author: Davis, P. J.: Daniels, J.:

text:
    MARX HARRIS, Respondent, v. THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES, Appellant.

      Policy of insurance —false statements —renewal of policy after forfeiture — Rescission of contract on account of fraud—when party must retwrn what has been received under.

    On the 1st of June, 1869, a policy for $8,000 was issued by the defendant, payable to the plaintiff, upon the life of his wife ; the policy provided that if any declaration contained in the application upon which the policy was issued, should be found false, then it should be null and void, and that, in case of a failure to pay the premiums at the times therein specified, the policy should cease and determine, and all payments made thereon should be forfeited to the company. The application, which was signed by the plaintiff and his wife,. stated, among other things, that she had never had rheumatism or disease of the heart.

      The premiums due September and December, 1869, and March, 1870, were not paid. In February, 1870, Mrs. Harris had a severe attack of inflammatory rheumatism, which resulted in disease of the heart, from which she died April third. On March 28th, 1870, plaintiff went to defendant’s office, tendered the premiums then due, and asked to have the policy renewed; he-stated that his wife was then in good health, and that she had not been sick , since she was examined for insurance, and signed a paper stating that she was then equally well, and in as good insurable condition as when examined. The defendant accepted the money, and gave a receipt continuing the policy in force until June 1, 1870. In an action upon the policy, Jield, that the legal effect of the agreement of March twenty-eighth was precisely equivalent to the taking out of a new policy upon the terms of the old one, the only difference being, that the representations as to the condition of the health of the assured should be regarded as repeated at that time with such modifications as the parties then made and accepted ; that as such representations were false, the policy became veid, and the premiums were forfeited to the defendant.
    A party who has been defrauded in the making of a contract, and who wishes, by an action at law, to avoid the contract for fraud and reinstate himself in the possession of the property parted with, or to recover its value before the maturity of the contract, must return, or offer to return, to the other party, before commencing his action, whatever he has received under the contract, unless it be of such a character that its return at the trial, or in the progress of the suit, will leave such party in as good condition as the return or offer before suit would have done.
    Where, however, the party who has been guilty of the fraud brings an action to enforce the contract, the other party thereto need not return what he has received thereunder, but may set up such fraud as a complete or partial defense to the action.
    After the commencement of this action, the defendant served an offer to allow judgment to be taken against it, for the amount of the premium paid March twenty-eighth, with interest thereon, together with the costs of the action, which was refused. At the trial, the court held that the defendant should have dis-affirmed the contract of March twenty-eighth on discovering the fraud, and returned or offered to return the premium then received, and that, as they had failed so to do, they were liable on the policy.

      Eéld (1), that defendant was not obliged to rescind the contract, but might set up ■ the fraud as a defense thereto; (2), that even if a rescission of the contract was necessary, the offer of judgment made by the defendant was a sufficient compliance with the rule requiring a return of what had been received under the contract.
    Appeal from a judgment in favor of the plaintiff, entered upon a verdict directed by t^e court.

      George De Forest Lord, for the appellant.
    Even in cases where the rescinding party is plaintiff, restitution before suit is not insisted upon where justice can be otherwise secured. (Nellis v. Bradley, 1 Sandf., 560; Ladd v. Moore, 3 id., 589; Nichols v. Michael, 23 N. Y., 264; Fraschieris v. Henriques, 36 Barb., 276; Pearse v. Pettis, 47 id., 267, 282; Allerton v. Allerton, 50 N. Y., 670; Hawkins v. Appleby, 3 Sandf., 421; Anderson v. Sherwood, 56 Barb., 66.) It is a very noticeable fact, that almost every case in our reports, in which the rule requiring a return of the property received under the contract is laid down, is a case where the rescinding party was plaintiff. (Ash v. Putnam, 1 Hill, 302; Voorhees v. Earl, 2 id., 288; Masson v. Bovet, 1 Den., 69; Baker v. Robbins, 2 id., 136; Mattewan Co. v. Bentley, 13 Barb., 641; Wheaton v. Baker, 14 id., 594; Willis v. Bradley, 1 Sandf., 560; Ladd v. Moore, 3 id., 589; Nichols v. Michael, 23 N. Y., 364; Fraschieris v. Henriques, 36 Barb., 276; Pearse v. Pettis, 47 id., 267; Hinney v. Kiernan, 49 N. Y., 164; Cobb v. Hatfield, 46 id., 533.) But although the distinction never appears to have been drawn in any adjudicated case, there are reasons why the rule, requiring restitution to be made before commencement of the action, should not apply to cases where the defendant seeks to escape from liability on the ground of fraud, and why restitution at or before the trial should be sufficient in such a case. While a party seeking to rescind may choose his own time for commencing an action, so that he can always tender restitution before doing so, he cannot so control the time of an action being commenced against him. If, therefore, he must tender such restitution before suit, his rights and liabilities will depend only upon his advantages, speed or negligence. This should not be. While a party who becomes an actor upon the basis of the rescission of a contract should be required to do everything to establish his position before he claims any rights under it, the party who simply depends upon that ground should be entitled to put in his defense after the attack is made.

      A. B. Dyett, for the respondent.
    Never having offered to return the premiums, or rescind the contract by which the original , contract was brought into existence again, the defendants had made their choice to affirm the contract, and were liable upon the policy. (Hutcheons v. Johnson, 33 Barb., 392; McNeven v. Livingston, 17 Johns., 437; Bruce v. Davenport, 3 Keyes, 474; Wheaton v.Baker, 14 Barb., 594, and cases there cited.)
   Davis, P. J.:

On the 18th day of Hay, 1869, the plaintiff made application to the defendant for an assurance of §3,000 upon the life of his wife. His application stated, among other things, that she had not had any of a long list of diseases, among which rheumatism, disease of the heart, of the urinary organs, or of any vital part, were specified. Mrs. Harris was examined by the medical examiner of the defendant, and found to be in such condition of health that he approved of and recommended the assurance. The application was subscribed by both plaintiff and his wife, and contained a declaration that the answers to the questions contained therein, were fair and true, and an agreement on their part that the statements therein should form the basis of the contract for assurance, and that any untrue or fraudulent answers, or any suppression of facts in regard to her health, should render the policy null and void.

On the 1st day of June, 1869, a policy on this application was issued upon the life of Mrs. Harris for $3,000, payable to the plaintiff, in consideration of the premiums then paid, and of $26.16 payable quarterly, on or before the first days of September, December, March and June of each year. The policy states that it was issued and accepted by the assured upon the conditions and agreements indorsed thereon, among which were the following: “ If the declaration made by the applicant for this policy, or if any statement respecting the person or family of the person whose life is hereby assured, submitted by such person to this society, and upon the faith of which declaration or statement this policy is issued, shall be found in any respect untrue, then and' in every such case, this policy shall be null and void. And if the premiums as herein stipulated shall not be paid on or before the days herein mentioned for the payment thereof, at the office of the society in the city of Hew York * * * then, and in every such case, this society shall not be liable for the payment of the sum assured, or any part thereof, and this policy shall cease and determine.” In every case when this policy shall cease and determine, or become and be null and void, all payments thereon shall be forfeited to the society.”

The premium of $26.16, which fell due on the 1st day of September, 1869, was not paid; nor were either of the premiums paid, which would have become due on the first of December and the first of March. About the 1st of February, 1870, Mrs. Harris had a severe attack of inflammatory rheumatism. Her family physician was called in, and attended her almost daily through February and March until her death in April. He testified that she suffered a great deal until about the middle or twentieth of March, when she became so much improved that he had hopes of her recovery, but a few days afterward she was taken with symptoms very grave, which indicated trouble in the heart, and in the lungs, and in the kidneys, and he found it necessary to ask for a consulting physician, and mentioned to plaintiff that he would like to have Dr. Alonzo Clark to assist in the case. Dr. Clark was called in consultation, on the twentieth day of March, and he says that he regarded her case as a grave one, and feared that it would terminate fatally; that she was in bed, .gravely sick, which would appear to any one who came into the room, professional or unprofessional. He continued to attend her, making seven visits of consultation before her decease. On the twenty-eighth day of March the plaintiff went to the defendant’s office, and' applied to have the policy on his wife’s life restored. He stated, in answer to questions put to him by the defendant’s actuary, that his wife was then in good health, and had not been sick since she was examined for insurance, and signed a certificate which was prepared by that officer in these words :

Hew Yobk, March 28, 1870.

“ Mrs. Rachel Harris is now equally well, and in as good assurable condition as on May 18th, 1869, when examined for assurance under policy Ho. 43,788, not having been sick since that time.

“M. HARRIS.”

The actuary then authorized the receipt of the premiums, and plaintiff paid the same, amounting to $78.48, and received the following :

92 Broadway, Hew Yobk, Sept. 1, 1869.

Received $78.48, continuing in force policy number 43,788, on the life of Mrs. Rachel Harris, from the 1st day of September, 1869, to the 1st day of June, 1870.

“ S. H. PHILLIPS, Actuary.

T. D. Jordan, Cashier.”

Mrs. Harris died on the 3d day of April, 1870, of heart disease, acute pneumonia, and Bright’s disease or congestion of the kidneys, which her doctor attributes as the primary cause, to her attack of inflammatory rheumatism. Proofs of death were delivered to the defendant the latter part of April; among which was the affidavit of the attending physician, who stated that he attended Mrs. Harris during her last illness; that ,he was called about the 1st of February, 1870, and continued in attendance till the time of her death; that the immediate cause of her death was heart disease, its remote cause rheumatic affection, and that she had also disease of the kidneys and lungs. After the expiration of sixty days, and about the 1st of July, 1870, the defendants refusing to pay the amount insured, this action was brought. ' Afterward, and before answering, the defendants served an offer to allow judgment to be entered against them for the same amount' as the premiums paid on the twenty-eighth day of March, with interest from that day and costs.

After the evidence on both sides was closed, the court held that it was the duty of the defendants at the time of the discovery of the fraud, to have returned, or offered to return, the premiums paid March 28th, 1870, and to disaffirm the new contract; and that, “ never having offered to return the premiums by which the original contract was brought into existence again, the defendants offered no defense.” Upon this ground the court directed a verdict for the plaintiff for the full amount of the policy and interest. The defendants duly excepted. The fraud practiced by the plaintiff upon the defendants, as shown by the evidence, was a bold and gross one. The proofs of death furnished by plaintiff contained facts sufficient, as it is claimed, to inform defendants that the fraud had been committed. By the terms of the policy the sum insured would be payable at the end of sixty days after the delivery of such proofs, and the suit was not brought till a few days after the lapse of that period. It is claimed, and was substantially so held by the court below, that the defendants’ only remedy for such fraud lay in a rescission of the contract, by offering, before the suit was brought, to return the premiums paid on the twenty-eighth of March, and declaring the contract void; and not having done so, they had elected to affirm the contract, and were liable on the policy. The plaintiff testified that, after the expiration of the sixty days, he called for payment, which was refused, the president of the defendants saying, “ You will have.to sue us.” This, certainly, was no ratification in fact. It was notice to plaintiff that defendants had not ratified the contract; and 'the only question is, 'whether, under the circumstances, the omission to tender back the premiums had such legal force or effect that the right to assert the fraud in defense was wholly gone. The effect of the failure to pay premiums was expressly stipulated by the agreement of the parties. In that event, the policy was to cease and determine. The premiums paid only covered the risk for the expired period. There was, therefore, no existing contract between the parties on the twenty-eighth day of March. By the plaintiff’s own election the policy had ceased and determined.” It was not, therefore, the waiver of a forfeiture which he sought, for the refusal of which he could ask for relief in a court of equity or elsewhere, but for the reinstatement of an expired contract upon such terms as the parties should agree upon. In legal effect, this was precisely equivalent to the taking out a new policy upon the terms of the old one; the only difference being that the representations as to the condition of the health of the insured should be regarded as repeated at the date of the renewal, with such modifications as the parties then made and accepted, and the premiums presently paid and thereafter to be paid, instead of being at the large rate that the advance in age might require, should be the sums that would have' kept the policy in force, if the party had chosen to pay in accordance with the original contract. W e have therefore to look at the representation in writing made by the applicant for the renewal, on the twenty-eighth day of March, and incorporate it with the contract or renewed policy, so as to find the, real intention and agreement of the parties made at" that date. By it the plaintiff represents that Mrs. Harris is now equally well and in good assurable condition, as on May 18th, 1869, when examined for assurance under policy Ho. 43,788, hot having been sick since that time.” This distinctly refers to and adopts the medical examination which had been made on the eighteenth of May previous, and affirms that the condition of things therein stated is the same now. It affirms also all the representations as to the condition of Mrs. Harris’ health when the policy was first issued, as contained in the plaintiff’s application for assurance; and it attaches to the representations now made, the' same contract and consequences that were attached by the former agreement to the representations then made. The plaintiff by that contract agreed that the statements made should form the basis of the contract for assurance, and also that any untrue or fraudulent answer, or any suppression of facts in regard to the person’s health * * * will render the policy null and void, and forfeit all payments made thereon.” By the new contract he repeated those representations, with the addition of those contained in the written statement, and made them the basis of the renewed contract, with the same stipulated consequence for falsity and fraud in either.

The law works out the new contract in this form, not only in the interest of justice and right, but because that is the manifest intent of the parties, unless we assume that one of them was intending trickery and bad faith. The result is, that the plaintiff made it a part of the new contract, that if his representations of March twenty-eighth were untrue or fraudulent, the renewed policy should be void, and the premiumspaid should be forfeited; and he has no right to insist that the premiums shall be returned to him before his falsity and fraud' can be set up as a defense. There is, in such case, no necessity for rescission, but only for enforcement of the contract of the parties, as the latter gives not only a complete remedy against the contract, but the additional remedy of forfeiture of the premiums, which forfeiture the plaintiff has expressly agreed shall be the consequence of his own fraud. There seems to us no good reason to doubt that the defendants might stand securely upon this ground, if the jury found the plaintiff guilty of the alleged fraud. In that case the defendants have only to affirm, and not to disaffirm the real contract to make their defense complete.

But we are also of opinion that the application to this case of the principle governing the rescission of contracts was improperly made. The substance of that principle of law is, that a party who has been defrauded in the making of a contract, and who wishes by an action at law to avoid the contract for fraud, and reinstate himself in the possession of the property parted with, or to recover its value before maturity of the contract, must return, or offer to return to the other party before commencing his action, whatever he has received under the contract, unless it be of such a character that its return at the trial, or in the progress of the suit, will leave such party in as good condition as the return or offer before suit would have done. This is the rule where the innocent and injured party takes the offensive against the wrong-doer, to treat the contract as a nullity because of his fraud. But what is the rule where the guilty party becomes the actor, and seeks the fruits of his fraud by enforcing the contract against the injured party ? There is certainly good reason for saying that in the latter case the rule, if applicable at all, must be subject to serious modifications. The vendor of real or personal property, who, under the form of a contract, has been led by fraud to part with its possession, or with evidence of title, occupies a relation to the transaction very different from that of a purchaser who has been induced to buy by the fraud of his vendor.

The latter may use the fraud as a sword or shield without the rescission of the contract, and he may also rescind and take his remedy for the consideration parted with, by properly electing that remedy. He never, however, loses the shield when the fraudulent vendor assails him upon the contract, but may assert the fraud as a total or partial defense. That rule was asserted in Whitney v. Allaire, in which it was held that a lessee, by taking possession at the commencement of the term, and after having discovered the fraud, waives thereby only his right to rescind the contract, but not his right to recover his damages occasioned by the fraud. In that case the defendant was induced to make a contract, through the fraudulent representations of the plaintiff that the right mentioned in the lease comprehended a parcel of land, which in "fact belonged to the corporation of Hew York. The lease was for one year from the first day of May, at the rent of $1,000. The defendant discovered the fraud before the first of May, and obtained from the corporation a lease of that parcel, at an annual rent of $1,000. It was held, in an action for the rent, that the fraud was properly set up as a defense, and that the measure of damages was what the defendant had in good faith been obliged to pay to the corporation for the second lease, and a verdict for the defendant was sustained, In the same case, in the Supreme Court, Cowen, J., says: “ Once establish that in all matters of pecuniary dealings, in all matters of contract, a man has a legal right to demand that his neighbor shall be honest, and the consequence follows, viz.: If he be drawn into a contract by fraud, this is an injury actionable per se.

Indeed, it would not be difficult in all such cases to show the degree of actual damage. The time of the injured party has been consumed in doing a vain thing, or one comparatively vain ; and time is money. It would not be difficult to satisfy the more ancient and strict rule of the Year Book, viz.: “ That there must riot only be a- thing done amiss but also damage, either already fallen upon the party or else inevitable. ( Waters v. Freeman, Hob., 267.) Fraud is a thing grievously amiss, and above all, odious to the law; and fraud in a contract can hardly be conceived without being attended with damage in fact.”

When Whitney v. Allaire was before the Supreme Court after the second trial, the court said, Jewett, J., delivering the opinion (speaking of frauds perpetrated by the vendor): • “A return of the property to the vendor, or an offer to return, is in no case necessary, except to enable the vendee to withhold or recover back the price. * * * In all cases of fraud, the vendee, who alone has the right of disaffirmance, may remain silent, and bring his action to recover damages for the fraud, or may rely on it by way of defense to the action of the vendor, although there has been full acceptance by him, with knowledge of the defects of the property. An affirmance of the contract by the vendor, with such knowledge, merely extinguishes his right to rescind the sale. His other remedies remain unimpaired. The vendor can never complain that the vendee has not rescinded.” It is not easy to see why the principle of these eases is not applicable to the case under consideration. The plaintiff by a gross fraud induced the defendants to reinstate a contract, which had terminated by its express terms, on payment of a small sum of money. The,contract subjects the defendants to pay $3,000 ; for that sum the plaintiff sues. The defendants set up the fraud as a defense. Their right of action for the fraud is perfect, and the measure of their damages would be the amount of the obligation fraudulently obtained, less, perhaps, the premiums paid. But their right to defend is as complete as their, right to sue, and the measure of damages is the same. On what ground is that defense to be cut off? Certainly, not on the ground that a rescission was necessary, for that was only essential to a particular form of remedy. Certainly, not on the ground of ratification, for nothing of that kind can be predicated of a distinct refusal to pay the fraudulent obligation, followed almost immediately by a suit and a plea of the fraud in bar. It is not a case where the parties, after knowledge of fraud, have continued to receive subsequently accruing premiums, and thereby, in continuing the contract with knowledge, have estopped themselves from alleging the fraud. It is a case rather, where the relations have not been changed since the discovery of the fraud, and where it is absurd to suppose that, with knowledge of the fraud, and while refusing to . pay, the defendants meant to ratify an obligation for $3,000, by retaining seventy-eight dollars.

If the policy had been negotiable within the law merchant, and had been assigned by plaintiff to a bona fide holder, within the well established rule, an action would have been sustained against plaintiff at the time the fraud was discovered, in which the measure of damages would have been the amount of the assurance (less, perhaps, the premium paid).

And the only reason-that can be assigned why the action would not lie against plaintiff upon the same facts, at the same time and for the same amount of damages, is, that the defense to the policy would be perfect, and therefore there could be only nominal damages in such a suit.

But if it be true that a rescission was necessary in order to establish the defense, we are of opinion that sufficient was done to accomplish that purpose. This action was brought very speedily after the right of action accrued under the policy. A plaintiff, to rescind, has the opportunity to take the necessary steps before action, because the time of commencing suit is within his control. But even he need not offer to return, where what he has received is of such a nature that he can bring it into court and cancel or tender it, so as effectually to put the defendant in a position equally as good as an offer before suit could have done. In Ladd v. Moore, the plaintiff had received a note and money, but he was not required to bring in the money at the time of bringing in the note on the trial.

There is good reason for holding that a defendant who is sued by a party who has fraudulently obtained his obligation, is not held to any sharp rule of return, or offer to return, before suit brought. Such a rule would be Highly advantageous to sharpers, and severe oftentimes upon their victims. In such a case, if the suit be brought soon after the right of action accrues, it ought to be enough that the defendant offers to replace the party in the position in which he was when he committed his fraud. The defendants, before issue, offered judgment under the Code for the full amount of the premiums and interest, with costs ■ of the action. This was, under the circumstances, we think, a compliance with the spirit of the rule. It ought to be so Held, especially in a case where it is apparent that no offer would have been accepted whenever made. The rule itself was established to promote justice, and not to enable fraud to consummate its purposes. The application of it in this case in the strictness claimed, is to pervert the rule into a handmaid of iniquity. The judgment should be reversed, and a new trial ordered with costs to abide the event.

Daniels, J.:

I concur on the ground that the policy was void, on account of the fraud shown by the evidence.

Beady, J., concurred.

Judgment reversed and new trial granted, costs to abide event.

       1 Comstock, 305.

       See Allaire v. Whitney,1 Hill, 484.

       19 H. 6, 44, pl. 92.

         4 Denio, 554, 558, and cases there cited; and see Muller v. Eno, 4 Hernan, 597.

       Decker v. Matthews, 2 Kern., 313; Ingalls v. Lord, 1 Cow., 240.

       Decker v. Matthews, 2 Kernan, 313; Murray v. Burling, 10 J. R., 172; Evans v. Kymer, 1 Barn. & Adol., 528.

         Cases last cited.

       Ladd v. Moore, 3 Sandf., 589; Nichols v. Michael, 23 N. Y., 264


source: Caselaw Access Project

author: Davis, P. J.:

license: Public Domain

text:
    ABRAHAM HEWLETT, Appellant, v. SAMUEL WOOD and others, Respondents THE SAME, Appellant, v. THE SAME, Respondents.

      Ohap. 238 of 1853—issue of foot to he tried by jmy in cause determined at Special Term— Supreme Gov/rt—jurisdiction of—■Special Term cause not necessarrily an equity cause.

    In an action brought under the provisions of chapter 238 of 1853, the cause is properly determined by the court at Special Term, but with the aid of a verdict of a jury to settle the questions of fact necessary to establish the title at law.
    The Supreme Court, sitting at Special Term, has all the jurisdiction, both legal and equitable, conferred by the statute on the Court of Chancery and the former Supreme Court in proceedings for partition, and is to conduct the same, so far as they are applicable, in conformity with the provisions of the Revised Statutes. A case is not necessarily an equity cause because on the Special Term calendar, and if there be an issue of fact in the case, the court may send it to a jury either upon a settlement of special issues or on the pleadings.
    Appeal from an order directing that issues he settled to be tried by a jury at circuit, and from an order settling such issues.

      E. T. Sohenoh, for the appellants.

      Abraham WaJcemcm, for the respondents.
   Davis, P. J.:

The first of these appeals is from an order of the Special Term, directing that issues be settled to’he tried by a jury at circuit, and that the verdict of the jury thereon be certified to the Special Term for further proceedings in the action.

The second is from the settling of the issues upon the questions proposed by both parties. The action is brought under the provisions of chapter 238 of the Laws of 1853, which provide that heirs claiming by descent from an ancestor who died in possession, notwithstanding any' apparent devise, may, whether they be in possession or not, prosecute an action for partition, provided they shall allege and establish in such action that the apparent devise is void. The point made on the part of the appellants, is, that this action is one purely at law, in which all the issues joined by the pleadings go of course to the circuit for trial, there to be tried, and the whole controversy disposed of, as are ordinary issues at law; and that the Special Term of the court, as such, has no authority to try the action, or to make any order touching the issues therein.

We think this question ought to be regarded by us as res adjudicaba. In an action for the same purpose, brought by the same plaintiff against the same defendants, and in which the same issues were made by the pleadings, the trial was noticed for a Special Term of the second district. A motion was there1 made for the settlement of issues to be tried by a jury, and denied by the court. On appeal to the General Term, it was held, Taluott, J., delivering the opinion, that the motion should have been granted by the Special Term, and the court reversed the order and directed that issues be settled in the usual manner, and tried by a jury. This case, we think, must be regarded as settling that the action was properly on the Special Term calendar, to be disposed of by that court with the aid of a verdict of a jury to determine the questions of fact necessary to establish the title at law; and that the proceedings in partition, after such title should be established by a verdict, were properly to he conducted by the court sitting at Special Term. We think this view a correct one. All the powers conferred by the Eevised Statutes, in proceedings for the partition of lands, upon the Supreme Court, and upon the Court of Chancery, are now concentrated in the Supreme Court. The proceedings under the statute, when brought in the Supreme Court, were to be commenced by petition, to be presented to the court on some certain day in term,” and to be served forty days previous to such term,” on all the parties interested in the lands; upon which an order was to he made upon the parties interested to appear and show title, etc., and to answer the petition, and of the issues joined, if any were joined, they were to be tried as issues in personal actions, and after such trial the court was to ascertain from the verdict of the jury, and declare the rights, titles, and interests of the parties to such proceedings, and give judgment in partition according to such rights. By section 79, the same power, upon petition or bill filed in that court, was conferred upon the Court of Chancery to decree partition and sales of lands, etc.

The Code has repealed the provisions authorizing the proceeding by petition or bill, and substituted proceedings by action, and made all the provisions of the Revised Statutes relating to the partition of lands, applicable to actions for such partition brought under the Code, so far as the same can be so applied to the substance and subject-matter of the action, without regard to form.

The Supreme Court, sitting at Special Term, has therefore all the jurisdiction, both legal and equitable, conferred by the statute on the Court of Chancery and the former Supreme Court, in proceedings for partition, and is to conduct the same, so far as they are applicable, in conformity with the provisions of the Revised Statutes. It does not follow that such an action is a suit in equity because it is on the calendar and moved for hearing at the Special Term. It is before the Supreme Court, which may take such action as the condition of the pleadings and proceedings requires; and if there be issues of fact in the case, upon the result of which depends the title of any of the parties, it becomes the duty, and as I think, it is the right of the court, to send such issues to a trial by a jury either upon a settlement of special issues, or on the pleadings themselves; and, after the determination of that issue, to proceed in the action as provided by section 23 of the Revised Statutes.

The orders should be affirmed with ten dollars costs of each appeal.

Daniels and Beady, JJ., concurred.

Orders affirmed, with ten dollars costs.

       Session Laws of 1853, p. 526.

       Hewlett v. Wood, 8 N. Y. S. C. R. (1 Hun), 478.

       2 R. S., 316, title III, “ Of the partition of lands owned by several persons.”

      2 R. S., 317, § 1; 318, § 10; 319, § 13; 330, § 19; 331, § 33.

       2 R. S., 339.

         See Croghan v. Livingston, 17 N. Y., 225.

        Ubi supra.


text:
    WILLIAM G. LATHROP, Respondent, v. MARIE ALICE GODFREY and JOHN A. GODFREY, Impleaded, etc., Appellants.

      Answer—if not dem/wrred, to or stricken out as frivolous, informalities which could be cured by amendment, and variance in proof are not grounds for excluding evidence within its general scope — Foreclosure — set-off—Fraudulent assignment.

    When the plaintiff does not demur to the answer, nor move to strike it out as sham or frivolous, but suffers it to form an issue of fact which he brings on for trial, evidence, tending to establish a legal or equitable defense, cannot be excluded on account of informalities in the answer, or any defect that can be cured by amendment; or when, the evidence being within the general scope and object of the answer, the pleading can be made to conform to the proof, under section 173 of the Code.
    Whether the evidence is sufficient to accomplish the purpose of the party, is a question upon which he is entitled to the deliberation of-the court or a jury.
    The defendant in a mortgage foreclosure suit, who is personally liable for the debt, or whose land is bound by the lien of the mortgage, may introduce a set-off to reduce or extinguish the plaintiff’s claim, and may show that the plaintiff has received only a colorable and fraudulent assignment of the mortgage, and holds it for the benefit of one against whom such set-off exists.
    Appeal from a judgment, entered on a decision of the court at Special Term.

      B. W. Huntington, for the appellants.
    “ When there is fraud, the party deceived, on discovering the fraud, may rescind the contract; but if he does not do that, the contract on his part remains entire, not broken and not modified, and he is bound to perform it fully according to its terms; he has, however, arising from the fraud a distinct cause of action, the amount of which he may set off against any liability on his part, growing out of the transaction in which the fraud was perpetrated.” (Gillespie v. Torrance, 25 N. Y., 306.) There is a distinction in foreclosure suits between defenses by parties against whom personal claims are made, and those against whom such claims are not made. (National Fire Insurance Co. v. McKay, 21 N. Y., 191.) “An assignee of a mortgage takes it subject not only to any latent equities that exist in favor of the mortgagor, but also to the like equities in favor of third persons.” (Schafer v. Reilly, 7 Albany Law J., number dated April 12th, 1873, p. 230.) The fraud in the sale was none the less that of Mrs. Bramhall because committed by her husband, as her agent. (Baum v. Mullen, 47 N. Y., 577.) Striking out evidence, or refusing to receive it because the answer does not state a defense, is severely criticised. (Smith v. Countryman, 30 N. Y., 655.) Fraudulent misrepresentations in sales of real estate are a valid ground of recoupment. (Van Epps v. Harrison, 5 Hill, 63; cited and approved by the Court- of Appeals in 1 N. Y., 312; 25 id., 309; 30 id., 669.)
    /S'. B. Brownell, for the respondent.
    A defendant in a foreclosure suit cannot set up a counter-claim arising upon an independent tort; the alleged tort has no connection with the subject of the action. (Code, §§ 149, 150, 153.) The subject of the action is the cause of action, to wit, the foreclosure of the mortgage. The pretended counter-claim is in no wise connected with the mortgage or its foreclosure. (Chamboret v. Cagney, 2 Sweeney, 398; Moffat v. Van Doran, 4 Bosw., 609; Brown v. Buckingham, 21 How., 190; Gotter v. Babcock, 11 Abb., 392; Lawrence v. Bank of Republic, 35 N. Y., 320; reversing S. C., 3 Robt., 142.) -The pretended counter-claim is not against the plaintiff, but against other parties, arising a year or more after the assignment to the plaintiff of the mortgage in suit. The answer, so far as it attempts to set up such a counter-claim against the plaintiff, is frivolous. A grantee of mortgaged premises, subject to a mortgage, who assumes the^ payment as a part of the consideration or purchase-money, cannot set up any defense to the mortgage. (Freeman v. Auld, 45 N. Y., 50; Ricord v. Sanderson, 4 id., 179.)
   Davis, P. J.:

This action was brought to foreclose a mortgage, executed by the defendants Bramhall and wife to one William G. Lathrop, Jr., on the 11th of June, 1869, to secure $8,000, and alleged to have b.een assigned by the mortgagee to plaintiff, on the 19th day of June, 1869. On or about the 10th day of December, 1870, the mortgaged premises were sold and conveyed by the defendants Bramhall and wife to the defendant Marie Alice Godfrey, who. by the terms of the sale and, conveyance, assumed the payment of the mortgage in question as part of the purchase-money. In the answer of the appellants to the complaint, they put in issue the alleged assignment by Wm. G. Lathrop, Jr., to the plaintiff, and alleged that “ the plaintiff is collusively the holder of the mortgage for the purpose of hindering the said Marie Alice Godfrey in the recoupment of damages claimed by her,” as thereinafter set forth; and charged that the “ plaintiff’s holding of the mortgage is subject to the equities of the defendant Marie Alice Godfrey, against the said William G. Lathrop, Jr., and the defendant Bramhall,” as thereinafter set forth. The defendants, after setting forth other matters, alleged in substance, that Charles A. Bramhall, as agent of Maria A. Bramhall, his wife (who was owner of the premises), and the said William G. Lathrop, Jr., conspired and confederated to deceive and defraud the said Marie Alice Godfrey; and, to induce her to purchase the said premises, falsely and fraudulently represented to her that the house was built in good workmanlike manner ; that the cellar was a dry cellar; that the walls were dry walls and uncracked, and that the foundation walls were well and securely built, and the sewers and plumbing in complete order; that said Marie believed such representations to be true, and trusted in them, and was induced by them to purchase the premises ; that the contrary of each and every of such false and fraudulent representations was true ; and that by reason of the fraud and falsity of such representations, she was greatly injured; and by reason of the fraud and falsity of such representations, and by reason that said house was defective in each of the represented particulars, she was obliged to expend about $3,500 in repairs, to make said house inhabitable with safety to life and health, and lost the use of said house to the value of $2,000 while such repairs were going on; which damages she claimed to have applied on said mortgage, and that judgment should only be given for the balance. On the trial of the case, the plaintiff produced the mortgage and an assignment thereof to him; and, after proving the amount unpaid, with interest, rested. The defendants called a witness, “ and offered to prove the facts set up in the answer as the defense of the defendants, on the ground of fraud alleged by their answer.” The counsel for the plaintiff objected that the answer did not state any defense, and that the defense stated was entirely, inapplicable to the defendants. The court excluded the evidence, saying: “I exclude the evidence as not being a defense and because the answer does not state any defense.” The defendants duly excepted. The court directed judgment of foreclosure, and for deficiency, if any, against the defendants Bramhall, and the defendant Marie Alice Godfrey.

The plaintiff did not demur to the answer, nor move to strike it out as sham or frivolous; but suffered it to form an issue of fact which he brought on for trial at the Special Term. This was in accordance with the course indicated by Mullih, J., in his opinion in Smith v. Countryman, as one competent for the plaintiff to pursue. But where that course is taken, and on objection that the answer sets up no defense, all evidence is excluded, it must be clearly apparent that no evidence which could be properly admitted under the pleadings, would tend to establish any legal or equitable defense to the action. The evidence cannot be excluded on account of informalities in the answer, or any defect of pleading that could be cured by amendment on the trial, nor where the evidence being within the general scope and object of the answer, it would be in the power of the court to conform the pleading to the proofs under section 173, of the Code.

When evidence under the answer would tend to establish a legal or equitable defense, it should be received for consideration by the court or jury, because whether its tendency is sufficient to accomplish the purpose of the party, is a question upon which he is entitled to the deliberation of the court or jury with the evidence before them. The question then in this case, is, whether the defendants could properly have been permitted, under the issues, to have proved any facts tending to establish a defense, partial or total, upon which they would be legally entitled to claim the consideration and judgment of the court. Under the pleadings they would have been entitled to show that the mortgage had not been assigned to plaintiff, but still remained legally or equitably the property of William G. Lathrop, Jr.; that the assignment produced was collusive or colorable, and that plaintiff was holding the mortgage collusively for the purpose of hindering the said Marie Alice Godfrey in the recoupment of her damages. That the said William G. Lathrop, Jr., and the defendant Bramhall, conspired together to deceive and defraud Mrs. Godfrey, and induce her, by false and fraudulent representations, to purchase the premises and assume the payment of the mortgage as a personal liability, as part of the purchase-price of the property. That they (or either of them in pursuance of a conspiracy) made the several alleged representations, and that they were false and fraudulent, and she relied upon and was induced thereby to make the purchase and assume the mortgage, and that she suffered the alleged damages and the amount thereof; and of course all the incidents and circumstances of the transaction tending to show either of these things would be admissible in evidence. If the court, on receiving the evidence, had found favorably to the defendants, in respect to every fact it tended to prove, would there be any defense against the mortgage or bond, or personal covenant of Mrs. Godfrey to pay the mortgage as part of the purchase-money ? The bond and mortgage would, in that case, be found to be the property of William G. Lathrop, Jr., and that plaintiff held only a naked legal title with no real interest; and the personal obligation of Mrs. Godfrey would equitably be to the plaintiff in interest, and any defense of Mrs. Godfrey which she could interpose, if William G. Lathrop, Jr., were plaintiff on record, would be admissible against the present plaintiff. It. would be found also, that William G. Lathrop, Jr., the equitable owner of the mortgage, had conspired with the defendant Bramhall to commit the alleged fraud, and had made the fraudulent representations which induced Mrs. Godfrey to purchase, and by means thereof, had effected the sale to her, and obtained from her the covenant in the deed which makes her personally liable for the debt secured by the mortgage. The amount of her damages by means of the fraud, would also be found. We think in such case, under the authorities, the damages could be applied in this action toward the sum recoverable on the bond and mortgage, or at all events, upon the personal covenant of Mrs. Godfrey on which a judgment has been taken against her for any deficiency. If William G. Lathrop, Jr., conspired, as is alleged, to induce her to purchase the premises by false and fraudulent representations, and to induce her to assume, and agree to pay his bond and mortgage, he and his co-conspirators are all liable for the damages she has sustained; and the frauds which entitle her to such damages grew out of the transaction which connects her with the bond and mortgage, and entitles him to bring suit against her thereon. If he had sued her on the personal covenant at law, there seems to be no doubt of her right in such action to recoup for her damages. The right of a defendant in a foreclosure suit, who is personally liable for the debt, or whose land is bound by the lien, to introduce a set-off to reduce or extinguish the claims, was recognized by Comstock, J., in The National Fire Insurance Co. v. McKay; (and see Hunt v. Chapman ). The plaintiff did not, in his complaint, demand a personal judgment against Mrs. Godfrey, but having taken one on sufficient proof in his judgment, he is not at liberty to assert that he was pursuing no personal remedy against her. We think the learned justice erred in his ruling rejecting all evidence under the answer on the ground assigned by him.

Judgment reversed and new trial ordered, costs to abide event.

Daniels, J., concurred.

Judgment reversed and new trial ordered, costs to abide event.

      30 N. Y., 655, 676.

       Vassear v. Livingston, 3 Kern., 248; Isham v. Davidson, 52 N. Y., 237; Whitney v. Allaire, 4 Den., 554; S. C., 1 N. Y., 305.

       21 N. Y., 191.

         51 N. Y., 555.


author: Davis, P. J. :

text:
    BENJAMIN F. VOORHEES and others, Plaintiffs, v. CYRUS OLMSTEAD and others, Defendants.

      Warehouse receipt—difference in effect between delivery of the receipt and, of an order for it — bona fide purchaser for value — Estoppel—affirmative action by pa/rty claiming it, not essential to its creation..

    A party who advances money upon presentation to him of a warehouseman’s receipt, stands in the position of a bona fide purchaser for value of the property therein described; while one, who in good faith advances money upon an order for such receipt, under an executory arrangement of which the delivery of the receipt was to be the consummation and consideration, does not occupy the same position.
    If in the latter case the receipt is delivered upon presentation of the order, and no notice of the repudiation of the receipt is given until after the time has elapsed "within which, had such receipt not heen delivered, the money advanced upon the order might have been recovered back, such delay will operate as an estoppel, and preclude the party seeking to set aside the receipt from doing so.
    It is not necessary to an equitable estoppel that the party should willfully intend to mislead, nor that the party who claims the estoppel should have acted affirmatively upon it. It is enough if he has been induced thereby to refrain from such action as lay in his power, by which he might have retrieved his position and saved himself from loss.
    Exceptions ordered to be heard in the first instance at General Term. •

      Wm. W. McFarland, for the plaintiffs.
    The defendants the Warehouse and Security Company, who claim title to this cotton under a,pretended pledge by George E. Biddle & Co., acquire no color of title, under what is known as the factor’s act, or the act in relation to warehouse receipts. (6 Edmonds’ Statutes, 668; 4 id., 461; Yenni v. McNamee, 45 N. Y., 614.) The factor’s act obviously has nothing to do with the case, Biddle & Co. not being in any sense.factors or agents. The design was to protect parties, dealing with the holder of the receipt upon the belief of his ownership founded thereon, although in fact he might not be the owner of the property, and have no power or authority to incumber it. (Yenni v. McNamee, 45 N. Y., 614.) An intention not to transfer a title to Biddle & Co., and give credit for the price of the cotton for one instant of time, is clearly established by the testimony. The sale, being for cash, payable on delivery, no title would pass until the delivery was completed in every point, and the purchase-money paid, or its payment waived and credit given. And this is equally true, whether the possession of the property be retained by the seller or surrendered to the purchaser. (Kein v. Tupper, 52 N. Y., 550; Ballard v. Burgett, 40 id., 314; Hutchings v. Monger, 41 id., 155; McNeil v. The Tenth National Bank, 46 id., 325; Coghill v. Hfd. & N. H. R. R., 2 Gray, 545; Leighton v. Stevens, 1 App., 154; Churchill v. Bailey, 1 Ship., 64; Leighton v. Stevens, 9 Shep., 252; Comstock v. Smith, 10 id., 302; Luly v. Bundy, 9 N. H., 298; Maxwell v. Briggs, 17 Vt., 176; Bradley v. Arnold, 16 id., 382; Fairbanks v. Phelps, 22 Pick., 535; Dresser Man. Co. v. Waterston, 3 Met, 9; Lehigh v. Field, 8 Watts & Sarg., 232; McBride v. White Lead, Geo. Dals., part 1, 165; Bennett v. Sims, 1 Rice, 421; Bradshaw v. Thomas, 7 Yerger, 477; Reeves v. Harris, 1 Bailey, 563; Marston v. Baldwin, 17 Mass., 606; George v. Stubbs, 26 Maine, 243; Herring v. Willard, 2 Sandf. Sup. Ct., 418; Buckmaster v. Smith, 22 Vt., 409; Etty v. Aldrich, 46 W. H., 127; Annington v. Houston, 38 W., 448; 36 Mo., 479; Patton v. McCane, 15 B. Mon. [Ky.], 555; Acker v. Campbell, id., 372; Pond v. Bradley, 9 Gill & Johns., 220; Blanchard v. Child, 7 Gray, 155; Penbank v. Crooker, id., 158; Goodwin v. May, 23 Geo., 205; Diehon v. Bigelow, 8 Gray, 159; Cragin v. Coe, 29 Conn., 51; Plumer v. Stinly, 16 Ind., 480.)

      Joseph H. Choate, for the defendants.
   Davis, P. J. :

This action was brought to recover possession of 226 bales of cotton. The court at circuit directed a verdict for the defendants. We think the court did not err in the conclusion that the case was a proper one to be disposed of by directing a verdict. There was not sufficient evidence to have justified the jury in finding that the Warehouse and Security Company acted mala fide in the transaction. They were not shown to have had any participation in or knowledge of the alleged fraudulent acts of Biddle & Co., nor to have had any notice that should have put them on inquiry touching the same. There was no substantial dispute as to the facts of . the case. There was some conflicting evidence as to the time when the warehouse receipt was delivered to the company, but the court must be held to have assumed that such delivery was made after the weighing, etc., of the cotton was completed, on Saturday, which is in accordance with the plaintiffs’ evidence. The facts of the case are these: James Phelan was the owner, and had possession of 226 bales of cotton on store in the warehouse of Cyrus Olmstead, and for which he held Olmstead’s non-negotiable receipt. On the 22d of April, 1868, he contracted to sell the cotton to the plaintiffs Voorhees & Garrison, to be delivered and paid for in twenty days. On the next day, Voorhees & Garrison sold a half interest-in the cotton to the plaintiffs Solon W. Dewey and Solon W. Dewey, Jr., to be delivered and paid for in nineteen days; and the last named purchasers left their interest in the cotton with Yoorhees & Garrison for sale. On the second day of May, Yoorhees & Garrison sold the whole of the cotton to Biddle & Co., to be delivered and paid for within ten days. On the seventh of May, Biddle & Co. drew a delivery order for the cotton on Yoorhees & Garrison, and thereupon the latter firm made arrangements to commence the delivery of the cotton on the following morning. They sent a delivery order to Phelan, asking him to deliver the cotton to bearer, who gave an order on the warehouseman to the same effect. On the morning of the eighth the outdoor clerk of Yoorhees & Garrison attended at the warehouse, to receive delivery from Phelan, and make delivery to Biddle & Co. The receiver and sampler of Biddle & Co. was there, and the work of delivering the cotton commenced at about eleven o’clock of that" morning. The bales of cotton were weighed, and as they left the scales were sampled and marked, S. O., which was the cotton mark of Biddle & Co. It was the intention of Yoorhees & Garrison, that one delivery should operate for all; that is, as a delivery from Phelan to them, and from them of one-half to Dewey & Co., and of the whole to Biddle & Co.; and this course was in accordance With the usages of dealing in cotton. The cotton, as soon as delivered, was returned to the same warehouse, and stored for Biddle & Co. On the eighth day of May and while the delivery was in progress, Biddle & Co. applied to the Warehouse and Security Company for a loan on this and other cotton, amounting to some 353 bales, at the rate of twenty-five cents a pound. The invoice of the cotton was made out by them, describing it in substance as 350 bales in Olmstead’s warehouse, and three bales elsewhere ; and a contract was entered into for the loan of §44,000 on the cotton mentioned in the invoice. An order was drawn by Biddle & Co., on the warehouseman, Olmstead, to deliver to the Warehouse" and Security Company the receipt for 350 bales of cotton, stored with him for Biddle & Co., and on the same day the check of the Warehouse and Security Company on the National Bank of the Republic, for §44,000, was given to Biddle & Co., who deposited it to their own credit, in the National City Bank of New York. An agent of the Security Company was sent with the order to the warehouse, where he presented the order and called for the receipt; he was told by Olmstead that the cotton was then being turned over, and that.if he called the next day the receipt would be ready. One hundred bales of the cotton were weighed, sampled, and marked S. 0., on the eighth of May, and on the following day, which was Saturday, the weighing, sampling and marking were completed at about three o’clock in the afternoon. The whole of the 226 bales in question were weighed, sampled and marked; but seven bales of another lot, which would have made the 350, were rejected. On Saturday, Olmstead, before the delivery was completed, notified the clerk of Yoorhees & Garrison, that the receipt was called for by Biddle & Co. The clerk went to their store and told them of the request, and was directed to go back and tell Olmstead to “ give it to them, of course.” The clerk returned and directed Olmstead accordingly. In the course of the afternoon, and after the delivery was completed, Olmstead delivered to the agent of the Warehouse and Security Company a warehouse receipt acknowledging the receipt in store, from Biddle & Co., of 343 bales of cotton. This receipt was negotiable in form, and was immediately taken to the Security Company. On Saturday afternoon, but after business hours, Yoorhees& Garrison made out a bill for the 226 bales, and sent it to the office of Biddle & Co.; but no one being in, it was pushed under the door. On Monday following, they sent for the money, but were told, in substance, that it was not payable till the next day. According to the usages of business, the bill was payable on Tuesday, the twelfth. On sending to collect the bill on that day, they were told that Biddle & Co. had suspended payment, and that the Warehouse and Security Company had the receipt for the cotton. On the thirteenth they served notice on that company that the cotton had not been paid for, and that they claimed the same, and demanded its delivery to them. The company refused to deliver the cotton, claiming that they held it and were" entitled tó hold it, as security for the loan of $44,000. It appeared, also, that at the close of bauk hours, on the -eighth day of May, there appeared to the credit of Biddle & Co., on the books of the bank where they deposited the check of $44,000, a balance of $52,377; and on the evening of Saturday, the ninth, a balance of $31,878.96, which was drawn down on the eleventh, to $2,083.75, and on the thirteenth, to $448.18. On the thirteenth of Hay this suit was commenced to recover the property.

There can be no doubt upon this state of facts, that both the title and possession of the cotton remained in Phelan, until the delivery to Biddle & Go. was complete on the afternoon of Saturday, the ninth of May. On the completion of such delivery, the title and possession passed from Phelan, through Voorhees & Garrison, to Biddle & Co.; but, as the sale to the last named firm was for cash, payable • on delivery, according to the usages of the trade, the delivery and possession were, as between that firm and Voorhees & Garrison, conditional upon payment for- the cotton; as between them, the right of recaption clearly existed, on the discovery of the insolvency of 'the purchasers, on the twelfth day of May. The questions of the case are, therefore, whether the Warehouse and Security Company are entitled upon the facts to hold the cotton as security for the loan of $44,000, as bona fide purchasers fro tanto, or whether any such condition of things existed, that they are entitled, upon the doctrine of estoppel, to shut off the assertion of any superior right on the part of the plaintiffs.

There can be no doubt, we think, that the loan was intended to be, and was made by the company, upon the security of the cotton, and in the belief that the transaction would be consummated by the delivery of possession in the form of a warehouseman’s receipt, on the presentation of the order of Biddle & Co. It is true that the company intrusted their check to Biddle & Co. before receiving the warehouse receipt, but that fact, under the circumstances of the case, does not show that they intended to make a loan to be secured by a pledge thereafter to be made. Each successive step in the arrangement for the loan and security, to and including the receiving by the company of the warehouse receipt on Saturday afternoon, was part of a single transaction, carried on in apparent good faith, with a single object, to wit: the making of a loan, to be secured by the possession, and, so far as necessary, by the title of the cotton. As between the company and Biddle & Co., there could be no question of this; nor could there be any doubt, if Biddle & Co. had defeated the obtaining of the warehouseman’s receipt on Saturday, that the right of recaption of the check, or money, as against them, would have been complete, and, for the same reason, that the plaintiffs’ right to retake the cotton, on failure to pay for it, was perfect as between themselves and Biddle & Go. It is therefore not sound in law or in fact, to assert that the pledge of the cotton was made, at the time of the delivery of the warehouseman’s receipt, as security for a precedent debt. That delivery was the consummation of a transaction remaining inconsummate until that event; and that act was, as between the parties to the transaction, the perfecting of a pledge to secure a loan of which it was the consideration, and not a pledge to secure an antecedent indebtedness. But this view of the law and fact as between the parties to the loan, does not dispose of the question between the plaintiffs and the Warehouse and Security Company. As between them, the question is whether the latter parted with the money, or with some valuable thing, upon the delivery of the possession and apparent title of the 226 bales of cotton, under circumstances in which they can claim to be bona fide purchasers. On the eighth day of Hay, when Biddle & Co. applied for the loan, they had no title to the cotton, and no right to its possession; all they had was a contract for its purchase, and an order for its delivery upon such contract. They were at that time incapable of transferring anything more than they had. They could of course sell the cotton as their vendors had sold to them, but that would, in legal effect, only have given the right to acquire title and possession by doing what they and their vendors were bound to do. It would operate as the assignment of an executory contract of purchase of property of which Phelan was the owner in possession, subject to the right of the intermediate dealers through whom the title and possession were only obtainable. Biddle & Go. were not in possession of any documentary evidence of title. The company were not deceived by the exhibition of such apparent evidence. On the contrary, the papers given to them were notice that Biddle & Co. did not then possess such evidence. The invoice rose no higher than their personal assertion of title; while the order on the warehouseman for a receipt for the cotton was notice that the evidence of title had not yet been delivered to them. -It cannot therefore be said that the company was induced, on the eighth of Hay, to part with their money or check, upon anything higher than the assertion of Biddle & Co., that they owned the cotton and had a right to call for and receive a warehouseman’s receipt. We think it cannot be claimed, within any of the authorities, that on the eighth day of May, the Warehouse and Security Company had acquired any interest in the cotton that could be set up to affect the rights of the plaintiffs. The question then is, whether anything subsequently transpired to change their relations to the property, and entitle.them to assert a better right than they got on the delivery of their check to Biddle & Co. We have seen that as a part of an incomplete transaction between themselves and Biddle & Co., they were authorized to call for and receive a warehouse receipt for the cotton, which, if it had been presented and delivered to them when they gave their check, on the eighth, would have made them purchasers for value to the extent of their loan. They were to do this for the purpose of consummating the transaction with Biddle & Co., and as part of it, and not as a separate matter. When that order was presented, the company found the warehouseman upon whom it was drawn, in the act of making delivery of the cotton to Biddle & Co., under the order of Phelan, the owner, and the order of Yoorhees & Garrison to deliver to bearer.” Their agent was informed by the warehouseman, that the cotton was then being turned over, and told to come the next day and the receipt would be given. On the next day, and before the delivery was complete, the warehouseman informed the clerk of the plaintiffs that Biddle & Co. wanted the receipt for the cotton. The clerk immediately went to the plaintiffs and stated to them that Biddle & Co. wanted the receipt, and asked if it should be given. The reply was, “ certainly, give it .to him of course.” This answer was reported to the warehouseman, and, acting upon it, he, as soon as the delivery of the cotton was finished, gave to the agent of the Warehouse and Security Company, upon Biddle & Co.’s order, a receipt for the 343 bales of cotton; which included the 226 bales in question. Nothing was said about the form- of the receipt by plaintiff's, but their silence authorized the giving of a negotiable one, if in accordance with the usages of business. By this consent and act of the plaintiffs, the transaction of the loan upon the pledge of the cotton between the Security Company and Biddle & Co. became complete according to the intention of the parties, ánd no one can doubt that, if Biddle & Co. had paid for the qotton on Tuesday following, the Security Company could have held it against them and every one. This act is claimed to be a ratification on the part of the plaintiffs, of the arrangement to pledge the cotton made by Biddle & Co. But the idea of ratification necessarily implies knowledge of the subject-matter ratified, and as it does not appear that plaintiffs, when they directed the receipt to be given, knew of the loan and its condition, and of the order of Biddle & Co. to deliver the receipt under that contract, it cannot be maintained that the Warehouse and Security Company’s right to the cotton can stand on the ground of ratification. It is urged by the plaintiffs’ counsel, that, as the company had parted with their money on the eighth, they cannot be said to have been induced to do so by a receipt not in existence till the ninth. This position is well taken ; for although the check was given on an executory agreement, yet, as matter of fact, it was delivered to Biddle & Co., and by them put to their credit in bank, on the eighth, and at least twenty-four hours before the receipt was delivered. It is difficult therefore for the defendants to stand upon a claim of superior right to the cotton, as iona fide purchasers .for value. Whatever rights they have as against the plaintiffs, must rest upon another principle — the principle of estoppel in pais.

We have already seen, that if on Friday the eighth, when the company first called upon the warehouseman for a receipt for the cotton, it had' been refused, and they had been told that Biddle & Co. had no right to any receipt, the company would have been at liberty to have demanded their check from Biddle & Co., or to have pursued its proceeds then lying to their credit in bank, either on the ground of fraud, or of the non-performance of the condition on which the check was given. They were lulled into security by the statement of the warehouseman, that the receipt would be delivered on the following day, when the delivery of the cotton would be complete. For this statement the plaintiffs were probably not responsible; but there was no lack of vigilance on the part of the Warehouse and Security Company in waiting till the next day, and therefore their right to such remedy of recaption remained in full vigor on the ninth. On Saturday the plaintiffs, by their own voluntary act, caused the delivery of the receipt which the warehouseman gave on the order of Biddle & Co. This act the plaintiffs did with full knowledge that the cotton had not been paid for by Biddle & Co., and that, according to the usage of business, it was not to be paid for until the following Tuesday, the twelfth of May. It is apparent that they relied upon the responsibility and business integrity of Biddle & Co. They are chargeable with the negotiability of the receipt, because they imposed no limit as to its form, and the warehouseman did not exceed his authority in giving it in that form. It is no strained inference to say that plaintiffs probably acted upon the assumption that Biddle & Co. needed the receipt to raise' the money to pay for the cotton on the following Tuesday, and that they intended to give them the facility for so doing. But however that may be, they voluntarily armed that firm with an instrument which was the evidence of title and possession, and upon which any bona fide purchaser for value could have acquired a perfect title to the cotton as against them. Morally considered, there is but small difference between the party who might advance his money on presentation of that receipt, and the party that in good faith had before done'so upon an order for the receipt, under an executory arrangement of which the delivery of the receipt was at once the consummation and consideration. But, legally speaking, the difference rests upon a sound principle of commercial law, which, as the learned counsel for the plaintiffs says, “ goes by sight and not by faith ” (although faith is the basis of all commerce). The plaintiffs are therefore able to say to the defendants: You did not part with your money on the receipt we gave on Saturday, because you had already given it to Biddle & Go. on Friday. But did not the Security Company part with something, which, under the circumstances of this case, might have been of equal value to them; and have they not lost that, by the act of plaintiffs in giving the receipt, and their delay in notifying them of Biddle & Co.’s insolvency until the thirteenth of May, when its pursuit was hopeless ? If this question be answered in the affirmative, we do not see why the principle of equitable estoppel, already alluded to, does not step in to protect the defendants. It appears' that, on Friday, the credit which the deposit of the cheek of $44,000 gave to Biddle & Co. in their bank, was intact, as their Dalanee on that day was more than $50,000. It appears also, that on Saturday, and at the hour when the receipt was delivered, which was after the close of banking hours, the same account was in credit $31,878.96, which is a sum greater than the company had loaned on the security of the 226 bales of cotton, as the computation made in the invoice will show. This was a tangible indemnity, which, had not the receipt been given, the company could have seized by legal process, and which probably Biddle & Co. would voluntarily have returned, to have avoided arrest and prosecution for fraud. These were rights which the company possessed- and could have exercised to save themselves from loss, but which, as the case shows, were gone when the plaintiffs repudiated the receipt, on the thirteenth of May.

It is not necessary to an equitable estoppel; that the party should willfully intend to mislead, nor that the party who claims the estoppel shall have acted affirmatively upon it. It is enough if he have been induced thereby to refrain from such action as lay in his power, by which he might have retrieved his position and saved himself from loss. This question has been so ably and fully considered by the Court of Appeals, in the late case of The Continental National Bank v. The Bank of the Commonwealth , that its further discussion seems wholly unnecessary. That case and those cited in the opinion establish, as it seems to us, that a clear equitable estoppel arises upon the undisputed facts of this case against the plaintiffs and in favor of the defendants, because, by their voluntary act of delivering the warehouse receipt, they enabled Biddle & Co. to consummate the pledge in such form as apparently to give possession and title; and by that means, and by their neglect, the Warehouse and Security Company were deprived of valuable modes of redress, which men of ordinary prudence and diligence would have pursued. The plaintiffs did not ask to go to the jury upon any of the questions of fact upon which the estoppel arises; and, indeed, we think there was no conflict of evidence to carry the question to the jury, had such request been made. So far as the requests incidentally or argumentatively affect the question, through knowledge of the custom or the usage of dealing in cotton, they may be assumed as true, without changing the rights of the defendants. There is nothing, we think, in conflict with the views above expressed on the question of estoppel, in Taft v. Chapman in which the owner of the bonds had done no act invoking the application of the principle to him; nor in Barnard v. Campbell, which was decided distinctly upon the ground that the doctrine of estoppel had no foothold in the facts of the case. “ The defendants here,” says Allen, J., in that case, at no time had any statement or declaration of the plaintiff upon which to rely, and were not led to act, or to forbear to act, by any documentary evidence of title in Jeffries, emanating from them.” It would be difficult to say this with truth in the case before us.

We are of opinion that the motion for a new trial should be denied, and that the defendants should have judgment upon the verdict, with costs.

Present — Davis, P. J., Daniels and James, JJ.

James, J., dissented.

Ordered accordingly.

       Kein v. Tupper, 52 N. Y., 550, and cases there cited.

      50 N. Y., 575.

       50 N. Y., 445.

       55 N. Y., 456.

         Casco Bank v. Keene, 53 Maine, 103; Irving Bank v. Wetherald, 36 N. Y., 885; Delaware Bank v. Jarvis, 20 id., 226; St. John v. Roberts, 31 id., 441; Brown v. Montgomery, 20 id., 287; Knights v. Wiffen, L. R. (5 Q. B.), 660; Man. & Tra. Bank v. Hazard, 30 N. Y., 226.


text:
    THE PEOPLE ex rel. TERESA A. DOYLE, Respondents, v. ANDREW H. GREEN, Comptroller, and others, Appellants.

      Assessment — Mandamus to enforce confirmation of— Commissioners of Central Parle — chap. 697 of 1867 — chap. 53 of 1853 — chap. 86 of 1813 (S. L.)—chap. 303 of 1859 — chap. 308 of 1861.
    The commissioners of Central Park established a new grade for a portion of One Hundred and Twenty-second street, Hew York, acting under the provisions of chapter 697 of 1867, section 3 of which act provides that all damages arising from altering the grade, shall be ascertained in the manner specified in sections 3 and 4, of chapter 53 of 1853, which last mentioned act provided that the estimate and assessment were to be made as directed in section 175, of chapter 86 of 1813. By chapter 303 of 1869, a board of assessors was organized, with the “ duty of making the estimates and assessments required by law for * * * pitching, paving, regulating and repairing streets.” Held, that these words were sufficiently broad to cover the grading of streets done under the law of 1867. That the board of revision and correction, created by chapter 308 of 1861, erred in returning the assessment list to the board of assessors, with directions to strike out the assessment of the relator’s damages for injury to her building by such change of grade, on the sole ground that the latter board had no power to estimate and assess them.
    A relator, having no remedy by action at law in such a case, is entitled to a mandamus requiring the assessors to return without change, the assessment list to the board of revision and correction, and that board to confirm the-same.
    Appeal from an order of the Special Term granting a peremptory mandamus requiring the confirmation of an assessment .of damages for injuries to relator’s property, arising from the change of grade of One Hundred and Twenty-second street, Hew York, by the commissioners of Central Park, under chapter 697 of 1867.

      William Barnes, for the appellants.

      James A. JDeerin'g, for the respondents.
   Davis, P. J.:

We think the order of the Special Term was right, for the following reasons: First. In establishing a new grade for One ' Hundred and Twenty-second street, from Mount Morris square to Hinth avenue, and altering the former grade, the commissioners of Central Park acted under chapter 697 of the Laws of 1867. The third section of that act provides that all damage to any land or "to any building or other structure thereon, existing at the time of the passage of this act * * * by reason of closing such street or altering the grade thereof, shall be ascertained and paid in the manner specified in sections 3 and 4 of an act entitled An act to make permanent the grades of the streets and avenues in the city of Hew York,’ passed March 4th, 1852.” The building of the relator was erected in 1860, and was existing ” at the time of the passage of the act of 1867. The damages to her building and premises by the change of the grade, were therefore a proper subject of estimate and assessment. At the time of the passage of the act of 1867, the estimate and assessment of the damages were doubtless to be made in the mode pointed out by the act of 1852, therein referred to, and a reference to the last named act shows that those things were to be done, as provided in section 175 of the act of April 9th, 1813. But the Legislature, by chapter 302, of the Laws of 1859, provided for the organization of a board of assessors, upon which it conferred the duty of making the estimates and assessments required by law for * * * pitching, paving, regulating and repairing streets.” The estimate and assessment of damages in such cases as the relator’s, are, as we have seen above, required by law, and the language used in defining the duties of the board of assessors, as above quoted, is broad enough to include the regrading of streets by the commissioners of parks, under the act of 1867. If the words, “ pitching, * * * regulating and repairing,” as used in the act of 1859, are applicable at all to the streets and avenues which are put under the exclusive control and jurisdiction of that commission, there seems to be no reason to doubt that they include the grading anew of those streets under the law of 1867. Otherwise, the expenses of carrying out their powers are to be subdivided for the purposes of estimate and assessment, and in the mode of enforcement and collection. The duties and proceedings intended to be created and applied to the streets transferred from the general jurisdiction of the common council to the commissioners of parks, would be seriously complicated and embarrassed by a construction which should hold that a portion of the damages to be estimated and assessed when an established grade is changed, is to be remanded to the process provided by the law of 1813, while the estimate and assessment of all other damages growing out of the same improvement, are to be conducted by the board of assessors created under the act of 1869. We are of opinion that the board of assessors were clothed with power over the whole subject, and their estimate and assessment of the damages to the relator’s buildings were clearly within their jurisdiction;

Second. The board of revision and correction, constituted by chapter 308 of the Laws of 1861, took thereby the power and authority then vested in the common council of the city of Hew York, relative to assessment lists and the confirmation thereof. It is not necessary to consider the question whether power is given to that board to review the awards made for damage in eases of this kind, or whether the board may return the assessment with instructions to the board of assessors to reconsider and revise the awards. Nothing of that kind has been attempted in this ease; but, as we understand the action of the board of revision, it has returned the assessment. list to the board of, assessors, with direction to strike out the assessment of the relator’s damages, on the sole ground that the latter board had no jurisdiction to estimate and assess them. In the decision of that question we are of opinion, that the board of revision erred, and that it was its duty, if no other objection to the assessment existed, to have proceeded to its confirmation. It was not suggested to the court below that any other ground of objection existed. The case was submitted at the Special Term upon the facts presented by the petition and affidavits on the part of the relator, which were either conceded or assumed to be true, and for that reason the mandamus was made "peremptory. No other facts are suggested to us. It is urged by the counsel for the relator, that the assessment had become confirmed by operation of law by reason of the lapse of time. The act of 1861 declares that the revision of such assessment lists shall be made without delay, so that the same shall be confirmed within thirty days from the time they shall respectively be presented for confirmation, and if not so confirmed, they shall be deemed to be confirmed at the expiration of thirty days after they shall be respectively so presented for confirmation. This provision is clearly mandatory, and not simply directory. The assessment ■ in this case was presented for confirmation, February 11th, 1874. No action was taken by the board until the 26th of March, 1874, when the resolution remanding the assessment for revision was adopted. We have not examined subsequent legislation^ to see how far the provisions of the act of 1861 may have been modified, because we do not deem it material to pass upon the effect of the delay of more than thirty days. If, however, the board of revision were right in the position that the board of assessors had no power over the question of such damages, then the proceedings of the latter board would be ooram non judice and wholly void. No lapse of time would confirm such a nullity, and there would, in such case, be no objection to the return of the lists for the purpose of eradicating the excess of jurisdiction, and conforming it to the authority possessed by the board of assessors. If this could not be done, then the law would be chargeable with the absurdity of confirming by lapse of time, an assessment which it must in the next breath declare to be absolutely void for want of jurisdictional power in the assessors who made it.

Third. The remedy by mandamus seems to be the appropriate and only one at this stage of the proceedings. The relator has no remedy by action at law for her damages. They are at common law damnum absque injuria;, as has been adjudicated in numerous cases. Her sole remedy is through the special proceedings authorized by statute, and, unless those proceedings are regularly brought to complete consummation, she cannot enforce payment as permitted by the acts above referred to. Whatever official step is essential to that end, whenever it becomes a duty which an officer or board of officers is legally bound to perform, becomes- also the appropriate subject of mandamus, if the officer refuses to perform the duty to the prejudice of public or private rights. In this case the official requisite to perfect the assessment lists is withheld, in good faith, doubtless, but upon an untenable ground, which in law is no excuse; and besides this, the board of assessors are directed to do an act officially, which the board of revision had not authority to command, but which, if done, will depriv.e the relator of legal rights, by de facto destroying an assessment lawfully made in her favor. To compel the performance of official duties which will prevent any such consequence seems to us a proper office of the' writ of mandamus, although it incidentally arrests action which, when taken, might be the subject of other remedies.

Under the circumstances, we think the appellants should not be charged with costs of the appeal.

Order appealed from affirmed.

Present — Davis, P. J., Daniels and Beady, JJ.

Order affirmed,

       Sess. Laws of 1867, vol. 2, p. 1748.

       Radcliff’s Executors v. Mayor of Brooklyn, 4 Comstock, 195; Mills v. Brooklyn, 32 N. Y., 489, and numerous cases therein cited.