author: O’Brien, J.

text:
    Cassa Marittima, Resp’t, v. The Phœnix Ins. Co., App’lt.

      (Court of Appeals,

      Filed January 20, 1892.)

    1. Insurance (Marine)—Maritime lien.
    Plaintiff, a foreign corporation, loaned a sum of money to the master of a ship upon a pledge of the vessel and the freight she was expected to earn on a voyage then about to be made. By the instrument given by the captain to secure the loan it was agreed that “the owner or captain shall not take any other advances upon the same freight at the port of loading, or in such case hold themselves bound to return the present loan, even, though the vessel be lost.” The captain did, unknown to plaintiff, take other advances upon the same freight. The plaintiff having obtained insurance from defendant for the voyage, and the vessel being lost, Held, that defendant was liable; that the parties never intended that the subsequ°nt wrongful act of the master in taking another loan should release the ship and freight as security for the payment of the plaintiff's, advances.
    3. Same.
    The personal liability of the master, if any grew out of his act in taking-other advances, may stand without destroying the lien, and had no effect upon it unless paid.
    Appeal from judgment of the supreme court, general term,, first department, affirming judgment entered upon decision of the court without a jury.

      Edward P. Lyon, for app’lt; Edward K. Jones, for resp’t.

       Affirming 36 St. Rep., 242.

   O’Brien, J.

The plaintiff recovered a sum, the equivalent of £400 English money, loaned by the plaintiff, through its agent at Pensacola, Florida, to the master of the ship Buoni Amici upon a. pledge of the vessel and the freight she was expected to earn on a. voyage then about to be made from Pensacola to South America, which was insured by the defendant. It appears that the plaintiff is a foreign corporation organized under the laws of the Kingdom of Italy, having its principal office at Naples, with branch offices in various other places, including the city of New York. It was-engaged in making maritime loans, and insured with the defendant a maritime risk evidenced by the following paper:

“ Pensacola, Fla., August 31,1886. £400.
“ Fifteen days after arrival at the port of destination, River Plata or other intermediate port, at which shall end the voyage of my vessel denominated Buoni Amici, I promise to pay to the order of the Cassa Marittima of Naples the sum of four hundred pounds-sterling, value received in cash as a loan on freight for the last expense necessary to the undertaking of the voyage from Pensacola to River Plata, and I hereby assign therefor, to the said Cassa Marittima, enough of the present freight to cover the sum of the above loan, with power to collect when due, and I hereby hypothecate ship and freight, for repayment of said loan, with priority over every other credit, and in case of total loss the-amount received as loan shall not be paid back, and I accept all the conditions set down in the regulations of the Cassa Marittima relating to loans on freight, of which I received a copy.
“B. Qiiartino.”

On the back of this instrument was printed the following: “ The loans which the Cassa Marittima agrees to make on freight, must be subject to the following rules:” Here follow sixteen separate and distinct rules, none of which need be referred to except the fifteenth, which is as follows: “ 15th. The owner or captain shall not take any other advances upon the same freight at the port of loading, or in such case hold themselves bound to-return the present loan even though the vessel be lost” It was admitted on the trial that the owner or captain did-, without the-knowledge, privity or consent of the plaintiff, unless such consent was given by the execution and delivery of the instrument above .set forth subject to the rules and regulations endorsed thereon, take other advances amounting to $1,100, upon the same freight at the port of loading. On the 18th of September, 1886, the plaintiff’s New York agent procured from the defendant upon payment of the required premium a policy of insurance to said Agent, on account of whom it may concern, for $2,000, whereby the defendant insured “ lost or not lost, at and from Pensacola to Montevideo and (or) Buenos Ayres, on advances against captain’s •drafts upon the freight of all kinds of lawful goods and merchandise, laden or to be laden on board the good bark Buoni Amici, whereof-is master for this present voyage.” The vessel ■sailed from her port of loading but was lost by perils of the sea ,and of course did not earn her freight which was pledged for the payment of the loan, and the plaintiff sought indemnity from the defendant under its policy. The defendant resists the claim on a .single ground only, and that is that by force of rule fifteen, endorsed upon the draft, to the effect that if the owner or master of the vessel took other advances upon the same freight, at the port ■of loading, they should hold themselves bound to return the loan, ■even though the vessel be lost, and that as the master did take .a. further loan upon such freight at the port of loading, though it was without the knowledge, privity or consent of the plaintiff or its agents, this act of the master created a personal obligation and destroyed the maritime character of the plaintiff’s loan, and its insurable interest, and thus defeated its right to recover on the policy. The defendant argues that a marine risk and not a personal obligation or promise is the subject of insurance. That when a loan is made upon pledge of the ship and freight a maritime lien is •thereby created which is the subject of insurance by the person in whose favor it is created. It is no doubt true that it is an essential feature of such a loan that if the ship be lost the loan is not to be repaid. What is strictly known as a maritime lien is created by mating the advances without any security for repayment except the chance that the ship will arrive safely at her port of destination, deliver her freight and thus earn the fund pledged to pay the loan. The0defendant urges that the recovery cannot _ be upheld unless at the time of the loss of the ship the plaintiff had an insurable interest, that is to say, a maritime lien, and that the act of the master in taking subsequent advances created a personal obligation and destroyed the maritime character of the risk. The vessel was an Italian craft, and it is found by the trial court that under the clauses in the policy authorizing and requiring the ■ plaintiff to sue and libel, with respect to the property so insured, the plaintiff brought suit against the owner of the vessel in the ■courts of Italy, upon the darft made by the master above set forth, but was defeated in such action. It was further found that the plaintiff has not made ,any attempt or taken any proceedings to collect the loan from the master for the reason that, since the loss under the policy, he was insolvent and nothing could be collected from him by execution. If the instrument is read without refer.ence to to the printed rule endorsed thereon, it is admitted that it is evidence of a loan made by the plaintiff upon the security of a maritime lien. It expresses upon its face what the law would imply from the nature of the transaction, that the loan was subject to the perils of the sea and contingent upon the arrival of the ship at her port of destination, as it is expressly stipulated that in case of total loss the amount received as a loan shall not -be paid back. ■So far the transaction vested an interest in the plaintiff in the freight and ship that was the subject of insurance. But it is contended in behalf of the defendant that the printed rule on the back of the instrument followed by the act of the master in taking further advances has changed all this, and has left the plaintiff with nothing but a piece of commercial paper as security for the loan which was not such an interest as could be insured. ■

To this point the plaintiff’s counsel answers, first, that under the statute of this state providing for the incorporation of marine insurance companies (Chap. 308, Laws of 1849) under which statute the defendant was created and exists as a corporation, authority is given “ To make insurance upon vessels, freights, goods, wares, merchandise, specie, bullion, jewels, profits, commissions, bank notes, bills of exchange and other evidence of debt, bottomry and respndentia interests and to make all and every insurance appertaining to or connected with marine risks and risks of transportation and navigation,” and that, therefore, the defendant is liable upon its policy in this ease whether the plaintiff had •at the time of the loss a maritime lien or not. But secondly, the plaintiff contends that, under certain circumstances, a maritime lien and a personal obligation may exist together as security for the same loan, and the defendant’s counsel, within certain limitations, does noi dispute this. The proposition, however, in his view is limited to cases where the personal obligation of the owner ■or master is collateral • merely and where the additional personal obligation conforms to the maritime lien itself, that is to say, is of no avail to the lender if the ship be lost. In other words, if the •personal obligation shares the fate of the lien itself and falls with it by the loss of the ship, then the maritime character of the loan remains intact and the maritime interest in the freight or subject hypothecated remains undisturbed. The application of this principle to the facts of this case is the point of difference between the parties. Both rely upon substantially the same cases and authorities to establish positions radically antagonistic with reference to the rule of law. Parsons on Marine Insurance, Vol. I, pp. 208, 213, 223; The Hunter, 1 Ware, 251; Stainbank v. Fenning, 11 C. B., 51; Stainbank v. Shepard, 13 id., 418; Cole & Thurman v. White, 26 Wend., 515; Bray v. Bates, 9 Met., 250.

It is not claimed that the master, by taking subsequent advances at the port of loading on the same freight, created, by force of the rule referred to and printed on the back of the instrument, any personal obligation as against the owner of the vessel with reference to the loan in question. The plaintiff attempted to enforce such an obligation in the courts of the country where the owner resided and where the ship belonged, and failed. What is urged, is that the master by his act in taking the subsequent advances succeeded in creating a personal obligation against himself, and that was enough to destroy the maritime character of the loan.

The defendant does not claim that the mere taking of a personal obligation or of additional security destroyed the maritime character of the draft. On the contrary, he admits that there is abundant authority for the position that a personal obligation or additional security may be taken and held, and at the same time the maritime lien preserved. He attempts to distinguish this from the reported cases where such personal obligations were held not to affect the maritime character of the loan, by the circumstance, as he claims, that the master, at least, was bound personally, though the ship was lost. Some of the cases in the books-turn upon the question whether maritime interest could be collected by the lender. In this case that question does not seem to be involved at all, as it does not appear what interest was exacted, and no question of that character is raised by the pleadings or otherwise. In the cases to which our attention has been called, the bottomry bond and the personal obligation were parts of the same transaction, and given by the parties as security for the same loan. In such cases it is reasonable enough to hold that a personal obligation, intended to survive the loss of the ship, destroys the maritime lien, but this case, in its facts, differs widely from those where it has been held that the personal obligation destroys the lien. Here the plaintiff made a loan which, by force of maritime law, as well as by the terms of the instrument taken from the master, became a lien upon ship and freight. This lien gave to the plaintiff a special property in the ship and freight which, it is admitted, was a proper subject of insurance. It is true that it was stipulated that in case the master displaced this lien by taking other advances on the same freight at the port of loading, then, by that wrongful act, a personal obligation was to spring up against him for the amount of the loan. But none of the parties intended that if such an obligation was ever incurred by the master, by reason of an act on his part which was thought merely possible, that it should have the effect of destroying and divesting the interest or special property which vested in the plaintiff after the making of the loan and the execution and delivery of the instrument by the master, and upon the faith of which the plaintiff made the advances. '

The additional promise that was to arise out of the master’s act - was contingent upon a future event and collateral merely to the principal security, that is to say, the lien. The lien having once attached could not be divested so as to avoid a policy thereon without payment or release, or some act on the part of the plaintiff. Granting that when the master took the subsequent advances an obligation came into existence against him to pay the plaintiff’s loan, that would not disturb the contract relations created between the plaintiff and defendant by the instrument which the master executed and the policy of insurance. The new and additional obligation of the master might come into existence and could stand as against him should the plaintiff elect to so> treat it, but how could that destroy a prior security, when the plaintiff did not intend to substitute it for the lien and in fact had no knowledge of its existence, because it had no knowledge of the •act of the master in taking the further advances out of which act the promise on his part was to arise, if at all ? The wrongful act ■of the master was without the knowledge, consent, privity or procurement of the plaintiff, but if, notwithstanding that, a promise to pay this loan on the part of the master arose from the act, such .a promise could not, without the plaintiff’s consent, destroy and take the place of an existing maritime lien. The promise of the master, if it ever came into existence against him, might stand as ■collateral to the lien on the freight and ship, but could not affect the validity of the maritime lien unless the master paid plaintiff’s loan, in which case the lien of course would be discharged. Whatever construction may be given to the printed rule on the back •of the draft, it is clear, we think, that the parties to the transaction never intended when the loan was made that the subsequent wrongful act of the master in taking another loan should have the ■effect of releasing the ship and freight as security for the payment of the plaintiff’s advances, and a maritime contract, like all -other contracts, should be construed according to what appears to be the intention of the parties and not in such a way as to accomplish a result not within the intention of any of the parties. To hold upon the facts as they appear in this case that the mere act of the master in taking other advances divested the plaintiff’s lien and avoided the insurance thereon would be to attach consequences to the printed rule on the back of the instrument that the parties never contemplated, and to work injustice. To hold that the personal liability of the master, if any grew out of his act in talcing other advances, may stand without destroying the lien and having no effect upon it unless paid, would be just and is not, we think, contrary to authority.

The judgment should be affirmed, with costs.

All concur.


source: Caselaw Access Project

author: Gray, J.

license: Public Domain

text:
    John B. McSherry, Resp’t, v. The Trustees of the Village of Canandaigua, App’lts.

      (Court of Appeals,

      Filed January 20, 1892.)

      1. Villages—Negligence—Sidewalk—Laws 1854, chap. 353.
    Under chap. 353, Laws 1854, the jurisdiction of the trustees of the village of Canandaigua with respect to the streets and sidewalks became absolute as that of commissioners of highways, and they were invested with general powers and corresponding duties, and the responsibility for their proper performance devolved upon the municipal corporation as such, and it became liable for the negligence of the trustees.
    3.' Same—Notice of defect.
    Plaintiff was injured by a fall through a defective grating in a sidewalk. It was admitted that one Chase was street commissioner at the time of the accident and that notice of the defective grating had been given him some time prior to the accident. Held,, that whether he was defacto or de jure street commissioner was immaterial, under the facts of the case, and notice to him was a sufficient notice to the corporation of the defect complained of.

      Appeal from judgment of the supreme court, general term, fifth department, affirming judgment in favor of plaintiff, entered on verdict of jury at circuit.

      Edwin Hieles, for app’lts; Franle Rice, for resp’t.

       Affirming 35 St. Rep., 433.

   Gray, J.

The plaintiff sued the defendants for the alleged neglect to keep a sidewalk in repair; in consequence whereof he sustained personal injuries by a fall through a defective and unsafe grating. The defendants have appealed from the affirmance of the general term of a judgment entered by the plaintiff upon a verdict by a jury in his favor. Of the points urged by their counsel I deem it unnecessary to refer to but two, and that reference may be brief, in view of the satisfactory opinion of Judge Dwight, at general term.

The appellants claim that the plaintiff should have been non-suited ; because under the village charter the trustees were under-no obligation to construct or repair sidewalks. In'his very elaborate brief the counsel for the appellants bases his argument in that respect upon a construction of the act, passed in 1815 (chap. 254), under which the village of Canandaigua was incorporated; of the subsequent act of 1847 (chap. 420,) constituting the village a separate road district, and of those provisions or sections of the general village incorporation act of 1847 (chap. 426), which were adopted by the village electors in 1848. in my judgment, we are not called upon, and it seems unnecessary, to follow him in tho-t argument, or to pass upon his interpretation of these laws. Whatever may have been the limitations upon the administrative powers and duties of the village trustees, with respect to the making and repairing of streets or sidewalks, the subsequent enactment of chapter 352, of the Laws of 1854, must be considered and taken to have so far enlarged those powers and duties as to have done away with the restrictions in the way of their exercise which may previously have existed with respect to authority either to-undertake such work or to bind the village. The title of the act, of 1854 is An act in relation to the village of Canandaigua and enlarging the powers and duties of the trustees of said village.”

Section 1 of the act provides that “ the trustees of the village of Canandaigua shall be commissioners of highways in and for said village and shall have all the powers of commissioners of highways, and as such they shall have power to regulate, repair * * * the streets, * * * sidewalks * * * in said village and to prevent the incumbering of the same in any manner and to protect the same from encroachment and injury.” If this legislation meant anything it could but mean a new grant of powers by the state, whereunder an ampler scope was given, in the respects mentioned, to the jurisdiction of the municipal authorities of the village. If, under the act of 1847, the village trustees were dependent for their authority to repair the streets and sidewalks upon the action of the village electors, it might, well be said that no obligation rested upon them to keep them in repair, in the absence of such action as would confer authority and supply the moneys. But, upon the passage of the act of 1854, what was formerly a qualified, or limited, jurisdiction in the trustees, with respect to the streets and sidewalks, became absolute as that of commissioners of highways.

By virtue of the enlarged jurisdiction the village trustees were invested with general powers and with corresponding duties, and the responsibility for their proper performance devolved upon the municipal corporation as such. Conrad v. Trustees of the Village of Ithaca, 16 N. Y., 158; Saulsbury v. Same, 94 id., 27. For the negligence of the trustees the corporation became liable at the suit of an injured party. The principle underlying the liability so devolving rests in an implied obligation to be responsible for the faithful performance of the duties imposed, in consideration of the investiture of the trustees by the legislature with the grant of the wider power. This obligation, obviously, enures to the benefit of every party interested in its fulfillment. The action, therefore, was maintainable, if there was notice of the existence of the defect. There was evidence that one Homer Chase was employed by the trustees to superintend and examine the streets and sidewalks, and the admission was formally made of record that Chase was “ the street commissioner of the village of Canandaigua at the time of the accident to the plaintiff and had been since January 1,1888.” There was evidence further to show that notice of the dangerous condition of the grating had been given to Chase some time prior to the accident. Whether he was de facto ■or de jure street commissioner becomes immaterial, under the facts of the case, and if the jury found that there was notice to him, it was sufficient notice to the corporation of the existence of the defect complained of.

The other questions raised by the appellants’ exceptions in the case have been considered; but none are of sufficient importance to call for discussion here.

The judgment should be affirmed, with costs.

All concur.


author: Peckham, J.

text:
    Frederick Booss et al., Resp’ts, v. Margaret A. Marion et al., App’lts.

      (Court of Appeals,

      Filed January 20, 1892.)

      1. Assignment for creditors—Individual debts of partners.
    An assignment for creditors executed by members of a firm, directed that after paying expenses, wages of employees and preferred debts the assignee should pay and discharge in full, if the residue of said proceeds was sufficient, all the debts and liabilities due from the assignors “together or respectively,” and if not sufficient to pay them in full then to apply the residue of said proceeds to the payment of said debts and liabilities ratably and in proportion. There were individual debts. Feld, that the assignment was fraudulent and void as its effect was in one contingency to devote a part of the partnership property to the payment of individual debts before payment in full of partnership debts.
    2. Same.
    The failure of assets to pay preferred creditors did not make the assignment valid, as there still remained the illegal intent to devote the property to an unlawful use.

      Appeal from judgment of the supreme court, general term, fifth department, affirming judgment for plaintiffs, entered on the findings and decision of the court at special term.

      Edward F. Wellington, for app’lts ; David N. Salisbury, for resp’ts.
   Peckham, J.

We think this judgment should be affirmed for the reasons stated in the opinion given at the general term. We-will add but a few words which are suggested by the argument of the counsel for the appellant before us. The construction which the supreme court gave to the language used in the assignment is we think, the only one permissible.

The effect of the assignment is in one contingency to devote a part of the partnership property to the payment of individual debts before payment in full of partnership debts, and there is an express finding that there were such individual debts of one of the partners. There is evidence sufficient to justify it. In Crook v. Rindskopf, 105 N. Y., 476; 8 St. Rep., 66, the members of the firm executed the assignment for the benefit of their creditors and devoted all their property to the payment of the co-partnership debts, and after such payment, if there should be any residue, it, was to be applied to the payment of the individual debts of the assignors or either of them. One member of the firm owned individual assets of the value of $30 and the other of the value of $10, and their individual indebtedness was of an unequal amount. It was thought hardly worthy of attention on account of the smallness of these amounts; but the construction of the assignment was. nevertheless entered upon and it was held that the language did not provide for the creation of a fund in the surplus after payment, of firm debts to be used indiscriminately in the payment pro rata of the individual debts of the members of the firm, but that if there were a surplus the share of each partner therein was to be applied to the individual debts of such partner. The language-used here does not permit of this construction. The payment of the firm debts is not provided for in full before any payment can-be made the individual creditors, but the contrary is the fact in a contingency provided for in' the assignment. If there are not. enough assets to pay the preferred firm creditors, no sufficient, answer to the charge of fraud arises from that fact.

If an insolvent firm appropriates by an assignment partnership property to the payment of the individual debts of one partner, the assignment is fraudulent and void. Wilson v. Robertson, 21 N. Y., 587.

In case of such an assignment it has been held, Hurlbert v. Dean, 2 Keyes, 97, if it be shown and found as a fact that there are no-individual debts thus provided for, the presumption of fraud may be repelled and the assignment upheld. But in this case the finding is exactly contrary. And in Crook v. Rindskopf supra, the-assignment having provided first for the full payment of firm creditors, such creditors, it was said, were not aggrieved, for the intention could not have been to defraud them by providing for the-payment of individual creditors thereafter even though the individual partners owned unequal amounts of individual property which might be affected by a provision to pay debts with the surplus pro rata. It never has been held that in a case where partnership assets have been by the assignment devoted in certain contingencies to the payment of individual debts, while a portion of the partnership debts remained unpaid, the stamp of fraud which the law places upon such a transaction can be rebutted by any evidence that the parties did not intend to commit a fraud.

In this case the plaintiffs endeavored to prove a fraudulent intent outside of and upon other facts than this provision of the assignment. Even if they had been unsuccessful in that endeavor, the failure did, not breathe vitality into the instrument which the law denounces as a fraud because of the existence of the illegal provision therein. If the fact be that there are not enough funds in the hands of thq assignee to pay the preferred debts of the firm, the other fact remains, that the assignment provided for the payment of the individual debts with firm property in certain contingencies, and the want of firm and individual assets sufficient to piay the firm debts does not cure this vice. The failure of assets to pay preferred creditors is not like the non-existence of individual debts in a case where an assignment provides for their payment out of firm property. ■ There is no contingency in such case and the provision is mere surplusage; hence, totally immaterial. But mere absence of assets with which to pay as directed may depend upon many contingencies. The illegal intent to devote the property to an unlawful use is there in any event. Good fortune in realizing upon sales of the property assigned may produce the assets, while in the other case there are no individual debts and no chance can create them.

Whether the provision is void or valid should not depend upon a fact of this kind, which may or may not exist when the assignment comes to be carried out. The invalid provision is made in case it should exist, and it is invalid when the assignment is made.

There is no error in the record and the judgment should be affirmed, with costs.

All concur.

       Affirming 35 St. Rep., 710.


author: Finch, J.

text:
    Isaac Romaine, Receiver, App’lt, v. Michael Chauncey et al., Resp’ts.

      (Court of Appeals,

      Filed January 20, 1892.)

    Divorce—Alimony—Cannot be taken (for wire’s antecedent debts.
    Alimony awarded to an innocent wife by a court of equity as incidental to a decree of divorce in her favor, cannot be appropriated by her creditor to the discharge of a debt contracted by her and actually subsisting prior to the date of the decree.
    Appeal from judgment of the supreme court, general term, first department, reversing interlocutory judgment overruling defendant’s demurrer, and sustaining said demurrer.

      George Y. N. Baldwin, for app’lt; Cowen, Dickerson, Nicoll & Brown and Noel Gale, for resp’ts.

       Affirming 39 St. Rep., 430.

   Finch, J.

This case presents an interesting question which we-are called upon for the first time to decide. There are no direct, and conclusive precedents to be followed; no explicit and specific statutes coming with an appropriate direction; but only a broad-general rule on the one side and a just and strong necessity for an exception to it on the other. The question is, whether alimony, awarded to an innocent wife by a court of equity as incidental to-a decree of divorce in her favor, can be appropriated by her cred-tor to the discharge of a debt contracted by her and actually subsisting prior to the date of the decree. The question was different in Stevenson v. Stevenson, 34 Hun, 157,t cited as a pertinent authority, for in that case the decree of divorce was granted in. 1855 and the creditor’s judgments obtained in 1880. A debt contracted by the wife after the decree, presumably for her support,, and with natural reliance upon the alimony by the creditor as the means of payment, stands upon a very different footing from a debt of the wife contracted prior to or during the marriage and. before its judicial dissolution. In the latter case two new elements enter into the question; one, the imposition of an unfounded duty on the husband, and the other, a perversion of the decree from its definite and intended purpose, and from that, authorized by the law. -

Alimony, as we all understand, is an allowance for support and maintenance, having no other purpose and provided for no other object. Like the alimentum of the civil law, from which the word was evidently derived, it respects a provision for food, clothing and a habitation, or the necessary support of the wife after the marriage bond has been severed; and since what is thus necessary has more or less of relation to the condition, habit of life, and social position of the individual, it is graded in the judgment-of a court of equity somewhat by regard for these circumstances, but never loses its distinctive character. If, sometimes, as the appellant claims, regard is had to the brutal and inhuman conduct of the husband, Burr v. Burr, 10 Paige, 20, it serves only to make the court less considerate of his situation and more liberal in its view of the necessities of the wife. Thus the prevailing rule in this country is said to be that where the wife has sufficient means to support herself in the rank of life to which she belongs no alimony will be allowed, 1 Am. & Eng. Enc. of Law, 485, and where the parties are living apart under an agreement of separation, by the terms of which the husband has provided adequate means of support, no temporary alimony will be given. Collins v. Collins, 80 N. Y., 1. And when awarded, it is not so much in the nature of a payment of a debt as in that of the performance of a duty. During the marriage the husband owes to the wife the duty of support and maintenance, although -owing her no debt in the legal sense of the word; but, under the modem statutes, he does not owe to her the duty of paying her debts contracted before the marriage or thereafter if they are solely hers and not at all his. The divorce, with its incidental allowance of alimony, simply continues his duty beyond the decree and compels him to perform it, but does not change its nature. The divorce and consequent separation are wholly his own fault, and do not relieve him from, the continued performance of the marital obligation of support. The form and measure of the duty are indeed changed, but its-substance remains unchanged. The allowance becomes a debt-only in the sense that the general duty over which the husband had a discretionary control has been changed into a specific-duty over which not he, but the court, presides.

The authorities therefore cited to the effect that alimony is not', strictly a debt due to the wife, but rather a general duty of support made specific and measured by the court, seem to me to be well founded. Wallingsford v. Wallingsford, 6 Har. & J., 485; Daniels v. Lindley, 44 Iowa, 567; Burr v. Burr, 7 Hill, 207; Guenther v. Jacobs, 44 Wisc., 354; Crain v. Cavana, 62 Barb., 109;. Jordan v. Wester man, 62 Mich., 170. And so it follows that as, during the marriage, the husband, while bound to support the-wife, was not bound to pay her pre-existing or separate debts, so after the divorce he must continue the support, but is not required to pay out of his means furnished for that purpose the wife’s antecedent debt The decree cannot logically work the miracle of transforming the duty which he does owe into one which he does-not and never did owe; and yet that result is inevitable if the antecedent creditor is at liberty to swoop down upon the provision and carry it away for his own use.

That result accomplishes another thing. It perverts and nullifies the decree of the court, and leaves the judgment specifically made for one purpose to operate wholly for another, and so obstruct and destroy the humane intent of the law. There is no-doubt, of course, that the wife’s right to alimony comes from the-statute and not from the common law. If that proposition needed the aid of a full and historical argument in its support such has already been furnished by this court. Erkenbrach v. Erkenbrach, 96 N. Y., 456. We must look then to the provisions of the Code of Civil Procedure, which has re-cast and re-produced the terms-of the previous statutes, to see when and for what purpose alimony may be allowed. Section 1769 regulates the temporary alimony which may be awarded pendente lite. The terms of the provision are that in an action for an absolute divorce or for a separation, the court may, in its discretion, make orders requiring the husband to pay any sum or sums of money necessary to enable the wife to defend the action or to provide suitably for the education and maintenance of the children of the marriage, or for the support of the wife, having regard to the circumstances of the respective parties.

It seems to me impossible to misunderstand the force or meaning of that provision. Its palpable purpose is to enable the wife to prosecute her suit and save her from starvation or beggary during the process. Is it conceivable that the court making such order is bound to stand silent and submissive while the whole scope and purpose of its provision is perverted and nullified ? If that be so, the law of divorce has no help or remedy for the injured wife who happens to be in debt. She cannot hire counsel or feed herself and her children pending the litigation, because her pre-existing creditor seizes the humane provision at the moment it is made. The court might as well not make it at all, and simply say there is no divorce or defense for. an indebted wife. Undoubtedly, in such a known state of the law, the court would find some way of making its order effective, as perhaps by interposing a trustee in behalf of the wife, but no one has ever yet supposed that such a safeguard was needed. And why should it be? The antecedent creditor has no equity against the fund; the husband is not bound to furnish it for such creditor’s benefit; nor the wife to accept it under a rule which gives her a stone when she asks for bread. And of such character has the allowance of temporary alimony been considered that an assignment of it by the wife to her solicitor as compensation for his services has been disregarded and set aside as being a misappropriation of a fund awarded for a special purpose. Jordan v. Westerman, supra.

Similar considerations pertain to § 1759 of the Code, which regulates permanent alimony. The second subdivision is this: “ The court may, in the final judgment dissolving the marriage, require the defendant to provide suitably for the education and maintenance of the children of the marriage, and for the support of the plaintiff, as justice requires, haying regard to the circumstances of the respective parties.” Thus the court may require the husband to provide for the support of the wife, but m'ay not require him to furnish a fund for the payment of her debts. He never stood under that obligation, and the decree of divorce cannot impose it. He has a right to insist that his allowance shall not be diverted to a use for which he did not in fact supply it and was under no obligation to supply it, and to resist, as he stands here resisting, a claim upon it which, as against him, is wholly unauthorized, and a completé perversion both of the decree and of his duty.

The plaintiff in his character of receiver for the judgment creditor comes into a court of equity in pursuit of equitable relief, into the same court which devoted the fund to the support of the wife and should decently respect its own authority, and asks the aid of that tribunal to practically nullify its decree, to abandon its humane purpose, to join in an indirect robbery of the husband, to pervert his allowance to an end which he never sanctioned and was not bound to sanction, and to disregard the public policy which seeks to protect wife and children from the pauper’s necessity and fate; and he asks this without a pretense of special equity against the fund and solely on the basis of a hard legal right. I have only to say that I think equity ought' not to give him that aid; but that having both the power and the opportunity to prevent the perversion of its purpose and to make effective and protect its own decree, it should avail itself of that opportunity and exercise that power by the simple process of refusing its assistance. Under some' circumstances the court might be troubled to compel respect for its purpose and prevent a perversion of its order, but there is no such difficulty where the wrong cannot be done except by the consent and with the active participation of the court. We have a right to refuse our assistance, not merely because the equities are balanced, but because those of the defendants are superior and ought to prevail.

I can see the possibility and realize the plausible force of one criticism upon this view of the subject; and that is that there is a legal judgment which cannot be satisfied by execution, and the-creditor has a right to pursue in equity the debtor’s equitable assets, and the court has no right upon some sentimental view of the subject to withhold its aid. Exactly; all that is true; but it assumes the precise point of the dispute, that the wife’s alimony is-an equitable asset liable generally as property to the payment of her debts. It is property in one sense, but not in the broad general sense of the term. It is a specific fund provided for a specific-purpose, with restraint and limitation written all over its-face by the very law and decree which brought it into existence. And here I think we may wisely avail ourselves of one of the analogies which the general term opinion has furnished for our use. Policies of life insurance in favor of the wife on the life of the husband we have persistently held to be non-assignable. Eadie v. Slimmon, 26 N. Y., 9. We determined that their peculiar character and purpose necessarily took from them -the-chief and most important characteristic of property in general. As-I read the later case of Baron v. Brummer, 100 N. Y., 372, we-distinctly held “ that such policies should not be subjected to the-lien of creditors either of husband or wife ; as to the former by the express words of the statute, and as to the latter by the determination of the courts.” We took from them the transferable-characteristic of property as such and tied them closely to their lawful object and purpose. The argument made now would convict us of error then. Alimony allowed by an order is in one-sense a debt due and to become due to the wife, and her property. In the same sense a life policy is a debt to become due or due as-to its dividends, and is property in the hands of the assured. The whole force of the argument lies in steadily ignoring the quality and character of the property and treating it as ordinary and general assets. The appellant’s criticism upon this analogy is that the doctrine as to life insurance policies was dictated by the act of 1840 and rested specially upon the provisions of that act. So-much is undoubtedly true, but does not at all disturb the analogy, for in the present case the similar construction is dictated by the statutes of divorce and is derived from the character of their provisions. In both cases a thing which might have had the general and ordinary characteristics of property, transferable by sale and liable to creditors, is taken out of that broad category by the terms of the statutes whose obvious purpose and aim require a restriction and limitation to which property in general is not subjected. This class of cases indicate that the question is not one of exemptions but of the right of creditors to a particular fund, which fund, created by equity, should have the protection of equity. It does not, therefore, answer the view we have-taken of the duty of .the court in this case to appeal to the-general law of property and the general duty of the court in respect thereto. The question concerns a species of property of a peculiar and specific character, created and existing for one purpose only, and whose express limitations take it out of the general rule.

The doctrine which I have here invoked, that a court of equity, when applied to for its active assistance in the enforcement of a claim founded upon a bare legal right, will refuse its aid where granting it would work injustice, or impose conditions calculated to mitigate or remove the injustice, has been repeatedly asserted under the old law, which permitted the husband to reduce to his possession and become the owner of the wife’s personal property. In such cases equity, not denying the legal right, has yet invariably limited and qualified it by recognizing and protecting the wife’s equity, not only against the husband, but against his assignee or judgment creditor. In Smith v. Kane, 2 Paige, 303, the chancellor did not hesitate, where the wife’s property was less than was needed for her support, to refuse relief entirely, and dissolve the injunction. This class of cases are pertinent only upon the right of the court to withhold its aid where the legal claim, however valid, is wielded to effect a wrong. The equity of the husband in the present case to prevent a perversion of his allowance to an unlawful purpose is entirely clear ; that of the wife to receive it under the decree for the specific purpose which led to its award I think also should prevail over the creditor’s claim. During the marriage he had no right, legal or equitable, against her support furnished by the husband, and, after its dissolution, without her fault, she ought not to be put in a worse condition. Yrhen to these equities are added the duty of the court to control and mak^ effectual its own decree, and the public policy in which its provision is founded, it seems to me that no doubt is left as to the right of the court to dismiss the creditor, and refuse him the relief he asks.

The judgment of the general term should be affirmed, with costs.

All concur.


text:
    The People ex rel. The Brush Electric Illuminating Co., App’lt, v. Edward Wemple, Comptroller, Resp’t.

      (Court of Appeals,

      Filed January 20, 1892.)

    1. Taxes—Domestic corporations — Electric lig-ht company—Exemption.
    An electric light company is a manufacturing company, and prior to the passage of chap. 353, Laws 1889, which took electric light companies by name out of the exemption clause in favor of manufacturing corporations (§ 3, chap. 543, Laws 1880) was exempt from payment of taxes to the state.
    3. Same—Certiorari.
    The account against the relator which established the assessment complained of, so far as it was within the power of the comptroller to do, was settled July 3, 1889. Immediate notice of the assessment was given to the relator, and after the expiration of thirty days, no proceedings having been taken to review the same under § 17 of ch.361, Laws 1881. as amended by Laws 1885, chap. 501, the comptroller issued his warrant for collection of the tax. Held, that the relator had not by delay lost its right of review by certiorari.

    3. Same—Appeal.
    The provision for an appeal to a board composed of the secretary of state, attorney general and state treasurer under the provisions of the law of 1881 does not apply to a case where the officers of the corporation claim that the company is not subject to any taxation.
    Appeal from judgment of the supreme court, general term, third department, confirming the action of the comptroller in levying and collecting taxes from the relator on the ground that it was not a manufacturing corporation doing business within this :state, and so entitled to exemption under § 3 of chapter 542 of the Laws of 1880.

      John W. Houston, for app’lt; Chas. F. Tabor, att’y-gen’l, for xesp’t.

       Reversing 39 St. Rep., 614.

   O’Brien, J.

This appeal brings here for review a judgment ■entered upon the return to a writ of certiorari, sued out by the relator, for the purpose of reviewing a decision or determination •of the defendant as comptroller of the state, whereby the relator was adjudged liable to pay certain taxes and penalties to the state under chapter 361 of the Laws of 1881, and the laws supplement.ary thereto and amendatory thereof, providing for the assessment and payment of taxes to the state by certain corporations. The relator is a domestic corporation organized by filing a certificate, February 17, 1881, under the act of 1848, providing for the formation of corporations for manufacturing and other purposes. Since its organization it has been engaged in the business of producing electricity and supplying the same to its customers in the city of Hew York, for the purpose of lighting public and private places in that city. The relator contended that it was a manufacturing corporation and as such exempt from paying the tax to the •state upon its business, and made no reports and paid no taxes till July, 1889, and then only by force of chapter 353 of the Laws ■of 1889, which took electric light companies, by name, out of the •exemption clause in favor of manufacturing corporations. The relator is beyond all controversy liable for the tax since the passage of the act last mentioned, but denies that it is liable for anything before, as the exemption clause covering manufacturing corporations then applied to it. In the year 1889 the comptroller ■caused an examination of the affairs of the relator to be made by a commissioner appointed by him, and upon his report made a statement of the account between the relator and the state, and determined the amount of the tax and penalty due to the state at 810,752.50.

The comptroller then issued his warrant to the sheriff, under the statute, directing the collection of the tax out of the relator’s property, and it was thus compelled to pay in order to protect its property from sale, and it did pay under protest. By chapter 463 of the Laws of 1889 power is given to the comptroller, at •any time, to revise and readjust any account for taxes settled •against any corporation, by him or any of his predecessors in office, for taxes arising under the statute, when it is made to appear by evidence submitted to him that the same has been illegally paid, or when it includes taxes that could not have been lawfully demanded, and he was required to resettle the account according to law and the facts, and to charge or credit, as the case might be, the difference, if any, resulting from such revision and resettlement upon the current account of such corporation. The relator, claiming the benefits of this statute, filed with the comptroller, August 4, 1890, an application in writing, in the form of a petition, for a revision and readjustment of the taxes previously-levied and paid. This application was verified and accompanied by proofs to show that the relator was a manufacturing corporation, and for that reason the taxes paid by it could not have been, lawfully demanded by the state. The comptroller denied this application, and from his order refusing the revision asked for the-relator sought relief before the courts by means of the writ of certiorari. The relator did not complain of the amount determined by the comptroller, and the only question which was the subject of controversy on the application for a revision was-whether the relator was or was not exempt from payment of taxes as a manufacturing corporation. A question of practice is presented by a point made by the attorney-general to the effect, that the relator was not entitled to the writ of certiorari in this-case, which renders it necessary to notice the various statutory provisions prescribing the methods of reviewing the determination of the' comptroller in these cases. The account against the relator which established the assessment, so far as it was within the power of the comptroller to do so, was settled July 8, 1889. Immediate notice of the assessment was given to' the relator, and after the expiration of thirty days, no proceedings having been taken to review the same under § 17 of the act of 1881, as amended by chapter 501 of the Laws; of 1885, the comptroller issued his warrant for the collection of the tax. The learned attorney-general contends that the relator by delay lost the right of review by certiorari. This would probably be so except for subsequent legislation which must be presently noticed. The Code, § 2122.; provides that, except as otherwise prescribed by statute, a writ of certiorari cannot be issued to review any determination which can be adequately reviewed by an appeal to a court or to some other body or officer, and it is urged, by the attorney-general that the relator could have appealed from the determination of the comptroller to a board composed of the-secretary of state, attorney-general and state treasurer under the- ■ last clauses of § 1 of the act of 1881, and for that reason was-not entitled to the writ. The provision for an appeal to this board does not seem to apply to a case like this, where the officers of the corporation taking the position that the company was not subject to any taxation whatever under the act, neglect or refuse to make any report, but to cases where reports are made by the proper-officers of the corporation and the comptroller not being satisfied with such report, proceeds to make a valuation of his own and to-settle an account against the company upon the basis of suph ■valuation, then the company may appeal to the board above mentioned and the question presented by the appeal would seem to be, whether the valuation made by the corporate officers, or by the comptroller in disregard of it, is the correct and just one. Here the valuation and determination was not made under § 1, but under § 12 of the act of 1881, as amended by chapter 151 of the Laws of 1882, and chapter 501 of the Laws of 1885. But the .act of 1889 above referred to, which gives to the relator the right to apply for a revision and resettlement of the tax, also prescribes a method for reviewing the action of the comptroller upon ■such application, which brings up all questions involved in the application. The act provides that “The action of the comptroller upon any application made to him by any person or corporation for a revision and a settlement of accounts, as provided in this .act, may be reviewed, both upon the law and the facts, upon ■certiorari by the supreme court at the instance either of the party making such application or of the attorney-general, in the name and in behalf of the people of this state, and for that purpose the comptroller shall return to such certiorari the accounts and all the evidence submitted to him on such application, and if the original or resettled accounts shall be found erroneous or illegal by that court either in point of law or of fact, the said accounts shall be there corrected and restated by the said supreme court, and from any such determination of the supreme court an .-appeal may be taken by either party to the court of appeals as in other cases.” Whatever may be said against the policy of requiring the comptroller to revise and change accounts for taxes, years after the settlement of such accounts, and perhaps after the payment of the tax, this statute is broad enough in its language .and was, we think, intended to reach such a case as this.

The right of the state to receive the tax assessed upon the relator depends upon the question whether it was or was not a manufacturing corporation. In the original act, providing for the payment of taxes to the state by certain corporations, “ manufacturing corporations carrying on manufactures within this state,” were ■exempted from its operation. Laws of 1880, chap. 542, § 3.

In the practical operation of the law it was soon discovered that these broad general words of exemption covered and protected from the payment of the tax a class of corporations which the legislature probably did not intend to relieve, when inserting the words of exemption in the statute. Accordingly it was found necessary from time to time as the cases arose to take out of this ■general exemption certain corporations by name which the legislature thought were not within its policy. The courts held that gas companies were manufacturing companies, Nassau Gas-Light Co v. The City of Brooklyn, 89 N. Y., 409, and the legislature, in 1881, proceeded to amend the law by providing that gas companies should not be taken to be within the exemption. So electric lighting and power companies were taken out of the exemption by the use of similar language. Laws 1889, chap. 353. These amendments, it is contended in behalf of the relator, show a construction by the legislature of the terms “ manufacturing corporations ” in harmony with its claims in this case. In so far as the action of the legislature has any bearing on the question at. all it is, no doubt, in that direction. But the circumstances under-which the amendment of 1889 was made deprives it of much of the weight that courts are accustomed to give to what is known, as legislative construction. A controversy then existed, as it had existed for some time before between the state, on the one hand, and the companies on the other. The companies claimed that they were exempt, as manufacturing companies, from liability to-pay taxes to the state under the act, while the comptroller, representing the state, asserted the contrary.

In this condition of things the legislature stepped in and enacted that thereafter the companies should not be deemed within the-exemption clause and this settled the controversy so far as the.future was concerned, but as to the years that bad elapsed when no report was made or any taxes paid, the question was left substantially where it was before. When a material change in phraseology is made many years after the passage of the act, and after controversies and differences in regard to its construction have arisen, there is sometimes a presumption that the legislature: intended by the amendment to add a new provision to the origi- - nal act and to make it apply to a case to which it did not apply before. When the legislature takes certain property, for purposes. of taxation, out of an exemption clause by name, the question arises whether there is not a presumption in such a case that it. was within it before. People v. Board of Supervisors, 16 N. Y., 431; People v. Knickerbocker Ice Co., 99 N. Y., 184. As the: statute now reads, certain manufacturing companies are by name-taken out of the exemption and subjected to the payment of the-tax. Whether without this special exception they would still be-exempt, under the general words of the exemption clause, is substantially the question involved here. Electric light and power companies are not now manufacturing companies within the statute under consideration, because the legislature, in 1889, so enacted. But it does not follow that because the legislature then declared that they should not be deemed manufacturing corporations and thus not exempt from payment of the tax, that they were-not such and so exempt before. In determining whether a given case is within a clause in a statute exempting certain property or interests from taxation, the policy of the law in making the exemption must be considered and should have great weight. If the-question whether a corporation engaged in the business of furnishing electricity for lighting public and private places or for power is a manufacturing company was made to depend upon the meaning of these words as found in dictionaries, or upon the technical language of science in describing electricity as a power or as an agent in nature, it would doubtless be difficult and perhaps impossible to show that the process which the relator calls manufacturing produces anything that in a certain sense and in some form did not exist before. That, however, is true of most- if not all' manufacturing operations.

The application of labor and skill to materials that exist in a. natural state gives to them a new quality or characteristic and adapts them to new uses, and the process by which this result is brought about is called manufacturing, whether the change is accomplished by manual labor or by means of machinery. But we think that these considerations are by no means conclusive in determining the true scope and meaning of the terms “ manufacturing corporations,” as they are used in the statute. The true inquiry would seem to be whether a corporation organized as this is and carrying on the business that this does, and in the manner shown, would not be considered, in common language, as engaged in some manufacturing process or carrying on some manufacturing business, though granting all that is said by experts and others about electricity as a natural element or force. To say that electricity exists in a state of nature and that a corporation engaged in the business that the relator is collects or gathers it, does not fully or accurately express the process by means of which it is enabled to sell and deliver something useful and valuable to its customers. The business in which this corporation is engaged renders it necessary, in the first place, to invest a large amount of capital in a plant, which may appropriately enough be called a factory. Then it must purchase and consume a vast amount of coal to produce steam and to-furnish power for the operation of machinery.- Then it supplies and operates a complicated system of machinery, such as boilers, engines, dynamos, shafting, belting and such other things as are commonly used in manufacturing establishments, and then by means of wires, cables and lamps it lights streets and private houses by electricity for a compensation. But the electricity or electric currents that produce this result cannot properly be said to be the free gift of nature, gathered from the air or the clouds. It is the product of capital and labor, and in this respect cannot be distinguished from ordinary manufacturing operations. According to the common understanding the electricity, or thing which produces the results from which the corporation derives its income, is generated or produced by the application of power to machinery, and thus, by means of a process wholly artificial, the relator is enabled to sell the product of its operations to its customers.

Passing by the refinements of scientific discussion as to the nature of electrichy, it would seem to be common sense to hold that a corporation that does all this is in every just sense of the term a manufacturing corporation. The mere appropriation or use of an article or thing which is furnished by nature is not a manufacturing operation. The liberation of natural gas from its hiding place in the earth, and its transportation through pipes to consumers, would not properly be called a manufacturing operation, but the production of illuminating gas and its distribution to customers, by means similar to the operation which the relator carries on, has been held by this court to constitute manufacturing, and a corporation organized for that purpose is a manufacturing corporation. Nassau Gas Light Co. v. Brooklyn, supra. So too we have held that the collection, storage, preparation for market and transportation of ice is not a manufacture but the production of ice by artificial means. People v. Knickerbocker Ice Co., 99 N. Y., 181.

1. When we attempt to establish the proposition that the gas which lights one room is a manufactured product and the electricity which lights another is not, we are obliged to rely more upon the definition of terms and the distinctions of scientists than the actual practical processes and operations by means of which results, in all respects or at least substantially the same, are produced. If due weight is given to the fact that electricity as now used and applied to the business of life, such as the lighting of streets and buildings, the propulsion of cars and machinery and like operations, is essentially the product of the skill and labor of man, there is no difficulty in reaching the conclusion that a corporation engaged in the business of generating, storing, transmitting and selling it is, what was commonly known at the time of the passage of the corporation tax law in 1880, a manufacturing corporation. The learned judge who gave the opinion in one of those cases at the general term has extracted from the proofs before the comptroller on the application of the relator a concise and accurate description of the mechanical process used in the business of electrical illumination which, on account of its clearness and brevity, conveys the idea better than any language we could employ: A steam engine is used as a motive power for the propulsion of machinery which is attached to a driving wheel, which, by means of a belt connected with another wheel or pulley of the dynamo, turns or revolves, the armature. The armature is a coil of wire wound on a metal core and mounted on a shaft, and is revolved by the power communicated from the engine through the means of the belt. The armature is revolved within or between the ends of a large horseshoe magnet, the opening of which is downward. The magnet is made by winding a soft iron horseshoe or soft curved horseshoe-shaped iron with a coil of conducting wire, and sending through the coil a current of electricity. When once vitalized by such current the magnet never loses this magnetic property, even after the current stops, but is ever afterwards available for the purpose of electric currents, upon the armature being revolved between the poles of this magnet. By the rapid revolution of the armature within what is termed the field of force between the poles of the magnet, this mysterious force or energy is accumulated, known as electricity, and is thence conducted over copper bars or mains throughout the territory or city in which it is used, and is distributed on smaller wires or mains to the houses or places which are to be lighted.” The material from which all manufactured things originate exists in a natural state; but the manufacturer, by the application to these materials of labor and skill, gives to them a new and useful property. The electricity which is generated and transmitted by the operation of the relator and which, under its manipulation, illuminates houses and streets, is a very different thing from that mysterious element that is said to pervade nature. The attorney-general has _attached to his brief in this case a very elaborate and able opinion by the court of common- pleas of Pennsylvania, in the case of the Commonwealth of Pennsylvania v. The U. S. Electric Lighting Company, in which the learned judge arrives at the conclusion that companies of this kind are not manufacturing corporations. It is proper to say, however, that the highest court of that state-while affirming the judgment rendered by the learned judge on other grounds, did not assent to his views that electric light companies are not manufacturing corporations. Commonwealth of Pennsylvania v. Northern Electric Light & Power Company.

The case is not yet reported, but the following passage from the opinion of the court by Williams, J., expresses views upon this question which are applicable to the case at bar. “ This company whose character we are considering sells the electricity it makes or brings into being ’ as a commodity. It provides the lamps or appliances for the use of its customers, by means of which the light is produced. It sells them the electricity, measures it as it is delivered, and is paid for according to the quantity furnished. Whatever electricity may be, it seems absolutely within the power and under the control of the company that brings it into being. It is compelled, by the process employed, to come into being. It is secured, stored, poured out or liberated at will. Its manifestations are both seen and felt. It moves with incredible velocity and power. It carries the tones and inflections of the human voice or moves loaded cars, depending on the volume of the current and the manner of its application. It may be, in the hands of a physician, a soothing remedial agent, and in the hands of the law an instrument of execution, swifter and surer than the headman’s axe. It may be too early to show just what it is. The scientists whose views the learned judge adopted may be right or wrong. We have no need to decide that question. The laws are written ordinarily in the language of the people and not in that of science; and if this case depended on the question on which it turned in the court below we should be led by the findings of fact to a different conclusion from that which was there reached and hold that this company was a manufacturing company.”

The facts that are before us in this case touching the manner of generating and using electricity are the same in substance as were before the supreme court of Pennsylvania in the case above referred to. One of the experts whose testimony was submitted to the comptroller by the relator on the application to revise and resettle the tax thus described the process: “ The electrical energy which is manufactured and sold by electric light corporations originally resides in and is extracted from the coal which is burned, or, more correctly speaking, from the heat which is produced by the combustion of coal. Electrical energy is produced at the central station; it may be stored up in cells of definite capacity, known as accumulators; it may be, and in fact is, measured and sold in determinate quantities at a fixed price precisely as are coal, kerosene oil and gas. It may be conveyed to the premises of the consumer upon a wagon boxed up in an accumulator, or it may be sent through a wire, just as gas or oil may be transported either in a closed tank or forced through a pipe. Having reached the premises of the consumer, it may be used in any way he may desire, being like illuminating gas, capable of being transformed either into heat, light or power at the option of the purchaser.”

The legislature has, in various acts passed since the corporation tax law was enacted, described the process of generating electricity as a manufacturing process, and recently in a revision of the statutes, providing for the incorporation of such companies, they are described as corporations for manufacturing and using electricity.” Laws 1890, chap. 566, art 6, § 60; Laws 1882, chap. 73, § 1; Laws 1887, chap. 716.

This is also true with respect to the statutes passed for the incorporation and regulation of such companies in England and in many of our sister states. 45 and 46 Viet., chap. 56; E. S., Ohio, 1890, § 8752. We think that until the amendment of 1889 the relator was exempt from payment of taxes to the state under the exception in the statute in favor of “ manufacturing companies ” generally.

The judgment of the general term and determination of the comptroller should be reversed, and the comptroller directed to re-settle the account, and to credit the relator in its account the amount of the tax and penalties paid, with interest from the date of payment, and costs in all courts to the relator.

All concur.


text:
    The People ex rel. The Edison Electric Illuminating Co., Pl’ff, v. Edward Wemple, Comptroller, Def't.

      (Court of Appeals,

      Filed January 20, 1892.)

    1. Taxes—Electric light comportes.
    An electric light company is a manufacturing company, and prior to the passage of chapter 353, Laws 1889, which took electric light companies by name out of the exemption clause in favor of manufacturing corporations, (§ 3, chap. 542, Laws 1880), was exempt from the payment of taxes to the state.
    2. Same.
    It is not material how or under what particular statute the relator came into existence as a corporation.
    Appeal from judgment of the supreme court, general term, tdird department, modifying the determination of the state comptroller in levying and assessing taxes upon the franchise and business of the relator, by deducting from the aggregate of the taxes and penalties the aggregate of the penalties above ten per centum.

      Eugene H. Lewis, for pl’ff; Okas. F. Tabor, att’y-gen’l, for resp’t.

       Reversing 39 St. Rep., 605.

   O’Brien, J.

The questions involved in this case are the same as those passed upon by us at this term in the case of The People ex rel. Brush Electric Illuminating Company v. Wemple, comptroller, etc. The record does not show any material difference in the facts out of which the questions arise. The relator was incorporated December 16, 1880, under chap. 37 of the Laws of 1848, providing for the incorporation of gas companies, whereas the relator in the other case was incorporated under what is known as the act for incorporating manufacturing companies, passed the same year. We do not think it is material how or under what particular statute the relator came into existence as a corporation. The material question is whether, during the years for which the tax in question was paid, it was engaged in business as a manufacturing company within this state. It was incorporated subsequent to the passage of the act, chap. 512, Laws of 1879, authorizing gas companies to engage in the business of supplying electric currents for purposes of illumination. Since its incorporation, the relator’s sole business has been the manufacture and sale of electric currents for purposes of illumination within the city of Hew York, and its entire capital has been and is employed in that business. The relator made the report and paid the taxes under chap. 542 of the Laws of 1880, as amended by chap. 361 of the Laws of 1881, for the years 1886, 1887 and 1888, but made no reports and paid no taxes for the years 1881 to 1885 inclusive. The comptroller caused an investigation of its affairs to be made, and on the 21st of February, 1890, settled an account against it for taxes and penalties amounting to $5,090.45, and served a copy of the same. Ho warrant was issued to collect the tax, but the relator, on March 24, 1890, paid it into the state treasury. On July 2, 1890, it filed an application in the form of a petition, accompanied by affidavits showing the nature of its business, with the comptroller, asking that the account settled against it for taxes be revised and resettled under the act of 1889.

On Hovember 26,1890, the comptroller denied this application, and on the 26th of December, 1890, the relator upon a petition gave notice of an application for the writ of certiorari, on. the 5th of January, 1891, which was allowed. The general term modified the determination of the comptroller by deducting a considerable sum for penalties which had been included in the account as settled, and as thus modified the decision of the comptroller was affirmed. The state could not lawfully demand the tax if the relator was a manufacturing corporation, and we have held in the case of the Brush company that it was, and as such was exempt from payment of the tax for the years for which it was assessed.

The judgment of the general term and determination of the comptroller should, therefore, be reversed on the relator’s appeal, and the comptroller directed to resettle the account and credit to the relator the amount of the tax and penalties paid, with costs in all courts.

All concur.


text:
    William Nicol, App’lt, v. Charles G. Sands et al., Resp’ts.

      (Court of Appeals,

      Filed January 20, 1892.)

    1. Contract—Construction or—Waterworks Company.
    Under chapter 369, § 5, Laws 1889, providing that it should be the duty of a water company “to contract with the authorities * * * of any town or village through which conduits or mains of such corporations may pass, * * * to supply any of such inhabitants or authorities with wholesome water," a water company made a contract with the authorities of the town of Islip, to lay its street pipes. In the company’s petition for the same, it says, “ for a privilege to supply the inhabitants and authorities with pure and wholesome water;” but nowhere in the contract was this provided for; but it contained provisions that the company should erect and operate two pumps of appropriate size, each having a capacity of pumping one million gallons in every twenty-four hours, and that they would lay twenty-three miles of pipe in the streets, etc. Held, that this was a binding contract to deliver pure and wholesome water to the town authorities and to the inhabitants up to the maximum amount (if required) of two million gallons every twenty-four hours.
    2. Same—Highway commissioner—Compensation roe supervising laying OR WATER PIPES.
    It is not the duty of a highway commissioner to supervise the laying of water pipes, and where a water company agree orally to pay them three dollars per day while performing such duty, it will be held to its agreement. “
    Appeal from judgment of the supreme court, general term, second department, affirming judgment for defendants rendered at special term.

      George A. Blade, for app’lt; Timothy M. Grifftng and Wil/mot M. Smith, for resp’ts.

       Affirming 39 St. Rep., 16.

   Peckham, J.

It seems to me to be too clear for argument that the contract between the town authorities and the Water Works Company obliges the latter to furnish water in addition to errecting works which would be comparatively valueless unless they were put to the use which their erection would imply. The obligation is just as binding upon the company if it can be fairly implied from the language actually used in the contract, as if it were in so many words specifically mentioned therein. Within chap.. 369 of the Laws of 1889, the contract was valid. The persons who signed the application to the town authorities pursuant to the provisions of the act in relation to the creation of water works companies in towns and villages, passed June 1873, and the acts amendatory thereof, stated in writing their intention to supply the town and the inhabitants thereof with pure and wholesome water. The town authorities in granting their official written consent to the application, recite therein the fact that the applicants have organized for the purpose of forming a water works company to supply the town and the inhabitants thereof with pure and wholesome water, which they allege would be of great advantage to the town and a great benefit to the inhabitants thereof.

The town authorities thereupon resolve “ to grant the said application and the same is hereby granted.”

After the incorporation of the company and its organization by the election of officers, the contract in question was entered into. In it the company, agrees to erect the water works and lay in the principal streets of the town twenty-three miles of pipe of different named sizes, for the puiqoose of supplying the town and its inhabitants with pure and wholesome water in accordance with the grant of right of way to lay pipes, etc., by the authorities. The limitation contained in the contract is not to the use of the water by the town authorities for any but fire purposes, but it applies to the fire hydrants, which were specially provided for to the number of 200, and they were only to be used for the extinguishment of fires and also for reasonable exhibitions and practice by the fire department and companies of the town.

The company agreed to erect two pumps and to operate them, which should be of standard manufacture and appropriate size, and each having a capacity of pumping a million gallons in every twenty-four hours. It was also provided that the rates for private consumption should not exceed those of the Haverstraw Water Company, a copy of which schedule was annexed to the contract. This contract was executed in September, 1889, and under it the company proceeded with the work therein provided for, and before September 19, 1890, had laid over twenty-three miles of pipe, and had erected their water works, and placed 200 fire hydrants as directed, and were furnishing to the town and the inhabitants thereof pure and wholesome water, and on the day last mentioned the town authorities stated these facts in writing and accepted and approved the performance of the contract by the company.

Taking everything in the contract and the writings explanatory of its purpose, and its practical execution and construction by the parties, and we have no hesitation in saying there was a binding contract to deliver pure and wholesome water to the town authorities and to the inhabitants up to a maximum amount (if required) of two million gallons every twenty four hours.

The practical construction put upon a contract by the parties to it is sometimes almost conclusive as to its meaning. Woolsey v. Funke, 121 N. Y., 87, at 92; 30 St. Rep., 768; Insurance Co. v. Dutcher, 95 U. S., 269, 273. The company had under this contract, and relying upon it, erected its works, laid its pipes, erected the fire hydrants and actually supplied the water to the town and inhabitants. The proof of the acceptance was objected to as having occurred subsequent to the commencement of the action, but there is evidently no doubt as to the facts which have occurred relating to the manner in which the contract has been carried out and its extent. We think the contract was, so far as this question is concerned, entirely valid.

The other objection is that the commissioners of highways who signed the contract upon the part of the town were bv its terms to be paid by the company for their services in directing and supervising the laying of the pipes. I do not see. that it is made their official duty by any statute to do this work. While there may be no unbending rule of law which positively prohibits under any contingencies sucha provision, yet it is of so questionable a nature as to call for the most scrutinizing review of the result by the courts.. Yery slight evidence of an improper or unfair execution of duty by the commissioners, or of a failure to fully perform the contract by the company after the manner of the strictest construction of its requirements, would probably cause a court to find a fraudulent motive for the insertion of such a provision. The onus would be upon the company to show that the contract was just and fair and had been by them justly and fairly carried out.

It might generally be difficult to prove such a condition of things, but in this case it is shown that there was no talk or conversation as to the compensation to the commissioners until the terms of the contract had been fully agreed upon and written out, and the terms themselves were fair and just to both sides. Each commissioner swore he was in no way moved to the acceptance of the terms of the agreement by any question of compensation, and that subject did not arise until the whole matter as to the terms and conditions of the contract had been already fully agreed upon and settled.

The agreement for the supervising the laying of the pipes and for the compensation of the commissioners was probably made by the company, as the evidence would seem to indicate, upon the theory that if the manner of laying the pipes were approved as the work progressed by the town authorities, there would be no question afterwards as to whether the contract had been fairly carried out on the part of the company. Supervision being no part of the duty of the commissioners, the company was willing to pay them a fair compensation for their work. There is no proof that the supervision was not faithfully executed and none that the contract was not in good faith carried out by the company both in letter and spirit.

Under these circumstances, while entirely disapproving the practice resorted to in this case, we do not feel that justice requires us to set aside this executory contract. The question of whether the compensation of a commissioner of highways in the town of Islip was two dollars or three dollars per day while engaged in the performance of his official duties, we think is immaterial. The company agreed orally to pay them three dollars per day while engaged in supervising the manner in which the water pipes were laid. As this was not an official duty, the question of the amount of difference between such agreed sum and the official compensation is irrelevant The statute of 1886, chap. 452, does not make such supervision ’a part of the duty of the commissioners and I am not aware of any statute that does. The last named act makes provision as to the laying of 'the pipes so that public travel shall not be interrupted, etc., but there is no duty of supervision imposed upon the commissioners of highways during the progress of the work. As there has been neither fraud nor illegality connected with this contract, we must uphold it.

The judgment dismissing the complaint must be affirmed, with costs.

All concur.-


author: Putnam, J. Learned, P. J.

text:
    Ellen Clark, Resp’t, v. The Saugerties Savings Bank, App’lt.

      (Supreme Court, General Term, Third Department,

      Filed December 28, 1891.)

    .Savings banks—Deposit—Invalid payment. °
    The husband of a depositor in a savings bank went to the bank with her book to draw a deposit. The bank officer said the deposit belonged to the wife, and that he must have her order. The husband said the money was his. He then said she had sent him for the money and that she could not give an order as she could not write. The officer gave him a check upon a national bank, payable to the wife’s order. That bank refused to pay it without her endorsement. The husband returned to the savings bank. He there stated that he was authorized to do business for his wife. He then endorsed the check in her name as authorized by her. Thereupon the national bank paid it. Held, that it had no authority to do so ; that hence the savings bank had never paid the depositor and was liable to her.
    Appeal from judgment in favor of plaintiff, entered on verdict and from order denying motion for a new trial on the minutes.
    Action to recover a sum of money deposited by plaintiff in the •defendant bank.

      Egbert Whittaker, for app’lt; Brinnier & Newcomb, for resp’t.
   Putnam, J.

The defendant claims that the judgment should be reversed because the court below erred in excluding evidence ■offered to show that the $500 for which plaintiff recovered was .the property of her husband, William Clark.

The offer on the trial was not to show that William Clark had acquired an interest in said deposit for which the action was brought, subsequent to the delivery of the money to defendant, by assignment or otherwise; but that when deposited it was the property of William Clark in whole or in part, as alleged in the answer.

It may be doubted whether a bank which has received money on deposit and is sued for the money can set up as a defense that the depositor was not the owner, at least, unless it proposes also to show that the person claimed to be the true owner has in some legal way asserted his claim to such money or prosecuted the bank "therefor or taken some proceeding or action to enforce his claim to said deposit. Lund v. Seamen's Bank, 37 Barb., 129; First Nat. Bank v. Mason, 95 Pa. St., 113; Sinclair v. Murphy, 14 Mich., 392.

In this case, under the answer and the facts appearing on the trial, it is difficult to perceive how the testimony offered by defendant could be competent or material. It does not appear that William Clark ever legally asserted any claim against the bank for the money on his own behalf. It is true he made a statement to the officers of the bank that he owned it. But he went there as the agent of his wife, carrying her bank book, and claimed only, to draw the money as her agent. The bank officers declined to pay him, as it belonged to his wife. The officer of the bank, Mr. Bus-sell, testified in this regard as follows, viz.: •

“ Q. What next? What occurred on the 26th day of March, 1888 ? A. On that day her husband,William Clark, brought the book to the bank and asked- for $500; I told him I could not pay that money, it belonged to his wife, it was deposited in her name,, and he said that it was money he had earned, it belonged to him, she had taken it to the bank and put it in her name, although it. belonged to him; then I told him it was necessary for him to get-an order from her to draw the money; he said tome, ‘you know she can’t write an order; ’ I asked him if she sent him for the money, and he said ‘ yes; ’ they had bought a little place and wanted to pay for it in the morning.
“Q. Wanted to pay $500 in the morning? A. Yes, sir; I did not have the money, so I drew a check on the Saugerties National Bank for $500, payable to the order of Ellen Clark; the Savings-Bank had deposits there; he went out with the check; afterward he came back and said they would not pay the check at that bank-unless Mrs. Clark’s name was on it; I tolci him that it was payable to her order, and of course it was necéssary for her to endorse-it; he asked why he could not do that; I asked him if he was authorized to do business for Mrs. Clark and ought to endorse for her; he said he was, but that he could not write; so he requested that her name be written on the check, endorsed on the check by him; her name was written on the check, as authorized by William Clark, to which he made his mark before witness.”

The money was deposited in plaintiff’s name. William Clark took her book to the bank as her agent and received a check payable to her order. The defendant insisted that she was the owner and that he could only draw the money as her agent; to which Clark assented.

The defendant, therefore, not having paid the money to William Clark, or acknowledged his title, but having paid it by delivering-a check to the party it assumed was plaintiff’s agent, payable to-her order, it cannot be competent or material to show that William. Clark was the owner of the deposit in the bank. Both the defendant and William Clark in the transaction of giving the check agreed and acted upon the assumption that plaintiff was the-owner of the funds in question. The bank, the defendant, decided that plaintiff was the owner of the deposit and acted upon such decision.

This view of the case rendered the evidence so, as aforesaid,, offered by the defendant and excluded by the court immaterial;. and makes it unnecessary also to consider the claim of the learned counsel for the appellant that the ruling of the judge below was-erroneous in excluding said evidence as based upon constitutional grounds.

The defendant also insists that there was no sufficient evidence-of a want of care and diligence of defendant, as required under by-law 24 of the bank, to justify the submission of the case to the-jury. Said by-law is as follows, viz.: Article 24. “ Although the bank will endeavor to prevent frauds and imposition, yet all-payments to persons producing the pass books issued by it shall be valid payments and discharge the bank.”

It has been held by the court of appeals in Kummel v. Germania Savings Bank of Kings Countg, 40 St. Rep., 252, in which case the= by-law of the defendant contained a provision that “ the bank will not be responsible to any depositor for any fraud committed upon the officers in producing the pass book and drawing the money without the knowledge or consent of the owner,” that, assuming that the by-laws printed in the book are binding upon the depositor, and constitute a contract between the parties, the duty still devolves upon the officers to exercise care and diligence in order that their ‘depositors may be protected from fraud and larceny. That case also holds that such clause in the contract between the parties does not permit the officers to carelessly close their eyes and pay any person presenting the pass book, but, on ■the contrary, they owe the depositors active diligence in order to detect fraud and forgery.

We think that on the evidence given in the case the question •of defendant’s negligence in delivering the check to William Clark, on which he obtained $500, was- properly submitted to the jury, and that the verdict in favor of plaintiff is supported by the evidence. On the evidence given the case could not have been taken from the jury upon this question of negligence. The plaintiff was called as a witness, and testified as follows, viz.:

“ On the 13th of February, 1888, I deposited in the Saugerties .Savings Bank $1,030; I gave the money to Mr. Jeremiah P. Bus-.■sell, the secretary and treasurer of the bank; I told him not to give that money to any one but me ; he did not make me no answer ; I says: 1 Mr. Bussell give this money to no one but me; he said all right; my husband drawed out $500 on March 26th, 1888; I did not; I did not consent to any person drawing any portion of this money; of the $1,030 I myself drew out $515 and one $15 before that, making $530; the other $500 I never had.”

The deposit was headed: “Saugerties Savings Bank in account with Ellen Clark, Special.” The jury, who saw and heard the plaintiff as a witness, might have believed her statement and not the testimony of the officer of the bank who contradicted her. Assuming that the jury believed plaintiff’s statement, there was :an express direction assented to by the defendant not to give the money in question to any one but the plaintiff. And yet, notwithstanding this agreement, defendant gave a check to William Clark on which he received the money. There was evidence in the case justifying the jury in believing that William Clark had never before drawn money of plaintiff’s, and never had any authority whatever to act as her agent.

On such evidence the question of defendant’s negligence in delivering the check to William Clark was properly submitted to the jury. Kummel v. The Germania Savings Bank, 40 St. Rep., 252; Allen v. Williamsburgh Bank, 69 N. Y., 314; Boone v. Citizens Savings Bank of N. Y., 84 id., 83; Appleby v. Erie County Savings Bank, 62 id., 12; Smith v. Brooklyn Savings Bank, 101 id., 58.

In the Kummel and Allen cases, above cited, there were rules ■of the.respective banks similar to the article on which defendant relies in this case. But the courts hold, as above stated, that the ■defendants owed the duty to the depositors of active diligence.

In a case like the present, where the deposit was marked special,” where the plaintiff testifies that notice was given to the bank to pay no one but herself, which direction was assented to-by the officers of the bank, where it does not appear that William Clark had ever drawn money before, and the evidence leads to-the conclusion that he was not in fact authorized to draw any, a court or jury could properly reach the conclusion that defendant had not exercised the care it should to protect the depositor’s interests. The giving by the' defendant to William Clark of the check on another bank, payable to the order of plaintiff, and the endorsing of said check in defendant’s bank, with the aid of an officer of defendant, is the same as if the bank had paid the $500--in money to Clark in defiance of the notice that plaintiff had given the bank when making the deposit.

The judge submitted the matter to the jury by a fair and impartial charge. His remark as to the plaintiff’s being “ a poor old. lady ” can hardly be deemed an error on which a valid exception can be taken, and if so the error was cured by the statement made-by the judge when his attention was called to such remark.

The plaintiff having made the deposit with the defendant and duly demanded payment thereof, the defendant having declined, to pay the same, and the jury having found the facts in favor of the plaintiff, she was entitled to recover. It was no defence to-the action that the bank had given the check to William Clark payable to plaintiff’s order, unless it appeared that William Clark was authorized to obtain and receive the said check. The evidence in the case was such that the jury could' find that William Clark had no authority whatever to act for plaintiff and was not in fact authorized to do so ; hence the obtaining and receiving the check by William Clark is no defence in the action. Plaintiff deposits $500 with defendant and demands it. Defendant cannot successfully defend because it gave a check payable to plaintiff’s order to-a person who was not authorized to receive it and which check never comes- to plaintiff’s hands.

On the whole we think the case was properly disposed of in the-court below and that the judgment should be affirmed, with costs.

Learned, P. J.

In concurring with the foregoing opinion ot my brother Putnam I wish to add a few words.

I do not feel confident that when William Clark presented plaintiff’s book to the bank, defendant, and the defendant gave a check payable to plaintiff’s order, there was any negligence. The-check could not be drawn without plaintiff’s endorsement. The * defendant did not make the check payable to William Clark, but. to plaintiff. The defendant authorized and requested the Saugerties National Bank to pay the money to the plaintiff. Thus defendant protected the plaintiff against a payment to any other person. And I should be inclined to hold that when a bank book with such a by-law therein was presented by a person other than the depositor, the bank had endeavored to prevent fraud a-nd imposition, when it gave a check on a bank of deposit, payable to-the depositor’s order.

If a check given under such circumstances were shown to be outstanding, and not accounted for, I am not willing to say that the savings bank would be liable for the amount. For the depositor might have endorsed the check and it might be remaining in the hand of some third party. In which case the savings bank would be liable thereon as drawer, if the bank of deposit should refuse to pay. And the payment by the bank of deposit would be a charge against the account of the savings bank thereon.

But in the present case the check is shown to have reached the-bank on which it was drawn, to have been presented and not to have been refused or protested. Hence no liability of defendant, thereon can arise. .

The Saugerties National Bank paid the check without the endorsement of the payee. Hence such payment did not authorize-that bank to charge the amount paid against the defendant. And the defendant has lost nothing.

The check was endorsed as follows: his

“ Ellen Clark, as authorized by William X Clark. Witness,. Frank Bussell.” mark

Bussell then was simply a witness to the fact that William Clark had affixed his mark to the endorsement. He was not a. witness to any authority possessed by William Clark. One who-witnesses an instrument executed by an agent does not in any way, by such witnessing, assert or guaranty that the agent is authorized by the principal. He only asserts that the agent signed the instrument. Frank Bussell, who witnessed the signature, does not appear to have been an officer of the defendant. But even if' he were, the act of witnessing signatures could hardly be within the scope of his duty. So that his act would not bind the defendant. And I have already stated that it bound the witness to-nothing but the genuineness of William Clark’s mark. The Saugerties National Bank were not misled. It saw that a check to the plaintiff’s order had an endorsement purporting to be made by William Clark as her agent. It was for that bank to determine at its own peril whether he was such agent. It failed to do-this.

The defendant therefore has not paid the sum in question to plaintiff or to any one. The money still remains, so far as appears in this action, to the credit of the defendant in the Saugerties National Bank.

The plaintiff is entitled to recover. For, as the case appears, the National Bank has no right to charge against defendant’s account the money paid on this check.

Judgment affirmed, with costs.