author: Andrews, J.

text:
    Francisco A. Pellas, Resp’t, v. Thornton N. Motley et al., App’lts.

      (Supreme Court, General Term, First Department,

      Filed May 13, 1892.)

    Contract—Action to recover sum deposited as liquidated damages.
    Plaintiff contracted to sell to defendants certain steamers, warehouses, etc., situated in the Republic of Nicaragua, together with a concession for the exclusive navigation of the San Juan river and Lake Nicaragua, granted by the republic to plaintiff, for which defendants were to'pay §300,000, and the sum of §5,000 was deposited with a bank, to be paid to plaintiff as liquidated damages in case defendants failed to carry out the contract on their part. Subsequently the defendants, through the refusal of one of them, failed to perform, and this action was brought to recover the said deposit. Defendants claimed that the agreement was procured through false representations as to the condition and value of the property, while plaintiff claimed that the refusal was because of defendants’' failure to dispose of their stock and bonds, and to secure a freight contract from the Nicaragua Canal Co. The evidence was conflicting, and of the inferences to be drawn from the surrounding circumstances, some seem to sustain one side, and some the other. Held, that under such circumstances, a judgment in favor of plaintiff would not be disturbed.
    Appeal from a judgment in favor of the plaintiff, rendered by the special term.

      E. Louis Lowe, for resp’t; George W. Wingate, for app’lts.
   Andrews, J.

On April 11, 1889, the plaintiff and the defendants Motley and Macaulay entered into a written contract which was executed at the city of New York, whereby the plaintiff agreed to sell, and said Motley and Macaulay agreed to purchase, for the price of $300,000, in cash, certain steamers, boats, warehouses, machine shops, ship-yards, and other property, situated in the Republic of Nicaragua, in Central America, and also a certain concession, or right, given to the plaintiff by said state of Nicaragua, for the exclusive navigation of the San Juan river and Lake Nicaragua. By the terms of the agreement, the plaintiff, on or before June 10, 1889, was to‘execute and deliver to said Motley and Macaulay proper conveyances and transfers of all of said property. The said sum of $300,000 was to be paid in instalments ; $45,000 upon the delivery of such transfers and conveyances, and the remainder, except $5,000, in five instalments of $50,000 each, to be paid during the years 1889, 1890 and 1891. The agreement also provided that $5,000 of such $300,000 should be deposited in the Commercial National Bank of the city of New York at the time of the execution of the agreement, and that, in case said Motley or Macaulay should fail to carry out the agreement on their part, said $5,000 should be paid by said bank to the plaintiff as liquidated damages, and not as a penalty, for the breach of such agreement. The agreement also contained the following provision: “ The said Pellas shall meet the duly authorized agent or agents of said Motley and Macaulay at Greytown, Nicaragua, on or before the 1st day of May, A. D. 1889, for the purpose of assisting said agent or agents in inspecting and examining said concession and checking said property.”

Shortly afterwards one Burt and one Snyder, who had been appointed the agents of said Motley and Macaulay, went to Nicaragua with the plaintiff, and there made an examination of all the property in question. After such agents had made some examination of the said property, and on May 11, 1889, they sent from Granada the following telegram, addressed to Motley, at New York: “Pellas plant valued at one hundred thousand dollars. Concession represents the balance. Everything is satisfactory. Cost and expenses will be about one hundred thousand to place in condition for canal business. Will have lawyer’s opinion. Shall we close ? ” To this telegram Motley and Macaulay sent a reply by cable which was, “ Close nothing.” Subsequently, under dates of May 4, 1889, May 21, 1889, and May 25, 1889, Snyder and Burt made very elaborate written reports in relation to the property in question and said concession. These reports wfere drawn up by Burt and were signed by him and Snyder, and brought from Nicaragua to New York by Snyder, and came into the hands of the defendants Motley and Macaulay about the 10th of June. Burt remained in Nicaragua until about August 4th, b.ut the plaintiff returned at the same time with Snyder. Subsequently said Motley refused to carry out the agreement, upon the ground that the plaintiff had made certain representations as to the conditions and value of such property, which, upon the examination by said agents, had been ascertained to be false.

This action was then brought to compel the defendant Motley to join with the plaintiff in an order requiring the bank and the defendant Flannagan, its cashier, to pay said sum of $5,000 to. plaintiff, and to compel the bank to pay said $5,000 to plaintiff pursuant to such order. An answer purporting to be a joint answer of the defendants Motley and Macaulay was served, but the defendant Macaulay does not really defend the action, and was a witness on behalf of the plaintiff upon the trial.

The defendant Motley claims that plaintiff represented to him and others that all the property covered by the agreement of April 11, 1889, was in first class condition, and irrespective of the value of the concession from the State of ¡Nicaragua, was worth at least $300,000. The plaintiff admits that he represented to Motley that the steamers and other water-craft were in fair running order, and that all the property was in fair serviceable condition, but he denies, that he ever represented that the property was worth the sum of $300,000, or any other particular sum.

Upon the question as to what representations were made by the plaintiff in regard to the property, there is a direct and irreconcilable conflict of testimony. The defendant Motley and his brother and one Adams swear positively that the plaintiff, on various occasions, did state in their presence that the steamers, warehouses, wharves and other property were in first class condition, and required but small repairs. On the other hand, the plaintiff and the defendant, Macaulay, swear with equal positiveness that the plaintiff never made any such representations, and that his statements were merely to the effect that the steamers and other water craft were in fair running order, and that all the property was in a fair serviceable condition; and the plaintiff and said Macaulay also testify positively that the plaintiff, instead of stating that but a small sum would be required for repairs, repeatedly stated that it would be necessary for the defendants to expend from $50,000 to $75,000 in repairs, in order to put the property in first class condition. They also testify that the plaintiff never stated that the property was worth $300,000, or any other particular sum.

Counsel for the defendant, Motley, concedes that there is such conflict in the testimony but insists that, in view of all the‘circumstances, the account of the matter given by the defendant Motley and his witnesses is the more probable of the two, because, as such counsel claims, it is highly improbable that Motley should -have entered into the agreement of April 11, 1889, unless the plaintiff had represented that the property was in good condition, and had made statements in regard to the actual value of the same.

The difficulty about this argument is that, m view of the fact that Motley entered into the agreement, it is difficult to determine what the probabilities as to the making of the representations are. The surprising thing about the matter is that Motley should have entered, into the agreement at all. The plaintiff and the defendant, Macaulay, were total strangers to the defendant, Motley, until the negotiations for the sale commenced. At that time Macaulay was introduced to Motley, and soon after the former introduced Pellas to the latter. The agreement of April 11th was an absolute agreement on the part of Motley and Macaulay to buy the property therein mentioned, and the execution of the agreement was.not, according to its terms, in any way dependent upon the report which should be made by the agents sent to Nicaragua by Motley and Macaulay.

The written instructions given by Motley and Macaulay to such agents did not direct them to .make an examination of the. property for the purpose' of ascertaining its value, but for the purpose of ascertaining what repairs would be necessary. No matter what representations were made, it is incomprehensible to us how Motley, if he were a man of any business prudence, and considered the question of the condition and value of the property as of any importance, could have joined an entire stranger in an agreement to purchase property, located irr a foreign country, from another entire stranger, at the price of $300,000 in cash, without having some previous examination of such property made. The fact that he did enter into such an agreement renders it impossible to say what the probabilities are as to whether he would enter into such an agreement in the absence of representations by the plaintiff as to the condition and value of the property, because it seems to us about as improbable that he should enter into the agreement, if such representations were made, as if they were not made.

Moreover, loolring to the question of probabilities, there is force in the suggestion made by plaintiff’s counsel. As above stated, the agreement provided that the plaintiff should meet the agents of Motley and Macaulay on or before May 1,1889, and the actual conveyance of the property was not to be made until on or before June 10th. The plaintiff knew, therefore, that although the agreement to buy the property was absolute, and not conditional upon the report of the agents, that such agents would examine the property and report to Motley and Macaulay before they accepted a conveyance of the property, and before any part of the $300,000 was paid to the plaintiff. There, is some force, therefore, in the suggestion of plaintiff’s counsel that, under these circumstances, it is in the highest degree improbable that the plaintiff would make such grossly false statements as to the condition and value of the property as it is claimed he made, when he must have known that the falsity of his statements would be discovered by such agents, and would be reported to Motley before a conveyance of the property was accepted and before any money was paid ; and that, in such event, Motley would have good ground to refuse, and probably would refuse, to carry out the agreement on his part.

With regard to the condition and value of the property the testimony is also conflicting. As appears by the telegram from the agents to Motley, above quoted, such agents valued the property, aside from the concession, at about $100,000. But they also said “ everything is satisfactory,” and put the inquiry to Motley, “Shall we close ? ” such inquiry meaning, as we understand- it, to ask whether they should close the whole transaction with Pellas, who was then with them in Nicaragua. Moreover, that part of the report made by said agents to Motley and Macaulay under date of May 25, 1889, contains the following: “We close this report by repeating our last cable to you from Granada, We advise you to-complete the purchase.”

Upon the trial of the action the defendant Motley testified generally as to the condition and value of the property as shown by the reports of said agents ; and said agent Burt was also a witness and testified as to the condition and value of the property The reports were not produced on behalf of the defendants, and Motley said that they could not be found, and Motley and Burt both appear to have testified under the belief that the original reports were lost, and that no copies were in existence. According to Motley’s testimony, based upon the reports, the contents of which had been communicated to the,plaintiff, and to Burt’s testimony, based upon his personal examination in 1889, the steamers, boats, launches, whorehouses, wharves, railroad, houses, and all the other property covered by the agreement of April 11th, were in a very bad condition, and of comparatively little value. The value of the testimony so given by Motley and Burt was, however, very seriously impaired by the subsequent production by plaintiff's counsel of copies of these reports. These reports showed that, while a great deal of such property needed repairs, it was in fair serviceable condition; and such reports contained glowing descriptions of the great value of the concession from the state of Nicaragua, of the vast amount of business that could be done thereunder, and of the great amount of money which could be made, if the agreement of April 11th was carried out. It thus appeared that, whether from failure of memory, or some other cause, Motley had not testified truthfully as to the contents of the reports, and that Burt had either originally made a false report as to the condition and value of such property, or had in his testimony given upon the trial grossly exaggerated the poor condition of the property, and had not testified truthfully as to its value.

It appeared by the testimony that after Motley refused to carry out the agreement of April 11th, the property in question and the concession were sold to the Nicaragua Canal Company, and that one Bell was sent down by the company to look after the property. Bell was called as a witness for the defendant Motley, and testified as to the poor condition of the property, and its little value. It plainly appeared, however, that Bell had a grievance against the Nicaragua Canal Company, and desired to make it appear that such company had made a bad bargain in buying the property. He testified as follows: “ I left here ” (New York city) “on the 9th of December and got back here on the 27th or 28th of January ; I left so soon because I went down there for a purpose, and I found out they had no use for me; I never got paid yet; they robbed me out of my wages, the company did; I didn’t sue them for it; I would not have much of a chance; I have got no very hard feelings towards that company.” It was quite evident that he did have a very hard feeling against the company, and desired to make out the property to be in as bad condition and of as little value as he possibly could.

One Hinman, a commission agent, had seen the property in question and was called as a witness for the defendant. He testified to the poor condition of the property, but did not make it out to be in so bad a condition as did Burt. His testimony, however, as well as that of Motley and Burt, is flatly contradicted by the reports made by Snyder and Burt above mentioned.

The defendant Macaulay was called by the plaintiff in rebuttal. He testified to the sale of the property in question to the Nicaragua Canal Company, and that he went down on behalf of that company soon after such sale to take charge of the property. He testified as follows : “ I went down to Nicaragua; I left here on the 1st of August, I think, of that year (1889) for the Nicaragua Canal Construction Company, a branch of the Canal Company ; 1 went down there as their representative; I reached there on the 25th of August; I commenced my investigation of the property immediately; I gave it a careful and itemized investigation; I examined all those vessels and all this property testified about by the other witnesses very carefully; I found this property in fair serviceable condition ; the representations made by Pellas to Motley and me, in all our interviews as regards the character of the property, was that it needed repairs all the way through and from $50,000 to $75,000 ought to be invested in that direction, repairs and new boats, to meet the needs of the new service expected by the advent of the canal; as to its character, it was in useful, serviceable order, in running order; from $50,000 to $75,000 was Mr. Pellas’ statement for repairs and new boats; it was in that condition ; I examined each and all of these boats ; I heard all this evidence ; I found them running when I went there; they ran while I was there; I left them running; I am not now in.the employ of the Canal Company or the Construction Company ; I have no connection whatever with the company, not the least; I am now living in Washington City engaged in another business; I have no connection with the Canal Company or Mr. Pellas or with this business, not a particle.”

It is claimed by defendant Motley’s counsel that, although Macaulay joined with Motley in making the contract, he was acting in the interest of Pellas and that his testimony, therefore, is not entitled to credit. In view of the manner in which the testimony of Motley and Burt was contradicted by Burt’s own report, we do not see why Macaulay’s testimony is not entitled to as much credit as theirs.

The testimony as to when, and how Motley refused to carry out the agreement of April 11th is also conflicting.

When Snyder brought back the reports written by Burt and signed by both, Burt remained in Nicaragua, and according to Macaulay’s testimony he remained there under the orders of himself and Motley; and the inference to be drawn from this, and other testimony, is, that Burt expected that the agreement of April 11th would be carried out, and that he would be placed in charge of the property by Motley and Macaulay.

Snyder and plaintiff returned at the same time, about the 8th, 9th or 10th of June, 1889. About June 10th Motley saw and read the report written by Burt and signed by him and Snyder. Motley testified that he refused to have anything more to do with the matter immediately after he had seen such reports. He said : “ I saw the report on the arrival of Snyder, right straight off, I judge within a day or two; so that I saw it either on the 10th or 11th or 12th of June; I first v gave notice to Mr. Pellas of our refusal to carry out this agreement about the middle of July, in writing; verbally Mr. Adams, and myself gave notice to him shortly after-wards at the Commercial National Bank, right after the report was received, Mr. Burt’s report; then we made up our minds, Adams and I, positively, upon the receipt of that report that we would go no further, and we notified Pellas of it immediately, within a day or two, the first conversation we had; I got that report from Snyder on the 10th, 11th, or 12th of June, 1889, and I immediately went to Adams, reported to Adams, and he and I thereupon orally notified Pellas.”

Mr. Motley seems to be as inaccurate in his testimony on this point as he was as to the contents of the reports. He is contradicted on this point by the plaintiff and Macaulay, and by a variety of circumstances. Pellas had brought a number of documents relating to the title to his property which were in Spanish, and these documents were at once taken, on his arrival with Snyder, to Motley’s attorney, and were subsequently sent to a Spanish lawyer, in order that he might translate the same into English, and draw a proper conveyance of the property. Motley testified that he had nothing to do with the procuring of such translations or the preparation of such conveyance ; but it appeared by his own testimony that he paid the expense of making such translations and drawing such conveyance. Moreover, on June 29, 1889, he and Macaulay signed and sent the following communication to Pellas:

“ Cable Address 'Hierarch,’ New York.
“ Thornton N. Motley & Co.,
“ and
“ for Export,
“ Manufacturers of and Dealers in Hardware and
“ Railway, Steamship and Contractors’ Supplies,
“ 26 Liberty Street.
“New York, June 29th, 1889.
F. A. Pellas, Esq.:
Dear Sir—I regret exceedingly that the examination of reports from our experts sent to Nicaragua, documents, translations, etc., have delayed and prevented a satisfactory conclusion. Regretting this delay, and assuring you of our desire to reach a definite result early next week, I remain,
“ Respectfully yours,
“Daniel Macaulay.
“ T. N. Motley, ”

Motley seeks to explain his payments to the Spanish lawyer, and his writing the above letter, by saying that Macaulay wanted to go on with the enterprise, and that lie made such payment, and wrote such letter, because he was trying to help Macaulay. Notwithstanding such explanation, his conduct seems strange, if, as he testified, he positively refused to go on in the matter as early as the 12th of June.

Macaulay testifies that Motley did not say anything about giving up the enterprise when the report was received, and that Motley went on with the matter as before until July 16th, when he refused to proceed.

It appears that immediately after the signing of the agreement of April 11th, Motley and his friends caused a company to be formed under the laws of W est Virginia, to which the property in question when acquired was to be transferred; they also caused stock and bonds to be engraved, at an expense of about $1,200. It also appears by the testimony that, when such agreement was signed, Motley and Macaulay had hopes of obtaining a valuable freight contract from the Nicaragua Canal Company, and that after the agreement was signed efforts were made to secure such contract, but that the same were unsuccessful. According to Macaulay's testimony, it was not until Motley and himself had failed to sell the bonds and stocks of such company, and had • failed to realize money with which to make the first payment of $45,000 to the plaintiff, and not until they had failed to secure such freight contract from the Nicaragua Canal Company, that Motley refused to proceed with the enterprise ; and according to Macaulay’s testimony, Motley’s refusal to proceed was not because he had ascertained from the report of Snyder and Burt that the representations of the plaintiff as to the condition and value of the property were false, but because they were not able to dispose of the stocks and bonds of such company, and were not able to secure such freight contract from the Canal Company.

We have examined all the testimony in the case with care, and have found considerable difficulty in reaching a satisfactory conclusion as to what the real facts were in this somewhat extraordinary case. As above stated, it is astonishing that Motley should have entered into the agreement of April 11th, whether the alleged false representations were, or were not, made to him by the plaintiff. Men do not ordinarily enter into written contracts to pay $300,000 for property in a foreign country upon the mere statement of a total stranger as to its condition and value; and we cannot understand how Motley came to enter into the agreement, unless his expectation, and that of the others interested in the purchase, was to form a company and dispose of a large amount of bonds and stock, which would be issued without special reference to the value of the property; and if this was the case, then it is just as probable that he entered into the agreement of April lltli without representations on plaintiff’s part as to the condition and value of the property, as that he entered into it in reliance upon such representations.

The testimony as to what representations were made as to the condition of the property, and as to what the condition of the property actually was, and as to when and why Motley refused to carry out the agreement, is conflicting; and of the inferences to be drawn from the surrounding eircumstanees, some seem to sustain one side, and some the other. Under these circumstances, we have concluded, though with some hesitation, that the judgment should be affirmed, with costs.

Van Brunt, P. J.—I am of the opinion that the judgment should be-affirmed, with costs.

OBrien, J., concurs in result.


source: Caselaw Access Project

author: Van Brunt, P. J.

license: Public Domain

text:
    The People ex rel. James F. McNeary, Resp’t, v. Charles F. MacLean et al., Appl’ts.

      (Supreme Court, General Term, First Department,

      Filed May 13, 1892.)

    Certiorari—Motion to dismiss.
    An objection that a writ of certiorari was not granted and served within the time limited by the statute can only be raised by motion to dismiss on that ground, and such motion is properly made at special term.
    Appeal from order denying motion to dismiss writ of certiorari.

      C. F. Collins, for app’lts; A. S. Warner, for resp’t.
   Van Brunt, P. J.

This motion was founded upon the fact that it appeared upon the face of the petition that the certiorari had not been granted and served within the time provided by § 2125 of the Code.

It is conceded that such was the fact, but it is claimed that such objection must be raised by answer in consequence of the provision of § 2133 of the Code, which is as follows: “ Any order may be made or proceeding taken in the cause, in relation to any matter not provided for in this article, as a similar proceeding may be taken in an action brought in the same court.”

ít is clear that this section cannot be held to require pleadings upon a writ of certiorari, because a certiorari is a writ of review exclusively and the return to the writ must betaken as conclusive and acted on as true. If false in fact, the remedy is an action for a false return; and, if insufficient in form, by applying for a further and more specific return. People v. Fire Comrs., 73 N. Y., 437.

The provisions of the section referred to apply, undoubtedly, to such proceedings as may be requisite and proper after a return has been made for the purpose of bringing the same on for review, or having the return made more specific if such relief is proper. But there is no way in which the question as to whether the court should have granted the writ can be brought up except upon a motion to set aside the writ.

It is urged that the only method in which the appellants could claim the advantage of the statute of limitations contained in § 2125, is by setting the same up in the return.

It is apparent that such cannot be the rule, because the Code requires no defense to the issuance of the writ to be returned, but simply the proceedings upon which the judgment of the inferior tribunal was founded.

Where it appears upon the face of the petition that the statute has run, it is not necessary that the fact should be brought before the court in any other manner.

It is to be observed that the writ of certiorari issues out of the supreme court, and that the return is made to the supreme court and is filed with the county clerk ; and it is only the hearing of the merits which is to be had at the general term. All incidental motions should be heard at the special term.

We think, therefore, that the court was in error in denying the motion and the order should be reversed, with ten dollars costs 'and disbursements, and the motion granted, with ten dollars costs.

Andrews, J., concurs.


text:
    Paul Williams, App’lt, v. William Hays, Resp’t.

      (Supreme Court, General Term, First Department,

      Filed May 13, 1892.)

    Estoppel—Negligence.
    Plaintiff sues as assignee of an insurance company to recover an amount paid by it to part owners of a vessel for its stranding and loss, alleged to" have been caused by defendant’s negligence as master thereof. The defendant set up in bar of the action a judgment recovered by him as part owner against the insurance company in an action to which the claim of his negligence was interposed as a defense. Meld, that such judgment was not a bar, as it was the claim of the other part owners to which the. insurance company became subrogated which was the subject of this action, and such part owners were not estopped by such judgment. «
    Appeal from judgment entered upon verdict directed by the court.

      G. A. Black, for app’lt; W. W. Goodrich, for resp’t.
   Van Brunt, P. J.

The plaintiff, as assignee of the Phenix Insurance Company, sues to recover an amount paid by the insurance company to Parsons & Loud, which by such payment becEtme subrogated to their rights, under a policy of insurance issued by the said company to them as owners of one-sixteenth' of a certain brig.

The complaint alleges that the defendant was the master of the brig, and that the loss and stranding thereof was caused by the negligence, misconduct and improper navigation of the defendant as master.

The defendant by his supplemental answer alleged that in an action brought by him against the insurance company to recover the amount of his insurance upon the three-sixteenths of said brig owned by him, he recovered judgment against the company, which had been affirmed by the court of appeals. 57 Supr. Ct., 199; 25 St. Rep., 123; 127 N. Y., 656; 38 St. Rep., 1015.

The single question presented is whether the plaintiff is estopped By the judgment in the case of the defendant against the Phenix Insurance Company above referred to.

Undoubtedly a recovery by the defendant in his action against the Phenix Insurance Company upon his policy of insurance is a bar against the insurance company from setting up in its own right any claim against the defendant because of the loss of the vessel, because a recovery upon the policy is inconsistent with the existence of such right of action. Doty v. Brown, 4 N. Y., 71; Castle v. Noyes, 14 id., 329; Gates v. Preston, 41 id., 113.

But the plaintiff in this action does not represent any claim which the insurance company had as against the defendant, but that which Parsons & Loud had as part owners of the vessel.

Such being the case, therefore, the judgment rendered in the case of Hays v. Phenix Ins. Co. in no way operated as an estoppel against Parsons & Loud from maintaining an action upon the same ground upon which the insurance company based its defense.

This is clearly so, because estoppels to be available must be mutual. Lawrence v. Campbell, 32 N. Y., 455.

If, therefore, Parsons & Loud were not precluded from maintaining an action against the defendant, their assignees are endowed with all the rights which they themselves possessed.

It being therefore the claim of Parsons & Loud which is sought to be enforced in this action, and the plaintiff being merely their successor in interest, he would seem to be entitled to all the rights which they could have enforced against the defendant. The mere fact that the intermediary was the Phenix Ins. Co. in no way affects this right, because he represented a different and distinct interest from”that which the insurance company represented in the action of Hays against it. Mersereau v. Pearsall, 19 N. Y., 108.

We think, therefore, that the previous judgment did not operate as an estoppel, and the plaintiff had a right to try the issue presented by the plaintiff upon the merits.

The judgment should be reversed and a new trial ordered, with costs to appellant to abide event.

O’Brien and Andrews, JJ., concur.


text:
    Benedickt Fischer et al., Resp’ts, v. Berthold Blank, App’lt.

      (Supreme Court, General Term, First Department,

      Filed May 13, 1892.)

      1. Trademark—Imitation—Injunction.
    Since 1888 plaintiffs have used a black wrapper with certain peculiar labels and symbols to distinguish the tea sold by them, which has become known in the market by the name “Black Package Tea.” Defendant put up tea in a black package, similar in size and shape, labeling and arrangement, but with different symbols. It appeared that plaintiffs’ tea is principally sold to illiterate persons in dark shops and cellars ; that the similarity between them and defendant’s packages "is so great that they can only be distinguished on close inspection, and persons are liable to be deceived, and in some cases defendant’s tea has been sold for plaintiffs’. Held, that, under these circumstances, plaintiffs were entitled to an injunction against the continued use by defendant of such wrappers.

      2. Same—Deceit.
    Plaintiffs are not guilty of deceit so as to deprive them of the right to relief, by the fact that they use the name “ Russian Caravan Tea” on their packages, as such term has become conventionalized, and does not signify tea imported into Russia from China by caravans, but a certain quality of tea which is grown in a certain district in China.
    Motion for new trial upon exceptions, after the entry of an interlocutory judgment in favor of the plaintiff, pursuant to § 1001 of the Code of Civil Procedure.

      Rowland Cox, for resp’ts; Charles Goldzier, for app’lt.
   Andrews, J.

This action is brought to restrain the defendant from an alleged infringement of plaintiffs’ wrappers, labels and packages used in the sale of tea, and of their alleged trade name of “ Black Package Tea; ” and for an acconnting of profits.

The special term found that about February, 1888, the plaintiffs were dealers in teas, and, for the purpose of identifying their tea, adopted a black wrapper upon which- appeared a number of peculiar labels, and a certain style of package containing such tea: that at the same time they adopted, as a designation of such tea, the term “ Black Package Tea; ” that since the year 1888 their tea has been known and identified in the market as “ Black Package Tea,” and that there has existed a large and increasing demand for the same ; that the plaintiffs’ “Black Package Tea” was and is consumed chiefly by ignorant and illiterate people, and is to a large extent sold by retail dealers whose places of business are in cellars and dark stores, and where the exact appearance of the article was and is not likely to be readily observed; that, plaintiffs’ tea is of a superior quality and of that particular kind known to Russians as “ Russian Caravan Tea; ” that after plaintiffs placed their Black Package Tea upon the market, and a demand for the same had been created, the defendant made use of, to inclose tea not of plaintiffs’ selection and importation, a black wrapper with labels upon the same, and that such wrapper and labels are imitations of those of the plaintiffs, and are so nearly like those of the plaintiffs that there is danger of the defendant’s wrapper being mistaken for that of the plaintiffs; that the packages containing the defendant’s tea are of the same size and shape as those which contain the plaintiffs’ tea, and that the defendant’s packages are so nearly like those of the plaintiffs that there is danger of the one being mistaken for the other; that the defendant’s tea had been handed out and sold when plaintiffs’ “ Black Package Tea” had been asked for; that the defendant’s packages of tea were by the defendant caused to be devised and arranged so as to resemble plaintiffs’ packages, with the intent, and to the end, that defendant’s tea might be sold in lieu of the plaintiffs’.

We are of the opinion that the above mentioned findings, and, others, made by the special term, are sustained by the testimony given upon the trial on behalf of the plaintiffs. The use by the defendant of certain wrappers and of a certain style of package is not denied, and there is some evidence that persons desiring to purchase the plaintiffs’ tea have been misled and have taken defendant’s tea, supposing it to be that of the plaintiffs. The purchasers are for the most part foreigners, many of whom are very illiterate and cannot read, and it is sold in many cases in dark shops and cellars, where there is not sufficient light to enable a person to distinguish between packages which bear a general resemblance to one another. The mere inspection of the packages which were submitted to us, upon the argument, is sufficient to satisfy us.that the packages of the defendant are so similar to those of the plaintiffs that persons buying under such circumstances might easily mistake the packages of the defendant for those of the plaintiffs. The packages of the defendant are of the same shape and size as those of the plaintiffs ; the paper of the wrappers is of the same color; the pictures and symbols are of the same color; the size and color of the labels on the end are the same. The pictures and symbols, though different from those on the plaintiffs’ package, are arranged in a similar manner. The difference between the packages can be seen upon a close inspection, but without such inspection the general appearance of the defendant’s packages is so nearly the same as that of the plaintiffs’ packages that any person, whether illiterate or not, if making a purchase in a place where the light was not good, would readily mistake the packages of the defendant for those of the plaintiffs; and such inspection satisfies us that the object and the intent of the defendant was to put up his tea in packages so similar to those of the plaintiffs • that they would be mistaken for the packages of the latter, and yet that the differences upon the wrappers should be such that the plaintiffs would not be able to maintain an action to restrain the defendant from selling his tea in such packages.

The law is well settled that, where a defendant is endeavoring by such means to palm off his goods upon the public as the goods of another, a court of equity will restrain him.

“ A tradesman, to bring his privilege of using a particular mark under the protection of a court of equity, need not prove that it has been copied in every particular. It would be sufficient to show that the devices employed bear such a resemblance to his as to be calculated to mislead the public generally, who are purchasers of the article bearing the device, and make it pass with them for his article. Hence, where on ordinary observation the labels used by two parties would not be apt to be distinguished the one from the other, the size, shape, vignette, coloring and marking being so nearly identical as to make them easily pass for the same, and the only difference discernible on considerable scrutiny being in the name of the warrantor stamped upon them in letters so small as not readily to attract attention, an injunction was granted.” Coddington’s Digest of Trade Marks, § 353; Walton v. Crowley, 3 Blatch., 440.

“ The imitation of the original trade mark need not be exact or perfect; it may be limited and partial; nor is it requisite that the whole should be pirated.” Codd. Dig., § 377; Filley v. Fassett, 44 Mo., 168.

“ A party will be restrained by injunction from using a label as a trade mark resembling one used by another in size, form, color, words and symbols, though in many respects different, where it is apparent that the design was to depart from the genuine label sufficiently to constitute a difference when the two were compared, and yet not so much so that the difference would be detected by an ordinary purchaser unless his attention were particularly called to it, and he had a very perfect recollection of the other label. And in such a case it will be inferred that the design was to deceive, and to obtain in the manufacture and sale of an article any benefit or. advantage that might be gained by its being purchased for another article of the same description which was known and distinguished by a particular trade mark.” Codd. Dig., § 378 Lockwood v. Bostwich 2 Daly, 521.

“Where the defendant puts up for sale his manufactured article with labels and wrappers which are a colorable imitation of those used by plaintiff, e. g., where the color of the paper, the words used, ana the general appearance of the labels, show an evident design to give a representation of those used by the plaintiff, he will be- enjoined from so doing, and the fact that he put his own name on the wrappers, etc., as the manufacturer of the article will not prevent it from being an infringement on plaintiff’s trade mark.” Codd. Dig., § 392; Lea v. Wolf 13 Abb., N. S., 389.

“ Where a person, by a combination of elements and symbols, has produced a wrapper to inclose and designate an article manufactured by him, under which it has gone into use, he cannot be .interfered with or despoiled of his lawful business by the adoption of a label by another similar in color, size, border, ornamentation, symbol and colored ink, and so closely an imitation that the careless or unobservant purchaser may be readily misled. Such practices are deceptive, and have their origin in and promote dishonorable competition. In order to justify the intervention of a court of equity, it is sufficient that the imitation is so close that a crafty vendor may palm off on the buyer the article manufactured by the latter as that of the former. It is no answer to an application for an injunction that in certain particulars the label of the defendant differs from that of the plaintiff, so long as the imitation in other respects is so close that the general appearance is the same, and purchasers have been and are likely to be deceived. Codd. Dig., § 497; Brown v. Mercer, 37 N. Y. Supr. Ct., 265.

Under these authorities, and many others which might be cited, we think that the plaintiff was entitled to the injunction, and to-the other relief granted by the special term.

It is claimed that the plaintiffs were not entitled to such relief because the name “Bussian Caravan Tea,” sought to be protected as part of their trade mark, was intended to deceive the Bussian inhabitants of this country. We are not able to concur in this view. It appears by the testimony that many years ago tea was imported from China into Bussia on the backs of camels, and that the tea so imported became known in Bussia as “ Bussian Caravan Tea.” It appears, however, by the evidence of one of the plaintiffs, which was not contradicted, that of late years very little tea is imported from China into Bussia in this manner, and that the term “ Bussian Caravan Tea” has become conventionalized, and does not signify tea imported into Bussia from China by caravans, but a certain quality of tea which is grown in a certain district in. China. As was well illustrated by the witness, the term “Bussian Caravan Tea ” no more indicates tea imported into Bussia from China by caravans than does the term “ English Breakfast Tea,” as used in this country, indicate tea imported from England; in each case the term is used to denote a certain quality of tea. And the uncontradicted testimony in the case is that the tea put up by plaintiffs is superior in quality to that which is ordinarily known as “ Russian Caravan Tea'.”

The judgment should be affirmed, with costs.

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


text:
    Samuel G. Metcalf, Rec’r, App’lt, v. Jose A. Del Valle, Impl’d, Resp’t.

      (Supreme Court, General Term, First Department,

      Filed May 13, 1892.)

    1. Receiver—Fraudulent transfers by debtor.
    The title to property previously transferred by the judgment debtor does not vest in his receiver appointed in supplementary proceedings, and the latter has no prior or exclusive right to maintain an action to set aside such transfer as fraudulent.
    2. Same—Rights of judgment creditors. •
    A judgment creditor who has brought the fifst action to set aside such transfer has a lien and preference over the receiver and all other creditors upon tne property sought to be reached, and is not a necessary or proper party to the receiver’s action.
    Appeal by plaintiff from an interlocutory judgment sustaining the demurrer of the defendant Del Valle to the amended complaint.

      Charles A. Murphey, for app’lt; G. O. & L. S. Hulse, for resp’t.
   Andrews, J.

The amended complaint alleges the following facts : That the First National Bank of Rondout recovered judgments against the defendant Navarro for over $25,000 on or about July 18, 1889; that on or about July 25, 1889, the plaintiff Met-calf was appointed receiver of said Navarro’s property in proceedings supplementary to execution, but that from the property received by him he realized about $1,900 only,, and that said judgments, aside from this, remain unpaid; that prior to December 81, 1888, the defendant Navarro owned five policies of insurance on his life for $10,000 each, payable to his executors, administrators or assigns, and that on that date he fraudulently assigned the same to the defendant Hyland; that at the time of such assignment the defendant Navarro was insolvent, and that the assignment was made with intent to hinder, delay and defraud his creditors; that the cash value of said policies is over $25,000, their value in paid-up insurance over $50,000, and in the event of the death of said Navarro, over $65,000; thatplaintiff first learned of the existence of said policies in the fall of the year 1890, at which time he also learned that the defendant Del Valle, who was also a judgment creditor of said Navarro to the extent of some $20,000, had commenced an action in October, 1889, to set aside said assignment of insurance policies as fraudulent and void; that at such time the plaintiff also learned that the trial of that action had taken place and had resulted adversely to Del Valle, and was then pending on appeal; that a decision granting a new trial in that action was rendered in October, 1891, and thereupon plaintiff obtained leave of the court to bring this action ; that plaintiff ever since July 25, 1889, has been the owner of said policies and of all the right, title and interest of said Navarro in and to the same, and, as such, is entitled to institute and'prosecute this action to set aside said assignment, and apply said policies or the proceeds thereof to the judgments aforesaid. The plaintiff in his prayer for relief asks that, after said assignment has been set aside, the rights of the respective parties be determined and the proceeds of said policies be, first, applied towards the payment of the judgments recovered by said bank, and that any balance be adjudged to be paid to'the parties entitled thereto.

The defendant Del Valle demurred to such amended complaint, on the ground that the same did not state facts sufficient to constitute a cause of action as to him; and from the judgment sustaining such demurrer this appeal is taken.

The sole question presented for our consideration is whether the legal title to the .policies in question vested in the plaintiff when he was appointed receiver of the defendant Navarro's property, and whether he has, as such receiver, the prior and exclusive right to prosecute an action to set aside as fraudulent the assignment of such policies to the defendant Hyland.

The plaintiff’s counsel, in his brief, cites a number of cases decided in this court, in. which it appears to have been held that a receiver of the property of a judgment debtor, appointed in supplementary proceedings, acquires the legal title, not only to the personal property of the judgment debtor which may be in his possession at the time the receiver is appointed, but also to such personal property as has, prior to the appointment of the receiver, been fraudulently transferred by the judgment debtor to some third party.

Such counsel also cite some cáses decided in the court of appeals, which contain expressions of opinion which may, but not necessarily must, be construed as supporting the same doctrine. This precise question, however, was considered and decided by the court of appeals in the case of Bostwick v. Menck, 40 N. Y., 383, and we are of the opinion that the decision in that case must control us in deciding the case at bar. Grover, J., delivering the opinion of the court, said: “He (the receiver), does not acquire the legal title to such property (fraudulently conveyed) by his appointment. That is confined to property then owned by the debtor, and the fraudulent transferee of the property acquires a good title thereto as against the debtor and all other persons, except the creditors of the transferor. The only right of the receiver is, therefore, as trustee of the creditors. ” The same doctrine is laid down in Pettibone v. Drakeford, 37 Hun, 628, and in Olney v. Tanner, 10 Fed. Rep., 101; affirmed on appeal, 18 Fed. Rep., 636. While, therefore, some of the cases in the court of appeals cited by plaintiff’s counsel contain expressions which may be construed as conflicting with the doctrine laid down in Bostwick v. Menck, supra, yet, as that case has never been directly overruled or questioned, we must consider it as a controlling authority.

It necessarily follows that the title to the policies in question did not vest in the plaintiff by virtue of his appointment as receiver of the property of Navarro, and the plaintiff has no prior or exclusive right to maintain an action to set aside such assignment as fraudulent, and that the defendant Del Valle, having brought the first action against the judgment debtor Navarro and his assignee Hyland, for the purpose of setting aside said assignment, has obtained a lien and preference over the receiver and all other creditors upon the property sought to be reached. Storm v. Waddell, 2 Sandf. Ch., 494; Corning v. White, 2 Paige, 567; Olney v. Tanner, supra; Edmeston v. Lyde, 1 Paige, 637.

In Olney v. Tanner, the court said: “In the superior court it has been still more explicitly decided that the receiver (in supplementary proceedings) has no title nor lien in respect to such property until the commencement of his suit. Field v. Sands, 8 Bosw., 685; Conger v. Sands, 19 How., 8. In Field v. Sands, the court says: ‘Such proceedings (supplementary) no more create a lien upon the assigned property than would a judgment creditor’s suit against the debtor only. Such proceedings do not affect property vested in a third person.’ Such fraudulent transfers therefore are no more absolutely void as respects such a receiver than as respects judgment creditors themselves. They are avoidable only when assailed at the election of the creditor or receiver in an action brought for the specific purpose of setting them aside. High on Receivers, § 411. There is nothing in this respect that a receiver might do that the creditor himself cannot do.”

In Corning v. White, supra, the court said: “This court has frequently decided that the creditor who first files his bill here to reach the defendant’s property which cannot be sold on an execution at law, obtains a preference.”

The defendant Del Valle, having brought his action first to set aside the alleged fraudulent transfer, cannot be divested of his priority of lien, and there is no reason why he should be stayed in his action by the receiver or any other creditor. Having a prior lien on the policies over the receiver and all other creditors, his rights cannot be adjudicated in this action, and he is not a necessary or proper party thereto.

In Bostwick v. Menck, supra, the court said: “ They (the fraudulent transferees)- have the right to' retain the property until the superior rights of creditors to divest them of it is shown; this right of creditors they have the right to litigate in respect to each creditor. * * * But the proceeding in each .case is separate and distinct, and the creditors take priority according to the date of their several proceedings.”

The judgment sustaining the demurrer should be affirmed, with costs.

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


author: Barrett, J.

text:
    William Englesdorff, Resp’t, v. Henry B. Sire, App’lt.

      (Supreme Court, General Term, First Department,

      Filed May 13, 1892.)

    1. Landlord and tenant—Failure to give possession—Damages.
    Where a lessor fails to give possession of demised premises, the measure of damage is the difference between the actual rental value and the rent reserved.
    3. Same.
    During the pendency of proceedings to dispossess a former occupant, also claiming a lease, which proceedings were unsuccessful, the landlord permitted plaintiff to occupy adjoining premises, and plaintiff expended money thereon for shelving and gas fixtures, which he deemed necessary for the convenient transaction of business. Held, that such amount could not be recovered as damages against the lessor.
    3. Same—Evidence.
    Testimony of an expert that the value of the lease amounted to a certain sum over and above the rent reserved, taking into consideration an intended occupancy for a certain business, necessarily involves speculation upon the special profits which such business location would be apt to produce, and is insufficient to support a verdict, where it appears that the rent reserved in the lease was the fair rental value of the premises.
    Appeal from a judgment in favor of the plaintiff, rendered upon a verdict had at circuit; also, from an order denying defendant’s motion for a new trial

      Albert I Sire, for app’lt; David Gerber, for resp’t.
   Barrett, J.

The action is for damages for the defendant’s failure to give the plaintiff possession of certain leased premises. No question is raised upon this appeal as to the right of action. Indeed, it appears that the plaintiff was kept out of possession because of a lease given by the defendant to one Merrick, a previous under-tenant of the premises. The only questions, therefore, are as to the damages awarded at circuit. Two objections are made by the appellant; first, as to the damages generally, and, second, as to the admission of evidence with respect to special expenditures. This latter objection was, we think, well taken. It appears that when the plaintiff found it impossible to give immediate possession of the demised premises, he permitted the defendant temporarily to occupy the adjoining premises. This was in view of certain proceedings which were taken to dispossess Merrick and in the expectation that such proceedings would speedily result in giving the plaintiff possession. While the plaintiff was thus temporarily in occupation of the adjoining premises, he expended some money thereon which he deemed necessary for the convenient transaction of his business. The learned judge, under the defendant’s objection and exception, permitted proof of the expenditures thus made for shelving and gas-fixtures. These expenditures were not the direct and legitimate result of the defendant’s failure to give possession of the demised premises, nor did they flow naturally from the violation of his agreement. The cases of Driggs v. Dwight, 17 Wend., 71, and Giles v. O'Toole, 4 Barb., 261, are cited in support of the ruling; but these cases merely hold that the lessee may under such circumstances recover the expense of removal to the leased premises. The general rule, as settled in this state, undoubtedly is that where the lessor fails to give possession of the leased premises, the measure of damages is the difference between the actual rental value and the rent reserved. Trull v. Granger, 8 N. Y., 115; Pumpelly v. Phelps, 40 id., 60; Dodds v. Hakes, 114 id., 265; 23 St. Rep., 192. Special damages, such as expenses for removing to a remote farm, are not to he allowed. Williams v. Oliphant, 3 Ind., 271. Nor are conjectural profits expected from the use of the demised premises. Dodds v. Hakes, supra; Alexander v. Bishop, 59 Iowa, 572; Newbrough v. Walker, 8 Gratt, 16. The plaintiff here might as well have claimed for the expense of any other alterations or improvements made by him in these adjoining premises.

Such expenses had no j ust relation to the defendant’s breach of covenant. They related solely to the defective condition of the other premises. There is no exception to the general rule of compensation, nor extension thereof, in this class of cases, which would cover these items of damage. The same observation applies to the damages generally which were awarded to the plaintiff. They were wholly unsupported by competent evidence. A single real estate expert testified in substance that there was no actual difference between the rental value and the rent reserved; that is, between the ordinary rental value in the market and such reserved rent. He stated, however, that in his judgment the value of the lease was $1,500 over and above the rent reserved, taking into consideration the intended occupancy of the premises “as a notion and drygoods store.” Upon cross-examination he explained what he meant by this statement, as follows:

Q. Then why did you tell this jury that the value of this lease was $1,500 over and above the rent that was to be paid there ? A. Because the loss sustained by not having that as a business place during those three years would in my judgment amount to that.
Q. Upon what do you base your judgment as to the loss? A. In obtaining the store.
Q. That is, he lost $1,500 in his business; is that what you mean to tell the jury? A. He lost an equivalent to that by not having it for his business.
This was further emphasized by his subsequent testimony, namely:
Q. Will you state to the jury what you took into consideration ? A. The loss which the man sustained by not having that location for that special business in which he is engaged.
Q. Have you any personal knowledge as to what loss he sustained? A. No, I haven’t the exact facts.
Q. Do you know anything of it yourself except what was told you? A. Yes.
Q. Do you mean to testify that you have personal knowledge as to what loss he sustained? A. Not his personal loss, but the loss which a man would sustain in that business on that street.
Q. I understood you as having testified that you knew nothing about that business, and never was engaged in that business; is that correct ? A. Yes, that is correct.
Q. And that you have no personal knowledge as to the loss that he sustained in that street; is that correct? A. Not from him; no.

The witness thus practically speculated upon the special profits which such a business location would be apt to produce. He repeatedly said that the fair rental value of the premises was the amount of the rent reserved in the lease. Yet he insisted that they were worth more to the plaintiff than such fair rental value. He did not claim that they would rent for more as a notion and dry goods store, or indeed for any particular business. His claim was that they were worth $500 per annum more for such a business than their real or market value. If, however, the plaintiff could have obtained no advance upon the rent reserved, even from people desirous of occupying the premises “as a notion and dry goods store,” then it is difficult to perceive how they could be worth more to him except upon the theory of increased business and greater gains. Plainly, this latter is what it comes to, and it is clear that the rule which disallows speculative damages cannot be thus evaded.

We think this evidence was insufficient to justify the verdict which was rendered, and upon this ground, as well as for the error in the admission of the special items first considered, the judgment and order appealed from should be reversed and a new trial granted, with costs to appellant to abide the event.

Van Brunt, P. J., concurs.


author: O’Brien, J. Ingraham, J.

text:
    Charles S. Holmes, Resp’t, v. Bessie L. Gilman, App’lt.

      (Supreme Court, General Term, First Department,

      Filed May 13, 1892.)

    1. Partnership—Appropriation op assets by partner.
    The act of a partner in appropriating for his individual benefit any portion of the firm property, is not stealing or embezzlement.
    2. Insurance (lipe)—Insurable interest op wipe.
    The insurable interest of a wife in the life of her husband is property belonging to her.
    3. Same—Rights op partner as to premiums paid with pirm punds.
    Where policies of life insurance are issued to a married woman upon the life of her husband, and the premiums thereon are paid by him out of funds wrongfully appropriated from the property of a co-partnership of which he is a member, Reid, that a trust will not be impressed upon such policies, or their proceeds, in favor of the other partners, but they may recover,from the beneficiary the amount of premiums paid out of partnership funds, with interest.
    Appeal from judgment entered on report of referee in favor of plaintiff.

      S. H. Olin, for app’lt; Jno. R. Holmes, for resp’t.
   O’Brien, J.

The action was brought to recover $56,706.10? the proceeds of four policies of insurance, and two certificates of membership in the Mercantile Benefit Association. Each of the four policies was issued upon an application signed Bessie Lawrence Gilman, per A. C. Gilman, and she was named in the application as the party for whose benefit the insurance was desired. In each policy the amount of the insurance was made payable upon the death of A. C. Gilman to the appellant. The applications for membership in the Mercantile Benefit Association were signed by A. C. Gilman, and he therein stated that he desired his death loss to be paid to the appellant, his wife; and certificates of membership were so issued.

Upon Gilman’s death the amounts due upon the policies and certificates were collected and deposited in a trust company, where they still remain.

It appears from the findings and opinion of the referee that in December, 1880, A. C. Gilman became a member of the firm of J. H. Labaree & Co., dealers in teas and coffees in the city of New York, and continued a member of that firm and the firms that succeeded it under the same name until his death, which occurred on the 15th of December, 1890.

During all this time he had practically the exclusive charge of the office affairs of these several copartnerships. Their books of account were kept by him or under his directions, and he had the entire management of their bank accounts. All notes, checks and other paper issued in the business of the copartnership were made by him, and for several years prior to hi.s death it was his custom to prepare and furnish to his copartners semi-annual statements which purported to show the assets, liabilities and actual condition of the firm at the dates when the same were rendered. These statements had been accepted by his copartners without question as true, they having the most unbounded confidence in his integrity. * * During upwards of eight years prior to his death, he had plundered his firms of large sums of money which he had appropriated to Ms own use. * * His embezzlements amounted to more than $220,000. The moneys so taken or much the greater portion of them, were deposited by him to his own credit in one or another of several banks with which ho had individual accounts, and then drawn out for his own purposes.

The complaint alleged that all the premiums and assessments upon the policies had been wrongfully paid by A. C. Gilman out of moneys wrongfully diverted from ins copartners; and the plaintiff claimed the right to follow these moneys into the policies, impress them with a trust, and take the proceeds as belonging to him. The amount of the plaintiff’s money which the referee decides was invested in these premiums, was $4,155.29; and having found that this money went to pay the premiums of certain of the four policies of insurance, he held that as to those policies the plaintiff was entitled to judgment, impressing upon them or the proceeds a trust in favor of the plaintiff, and as to one of the policies, although by the judgment the proceeds thereof are not awarded, he decided that the amount of premiums paid out of the plaintiff’s money with interest should also be recovered by him.

As to the remaining funds, being the proceeds of the other policies, the premiums upon which had not been paid with the plaintiffs money, he decided, subject to a lien thereon for premiums paid in favor of plaintiff, that the same belonged to the defendant.

The appeal is from so much of the judgment as was in favor of the plaintiff.

It will be seen that the referee adopted the plaintiff’s theory that he was entitled not only to the amount of the premiums, but also to the policies which were the fruits of those premiums, upon the ground that equity will follow the proceeds, impress a trust upon them, and take them from the defendant. A contrary view of the principles which should control and govern the rights of the parties was expressed upon the motion granting the preliminary injunction in this case. As the judgment is not open to the criticism of being founded upon insufficient evidence, its affirmance or reversal is necessarily dependent upon the view which we are to take of the two directly opposite theories advanced in this case.

Throughout, the referee and the counsel for the plaintiff characterized the moneys appropriated by Gilman as moneys “ stolen or embezzled" from the firm. We think that a moment’s consideration of the true relation and title of a partner to the funds and property of the copartnership will demonstrate that the use of such language is inappropriate. We also seriously question (although wc ate aware of the fact that writers and text books and also in decisions, expressions to that effect can be found) whether the relation of a partner to his copartners is strictly that of a trustee.- The relation between partners is strictly one of contract It does not arise by operation of law, but is founded upon an agreement, express or implied, between the parties thereto.

There can be no doubt that, from its nature, as was said in the Mfg. Bank v. Cox, 2 Hun, 572-5, the principles upon which the relationship of copartners is founded are strict and exacting, demanding entire good faith towards each other and the highest standard of morality, integrity and fair dealing. And it is no doubt in view of the character of this relationship that we frequently speak of and designate the same as a trust relation; and this arises from the fact that the functions, rights and duties of partners in a great measure may be regarded as comprehending those both of trustees and agents, and in some cases where the facts warrant, the general rules of law applicable to such characters have been applied. This, however, is far from saying that the relation itself is strictly one of trust. In this case the importance of 'the distinction between a quasi trust and a strictly trust relation need not be dwelt upon in view of the conclusion which, upon either ground, we have reached.

Whatever the relation of one partner to another may be, We do not think that the appropriation of any of the copartnership property by one partner can be properly characterized as property stolen or embezzled. As was said in Mabbett v. White, 12 N. Y., 455, the relation subsisting between partners is of the most intimate and confidential nature. They are joint tenants of the stock and effects of the company; their interests are joint and mutual, and each is seized per my et per tout. Each has entire possession as well of every part as of the whole, and each of two partners has an undivided moiety of the whole, and not an undivided whole of a moiety. A partnership is a voluntary association, by which in all the affairs connected with the business an authority is impliedly given to every member to dispose of the partnership property as if it were his own persona! effects. Such is the indh visible nature of their interest, and the capacity of every member to act as the authorized agent of all, that whatever one does in the course of the partnership business has the same efficacy as if all had severally and directly joined in the 'act.

As the title of a copartner in and to all of the partnership property is clear from the principle recognized in this case, we do not think that the fact of appropriating any portion thereof by a partner, and using the same for his individual benefit, can be termed a stealing of the same, for the reason that one cannot steal property to which he has title. This view we think will be enforced by a consideration of the result of the contrary doctrine as applied to the ordinary affairs of a copartnership. It is a matter of common occurrence in copartnership affairs to have one co-partner overdraw his account, and take from the funds of the copartnership an amount in excess of what he is justly entitled to. This is sometimes done with, and sometimes without, the knowledge or consent of his copartners. We do not think it would be seriously claimed, if the amount of such overdraft were some sum like $10 or $20, or $100, out of the property of a copartnership with assets of $10,000, $50,000 or $100,000, that a partner thus appropriating the money would not have a title thereto, or that the same could be recovered if paid out from either the wife or the insurance company, if applied in payment of a premium due upon a policy of insurance.

The principle, however, which is the same whether the amount of the overdraft be great or small, is apt to be obscured when it is sought to be applied in a case like the one at bar, where the amount appropriated exceeds $200,050, and where the contract obligation has been so fraudulently disregarded by one partner as to excite our indignation at the extent of the duplicity and the resultant loss of the other copartners.

The distinction which we seek to emphasize will be apparent if we consider what rights the plaintiff would have upon the facts here shown to recover the moneys paid to the insurance company, if we assume that during the life of Gilman the policies, by reason of the failure to pay the premiums, had lapsed, and the plaintiff had discovered the misappropriation of the firm’s money by Gilman.

It is true that a recovery against the insurance company could be defeated upon the ground that money was paid which having no “earmark” could not be followed. But assuming it were property which could have been identified, and which was still in the possession of the insurance company, we think that no recovery could be had as against the insurance company, due entirely to the fact that the title of the property thus delivered was at the time of its delivery in Gilman, and therefore could not be recovered back by the plaintiff as against the company, which stood in the position of one receiving the same without notice and for value.

The observance of the distinction between an overdraft and the secret withdrawal beyond his interest therein by one of the partners of the funds of the copartnership would have saved the referee from falling into one error into which he has fallen in awarding the proceeds of two of the policies, the Northwestern Mutual and The Provident Savings Life Insurance.

The Provident Life policy was issued in 1884, and the premiums paid June 14 and October 20, 1886, were paid by checks of J. H. Labaree & Co., and the amounts thereof were duly charged against A. C. Gilman in his account with the firm. In the Northwestern Mutual policy, the premium which was due in October, 1886, was paid by a firm check, and the amount duly charged to Gilman on the books of the firm. The credits to his account on. such books were .partly for his share of the profits, and partly for amounts of cash put in by him. These premiums were paid out of the mixed fund, partly composed of Gilman’s own money and partly of amounts allowed to him as his share of the profits. It will thus be seen that these checks were drawn against a fund to all of which Gilman had a legal -title, and to some of which his partners never had any claim whatever. And yet, because he defrauded them in other matters, the referee held that they could follow his payments made years before in the ordinary course of business for insurance in favor of his wife.

We do not think that Gilman’s title to these moneys is in any way affected by the rule which holds, that as between agent ani principal, a settlement is only final if the principal is informed of the facts. For while this may be good as between the parties, it should not de extended so as to permit the plaintiff to seek the interposition of a court of equity to set aside such an account, and follow the money after plaintiff had paid it over to Gilman as his own and knew that it was expended in procuring insurance for the wife.

We think the law which determines the exact title that a partner has in and to the funds and property of the copartnership would raise a serious question as to the right of his copartners to follow such funds or property in the hands of persons who, without fraud or knowledge of the misappropriation, had in good faith for value received the funds or property.

It is not, however, necessary for us to go to this extent. But we shall assume, upon the very theory taken by the referee, that the partnership relation is one of trust; * * * that the partnership moneys of which Gilman was placed in charge were in his charge in trust, and that his duties in respect to them were those of a trustee for his copartners. Assuming upon this theory the right of the surviving partners, upon showing that of the so-called trust moneys diverted some was expended in the payment of premiums, to recover such sums, the question still remains whether the facts established will entitle the plaintiff to recover any more than the amount of such premiums paid.

The principles that should govern were those stated in the opinion upon the injunction herein, and we do not understand that any different view was taken by the referee. “ It is * * * settled that equity will in cases of theft or diversion of trust fund follow the misapplied trust fund or stolen money through any changes of investment or form until the means of ascertainment fail or the rights of bona fide purchasers or incumbrancers intervene, Newton v. Porter, 69 N. Y., 133; but if the stolen money or diverted fund has been mingled with other money, or has been invested with other money, then equity will not give the mingled amount of the whole investment to the plaintiff, but will give him. a lien to the extent of the money taken and mingled or invested, with interest.”

In applying this principle to the facts appearing upon the motion it was intimated that “ the insurable interest which the wife has upon the life of her husband, irrespective of how or by whom the premiums were paid, is her individual and separate property, and as such entitled to be recognized and protected by the laws of this state.”

This view was enforced by citations from the case of the Ætna Nat. Bank v. U. S. Life Ins. Co., 24 Federal Rep., 770, which decision was approved in the supreme court in the Cent. Bk. of Washington v. Hume, 128 U. S., 195, wherein it was said “ that the obvious distinction between the transfer of a policy taken out by a person on his insurable interest in his own life and payable to himself or to his legal representative, and the obtaining of a policy by a person upon the insurable interest of his wife and children, and payable to them, has been repeatedly recognized by the courts.”

These views wore not concurred in by the referee, and he distinctly held (which resulted in the conclusion reached -by him) that the wife had no insurable interest or any interest in a policy other than that produced by or resultant from the payment of premiums, and that as these had been paid with moneys belonging to the plaintiff, not only the premiums but the proceeds or principal sum due upon the policy belonged to the plaintiff.

In examining the reasons given for the opinion of the referee wo are unable to concur with him, it seeming to us that by force alone of the statutes of this state the insurable interest of a wife in the life of her husband is property which belongs to her. Therefore the proceeds of the policy did not spring solely from the premiums paid, but arose also from the right of the wife to insure her husband’s life, which is property, or in the nature of property. The proceeds are not then the sole result of the plaintiff’s money, but of that mingled with something which belonged to the wife; and therefore the plaintiff is not entitled to the whole proceeds, but only to a lien for the amount of the premiums and interest

In determining the question as to whether the insurable interest of a wife is property, regard need only be had to its nature. In important respects this right is sole and exclusive of all other persons, and by statute the wife’s policy has certain substantial features and advantages which add to its value, and are not found in other policies. It cannot be taken by her creditors nor by his, even when he pays the premiums; audit is non-assignable. In other words, the wife’s insurable interest is an exclusive right peculiar to herself to make a contract for the payment of money, which contract is a more advantageous one than can be made by any other person in regard to the same subject matter.

It has never been denied that a franchise (which is nothing inore than a special privilege) is property.

As defined by Webster, property “is that which is peculiar to any person; that which belongs exclusively to an individual; that to which a person has a legal title whether in possession or not; thing owned. ’’ As therefore the right which a wife has to make a particular contract of insurance upon the life of her husband is one limited to her, we do not see how, under the definition, it can be regarded as anything other than property.

Apart, however, from these general considerations, as already said, we think that the statute itself enforces the view that the insurable interest of the wife is property.

The referee in his opinion attaches much weight, and it seems to us gave undue importance, to the case of Shaler v. Trowbridge, 28 N. J. Eq., 595. It is true that that was a case in some respects similar to this. But the distinction between that case and the one at bar was pointed out in the opinion delivered at special term upon the motion for an injunction.

It was therein said: “The distinction between this and the other cases in one respect is to be found in the circumstance that in Shaler v. Trowbridge the policies were originally taken out by the husband payable to himself, whereas in the case cited and the one at bar the policies were payable to the wife. Another distinction is to be found in the fact that the status of a married woman, and her rights under the law relating to property and policies of insurance, are entirely different in the two states of New Jersey and New York.”

Both of these distinctions between the Shaler case and the one at bar we regard as material and important. Unquestionably a difference must arise between a policy taken out by a husband on his own life and assigned to his wife, and a policy taken out by the wife on the life of the husband, which latter is a contract made between her and the company, and the moneys due thereunder are expressly payable to her alone.

With reference to the other distinction, the status of a married woman and her rights under the laws of New Jersey and New York as they existed at the time of the decision of the Shaler case are so different and distinct that it is only necessary to refer with regard to the woman’s rights under the laws of New Jersey to the cases of Muirhead, v. Aldridge, 33 L. I., 213; Skillman v. Skillman, 2 Beas., 403; Osborne v. Edwards, 3 Stock., 73; Clinton Co. V. Hummell, 10 C. E. Green, 45; Persons v. Persons, id., 250, and Quidort's Adm’r v. Pergeaux, 3 id., 472. These cases will show that a wife gained no interest in a policy on her husband’s life unless she paid the premiums, and her property mingled with her husband’s was liable to the claims of his creditors; and this is true of money in bond as well as of less tangible rights.

We think, therefore, that the learned referee was in error in holding that the Shaler case went on fixed and certain principles of equity jurisprudence, which, as he stated, must be the same in every civilized jurisdiction ; for the reason that the rule governing the application of such principles will show that they are to be applied according to the legal relations of the parties existing in the forum.

Apart, however, from the importance of these distinctions, if we assume that the principle in Shaler v. Trowbridge would apply to the facts here established, we cannot but regard the case-as directly opposed to the views expressed in Bank of Washington v. Hume, supra; Ætna Nat. Bank v. Manhattan Life, supra; Pence v. Makepeace, 65 Ind., 345, and Stigler v. Stigler, 77 Va., 163, which we think are founded upon the better reasoning, and more consonant with justice and the public policy that prevails of protecting the insurable interest of the wife in the life of her husband.

It may be urged that the logical conclusion resulting from our views would negative plaintiff's right to impress a trust on these funds even to the extent of the premiums paid. The learned counsel for the defendant, affected no doubt by the justice of the claim so asserted as to premiums paid with copartnership money, apparently concedes plaintiff’s right to recover the same.

Technically, the proper form of action to obtain such moneys “ ex cequo et bona,” as against Mrs. Gilman, would be for money had and received.

We have, however, all the parties before the court, the action itself is one in equity, and it will avoid circuity of action if the rights of the parties are here determined. This seems to be the attitude assumed by counsel in submitting the questions regardless of the form of action and without objecting to an adjustment of their rights in this action.

We think that the surviving partners would have a cause of action against Mrs. Gilman for moneys given to her or applied to her use out of the copartnership funds. The amounts of such payments are easily ascertainable, and are, in fact, determined by the referee in his report

As no point is made in regard to the form of action, and as a recovery for the premiums paid could be had against Mrs. Gilman in a proper action, and as a grave doubt exists upon the question as to whether to the amount thereof a lien could not be impressed upon the funds in court, we have concluded to adjudge the rights of the parties in accordance with what we regard to be both equitable and just.

While, therefore, we are of opinion that, to the extent that it can be shown that premiums were paid with moneys of the firm, they should be recovered with interest, we also think that no recovery of such policies beyond such premiums should be allowed.

This conclusion requires a reversal of the judgment and a new trial, which is accordingly ordered, with costs to appellant to abide event.

Van Brunt, P. J., concurs in result.

Ingraham, J.

There are two grounds upon which plaintiff may seek to sustain this action. One is that the money that was used to pay the premiums upon the policies of insurance from which the fund which plaintiff seeks to recover was realized, was stolen or embezzled from the firm of Labarce & Co., so that neither Gilman, who stole it, or the defendant, Bessie L. Gilman, ever had any title thereto as against the firm, or this plaintiff as surviving partner of the firm; and the other, that as between Gilman and his copartners, Gilman was a trustee for his copartners as to the firm assets, and upon the misappropriation by Gilman of such assets the surviving copartners, as the cestui que trustents, could follow the trust property into the hands of one who received it, except a bona fide purchaser for value without notice of the trust.

It is not clear from the complaint upon which of these grounds plaintiff places his cause of action.

The complaint alleges that Gilman robbed the firm of which he was a member, and that the money of which he robbed the firm was used to pay these premiums;

It is also alleged that each of the other partners implicitly trusted Gilman, and intrusted to him the entire management of the bank account, finances and office business of the copartnership, but there is no special agreement alleged by which Gilman occupied any relation to the firm other than that of a copartner who, in the administration of the firm business, had special charge, of the firm’s finances.

The counsel for the plaintiff in his brief submitted on this appeal, appears to rely upon the existence of the trust relation. He says:

“In order to prevent the reversal of the judgment rendered by the referee, it is sufficient for the plaintiff and respondent to show, first, that Arthur C. Gilman occupied a fiduciary relation to his copartners in the firm of J.* H. Labaree & Co.; second, that without the knowledge and consent of his copartners he withdrew from the firm moneys intrusted to him in that capacity; and third, that with this money he paid the premiums on the policies involved in this appeal, i. e., he bought the policies with this money.”

I agree with Mr. Justice O’Brien that for the reasons stated by him the plaintiff could not be said to have stolen or embezzled the firm property. He, as a member of the firm, was the owner of the copartnership property, and the fact that he paid himself from the firm assets a greater amount than under the copartnership agreement he was entitled to, be that amount small or large, could not be said to be a robbery from the firm. He would be, under the copartnership agreement^, liable to repay to the firm or to his copartners upon an accounting the amount of such excess, but upon no principle can a member of a firm be said to steal or embezzle property of which he is the legal owner.

It is, undoubtedly, a general principle that where one partner diverts the capital or funds of the copartnership to carry on another trade or the same trade for his own profit and advantage, or to invest such copartnership moneys in any property for his own benefit, he will be compelled in equity to account for all profits made by such instrument, Story on Partnership, § 178; Long v. Magestre, 1 Johns. Ch., 305, where Chancellor Kent held that an action could be maintained by one partner against the administrator of his deceased partner for an accounting of the business which the deceased partner had carried on with another party with the funds of the copartnership.

Whether the relation that existed between Gilman and his copartners can be said to be that of a trustee and cestuis que trust or not, is immaterial. Whatever the relation is that exists, a copartner who invests the capital of the copartnership in any way for his personal advantage or in property taken in his own name upon which he realized a profit will undoubtedly be held to account in equity for not only the portion of the co-partnership property so invested, but also for any profits that he may realize therefrom.

In the case of Shaler v. Trowbridge, 28 N. J. Eq., 595, a co-partner invested the copartnership property in a policy of life insurance, which was payable to himself or his" executors upon his death, and it was held “ that such policy of life insurance, although taken in his own name, was in reality copartnership property, it having been created entirely by the application of the moneys of the copartnership, and that a subsequent transfer of the policy without consideration was void as against the co-partnership,” and I concur with the decision in that case.

If therefore the proof in this case shows that Gilman invested the copartnership money in any property or contract or obligation of his own, so that such property or obligation was created or existed solely because of the investment of the copartnership money or property, plaintiff would be entitled to judgment declaring that such obligation or property that had been so purchased or created by the use of the copartnership money was in reality copartnership property in the hands of a copartner, his representatives or a transferee who was not a bona fide purchaser for value.

The question to be determined is whether or not these policies of insurance come within this rule. There were four policies of insurance, and so far as they affect this question they are substantially the same; the applications for the policies were made by defendant Bessie L. Gilman, and signed Bessie 0. Gilman, by Arthur G. Gilman, who thereby acted as her agent in making such applications, and the contract in the policies was that the insurance company promised to pay to Bessie L. Gilman, the wife of Arthur C. Gilman, the sum mentioned within ninety days after due notice and satisfactory proof of the death of Arthur 0. Gilman.

The contract was thus between the insurance company on one part, and Bessie L. Gilman on the other, and the sole relation that Arthur G. Gilman had to the contract was that he- had acted as agent of the defendant, Bessie L. Gilman, in making the application for the policies of insurance, and the contingency upon which the money was to be paid was the termination of his life.

“ He therefore, in procuring the policies to be made, and in paying the premiums, in receiving and acting upon notice, and in paying whatever was necessary to perfect and continue the rights of the assured, himself stood in the attitude of an agent acting for and representing the assured.” See Whitehead v. N. Y. Life Ins. Co., 102 N. Y., 150; 1 St. Rep., 344.

And it was further expressly held in the last case cited that, upon tlie execution and delivery of these policies, the wife had a vested interest in the policy which could not be divested by any act of the husband, and she had the right to pay the premiums, and so continue the policy in force, and the husband could not without the consent of the assured surrender the policy to the company.

This principle has been many times reasserted in this state, and is now well settled.

The question as to whether or not the wife had an insurable interest in the life of her husband, or just what that insurable interest was, has nothing to do in determining this question. That question related solely to the validity of the contract of insurance. The insurance company has admitted the validity of the contract of insurance by paying to the wife or upon her order the amount due under the policy upon the death of the insured.

What we must assume is that this agreement between the insurance company and Bessie L. Gilman was a valid agreement whereby the insurance company agreed to pay said Bessie L. Gil-man the amount named in the policy upon the death of Arthur G. Gilman.

The referee has found, upon evidence which is sufficient to sustain the finding, that Arthur C. Gilman had drawn from the copartnership sums largely in excess of the amount that he was entitled to draw under the copartnership agreement, and that he had paid out of such money so withdrawn the premiums upon these policies of insurance.

In some instances the payments were made by checks of the co-partnership which were charged up to him as against his interest in the copartnership, and in other instances by his individual check upon an individual bank account, which individual bank account was largely made good by moneys drawn by him from the copartnership.

I fail to see how it can make any difference in determining this question as to whether Arthur C. Gilman took such money from the copartnership with or without the knowledge of the copartners. The act in either case was the same ; it was a withdrawal by him of the capital of the copartnership and the appropriation thereof to Ins own use, and as before stated if he had invested such proceeds in real estate or other property, a court of equity could compel him or his transferees to account for such property as the property of the copartnership.

Here, however, there was no such investment. What he did, having appropriated a portion of the copartnership property to his own use, was to pay a debt of his wife, or, in other words, present her with so much money which he, acting as her agent, applied to the payment of her obligation and thereby continued in force the policies of insurance, whereby the insurance company agreed to pay her at a future time a sum of money.

There was here no investment of copartnership property by the copartner for his own benefit. , The defendant had the right to pay the premiums herself, and so continue the policy of insurance ; and the fact that her husband undertook to pay them himself with what he represented was his own money, and where she had no knowledge that it was not his money, cannot be said to be an investment by a copartner of copartnership property for his individual benefit.

It may be that the surviving partners would have a cause of action against Bessie L. Gilman to recover the money belonging to the copartnership that Arthur C. Gilman had given to her or applied to her use, but upon-no principle can it be said that when she used money given to her by her husband in payment of her obligation to the insurance company, and which she had no reason to suppose was not her husband’s money, it was an investment of the firm money upon which the surviving partners of the firm can impress a' trust, so that not only can they recover back the amount so given her, but adopt her act in making the investment as a firm and hold the property in which money so given to her had been invested as firm property.

In all of these policies of insurance it is Bessie L. Gilman as the assured who paid the premiums, and it is upon her payment of the premiums in the future that the policies are to remain in force.

It is not the interest of the insured or of the copartners that is covered by the insurance, but is the interest of the assured, the defendant, that is so covered. The assured pays the premiums; to the assured the sum is to be paid, and when her husband gave her the money to pay these premiums that money belonged to and became her property just as much as it belonged to and became the property of the bank in which it had been deposited.

As between the bank and Arthur C. Gilman, upon the deposit of any of this money the money became the property of the bank and the bank became his debtor.

Upon the payment of Gilman’s check to the insurance company that indebtedness was discharged, and the money so paid became the property of the insurance companies and their obligations to pay defendant the sum of money were continued in force. It was then the money that was paid by the bank to discharge its obligations to Arthur G. Gilman that was received by the insurance company.

It may be that the surviving partners can recover from the defendant Bessie L. Gilman in a proper action the amount of money that Arthur C. Gilman had paid to her or on her account out of the copartnership funds, but the investment that she had made of money received by her from her husband, or that he had applied towards paying her obligations, was money given to her by one who had the legal title to it, and which she had a right to apply to her own use, her only liability being the obligation which might be implied to repay the money of the firm in case it should subsequently appear that said money that was given her was money belonging to the copartnership. If the bank had invested the money that was deposited with it in real estate it could hardly be claiped that the copartnership would be entitled to have suc-h real estate declared to be the property of the copartnership, and I can_ see no reason why the defendant stands in any different position.

The case of Olmsted v. Keyes, 85 N. Y., 597, which seems to be relied upon by the plaintiff, is in harmony with these views. It was there held that the policy taken out by Lester for the benefit of his wife became the property of the wife, and that upon her death her interest in such policy, under the law as it then stood, devolved upon her husband by virtue of his survivorship, and that he was entitled to reduce the policy to possession the same as he would any other choses in action belonging to her at the time of her death.

The right of the surviving partners to recover a money judgment against the defendant Bessie L. Gilman for any sum of money paid to her or given to her by her husband which was in fact co-partnership property cannot be enforced in this action. This action is in equity to impress upon the proceeds of these policies of insurance a trust in favor of the plaintiff, and for the reasons before stated no such trust exists.

I think, therefore, the plaintiff has failed to show any right to recover, and that the complaint should have been dismissed. For these reasons I think the judgment should be reversed and a new trial ordered, with costs to appellant to abide the event.