secretary of state; the capital stock was subscribed and partly paid in; the route of the road was surveyed, and located; the right of way obtained; a contract for the construction of the whole road •entered into and liabilities incurred which have not been satisfied. This was sufficient to constitute the plaintiff a corporation' de facto, so that neither it nor its stockholders can object that it is not strictly a corporation de jure.

I am of the opinion that, under this and similar general acts for the formation of corporations, if the papers filed, by which the corporation is sought to be created, are colorable, but so defective that, in a proceeding on the part of the State against it, it would for that reason be dissolved, yet by acts of user under such an organization it becomes a corporation de facto, and no advantage can be taken of such defect in its constitution, collaterally, by any person.

Any other rule, it seems to me, must be fraught with serious consequences and great public mischief. Most of the persons who subscribe in good faith for the stock, do not examine to see whether all the requirements of the statute in the organization of the corporation have been complied with; and if they did examine would not probably discover a defect like the one now pointed out. The stock is sold in market from hand to hand without any such examination. The corporation may carry on its business for years, and its stock have entirely changed hands, when its property may be destroyed by a trespasser, and in an action against him in the name of the corporation his only defence, “you are not legally a corporation by reason of a defect in your constitution,” would (upon the doctrine contended for by the defendant) be successful. The doctrine of estoppel could not be applied in that case, as it has been in some cases, to counteract an erroneous decision upon the question now before me.

I am aware that there are decisions in the Supreme Court, beginning with The First Baptist Society v. Rapalee (16 Wend., 605), upon the point now presented to us, in conflict with the opinion I have here expressed. Their error is, in not recognizing the distinction between what is sufficient to constitute a corporation de facto and what is necessary to constitute one de jure, and how and by whom a corporation de facto may be shown not to be a corporation de jure. The State alone can takel advantage of a defect in the constitution of a corporation like] the one in this case. In its action it will be governed by public policy and considerations. And it has declared that it will not take advantage of the defect in the plaintiff’s constitution. I think the Court of Appeals has settled the principle as I have stated it. (Eaton v. Aspinwall, 19 N. Y., 119.)

Allen, J., (dissenting.)

The plaintiff’s right to recover must, I think, depend upon the validity and sufficiency of the proceedings for their incorporation under the general act of 1850. The question is upon the validity of the contract alleged to have been made by the intestate by his subscription on the 8th of June, 1853; and the tests of its validity must be applied as of that date. There is no evidence that he did anything, after that time, recognizing the existence of the corporation, and up to that time there had been no user of the franchise which would estop any one from disputing the corporate existence of the plaintiff. All that had been done under the articles of association was, that the persons named as directors had come together and chosen from their number a president, secretary, treasurer and other officers. This was in no sense a user of any corporate-franchise extended to the body as a corporation by the laws of the State. By thus getting together, calling themselves a corporation and electing officers, they did not become a corporation quoad third persons and the people, so that their corporate existence could only be questioned by the Attorney-General upon a quo warranto. Had they, on the 2d day of June, 1853, brought an action as a corporation, no one would claim that this formal election of officers was such a user of a corporate franchise as to constitute them a corporation de facto. And yet that was all there was when the plaintiff subscribed; and if they w:ere not then a corporation, either de jure or de facto, the contract was invalid, and the subsequent acquisition by the plaintiff of certain corporate rights, as against third persons and the public, by usurpation, could not inure by relation to establish a contract against an individual having no subsequent concern or 'dealing with the Company. A single act in the exercise of the franchise ■ claimed would not be a user, within the rule that makes a user evidence of corporate existence; still less is the preparation to enter upon the user sufficient to establish the existence of a corporation. The user of a corporate franchise has never, so far as cases have come to my notice, been relied upon or regarded as evidence of corporate existence in actions up*n subscriptions to the capital stock. Indeed it could not be, for the reason that contracts of that character are incident to the creation of the corporation. In some cases a person dealing with a corporation is estopped from denying its existence. (Angell & Ames on Corp., § 94.) But in this court, as well as in other courts, in actions upon subscriptions to the capital stock, the question of the creation and existence of the corporation has been regarded as an open question, and the subscriber has not been concluded by his subscription. The questions made in the cases that have been before this court would have been very easily disposed of, had the doctrine of estoppel been deemed applicable; and the fact that the proceedings for the incorporation have been- examined and cases disposed of upon the merits, is very high evidence that the subscriber is at liberty to controvert the existence of the corporation. (Eastern Plankroad Co. v. Vaughan, 14 N. Y., 546; Buff. and Pittsburgh R. R. Co. v. Hatch, 20 id., 157.) There is good reason why the party should not be held to have admitted the existence of the corporation by his subscription. The consideration of his undertaking is the shares of stock which he receives, or expects to receive, from the corporation. If the company has not been legally incorporated, the stock, as such, is of no value: it has no existence. He agrees to pay for what he cannot get, and hence his promise is nudum pactum. It was decided, in The First Baptist Society v. Rapalee (16 Wend., 605), thát a promise in writing to pay a certain sum to the trustees of a certain church did not estop the promisor from requiring proof, or, in other words, from denying the incorporation of the church. (Welland Canal Co. v. Hathaway, 8 Wend., 480; Central Turnpike Corporation v. Valentine, 10 Pick., 142; Proprietors of Norwich and Lowestaff Navigation v. Theobold, 1 Mood. & Malk., 151; Schenectady and Saratoga Plankroad Company v. Thatcher, 1 Kern., 102; Rensselaer and Washington Plankroad Co. v. Wetsel, 21 Barb., 56; Hamilton and Deansville Plankroad Co. v. Rice, 7 id., 157); all of which, with the exception of the first, were actions upon stock subscriptions, and in all of which th% question of the proper organization ánd incorporation of the plaintiff was made by the defendants and considered by the court. Valk v. Crandell (1 Sandf. Ch., 179,) was the case of a subscription intermediate an irregular organization of a banking association, by a certificate not in conformity with the statute, and a formal perfect organization by filing a certificate as required by law, and it was held that the subscription and the mortgage given as security were void. It does not need the citation of authority to the proposition that a party, seeking to avail himself of a special privilege or franchise under a statute, must bring himself strictly within the terms of the act, the benefit of which he seeks. The principle is elementary. The statute authorizing the creation of corporations, by the voluntary association of individuals for that purpose, must be strictly pursued. A compliance with the statute is a condition precedent to the existence of the corporation. No act required by the statute as a preliminary to the formation of the corporation can be omitted as non-essential. In The Eastern Plankroad Company v. Vaughan (supra), stress was laid upon the fact that the documents mentioned and called for by the statute contained all that was, in terms, required to be inserted in them; thus conceding that any departure from the statute, in omitting to comply with a positive requirement, would have been fatal. In Buffalo and Pittsburgh Railroad Company v. Hatch (supra), judgment was given for the plaintiff, for the reason that there was a substantial compliance with the statute in all respects; and the same remark applies to the case of The Schenectady and Saratoga Plankroad Company v. Thatcher. It is only on compliance with the provisions of this act that the articles of association may be filed in the office of the Secretary of State, and the associates become a corporation. (Laws of 1850, p. 211, § 1.) Section 2 of this act forbids the filing and recording of the articles of association and the incorporation of the associates, until there is indorsed upon or annexed to such articles an affidavit, made by at least three of the directors named in the articles, stating, among other things, that. “ it is intended in good faith to construct or to maintain and operate the road mentioned in such articles of association.” This is omitted in the affidavit filed with the plaintiff’s articles of association. The statute required some evidence of the good faith of the associates, and prescribed this as the evidence to be presented. When the legislature parted with their discretion and supervisory control in the matter of creating railroad corporations, it was fit and proper that the public should, so far as was practicable, be protected against fraudulent or speculative organizations under the general act, and hence the requirement of not only the subscription and payment of a given sum per mile of the proposed road, but an affidavit of the bona fide intent to carry into effect the object of the proposed corporation. The omission of this part of the required affidavit was fatal to the proceedings for the incorporation of the plaintiff. It was so regarded by the plaintiff and by' the legislature, and hence the act of 1858 was passed. That act legalized the acts of the corporation from the first, and to some extent and for some purposes gave them the saíne rights as against third persons and the public which they would have had if the proceedings for their incorporation in the first instance had been perfect and regular. But the act could not have a retroactive effect so as to give vitality to an executory contract with a stranger void in its inception, for the reason that there was no corporation capable of contracting. If the intestate was not bound by his promise when made, no subsequent act of the .legislature could'create a liability. The legislature can neither make nor unmaké contracts for parties. The Constitution, as well as the well defined limits of legislative power, aside from the express prohibition of the Constitution, forbid this.

The judgment should be reversed and a new trial granted, costs to abide event.

Sutherland, J., also dissented; Selden, J., expressed no opinion.

Judgment affirmed.


author: Davies, J.

text:
    Phelps v. McDonald.
    Where the Supreme Court, at general term, affirms a judgment, any finding of facts, contradictory or supplementary to that of the referee or judge who originally tried the case, is unauthorized and disregarded by this court.
    Accordingly, where a referee omitted to find anything in respect to the allegations of a counter-claim set up by the defendant, and the Supreme Court, at general term, affirming the judgment, found the facts stated in the counterclaim for the purpose of enabling the defendant to raise a question thereupon, this court declined to look into such supplementary finding.
    Appeal from the Supreme Court. In his answer the defendant set up a counter-claim, and on the trial evidence was given in support of and against it. The referee, in his finding of facts, made ^no statement in respect to the facts on which the counter-claim was founded. Judgment was rendered for the plaintiff, and was affirmed at general term, but the court at general term made a new statement of facts on which its judgment was founded, which included all the facts proved in respect to the counter-claim. This statement was, by stipulation of the parties, annexed to the judgment-roll, and was to form a part of the return and of the case, on which the appeal might be heard and determined in this court.

      George B. Dusinberry, for the appellant.

      Bangs & Summerfield, for the respondent.
   Davies, J.

This is an action upon a promissory note made by the defendant. The referee, before whom the action was tried, found, as matters of fact, that the defendant, on the 6th of December, 1855, for value received, promised by his certain note to pay C. L. & A. C. Burpees or bearer, one day from date, $320.24,' with use, at their office in Le Boy, and delivered the same to the payees: that before the transfer of said note, the defendant paid thereupon, on the 23d February, 1856, $100, which was indorsed on said note: that before the transfer, the defendant paid to the payees of the note the sum of $3, and that the interest thereon is 35 cents: that the note was transferred to the plaintiff, and that he was the owner and holder thereof. Judgment on this report was entered for the plaintiff, for the balance due on the note, which was affirmed at the general term. The defendant set up a counter-' claim, which, in the judgment of the referee, was not sustained by the evidence, and was therefore disallowed by him. The only question, therefore, which this appeal presents, is one of fact, and which, on appeal to this court, is not reviewable here, and in respect to which the appellant is precluded by the judgment of the Supreme Court. (Ingersoll v. Bostwick, 22 N. Y., 426.)

.Grant v. Morse (22 N. Y., 323), is a case like the present. There the defendants set up a counter-claim for damages sustained by them, and the referee did not specifically find upon the counter-claim, but found generally for the plaintiff. We then said that, to raise a question of law in this court, the facts must be explicitly found. The party appealing must make his case, and have it settled with such a statement of the facts as will necessarily show that the law is in his favor. If he does not, every intendment, not absolutely unreasonable in itself, will be against him. Judgments are not reversed in this court because the facts found by a referee or judge do not affirmatively sustain them: on the contrary, the judgments of subordinate courts are presumed to be right, unless it appear that a rule of law has been violated after assuming that the facts have been viewed in the most favorable light which the case will admit of. It was the privilege of the defendant, in procuring the referee to settle his. report, to require him to find upon all the issues one way or the other. If he refused so to do, no doubt the Supreme Court would have granted a new trial for that very reason; or if not, then an exception to such refusal might have been available in this court; but nothing of this kind appeared in the case of Grant v. Morse, neither does it appear in the present case, and we are therefore left to infer here, as we did there, that the general conclusion of the referee as contained in his report, did involve a finding by him, although not in terms expressed, upon all the material questions in issue.

We do not look at the finding, or statement of facts, made by the general term. It has no authority by the Code to make or find such statement. The facts must be found by the primary tribunal, the referee or the court which tried the action, without a jury, and such finding is conclusive upon this court when it is affirmed by the general term. And it is also conclusive in the case of a reversal by the general term, unless it be stated in the order of reversal that the judgment is reversed upon questions of fact.

The judgment appealed from must be affirmed, with costs.

All the judges concurring,

Judgment affirmed.


author: Denio, Ch. J.

text:
    Cross et al. v. Beard.
    Where there is an express contract about demurrage, the parties are held strictly to its terms, and, in general, no excuse is available for delay, though without the fault of the party, which is not stipulated in the eontrapt.
    In the absence, however, of express agreement, a contract is implied that the owner and consignee of goods will provide for discharging them in a reasonable time, to be ascertained by the jury from a consideration of all the circumstances.

      Held, accordingly, that the consignee of goods, to be discharged at his own wharf on Lake Ontario, was entitled to explain his delay in giving a berth to the ship, by proof that a break on the Erie canal, and a storm - on the lake, had caused an unusual number of vessels to be collected at his wharf just before the arrival of his goods.
    This action was brought in the Supreme Court for the recovery of damages alleged to have been sustained by the plaintiff, the owner of the schooner Forest, for the delay of the defendant in receiving a cargo of coals carried by that vessel from Oswego to Toronto, and which were shipped from the former port by the agents of the defendant and consigned to him at the last mentioned place. The defendant, who appeared to be a dealer in coals at Toronto, caused to be shipped on board the schooner, of which one of the plaintiffs was the master, about 266 tons of coal, with which the vessel sailed from Oswego on the 10th day of June, 1857, and she arrived at Toronto in the morning of the 12th day of the same month, which was on Friday, and was ready to commence unloading the cargo at about noon on that day; of which the defendant had notice. The defendant possessed a dock at which he desired the delivery to be made; but at the time when the Forest arrived, seven or eight other steamers laden with coal for the defendant were there, three of which were then lying at the dock and being unloaded; and this caused the delay in discharging the plaintiff’s vessel, as the defendant would not admit her to the wharf until the other vessels had discharged their cargoes. They were brought up to the wharf, and the cargoes discharged in the order in which they arrived at the port. The master of the plaintiff’s vessel requested that he should be allowed to unload at some other wharf, but this the defendant would not consent to, saying he did not wish his coal to be scattered about; upon which the master served a notice upon the defendant that he should claim demurrage if he was delayed in unloading. The Forest came up to the dock in her turn, on Monday evening, and commenced unloading, and finished discharging the coals on Wednesday evening.
    The bill of lading signed by the master at Oswego was given in evidence. It contained no stipulation as to the time to be allowed for discharging the cargo.
    The defendant’s counsel moved for a nonsuit, on the ground that an action for demurrage would not lie unless there was an express contract on the subject; and also that no action for the delay could be sustained if the vessel was discharged in its turn and with reasonable diligence. The judge denied the motion, and the defendant excepted.
    The defendant then offered to show that a break had occurred in the Erie canal, by reason of which a large amount of coal designed to pass by Buffalo was turned into the Oswego canal, and that that coal was loaded upon the plaintiff’s and other vessels at Oswego and dispatched for Toronto; that the vessels so dispatched formed a large fleet, and that, if they had arrived at Toronto in the same order as loaded, they would have been promptly discharged by the defendant, with his facilities ; but that, by reason of tempestuous and unfavorable ■weather, some were delayed and others accelerated, so that they came into Toronto in so crowded a fleet that it was impossible to discharge them at once, and that the defendant did discharge all the vessels in. their turn as fast as could be done, with all reasonable dispatch and in a reasonable time under the circumstances; and that the delay was not occasioned by the force of circumstances over which the defendant had control, but by a vis major ; and that the defendant had greater facilities than any other in Toronto for unloading, and sufficient for all ordinary circumstances. ■ The judge excluded the evidence upon the plaintiff’s objection, and the defendant excepted.
    A witness for the defendant testified that the usual time for discharging a cargo of coals from a vessel of the size of the Forest would be three days, at the usual working time at Toronto. The defendant gave evidence showing the size of his wharf.
    It appeared that a fair charge for the demurrage of the Forest would be thirty dollars per day.
    Some other questions of law were raised by the defendant’s counsel which were not insisted on here. The verdict was for the plaintiff for sixty dollars’ damages. The defendant appealed from the judgment of affirmance at the general term, where the opinion was delivered by Allen, J., now sitting in this court.

      Marsh & Webb, for the appellant.

      Grant & Allen, for the respondent.
   Denio, Ch. J.

The Supreme Court was plainly right in holding that the owner of a vessel is entitled to recover against one who has chartered it, or has shipped goods on board of it, for an unreasonable and improper delay in unloading the cargo, by which such owner has been for a time unjustly deprived of the use of his ship, or has otherwise suffered damages. The thorough examination which that question has received at the hands of our learned brother, who prepared the opinion of the Supreme Court, appears to have convinced the plaintiffs’ counsel; for the contrary position is not asserted in the printed argument submitted upon this appeal, though the point is understood to have been taken on the motion for a nonsuit made at the trial. Although there was not, in the agreement for carrying these coals, any stipulation as to the time to be allowed for discharging them at their port of destination, they were consigned to the defendant by his own agents, and he was as much bound to receive them within such time and in such a manner as not to embarrass or damnify the plaintiff in the enjoyment of the use of their vessel, as the plaintiff was to carry the cargo safely to the' port to which it was consigned. In every contract between these parties, where the performance by one of them presupposes some regular act to be done by the other party prior thereto, or contemporaneously, the neglect or refusal to perform such act not only dispenses with the obligation which the other was under to perform on his part, but, where the circumstances are such that, as in this case, a rescission of the contract will not afford an adequate remedy to the party who was ready to perform, he is entitled to a recompense against the delinquent party equal to the damages which such delinquency has caused him. The principle has often been applied to cases where the owner or shipper of goods has failed promptly to receive them at the port of delivery, so as to return the vessel to the general use of the owner in a reasonable time. The following authorities, most of which are commented on in the opinion of the Supreme Court, either expressly affirm this principle, or, taking it for granted, apply it to the solution of other questions. (Abbott on Shipping, 304; Horn v. Bensusan, 9 Car. & P., 709; Evans v. Foster, 1 Barn. & Ad., 118; Brouncker v. Scott, 4 Taunt., 1; Rodgers v. Forrester, 2 Camp., 483; Burmster v. Hodgson, id., 488; Hill v. Idle, 4 id., 327; Clendanial v. Tuckerman, 17 Barb., 184.)

But the question presented by this appeal requires a consideration of the excuses which the shipper of goods or the charterer of a vessel may setup to excuse a delay in discharging the cargo; and upon this part of the case I think there is a distinction which has been overlooked by the Supreme Court. It is usual in charter parties to insert an agreement that a specified number of days shall be allowed for loading and unloading, or for one of those operations, and that it shall be lawful for the freighter to detain the vessel for these purposes a further specified time on payment of a daily sum. (Abbott, p. 308.) A contract to the same effect is often inserted in the bill of lading where goods are sent in a general ship. (Harman v. Gandolph, Holt’s N. P., 95.) This delay, and the payment agreed upon, are called demurrage. Where the contract is thus precise, the shipper of the freight is held very strictly to its terms: thus, a municipal regulation of the port, prohibiting intercourse for a limited period, by means of which there was a delay in loading; a delay occasioned by frost, or by the prohibition of a foreign government to export the stipulated cargo, or by custom house restraints, or by unlawful seizure of some part of the cargo, do not relieve the shipper from the payment of demurrage. “ The merchant,” as Lord Ellenborough said of this subject, “is the adventurer who chalks out his voyage.” (Burmster v. Hodgson, 3 M. & C., 267; Abb., p. 360.) But the rule is somewhat different when no period of delay is fixed by the contract. There a reasonable time is implied, and this is to be determined upon by a regard to all the circumstances legitimately bearing upon the case; and it is a question for the jury. Thus, in Randal v. Lynch (2 Camp., 352), forty days for loading and unloading were allowed by the terms of the charter-party, and also five pounds per day for the next ten days of delay. Owing to the crowded state of the London docks, the sloop was detained beyond the forty days. Lord Ellenborough said that a person who hires a vessel detains her, if, at the end of the stipulated time, he does not restore her to the owner. He added that he was responsible for all the various vicissitudes which may prevent him from doing so; and he further said that he considered the dock company the defendant’s agents, and that the defendant was as much responsible for a delay arising from the want of a berth as if it had arisen from tempestuous weather or any other cause. It is obvious that these and a few other similar cases are based upon a consideration that the shipper, by fixing upon a number of days’ delay, becomes the insurer against casualties of the kind mentioned, which may prevent the loading or unloading within the specified time. He is not guilty of a breach of contract, however, if the vessel is detained a longer period than the days specified. He simply pays the additional sum according to the contract. The case is very different where there is no express contract, or, what is the same thing if no particular period of delay is bargained for in the contract. In such cases the defendant is not charged for the payment of a sum pursuant to the terms of a contract, but for general damages for the breach of his implied agreement. This involves a greater or less degree of delinquency, and it would, therefore, be unreasonable to hold the defendant responsible if he was able to show that it was in no respect his fault that there was a delay in loading or unloading the vessel.

The cases establish the existence of this rational distinction. In the case of Randal v. Lynch, we have just seen that a delay arising from the crowded state of the London docks was charged upon the charterer of the vessel, the charter-party having specifically fixed upon forty days for the time of loading and unloading, which was exceeded for the reason mentioned. Shortly afterwards the case of Rodgers v. Forrester was tried before the same judge. It was covenant on a charter-party for demurrage. The contract provided “that the said freighter should be allowed the usual and customary time to unload the said ship or vessel at her port of discharge.” The vessel was compelled to wait from the last day of August until the 20th of October, on account of the erowded state of the London docks, before the plaintiff could commence the unloading, and the cargo was not fully discharged until the 26th of that month. The defendant’s counsel relied on Randal v. Lynch, where the same excuse was held to be of no avail in a case in which a specified delay had been inserted in the charter-party. Lord Ellenborough: took the precise distinction I have suggested. In the case of Randal v. Lynch, he said, a specific period of forty days was fixed by the charter-party for loading and unloading the cargo. Here the stipulation is that the freighter shall be allowed the usual and customary time to unload the ship in'her port of discharge, which is the usual and customary time for a ship to unload a cargo of wines in the port of London, according to the evidence, where the ship gets a berth by rotation, and the wines can be discharged into the bonded warehouses.” * * * “I am, therefore, of opinion that the defendant has not broken the implied covenant arising from the terms of the charter-party, to unload the ship in the usual and customary time for that purpose at her port of discharge.” At a later period of the "same year the case of Burmster v. Hodgson (supra), came on to be tried-before Sir James Mansfield, Chief Justice of the Common Pleas. The defendant was the consignee of a cargo of brandy brought to London in a ship of which the plaintiff was master; but as the docks were extremely crowded, sixty-three days elapsed before she could be unloaded. The action was for compensation in the nature of demurrage from the time when the ship might have been unloaded until she was "completely discharged. There appears not to have been any express contract as to the time of unloading. The chief justice was of opinion that the case could not be distinguished from Rodgers v. Forrester. “ Here,” he said, “the law could only raise an implied promise to "do what was there stipulated for by express covenant, viz.: to discharge the ship in the usual and customary time for unloading such a cargo. That has been rigidly held to be the time within which a vessel can be unloaded in her turn into the bonded warehouses.”

I am of opinion that the present case falls within the reasons of the two nisi prius cases last mentioned, and that the doctrine which was established is reasonable and just in itself. If it be conceded that the defendant had a right to require that the coals should be" delivered upon his own dock, he was guilty of no fault or breach of contract in delaying the plaintiffs’ vessel until she could come up to the dock by taking her turn among the other vessels which were also waiting to be discharged, unless he was guilty of some fault in suffering such an accumulation of craft laden with cargo for himself for the same wharf at the same time. The evidence which the defendant offered respecting the storm, on the lake was addressed to that point, and I think it should have been received. It certainly sometimes happens that a crowd of vessels arrive at a marine or a lake port very near each other, owing to their having been held, back by a storm or by adverse winds. Whether, if that was the case in this instance, the defendant should be considered in fault in not providing means for unloading a greater number of vessels at one time, or whether under the actual circumstances, he ought to have engaged another wharf to receive the coals, were questions for the jury to determine. But it was a material feature of the case for the defendant to show, if he could, that it was not owing to any mismanagement of his, or of his agents or correspondents, that so many vessels were at the port laden with his property and ready to be discharged at the same time. That, it seems to me, he offered to do; but the evidence was ruled out. We think the judgment should be reversed on account of this error, and that a new trial should be awarded. We do not perceive any error in the denial of the motion for a nonsuit, because, in our view of the case, there were still questions for the jury to pass upon, namely, those which have just been mentioned.

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

Judgment reversed, and new trial ordered.


author: Gould, J. Wright, J.

text:
    The Ætna Insurance Company v. Aldrich et al.

    The act of Congress of July 29, 1850, for the recording in a collector’s office of mortgages of vessels, does not supersede a State law requiring the record of such mortgage with a State officer as the condition of its validity against third persons.

      Held, accordingly, that the mortgage of a vessel recorded in the collector’s office at Chicago, where the parties resided, was void as against a creditor in this State, because not recorded as required by the law of Ulinois.
    Appeal from a judgment of the Superior Court of Buffalo, on a case made and submitted under section 872 of the Code of Procedure. The defendants were the owners of the schooner Stella, and on the 4th February, 1856, conveyed her to one Jacobs, who, on the same day, executed to the defendants a chattel mortgage upon the vessel to secure the payment of $6,000 of the purchase money, conditioned to pay this sum in various installments. The vessel was at this time in Chicago, in the State of Illinois, and the sale was made and the mortgage executed at Chicago, which was the domicil of the mortgagor and mortgagees.
    On the day of its execution, the mortgage was recorded in the office of the collector of customs for the port and district of Chicago, in compliance with the act of Congress, to “ provide for the recording of the conveyances of vessels and for other purposes,” passed July 29, 1850. The schooner was enrolled at this time in that office. Jacobs, the mortgagor, remained in the possession of the schooner until she was attached in an action at the suit of the respondents. The mortgage was never acknowledged as required by the first and second sections of the statute of Illinois, hereafter mentioned, nor recorded elsewhere than in the office of the collector of customs, nor was any copy of it filed anywhere. At the time the mortgage was executed, there was, and ever since has been in force, a statute of the State of Illinois, the three first sections of which are as follows:
    “ § 1. No mortgage on personal property shall be valid as against the rights and interest of any third person or persons unless possession of such personal property shall be delivered to, and remain with, the mortgagee, or the said mortgage be acknowledged and recorded, as hereinafter directed.
    “ § 2. Any mortgagor of personal propetty may acknowledge such mortgage before any justice of the peace in the justices’’ district in which he may reside, and the said justice shall certify the same as follows: [giving the form of certificate] and the said justice shall also keep on his docket a memorandum of the same in substance as follows: [giving the form of memorandum.]

      “ § 3. Any mortgage of personal property so certified shall be admitted to record by the recorder of the county in which the mortgagor shall reside at the time when the same is made, acknowledged and recorded; and shall thereupon, if Iona fide, be good and valid from the time it is so recorded for a space of time riot exceeding two years, notwithstanding the property mortgaged or conveyed by deed of trust may be left in the possession of the mortgagor, provided that such conveyance shall provide for the possession of the property so to remain with the mortgagor.”
    The plaintiff commenced an action in the Superior Court of Buffalo against Jacobs, on a promissory note for $475, and he being a non-resident of this State, the plaintiff in such action procured an attachment pursuant to the Code of Procedure, under which the sheriff levied upon the vessel on the 11th December, 1856. During all this time the schooner was a vessel of the United States, enrolled and licensed for the coasting trade, and was engaged in the business of commerce and navigation between ports and places in different States and territories of the United States upon the northwestern lakes and the waters connecting the same.
    The question of difference submitted on the case was, whether the mortgage was valid or void as to the lien acquired by the respondent under its attachment.
    At the request of the defendants, and on their promise to pay the amount of the note and interest, and the costs of the attachment suit, in the event of the court deciding the question in favor of the respondent, the respondent released the vessel from the operation of the attachment.
    The parties stipulated, in the case submitted, that if the court should decide in favor of the respondent, judgment should be rendered in its favor for the amount of the note and interest thereon, with the costs of the attachment suit and of this controversy ; and in case the court decided in favor of the appellants, then judgment was to be given against the respondent for the costs of the action.

      The case states that $500 of the purchase money of the vessel was due and unpaid on the 1st October, 1856. There was a provision in the mortgage to the effect that if default should be made in the payment of the several notes secured by the mortgage, or if the mortgagees should at any time deem themselves in danger of losing their debt or any part thereof by delaying its collection until the expiration of the time limited for the payment, the mortgagees were authorized to take possession of the vessel, and to sell the same to satisfy the debt and reasonable expenses, on giving thirty days’ notice of such sale in a newspaper published in Chicago.
    The Superior Court decided in favor of the plaintiff below, and directed judgment, in accordance with the submission, for the sum of $659.69. • From this judgment the defendants below appealed.

      B. H. Austin, Jr., for the appellants.

      John Ganson, for the respondent.
   Gould, J.

While there can be no doubt that the United States Government has the power to pass all laws for regulating the transfer of the title of enrolled vessels, as part of its supervisory power over the nationality of such vessels, and while that government may properly require the recording of a mortgage of a vessel, because it is a transfer of the title, there seems no reason why, in regard to vessels any more than any other chattels, the rules of evidence in the State tribunals should be regulated by acts of Congress. As to a purchaser of a vessel, it may be that, as he necessarily is referred to the-certificate of enrollment, as part of the seller’s title, he is thus put in the way of finding out, at the office where such enrollment was made, whether there be any mortgage of the vessel there recorded. And in this way he (though in a different State from the office) may be held bound by such record, as one of which he either had, or was bound to have, actual notice. This would, however, be but an incidental effect of the statute, and if that effect, and no other, were the object of the law, that object could hardly be deemed within the jurisdiction of Congress. It certainly need not be called so plainly within that jurisdiction as to make that exclusive of State jurisdiction. And such incidental effect should not be allowed to interfere with the law of a State, passed upon the same subject, for the very purpose of regulating the action of its own citizens and courts. And in the courts of any State, the citizens of another State stand upon the same footing, both as to person and property, as do its own citizens. This must be the rule for chattels, as well as for land. And parties who place personal property within the jurisdiction of any State, are as much bound by its laws in regard to that propérty, and any lien on, or right or title to it, as if it were land, and incapable of being moved into any other jurisdiction.

It is upon this principle that, “ whenever personal property is taken by arrest, attachment or execution, within a State, the title so acquired under the laws of a State is valid in every other State.” (Story Conflict of Laws, § 550; 3 T. R., 733; 9 Mass. Rep., 468; 19 N. Y., 224.) And if the plaintiff in this case, within this principle, under the laws of Mew York, by the attachment against Jacobs, acquired a valid lien on this vessel, the judgment below is to be affirmed.

By the laws of Illinois (as by the law of this State on the same subject), the mortgage of this vessel was valid between Jacobs and Aldrich; and if the latter, following the vessel to Buffalo, had then sought to enforce his title, there can be no doubt that our courts would have sustained him in so doing. But suppose (to avoid, for the present, all question as to the U. S. statute), the mortgaged property a horse, and that Jacobs had brought it to Buffalo and sold it to a Iona fide purchaser, would our courts sustain Aldrich’s title as against this purchaser ? To do so, they would be obliged to admit evidence of good faith (in the transaction between Jacobs and Aldrich), without having laid for such admission the foundation of notice in law, which, between our own citizens, our statute provides for in the filing and recording of the mortgage; and further, they would be obliged to call good here, an Illinois contract which is not good there. How far different would this be from holding a note, made and to be paid in Massachusetts, and reserving seven per cent interest, good here, though bad there ? For the validity of a contract, the lex bci contractus governs: the lex fori applies only to the enforcement of the remedy. Nor is it an answer to say that the contract is valid in Illinois for some purposes, that is, as between the parties to it; for, as to the parties litigant in our court (“ as against the rights and interests of any third parties”), the Hlinois statute says expressly it “ shall not le valid.” It is absolutely invalid as to any third person who takes the objection; and as to all such, it vested no title in Aldrich.

Applying this rulé to the case before us, leaves the mortgage in the same state of invalidity, as regards the rights of a mere creditor (as this plaintiff is), as if a purchaser were the contesting party; and though this is done in favor of a party who, being really entitled to take only what his debtor has in the property, has no equity as against the mortgagee. Still the law, for the purpose of preventing the fraudulent covering up of property, has seen fit so to extend the rule; and so the law is to be administered. The law is, in substance, that the mortgage having (as to third persons), no power to divest Jacobs of his title, he remains, as to them, with the title in him; and that title is reached by the attachment.

It is not necessary to pass upon the point, whether, in case of a chattel mortgage valid in Illinois by being there recorded, our courts would be bound to enforce, against a lona fide purchaser here, a title of which he not only, had no actual notice, but was really in no position to be charged with constructive notice. We simply hold that a mortgage of personal property is no better in this State than in the State in which it was executed, and of which the parties to it are citizens. The judgment of the Superior Court of Buffalo should be affirmed.

Wright, J.

The law of Hlinois is to govern as to the validity and effect of the defendant’s mortgage. The contract was made in that State, and if valid there, it is to be considered equally valid, and to be enforced here; and on the contrary, if it be void there, it is to be considered void in this State. The defendants have come into the State to defeat an interest of the plaintiff in the vessel acquired here, by a right claimed to have, been acquired by them under the laws of Illinois; and as the same policy, relative to mortgages on personal property, exists in Hew York that obtains in Illinois, there is no objection to treating the contract in Hew York in the sanie manner that it would be treated in Illinois. Indeed, it is conceded by the defendant’s counsel that the law of lili-. nois, being the lex loci contractus, governs in regard to the interpretation of the mortgage; and if the Illinois statute in respect to chattel 'mortgages was in force, as regarded the’ schooner, when the. mortgage was executed, the defendants must fail, for they have not complied with its provisions.

The statute of Illinois declares that “ no mortgage on personal property shall be valid against the rights and interests of any third person or persons, unless possession of such per ■ sonal property shall be delivered to and remain with the mortgagee, or the said mortgage be acknowledged and recorded,” as provided in the statute. In this case, there was neither a delivery of the vessel to' the mortgagee, nor an acknowledgment or recording of the mortgage; and it was therefore void as to the rights and interests of third persons. If this statute was operative where the property mortgaged was an enrolled vessel of the United States, licensed and engaged in the coasting trade, the mortgage, as against the plaintiff, would be invalid. The obvious purpose of the statute (like a kindred one of our own), was to prevent fraudulent conveyances. It is urged, however, that it is in conflict with the act of Congress of July 29, 1850, entitled “an act to provide for the recording of the conveyances of vessels, and for other purposesand as the latter act was passed in pursuance of a clear authority under the United States Constitution, it is the supreme law of the land, and any law of a State in conflict with it is inoperative and void. There is no doubt of the soundness of the general principle that if Congress have the constitutional and exclusive power to regulate a particular subject, and they have exercised the power in a particular -manner, and in a certain form, State legislatures have no right to interfere and prescribe additional regulations, or what they may deem auxiliary provisions for the same purpose. If the power be lodged exclusively in Congress, and it has been exercised, the proposition that the States cannot interfere, even by way of additional legislation, to further the same purposes, requires no argument. The power of the legislature, and the purpose and intention of a particular statute, are, however, questions for the courts; and it is the duty of judicial tribunals to so construe statutes as to give them force and effect, and, if possible, to avoid conflict.- The question under consideration is of importance; for if the Illinois statute be in conflict with the act of 1850, and must yield in reference to mortgaged vessels engaged in foreign commerce or among the several States, the same fate awaits our own statute of frauds. Prior to the act of 1850, no doubt was ever expressed as to the applicability of our statute to a vessel of the United States, and I am not aware that any case has arisen since the passage of the act in which it has been questioned. (White v. Cole, 24 Wend., 116.)

The defendant’s mortgage was recorded in the office of the collector of customs at Chicago, where the schooner was enrolled, and not elsewhere. The first section of the act of Congress declares “ that no bill of sale, mortgage, &c., of any vessel or part of any vessel of the United States, shall be valid against any person other .than the grantor or mortgagor, his heirs and devisees, and persons having actual notice thereof, unless such bill of sale, mortgage, &c., be recorded in the office of the collector of the customs where such vessel is registered or enrolled. (1 U. S. Stat. at Large, 440.) How it is contended by the defendant’s counsel that the intention and effect of the act is to determine the rights of third persons in regard to mortgaged vessels of the United States, or what shall be requisite to the validity of such a mortgage as against third persons; and as Congress had power to pass a law having the effect claimed, it was the law of Illinois — the lex loci contractus— which -was complied with by the defendants. The construction given by the defendants to the section, in effect, is that if the mortgage be recorded with the collector as prescribed, it shall not be necessary to comply with any of the statutes of the States, and if there be not a compliance with the statute of the State of Illinois, as in this instance, still the mortgage shall be valid against everybody. It is answered that the act was intended to prevent fraudulent conveyances of vessels of a national character, and to regulate the rights of owners as among themselves, or transfers as between citizens and the rights of third parties. I am not inclined to consider this the purpose of Congress in the passage of the act, or that such is its effect. This was certainly not the purpose and effect of the registry and enrollment acts of 1792 and 1793, to which it is evidently additional; for those acts were passed to apply between the government and the. owners of a certain class of vessels. (Larned v. Huntington, 15 John., 298; Sharp v. United States Insurance Co., 14 id., 201.) The act of 1850 was evidently not passed to prevent fraudulent conveyances ; for the moment a vessel ceases to be enrolled or registered the act ceases to apply, showing that the act was intended to regulate the vessel’s action in commerce and navigation. It has not the features of an act to prevent fraudulent conveyances. It does not apply to any vessels other than those which are enrolled or registered, and the enrollments and bills of sale of vessels under it are required to be so drawn as to specify “ the part of the vessel owned by the person selling, and the part conveyed to each person purchasing.” The act also requires the owner to swear as to his ownership (§5), and no proof of the due execution of the instrument transferring title is made a prerequisite to the recording of it, nor is the record or a certified copy of it made evidence of any fact, unless, probably, the fact of record simply.

I am of the opinion that the terms of the act of 1850 do not require us to adopt the defendant’s construction of it;' but that its requirements are only additional to those of the statutes of the States. It seems to me it was passed to apply between the government and the owners of a certain class of vessels. That its purpose was to secure a complete record in the office of the collector of customs of the title'to enrolled and registered vessels, and its object was not to regulate and control the transfer of property in" vessels generally, but to provide a custom house regulation which would better protect the government against violations of its revenue system, and enable its officers to enforce the rules relating to the national commerce. The recording of bills of sales, mortgages, &c., Of vessels registered or enrolled in the office of the collector of customs: the specifying the name of the vendor and vendee, their respective interests; the verification of these facts by the owner, are mere regulations to prevent abuse, and to enable the officers of the general'government to more successfully detect and guard against infractions of the laws regulating commerce with foreign nations and among the several States. By adopting this construction, both the act of Congress and the statutes of the several States will have force and effect, and conflict be avoided; whereas, if we regard the enactment of Congress as a statute of frauds, and thé exercise of a power to regulate the ownership, transfer and evidence of title of that species of personal property in an enrolled or registered vessel, there will be direct conflict, and one or the other must yield. It is, at least, doubtful whether Congress has any power to pass any law having the effect claimed for this act by the defendants; but regarding it as a mere commercial regulation, intending to apply only between the government and a certain class of vessels, the power is not doubtful. We are not, if it can be avoided, to adopt such a construction of a law as involves a doubtful exercise of legislative power in its passage.

I think, therefore,, that the act of Congress did not annul the Illinois statute, but that they may both stand and be harmonized, and force and effect given to both. The recording of the defendant’s mortgage, under and in compliance with the act of Congress, did not give such notice to the plaintiff as dispensed with a compliance with the statute of the State of Illinois, and such mortgage was consequently void as against the plaintiff.

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

All the judges concurring,

Judgment affirmed.


author: Gould, J.

text:
    Alden v. The New York Central Railroad Company.
    A common carrier is bound, absolutely and irrespective of negligence, to provide road-worthy vehicles. .

      Held, accordingly, that a railroad corporation was liable for injuries to a passenger, caused by a crack, in the iron axle of a car, although the defect could not have been discovered by any practicable mode of examination.
    Action for damages to a passenger on the defendant’s railroad, from the running off the track of the car in which he was riding. Upon the trial, it appeared that the accident was caused by the breaking of the axle of the car. It was extremely cold, and there had been an unusual severity and continuance of cold weather before the accident; which, it was proved, chrystalizes iron and renders it brittle. There was a small old crack in the axle, so covered by the wheel that it would have been impossible to discover it without taking the wheel off; and to replace it would require a power equivalent to twenty-five or thirty tons. Some of the witnesses, who were experts, testified that they knew of no way of discovering such a crack without destroying the axle. The defendant moved for a nonsuit on the ground that no negligence bn its part had been shown, which was denied and an exception taken. The defendant asked the court to charge that the care and diligence required of it by law did not require the taking off of the wheel to examine the axle before starting the car. The judge declined so to charge, and the defendant took an exception. The plaintiff had a verdict and judgment, which were affirmed at general term in the eighth district, and the defendant appealed.

      John L. Curtenius, for the appellant.

      Henry W. Rogers, for the respondent.
   Gould, J.

In regard to what has been called the negli. gence of railroad companies, in not providing safe axles for their cars, the only case in our own courts which professes to fix any rule, is that of Hegeman v. The Western Railroad Corporation (3 Kern., 9). The result of that case held, in substance, that the Company was responsible, both for the manufacturer’s possessing the requisite skill, and for his actual exercise of that skill in each particular axle—the judgment in that case being against the Company for negligence, in not having discovered a flaw in the axle, which could not have been discovered by any known trial after the axle came into the Company’s possession, but which might have been discovered by a process of bending, before it left the hands of the manufacturer.

But in that case the charge to the jury, at the circuit, held that, “in making the careful examination required by law, before the train started, the Company was not guilty of negligence, if it made all the examination which human skill and foresight could make without taking the machinery to pieces.” And in this court, the prevailing opinion says the Company “ is bound to use all precautions, as far as human care and foresight will go, for the safety of the passengers.”

In the case before us, so far as the defect in the axle (the hidden crack) is concerned, it is clearly, and without any contradiction, proved that it was absolutely out of the reach of discovery by any practicable examination of the axle, unless by taking off the wheel, with great difficulty and labor; that is, “ taking the machinery to pieces.” Tried by the Hegeman case, it would seem that this defendant could not be responsible for an injury caused, as the one sued for seems to have been, by that defect; as it is positively testified “that it •would not be safe to run at all an axle cracked as this was” found to have been on examination after the accident.

There has, however, always been something unsatisfactory in the decision of the Hegeman case, arising from the difficulty in finding anything to call negligence in the acts of the Company as there proved; and we can probably place the result of that case on a surer and more satisfactory ground, as well as fix a test of much easier application, by referring to another case. In Sharp v. Grey (9 Bing., 457; S. C., 2 M. & Scott, 621), the proprietor of a stage coach was sued for injuring a passenger by the overturning of his coach from the breaking of an axle. The axle was of iron, secured and strengthened by parallel wooden strips screwed on and around it; and before starting it was carefully examined, and showed no flaw. After the accident, it was examined, and it then appeared that it had been cracked for some time, but the crack was in such a place that it was not possible for any strictness of examination to find it, without taking off the wooden strips, the frequent taking off of which would have injured the axle, and rendered it less safe than it would be if those pieces of wood were left undisturbed.

Yet in that case a verdict of £500 was rendered against the defendant, and the court in banc refused to set it aside; holding, unanimously, (not that the defendant was guilty of any. negligence, but) that he must be held accountable, in every ^ event, to furnish a road-worthy coach; and that, if the event proved it not to have been so, he must suffer the consequences. And though this may seem a hard rule, it is probably the best that can be laid down; since it is plain and of easy application, and, when once established, is distinct notice to all parties of their duties and liabilities. And, practically, it will be likely to work no more' burdensome results to carriers of passengers than to leave them, with an uncertain criterion of responsibility, to the trouble and expense of strongly litigated contests before juries.

The judgment of the Supreme Court should be affirmed, notwithstanding there may, in strictness, have been an error in the refusal to charge (as requested), that the defendant was not bound to take off the wheel and examine the axle; since, by the rule now laid down, so charging would be entirely immaterial to the result.

All the judges concurring,

Judgment affirmed..


author: Sutherland, J.

text:
    Tallmadge et al. v. The East River Bank.
    The owner of land may, by parol contract with the purchasers of succes - sive parcels in respect to the manner of its improvement and occupation, affect the remaining parcels with an equity requiring them also to be occupied in conformity to- the general plan, which is binding upon a subsequent purchaser with notice of the fact, though his legal title be absolute and unrestricted.
    The owner of lots on both sides of a city street made a plan exhibiting the street as widened eight feet on each side, and represented to several vendees of different lots that all the buildings to be erected on the lots he had sold and should sell, should stand back eight feet from the line of the street. The vendees erected buildings in conformity with this plan; none of them being restricted by their conveyances or bound by any covenant in respect to the extent or their mode of occupation:

      Held, that a subsequent purchaser of one of the lots, with constructive notice of the facts, was not at liberty to build upon the eight feet adjoining the. street.
    The doctrine of dedication is, it seems, inapplicable to the case; the strip in front of each lot not being reserved to the grantor nor appropriated to public usfe.

      It seems that the uniformity of the position of the houses was sufficient alone to put the purchaser upon inquiry and charge him with notice: Per Sutherland, J.

      It seems, also, that the equity existing between the grantor and his grantees is mutual as between his grantees, without regard to priority of conveyance : Per Sutherland, J.
    Appeal from the Superior Court of the city of New York. Action to restrain the defendants, who owned the lot on the northeast corner of Eighth street and Third avenue in the city óf New York, from erecting a building thereon covering the whole lot, and to require them to leave a space of eight feet between the building and the line of the street, in conformity to the plan on which the dwellings of the plaintiffs and other proprietors of adjacent lots were located. From the pleadings, and the finding of the judge before whom the cause was tried, these facts appeared: In 1829, a strip of land, sixty feet in width from the Second to the Third avenue, was conveyed to the city of New York for the purposes of a public street. It was accepted by the city, and became a part of Eighth street, as it was then called. On and prior to February, 1831, and before any of the land had been built upon, one Davis became the owner of all the lots on both the sides of this street. Davis made a map of the street between the Second and Third avenues, in which the street was shown as seventy-six feet wide, eight feet being added on each side. He called the ayenue, thus widened, St. Mark’s Place. This was before he sold or built on any of the lots. Soon thereafter, in conformity with this plan, Davis erected sixteen dwelling-houses on the south side of the street, and thirteen on the north side. They were of a superior class, all upon one uniform line, eight feet back from the original line of the street—the eight feet being devoted to doorsteps and areas inclosed in iron fences. When Davis sold any of the houses or lots, he exhibited this plan to the purchasers, and represented to all who had purchased that the street was always to remain as laid out, and that, when he so formed and laid out the street and' built thereon, he gave, up and dedicated the strip of eight feet of land on each lot to be" used as a part of the Place in the manner it has since been used. It would appear that the effect of this plan of building was to save the sidewalk from the encroachment that it would otherwise have suffered from the projection of the doorsteps, and thus, in effect, to widen the available footpath. In October, 1832, after sales to the plaintiffs, Davis sold two lots to one Henriques. The conveyance, though absolute in form, appears to have been in the nature of a mere security—Davis retaining the right to dispose of the property and account for the proceeds. In 1833, he negotiated the sale of these lots to one Wilkes, showing to him the plan, or diagram before mentioned, and declaring his intention that the buildings to be erected thereon should be set back eight feet from the original line of the street. On one of these lots, which was on a corner, Wilkes erected a building, owned by the defendant at the time .of commencement of this suit, and which it was preparing to tear down. This building and two others erected by Wilkes were located in conformity to the line previously adopted and built upon by Davis. The deeds of Davis were absolute and unrestricted, conveying the legal title to the entire lots as bounded by the original jine of the street. One of the mesne conveyances under which the defendant derived title refers to a “certain court-yard .of eight feet in width” as included in the premises, and at the end of the habendum clause are the words, “subject to all restrictions and covenants, if any exist, in relation to keeping the court-yard perpetually open as said court-yard.” The defendant bought, it was found by the judge, with notice that it was claimed there were restrictions which would prevent it from acquiring a right, as purchaser of the lot, to build upon the eight feet described as court-yard.
    The judge found, as a conclusion of law from these facts, that Davis had made a valid dedication of the eight feet of land on each side of the street, and that its validity is not-affected by the fact that it was made with the intention and understanding that the proprietors of lots should be at liberty to inclose eight feet as an area or court-yard. He ordered j udgment for the relief demanded in the complaint. The judgment was affirmed at general term, not on the ground of dedication, but on the ground that the original purchasers having verbally agreed to, and executed a plan for, the improvement of the Place, they were bound to adhere to it, and the defendant, purchasing with notice, took subject to the same equity. The defendant appealed to this court.

      William Allen Butler, for the appellant.

      Richard Mott, for the respondent.
   Sutherland, J.

It is very plain that this action could not be maintained on the ground that the strip of ground eight feet in width, which it was the purpose of the action to restrain the defendant from building on, had been dedicated to the public. The deeds from Davis to Henriques, and from Henriques to Wilkes, which.were deeds with full covenants, bound the lots on the original line of the street, sixty feet in width; thus including the strip of land in question. Usually, when land is dedicated to public use, the owner retains the legal title. Ho doubt there may be an express dedication by deed; but, as the public cannot be a grantee, or the grantees, when there is an express dedication by deed, the deed must be to an individual, or body corporate, capable of being a grantee, and of holding for the use of the public. ¡Neither of the deeds before mentioned declared any such public use or trust; and the covenants in the deeds would seem to be inconsistent with' an intention by such deeds to dedicate the strip of land to public use. The deeds from Davis to Maxwell, one of the plaintiffs, convey with full covenants to the street line, and. without any restriction, stipulation or dedication as to the eight feet. The making and exhibition of the map of St. Mark’s Place by Davis, showing an open space of seventy-six feet in width, that is, eight feet on both sides wider than the original street, was perfectly consistent with an intention on the part of Davis to appropriate these strips of eight feet in width, on both sides of the original street, to the private use of the occupiers of the lots on both sides of the street; and the case shows that these strips^ of eight feet on each side have been inclosed in court-yards, with iron railings. The judge who tried the case at special term did not find as a fact that these strips of eight feet in width had been used by the public. There is no fact found, or admitted by the pleadings, from which an acceptance by the public of any intended dedication can be inferred. It appears to me plain, then, that the judgment in this case cannot be affirmed on the ground of dedication.

But I think the action could be maintained, .and that the judgment below can be affirmed, on another principle.

From the facts found by the judge at special term, it appears that when the plaintiff Maxwell and others bought lots in St. Mark’s Place of Davis, they were shown the map or plan of St, Mark’s Place, showing that the houses on both sides of the Place were to be set back eight feet from the street, and that they bought on the assurance of Davis that that plan should be observed in building on the Place; that the strips of eight feet in width on both sides of- the street should not be built upon, but kept open. It is to be presumed that they would not have bought and paid their money except upon this assurance. It is to be presumed that, relying upon this assurance, they paid a larger price for the lots than otherwise they would have paid. Selling and conveying the lots under such circumstances and with such assurances, though verbal, bound Davis in equity and good conscience to use and dispose of all the remaining lots so that the assurances upon which Maxwell and others had bought their lots would be kept or fulfilled. This equity attached to the remaining lots, so that any one subsequently purchasing from Davis any one or more of the remaining lots, with notice of the equity as between Davis and Maxwell and others, the prior purchasers, would not stand in a different situation from Davis, but would be bound by that equity.

In Tulk v. Moxhay (11 Beav., 571), a covenant by the grantee of a piece of land to use it as a private square was enforced against a purchaser from the grantee with notice. The Lord Chancellor said the question was, not “whether the covenant ran with the land, but whether a party shall be permitted to use the land inconsistently with the contract entered into by his vendor, and with notice of which he purchased.” He then stat^ this principle as an answer to the question: “ If an equity^ttachedjco the property by the owner, no one purchasing with notice of that equity can stand in a different situation from the party from whom he purchased.” (See, also, Patching v. Dobbins, 1 Kay, 1; Cole v. Sims, id., 56; Rankin v. Huskinson, 4 Sim., 13; Watman v. Gibson, 9 id., 196; Schreaner v. Reed, 10 id., 9.)

In Hill v. Miller (3 Paige, 254), where M. had purchased land in a village adjoining a public street, and it was at the same time agreed between him and the vendor that a triangular piece of ground belonging to the vendor on the opposite side of the street should never be built upon, but should be deemed public property; and the vendor executed to M. a deed of the land sold, and a bond for the performance of the agreement as to the triangular piece of land, both instruments being duly proved and recorded; and H. afterwards purchased of M. the land opposite the triangular piece, after being informed by him of the privilege secured by the bond; it was held, that H. was entitled to the benefit of the easement, and that M. could not, without his consent, be permitted to make a new arrangement with the holders of the legal estate in the triangular piece of land, by which buildings should be erected thereon.

In Barrow v. Richard (8 Paige, 351), where the owner of a block of ground in t4e city of New York divided it into lots, and sold the lots from time to time to different individuals, and the conveyances of the lots contained mutual covenants between the grantor-and grantees respectively against the erection of any livery stable, slaughter house, glue factory, &c., upon any part of the lots conveyed, or the carrying on of any manufactory, trade or business, which might be in anywise offensive to the neighboring inhabitants; it was held that the covenants in the deeds of the different lots wer.e for the mutual benefit of all the purchasers of lots on the block; and that, although a previous purchaser from the owner of the block could not sue at law upon the covenant in the deed to a subsequent purchaser, the Court of Chancery might protect him by injunction against the carrying on of any noxious business or trade upon the lot of such subsequent-purchaser.

The plaintiff, Maxwell, in the principal case, bought two of the lots on St. Mark’s Place, on which first-class dwelling-houses had been erected by Davis, according to the map or plan of St. Mark’s Place, made and exhibited by him (the houses being set back eight feet from the street), on the 13th day. of January, 1832, that being the date of Maxwell’s deed. The facts found by the judge at special term, and the facts admitted by the pleadings, show that these lots were bought by Maxwell upon the assurance or agreement of Davis that all the houses on the Place, as shown on the map, were to be set back eight feet from the street, leaving the open space between the houses seventy-six feet in width.

The judge at special term found that on the 11th of October, 1832, Davis conveyed to Moses Henriques two lots on Third Avenue, at the northeast corner of Third Avenue and Eighth street (the strip of land of eight feet in width, which it was the object of this suit to restrain the defendant from building oh, being a part of the northeast corner lot), and a lot on Eighth - street, next easterly of the corner lots; that this deed was in the nature of a mortgage to secure the firm of Josephs & Co., of which Henriques was a member, for money loaned by the firm to Davis, Davis still retaining the ' right to dispose of the property, accounting to them for the same when sold; that on the 13th of February, 1833, Davis negotiated a sale of these lots to Edmund Wilkes, who on that day received a deed from Henriques and wife for the lots; that at the time Davis sold these lots to Wilkes, he showed Wilkes the diagram of the Place, and declared his intention to set the building back eight feet from the original line of the street; that when Wilkes built the corner building now owned by the defendant, and also two other houses east of it, he erected them all on the line designated by Davis, and in conformity with the .line of the other buildings previously erected by Davis on that street, carrying out the plan which Davis had previously formed of making St. Mark’s, Place a uniform street or Place of seventy-six feet in width.

The defeiidant holds through several mesne conyeyances from Wilkes. The defendant bought with notice that it was claimed that there were restrictions which would prevent the defendant from acquiring a right, as purchaser of the lots, to build upon the eight feet described as a court yard. . The uniformity of the position of all the houses on St. Mark’s Place was probably sufficient alone to put the defendant on inquiry. •

It is probable, that the equity arising from the circumstances and assurances under which the lots were sold and conveyed by Davis, was mutual, as between him and his grantees respectively; and hence, that it would be easy to show that the equity was mutual as between his grantees, without regard to priority of conveyances, so that the equity would or might exist in favor of a subsequent grantee against a prior grantee, as well as in favor of a prior grantee against a subsequent grantee, but it is unnecessary in this case to examine or decide that question.

The judgment of the Superior Court should be affirmed, with costs, on the ground of the equity in favor of the plaintiffs, as prior grantees, arising from the circumstances and assurances under which they took their conveyances and paid their money; which equity attaches to the remaining lots, and can and ought to be enforced against the defendant, taking with notice, or under circumstances equivalent to notice, of the equity in favor of the plaintiffs.

Seldem, J., did not sit in the case; all the other judges concurring,

Judgment affirmed.