author: Van Brunt, P. J. O’Brien, J.

text:
    Sophia Brown, Individually and as Ex’rx, Respt, v. Lafayette J. Finch, App’lt.

      (Supreme Court, General Term, First Department,

      Filed February 18, 1892.)

    Partnership—Continuance after death of member of firm—Widow
    NOT A PARTNER.
    Articles of partnership between Brown & Finch provided that death should not terminate the partnership; that if Brown died, .Finch should pay the widow a certain .sum . during life; that twice a year a balance should be struck and his share be paid the widow, and that at any time she might examine the books. Provision was made for his widow in case Pinch died, but none that she should have a right to examine the books. That if the partnership was terminated, there should he an accounting, and. that Brow,n should pay Finch what was due him, but that the good will should be the property of Brown. That if either party died and did not leave a widow, or if the widow of either party died, the good will slioulcL belong to the survivor. _ Brown died. Held, that his widow and Finck were not partners, and it was error to take the business from Finch by tho appointment of a receiver.
    (O’Bbien, J., dissents.)
    Appeal from order appointing receiver.

      Louis V. Booraem, for app’lt; A. J. Dittenhoefer, for resp’t.
   Van Brunt, P. J.

It is apparent from the memorandum, made by the court upon the appointment of the receiver herein, that it was based upon the fact that the parties to the action were partners with each other, and that as irreconcilable difficulties had arisen between them, the appointment of a receiver became a. matter of course.

We fail to see how it is possible to hold the plaintiff and defendant as copartners in the business which was being conducted by the defendant, under the firm name of Brown & Pulverman. The complaint was not drawn upon any such theory, and the affidavit of the plaintiff upon which this motion was founded admits that such was not the fact. The plaintiff declares that the co-partnership was dissolved by the death of her testator, and the relief demanded is that an account be taken of all the dealings and transactions of said copartnership from the time of its commencement to the time of its dissolution by the death of Brown,, and that the defendant account for all his dealings and transactions in regard to the property, assets and effects of said copartnership since such dissolution, and further, that the said copartnership be adjudged and decreed to be dissolved.

This latter prayer was merely asking for a legal adjudication that by the death of Brown the copartnership had been dissolved,, and not in any way was it claimed that the plaintiff was entitled: to any relief' except as representing the interest of Brown, deceased.

An examination of the articles of partnership annexed to the-complaint shows that the relation of partners does not exist between the plaintiff and the defendant, and that the copartnership did not continue after the death of the plaintiff’s testator, unless a copartnership can be composed of one individual. The. defendant, was merely the surviving partner of a partnership which had been dissolved, and carrying on business as such according to the terms., of the articles of copartnership between himself and the plaintiff’s testator.

It is to be observed that by the articles of copartnership it-is provided that the death of neither of the parties shall work a dissolution of the partnership, but that in the event of the death of the party of the first part, viz.: Brown, the party of the second, part (the defendant) shall'continue the business and pay the widow of the party of the first part $100 a month during her life from the profits arising on the interest of said party of the first part as it existed at the time of his death ; and that on the first days of January and June a balance should be struck and the defendant should pay to the said widow the amount of any balance to her -credit, and further, the said widow of said party of the first part shall have a right, either by herself on her authorized representative, to examine the books of the firm at any time.

This latter provision shows conclusively that it was not the intention of the parties that the widow should be a partner; otherwise it would have been entirely unnecessary to grant an authority ■upon the part of the widow to examine the books.

Then follows a provision in respect to what should be done in ■case of the death of the defendant In the event of his widow ■surviving him, she is to be paid a monthly stipend and a balance •of profits by the party of the first part, but no provision is made for an examination of the books by the widow of the defendant; ••and it would hardly be claimed under this provision that in cade ■of the death of the defendant his widow would have been entitled "to exercise the rights of a partner.

The articles contained the further provision that whenever the partnership was terminated for any cause there should be an accounting and adjustment of copartnership affairs, and that the party of the first part or his legal representatives within six months ■shall pay to the defendant the sum to his credit on the books of 4he firm at the time of the dissolution together with his proportionate share of the profits and increase of the firm, and then provided that the good will and firm name should be the exclusive property in any event of the party of the first part and his representatives except as provided in §§ 18 and 19.

By paragraph 18 it is provided that in the event of the death of either of the parties not leaving a widow, or in the event of •the death of the widow of either of the parties during the continuance of the agreement, then the entire good will of the business shall belong to the surviving partner, subject only to a legal ■accounting to the legal representatives of said deceased partner, or if he dies leaving a widow him surviving then to the legal representatives of his widow for the profits accrued at the time of ■the death of said deceased partner or at the'time of the death of his widow if said partner dies leaving a widow him surviving.

_ Paragraph 19 provides that after the death of both Brown and . his widow the firm name may be used by the defendant to continue the business on his own account, but he shall have no power to use said firm name except in accordance with the terms of the agreement at any time prior to the death of Brown or his widow without written agreement to that efféct

. These provisions show that it was the intention of these articles that the business should continue during the lifetime of the partners, and if either of them died, of his widow, in order to provide for such widow during her life; and that if the partner Brown died first leaving a widow, upon the death of the widow the defendant was absolutely entitled to the good will and firm • name, without being liable in any way to the legal representatives •of said Brown or of his widow.

The articles further provide for an indefinite continuance of the partnership unless six months’ notice should be given by either of the parties thereto or the widow of the partner Brown. They provide that in case of a dissolution of the copartnership by notice from the defendant after the death of Brown and without the consent of his widow, the defendant should not during the lifetime-of the widow act as an advertising agent, etc., within certain limits.

Under these circumstances it is difficult to see how the relation-of partners existed between the plaintiff and defendant. Whatever her rights may be in respect to this business, it does not seem to be that of partner. Neither has the plaintiff any interest in. the firm name or the good will of the business which can extend beyond her life, as the provision of the articles is that after her death the defendant shall own this firm name and be at liberty to-continue the business without accounting either to Brown’s representatives or to his widow’s.

We think that if a claim was made against the plaintiff' as a. copartner in this business for losses sustained in the business the-claimants would find it exceedingly difficult to hold her individually or representatively liable therefor.

It having been the manifest intention of the parties that in case-of the death of either, the survivor should continue the business- and have sole charge thereof, there should be exceedingly cogent, reasons adduced before the court should deprive the surviving-partner of the fruits of that which had been assured to him by the agreement with his copartner. Taking possession of the business in question would seem to be its absolute destruction, and would work irreparable injury to the defendant who'alone has the-right to continue the same.

The facts presented upon the moving affidavits are denied im the main, and the true condition of affairs can only be ascertained by the examination of witnesses, and there is no evidence that irreparable injury will happen to the plaintiff if final relief is postponed until the decision of the questions of fact upon the-trial.

In the decision of this appeal we express no opinion as to what, the ultimate rights of the plaintiff might be in an action brought in the form of the one at bar, leaving that question to be determined upon the trial of the case.

We think, therefore, that the order appointing the receiver-should be reversed, with ten dollars costs and disbursements to-the defendant to abide the final event.

Patterson, J., concurs.

O’Brien, J.

(dissenting.)—I do not concur in the result reached, by the learned presiding justice for reasons which may be briefly stated.

The plaintiff sues in her individual right and as executrix of her husband. Her claim is predicated upon the written agreement which is set forth in the complaint and which has been analyzed by the presiding justice.

It may be difficult to determine just what the plaintiff’s status thereunder was, but it seems to me to be more nearly analogous to that of a partner than any other. The agreement itself provided that the death of one of the two partners should not work a dissolution of the copartnership. Notwithstanding this provision, unless we assume that plaintiff became a copartner, the co-partnership would have been dissolved, there remaining but one person, who of himself could not constitute a copartnership; it requiring for that purpose more than one individual.

After the death of plaintiff’s husband she was accorded by the terms of the agreement every right usually accorded to partners except the active management of the business. Even in regard to what should become of the good will and firm name in the event of a dissolution between the plaintiff and the defendant, which was contemplated, provision was made for its reverting to the plaintiff, and it was only in the event of the death of plaintiff and her husband that it became the property of the defendant.

It is unnecessary for us to determine what might be the relation of these parties as to creditors. Cases occur where persons, who as between themselves are not partners, have- been held as to creditors to be partners. The reverse of this proposition seems to me to be one likely to occur, that a partnership relation will exist between persons, one of whom it might be difficult to hold to the liability of a partner so far as the creditors might be concerned. Of this latter kind the present case I think furnishes a good illustration. ' •

The fact that the plaintiff is to have the right to examine the books, and is given other rights accorded to partners expressly by the terms of the agreement, should not, it seems to me, be urged as a reason or argument for showing that she had not the rights of a partner.. I am inclined to the view that the agreement between plaintiff’s husband and defendant contemplated upon the death of the former a partnership between his widow, who is the plaintiff here, and the defendant, who thus became the surviving partner, Under an arrangement, the effect of which was to transfer all the assets of the old firm to a copartnership thus to be formed, in which each of the parties had definite and fixed rights and in which the active management and control was given to defendant.

To sustain, however, the order appealed from it is unnecessary for us to go to the extent of holding that the plaintiff was a copartner; for considering her position as executrix, which gave her as against the surviving partner a right to an accounting and her own right to share in the .profits of the business accorded under the agreement of partnership between the defendant and plaintiff’s husband; and considering the charges made against the defendant of wrong-doing, which were not fully met,oit was not error to appoint a receiver.

The relation between the plaintiff and defendant constituted, to say the least, a quasi partnership, and the refusal of the defendant in violation of the agreement to permit her to inspect the books of the business and the- excuses given for the non--production of the books and vouchers, and the other charges made showing a repudiation on the part of the defendant of all rights of the plaintiff in the business, presenting an honest difference of opinion not only as to the administration of the assets which belong equally to both, and of which, so far as the good will and firm name was concerned, belonged entirely to the plaintiff during her life; these justified in the presence of the quarrel between the parties the appointment of a disinterested person as a receiver, to the end that the property might be preserved during the litigation, and as the result of an accounting distributed as justice might require. „ ,

I am, therefore, of the opinion that the order appealed from should be affirmed, with costs and disbursements.


source: Caselaw Access Project

author: Lawrence, J.

license: Public Domain

text:
    The Hanover Fire Insurance Co., Resp’t, v. The Germania Fire Insurance Co., App’lt.

      (Supreme Court, General Term, First Department,

      Filed February 18, 1892.)

    1. Costs—Extra allowance—Subject matter involved.
    A complaint alleged that the plaintiff and defendant agreed to establish an underwriters’ agency to be conducted by one Stoddard, who was also to close the matter when the agreement, expired; that it had expired, but that the defendant obstructed Stoddard’s acts in settling .up the business. It demanded specific performance and an injunction from interference by the defendant with Stoddard. No money judgment was asked, and upon the trial the relief was only a permanent injunction. Feld, that there was nothing upon which an extra allowance could be based, and that the court had no power to grant one.
    2. Appeal—Questions involved.
    An appeal from a judgment brings up on the face of the record a question of power, and the court will examine it, although no exceptions were taken to findings which embodied the unauthorized act.
    Appeal by the defendant, The Germania Fire Insurance Company, from so much of the judgment entered in favor of the plaintiff as adjudges and decrees that the plaintiff recover of said defendant an extra allowance of $2,000.

      George W. Cotterül, for resp’t; Ernest Hall, for app’lt.
   Lawrence, J.

This is an appeal by the defendant, the Ger-mania Fire Insurance Company, from so much or such part of .the judgment entered in favor of the plaintiff against the defendant as grants to said plaintiff an allowance of two thousand dollars ($2,000) in addition to costs.

The complaint sets forth that the plaintiff and defendant companies entered into an agreement whereby they formed the Underwriters’ Agency, to be carried on under the management of the defendant, Alexander Stoddard, of which the defendant Kahl was appointed treasurer, and which agreement terminated by its terms on the 31st of December, 1888, and by the terms of which agreement the business of the agency was to be wound up upon the termination of the contract under the direction and management of the general agent, unless both of the contracting parties object to his so acting; that the defendant, Alexander Stoddard, is the only person who can be procured for the purpose of winding up that business without great detriment to the interest of the parties; that, notwithstanding said agreement, the defendant-company has hindered, obstructed and continues to hinder and obstruct the said Stoddard in closing up the said business, and demands judgment that the defendant company specifically perform said agreement, and be enjoined and restrained from in any manner preventing or interfering with the closing up by said Stoddard of the business 'of said agency, or with the assets, money, property, matters, or any of them pertaining to, the liquidation or closing up of said business, and from appointing or continuing or otherwise placing any other person other than the said Stoddard to act in and about the liquidation, settling up or closing up of the said business, and that the said John E.. Kahl be required, by the mandate or order of this court, to obey, honor and recognize all the acts of said Stoddard in and about the closing up of the said business, and that he be restrained from preventing and obstructing the closing up of the same, and that plaintiff have such other and further relief as to the court may seem just and equitable, together with the costs of the action.

The answer of the defendant, while admitting the malting of the agreement set forth in the complaint, and the employment of Stoddard as general agent, denies any violation of the agreement on their part, and sets up as a separate defense, that the general agent, during the continuance of the Underwriters’ Agency, composed of the plaintiff and defendant companies, and in violation of his agreement with them, undertook the formation of another Underwriters’ Agency of the same character and' to do business in the same territory as the said former agency, between the Hanover and Citizens’ Companies, to the exclusion of the defendant company, and for that purpose made use of the name, agents, facilities, etc., of said agency, and alleges that by reason of said act the said Stoddard was not a fair, impartial and fit person to be entrusted with the management and winding up of the affairs of said agency. The answer demands judgment that the complaint may-be' dismissed, and that said Stoddard may be declared to have violated his agreement and be enjoined from interfering with the property or affairs of said Underwriters’ Agency,, and that he and the plaintiff be enjoined from using the name- of the Hew York Underwriters’ Agency in conjunction with any one excepting the defendant company.

An injunction during the pendency of the action was granted, upon motion by the -plaintiff, which, upon appeal, was affirmed by the general term of this court, and upon the trial it was determined that the plaintiff was entitled to the. injunction demanded in the complaint.

It will be observed that in the complaint no pecuniary judgment is demanded against the defendants, or either of them. There is an allegation in the fifth paragraph of the complaint that the business carried on under the agreement became large and profitable, and there is an affirmative allegation in the thirteenth paragraph of the defendant’s answer that the name of the Hew York Underwriters’ Agency possessed and possesses a pecuniary value of at least $50,000.

As was before stated, the special term, in rendering judgment, determined that the plaintiff was entitled simply to an injunction, giving no pecuniary judgment, but it awarded to the plaintiff, in addition to the costs, an extra allowance of two thousand dollars ($2,000), and from that provision in the judgment the defendant, The Germania Fire Insurance Company, has appealed.

It has frequently been determined that where no sum of money is claimed in the pleadings or allowed to the plaintiff, there is nothing upon which an extra allowance can be based, and that the court has no power to grant it.

In Conaughty v. The Saratoga County Bank, 92 N. Y., 401, it was held that under the provisions of the Code of Civil Procedure, § 3253, in reference to extra allowance in an action wherein rights of property are involved, and a pecuniary value may be predicated of the subject matter, the importance of the litigation in any other than in its pecuniary aspect affords no basis for the allowance; and when no money judgment .is asked or rendered, and the subject matter involved is not capable of a money value, or the value is not shown, the allowance is not authorized. The term, “subject matter involved,” refers simply to property or other valuable things, possession, ownership or title to which is to be determined by the action. It does not include other property, although it may be directly or remotely affected by the result.

In this case, no evidence whatever was given upon the trial as to the pecuniary value of the name, the New York Underwriters’ Agency, and no pecuniary judgment was rendered in favor of the plaintiff and against the defendant. The case therefore seems to come within the decision in Conaughty v. The Saratoga County Bank, supra, and numerous cases cited in the opinion of the court in that case.' It is said, however, by the respondent’s counsel in his points, that as the allowance and the costs were inserted in the findings of the learned justice, and as no specific exception was taken to the findings, in which such allowance was contained, and the appeal being simply from that part of the judgment which awards the allowance, this court has no power to review the determination of the court below in respect thereto. We cannot accede to this view. The cases relied upon by the counsel for the respondent are not cases, as we understand them, in which the court did not possess the power to make tile determination appealed from. They were cases which arose either upon an erroneous reception or rejection of evidence on the trial, or in which the question determined was one within the discretion of the court, in which case the determination could not be reviewed without an appropriate exception. Here, if the views above expressed are correct, the court had no power, under the provisions of the Code, to grant any allowance whatever, and there was no basis whatever upon which it could be determined, even if the court had the power to grant an allowance, whether it exceeded the limitation prescribed by the Code. The case of Murray v. Church, 1 Hun, 49-51, relied upon by the respondent’s counsel, was a case where the allowance was within the descretion of the court, and in that case the court held that there was in the case nothing showing that the discretion of the court was improperly exercised, but if there were anything of that nature in the case, it would not aid the appeal, because no exception was taken and presented for consideration. That case was different from the case at bar, because, as already stated, in the case at bar the question is one of power and an appeal from the judgment brings up upon the face of the record the question of power which this court has the right to examine into and refuse.

The case of Munro v. Smith, 23 Abb. N. C., 275; 25 St. Rep., 624, is not in conflict with these views, inasmuch as there it appered by the plaintiff’s affidavit, which was uncontradicted, that he had spent fifty thousand dollars ($50,000) in advertising articles on which he used the trade-mark, and that the right to the exclusive use of it belonged to him.

Mr. Justice Brady, delivering the opinion of the court in that case, distinguishes it from the case of Coates v. Goddard, 34 Superior Court (J. & S.), 118, on the ground that in the latter case plaintiff had not recovered°any judgment but one directing a perpetual injunction. The same distinction exists in the case before us.

Eor these reasons we are of the opinion that so much of the judgment below as awarded an allowance of two thousand dollars to the plaintiff should be reversed, with costs and disbursements, and motion denied.

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


author: O’Brien, J. Lawrence, J. Van Brunt, P. J.

text:
    The People ex rel. Alexander Meakim et al., Excise Commissioners, Resp’ts, v. Max Eckman et al., App’lts.

      (Supreme Court, General Term, First Department,

      Filed February 18, 1892.)

      1. Excise—Bond—Panties.
    The excise commissioners of the city of New York are authorized by § 24, of chapter 628, Laws of 1857, to sue upon a bond given to the People upon the issuance of a license to sell strong and spirituous liquors at a° saloon in said city.
    2 Same—Estoppel.
    Where such a bond has been given, and a license has been granted upon the faith of it, the obligors therein are estopped from questioning the authority of the excise commissioners to demand the bond.
    3. Same—Condition op bond—“ Disokdekly.”
    Where a condition of such a bond was that the obligor would not suffer his place of business to become disorderly, and he sold liquor to.a minor under fourteen, which is an illegal act, Held, that the condition was broken. The meaning to be given '‘disorderly” is the common one, and not that of the Penal Code, where it treats of disorderly houses.
    Appeal from an interlocutory judgment overruling the defend- . ants’ demurrer to the complaint.

      Moses Weinman, for app’lts; Edward Browne, for resp’ts.
   O’Brien, J.

The complaint in this action is based upon an alleged breach of the condition of a bond given by the defendants to the People of the State of New York, upon the issuance to the defendant Eckman of a license to sell strong and spirituous liquors upon premises. The bond is in the sum of $250, and the condition reads: “ That if during the time for which the said license shall be granted he shall not suffer his place to be disorderly, nor suffer any gambling table of any description within the premises so kept by him, or in any outhouse, yard or garden belonging thereto, nor suffer said premises to be used for immoral or unlawful purposes, and that if during the time for which the undersigned shall be licensed he shall keep and observe the provisions of the acts of the legislature known as chap. 628 of the Laws of 1857, and supplementary thereto, and amendatory thereof, then this obligation shall be void, otherwise to remain in full force and effect.”

A violation of the condition of the bond is charged against Eckman in ¿his, that on a day specified he sold, and permitted his agent and servant to sell, strong and spirituous liquors to a minor under the age of fourteen years. The demurrer admits the facts, and, therefore, the three questions of law arising upon this appeal open for discussion are:

First. As to the plaintiffs’ right to maintain this action.

Second. As to the commissioners’ power to demand the bond as a condition of granting the license to Eckman.

Third. Was there a violation of the condition of said bond by the sale of intoxicating liquor tó a minor under the age of fourteen years.

In disposing of these questions relied upon by the appellant, it should be remembered, as stated by the learned judge Below, that “ The instrument was exacted, but voluntarily executed and delivered to obtain the desired license.” The learned judge was also of the opinion that the obligors should not be permitted to question the validity of an obligation thus assumed. Apart, therefore, from any statutory provision requiring a bond to be * given, the conclusion reached by the learned judge below, it seems to us, can be sustained. It is discretionary with the commissioners as to the persons to whom and the conditions upon which the license shall be issued. Where, therefore, in the exercise of a discretion conferred by law a bond is required as a condition precedent to the issuance of a license, it can Be enforced if its conditions are violated. u This results from the fact that it is a good common law bond.

■ We-have not overlooked in this connection the fact that a failure to wisely exercise their discretion can be remedied by an application to the court for a mandamus, and upon such an application the court undoubtedly would have the right to determine whether the conditions imposed by the commissioners were reasonable and just. In this case the commissioners required a bond and no objection was made to giving one, nor was any resort had to the court by mandamus for the purpose of determining their right to exact the same. Under such circumstances, the bond being executed became, as stated, a good bond at common law, and can be enforced. In addition, however, we are of opinion that statutory authority can be found for a determination of the questions presented upon this appeal favorable to the commissioners.

First. As to plaintiff’s right to maintain the action, it must be conceded at the outset, that unless some authority is found in the statutes, that the obligee of the bond being the People of the state, an a'ction on their behalf could only be maintained by the" attorney general or district attorney. This view is enforced by reference to § 1962 of the Code, which requires such actions to be brought by the officers named where provision is not otherwise specially made.

The act of 1857, chap. 628, provides by §§ 22 and 24, by whom and in whose name actions shall be maintained. This question has been discussed in the two cases of the People v. Groat, in the 22d of Hun, 164, and in Board of Commissioners of Excise v. Burtis, in 103 N. Y., 140; 2 St. Rep., 755. The latter case decided that for penalties imposed by the act the commissioners of excise were the proper parties to maintain the action. Besides actions to recover penalties imposed by the act, for violations of the excise law, a cause of action exists in favor of some one for a breach of the condition of a bond. This has been specially provided for by § 24 of the Laws of 1857, as construed in the case of the People v. Groat, supra, wherein it was held that an action to recover the penalty incurred by the breach of the condition of s.uch a bond must be prosecuted by the officers named in § 24, which specially names the commissioners of excise as the persons to prosecute in the name of the People.

In view therefore of the express authority given by the statute as construed in the cases cited, it seems reasonably free from doubt that the commissioners of excise, as they have done here, could in the name of the People bring and maintain this action. However we-do not think that the appellants are in a position to urge such an objection upon this appeal, for the reason that it does not appear upon the face of the complaint that the plaintiffs have not legal capacity to sue, and therefore under §§ 488 and 489 of the Code the objection should be taken by answer and not by demurrer.

Second. Had the commissioners the legal power to demand the bond as a condition of granting the license to Eckman ?

There are two classes of bonds authorized to be taken, and required to be given before a license can be granted to an applicant ; one from applicants who desire to sell liquors to be drunk on the premises, commonly known as hotel and saloon licenses ; the other to applicants who sell liquors not to be drunk on the premises.

The license granted in this case is known as a “ saloon license,” and with that alone we have to deal upon this appeal. Many changes by amendments and new enactments have taken place in the excise laws since -the adoption of the general scheme in 1857. Laws of 1870, chap. 175; Laws of 1873, chap. 820; Laws of 1878, chap. 109; Laws of 1883, chap. 340, and chap. 496 of the Laws of 1886. Hone of these laws in express terms repeals the general scheme or act of 1857, and except so far as the subsequent acts may be inconsistent with or repugnant to certain sections thereof, which to that extent would be abrogated, what remains of the act of 1857 would still be of binding force and effect.

By § 4 of the act of 1857, the board of excise was given the power to fix the conditions before granting licenses. By § 6 it was provided that the licenses should not be granted to any persons to sell liquors to be drank on the pi emises, unless a person proposed to keep an inn, tavern or hotel. Section 7 (Laws of 1857) makes provision for the bond as follows: Nor shall such license to keep an inn, tavern or hotel be granted until the applicant shall have executed and delivered to the board of commissioners of excise a bond * * * with the condition that such applicant during the time that he shall keep any inn’ tavern or hotel will not suffer it to be disorderly, or suffer any gambling or keep a gambling table of any description within the inn, tavern or hotel, so kept by “him, or in any outhouse, yard or garden belonging thereto.

Section 15 provides that any person who shall sell liquors to a minor shall be deemed guilty of a misdemeanor, and upon conviction shall be liable to a fine of twenty-five dollars for each and every offense, and provides by whom such penalty can be recovered.

It will thus be seen that the act of 1857 made no provision for a saloon license, the board of commissioners being restricted to the granting of licenses to persons keeping an inn, tavern or hotel. It is contended further, that because a specific penalty is prescribed for the violation of the law by selling liquors to a mihtir, that a recovery cannot be had on the bond. Our answer is, that the legislature having the power to regulate the sale of intoxicating liquors could impose dual penalties for the same offense. When the statute fixes both the penalty and declares it a misdemeanor for doing any act, such as selling liquor without a license, they are entirely independent of each other, and the conviction for the misdemeanor is no bar to an action for the penalty. People v. Stevens, 13 Wend., 341; Blatchley v. Moser, 15 id., 215. An examination of the laws referred to will show that no act of the legislature since the passage of the act of 1857 contains anything repugnant to, or inconsistent with, §§ 4 and 7, so that the situation to-day is, that, so far as the board of excise is concerned, no doubt exists as to their power and as to their duty to exact a bond from all persons who apply for a hotel, inn or tavern license. If, therefore, the contention of the appellant is correct that the commissioners had no power to exact a bond at all from him for a saloon license, then the anomaly is presented that while in all the other cases specified a bond must be. given, a saloon keeper has the right to obtain a license without being required to give any bond.

In 1870, by chapter 175, power was given to the commissioners to license any place to sell strong and spirituous liquors.^ This is the first authority for granting saloon licenses at all. It is true that as amended by the Laws of 1873, chap. 549, no mention whatever is made of the giving of a bond by a saloon keeper, .and this is equally true with regard to chap. 340 of the Laws of 1883. But chap. 496 of the Laws of 1886, being an amendment ■to chap. 340 of the Laws of 1883, provides that the board of commissioners of excise, “if all other requirements have been •complied with, have power to grant licenses to sell strong or spirituous liquors, etc., to be drank on the premises.” Although, therefore, it may be true, as claimed by the appellants, that no mention of the bond as a condition of granting a license is, by express terms, made a provision of any of the acts subsequent to 1857, yet it seems from a fair construction of all the various provisions of the excise law that it was not the intent of the legislature to relieve the saloon keepers from giving a bond, while it imposes the condition upon others in the ■ same business. In other words, we are of opinion that the general policy of the legislature

in extending the power to grant licenses to sell intoxicating liquors to others than to hotel and tavern keepers, was to formulate a gen•eral plan or policy equally applicable to all classes of licenses. 'This conclusion is justified not only by a reference to the general .scheme enacted by the act of 1857, but is fortified by the provision of the Laws of 1886, already referred to, which enables the ■commissioners, upon a compliance by the appellant with the other requirements of the law, to grant the license. One 6f the requirements of the law applicable to all persons entitled to a license was by the act of 1857 the giving of a bond, and there is nothing in any act subsequent to 1857 indicating that saloon keepers should enjoy greater advantages in the right to sell liquors than other licensees. The legislature undoubtedly intended to treat all applicants for licenses alike, and that the requirement of a bond as a condition in all cases was and is intended.

Third. Was there a violation of the condition of said bond by the sale of intoxicating liquor to a minor under the age of fourteen years ?

The appellant contends that the licensee by selling liquor to a minor did not commit a breach of the condition of the bond, and that the sale of liquor to a minor is not such a violation as would entitle the commissioners of excise" to recover upon the bond. This contention is sought to be upheld by a rigid construction of the act of 1857 as to the purposes for which a bond can be exacted. It is insisted that the sale of liquor to a minor is not a violation of any of the conditions expressly fixed by § 7, and •that § 15 by affixing a penalty, and prescribing the manner in which the person guilty of selling liquor to a minor shall be ■punished, has thus indicated in what manner, and in what manner ■only, shall an offense of that character be visited. There can be no doubt that selling to minors is a violation of the law, and it is equally clear that the’ appellant violated the express condition of the bond by failing to “ keep and observe the provisions of the .acts of the legislature known as chapter 628 of the Laws of 1857, .and supplementary thereto, and amendatory thereof.”

It is insisted, however, that the commissioners exceeded their power in inserting in the bond the language last quoted, and it is claimed that even though a bond could be exacted, its terms should be restricted to imposing conditions which are expressly prescribed, by the act itself.

The conditions of the bond are. not unreasonable, and they are: directed to cover the evil which it was the evident intention of. the legislature to prevent. We think it doubtful, moreover, if the appellants had the right to challenge the express conditions of the-bond, for the reason that the license was issued and they accepted, thp privilege, and in consideration thereof executed the bond, which has been sued upon., “ Whenever a bond" is or shall be required by law to be given by any person in order to entitle him to any right or privilege conferred by law, or to commence any proceeding, it shall not be necessary for such bond to conform in all respects to the form thereof prescribed by any statute, but the same shall be deemed sufficient if it conform thereto substantially, -and do not vary in any manner to the prejudice of the rights of the party to whom and for whose benefit such bond shall have-been given.” Supervisors, etc., v. Pindar, 3 Lans., 11; Farley v. McConnell, 7 id., 430; Foster et al. v. Foster, 7 Paige, 49; Ring v. Gibbs, 26 Wend., 510; Village of Warren v. Phillips, 30 Barb., 651.

We do not think, however, that it is necessary to strain the construction of the statute in the present case to uphold the power of the commissioners in maintaining their action upon the bond, for a violation of any of the provisions of the excise law not expressly enumerated in § 7 of the act of 1857, for the reason that, the breach assigned in the present case seems to be covered by the conditions in § 7 mentioned. One of the conditions so expressed is that the obligor will not suffer his place of business to-become disorderly. In determining the construction or meaning to be given to the word “ disorderly,” it will not do to resort to-the Penal Code, as claimed by appellants, and take the definition therein given as to what would constitute a disorderly house.

As defined by Webster it means “ not regulated by the restraints of morality.“ Not complying with the restraints of order and law.” This definition coupled with the one given by Bishop on Criminal Law, in defining what is meant by disorderly inns,, etc. (§§ 1111 and 1119), go far to support the contention that the sale of intoxicating liquor to a minor under fourteen years of age is a disorderly act, and a breach of the condition of the bond. Moreover as all the questions raised upon this appeal have been examined in the cases of the People, etc., v. Burgett, and the Board of Excise v. Detterlein, Manuscript opinion, filed December 9, 1889, and determined adversely to appellants, further discussion is unnecessary.

We think the conclusions reached in those cases were correct,, and that the judgment appealed from should be affirmed, with costs.

Lawrence, J.

I concur with Justice O’Brien in affirming the judgment rendered at the special term on these grounds:

First. That the defendants are estopped from questioning the validity of the bond upon which the action is brought. Having-obtained the license for Eckman on the faith and strength of that bond, the defendants should not be permitted to repudiate their obligation, nor aided by the court in escaping the consequences of a violation of its condition.

Second. I am further of the opinion that there was a violation •of the condition of the bond in sellingoliquor to a minor under the age of fourteen years, for the reason that by such sale the obligor suffered his place of business to be disorderly,” within the fair and proper construction of that term as used in the bond. In other words, that the term disorderly ” should not be limited in its construction or application to the definition contained in the Penal Code, but should receive the broad and general signification ■given to it at common law and by the lexicographers.

Van Brunt, P. J.

(dissenting).—The plaintiffs in this action are the excise commissioners of the city of Mew York, and this action is based upon an alleged breach of the condition of a bond given by the defendants to the people of the state of Mew York upon the issuance to the defendant Eckman of a license to sell ■strong and spirituous liquors upon the premises Mo. 21 Rutgers place.

It is not necessary in view of the conclusion to which I have •arrived to consider the condition of the bond or the question as to the act complained of being a breach of such condition; matters •which were argued upon this appeal.

The complaint alleges that the plaintiffs are the commissioners of excise; that the defendant Eckman made his application to said commissioners for the issuance of a license to sell strong and •spirituous "liquors,oetc., in quantities less than five gallons at a time to be drank -upon the premises, and that said Eckman as principal and the other defendants as sureties duly made and executed to the People of the state of Mew York and delivered to said board of commissioners a bond as required by the statutes of •this state ; that the commissioners approved the bond, and issued •to the defendant Eckman a license to sell strong ■ and spirituous liquors and that subsequently said bond was filed in the office of the clerk of the city and county of Mew York. The complaint further alleges a breach of the condition of the bond and. demands judgment for the penalty.

Three points were raised upon the argument: The first as to the plaintiffs’ right to maintain the action; the second as to the commissioners’ power to receive a bond from the defendant Eckman upon the granting of a license to him; and the third as to the violation of the condition of the bond.

The last question, as has already been intimated, it is not necessary to discuss..

If the bond has any validity whatever, and can be enforced by anybody, it is plain that the commissioners of excise have the power to maintain this action, because § 24 of chap. 628 of the Laws of 1857, which is still in force, provides that if there shall be a breach in the condition of such bond given upon the granting of any license, it shall be the duty of the commissioners * * * to prosecute the same and recover the penalty therefor. There seems to be no question, therefore, but that the commissioners may maintain an action to recover for a breach of the bond provided any recovery at all can be had thereon.

One of the grounds upon which the decision of the court below rested, as appears by, the opinion, was that the instrument was-exacted, but voluntarily executed and delivered to obtain the desired license, and that the obligors should not be permitted to-question the validity of an obligation thus assumed. And it has been claimed, therefore, that even if there is no statutory provision requiring a bond to be given, it being discretionary with the commissioners as to the person to whom and the conditions upon which a license should be issued, that if said commissioners require a bond as a condition precedent to the issuance of a license, it can be enforced if its conditions are violated.

It seems to me that a very plain answer to this proposition is-that there is no allegation in the complaint that this bond was-exacted as a condition of issuing a license in the exercise of any discretion upon the part of the commissioners; but, on the contrary, it is alleged to have been a bond delivered as required by the-statutes of the state; and, therefore, unless its delivery was required by the statutes of the state, it never had any legal existence, and, as will be seen hereafter, the commissioners have no-power to exact additional obligations to those mentioned in the-statutes as conditions of issuing a license. They have a discretion, to refuse to issue a license, but when they issue the license the-licensee is under no obligation except those which the statute-imposes.

It has been suggested that the excise board have an absolute-discretion in reference to the conditions exacted because of the provisions contained in § 4 of the chapter above. referred to, which provides that all licenses shall be signed by the commissioners granting the same, but they shall not be issued until the requirements fixed by the act shall have been complied with. But this provision evidently refers to the rules which the board shall adopt in reference to the manner in which the business of applying for license shall be carried on, the nature of the proof of the facts necessary to be established to the satisfaction of the: board of excise before they issue a license, the nature of the-security upon the bonds to be approved by them, and the amount of the license fee.

It certainly was not the intention of the legislature to give the board of excise the right to impose any such arbitrary conditions as they might choose under the provisions of the section referred to as a condition of the issuance of a license.

A very brief history of the legislation in respect to the question of the issuance of licenses will, it seems to me, demonstrate-the fact that .there is no requirement of statute at the present, time.under which a bond may be exacted by the excise commissioners as a condition of 'issuing á license other than in case the-applicant proposes to keep an inn, tavern or hotel.

By chapter 628 of the Laws of 1857, § 2, it is provided that the commissioners of excise shall have the power to grant licenses to keepers of inns, taverns, or hotels, being residents of the town or city where such inn, tavern, or hotel is proposed to be kept, to sell strong and spirituous liquors and wines to be drank in their houses respectively ; and to storekeepers, being such residents, license to sell -such liquors and wines in quantities less than five-gallons, but not to be drunk in their shops, houses, outhouses, yards or gardens, and it was also provided that they should have power .to determine the sums to be paid for a license for each person applying within certain limits; and by § 6 it is provided that licenses shall not be granted to any person to sell strong and spirituous liquors and wines to be drank on the premises of the person licensed unless such person proposes to keep an inn, tavern or hotel, nor unless the commissioners-are satisfied that the applicant is of good moral character, etc.; nor unless on the petition of not less than twenty respectable freeholders of this state, residing in the election district where such inn, tavern or hotel is proposed to be kept, etc. Section 7 provides that no such license to keep an inn, tavern or hotel shall be issued until the applicant shall have executed and delivered to the board a bond to the People of the state in the penal sum of $250, with sufficient sureties, * * * conditioned that such, applicant, during the time he shall keep such inn, tavern or holely will not suffer it to be disorderly, etc.

Section 10 provides that no inn, tavern or hotel keeper who shall trust any person other than those who may be lodgers in his-house for afiy sort of spirituous liquors or wines shall be capable of recovering the same by any suit.

Section 11 provides that in all licenses that may be granted (except to inn, tavern or hotel keepers) to sell strong and spirituous liquors or wines in less quantities than five gallons, there-shall be inserted an express declaration that such license shall not be deemed to authorize the sale of any liquors, etc., to be drunk in the house or shop of the person receiving such license, etc.

Section 12 provides that such licenses shall not be granted unless the commissioners are satisfied that the applicant is of good, moral character, nor until such applicant shall have executed a. bond to the People in the penal sum of $500, who shall justify in double the amount, conditioned*that he will not sell, or suffer to be sold, any strong or spirituous liquors or wines to be drank in his shop or house, etc.

Thus it would appear that there were two classes of persons to whom the commissioners might issue licenses. The one was those who proposed to keep an inn, tavern or hotel, who should give a bond in the penal sum of $250; and the other class of licenses being issued to those persons who proposed to sell liquors- and wines, less than five gallons, not to be drank upon the premises, who were required to give a bond in the penal sum of $500.

The foregoing law remained substantially unchanged until the-year 1870, when by chapter 175 of the laws of that year the legislature greatly extended the power of the commissioners to issue licenses.

59

Section 4 of that act provided that the board of excise shall have the power to grant licenses to any person of good moral -character approved of by them permitting him to sell and dispose of, at any one named place within such city, town or village, strong or spirituous liquors, wines, ale and beer in quantities less than five gallons at a time upon receiving a license fee to be fixed in their discretion, not less than $30, nor more than $150. Such license shall only be granted on written application of said party signed by the applicant or applicants, specifying the place for which license is asked and the name or names of the applicant ■or applicants and of every person interested or to be interested in the business to 'authorize which the license shall be issued. Persons not licensed may keep, and in quantities of not less than five gallons at a time may sell and dispose of strong and spirituous liquors, wines, etc., provided that no part thereof shall be drunk or used in the building in which the same shall be so kept, disposed of or sold.

Section 6 provides that the provisions of the act passed April 16, 1857 (chap. 628 being probably referred to) except where the same are inconsistent or in conflict with the provisions of the act of 1870, shall be taken and construed as part of that act, and be .and remain in full force and effect throughout the whole state.

The question is presented whether under this act of 1870 the board of commissioners can exact a bond as a condition of granting a license' except from a person who proposed to ¡teep an inn, tavern or hotel.

It seems to me clearly that no such right exists. The provisions of the act of 1857 in respect to the giving of a bond are totally inapplicable to the case of a license issued to sell liquor to be drunk upon the premises unless the person keeps an inn, tavern or hotel.- ° ■

It is to be observed that under the act of 1857 two classes of licenses are mentioned and under the act of 1870 but one is referred to. The restriction upon licensees who do not propose to keep an inn, tavern or hotel that they shall not sell liquor in quantities less than five gallons to be drunk upon the premises is ■abolished.

And we have a general power*to grant licenses to any proper persons who apply for the same, to Sell liquor in quantities less than five gallons to be drunk upon the premises; the conditions "being that the persons shall be approved by the commissioners and "be of good moral character, with certain details in regard to the method of application.

Now, if such an applicant who does not propose to keep an inn, tavern or hotel, is chargeable with the duty of furnishing a bond, which bond is it ? The bond which the hotel keeper is bound to give under the act of 1857 or the bond which the other licensees are required to give where they sell liquor in quantities less than five gallons, but which cannot be drunk upon the premises ?

The new licensees, under the act of 1870, are certainly more nearly allied to the latter class than they are to the former; and the act of 1870 is evidently intended to be a removal of the restriction placed by the act of 1857 upon the second class of licensees, that no part of the liquor sold by them shall be drunk upon-the premises; and such restriction being removed, the provisions of 112 of the act of 1857, in regard to that class of licensees, became- absolutely inapplicable, because one of the conditions of the bond which they are required to give is that the licensee will not sell, or suffer to be sold, any strong or spirituous liquor to be drunk in his shop or house, a thing which he is expressly authorized to do by the act of 1870. Therefore, the provisions of the act of 1857 in reference to such licensee giving a bond are in conflict with the provisions of the act of 1870, and inconsistent therewith, and were' not re-enacted by the provisions of § 6 of said-act, above referred to. .

It is clear that the provisions in regard to bonds to be given by hotel keepers cannot apply to saloon keepers, because the condition of that bond, as fixed by the statute, is that such applicant, during the time he shall keep such inn, tavern or hotel, will not suffer it to become disorderly. And as has already been seen, the-commissioners of excise have no power to alter the statutory condition of a bond in any particular.

The next legislation upon the subject is by chap. 549 of the Laws of 1873, under which § 4 of the act of 1870 is amended by requiring a posting of the license and compelling the board of excise to keep a record of all persons licensed, etc.

In 1883, by chap. 340, it was enacted that the board of excise, in cities of this state having a population of over 300,000, shall,, if all other requirements of the law have been complied with, have power to grant licenses to sell strong and spirituous liquors, etc., to be drank on the premises, to any person or persons of good moral character, whether or not they propose to keep an inn, tavern or hotel, provided that no such license shall be granted unless-such commissioners are satisfied, upon examination, that the applicant is of good moral character, and the license may properly be granted for such sale in the place proposed; the legislature here clearly indicating again that by the act of 1870 the provisions of the act of 1857, in regard to hotel keepers, were not interfered with, but that the provisions of the act of 1870 were a mere removal of the restrictions upon the other licensees in respect to the sale of their liquors.

It has been urged that the use of the language in this section “if all other requirements of the law have been complied'with,” is a recognition of the duty of such an applicant to give a bond under the act of 1857. But as already seen if any bond is to be given, it was a bond such as a store keeper was required by that act to give, and not the bond which the hotel keeper was required to give, and that the condition of such a bond as required by the act of 1857 was absolutely incompatible with the provisions of the act of 1870.

We next have chap. 496 of the Laws of 1886, purporting to amend chap. 340 of the Laws of 1883, entitled “An Act to regulate the sale of intoxicating liquors in cities having a population of over 300,000.” By this act the limit was reduced to 150,000# and provision was made for application to the court in case a license should be arbitrarily refused. The words “ if all other requirements of the law have been complied with ” are ■ also inserted in this act, but as already seen this evidently cannot refer to the giving of the bond required by the act of 1857.

It may be said that it is a harsh condition to compel an innkeeper to give a bond and not other persons. But the courts cannot be responsible for the omissions of the legislature ; neither can we complete by judicial decision that which the legislature has left unfinished. It seems to me it was evidently the intention of the legislature to abolish the exaction of bonds; trusting for the •enforcement of discipline to the additional powers which were ¡given to the board of excise to revoke licenses; a power which did not exist in them under the act of 1857.

I am of the opinion, therefore, that there was no power in the board of commissioners to exact the bond in question, and therefore there can be no recovery thereon, and that the demurrer should have been sustained.

The judgment appealed from should be reversed and the demurrer sustained, with costs.

Judgment affirmed, with costs.


author: O’Brien, J.

text:
    Carroll S. Page, Resp’t, v. Joseph Krekey, App’lt.

      (Supreme Court, General Term, First Department,

      Filed February 18, 1892.)

    1. Estoppel—tGuarantor and surety.
    Vendors sold and delivered goods in good faith to a vendee in reliance upon a guaranty executed by an illiterate man who was deceived by the vendee as to its nature. Held,, that the vendors could recover against the surety.
    2. Same—Burden of proof.
    Where a surety, in such a situation, seeks to avoid his obligation the burden of proof is upon him to show that in signing the instrument he was free from negligence.
    8. Same—Degree of negligence.
    In order to create an estoppel it is sufficient that the surety was negligent, and gross and culpable negligence need not be shown.
    Appeal from a judgment entered in favor of the plaintiff upon the verdict of a jury, and also from an order denying defendant’s motion for a new trial.

      Edward W. S. Johnston, for app’lt; Phillip 0. Bartlett, for res’pt.
   O’Brien, J.

The action was brought upon a guaranty signed by defendant and received and acted upon by plaintiff, who shipped goods to defendant’s principal while it was in force. "Tli ese goods were delivered under contract which acknowledged their receipt, and provided for work upon 'them by the principal, with the right to become their owner upon payment of their value within the,time stated, which value was fixed in the agreement; if not so purchased they were to be redelivered to plaintiff’s agents for sale. The goods were never redelivered by the principal, nor paid for by him. In addition to errors assigned as to the admission and exclusion of evidence, the substantial question presented upon this appeal arises out of the defense interposed that the defendant, who could not read, and had never had the guaranty read to him, was' induced to sign the same by the false and fraudulent representations of his principal, that the paper was a mere application for a license. These representations were made to the defendant while he was sober, and he admits that relying thereupon, he agreed to sign and did sign, at the same interview, although, before the actual signature was affixed, he had several drinks and appeared to be under the influence of liquor, but the defendant states that even then he would not have signed the paper if its true contents had been made known to him.

At the outset, therefore, we may entirely disregard considerations arising out of his physical and mental condition at the time ■of signing produced by drink, for it is admitted that while sober he agreed to sign the paper, and that although he drank several times before actually signing it, that if he had known' the contents he would not have signed it, showing that he was sufficiently conscious, notwithstanding the drinks, to have formed a rational judgment as to whether he would sign or not. The question therefore remaining is as to the effect upon the validity of the guaranty of the misrepresentation of the principal to an illiterate man, such as the testimony shows the defendant was.

The guaranty was properly executed, forwarded to the plaintiff, and in good faith, relying thereon, he shipped the goods to one Thinnes, defendant’s principal. The testimony also tended to support the view taken upon the trial that the defendant had been deceived and misled into signing the guaranty. These facts appearing, the learned judge charged as follows: “ There is a general legal proposition that the courts always enforce, and that is, where one of two innocent parties has to suffer for the wrongful .act of another, and where the act of one of the parties has made it possible for the injury to be inflicted, where one party does an act, or neglects to do an act, that makes the injury possible, then the person who is so negligent or who does the act that causes the injury is to be held responsible, rather than the one who is perfectly innocent and who has done nothing in the transaction or no affirmative act that caused the injury. Applying that rule to this case, it is very plain that plaintiff did nothing that caused the injury, and is responsible for no negligence which caused it. He relied upon the guaranty, supposing, of course, it was valid, and supposing it was signed by the person it purported to be signed by, and on the face of that he shipped the goods to defendant. 'The defendant signed the paper, so that what he did, his signing the paper, was the real cause of the plaintiff’s trusting defendant for the goods. The question is, should we apply the rule I have ■stated so as to hold the defendant liable for the loss of the goods, because it was the act of the defendant, his signing the paper, that rendered such loss possible And this rule should be applied if there was any act of negligence, if the defendant, in signing the paper, was at all negligent in ascertaining, or- trying- to ascertain, the contents of the paper. That is the question I am going to submit to you. The burden of proving that fact is on the defendant.”

We have thus at length referred to the charge of the learned judge, because the whole case turns upon the two views taken as-to the law that should be applied to the facts and which were-raised not only upon the motion to dismiss the complaint and direct a verdict for the defendant, but upon the various requests-made to the court to charge the jury. The rule, as stated above, was consistently adhered to by the judge, and it remains,, for the purpose of disposing of the question thus raised, to determine whether the rule thus laid down was a correct exposition of the law. Our attention has been called by appellant to some; early decisions in this state, and to many from other states, in which'it has been held that the burden was on the plaintiff, the-defendant being unlettered, to show that the contract was read to-the defendant and fully explained before such contract was executed by him.

In Trambly v. Ricard, 130 Mass., 261, where the proposition thus stated was referred to with approval, the court says: “ A person dealing with an illiterate man who cannot read, and. taking-from him an obligation, is bound to show affirmatively that he-understood the object and import of the writing sought to be enforced against him. A party who is ignorant of the contents-of a written instrument from inability to read, and who signs it without intending so to do, is no more bound by it than if it. were a forgery.” Whatever force these cases might have had as arguments were the rule of law unsettled and undetermined, we-must, in the presence of the decisions of our own state, which are binding authorities, be controlled thereby. The rule relied upon by appellant, where the action is between the surety and principal, or where an action is brought by the obligee of a bond against the surety with knowledge of any fraud or misrepresentation practiced upon the surety, would be applicable. But in> actions in our state, where, as here, the plaintiff in good faith received and accepted the guaranty without notice or knowledge of any misrepresentation or fraud practiced by the principal upon the guarantor, we take it that the rule is otherwise. In regard to-commercial paper and negotiable promissory notes, the law, by a series of decisions, has been settled in this state, holding in cases; wherein it was claimed that notes were procured from the maker-by false representations, whereby the maker believed the contract to be of an entirely different character, the question for the jury was as to whether or not the maker was negligent in signing the-note, relying upon false representations as to the character of the instrument, and that if he was so negligent, he was liable to-, a bona fide purchaser for value before maturity and without notice. Whitney v. Snyder, 2 Lansing, 477; Chapman v. Rose, 56 N. Y., 137; Nat Ex. Bank v. Veneman, 43 Hun, 241; 4 St. Rep., 363; Fenton v. Robinson, 4 Hun, 252.

As stated in Whitney v. Snyder, supra : “ The precise question presented here, as applied to commercial paper in the hands of a bona fide purchaser, etc., * * * has * *" * been presented in the case of Foster v. Mackinnon, English Common Pleas, 38 L. J. Rep., N. S., 310, which case was fully argued and carefully considered. * * * The learned chief justice who tried the

case left the jury to say whether the signature was obtained on fraudulent representation that the paper to which if was put waü a guaranty, and instructed the jury that if it was so obtained, and •the defendant signed it not knowing it was a bill and under the belief that it was a guaranty, and if he was not guilty of any negligence in writing his name on the bill without ascertaining what he was signing, he would be entitled to their verdict. This instruction was sustained by the whole court by an elaborate opinion delivered by Byles, J.

“ We are satisfied with the reasoning of the court in that case, •and we think any other rule would be fraught with great danger •to the security of property.” While it may be conceded, therefore, that the law is settled as regards negotiable instruments, it is claimed that a different rule prevails and should be applied to non-negotiable instruments such as a bond of guaranty.

The grounds of such distinction have not been pointed out, -nor have we been referred to any authority which would sustain the view that any modification of the law, as applied to negotiable instruments, should be applied to other instruments in writing. Tn Baylies on Sureties & Guarantors, at page 214, it is stated: “ It is the general rule that fraud vitiates all contract and contracts of -guaranty and suretyship-- form no exception. But the fraud which will vitiate a contract of suretyship must be one to which the .person benefited by the contract is a party, or at least of which he ha’d notice. Wherever there is any misrepresentation, •or even concealment from the surety of any material fact which, ' if disclosed, might have prevented him from entering into the •contract of suretyship, it will render it invalid and a surety will not be liable. , But the obligee is not bound to seek out the •sureties and explain to them the nature and extent of their obli-gation at the point of losing the security, nor is he to be held responsible for the fraudulent representations or concealment of the principal of any of the facts. It is the duty of the sureties to look out for themselves and ascertain the nature of the obligations ■embraced in the undertaking, and any other rule would not only work serious inconvenience, but render securities of this character •of but little, if any, value.”

See same language in Western New York Life Insurance Co. v. Clinton, 66 N. Y., 326.

The case, however, which more nearly resembles this than any we have been able to find in this state is that of Mc Williams v. Mason, 31 N. Y., 294 That was an action brought upon a guaranty for the payment of a bond, and the defense was that the ■guaranty was executed relying upon certain representations of the principal which-were false. As stated in that case: “It is the law that the rights of a surety are strictissimi juris * * * the. real question is which of two innocent parties shall suffer by a •fraud perpetrated by another, * * * but it turns out when the guaranty was sought to be enforced that the defendant was-induced to make it by a false representation as to the consideration * * *. This is no defense, because in such actions the law imposes the loss upon the party who, by his misplaced confidence, has enabled another, on the faith of his obligation, to obtain money or property of a third person who has dealt in good faith, relying on such obligation. The doctrine of estoppel steps-in to prevent the assertion of such a defense, because it is more consonant with public policy, as well as sound morals, that he who, by permitting himself to be deceived, has put it in the power of another to defraud an innocent third party, should himself suffer rather than the third party.’’

Appellant, however, insists further that the defendant’s physical inability, by reason of his illiteracy, to read or understand the contents of the instrument, presents an additional reason why this-rule should not be applied. We do not think, however, there can be any real difference between cases where one cannot read an instrument and the cases, many of which are given in the books,, where persons innocently affix their names to papers above which nothing was .written,, and where subsequently obligations were-written in, to which they were bound. In the latter cases, the fact that they were educated or could read in no way would help-them, because the opportunity of reading was not afforded, and yet, in these cases, it was held that a liability ensued. So in the-case of notes, where the amount has been left blank, and subsequently a much larger sum than was agreed upon by the parties-has been inserted Here the opportunity of examination or reading the contents was wanting. We are of opinion, upon an examination of the cases, all of which cannot be reconciled, that the better-view seems to be that where an innocent party has acted, as in this case, upon a guaranty, signed,- it is true, under misrepresentation, that to relieve himself from responsibility thereon he must show that he was free from negligence.

This was the exact ruling of the learned court upon the trial,, and our assent thereto disposes of all the exceptions in the case-predicated upon -an opposite view of the law.

There remains, however, briefly to consider some of the exceptions taken to the rulings of the court upon evidence.

The first exception relates to the reading upon the trial of the deposition of the plaintiff taken upon defendant’s application before trial. Subsequently to the reading, plaintiff was present and testified in his own behalf. The exception to the allowance of the reading of the deposition without proving that the person was unable to attend is not good, for the reason that § 882 permits without such preliminary proof of absence, etc., the reading of a deposition of a party taken at the instance of an adverse-party.

The second exception relates to the reception of the guaranty-in evidence, which was objected to on the ground that the defendant, who was a-witness, being illiterate, the burden was upon the-plaintiff, and it was necessary for him to show that the contents-■of the paper purporting to be subscribed by the defendant were made known to him before he delivered it. It will be seen, however, that before being allowed in evidence, the witness, in answer to a question, testified that the signature thereto was in his handwriting, and in other respects appearing to have been duly and regularly executed, it was properly received. The question as to the burden of proof has already been considered in the prior discussion of the principal question of law presented.

The next exception relates to the introduction in evidence of the agreements between the plaintiff and Thinnes subsequent to the guaranty.

The agreements and notes also offered seem to us to have been properly received, being admissible as acts or admissions of the principal, establishing the receipt of the skins, the terms on which received and the time of the option and the value. They were part of the res gestee, and therefore admissible.

The discrepancy between these agreements and the guaranty as to the place where Thinnes, upon failure to pay, should deliver them, was not so material or vital as to prevent the introduction of the agreements themselves, or uphold the validity of the guaranty. Redelivery to either Rose, McAlpin & Co., the parties named in the guaranty, or Myers & Gordon, the persons named in these agreements introduced in evidence, or to any accepted agent of the. plaintiff, would have discharged the guaranty. The introduction of a new name was, therefore, immaterial. When the guaranty was made, there was no principal contract. When one was made, it fell wholly within the scope of the transaction authorized by the guaranty, and the principle of discharge by alteration has no application.

The next exception relates to the exclusion of certain questions asked by the defendant as to what was said between Thinnes, the •defendant, McKenzie, and some others, at an interview long subsequent to the signing of the guaranty by defendant. It is true the plaintiff was permitted to show part of the conversation between the parties, which was entirely immaterial and irrelevant, and not binding upon any of the parties, and exception to which would have been good, were it not evident from the case that the learned judge reached this conclusion and determined to keep out of the case this irrelevant testimony, and in his charge to the jury expressly told them that such, testimony, in reaching a determination, should be entirely disregarded, thus obviating any harm that otherwise might have flowed from permitting plaintiff to testify as to part, and refusing the defendant an opportunity to give the balance of the entire conversation between guarantor and principal.

The sixth exception relates to the exclusion by the learned judge of questions put to witnesses for the defendant, in form as follows:

“ Have you any knowledge on the subject of whether Mr. Krekey can read or write ? ”

If the question was in dispute, it would have been error to have excluded the answer to these questions, and it would have been entirely competent for witnesses to have answered whether they had or had not knowledge, as properly introductory to eliciting facts about the extent and character of their knowledge. Such evidence, however, was merely cumulative, because defendant’s own testimony was uncontradicted, and at the close of the-case it was assumed that the defendant was illiterate, and the sole- and only question presented to the jury was, assuming his illiteracy, whether he was guilty of negligence. This single question presented, also disposes of many other errors assigned by defendant, in regard to the refusal to submit the question of plaintiff’s negligence to the jury, and also in reference to the goods delivered to Thinnes. There was no testimony to raise any conflict upon these questions, and there was therefore nothing in reference thereto to submit to the jury. In the absence of conflicting testimony, the court practically determined that the plaintiff was not guilty o£ negligence, that the defendant.was illiterate, and therefore only presented the questions whether he had been induced to sign by false representations which depended upon the truth of defendant’s story,- and as to whether he was free from negligence, These were the only questions necessary or that were submitted to the jury. In regard to the negligence, it is further insisted by appellant that to create an estoppel it must be culpable and gross, and therefore that the court erred in not so charging. We do not-understand, however, that the principle in regard to the degree of negligence in order to charge one who claims to have been induced' to sign an instrument by misrepresentation is as strict or goes to the extent as claimed by appellant, as already shown by' the case of Whitney v. Snyder, wherein the charge of the Lord." Chief Justice in the English case was quoted at length, assented to and approved.

Without reviewing the other grounds relied upon which have •been examined, we are of opinion that the judgment appealed from should be affirmed, with costs.

Yan Brunt, P. J., and Lawrence, J., concur.


author: Follett, Ch. J.

text:
    Theodorus B. Woolsey et al., Resp’ts, v. The New York El. R. R. Co. et al., App’lts.

      (Court of Appeals, Second Division,

      Filed March 8, 1892.)

      1. Railboads—Elevated—Damages.
    In an action to restrain the operation of an elevated railroad, the case-was evidently tried by both sides upon the theory that the diminished rental value was the measure of past damages. The court refused to find as requested, “That since the time the said elevated railroad was constructed, and for many years prior thereto, the said building had been occupied by the plaintiff for the purpose of his business as a dealer in flour ” Held, that the request did not call attention to the rule of damages, that, the recovery should be limited to the diminished value of the premises for the purpose for which they had been used since the road was constructed, in such a way as to bring the question up on this appeal.
    2. Same—Injunction.
    Plaintiff, before the action was begun, requested defendants to condemns the easement. After the action was begun proceedings were noticed and commissioners were appointed to condemn the easement after the trial of this action was begun. After the trial; the parties by stipulation asked the court to find the value of the property taken so as to avoid an injunction. Held, that the court did not err in refusing to direct that an injunction should only become effective in case the defendants failed to acquire the easements by condemnation.

      3. Same—Judgment—Mortgages.
    Where there are mortgages on the premises injured, the judgment should require the owners to tender with their deed of release of the rights and easements a discharge of the mortgage from the rights and easements so to be conveyed.
    Appeal from a judgment of the general term of the supreme court of the first judicial department, which affirmed, with $96.49 costs, a judgment entered on a decision of the special term for $1,900, with interest from February 26, 1889, past damages, with $291.61 costs, and $5,500, and interest from February 26, 1889, fee damages, with an injunction clause restraining the defendants from operating the road unless the fee damages, are paid within thirty days from the entry of the judgment.
    , William Mitchell, for resp’ts;' Brainard Tolies, for app’lts.

       Modifying and affirming 31 St. Rep., 91.

   Follett, Ch. J.

The appellants insist that the court erred in permitting the plaintiffs to recover for the diminished rental value ■of the premises occasioned by the maintenance and operation of the defendants’ road, instead of the diminished value of the premises for the purposes for which they had been used since the road was constructed. The evidence shows that the building, No. 26 Front street, has been used ever since the elevated road was opened as a' warehouse for storage and packing of flour by the plaintiff personally; it never having been rented or offered for rent. The plaintiff was permitted on the trial to give evidence of the rental value with and without the road, to which evidence the defendants objected on the ground that it was incompetent, irrelevant, immaterial and not the proper measure of damages^ but the defendants did not suggest that the proper rule of damages was how much the premises were injured for the particular purposes for which they had been used. The defendants called three witnesses who gave evidence of how the rental value was affected by the road, but they offered no evidence as to the amount of damages occasioned to the premises for the particular purpose for which they had been used. The case was evidently tried by both sides upon the theory that the diminished rental value was the measure of past damages. The question now sought to be argued was not raised at the trial, but the appellants insist that it was raised, by the seventeenth request which the court refused to find, which was in fact supported by the uncontradicted evidence of the plaintiffs. The following is the request: -

Seventeenth. That since the time the said elevated railroad was constructed, and for many years prior thereto, the said building had béen occupied by the plaintiff Theodorus B. "Woolsey for the purpose of his business as a dealer in flour and for the storage and manipulation of flour.”

We do not think that this request, or any of the other requests, called the attention oí the court to the rule of damages which the defendants now assert should have been applied to the case, and the question which they seek to argue is not before the court.

•It is also urged that the court erred in refusing to direct that an injunction should only become effective in case the defendants, failed to acquire the easements by condemnation. The road was built through Front street in June, 1878. The plaintiff testified, and in this he was uncontradieted, that before this action was begun he requested the defendants to condemn the easements. May 13, 1887, this action was begun, and May 15, 1888, a notice of motion for the appointment of commissioners in proceedings to condemn the easements was served, and October 25, 1888, the next day after the trial of this action was begun, the commissioners were appointed. After this action was tried the parties by stipulation asked the court to find the value of the property taken, so that an injunction could be avoided by payment of the amount so found. Under this state of facts the court, did not err in awarding an injunction.

On the 16th of July, 1885, the plaintiff, Theodoras B. Woolsey, gave a mortgage on the property to James Renwick, executor, etc., to secure the payment of $10,000, which was duly recorded, and at the time of the trial was unpaid. The judgment does not-provide for the release of this mortgage from the rights to be conveyed by the plaintiffs to the defendants upon the payment of the-fee damages, which was asked by the defendants, but not granted. This was error.

The judgment should be modified by requiring the plaintiffs to-tender, with their deed of release of the rights and easements, a discharge of this mortgage from the rights and easements so to be-conveyed by the plaintiffs to defendants, and as so modified the judgment-should be affirmed, without costs to either party.

All concur.


author: Landon, J.

text:
    Edward Mitchell et al., Resp’ts, v. The Metropolitan El. R. Co. et al., App’lts.

      (Court of Appeals, Second Division,

      Filed March 8, 1892.)

    1. Railboad—Elevated—Evidence.
    In an equity suit against an elevated railroad by an adjoining property holder for an injunction nisi, involving final and complete compensation, it is not error to allow a witness to testify what the value of the property was, and at the present time is, on the assumption that the elevated railroad was not there, where the evidence was taken “ as one of the factors in the ascertainment of damages, reserving the question as to the application of it.”

      2. Same.
    Where plaintiffs have recovered in one action the damages they might have divided among two, in the absence of any exception clearly presenting a protest, justice should not be delayed by a reversal.
    Appeal from a judgment of the general term of the supreme-court, first department, affirming a judgment in favor of the paintiffs, entered after trial at special term upon the decision of the court.

      The judgment, conformably with the complaint, contains an. injunction restraining defendants from maintaining and operating their elevated railroad in front of defendant’s premises, No. 104: South Fifth avenue, unless within a time limited by the judgment they pay plaintiffs the sum of $3,000 adjudged to be the value of the easements belonging to the plaintiffs and appropriated by the defendants for the permanent location of the existing structure of the railway and for the operation thereof forever.
    ■ The judgment awards $900 as the value of the property taken from the date of taking the date of the decision.

      Brainard Tolies, for app’lts; William Mitchell, for resp’ts.

       Affirming 31 St. Rep., 80.

   Landon, J.

The appellants present but a single objection to-the judgment, namely, that the court adopted an erroneous measure of damages in ascertaining the compensation to be made for plaintiff’s easements.

There are two answers to this objection : First, the fact assumed in it does not clearly appear; second, it is not clearly presented by any exception. The fact assumed is that the court in awarding the plaintiffs fee damages increased them by adding damages for the wrongs and .trespasses committed by the defendants.. Since the case was tried this court has in this class of cases, recognized the distinction between fee damage and damage for tort feasance, that is to say, the distinction between compensation for the easements of light, air and access taken by the defendants,, and damages to the land not taken but by subsequent acts wrongfully injured. Am. Bank Note Co. v. N. Y. El. R. R. Co., 41 St. Rep., 531; Messenger v. Metropolitan El. R. Co., 42 id, 96.

By its decision the court found the value of the easements and property taken ; no opinion was written; no rule of damages was announced during the trial; testimony was given by the respective parties according to their theories for the consideration of the court; the decision does not state how the court measured the damages; the general term in its opinion says that the evidence was sufficient to sustain a much larger award than was actually made, an opinion from which we see no reason to dissent

No exception clearly presents the question. Stress is laid by the defendants’ counsel upon this question, which one of the plaintiffs was permitted to answer:

“ Q. What, at the time of the commencement of this action, was, and at the present time is; the value of the plaintiffs’ property in question, on the assumption that the elevated railroad is. not there ?
“ Counsel for defendants objected to the question as immaterial, incompetent, irrelevant and as not the measure by which to estimate the amount of permanent damages; and that such evidence-would include all annoyances by the .road as affecting the fee value of the premises, and not merely the value of the easement.
“ The Court. I will take the evidence as one of the factors in the ascertainment of damages, and reserve the question as to the application of it Counsel for defendants duly excepted A. From $40,000 to $45,000.”

The fact thus called for was material and relevant, and was, as the trial court remarked, one of the factors in the ascertainment of damages. The Pappenheim case, 128 N. Y., 436-449; 40 St. Rep., 445, a case similar to this, distinctly so holds.

No point touching the competency of the opinion of the witness upon the amount of damages was presented by the objection, as in the Roberts case, 128 N. Y., 455; 40 St. Rep., 454, nor upon a speculative or imaginary condition of things, as in the Doyle case, 128 N. Y., 488; 40 St., Rep., 474, but the objection was based upon the assumption that the witness might possibly include in liis answer as elements of fee damage some element of the damage subsequently done by the defendants as tort feasors. Whether the fact assumed in the objection was actually the fact could be brought out upon the cross-examination of the witness and it was not improper for the court to admit the answer, and await such motion to strike out as counsel might make. No such motion was made. The defendants’ requests to find do not present the distinction now insisted upon. They were to the effect that the value of the easements themselves taken by the defendants was merely nominal. Such requests presented only part of the case, and without more would not present the • objection now urged. Plaintiffs’ easements of light and air were taken to the extent that . they were destroyed or fenced out, and as the excluding structure or fence was to be permanent, the taking and the permanent means of taking must in measuring their value be considered together.

Again, this complaint was framed with the view to the recovery of all the damages the defendants had inflicted upon the plaintiffs’ property rights in their lot. It stated the facts, and characterized •them as a taking of property, but the characterization did not impair the force of the facts alleged.

In the light of subsequent decisions doubtless the plaintiffs pould have brought two actions instead of one. It may be easy to state in the abstract the legal distinction between fee damage and damage arising from constant tort feasance, but not so easy in the concrete case to see the line which divides them.

If the plaintiffs have recovered in one action the damages they might have divided among two, in the absence of any exception clearly presenting a protest, justice should not be delayed by a reversal.

Judgment should be affirmed, with costs.

All concur.