author: Peckham, J.

text:
    Frederick H. Smith, Jr., App’lt and Resp’t, v. Francis W. Savin et al., Impleaded, etc., App’lts and Resp’ts.

      (Court of Appeals,

      Filed February 27, 1894.)

    1. Fraud—Ratification.
    A party ignorant of the material facts, does not ratify alleged illegal sales by commencing and proceeding with an action based upon the validity of such sales.
    S. Pledgor and pledgee—Stock.
    A failure to comply with some rule of the stock exchange, in order to make a good delivery of the stock under the rule, constitutes no notice to the pledgee which should put him upon inquiry as to the right or title of the pledgor.
    3. Same—Rights.
    A pledgor, whose stock is hypothecated for other stock by his pledgee has the right, after notice to the latter pledgee, simply to demand that the other stock, for which his own was security, should he sold for its full value.
    4. Same.
    He cannot insist upon charging such pledgee with the highest price of such stock.
    5. Same.
    But he can complain of an illegal sale of his own stock and sue to recover damages therefor.

      6. Same.
    He has the right to claim the highest price his stock reached within a reasonable time after its illegal sale.
    7. Same.
    In such case, what remains of the debt for which his stock originally stood as security should he deducted from such price.
    Gross-appeals from judgment of the general term of the supreme court in the first judicial department, entered upon an order made May 31, 1893, which affirmed a judgment in favor of plaintiff entered 'upon the report of a referee.
    This action was brought to restrain the defendants Francis W. Savin and Elisha W. Yanderboof, composing the firm of Savin & Co., from paying over to the defendant John Wheeler, as assignee and receiver of 0. M. Bogart & Co., the proceeds of sale of 100 shares of Missouri Pacific stock, and to have the same adjudged to be the property of plaintiff.
    All parties to this action have appealed from the judgment of the general term of the supreme court which affirmed a judgment for plaintiff, entered on the report of the referee.
    The plaintiff has appealed because the judgment which he has obtained was not as large in amount as he thinks be is entitled to, while the defendants Savin & Co. have appealed because they think any judgment against them is erroneous. The defendant Wheeler, the assignee of Bogart & Co., has appealed because he claims that the judgment in favor of plaintiff should have been in his favor as against defendants Savin & Co., and that the plaintiff should onlyshare pro rata with the other creditors of Bogai't & Co. in the amount of the recovery against Savin & Co. The facts upon which the questions arise are as follows:
    For a long time prior to May 14, 1884, the plaintiff bad done a banking business with O. M. Bogart _ & Co., a firm of bankers and brokers in the city of New York, and among other stocks the plaintiff had on deposit with that firm on the 8th of May, 1884, 100 shares of the capital stock of the Missouri Pacific Railroad Company, of the par value of $10,000. This stock, together with stock in other corporations, had been deposited by the plaintiff with the firm as security for the payment of plaintiff’s indebtedness to it, which, on the 13th of May, 1884, apparently amounted to the sum of over $48,000, but in fact the plaintiff was at no time since the 8th of May, 1884, equitably indebted to the firm of Bogart & Co. in any sum whatever.
    On the date last stated Bogart & Co wrongfully, and without the knowledge or consent of the plaintiff, pledged with the defendants Savin & Co. this scrip, then owned by the plaintiff, together with 500 shares of stock of other corporations, belonging to Bogart & Co., the whole being pledged as security for a call loan of $50,000 then obtained by Bogart & Co. from. Savin & Co. The transaction was concluded between one of the members of each, firm, who were also members of the New York Stock Exchange, and the loan was made subject to the rules of the exchange.
    The defendants Savin & Co. were ignorant of tire fact that Bogart & Co. were not the owners of the 100 shares of Missouri Pacific stock and the defendants were bona fide pledgees of all the stock as security for the amount of their loan of $50,000. On the morning of May 14th, 1884, Bogart & Co. failed and made an assignment to defendant Wheeler for the benefit of their creditors. Plaintiff learned of the fact of the assignment on the same day and soon after it was made, and he then for the first time learned hat his Missouri Pacific stock had been pledged to and was in the hands of Savin & Co., to whom he immediately went and notified them of his interest in that stock, and requested from them a statement as to the amount for which they held the same. The defendants refused to recognize plaintiff’s rights in the stock, and refused to give him any information whatever concerning the transaction for which it was held. This was before the stock was sold by the defendants. When they heard of the assignment and sometime in the morning of the 14th, one of the defendants made a demand at the place of business of Bogart & Co., of one who bad been a clerk but who was not a member of that firm, for the repayment of the loan, which was not complied with and thereupon the defendant Savin went to the stock exchange and within half an hour sold all the stocks which had been pledged as security for the loan. The sales were made on the floor of the exchange, partly through two private brokers and partly through Savin himself, and all the sales were without notice to Bogart & Co., or to their assignee, or to the plaintiff, and they were all made in violation of the rules of the stock exchange. The amount realized at the sales for all the stocks was about $53,000, and for the stocks owned by Bogart & Co., deducting the stock owned by the plaintiff, the.sum of a little over $45,000, leaving between $7,000 and $8,000 as the proceeds of the sale of the plaintiff’s stock, and after applying these proceeds to the balance of the debt due Savin & Co. from Bogart & Co. of $50,000, there remained a little over $3,000 in the hands of Savin & Co., which they claimed the right to apply on account towards the payment of another debt due them from Bogart & Co., but which was not secured by the pledge of the stock in question. The plaintiff did not learn of the sale of his* stock until about the 21st of June, 1884, at which time the price for such stock had reached par. The prices of the other stocks sold by the defendants, and which belonged to Bogart & Go., also rose soon after the stocks had been sold by Savin & Co., and to such an extent did the prices advance that if these stocks had been held by defendants up to June 4, 1884, and then sold at the market price, the amount realized at such sale would have been sufficient to pay the full amount of the call loan and interest, and would thus have left the stock of plaintiff free from any claim by reason of that loan. In May, 1885, the plaintiff commenced this action against the defendants Savin & Co., and also against the defendant Wheeler as assignee of Bogart & Go.
    In the original complaint the plaintiff alleged that the other stocks pledged by Bogart & Co. sold for enough to pay their debt to the defendants Savin & Co., and that this stock of the plaintiff was sold for $9,000, and that the defendants Savin & Go. claimed the right to apply that sum to the payment of the balance due them from Bogart & Co. on another loan. The plaintiff asked judgment that the $9,000 might be adjudged to be his property and that Savin & Co. be directed to pay the same over to him and that the assignee be barred from all claim and interest therein. At the time he commenced this action the plaintiff did not know of the time, place or manner of sale of the stocks held by the defendants Savin & Co., nor did he know that they had been sold without any demand of payment on Bogart & Co. or their assignee, or that they had been sold without any notice of an intention to sell. ■ ■
    After this action was at issue and referred to a referee, the plaintiff learned for the first time and from the testimony of the defendant Savin in another action, the manner and time of sale of the stocks in question, and on the first trial of this action in Majq 1889, if not before, he knew that such sale was not in strict accordance with the provisions of the by-laws of the New York Stock Exchange. The referee on the first trial reported in favor of the defendants, and upon plaintiff’s appeal the judgment was reversed by the general term, from which the defendants appealed to the court of appeals, which court subsequently and upon their application allowed defendants to withdraw their appeal. Then the plaintiff upon motion papers asked the' court for leave to amend his complaint by setting up the facts as to the illegal sale and by asking for damages for the sale of his stock by the defendants. This motion was granted upon condition of the paymant of all the costs of all the defendants up to the making of the motion (amounting to over $1,200), which the plaintiff paid and amended his complaint accordingly. The defendants answered and denied any and all liability, and among other things alleged that the plaintiff had elected to affirm the sale of the stock and to proceed against defendants for the amount realized on the sale. The second trial was also before a referee, who gave judgment for the plaintiff for the highest price his stock reached intermediate the day of sale by defendants at the stock exchange and the 21st of June, 1884, deducting therefrom the balance of the original debt due Savin & Co. from Bogart & Co., after applying thereon the proceeds of the sale of the other mentioned stocks.
    The plaintiff claims that the defendants should have been charged with the highest prices the other stocks reached within a reasonable time after their improper sale by defendants, in which case those stocks would have paid the $50,000 call loan debt in full and would have given plaintiff the highest price for his stock without any deductions whatever. The defendants Savin & Co. claim they were under no liability of any kind to the plaintiff, and that judgment ought to have been directed for them by the referee. The assignee, Wheeler, claimed that the moneys should have been directed to be paid to him as already stated.

      Thaddeus D. Kenneson, for def’ts ; J. A. Dennison, for pl’ff.

       Affirming 53 St. Rep., 378.

   Peckham, J.

The defendants Savin & Co. make a preliminary objection to the maintenance of this judgment on the ground that the plaintiff has elected by the form of his original complaint to treat the sales of the stocks as a valid and regular sale, and assuming its validity he has asked to recover from defendants Savin k Co. only the amount which they received from such sale. The present form of the action the defendants say is inconsistent with the original, for the reason that the cause of action as now set up is based upon the alleged illegal character of the sale of the plaintiff’ s stock and the consequent liability of the defendants to pay him the damage he lias thereby suffered.

The plaintiff at the time of the commencement of the action supposed that the defendants had realized enough upon the sale of the other stocks to repay them the amount of the call loan, and that the only claim they made upon his stock was the right to apply it on other indebtedness. He also supposed his stock had sold for $9,000, and he demanded that sum from Savin & Co. It seems he was mistaken as to these facts; the other stocks did not realize upon their sale enough to pay the debt due defendants, nor did his stock sell for $9,000, and the defendants claimed the right to hold his stock for the balance of the call loan debt, and then to hold what was left as payment on account towards other indebtedness of Bogart & Co. to them. The plaintiff was also ignorant of the fact that the sale of the stocks was made without notice and in violation of the rules of the stock exchange. As the plaintiff commenced his action in ignorance of these material facts, he ought not to be held as conclusively ratifying these alleged illegal sales, simply because while thus ignorant his complaint proceeded upon the ground of the validity of such sales and asked for proceeds arising therefrom so far as his own stock was concerned.

When he became informed of the facts, after the action had been referred, we do not think that he lost his right to repudiate the validity of the sale by going on under the original complaint. It is evident, from the finding of the referee, that the plaintiff supposed he could then, and under the original complaint, prosecute the defendants for their wrongful and illegal sales, which he then discovered, and to, that end he gave evidence of the rules of the stock exchange, and upon appeal to the General Term the plaintiff still entertained such belief and claimed such right. When the courts decided against him upon that view, he then asked for an amendment and, upon payment of all the costs incurred by all the defendants up to the time of the motion, he was permitted to amend his complaint. Under these circumstances we are of the opinion that there was no such election, with knowledge of all the facts proved in this case, as would preclude the plaintiff from insisting, under his amended complaint, upon the invalidity of the sale of his stock.

We must come, therefore, in this case to a consideration of its merits.

The defendants Savin & Co. must be treated as bona fide pledgees of the stock as a portion of their collateral security for the payment of the $50,000 call loan. Some criticism was made upon the argument based upon the fact that the scrip for the 100 shares of Missouri Pacific had been issued in the name of the plaintiff, and the power of attorney to transfer the same was a detached paper, and the plaintiff’s signature thereon was not acknowledged by plaintiff before a notary public, as required by the rales of the stock exchange, in order to make a good delivery upon a sale under those rules. This fact we regard as wholly immaterial for the purpose of charging the pledgees with notice of any defect in the title to the scrip on the part of the subpledgors. The power of attorney was full and complete for the pui’pose of transferring the right to the pledgees to demand of the railroad company a transfer of the scrip upon its books to the pledgees. A failure to comply with some rule of the stock exchange, in order to constitute a good delivery of stock under the rule, has no significance upon the question of the good faith of the pledgee, and constitutes no notice to him which should put him upon inquiry as to the right or title of the pledgor.

There is no evidence in the case that the defendants Savin & Co. were not bona fide pledgees, and we must hold that they were such with all the rights which such a position gave them. It would appear to be also immaterial whether the loan and the pledge of the securities were made under the rules of the stock exchange or subject to the ordinary rules.appertaining to a.pledge as collateral security for a loan of money. In either case the sale was in violation of the law upon the subject. The question before us is what are the rights of the plaintiff in the light of the circumstances above set forth?

When the pledge was made to them the defendants were entitled to regard Bogart & Co. as the owners of all the stock which was pledged, but when the plaintiff (being in fact the owner of the stock) notified the defendants of his rights before any sale was made by them, the plaintiff then stood, with reference to that stock, as a simple surety for the payment of the loan and with the right on his part to compel Savin & Co. to apply the proceeds of other securities held by them, before resorting to to the stock owned by him. Farwell v. Importers' & Traders' Nat. Bank, 90 N. Y. 488. The right of property in the stock did not pass to Bogart and Co. by the deposit made of it with them by plaintiff as security, and of course it did' not pass to Savin & Co. This right of property remained with the plaintiff, subject to the lien of Bogart & Co., and after their pledge to defendants, subject to defendants’ lien also. Wheeler v. Newbould, 16 N. Y. 392, 398.

This action is in effect an action to recover damages for the conversion of the 100 shares of plaintiff's stock. After his notice to defendants of his ownership to that stock, the plaintiff had the right simply to demand that the other stock for which his own was security, should be sold for its full value. He stood in no such position with regard to the other stock, of which he was not the owner, as would entitle him to complain that it had not been sold in accordance with the stock exchange rules, so long as it was in fact sold for its full value on the day of its sale If the rules had been observed the stock might even then have been sold on that day and at that place. So long as it was in fact sold for its full value the plaintiff cannot complain.

There is no finding and no proof that this stock was not so sold.

So far as appears the only difference between the sale that actually took place and that which might have taken place if the "stock had not been sold “ under the rule,” is that in the latter case the sale would have been made by one of the officers of the exchange at a certain hour of the day and at public auction.

The price actually received was as high as the price of any stock of that kind reached that day; at least there is no evidence that it was not, and it would appear that the price actually received for the stock was its market value at that time. This was all that the plaintiff could require in regard to the stock which he never owned or had possession of.

If the defendants, by reason of the violation of the stock exchange rule, laid themselves open to a charge of conversion as in favor of Bogart & Oo. or their assignee, with reference to the stock owned by them, such course of action was a matter of no legal interest to plaintiff so long as that stock then sold for its full value, and he could not, at any rate in such an action as the one he has brought, insist upon charging Savin & Co. with the highest price of stock which he owned, as he now claims is his right. Whatever cause of action Bogart & Co. might have for an illegal sale belongs to them and cannot be set up by plaintiff as an affirmative claim on his part. Gillespie v. Torrance, 25 N. Y. 306.

In regard to the stock owned by plaintiff, however, he had the right, by reason of his ownership and because of the wrongful act of Bogart & Co. in pledging such stock, to insist that the defendants Savin & Co. should abide by their contract of pledge, and that" they should sell his stock in strict accordance with the law, and in case of a violation of duty on the part of defendants which resulted in an illegal sale of the plaintiff’s stock, he had the right to complain of such violation and to sue to recover damages therefor.

The plaintiff in fact was not indebted to Bogart & Co. when they unlawfully pledged his stock, and they had no right as against plaintiff to claim or take possession of his stock from the hands of Savin & Co. The latter had their lien on it as security, and subject to that lien the plaintiff was the owner. The defendants Savin & Co. having violated the law in selling the stock as they did, without notice to their original pledgors or their assignee, the plaintiff, by reason of his ownership of the stock, could thereafter treat such sale as an aversion, and after the proceeds of the sale of the other stock were applied towards the payment of the debt of Bogart and Co. to the defendants, the plaintiff had the right to claim the highest price which his stock reached within a reasonable time after its illegal sale by defendants, Wright v. Bank of Metropolis, 110 N. Y. 237 ; 18 St. Rep., 92, and from that sum should be deducted the balance of the debt due from Bogart & Co. to Savin & Co. I should say that in general, the time elapsing between the 14th of May and the 21st of the following June was much more than .a .reasonable time in which to purchase back the stock of this kind when it had been illegally sold, but the fact appears that the plaintiff was not aware of such sale until about near the latter date, and in such case the time allowed to take the highest priee is of course not unreasonable.

The defendants cite the case of Thompson v. St. Nicholas Natl. Bank, 113 N. Y. 325;. 22 St. Rep. 927, as conclusive in their favor and as. showing entire absence of all liability on their part, to plaintiff. I do not think the case is in point. The pledgee had by the contract in question in that cas'e full power to sell at public or private sale and without notice, and power to apply the-proceeds in payment of the indebtedness for 'which the pledge was security. This right was not affected by notice from the original plaintiff that he owned the bonds, and he had no right to. forbid defendant to .part with the stock in the manner which it was authorized to do by its contract with the pledgor. The defendant did sell in a valid manner in the Thompson case, while in this case the defendants sold in an illegal manner and were thustechically guilty of a'conversion. We may assume here that the plaintiff in the Thompson case obtained no right by his notice* to the defendant to insist that it should only sell after notice to him. The defendant was a Iona fide pledgee for value of the bonds, and at the time, when the loan was made and the bonds pledged, the contract was made providing for a sale without notice and at private sale or by auction. T.his privilege was-part of the security, and the plaintiff could not by any notice impair that security or alter the right which defendant had obtained by its contract made at the time when the loan was effected and the securities pledged. But the fact that the defendant in that case had the right originally under its contract to make and did make a valid sale without notice to the plaintiff therein, furnishes no ground for permitting the defendants here to make an illegal sale of the plaintiff’s stock without responding in damages to him on account of such illegal act. The illegal sale by these defendants consists (aside from the question of a lack of proper demand of payment on Bogart & Go., or their assignee) in an omission of any notice of sale to Bogart & Co, or their assignee, and also of a sale in violation of the rules of the stock exchange. And the plaintiff by reason of his ownership can take advantage of that violation of law on the part of the defendants and sue for this conversion of his stock. The Thompson case was not decided in favor of the defendant bank while assuming that it had sold the -bon^s in violation of the rights of Capron and Merriam, their pledgors. On the contrary, the reasoning of the case shows it was assumed the sale had been properly made so far as their right were concerned. And therein lies the important difference in the facts in the two cases. In the Thompson case the sale was proper and in this case it was not.

The deduction of the balance of the indebtedness of Bogart & Co. to defendants Savin & Co., from the price allowed for plaintiff’s stock, is proper because the stock was originally pledged for that debt, and although the defendants by their mode of sale were guilty of a technical conversion of the stock to their own use, yet the result of such conversion resolves itself into a question of damage; what damages has the plaintiff suffered by reason of this conversion? And, we think, upon that question it is proper to deduct what remains of the debt for which the plaintiff’s stock originally stood as security, from the highest amount for which the stock sold within a reasonable time after its conversion. Wright v. Bank of Metropolis, 110 N. Y., 237; 18 St. Rep., 92, supra, and cases cited; Minor v. Beveridge, decided at this term.

As to the defendant Wheeler, the assignee of Bogart & Co., we think he has no complaint in this case. The judgment bars him of all right to the stock in question or to any portion of the proceeds thereof. After Bogart & Co. ceased to be creditors of the plaintiff, neither they nor their assignee had any further interest in this stock. The referee finds that plaintiff was not equitably indebted to Bogart & Co. in any sum whatever after the 8tli day of May, 1884. They were not in fact creditors after that date.

The judgment should be affirmed as against all appellants, without costs in this court in favor of any one.

All concur.

Judgment affirmed.


source: Caselaw Access Project

author: Andrews, Ch. J.

license: Public Domain

text:
    The People ex rel. Benjamin W. Wooster, Resp’t v. Edward A. Maher, etc., App’lt.

      (Court of Appeals,

      Filed February 27, 1894.)

    1. Mandamus—Discretion.
    Where a public officer or body is clothed with a discretion, a mandamus can only issue to compel a decision, in case of a refusal to decide, and, when a decision is made, the remedy by mandamus ends.

      2. Same.
    The court cannot, on mandamus, review the decision made, or compel a decision the other way.
    3. Same.
    The mayor of Albany lias a discretion to refuse the direction to the city engineer to give notice to the owner for the summary removal of building claimed to stand upon or encroach on the street.
    4. Same—Common council.
    The common council cannot, by resolution, change the character of such duty.
    Appeal from order of the general term of the supreme court in the third judicial department, made July 2, 1892, which affirmed an order directing the issuance of a peremptory writ of mandamus which required defendant, as mayor of the city of Albany, to send written directions to the city engineer of the city of Albany to send written notice to the owner or person who erected or is now maintaining said porch or building as aforesaid, within ten days after receipt of said notice to remove the said building or porch, as aforesaid, to the range of the street laid down by the city engineer, under and pursuant to the provisions of § 10 of title 13 of chap. 298, Laws of 1883, as amended by § 10 of title 13 of chap. 398, Laws of 1888.
    The facts, so far as material, are stated in the opinion.

      Matthew Hale, for app’lt; Franklin M. Danaher, for resp’t.

       Reversing 46 St. Rep., 205.

   Andrews, Ch. J.

This is a proceeding by mandamus, and the judgment from which the appeal is taken directs the mayor of the city of Albany to give written directions to the city engineer to notify the owner of the building on Pearl street known as the Albany Female Academy to remove the porch of the building, which the judgment finds projects thirteen feet and four-inches into Pearl street, within ten days after receipt of the notice, pursuant to the provisions of § 10, title 13 of chap. 298 of the Laws of 1883, as amended by chap. 398 of the Laws of 1888.

The question whether the porch projected into the street and the extent of the alleged encroachment was litigated on the trial. If the affirmance of the judgment depended on the question whether in fact the alleged encroachment existed, we should have no difficulty. Upon the facts found and proved there can be no reasonable doubt that the porch is an unlawful obstruction in the street and a public nuisance. Although originally built with the consent of the city, the municipality could not legalize the structure so as to bar the public right, and the user, though long continued, is no obstacle to proceedings for its removal. All the remedies, public and private, for the abatement of encroachments in highways or public streets, are open and unaffected by the colorable authority under which the porch was erected, or by acquiescence in the unlawful user. St. Vincent Orphan Asylum v. City of Troy, 76 N. Y., 108, and cases cited. But the question here is whether, under the provision of the city charter referred to in the judgment, the mayor of the city may be compelled, under the coercion of a writ of mandamus, to direct the city engineer to give the notice therein specified. When such direction is given by the mayor, either voluntarily or by compulsion, the duty imposed on the city engineer is mandatory and imperative. ÍTpon receiving such direction he must give the notice of ten days to the owner, and if the owner neglects or refuses tp comply with the notice, he must then cause such removal to be made, in the first instance at the expense of the city, to be reimbursed by an assessment on the property of the owner. The city engineer would have no discretion, but would be bound to act in accordance with the peremptory direction of the statute. Is the authority given the mayor to initiate these summary proceedings, by directing the city engineer to give notice to the property owner, also a mandatory duty, or was it the intention of the charter to leave it to his judgment and discretion whether this method of enforcing the public right should be pursued ? The right to proceed against the mayor by mandamus depends upon the answer to this question. There is no dispute as to the rule of law that a mandamus against a public officer, or a municipality, is a proper remedy to compel the performance of a ministerial duty plainly prescribed, and may be invoked in behalf of any party interested in its performance, on the failure of the officer or public body to do the act or thing required. But where the officer or body is clothed with a discretion, and it may do or omit to do the act or thing according to the judgment of the person or body authorized to act, then a mandamus can only issue to compel a decision, in case of a refusal to decide, and when a decision is made the remedy by mandamus ends. The court cannot on mandamus review the decision made, or compel a decision the other way, because the court may disagree to the justice or propriety of the conclusion reached. The board of distinction is between duties mandatory and peremptory and those involving discretion and judgment. In the one case the public agent cannot refuse to act, or to do the thing required, and in the other the court is not permitted to substitute its judgment for that of the officer or body clothed by the law with the power to decide. There is sometimes difficulty in determining whether a duty is peremptory or discretionary. Language permissory in form is sometimes construed as imperative in meaning. It is not infrequent that a statute declares that it shall be lawful for an officer or body to do this or that, or that this or that thing may be done, using language which in ordinary acceptance imports permission, and not command, and in many such cases the duty is held to be imperative. It is a question of the real meaning of the legislature to be ascertained from a consideration of the nature of the authority, the character of the public agency, and the public duty involved. For example, it has frequently been held that where authority is given to raise money by taxation for public purposes or to discharge a municipal obligation, the duty to exercise the authority may be imperative, although conferred in permissory language. On the other hand, there are many occasions for vesting in public agencies actual discretion in respect to the exercise of powers conferred, because the legislature cannot always anticipate the circumstances which may call for their exercise, or which may require that they should be held in abeyance. People ex rel. Demarest v. Fairchild, 67 N. Y. 334; People ex rel. Hammond v. Leonard, 74 id. 443 ; People ex rel. Francis v. City of Troy, 78 id. 33 ; Dillon on Municipal Corporations, § 98; High on Extraordinary Rem. §§ 24, 42.

In the light of these familiar incidents we are to consider whether the mayor of Albany had a discretion to refuse to issue the direction to the city engineer, which the judgment below requires him to give. It appears by reference to the charter of Albany (Laws of 1883, chap 208) that the original section relating to the summary removal of buildings projecting into the streets is one of the sections of title 13, entitled “ city engineer and survey- or.” This title prescribes the duties of that officer, and the section as originally passed contained no reference to the mayor, and conferred upon him no authority or duty, but left it to the engineer and surveyor on his own motion to institute the proceedings (§ 11). This general and unguarded power might lead to very grave consequences, and place upon the city onerous responsibility. The amendment of 1888 (Chap. 308, title 13, § 10) for the first time made the mayor a necessary party to any proceedings instituted for the summary removal of buildings standing upon or encroaching on the streets. The amendment provided that the city engineer “shall, upon the receipt of written directions from the mayor,” send written notices, etc. It took from the city engineer the power to institute the proceedings independently of the mayor, which he possessed under the original section, and made the preliminary direction of the mayor essential before any action should be taken by the subordinate officer. It is, we think, quite manifest from the history of this provision, as well as from its language, that it was the intention of the legislature to confide to the mayor the determination whether summary proceedings under that section should be commenced in a given case. There was great propriety in this. The city, i£ it proceeded to tear down buildings under this section,would do so at the hazard of being able to justify the act by showing that the encroachment in fact existed, and to the extent of such interference. The decision of the mayor would not bind the property owners. The owners whose buildings were threatened with demolition, might upon cause shown to the satisfaction of the court procure an injunction. But they would not be bound to do so, but might await the trial of the right in an action for damages. The city had other remedies by ordinary procedure at law to remove the obstruction, in pursuing which it would incur no hazard. It seems to us that it was the plain intention of the section, as amended, to confide to the judgment and discretion of the mayor the determination of the question whether proceedings should be taken under this section of the charter, and if this is the true meaning of the statute, the court had no power by mandamus to compel him to initiate such proceedings.

We think the situation was not changed by the resolution of the counsel passed April 15, 1889. That resolution was in form a request by the council to the mayor to take proceedings for the removal of the porch under the section in question. It was adopted in pursuance of the report of the law committee of the council previously made, in which report it was said: “The passage of this resolution will, however, operate simply as a recommendation to the mayor, with whom the matter is discretionary.” It is reasonable to suppose from the form of the resolution adopted that it was acted upon in this view. The statute left the matter to the judgment of the mayor, and the council could not change the character of the duty imposed and make that mandatory which under the statute was discretionary. The common council as commissioners of highways might institute proceedings appertaining to their functions as such, but the power to change the statute was not among them.

These views lead to a reversal of the order below. Judgment of special and 'general term reversed and proceedings dismissed, with costs against relator.

All concur.

Judgment reversed.


author: O’Brien, J.

text:
    Antoinette L. Milbank, Individually, etc., Resp’t; v. Morgan Jones, Appl’t.

      (Court of Appeals,

      Filed February 27, 1894.)

    1. Pleadings—Denial—Proof..
    Under a general denial, the defendant may controvert hy evidence anything which the plaintiff is bound to prove in the first instance to make out his cause of action, or anything that he is permitted to prove for that purpose under his complaint.
    8. Same—Proof.
    A cause of action, proved but not pleaded, may be met at the trial by proof that it was satisfied, extended or modified in such a way as to defeat any right of action upon it.
    Appeal from j udgment of the general term of the superior court of the city of New York, entered upon an order made March <8, 1893, whicli affirmed a judgment in favor of plaintiff entered upon a verdict directed by the court and also affirmed an order denying a motion for a new trial.
    The nature of the action and the facts, so far as material, are stated in the opinion.

      Joseph Fettretch and John M. Jones, for app’lt; Ira Shafer and William. II. Hamilton, for resp’t.

       Reversing 51 St. Rep., 616.

   O’Brien, J.

This action was originally brought by the plaintiff’s husband, who having died after the iirst trial, his widow, the present party plaintiff upon the record, was substituted in his place. On the first trial there was a verdict for the defendant, but the judgment was reversed by the second division of this court, Milbank v. Jones, 127 N. Y., 370; 38 St. Rep., 910. On the second trial the court directed a verdict for the plaintiff and the judgment entered thereon has been affirmed at the general term. In the disposition of this appeal it is only necessary to examine certain exceptions taken by the defendant at the trial to the exclusion of evidence. The cause of action stated in the complaint is that some time in the month of June, 1866, the defendant, as trustee for the plaintiff, received the sum of $5,000 in cash, which he has ever since continued to hold in trust for the plaintiff. That by the terms of the trust, under which the money was received, it was expressly provided, and the money was received upon the condition, that the trust might be terminated by the plaintiff at his election, on or after July 10, 1866. That in February, 1886, the plaintiff notified the defendant of his election to terminate the trust and demanded payment to him of the money, but the defendant neglected and refused to pay the same. The only defense interposed was a general denial. At the trial the-plaintiff, in order to prove the allegations of his complaint, gave in evidence a resolution of the common council of the city of New York, authorizing and directing the street commissioner to make a contract for lighting the streets and public places with coal gas, the contract to be founded upon sealed bids and proposals and to be made with the company giving adequate security, to be approved by the comptroller in the manner provided by law, which shall agree to do the same for the lowest price for each lamp or light per annum, or quantity, when it can be measured according to existing regulations, and affording to such company sufficient time to lay their mains and introduce gas as required by the contract. The resolution also contained some provisions as to the form of the contract and repealed all ordinances or resolutions inconsistent with its provisions. There was attached to this resolution, and offered in evidence with it, a paper of which the following is a copy:

“New York, June 14, 1866.
“ Received of R. W. Milbank, five thousand dollars ($5,000), and also certificate for two hundred and fifty (250) shares of the stock of the People Gas Light Company of the city of New York, number seven (7), the said money and stock to be returned to said Milbank in case the resolution above shall not be passed and take effect before the 10 th of July next.

It being understood and agreed that said Milbank shall have the right at his election, in case said resolution shall pass and take effect before the said 10th of July, to purchase back tlie said stock at any time within sixty (60) days from the time said resolution shall take effect, by paying to me fifteen thousand dollars ($15,-000) therefor; and that he shall on his part be bound to purchase the same and pay said fifteen thousand dollars ($15,000) therefor, within said sixty (60) days, at my election.

MORGAN JONES.
I assent to and join in the above understanding and agreement.
New York, June 14, 1866.
R. W. MILBANK.”

The defendant’s counsel objected to this evidence upon the ground, among others, that it was incompetent and not within the issues made by the pleadings. ' The court overruled, the objection and the defendant’s counsel excepted. The plaintiff then proved by other documentary evidence that this resolution was vetoed by the mayor, and on the 10th day of July, 1866, was passed, notwithstanding the veto, and went into effect on that day. This was all introduced under the defendant’s objection and exception, and the plaintiff having given this proof rested. The defendant’s counsel moved to strike out this evidence upon the ground, among others, that it did not correspond with the allegations of the complaint, or tend to prove the cause of action alleged, but a different cause of action, and upon the same ground, to dismiss the complaint. These several motions were all denied and the defendant excepted. The defendant then offered to prove that after the veto he had a conversation with the plaintiff, who had signed the contract, in which, in substance, he stated to him that he would have to give back the money, as he could not procure the resolution to be passed within the time, to which the plaintiff, in substance, replied that he would not exact performance at the precise day, and further, that when the resolution was finally passed, the plaintiff called upon the defendant and furnished him with a certified copy of the resolution, and he accepted it as performance. This evidence was objected to by the plaintiff on the ground, amongothers, that it was not admissible under the pleading, which objection was sustained by the court and the defendant excepted. The questions involved in the appeal arise upon these exceptions. It will be seen that the course of action alleged in the complaint was the receipt by the defendant, as trustee for the plaintiff, of a sum of money which, by the terms of the trust, could be recalled by the plaintiff on or after a specified day. That the defendant continued ever since the receipt of the money to hold the same under the trust which the plaintiff elected to terminate nearly twenty years afterward by notice, and thus became entitled to have it paid over to him. The parties doubtless knew to what transaction the pleading referred, but it must be admitted that a stranger could hardly anticipate the evidence given from any statement in the complaint. It was within the power of the court to amend the pleading to conform to the proof, and had it exercised that power it is quite probable that the defendant would not have been surprised. The court, however, admitted the evidence as proof of the facts alleged without any amendment, which was a ruling quite favorable to the plaintiff, and the only question now necessary to consider is the proof now offered by the defendant to overthrow what had been prima facia established. What the plaintiff proved was an agreement on the part of the defendant to return to the plaintiff a sum of money if the resolution should not pass and take effect before a certain day named. He showed that the resolution did not pass before that day, and he had averred that for twenty years afterward the defendant continued to hold the money as his trustee. The defendant was entitled to prove any fact that contradicted the evidence given by the plaintiff in support of his complaint. Under a general denial the defendant may controvert by evidence anything which the plaintiff is bround to prove in the first instance to make out his cause of action, or anything that he is permitted to prove for that purpose under his complaint. Griffin v. L. I. R. R. Co., 101 N. Y. 354; 1 St. Rep. 56; Wheeler v. Billings, 38 N. Y. 263 ; Schwarz v. Oppold, 74 id. 307; Gilman v. Gilman, 111 id. 265, 270; 19 St. Rep. 283.

Therefore, the defendant could prove that the resolution had taken effect before July 10, 1866, or on that day, if he also followed the latter fact by proof that the plaintiff extended the time within which the resolution could be passed in order to fulfill the condition upon which the defendant could retain the money as his own, discharged from the trust. In other words, he should have been permitted to show that the trust, under which the plaintiff alleged the defendant held the money for twenty years, had in fact terminated, not before July 10, 1866, but on that day, by the passage of the resolution and the acceptance by the plaintiff of that as a substantial performance of the condition upon which the defendant could retain the money. If the plaintiff, after the writing was signed and delivered, directed the defendant to retain the money as his own, in case the resolution went into effect on the 10t.h of July, then he had no cause of action, for his interest in it as the beneficiary of a trust had ceased. The plaintiff was permitted to give evidence in support of the complaint that was not strictly admissible. The defendant then had the right to controvert the facts proven by showing what the actual transaction was. He could show that the transaction as to which the plaintiff gave proof never in fact took place, or that it was a different transaction from the one shown in fact or in legal effect. It was part of the plaintiff’s case to show that the defendant all the time held for him a sum of money in trust. The defendant could controvert this by showing that the trust had been satisfied by the passage of the resolution on the 10th of July, and that the parties had agree that after the date the defendant held the money in his own right and as his own, freed from all the obligations of the trust. So that the ruling was erroneous even upon strict rules of pleading as it precluded the defendant from giving proof necessarily ■embraced within his general denial. But it was admissible also upon another principle. When a plaintiff is permitted to give proof of a contract or obligation other than the one stated in the complaint, the defendant is entitled to the benefit of any defense which he may have to the cause of action established. In such a case the plaintiff has proceeded in disregard of his pleading, and it would be manifestly unjust to deprive the defendant •of the benefit of any legitimate defense that he may be able to prove in answer to the actual case made by the plaintiff. In this court, in such a case, the pleadings may be regarded as amended to conform to the plaintiff’s proof on the one hand and to cover any proof that the defendant may offer which answers or defeats the case made against him on the other. Arnold v. Angelí, 62 H. Y., 512. The evidence offered and excluded was not, of course, conclusive, but it tended to controvert the case made by the plaintiff, and its force and .effect was a matter for the consideration of the jury. A cause of action proved but not pleaded may be met at the trial by proof that it was satisfied, extended or modified in such a way as to defeat any right of action upon it, and this was what the defendant attempted to show, and any proof was admissible that tended to show that the plaintiff had in fact no claim. Having denied all the allegations of the complaint, including the trust, he might show that the money came to his hands as compensation for services.

The defendant also offered to show that the transaction was for the purpose of influencing legislation before the common council with respect to the subject embraced in the resolution, and for that reason was contrary to public policy. Chesebrough v. Conover, 140 N. Y., 382; 55 St. Rep., 728. This offer was excluded on the ground that no such defense bad been pleaded, and this ruling is sustained by the decision in the case when before the ■second division on the former appeal. We will not now inquire whether this view is strictly correct or not, as we are disposed to regard the decision as the law of this case at least.

For the reason stated the judgment should be reversed and a new trial granted, costs to abide the event.

All concur.

Judgment reversed.


author: Bartlett, J.

text:
    Round Lake Association, Resp’t, v. Bradford D. Kellogg, App’lt.

      (Court of Appeals,

      Filed February 27, 1894,)

    1. Deed—Covenant.
    Where a grantee binds himself by a covenant in his deed, limiting the use of the land purchased in a particular manner so as not to interfere with the trade or business of the grantor, and the covenant is valid as between the parties, it is also binding upon, and may be enforced against, a grantee of the covenantor taking title with notice of the restriction.

      2. Same.
    The acceptance of a lease from an association, even without becoming a party to it, is sufficient to render the lessee and his assignee subject to its terms and provisions, as though they had signed it.
    3. Same.
    In such case, the assignee becomes ipso facto a member of the association and is bound by such rules and regulations as were afterwards adopted and promulgated.
    4. Association—Rules.
    The Round Lake Association has power to regulate the vending of goods ” in a store or from house to house.
    -5. Same.
    The adoption of rules and regulations by the executive committee is regular and, especially if recognized and acted upon by the trustees and members, binds the association and its members.
    . 3. Same- Relief.
    Such association is entitled to the aid of a court of equity in compelling the defendant to observe covenants and conditions by which he is bound as assignee of such leases.
    Appeal from judgment of the general term of the supreme court in the third judicial department, entered upon an order made September 14, 1892, which affirmed a judgment in favor of plaintiff entered upon a decision of the court on trial at special term.
    The nature of the action and the facts, so far as material, are set forth in the opinion.

      C. H. Sturges, for app’lt; M Countryman and Charles S. Lester, for resp’t.

       Affirming 47 St. Rep., 668.

   Bartlett, J.

This is an appeal from a judgment affirming the judgment of the special term enjoining the defendant from selling or offering for sale any goods, wares or merchandise upon , the lots leased by him of the plaintiff, or upon any of its grounds, without first obtaining a license from the plaintiff.

The plaintiff is a corporation organized as “ The Bound Lake Camp Meeting Association of The Methodist Episcopal Church of the Troy Conference,” under chapter 617, Laws 1868. The name of the corporation was changed, by order of the Saratoga County Court, July 8th, 1887, to the Bound Lake Association. In Sept, 1868, the trustees adopted a constitution and by-laws, which were, on the 31st day of March, 1869, adopted and approved at a meeting of the stockholders. This constitution declared that the objects of the association were to appoint and hold such camp meetings within the bounds of the Troy conference as they may choose.

It further provided that the trustees should elect out of their number a president, vice-president, treasurer, secretary and a prudential committee of three, who, together, should constitute an executive committee and have full power to act for; the board of trustees during the interim of their regular meetings, and hold office until their successors were elected. It also provided in a separate article that the executive committee should have general oversight of all the interests of the camp meeting, and that they should arrange “ the prices for tents, ground tents, fees for entrance for teams, railroad "fares, privileges for boarding tents and other privileges.’’

The trial court finds the constitution was legally revised in 1874, but not changed in the particulars material to this action. On the 26th of March, 1887, certain rules and regulations were adopted by plaintiff’s executive committee and posted in public places and distributed among the cottagers, which contained, among others, the following :

“ 1. Merchandise, general or special, shall not be sold of offered for sale on any lot, or on any place on the association grounds, either on the east or west side of the railroads, without a purchased permit given in writing by the executive committee. * * *
“4. No peddler, organ grinder, tramp, or pther person with goods or wares of any kind to sell, shall be allowed to ply his vocation on the grounds."

On May 3rd, 1890, the executive committee also adopted the following additional rules and regulations:

“No person shall sell or offer to sell goods, wares or merchandise upon any of the lots leased by this association, or upon the grounds of the association, without having first obtained a license or permission therefor from the officers of this association.
11 No person shall carry on any trade, business or vocation on such lots, or upon the grounds of the association, without first having obtained a license or permission from the officers of this association, or without having first paid the rent or fee fixed by the officers therefor.”

May 5th, 1890, defendant was notified, in writing, by plaintiff’s superintendent, that the "selling of merchandise on this lot was in violation of the rules and regulations, and that he was required to desist and refrain from doing so without the written permission of the executive committee. The defendand then informed the superintendent that he proposed to fight it out, and know what he could do, and would continue to sell as long as he could. On the 24th of May, 1890, copies of the rules adoptéd on the 3rd of May, 1890, with a notice of their adoption, and that defendant was required to obey the same, were served personally on the defendant. This action was commenced May 26th, 1890.

The plaintiff, in the year 1884, leased to Caroline J. Bancroft lot No. 1426, and to Rice Hall lot No. 1427, and in September, 1886, both of said leases were assigned to the defendant.

These leases contained the following provisions, viz.: “This lease is granted by said party of the first part and excepted by said party of the second part, subject to the following express conditions, reservations and restrictions: * *

“5th. This lease is accepted by the said party of the second part, subject to all the rules and regulations which may from time to time be adopted and promulgated by the party of the first for the government of said grounds, and which are hereby made a part of this lease, as fully to all intents and purposes as if they were incorporated therein.
“6th, A refusal on the part of the party of the second part, his heirs, legal representatives or assigns, to fulfill all or either of the foregoing covenants, conditions and agreements, shall operate as a forfeiture of this lease, and said party of the first part may, at its option, after such failure or refusal, re-enter upon said premises without suit our legal process, and re-possess, hold and enjoy the same, as of its first and former estate. To all of which terms, covenants and conditions the parties hereto mutually consent and agree.”

On the 26th day of March, 1887, the executive committee gave permission to the defendant to conduct a store on the lots covered by these leases, for the sale of groceries, dry goods, etc., on the payment of $50 for the year 1887, and for the next four years at the rate of not exceeding $100 per year.

Before erecting his store the defendant was informed that he would have to pay for the privilege of doing business. The defendant, with the exception possibly of the first payment of $50, refused to pay for the privilege of doing business, and continued to sell his merchandise in violation of the rules and regulations of the association.

The questions presented on this appeal are whether the defendant, as assignee of said leases, is bound by the rules and regulations adopted by the executive committee are, in contemplation of law, the rules and regulations of the association.

Tire learned counsel for the defendant, in view of the fact that the lease is for a term of ninety-nine years, and renewable for a like term of years forever, insists that such a lease is in law a fee simple running as it does to the heir and not to the legal representative.

It is not important to determine, for the purposes of this case, whether the defendant took a fee or something less than a freehold estate.

This court has held that where a grantee binds himself by a covenant in his deed limiting the use of the land purchased in a particular manner so as not to interfere with the trade or business of the grantor, and the covenant is valid as between the parties, it is also binding upon and may be enforced against a grantee of the covenantor taking title with notice of the restriction. Hodge v. Sloane, 107 N. Y., 244; 11 St. Rep., 770. In the case cited the grantor was a dealer in sand and the grantee covenanted in the deed that he would not sell any of the sand off the premises conveyed.

The grantee subsequently made a deed containing no such covenant, but his grantee took with notice, and was held to be bound by the original covenant

Judge Danforth said (p. 249): “ We see nothing unreasonable in the restriction which the grantee imposed upon himself. He was not a dealer in sand. He wanted to buy the land on the best terms and in the most advantageous way, and in order to do this it was necessary that he should preclude himself from so using it as that by its means he should enter into competition with the vendor. I cannot find that such a covenant contravenes any rule of public policy, nor that it is incapable of being enforced in 'a court of equity. It stands upon a good consideration and is not larger than is necessary for the protection of the covenantee in the enjoy- ■ ment of his business.’’

This same principle had been previously recognized by this court in Tallmadge v. East River Bank, 26 N. Y., 105, and Trustees of Columbia College v. Lynch, 70 id., 440. Also by the high court of chancery in England in Tulk v. Moxbury, 1 Hall & Twells, 105. This court has recently approved the earlier cases in Rowland v. Miller, 139 N. Y., 93; 54 St. Rep., 465. It is quite clear the plaintiff was entitled, in executing either a deed or lease, to insist upon such covenants as to the use of lots sold or rented as would protect it in the management of its property in such manner as would be consistent with the objects of its incorporation. The acceptance of the lease even without becoming a party to it was sufficient to render the lessee and his assignee subject to its terms and provisions as if they had signed it. Atlantic Dock Co. v. Leavitt, 54 N. Y., 35; Bowen v. Beck, 94 id., 86; Post v. West Shore R. R. Co., 123 id., 580; 34 St. Rep., 484.

It is equally clear that the defendant on accepting the assignment of the leases, became ipso facto a member of the association and was bound by such rules and regulations as were afterwards adopted and promulgated.

The rules and regulations adopted by the executive committee were found by the trial court to be reasonable and proper, and, in view of the objects for which plaintiff was incorporated, we are of of opinion this finding was authorized.

The grounds of the association were dedicated, primarily, to the purpose of'holding camp meetings, which were originally held in tents, but afterwards a large permanent auditorium was erected; buildings were also put up for summer schools and Sunday school assemblies. These exercises, religious and educational, continue during the summer for about eight weeks, and from ten to twenty thousand people assemble on such occasions. The grounds were divided into lots to enable persons habitually attending the camp' meetings to erect cottages.

As the principal and primary use of the grounds of the association was for religious purposes, it is manifest that the plaintiff must necessarily maintain the strictest supervision of its property. The regulation of the vending of goods in a store or from house to house falls within the limits of this reasonable power.

This brings us to the remaining question in the case, whether the adoption of the rules and regulations by the executive committee is regular and binds the association and its members.

This depends upon the construction of the constitution adopted by the association in 1869, already referred to, and the powers of the executive committee thereunder.

By this constitution (article IY) the trustees were given the general oversight of all the interests of the association, and the executive committee was clothed with full power to act for the trustees during the interim of their regular meetings. The executive committee by article YI also have general oversight of all the interests of the camp meeting, and among other things arrange ground rents and other privileges.

These powers conferred upon the executive committee were ample to enable it to enact the said rules and regulations, which were posted in public places, distributed among the cottages, and received general recognition by the association.

We are of opinion that the executive committee were given sufficient power by article YI of the constitution to enact rules and regulations, without regard to its authority to act for the trustees when they were not in session, under article IY.

The power to arrange ground rents and other privileges fully authorized the enactment of the rules and regulations to which we have already referred. It is also established by the evidence that these rules and regulations were recognized and acted upon by the trustees and members of the plaintiff in a manner that amounted to legal ratification and confirmation. The state of facts disclosed by this record clearly entitled the plaintiff corporation to the aid of a court of equity in compelling the defendant to observe the covenants and conditions by which he was bound as assignee of the leases in question. We have examined the various exceptions in the case and find no error that should lead to the reversal of the judgment.

The judgment is affirmed with costs.

All concur.

Judgment affirmed.


author: Finch, J.

text:
    Lewis C. King, Resp’t, v. John Townshend, Impleaded, etc., App’lt.

      (Court of Appeals,

      Filed February 27, 1894.)

    1. Equity—Cloud on title.
    Equity may interfere to prevent a threatened cloud, as well as to remove an existing one.
    2. Same.
    But the danger must be more than merely speculative or potential.
    3. Same.
    The existence of a lease in tax proceedings is a threat.
    4. Same.
    The fact that the lessee has, for many years, omitted to give the notice required is no answer, but only intensifies the injury and the danger.

      5. Same—Adverse possession.
    The defendant’s possession under the comptroller’s lease, at the date of plaintiff’s deed, does not affect the validity of such deed.
    6. Same—Former adjudication.
    A judgment in favor of defendant, in an action between the parties, Which does not establish a title in any one, does not destroy or affect a title subsequently made perfect in plaintiff by possession.
    7. Trust—When not created.
    Sections 49-58 of 1 R. S., 728, do not apply to a case where the grantee has himself a beneficial interest in the grant and is something more than the holder of a mere nominal title.
    Appeal from judgment of the general term of the supreme court in the first judicial department, entered upon an order made the first Monday of June, 1892, which affirmed a judgment in favor of plaintiff entered upon a decision of the court on trial at special term.
    The nature of the action and the facts, so far as material, are stated in the opinion.

      John Townshend, for app’lt; G. A. Gould, for resp’t.

       Affirming 48 St. Rep., 592.

   Finch, J.

The relief sought in this action is the cancellation of a lease executed and delivered by the comptroller of the city of New York upon a sale for unpaid taxes. It is admitted by the defendant, who is the assignee of the lease, that it is void because the sale included an illegal charge for interest. It would seem that such an admission should at once end the controversy and the lease be promptly canceled, but some ulterior purpose appears to lie behind the apparent litigation, and serves to prolong it. For, notwithstanding the defendant’s concession, he resists the relief sought upon the double ground that there is no cloud on the one hand and no title to be clouded on the other.

The claim that the lease constitutes no cloud is founded upon the provisions of the statute which make the lease inchoate; ineffective to produce a right of possession or establish a title; until a specified notice to redeem has been given to occupant or owner, and a certificate of which, signed by the comptroller, must accompany the record of the lease. (Laws of 1871, ch. 381, §§ 13, 14, 15 and 16.) It is undoubtedly true that, until that certificate is given, the right of the lessee is imperfect and no title passes by the conveyance. Lockwood v. Gehlert, 127 N. Y. 241; 38 St. Rep. 261., But if we concede that the imperfect and inoperative lease does not constitute an actual cloud it is nevertheless a decisive step towards the creation of a cloud and a threat and menace to create one in the future. Equity may interfere to prevent a threatened cloud as well as to remove an existing one Sanders v. Yonkers, 63 N. Y. 492. It is true that, in such a case, there must appear to be a determination to create a cloud, and the danger must be more than merely speculative or potential. That was said of tax proceedings in which no lease had been given and there was no proof that the purchaser claimed it or the city threatened it. Here it has been given. Its very existence is a threat. It was not given for amusement or as an idle ceremony. It meant and could only mean a purpose to subvert the title and possession of the owner. The further steps necessary to make the result effective lay wholly in the option of the lessee. If he actually served the necessary notice and filed the prescribed affidavit and satisfied the comptroller of these facts the certificate followed as a matter of course if not barred by a redemption. The lessee, therefore, in the present case stands with an effective weapon in his hands and may strike his blow when he pleases. It is in that respect that the situation differs from that in Clark v. Davenport, 95 N. Y. 478. There the state comptroller had not given a deed and was not bound to give it. He might instead cancel the sale and could be compelled to do so. Here the city comptroller has given the lease and has no discretion left. If the grantee gives the notice and proves it, the comptroller must make the certificate. Nor is it an answer to say that for many years the lessee has omitted to give the notice. That only intensifies the injury and the danger. In Hodges v. Griggs, 21 Verm. 280, a creditor’s execution against land following an attachment had been allowed to sleep for seven or eight years, and equity required him to enforce his right or remove the threatened cloud. And so the defendant here has no right to maintain a threat of title as lessee, when he confesses that it is founded on no legal right. The lease is something more than a certificate of sale. It is in form and terms a conveyance, effective at the option of the lessee if there be no redemption. The statute provides that “ all such leases executed by the said comptroller and witnessed by the clerk of arrears, shall be presumptive evidence that the sale and all proceedings prior thereto, from and including the assessments on said lands and tenements for taxes or assessments, or Croton water rents, and all notices required by law to be given previous to the expiration of the two years allowed to redeem, were regular and according to the provisions of the statute.” Such a lease, armed with such presumptions, effective at the option of the lessee, unless there is a redemption for his benefit drawing forty-two per cent, of interest, and sufficient to prevent any sale of the property and cloud the owner’s right, cannot be said to be a mere speculative danger.

Nor is it true that the invalidity of the lease appears upon its face. It shows no details of the amounts for which the sale was made, and the presumptions attending it make proof of such details unessential to the right of the lessee. It is only by evidence outside of the lease itself that its invalidity can be made to appear.

I think, therefore, that enough was shown to justify the intervention of equity to cancel the lease even if considered only as a threat to create a cloud, and if the action be regarded as one not to remove but to prevent a cloud.

The further controversy appears to me to be quite extraordinary. It is over the purely legal question whether the plaintiff’s title was or was not good and perfect, and the equity action became busy with the exact issue belonging to an action of ejectment. The plaintiff alleged that he was the owner of the land as he was bound to allege, and the defendant denied the allegation. If thereupon the plaintiff, as a condition of equitable relief, is compelled, not only to show possession which raises a presumption of title, but to go beyond that and disclose and defend the actual title under which he holds, with the burden of establishing it. resting on him, and every weakness in it inuring to the adversary,, and the final judgment conclusive on the question, he is stripped of every advantage due to his possession and which would be his-in an action of ejectment. I incline to the opinion that this plaintiff was not bound to show • or defend his paper title; that he might safely have rested upon his possession and the presumption of ownership which the law attaches to it, and was not required to subject his chain of title to the attack of his adversary. But I do not decide that question, or bind my own later judgment, because in this case no such objection appears; the paper title was disclosed and fought over and passed upon, without objection or protest; and so the question is presented whether it is good or not.

The plaintiff’s chain of title was attacked, first, at the conveyance by Rollins to Mooney, Stansbury and Queripel, described as trustees of the New York City Land Association, but, nevertheless, running to them “as joint tenants, to the survivor of them, his-heirs and assigns forever.” It does not appear that the association was a corporate body or capable as such of taking a legal title.. It must be assumed to have been a partnership of individuals-associated for dealing in real estate. Who they were we do not know, but we must presume that the three grantees were members' of the association holding the legal title for the benefit of others-as well as of themselves. They had, therefore, or may have had, a beneficial interest, and were not mere trustees holding the bare- and naked legal title. The sections of the Revised Statutes which take away the nominal title and vest it in the beneficiary .intended do not apply to a case where the grantee has himself a beneficial' interest in the grant and is something more than the holder of the mere nominal title. 1 R. S. p. 728, §§49-58; N. Y. Dry Dock Co. v. Stillman, 30 N. Y. 194. No case was made sufficient to divest the grantees of the legal title and vest it in an association which probably could not take at all; and whether we regard th.e deed as one to the individuals merely, discarding the reference to the-association as matter of description (Towar v. Hale, 40 Barb. 361), or as conveying to some extent also for the benefit of others, the-result is the same; for in the "latter cáse there was undoubted authority to sell, entirely consistent with the possible or supposed trust, and in no respect a contravention of its purposes; so that the purchaser’s title would be good, and not charged with responsibility for the due disposition of the proceeds.

Nor was the deed to plaintiff void because at its date Townshend was in possession and holding adversely. If he held under the comptroller’s lease his possession was not adverse to plaintiff’s title. Moores v. Townshend, 54 Super. 249; 10 St. Rep. 463 , Bedell v. Shaw, 59 N. Y. 46. If he did not hold under that he failed to show any specific title upon which his possession rested. Dawley v. Brown, 79 N. Y. 396. He now asserts that he held under the judgment in ejectment rendered in Moores v. Townshend, but that judgment gave him no title, and adjudged none in him. He pleaded none and defended on his possession alone.

But he further relies upon the decision in that action as conclusive against the title now asserted by the plaintiff. Judgment then went for the defendant and is described as upon its merits. It settled that Moores at that time and upon the then existing facts had no valid title, such as to defeat Townshend’s possession. The judgment established no title in anybody, for the defendant neither pleaded nor proved one in himself, but stood, as he had a right to stand, on his possession. The certificate of the Superior Court shows that the pbintiff proved no possession in himself or in any of his grantors, and he may have been defeated for that reason and that alone. But the present plaintiff has obtained possession and changed the situation. The previous adjudication that a title in the air was bad, does not destroy the title subsequently anchored to the possession. The conditions are different: the questions are not the same. The argument of the General Term shows, I think very fairly, that the judgment in ejectment is conclusive only as to the title established in that action, and that the judgment rendered did not establish any. The defendant pleaded none : the plaintiff proved none. If the court had decided in that case that the paper title disclosed was at any point defective or unsound, the decision would conclude us, but it does not so appear. The court may have held it to be good in and of itself provided only that there was possession somewhere under it. There is such possession now, and a decision on the present facts in favor of tlie the plaintiff does not necessarily contradict the previous judgment against his grantor. At all events, the defendant was bound to show a decision adverse to and destructive of the title now asserted in some of its essential elements, but has not done so. In that respect we agree with the reasoning of the General Term.

It follows that the judgment should be affirmed, with costs.

All concur.

Judgment affirmed.


text:
    Levi P. Rose, App’lt, v. David Hawley et al., Resp’ts.

      (Court of Appeals,

      Filed February 27, 1894.)

    1. Former Adjudication—When not Bar.
    Where a party has been defeated in his action by reason of neglect to perform some preliminary act necessary to perfect the cause of action, the judgment is not a bar to another action begun after the cause of action has become perfected.
    2. Ejectment—Breach of Condition Subsequent.
    When a grantor seeks to re-enter for breach of a condition subsequent, he must establish something more than a technical encroachment through the action of strangers without the grantee’s permission.
    Appeal from judgment of the general term of the supreme court in the second judicial department, entered upon an order made September 11, 1893, which affirmed a judgment in favor of defendant entered upon a decision of the court dismissing the complaint on trial at circuit.
    Tiie nature of the action and the facts, so far as material, are stated in the opinion.

      James M. Hunt, for app’lt; Theodore Fitch, for Hawley and others, resp’ts; Joseph M. Haly, for City of Yonkers, resp’t.

       Affirming 53 St. Rep. 403.

   O’Brien, J.

The questions presented by this appeal arise in an action by the plaintiff to recover the possession of real property, based upon allegations of the breach of conditions subsequent in a deed. On the 30th of December, 1848, the plaintiff conveyed to the municipal corporation then known as the town of Yonkers, a parcel of land described as containing eighty-four-hundredtlis of an acre. All the interest, rights and obligations conferred by this deed have since become vested in the city of Yonkers, one of the defendants in this action. The deed, after a description of the land intended to be conveyed by metes and bounds, contained the following provision : “This conveyance is upon this express condition, that the strip of land forming part of the premises above described, and being twelve feet and six inches in width, and extending all along said Academy street, shall forever hereafter be and remain a part of said Academy street, and shall never be used for any other purpose whatsoever. And also that all the residue of said land hereby conveyed shall forever hereafter be and remain public and open as a public highway, and that no house, building or other erection whatsoever, except a public monument, shall ever be built or erected or permitted upon the said land or upon any part thereof.’’

The complaint alleges in terms quite broad and general that there has been a breach of this condition, and particularly that the defendant Hawley' has been permitted by the city to erect a building on a part of the premises, and that it still continues to permit him to maintain the building and bold the land upon which it was erected and claim it as his own contrary to the conditions expressed in the grant.

At the trial the plaintiff attempted to show by proof that a building erected by the defendant Hawley or his grantors many years ago encroaches upon the land described in the deed. This building is north of the land conveyed and is something over sixty feet in length. It is claimed that the southerly wall stands upon a portion of the soil included within the bounds of the deed to the town to the extent of sixteen inches at one end of the building and two inches at the other end. The evidence on this point is quite complicated, obscure and conflicting, but it is conceded that unless there is some-insurmountable legal obstacle in the way of the plaintiff’s recovery in any event, that he was entitled to have the fact as to the existence and extent of the alleged encroachment determined by the jury. The other proof, in regard to the breach of the condition, shows the existence of an area south of the building above mentioned, under the surface of the ground, extending south from the building four feet, about eight feet deep. The southerly wall of this area is sixty-four feet in length, eight feet in height and about sixteen inches thick. All the surface inclosed in this area is within the bounds of the land conveyed by the deed. There is a stone stairway in the area leading below from the street, and over all the space is a sidewalk containing gratings and a door to the stairway which, when closed, constitutes no obstruction to persons passing upon the walk. This feature of the case simply shows a practice quite common in cities of using the space under the walk as a cellar or area for the storage of goods which, in no material respect, interferes with the use of the surface above as a public highway in the manner in which sidewalks are generally used. This was the situation with respect to the breach of the condition when this litigation began. The persistency of the litigants, and the varying results of the contest from, time to time, have added to the case some new complications which require some notice in order to obtain a clearer view of the questions presented now by the record.

In the year 1886 the plaintiff first brought his action to recover the land granted as above described, and in that year he obtained a judgment in his favor upon a trial by the court without a jury. This judgment was reversed by the general term upon the law and the facts and a new trial granted. Rose v. Hawley, 45 Hun, 592; 10 St. Rep., 360.

From this result the plaintiff appealed to this court, stipulating, as required by § 191 of the Code, that if the order was affirmed, judgment absolute should be rendered against him- The case was heard by the second division of this court, which affirmed the order appealed from and directed judgment absolute against the plaintiff. Rose v. Hawley, 118 N. Y., 502; 30 St. Rep., 6. This judgment was duly entered upon the remittitur in the court below. One of the reasons given in the opinion of the second division for the affirmance of the order was that no notice had been given to the city of the erection claimed as a breach of the conditions in the deed. The plaintiff began this action in the year 1890, and the complaint differs from that in the former action only in this respect. It contains allegations as to the commencement of the first action, the service of the complaint upon the city and the defendant Hawley, charging a breach of the conditions and stating the facts constituting the same, which were substantially identical with the facts contained in the record and already mentioned; that the city appeared and defended the action, and thus had notice of all the facts. The defendants, in addition to the defenses interposed in the first suit, have pleaded the former judgment as a bar. Before serving the answer, however, they demurred upon the ground that the complaint did not state facts sufficient to constitute a cause of action, and upon the further ground that upon its face the existence of the former judgment appeared which constituted a bar to this. The demurrer was sustained at the general and special terms, but overruled in this court. We then held that for the purpose of the question then before us, nothing could be known in regard to the former judgment except what was stated in the complaint, and that enough did not appear to sustain the demurrer. Rose v. Hawley, 133 N. Y., 315; 45 St. Rep., 119. In the answer the defendants have set forth fully all the facts in regard to the former action, and allege that the final judg-' ment was upon the merits and determined the question of encroachment and breach of the conditions. The trial of the issues was had before a jury and the plaintiff had a verdict, but the judgment was again reversed at the general term, upon the facts, • and a new trial granted. Rose v. Hawley, 69 Hun, 614; 53 St. Rep., 403. Upon the hew trial the same facts appeared, and upon the defendants’ motion the court dismissed the complaint upon the merits, to which ruling the plaintiff excepted. The judgment entered in favor of the defendants upon this decision has been affirmed in the court below, and the record containing all the proceedings is now before us for review. The former adjudication was not upon the merits in the sense which the rule requires in order to render the judgment a bar in another action. The plaintiff failed, so far as this question was involved, because notice of the alleged encroachment could not be imputed to the city. Since the judgment that element of the plaintiff’s case has been supplied, and hence the present action may be said to stand upon facts occurring after the first judgment, or at least after the commencement of that action. Where a party has been defeated in his action by reason of neglect to perform some preliminary act necessary to perfect the cause of action, such as the giving of notice or the like, the judgment is not a bar to another action begun after the cause of action has become perfected by the giving of notice or the performance of the requisite preliminary act, whatever it may be. A party who fails in an action upon a note or other promise for the reason that it was not due at the time the suit was commenced, may bring another action when the promise matures, and in such cases the former judgment, though rendered upon the merits, is no bar, and the same principle applies to the facts in this case. A subsequent action may be brought in such cases in a way to avoid the objection which proved fatal in the first. Marsh v. Masterton, 101 N. Y. 401-407; Spelman v. Terry, 74 id. 448 ; Shaw v. Broadbent, 129 id. 114; 41 St. Rep., 449 ; Bell v. Merrifield, 109 N. Y. 202 ; 14 St. Rep. 796.

But the plaintiff had stipulated in the former action that in case his appeal to this court was unsuccessful then judgment absolute might be rendered against him, and such judgment was rendered. The plaintiff, by this stipulation, waived his statutory right to another trial, which is given by the Code in actions for the recovery of real property, Roberts v. Baumgarten, 126 N. Y. 336 ; 37 St. Rep. 482, and whether he is bound by the former judgment absolutely and forever, even in a new action, brought upon new or additional facts, not existing when the former suit was commenced, may, perhaps, be still an open question, which in the view we are disposed to take of the case, is not now important to decide.

It is quite certain that the plaintiff cannot recover without showing a breach of the condition in some substantial and material respect. The important question, therefore, is whether such a breach was shown by the facts, assuming, as we must, that the jury would have found them as claimed by the plaintiff. .Tn respect to the area, it was held by the second division not to constitute a breach of the condition, as it was not an erection upon the land within its true purpose and meaning, nor was it rendered so by use. The purpose of the condition was to preserve the land conveyed for public purposes, and it was not violated by permitting the soil or space under the sidewalk to be used in such manner as is usual and common in cities and villages, as such use is in no sense inconsistent with that of the public for the purpose of a sidewalk for persons passing along the street.

The remaining question is whether the encroachment of the wall of the building at the north upon the land conveyed, sixteen inches at one end of a line sixty-four feet in length, and running down to two inches at the other end, constitutes, under the circumstances, such a breach of the condition as to forfeit the grant and entitle the plaintiff to re-enter. It may be said generally that such conditions in grants are not favored in the law. In the language of Chancellor Kent, “ Conditions subsequent are not favored in law, and are construed strictly, because they tend to destroy estates; and the rigorous exaction of .them is a species summum jus, and in many cases hardly reconcilable with conscience.” 4 Kent’s Com. 130; Craig v. Wells, 11 N. Y. 315; Woodworth v. Paine, 74 id. 196. There are instances where such conditions were enforced for reasons .and upon grounds apparently technical, but, it is believed, that in such cases the ground upon which they were given" effect was within the intention of the parties when the condition was inserted, however slight the violation was. Plumb v. Tubbs, 41 N. Y. 442.

The intent and purpose of the condition in this case was to prevent the city from using the land conveyed for any other purpose than that mentioned in the grant; hence, it was prohibited from erecting upon it any house, building or other erection, except a public monument, and it cannot be said that the city itself has literally violated this condition, as it has not constructed or erected upon the land any building or structure whatever. But it is said that the condition was to the effect that the city should not permit any one else to make the forbidden erection, and as it has permitted Hawley to encroach upon it when building his wall several years ago, that the condition is broken and the estate forfeited. It was said when the demurrers were before us, that the forfeiture claimed is rested upon the conscious and willful sufferance of the city as amounting to a permission. The estate granted to the municipality cannot be forfeited by proof that a trespasser, without permission or authority from the city, express or implied, has appropriated to his own use a strip of land a few inches in width. The city cannot be said to permit the unlawful use until it has knowledge of the facts. Hawley claims that this strip of land belongs to him, and there has never been a time since the city has had the notice of plaintiff’s claim that.it could remove the building without proving, as against Hawley, that he was the trespasser. This litigation has been on foot for nearly eight' years in one form or another, and the only disputed question of fact has been the location of the true boundary line. The plaintiff claims that it is north of the south wall of the building, to the extent of sixteen inches at one en’d and two inches at the other. The defendants, Hawley and the city, take a different view of the matter, and both insist that the wall does not encroach on the land conveyed to the town in 1848. This dispute, involving a small strip of land, depends largely upon the memory of witnesses as to the location of old monuments, and upon the ability of engineers to reproduce old surveys from courses and distances. A result absolutely accurate is seldom attained in such cases. It appears that the building north of the land conveyed to the city was located by competent engineers about 1857, and it was then supposed by every one that the wall was on the true boundary line. The plaintiff was a member of the village board of trustees in 1864 and 1865. He saw these buildings erected first in 1857 and again in 1866, but not until twenty years after did he make any claim against the city that it had broken the conditions of the deed. The parties who owned and erected the buildings, now claimed to constitute the encroachment, are dead, and an accurate location of the northerly boundary line of the grant has become more difficult by the lapse of time. All these considerations are important upon the question whether, under the circumstances, the city has done or knowingly permitted anything which amounts to a breach of the condition within any fair and reasonable construction of its terms or the intention of the parties when the grant was made. The most that can be said is that there is an honest mistake between the plaintiff on the one hand, and the defendant on the other, as to the location of the line, and, assuming that the plaintiff’s theory as to the disputed fact must ultimately prevail, still, we think, there would • be no such substantial breach of the condition as to authorize a forfeiture of the grant and a re-entry by the grantor, as there was no permission to encroach within the meaning of the condition. If it be admitted that this small strip of land was included in the plaintiff’s grant to the municipality for public purposes, and that it has by an honest mistake been appropriated to a private purpose, in the manner disclosed by the record, the breach of the condition, if any, would be purely technical and of such an unsubstantial character as to warrant the conclusion that it was not within the purpose or intention of the parties to the conveyance. When a grantor of land seeks to re-enter for breach of a condition subsequent he should be required to establish something more than a technical encroachment through the action of strangers without the grantee’s permission. It is not enough to show in this way that the letter of the condition is violated, but it must appear that its true spirit and purposé have been willfully disregarded by the grantee. Upon the undisputed facts of the case we think that no such permission as is contemplated by the contract of the parties was shown, and, therefore, no substantial breach of the condition has been made out.

Our conclusion, therefore, is that the judgment should be affirmed, with costs.

All concur.

Judgment affirmed.