author: Bockes, J.: Learned, P. J. :

text:
    ALEXANDER T. STEWART, Appellant, v. GEORGE W. BEALE and HENRY A. MORRIS, Impleaded with ABRAHAM VAN HOESEN and others, Respondents.

      Mortgage on chattels — failure to file, effect of — Execution, a Km before levy — when and to what extent— Court of equity — distribution of moneys in court — Bes inter alios acta.

    A creditor at large of a mortgagor has no standing in court, to have a chattel mortgage declared void, on the ground of its not being filed in the proper office, and a party to maintain such right must be a judgment creditor with a lien upon the mortgaged property, or valid claim to its avails.
    But where a mortgage, covering both real and personal property, has not been •filed in the proper office, as a chattel mortgage, it is void, as to the personalty, against the claim of a creditor arising since the making, but before the filing of such mortgage, on which judgment has been obtained, and execution issued to the sheriff of the county where such personal property is situated, although no actual levy has been made by such officer.
    An execution delivered to the sheriff without actual levy, creates a lien on all the judgment debtor’s personal property within the county from the time of its delivery, enforceable in a court of equity; and such lien can only be defeated by tbe title of a purchaser in good faith, without notice of the execution. (Bocees, J.)

      Beale y. Burdett (1 Paige, 805) approved; Hathaway v. Howell (54 N. Y., 97) distinguished.
    The plaintiff: having a mortgage, covering both real and personal property, but not filed, after a subsequent creditor had obtained judgment and issued execution to the sheriff of the county where such chattels were situate, applied for and obtained the appointment of a receiver of such chattels, and thus prevented such judgment creditor from levying his execution and satisfying his judgment. The moneys on a sale of such chattels having been paid into court for distribution by it as a court of equity, among the parties entitled thereto, held (per Learned, P. J.), that such mortgage was void as against such judgment creditor, and that the court having, by its appointment of a receiver, prevented a levy whereby the judgment creditor would otherwise have been paid, was bound to preserve his rights, and award the fund to him.
    The defendant Van Hoesen, after the execution of the mortgage to the plaintiff, which was not filed, and before the entry of judgment and issue of execution by the defendants Beale and Morris, executed a subsequent mortgage to one Palls, on the same property, which second mortgage was duly filed, and default made thereon, also before issue of said execution, held (per Bocees, J.), that although the title to the chattels vested in Falls on default, and consequently there was no levyable interest in such chattels in the judgment debtor, Van Hoesen, to be reached by the executions of Beale and Morris, yet that this fact could not be taken advantage of by the plaintiff as against Beale and Morris to defeat their claim to such chattels or the avails thereof, after satisfying the Falls mortgage, on the ground of ‘res inter alios acta.

    Appeal to the General Term from a judgment of the Special Term of Columbia county, determining the rights of the parties to certain moneys in the hands of a receiver, entered on the 15th day of June, 1875. The action was brought to foreclose a mortgage of $30,000 held by Alexander T. Stewart, the plaintiff, upon the mill property of Abraham W. Yan Hoesen, at Stuyvesant Falls, Columbia county, New York. The judge at Special Term found, among other facts, that said mortgage was in form a real estate mortgage, but after tbe description of tbe real estate contained the words following viz.: “Together with the buildings, fixtures, machinery and chattels of every kind now situated thereon, or used in connection therewith, with all the right of every nature belonging to said property,- or necessary or convenient to be used in the proper and complete enjoyment of tbe same, and which tbe parties of the first part now own, or are entitled to.”
    No other or further description of said machinery or other persoual property was contained in said mortgage, than as above recited.
    The said mortgage was recorded in the office of the clerk of Columbia county, February 10th, 1869, but the same was not, nor was any copy thereof, filed as a chattel mortgage, or otherwise, in the town clerk’s office of the town of Stuyvesant in said county, until November 20th, 1872, when such mortgage was for the first time filed in said town clerk’s office, and thereafter duly renewed on the 18th December, 1873, by filing a copy thereof, with the statement indorsed thereon required by law.
    At the time of giving said mortgage the said Yan Iloesen resided in said town of Stuyvesant, and has ever since continued to reside in said town; and said mortgage was made in good faith and without any'fraudulent intent in fact. And said personal property consisted of the machinery used in said mill for the operation thereof; and the same remained in the possession of said Yan Iloesen, from the date of said mortgage, for the purpose of operating said mill, and was so used by him for that purpose until a short time before taking possession thereof by the receiver in this action.-
    In the months of June and July, 1870, the defendants Beale and Morris, composing the firm of George W. Beale & Co., sold and delivered to the defendant A. W. Yan Iloesen, merchandise, consisting of wool, and took from Said Yau Hoesen on account thereof his notes for the price thereof, dated in June and July, 1870, all payable in four months from t-heir respective dates; said notes amounting in the aggregate to $10,299.42.
    These goods were sold and delivered to said Yan Hoesen before the plaintiff’s mortgage ivas filed in said town clerk’s office; and at the time of the sale thereof the defendants Beale and Monis had no actual knowledge or information of the fact that the plaintiff’s mortgage covered the machinery or other personal property in said mill.
    In December, 1870, the defendants Beale and Morris commenced an action in the Supreme Court in Westchester county against said Yan Hoesen upon said notes, and on the 5th January, 1871, obtained a judgment against him in said action for the amount then due and unpaid thereon, viz., $9,652.67, no part of which has yet been paid. The judgment roll was duly filed, and said judgment docketed in the office of the clerk of Westchester county, where said action was pending January 5th, 1871.
    In the months of August and September, 1870, the said defendants Beale and Morris sold and delivered to the said Yan Hoesen other quantities of wool, and received from said Yan Hoesen, on account thereof, his notes for the price thereof, dated in August and September, 1870, payable in four months from their respective dates; which notes amounted in the aggregate to $5,084.56.
    These goods were also sold and delivered to said Yan Hoesen before the plaintiff’s said mortgage was filed in said town clerk’s office; and at the time of such sale the said Beale and Morris had no actual knowledge or information of the fact that plaintiff’s mortgage covered the machinery or other personal property in said mill.
    In January, 1872, the said Beale and Morris commenced an action in the Supreme Court in Westchester county, against said Yan Hoesen, upon said notes, dated in August and September, 1870, as aforesaid, and on the 2d day of March, 1872, obtained a judgment against him in said action for the amount then due thereon, viz., $5,522.81, no part of -which had yet been paid ; the judgment roll being filed, and the judgment docketed in the office of the clerk of Westchester county, March 2d, 1872.
    The defendant A. W. Yan Hoesen continued in the undisturbed possession of all the machinery and other personal property referred to in the plaintiff’s said mortgage, until September 19, 1873, when possession thereof was taken, by the receiver appointed in this action.
    Prior to that time there was no actual or continued change of the possession thereof.
    The defendant A. W. Yan Hoesen made and delivered to one Daniel J. Falls, a chattel mortgage upon said machinery and other personal property in said mill, dated March 15th, 1872, and acknowledged March 25th, 1872, to secure $4,500, which mortgage was duly filed March 28, 1872, in said town clerk’s office, and was duly renewed by the filing of a copy thereof, with the statement thereon indorsed required by law, March 12th, 1873. And said mortgage was again duly renewed in like manner February 25th, 1874, upon which mortgage there was due and unpaid before and at the time of the commencement of this action something over $3,500, default having been made in the payment thereof in January, 1873. Said mortgage was made in good faith to secure an actual indebtedness, and without any fraudulent intent.
    On the 17th September, 1873, an order was made in this action, appointing Arthur M. Hanks receiver of both the real property and of all the said machinery and other personal property in said mill, with an order to show cause why said appointment should not be continued pendente lite, and said receiver took possession of said machinery and other personal property, under said order, of September 19, 1873, but did not remove the same from said mill.
    On the 3d day of December, 1873, an order was made in this action continuing the said receivership pendente lite, and said receiver continued in the possession of said property from September 19th, 1873, until the sale thereof by him.
    On the 2d day of December, 1873, transcripts of both the above mentioned judgments in favor of said Beale and Morris, and against said Yan Hoesen, were duly filed and said judgments docketed in the office of the clerk of Columbia county; and on the same day executions on both of said judgments were issued and delivered to the sheriff of Columbia county, which executions are still outstanding and uncollected, and under which no levy or levies had ever been made.
    During the pendency of this action, by an order entitled in this action, and also entitled in the action of Beale and Morris v. Van Hoesen and others, tried herewith, the said receiver (who had also been appointed receiver in said other action) was authorized and directed to make a sale of said machinery and other personal property, and, after paying his lawful expenses and commissions, to pay out of the proceeds thereof the amount due on said mortgage to Daniel J. Balls, and to deposit the balance of said proceeds in the New York Life Insurance and Trust Company, in the city of New York, to the credit of both said actions, to abide the result of this action, and of said other action commenced as aforesaid by said Beale and Morris, and to be drawn out only upon the order of this court.
    Such sale took place July 9th, 1874; the receiver has made report thereof, which report has been confirmed by an order of this court, by which it was adjudged that the gross proceeds of such sale of the personal property were $11,286.03 ; and after payment of the mortgage to Daniel J. Falls, January 21,1875, and the commission and expenses of such receiver, there remained a balance of $6,473.68 as the net proceeds of such sale; which sum was deposited by said receiver February 3d, 1875, in the New York Life Insurance and Trust Company, in the city of New York, to abide the result of this action, and of said other actions brought by said Beale and Morris.
    A sale of the real estate described in the plaintiff’s mortgage has also been made under a decree in this action, and the amount realized upon such sale was insufficient to pay the amount due upon plaintiff’s mortgage; leaving a deficiency therein of about $13,000.
    It was provided in and by said decree that the same was made without prejudice to the claim of the plaintiff, or of the defendants Beale and Morris, to the personal property, or to the proceeds thereof, mentioned in the complaint and mortgage therein described, the title to which and the priority of liens upon which were reserved to be further litigated in this action.

      Henry E. Davies and Edward B. Hilton, for the appellant.

      R. E. Andrews, for the respondents Beale and Morris.
   Bockes, J.:

The leading question on this appeal is, whether the respondents, at the time they took their position in court in hostility to the plaintiff’s mortgage, and demanded that it be adjudged void as to them, were in a position to assail that instrument, on the ground that it was not filed in the proper office to secure its lien, when their claims against the mortgagor were contracted. They had obtained judgments against the mortgagor on their claims, and had issued executions thereon to the sheriff, but that officer had made no levy thereunder on the mortgaged property, nor had he made return of them, or of any proceeding, on his part, under them.

It may be well first to examine the case without regard to the Falls mortgage. It will then stand as a case between the appellant, as mortgagee of the property in question, and the respondents, as creditors of the mortgagor with judgments and executions; the latter claiming to have the appellant’s mortgage declared illegal and void as to them. Leaving the Falls mortgage out of the case, this was the position of the parties when the respondents put in their supplemental answer to the complaint in the original action, and when they filed, what would have been called under the old chancery practice, the cross-bill. Thus the respondents had judgments and executions unspent in the hands of the sheriff, but no levy, when they asserted their rights in court, and claimed relief through the exercise of its equitable powers. The appellant insists that the respondents had no standing in court, to assail the validity of his mortgage on the ground urged, for the reason that they had neither a levy on the mortgaged property under execution against the mortgagor, or a return of such execution unsatisfied. The decisions are numerous and uniform to the effect, that a mere creditor at large of a mortgagor has no standing in court to have a chattel mortgage declared void on the ground here,relied on; and that a party, to maintain such right, must be a judgment creditor with a lien upon the mortgaged property, or valid claim to its avails. This position is not denied; indeed, is conceded. But, on the part of the appellant, it is insisted that an actual levy was necessary to give the requisite lien, whereas, on the part of the respondent, it is urged that the delivery of the execution to the sheriff created such lien in law, without levy or further action by that officer; that is, that the debtor’s goods and chattels were bound from the time of delivery for their benefit, so as to secure to them a lien thereon, enforceable in and by a court of equity. The precise question here presented was determined in Beck v. Burdett (1 Paige, 305), and it may be well to quote the language of the chancellor, as it is directly applicable to the case in hand. He says: “ There are two classes of cases where a plaintiff is permitted to come into this court for relief, after he has proceeded to judgment and execution at law without obtaining satisfaction of his debt. In one case the issuing of the execution gives the plaintiff a lien upon the property, but he is compelled to come here for the purpose of removing some obstruction, fraudulently or inequitably interposed to prevent a sale on the execution. In the other, the plaintiff comes here to obtain satisfaction of his debt out of property of the defendant which cannot be rea'ched by execution at law.

“ In the latter ca.se his right to relief here depends upon the fact of his having exhausted his legal remedies without being able to obtain satisfaction of his judgment. In the first case the plaintiff may come into this court for relief immediately after he has obtained a lien upon the property by the issuing of an execution to the sheriff of the county where the same is situated ; and, the obstruction being removed, he may proceed to enforce the execution by a sale of the property, although an actual levy is probably necessary to enable him to hold the property against other executions or bona fide purchasers.” To the same effect is the remark of Chancellor Kent, in Hendricks v. Robinson (2 Johns. Ch., 296), where lie says : “ The preliminary step which seems to be required is, that the judgment creditor should have made an experiment at law, and bound the property by actually sueing out execution.” So Judge Spencer says, in Hotchkiss v. Mc Vickar (12 Johns., 407): “ The execution creates the lien for the benefit of the creditor ; and the sheriff is the mere minister of the law to procure for the creditor satisfaction of the debt.” These remarks have sanction in several earlier cases. (Angell v. Draper, 1 Vern., 399; Shirley v. Watts, 3 Atk., 200; Payne v. Drewe, 4 East, 523.) And in Lambert v. Paulding (18 Johns., 311) it was held that the delivery of an execution to the sheriff gave a lien without levy on the debtor’s property, so as to entitle the execution creditor to its avails when levied on and sold under a second execution, by the sheriff of the adjoining county. The right to proceed on execution without levy, in a case like the one at bar, is recognized in McElwain v. Willis (9 Wend., 548). In Ray v. Birdseye (5 Denio, 619) the chancellor said that when an execution had been actually delivered to the sheriff to be executed, it is a legal lien upon all the property of the judgment debtor liable to execution within his bailiwick. So, in Roth v. Wells (41 Barb., 194), it was said that no actual levy was essential to create the lien. This remark received approval in the same case in the Court of Appeals (29 N. Y., 471), although it was pronounced obiter in Hathaway v. Howell (54 id., 97), which latter case will be hereafter considered. And, again, in the Court of Appeals, in Bond v. Willet (29 How., 47) it was said that the execution bound the judgment debtor’s property, from the time of its delivery to the sheriff, and that the lien thus created could only be defeated by the title of a purchaser in good faith, without notice of the execution. In Shaw v. Dwight (27 N. Y., 249) Judge Denio quotes with approval the rule laid down by the chancellor in Brinkerhoff v. Brown (4 Johns. Oh., 671), thus: “ If the plaintiff seeks aid as to real estate he must show a judgment creating a lien upon such estate. If he seeks aid in respect to personal estate, he must show an execution giving him a legal freference or lien upon the chattels.” So Commissioner Earl, in Fox v. Moyer (54 N. Y., 129), in speaking of a case like the present one, said : “ The weight of authority seems to be that the judgment, with an execution issued and not returned, is sufficient to enable the plaintiff to maintain his action. The learned commissioner referred to a remark of Judge Denio in Shaw v. Dwight (supra), to the effect that the execution should be both issued and returned unsatisfied. But such remark was made with reference to real property, and was based upon the necessity of showing an inability to collect the debt by process against the debtor’s goods and chattels, which was a prerequisite to a right to resort to real property. There are many other cases beside those above alluded to, where the same rule is declared, among them the following: Rinchey v. Stryker (28 N. Y., 45, 50); Andrews v. Durant (18 id., 496); Bank v. Olcott (46 id., 12-18); Noble v. Holmes (5 Hill, 194); Falconer v. Freeman (4 Sandf. Ch., 565); Thompson v. Van Vechten (27 N. Y., 568-582). In some of the cases cited — perhaps in many of them — the precise question was not before the court. In others of them, however, the point was directly decided. (See, also, Heye v. Bolles, 33 How., 277.)

It is now proposed to see if this rule, so repeatedly declared, has been at all impugned by the late decision in Hathaway v. Howell (54 N. Y., 97). No intimation is there given of an intention to overrule former decisions, or to lay down any new rule. On the ' contrary, the law, as established in an unbroken line of authorities from a very early period, is fully recognized. How and to what extent the goods and chattels of a debtor were bound by the delivery to the sheriff of an execution against him was considered both under the statute and the decisions, and it was again held, in accordance with the cases, that the property was bound from the time of the delivery of the process for the benefit of the execution creditor, so as to give him a lien thereon; the point on which the decision turned being this: that sueh lien was lost by the negligence of the officer in omitting to make it effectual by an actual levy within the life of the process. Commissioner Lott says, in terms, that the debtor’s property became bound by the executions on their delivery to the sheriff, and continued subject to them until the return day thereof; and he states the question there before the court as follows : whether the sheriff, by his failure or omission to make an actual levy, during the lifetime of the executions, lost all right to interfere with, or in any manner to exercise dominion over the property after their return day. This question was decided by the court affirmatively. Now the case at bar is quite different. Here the respondents, having secured their lien on the debtor’s property by issuing their executions to the sheriff (the case is now being considered as if the Falls mortgage was not in it), proceeded, at once, while their lien remained to them, to assert and enforce it. Finding an illegal obstruction in the wav of enforcing their lien by further proceedings at law, they invoked the aid of the equity powers of the court for its removal. According to their showing, the property was subject to their executions, and they had a right to seize and sell it, but were impeded by an unlawful obstruction interposed by a party who claimed it, and held its possession from them under an instrument which the law declared void as to them. So this was a case of an inequitable obstruction, interposed by a party against whom they proceeded; embarrassing them in the collection of their judgments, independently of which their remedy at law would have been ample. They had proceeded at law to the utmost extent unimpeded. Thus they had a right to come into a court of equity for relief, and, on the case so made, that court had jurisdiction in that behalf.

No matter now about any actual levy of the executions upon the property. Jurisdiction being acquired, means would be employed, through the assistance of a receiver or otherwise, to work out justice between the parties, according to the equities of the case, as it existed when the aid of the court was invoked.

In the view here taken of it, this is not a case of a simple creditor’s bill, where dioses in action and equitable interests of the debtor are sought, in order to satisfy a judgment therefrom. In such case, there must be an execution and return nulla tona before proceedings in equity can be had. An execution returned unsatisfied is necessary to jurisdiction. Not so when the party seeks the aid of the court in regard to property liable to seizure and sale under execution, alleging an illegal impediment to further proceedings at law. In such case, as is above shown, an execution in the hands of the sheriff, without levy, creates a legal lien on the property for the benefit of the execution creditor, which is all that is necessary to give him standing in court, in view of the desired relief.

In reaching this conclusion I have not been unmindful of the remark of Judge Wright in Dunlevy v. Tallmadge (32 N. Y., 457), that before a judgment creditor was entitled to the aid of the Court of Chancery against the goods and chattels of his debtor, he must have taken out execution at law and caused it to be levied or returned. So too the same learned judge made a similar remark in Lane v. Lutz (1 Keyes, 203, 214). Mr. Justice Field also said the same in substance in Jones v. Green (1 Wall., 330). But it will be found, on an examination of those cases, that those remarks were unnecessary to their decision; and it may be added, that if literal force be claimed for them, they stand in direct conflict with a very long line of decisions in this State. Indeed the very cases cited by Mr. Justice Fiicld in support of his remark, maintain the conclusion herein above reached, that an actual levy was not necessary before suit in a case, such as we are here considering. Mr. Justice Field cites Crippen v. Hudson (13 N. Y. [3 Kern.], 161), but Johnson, J., there says (p. 166), that there were cases in which a judgment creditor might resort to a court of equity, where the property was in its own nature subject to sale upon execution, and the creditor had obtained judgment and issued execution, and thus acquired a specific lien upon the property in question, but was prevented from obtaining satisfaction of his debt by some fraudulent or inequitable obstruction or embarrassment. Nor is any different rule established or suggested in In re Collins (12 Bank. Reg.), or in Geery v. Geery (in the Court of Appeals, MS. opin., Earl, J.). In the former case Mr. Justice Hunt says: “There must be * * * execution or'an attachment levy, or its equivalent, constituting a lien on the specific chattel.” He does not say there must be an execution levy, but merely execution. If the lien claimed be by attachment, there must be a levy ; for the property is not in that case, as in the case of an execution “bound” from the time of the delivery of the process to the sheriff. (Rodgers v. Bonner, 45 N. Y., 379, 382.) In Geery v. Geery, Judge Earl fully recognizes the .rule declared in the numerous cases above cited. Thus it seems the respondents were clothed with judgments and executions against their debtor’s property, which executions in the hands of the sheriff and in full force, gave them a lien thereon ; and this lien they might vindicate against illegal obstructions and impediments in a court of equity. Nor did the fact that the possession of the property had passed to a receiver on the application of the appellant, the mortgagee, change the rights of the respondents. The appellant was proceeding in court to foreclose the mortgagor’s equity of redemption in the property, and he applied for and obtained a receiver in that proceeding, who as such took possession of the property. The receiver was but the custodian of the property, and at most could only be deemed as holding possession for the mortgagee. Thus the latter could claim no advantage from the receiver’s possession, beyond what he might claim had he taken possession himself as 'mortgagee. The property was still subject to the rights of any one who could make a better claim. (Delaware v. Ensign, 21 Barb., 89.) Therefore, leaving out of view the Balls mortgage, as hitherto has been done in its examination, and this case seems to come directly within the decision in Thompson v. Van Vechten (27 N. Y., 568), approved in Parshall v. Eggert (54 id., 18, 22). The appellant’s mortgage, although in existence, was. not filed in the proper office, so as to secure its lien on the property, when the respondents’ debts against the mortgagor, on which they obtained their judgments and issued executions, were contracted. It was, therefore, void as to them, by the express terms of the statute, and this notwithstanding the instrument was subsequently filed, before the respondents acquired a position to attack it as judgment creditors. Having ultimately acquired that position, they could hold the preference given them by the judgment, from which the appeal is here taken.

We must now bring the Falls mortgage into the case in the further consideration of the appeal. It is insisted on the part of the respondents, that this i's a subject with which the appellant has no concern; that he can claim no benefits or advantages to himself therefrom, but it may be well to see how the case would stand, giving that mortgage full force and effect in respect to the respondents’ rights.

It appears that the mortgagor after giving to the appellant his-mortgage, and while it remained unfiled, made a second mortgage, covering the property, to Mr. Falls, who received the security in good faith, and without notice of the appellant’s unfiled mortgage. Mr. Falls immediately placed his mortgage on file, and thus secured to himself a priority of right over the appellant thereunder. The debt secured by this mortgage was due and unpaid, before the respondents acquired their positions as judgment creditors of the-mortgagor.

Thus, in point of fact, and without reference to the appellant’s-mortgage, the debtor had but an equity of redemption in the property. Now it is well settled law that, on default in the payment of the debt secured by a chattel mortgage, the title to the mortgaged property becomes vested in the mortgagee, and that all that remains to the mortgagor is a mere equity — the equity ol redemption — and further, that such equity is not a subject of levy- and sale under execution. On default in payment, the title to the property becomes absolute at law in the mortgagee. The decisions in support of this doctrine are too numerous and familial to require citation. Such being the case, the mortgagor had no leviable interest in the property when the respondents’ executions were delivered to the sheriff, nor, as the case shows, did he ever after acquire any, consequently the executions did not, as is claimed, bind the property. In this view, the case is entirely different from that first above considered, when it was examined on the hypothesis that the appellant’s illegal claim alone intervened to prevent a levy and sale of the property, under the respondents’ executions. Giving effect, however, to Falls’ mortgage, and the mortgagor, the execution debtor, had but a bare equity — an equity of redemption only. Now, following the logic of the law, before the respondents could assert any right whatever in regard to the property, they must show themselves possessed of this equity, or of a special claim upon it, and this, if predicated on compulsory proceedings, could only be done by showing, in court, an execution returned unsatisfied against the debtor; that is, they must present themselves in court as having exhausted their remedy at law; then having secured to themselves the debtor’s equity of redemption, they could redeem as to valid liens, and have such further relief, against fraudulent and illegal claims, as they could show themselves entitled to, and could employ the aid of the court in that behalf. (McDermutt v. Strong, 4 Johns. Ch., 691.) And it would matter not whether they were in court as plaintiffs or defendants, their rights would depend on what they were able to aver and prove. They would then be in court ashing its aid, first, to vest them with the debtor’s equity, and secondly, to make it available and valuable to them, according as their right should be made to appear. The question then would be as between any one who could raise the question and the judgment creditors, whether the latter were in a position to ask such aid from the court; that is, aid. against property not liable to be levied on and sold under execution. It is the settled law in such case, that the creditor must present himself with execution returned unsatisfied. This was the ancient rule in equity, and is now statutory. So it was decided in very many of the cases above referred to, in connection with that other rule, in verification of which they were cited, that to entitle a judgment creditor at. law, to the aid of a court of equity to obtain satisfaction of his judgment against a defendant, out of property not liable to be levied upon by execution, he must show not only an execution issued, but returned nulla bona ; jurisdiction is made to depend on such return. Now if the appellant may here raise this question against the respondents, the latter must fail in their claim to priority of right to the avails of the mortgaged property. Their executions were not returned, but remained in the hands of the sheriff, even down to trial and judgment. Thus giving effect to the Falls mortgage, they had not exhausted their remedy at law, hence, were not in a position to assail the appellant’s mortgage with a view to obtain a priority of right over it. Such is the result in case the appellant may wield the Falls mortgage for his own protection. But what concern had tne appellant with that mortgage, as regards any issues raised in his suit ? He set up a claim to the property under his own mortgage, and brought the respondents into court on that claim, stating that they had, or claimed to have, some interest or lien upon the same; and averring that such interest or lien was subordinate to his own. On this last averment the respondents took issue, and set up a priority of right. Thus the issue was between those parties, and was to be determined on the force and effect to be given their respective claims. Standing on these claims alone, leaving out of the case the rights of other parties, and the respondents hold the priority of right. Could the appellant make his own claim good against his adversary on the record, by the introduction of a claim of a third party ? Could he force an issue between other parties for his own benefit ? Was not the matter of the Falls mortgage entirely res inter alios acta ? It was for Falls to insist on his lien and on the forfeiture, as he might elect. It was not for the appellant to elect for him. That was a subject outside the issue he had tendered to the respondents, which they had accepted. The question was between these parties on the record, and on the issue presented by the record. The appellant set up his claim on his mortgage, and challenged the respondents to a contest on that, or to acquiescence. It was sufficient for the latter to answer the claim as presented by his adversary on the record. If this conclusion be sound, the subject of the Falls mortgage should be left out of the case in determining the rights of these litigants; and it must then follow that the judgment appealed from is right. The third conclusion of law of the learned judge is not sound in the view of the case above taken, but the judgment seems to be right, independent of that finding. . It should not therefore be reversed.

Judgment affirmed with costs.

Learned, P. J. :

It is important to understand how the question to be decided arises.

The plaintiff commenced this action to foreclose a mortgage made by Van Hoesen upon a mill and other property. The complaint describes the mortgage as covering the fixtures, machinery and chattels; but does not aver the filing of the instrument as a chattel mortgage. It avers that JBeale and Morris have a subsequent lien “ by way of mortgage.” Beale and Morris by a supplemental answer aver that they have a prior lien as to the personal property, by virtue of judgment and execution against Van Hoesen, on causes of action which arose before the filing of the plaintiff’s instrument as a chattel mortgage.

Prior to the commencement of this action, another chattel mortgage on the same personal property to one Falls had been.executed and the debt secured had become payable, and default had been made.

After the commencement of this action and before the recovery of Beale and Morris’ judgments against Van Hoesen, a receiver of the real and personal property was appointed herein.

After Beale and Morris had recovered their judgments and issued their executions, they commenced an action against this plaintiff. Van Hoesen, Falls and the receiver, setting forth these facts and seeking to have the Stewart mortgage declared void as to them in respect to the personal property.

Thereupon the powers of the receiver were extended to the subject-matter of the' second action ; and by an order entitled in both, he was directed to sell the personal property; to pay therefrom the Falls mortgage and deposit the balance subject to the order of the court. The real estate has been sold by judgment in this action, and no question arises in regard to it. The receiver has sold the personal property, paid off the Falls mortgage and brought the balance into court. And the question is : Does that balance belong to Stewart or to Beale and Morris? There is no claim that it belongs to Van Hoesen or Falls or any one else. The mortgage of Stewart on the personal property was void as against the debt contracted to Beale and Morris before the filing of that mortgage. (Parshall v. Eggert, 54 N. Y., 18; Thompson v. Van Vechten, 27 id., 581.) But the plaintiff urges that Beale and Morris cannot assert that this mortgage is void, because they have not levied their execution. Now the plaintiff had in his own suit obtained the appointment of a receiver of this personal property, and had thus prevented Beale and Morris from making a levy. And the doctrine therefore which the plaintiff contends for is this: that the mortgagee of a chattel mortgage, which is void against creditors because it is not filed, may obtain the appointment of a receiver of the mortgaged property, and may thus prevent a creditor from asserting successfully the invalidity of the mortgage.

For after the appointment of a receiver the creditor cannot levy ; and if his rights depend always on an actual levy, the appointment of the receiver defeats them. And by this ingenious contrivance the statute is practically annulled.

Now it seems to me plain that if the court, by appointing a receiver, deprived the creditors of the opportunity to levy, it should preserve to the creditors the rights which, without the interference of the court, the creditors would have obtained by levy; or, in other words, that when the court, by the intervention of a receiver, has taken possession of property, the court should not deprive a creditor of the right to show that, as to him, another creditor’s security was void.

I leave out of account the Falls mortgage, because, by the action of the court in behalf of all parties, that mortgage has been redeemed, although the title to the property may have vested in Falls on default. (Judson v. Easton, 58 N. Y., 664.)

If, then, there had been no receiver appointed, and if Stewart liad claimed that, by default, the personal property had vested in him, then Beale and Morris, claiming that Stewart’s mortgage was void as to them, could have levied, and could thus have tried the question. But Stewart has prevented any levy by obtaining the appointment of a receiver, and now he objects that Beale and Morris have not done what, by his own act, he absolutely prevented. This is not equity; and the question here is on the distribution of funds held by a court of equity.

I see nothing in the case of Hathaway v. Howell (54 N. Y., 97), which interferes with this view. That question arose between the plaintiff, a mortgagee of chattels, and the defendant, a sheriff holding executions issued before any judgments had been legally filed. No question arose in that case as to the manner of enforcing the claim of one creditor as against another, after a court of equity has taken into its custody the property out of which the conflicting claims are to be paid.

That seems to me to be the question here. The court has taken the property and sold it, and holds the avails. Mr. Stewart says these avails are his, because the property was mortgaged to him. Beale and Morris say they are theirs, because, as to them, Mr. Stewart’s mortgage is void. So much is hardly disputed. Then, Mr. Stewart’s mortgage being out of the way, they say the avails should be paid to them, because they are creditors of Van Hoesen, have recovered judgments, and have issued executions, which would have been levied on this property if the court had not prevented them.

I think their claim is just, and that the judgment should be affirmed with costs.

Present — Learned, P. L, Bocees and Boarpman, JJ.

Judgment affirmed with costs; order to be entered as of January Term.


source: Caselaw Access Project

author: Boardman, J.:

license: Public Domain

text:
    EDWARD PALEN, as General Guardian of ISAAC N. BENTON, an Infant, Respondent, v. MARGARET H. STARR, Appellant.

      Attorneys — acts done by, under general authority — binding on client.

    Proceedings regularly had by attorneys, lawfully appearing for the respective parties, cannot, in the absence of fraud, be questioned by their clients because of the want of specific authority to do the acts done or consented to by them.
    A married woman may charge her separate estate by directing her attorney to allow judgment to be taken against her, though she was not liable in the action.
    Appeal from an order, refusing to vacate a judgment and allow defendant to come in and defend.

      John J. Lmson, for the appellant.

      Geo. McLaughlin, for the respondent.
   Boardman, J.:

Mr. Starr, defendant’s husband was the guardian of the infant, Benton. Starr becoming insolvent, as also his sureties, was removed and Palen appointed in his stead. Upon an accounting Starr was found indebted to Benton about $600, and refusing or neglecting to pay was attached for contempt, and fined $620 for the benefit of his ward, and committed to jail until the fine was paid.

Soon after an attorney acting for defendant, began negotiations for the release of Mr. Starr, which resulted in an agreement between the attorneys for these parties, that the plaintiff should bring an action against the defendant to recover of her $620, and that defendant’s attorney should offer to allow plaintiff to take judgment for that amount, which was accordingly done. It was further agreed that, in consideration of such judgment, defendant’s husband was to be released from his imprisonment. That certain real estate contracted by defendant to be sold should not be bound by the judgment, and that execution upon the judgment should be stayed a year. These conditions were all performed by plaintiff, and now, eighteen months after the entry of judgment, the defendant having received all the benefits contracted for, seeks to repudiate her liability, set aside the charge made by her on her separate estate, and contest her original liability. She concedes that a summons was duly served upon her; that she employed an attorney to appear for her and do whatever in his judgment was best. Under such authority the proceedings were had, and judgment rendered as stated. Now she denies any specific authority to her attorney to allow such judgment, to be taken against her. But that is of no consequence since the attorney had general powers. She denies any knowledge of such judgment until just before this motion was made, but that is equally idle since notice of the judgment was given to her attorney immediately after its entry.

There is no pretense that the defendant’s attorney has been guilty of any fraud or collusion, or that he is not responsible. Now, if he has done the defendant any wrong, which I do not believe, she must look to him for satisfaction. He has appeared by her authority. He has done what he had.the right to do under such authority. His act binds the defendant. It will not do to allow proceedings regularly had by attorneys, lawfully appearing for the respective: parties, to be questioned by their clients for want of specific authority in the absence of fraud. The defendant cannot for the reasons assigned by her attack the conduct of her attorney in tin's case.

But upon the main proposition there is no difficulty. The defendant saw fit by judgment to- charge her separate estate with the payment of her husband’s debt.

Concede that she was under no legal liability to do so, yet she had the right out of her own means to pay such debt. She could give her note therein charging her separate estate for such debt and it would be valid against her and her property. She could secure the payment of the debt by mortgage of her property and such mortgage would be valid. She could create a specific lien by the confession of judgment and it would bind her estate. Equally binding and conclusive is the judgment in this case.

It is not a question whether she could have defended this action. For reasons of her own she did not choose to do so. By not defending she obtained the release and discharge of her husband from jail, and secured his personal services in her business affairs thereby. The plaintiff has lost the security he had against her husband. That security cannot be restored. The plaintiff cannot revive his remedy against the husband.

Under such circumstances it would be unjust to allow defendant to repudiate her contract, after she had reaped all its benefits, without the intent if she had the ability or the ability if she had the intent to restore the plaintiff to his original condition and without the possibility on plaintiff’s part of securing his former advantages.

The order should be affirmed with ten dollars costs and expenses of printing.

Present Learned, P. J., Bookes and Boardman, JJ.

Order affirmed with costs.


author: Boardman, J.;

text:
    PERLEY D. MOORE and ALLEN M. MOORE, Appellants, v. FARNHAM P. HUNTINGTON, Respondent.

      Pa/rtnership — in profits, but not in property prom, which sueh profits anise.

    As between the parties to an agreement, themselves, a partnership in profits may exist, without including title in all the partners in the stock or property out of which such profits are made.
    Appeal from a judgment in favor of defendant and against the plaintiffs, on a decision by the court without a jury.
    In the year 1869 an agreement was entered into between the plaintiffs, who were doing business in the city of Boston, Massachusetts, as manufacturers and dealers in leather and hides, and Huntington & Hoyle, who owned and carried on a tannery in the town of Champlain, Clinton county, New York, by which the plaintiffs, at their own cost and expense, were to furnish raw' hides and send them to Huntington & Hoyle, to be tanned at their tannery. Huntington & Hoyle were to receive six and a-half cents per pound for tanning. When the hides were tanned they were to be returned to the plaintiffs at Boston, who were to sell the leather, and if, after paying H. & H. the six and a-half cents per pound for tanning, paying freights to and from Champlain, and retaining seven and a half per cent for their commissions for purchasing the hides and selling the leather, and also retaining the interest on their cash advances, there should remain any profits, the same were to be divided equally between the parties. Should a loss occur, it was to be borne equally by both parties.
    Under this agreement hides were shipped to Huntington & Hoyle by the plaintiffs, from time to time, until November, 1872, soon after which date Mr. Hoyle died. After his death the defendant, Huntington, carried on the business as surviving partner, and completed the work of tanning the hides received before Mr. Hoyle’s death.
    In the month of April, 1873, the plaintiffs called upon Mr. Huntington, and demanded a quantity of leather in his possession, which had been tanned from raw hides sent by plaintiffs to Huntington & Hoyle, under this agreement, and which he had not returned to plaintiffs. The defendant refused to deliver the leather. Plaintiffs thereupon brought this action, asd replevied 659 sides of leather, weighing 8,246 pounds, and worth $1,855.35.
    The issues were tried by Mr. Justice Potter, without a jury, who held that the plaintiffs and Huntington & Hoyle were partners, as between themselves ; and that the defendant, as surviving partner, was part owner and tenant in common, and, as such tenant in common and part owner, was entitled to the possession of the whole of the hides and leather, and rendered judgment against the plaintiffs for a return of the leather, and, in case of failure to return, then for its .full value, i. <?., $1,855.35, and costs of the action.

      N. C. Moak, for. the appellants.

      E. Cowen, for the respondent.
   Boardman, J.;

An examination of the evidence and the authorities satisfies me that the parties by their agreement did not intend to become partners, as between themselves, in the possession and ownership of the hides and leather.

Such intent where it can be ascertained will control, except perhaps as to creditors having no knowledge of the limitation. A partnership in profits may exist without including title to the stock out of which such profits arise, if such be the agreement of the partners. The most that can be claimed in this case is a partnership in profits. In reality it was a mode adopted for payment of services rendered and material used by defendant, in adding value to plaintiffs’ property.

All the circumstances surrounding this transaction repel the presumption that the defendant was to acquire any title to the property. He was not even entitled to the possession, except for the purpose of bestowing his labor upon it. As soon as that was done it was to be returned to plaintiffs that they might sell it.

Indeed the defendant by his answer does not pretend that he was a partner with plaintiffs, or was joint owner with them of the leather in controversy.

This subject is discussed in 1 Parsons on Contracts (5th ed.), 157-160, and note m; Smith v. Watson (2 Barn. & Cr., 401); Story on Part., §§ 27, 36, 38; Burckle v. Eckhart (3 N. Y., 138); Conklin v. Barton (43 Barb., 435); Penfield v. Dunbar (64 id., 239).

In this respect, I think, the learned judge at the Circuit was led into an error, for which the judgment should be reversed.

From the same considerations, it must follow that defendant could not recover, in lieu of a return of the property, any thing beyond the price per pound for tanning, while the judgment below gives to him the full value of the tanned leather. At most he had only a lien for the cost of tanning. But, by the contract, he had no lien even for that. He was bonnd to send the leather to plaintiffs when tanned. When the leather is demanded he does not claim to hold it by virtue of any lien, although such lien is set up by way of answer. It would seem that the expenses of tanning were to be paid like commissions for buying and selling, out of the proceeds of sales of leather made by plaintiffs.

But, irrespective of this question of lien, the judgment must be reversed and a new trial granted, costs to abide the event.

Present — Learned, P. J., Bocees and Boardman, JJ.

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


author: Learned, P. J.:

text:
    LEWIS WHITE and IRA BLAKEMAN, Respondents, v. CHAUNCEY MILLER and JESSE HARWOOD, Trustees of the Mutual Society called Shakers, Appellants.

      Shakers — how sued — Party defendant — Misnomer — Phoidence— custom of dealers — Warranty — damages for breach of — “Bristol cabbage seed,” definition of— chapter 174, Laws of 1839 — chapter 373, Laws of 1849 — chapter 203, Laws of 1852.
    An action was brought by the plaintiffs, wbo are market gardeners at Greenbush, in the county of Rensselaer, against the defendants, as trustees of the mutual society called Shakers, to recover damages for a breach of contract made by the defendants to deliver the plaintiffs six pounds of large Bristol cabbage seed. The defendants actually delivered six pounds of seed, which turned out to he an inferior and worthless variety, from which cause the plaintiffs lost their crop. The defense was set up by the defendants that there was a misnomer of parties defendant, in that the society should have been sued by some other name.
    Held, that such objection should have been set up quasi in abatement, and in the old language of pleading, the plaintiff should have been given a better writ by an allegation of the correct name. *
    That the defendants were not a joint stock association, or a partnership, as no individual member had any stock or any proportionate share in the property, which on leaving he could draw out or transfer to any one else.
    That they were a religious society, carrying on business, and to which the legislature had given atleast three corporate qualities,viz., that these so-called trustees may hold the property, may have succession, may have the immunity of exemption from the statute of uses and trusts.
    That if there was no corporation or quasi corporation, then, as to the world at large, these defendants must be treated as absolute owners of the property, leaving the right of the society and its members against them to be decided whenever it shall arise.
    The plaintiff called for the production of the articles of association, and the defendants produced the same, but objected to their admission on the ground of want of proof of the signatures (there being some 200), held, that where a party to a suit, in pursuance of a notice, produces an instrument to which he is a party, and under which he claims a beneficial estate, as in this case, the other party need not call the attesting witnesses.
    The admission of conversations of Miller, one of the defendants, having been objected to, held, that under the rulings above made, such admission was correct, as he was either the officer of a corporation speaking in regard to business intrusted to him, or the owner of the property fully authorized to act, to sell and to deal with it, or the agent with full discretion and absolute power, without accountability and holding the title.

      Held, that in the relation these defendants held, having the power to sell on such terms as they chose, the referee was not bound to receive evidence of the custom of seed dealers, showing that such sales were not usually made with warranty, as such custom did not control them.
    Held, as to the question of warranty, and the breach thereof, that the defendants did contract with the plaintiffs that the seed delivered and marked “large Bristol cabbage seed,” wore such seed, and by this term was meant to show what it would produce, not what it was produced from, and meant seed which, under proper cultivation, and if it grew at all, would produce large Bristol cabbage; and the only question to be determined was, whether the plants raised from this seed were or were not large Bristol cabbage, and the referee having found the seed was properly cultivated by the plaintiff, and that, although it produced plants, it did not produce Bristol cabbage, or only about 200 out of 100,000 plants, that the covenant or agreement was broken.

      Held, as to the damages to which the plaintiffs were entitled, that this did not depend on whether the agreement was express or implied as long as it existed and was broken, and the plaintiffs were entitled to recover all their damages, including gain prevented.

      Passenger v. Thorburn (34 N. Y., 634); Milburnv. Bellrmi (39 id., 53); Messmore v. W. 7. Shot and Lead, Go. (40 id., 432); Fleets. Weatherbee (20 Wis., 392); Walcott v. Mount (36 N. J., 262) followed.
    Appeal from a judgment, entered upon the report of a referee, in favor of the plaintiffs.
    In, and prior to the year 1867, the defendants were trustees of a mutual society of the people, commonly called Shakers, which was located at Niskayuna, in the town of Watervliet. Its constitution provided for the appointment of “trustees or agents,” and that they should execute declarations of trust, which they had done. In 1867 and 1868, the plaintiffs were market gardeners, residing and doing business in Greenbnsh. In the fall of 1867, Chauncey Miller, one of the defendants, had eonvei’sations with the plaintiffs, in which he told them in substance, after inquiring about their crop of that year, that the defendants had raised that year 200 pounds of Bristol cabbage seed, and if they wanted any they must come early. At that time White told Miller they would want five or six pounds of this seed. In the month of February, 1868, the plaintiff White went to the office of the defendants at Niskayuna, and found thére one Edward Hallam, who was the agent or clerk of the defendants. White then gave an order for seeds in the following manner: Hallam took a blank list of the seeds that the defendants had for sale, and White told him the quantities of each "that plaintiffs desired to purchase; among the quantities ordered was six pounds of Bristol cabbage seed. Hallam wrote down the amounts ordered on the list,-and. promised to deliver them in a few days thereafter at the store of Isaac Aikens, in the city of Albany. Hallam gave the order to the defendant Chauncey Miller, who made out the bill for them. The seeds were sent with the bill to Isaac Aikens, and the plaintiffs received them from there by one Hall. The plaintiffs took the seed and sowed it, and at the proper time set out the plants on good land and cultivated them in a proper manner. The crop which resulted was not Bristol cabbage, which is a cabbage of a dark green color with a solid head, but was a wild cabbage running all to stalk or leaves, with the leaves largely striped with red, and proved to be nearly worthless. The production of this wild and worthless variety of cabbage, instead of the genuine Bristol, was due to the fact that when the defendants set out their seed cabbages in 1867, they set near them several rows of another variety, known as the “ Dutch Red,” and the two varieties intermixed, and in consequence of such crossing, a new variety was produced, which would not head, and was worthless.

      Lyman Tremain, for the appellants.

      EseTc Gowen, for the respondents.
   Learned, P. J.:

The first question to be considered is, whether this action is properly brought against these defendants, even assuming that a right of action exists.

The United Society of Believers, called Shakers, residing in Watervliet, consists of a number of men and women who have, by a written agreement, as well as by their acts, united themselves into a religious and social community.” For that purpose they have adopted a covenant or constitution. Some of this touches on religious matters, some on business affairs. Each person joining the society is to sign the covenant.

After providing for “the primary administration of parental authority ” at New Lebanon, it states that it has been found necessary that “ superintending deacons and deaconesses should be appointed and authorized to act as trustees or agents of the temporalities of the church.” It declares that “the official trustees of the church are generally known among us by the title of office deacons; ” that “ they are invested with the powér to take the general charge and oversight of ail the property, estate and interest dedicated, devoted, consecrated and given up for the benefit of the church; to hold in trust the fee of all the lands belonging to the church,” etc. It declares that it is the duty of said deacons or acting trustees “ to improve, use and appropriate the said united interest for the benefit of the church ; ” “to make all just and equitable defense in law,” provided that all their transactions shall be for the benefit of the church, and not for their private interest. They are to keep books of account “in which shall be entered the debit and credit account of all mercantile operations and business transactions between the church and others.” They are to execute a declaration of trust, stating that they “ hold all such lands, tenements, hereditaments and all the personal property in trust for the uses and purposes expressed in, and subject to, the rules,” etc. This covenant is signed by some 200 persons.

The defendants are the trustees so designated. Each of them has signed a declaration reciting that he has been appointed one of the trustees of the temporalities; that he is empowered to hold, manage and improve the temporalities; to buy, sell and transact business in behalf of said church, and declaring that he holds the lands and personal property as such trustee, for the benefit of the church, and that he has no right to the same except according to the covenant.

In order that the arrangements should be legal an act was passed (1849, chap. 373), amending a former act. This declared the validity of such trusts, and that the legal authority of the trustees shall forever descend to their successors in office and trust. A further act (1852, chap. 203) defines and recognizes the existence of “ a united society of,” etc., declares that such trusts may be created and that the legal estates shall be vested in the trustees, and in those to whom such property is transmitted by appointment of the society.

Now it is plain, from these instruments, that the' so-called trustees or agents of this society have the right to buy and sell and deal with the property. I do not mean by this that they are to appropriate the property to their private gain. But, for the purposes of the society, they, and they only, are the persons who are to buy and sell and deal with the property. The covenant, in express language, contemplates “ business transactions ” and mercantile operations” between the church and others. Who is to carry these on ? Not the church in its associated capacity, but the trustees, to whom the church has intrusted this business. It is even provided that “ the leading authority of the church ” (whatever that may be), with the trustees, shall be the official auditors. And the signature of one áuditor is sufficient. So that the trustees are not only authorized to carry on the business transactions, but one of them may audit and approve the same.

The defendants’ counsel urges that private trustees are in general liable only in equity; that when such a trustee sells land with covenant of warranty he is at law liable only personally (Duvall v. Craig, 2 Wheat., 45); that executors are liable personally for contracts made by them. (Ferrin v. Myrick, 41 N. Y., 315 ; Mygatt v. Wilcox, 45 id., 306.)

It is not necessary to dispute this principle. But it applies to cases quite different. Neither the executor nor the ordinary trustee of a private trust is put in the ownership of property with which to buy and sell and can-yon “business operations and mercantile transactions.” The ordinary trustee has usually only to collect and apply income. The executor has only to close up an estate. But these trustees are to carry on the business of this society so long as it exists, and are to have perpetual succession. To show that they are not ordinary trustees, it might be asked : Who are the cestui que trusts? There is nothing to show that an individual member of the society has any separate right to the property or its profits. And therefore it could not be said that every member was a cestui que trust. And if it be suggested that the whole society are the cestui que trusts, then that suggestion shows that these so-called trustees are not analogous to ordinary private trustees, but that they are analogous rather to the trustees of religious corporations, or perhaps I should say, of other religious corporations.

It is urged however by the defendants that they are nota corporation and some cases are cited. Appleton v. Water Commissioner (2 Hill, 432), holds that the water commissioners of New York are not a corporation, but throws no light on this question. Gardner v. Board of Health (10 N. Y., 409), holds that the board of health is not a corporation, and the opinion given by Chief Justice Oakley, and adopted by the Court of Appeals, shows the reason and is important to the present case. He says that the board of health has no succession, no seal and no funds. It may be changed as to its members at the pleasure of the common council. Now, on the contrary, these defendants have perpetual succession, have the absolute title to very large property real and personal, and they cannot be changed, so far as appears, by anyone.

It is the ordinary statute law of this State that the property of religious corporations shall be managed by trustees. And the language of the act even authorizes the trustees to hold the property. (Act of April 5, 1813, chap. 60, § 4.)

And such trustees are, as it were, the officers of the corporation. Now, while in regard to this society of Shakers the legislature has not followed precisely the same course, yet they have done practically the same thing. They have allowed the appointment of trustees; they have given them succession ; they have allowed them to hold real and personal property, and they have put a restriction on the annual income, which might thus be held. By what right would any such restriction be imposed on private trustees, or on any but a corporate, or quasi corporate, body ?

It seems to be claimed by the defendants that they are a joint-stock association. But the answer to this is, that no individual member has any stock or proportionate share in the property of the defendants. There is nothing to show that one who leaves the society has any interest which he can draw out or transfer to some one else. Indeed, the contrary is evident. For a similar reason the society is not a partnership. It is really a “religious society,” carrying on business; to which the legislature has given, at least, these qualities of a corporation, viz.: That these so-called trustees may hold the property; may have succession; may have the immunity of exemption from the statute of uses and trusts.

If it be claimed by the defendants that there was a misnomer, and that the society should have been sued by some other name; that defense should have been set up quasi in abatement, and the plaintiff, in the old language of pleading, should have been given a better writ, by an allegation of the correct name.

Even if it should be admitted that the defendants were-not a corporation, still we should have the case of two persons authorized by law to hold and own real and personal estate, and to buy and sell and carry on business for the benefit and increase of property thus held by them. To say that, for their transactions, there could be no liability, except against them personally, excluding the property thus held, would be most unreasonable; especially when, by the fundamental doctrine of the society, neither these trustees nor any members are to own any property individually. If there is no corporation or quasi corporation, then, as to the world at large, these defendants must be treated as absolute owners of the property; leaving the right of the society, and of its members against them, to be decided whenever it shall arise.

The next point urged by the defendants is, that the complaint only presents a case against the defendants as individuals. This is rather a question of pleading than a question on the merits. The case has been tried on the theory of a liability of the defendants as trustees, and proof has been given to show their character as such, and the transaction in question as one in their ordinary business as trustees. The complaint alleges that the society is carrying on the business within which the transaction in question came, and that the-society made the sale. If any amendment to the complaint be necessary it should be made. But if the defendants, as trustees, are properly sued (the point previously discussed), the complaint should, at this time, be deemed sufficient.

The plaintiffs, previously to the trial, required the defendants to produce the covenant or articles of association and the declarations of trust. At the trial the plaintiffs were proceeding with parol evidence that the defendants were acting as trustees of the society, when the defendants objected. The plaintiffs then called for the production of the articles of association and the defendants produced the same, purporting to be sigued by about 200 persons. The defendants objected to the admission, on the ground of want of proof of the signatures. The referee admitted the articles. The same course was followed in regard to the declarations of trust, which were produced under similar notice. The further objection was taken by the defendants in regard to these, that there were subscribing witnesses who should have been called. The decision of the referee seems to be correct. (Betts v. Badger, 12 Johns., 223.) The qualification in Jackson v. Kingsley (17 Johns., 158), does not seem to affect the present case. There it is said that when a party to a suit, in pursuance of a notice, produces an instrument to which he is a party, and under which he claims a beneficial estate, the other party need not call the attesting witness. Both of these defendants were parties to the covenant or articles. And they thereby claimed a beneficial interest in the deeds of trust, one of which was executed by each. Whether every one of the 200 signatures was genuine or not, these were the articles of association of the society. And the declarations of trust were those under which the trustees held, and which declared their rights and duties to the society, in whose possession the declarations were.

The next objection is to the admissions and conversations of Miller, one of the defendants. This objection is put on the ground that he is a merely nominal party, a mere trustee, whose admissions are inadmissible against his cestui que trust. But in the views above stated this objection is not tenable. He is the officer of a corporation, speaking in regard to business intrusted to him. Or he is the owner of the property fully authorized to act, to .sell and to deal with it. Or he is the agent with full discretion and absolute power, without accountability, and holding the title.

The next point urged is, that the referee should have received evidence of the custom of seed dealers. And the case of Smith, v. Tracy (36 N. Y., 79), is cited to show that an agent authorized to sell, has no authority to warrant when the property is of a kind not usually sold with warranty. The difficulty with this objection is, that Miller and Harwood had the title to the property and full power to sell. They did not sell simply as agents without any title. Either they are like officers of a corporation to whom by the terms of the corporation an absolute power of sale is given, or they are absolute owners in respect to all others than the society. In either case, they have the power to sell on such conditions as they choose, í.nd the custom of others does not control them.

The next important question is, whether there was any agreement on the part of the defendants to deliver “ large Bristol cabbage seed,” or any implied warranty, so called, in respect thereto. The facts found are in brief as follows: To Chauncey Miller, one of the defendants, was assigned the general duty of selling seeds iaised by the society. In the fall of 1867, he informed the plaintiffs that the defendants had raised some Bristol cabbage seed, the same as the plaintiffs had had that year, and advised them to come for it early. In February, 1868, one of the plaintiffs went to the defendants’ seed store, in Watervliet. A catalogue of seeds for sa e was there shown him, and he ordered various kinds of seeds. Among these he ordered six pounds of large Bristol cabbage seed, which was one of the kinds on the catalogue. The order was written down by one Hallam, who was the agent of the defendants to sell seeds at their store. And Hallam, as such agent, promised, at plaintiffs’ request, to deliver the seeds to them at a store in Albany. No seeds were weighed out or separated from the mass at their interview. Within a few days seeds were weighed out by Hallam, as and for the seeds ordered. Among them were six pounds, marked and designated as “ large Bristol cabbage.” The defendant Chauncey Miller made out a bill of sale of the seeds so purchased by plaintiffs. Among the items was: “Six pounds large Bristol cabbage, thirty-six dollars.” The seeds and the bill were carried by the defendant Harwood to the store in Albany designated, and were there delivered for the plaintiffs, who soon after received the same. Under the authority of Hawkins v. Pemberton (51 N. Y., 198), if the seed had been present and seen by the buyer at the time of sale, the bill of parcels would have been evidence of a warranty. Indeed the court imply that it would have justified the court in holding as matter of law that there was a warranty. So in the case of Allen v. Lake (18 Ad. & Ellis, 561), where the defendants sold the plaintiff a parcel of turnip seed, and gave them a sold note in which it was described as “ Skirving’s Swedes,” this was held to be a warranty.

But the contract was executory. The plaintiff ordered “ large Bristol cabbage seed;” the defendants subsequently delivered on that order certain seeds as large Bristol cabbage seed. Can there be any doubt that this transaction implies an agreement, that the thing thus delivered is the thing ordered ? (Reed v. Randall, 29 N. Y., 368.) Either then by virtue of the bill of sale as a representation, and by the preceding and contemporaneous statements, or by the pretended performance of an executory agreement, the defendants did contract with the plaintiffs that the six pounds of seed delivered and marked “ large Bristol cabbage seed,” were such seed.

There is also another ground of liability, and that is that where one sells an article of his own manufacture for a particular purpose, there is an implied warranty against defects in the process of manufacture, which will render it unfit for the purpose. (Hoe v. Sanborn, 21 N. Y., 552.) The defect in the process of manufacture, in this instance, was that the defendant planted other cabbage so near to the Bristol cabbage that the pollen was carried by the wind to the flowers of the Bristol cabbage. There was some evidence tending to show that the defendants knew of this error. At any rate it was an error which, as found by the referee, produced the bad seed. There is no dispute .that the plaintiffs could not discover by inspection that these were not such seed.

Was, then, this agreement or warranty broken % The referee finds that this seed was not genuine “ large Bristol cabbage seed; ” that it was raised by defendants, that it grew upon stocks of Bristol cabbage, which the defendants had planted in the vicinity of other cabbage; that the pollen produced by flowers of such other varieties had been carried to a large portion of the flowers on the Bristol cabbage stocks which were fertilized thereby; that in consequence thereof this seed was impure, and was not genuine Bristol cabbage seed.

The defendants claim that seed which is produced by a Bristol cabbage stock is Bristol cabbage seed. They offered to prove that, in the language of scientific men, seed grown on the stock of the Bristol cabbage, although fructified by pollen from the red cabbage, would be Bristol cabbage seed. They then offered the same proof, omitting the clause “in the language of scientific men.”

And it is important to notice, in this connection, that the alleged breach of warranty is not that the seeds would not grow, but that they were not “large Bristol cabbage seed.” The question, then, whether there was a breach of warranty depends on the meaning of those words, “ large Bristol cabbage seed,” as they were used by the parties. The defendants claim that these words mean simply the seed produced by Bristol cabbage, although the flower were fructified by a different cabbage. The plaintiffs claim that these words, as there used, mean seed which, growing, will produce Bristol cabbage; for which result it seems to be necessary that the flower should not have-been fructified by any other variety of the plant.

Now to understand the meaning of the words “large Bristol cabbage seed” we must take the circumstances into consideration. The plaintiffs were market gardeners; known to be such to the defendants. The defendants raised seed for cultivation, and had sold to the plaintiffs the year before. If seed were raised, sold and bought, (as for instance mustard seed might be,) only for cousump tion, not for planting, then it is possible that the description of the seed might reasonably be understood to apply simply to the stock on which it was raised. But this seed was raised for the purpose of sowing; and it was bought for that purpose, as the defendants knew: Its designation was intended to show what it would produce, not what it was produced from. The description of it, then, as “large Bristol cabbage seed,” meant seed which, under proper cultivation, if it grew at all, would produce large Bristol cabbage. And the question whether the agreement or warranty had been broken was to be determined by the inquiry whether the plants raised from this seed were large Bristol cabbages. The evidence offered was, therefore, properly excluded.

The referee then finds, as a fact, that this seed, having been properly cultivated by the plaintiff, although it produced plants, did not produce Bristol cabbage; that is, that out of about 100,000 plants only 200 were genuine Bristol cabbage; that the others were of no known variety, and of no value except as food for cattle. There is no doubt, then, that the covenant or agreement was broken.

The remaining question is that which gives importance to this case; and that is as to the measure of damages. The referee has followed the rule in Passenger v. Thorburn (34 N. Y., 634), and has given the plaintiff, to state it briefly, damages equal to the loss sustained by the failure of the crop.

The defendants urge that this rule is unjust. Undoubtedly the recovery is much inore than the amount involved in the original transaction. But the loss has actually occurred; and the only piestion is., on whom shall it fall. The defendants further claim that in that case there was a warranty that the seed were Bristol cabbage seed, and would produce Bristol cabbage. But it has been already shown that in the present case there was an agreement, or as it is sometimes called, an implied warranty, that these seeds were Bristol cabbage seed, and that there was a breach of that agreement ; and the question is only, what damages should be recovered for that breach. That question cannot depend on the fact whether the agreement were express or whether it were implied; as long as it existed and was broken. It would be unreasonable to say that, where a vendor produces an article and says that this is Bristol cabbage seed, one rule of damages is to be followed in case of breach; and that another rule is to be followed where the purchaser orders Bristol cabbage seed, and the veudor in compliance with that order, sends some other seed. It seems to me, therefore, that the rule of damages in Passenger v. Thorburn applies here. To the same effect are the cases of Milburn v. Belloni (39 N. Y., 53); Messmore v. N. Y. Shot and Lead Co. (40 id., 422); Flick v. Weatherbee (20 Wis., 392); Walcott v. Mount (36 N. J., 362). It cannot be useful to examine a question which has been settled by our highest court. The rule laid down is, that “ the party injured is entitled to recover all his damages, including gain prevented.” The two conditions are that the damages may be such as might naturally be expected to follow from the violation of the contract; and they must be certain. (Passenger v. Thorburn.) Applying that rule, the loss of the crop would be naturally expected to follow from a delivery of impure seed; and that loss was a certain result from the cause; that is from the sowing of such seed.

The judgment appealed from should be affirmed, with costs.

Present — Learned, P. J., Bockes and Boardhan, JJ.

Judgment affirmed, with costs.


text:
    MARY E. ALEXANDER, Executrix of, etc., of ANDREW ALEXANDER, Deceased, Respondent, v. PHILIP DUTCHER, Jr., PETER W. HOUSE, JEROME B. DUTCHER and CHARLES DUTCHER, Appellants.

      Evidence — Pecuniary ability of ind/yrs&r, pecuniary distress of holder, not admissible as tending to prom payment of a note — Laws of 1832, chap. 276, § 8 — Oode, § 399.
    In an action on a note, payable in 1868, brought in 1874 after the holder’s death, evidence that the holder of the note was pressed for money, and that the indorser of it lived near him until the holder’s death in 1873, and such indorser was responsible, held not admissible on the ground that pecuniary ability does not tend to prove payment.
    The act of 1833, chapter 276, allowing the maker to be sworn for the indorser, is subject to the restrictions contained in section 399 of the Oode.

      Genet v. Lawyer (61 Barb., 211) followed.

      Appeals from a judgment in favor of the plaintiff, in an action brought against the makers and indorsers of a promissory note.

      E. F. Bullard, for the appellant Philip Duteher, Jr.

      Geo. Day, for the other appellants.

      Eselc Oowen, for the respondent.
   Learned, P. J.:

This was an action by the executrix of Andrew Alexander against the maker, Philip Duteher, and the several indorsers, House, Jerome B. Duteher and Charles Duteher, of a promissory note. Philip Duteher answered separately. The other defendants put in a joint and several answer. On the trial House was sworn as a witness and, on behalf of Philip Duteher, the maker, only, he was asked: Were you in the habit of borrowing money from Andrew Alexander from time to time ? The plaintiff objected, that this was a transaction between the witness and a deceased person, and the testimony was excluded.

Philip Duteher was then sworn and, on behalf of the indorser, the offer was made to prove by him the usury set up in their answer. This was excluded on the same ground.

The appellants claim that the provisions of the act of 1832 are not restricted by section 399 of the Code. The question has been decided otherwise in Genet v. Lawyer (61 Barb., 211), and we ought to follow that decision.

It appeared on the trial that the note in suit became payable August 17, 1868; that the suit was commenced in February, 1874; that the defendant House was responsible and lived near Alexander ; that Alexander was pressed for money, and that he lived until June, 1873. From these facts the defendants asked to go tc the jury on the question of payment of the note, but the court refused and directed a verdict for the plaintiff.

But no presumption from lapse of time of the payment of a mortgage arises within twenty years after the mortgage becomes payable. (Ingraham v. Baldwin, 9 N. Y., 45.) Nor does the pecuniary ability of the defendant tend to prove payment. (Daby v. Ericsson, 45 N. Y., 786.)

The judge properly directed a verdict and the judgment should be affirmed, with costs.

Present — Learned, P. J., Bookes and Boardhan, JJ.

Judgment affirmed, with costs.


text:
    JEHIAL BEACH and others, as Trustees of THE FIRST METHODIST EPISCOPAL SOCIETY OF WALTON, NEW YORK, Respondents, v. ANDREW ALLEN, Appellant.

      Ghurch edifice — sale of, on severance from realty — Statute of frauds — Qua/rantee — Mutuality of consideration.

    The plaintiff, a religious society, sold to the defendant its church edifice, which had heen removed from its foundations and placed on rollers, so as to be removed from the lot on which it stood, and thus severed from the realty. Held, that it was not a sale of land, which would have required an application to be made to the court therefor, but, like any other personal property, it could be sold by the trustees.
    Where, on payment for such edifice, the defendant assigned to the plaintiff a bond and mortgage on certain real estate, on which there was a prior lien, and as the value of the mortgaged property depended in a measure on a building thereon, executed an agreement that, in case such building was burned, the defendant would purchase the property for the amount of the assigned mortgage and the prior hen, at the time the mortgage became due. The building afterward having heen burned, and the mortgage having become due, held, that the agreement was not void by the statute of frauds, as being an agreement hy the defendant to buy the land of the plaintiffs, and not signed by them — such not being the meaning of the agreement — but being similar to a guarantee by the defendant to bid a certain amount, and was based on sufficient consideration. That the defense that there was no mutuality was not good, the mutuality being that the plaintiffs sold their church edifice for the assigned mortgage, with this agreement or guarantee.
    Appeal from a judgment entered upon the report of a referee.
    On the 1st day of October, 1870, the plaintiffs sold to the defendant their old church edifice, which had been removed from its foundations and placed on rollers, so as to be removed from the lot on which it stood, for a mortgage executed to him by Sarah and James II. Bump on certain premises in Unadilla, Otsego county, N. Y., to secure the payment of $500, and interest, annually, dated October 16, 1869, the principal to be paid five years from date. At the time of the sale or exchange there was a mortgage on said mortgaged premises of $1,000, executed by said Bumps to F. A. Sands, which was a prior lien to said $500 mortgage, and the existence thereof was known to all the parties. The defendant, on the sale or exchange aforesaid, executed the following instrument to the plaintiffs:
    “ Whereas, said Allen has this day sold and transferred to said trustees a certain indenture of mortgage made by Sarah Bump and James IT. Bump on certain premises in ITnadilla, Otsego county, New York, which mortgage is recorded in the Otsego county clerk’s office, in book No. 78, at page 301; and, whereas, there are now certain other lien or liens on the property described in said mortgage, which are prior liens on said property; now, therefore, value received, said Allen hereby covenants and agrees to and with the said trustees, that in case the building on the premises mentioned in said mortgage are burned, that then said Allen will pay for the property mortgaged the amount of said mortgage and the amount of said prior liens, and will make such payment at the time said mortgage shall become due. In testimony whereof, said Allen has hereunto set his hand and seal the day and year first above written.
    [l.s.] “ANDREW ALLEN.
    “ Signed, sealed and delivered in presence of, and the words “ or damaged by fire ” erased upon signing.
    “N. C. Marvin.”
    On the 20th of May, 1872, the main building on the mortgaged premises was destroyed by fire. The plaintiffs paid up and discharged the prior liens on the premises.
    On the 17th day of August, 1871, Sarah Bump and James H. Bump conveyed the mortgaged premises to Jehial Beach, one of plaintiffs’ trustees, by warranty deed, subject to the $1,000 held by Sauds, which' said Beach assumed to pay.
    On the 22d day of October, 1872, said Beach and wife executed a deed of the mortgaged premises to the defendant, and on the Tth of November, 1872, they tendered said deed and the $500 mortgage to the defendant, with the assignment thereof, which he had made to the plaintiff, such assignment not being recorded, and also tendered to him the Sands mortgage, with a satisfaction thereof. Defendant did not receive said papers, nor pay the amount of the lien.
    And this action was brought in February, 1873, to recover the amount of the $500 mortgage, and the amount of the Sands mortgage, with interest on the same, and to have the defendant decreed to be the owner of the mortgaged premises. The plaintiffs recovered in such action the amount of the two mortgages, $2,086.63.

      D. P. Loomis, for the appellant.

      N. C. & M. W. Marvin, for the respondents.
   Learned, P. J.:

This is an action brought by the trustees of a religious society, in their official capacity, to recover on an alleged cause of action belonging to the society. The name of the society is mentioned in the summons and in the title to the complaint.

The cause of action is fully set forth in the complaint, and shown to be in favor of the trustees, as such, and in behalf of the society. The written contract, on which the action is brought, is expressed to be made with the trustees of the society. The complaint alleges that “ they are trustees of” etc., “a religious society, duly incorporated under the laws of the State of New York.” And the answer, in express words, admits the incorporation of the plaintiff as stated in the complaint.” And no objection is taken in the answer that the action should be in the -name of the society, instead of being in the name of the trustees of the society. It is probably more accurate for a religious society to sue in its corporate name, and not in the names of its trustees. Although the language of the act might seem to imply that the title to the property was in the trustees. But, at any rate, it is too late for the defendants to take this objection now, especially after the admission of-their answer.

The next point of the defendants is, that the trustees had no right to sell the building without authority from the court. The building which was sold was an old church which had been removed from its foundation and placed on rollers in order that it might be taken from the lot. A new edifice had been built upon the old foundation. The old building had thus been .severed from the realty, and might, like other personal property, be sold by the trustees. The next objection is, that the agreement on which the action is brought is void by the statute of frauds, because it is an agreement by the defendant to buy the land of the plaintiffs, and they did not sign it. This is not the meaning of the agreement. The plaintiffs did not own or agree to sell the land in question. There was a good consideration for the agreement; and for this good consideration the defendant agreed that, in a certain contingency, he would pay for the property a certain sum. The defendant desired the plaintiffs to take a second mortgage, which he held on a piece of land, in exchange for their old building. The value of the mortgaged property was, to some extent, in the building upon it. And the plaintiffs washed to be sure that, when the mortgage became due, the property would sell for enough to pay off the mortgage. It might not do so if the building should previously be burned. And, therefore, the defendant, as a consideration of .the exchange, agreed, in ease of such burning, to pay for the property enough to satisfy all liens. This was uot a contract to sell lands. No one assumed to agree to sell the land to defendant. Only he agreed that he would pay so much for it ; and the consideration for this agreement was the acceptance by plaintiffs of the mortgage in exchange for the building. Tbe defendant’s agreement was similar to a guarantee, that on a foreclosure sale a guarantor will bid a certain amount.

The defendant’s next objection is, that there, is no mutuality in the agreement; that the plaintiff's did not agree to sell the land. But the mutuality is this : the plaintiffs agreed to sell the defendant their old church edifice in exchange for this mortgage of the Bumps which he held; he agreeing, as a part of the transaction, and as an inducement to them to accept this second mortgage, to execute the instrument in question. The mutuality then is, that the trustees sold and delivered to him the old church edifice in consideration of his assignment to them of the mortgage, and of his also executing the agreement now in suit. The defendant further insists that the plaintiffs, a religiohs corporation, were not competent to make this contract. This objection is based on the notion that this was a contract for tbe sale of lands, which lias been already disposed of. The language of the agreement is; that “ in case the buildings on the premises are burned, that then,” etc. The defendant insists that the words “ are burned ” refer to the time of the agreement; that if a future burning had been contemplated the language would have been, “shall be burned; ” that the reason is apparent, because the parties were seventeen miles from the property, and did not know but that the buildings were in fact burned at the time of making the agreement. As a grammatical criticism, this objection is excellent.

It is insisted by the defendant that the deed from the Bumps to Beach operated as a payment and merger of the mortgage. The principle of merger is, at least in equity, to depend nearly always on the intention of the parties and the justice of the case. But it seems to be of little consequence how it applied here. The defendant’s agreement was to pay for the property the amount of the mortgage and prior liens. The mortgage and prior liens are mentioned to fix the amount which he should pay. As long as he receives a good title, by the operation of merger or otherwise, for Ins money, that is enough. The same may be said in regard to the objection that the Sands mortgage had been paid. The defendant agreed to pay for the property mortgaged a certain amount. This, of course, implies that, on paying for it, he is to receive a title, and as long as a good title was tendered to him, he has nothing to complain of in this respect. If the mortgages were extinguished, then the title was good so far.

The defendant was, in the contingency specified, to pay the amount mentioned “ at the time the said mortgage shall become due.” The holders of the mortgage elected, according to a pi’ovision therein, to declare the whole due on thirty days’ default of interest.. The defendant insists that the agreement refers to the time mentioned in the mortgage. But the provision that the whole might become due on default is a part of the mortgage also. And the defendant must be held to have contracted in reference to this provision, as well as in reference to any other.

A more difficult question arises on the right of the plaintiffs to the relief granted. The referee finds that the amount of the mortgages is $2,086.63, and he decides that the defendant is entitled to a deed of the premises, with a satisfaction of the prior mortgage and a surrender of the assignment of the Bump mortgage, and that the plaintiffs are entitled to judgment for the amount above stated. The referee therefore treats the agreement as a contract for the purchase and sale of land, and gives the relief of specific performance. Now the objection to this is one which is mentioned above in another connection; and that is, that there was no contract to sell the premises by any person, still less by any owner; nor did any owner of the premises sign the contract. There is, then, no contract binding any one to a sale of the premises, and, therefore, there can be no mutual contract for the purchase and sale of the premises. The defendant, on tendering the amount due on the mortgages, could never have compelled any one to convey the laud to him. It follows, therefore, that he cannot be compelled to carry out the supposed agreement of purchase and sale. This does not imply that the contract is void; and we have already seen that it liad a good consideration. But the question is, what are the liabilities incurred thereby and what the remedy for a breach. If the plaintiffs had added to the contract a clause agreeing to sell the premises to the defendant at that price, and had signed the contract, then there would have been a case for the relief which the referee has given. But, evidently, the plaintiffs had no intention of assuming that obligation.

To illustrate the meaning further, let us suppose that the Sands mortgage had proceeded to a foreclosure and sale, and that on the sale some third person had bid $1,000. Then, evidently, the plaintiffs’ damages would have been only the deficiency of $1,086.63. And, indeed, it is doubtful whether their damages could have exceeded their own mortgage of $500 and interest, in any case. And again, if on such a sale the property had been sold to some third party for $2,500, the plaintiffs would have suffered no damages, and could probably have recovered nothing on this contract. And yet, in that case, the defendant would have broken the terms of the contract, but the plaintiffs would not' have been damnified.

We thus see that it is impossible to consider this contract, as the referee has done, an agreement for the purchase and sale of lands. It is only an agreement with one person to pay a certain sum for premises of another; and when it is broken the question is, how much is the aggrieved party damaged.

It may be compared to a guaranty that, on a foreclosure and sale, premises shall sell for such a sum. It may not be necessary, in this instance, that there.should be an actual foreclosure and sale. Yet such a guaranty as has just been mentioned, will illustrate the rule of damage, and the difference between such an agreement and a contract for purchase and sale.

It may be said that the plaintiffs having become the owners of, or having control of the title, can now enforce the contract by specific performance. The answer is this: as parties to the original contract they made no agreement to sell, and, therefore, cannot compel the defendant to buy. As grantees of the Bumps, who were the owners, the plaintiffs have no contract with the defendants to enforce. The Bumps never agreed to sell to the defendant.

The question what damages the plaintiffs have sustained is not easy to determine. If there had been a foreclosure and sale the result would have determined this. But it does not seem to be a necessary condition of the contract that there should be such a foreclosure. The defendant has refused to pay for the premises the amount which he agreed to pay. For this breach he is liable to pay the consequent damages. If he had fulfilled his agreement the plaintiffs would have received the amount of their $500 mortgage and interest. This, then, is the amount that they have been damnified by his breach.

The plaintiff, therefore, should have a judgment to recover against the defendant the amount of the $500 mortgage and interest. This will be without prejudice to the rights, if any, which the defendant may hereafter have, after such payment, to claim a right to have an assignment of the $500 mortgage. "We do not determine the rights and equities of the several parties in case any suit should be brought for that purpose. No costs of this appeal to either party.

Present — Learned, P. J., Bocees and Boardman, JJ.

Judgment modified, order to be settled by Learned, P. J., in accordance with opinion.