author: Gray, J.

text:
    Laura Wooden, Resp’t, v. The Western New York and Pennsylvania Railroad Company, App’lt.

      (Court of Appeals,

      Filed November 26, 1895.)

    1. Master and servant—Fellow-servant.
    Where the printed posted rules of a railroad company direct conductors, when in doubt as to their ability to take their trains over the summit, to apply for instructions, the exercise of judgment in this respect by a conductor does not transform him from the mere servant to the agent or representative of the master.
    3. Same—Duty of master.
    The duty of the company to its servants is performed if it furnishes adequate machinery and suitable appliances for the work and employ competent fellow-servants, under proper rules duly promulgated and adapted to the end of meeting possible emergencies of an ordinary or extraordinary character which might be foreseen to arise in the conduct of its operations,
    3. Same—Delebation.
    Unless the duty to be performed is one which the master is supposed to. do in person for his servant’s safety in his place of work, it can be delegated to another so far as to free the master from responsibility for the consequences of some neglect. And where such duty relates to the performance of a part of the servant’s ordinary work and is regulated by rule and published notice, and the servant to whom such duty is delegated, is competent and experienced, a careless and negligent performance of his duties is a risk assumed by his fellow servants.
    4. Same—Appliances.
    In the absence of proof that hand brakes are unusual or inadequate, or that air or steam brakes are safer, the furnishing of freight engine, equipped with hand brakes only, does, not of itself render the company liable for an injury to one of its trainmen occasioned by the unchecked descent of a train down a steep grade.
    5. Same—Unsafe roadbed—Inference.
    The jury will not be allowed to infer, from the testimony of a witness that he had casually observed rotten ties in the roadbed, that a train, rushing down a steep grade beyond the control of its brakes and with increasing momentum, would not have been wrecked except for the presence of some rotten ties, in the absence of proof that the roadbed was unsafe or that the presence of rotten ties was the proximate cause of the wrecking of the train.
    Appeal from order of the general term of the superior court of the city of Buffalo, which sustained plaintiff’s exceptions ordered to be heard in the first instance at general term, set aside a nonsuit directed by the trial court and granted a new trial.
    This action was brought to recover damages for the death of plaintiff’s husband, alleged to have been caused by the negligence • of defendant while he was in its employ.

      John G. Milburn, for app’lt; Harlow G. Gurtiss, for resp’t.

       Reversing 58 St. Rep. 112.

   Gray, J.

In January, 1890, the plaintiff’s husband lost his life, as the result of the wrecking of a train on defendant’s road, on which he was employed as a brakeman. The following were the circumstances, as we learn from the record before us. Between the stations of Olean and Emporium, the railroad passes down a steep incline or grade of 110 feet to the mile for five and one-half miles, southerly from a point called Keating Summit-At the foot of the incline is a point called Parker’s Station. North o£ Keating Summit is Portage Station, from whence the ascent of the hill commences. There was a rule in the book of rules of the company, and an order was posted on its bulletin boards, which directed conductors as to the operation of trains over Keating Summit. In the language of the conductor in question :

“The order was to the effect that if we thought we had a train we could not handle either ask for help or ask to set off cars. If I had a train which in my judgment, which the conductor thought, was too heavy to take over the Summit, either to apply for help or set off cars. Apply for help méant to wire Buffalo. The help they would give was, if they have got a spare man on the pusher, they would give you a brakeman from the pusher, and if they could not they would tell you to set off cars. Going south to Emporium you could wire from Portage Creek to Buffalo. At that point I would wire if I thought my train was too heavy. They would either make arrangements for help for me or tell me to set off my cars. If I thought my train was all right, that it was not too heavy, I did not apply at all for instructions. I went right along with my train. In determining about the train at any time I had to take into account the state of the track. I would look the train over and use my own judgment as to that; look the train over as to what cars and the number and condition of the cars and the condition of the night.”

On the night in question, a train was made up at Olean containing between engine and caboose thirty-three oil and freight cars. It was in charge of crew consisting of an engineer, fireman, conductor and three brakemen. The train was, according to the evidence of the conductor, plaintiff’s principal witness, “nothing out of the way, it was not any more than we were supposed to draw.” The company kept an engine at Keating Summit, called a “pusher;” from which an additional brakeman would be supplied, in respose to a telegram to Buffalo for help; if the instructions did not direct to setoff cars from the train. The conductor upon this night did not apply for instructions at Portage Station, upon commencing to cross the hill; because, as he says, “it was his judgment that he could take his train over safely * * * he decided he did not need any help or to set off cars.” When the train was crossing over the narrow space at the top of the hill, the conductor believed the brakemen commenced to set the brakes and to prepare for the steep descent; but he could not see distinctly. The train, however, got from under control and went down the grade with such immense velocity that, as it was said, the fire flew from the wheels. The practice was to set the brakes, while the train was “topping over” the hill, as quickly as possible, until enough were set to hold the train. How well their duty was performed by the brakemen we are not informed. In some way, control was lost of this train and it rushed down the incline; until, at the bottom of the hill, near Parker’s Station, the train was wrecked and all the cars left the track, except the caboose, in which was the conductor, and four cars next to it, and the track was torn up for 900 to 1,000 feet. The dead body of the plaintiff’s intestate was found in the wreck. He had been several years in railroad service and for several mouths with the crew of this conductor; whose employment was upon the freight trains of defendant. He had gone over this part of the road a number of times.

Various grounds are assigned as constituting negligence on the part of the defendant, for which it should be held liable in damages to the plaintiff for causing her husband’s death. The plaintiff argues that this was a dangerous place and that the rails were slippery with frost and “ in clothing the conductor with the sole discretion as to whether the train was safe or not to take over the mountain, the defendant should have promulgated and enforced rules * * relative to inspecting * * * the track as well as the train. ” The difficulty with this point is that there is no evidence that the company was derelict as to .any such duty. Negligence in the performance of a duty to others must be established by facts, which allow of its reasonable inference. It will never be presumed, or left to surmise. There was a book of rules, from which plaintiff offered in evidence several; though they are not in this record, and we cannot assume that any proper rule was wanting, or attention would have been called to it. "According to the evidence of the conductor, upon which the plaintiff’s case mainly depends as to the immediate facts, he judged that he “ could take his train over safely,” and in determining not to apply for any directions he “ exercised his judgment and based it on the condition of the train as it was and everything bearing on the matter.” He knew the night was frosty, what his train consisted of and what was the difficulty of passing a train over the hill from Portage at one side to Parker’s at the other. All these facts were equally within the observation and knowledge of the train hands and the question really comes to this: was the conductor the representative of the master in determining not to apply for more brake men, or to set off cars from the train, before proceeding from .Portage Station ? Was he merely performing one of his duties as an employe, or did he, pro hac vice, represent the company ? A further cpiestion is, if he was such, whether a neglect of duty was shown l Under the rule of the company, the decision of what was to be done at Portage certainly was committed to the conductor’s judgment. But the first and obvious comment is, how could it be otherwise and what more could the company have done for the safety of its train hands than to print and post a rule, which directed conductors, when in doubt as to their ability to take their train over the summit, to apply for instructions ? Of this rule and notice all concerned had knowledge, or were chargeable with it, and the situation being one as apparent to them as to the conductor, if he judged it safe to proceed where is the ground for the assertion of negligence in the company ? The passage of this part of the road was at all times accompanied with the danger attending such steep grades. That, however, was a risk assumed by the deceased, while continuing in the employment of the company, and was known to him by experience. In taking this particular train over, there was nothing unusual, according to the evidence, and the conductor testified that his decision to do so was made after observing “the condition of the train as it was and everything bearing on the matter.” That was a duty which had to be entrusted to some one and its performance was regulated and risks were guarded against by the company in the only conceivable way, and that was by the printed and posted rule above referred to. A conductor of a railroad train is frequently called upon, in the proper exercise of his functions, to use his judgment; but it would be absurd to say, when exercising that judgment, that he was necessarily transformed from the mere servant to the agent, or representative, of the master. That he was the fellow-servant of the intestate in doing his ordinary work has been long settled. Slater v. Jewett, 85 N. Y. 61. The duty of the company, as of any other master, to its servants was performed if it furnished adequate machinery and suitable appliances for the work and employed competent fellow-servants, under proper rules, duly promulgated and adapted to the end of meeting possible emergencies of an ordinary or extraordinary character, which might be foreseen to arise in the conduct of its operations. It is only when the duty to be performed is one which the master is supposed to do in person for his servant’s safety in his place of work, that it cannot be delegated to another so as to free the master from responsibility for the consequences of some neglect. The duty here was not of that character. It related to the performance of a part of the servant’s ordinary work and was regulated by the rule and published notice. There is no pretense that the conductor was incompetent or inexperienced. A careless or negligent performance of his duties was a risk assumed by his fellow-worlcmen. Here, he had before him a duty with respect to conducting the train at a certain point, which was regulated by a rule and which was to be' governed by the apparent facts. Nothing was defective about the appliances of the train ; unless in the fact insisted upon by the plaintiff that hand brakes were used on this locomotive, instead of air, or steam, brakes. But as to that fact, while we maj' assume that brakes might be more quickly applied by the agency of compressed air, or steam, there is no evidence that the hand brakes were inadequate to the purpose, or unusual in hauling these trains. To the contrary, the proof is that heavy freight engines on the road were indifferently used with respect to their brakes and it is not made to appear that the one kind was safer, or more useful, than the other in such an emergency. They had proved adequate before, and, if inference may be indulged‘in from this evidence, the fault was not in the kind of brake used on this engine, but in the setting of the brakes upon the various cars "as the train passed over the summit of the hill and commenced its steep descent The conductor says: “I first noticed something out of the way about the speed the train was acquiring right at the top of the hill almost I saw they were going too fast within a quarter of a mile of the top of the hill.” Certainly the evidence fails to show that the momentum of this train could have been arrested, had the locomotive been equipped with other than hand brakes, and we are left distinctly in doubt as to the point upon the train where, under the circumstances, the brakes would be most effectively applied. At any rate, there was no evidence that the accident was attributable to the inadequacy of the brakes. I think we are forced to the conclusion that this was an accident due to peculiar conditions of the track, or to the fault •of the brakemen in not seasonably applying the brakes ; or to a combination of both causes. If the conductor was at fault for failing to apply for instructions and additional help, then his failure was with respect ,to a matter pertaining to his ordinary work and was the dereliction of one servant towards his fellow-servants in an emergency as to which the master had provided by a rule, known to all and calculated to obviate the possible peril of the employment. There was the peculiar peril incident to the work of the deceased, and he knew that his master had sought to protect him against it by the promulgation of a rule for the conduct of the trains, and, so far as we know, had employed competent fellow-servants and had furnished a properly equipped train. It is impossible to see in what respect the company was responsible for this lamentable occurrence, or what more it could have done to guard against it.

But the plaintiff, also, insists that the defendant was negligent with respect to the condition of the roadbed, and he refers to evidence that some ties in the roadbed had rotted between Keating Summit and Parker’s Station. That was furnished by one witness, who spoke of the condition of things after the wreck had torn up the track and revealed the presence of a rotten tie, and by another witness, who said he had noticed that the ties were defective, or partially rotten, along the track, but where in particular was not stated by him. The difficulty, however, with this evidence, as a subject for consideration by the jury, upon the question of the defendant’s negligence, is that it would have been a matter of speculation with them as to whether that was the cause of the accident. There was no evidence that the roadbed was unsafe, or that the presence of rotten ties was the proximate cause of the wrecking of this train. The witness who had seen rotten ties knew nothing about railroading. He admitted that he had seen the section boss and workmen at work putting in new ties from time to time, and it is a fact, which we might assume knowledge of, that ties must become worn out, or defective, and are to be replaced from time to time. In order to infer an unsafe condition of the railroad track, we should have some evidence to that effect from persons capable, by reason of experience and observation, to speak to the fact. Ho evidence here reveals a failure on the part of the company, to inspect, or to keep its track in an ordinary safe condition. It had proved sufficient in the past; it was being renewed from time to time and, save for the terrible strain, it might have answered every purpose in the future. To allow the jury to infer, because of the testimony of a witness that he had casually observed rotten ties in the roadbed, that this train, rushing down .this steep grade, beyond the control of its brakes and with increasing momentum, would not have been wrecked except for the presence of some rotten ties, would be to allow them to indulge in very wild guesswork. A track safe for the ordinary operation of trains might, and probably would be, inadequate to meet the strain of a train running headlong down a steep grade and it could not reasonably be said, in the absence of some evidence that the roadbed was actually unsafe for the operation of trains, that the proximate cause of the accident was other than the loss of control of the train as it descended the hill.

We have considered the rulings upon the trial and cannot find that any error was committed and we think that the order of the general term, which granted a new trial upon the plaintiff’s exceptions, should be reversed and judgment, of nonsuit should be ordered for the defendant as directed in the trial court.

All concur.

Ordered accordingly.


source: Caselaw Access Project

author: Peckham, J.

license: Public Domain

text:
    H. Wilson Blashfield, App’lt, v. The Empire State Telephone and Telegraph Company, Resp’t.

      (Court of Appeals,

      Filed November 26, 1895.)

    I. Appeal—Covet of appeals.
    Where the order of the general term, reversing a judgment entered upon the report of a referee, does not show that the judgment was reversed upon any question of fact, the court of appeals will presume that it was not reversed or the new trial granted upon any such ground.
    2. Same—Disbegabding evidence.
    A referee or judge, who has erroneously admitted incompetent evidence upon the trial of an action, cannot in ordinary cases, after the submission of thecase to him for decision, cure the error by simply reporting that he had disregarded the evidence erroneously admitted, and formed his judgment without reference thereto.
    3. Same.
    But, where the referee, by the consent of the parties, has aided by his own observation the conclusion to which he has come on the question as to which he reported that he had disregarded the incompetent evidence, and there is other evidence in the case upon which his determination on that question could be satisfactorily founded, and an opportunity has in fact been given to the parties to re-open the case and give further evidence if they desired, the judgment will not be reversed by reason of such error.
    Appeal from order of the general term of the supreme court in the fourth judicial department, which reversed a judgment in favor of plaintiff entered upon the report of a referee and granted a new trial.

      Franklin Pierce, for app’lt; Frederic F. Storke, for resp’t,

      Affirming 54 St. Rep. 917.

   Peckham, J.

This action was commenced to recover damages alleged to have been sustained by the plaintiff’s assignors by the building of the defendant’s telephone line along the highway opposite their lands. These owners, numbering some sixty different individuals, assigned their claims to the plaintiff, who brought this action, and after trial before a referee succeeded in recovering judgment in his favor in a total of sevéral hundred dollars. The defendant denies some of the material-allegations of the complaint,, and also set up an affirmative defense that plaintiff’s attorney had purchased the various causes of action for the purpose of bringing suit thereon, and that the plaintiff had no -real interest in the subject-matter of the action and was in reality only the representative of the attorney. A further defense was that whatever damages had been sustained were the results of the acts of an independent contractor for whom the defendant was not liable.

Upon the trial evidence was taken tending to prove the damage sustained by each assignor by reason of the building of defendant’s line and the erection of poles in the highway abutting upon his land. In the conree of the trial the plaintiff, in addition to-other and competent evidence upon the subject of damage, gave expert evidence upon the objection and exception of the defendant in relation to the value of the land as it would have been if the poles had not been erected. This evidence, it is assumed on both sides, was erroneous as within the principle of our decision in Roberts v. Elevated R. R., 128 N. Y. 455; 40 St. Rep. 454.

After all the evidence in the case was in on both sides the parties entered into a stipulation “ that the referee might ride over the highway along which these telephone lines are constructed, and that he might take into account in determining the question of damages (if he shall reach that question) the facts derived from such observation.” Pursuant to the stipulation the referee, in company with the attorneys for the respective parties, rode over the highway where the lines in question were erected, or some portion of them, observing the nature of the injuries arising from the erection and maintenance of the poles, so far as observaation enabled him to do so. Thereafter he reported in favor of the plaintiff, and stated with regard to each cause of action the amount of the damage sustained by the assignor thereof by reason of defendant’s acts in question. In making up his report the referee made, among many others, the following finding of fact:

Seventy -fourth. I allowed the plaintiff upon the trial to call a number of witnesses, chiefly from among the plaintiff’s assignors, and after the witnesses had described the nature of the injuries to their respective farms, I permitted them, upon the question of the injury to the rental value of their respective premises by the erection and maintenance of these telepone lines, to give in some cases their opinion as to what the rental value would be or would have been without the telephone poles thereon. After such evidence was given I was invited by the attorneys for the respective parties to ride over the telephone routes involved in this controversy, and to observe the nature and extent of the injuries described in the evidence, and it was stipulated that I might consider what I thus observed in determining the amount of the plaintiff’s damages if it should become necessary for me so to determine. I made such examination in company with the attorneys of the respective parties in September, 1891. Upon reflection and ex- • amination, I became doubtful as to the competency of the said

opinion evidence given by--, plaintiff’s witnesses, as before detailed, and before assessing the damages herein I called the attention of the attorneys of the respective parties to my doubt as to the competency of such evidence, and stated to them that upon my own motion I should strike out such evidence and disregard the same in assessing the damages herein. I have, therefore, stricken out all such opinion evidence on the part of the plaintiff’s witnesses, and I have entirely disregarded the same in my assessment of the plaintiff’s damages, and I have assessed said damages entirely upon a consideration of the description of the damages given by both the plaintiff’s and defendant’s witnesses herein, and also upon mv personal observation as to the nature and extent of such damages so far as the same could be ascertained by me in an examination while riding along said line. An exception to my action in thus striking out such evidence is hereby given to either "party who feels himself aggrieved thereby, with the same effect as though taken by him upon the trial of the action.”

Judgment having been entered in pursuance of the referee’s report, the defendant appealed to the general term of the supreme court, where the judgment was reversed. The order of reversal does not show that the judgment was reversed upon any question of fact (see § 1338 of the Code of Civil Fro.), and we are, therefore, compelled to presume that it was not reversed' or the new trial granted upon any such question. The judgment was in reality reversed by the general term on the ground of the referee’s cr-' roneous ruling in regard to the admission of the expert evidence above described and because of its belief that such error was not cured by the subsequent action of the referee as stated in his 74th finding above quoted. We agree with the learned judge delivering the opinion of the general term that in ordinary cases it would be most dangerous to hold that a referee or judge who has erroneously admitted incompetent evidence upon the trial of an action could, after the submission of the case to him for decision, ■cure the error by simply reporting that he had disregarded the evidence erroneously admitted, and formed his judgment without reference thereto. We should in ordinary cases most surely condemn the practice as contrary to the proper conduct of trials by judge or referee, as most dangerous in its possibilities and as improperly depriving the party against whom the incompetent evidence was offered and received of his exception thereto duly taken.

This, however, it seems to us, was an exceptional case and should be decided with reference to the exceptional facts which exist. An error made by the judge presiding at a trial by jury in the admission of incompetent evidence we have held may be cured by his charge to the jury when it in effect strikes out the evidence, witholds it from the jury and plainly directs that. body to disregard such evidence in coming to a conclusion upon the case. Holmes v. Moffat, 120 N. Y. 159; 80 St. Rep. 799. We have applied that rule on a trial for murder. People v. Wilson, 141 N. Y. 185; 56 St. Rep. 828. Of course there is a distinction between the two modes of trial in regard to the manner of curing an error in the admission of incompetent evidence; where a judge charges a jury to disregard it and in effect strikes it out and withholds it from the jury, the opportunity is then presented to either party to except to that decision and to ask the court to open the case and permit other -and further evidence upon the subject to be given which would be competent and proper for the j ury to regard, and a refusal to open the case under proper circumstances would seem to be just ground for exception by the party aggrieved. In the ordinary case of a trial by a judge without a jury, or by a referee, where he merely states in his decision or report that incompetent evidence which had been received under objection had been disregarded by him in coming to his conclusion, such practice would give no fair opportunity to the aggrieved party to "except to that decision, or to give further evidence in regard to the matter itself. The error could not be thus cured.

In the case at bar, however, we have the very important fact that the parties themselves stipulated that the referee might ride along the highway and take into account in determining the question of damages the facts derived from his observation at that time. Thus by the consent of the parties the referee was given power outside of and beyond the evidence taken before him from the witnesses to aid by his own observation the conclusion he might come to in regard to this single question of damages. This power was given for some purpose, and it constituted a kind of evidence which does not and cannot appear in the record before us, which is not the subject of exception, and the extent of the benefit' derived from which we have no means of determining. In addition to that we have the facts detailed in his finding, from which it will be seen that an opportunity was in fact afforded the parties by the referee by reason of his informing them of his determination, to ask him to re-open the case, and to receive such further evidence on the subject as. either party might desire to give. The fact that it does not appear that either party availed himself of such opportunity by making any such request of the referee is evidence quite satisfactory to us that it was not regarded as important. There was other evidence in the case aside from this expert evidence, and aside from that obtained by the referee in his personal observation of the premises adjoining the high way, upon which his determination on this question could be satisfactorily founded. Upon these peculiar and exceptional circumstances we think the error of the referee in admitting the incompetent evidence was substantially cured, and it would not tend to a more just result to reverse the judgment for any such error.

Second. Another ground for the reversal of this judgment and the affirmance of the order granting a new trial was argued before »us, and it arises under section 73 of the Code of Civil Procedure, which provides that “an attorney or counselor shall not directly or indirectly buy, or be in any manner interested in buying a bond, promissory note, bill of exchange, book debt, or other thing in action, with the intent or for the purpose of bringing an action thereon.” The learned counsel for the defendant .contended here that the evidence vías wholly uncontradicted, and showed that this section had been violated by the attorney ‘for the plaintiff, and that in fact he was the owner of these claims which had been nominally assigned to the plaintiff, and that he had in effect purchased the same in violation of this section of the statute. We have carefully examined the evidence in this respect, and are clearly of the-opinion that the section in question has not been violated in the case now under review. The attorney for the plaintiff did not directly or indirectly buy, nor was he in any manner interested in buying, these claims in suit. The evidence on this subject falls-far short of proving any such purchase of the claims by the plaintiff’s attorney, directly or indirectly, as comes within the prohibition of the statute. There has been no purchase at all.

We have examined the other questions argued before us and contained in the excellent brief of the defendant’s sounsel, andaré of the opinion that they do not show any good ground for the reversal of the judgment entered upon the referee’s report.

We are, therefore, of the opinion that the order of the general term granting a new trial should be reversed, and the judgment entered upon the report of the referee should be affirmed, with costs.

All concur. Ordered accordingly.


text:
    Daniel Schmeer, as Administrator, etc., App’lts, v. The Gas Light Company of Syracuse, Impleaded, etc., Resp't.

      (Court of Appeals,

      Filed November 26, 1895.)

    1. Negligence—Gas company.
    The question whether it is negligence in a gas company, before permitting its gas to be turned into a building for the purpose of supplying those who have applied for it, in not making, through its own servants, some-examination of the condition of the piping leading to the other parts of the building, to the end that it might say with reasonable certainty that such piping was in proper condition to hold the gas, and not to' let it escape upon the premises of those who had not applied for and did not want it, is one of fact and not of law.
    2. Same.
    The propriety of the custom of relying upon the plans of the building-when delivered as equivalent to a certificate that the piping was in good condition, and thereafter permitting any one to turn on the gas, may go-to the jury upon the question of negligence.
    3. Same—Extent oe liability.
    The company, in delivering its gas, is not an insurer, but is simply-bound to that degree of care, which the nature of the article it deals in and the consequences to be apprehended from an accident, reasonably call-for.
    4. Same.
    When once the piping has been fairly and properly examined previous, to turning on the gas, if such examination by the company’s servants is called for at all, there is no continuing liability on the part of the company to see it that such piping is kept in proper condition,
    Appeal from judgment of the general term of the supreme court in the fourth judicial department, entered upon an order, which affirmed a judgment in favor of defendant entered upon the ■dismissal of plaintiff’s complaint upon the merits on trial at circuit.
    This action is brought to recover damages for the death of plaintiffs son from an explosion of gas in the building in which the plaintiff had an apartment, such explosion having occurred, as is alleged, by reason of the negligence of the defendants in permitting the gas to flow into the building without first properly testing the pipes. The answer denied any negligence on the part of the company, and set up as a further defense the contributory negligence of the deceased. ' The plaintiff was nonsuited at the trial and the general term affirmed the nonsuit, and the plaintiff appeals here. The defendant is a manufacturer of gas in the city of Syracuse and furnishes the same to all inhabitants of the city ■desirous of using it. The gas is supplied in the usual way by means of mains laid underground in the streets and connecting by means of service ñipes with the different structures in which the gas is consumed. The company lays and owns the street mains ■and the service pipe therefrom to the inside of the cellar or basement of the buildings to be supplied. The service pipe is left by the company unconnected with the piping in a building, and the gas is prevented from flowing into it by means of a stopcock placed in the service pipe a short distance inside the curb at the side of the street. It has been the custom of this company to permit this service pipe to be connected with the piping in a building by the owner thereof as soon as he had made application to the company to become a consumer of the gas and after it has supplied him with a meter, and such connection has been customarily made by a gasfitter employed for that purpose by the owner, and without giving any notice thereof to the company.
    In the spring of 1889, one George Young had completed the erection of a three story brick building on the west side of North Salina street in the city of Syracuse. The building was divided into stores on the ground floor and in to separate and independent apartments or flats above. There was one double and one single store, and there were three fiats upon each of the floors above the stores. The double store had beeu rented by the owner to a firm named Vinney & Krause, while the single store had been rented to the plaintiff for a confectionery shop, and the plaintiff had also rented one of the flats in the second story for his family. Two of the flats on the third floor and immediately above the flat occupied by the plaintiff were occupied by the families of two women, Mrs. Ripple and Mrs. Bordner. The plaintiff moved into the building April 19, 1889, and the other tenants were moving in about the same time. The accident occurred that same evening. The whole building was equipped with gas pipes, but so arranged that each store and flat could be supplied with gas through a separate and independent meter.
    Upon the application of the owner, made about the 29th of March, 1889, the company put in the service pipe extending into the cellar of the building through the cellar wall. The gas was excluded by means of the stopcock near the curb at the sidewalk. On the 10th of April one Steingriebe, who occupied one of the three flats on the third story, applied for a meter for his flat by signing an order book at the office of the company. Yinney & Krause, the tenants of the double store, had also and about the same time applied for a meter. The meters had in both cases been refused by the company until proper plans of the piping were furnished. These plans were subsequently furnished and the meters were then delivered. The gas was subsequently turned on by one of the gasfitters or his employe, and without notice to or knowledge on the part of the gas company. It had been the practice of the company for many years in Syracuse to accept and rely upon these plans when furnished the same as if they were a certificate by thé gasfitter or plumber putting in the piping that such piping was then complete, tested and ready to receive gas, the company itself not making any examination. It -did not itself connect the meters with the piping in a house nor itself and directly through its own agents and employes see to the turning on of the gas from the street mains through the service pipe into the building. Those who applied for the meters engaged such persons as they chose to do the work. After the meters had been supplied to this building they were connected with the service pipe by the employes of the owner or tenants who engaged them for the purpose. There was customarily no objection made by defendant to the turning on of the gas from the street main after the person wishing to use the gas had applied for the same to defendant and been furnished by it with a meter. The defendant, by furnishing the meter, thereby consented to the turning on of the gas by any one. In this case the defendant relied on.thé certificate spoken of as to the condition of the pipes. ' In truth, the piping in the upper hallways had not been properly attended to before the gas was let into the building by one of the employes of the plumber or gas-fitter who was engaged to attach the meter to the service pipe by one of the tenants. The ends of the pipes in the third story hallway had not ,been plugged, and hence the moment the gas was turned on the street it went, in addition to the store where it was wanted, up through the other pipes into the hallway of the third story and escaped therefrom into that hall. The only opening at which the gas could escape was in the hallway. The hallway was also the only means of access which the tenants had to their respective flats from the street entrance. The two women tenants had not applied to the company to be furnished with gas, and did not intend to use the same-in their apartments. They were using oil for illuminating purposes. After the gas had been turned on from the street on the evening in question by some one not in any way connected with the company, and some time between half after eight and nine o’clock, the smell of gas became noticeable in the hallway mentioned. The plaintiff’s son, a young man about eighteen years of age, was in the apartment hired by his father, reading, when he heard the voices of the women, and going' out into the second story hallway, asked them what was the matter. There was then no smell of gas in the plaintiff’s apartment. The boy was told of the escaping gas somewhere and so he went up stairs to the third story and said he would try and discover the location of the leak and stop it until morning, and proposed to take a lamp. Mrs. Bordner, one of the tenants, said she thought a lamp would be dangerous, to which the boy assented, and then said he would take a candle, as be had seen plumbers use a candle to find a leak. He, therefore, procured one and had it lighted and went to a pipe in the side wall in the third story and applied the flame to the cap of the pipe and around it and said “that is all right.” Walking to the end of the hall he had partly got upon a barrel lying there, when an explosion occurred which injured the boy so that he soon thereafter died.
    Gas fitters do in fact use torches and candles upon some occasions'll! testing or searching for leaks in gas pipes. Believing that the gas company had been gulity of negligence in causing the death of plaintiff’s intestate under the circumstances herein stated, the plaintiff brought this action to recover damages on account thereof.

      Louis Marshall, for appl’t; Edwin Nottingham, for resp’t.

      Reversing 56 St. Rep. 892.

   Peckham, J.

We think it was error to nonsuit the plaintiff upon this proof. There was, in our judgment, a question for the jury to determine, the question being whether, upon all the evidence, the defendant company had been guilty of negligence which caused the death of the deceased youth.

A portion of the gas which escaped through the pipes in third story hall found its way into the premises of the women tenants, and occasioned them annoyance from its odor. The deceased, upon hearing of the difficulty, and in order to aid the two women in its removal, endeavored to find the location of the leak for the purpose of stopping it with some temporary means until the next day. He was acting in their behalf and for their benefit, although the means he used were his own. The women were not consumers of the gas, and had made no application to the company to be supplied with it, and its presence in the hall and in their apartments was most obnoxious to them, and if continued might, of course, soon have become very dangerous.

The question which should have been left to the jury was whether the company had failed to use such reasonable precautions as might properly be exacted of it before turning on the gas, or permitting it to be turned on by some third person.

The company in some respects occupied the position of a public corporation. It was by statute bound to furnish gas upon the written application of the owner or occupant of any building or premises within one hundred feet of any main laid down by it, subject to such and proper regulations as it might adopt as a means of securing payment for its gas and safety in its supply. It manufactured and furnished an agent for illuminating purposes which might have become a most dangerous one, liable to explode and to injure human beings and property. While this gas remained on the premises of the manufacturer, or while it was being conducted through its own pipes to different parts of the city, there can be no doubt that the company was bound to ■exercise vigilance to prevent injury to third parties from the dangerous qualities of the gas. The question is where its responsibility ended. The claim is made on its behalf here that such responsibility had certainly determined before this explosion occurred. It is urged that it had no responsibility for putting the piping in the house, as it was done by third parties under the •employment of the owner; that it had no charge of such piping after it was fitted in the building; that the gas was turned on by third parties without consultation with or knowledge on the part •of the officers of the company, which simply was accustomed to and in this case did permit any one to turn on the gas after plans had been submitted to it and a meter had been provided by it upon application.

These circumstances might furnish a good answer to the company as against any claim of the owner of the building who had applied for a meter or any tenant who had so applied. The case of Flint v. Gloucester Gas Light Co. (3 Allen, 343) does not go far enough to save the defendant from any possible liability in this case. There the plaintiff was himself the owner of the building and had employed and paid one Thomas to put gas pipes therein connected with the service pipe laid by the defendant and to put up and arrange the fixtures and burners necessary for using gas in some of the rooms. This man, having put the fixtures in the building, himself turned on the gas, and the explosion soon thereafter took place. The plaintiff claimed that Thomas in turning on the gas was the agent of the defendant, while the defendant claimed that it had simply been cognizant of a custom on the part of Thomas or other gasfitters to turn on the gas when they had completed their piping, and that defendant had simply permitted it, but had in no sense employed Thomas or any one else to do it. The defendant requested the court to charge that this mere permission was not sufficient to make Thomas its agent if it had never assumed to furnish or interfere with the pipes or fixtures inside the building. The court declined to give such instruction, and it was held error. It was a case of an application for gas by the owner of the building. We are here not dealing with the case of an owner or of a tenant who had made application for a meter and who might be said to have asserted by that act the proper condition of the piping and to have thereby waived any further examination. Here is the case of an injury to a third person árising. from an explosion in the third story hall caused by the escape of the gas from pipes situated in that story and not properly capped, by reason of which the escaping gas penetrated into the apartments of non-consumers and who had made no application for such gas.

Was there any negligent failure on the part of the defendant company to do what was reasonably prudent for the purpose of insuring safety to those women and-to those who were roused by them to make efforts to discover the source of the leak ? The company surely had no right to intentionally pour out its manufactured gas upon the tenents who had not applied for it. Some care was due from it when supplying those who did apply, to see that who did not should be protected from the undersired ■element.

The defendant urges that it would be most unreasonable to impose upon it the duty of knowing when gas was to be turned on in every building in the city where it was to be used and to inspect the piping immediately prior to the turning on of the gas. It is asserted such a duty would be almost impossible of performance and that every reasonable requirement is met by the obligation to inspect upon notice and request. But the company by the adoption of the custom already spoken of in regard to the delivery of the plans of the piping to it entirely did away with the necessity of notifying it and left it’ to the discretion of the ■owner or applicant at what time or by whom the gas might be turned on. It has by its own act relieved itself, so far as it could, of any obligation to make inspection before the gas shall be turned on. We do not see the impracticability of inspection as is alleged by defendant or its great expense. If when a meter should be applied for in an apartment house like this in order to take the defendant’s gas, the defendant should at the time of sending it send a proper inspector to inspect the piping, there would not be much difficulty in that case. The inspection here spoken of would not include the examination of pipes under floors or covered by plastering; no ripping up of work already ■done in the way of flooring and of lath and plastering could reasonably be required. A fair examination of the piping which was disclosed and the ends of tubes coming out into the open spaces through which the gas might penetrate into other quarters than where it was applied for, would certainly be all that could be reasonably called for. We do not say that even this must be done as a legal proposition. It is a question for the jury upon the issue of negligence.

The suggestion that the company had no right to enter upon the premises- for that purpose we do not regard as well founded. It might properly refuse to permit the gas to be turned on in a case of separate stores and flats like that here presented, until some -reasonable examination of the piping had been made in the other portions of the building, where gas had not been applied for, such as would lead to the belief that the piping in that other portion was in proper condition. We do not say that the company was bound, as matter of law, to make this examination by its own agents, or that a failure to make it, and a reliance on the certificate implied from the delivery of plans was negligence, but we say that whether such reliance was or was not negligent was, under the ■circumstances of this case, a matter for the j ury to decide. Having adopted the practice of relying upon the plans when delivered as equivalent to a certificate that the piping was in good condition, and thereafter permitting any one to turn on the gas, the propriety of that custom must'go to the jury upon the question of negligence. ,

The defendant, after the delivery of the plans and having thus obtained a general knowledge of the character of the building, must have known of the separate stores and apartments, and that separate meters were required. The agents of the defendants saw that by the plans the pipes were placed so as to distribute the gas-to other portions of the building than those from which application had been so far made. Was it or not a reasonable matter to ask of the defendant that before permitting its gas to be turned into-the building for the purpose of supplying those who had applied for it, the company should, through its own servants, make some examination of the state of the piping leading to the other quarters, to the end that it might say with' reasonable certainty such piping was in proper condition to hold the gas, and not to let it-escape upon the premises'of those who had not applied for and did not want it ? Or had the company done all that could reasonably have been required of it by entering into the understanding as to the plans, and that their delivery should be regarded as-equivalent to a certificate ? This presents, we think, a fair question of fact and not one of law.

The defendant also urges that it was not its duty to turn on the gas, but it was only obliged to allow it to be turned on, and, therefore, it ought not te be held liable for the act of a stranger. In this we think it entirely misapprehends its duty. It is obliged to supply the gas to applicants. When they have done what is necessary to make a connection with its consent with the mains of the defendant and have applied for and obtained the meter to measure their supply, we are clearly of the opinion that in order to fulfill its duty to supply gas the defendant is under the obligation when applied to of turning it on so that the supply may be-given. Certainly it ought not to be held liable for the act of a stranger in turning on the gas without its knowledge or request. We do not permit any liability to be founded upon that fact. If liable at all, it must be for its own neglect (if the jury shall so find) in failing to make any inspection and in adopting a custom which when carried out permitted the turning on of the gas by any one at any time after the delivery of a meter by the company. This is the extent of defendant’s liability. We do not think the principle of the case of Rylands v. Fletcher, L. R., 3 H. of L. 330, applies here. The defendant is not an insurer. In the English case the defendant was held liable at all events for the damage done to his neighbors’ mines by reason of an overflow from water which the defendant had accumulated on his own land.

Here the defendant is engaged in manufacturing and selling an article which has become so universally used for illuminating purposes as to be regarded almost as an essential of city life. Having manufactured it, the law compels the company to furnish it to an owner or occupant on certain terms. It is bound not only in the fulfillment of the purpose of its existence but by affirmative provisions of law to deliver the gas into the buildings of others. In making that delivery it is not an- insurer, but is simply bound (in such a case as this) to that degree of care which the nature of the article it deals in and the consequences to be apprehended from an accident reasonably call for. Nor do we assume to say that when once the piping in cases similar to this has been fairly and properly examined previous to turning on the gas (if such examination by defendant’s servants is called for at all), that therefore there is a continuing liability on the part of the company to see to it that such piping is kept in proper condition. As the company has no control over the piping, does not put it in and is not consulted about it, the principle upon which it might be held liable in cases of this character at the time of the first delivery of gas, if- no precaution were taken at all, is simply that it would have the right to refuse to turn on, or permit others to turn on, the gas for the supply of the applicants until properly assured of the condition of the piping in other portions of the building. Having become assured of it, and the gas being on, it would not seem that the company ought further to be regarded as liable for the continuous good condition of the piping. Here we may justly say that to impose such a liability upon the defendant would clearly be unreasonable. It would render necessary the examination at frequent intervals of all the buildings in the city in which gas was used. This would be so onerous as to be practically impossible of execution because of the expense to the company. The law ought not to, and does not, exact an unreasonable amount of care from any one. Under the restrictions, however, as above stated, we think the question of defendant’s negligence was for the jury.

The other ground of defense; as to the contributory negligence of the plaintiff’s intestate, we do not think should be taken from the jury. Sometimes it is extremely dangerous to take a light to discover the location of a gas leak and sometimes it is not, depending upon various circumstances, among others, upon the extent of the leak, the size of the inclosure where located and the length of time the leak has existed. The plaintiff’s intestate, a boy of eighteen, took the candle with the statement that he had seen gas men take a candle to find a leak, and it is a fact that they do so upon some occasions. The whole case as to the contributory negligence of the plaintiff’s intestate should be submitted to the proper judges of fact.

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

O’Brien, Bartlett and Haight, JJ., concur; Finch and Oray, JJ., dissent; Andrews, Oh. J., not sitting.

Judgment reversed.


author: O’Brieit, J.

text:
    James J. Belden, Resp’t, v. Stevenson Burke, Impleaded, et al., App’lt.

      (Court of Appeals,

      Filed November 26, 1895.)

    1. Bonds—Railroad—Purchase with notice.
    A person cannot buy depreciated bonds in the market, with knowledge of all tlie facts, and then proceed to increase the value by attacking, in a court of equity, business transactions which took place years before he had any interest in them, whereby some portion of the security promised in the mortgage was diverted, released or waived by the action and with the consent of every party who then had any interest either in the bonds or the property.
    2. Same.
    A holder of mortgage bonds, who purchased his bonds in the open market, after full inquiry, with knowledge of the situation and how the bonds or their proceeds had been used and, in such purchase, did not act upon the faith of any statement in the mortgage, hut upon his own judgment, and who has sustained, and will sustain, no loss from, but has made a considerable sum of money by, the transaction, cannot maintain an action in equity, on behalf of himself and other bondholders, on the refusal of the trustee to sue, to obtain redress for a breach of an alleged covenant in the mortgage to devote the bonds or their proceeds to the improvement of the mortgaged property and to enhance the security of the mortgage lien.
    3. Same.
    The question whether, in the absence of notice to the plaintiff of the facts when he purchased the bonds, the action could have been maintained, was not passed upon by the court.

      Í Same—Holder in good faith.
    A subsequent holder of bonds in good faith and without notice is not precluded from relief, on the ground that the original holder from the company took with notice of the actual transaction.
    Appeal from order of the general term of the supreme court in the first judicial department, which reversed a judgment of special term dismissing the complaint upon the merits and ordered a new trial.

      Stevenson Burke and William B. Hornblower, for app’lt; John F. Dillon and Samuel B. Clarke, for resp’t.

       Reversing 55 St. Rep. 844.

   O’Brieit, J.

The plaintiff, as a bondholder of the Columbus, Hocking Valley and Toledo Railway Company, brought this action in his own behalf and in behalf of all other persons holding the bonds, against the railway corporation, the trustee named in the mortgage executed to secure the payment of the bonds, Stevenson Burke and five other persons, called his associates in the transactions hereinafter referred to, two banking firms in the city' of New York and three other persons who represent deceased parties or dissolved firms connected in some way with the transactions. Four of the associates of Burke were never served with process, and are not before the court, the complaint was dismissed at the trial by consent as to one of the banking firms, the other defendants either have no interest in the controversy, or acquiesce in the decision below, or are interested in the plaintiff’s success and have not appealed from the judgment. The only party who has appealed to this court is the defendant, Stevenson Burke, who has stipulated that in case-the judgment of the court below be affirmed here, then that judgment absolute be rendered against him for the relief demanded in the complaint. He is the only defendant who has appeared in this court to contest the decision given, having for some reason assumed the whole burden of the litigation, and must, therefore, be considered as the sole, responsible defendant.

The general purpose of the action is to compel the railway corporation, defendant, to make good its covenant infrhe mortgage to devote the bonds, or their proceeds, to the improvement of the mortgaged property and the enhancement of the value of the security to all the bondholders, and it being alleged that the defendant Burke and his associates, as directors and agents of the railway, by means of various transactions stated and found, diverted the bonds from the uses and purposes for which they were issued, and virtually applied and converted them, or the proceeds, to their own use, that they account for'the same to the railway company and pay the same into its treasury. The bonds in controversy amount to eight million dollars, or eight thousand bonds of one thousand dollars each, part of an issue of fourteen million five hundred thousand dollars, secured by a mortgage on the railway property to the Central Trust Company of New York as trustee, bearing date October 1, 1881. The decision of the court below, now before us for review, is to the effect that Burke and his associates are bound to account to the railway company for these eight thousand bonds or their proceeds, with' interest from the time of the issue, in 1881, thus establishing a liability on the part of the defendant of fifteen million dollars or more. The complaint charges various acts and transactions on the part of Burke and his associates in regard to the issue and disposition of the bonds, constituting, as is claimed, fraud and conspiracy, or breach of trust, or both, all of which allegations have been put in issue by his answer. These complicated transactions were settled by the trial court in one hundred and forty-three findings of fact and six of law. The case comes here upon these findings alone and upon the exceptions taken by the plaintiff’s counsel to the conclusions of law upon which the complaint was dismissed. The general term, having reversed the judgment of the trial court, taking an entirely different view in regard to the defendant’s liability, these findings of fact, upon which all the parties stand, must constitute the basis of the discussion. Many of the findings ’are in regard to facts merely introductory or supplementary, and as they are fully stated in the report of the case in the court below, Belden v. Burke, 72 Hun, 51; 55 St. Rep. 844, it will be necessary to refer here to only a few.of the findings which contain the important or fundamental facts.

On the 22d of December, 1883, the plaintiff bought in the open market at the Stock Exchange in New York, and he now owns fifty-five per cent fifty-year bonds of the said railway company, certified by the trustee named in the mortgage in the manner and form therein prescribed. The interest on these bonds were payable semi-annually from the first day of September, 1881, on the first day of March and September thereafter, and the principal was not to become due till September 1, 1931, when the bonds mature. These bonds of the denomination of one thonsand dollars each were a part of a large block of about six million dollars sold at or prior to the date of their issue and delivery to one of the defendant banking firms, Winslow, Lanier & Co. W hen the plaintiff procured the bonds he had no knowledge of the provisions of the mortgage upon which his claim in this action is based and did not rely on the same. He knew generally that the bonds were secured by a mortgage, and relied upon that security whatever it was. The plaintiffs assert in this action only such rights as he claims the Central Trust Company, trustee in the mortgage, could or should have asserted for him and his fellow bondholders in the performance of its duty as trustee. It has been found that it refused to bring the action upon plaintiff’s request for the benefit of himself and the other holders of the bonds, and, upon such refusal, the action was brought in its present form, the trustee, upon refusing to become a plaintiff, having been made a defendant. The mortgage executed October 1, 1884, covers all the property and franchises of the railway company, and the Hocking Coal & Railroad Company united in it, conveying upon the same trusts some ten thousand acres of coal lands, the previous arrangements and transactions having all along contemplated the union of the properties of the two corporations, which was practically consummated, so far as it could be, by this act.

The defendant railway was created by a consolidation under the laws of Ohio of three other railways, forming a continuous line from Toledo through the Hocking valley in the state of Ohio to some point or points at or near the Ohio river, with various branches, and the scheme of consolidation had in view from the beginning the final union of the coal company property and that of the consolidated railway corporation, and the execution of the mortgage were the important and one of the final acts through which that end was accomplished. The facility with which the defendant and his associates were able to bring about this result by means of contracts, resolutions and various corporate acts was due entirely to the fact that they had acquired and owned all the stock of both companies, so that both corporations were made, through the dieectors, to move, speak and act in absolute obedence to the will of a few men who owned them. Among the numerous questions in the case which constitute the subject of contention between counsel and in regard to which there is a wide and irreconcilable difference of opinion, the correct interpretation and meaning of certain provisions of the mortgage, thus executed, takes an important place, if, indeed, it is not at the basis of the whole controversy and the necessary premise from which every proposition asserted by the plaintiff is deduced. The learned counsel for the plaintiff contend that by its terms the bonds in question were devoted to the improvement and enlargement of the mortgaged property by adding to its value in such a manner as to increase the security of the bonds, or, as counsel express it, to feed the mortgage lien, while, in behalf of the defendant, it is just as stoutly urged that the language used did not put any such restriction upon the railway, or its officers in regard to the use of the bonds or their proceeds. • It is impossible to get a clear view of this question without reference to the terms of the instrument itself.

In the habendum clause five distinct covenants were inserted, and the last of these is the one with which we are now concerned. It reads as follows :

“ And it is hereby expressly covenanted and agreed by and between the parties hereto, each covenanting and agreeing respectively for themselves and their successors and assigns, and for the benefit and use of all parties who shall become holders and owners of the bonds issued under and secured or intended to be secured hereby in manner following, that is to say * * *

“ Fifth. Eight thousand of said bonds, amounting to $8,000,-000, numbered from 1 to 8000, shall be at once executed by the president and secretary of said railway company and certified by said Central Trust Company of JSTew Y"ork, trustee, and delivered to the president .and vice-president, or either of them, of said party of the first part, the Columbus, Hocking Valley and Toledo Railway Company, to be used and disposed of by them in accordance with the stipulations hereinbefore contained; but the said trustee shall be in no respect answerable for the use made of such bonds, or either of them, by the president or vice-president of said Columbus, Hocking Valley and Toledo Railway Company after the certification of such bonds and the delivery thereof. The remaining six thousand five hundred . bonds, numbered from 8001 to 14500 inclusive, * * * shall be deposited with the said trustee * • * * and used * * * for the purpose of being exchanged for * * * or providing for the payment and satisfaction of the outstanding bonds,” etc.

It is plain enough from this provision that six million five hundred thousand of the whole issue of bonds was to be used for the purpose of retiring the outstanding bonds of the three divisional roads that had been absorbed in the consideration. As to these bonds there is no question raised or any claim that they were not honestly applied to the purposes for which they were executed. The controversy arises solely from the disposition made of the other eight thousand bonds, which, in the language of the covenant, were to be used and disposed of by the president and vice-president of the railway “in accordance with the stipulations hereinbefore contained,” and these stipulations must be found, if at all, in the preceding portions of the instrument. If we can find any language there employed by the railway corporation or its directors, which fairly denotes the uses or purposes to which these bonds or their proceeds were to be applied, that may be regarded as the stipulation referred to in the covenant, whatever form of statement was employed. The instrument begins with a long recital in the form of a preamble, giving a full history of the origin, property and financial necessities of the new or consolidated railway, and this part of the preamble concludes in the following language :

“ Whereas, said railway company, party of the first part, for the purpose of providing for the redemption and cancellation of the bonds secured by said prior or divisional mortgages, to enable it to borrow a further sum of money found necessary to be used in building and double-tracking its road, paying for property purchased and to be purchased, improvements made and to be made, and for the equipment of its said line of railway, providing terminal facilities, constructing docks, building bridges, and otherwise extending and enlarging its capacity for the transportation of freight and passengers, and for other general purposes of said railway, and for the purpose of resolving its entire bond and mortgage indebtedness into one loan, secured by one consolidated mortgage, has, by its board of directors and all its stockholders,, resolved to issue its bonds payable in gold coiffiof the United States, of the present standard of weight and fineness, as hereinafter specially provided, in the sum of $14,500,000.”

Then follows the form of the proposed bond in full in the ordinary form of such obligations, without any words to indicate upon its face the use to which it or the proceeds were to be applied, It must be confessed that the language here employed, with respect to the use of the bonds, is quite broad and general, and if nothing else could be found in the instrument on that subject it. would be quite difficult to adopt the construction for which the learned counsel for the plaintiff contends. But the resolutions of the board of directors authorizing the execution of the mortgage were also incorporated in fall in a subsequent part of the preamble, and that part of them relating to the use of the bonds is as follows:

“ Resolved, That six thousand five hundred of said bonds, amounting to $6,500,000, shall be reserved and held by said trustee, and issued and used for the purpose of being exchanged for, or providing for, the payment of the outstanding bonds of said Columbus and Toledo and Columbus and Hocking Valley railroads, and the Ohio and West Virginia Railway Company, and for no other purposes, whatever.

“Resolved, That the remaining eight thousand bonds, amounting to $8,000,000, shall be sold and disposed of by the president and executive committee, and the proceeds thereof shall be applied for the purpose of double tracking, equipping and increasing the transportation facilities of and improving the company’s railway, and in purchasing such real estate and other property as in the judgment of its board of directors, or of the president and executive commiteee, the interests of said company require.”

It is upon the language of this resolution that the learned counsel for the plaintiff rely to establish their contention that the bonds in question were to be used for the purpose of increasing the value of the property mortgaged, or the purchase of other property of such a character as to come under the lien of the mortgage as soon as acquired. The instrument contained the usual covenants that when the railway acquired any franchises or other property the same should be held upon the trust and subject to the lien of the same, but from this provision “ stocks, notes or bonds of other companies, for the use of or in connection with its railroad,” were excepted. -

There is no dispute in regard to the important fact which appears in the findings, that the eight thousand bonds were delivered by the railway company to Burke in exchange for all the stock of the coal company, amounting to fifteen thousand shares, which at par would amount to only one million five hundred thousand dollars, but which, as the plaintiff claims, was worth less than half that sum. The defendant, however, insists that the property thus acquired was of great value, and there is a finding in the case to the effect that the profits of the railway company, in the year 1891, from this coal property, amounted to a large sum of money, more than sufficient to pay the interest on the bonds exchanged for it. But whatever the value of the stock may be, it is all that the railway company ever got for the bonds, and it still holds and owns it. The bonds were thus delivered to the defendant under a resolution of the board of directors of the railway, subsequently ratified, which he and his associates, being in absolute control, were enabled to pass, and, owning all the stock of both corporations and directing all their affairs, they were thus enabled to deal with each other without fear of complaint from any stockholder. But it is evident enough that the acquisition of the coal stock was not the sole purpose for which the bonds were delivered to the defendant. At most only a million and a half was necessary for that purpose, and they were in fact used also for the purpose of paying notes, amounting to-six million dollars, which the defendant and his associates had given to the bankers referred to in order to raise money with which to purchase all the stock in the three divisional companies, absorbed in the consolidation, the possession and ownership of which was a vital part of the whole scheme. This stock when purchased by them was exchanged for the new stock of the consolidated road which they received as their own property and subsequently sold as their own. The remainder of the proceeds of the bonds was used to pay commissions to the bankers, to pay for services to various persons who aided in the promotion of the project and for some other purposes not important to state. It is-sufficient to say that all the proceeds of the bonds went to the personal use of the defendant and his associates and the payment of their debts except so far as necessary to acquire the stock of the coal company.

This was contemplated from the very beginning, and they had, in fact, long before the bonds were issued, contracted with the bankers to deliver them for this purpose when issued, and in so-disposing of the bonds they were but carrying out arrangements into which they had'entered long before, and which were necessary to the accomplishment of the end in view.

The general attitude of the plaintiff is that he, as the champion and representative of all the bondholders, in default of the trustee whose duty it was to act, has the right to reclaim the fund so improperly diverted and compel the railway company to apply it to the purpose to which it was originally devoted.

The true character of all the transactions in which the defendant and his associates were engaged, and their conduct, inlaw and in morals, cannot be fairly judged without always keeping clearly in mind their real relations to the property with which they were-dealing, and to the two corporations in whose, names it was nominally held. They were, however, the reál benefical owners-of it all, and when they had finally consummated the scheme by the various acts complained of what they had actuallj- done amounted to this and nothing more: They had raised a vast sum of money by placing a mortgage upon their own property, and had expended and disbursed the money as they thought would best promote their own interests. There is no one who, in this action, has any right to complain of this unless the bondholders, from whom they borrowed the money, were intentionally deceived to their loss or injury for which they have no adequate redress at law.

Recurring again to the construction of the provisions of the mortgage, it is obvious that the stipulations referred to in the covenant must be gathered from all the language which precedes it and has already been referred to. The only purpose of inserting the covenant at all was to prescribe the use to which the bonds or their proceeds were to be devoted, and it is reasonable to suppose that some restriction at least was intended. For the purpose of promoting justice and .guarding against or redressing injury to innocent parties a court of equity would be astute to give effect to such instruments, according to the sense in which the party executing it intended that it should be understood, and, taking all the words together and applying the principle of ejusdem generis, it is quite possible that a construction could be adopted in accordance with the contention of the plaintiff.

Assuming that proposition, there would still remain other questions of the gravest nature which would also have to be resolved in his favor. Perhaps the most important one is embraced in the ■contention of his counsel, that upon the certification and delivery of the bonds by the trust company, the trustee, to the railroad company, they were at once impressed with a trust, lien or equity in favor of the trustee, for the benefit of the future purchasers, and that a breach of such trust, by the use of the bonds for other purposes, subjected all the parties engaged in it, whether the railway company or the defendants, or all of them, to liability to restore the proceeds obtained in violation of the trust, for the benefit of the holders of the bonds. The defendant’s answer to that position is that the bonds had no inception or validity as obligations of the railway company until sold; that until then they were not property which could be the subject of a trust, and that at no time did the trustee of the mortgage have any property right or interest in them, legal or equitable; that the railway company held them with the absolute power of disposition, and when they were delivered to Burke in exchange for the stock he acquired the absolute title free from any trust, lien or equity in favor of any one. The defendant’s answer to the plaintiff’s claim on the theory of breach of the covenant, as a contract, would seem to be conclusive, and that is that he never made the covenant, but that contract, whatever its effect, was the act of the railway company, and that even if it were true that he caused'it to be violated, by means of his control of the corporation, it does not follow that he is liable upon it or that the plaintiff is entitled to sue for its breach in a court of equity. Finally, it is urged that the defendant and his associates are liable and bound to restore the proceeds of the bonds on the ground of fraud. There is no distinct finding of fraud in the ease, but' there are findings in regard to the various .acts of the defendant and his associates from the inception of the ■scheme to its close, and from all these findings it is argued that they so managed all the several steps leading up to the execution of the mortgage and the delivery of the bonds and so framed the language of the mortgage itself as to be a deceitful word of promise to the ear of investors who were thereby induced to purchase the bonds.

These problems are somewhat complicated and embarrassed by the presence in the case of another question which arises from a .former litigation. The defendant’s answer alleges, by way of defense, and the trial court has found, that on the 10th of February, 1887, the railway company brought an action against Burke and his associates, or some of them, in the court of common pleas of Franklyn county, Ohio, the domicile of all the corporations, and the state in which all or most of the transactions took place; that the action so brought was based upon the same facts alleged and found in this action; that after issue joined it was, by agreement, referred to arbitrators for decision; that they heard the evidence •and considered the claims of the then plaintiff which were based upon substantially the same ground as the plaintiff now claims in this action; that the award was in favor of the defendants on all the issues, and that on November 1, 1888, judgment was entered thereon in accordance with the agreement for arbitration. Neither the plaintiff nor the trust company, whose rights he represents, were parties to that action, and, of course, the action cannot be a bar, except as to such rights, if any, as the plaintiff now claims through the railway company. It may also be added that the .learned counsel for the plaintiff contend that the delivery of the bonds to the defendant in exchange for the stock of the coal company was an act ultra vires under the laws of Ohio.

There are other minor questions in the case, but sufficient has already been stated to show that the plaintiff’s road to success in the action is beset with many difficulties. The questions are of such a character that it may reasonably be asserted that a court of equity would have some hesitation in resolving them in the plaintiff’s favor, unless, possibly, in the presence of some great wrong or injury that called for redress or prevention.

The position of the parties is sought to be maintained on the one side and resisted on the other by elaborate argument, evidently the result of great industry and learning, by abundant citation of authorities, which we deem it unnecessary now to quote, ¡and with much subtle and ingenious reasoning. If we were now ■to enter upon the discussion and decision of these questions, it •would be fortunate, indeed, if we could reach any conclusion that ■would be satisfactory to ourselves, without, at the same time, imperiling in some way the enormous financial interests based upon the security of railway bonds, which, although not within the immediate and direct scope of this litigation, might be affected by its results.

In the view that we are disposed to take of this case, the deci.sion of these important and complex questions will not be necessary, so we leave them for some occasion when their determination becomes necessary, and they have been referred to now, only, for the purpose of making plain the point upon which we think that, our judgment can safely rest.

The nature of the questions upon which the plaintiff’s case depends, the sweeping relief which is given to him by the scope of the decision under review, and the momentous consequences to the defendant which must followthat decision it sustained, naturally directs the mind at once to an examination of the record for the-purpose of finding some serious wrong or injury committed,, threatened or reasonably probable, for the redress or prevention of which the plaintiff is entitled to appeal to the powers of a court of equity. It is needless to say that the case is entirely barren of any such feature. There is no allegation, proof or finding on that subject, but, on the contrary, it not only appears that he has not suffered any actual loss, but that, when he purchased the bonds at less than eighty cents, he made a good bargain and secured a prudent investment, the fruits of which he has ever since enjoyed and still retains. The interest has been promptly paid as it became due, the bonds have materially appreciated in value in the market, and there has not been a time since he made the purchase that he could not have sold them at a handsome profit. W hen we bear in mind the fact that those securities have passed through a period of great financial depression and disaster without default in the payment of interest, or depreciation in the market price, the transaction was rather creditable to his financial judgment than otherwise.

We have seen that these bonds were a part of a large block of six millions which were purchased by Winslow, Lanier & Go., the bankers, at the time they were issued, and it appears in the case that another million and a half were subscribed for at par by parties perfectly responsible and before any mortgage was made. The bankers purchased them with full knowledge of all the facts. They had knowledge of and were intimately connected with all the transactions that resulted in the issue and delivery of them to the defendant for the coal company stock. They knew perfectly well-that it never was the intention to use them or the proceeds for the purpose that the plaintiff insists they should have been, applied, and they were aware of all the steps in the scheme of the defendant and his associates as well as the end and aim in view. Of course these purchasers could not have been and were not defrauded or injured in any way, and it is conceded on-all sides that they could not have maintained this action, and hence the-plaintiff cannot unless he stands in a better position. We think that upon the findings in the case the same knowledge may be fairly imputed to him. Before acquiring the bonds he made full inquiry in regard to the condition of the property, their safety as an investment and the security for their payment. It is found that he was not aware of this particular covenant in the mortgage, and that he did know substantially what the actual situation was and how the bonds or their proceeds had been used. It appears that he availed himself of every source of information on this-subject that was open to a careful and prudent man. He made inquiry of the defendant Burke and was informed by him that the whole issue had been sold; that the railway company had parted with them, and that they were all then in circulation upon the market. He consulted Poor’s Manuel, a publication intended to furnish needful information on this subject to investors, and which contained the general balance sheet of the company. From that he learned that the eight thousand bonds had been sold ; that interest had been paid upon them in the year 1882; that the company had as part of its assets over eight millions in stocks and bonds and but a comparatively small balance in cash. This was notice to the plaintiff that the bonds had not been used to increase the security of the mortgage lien, and furnished to his mind the reasonable inference as to what the real fact was, namely, that they had been exchanged for the very large and nearly corresponding amount of assets on hand represented by stocks or bonds. With these findings in the case it is impossible to say that the plaintiff was deceived or defrauded to his injury, and •even if it was true, that the conduct of the defendant and his associates was questionable from the standpoint of strict commercial honor and business integrity, yet, it did not result in any injury to the plaintiff, the trustee or any of the bondholders. It is quite true that he is a Iona fide holder of his bonds in the sense in which that term is applied to negotiable obligations for the payment of money, but it does not follow that this position entitles him to invoke the jurisdiction of equity to interfere in or set aside transactions that were entered into long before he had any interest in the bonds, to which he was not a party, and that had the consent and acquiescence of the then owners of all the bonds, and of the railway company whose obligations they were, and which have not resul ced in any actual injury to him. So far as he is concerned these transactions are res inter alios acta. The contention that plaintiff is entitled to the benefit of the security nominated in the mortgage, though he has not yet been injured, in order to protect him from the chances •of future loss and to give to his bonds the value in the market which the restoration of the diverted fund would necessarily produce, is not, we think, entitled to much weight. One answer to it is, that a person cannot buy depreciated bonds in the market, with knowledge of all the facts,' and then proceed _ to increase the value by attacking, in a court of equity, business transactions which took place years before he had any interest in them, whereby some portion of the security promised in the mortgage was diverted, released or waived, by the action and with the consent of every party who then had any interest either in the bonds or the property. Having acquired the bonds with knowledge of all the facts, lie must, in equity, be deemed to have acted upon and acquiesced in the condition of the security as he found it. Moreover, it is altogether uncertain whether the plaintiff’s success in this action could accomplish the desired result. If the defendant should be adjudged to pay this vast sum into the treasury of the railway company, who would then own or have the benefit of the money ? The stockholders certainly have no right to it, since they acquired their stock subsequent and subject to the mortgage, and yet it is difficult to see who else could be benefited. It may be said that the court would direct the railway company to use it for the purpose held out in the mortgage-to the purchasers of the bonds and to feed the security, but that might be a waste of the money. To double-track a railroad or to add terminals does not necessarily increase its earning capacity, and, therefore, does not necessarily increase its value. Whether, in this case, such an application of the money would or would not add to the value of the security would depend upon circumstances. If the railway is now in every way equipped for the transaction of all the business that naturally belongs to it, then the use upon it of this large sum of money might not materially increase its revenues and might add to its expense. There is no-allegation or finding in the case that this railway now needs anything in the way of construction in order to enable it to transact all of its business. If the money is put into the treasury, to await the maturity of the bonds, it would still be the money of the railway, and, unless the courts keep watch and guard over it, or supervise its use or expenditure, it must be subject to the control of the directors. But we know that directors are made and unmade by stockholders, and the latter could always be relied upon to elect such as would best promote their own interests. The difficulty of formulating any judgment in the case which, on any state of the facts, would conform to equity might be further illustrated by another fact which is asserted in the case. It is stated upon the defendants’ brief that Winslow, Lanier & CJo., or the other bankers, still own three thousand two hundred and fourteen of these bonds. This assertion does not seem to be disputed, though I have failed to notice the fact among the findings. It is, of course, quite possible, since they could purchase them at any time in the market, if they have not retained them under the original transaction, and so may Burke and his associates. But, upon the theory of this action, they were all original wrongdoers who conceived aud perpetrated the fraud from beginning to end, and, of course, could have no standing in a court of equity to question any of the transactions, and yet it is difficult to see how they can be debarred from sharing in the fruits of the plaintiff’s success in this action and thus becoming beneficiaries of their own wrong.

If the market value of the plaintiff’s bonds would be increased by compelling the defendants to account for the money received upon the sale of the bonds, that increase would inure to the benefit of every other holder as well. It would be found impossible to discriminate between the innocent and the guilty. There is no aspect of the case that presents any element of equity that would justify the application of the principles stated with so much clearness and force by counsel. So, we think, it can and should be disposed of upon a few plain propostions in regard to which we are all in accord.

The plaintiff did not act upon the faith of any statement in the mortgage, but upon his own judgment, after full inquiry, with knowledge of the exact situation, and, hence, he was not deceived. He sustained no loss by the transaction, but, on the contrary, made a considerable sum of money. There is nothing in the case that gives any reasonable warrant for supposing that he ever will sustain any loss. This leaves him without any just ground of complaint and without any right to maintain this action.

We do not mean to intimate that even a bondholder, more favorably situated than the plaintiff is, could maintain it without showing some actual loss sustained, or probable danger of loss in the future. In any case the lapse of time and long acquiescence in the situation, would furnish good ground for the refusal of a court of equity to review transactions of this character between prior owners of such bonds and the railway, which had the assent of every party in interest. Calhoun v. Millard, 121 N. Y. 69 ; 30 St. Rep. 759. Hor are we inclined to concur in the legal conclusion upon which the case was disposed of at the special term, that plaintiff’s rights as a bondholder are derived through and under the original takers, and that he can have no other rights, under any circumstances, except such as they could assert. The plaintiff is one of the future bondholders named in the mortgage, with whom the contract was made, and one of t'he beneficiaries under that instrument, and must, for all the purposes of this question, be deemed to be a purchaser of the bonds as of the time when the railway company made the agreement under which they were issued and their payment secured. His rights are not affected by the mere fact that the title to his bonds can be traced back to parties who participated and were actors in the several transactions that took place prior to December, 1881, but if, under any circumstances, he could maintain this action, that right is materially affected by the equities existing to his knowledge when he purchased the bonds, and the further fact that he is in a court of equity without any solid ground for a claim of actual or prospective loss or injury. It is the absence of commanding'equity in his favor, not any inherent infirmity that attached to the bonds themselves, that constitutes the conclusive answer to this action, whatever may be its technical character, whether grounded upon fraud, breach of trust or breach of covenant.

The judgment of the general term should be reversed and that of the special term affirmed, with costs.

All concur in result upon the ground of the plaintiff’s relation to the litigation, but withholding all expression of opinion upon the question whether, in the absence of notice to the plaintiff of the facts when he purchased the bonds, the action could or could not be maintained.

The court agreed upon the proposition that subsequent holders of bonds in good faith and without notice are not precluded from relief on the ground that Winslow, Lanier & Co., took the bonds with notice of the actual transaction.

Finch and Haight, JJ., concur with opinion.

Judgment accordingly.