text:
    William Bradley, Resp’t, v. Margaret Shafer et al., App’lts.

      (Supreme Court, General Term, Third Department,

      Filed July 2, 1892.)

    1. Pleading—Amendment after verdict.
    In an action against a married woman for a tort, brought before the passage of the act of 1890, in which her husband was joined as defendant, the complaint prayed for judgment against her alone. After a verdict in favor of plaintiff the court ordered the complaint amended to conform to the facts and so as to demand judgment against both defendants, Held, error, as it had the effect of creating a verdict not given by the jury, and increased the amount claimed against the husband.
    S. Married women—Tort—Verdict.
    The husband being jointly liable for the wife’s torts prior to the act of 1890, a separate verdict against either is improper.
    Appeal from judgment in favor of plaintiff, entered on verdict, and from order denying motion for new trial.

      Frank Kampfer, for app’lts; Henry T. Sanford (Eugene Burlingame, of counsel), for resp’t.
   Putnam, J.

This is an appeal from a judgment in favor of plaintiff, entered February 4, 1891, and from an order denying a motion made to set aside the verdict and grant a new trial because the verdict is against evidence and the damages excessive, and also from an order allowing an amendment to the complaint after the verdict.

The action is for wrongfully and maliciously enticing plaintiff’s daughter from the home of her parents to defendant’s house, and there keeping her under the control of defendants against the wish and consent of plaintiff. She was seduced by defendant’s soil in the house of defendants, while thus kept away from her own parents.

The complaint in this case, after stating the plaintiff’s alleged cause of action, contained the following prayer for judgment: Whereupon the plaintiff and his family have been brought into disrepute * * * to his damage, $5,000, for which amount plaintiff demands judgment against the defendant, Margaret Shafer, and co’sts.” The trial judge, in his instructions to the jury, remarked: “The defendant, Margaret Shafer, who is the real defendant here, although her husband is joined with her, that is because, as the law was when this action was brought, a married woman could not be sued for a tort alone, * * * so that, in this case, the husband was made a party only because the law required, in order to maintain the action, that he should be joined with his wife, she being a person against whom the tort is alleged.”

The case states that “ the jury returned a verdict in favor of the plaintiff for $2,500 damages.” Afterwards, on motion of plaintiff, the court ordered “ that the prayer of plaintiff’s complaint be and the same is hereby amended to conform to the facts proven, and so as to demand judgment for damages against both defendants.”

I think that this order was inadvertently granted by the court.

It was made after the rendition of the verdict. The jury in. bringing a verdict of $2,500 for the plaintiff rendered it in pursuance of the prayer of the plaintiff’s complaint against the defendant, Margaret Shafer. They did not and could not render such a verdict against Bobert Shafer, for the reason that no such verdict was claimed in the complaint. Hence the order of the court liasthe effect of creating a verdict against the defendant, Bobert Shafer, that was not in fact given by the jury. It is well settled that after a verdict the complaint cannot be amended so as to increase the amount claimed. Bowman v. Earle, 3 Duer, 695; Decker v. Parsons, 11 Hun, 296; Dox v. Dey, 3 Wend., 356; Corning v. Corning, 2 Selden, 104; Pharis v. Gere, 31 Hun, 443.

In this case no recovery was demanded of the defendant Bobert in the complaint,- but the demand for judgment was expressly made against the defendant Margaret Shafer alone, and the complaint so remained until after the rendition of the verdict. The effect of the order was to increase the amount claimed from the defendant Bobert from a nominal sum to $5,000. Within the above authorities this order was unauthorized.

This action was begun in 1889, hence chap. 51 and chap. 248 of the Laws of 1890 did not apply. See Hill v. Duncan, 110 Mass., 238-239.

Therefore the husband was a proper and necessary party defendant in the action, and judgment should be collected from him. Fitzgerald v. Quann, 33 Hun, 652-658; Fitzgerald v. Quann, 109 N. Y., 441; 16 St. Rep., 395; Mangam v. Peck, 111 N. Y., 401; 19 St. Rep., 78; Bennett v. Bennett, 116 N. Y., 597; 27 St. Rep., 679.

The complaint in this case should have been amended before the verdict. Doubtless the court, under § 723 of the Civil Code, on motion, could have allowed such an amendment at any time-before the submission of the case to the jury. After the verdict, as we have seen, the court possessed no such power. The effect of such an amendment and of the order in question was to make a verdict for the jury never in fact rendered. Therefore as to the-defendant Bobert Shafer the order in question and the judgment must be reversed, and a hew trial granted.

But as we have seen the husband is a necessary party defendant. He is liable to pay the judgment. Fitzgerald v. Quann, 33 Hun, 656-658.

He is jointly liable with his wife. It is not a case where a separate verdict against either would be proper. Hence the orders- and judgment should be reversed, and a new trial granted as to both defendants. See Pollock v. Webster, 16 Hun, 104, and kindred cases.

It is urged by defendants that there should be a new trial because the damages were excessive. That the seduction of plaintiff’s daughter by defendant’s son did not properly enter into the question of damages. That for that injury plaintiff has a cause o£ action against George Shafer.

The trial court instructed the jury that they had no right to give plaintiff a verdict because defendant’s son seduced the girl, unless they found that the mother did connive, did aid, or did assist in bringing about the seduction, and either originally enticed the daughter away from the father for that purpose or subsequently entered into some arrangement to bring it about.

¡No exception was taken to the charge of the judge. Had an exception been taken, I am not prepared to say that if the jury believed all that the witness Mary Bradley testified to, that they might not properly consider her seduction on the question of damages. According to this witness Margaret Shafer persuaded, and in fact, almost coerced her to leave, and to remain away from her parents at the house of said defendants. Margaret knew of the seduction of the witness by her son the day it first occurred. She knew that the witness and her son were having unlawful commerce in her house. She knew the bad character .of her son; yet she prevented the witness from returning to her parents and knowingly kept her exposed to the solicitations of her son, making no -effort to put a stop to the immoral intercourse going on. Margaret absented herself for days, leaving her son and the witness alone together. I am inclined to think that there was evidence in the -case from which the jury might, if they believed the statements of the witness Mary Bradley, as they could, find that the witness -defendant Margaret Shafer, having induced this young girl to leave her parents and sojourn at her house under her care and charge, knowingly connived at the commerce between the girl and her son which was carried on without objection on her part. I am, therefore, not prepared to say that the matter was not properly submitted to the jury by the learned trial judge, or that the jury, believing the statements of the witness Mary Bradley, could not consider the seduction on the question of damages, and hence that the verdict should be set aside on the ground that the damages were excessive.

But for the reasons above stated the orders and judgment should be reversed, and a new trial granted, costs to abide the event.

Mayham, P. J.—I concur upon the ground first stated in the written opinion.

Herrick, J., concurs.


source: Caselaw Access Project

author: Putnam, J.

license: Public Domain

text:
    Louise F. Mars, Adm’rx, Resp’t, v. The Albany Savings Bank, App’lt.

      (Supreme Court, General Term, Third Department,

      Filed July 2, 1892.)

    Interpleader—Aeeidavit.
    An affidavit for an order of interpleader, under § 820 of the Code, should set out facts showing that there is some foundation for the claim asserted to the fund, or some plausibility in the claim, or such a state of facts as justifies a reasonable doubt in the mind of the moving party as to its validity.
    Appeal from order denying motion for an order of inter-pleader.

      Tracy & Cooper (James Fenimore Cooper, of counsel), for app’lt; Chase & Delehanty (Norton Chase, of counsel), for resp’t,
   Putnam, J.

Plaintiff, as administratrix of John H. Mars, brings this action to recover a balance of $773.72, claimed to be due from defendant, alleging that at the time of his death John H. Mars had on deposit with defendant $1,186.38. After his death the account was transferred to the credit of the plaintiff as his administratrix. She afterwards deposited various sums to her credit as administratrix, and drew out moneys, and at the time of the commencement of the action there was due her from defendant the sum of $773.72, which plaintiff had demanded of defendant and the latter had declined to pay.

The defendant, on the complaint and an affidavit, moved, under § 820 of the Civil Code, for an order substituting Helen Stanley and Kate A. Judge as defendants, and discharging defendant from liability to the plaintiff or said Stanley and Judge on paying into court the amount claimed in the complaint. The affidavit on which the defendant moved, as far as material, is as follows:

“That deponent further says that Helen Stanley and Kate A. Judge, who are not parties to said action, make a demand of said bank to them of said sum sought to be recovered in this action, claiming to be entitled to the same, and to be the owners thereof ; that'said demand is made without collusion with the defendant herein; that the nature of the claim of said claimants to said property, as far as shown to this deponent, is as follows, namely: that the plaintiff in this action claims the said sum as administratrix of the late John H. Mars, deceased, and that the said Helen Stanley and Kate A. Judge claim the same by virtue of an alleged gift to them of said fund by the said John H. Mars, deceased, during his lifetime.

“And deponent further says that the defendant has no interest in the question to whom said debt or deposit belongs, and is ignorant of the grounds and merits of the respective claims made to said fund or debt) except as above set forth, and does not know to which of said claimants it may safely pay said fund or debt, and offers to pay the same into court, or to such person as this court may direct.”

This is an appeal from an order denying said motion.

It will be observed that the affidavit does not state any facts showing that the claim asserted by Stanley and Judge is well grounded, or that such claim is not frivolous,' or that the officers of the defendant have doubts as to its validity. For all that appears in the affidavit the claim of' the said parties may not only be frivolous, but the defendant's officers may believe it invalid. It is true that _ the affidavit states that the treasurer of defendant is ignorant of the grounds or merits of the respective claims made to said fund, and does not know to which of said claimants it may be safe to pay the same. But it is not stated in said affidavit that the claim of Stanley and Judge is plausible or that the treasurer believes it is well founded, nor are any facts set out from which it might be inferred that the claim is such as to create a well founded doubt as to its validity. In Bowery Nat. Bank v. The Mayor, etc., of New York, 4 St. Rep., 565, it was held that on a motion like this it was npt necessary for an affidavit to show that the demand made on the fund would probably be successful, but only that there was a person not a party to the action who made a demand for the same debt without collusion with defendant. That case was followed in Dreyfus v. Casey, 52 Hun, 95; 23 St. Rep., 397. Under these authorities, probably the affidavit in this case, should be deemed sufficient. I judge, however, that in the cases cited the facts appearing indicated that the claim of the persons who were substituted as parties defendant were plausible and not frivolous, and that said facts created a reasonable doubt as to the validity thereof. In that regard those authorities are not similar to this case.

A different construction was placed upon the provisions of § 820, supra, by the general term of this district, in Williams v. Ætna Life Ins. Co., 8 St. Rep., 567. In that case, it was held that the court has a discretion to grant or refuse an order to substitute a third party making a claim to a fund. In that case, Justice Learned, delivering the unanimous opinion of the court, remarked r “ There must always be a real doubt in the mind of the defendant, based upon facts, as to who has the just claim, before interpleader will be permitted or the provisions of the Code of Civil Procedure, § 820, enforced.” The affidavit on which the motion was made in that case seems like the affidavit here. The general term reversed the order in that case made at special term, holding that there should be evidence given as to the validity of the claim asserted to the fund to recover which the plaintiff brought the action. See, also, Pustet v. Flannelly, 60 How., 67. I assume that, the judge below felt bound to follow the rule laid down by the general term of this district in the case cited. In the case we are considering, the plaintiff seeks to recover a deposit standing in her name as administratrix in defendant’s bank. ' The defendant, asks to substitute other parties as defendants on the mere allegation that they claim the fund. No facts are stated from which we could infer that there are any grounds for the claim. In fact,, the affidavit on which the motion is founded states that defendant’s treasurer is ignorant of the grounds and the merits of the respective claims. The affidavit does not state that the defendant’s officers have doubts as to whether the claim asserted by Stanley and Judge is invalid or otherwise, or that the claim is plausible, or that they believe it to be well founded. I think it is proper, when an application is made under the provisions of § 820, supra, that the affidavits and papers on which said motion is founded should set out facts showing that there is some foundation for the claim asserted to the fund, or some plausibility in the claim, or such a state of facts as justifies a reasonable doubt in the mind of the moving party as to its validity. To that extent, at least, I think, the case of Williams v. Ætna Life Ins. Co., supra, should be followed.

The order should be affirmed, with costs.

Herrick, J., concurs; Mayham, P. J., not sitting.


author: Herrick, J.

text:
    William B. Weaver, App’lt, v. Jehiel White, Resp’t.

      (Supreme Court, General Term, Third Department,

      Filed July 2, 1892.)

    Partnership—Appropriation of firm assets to individual debt.
    Plaintiff endorsed a note for his son to establish him in business, and also one to enable him to purchase goods. Thereafter the son formed a partnership, the firm taking his assets and agreeing to pay his liabilities, including said notes; neither partner putting in any cash. Plaintiff also endorsed a note for said firm. Said notes were renewed by the firm with plaintiff’s endorsement, but plaintiff finally paid the same and other firm debts, and took a bill of sale of the assets of the firm and continued the business himself. Held, that said notes were valid obligations against the copartnership and were not fraudulent against creditors of the firm who became such after the same were given, and an appropriation of the firm property to pay such notes was not unlawful.
    Appeal from judgment in favor of defendant, entered upon nonsuit.

      Shedden & Booth (L. L. Shedden, of counsel), for app’lt; Weeds, Smith & Conway (T. F. Conway, of counsel), for resp’t.
   Herrick, J.

This case coming before us to review a judgment entered upon an order nonsuiting the plaintiff, it must be assumed that those facts which the plaintiff’s evidence proved, or tended to prove, are established or found in his favor, and such facts are as follows:

Some time in the year 1889, or prior thereto, one Peter O. Weaver entered into business in the village of Morrisonville, Clinton county. To raise money to establish such business the plaintiff, his father, endorsed a note for him for the sum of $2,000, which note was discounted at the Merchants’ Bank of Plattsburgh ; subsequently the plaintiff endorsed another note for him, for $500, which was discounted at the same bank After conducting the business for a year or more, one Loren B. Weaver, a brother, was taken into partnership in the business by Peter O. Weaver.
Peter O. Weaver at that time was between $5,000 and $6,000 in debt; his stock in trade was estimated to be of the value of $3,000.

The articles of copartnership recite that the “ party of the first part, Peter O. Weaver, has contributed the sum of $2,000 in cash, and the said party of the second part, Loren B. Weaver, has contributed the sum of $1,000 in cash,” “ and this amount is now invested in a stock of goods now in the store of J. Broadwell, in the village of Morrisonville, N. Y., estimated at $3,000.”

As a matter of fact no cash was actually contributed by either. The fourth article of the co-partnership agreement reads as follows : “ The parties above named agree to take all the accts., debts and liabilities that now remain unsettled that, were contracted by Peter 0. Weaver during the past year while in the mercantile business at Morrisonville and that were incurred for the benefit of the said business, a part of this amount being $200 to J. Broadwell, $2,000 to Merchants’ Bank, $500 to Merchants’ Bank, $1,000 to Merchants’ Bank of Plattsburgh, N. Y., being the amount now "vested in the stock of goods which P. 0. Weaver & Co. now agree to buy and do take possession of this 10th day of June, 1890, and $3,000 of this amount shall he the capital stock invested in this company by P. O. Weaver and Loren B. Weaver, Jr."

The $2,000 and $500 notes were the ones I have already referred to as having been endorsed by plaintiff. On the 10th day of June, 1890, Peter O. Weaver and Loren B. Weaver under the firm name of P. O. Weaver & Co., executed a note for $1,000 which was-endorsed by the plaintiff and discounted at the Merchants’ Bank of Plattsburgh and is the $1,000 note referred to in said fourth article of the partnership agreement; the proceeds of that note were used to pay debts contracted in the business by Peter O. Weaver prior to the formation of the co-partnership.

All these notes were renewed as they became due by and under the firm name of P. O. Weaver & Co., and endorsed by the plaintiff. The co-partnership continued to do business until May 2, 1891, when, becoming embarrassed and the plaintiff refusing to endorse or raise any money for them, they executed a bill of sale-to him of all the goods in the store, at the inventoried price of $3,145; the accounts valued at $1,200 were also transferred to-the plaintiff, making the consideration in all $4,345 ; this was to be paid by the plaintiff by taking up the $2,000, $1,000 and $500 notes in the bank, and by his agreement to pay certain other debts of the firm making up the balance of $4,345. The plaintiff subsequently took up the notes in the bank and gave them to-Peter O. Weaver, either paying the bank or giving his own notes in place of the ones he took up. The plaintiff carried on the business until about August 25, 1891, during which time he purchased goods and added .them to the stock in trade, to the amount of between $400 and $500.

On the 25th of August, 1891, the stock in trade was seized, and the store closed, by the defendant, the sheriff of Clinton county, under an execution issued upon a judgment recovered by Edward P. Durant and E. Matthew Carpenter against Peter O. Weaver and Loren B. Weaver, for the sum of $982.15, the judgment roll being filed June 5, 1891, and the recovery being had for goods, wares and merchandise sold to the firm of P. 0. Weaver & Co., apparently between November 8, 1890, and April 17, 1891.

The plaintiff brought an action in replevin against the defendant to recover possession of the goods, and upon the trial at the-close of plaintiff’s case a motion for a non suit was granted, and from the judgment entered thereon the plaintiff appeals to this-court. The case was disposed of in the court below upon the principle that copartnership property cannot be applied to the payment of the individual debts of the copartners until the firm debts are paid.

That such" is the general rule there can be no serious question.

The point to be considered here is whether the $2,000, $1,000- and $500 notes held by the Merchants’ bank and endorsed by the plaintiff were copartnership notes or individual notes. The_$l,000* note was originally issued as a copartnership note. The $2,000 note was originally issued as the individual note of Peter 0. Weaver before the formation of the copartnership. So also the $500 note. When the copartnership was formed it was agreed that it should assume the payment of all these notes, the $1,000 note being issued the same day the firm was by the terms of the copartnership agreement to take possession of the store and business.

No cash was actually put in by either member of the firm. The new firm simply took possession of the store, stock in trade and business formerly possessed and carried on by P. O. Weaver, and assumed to pay all the debts that had been contracted by him in that business.

The proceeds of the $2,000 note had been used to start him in business; that is, to purchase the stock in trade. The proceeds of the $500 note were also used in the regular course of such business, probably to purchase merchandise; the proceeds of the $1,000 were used also to pay some of the debts contracted by Peter O. Weaver in that business, presumptively in purchasing goods and merchandise, and the goods, wares and merchandise so-23urchased were, as we have seen, turned over to the new firm, so-that the copartnershi23 had in fact the benefit of all the notes. And the notes so given by the firm, or in renewal thereof, or assumed, by it, are valid obligations against the copartnership. Turner v. Jaycox, 40 N. Y., 470; Arnold et al. v. Nichols, 64 id., 119; Hannigan v. Allen, 127 id., 639-42; 37 St. Rep., 138.

The merchandise in the hands of Peter O. Weaver was liable for his debts; there was nothing inequitable as against subsequent-firm creditors in making such debts obligations of the new firm which took the merchandise, for the jmrchase of which the debts were contracted, without paying for them.

The indebtedness for which the merchandise was liable was not increased; the new obligations simply took the place of the old.

It was not the ordinary case of making firm obligations binding upon the firm property to pay individual debts with ;-here at the time of assuming the two notes and making the other the firm had no property; the assumption of the two notes and the execution of the other was for the purpose of procuring firm property with which to transact business.

“In Menagh v. Whitwell, 52 N. Y., 146, and all kindred cases there was substantially a donation of firm property to pay the debt of an individual partner without any consideration to the firm.” Bernheimer v. Rindskopf, 116 N. Y., 439; 27 St. Rep., 648.

In this case the consideration is ample ; the copartnership sA cures the merchandise which the debts it assumes and pays were contracted to purchase.

The new firm took the individual property of Peter 0. Weaver and assumed his individual debts at the same time; they became copartnership debts at the same time the property became co-partnership 23i’023erty; the one was the consideration of the other.

They came into existence as firm debts at the same time the firm came into existence.

The indebtedness for which the judgment was obtained and execution issued thereon to the defendant was incurred months after the giving and assumption of the notes in question, and hence such notes cannot be regarded as fraudulent as against such judgment creditors, and an appropriation of the firm property to pay such notes is not unlawful. Nordlinger v. Anderson, 123 N. Y., 544; 34 St. Rep., 361.

The other indebtedness in consideration of which the transfer of the property was made to the plaintiff, it is conceded, or at least not controverted here, was copartnership indebtedness.

No contention is made but that the transfer to plaintiff was lawful, provided the obligations in question were copartnership obligations, and not those of the individual members of the firm; the conclusion at which I have arrived in that respect renders a reversal of the judgment necessary.

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

Mayham, P. J., and Putnam, J., concur.


text:
    The People ex rel. Daniel E. Sutliff, Resp’t, v. The Board of Supervisors of Fulton County, App’lt.

      (Supreme Court, General Term, Third Department,

      Filed July 2, 1892.)

    1. Certiorari—Supervisors—Fee for return.
    A board oí supervisors cannot be required to file its return to a writ of certiorari to review its audit of bills without payment of the fee therefor at the rate prescribed by § 2135 of the Code.
    2. Same.
    Section 3280 of the Code does not apply to such a case; it refers only to official duties.
    Appeal from order of special term, requiring defendant to file its return to a certiorari within ten days, or show cause why it should not be adjudged in contempt.

      N. H. Anibal (J. A. Dennison, of counsel), for app’lt; Smith & Nellis (John M. Carroll, of counsel), for resp’t.
   Herrick, J.

The relator presented to the board of supervisors of Fultoú two verified claims for audit and allowance. After investigation, the board rejected the greater portion of such claims. The relator subsequently commenced proceedings to review the actien of the defendant, the board of supervisors, and a writ of certiorari was granted by the supreme court directed to the defendants, for the purpose of reviewing their proceedings upon the audit of such claims.

z, , The defendant prepared the return to said writ but refused to 'file the same until the fees it claimed were allowed by law were paid by the -relator. The relator claimed the defendants was not entitled to any fees whatever for preparing and filing such return, and refused to pay any.

An order was granted at the special term requiring the defendant to file such return without the payment of any fees, and from such order the defendant appeals to this court.

The relator cites § 3280 of the Code of Civil .Procedure, as authority for the non-payment of fees. That section reads in part as follows: Each public officer upon whom a duty is expressly imposed by law must execute the same without fee or reward, except where a fee or other compensation is expressly allowed by law.” _ ”

_ I do not think obedience to a process of the court comes within the provisions or meaning of this section. It is not a duty expressly imposed upon them by law as public officers; it is not an official duty; the section refers only to official duties.

But assuming that obedience to such writ does come within the meaning of § 3280, still there is a fee or other compensation allowed by law for making a return to a writ of certiorari.

Section 2005 of the Code of Civil Procedure reads as follows: “A person upon whom a writ of certiorari, issued as prescribed in this title, is served, must in like manner upon payment or tender of the fees allowed by law for making a return to the writ, and for copying the warrant or other process or proceeding to be annexed thereto, obey and return the writ according to the exigency thereof.”

Under the name person is included not only natural but artificial persons, corporations and bodies corporate, whether municipal or otherwise. The board of supervisors in making a return necessarily acts through its officers and employees, and it is just as much entitled to the fees and compensation for making a return as a natural person. The only open question is, What is the fee? While the section I have quoted recognizes the fact that there is a legal fee allowed by law for making the return, I have been cited to no statute specifically stating what that fee is, unless it is § 2135 of the Code of Civil Procedure, that seems to fix the amount legally payable for making a return, and in the absence of any other statute we must be guided by that; the fee that is lawful for one class of persons to charge and receive must be the legal and proper fee for others to charge and receive from others for the same services.

There is no reason why any different rule should prevail as to boards of supervisors than prevails as to other persons against whom writs of certiorari issue.

The order of the special term should be reversed, with ten dollars costs and printing disbursements.

Matham, P. J., and Putnam, J., concur.


author: Andrews, J.

text:
    Luther Kountze, App’lt, v. William W. Flannagan, Resp’t.

      (Supreme Court, General Term, First Department,

      Filed May 13, 1892.)

    1. Contract—Agreement between stockholders—Public policy.
    Plaintiff, with other stockholders, was in a position to control the policy of a corporation, and entered into an agreement with defendant by which he was to secure the election of defendant and others named by him as directors, in consideration of an agreement by defendant to devote his time and attention to promote the welfare and success of the corporation, to procure the construction of an electric railroad at a reasonable expense, secure the location of factories on its lands, cause sales of its lands to be made, and so conduct the affairs of the company as to increase the value of its shares. In an action for a failure of defendant to carry out his agree.ment, whereby it was claimed that a depreciation in the shares was caused, Held, that so far as the agreement related to the performance by defendant of his duty as a director, the injury, if any; was one common to all the stockholders, and plaintiff could not maintain a separate action therefor, and so far as it related to acts to be done through the action of the board h of directors, it was illegal and void.
    2. Same.
    An agreement to control the action of a board of directors in such manner as a stockholder shall require, is against public policy and void, and performance on the part of the stockholder of the consideration therefor gives him no right to enforce the same.
    Appeal from a judgment sustaining a demurrer to the complaint.

      George W. Van Slyck, for app’lt; L. Laflin Kellogg, for resp’t.
   Andrews, J.

The complaint alleges, in substance, that the West Lynchburg Land Company is a corporation incorporated under the laws of the State of Virginia, and owning a large tract of land in that state; that said company is authorized to purchase and sell such lands, to build and rent houses, hotels, manufactories and edifices on said land, to lay out and grade streets thereon, and to build and operate street railways, waterworks, gasworks and electric light plants thereon; that the management and control of said corporation was vested in a board of directors consisting of twelve persons to be elected annually; that the capital stock of said company consisted of 10,000 shares of $100 each, of which 7,500 had been issued and sold, and 2,500 shares remained in the treasury; that the plaintiff was the owner of 800 shares, and with other stockholders, who were in accord with his views and wishes as to the management of the company, was able to control and direct the policy of the company, the management of its affairs and the election of its officers ; that about March 19, 1890, shortly before the ensuing annual election, the defendant represented and agreed to and with the plaintiff that if the latter would use his influence with other stockhol lers who were in harmony with plaintiff, and induce them to vote for and elect the defendant, and such other persons as defendant should name, as directors of said company, and if plaintiff would vote for the same persons, and so help towards their election, at the next annual election of said company, and thus give such directors the control and management of said company, the defendant would devote such time and personal attention to the business of said company as should be necessary to promote its welfare and prosperity, and would give the best results of his long experience to the care, conduct and management of the business and affairs of the said company, so that its business would be greatly increased and its profits greatly enlarged, and that he would do all that was possible to be done to promote its business and interests, and that he would, among other things, procure the construction and equipment of an efficient electric railway upon the lands of the said company at a reasonable expense, and that he would devote his attention to securing the location of factories and other industries by parties other than said company upon its lands, and would cause sales of a large number of the lots of the said company, and procure peopie to build, houses thereon, and would use his best endeavors to get people to settle and live on the said lands, and so conduct the affairs of the said company that the value of the shares of the capital stock would be greatly increased; that thereupon, relying upon such representations and agreement, plaintiff agreed to vote and to use his influence to get other stockholders to vote for the defendant and other persons named by him as directors; that the election was held and that, through the votes of plaintiff and other stockholders influenced by him, the defendant and other persons named by him were elected to the board of directors ; that .the defendant failed in many respects to keep his agreement made as aforesaid, and that in consequence thereof plaintiffs stock was depreciated in value. Wherefore, the plaintiff demands judgment against the defendant for the sum of §20,000.

We are of the opinion that the demurrer to the complaint was properly sustained. Some of the alleged promises made by the defendant were to use his best endeavors to accomplish certain results, and it does not appear from the complaint but that he did perform such promises. Other promises were to do certain things which wore directly in the line of his duty as a director of said company. The complaint alleges that the defendant agreed with the plaintiff to do such things, but does not state whether such agreement was in writing, or oral, nor whether it was an express or an implied agreement. It is immaterial, however, whether there was an express agreement between the plaintiff and the defendant as to the performance of such acts as lay within the line of his duty as a director, for there vras an implied agreement between the defendant and the plaintiff and all other stockholders that the defendant would do his duty as such director. If, therefore, the plaintiff has suffered injury because of the failure of the defendant to perform such duty, that injury is one which the plaintiff has suffered in common with all the other stockholders of the company, and the plaintiff cannot maintain a separate action to recover the depreciation of his stock; he must first request the company, or its officers, to bring an action which, if successful, wquld enure to the benefit of all the stockholders; and if the company, or its officers, should refuse or neglect to bring such action, then he might maintain the same on behalf of himself and all others similarly situated.

A third class of such alleged promises was to do certain things which could only be done through the action of the board of directors ; among such things are’ two of the matters which are particularly specified in the complaint, and which relate to the sale of lots belonging to the company, and to the construction of an electric railroad dt a reasonable expense.

If the allegations of the complaint are to be regarded as setting forth an agreement on the part of the defendant to do such things irrespective of the action of the board of directors, such agreement would obviously be null and void; and if such allegations are to be regarded as setting forth an agreement on the part of the defendant to control the board of directors and induce them to act entirely in accordance with the wishes of the plaintiff, such agreement was an illegal one, and cannot be enforced in this action. It appears by the complaint that lots were sold, and an electric railroad constructed, and that various other things were done, in a manner which did not meet the approval of the plaintiff. All such acts must, however, have been done by authority of the board of directors; and if such directors were guilty of a breach of duty, they can be held responsible in a proper action; but an agreement that the defendant should control the action of the board in such manner as the plaintiff should require was against public policy, and cannot be enforced. The plaintiff was the owner of but 300 shares out of 10,000 and the defendant could not lawfully enter into an agreement which contemplated that the directors of the company should surrender their powers to the plaintiff. In Morawetz on Private Corporations, § 519, it is said: “It is clear that a director has no right to sell his influence in the management of the company, or to enter into any agreement by which his official action would be influenced or controlled.” This statement of the law is supported by many authorities. See West v. Camden, 135 U. S., 507; Bliss v. Matteson, 45 N. Y., 22; Fuller v. Dame, 18 Pick., 472; Guernsey v. Cook, 120 Mass., 501; Duncomb v. N. Y. etc., R. R. Co., 84 N. Y., 193, (190); Hoyle v. R. R. Co., 54 id., 315.

It does not affect the matter that the alleged agreement has been performed on the part of the plaintiff. As the alleged agreement is against public policy, the performance by the plaintiff does not give him any right to claim performance on the part of the defendant.

The judgment appealed from should be affirmed.

Yan Brunt, P. J. and O’Brien, J., concur.


author: Van Brunt, P. J.

text:
    James H. Ferguson et al., Resp’ts, v. George H. Gill, App’lt.

      (Supreme Court, General Term, First Department,

      Filed May 13, 1892.)

    1. Manufacturing companies—False certificate—Evidence.
    In an action against a trustee of a manufacturing company to enforce Ms liaMlity for debts of the company, because of having signed a false certificate that the capital stock had all been paid in, when, in fact, it had all been issued for a patent which was claimed to be worthless, evidence of consultations had with the owner of the patent as to its value is admissible upon the question of scienter, and its exclusion is error.
    2. Same—Indebtedness—Renewals.
    An indebtedness of the company is within the terms of the statute, although originally incurred prior to the filing of the certificate, where renewal notes therefor are given subsequent to such filing.
    3. Same.
    Reliance upon the certificate need not be shown to entitle the creditor to recover against the trustee.
    ,4. Same—Partnership claim—Effect of death of partner.
    The death of one member of a firm having a claim against a manufacturing corporation in no way affects the title of the surviving partners to the claim or their right to enforce the penalty prescribed by the statute against the trustees; in such case there is no devolution of title to the claim.

      Appeal from judgment entered after trial at circuit and from order denying motion for new trial.

      C. G. Rushmore, for app’lt; B. Estes, for resp’ts.
   Van Brunt, P. J.

This action was brought to enforce an alleged liability of the defendant for certain debts of a corporation organized under the manufacturing act, upon the ground that the defendant, being a trustee of the corporation, joined in the making and filing of a false certificate that the capital stock of said company had all been paid in.

Without considering in detail the facts developed upon the trial, it will only be necessary to refer to them in a general way to illustrate the questions which have been raised upon this appeal.

The statute under which the liability is claimed to arise reads as follows:

“ If any certificate or report made or public notice given by the officers of any such company in pursuance of the provisions of this act shall be false in any material representation, all the officers who shall have signed the same knowing it to be false shall be jointly and severally liable for all the debts of the company contracted while they are stockholders or officers thereof.”

The capital stock of the corporation in question having been issued ostensibly in payment for a patent, a certificate of paid up stock was filed, signed by the defendant and others, and it is claimed by the plaintiff that the patent in question was substantially worthless to the knowledge of the defendant and that therefore the certificate was false.

The plaintiff offered evidence tending to show that the patent had belonged to a previous corporation and was sold by the receiver for a very small sum of money; and it appeared from the minutes of the corporation that on the 5th of April, 1886, the purchaser from the receiver presented a bill of sale of the patent which was purchased by the company of which the defendant was trustee for the sum of one dollar. And it further appeared that by resolution the value of the patent was fixed at $100,000 and 1,000 shares of stock of the par value of $100 were issued partly to the seller and partly to other persons. On the 24th of May, 1886, it further appeared, the said seller made a proposition to sell and assign to the company in question said patent for 1,000 shares of the capital stock of the company, which offer was accepted by the company and the stock issued to the seller who subsequently distributed the stock in various ways.

The plaintiff further offered evidence tending to show that the patent in question was worthless.

Upon the part of the defendant testilnony was offered going to show a consultation had between the parties interested in this patent as to its value, which testimony was excluded and an exception taken. Evidence was also offered that certain work had been done under the patent which was also excluded.

This we think was error. The question involved was as to the knowledge of the want of value of the letters patent, and any communications which had been made to him upon the subject were competent upon the question of scienter. And in respect to the question as to work done, that evidence was offered to directly contradict evidence which had been given upon the part of the plaintiff to the effect that no work had been done under the patent; clearly within the issue and proper to be submitted to the jury upon the question of value.

It is further urged upon the part of the defendant that the indebtedness sued upon was not contracted subsequent to the filing of the certificate in question. But even if the original inception of the debt was prior to that time, it appears that there were various renewal notes given by which the debt was extended, and such renewal notes were given after the filing of the certificate, which brings the claim distinctly within the terms of the statute.

It is further urged that the plaintiffs are estopped from taking advantage of the act of the defendant in filing the certificate of fully paid stock, because they knew the value of these letters patent, and that the stock of the company was issued for the letters patent in question, and that, therefore, they could not have been deceived by the false statements contained in the certificate.

Thi's claim upon the part of the defendant rests upon the erroneous theory that reliance upon the certificate is necessary to be shown by the creditor before a recovery can be had. This is importing into the statute a provision which it does not contain. It is entirely immaterial whether the creditor relies upon the certificate or not. As long as the trustee knows the certificate to be false, and the debt is thereafter contracted while he is an officer of the company, it comes within the provisions of the statute.

It is further urged that the plaintiffs not being the original creditors of the "company, but having obtained whatever title they have to the claim by assignment or legal devolution, they cannot enforce the penalty provided by statute.

We are unable to see the force of this objection. The plaintiffs and each of them have always been the owners of the claim in question. They were partners with Henry Lovejoy, and the firm composed of those three members "were the owners of the claim. The death of Lovejoy in no way affected the title of the surviving partners to the claim. As soon as his title dropped out that of the surviving partners remained the same as it was before his death. Each partner is the owner of the whole of the copartnership assets and can sell the same and give a good title thereto. Consequently by the death of Lovejoy there was no devolution of title upon his surviving partners.

Because of the errors ill the exclusion of evidence heretofore mentioned, it is necessary that the judgment should bé reversed and a new trial ordered, with costs to the appellant to abide the final event.

Andrews, J., concursO’Brien, J., concurs in the result.


author: Per Curiam.

text:
    Adolph Schwarz et al., App’lts, v. Timothy B. Livingston et al., resp’ts.

      (Supreme Court, General Term, First Department,

      Filed May 13, 1892.)

    1. Service—Notice of trial—Mail.
    Where notice of trial has been duly served by mail, the fact that the attorney to whom it was directed claims not to have received it is immaterial on the question of the right to proceed upon it.
    3. Reference—Consent.
    Where a case is properly referable, the court has jurisdiction to grant an order of reference irrespective of the consent of the attorney for a defendant who is in default.
    Appeal from an order vacating an order appointing a referee.

      S. J. Goldsmith, for app’lts; Geo. C. Henderson, for resp’ts.
   Per Curiam.

The order of reference in this case was vacated upon the ground that at the time the action was reached upon the circuit calendar the cause was not in a position to be tried, because a notice of trial had not been properly served.

In this conclusion we think the learned court at special term erred. It appears without dispute that the notice of trial was duly served by mail. Section 797 of the Code of Civil Procedure expressly provides for this mode of service; and when service is so made, it is as complete as though made in any of the other methods prescribed by the various subdivisions of the section in question. The fact, therefore, that the attorney claims not to have received notice was irrelevant upon the question of the right to proceed upon the notice, as it was served.

There was jurisdiction to proceed with the trial, and, in the absence of the defendant Irwin, and of his attorney, judgment might have been rendered against him by default. Instead of that an order of reference was made upon the consent of the attorney for the other defendant, who assumed to act and consent for all. The order of reference which was thereupon made was duly served upon Irwin’s attorney together with a notice of hearing before the referee. This attorney retained both the order and the notice, without objection, for upwards of two weeks, and only objected thereto upon the first hearing before the referee. His motion to vacate was founded solely upon the grounds, first, that notice of trial was never served upon him; and, second, that he never consented to the order of reference. It was not claimed, much less proved, that the cause was one which was not compulsorily referable. Whether the attorney consented or not, the court had jurisdiction, Irwin being in default, to refer what we must assume to have been a referable case, of its own motion. In view of the -consent of the other attorney, professing to act for both defendants, and the retention of the order until the hearing, we think the motion to vacate was in bad faith and should have been denied.

The order should be reversed, with ten dollars costs and disbursements.

Van Brunt, P. J., O'Brien and Barrett, JJ., concur.


text:
    George Fuchs, Resp’t, v. John A. Morris, App’lt.

      (Supreme Court, General Term, First Department,

      Filed May 13, 1892.)

    Bill of particulars—When further bill should be required.
    Where the bill of particulars of a counterclaim consisting of an account assigned to defendant shows that such account is in part for an indebtedness incurred by the assignor to another person not before named in the case, the defendant should be required to give a further bill of the particulars of such claim.
    Appeal from an order of special term, directing, a further bill of particulars.
    Defendant set up four counterclaims to this action, the fourth of which was upon a claim assigned to defendant by one Henderson. _ A bill of particulars of this claim showed that it was for services performed for plaintiff by Henderson, who was an attorney, and one Treloar.

      A. B. Cruikshank, for app’lt; Wm. W. Ladd, Jr., for resp’t.
   Per Curiam.

The counterclaim was indefinite with regard to-the contract between Henderson, the assignor of the defendant, and Treloar. In fact, Treloar’s name is not mentioned in the answer ; and it is only when we look at the bill of particulars that-we see Treloar’s relation to the item of $3,871.22 claimed to have been incurred by Henderson as an indebtedness to Treloar.

The question involved should therefore be treated precisely as though Henderson (or Treloar) was himself suing for this sum, and had served a complaint substantially in the language of the bill of particulars. It would have been a matter of course under these circumstances to have required Henderson (or Treloar) to-give the particulars of such claim; and it is quite clear that the defendant should be required to do likewise. The plaintiff cannot be compelled to go to trial without knowledge of these particulars merely because the defendant is the assignee of a person who is said to have incurred the disbursement in question. It is more appropriate that the defendant, who sets up this assigned claim, should procure from Henderson (or Treloar) these particulars, than that the plaintiff should be called upon to make an inquiry with regard thereto. If the defendant is unable to. secure such particulars from Henderson or Treloar, the consequences flowing from failure in that respect should fall upon him rather than upon the plaintiff, who is simply in the position of a defendant with regard to this counterclaim, and who, like any other defendant, is entitled to the particulars of plaintiff’s claim.

The order should be affirmed, with ten dollars costs and disbursements.

Yan Brunt, P. J., O’Brien and Barrett, JJ., concur.


text:
    In the Matter of The People ex rel. Maria Louisa Collins, Trustee, Resp’t, v. Charles Donohue et al., App’lts.

      (Supreme Court, General Term, First Department,

      Filed May 13, 1892.)

    1. Abatement and revivor—Death of party after submission.
    Where the relator jn a proceeding which survives dies after the case is taken under advisement by the court, it is matter of course to continue it in the name of his legal representative, and a supplementary eomjilaint is not necessary, as the case will necessarily be decided on the facts and law as they existed at the time of such death.
    3. Same—Code Civ. Pro., §766.
    The mere fact that the designation "trustee” was appended to the name of the original relator does not necessarily require the continuance to be in the name of the successor as trustee under § 766. That section only applies to an action or special proceeding brought in the name of a public officer, or by a receiver or other trustee appointed by virtue of a statute.
    Appeal from, order continuing this action in the name of John Collins, successor to Maria L. Collins, deceased, as relator.

      A. Kling, for app’lts; A. M. Card, for resp’t.
   Per Curiam.

As this was an action which survived, it was a matter of course, under § 757 of the Code of Civil Procedure, upon the death of Maria Louisa Collins, to continue it in the name of her legal representative.

There was no necessity, as claimed by the appellant, for a supplemental complaint to enable the defendants to take advantage of any legal objection to the action as it was originally brought

The case was under advisement when Maria Louisa Collins died, and it will necessarily be decided upon the facts and the law as they existed at that time.

Nor was it necessary to continue the action, under § 766 of the Code, in the name of the successor to Maria Louisa Collins as trustee. That section only applies to an action or special proceeding brought in the name of a public officer, or by a receiver or other trustee appointed by virtue of a statute. There is nothing in the record to show that Maria Louisa Collins came within this definition. On the contrary, that record shows that she alone was personally interested in. the recovery of the fund for which the action was brought, and the designation “ trustee,” etc., appended to her name as relator, so far as we are informed by this record, was a mere descriptio personae.

The averments of the petition upon which the order appealed from was made are not denied; and those averments clearly show that the order substituting the legal representative of Maria Louisa Collins was right.

The purpose of the order appealed from was to permit the learned judge who has the case under advisement to decide it; and the revival properly accomplishes that object without the least prejudice to the defendants, or to any defense which they have interposed.

The order should be affirmed, with ten dollars costs and disbursements.

Van Brunt, P. J., O’Brien and Barrett, JJ., concur.


author: O’Brien, Van Brunt, P. J.

text:
    Mary B. De Frece, Adm’rx, Resp’t, v. The National Life Insurance Co., App’lt.

      (Supreme Court, General Term, First Department,

      Filed May 13, 1892.)

    Insurance (life)—Payment of premiums—Notice.
    Plaintiff's intestate was insured in the defendant company. At the time of Ms death he was indebted to the company for part of a premium for which he had given a note and also a premium which had just become due. Almost all the premiums had been paid by him after they became due. The notice served by the company did not comply with the statute. Held, that a judgment in favor of plaintiff would not be disturbed.
    Appeal from judgment entered upon a verdict directed by the court at circuit.

      I. Newton Williams, for app’lt; B. F. Einstein, for resp’t.
   O’Brien,

The defendant issued three endowment policies-on October 27, 1881, on the life of plaintiff’s intestate for $1,000 each. The bonds were payable in twenty years, or upon the death of the intestate, on the condition that the annual instalment should be paid on or before the 27th day of October in each year. The inode of payment, from annual to quarterly payments of premium, was changed by an arrangement between the parties in October, 1888, so that, subsequent to that period, the premiums were due- and payable on the 27th days of October, January, April and July in each year.

The bond sued upon contained a provision that “in case any instalment * * * shall not be paid the day when payable, the bond shall thereupon become forfeited and void * * *.’’

Benjamin De Frece died on February 19, 1889, and after the appointment of plaintiff as administratrix, she, on August 7, 1889, presented proof of his death to the defendant and demanded payment of the policies, which was refused; hence this-action.

De Frece, at the time of his death, was indebted to the company in the sum of $250, with interest from October 27, 1888, for which lie had given his promissory note, and which defendant-sets up as a counterclaim in this action. As this amount was conceded to be due the defendant upon the trial and no question arises concerning it upon this appeal, we may dismiss it without further consideration, it being conceded that any recovery to be had by the plaintiff must be subject to a deduction for the amount of such note.

As to what was due the plaintiff upon the bonds was the question litigated upon the trial; the plaintiff insisting that the whole amount was due, except the indebtedness owing to the company upon the promissory note hereinbefore referred to, and the defendant insisting that all that the plaintiff was entitled to recover was the marginal or cash value of the bonds, with interest, amounting to $846.45, less the amount of the promissory note, for which the company was entitled to credit.

The ground upon which the defendant refused to pay the policy and insisted that only the cash value was due, was that the quarterly premium, which fell due on January 27, 1889, was not paid, but that, inasmuch as two annual premiums had been paid, the plaintiff was entitled to the cash value only of the policy.

It appears from the evidence that the insured paid all the premiums or instalments which became due on the bonds to-January 27, 1889, so as to leave only the question as to the effect of the failure to pay the last premium, due January 27, 1889.

It appeared that all the premiums, some twenty-one in all, except in three instances only, were paid after these payments became due; and in respect to the premium which was payable October 27,1888, the evidence shows that it was not paid until January 80, 1889, or three days subsequent to the date when the January premium of 1889 was due and payable.

It was insisted by plaintiff upon the trial, that whether any default was made in reference to this condition in the policy, as to the forfeiting the same in case of non-payment of the premium when due, the same was not available as a defense to the defendant, upon the ground that the notice which the law requires as a pre-requisite to declare a forfeiture for non-payment, chap. 341, Laws 1876, as amended by chap. 321, Laws 1877, had not been served upon plaintiff’s intestate.

In view of the conclusion to which we have arrived, we may assume that the notice was properly given, and, if the facts otherwise warranted, the defendant was in a position to take advantage of the forfeiture provided for in the policy.

The question presented, therefore, in this case is whether the policy became forfeited by the failure to pay the premium upon the day when due, or whether, as contended by the plaintiff, the defendant waived the prompt payment of such premium.

In this connection it is strenuously insisted by appellant that the court erred in allowing evidence tending to excuse the payment of the premium or any evidence tending to show a waiver of the condition of the bonds. For this purpose resort is had to the familiar principle, that where the plaintiff alleges performance of a condition, it is necessary in order to recover that such performance be proven, but that where, as here, an excuse is sought to be interposed for nonperformance, it must be pleaded, and that under an allegation of due performance, wheti controverted, evidence in excuse of performance is not admissible. We think, however, that the defendant gives too narrow a construction to the complaint, and that, apart from this consideration, the manner in which the trial was conducted prevents defendant availing itself of this objection. If before such proof can be considered an amendment is necessary, such amendment can be allowed by this court to sustain the judgment, if in other respects just and proper.

In regard to the pleadings, it should be noticed that the plaintiff does not state that the terms and conditions of the original policy were fully performed, but the allegation is “ that the said Benjamin De Frece complied with the terms of said agreement so far as the same were to be complied with by him.” If the plaintiff did not intend to avail herself of the change in the terms of the policy in respect not only to the time when the premiums were payable, but also as to the waiver upon which a right of recovery would be predicated, the proper form of allegation would have been that he had duly performed all the terms and conditions ofth& policy. We do not regard the allegation of performance in the complaint to be equivalent to this, or a statement that the plaintiff had performed the terms of the original agreement; but, on the contrary, the statement is that he had complied with such terms, so far as the same were lo be complied with by him. Moreover upon the trial, after the case was opened, and without any proof being offered by plaintiff, the defendant proceeded to introduce its defense by showing the service of notice, required by law, to entitle it to foi-feiture, coupled with the fact that such notice had not been complied with by the payment by plaintiff’s intestate of the premium thereafter falling due. It seems to us that it was competent, where the defendant assumed the affirmative, for the plaintiff, in rebuttal, to introduce such evidence as would destroy the force and effect of the defense so sought to be presented. We think, therefore, that it was proper for the court to allow any competent evidence to be introduced which would tend to prove that the defendant had waived the condition of -the policy in respect to the prompt payment of premiums. It remains then to consider the force and character of the evidence adduced.

We regard it as w'ell settled, that a condition in a policy of insurance that no insurance, whether original or renewed, shall be binding until the actual payment of premiums, may be waived by paroi by the company or its authorized agent, and the waiver may be shown by proof that the credit was expressly given, or may be inferred from the circumstances attending the relations or dealings of the parties. Bodine v. Exchanae Fire Insurance Co., 51 N. Y., 117.

We think that testimony such as was here given, showing that out of twenty-one payments eighteen were received subsequent to the date when actually payable, according to the terms of the policy, was competent, as tending to show or prove a waiver. From such evidence it could be legally inferred that the defendant, by its course of dealing with De Frece by accepting payment of premiums long after they became due under the terms of the policy, led him to believe that prompt payment of premiums was unnecessary, and that the same might be paid within a reasonable time after they became payable, without- forfeiture of the policy. As said in Leslie v. Knickerbocker Life Ins. Co., 63 N. Y., 33, “Even if there be no primary hostile purpose in the action of one who may, in a certain event, become entitled to a forfeiture or other right arising from the non-performance of a condition, if by his act he has induced another to omit strict performance, he may not take the benefit or exact the forfeiture.”

In Phoenix National Life Ins. Co. v. Doster, 106 U. S., 37, the judge writing.the opinion of the court remarks: “In Ins. Co. v. Norton, 96 U. S., 239, we said, in reference to a policy similar to the one here in suit, that the company was not bound to act upon the declaration that its agents had no power to make agreements or waive forfeitures, but might, at any time, at its option, give them such power; that the declaration was tantamount to a notice to the insured, which the company could waive and disregard at pleasure. 'In either case,’ said the court, ‘ both with regard to the forfeiture and to the powers of its agents, a waiver of the stipulation or notice would not be repugnant to the written agreement, because it would only be the exercise of an option which the agreement left in it. And whether it did exercise such option or not was a fact provable by paroi evidence, as well as by writing, for the obvious reason that it could be done without writing.’ In the same case it was said that although in life insurance time of payment was material, and could not be extended against the assent of the company, where such assent was given the court should be liberal in construing the transaction in favor of avoiding a forfeiture. And in Ins. Co. v. Eggleston, 96 U. S., 577, it was said that the courts are always prompt to seize hold, of any circumstances that indicate an election to waive a forfeiture, or agreement to do so on which the party has relied and. acted. Consequently, said the court, speaking by Mr. Justice Bradley : ‘ Any agreement, declaration or course of action on the part of an insurance company which leads a party insured honestly to believe that by conforming thereto a forfeiture of his policy will not be incurred, followed by due conformity on his part, will and ought to estop the company from insisting upon the forfeiture, though it might be claimed under the express letter of the contract. The company is thereby estopped from enforcing the forfeiture. The representations, declarations or acts of an agent, contrary to the terms of the policy, of course, will not be sufficient, unless sanctioned by the company itself. Ins. Co. v. Howry, 96 U. S., 544. But when the latter has by its course of action ratified such declarations, representations or acts, the case is very different.’ ”

We think, under these decisions and many more which might be cited, that it is perfectly competent to introduce evidence showing the course of dealing between the parties, and that where such evidence warrants a conclusion that an assured acted upon the belief that a literal compliance with the provisions of a policy concerning th§ payment of premiums would not be required, such conclusion amounts to an estoppel against insisting, upon a technical forfeiture.

Apart from the manner in which the premiums generally were-paid, the very last payment is most significant, not only as showing that a credit was given for overdue premiums, but also as estopping the defendant from insisting upon a forfeiture.

As already stated, the default claimed was for a premium due upon January 27, 1889, and yet, in the face of a forfeiture now claimed for such default, the evidence shows that on January 30 or 31,1889, three or four days after the default upon the January instalment became due, they received the premium for the three months or quarter ending October 27, 1888; so that on January 30th or 31st, when the October premium was paid, two premiums were due, and yet the defendant, after having received the payment of one, insists that it is entitled to take advantage of the failure to promptly pay the other, and can take advantage of a, technical default and forfeit the plaintiff’s rights in the bonds. This would be in the highest degree inequitable and unjust, and we do not think there is any authority that would warrant or support any such forfeiture as is claimed here.

It must be remembered that upon the conclusion of the case both sides requested the direction of a verdict, and the court having directed a verdict for plaintiff, all the controverted facts and all inferable facts in support of the judgment must be deemed to have been established.

The only other question that need be referred to is defendant’s insistence that it was reversible error to allow the counsel for plaintiff, upon cross examination of one of defendant’s witnesses, to ask as to the contents of the monthly reports made by the general agent to the home office of the defendant, which reports were not in evidence nor present upon the trial. No doubt the purpose of these questions was to prove knowledge and ratification, by the defendant, of the alleged acceptance of the premiums -after due, by showing that reports as to the time when premiums were paid were made by the general agent to the home office, and if, as claimed, there was no other evidence showing ratification by the defendant or acceptance of these premiums after the same were due, the admission of such evidence would be prejudicial error which would call for a reversal. If, however, we entirely leave •out this testimony, we will find that the defendant itself called for and put in evidence receipts for premiums paid, each of which receipts was countersigned by the proper officer of the defendant, and each of which showed when the premium became payable and when, in fact, it was actually paid. There was practically no dispute as tó defendant’s knowledge of the times when payments were made, or as to the fact of its accepting such payments at periods long after the same were due. The insistence was that, notwithstanding this had been done in all the instances enumerated, the defendant was still entitled to avail itself, by reason of the strict letter and terms of the policy, of a forfeiture. We do not think that a life insurance company that would seek to avail itself, upon the facts here appearing, of such a technical defence, so as to escape the payment to those whom the assured wished to benefit of a just and honest debt, is entitled to any consideration other than the extension to it of the hard and rigid rules of law, to which, for the purpose of escaping its liability, it itself appeals in seeking to escape such liability.

In our opinion, the facts proven justify the inference made by the learned judge in directing a verdict, and there being no error requiring a reversal, the judgment should be affirmed, with costs.

Van Brunt, P. J.

I do not concur in the foregoing opinion. I think, however, that the judgment should be affirmed upon the ground that the notice served was entirely insufficient to comply with the statute. In order that an insurance company can insist upon a default in the payment of a premium it must serve, as prescribed by statute, a notice stating when the premium will fall due, and that, if not paid, the policy and all payments thereon will become forfeited and void.

The notice served in the case at bar contained no reference to forfeiture. Upon the back of the notice is printed what purports to be a copy of the statute, which it is not. This endorsement is not referred to in the notice, forms no part thereof, and certainly is not a compliance with the statute. If the insurance company want to insist upon a forfeiture they must show a compliance with the statute. The judgment should therefore be affirmed, with ■costs.

Andrews, J.—I concur in the result.


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    Jacob Tome, Resp’t, v. Charles A. Gerlach, App’lt.

      (Supreme Court, General Term, First Department,

      Filed May 13, 1892.)

    Bills and notes—Considebation.
    One H., who owned a patent, executed a license thereunder to defendant. Thereafter H. executed a similar license for the same territory to defendant and two others, and required that the notes given by the two others be made to and endorsed by the defendant. In an action upon one of said notes, Held, that there was a sufficient consideration for defendant’s endorsement, and that II. himself could have recovered upon it against him.
    Appeal from a judgment in favor of the plaintiff, entered upon a verdict directed by the court, and from an order denying defendant’s motion for a new trial.

      Henry Major and C. Godfrey Patterson, for resp’t; Hamilton R. Squier, for app’lt.
   Andrews, J.

The action was brought to recover upon a promissory note for $1,000. The defendants were originally Charles A. Gerlach and Peter Herdic, but the defendant Herdic has died since the commencement of the action. The complaint alleges that the 'note in suit was made by one Phillips on April 22, 1882, to the order of the defendant Gerlach, and was endorsed by said Gerlach to said Herdic, who endorsed the same and delivered it to the plaintiff, before it became due and for full valué.

The answer does not deny any of the allegations of the complaint, but sets up that the defendant Gerlach, or or about December 20, 1881, held certain property of said Herdic in trust for sale; that said Gerlach, on or about the same day, sold a portion of said property to said Phillips, and that Phillips gave Iris note for $1,250 to the order of said Gerlach in part payment therefor; that said defendant, without consideration, endorsed said note merely to transfer title thereto to said Herdic; that said Phillips at the maturity of said note, and on or about April, 1882, paid a part thereof and gave the note in suit to the ■order of the defendant for the balance; that said defendant, without consideration, endorsed the said note in suit only to transfer the title to said Herdic, but without any intention on the part of either said Gerlach or said Herdic to incur a liability on said note as endorser; that said Herdic wrongfully diverted and transferred said note to the plaintiff; that said plaintiff had notice of the above facts, and failed to pay full value for said note at the time of its transfer to him; and that the said plaintiff had received at the time of such transfer ample security for the money he had advanced for said note, and that he should be-compelled to resort to such security rather than to the defendant, to enforce payment

Upon the trial the defendant Gerlach claimed the affirmative,, and this application having been granted, his counsel called a number of witnesses who, against the objection of the plaintiff, gave certain testimony. The plaintiffs counsel then called a single witness who 'proved the interest upon the note, and then, upon the motion of such counsel, the court directed a verdict in favor of the plaintiff for the amount of the note with interest. And from the judgment entered upon such verdict, and from the order denying a motion for a new trial, this appeal is taken.

We cannot discover that any grounds whatever exist for reversing the judgment or order appealed from. No testimony was-given on behalf of the defendant which sustained, or tended in any degree to sustain, either of the defenses set up in the answer; on the contrary, the witnesses called in behalf of the defendant completely disproved the first defense so set up. The testimony given by such witnesses was taken against the plaintiff’s-objection, and showed the following facts:

Herdic was the owner of letters patent for improvement of certain vehicles for personal transportation, and on September 14, 1881, executed a license, which gave Gerlach the exclusive right, within the city of Buffalo, to run for hire any and all forms of vehicles for the transportation of persons within that city that might be constructed' under and in accordance with the specifications contained in such letters patent. The consideration named in-such license was $7,500. On December 20, 1881, Herdic executed a joint license to said Gerlach, Phillips and one Briggs for the price of $7,500, which granted precisely the same rights to said three licensees which had been given to Gerlach by the instrument of September 14, 1881. Gerlach, Phillips and Briggs each gave notes to Herdic for $2,500. At the time the notes were given, something was said about each endorsing the notes of the others, but this was objected to, and was not done. Herdic said he had $7,500 of Gerlach’s notes, and had used them in the bank, and he insisted that the notes given by Phillips and Briggs should be made payable to Gerlach’s order, and endorsed by him, and this was done. Briggs and Gerlach subsequently paid each his $2,500. Phillips gave two notes, one for $1,300 and one for $1,-200, each being made payable to Gerlacli’s order and endorsed by him. When the $1,300 note given" by Phillips came due, he paid $300 upon it, and then a renewal note was given for the balance of $1,000. This renewal note was signed by Phillips, endorsed by Gerlach, delivered to Herdic, and by him transferred to the plaintiff before maturity, and is the note in suit.

When Herdic executed the license to Gerlach, Phillips and Briggs, he appears to have entirely ignored the previous license which -he Had given to Gerlach alone. And, as above stated, there is no testimony that tends to sustain the defense that Gerlach transferred property belonging to Herdic, and endorsed Phillips’ note for the mere purpose of transferring the title of it to Herdic. On the contrary, it appears that the license was given by Herdic himself, and, at the time of granting such licenses, he insisted that the notes given by Phillips and Briggs should be endorsed by Grerlach. Such notes, as between Herdic and Grerlach, were upon sufficient consideration, and Herdic himself could have recovered upon them against Grerlach.

Moreover, the note in suit is produced by the plaintiff; and the presumption of law is that the plaintiff took it for value and before maturity, and there is no evidence to the contrary. Some evidence was given by the defendant’s attorney as to an interview between himself and the plaintiff, in which they had some conversation about a note, but that note was not the one in suit. The exceptions as to the exclusion of evidence were not well taken, because such evidence related to personal transactions between the witness and Herdic; and besides, the testimony, if admitted, would not have tended to establish either of the defenses set up in the answer.

The judgment and order appealed from should be affirmed, with costs.

Van Brunt, P. J., concurs.


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    The Tradesmen’s National Bank, Resp’t, v. The Manhattan Lumber Co., App’lt.

      (Supreme Court, General Term, First Department,

      Filed May 13, 1892.)

    Corporations—President cannot supersede express resolution of BOARD OF DIRECTORS.
    A corporation which held notes of defendant, by express resolution of its board of directors, caused them to be deposited with plaintiff’s cashier, to be held by him subject to the joint order of the president and treasurer of the payee. Held, that the board of directors of the payee having acted and plaintiff having notice of such action, it was bound by it and could not acquire any title to the notes except by compliance with its resolution; and that a subsequent attempted pledge by the president alone was nugatory and conferred no title under which plaintiff could maintain an action on said notes.
    Appeal from judgment entered on report of referee.

      L. C. Waehner, for app’lt; W. W. Niles, for resp’t.
   Van Brunt, P. J.

This action is brought upon various promissory notes, all of which are dated April 4, 1888, and made by the appellant, the Manhattan Lumber Co., to the order of the Trimble Mill & Lumber Co., aggregating the amount of $30,000.

The defense raised the question of the title of the plaintiff to the notes in question.

It appears from the findings contained in the referee’s report that the defendant made the several promissory notes set forth in the complaint, which were duly delivered to the Trimble Mill & Lumber Co., the payee therein named, for value, and before maturity of any of the notes ; and that on the 13th of April, 1888, before such maturity, the directors of the Trimble Mill & Lumber Co., the owner of the notes, passed a resolution that the same should be delivered to O. F. Berry as custodian, subject to the joint order of Samuel Gr. Adams, Esq.; president, and George R. Trimble, treasurer of the Trimble Mill & Lumber Co. In pursuance of .this resolution, the notes were delivered by the treasurer of the defendant to said Berry, who was at that time the cashier of the plaintiff, and had notice of the passage of the resolution, whereupon said Berry gave to said treasurer a receipt in the words and figures following: “ Received April 13th, 1888, of William N. Brpwn, treasurer of the Manhattan Lumber Co., the following described notes of said company, each payable to the order of the Trimble Mill & Lumber Co., and dated April 4thr 1888 ” (then follows a description of seventy-six notes, aggregating $30,000), “ the same to be held by him, subject to the order of the Trimble Mill & Lumber Co., jointly signed by said Samuel G. Adams, president, and George R. Trimble, treasurer.”

The referee further finds, that prior to the time said notes were so deposited with said Berry, the said Trimble Mill & Lumber Co. had procured to be discounted at the plaintiff’s bank the paper of said company, amounting to three or four thousand dollars, which paper had not matured at the time said notes were so deposited. This finding is disputed by the appellant, but in the view we take of the questions which arise upon this appeal, it is not necessary to consider this point.

The referee further finds that said notes were so deposited with said Berry to be held by him in escrow as collateral security for the payment of any indebtedness of the Trimble Mill & Lumber Co. to the plaintiff, of which deposit the plaintiff had notice. The evidence of such deposit as security is the paper hereinafter mentioned, dated April 13,1888.

Afterwards on the 20th April, 1888, Samuel G. Adams and Geo. R. Trimble, as treasurer of the Trimble Companj'-, made, executed and delivered to the said Berry an instrument in writing in the words and figures following:

“To O. F. Berry, Fsq.:
“Dear Sir—You will please take notice that the notes deposited with you made by the .Manhattan Lumber Co. have been pledged to Mr. Sol. Kohn, attorney, etc., to secure payment of the judgment obtained by him against the Trimble Company, Limited, in favor of Mr. George H. Lewis and Mrs. Anne Trimble. This pledge is, however, subordinate to the rights of the Tradesmen’s National Bank.
“Dated N. Y, April 20, 1888.
“ Samuel G. Adams,T. M. & L. Co., Limited.
“ George R. Trimble, Treas., T. M. & L. Co., Limited.”

At some time subsequent, the said Samuel G. Adams under date of April 13th, as president, executed and delivered to the plaintiff an instrument in writing in the words and figures following :

“ For value received we hereby pledge the within described notes except Nos. 1 to 12 inclusive to secure any and all indebt■edness of the Trimble Mill & Lumber Co. to the Tradesmen’s National Bank.
“Dated April 13th, 1888.
“Samuel Gf. Adams, President.”

This instrument, Trimble, the treasurer, refused to sign.

The notes were never endorsed by the Trimble Co., the payee thereof, nor by any of its officers. And the referee found that the said Trimble Mill & Lumber Co. did not give any order jointly signed by Adams, president, and Trimble, treasurer, to said Berry for any disposition of said notes.

The referee gave judgment for the full amount of the notes, and from the judgment thereupon entered this appeal is taken.

It is urged by the appellant that the plaintiff has shown no title whatever to the notes in question.

There is no doubt but what the valid transfer of a chose in action may be made by paroi, and the fact that the notes were never endorsed by the payee is not necessarily fatal to a recovery pro- , vided the plaintiff is able to show that the same have been otherwise transferred.

In the case at bar it is to be observed that Berry was the cashier of the plaintiff, and was fully aware of all the circumstances under which the notes were placed in his hands. By a resolution of the board of directors of the owner of the notes, it was resolved that the notes should be delivered to Berry as custodian, subject to the joint order of Samuel Gf. Adams, president, and George E. Trimble, treasurer of the owner; and Berry gave a receipt for the notes certifying that he held the same subject to the order of the payee jointly signed by Adams & Trimble. But subsequent to the.deposit of these notes as aforesaid, the president of the payee assumed to pledge all of the notes except the first twelve to the plaintiff to secure any and all indebtedness of the payee to the plaintiff. And this the referee holds to be a valid pledge of the notes. No joint order was given by the president and treasurer as provided in the resolution under which,the notes were placed in the hands of the cashier of the plaintiff; but simply upon the pledge of the president alone it is claimed that the title to the notes in question was transferred to the plaintiff.

We have yet to learn that the president of a corporation has the power to repeal the resolutions of its board of directors. Whatever might have been his powers had not the plaintiff been aware of the circumstances under which the notes came into the possession of its cashier, he being aware of the restriction which the resolution of the board of - directors had placed upon the disposition of these notes, it could acquire no title either from the president or the treasurer separately, and could acquire title only by the fulfillment of the conditions which the cashier of the plaintiff had himself recognized in his receipt for the notes. But it is claimed upon the part of the respondent that it is quite immaterial how a party holding a note in escrow holds it if the corporation or its officers have procured it from him and delivered it to another to be held as collateral, and this is especially so when it is a mere question of whether the surrender by the party holding in escrow was to be made upon a written or verbal request.

This proposition has no application to the facts in the case at bar. The board of directors had disposed of the notes. The plaintiff knew of such disposition, and of the restrictions placed upon their negotiation, and the officers of the corporation were bound by such limitations which were placed upon such disposition, and if the corporation, the payee, required that the title should be conveyed by a joint order in writing, such requirement could be waived only by the same authority which imposed the restriction. Therefore, the attempted pledge of the president of this corporation was entirely without effect and void.

If it be claimed that the letter to the cashier, of April 20th, stating that the pledge to Kohn was suboi dinate to the rights of the plaintiff, and signed by the president and treasurer, was a compliance with the resolution of the board of directors, it is sufficient to say that it is apparent that such was not the intention of the parties signing the letter in question. It was not intended to. confer any rights whatever upon the plaintiff, but simply to notify the plaintiff of rights which had been acquired by the alleged pledgee. And besides it appears that the reservation of the rights of the plaintiff in the paper above mentioned related to the intended giving of an order to be signed by Adams & Trimble, which order never was given; and at the time of the writing of the instrument of April 20th it was well understood that the plaintiff had no right m the notes at all.

The terms of the deposit made the notes subject to the order of the Trimble Mill & Lumber Co., jointly signed by the president and treasurer. The letter above mentioned contains no such order, and therefore cannot be appealed to to establish a title.

But it is said that the president requested suit to be brought upon them, and the president and general manager intended to give the bank an order signed by them.

What they intended to do is immaterial, as intentions never confer title. We do not see upon the conceded facts how the plaintiff shows any title whatever to the notes, and the whole case seems to have been disposed of precisely as it would have been had there been no resolution of the board of -directors upon this subject.

As already stated, the board of directors having acted upon this question and the plaintiff having notice of the action, it was bound by it, and could not acquire any title except by compliance with the resolution of the board of directors.

It seems to us, therefore, that the referee erred in holding that the plaintiff had title to the notes; and the judgment should, therefore, be reversed and a new trial ordered, with costs to appellant to abide the event

O’Brien and Andrews, JJ., concur.