author: Daniels, J. :

text:
    HENRY M. BRADHURST, Appellant, v. MARY A. TOWNSEND and others, Executors, etc., Respondents.

      Oount&r-clavm — joinder of canses of action— Code, § 150.
    Plaintiff brought this action to set aside an assignment and procure a reassignment of two bonds and mortgages assigned by H. Nicoll to himself and the defendants, as executors of Gr. T., deceased, said Nicoll acting under a power of attorney from plaintiff. The defendants set up in their answer, as a counterclaim, that the said N. and two others, acting under power of attorney from plaintiff, had, for a valuable consideration, assigned to defendants three other bonds and mortgages; that plaintiff had procured possession of them and refused to deliver them over. Another similar transaction was set up as a second counter-claim. The assignment sought to be set aside was made in November, 1870; the others in January or October, 1878.

      Held, That the causes of action set forth as counter-claims did not arise out of the contract or transaction set forth in the complaint, nor were they connected with the subject-matter thereof.
    That the action set forth in the complaint was not an action arising on contract, within the meaning of sub-section 2 of section 150 of the Code.
    That a demurer on the ground of an improper joinder of causes of action was proper, and should be allowed.
    Appeal from an order overruling a demurrer to counter-claims set up in the answer, on the ground that they did not constitute a defense or counter-claims in the action.

      The action was brought to recover two bonds and mortgages assigned November 4, 1810, by Henry Nicoll to himself and the defendants, as executors of Isaac Townsend, deceased.
    It was alleged that the bonds and mortgages were the property of plaintiff, and stood in Mr. Nicoll’s name, as his attorney. The power of attorney was a joint and several power of attorney to Henry Nicoll, David Thurston and William Gr. Annan; that the assignments were made in fraud of plaintiff’s rights, and that plaintiff has never received any consideration for the assignment.
    The case, therefore, involved the consideration of the question resulting from the fact that Mr. Nicoll was acting in the two capacities of plaintiff’s attorney and of co-executor with the defendants.
    The counter-claim raised the same question in respect to other investments and securities belonging to the Townsend estate, which had got into the possession of the plaintiff. It alleged that, under the power from plaintiff, Mr. Nicoll and his co-attorneys had the right to sell and transfer securities;' and that defendants bought three mortgages held by Mr. Nicoll under said power, for $15,000, intrusted to him for that purpose ; that they sold them, subsequent to January, 18J3, for that amount, to defendants, but that plaintiff had possession of the bonds and mortgages so sold. Another similar counter-claim was also set forth in the answer.

      Charles A. Jaoltson, for the appellants.

      8. P. Nash, for the respondents.
   Daniels, J. :

This action was brought to set aside the assignment and to obtain a reassignment of two bonds and mortgages, assigned by Henry Nicoll, acting under a power of attorney from the plaintiff, to himself and the other two defendants, as executors of the estate of Isaac Townsend, deceased, and for the recovery of the moneys which had in the meanwhile been collected upon them. The answer denied certain of the material allegations of the complaint, and then, by way of counter-claims, set forth that Nicoll and two other persons empowered to act with him as attorneys of the plaintiff, had in their possession three other bonds and mortgages, with authority to assign them, and that they did, for the consideration of $15,000, assign them to the defendants as such executors. It was further alleged that the plaintiff had afterwards acquired possession of them and refused to deliver them to the defendants. Similar allegations were made concerning the assignment of two other bonds and mortgages which were alleged to have been afterwards assigned to the plaintiff, who refused to assign or deliver them to the defendants. It was shown by the answer that these bonds and mortgages were each assigned to the defendants at different times from that when the assignment, complained of by the plaintiff as unlawfully made, was executed and'delivered; and that since then Nicoll had resigned his position as one of the executors and trustees under the will of Isaac Townsend.

The transaction forming the ground of the plaintiff’s complaint was alleged to have taken place on the 4th of November, 1870, while those upon which the counter-claims have been predicated did not occur until January and October, 1873; and they were in no respect connected with the assignment or the other bonds and mortgages assigned, as they were described and set forth in the complaint. If the plaintiff shall prove himself entitled to recover, he will secure a reassignment of the bonds and mortgages mentioned in his complaint, and receive the interest which the defendants have collected upon them; and if the defendants succeed in maintaining their right to the bonds and mortgages assigned to them, they will be entitled to a similar judgment, but only for the delivery of those securities. Both the determinations required under the pleadings to be made,-if they should all be made, will be distinct and separate. They will be entirely independent of each other. One, in no legal sense, can qualify or affect the other; and fully to hear and determine either will require no reference to or knowledge of the other. The fact that they resulted from the existence of the same power over the plaintiff’s property has not in any way united or identified them ; they are still just as separate and distinct as they would have been if a special power had been created for the disposition of each of them.

If the foundation of the different claims made be conceded to have been that of contract, the position of the defendants will be in no way advanced by it, for the contracts existing in their favor have no relation whatever to that sought to be annulled by the plaintiff; they were made at different times, for the purchase of distinct securities and upon different and dissimilar termsand they are equally as distinguishable from and disconnected with each other, as the answer has described them, as they both are from the transaction set forth in the complaint.

It has not been, as it could not with any propriety be, claimed, that the plaintiff’s action is upon contract, as that term has been used in the provision made concerning counter-claims. But it has been insisted that the answer was proper because the counter-claims alleged arose out of the contract or transaction set forth in the complaint as the foundation of the plaintiff’s claim, or that it was connected with the subject of the action. Either of those attributes would render the counter-claims proper. (Code, § 150.) But neither has been shown to exist in the defendant’s favor. What does appear by the pleadings are distinct and separate causes of action in equity, having no relation to or connection with each other. The object of one is to vacate and set aside the transaction out of which it has arisen, and of the other to secure a specific performance of the acts necessary to complete assignments shown to have been made. The demurrer was proper, and it should have been sustained. Eor that reason the order should be reversed, with costs, and the demurrer sustained.

Davis, P. J., concurred. .

Present- — Davis, P. J., Brady and Daniels, JJ.

Order reversed with costs ; demurrer sustained.


source: Caselaw Access Project

author: Daniels, J.:

license: Public Domain

text:
    THE ST. NICHOLAS INSURANCE COMPANY, Respondent, v. THE MERCHANTS’ MUTUAL FIRE AND MARINE INSURANCE COMPANY, Appellant.
    Reinsurance— notice of other insurance — “ runnning on the Hudson rimer? defined — extra-hazardous an'tides.

    In an action upon a policy of reinsurance delivered by the defendant to the plaintiff, of a barge “while running on the Hudson and East rivers,” it appeared that the original policy of the defendant had been, at the expiration of its term, extended; that after the delivery of the defendant’s original policy, and before its extension, the plaintiff, its first policy having expired, had issued a new policy, with the same provisions, upon the property insured; that no notice of the plaintiff’s new policy had been indorsed on the defendant’s policy, which provided that it should become void if the insured should thereafter make any other insurance on the property without giving notice to the defendant. Held,

    That the agreement contained in the receipt extending the defendant’s original policy created a new contract resting on the facts as then existing, and revived the defendant’s original policy, even if, before such agreement to extend it, it had become invalid;
    That it was not necessary to have notice of the plaintiff’s new policy indorsed upon defendant’s policy, as the latter policy provided that any loss incurred should be borne by it pro rata with the plaintiff, which was a sufficient indorsement of the plaintiff’s policy;
    That tiie words “ while running on the Hudson and East rivers ” did not restrict the insurance to the time that the barge was in motion, but it was intended by them to describe the business of the barge employed upon those waters, and to cover the time required for lading and unlading, as well as when the barge was in actual motion;
    That, although baled hay and straw were mentioned in defendant’s policy as extra-hazardous articles, and it was therein provided that defendant should not be liable under its policy while the barge was used for carrying extra-hazardous goods without notice, yet that plaintiff might show that it was part of -the ordinary business of barges “running on the waters of the Hudson and East rivers ” to carry such articles, and thus establish defendant’s liability under the general terms of the policy;
    That if such proof were given by plaintiff, defendant was entitled to show that the custom of carrying such articles was invariably subject to the payment of an extra-hazardous premium.
    The underwriter is presumed to understand the business which is made the subject of the insurance.
    Appeal by defendant from a judgment recovered on trial at tbe New York Circuit, and from an order denying a motion for a new trial made upon tbe minutes of tbe court.

      Geo. W. Parsons, for the appellant.
    It was conceded on the trial, and cannot be denied, that carrying or storing “ hay and straw pressed in bales,” or baled hay and straw, is an extra-hazardous business. ( Wall v. The East Rimen Ins. Go., 3 Duer, 261; 3 Seld., 3Y0; Lee v. Howard Fine Ins. Go., 3 Gray [Mass.], 583; lemmings y. Ghenungo Mut. Ins. Co., 2 Den., Y5; Merrieh v. Provincial Ins. Co., 11 Upper Canada [Q. B. Cases], 139 ; Macomher y. Howard Fine Ins. ■ Co., Y Gray, 25Y; Whitemansh y. Charter Oak Fine Ins. Co., 2 Allen [Mass.], 581.) The evidence in regard to the custom of a class of barges to carry baled hay and straw as freight on the Hudson and East rivers was improperly admitted. (Collendan v. Dinsmore, 55 N. T., 200; Ripley v. AEtna Ins Co., 30 id., 136 ; Wall v. The East Rimer Ins. Co., 3 Duer, and Seld., supra; St. Nicholas Ins. Co. v. Merc. Mut. Ins. Co., 5 Bosw., 23, and numerous cases cited; Macomher v. Howard Fire Ins. Co., Y Gray, 25Y; Whitemarsh v. Chanten Oak Ins. Co., 2 Allen, 581; Pindar v. The Resolute Ins. Co., 1Y N. Y., 111.) At most the custom sought to be proved was local, and the defendant being a foreign corporation, could not be presumed to know it. {Stébbins v. Globe Ins. Co., 2 Hall, 632; Bradley v. Wheeler, 11 N. Y., 500; Higgins v. Moore, 31 id., 125; Dawson v. Kettle, 1 Hill, 13Y; Wheeler v. Newbold, 5 Duer, 29; affirmed in 16 N. Y., 392; Barnard v. Kellogg, 10 'Wall., 383; Walls v. Bailey, 19 N. Y., 1Y3 ; Rogers v. Mechanics’ Ins. Co., 1 Story’s C. C., 603.) “ The usage in a particular jdace, or of a particular class of persons, cannot be binding upon other persons, unless the other persons are actually acquainted with the usage, and adopt it.” {Bartlett v. Pentlcmd, 10 Barn. & Ores., Y60; Russell y. Bangley, 1 Barn. & A., 395; Gabay v. Lloyd, 3 Barn. & Ores., Y93; Lawrence v. Aberclein, 5 Barn. & Aid., 10Y; Seott v. Erving, 1 id., 605; Hermann v. Western Fine Ins. Co., 15 La., 51Y; Ripley v. The AEtna Ins. Co., 30 N. Y-, 136; Sipperl/y v. Stewart, 50 Barb., 62; Stébbins v. Globe Ins. Co., 2 Hall, 632; How, Receiver, etc., v. Mtabual Safety Ins. Co., 1 Sandf. [N. Y.], 13Y; affirmed, 2 Comst., 235; 2 Pars, on Con., 53; Harper v. Albany Mut. Ins. Co., 1Y N. Y., 191; 22 id., Ill.)

      Enastas Cooke, for the respondent.
    These articles, known as extra hazardous, being included in the general business of a freight boat on the Hudson river, are just as clearly embraced in the policy as if each article was enumerated. (Opin', of Pratt, J., in Harper v. The Albany Ins. Oo., 17 N. Y., 197; Same v. N. Y. City Ins. Go., 22 id., M2; Steimbaok v. Lafayette Fire Lns. Go., 54 id., 90; ■ The Mayor, eto., v. The Ha/milton Fire Ins. Go., 10 Bosw., 587.) Having knowledge of the actual use of the boat, even if the articles were absolutely prohibited in the policy, the insurer is liable. (Peoria Marine Fire Ins. Go. v. Hall, 12 Mich., 202.) In a policy of reinsurance the subject of the contract is not the property originally insured, but the risk incurred by the former underwriter and his interest in the preservation of that property. (The Mut. Safety Ins. Oo. v. How, 2 N. Y., 235; JBurritt v. The Saratoga Go., 5 Hill, 192; People v. Liverpool, London and Globe Ins. Go., 2 N. Y. Sup. Ct., 268) In Lad/wig v. The Jersey Gity Insurance Company (48 N. Y, 379) the insurance was upon goods on the first floor. At the time of the renewal of the policy they had been removed to the upper floor, of which no mention was made on the policy. The insurers were held liable. (Stebbins v. Globe Ins. Go., 2 Hall, 632.)
   Daniels, J.:

This action was brought, and the recovery in it was had, upon a policy of reinsurance executed and delivered by the defendant to the plaintiff. The plaintiff in the first instance issued a policy of insurance upon the barge Berkshire, her tackle, etc., while used as a freight-boat on the Hudson river, bay and harbor of New York, or while lying up or stopping at any of the ports or places in such waters.

This policy was in the sum of $4,000, extending from the 16th of March, 1864, until the 16th of March, 1865. And on the 1st of March, 1865, the defendant issued its policy of reinsurance by which it insured the plaintiff, in the sum of $2,000, against loss by fire on the barge .Berkshire, running on the Hudson and East rivers, from the 28th day of February, 1865, until the first day of the next September; and the loss, if any, was declared to be payable pro rata with the reinsured. This policy was afterwards extended until the 16th day of March, 1866, and on the 27th day of November,'1865, the barge was destroyed by fire while laden with a cargo, and lying at Yan 'Wie’s dock, a few miles below Albany, on the Hudson river. The defendant resisted its liability under its policy for several reasons. One of these was, that the plaintiff, on the Yth of March, 1865, issued a new policy on the barge, by which it was, in the same terms as were used in the original policy, insured against loss by fire from the 16th day of March, 1865, until the 16th day of March, 1866, in the amount of $5,000, and as notice of that was not given to the defendant, and it was not indorsed upon its policy, it was claimed that it had ceased to be liable when the barge was destroyed.

The clause contained in the defendant’s policy upon this subject was the usual one by which it was declared that if the assured or its assigns should thereafter “ make any other insurance on the same property, and shall not, with all reasonable diligence, give notice thereof to this corporation, and have the same indorsed on this instrument, or otherwise acknowledged by them in writing, this policy shall cease and be of no further effect.” It is not necessary to determine whether this clause would be violated by a further insurance made upon the same property by the party reinsured, for the reason that the defendant’s policy, by its own terms, expired before the loss was caused by the destruction of the property, and before the happening of that event, and after the increase was made in the insurance issued by the plaintiff, from $4,000 to $5,000, the defendant extended its insurance until the time designated for the expiration of the last policy issued to insure the property by the plaintiff.

That was done by a receipt, acknowledging the payment of a further premium for that purpose, and containing an agreement that its preceding policy was thereby continued in force from the 1 st of September, 1865, until the 16th of March, 1866, and that had the effect of reviving the insurance from the time it was given, even though it had previously become inoperative by reason of the plaintiff’s failure to give notice of the increase in the amount of its own insurance, and its omission to have it indorsed upon the defendant’s policy, or to be otherwise acknowledged by it in writing; for the agreement contained in the receipt created a new contract between the parties by which the plaintiff was reinsured, according to the terms of the policy nominally as well as actually expiring at that time, for the further period mentioned in the receipt.

It took effect at the time when the latter instrument was made

and delivered, and from that time applied tbe preceding policy to tbe additional insurance made by tbe plaintiff. It was a new contract of reinsurance, creating a liability on tbe facts tben existing; and it revived tbe defendant’s policy, even if, before that, it bad become invalid for want of conformity to tbe clause already mentioned ; tbat was tbe natural result of what tben transpired, and it lias the sanction of several authorities existing upon this subject, in which it has been held tbat tbe renewal of tbe preceding policy creates a new contract of insurance. (Noyes v. Hartford Fire Ins. Co., 54 N. Y., 668; Peoria Marine avid Fire Ins. Co. v. Hervey, 31 Ill., 46, 64; Hartford Fire Ins. Co. v. Walsh, 54 id., 164, 167; Brady v. Wortlvwestern Ins. Co., 11 Mich., 425-444; Luciani v. Am. Ins. Co., 2 Walton, 167; Driggs v. Albany Ins. Co., 10 Barb., 440; Carroll v. Charter Oak Ins. Co., 38 id., 402.) And as tbe risk newly taken by tbe defendant was in no respects changed, tbe policy contained nothing rendering tbe receipt inoperative or ineffectual as an extension of tbe insurance. Neither was tbe defendant’s policy avoided by any omission to comply with tbe clause requiring tbat notice of previous insurance should be given to it, and such insurance indorsed upon the policy issued by it, for tbe clause inserted in tbe defendant’s policy declaring tbat any loss incurred should be borne by it pro rata with tbe plaintiff, was apparently designed to dispense with any further notice of tbe insurance previously made by tbe plaintiff upon the property mentioned. It imported tbe existence of an understanding tbat tbe plaintiff bad already insured the property, and tbat tbe defendant’s insurance was designed as an indemnity, to tbe extent of tbe sum mentioned in it, against tbe loss which tbe plaintiff might be required to bear by means of its own insurance. Tbat was a sufficient indorsement of tbe insurance made by tbe plaintiff when tbe defendant’s policy was issued, and it was renewed when tbe receipt continuing tbe insurance was given on tbe first day of tbe • following September. This clause, as a portion of tbe said agreement, was rendered applicable to tbe insurance then created, as well as tbe others contained in tbe same policy. Altogether, they effected a new insurance to tbe plaintiff in this action, as it bad then itself become bound by its second policy.

Tbe plaintiff’s policies were both much more explicit in their description of the business of the barge than the one issued by the defendant. They insured her while used as a freight-boat, and while lying up or stopping at any of the- ports or places on the waters of the Hudson river, bay and harbor of New York; but while they were more minute, they were really no more extensive in their signification than the terms made use of by the defendant. By its policy, it insured the barge while “ running on the Hudson and East rivers.” The term “running” was evidently here employed in the sense ordinarily given to it, as it is applied to the business of navigation, and for that reason it could not have been intended that it should be restricted to risks encountered only when the barge was in motion, but it was equally within the protection intended to be afforded by the policy while it was lying at the wharves it was obliged to resort to for the purpose of receiving and discharging its cargo. The term “ running,” as it was used by the defendant, must have been designed to include all that ordinarily would be comprehended by the business of a vessel in active employment. It described the condition of a vessel commercially engaged; and it was used by way of contrasting the difference between vessels laid up and out of use and those making trips upon-the water. It must have been so understood by the parties in this instance, for nothing less than that could have been consistent with the indemnity designed to be secured by the defendant’s policy. It was known by the defendant that the plaintiff had insured this barge in the use which would be expected to be made of it upon the waters of the river, and of the harbor of New York. And to share its liability,,the policy was made by and taken from the defendant. Both parties understood that to be the design entertained, and the language selected was assumed to be adequate for that purpose. That was its popular meaning, and the fair intention of the parties cannot be maintained by placing any other construction upon it. By “ running ” upon the waters of the Hudson and East rivers the business of the barge employed upon those waters must have been intended to be described; and that included the time required for lading and unlading, as well as that when the barge was actually in motion. She was all the while employed upon these waters, and that was running upon them within the meaning of that term in its application to commercial pursuits.

i Wien the barge was burnt sbe was laden witb a cargo, wbicb in part consisted of baled bay and straw, wbicb were mentioned by tbe pobcy of tbe defendant as extra-hazardous articles. And it was in substance provided that tbe defendant should not be liable, under its pobcy, for any loss occurring while tbe barge was used for tbe purpose of carrying on or exercising therein any trade, business or vocation, or storing therein any of tbe articles, goods or merchandise denominated extra hazardous, unless otherwise specificaby provided for or agreed to in writing added to or indorsed upon tbe pobcy. But by insuring her as a barge running on tbe waters of tbe Hudson and East rivers, it was contended by tbe plaintiff, that this clause bad been so far compbed witb as to render tbe defendant bable. It was maintained that it was part of the ordinary business of barges employed upon those waters, to carry baled bay and straw ; and if that were true, then tbe insurance made abowed tbe barge to carry those articles. It included all that such barges were usually employed to do. And if carrying baled bay and straw was part of that employment, then it was in writing added to and indorsed upon tbe pobcy, and tbe defendant was bable for a loss arising from it.

Tbe plaintiff’s pobcy, in express terms and for an additional premium, abowed tbe barge to carry baled bay and straw. But if it was really a portion of tbe business, in tbe transaction of wbicb it was insured, this was simply a needless precaution, making no change in tbe obbgations of tbe insurer. It did not preclude tbe plaintiff from stib claiming that tbe defendant bad become bable to tbe same extent, by means of tbe general terms used in its pobcy to describe tbe business of tbe barge. In that respect tbe case resembled.very nearly that of Steinbach v. Lafayette Fire Insurance Company (54 N. Y., 90), where tbe special enumeration of one extra-hazardous article did not preclude tbe plaintiff from bis right to insist upon tbe benefit of tbe general terms, otherwise used for tbe purpose of including different articles deemed to be equaby hazardous. It was simply a circumstance opposed to tbe position taken concerning tbe ordinary business of a barge, and in that respect it would not fail to be attended witb its appropriate effect. But tbe plaintiff bad tbe right, if it could succeed in doing so, stib to show that tbe common business of barges upon these rivers included tbe carriage of baled bay and straw as portions of their cargoes; and if that could be estabbsbed, then tbe insured would seem to be entitled to maintain tbe action brought by it upon tbe policy. For tbe underwriter is presumed to understand tbe business which may be made tbe subject of tbe insurance, and for that reason, to intend to protect what may properly appear to constitute a portion of it, as it is usually carried on. [Harper v. Albany Ins. Co., 17 N. Y., 197; Bryant v. Poughkeepsie Ins. Co., id., 200; Pindar v. Kings Co. Ins. Co., 36 N. Y., 648; Hall v. Ins. Co. of North Am., 85 id., 292.)

For tbe purpose of showing that tbe present case was within tbe principle sustained by these authorities, several witnesses were examined who testified that barges on tbe Hudson river commonly carried baled hay and straw, and as the case was ultimately made to depend upon the proof of that fact, it must have been found to' have been established, for the jury could in no other way have rendered the verdict which they did for tbe plaintiff. Tbe fact itself was controverted by tbe defendant, where no additional premium was paid for tbe privilege of carrying articles of this description. And it accordingly offered to show that the custom, as it was called upon the trial, was invariably subjected to tbe payment of an extra-hazardous premium. This was rejected on the objection of tbe plaintiff, and tbe defendant excepted to its exclusion. Tbe contract existing in this case was made between tbe insurance companies, each of which must have understood tbe business to which it appertained. And if tbe privilege of carrying baled bay and straw upon barges was subject to this restriction, tbe evidence offered to prove it ought to have been received. Tbe substance of tbe offer was that no such privilege existed unless a special premium were paid for its enjoyment; and that bad some tendency to estabbsb tbe fact that these articles were not understood to be ordinary portions of tbe cargo of a barge. If that were tbe fact, then insurance, made upon such a vessel running upon these rivers, would only include baled bay and straw, when specially provided for as extra-hazardous commodities. The evidence given on tbe plaintiff’s behalf directly tended to establish tbe fact that they were included in the terms used as descriptive of tbe business itself; while that offered by tbe other party, if it bad been received, would have indicated that they were entitled to no such comprehensive signification. It would have added a material cpialification and restraint to that given on the part of the plaintiff, and might possibly have led to a different result in the action.

It was also objected that the privilege given to burn kerosene for lights avoided the insurance made- by the defendant. But as that article was not used oh the barge, the simple liberty to use it could not be attended with the effect of annulling the policy in controversy.

It was error to reject the evidence which was excluded, relating to the business of barges on the rivers, and for that reason the judgment and order should be reversed, and a new trial ordered, with costs to abide the event.

Davis, P. J., and Beady, J., concurred.

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


text:
    THE HEBREW BENEVOLENT AND ORPHAN ASYLUM, Respondent, v. THE MAYOR, Etc., OF THE CITY OF NEW YORK, Appellant.

      Tumtion — House of industry — wliatis — IB. S. [5 tiled.], 906, §4.
    The Hebrew Benevolent and Orphan Asylum of the city of Hew York, incorporated under chapter 14 of 1832 and chapter 316 of 1860, is a “house of industry,” within the meaning of section 4 of 1 R. S. [5th ed.], 906, and as such is exempt from taxation.
    Appeal from a judgment in favor of the plaintiff, entered upon the trial of this action at Special Term.

      T. J. Deem, for the appellant.

      Irvirng Ward, for the respondent.
   Daniels, J.:

This action was prosecuted to annul and set aside a tax imposed upon the plaintiff’s property. It was alleged to be a cloud upon its title, and the tax was vacated for the reason that the property of the plaintiff was regarded as exempted from taxation under the provisions contained in the Revised Statutes of this State. (1 R. S. [5th ed.], 906, §4.) The property taxed is situated on the northerly side of Seventy-sixth street, in the city of New York, and, with the building erected upon it, has been used as an industrial school, in which mechanical trades have been taught to children, in the custody and under the charge of the plaintiff. When first incorporated it was simply a charitable society. (Laws of 1832, chap. 14.) But since that time its powers and authority have been very greatly enlarged; that was done by chapter 316 of the Laws of 1860. It was then empowered to take into its charge, control and custody such orphans, half-orphans and indigent children, of the age of not exceeding thirteen years, as the trustees should agree to maintain, provide for, educate and instruct, during their minority, and who should be placed in its charge with the consent, in writing, of the legal guardian or nearest relative of such orphans or of one of the governors of the alms-house, or of the parents, or surviving parent or legal guardian of half-orphans or indigent children, or should be committed to its care and custody by any court, magistrate or police justice of the city of New York, in any case where such court, magistrate or police justice should acquire jurisdiction for that purpose under any law of this State. And in such cases the court, magistrate or police justice was given the like power and authority, with the consent of the trustees, to commit to the care and custody of the society as could then be exercised in regard to any other public institution. It was also given the power, by agreement ánd transfer, from every other institution having the legal custody of such orphans, half-orphans or indigent children, to obtain the care and custody of such child or children, the same as though it were secured by the consent or commitment previously mentioned. And at and after the age of thirteen years to bind them out to be taught and instructed in useful employments. It was also vested with all the powers and authority over such children as was possessed by the New York Juvenile Asylum. Under certain acts specifically mentioned (chap. 316, Laws of 1860, 540, 541, § 4), and by force of their provisions, it was empowered to receive children between the ages of five and thirteen years who should be found in any street, highway or public place, in the city of New York, in circumstances of want, suffering, abandonment, exposure, neglect or. beggary, who should be committed by the mayor, recorder, alderman, or other magistrate of the city, to its custody; and also such other like children as it should receive, with the consent in writing of their parents or guardians (chap. 332, Laws of 1851, 635, §§ 7, 8), and to afford them the means of moral, intellectual and industrial education (id., 633, § 2), and to provide such buildings as should be required for those purposes. (Chap. 547, Laws of 1853, 1020, § 6.) To the same general effect, also, were the further provisions made in 1851, which were also rendered applicable to the plaintiff in this action. (Laws of 1854, chap. 387, p. 921.)

Under these acts it is evident that the property affected by the tax in controversy, was lawfully devoted to the maintenance of what the statute, prescribing the exemptions from taxation, has designated as a house of industry. With the other buildings owned by the society, it was used for the custody, education and employment of dependent, destitute and friendless children; and it was maintained for the same general purposes as poor-houses and alms-houses — all of which are declared to be exempt from taxation. (1 R. S. [5th ed.], 906, § 5, sub. 1.) Houses of industry are, in terms, placed upon the same foundation, for this purpose, as those institutions ; and it is very manifest that they should be, for they are all maintained for the promotion of kindred objects. The statute has not definitely described what shall be known and included within the signification of the phrase “house of industry.” The terms are, accordingly, subject to construction; and that construction should be given to them as will best accord with their popular sense and meaning and advance the object intended to be encouraged by the exemption. No good reason can be perceived for excluding the institution, maintained by the plaintiff, from the privilege secured by this provision. If property devoted under the laws of this State to the teaching of useful trades to destitute, indigent and orphan children, committed to the custody of its corporate owner, cannot be properly designated as a house of industry, it is difficult to imagine what the legislature intended should be understood by the phrase inserted in the law.

These institutions are maintained for the advancement of objects of general interest which, in the end, must relieve the burthens of the public, by rendering persons dependent upon its bounty capable of sustaining themselves and of becoming orderly and useful members of the community in which they may reside. More than a fair equivalent for the exemption afforded them is returned by their ultimate contributions to the general good. They receive the indigent, destitute and dependent, committed under the authority of the laws, and restore them afterwards with industrial arts and habits, which must render them competent and useful members of society, capable of contributing to its prosperity, instead of endangering its safety and burthening it with expense, as otherwise would most probably be found to be the case in very many instances.

For that benefit sound policy required that encouragement should be afforded; and, to a slight degree, that was designed to be secured by providing that property devoted to these kind offices of humanity should be exonerated from liability to taxation. It is reasonably plain that the plaintiff’s premises are within the exemption provided for by the statute; and its application to cases of this description has not been restrained by any thing contained in chapter 282 of the Laws of 1852. That, by its terms, was confined alone to buildings used for public worship and schools in the city of New York. The property affected by the tax imposed in this instance was included in neither of those classes. It was a house of industry, and exempt from taxation, under the subdivision relating to institutions of that nature. The judgment appealed from should be affirmed, with costs.

Davis, P. J., and Brady, J., concurred.

Judgment affirmed, with costs.


text:
    HENRY A. CASSEBEER and J. OTTO TOUSSAINT, Executors, etc., of WILLIAM RUHL, Deceased, Appellants, v. FREDERICK W. KALBFLEISCH, Respondent.

      Accommodation indorsee — payment by, of note usuriously discounted — right to recover against malcer.

    One Buhl indorsed a note made by one Kaibfleisch for the accommodation of the latter, by whom the same was discounted at a usurious rate of interest. Upon the maturity of the note Buhl paid the same in ignorance of its invalidity, and subsequently Kaibfleisch made and delivered to him another note in place thereof. In an action upon the latter note, held, that the usurious discount of the first note constituted no defense thereto.

      An accommodation indorser of a note wiio takes up tte same at maturity, in ignorance of the fact that it has keen discounted at a usurious rate of interest, may maintain an action thereon against the maker thereof.
    Appeal from a judgment in favor of the defendant entered upon the verdict of a jury, and from an order denying a motion for a new-trial made upon the minutes of the judge before whom the action was tried.

      F. O. Gcmtme, for the appellants.

      Inioirn B'i/rdseye, for the respondent.
   Daniels, J.:

This action was brought upon two promissory notes made by the defendant to the order of William Buhl, and claimed by the defendant to have been void for usury. After its commencement, the complaint was amended by adding two other notes of the same description. But the evidence concerning them was stricken ont by the court, because- they matured on the day when the summons was served. The trial accordingly involved the liability of the defendant only upon the two notes originally set out in the complaint. The first of these was dated on the 29th day of June, 1874, payable in four months from that time at the Tradesmen’s National Bank. That was indorsed by Buhl, the testator; and the evidence tended to show that it was made and indorsed for the accommodation of the Empire Sewing Machine Company, with which the indorser was in no way connected, but of which the defendant was president. It also tended to show the discount to have been made of it at a usurious rate of interest. The other note was dated on the 1st of July, 1874, and became due in three months after its date, and was payable at the same bank as the other. The evidence showed that the last note was delivered to Buhl in exchange for a similar preceding note made by the defendant, and indorsed by himself, which had also been discounted at a usurious rate of interest. The notes were signed in blank by the defendant and placed in the hands of the secretary and treasurer of the sewing machine company, to be used for its benefit. And he filled them out and procured the first to be indorsed by Buhl, and afterwards discounted for the company. The other did not pass out of Buhl’s hands, but was held by him in place of the note which he surrendered for it, which was probably discounted and used in the same manner as the note of the twenty-ninth of June, for the accommodation of the company. Upon all the notes which were used in that manner, and they were shown to have been numerous, the defendant was maker and Buhl indorser for the use and benefit of the company, and for that reason the sale of them by the company at a greater rate of discount than seven per cent rendered them usmious in the hands of the holder. That was their first delivery or inception as commercial paper, and for that reason the notes could not lawfully be transferred to the lender of the money at a greater rate of interest than after the rate of seven per cent per annum. (Catlin v. Gunter, 1 Kern., 368.) In that respect they differ from what is known as business paper, or bills and notes arising out of or predicated upon real transactions. ( Williams v. Storm, 2 Duer, 52; Dowe v. Schutt, 2 Den., 621; Newell v. Doty, 33 N. Y., 83.)

But the evidence did not show that Buhl was in any manner connected with the usurious disposition of any of the notes. It directly showed the contrary — that the discounts were procured solely by the secretary and treasurer of the company. It also appeared that the notes which had been discounted were taken up by Buhl on account of his relation to them as their indorser; and there was nothing disclosed in the course of the trial from which it could be inferred that he knew or understood that either of them had been sold at a usurious rate of discount or interest. The only conclusion upon this subject which the evidence warranted was, that the notes were taken up by him in good faith, and under the belief that he was legally liable upon them. And if that was the case, then he was entitled to recover upon the note of July 1, 18Y4, because it had been delivered to him in exchange for a preceding note which he had in that manner acquired. As to the substituted note, no defense appears to have been made out. The facts were all proved by the defendant’s witness, and they were not contradicted. And the court was requested to hold that a recovery should be had on that note, but the request was declined, and the plaintiff’s counsel excepted. That, according to the case of Kent v. Walton (7 Wend., 257) was erroneous. It was there held, concerning a transaction similar in principle to this one, that “ although it had been shown that the first note was tainted with usury, and therefore void in the hands of the Franklin Bank, who had paid value for it without notice of the usury, yet the giving of a new security to an innocent holder for valuable consideration constitutes a new transaction, and the usury of the first note does not affect the second.” (Id., 258.) And that was shown to have been in accordance with the opinions of the chancellor and Golden, senator, in the case of Powell v. Waters (8 Cow., 669).

At the close of the case, the learned justice presiding at the trial was requested to instruct the jury “ that if Ruhl indorsed either of these notes at the request of Kalbfleisch, and the note was subsequently1 discounted at an usurious rate, and he took it up, the defense of usury is not available against him ; in other words, he was surety, and was not bound to plead the defense of usury unless, perhaps, he was specially required to do so by Kalbfieisch.” This was also declined, and the counsel for the plaintiff excepted. The evidence which had been given did tend very directly to show that Ruhl indorsed the notes at the request, of the defendant; and no point had in any form been made that Ruhl had taken up either of them when he had reason to believe that it had been usuriously discounted. In fact, there was no evidence in the case sustaining that view; for that r^,son, this request was equivalent to asking the court to hold that if Ruhl, as the defendant’s surety, had taken up either of the notes without notice that it had been discounted at a usurious rate of interest, he was entitled to recover against the defendant. The form of the request was somewhat defective, and open to criticism; but it was probably understood, in view of the evidence, as simply embodying the proposition which has already been stated, and the defendant’s counsel has so discussed it. Construing the request in that form, as, under the circumstances, it was probably understood at the trial, it ought to have been charged by the court; for a surety who, without either knowing or having reason to believe that any defense exists against the obligation undertaken by him at the request of another, has in good faith discharged it by payment, may legally resort to his immediate principal for reimbursement. (Burge on Suretyship, 367, 368.) And the fact that it may, without his knowledge or authority, have been discounted at a usurious rate of interest will not exclude it from the operation of this rule. (Robinson v. May, Croke’s Eliz., 588; Button v. Downham, id., 643 ; Parker v. Rochester, 4 Johns. Ch., 329.) In 1868, this question was before the General Term of the Superior Court of Buffalo; and it was held that “ usury in the inception of a note is no defense to the maker in an action against him of the accommodation payee and indorser, who took it up after protest without notice of the usury.”

Taking up such paper, by a party apparently liable to do so, as its indorser, is a very different thing from succeeding to the title of the usurious holder by its purchase. It is the performance of the contract made by its indorser at the instance of the maker. And in doing it he is not bound to suspect that an illegal use was made of the paper indorsed by him. He may act upon the presumption, which the law sustains, that its injunctions have not been violated, unless something has occurred to awaken his suspicions that the fact is otherwise. Aud when that has been done in good faith, the legal rales applicable to the case of a mere surety, as Buhl was shown to have been by the evidence (Pitts v. Congdon, 2 Comst., 352, 351) entitle him to indemnity from his principal. (1 Parsons on Bills, etc., 213, 211.)

Other objections were urged during the progress of the trial which have been relied upon as supporting the appeal, but as those already considered were well founded, these do not require to be considered.

The judgment and order should be reversed, and a new trial directed, with costs to abide the event.

Davis, P. J., and Brady, J., concurred.

Judgment and order reversed; new trial directed, costs to abide event.


author: Dakiels, J.:

text:
    In the Matter of the Application of JANE WEBB for Leave to Revive an Action and Serve a Supplemental Complaint.

      Foreign executor and administrator — cannot prosecute or defend action — except vilwre tlrn'e a/re assets in this State.

    An executor or administrator, appointed in and acting under the authority of a foreign court of prohate, hy virtue of his office merely, cannot prosecute or defend an action in the courts of this State, nor can he he substituted in the place of the deceased in an action therein, pending against him at the time of his death.

      Semble, that the rule is otherwise where the executor has brought assets of the estate into this State.
    Appeal by John D. Buckalew from an order made reviving an action, and allowing the service of a supplemental complaint.

      Aaron Pennington Whitehead, for the appellant.
    Foreign executors cannot be held liable in this State as such in a court of law; this has been expressly held by the Supreme Court of the United States and by the courts of this State. ( YanghnY. Northrwp, 15 Peters, 7; Yerrwilya v. Beatty, 6 Barb., 429; Story’s Confl. of Laws, § 513; Parsons v. Lyman, 20 N. Y., 103 ; Morrell v. Diekey, 1 Johns. Ch., 153; Doolittle v. Lewis, 7 id., 45; Williams v. Storrs, 6 id., 353; Broom v. Yam Horne, 10 Paige, 549 ;• Brown v. Brown, 1 Barb. Ch., 189; Warren v. Eddy, 13 Abb. Pr., 28.) The only exception is, where the foreign administrator has brought the assets into this State. (Guíñele v. Guliok, 33 Barb., 92.)

      I. T. Williams, for the respondent.
    It is well settled that a foreign executor or administrator, who has brought a portion of the assets of the estate of the deceased into this State, may be sued by a creditor in the courts of this State, and be compelled to pay his claim from such assets, if they are sufficient for that purpose. (Gamrpbell, Adrnr., etc., v. Towsey, Exr., ete., 7 Cow., 64; McNamara v. Dwyer, 7 Paige, 239 ; Brown v. Brown, 1 Barb., 189; Guliok v. Guliok, 33 id., 92; Peterson v. Chemical Bank, 32 N. Y., 21; Harvey v. Richards, 1 Mason, 403; Da/wes v. Head, 3 Pick., 123; Mothland v. Wiseman 3 Penn., 185 ; 2 Kent Com., 433; Tunstall v. Pollard’s Admr., 11 Leigh, 1; Brycm v. McGee, Adrnr., 2 Wash. 0. C., 337; Pugh’s Evers, v. Jones, 6 Leigh, 310; Middlebrooh v. The Merchants’ BamJc, 21 How., 267.)
   Dakiels, J.:

The plaintiff, Jane Webb, commenced and prosecuted an action against James Buckalew, to recover damages for the breach of a covenant against incumbrances contained in a deed executed and delivered by him to her grantor. Issue was joined in the action by the service of an answer, and a reference of the case was directed to obtain proof of the facts. While that remained undetermined the defendant departed this life, being at the time a resident of the State of New Jersey. He left a will, by which he appointed his sons, Isaac S., John D. and Frederick S. Buckalew, his executors and also trustees of one-fourth of his estate for the benefit of his daughter. Letters testamentary were issued to them by the surrogate of the county of Middlesex, in the State of New Jersey, and the will was also proved and recorded in the Surrogate’s Court of the county of New York; but no letters testamentary were issued upon such proof. John D. Buckalew was afterwards found within this State and served with an affidavit and notice of motion for an order reviving the action and for leave to serve a supplemental complaint for that purpose. The' motion was heard and an order made to the effect applied for, and from that order the executor, upon whom the motion papers were served, appealed.

The claim in suit is strictly one against the personal representatives of the testator, and in no way connected with any trust created by his will. If the action had been to enforce, maintain or vindicate a trust, the foreign domicile or appointment of the trustee would have formed no objection to its prosecution against him in the ' courts of this State. (1 Perry on Trusts, §§ 71, 72.) But the cause of action alleged arose during the lifetime of the testator, and the trusts created by his will have no possible relation to or connection with it. For those reasons the action cannot properly be revived and prosecuted against his executors as trustees under the will.

Neither have the executors, or either of them, removed or brought any portion of the assets in their hands into this State. If that had been done, the action might have been revived and proceeded against the party served for that reason. (McNamara v. Dwyer, 7 Paige, 239; Brown v. Brown, 1 Barb. Ch., 189 ; Gulick v. Gulick, 33 Barb., 92; Pugh’s Exrs. v. Jones, 2 Leigh, 299, 310.)

The application to make them parties to the action must, therefore, depend alone upon the fact that they have been appointed executors under and by virtue of the laws of the State of New Jersey; and that, according to the uniform course of the authorities upon the subject, seems to be insufficient to justify the proceeding. In Doolittle v. Lewis (7 Johns. Oh., 15) that was declared to be the law. The chancellor, in deciding the case, held that it was well settled that a party cannot sue or defend in our courts, as executors or administrators, under the authority of a foreign Court of Probate. (Id., 17.) In Vermilya v. Beatty (6 Barb., 429) the precise point was before the General Term of the first district, and that rule was then maintained as the settled law.

And it was again repeated in Warren v. Eddy (13 Abb., 28), and to the same extent in Vaughan, v. Northup (15 Peters, 1); Noonan v. Bradley (9 Wall., 394); 2 Williams on Executors (3d Am. ed., 1611); Story’s Conflict of Laws (5th ed., § 513). The authorities all appear to be in one direction, holding the law to be that foreign executors and administrators cannot merely by virtue of their offices either prosecute or defend actions in the courts of other States. In some instances the disability has been removed by statute; but where that is not the case, and the representative has not removed the assets or some portion of them into this State, the rule of the common 'law is that which has been already stated.

The order made must consequently be reversed and the motion denied.

Davis, P. J., and Brady, J., concurred.

Order reversed and motion denied.


text:
    ERNST W. ALBRECHT, Plaintiff, v. STEPHEN PELL, Defendant.

      Ma/i'fiage settlement in 1841 —power of wife to devise lands under power in.

    By a marriage settlement made in 1841 property was conveyed to a trustee, the wife being empowered to limit, devise, order or appoint, either by her last will and testament in writing or by any other writing, the property held in trust to such persons as she might see fit. The wife died in 1875, leaving a will executed in 1874. Held, that though at the time of the execution of the settlement the law did not permit the wife to transfer the legal title to the land by a will, yet, that at the time of her death the law did authorize her so to do, and that a devise thereof by her to her executors vested the legal title in them.
    Controversy submitted without action pursuant to section 372 of the Code.
    Ernst W. Albrecht, having contracted for the pxu’chase of a lot of ground in the city of New York, with Stephen Pell, executor, refused to take title, on the ground that said Pell could not give a full and clear title in fee simple of said lot, and demanded of said Pell to take such steps and measures as would give him (Pell) such full title in fee simple, when he (Albrecht) would take title, which, however, said Pell refused to do.
    The controversy depended upon the construction to be given to an ante-nuptial agreement of September 21, 1811, which, after placing certain real estate of the intended wife in trust for the payment of the income to her for life, provided, among other things, as follows: “ That if the said intended marriage shall take effect, that then he, the said John W. Innes, shall and will permit and suffer the said Mary to give, grant, bargain, sell and dispose of her said separate estate in her lifetime, and to make such will and other writings as aforesaid, and thereby to give, order and devise, limit and appoint the said separate estate to any person or persons, for any trust, use, intent or purpose whatsoever.”

      Nehrbas <& Pitshke, for the plaintiff.

      Edma/rd Fitch, for the defendant.
   Daniels, J.:

The only point submitted to the court for its decision in this case presents the question whether the executor can convey the title to certain real estate he has contracted to sell to the plaintiff. It is conceded to have been lawfully vested in a trustee, under a marriage settlement made for the benefit of the testatrix in 1841. By the terms of the settlement the property was to be held in trust for her during her marriage; and it was so held until the period of her own decease. The trustee himself has since died, and it is contended, on the part of the plaintiff, that the trust has from that time vested in this court; but that is evidently an erroneous view of the effect of the decease of the beneficiary, for it has been provided by statute, which was in force when the trust was created, that when the purposes of an express trust shall have ceased the estate of the trustee shall also cease. (3 R. S. [5th ed.], 22, § 86.) This provision had the effect of terminating the title of the trustee in the property when the beneficiary died, and there was nothing left to devolve upon the court for execution. It is only when the trust itself remains partially unexecuted, that it becomes vested in this court upon the decease of the trustee (id., § 81), and that, as already stated, is not this case. The parties to the marriage settlement included the trustee, and the persons who contemplated marriage ; and in the instrument making the settlement and creating the trust they, in terms, so far qualified the estate of the trustee in the property as to secure the power to the intended wife, at any time during her life, to “ limit, devise, order or appoint, either by her last will and testament in writing, or by any other writing signed with her hand, in the presence of two or more credible witnesses,” the property held in trust for her benefit; and it was further declared that the person or persons to whom she should give or dispose any part of her separate estate, by her last will or any other writing that shall be signed by her in the presence of two credible witnesses, as aforesaid, shall, and lawfully may, peaceably and quietly have, hold, occupy, possess and enjoy the same according to the true meaning of such grant, gift, devise or appointment, without any let, denial, hindrance or interruption of, or by, the said John "W.” (the husband), “ his executors, administrators or assigns, or any of them.”

The trust was subordinated to the existence of this power in the beneficiary from tbe moment of its creation, through the entire period of its duration. And although the law may not have permitted such an effectual execution of it by her as would transfer the legal title to the estate through the operation of her last will, when her marriage took place, that disability was afterwards, and before her will was executed, removed by express statutory enactments. Before that her will was deemed sufficient to devise an equitable estate, under the authority of such a power, which would entitle the devisee, through the intervention of a court of equity, to a conveyance of the legal estate from the heir. (.Bradish v. Gibbs, 3 Johns. Ch., 522.) And as the devisee took the estate under the power, and not exclusively by means of the will, the necessity for such a conveyance to complete the title was not uniformly conceded. (Strong v. Wilkin, 1 Barb. Ch., 9.) But still it seems to have been the law. (Wadhams v. Am. Home Miss. Society, 2 Kernan, 415.) But since that time and before the will was executed which is now before the court, that disability had been removed by legislation.

By chapter 375 of the Laws of 1849, married women were empowered to devise their real and personal estate; and afterwards they were expressly authorized to make wills. (Laws of 1867, vol. 2, page 1927, chap. 782, § 4.) The testatrix executed her last codicil in 1874, and died in 1875. Her will and codicils went into effect at that time, and they consequently had the sanction and authority of both these statutory provisions. That was sufficient under the power reserved to her by the marriage articles, to render her devise of the real estate, affected by the trust, effectual, as a conveyance of the legal and equitable title, to her executor. Her power in that respect was in no way restrained by the last section of the act of 1849, declaring that all contracts made between persons contemplating marriage, shall remain in full force after such marriage shall take place. (Laws of 1849, chap. 375, § 3.) It was by reason of the fact that the marriage articles did remain in force, and consequently preserved unimpaired the power created by them, that the testatrix could devise the title to the trust estate. After her preceding disability as a married woman had been removed by the legislature, neither the case of Anderson v. Mather (44 N. Y., 249) nor that of Mc Whorter v. Agnew (6 Paige, 111), could in any manner qualify the authority possessed by her under the statutes, which have been, referred to and which were in force at the time when her will went into effect. She clearly devised to her executor the title to the property affected by the present controversy. Indeed, that is conceded by the plaintiff’s counsel, if she had authority to execute the power reserved to her by the instrumentality of her will. That she had that right has already been shown. The unqualified statutory authority given to married women to make and execute wills, added to that which preceded it, of devising their real estate and bequeathing their personal estate, were ample for that purpose.

The defendant should, therefore, have judgment on the case submitted for the determination of this court.

Davis, P. J., and Brady, J., concurred.

Judgment for defendant on case submitted.


author: Brady, J.:

text:
    THE FARMERS’ LOAN AND TRUST COMPANY, Plaintiff and Appellant, v. DAVID M. HUGHES, Impleaded with THE MILWAUKEE AND ST. PAUL RAILWAY COMPANY and THE CHICAGO, MILWAUKEE AND ST. PAUL RAILWAY COMPANY, Defendant, Appellant.

      Trustee under railroad mortgage — effect of Ms removing to anotlwr country — eryovning him from aching as trustee.

    The rights and duties acquired by and imposed upon a trustee under a mortgage executed by a railroad company are personal in their character and incapable of delegation, and when such trustee voluntarily removes to and becomes a resident of a foreign country, he incapacitates himself from discharging the duties of his office, and thereby vacates the same.
    In such case this court will enjoin him from acting as such trustee, and from further prosecuting an action, as trustee, in the United States court.
    Cross appeals from part of au order made at Special Term granting an injunction, and from a part refusing an injunction. The defendant Hughes appealed from the order because it restrained him from acting as a trustee, and the plaintiff because it did not restrain the defendant Hughes from proceeding with an action commenced by him as trustee.

      Oha/rles D. Ingersoll, for the defendant Hughes.
    The justice properly denied the motion for an injunction against the further prosecution of the suit in the United States Circuit Court. This State court has no injunction to enjoin the prosecution of that action. (Mead v. Merritt, 2 Paige, 402; MeKim v. Voorhies, 7 Cranch, 279; Schuyler v. Pelissier, 3 Edw. Ch., 191, and cases cited, approved and followed in Ooster v. Griswold, 4 id., 364; Willard’s Equity Jurisp., 348, and cases cited; Williams v. Ayra/ult, 31 Barb., 364; Ma/ri/posa Go. v. Ga/rrison, 26 How. Pr., 448.) If the plaintiff; here has any equity, he should apply to the United States Circuit Court, which court has equity jurisdiction and full power to grant all the relief sought by this motion, and to do complete justice to all the parties. (Grant v. Quick, 5 Sandf., 612; Ooster v. Griswold, 4 Edw. Ch., 364; Mallow v. Hinde, 12 Wheat., 193; Erie Railway Go. v. Ramsay, 45 N. Y., 637; Dum/n, v. Glamke, 8 Peters, 1.) Even if Hughes did remove from this country, it has not created a vacancy. ( Withvngton v. Withvngton, 16 Simons, 104; In reWatts, 9 Hare, 106; S. C., Law Jour., vol. 20 Rep. [N. S.], Eq., 337; In re The Moramian Society, 26 Beav., 101; Oammeyer v. United Germ. Luth. Oh., 2 Sandf. Ch., 186.) “An alien may be trustee of a corporation.” (See, also, Lewin’s Law of Trusts [5th ed.], 467, § 16.)

      E. Randolph Robinson and F. W. Bangs, for the plaintiff.
    The court below erred in refusing to restrain the defendant Hughes from proceeding with his action in the federal court. The power of the court to enjoin, in a proper case, parties from proceeding before another court in the same State, or in a sister State, or in a foreign or federal court, cannot be denied. (High on Inj., §§ 57 to 60, and 208; Vail v. Knayp, 49 Barb., 299; Dehonpr. Foster, 4 Allen [Mass.], 550; Bank v. Rutland, 28 Yt., 470; Ackerley v. Vilas, 15 Wis., 401; Engel v. Scheuerman, 40 G-a., 206; Mitchell v. Bunch, 2 Paige, 606; Hayes v. Wa/rd, 4 Johns. Ch., 123; Erie Railway Go. v. Ramsay, 45 N. Y., 637; Ba/rry v. Bruñe and the Mut/uaZ life Ins. Go., Supreme Court, first dept., MS. opinion; Graft v. lothrop, 2 Wall., Jr., 103; Gray Falls v. Worcester, 23 N. H., 470; Bunby v. Burnby, 1 Beav., 320; Beckford v. Oam/pbell, 1 Simons & Stuart, 7.)
   Brady, J.:

The plaintiffs seek to enjoin David M. Hughes from acting as trustee under a certain mortgage executed by the Milwaukee and St. Paul Railway Company, and by which he and John P. Yelverton were appointed trustees for the purposes mentioned. Mr. Yelverton died about the 1st of January, 1867, and the duties of the trust, by the instrument creating it, devolved upon Mr. Hughes. The mortgage provided that the trustees, or their survivor, might be removed by the vote of a majority, in interest, of the holders of the bonds referred to in the mortgage, at any meeting called for that purpose; and, further, by a separate and distinct provision, that in case of the death, removal, resignation, incapacity or inability of both or either of said trustees to act in the execution of the trust, then a majority of the holders of such bonds might designate and select, in writing, one or more competent persons to fill the vacancy so occurring. The plaintiffs were designated and selected in the place of Mr. Hughes upon the assumption that he having permanently removed from this State and become a resident of France, the majority of bondholders empowered to select in case of the incapacity or inability of the trustee to act in the execution of the trust, had the right to exercise their authority, and thus to remove Mr. Hughes. The plaintiffs insist that the defendant Hughes has changed his residence permanently, while the latter, through his agent and attorney, maintains that the absence is only temporary, and for the purpose of educating his daughter. The plaintiffs also insist that the change of residence, such as they assert it to be, incapacitates the defendant, Hughes, from continuing as trustee, while the latter insists that even if his residence abroad be regarded as permanent, he is not disqualified, and- that the majority of bondholders referred to could not displace him. In reference to the first dispute, it appears that Mr. Hughes- went abroad in the year 1865, and has, with slight intervals which he spent in this country, continuously remained away. It also appears that Mi’. Harvey H. Woods also had known Mr. Hughes for fifteen years. In an affidavit made by him herein, he stated, among other things, as follows: “ Deponent further says, that shortly after the said David M. Hughes first went abroad, deponent was requested by the said Hughes to attend, for him, to a matter relating to some assess-meats which had been made upon him, in the city of New York, for personal taxes, or taxes upon his personal estate, which, as deponent is advised and believes, are assessed only against residents of the city, and that the said Hughes requested deponent to have the assessments which had been made against him on his personal property removed or vacated, on the ground that he was not a resident of the city of New York; and deponent did make application on behalf of the said Hughes to the tax commissioners of the city of New York, on the ground of the non-residence of said Hughes, for the vacation of the said personal tax and assessments, and the same were so vacated, and have not been since imposed or assessed against the said Hughes, as deponent is informed and believes.” It also appears that none of the allegations in the complaint contained are denied by Mr. Hughes, except through his agent and attorney, and that the incident related by Mr. "Woods in regard to taxes is not at all contradicted. It is, however, the controlling feature in the case. The long-continued absence of Mr. Hughes, coupled with the application to be relieved from taxes as a non-resident, is, in the absence of responsive proof, sufficient to sustain the truth of the charge that he has become a permanent resident of another country. It is true that it appears from the conversations had between Mr. Hughes and Mr. Cowdrey, his agent and attorney, that the trustee expressed his intention to return, and avowed his continued residence here, but his acts are inconsistent with such intent and avowal, and cannot be accepted as other than quite sufficient to establish the charge of non-residence. The result is, that the first question must be held to have been properly decided against Mr. Hughes. In regard to the second disputed proposition, it must be said that the trust conferred is personal, and not to be delegated. Indeed, it is the general characteristic of a trust that it is personal, and not to he transferred to another. The trustee is generally selected because of confidence in his integi’ity and capacity, and especial fitness for the duties imposed by the trust. His personal attention is the basis of his duty, and this cannot be given, as contemplated, during a residence far away. The duties which Mr. Hughes was called upon to perform were important. They are correctly set forth by the plaintiffs’ counsel as follows: These duties are :

First. Those which will arise in the event of the non-payment of interest, and of foreclosure, namely: To enter into and npon and to take actual possession of all the property, real and personal, and rights and franchises of the railway company, and to hold, use and enjoy the same, to make repairs, etc., and to collect and receive all tolls, freight, income, rents, issues and profits of the same, and of every part thereof.

In the contingency of foreclosure, there are also these further duties to discharge, namely: To sell at public auction, to the highest bidder, the entire property, real and personal, of the railway company ; to give the proper notices of sale; to execute the necessary conveyances; and after such sale, to distribute the moneys derived from operating the railway, and the proceeds of sale, in their proper order, among the parties entitled thereto, or, at the request of a majority of the bondholders secured by the mortgage, to buy in the property, real and personal, of the railway company, at the foreclosure sale, and thereupon to organize a new corporation, and to convey the premises purchased to such new corporation.

If the trustee, with these obligations resting upon him, voluntarily removes to a foreign land, and becomes a resident of it, there does not seem to be room to doubt his inability, in the language of the trust, to act in its execution according to its spirit, object and its ultimate ends, which were to secure the advantages of a faithful and prompt personal fulfillment of its provisions, according to the facts and circumstances prevailing or to occur during its existence.

If the question were res nova, there is little doubt that the courts would, without hesitation, declare that a permanent residence abroad, or even a temporary residence, which rendered the full discharge of the trust duties problematical, would revoke the trusts. The eestuis que trust are entitled to the absolute certainty of such personal devotion to their interests and confidence as the trust conferred contemplates, and hence it is that the courts, when the trust is accepted, will not permit the trustees to abandon it or yield it up without a decree therefor, to be made only upon investigation and due consideration. The text-books, and many of the authorities bearing upon the question, recognize a permanent residence abroad as an incident in the life of a trustee which incapacitates him from performing the trust reposed in him. The rule is sound, and sustamed by tbe relations of personal confidence and personal duty which spring from the trust itself. (Perry on Trusts, § 275, and cases cited; O’Reilly v. Alderson, 8 Hare, 104; Smith v. Smith, 10 Hare App., lxxi; In re Ledwith, 6 Irish Eq., 562 ; Atty.-Gen. v. City of London, 3 Brown’s Ch., 171; Lake v. De Lambert, 4 Ves., Jr., 592; Mennard v. Wilford, 1 Sm. & G., 426; Re Stewart, 8 Week. Rep., 297; Commissioners of Charity Donations v. Archbold, 11 Irish Eq., 187, 194; Cornegys v. The State, 10 Gill & J., 183, 184; Dorsey v. Thompson, 37 Md., 27, 47; Maxwell v. Finnie, 6 Cold. [Tenn.], 434; Ex parte Tunno, Bail. Eq. [S C.], 387; Ex parte Robert, 2 Strob. [S. C.], 88, 89; Ketchum v. Mobile and Ohio R. R. Co., MS. op. of Woods, Ch. J.)

Having arrived at this conclusion, it follows that the designation and selection of the plaintiff by the bondholders as the trustee in place of Mr. Hughes was, prima facie, authorized, and is legal, and that the latter is deposed. It follows, also, from this result, that he cannot longer continue any litigation in reference to the trust, and that the plaintiff must be ultimately substituted in his place therein, unless the final judgment of this court, in case of a trial of this action, shall determine that he was not lawfully removed ; for this reason, he should be restrained from acting as the trustee of the company, and the restraint should be extended to actions pending in his name, without which it might be supposed he still had authority to conduct and manage them. It would seem to follow, as the natural legal sequence of restraining him from acting as the trustee of the company, that he could not continue in bis name any action commenced by him as such trustee ; and hence the order at Special Term, while it was correct in prohibiting him from acting in that capacity, was erroneous in not preventing him from prosecuting the action which he had commenced in the Circuit of the United States against the company. It might be well, in some cases, to make such an order, but there does not exist in this case facts which require it. The order should have enjoined the trustee, Hughes, from the further prosecution by him of the action mentioned. The plaintiffs are abundantly able to take proper care of the interests of the cestwis que trust, and are responsible for a faithful discharge of the duties they have accepted.

There should, for these reasons, be an affirmance of that part of tbe order appealed from by tbe defendant Hughes, and a reversal of that portion appealed from by the plaintiffs.

Ordered accordingly, with ten dollars costs and the disbursements of this appeal.

Daniels, J., concurred. Davis, P. J., talcing no part.

Order affirmed on defendant’s appeal, and that part of the order appealed from by plaintiffs reversed, with ten dollars costs and disbursements.


author: Brady, <T.:

text:
    APPLETON STURGIS, as Administrator, etc., Respondent, v. DANIEL DREW and others, Appellants.

      Dissolution of corporation— effect of, upon pending action.

    In 1865 an action was commenced against the New Jersey Steam Navigation Company. In 1869 the corporation dissolved hy the expiration of the time limited hy the charter for its existence. In 1871 the action was tried and a verdict rendered in favor of the plaintiff upon which a judgment was entered. Held, that the judgment was void, as it was recovered after the dissolution of the corporation against which it was rendered.
    Appeal from a judgment in favor of the plaintiff, entered upon the trial of this action by the court and a jury.
    The plaintiff’s intestate, in 1865, commenced an action against the New Jersey Steam Navigation Company and recovered judgment therein in 1811. During the pendency of the action, and in 1869, the company was dissolved by the expiration of the time limited for its existence by its charter. The plaintiff’s execution having been returned unsatisfied, this action was brought against certain of the trustees and directors, who had divided the property of the corporation among themselves, to recover the amount due upon the said judgment.

      James MeNamee and Meiwy E. Jamies, for the appellants.

      William Allen Butler, for the respondent.
   Brady, <T.:

The plaintiff’s intestate, having a claim against the New Jersey Steam Navigation Company, commenced an action against it in the year 1865. The company appeared and defended; Daniel Drew, as its president, verifying the answer. The issues joined were tried on the 12th April, 1871, and a verdict rendered in favor of the plaintiff. On the 15th April, 1871, a judgment was entered upon the verdict for the damages and costs, which, on successive appeals to the General Term and Court of Appeals, was affirmed.

The New Jersey Steam Navigation Company, the defendant in that action, was incorporated by act of the legislature of New Jersey, on the 29th February, 1839, tbe ninth section of which is as follows: “ And be it enacted that this act shall continue in force for thirty years unless sooner modified or repealed, and that tbe legislature may at any time hereafter alter, modify or repeal tbe same.” Tbe charter expired therefore, by its own limitation, in tbe year 1869, and tbe company ceased to exist. When tbe action was commenced against it by tbe plaintiff’s intestate it was in being, but when tbe judgment was entered, and indeed long before tbe trial was bad, it bad ceased to exist. It is tine that no suggestion of this was made upon tbe record, or to tbe court, in any way, and tbe action was allowed to proceed as if tbe parties were unchanged in any respect. Tbe plaintiff’s rights in this action were predicated of that judgment, and tbe defendant Vanderbilt insisted as a defense *on tbe trial herein, and urged on tbe appeal again, that tbe judgment is a nullity because, tbe company’s charter having expired, it was rendered without jurisdiction. Various considerations bearing upon tbe question were presented by tbe respective counsel in elaborate and able briefs, but tbe result can be briefly pronounced. Tbe charter expired in February, 1869, and tbe company ceased to exist (People v. Walter et al., 17 N. Y., 502), and that state of facts rendered it necessary to apply to tbe court for an order continuing tbe action. {McCulloch v. Norwood, Receiver, etc., 58 N. Y., 562.) In tbe case just cited a judgment was obtained against tbe Lorillard Fire Insurance Company, on tbe 14th May, 1872. On the 24th October, 1871, however, a judgment bad been entered dissolving it and continuing tbe receivership of tbe defendant. When tbe action against tbe company came on for trial its attorneys announced in open court that it bad been adjudged insolvent and bad been dissolved and a receiver appointed, but tbe court nevertheless allowed the plaintiff to proceed and take judgment. Tbe proceeding was declared to be invalid, and the judgment valueless, because it was pronounced without the legal presence of the party entitled to defend. It was said that at common law it was very clear such a judgment would be of no force, and that section 121 of the Code and the statute of 1832 (Laws of 1832, chap. 295), which latter was invoked by the plaintiff herein, did not relieve the plaintiff from the necessity of applying for an order of continuance.

Tbe statute of 1832, it was adjudged, while it gave tbe receiver the right to continue an action brought by it in the name of the corporation after his appointment, required that in actions against the corporation after its dissolution an order should be obtained to continue it. The cases are parallel. In the one the dissolution was announced in open court by the attorneys for the corporation, and in the other the act of incorporation declared when the company should cease to exist and become defunct. The notice was given in both cases: in this by the charter and in the case cited by the declaration in open court. The company having ceased to exist could act only through its representatives, and they would be, according to tbe law of New Jersey, tbe president and directors or trustees or managers of the affairs of the corporation at the time of its dissolution, who were vested with full power to settle its affairs and divide its property among the stockholders, and who could be* sued for the debts due from the corporation. (Statute, New Jersey, passed April 15th, 1816.) Our statute is substantially tbe same as this. (1 Rev. Stat., 600, §§ 9, 10.) The judgment was therefore pronounced without tbe legal presence of the persons entitled to defend, and who would be by our statute {stvpra) the directors or managers of the affairs of the corporation, unless some other persons were' appointed by a court of competent authority. The learned counsel for the plaintiff referred to the case of Mo Goon v. Scales (9 "Wall., 23) as an adjudication in favor of the validity of the judgment, but the proper parties it seems had appeared in tbe action, and by a special statute of Wisconsin it also appeared a bank whose functions bad ceased, but which yet owned property and owed debts, might be sued and the property subjected to the payment of them. Our system is otherwise and so is that, of New Jersey. We have no such special statute as this. On the contrary, the course to be adopted is distinctly marked out, and when the New Jersey Navigation Company was dissolved by lapse of time, the directors or managers of its affairs became necessary parties, by a proper order, to an action pending against it, whose presence was indispensable to the validity of any further proceedings. If the case suggested any theory which would avoid the application of this rule it would seem to be just to evoke it, because the expiration of the charter was known to the company and should, in fairness, have been stated to the court. It is true that the plaintiff must be supposed to have known it as well, because it was an element of the charter, but it may have escaped his observation.

There is no doctrine, however, which can intervene, and the judgment herein must be reversed, but we think without costs.

Davis P. J., and Daniels, J., concurred.

Judgment reversed, without costs.


text:
    ALEXANDER STEWART, Respondent, v. EDMUND C. BRAMHALL, Appellant.

      Usury — accommodation indorser of corpoo'ation note— cannot plead.

    One who becomes the accommodation indorser of a note, made by a corporation to enable the corporation to raise money, which is subsequently discounted at a usurious rate of interest, cannot interpose the defense of usury in the action brought against him thereon.
    Appeal from a judgment in favor of the plaintiff, entered on the report of a referee.

      Wm. F. Shejpa/rd, for the appellant.

      A. B. GwpweTl, for the respondent.
   Brady, J.:

The New York and Silver Peak Mining Company determined by a resolution to raise money by their notes, which were to be sold at a discount not exceeding twelve and a half per cent. The defendant and one Roswell S. Burrows were trustees of the company, and the former was a member of the finance committee authorized to borrow money in the manner stated. He participated in the proceedings which resulted in adopting the method mentioned of raising the money required. Mr. Burrows took some of the notes and agreed with the defendant to discount the note in suit, if the latter would indorse it for the benefit of the company. The indorsement and discount were made and the proceeds paid to the company'. The defendant thus became a surety for the payment of the sum for which the note was paid. It was upon the strength of his indorsement that Mr. Burrows discounted the note. The rate of discount was in accordance with the resolution. There is no distinction in principle between this case and the ease of Rosa v. Butterfield (33 N. Y., 665). The note herein was discounted for the company at their rate, but not upon their responsibility alone. The note, though thus discounted, was a valid obligation against the company, and it was not affected in any way by the agreement between Mr. Burrows and the defendant. It was a binding instrument, and a guarantor of its payment would be bound (33 N. Y., supra;) or an indorser. (Union Bank, of Pittsburgh v. Wheeler, 60 N. Y., 612.) Under these authorities neither the company nor the indorser could make the defense of usury available.

The judgment should, for these reasons, be affirmed, with costs.

Davis, P. J., and Daniels, J., concurred.

Judgment affirmed, with costs.


text:
    JOHN M. PHILLIPS, Survivor, etc., Respondent, v. LOUIS F. THERASSON, Impleaded, etc., Appellant.

      Section 10, chap. 40 of 1848— capital stock not paid in full — liability of stockholders arising from — Statute of limitations.

    Under tire provisions of section 10 of chapter 40 of 1848, declaring all stockholders liable to an assessment equal to the amount of stock held by them respectively for all debts of the corporation, until the capital stock is paid up in full, and declaring the corporation dissolved if the capital stock is not all paid up in two years from the incorporation of the company, an action to enforce the liability thereby created must be brought before the expiration of six years from the termination of the two years allowed for the paying up of the capital stock, or it will be barred by the statute of limitations.
    A stockholder is not liable under the act, for a debt created prior to his becoming a stockholder.
    Appeal from an order sustaining a demurrer to the defendant’s answer.
    This action was brought on October 1, 1874, against the defendants, stockholders of the American Tunnel Machine Company, to compel the payment of a debt alleged to be due from the corporation, it being claimed that the capital stock had not been paid up in full, as required by the act of 1848. The corporation was formed on June 15, 1865. Immediately after the incorporation of the company plaintiff was authorized to do certain work, for which he, on the 26th of June, 1866, recovered a judgment against the company for $5,391.84.
    The answer, among other things, alleged that the indebtedness was contracted, if ever, before the subscription by the defendant for the company’s stock.

      Wm. Alim Butler, for the appellant.

      B. McK.'Ormsby, for the respondent.
   Brady, J.:

The tenth section of the act of 1848, authorizing the formation of companies for manufacturing purposes (Laws of 1848, chap. 40), declares that the stockholders shall be severally individually liable to the creditors of the company to an amount equal to the amount of stock held by them respectively for all debts and contracts made by the company, until the whole amount of the capital stock fixed and limited by such company shall have been paid in and a certificate thereof shall have been made and recorded as provided, and it is • further declared that such capital stock shall all be paid in within two years from the incorporation of the company or such corpora^ tion be dissolved. The defendant the American Tunnel Company was formed on the 15th June, 1865. The defendant Therasson subscribed for 100 shares of the stock. He paid an assessment of five per cent. The whole subscription was not paid by him and other subscribers, and therefore the whole capital stock was not paid in within the two years limited for that purpose, and which expired on the 15th June, 1867.

The plaintiff’s judgment was recovered on the 26th June, 1866. The defendant Therasson’s liability commenced probably at the time the debt due the plaintiff was contracted, because the capital stock had not been paid in, and never was. Assuming, however, that the stockholders and company had until the 16th June, 1867, which would be two years after the formation of the company, to pay or procure the payment of the capital stock, the obligation then became absolute, because the capital stock was not paid in and the right of the creditors of the company, became fixed to sue the stockholders under the provisions of the act mentioned. The liability to the plaintiff was created by statute, and that liability thus created existed for six years, and no longer. The statute declares, as we have seen, that if the capital stobk be not paid in within the two years, the corporation shall be dissolved. The remedy of the corporation, through its receiver, for unpaid subscriptions, if it existed, would at least begin from the expiration of the two years, because the corporation would have no life as such beyond that time. The statute declares it dissolved. This action was commenced in October, 1874, which was more than seven years after the expiration of the time limited for the payment of the capital stock, and more than nine years after the formation of the company. The defendant Therasson, therefore, set up as a defense the statute of limitations. It seems to have been well interposed. The liability of the defendant Therasson to the plaintiff rested upon the tenth section of the act of 1848, as we have seen, and by which the stockholder is admonished that the capital stock of the company must be paid up and thus placed within reach of the creditors, who i;elied upon it, and to which they properly looked for the payment of their demands. The statute, in other words, was designed to insure a subscription for stock in substance, and not in form only, and thus to prevent what might, otherwise, operate fraudulently. The legislature said to the stockholder, unless the capital is paid in you shall be liable; and you must see to it that this requirement, which is one of substance, shall be observed. Regarded as either arising upon contract or a liability created by statute, the claim is, therefore, within the statute of limitations affecting civil actions, and by which such actions must be commenced within six years. The plaintiff’s counsel insists that the plain import of the statute is, that the liability of the stockholder shall continue as long as the delinquency continues ; and therefore the right of action remains until the capital is paid up. This is an erroneous view of the subject. The statute of limitations covers all classes of actions,' and properly, because it relates to rights which begin at a known time or period. Every cause of action has its time of origin, and its determination. Under the Code, section 4, they are civil and criminal. The distinctions between actions at law and in equity are abolished (section 69); and by section 74 it is declared that civil actions can only be commenced within the periods prescribed, after the cause of action shall have accrued. Section 91 declares that an action upon a contract, obligation or liability, express or implied, except those mentioned in section 90, of which this is not one, shall be commenced within six years ; and there are no provisions extending the period, save those contained in sections 108. and 109, which, except actions to enforce the payment of bills, notes, and other evidences of debt, issued by moneyed corporations, or issued and put in circulation as money, and actions against directors and stockholders of moneyed corporations or banking associations to recover a penalty or forfeiture imposed, or to enforce a liability created by law; but such actions shall be brought within six years after the discovery by the aggrieved party of the facts upon which the penalty of forfeiture attached, or the liability was created.

The provisions contained in the Revised Statutes relating to the subject, prior to the Code, were repealed (sections 73, 74), except where, in special cases, a different limitation is prescribed by statute ; and there being no special or different limitation for such an action as this, the provisions of the Code apply.

The actions against stockholders, other than those of moneyed or banking corpoi’ations, are to be commenced within six years after the cause of action accrued. The exclusion of that class from section 109, just quoted, is evidence of the legislative intent on the subject.

The liability of the defendant Therasson to the plaintiff is one ' created by law, and is of a class which it would be necessary to commence even against the stockholder of a moneyed or banking corporation, if it were not for the provisions of section 109, just recited.

The case of Conklin v. Furman (48 N. Y., 527) seems to be decisive of this question. The stockholder therein prosecuted was made liable by statute for the debts of the company, and it was held that if the action was not commenced against him until after the expiration of six years from the time the cause of action arose, it was barred.

The cases are parallel. The defense considered should, therefore, have been sustained. This is not an action in equity against all the stockholders to determine their rights and obligations or to enforce equitable contributions. The defense that the plaintiff’s debt was contracted before the defendant Therasson became a stockholder, was also well pleaded. It is a good answer. (Tracy v. Yates, 18 Barb., 152.) Tie is not liable for debts which were contracted prior to the time when he became a stockholder.

The order appealed from should, for those reasons, be reversed, with ten dollars costs and the disbursements of this appeal.

Davis, P. J., and Daniels, J., concurred.

Order reversed, with ten dollars costs and disbursements.


author: Beady, J.:

text:
    JOHN LYNCH, Respondent, v. JOHN J. LEVY, Appellant.

      Action upon promissory note— demurrer — when frivolous.

    In an action by the payee against the indorser of a promissory note, the complaint alleged the making of the note by the maker and “ that the defendant then and there, and before the delivery of said note to the plaintiff, indorsed the same to the plaintiff for value, and that said note was afterwards, and before the commencement of this action, delivered to the plaintiff herein for value,” etc., and then alleged the failure to pay the note and due notice thereof to the defendant. The defendant demurred on the ground that the complaint did not state facts constituting a cause of action. Seld, that the demurrer was frivolous.

      Wood/ruff v. Leona/rd (1 Hun, 632) distinguished.
    Appeal from a judgment rendered on a frivolous demurrer to tbe complaint.

      Joseph G. Levi, for tbe appellant.

      Wm. G. JBtrney, for tbe respondent.
   Beady, J.:

Tbis action was brought by tbe payee of a note, against tbe defendant, and upon these allegations: Eirst, that heretofore one A. M. Cristalar made bis certain promissory note, in writing, dated at the city of New York, on tbe 27th day of May, 1874, wherein and whereby tbe said A. M. Cristalar promised to pay to tbe plaintiff tbe sum of three thousand and five hundred dollars ($3,500), two months after tbe said date, at No. 691, Broadway, New York city. Second, that tbe defendant then and there, and before the delivery of said note to tbe plaintiff, indorsed tbe same to tbe plaintiff for value, and that said note was afterwards, and before tbe commencement of tbis action, delivered to tbe plaintiff herein for value, and tbe plaintiff became, and now is, tbe owner thereof for value. Tbb’d, that at tbe maturity thereof tbe said note was duly presented for payment, and payment thereof duly demanded, but tbe same was not paid; of all which due notice was given to defendant, and that no part of said note has been paid.

The defendant demurred, upon the ground that the complaint did not state facts constituting a cause of actiou. On motion, the demurrer was declared to be frivolous, and a judgment accordingly entered.

There can be no doubt that if in such a case as this there are allegations showing that the indorsement was made to give the maker credit with the payee, the action can be maintained. The payee can at any time, even at the trial, indorse the note without recourse, or it can be considered done, for the purposes of the action. Both of these propositions are decided by the ease of Moore v. Cross (19 N. Y., 227). In that case the special circumstances changing the apparent relation of the defendant, as second indorser, were stated, and presented the facts, therefore, upon which the court could determine the precise attitude upon which the parties stood, each to the other. The question arising herein is one of pleading, and it is whether the allegations set- forth are sufficient to bring this case within the principle of the one cited. They seem to be sufficient. They result in this, namely: A. M. Cristalar, on the 27th May, 1874, made his promissory note, by which he promised to the plaintiff the sum of $3,500; the defendant then, and before the delivery of the note to the plaintiff, indorsed and delivered it to him for value, and he became the owner for value. This may be criticised as an indefinite mode of stating the transaction, but it is clearly sufficient to show that the indorsement by the defendant was not that of a second indorser, and that he became bound to the plaintiff by a legal consideration for the promise to pay the amount of the note to him. The complaint differs, therefore, materially from that in Woodruff v. Leonard (8 S. C. N, Y. [1 Hun], 632). It may be supposed from these averments that the credit was given either to the maker or the defendant on the strength of the latter’s indorsement, but it matters not which, so far as the defendant’s liability is concerned. The allegations, therefore, are sufficient, although signalized by the words for value,” to express the fact that a consideration moved to the defendant from the plaintiff for the indorsement (Prindle v. Caruthers, 15 N. Y., 427; Benson v. CouChvman, 1 Code B., 119), and to show that the plaintiff was not in any sense bound to the defendant by reason of his relation to the paper. The course of the defendant, therefore, was to move to make the complaint more definite and certain, and lie might have succeeded in that effort. A plain statement of facts is all that is necessary now to perfect a pleading; and when the substance is present, although somewhat shadowy in form, the remedy is to make it more apparent, by demanding a more certain and definite exposition.

The learned justice at Special Term was right in declaring the demurrer frivolous.

Davis, P. J., and Daniels, J., concurred

Judgment affirmed.