text:
    Timothy M. Spelman et al., Resp’ts, v. Moritz Friedman et al., App’lts.

      (Court of Appeals, Second Division,

      Filed January 20, 1892.)

    1. Assignment for creditors—Action by general creditor to set aside CONFESSED JUDGMENTS.
    A general creditor may maintain an action to set aside judgments confessed by a debtor, for an amount greater than one-third of his assets, immediately before making a general assignment.
    2. Same—Pleadings.
    Where the complaint in such an action alleges that all the transactions were done in contemplation of, as well as in fraud of, the assignment and with the intent to prevent a distribution of the property of the assignor, it is not demurrable because it does not state that the judgment creditors knew that the assignor intended to make an assignment.
    Appeal from a judgment of the general term of the supreme court in the first judicial department, affirming an interlocutory judgment entered upon the decision of the court at special term.
    This action was brought by the plaintiffs, as general creditors of the defendant Josephine M. Soussman, to set aside three judgments confessed by her in favor of certain of the other defendants, together with the executions issued thereon and levies made thereunder, as in violation of the statute restricting preferences in general assignments for the benefit of creditors. (Laws 1887, chap. 503). Several of the judgment creditors demurred upon the ground that the complaint did not state facts sufficient to constitute a cause of action.
    The general term affirmed the interlocutory judgment of the special term, overruling such demurrers, but certified that the question involved was of sufficient importance to render a decision" by this court desirable before proceeding further. Code Civ. Pro., 1190, par. 4. _ t
    _ The facts appear in the opinion.

      Alex. B lumenstiel, for app’lts; John W. Boothby, for resp’ts.

       Affirming 27 St. Rep., 392.

   Vann, J.

The plaintiffs were general creditors of the defendant Soussman on the 14th of May, 1888, when she made a general assignment of all her property for the benefit of her creditors to the defendant Phillips, who accepted the same, and it was thereupon recorded in the office of the clerk of the city and county of Mew York, at a quarter past twelve in the afternoon of that day. A few hours before Mrs. Soussman, being insolvent, confessed a judgment in favor of the defendants Jaffrey and others for the sum of $2,110.80 ; a second, in favor of the defendant Sigisman .for $2,056.38, and a third, in favor of the defendants Preedman for $2,802.27, and the respective judgment rolls were filed in said clerk’s office at seven, eight and nine minutes past ten in the forenoon of the day on which said assignment was made and recorded. Immediately after the entry of said judgments, executions were issued thereon against the property of Mrs. Soussman to the defendant Grant, as sheriff, who by virtue" thereof, just before the delivery of said assignment, levied upon, all her property, which was not worth three times the amount of said judgments. After setting forth the foregoing facts the complaint further alleged “ that the said judgments were confessed and the said executions issued and levies made, in contemplation of the said assignment and for the purpose of preferring the said persons in whose favor the said judgments were confessed out of the property of the said defendant Soussman, in fraud of the said assignment, for more than one-third of the net assets of the said defendant Soussman, and to prevent the said assets from going into the hands of the defendant Phillips, as such assignee, and being distributed tó the plaintiffs and the other creditors of the said defendant Soussman, pursuant to the statute in such •cases made and provided and pursuant to the provisions of the .•said assignment, and are fraudulent and void as against the de.fendant Phillips, as assignee.”

It was further alleged that the assignee, after due notice of the facts, refused to bring an action to set aside said judgments, executions and levies, although requested by the plaintiffs so to do. The relief demanded was that the judgments, executions and levies be declared void as to the assignee; that the sheriff be directed to turn over the property levied upon by him to the assignee; that the proceeds thereof be applied pursuant to the terms and conditions of said assignment; and that all of the defendants, except the assignee, be restrained from disposing of or interfering with the property so levied upon.

A copy of the assignment and of the several rolls of the confessed judgments were annexed to and made a part of the complaint, from which it appeared that the debts for which such judgments were recovered were preferred in the assignment and that they were the only preferences therein, except wages and salaries actually owing to the employees of the assignor.

In support of their demurrer the defendants contend that as the plaintiffs are not judgment creditors of the assignor, they have no standing to maintain an action of this character. If this were an ordinary creditor’s suit, brought to set aside the assignment as a fraudulent obstruction to the rights of the plaintiffs, it would be .necessary for them to allege that they had exhausted their remedy at law. It is well settled that a simple contract creditor cannot attack, as fraudulent, the transfer by his debtor of property applicable to the payment of the debt, until after the recovery of judgment, the issue and levy of an execution or its return unsatisfied. Dunlevy v. Tallmadge, 32 N. Y., 457; Adee v. Bigler, 81 id., 349; Adsit v. Butler, 87 id., 585; Wait on Fraudulent Conveyances and Creditors’ Bills, 106; Code Civ. Pro., § 1871; 2 E. S., 173, § 38.

The plaintiffs, however, do not attack the assignment, but seek to uphold and enforce it. Their theory is that it is a valid instrument and that it vested in the assignee the legal title to all the property of the assignor. They rest upon the assignment, making their action subsidiary and not hostile thereto, and aim to protect the property in the hands of the assignee, as they claim he should have protected it, to the end that its proceeds may be distributed by him according to the provisions of-the assignment. As beneficiaries under the trust they are trying to have it enforced, through the assignee, by taking such action as they allege he should have taken, not for their exclusive advantage, but for the benefit of all similarly situated. They do not seek to discover assets or to obtain a lien, but-to cause certain effects in which they have an interest to be administered and distributed according to the assignment without spoliation or waste. A cestui gue trust is not required to establish his debt by an action at law in order to compel an enforcement of the trust, or to protect the trust property from unlawful interference.

As the plaintiffs acknowledge the validity of the assignment and come in under it, what use could they make of a judgment if they had one? If they were in a situation to issue an execution,, it would be improper for them to levy upon the assigned property. What could they do in aid of the assignment with, that they cannot as well do without, a judgment recovered and execution re: turned? Their ultimate right to share in the assets, and the refusal of the assignee to bring an action that is necessary for the protection of the assets, gives them the right to bring it as auxiliary to the trust. His right to maintain an action depends on. the act of 1858,- Laws 1858, chap. 314, and their right comes through his refusal to sue. As he can sue for the benefit of simple contract creditors, Southard v. Benner, 72 N. Y., 424, why cannot simple contract creditors sue, making him a party, upon his refusing to sue in their behalf ? What reason is there for limiting action .to judgment creditors, when creditors at large have an equal right to share in the benefits ? What virtue is there in a judgment as the basis of an action when it is not needed in order to fully share in the fruits of the action ? The line of reasoning suggested by these inquiries finds support in the authorities which recognize a distinction between an action of this kind and a creditor’s bill. The function of a creditor’s bill is to establish and enforce a lien upon property alleged to belong to the debtor, to take it from the possession of whomsoever may claim to own it, and to cause it to be sold to pay the judgment creditor’s debt, who thus obtains an advantage over all the other creditors. It is exclusive in object and result, and benefits the active at the expense of the inactive creditor. It is necessarily hostile to a general assignment, which it must destroy in order to succeed as to any property transferred thereby. Loos v. Wilkinson, 110 N. Y., 195; 18 St. Rep., 110.

The act of 1858 authorized a new class of actions, analogous in many respects to creditors’ bills, to be brought for the benefit of all the creditors alike, by the assignee or other representative of an insolvent estate, to set aside fraudulent transfers by the debtor. Such actions require no lien, but are maintainable by force of the statute. Southard v. Benner, supra; Reynolds v. Ellis, 103 N. Y., 116, 123; 2 St. Rep., 786. When the assignee neglects or refuses to bring such an action, after notice of the facts, as was declared by this court in Dewey v. Moyer, 72 N. Y., 70, 78, “itis. abundantly established that the creditors may commence an action to reach the property (fraudulently transferred) making the assignee, the debtor and his transferees parties defendant.” So in Crouse v. Frothingham, 97 N. Y., 105, 113, it was said that if the: “ assignee refuses in a proper case to proceed and get in the assigned. property, the creditors collectively, or one in behalf of all who may come in and join, may compel the execution of the trust in equity.” While in the cases cited the actions were brought by judgment creditors, it was not intimated that this was. essential, and we find no case that so holds.

We think that the action can be maintained by any of the creditors who would be benefited by the result, including both. judgment creditors and creditors at large. Harvey v. McDonnell, 113 N. Y., 526; 23 St. Rep., 501; Preston v. Spaulding, 120 Ill. 208, 214; Goncelier v. Foret, 4 Minn., 1; Holt v. Bancroft, 30 Ala., 193, 204; McDougald v. Dougherty, 11 Ga., 570; Weir v. Tannehill, 2 Yerger, 57; 2 Barb. Ch. Pr., 149.

The appellants further contend that their demurrer should be ■sustained because it does not appear from the complaint that they knew that the assignor intended to make an assignment.

The- act of 1887 changed the policy of the state with reference to preferences in general assignments. Laws 1887, ch., 503, § 30. Prior to the passage of that act there was no restriction upon the power of an insolvent debtor to give such preferences as he chose when making an assignment either by that instrument alone or by ■other transfers in connection with it. The object of the act was to change the law by placing a limit to the power to prefer in a general assignment and it should be liberally construed, as has been held in relation to similar statutes, “ so as to suppress the mischief and advance the remedy.” White v. Cotzhausen, 129 U. S., 329, 341; Preston v, Spaulding, 120 Ill., 208; Appeal of Miners' National Bank, 57 Pa. St., 193, 200.

Accordingly the assignor should not be allowed to subvert the statute by artifice or evasion, especially when the creditor preferred participated in the unlawful design. Whatever is done in connection with, or in contemplation of the assignment, with the intent to defeat the operation of the statute, falls within the spirit of its prohibition and should receive the condemnation of the courts. When the assignment is part of a scheme to circumvent the law, the judgments are confessed by the debtor, executions issued thereon by the creditors and levies made upon the property of the debtor in their behalf, as parts of the same scheme, it is the duty of the courts to see that the object of the legislature is not defeated by such acts, which, although not a part of the assignment, are done in contemplation of it and with the intent of both ■debtor and creditor to frustrate the statute. Such is the case made against the defendants by the complaint as we construe it. It appears from that part of the complaint already quoted that the “judgments were confessed * - * in contemplation of the ■said assignment and for the purpose of preferring the said persons In whose favor the said judgments were confessed, out of the property of the said defendant Soussman, in fraud of the said ■assignment, etc.” Those were the acts and this the intent of the debtor. But it is also as distinctly alleged that “the said executions (were) issued and levies made in contemplation of the said assignment and for the purpose of preferring * * * in fraud of the said assignment * * * and to prevent the said assets from going into the' hands of the * * * assignee and being ■distributed * * * pursuant to the statute *' * * and pursuant to * * * the assignment, etc.” These were the .acts and this the intent of the judgment creditors. All the transactions which the plaintiffs seek to set aside are alleged to have been done in contemplation of, as well as in fraud of, the assignment and with the intent to prevent a distribution of the property of the assignor according to the assignment and the statute. The debtor confessed the judgments and the creditors issued the executions and caused the levies to be made, participating in the same fraudulent purpose and jointly contemplating, that is expecting, or looking forward to, the assignment as about to be made.

The connection between the acts alleged to be illegal and the assignment is emphasized by the preference in the latter of the same debts.for which the judgments were confessed, so that if the judgments are set aside, the judgment debtors will still be preferred to the extent of one-third of the assets of the assignor, or all that the law allows. Their efforts to secure more than this by a palpable evasion of the statute should not succeed, and the instrumentalities employed to effect that object have been properly adjudged void by the judgment of the courts below. Berger v. Varrelmann, 127 N. Y., 281; 38 St. Rep., 813 ; Manning v. Beck, 129 N. Y, 1; 41 St. Rep., 199.

The cases cited leave nothing further to be said upon the subject, as, according to either, the complaint sets forth a good cause of action, so far as the point under consideration is concerned.

The judgment should be affirmed, with costs, but with leave to the appellants to answer on payment of costs.

All concur, except Bradley, J., not voting.


source: Caselaw Access Project

author: Bradley, J.

license: Public Domain

text:
    Oliver W. Barnes, Pl’ff, v. George H. Brown and James Seligman et al., Ex’rs, Def’ts.

      (Court of Appeals, Second Division,

      Filed January 20, 1892.)

    1. Contract—Breach—Damage.
    Plaintiff was president of the IT. T. City Cent. TT. By., and had claims-against it. Only 117 shares of stock had been issued, of which he held sixty-three. He transferred sixty shares to Brown and Seligman and they contracted to pay him his claims if certain amendments to their charter passed the legislature and then give him 8,000 paid shares of the capital stock. If the amendments did not pass, they agreed either to do the same or return his sixty shares to him. The amendments did not become a law and defendants paid plaintiff's claims and transferred to him 3,000 shares of unpaid stock, which he returned and demanded paid stock. Upon an action for breach of contract plaintiff was awarded nominal damages against Brown on the ground that at the time defendants undertook to deliver the stock it had no market value. Held, no error.
    8. Same—Joint obligors—Executors oe deceased.
    An action cannot be maintained against the executors of a deceased joint obligor to enforce the obligation, in absence of an allegation of the-insolvency of the surviving obligor.
    Appeal by the defendant Brown from order of the general1 term of the supreme court in the first judicial department, reversing judgment entered upon report of referee and granting a new trial. And appeal by the plaintiff from judgment of the same-general term, affirming judgment entered upon the report of the referee in favor of the defendants Seligman.
    The action was brought to recover damages for the alleged breach of contract, of which the following is a copy, to wit:

      “Oliver W.Barnes having, by instruments bearing even date, herewith assigned and transferred to us, George H. Brown and Joseph Seligman, all claims and demands against the Mew York City Central Underground Railway Company, and his title to certain subscriptions to the capital stock of said company, and also any interest he may have in a certain alleged contract made with the said company by Francis P. Byrne, and having also transferred sixty shares of stock in said company: Mow we, George H. Brown and Joseph Seligman, do hereby, in consideration of the premises and of one dollar to us paid by the said Oliver W. Barnes, agree that we will, upon certain amendments to the charter of the said Mew York City Central Underground Railway Company, now pending before the legislature of the state of Mew York, becoming a law, pay, or cause to be paid to the said Oliver W. Barnes, his representatives and assigns, the sum of twenty-seven thousand five hundred dollars in currency of the United States, being the amount of certain advances made and services rendered by the said Barnes to the said railway company. And also that we will cause to be delivered to the said Barnes or his assigns at the time of the payment of the said money, two thousand shares of the -capital stock of the said railway company, which said stock is to be full paid stock.
    “And we further agree with the said Oliver W. Barnes, his representatives and assigns, that in the event of the said amendments not becoming a law at the present session of the legislature we will either cause said money to be paid and said two thousand shares of stock delivered to the said Barnes or his assigns, or have reassigned to the said Barnes or his assigns the claims, demands and rights so assigned to us, and transfer to him or his assigns the said sixty shares of stock so transferred to us the next day after the close of the present session of the legislature of Mew York. And we further agree that not more than one hundred additional shares of the stock of said company shall be issued until the said payment be made and stock delivered without the consent of the said Barnes, and that so much of said one hundred shares as shall be issued shall be transferred to the said Barnes if we do not exercise our option of paying said twenty-seven thous- and, five hundred dollars and delivering said two thousand shares on the failure of the said amendments to become a law at the present session. And we further agree that no contract for the construction of the railway of the company shall be entered into without the consent of the said Barnes until the said money shall be paid and the stock delivered.
    “In witness whereof we have hereunto set our hands and seals, this twenty-sixth day of March in the year .one thousand eight hundred and seventy-two.
    “George H. Brown, [l. s.]
    “Joseph Seligman.” [l. s.]
    When in 1882 this action was commenced, Joseph Seligman had died and executors of his will were joined as defendants with Brown. The alleged default was in the failure or refusal to deliver to the plaintiff the two thousand shares of the stock of the railway company as Brown and Seligman had undertaken by the contract The plaintiff sought to recover $200,000 and interest The referee found that the stock had no value and directed judgment against Brown for nominal or six cents damages ; and as to the defendants, executors, the referee directed judgment of dismissal of complaint The general term affirmed the latter, and reversed the judgment for nominal damages and as to the defendant Brown granted a new trial.

      Edward O. James and Ira Leo Bamberger, for pl’ff; Hamilton-Odell, John E. Parsons and George W. Seligman, for def’ts. i

   Bradley, J.

The main controversy has relation to the rule or measure of damages applicable to the breach of the contract upon-which this action was founded. While the plaintiff claims that damages cannot be less than two hundred thousand dollars and interest, it is insisted on the part of the defense that they were-only nominal. Before proceeding to the consideration of the question in that respect, reference may properly be made to the facts out" of which the alleged, claim arose. The New York City Central Underground Railway Company was organized under an act incorporating it and authorizing the company to construct and operate an underground railway in the city, of New York, passed in 1868,. and amended in 1869. The authorized capital stock of the company was ten millions dollars. At the time the contract of March 26, 1872, was made, the plaintiff was president of the company. He then had some claims against it; and only one hundred and seventeen shares of capital stock had been issued, of which he held' sixty-three shares. By the transfer of the sixty shares to Brown and Seligman they took the control of the organization of the-company. The amendments to the charter then pending in the legislature did not become a law; and consequently it was optional with them to either retain their purchase and pay or surrender what they had received and put an end to the contract. They, however, concluded to treat it as effectual and assumed the-undertaking to perform, and afterwards did pay to the plaintiff the twenty-seven thousand and five hundred dollars, and did deliver to the plaintiff certificates of two thousand shares of the capital stock of the company. This was apparently full performance, but. in fact was not, because that so delivered was not paid stock. And when this was discovered by the plaintiff he offered to return the certificates and demanded such as he was entitled to. Further performance was refused, and this action followed. The only question as against.the defendant Brown was one of damages. And the referee found that at the time when he and Seligman' undertook to deliver the stock to plaintiff it had no actual or market value, and determined that he was entitled to recover nominal damages only.

The stock certainly had no market value. None was in the market This finding and conclusion were challenged by the-plaintiff’s exceptions. By reference to the condition of the com-pony it is seen that the total amount of money received by it on account of subscriptions to its stock was $5,700, and that was received in 1869 and 1871. The other credits to the capital stock account were in demand loans and special services rendered the company. The various efforts prior to 1872 were unsuccessfully made to raise money for the purpose of construction of the rail-, way, and the reason why the bonds of the company could not be negotiated was that it had been unable to obtain subscriptions to its capital stock to pay for right of way. The land and consequential damages incident to the construction of the railway were estimated at $5,000,000, and the expenditures by the company for work done towards construction and for land and land damages did not exceed $4,000. The indebtedness of the company was about $350,000. This was, in general terms, the situation of the company when the contract of March 26, 1872, was made, and it was known as well to Brown and Seligman as to the plaintiff.. Whatever of value they took by the contract was in the franchise of the company and- was dependent upon the use which could be made of it by way of the construction and operation of an underground railway. While the futility of the enterprise tended to show that it never had any actual value, there evidently was hope and expectation of success entertained by Brown and Sqligman when they elected to retain the benefit of the contract, and it is in that view insisted by the plaintiff that the stock then had a value which to him may at that time have been available, although later it turned out to have had none, and, therefore, he lost whatever he may have realized by its conversion if it had in due time been delivered to him. There is apparently some force in this suggestion, but it is entirely speculative, assuming that the stock then in fact had no actual value as well as no market value. There was some conflict in the expert evidence upon the subject founded upon the situation of the company. While that on the part of the defendants was that the stock had no value, that of the witnesses called by the plaintiff was to the effect that it was as the situation then appeared worth par. It may be observed that the plaintiff held the stock represented by the certificates so delivered to him until about September 1,1874, upon the assumption that it was full paid stock before his discovery that it was otherwise.

The finding of the referee that the stock had neither actual nor market value was supported by evidence, and for the purposes of this review must be deemed conclusive. But it is insisted by the learned counsel for the plaintiff that the plaintiff should nevertheless have received the $200,000, and interest upon it, because he was entitled to the stock, or to a sum which it would cost to obtain it. As a general rule the damages which a party is entitled to recover against another for breach of contract are such as will indemnify him for the loss he has suffered by the default. And it is with a view to that result that the rules for ascertaining and awarding damages have been adopted. The purpose of the rule in that respect is to leave the party in no worse, and place him in no better condition than he would have been if the act or default complained of had not been committed.

It was with a view to such measure of relief, and the adoption of a rule to accomplish it, that the doctrine which gave the highest market value up to the time of the trial as the measure of damages for conversion of property of fluctuating value, as held in Markham v. Jaudon, 41 N. Y., 235, and some prior cases, was-overruled in Baker v. Drake, 53 N. Y., 211, and the market value for a reasonable time within which to replace the property was adopted as furnishing the guide to the proper measure of damages, and the more satisfactory means of indemnity. In that case the defendants, pursuant to an arrangement with the plaintiff, had purchased stocks to hold and carry subject to his order so long as-lie kept his margin good. The defendants disposed of the stock in violation of the agreement. And the court there held substantially that an amount sufficient to indemnify a party injured for the loss naturally, reasonably and proximately resulting from the act complained of, and which a proper degree of prudence on the part of the complainant would not have averted, is the proper-measure of recovery when punitive damages are not allowable. And that “ the advance in the market price of the stock from the time of the sale up to a reasonable time to replace it after the-plaintiff received notice of the sale would afford a complete indemnity.”

The principle upon which the determination of Baker v. Drake rested was that the measure of the plaintiff’s damages was governed by the opportunity which was afforded by the market for him within a reasonable time to replace the stock on the refusal of the defendant to do so. S. C., 66 N. Y., 518; Colt v. Owens, 90 id., 368. And in Wright v. Bank of the Metropolis, 110 N. Y., 237; 18 St. Rep., 92, the same rule was held in like manner-applicable where stock fully paid for by the owner is through the-honest mistake of the pledgee converted by him, and he refuses, to replace it. Thereupon the owner may do so within a reasonable time, and the highest market price within that time is the proper measure of damages. This is the recognized rule in this state ; and it is applicable alike to actions upon contract as in tort.

In the present case there was no market to resort to for the plaintiff to supply himself with the stock, nor any market value to furnish the measure of damages. The rule applied in the cases last cited was not, therefore, in that sense applicable to the situation in the case at bar. A subscription, however, to two thousand shares of the capital stock of the railway company, and payment, of the full amount to the company, would have produced the stock, and it, may be assumed that it could not otherwise have-been procured. It is upon that ground that the plaintiff insists, that the liability of the defendant is measured by that amount This would have been so if the agreement of Brown and Seligman had been to pay the plaintiff $200,000 in the stock . of the company. Then their indebtedness or liability would not have been controlled by the value of the stock, but would have been fixed by the contract; but when the specific quantum of the stock was made the consideration in that respect for the plaintiff’s sale to-them, on their failure to deliver it he was entitled in damages to the equivalent of that which they had undertaken to render.

In the absence of special circumstances in an action for conversion of personal property, as well as one for failure to deliver it in performance of a contract where consideration has been received, the value of the property at the time of such conversion or default, with interest, is the measure of compensation. Ormsby v. Vermont, etc., Co., 56 N. Y., 623; Parsons v. Sutton, 66 id., 92. Ho special circumstances were alleged in the complaint to take this case out of the general rule. Hor was there any fluctuation in the value of the stock succeeding the time for its delivery under the contract to qualify the application of such rule.

The damages which a party ordinarily may recover for breach of contract are those which naturally flow from the default. And. if the contract is made in reference to special circumstances affecting the measure of compensation, such circumstances may be treated as within the contemplation of the parties and constitute a basis for the assessment of damages. Booth v. Spuyten Duyvil R. M. Co., 60 N. Y., 487. They come within the meaning of special damages, and must be the subject of allegation in pleading to entitle the party to make proof of them, unless objection in that respect be waived. In "the present case no facts of special character relating to damages were alleged, nor were any established by the evidence further than the mere fact that the stock of' the company had no market value. If, notwithstanding that fact, the stock may have had an actual value, a different question would have been presented, for the plaintiff could not be subjected to loss, nor could the defendant be permitted to profit by the fact that the stock had no market value at the stipulated time for delivery. Then other means than those afforded by the market would be resorted to under the contract, as within the contemplation of the parties, to ascertain the amount requisite to full indemnity to the plaintiff. Sternfels v. Clark, 2 Hun, 122; 70 N. Y., 608.

There may be cases in which damages have no support in market values where the value is peculiar to the party entitled to performance, and relief will be given accordingly. Scattergood v. Wood, 14 Hun, 269; 79 N. Y., 263: Parsons v. Sutton, 66 id., 92. And when the remedy at law for compensation is inadequate or impracticable it may be found in equity by way of specific performance. Pom. Bq. Jur., § 1401. Those are supposed cases to which the principles of law adapt remedies when they arise.

But in the case at bar the stock not only had no market value, Jt also had no actual value. Hor does it appear that it would have been of any value to the plaintiff or of any substantial benefit to him for any purpose if he had received it. The defendant Brown and his associate Seligman did not by the contract undertake to do anything to give any future value to the stock of the company. Then we have the simple case of a contract to deliver a certificate for a certain quantity of capital stock then having no-existence, and when due and thereafter having ho value. The claim that because the creation or issue of this worthless stock would cost its par value the plaintiff is entitled to recover that sum, does not seem to have the support of any well defined principle- of law. But it is said that with knowledge of the situation Brown and his associate absolutely agreed to deliver the stock'and therefore they were bound to pay the amount requisite to accomplish it without regard to the value of the stock or of its beneficial use to the plaintiff.

' In an action at law to recover damages for breach of contract the question of damages is one of indemnity. And in that respect the remedy founded upon this contract does not differ from that upon any other contract for default in the delivery of property which a party has unqualifiedly undertaken to deliver for a consideration received.

In Dana v. Fiedler, 12 N. Y., 40, the measure of damages for failure to deliver madder-pursuant to contract was founded upon the market value at the time of the default. The question there-arose .upon the exclusion of evidence speculative in character, and which for that reason was held inadmissible upon the question of such value.

Nor does Scattergood v. Wood have any essential application in principle to the case at bar. In that case there was an element of exemplary damages against the defendant, who had willfully deprived the plaintiff of the use of a test machine designed by him for a special purpose, in consequence of which he was put to the expense of constructing another for such purpose. Of this intended use the defendant was advised when he appropriated and withheld the machine from the plaintiff. The recovery of the expense of constructing the second one as damage for the detention of the other was sustained, although, by reason (as it turned out) of its insufficiency, the value of the latter was much less than such cost

In the present case the action is founded solely upon the failure to deliver to the plaintiff the stock without any supported claim of special circumstances for any damages other than such as flow naturally and reasonably from such default of Brown and Seligman. While the performance of their contract in that respect may have required them to pay to the- company $200,000, the entire value of its performance to the plaintiff was in the stock which they undertook to deliver to him, and this was the only benefit he was entitled to take under that provision of the contract. The value' of the stock, or its pecuniary equivalent, was the measure of his injury by the default And, as it had no value, the plaintiff was awarded complete indemnity by the conclusion of the referee that he was entitled to recover nominal damages only.

There was no error in the ruling of the referee by which evidence of value of the stock was received. The complaint alleged that on January 22, 1873, when the plaintiff accepted the certificate before mentioned of stock in performance of the contract, the stock of the company was worth and salable in the market at its full par or face value, and demanded judgment for that amount and interest from January 23, 1873. This was the situation of the complaint when the evidence upon the question of value was given. And the plaintiff, upon a state of facts embraced in a hypothetical question, called upon the witnesses to state the value of the stock in January, 1873. This was the time when, by the issue tendered in the complaint and taken by the answer, the-value of the stock was, by the pleadings, brought in question. And it may be observed that the assumed facts upon which the answers of the witnesses were predicated were the same and no-different at that time than they were on the day when the contract matured.

These views lead to the conclusion that as to the defendant Brown the judgment directed by the referee should be sustained. But as the order granting an additional allowance of costs to that, defendant may be deemed to have been reversed at general term, that disposition of the order is affirmed, and the costs recovered treated as reduced accordingly.

The contract was the joint undertaking of Brown and Seligman.The latter having died before the action was commenced his personal representatives were joined as defendants with Brown. The-complaint was as to those executors dismissed by the referee upon the ground that facts sufficient to constitute a cause of action against them were not alleged. Their testator having only the relation of joint contractor with Brown, his death placed the primary liability upon the latter unless he was unable to pay or insolvent Upon that fact the liability of those personal representatives, to-the plaintiff upon the contract was dependent, and that fact was essential to the cause of action against them. Grant v. Shurter, 1 Wend., 148; Trustees, etc., Orphan House, v. Lawrence, 11 Paige, 80; 2 Denio, 577; Pope v. Cole, 55 N. Y., 124, and cases there cited; Hauck v. Craighead, 67 N. Y., 432. It was not alleged. This defect was available by objection which was taken at the trial. Code, § 499.

It does not appear on what ground the motion to amend the complaint was denied. The plaintiff was not entitled to it as-matter of right. And the discretionary power of the referee exercised in denying the amendment is not the subject of review here.

The judgment in favor of the defendants Seligman as modified by the general term should be affirmed. And the order reversing the judgment and granting a new trial as against defendant Brown should be reversed and the judgment entered upon the report of the referee (after deducting therefrom the amount of the additional allowance of costs) affirmed.

All concur.

       See 29 St. Rep., 68.


author: Brown, J.

text:
    George B. More et al, Resp’ts, v. The New York Bowery Fire Ins. Co., App’lt.

      (Court of Appeals, Second Division,

      Filed January 26, 1892.)

    1. Insurance (Fire)—Contract for policy—When binding on insurer.
    Plaintiffs applied for insurance to one 1ST., who had blanks furnished him by Sage, an agent of defendant, who had full power to make contracts. hi. filled out the blank and sent it to Sage, who wrote to bL, saying he had written the company in regard to the risk and would advise him as soon as he heard from them, as it was a special risk and he did not wish to write it without first submitting it to the company. Plaintiffs knew that the application must receive the approval of the company. The application was rejected May 19, but Sage did not notify hT. or plaintiff. On May 30 plaintiff sent hi. a check for the premium and on June 6 the property was burned, field, that the company was not liable, as there was no agreement on the part of Sagé as agent of the defendant to issue a policy to plaintiffs.
    3. Same.
    The mere failure of an insurance company to respond to an application raises no inference that the company accept and insure the risk. The proper inferences from failure to respond to a proposition of any kind is that it is rejected or declined.
    3. Same.
    The acceptance of the premium by If., an insurance solicitor, and his statement that it was all right, did not bind the defendant. As plaintiffs understood that he did not have power to contract, such statement was merely the expression of an opinion.
    Appeal from a judgment of the general term of the fourth judicial department, affirming a judgment entered upon the report of a referee.
    This action was brought to recover upon an alleged paroi contract to insure the plaintiffs’ creamery building in Delaware county for the term of six months, from May 12 to November 12, 1887. The defendant denied the making of the contract
    It appeared that Omar Y. Sage was the secretary of the Cooperative Insurance Company, a company engaged in the insurance business in the counties of Greene, Schoharie and Delaware, and issuing policies limited in amount to $2,500.
    For the purpose of dividing risks where the value of the property on which the insurance was sought exceeded that amount, he requested to be and was appointed agent for the defendant company. As such agent he had full power to fix the rate of premium, collect the same and issue policies. The co-operative company had numerous agents soliciting insurance in the counties named who were informed by Sage of his appointment and the purpose of it, and to whom he sent blank applications, with instructions that in ease they secured business for the defendant, they should fill out such applications as completely as possible and send to him at Catskill, leaving blank the space to be signed by the agent for his (Sage’s) signature.
    On May 12, 1887, Charles E. Nichols, one of the agents for the co-operative company, as a result of negotiations had with the plaintiffs, filled out one of the blank applications which had been sent to him as aforesaid and forwarded it by mail to Sage at Catskill.
    On its receipt Sage wrote to Nichols saying that he had written to the defendant in reference to the risk and would advise him as soon as he heard from them. That the risk was special and he did not wish to write it without first submitting it to the company.
    On the same day he wrote to the defendant at New York, stating the application and what the risk was, and the defendant immediately replied rejecting the application and declining to write the policy. This letter from the defendant was received by Sage about May 19th, but he neglected to notify the plaintiffs or Nichols of the defendant’s action. The application made out by Nichols was as follows:
    “ New York Bowery Fire Insurance Company of New York in consideration of thirteen 50-100 dollars do insure C. B. More & Co., to the amount of Eighteen hundred dollars on their 11-2 story frame building, shingle roofed, situated in the village of No. Harpersfield, Del. Co., N. Y., on the south side of Main street, used as a creamery for the manufacture of butter. Said Eighteen hundred dollars is divided as follows : $800 on building; $800 on fixtures therein; $200 on butter packages, milk cans and butter therein contained. Term six months. Amount $1800, rate § per cent, premium $13.50.
    “ Commences May 12, 1887. Terminates November 6, 1887,
    •--, Agent.”
    On May 30th the plaintiff sent a check for the premium agreed upon to Nichols, which he received but never remitted to Sage or the defendant, and on June 6th the buildings were burned.
    With reference to the application for the insurance the referee found that it was made after two or three conversations between Nichols and the plaintiffs and “ was written on the day of its date as the final agreement which the plaintiffs had concluded to make and as the terms had been agreed on.” “ That the plaintiffs did not see the application blank.” “ That the plaintiffs understood distinctly, from their conversation with Nichols, that he could not make or issue a policy of insurance upon their property in behalf of the defendant, and that before such policy could be issued their application must receive the approval of some other person or persons.” With reference to the payment of the premium, he found, “ That a day or two thereafter Nichols met one of the Elaintiffs, who asked him if he had received the check and said that e had received no policy, and Nichols told him that it was all right, that he had heard nothing from the company and consequently it was all right, and that he would get the policy in a day or two.” 41 That plaintiffs believed that they were insured according to the terms of the writing * * * after the assurance given them by Nichols upon the receipt of the check for the premium, that it was all right or he would have heard from the company.” He found, as a conclusion of law, “ That the writing of Nichols on the 12th day of May, 1887, together with the acts of the defendant, and the agent Sage, and by reason of the writing not being repudiated within a reasonable time after it was submitted to the defendant, became and was a valid and subsisting contract of insurance at the time of the fire according to the terms of the writing, and in the form of the standard stock policy of the state, and was as such binding on the defendant.”

      A. H. Sawyer, for app’lt; John P. Grant, for resp’ts.

         Reversing 29 St. Rep., 768.

   Brown, J.

The question presented in this case is whether there was a contract for insurance between the parties, and it maybe said that if such a contract existed at any time subsequent to May 12th it had not been rescinded or annulled at the time of the fire.

If there was a contract, it grows out of the acts of the agent, Sage, and his subordinate, Nichols, which are binding upon the defendant, notwithstanding the fact that it promptly refused to accept the risk or issue a policy when the application was presented to it.

An agent of a fire insurance company having unrestricted authority to accept risks, fix premiums and make and issue policies, has power to bind his principal by a preliminary paroi contract to-issue a policy. Ellis v. Albany City Fire Ins Co., 50 N. Y., 402; Angell v. Hartford Fire Ins Co., 59 id., 171. Such was the power-possessed by Sage as the agent of the defendant, and had he-agreed to issue a policy to the plaintiffs, the judgment could be sustained.

The general term based its decision upon the application of the-principle of the cases cited to the facts which that court assumed, to exist, that Sage knew on May 16th that the insurance, according to the agreement between Nichols and the plaintiffs, was to taker effect from May 12th, and that the plaintiffs relied upon the defendant as an insurer of their property, and that Sage’s silence under these circumstances was in legal effect an approval of the application, and a consent on the part of the defendant to enter into the contract contemplated by the plaintiffs. That Sage had the powel- and authority to make just such a contract as plaintiffs claim was. made may be conceded, but the facts assumed by the general term, were not found by the referee. He refused to find that Nichols-agreed that, in case the property was burned after May 12th,. plaintiffs would get their insurance, or that the agreement was to-commence on that date.

The finding that he did make was that the evidence tended to-the belief that it was to be considered as commencing on that day. But this was qualified by another finding, that plaintiffs understood from Nichols that he could not issue a policy, and that before that was done their application must receive the approval of some other person. In effect this was a finding that there was not. to be a contract until the application was approved elsewhere.

The evidence does not disclose that Sage had any knowledge concerning the negotiations between plaintiffs and Nichols, except-such as he derived from the. application, and in view of the findings of the referee that I have quoted, it cannot be said that on May 16th he knew, or had any reason to suppose, that the plaintiffs, relied upon the defendant as an insurer of their property. On the contrary, the finding of the referee in reference to the plaintiffs’ belief on that subject is, that they “ believed that they were insured after being informed by Nichols that he had received the-premium, and that it was all right, or he would have heard from the company.”

But this was on June 1st, and on May 18th Sage had informed-Nichols by letter that he could not approve the application; that the risk was a special one and could not be accepted without the defendant’s consent It appears, thorefore, that the referee has not found that plaintiffs relied upon the defendant as insurer of their property until about June 1st, six days before the fire, and that this resulted not from Sage’s neglect to inform them that the application was refused, but from what Nichols told them on that date.

It is contended, however, that a contract can be inferred from Sage’s silence and failure to notify the plaintiffs that the application was rejected. This, I think, would be a novel doctrine to introduce into the law of contracts. In discussing it, I assume Sage’s powers to have been those of a general agent, and coextensive with those of the defendant The courts have applied the principles of waiver and equitable estoppel in a most liberal manner to insurance contracts, but always to enforce good faith and to prevent injustice and fraud where the insured has been misled by the acts of the company or its agents. But no case has yet decided that the mere failure to respond to an application raised an inference that the company accepted and insured the risk.

The proper inference from failure to respond to a proposition of any kind is that it is rejected or declined. A party cannot be held to contract where there is no assent Silence operates as an assent and creates an estoppel only when it has the effect to mislead.

There must be such conduct on the part of the insurer as would, if it were not estopped, operate as a fraud on the party who has taken or neglected to take some action to his own prejudice in reliance upon it 2 May on Ins., § 508. When a party is under a duty to speak, or when his failure to speak is inconsistent with honest dealings and misleads another, then his silence may be deemed to be acquiescence.

If the company knew a person was acting as its agent without or in excess of authority and did not disclaim his acts, it might be held liable, as in such a case there is a duty to speak. But this case presents no element of that character. The plaintiffs knew that Nichols had no authority to contract with them on behalf of the defendant. Their application was promptly rejected by the defendant when it reached it They were not misled by the neglect of Sage to notify them of that fact. They knew they had no contract until the application was approved, and they could at any time have withdrawn their application and secured other insurance. If they had done so and the defendant had issued a policy, it could not be claimed that they were liable for the premium. It is very plain that they relied upon Nichols and his statement that “ it would be all right,” but as they knew he had no power to speak for the company, their trust was in him alone, and they had at no time any legal claim upon the defendant.

While I do not find that this question has been presented before in the courts of this state, it has been raised in other jurisdictions and decided adversely to the plaintiffs’ claim.

In Insurance Co. v. Johnson, 23 Penn. St, 72, afire occurred six monthp after the application was made, during which time the company had neglected to notify the plaintiffs that their application was rejected, and that delay was claimed to justify the inference of a contract It was held that a proposal could not become a contract from delay in rejecting or answering it

In Royal Ins. Co. v. Beatty, 119 Penn., 6, the validity of a policy by renewal was involved, and it was decided that when in an action upon a contract plaintiff’s case consists of proof of a proposal with the presumption of assent thereto arising from silence of the defendant, no legal inference of a contract can arise out of such silence without evidence of a duty to speak on the part of the defendant, which was neglected to the plaintiff’s harm. To the same effect are Haskin v. Agricultural Ins. Co., 78 Va., 700; Misselhorn v. Mut. R. F. Life Ass'n, 30 Fed. Rep., 543; Winnesheik Ins. Co. v. Holzgrafe, 53 Ill., 516.

And it was said in Titus v. Glens Falls Ins. Co., 81 N. Y., 410, in reference to a waiver by an insurance company of a breach of a condition which forfeited the policy, that “A waiver cannot be inferred from mere silence. It (the company) is not obliged to do or say anything to make a forfeiture effectual.” And it may be added, that a person is under no obligation to do or say anything concerning a proposition which he does not choose to accept

Our opinion is, that when an application for insurance is made and its rejection is not signified, no presumption of its acceptance can be indulged in. There must be • actual acceptance or there is no contract.

The respondent contends further that the company was bound from the time of the payment of the premium to Nichols. Their payment was never remitted to Sage or to the company and it is not found that they had any knowledge of it. Its effect, therefore, depends on the relation which Nichols bore to the defendant and the knowledge which plaintiffs had of his powers.

There is no finding in the case that Nichols was the defendant’s agent. The referee refused to find either that he was or was not the defendant’s agent. He found that Sage had authority to appoint sub-agents and that the acts done by Nichols in connection with the risk in question were within the scope of Sage’s authority. But this does not aid the plaintiffs in view of the express finding that plaintiffs knew that the application had to be submitted to some other person or persons and approved by them before a policy could be issued. '

The negotiations with Nichols did not reach the point where a contract was made. Nichols did not assume to have power to contract. The plaintiffs understood that perfectly! There was an application to defendant through Nichols. He was the solicitor merely. His apparent power to represent the defendant did not go beyond that. The application was to be approved by and the contract to come from some person other than him.

. That person was either Sage or the company. The application reached and passed Sage without approval, and of this fact Nichols was informed, and he then knew that the contract if made must come from the company. About June 1st the plaintiffs learned from Nichols that he had received no word from the company that the application had been approved or the risk accepted. In substance Nichols informed them that approval must come from the company, and yet he told them because it had not come it was all right, and they would get the policy in a day or two.

Now it is very plain that Nichols had no authority to make that statement Had plaintiffs any right to rely upon it? Did the acceptance of the premium by Nichols coupled with the statement that it was all right, and the policy would come in a day or two, bind the defendant? Obviously not, under the finding that plaintiffs had been informed that he had no power to make or issue a policy, and that before their application could grow into a contract it must be approved elsewhere This fact, of which plaintiffs were informed at the beginning of their negotiations, limited and qualified all their subsequent dealings with Nichols. The payment of the premium could not, therefore, bind the defendant, as Nichols had no authority to contract on its behalf, and for the same reason his statement that “ it was all right and they would get the policy in a day or two ” was the expression of an opinion merely. Having no power to contract, he could not bind the defendant by a representation as to the effect of its failure to report its action upon the application. A different question would have been presented had the plaintiffs dealt with Nichols as the agent of the defendant with no knowledge as to any limitations upon his power. Bodine v. The Exchange Fire Ins. Co., 51 N. Y., 117; Arff v. S. F. Ins. Co., 125 id., 57-64; 34 St Rep., 366. But such a case is not presented on the facts as found by the referee.

The judgment must be reversed and a new trial granted.

All concur.


author: Follett, Ch. J. Bradley, J.

text:
    Charles Blood, Resp’t, v. Sarah S. Kane, App’lt.

      (Court of Appeals, Second Division,

      Filed January 26, 1891.)

    Executors and administrators—Counterclaim in action by undertaker.
    Defendant, as sole executrix, employed plaintiff, an undertaker, to take charge of the funeral and burial of her testator. In this action to recover therefor defendant set up as a counterclaim a debt owing by plaintiff to her husband's estate; that by his will he gave all his property to her and appointed her executrix, that she had qualified and taken possession of the estate and owned in her own right the claim against plaintiff. On the trial defendant admitted that no notice to creditors had been ordered or published. Held, that she was entitled to show by common law evidence that all of the debts of testator had been paid, and that fact being established she was entitled to have the sum due her testator allowed as a counterclaim.
    (Bradley and Parker, JJ., dissent.)
    Appeal from a judgment entered upon an order of the general term of the supreme court in the fifth judicial department, affirming judgment of the Chautauqua county court entered on report of a referee.
    The complaint contained two counts. The first was for furnishing casket and hearse and preparing the body of the defendant’s deceased husband for burial and attending it for that purpose at the defendant’s request. And second, for taking charge of and attending the burial of the body of the defendant’s deceased brother at her request
    The defendant alleged by way of counterclaim that the plaintiff was indebted to her husband in an amount mentioned at the time of his decease, that by his will he devised and bequeathed all his property to her, and appointed her as executrix of the will, which had been admitted to probate and letters testamentary issued to her, and that she had taken possession of the estate and held and o'wned in her own right the claim against the plaintiff. The referee found the facts substantially as alleged in the complaint and directed judgment for the plaintiff.

      Walter W. Bolt, for app’lt; L. F. Stearns, for resp’t

       Reversing 23 St. Rep., 298.

   Follett, Ch. J.

December 5, 1883, James Kane died leaving a will by which he devised and bequeathed his entire estate to his widow, the defendant, and appointed her sole executrix. On the 17th of that month the will was probated and letters testamentary issued to her. The defendant employed the plaintiff, an undertaker, to take charge of the funeral and burial of her testator, for which she agreed to pay him eighty-five dollars. In January, 1885, the plaintiff rendered other service for the defendant, of the value of ten dollars, as found by the referee. ¡November 24, 1885, this action was begun to recover those sums. The defendant set up by way of counter-claim that the plaintiff was indebted in the sum of $178.10 to her testator for services rendered by him in his lifetime. Ou the trial the defendant admitted that the surrogate’s court had made, no order directing the publication of a notice to creditors to present their claims and that no notice had been published, but testified: “James Kane owed very few debts when he died; I paid those debts. There are no debts on his books owing by him which remain unpaid that I know of.” She offered to prove the claim and asked that it be allowed: (1) as a counterclaim and that she be given a judgment for the excess ; (2) as a set off against and in extinguishment of the plaintiff’s claim for eighty-five dollars, the. agreed price for the burial of her husband. The evidence was rejected and the referee ruled that the claim which accrued to her testator was not availailable as a counterclaim nor as a set off, to which ruling an exception was taken, and which presents the only question to be reviewed.

An executor as such takes the unqualified legal title of all personalty not specifically bequeathed, and a qualified legal title to that which is so bequeathed. He holds not in his own right, but as a trustee, for the benefit (1) of the creditors of the testator, and (2) of those entitled to distribution under the yill, or if not all bequeathed, under the statute of distributions.

As to the chattels and choses in action specifically bequeathed, an. executor has but a qualified title, the right to apply them in discharge of debts after first exhausting all other property applicable to that purpose. If he assents to their delivery to the legatees they acquire a perfect legal title to the article or demand, and in case the remaining property of the testator is insufficient to pay his debts the recipients of the specific legacies are liable under the statute to pay the amount or value of the legacies received by them.

The title of one who takes the entire estate under a will stands on the same footing, and is just as absolute, and he with the assent of the executor can recover in his own name a chose in action or make it available by way of counterclaim.

The trust estate of a sole executor, who is also the sole devisee .and legatee, is solely for the benefit of the testator’s creditors, and when they are paid the trust estate sinks into and is merged with the beneficial interest, and the sole devisee and legatee becomes vested with the legal title of all of the testator’s estate.

Mr. Preston, in discussing this subject in his learned treatise on -conveyancing, says: (Yol. 3, 310) “ On the continuance of the privilege from merger, an observation which will be properly introduced into this place presents itself. Though a person is originally entitled to a term, or to an estate of freehold, as an executor -or administrator, yet in process of time he may become the owner of that estate in his own right This happens in the case of executors, when the executor is also residuary legatee, and he performs all the purposes of the will, and holds the estate as legatee ; or when the executor pays money of his own, to the value of the term, in discharge of the testator’s debts, and with the intention to appropriate the term to his own use in lieu of the money. And in the case of administrators, when the administrator is the only person entitled to the beneficial ownership of the intestate’s property, or procures a discharge from those who are to share that property with him, and all the debts of the intestate are paid. Under these and the like circumstances, the executor or administrator will have the estate in his own right; and when he has the estate in his own right it will be subject to merger.

“ Generally speaking, it is difficult to ascertain when the character of executor or administrator ceases, and the ownership, independent of that character, commences. Every case must depend on its own circumstances. This conclusion only is certain, that when the executor or administrator ceases to hold the estate in that character, he will hold the same in his own right, and it will be subject to merger. The burthen of proof lies on the executor, or those persons who claim title under him.”

This statement of the rule is quoted with approval in Williams ■on Executors (6th Am. Ed., vol. 1, 642), and at page 649, that learned author says : “As an executor, who is also a legatee, may, by assenting to his own legacy, vest the thing bequeathed in himself in the capacity of legatee, so an administrator, who is also entitled to share in the residue as one of the next of kin under the statute of distribution, may acquire a legal title, in his own right, to goods of the deceased, either by taking them by an agreement with the parties entitled to share with himself under the statute or even without such agreement, by appropriating them to himself as his own share.” 3 Red. Wills (3d ed.), 131-133, § 6; Schouler Ex. and Adm., §§ 242, 246, 248 ; 2 Woerner’s Law of Adm., § 453.

It has been quite recently held by the House of Lords, Cooper v. Cooper, L. R., 7 H. L., 53, that “ The rule of the statute of distributions which requires the conversion of an intestate’s estate into money is introduced simply for the benefit of creditors, and the facility of division among the next of kin. But, as regards the substantial title to property, the right of the next of kin (subject only to the claims of creditors) is complete.”

It is a universal rule that when the purpose of a trust has-been fully accomplished, the title or estate of the trustee is at an end, and if he is also entitled to the beneficial estate, the two estates meeting in the same person are merged, and he becomes vested in his own right with the entire interest in the property.

It follows from these views that the defendant was entitled to> show by common law evidence that all of the debts of the testator had been paid, and that fact being established the defendant, was entitled to have the sum due her testator allowed as a counterclaim.

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

Bradley, J.

(dissenting).—There was no controversy about, the plaintiff’s claim for furnishing casket and hearse for attending the burial of the body of the defendant’s deceased husband, and for services in the burial of the body of her brother.

The questions for consideration arose upon exceptions taken to> the exclusion of evidence offered in support of the matters alleged as counterclaim. The defendant’s husband left his will by which, after payment of his debts, he devised and bequeathed all his estate, real and personal, to her, and nominated her to be executrix. The will was admitted to probate-and letters testamentary issued to the defendant in 1883; and this action was commenced in 1885.

She had not been discharged from her relation of executrix. There had been no settlement in surrogate’s court of her accounts-as such. Ho order had been made for notice to creditors, nor had any notice to them been published. But she testified that the-testator owed only a few debts; that she had paid them so far as they had come to her knowledge ; and that none appearing on her books remained unpaid. The alleged counterclaim was an indebtedness of the plaintiff, and due and payable to her testator at the time of his decease, which she also alleged was owned by her.. And the evidence offered to prove that claim against the plaintiff was excluded and exception taken. The question presented is whether this evidence was available to the defendant for the purposes alleged. She as executrix represented the person of the testator, and as such representative she became vested with title to all his personal estate as of the time of his death. Schultz v. Pulver, 11 Wend., 363. And the plaintiff’s cause of action so far as related to the burial expenses of her deceased husband having arisen after the death of the testator, was one against the defendant personally, although she would be entitled to reimbursement from the estate. Ferrin v. Myrick, 41 N. Y., 315; Austin v. Munro, 47 id., 366. The apparent situation until something should appear to change the relation of the defendant from that of personal representative of the testator in respect to personal estate to that of individual owner, would be that she held it in the capacity in which she took it. She so received it as executrix only. If the claim against the plaintiff had been the subject of specific bequest or legacy to her, then she could by her mere assent to that effect be deemed to have personally taken title to it under the will. Hudson v. Reeve, 1 Barb., 89; Doe v. Guy, 3 East, 120.

In such case the legacy is subject to ademption, and it is not chargeable with the payment of debts of the testator unless there is a deficiency of. other assets for that purpose. Parrott v. Worsfold, 1 Jac., & Walk., 575; Kirby v. Potter, 4 Ves., 748; Giddings v. Seward, 16 N. Y., 365; Newton v. Stanley, 28 id., 61. But the bequest to her of all the personal estate was not a specific one. It. was a general bequest 2 Williams on Exrs., 1054; Tifft v. Porter, 8 N. Y., 516; Briggs v. Hosford, 22 Pick., 288. And therefore the defendant individually could only through the execution of the will take title to the personal estate. This had not been accomplished when the action was commenced. Her representative relation and title in her as executrix to such estate do not appear in any manner to have been terminated. The question arises whether she could be permitted to effectually assert in her behalf personally as a counter-claim or set off the plaintiff’s indebtedness which constituted part of the personal estate taken by her as executrix. It would not be permissible to set off or countercharge a claim held by her as executrix in an action against her personally, which is the character of the cause of action alleged in the complaint, as it arose after the decease of her testator. Buckland v. Gallup, 105 N. Y., 453; 8 St. Rep., 56. The requisite mutuality is there wanting. This rule in its application to-the question here as it existed before the Code has not been changed by it. Code § 501; Patterson v. Patterson, 59 N. Y.,. 574; Jordan v. N. S. & L. Bank, 74 id., 467; Thompson v. Whitmarsh, 100 id., 35. But it is urged that by setting up the indebtedness of the plaintiff the defendant effectually elected to treat it as belonging to her individually; and that she could thus appropriate it inasmuch as the personal estate was bequeathed to her. In other words, that she might at pleasure by her mere desire to so treat it throw off her relation of executrix to the title and assume that of individual owner. It is true she as executrix could sell or assign the property and thus vest title in another; and whether as executrix she could have assigned the claim against the plaintiff to herself personally it is unnecessary to inquire, as it is neither .alleged nor made to appear that she did. so. Her alleged right to it for the purposes of a counterclaim in this action is evidently based upon the general bequest to her after payment of the debts.

The right of the defendant to make her claim available seems to be dependent upon the proposition that she may by mere assent or assumption on her part be treated as having title individually to the personal estate bequeathed by the will. As the trust and beneficial relation to the property existed in the same person it may be assumed that the defendant by the assent of the executrix sought to appropriate the claim against the plaintiff for the purpose which is alleged by her in this action. But it is not seen how the representative could in that manner be divested of title and the individual invested with ih 'The former took the legal title to the personal estate, with power of disposition of it, and the latter as beneficiary takes legal title to the estate or the fund produced by it through the execution of the will. In the view taken there seems to have been no evidence of counterclaim offered having the support of legal title to it in the defendant.

If it had appeared that the executrix had paid all the debts of her testator it may be that a different question than now arises would have been presented, as in practical effect the right" of the defendant to the property as beneficiary was subject only to the payment of the debts of her testator. But the evidence did not warrant the conclusion that the debts left by him had been paid. There is a way provided by the statute for a personal representative of a decedent to ascertain prima facie the debts which the latter owed at the time of his decease. This may be done pursuant to oi’der by notice to creditors to present their claims, and when the requisite time for doing so has elapsed such personal representative may for the purposes of the execution of the truét treat as existing no debts for him to pay other than those which have been presented. Then the right to the residue after payment of such debts presumptively is in the beneficiary of the will. In the present case there was no evidence tending to prove that all the debts of the testator had been paid. The fact that the executrix had paid all the debts of which she had been advised did not warrant the conclusion that none other remained unpaid.

In the cited case of Onondaga Trust & D. Co. v. Price, 87 N. Y., 542, there was a specific legacy given by the will and taken by the legatee with the assent of the executors. In Barlow v. Myers, 3 Hun, 720; 64 N. Y., 41, the defendant, who was executrix of the will of her deceased husband, was charged personally with liability upon a cause of action arising in a matter relating to the estate after the death of her testator. She set up as counterclaim a negotiable promissory note, available as such if owned by her. And the view of the court was that if the note was held by her when the action was commenced it was a proper set-off unless she held it as executrix, which could not without evidence to that effect be assumed. On review of a subsequent trial of the same case, 24 Hun, 286, the note was held. available to the defendant as a counterclaim because it was negotiable.

But the court went further and added that such right existed in the defendant because she took title to it as part of the residuary estate bequeathed to her by the will. This last remark does not ■seem to have been essential to the result in the view there taken by the court The facts which the defendant sought to prove in the present case would not establish in her individually a right or cause of action upon the claim against the plaintiff They would not have been effectual to constitute a counterclaim or set-off at law, which is the only view that can be taken of it as alleged in this action.

It follows that the exclusion of the evidence was not error, and that the judgment should be affirmed.

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

All concur, except Bradley and Parker, JJ., dissenting, .and Potter, J., not voting.


text:
    Alexander Armstrong, Resp’t, v. The Agricultural Ins. Co. of Watertown, N. Y., App’lt.

      (Court of Appeals, Second Division,

      Filed January 26, 1892.)

    Insurance (Fire)—Waiver of rule requiring- consent to foreclosure.
    After the commencement of foreclosure proceedings by a mortgagee to whom the insurance was made payable under the policy, but which was rendered void by the commencing of such proceedings without consent, application was made to the company for consent to continue the action, to which no reply was made. After the fire, the owner refusing to make proofs of loss, they were made by plaintiff, whereupon defendant notified him that it declined to receive said proofs as not having been made by the assured. Feld, that this was not a waiver of the condition rendering the policy void in case of a foreclosure without the company’s consent.
    Appeal from a judgment of the general term of the second judicial department, affirming a judgment entered upon the decision of the court upon a trial without a jury.

      A. JJ. Sawyer, for app’lt; Calvin Frost, for resp’t.

       Reversing 31 St. Rep., 201.

   Brown, J.

This action is upon a policy of insurance against fire issued by the defendant to Daniel Brown, owner. The loss, by an endorsement upon the policy, was made payable to the plaintiff as mortgagee and was to be paid “ within sixty days after due notice and proof of the same made by the assured.”

One of the conditions of the policy was that “ if proceedings ■shall be commenced to foreclose any mortgage upon the insured property * * * then this entire policy and every part thereof shall be null and void unless the written consent of the company at the Yew York office is obtained.”

On January 6, 1888, the plaintiff commenced an action to foreclose his mortgage without having obtained the company’s consent, and by so doing the condition quoted was broken and the policy was by its express terms from that date “null and void.” Titus v. Glens Falls Ins. Co., 81 N. Y., 410; Devens v. M. & T. Ins. Co., 83 id., 168.

The respondent claims, however, that the breach of this conditian was waived, and the trial court and the general term so determined. It appeared that on February 2, 1888, the plaintiff caused a letter to be written and mailed to the defendant at its Mew York office, which was delivered in due course of mail,, notifying it of said foreclosure action and that it had been commenced without discovering the clause against it in the policy, and asking consent to continue the action, to which letter no reply was ever made. On February 4th judgment of foreclosure and sale was entered and on February 10th the buildings were burned.

Daniel Brown, the owner of the property, refused to make proof of loss under the policy, and thereupon such proofs were made by the plaintiff and sent to the defendant; whereupon on March 24th it notified plaintiff by letter that it declined “ to accept or receive such papers as a proof of loss under said policy, upon the ground that they are not executed by the assured mentioned in the policy as required by the conditions of the policy.”

Upon receiving such notice plaintiff again solicited said Brown to make proofs of loss, but he declined, and an affidavit of such request and declination was sent to the defendant; whereupon it replied that it “ did not see how these affidavits obviated the objection already made.” The finding that there was a waiver of the forfeiture was based upon the failure of the defendant to reply to the letter of February 2d and upon the demand implied from the letter of March 24th that plaintiff should furnish it with proof of loss made and sworn to by the owner of the property.

One of the questions considered in Titus v. Glens Falls Ins. Co., supra, was similar to the one presented in this case, and it, was there said that a waiver cannot be inferred from silence. That “ the company is not obliged to do or say anything to make a forfeiture effectual” Within the rule there stated the defendant was under no obligation to reply to the plaintiff’s letter informing it, that the foreclosure suit had been commenced. And I am unable to see how under any rule any legal obligation rested upon the defendant to reply, or how it could be inferred from the failure to reply that it intended to waive the enforcement of that condition of the policy.

The commencement of the suit rendered the policy from that time void. The plaintiff must be presumed to have known of that fact. He deliberately violated the condition and destroyed his contract, and then informed the defendant of his act It would require some affirmative action on defendant’s part under such circumstances to indicate that it intended to waive the result of the plaintiff’s breach. Wc have at this term of the court considered the failure to respond to an application of insurance in its effect upon, a contract, and held that a contract could not be presumed under such circumstances. More v. N. Y. Bowery Ins. Co., ante, 543, and no substantial distinction exists in principle between that case and this. The failure to reply to the plaintiff s letter, or as was said by the general term, “the neglect to refpse the consent as promptly as the occasion demanded,” raised no inference that the defendant consented to the foreclosure action. Walsh v. Hartford Ins. Co., 73 N. Y., 5.

The rule is now established, however, that if, in any negotiation or transaction with the assured after knowledge of the forfeiture, it recognizes the continued validity of the policy or does acts based thereon or requires the insured to do some act or incur some trouble or expense, the forfeiture is waived. Titus v. Glens Falls Ins. Co., supra; Roby v. Am. Central Ins. Co., 120 N. Y., 510; 31 St. Rep., 560; Pratt v. Dwelling House Mut. Ins. Co., 41 State Rep., 303.

While the later decisions all hold that such waiver need not be based upon a technical estoppel, in all the cases where this question is presented, where there has been no express waiver, the fact is recognized that there exists the elements of an estoppel. Brink v. Hanover Fire Ins. Co., 80 N. Y., 108-112; Goodwin v. Mass. Mut. Life Ins. Co., 73 id., 480; Prentice v. Knickerbocker Life Ins. Co., 77 id., 483.

In the cases cited the plaintiffs were misled by the action of the defendants, and their acts were the cause of the omission to comply with the condition of the policy, the breach of which was alleged as a defense, and under these circumstances the defendants were held to be estopped from asserting the objections.

In Titus v. Glens Falls Co., supra, the defendant required the insured to appear before a person appointed for that purpose and submit to an examination. Roby v. Am. Central Ins. Co. was of a like character. In those cases the defendant exercised a right which it had only by virtue of the policy, and it was held that exercising a right after knowledge of a breach of one of the conditions of the policy by the assured was a recognition of its validity, and hence a waiver of the forfeiture.

It will be observed, however, none of the things required of the insured in the cases cited were the ordinary contract stipulations, but were to be performed only when requested by the insurer. They were not essential to his cause of action, but were in the nature of an examination into the loss by the assured after service of the formal proofs, and this element points the distinction between those cases and the case at bar.

The condition requiring service of proofs of loss is one wholly for the benefit of the insurer. The assured contracts to perform it, and until he does so he has no legal claim against the insurer and no cause of action. The proofs thus provided for are the legal evidence of the loss. The performance of the condition is not a thing to be done at the request of the insurer. The company may remain silent, and until proofs are furnished it cannot be called upon to pay the loss. But the law does require of it entire good faith and fair dealing in its transactions with the assured in reference to the proofs, and hence it is bound to point out any defects of a formal character therein that the assured may have an opportunity to correct them, and if it accepts those served within the time named in the policy, it will be deemed to have waived defects and to receive them in performance of the condition of the contract.

I do not think a waiver by the defendant can be inferred from its letter respecting the proofs served.- It there made no demand upon the plaintiff. It pointed out to him the fact that in its interpretation of the contract he was not the assured, and the implication was that that term applied to the owner of the property, and proofs must be made by him to fulfil the condition of the-contract That this was an act of entire good faith towards the plaintiff is apparent It required no action from him and put. upon him no trouble or expense, but left him free to stand upon his interpretation of the contract if he chose, and it gave him the opportunity, if he desired and could do so, to remove a possible objection to his claim.

But it is said that the defendant should then have asserted the-forfeiture of the policy, and failing to do so it waived it But if it had placed its refusal to pay upon that ground it would not have been permitted thereafter to set up and rely upon defective-proofs. A denial of liability and a refusal to pay on the ground that there was no contract would have been equivalent to a declaration that it would not pay though the proofs be furnished. Taylor v. Merchants' Fire Ins. Co., 9 How. (U. S.), 390; Knickerbocker Life Ins. Co. v. Pendleton, 112 U. S., 696; Blake v. Exchange Mut. Ins. Co., 12 Gray, 265-272; Vos v. Robinson, 9 Johns., 192; Ætna Fire Ins. Co. v. Tyler, 16 Wend., 385-401; Brink v. Ins. Co., 80 N. Y., 108. So if it had accepted the proofs without objection, it would not have been permitted thereafter to have denied that the plaintiff was the assured. May on Ins., § 468; Bodle v. Chenango Co. Ins. Co., 2 N. Y., 53; Brink v. Hanover Ins. Co., supra.

So that'we have this case. The defendant knowing that a. claim is to be made upon it intends presumably to assert as a defense a breach of the condition quoted, and to demand strict compliance with the condition as to the service of proofs of loss.

, It had a legal right to take that stand. The plaintiff presented proofs which, according to the company’s construction of the contract, were not made by the proper person. What was it to do ?' If it accepted them it could not thereafter assert that they were-not made by the assured. If it asserted that the contract was forfeited, the same result followed. If it refused them on the-ground that the plaintiff was not the assured, it waived (so claims-the respondent) every defense known to it arising out of the-breach of the condition of the contract by the assured.

How then was it to preserve its rights and enforce both conditions of the policy ? Under the rule that thus far has been applied in this case, I am unable to see how it could take any action without waiving one or the other of the two conditions. If it received the proof, it lost the right to assert that the owner and not the mortgagor was the assured. If it rejected them, the penalty was loss of the right to assert the breach of the condition as-to foreclosura At any rate it could not reject them and demand that proofs be made in accordance with the contract as it interpreted it, without at the same time notifying the assured of its-proposed line of defense. But the law imposed no such hardship upon it. _

_ It needs no argument to show that it was justified in standing. upon its legal rights and asserting them in the ordinary way and at the proper time, so long as in so doing it did not mislead the-^plaintiff to his own harm.

It had a right to base its defense to any claim made upon it upon the violation prior to the fire of any provision of the contract, and to require performance by the assured after the fire of those conditions which he had contracted to perform and which were essential to his cause of action and preliminary to the assertion of any claim upon the policy. And in demanding strict compliance with such condition it did not waive any of its rights under the contract.

It did not mislead the plaintiff or cause or require him to do anything that he did not agree to do.

„ It has not found fault with the character of the proof or the matter therein stated or required him to submit oral or written testimony, as was done in Titus v. Glens Falls Go. and the older cases cited. It asked only the performance of the contract What it did was in the line of fair dealing and was beneficial to the plaintiff in enabling him to procure the proofs from the owner if he could have done so, and thereby remove an obstacle to his claim. And there is no fact or circumstance existing in the case tending to show that the plaintiff was prejudiced in his action by anything that the defendant did. If it had, when the proofs were presented, asserted the forfeiture and denied any liability on the contract, that would not have aided him, as he could not have removed the difficulty that confronted him or mitigated in the slightest degree the effect upon the contract of the commencement of the foreclosure action.

To hold under the circumstances that the defense was waived, is to extend the rule far beyond that of any reported case.

As has already been said, in every case where a waiver has been implied from the defendant’s acts, there has existed something of the element of an estoppel. The plaintiff has been misled to his harm, or the.company has done something which could be done only by virtue of the policy, or has required something from the assured which he was bound.to do only at the request of the company and which request could only be made under a valid policy.

But none of these elements exist here. The plaintiff was not misled nor has his claim been prejudiced by any act of the defendant, and that which he was required to do was essential under the contract to the assertion of any cause of action upon the policy. Moreover, at the time the proofs were rejected the loss was not payable and the plaintiff was not in a position to demand payment or bring an action.

By the policy the loss was payable sixty days after service of proofs, and until that period elapsed there was no occasion or necessity for the defendant to make known whether it intended to-pay or contest the claim.- How can it be said that the plaintiff, having no right to demand payment, yet had a right to know whether the defendant would or would not pay upon the maturity of the contract, and also to be informed sixty days in advance of his right to sue whether in such a suit the defendant’s liability would be denied. Yet, such is the result of the rule applied in the case. If such a rule was applicable at all it would seem that the defendant should at least be allowed until the loss is due and payable to determine whether or not it will contest the claim. But no principle of this kind ever was applied to any other contract, and no reason is apparent why it is applicable in cases of this character.

Had the defendant accepted the proofs tendered, there would have been no pretense of a waiver, and there is no rule that works a different result from their rejection.

The conclusion that, under the circumstances disclosed in this case, there was no waiver, is in accordance with the authorities. Phoenix Ins. Co. v. Stevenson, Sup. Ct., Ky., 8 Ins. Law Journal, 922 ; Fitclvpatriclc v. Hawlceye Ins. Co., 53 Iowa, 335, are directly in point.

In the first case cited the policy provided that “ if the assured shall have * * * any other insurance on the property herein insured * * * without the consent of the comprny written thereon, then this policy shall be void.”

The condition was broken, but, with knowledge of the breach, the company informed the assured that if he had any claim against the company he should furnish proofs of loss in accordance with the condition of the policy. The supreme court of Kentucky held this was not a waiver.

In the Iowa case, there was a breach of condition as to occupancy, and after being informed of that, the company required the assured to present proofs of loss. The court held there was no waiver, that proofs were required in pursuance of the assured’s obligation in the policy, and without them plaintiff had no cause of action, and that the requirement of defendant that the assured should discharge his contract obligation did not estop it from insisting on other conditions of the policy.

In Desilver v. State Mutual Ins. Co., 38 Penn. St., 130, it was held that a waiver of notice is not a waiver of the preliminary proof or of the particular account when they are made by the policy distinct and separate acts.

In Titus v. Glens Falls Ins. Co., supra; it was said the company might wait until claim is made and then in denial thereof or in defence of a suit assert the forfeiture.

In Brink v. Hanover Insurance Co., supra, it was said in speaking of the duty of insurance companies to deal with their customers with fairness: “ They may refuse to pay without specifying any ground, but if they plant themselves upon a specified defence and so notify the assured, they should not be permitted to retract after the latter has acted upon their position as assumed.” This language was repeated in Devens v. M. & T. Ins. Co., 83 N. Y., 168-173, and it was there said in addition that “the doctrine of waiver should not be extended so as to deprive a party of his defense, merely because he negligently or incautiously when a claim is presented, while denying the liability, omits to disclose his defense or states another ground than that upon which he finally relies. There must be in addition evidence from which the jury would be justified in finding that, with full knowledge of all the facts, there was an intention to abandon or not to insist upon the particular defense afterwards relied upon, and that it was purposely concealed under circumstances calculated to and which actually ■did mislead the other party to his injury.”

In that case proofs of loss were served and accepted and the company while denying liability omitted to put its disclaimer upon 'the breach of warranty afterwards asserted as a defense. The case was stronger for the plaintiff than the one at bar.

Here the plaintiff knew that he had violated the policy in commencing the foreclosure suit, and he was informed just what the defendant claimed as to the proofs of loss. He knew therefore just what defense his claim was liable to meet and he was not misled or injured by the defendant’s action. But in the-case just cited the defendant placed its disclaimer of liability upon a ground under which it did not afterwards rely, and the court said this was not inconsistent with an intention to rely upon the defense afterwards made. See also Putnam Tool Co. v. Fitchburg Mut. Fire Ins. Co., 145 Mass., 265.

We are of the opinion that there was no waiver by the defendant of the breach of the policy, and for that reason the judgment must be reversed and a new trial granted.

This conclusion renders it unnecessary to consider the other ■questions in the case.

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

All concur.


author: Barnard, P. J.

text:
    John Seton, Resp’t, v. Heman Clark, App’lt.

      (Supreme Court, General Term, Second Department,

      Filed December 14, 1891.)

    Use and occupation—Injury to heal estate.
    In an action for use and occupation of real estate, and for injury to the property by filling the same with street sweepings and refuse, the plaintiff claimed that defendant’s entry was unauthorized, as he had refused to let the premises; while defendant claimed that there was a lease, and that rent had been tendered and refused. Judgment was rendered in plaintiff’s favor, including damages for the filling. Held, no error; that a demand of the use and occupation was right if there was a trespass, and did not prevent a recovery of the agreed price if there was a contract; that if there was a mere contract of lease, the action could be maintained for the injury to the property not authorized by the contract, and that the court was right in refusing to charge that the jury must find for defendant if there was a contract.
    Appeal from judgment.in favor of plaintiff, entered on verdict.

      M T. Lovatt, for app’lt; J. Stewart Moss, for resp’t
   Barnard, P. J.

The plaintiff owns certain lots in the city of Brooklyn. The defendant entered into the possession of these lots. While the defendant was in possession of the premises he filled in the lots with refuse filling. The plaintiff claims that the -entry by defendant was without his permission, and that the filling injured the lots, and he demands judgment for the use and occupation, and for the injury resulting from the filling.

The defendant avers a contract at five dollars per month, and that the use was to be for his purposes. The evidence was as conflicting as the pleadings. There was proof tending to show that a lease was refused by plaintiff, and that the entry was consequently wrongful, and the filling injurious and unauthorized.. The defendant produced evidence that there was a lease for fifteen dollars per month, and the question of fact went to the jury, who found for the plaintiff. No rent had been paid. It was claimed that rent had been tendered and refused. There is no basis for a reversal of the judgment. The demand of the use and occupation, of the lots as a part of the compensation for the-trespass was right if there was a trespass; and, if there was a contract, such a claim would not prevent a recovery of the agreed price, if one was-proven.

The refusal to charge that the jury must find for the defendant, if there was a contract, was right. The action must be sustained under the second cause of action, if there was a mere contract of lease and an injury done to the property which the contract did not authorize. The proof showed that the lots were filled in where the houses are usually built in cities; that the filling was-, some ten feet deep.

The quantity of refuse was proven, and what it would take to excavate it was also proven. Every fact necessary for correct, judgment was given.

The verdict of the jury is fully sustained by the evidence, and the judgment should be affirmed, with costs.

Dykman and Pratt, JJ., concur.


author: Dykman, J.—This

text:
    Jennie Emerson, Resp’t, v. Frank Herbert Emerson, App’lt.

      (Supreme Court, General Term, Second Department,

      Filed December 14, 1891.)

    Divorce—Adultery.
    Proof of association with, prostitutes, and that defendant gave secret entertainment to women in the night time in his own rooms in the absence of his wife, is sufficient to justify a finding of adulterous intercourse.
    Appeal from judgment in favor of plaintiff.
    Action for divorce on the ground of adultery. There was. no direct evidence of the acts of adultery, but a witness testified that he introduced defendant to a prostitute in a saloon ; that they left the saloon and were gone an hour, and that defendant said he had had a nice time and it cost him three dollars. Other witnesses testified that during plaintiff’s absence from home ladies were admitted to defendant’s rooms, and on one morning the servant found the remains of an entertainment in the rooms, the bedding disarranged and articles indicating sexual intercourse, and she testified that defendant became excited when he found she had taken them away, and tried to explain that they were for a different purpose.
    J., W. Ridgway and W. J. Gibson, for app’lt; A. H. Dailey,. for resp’t
   Dykman, J.—This

is an action for a divorce on the ground of’ adultery, brought by the wife against her husband. The trial was before a judge, without a jury, and he found the defendant guilty and granted the plaintiff an absolute divorce.

The defendant has appealed from the judgment, and insists here, as he did upon the trial, that the evidence was insufficient to establish his guilt.

A careful examination of the testimony conducts the mind to a conviction of the guilt of the defendant. There is no positive proof of any act of adultery, but the circumstances and facts developed by the testimony all point in one direction, and they are entirely inconsistent with the innocence of the defendant.

Innocent and virtuous men who entertain a proper regard for their marital obligations do not voluntarily place themselves in the equivocal positions occupied by this defendant.

They do not associate with prostitutes and give secret entertainment to women in the night time in their own rooms, in the absence of their wives, and when such conduct is proven it leads irresistibly to a conclusion of guilt.

Men do not violate their marriage vows openly. They commit their wrongs with companions of their secret hours, and partners in their guilt, and positive proof is not often attainable.

In such cases, as in all others, therefore, resort may be had to circumstantial evidence, which is sometimes quite as satisfactory as positive proof.

A full and careful examination of all the testimony leads us to the conclusion reached by the trial judge, and the judgment ■should be affirmed, with costs.

Barnard, P. J., concurs; Pratt, J., not sitting.