text:
    People, Resp't, v. Thomas Hall, App'lt.
    (Supreme Court, Appellate Division, Fourth Dept.,
    Filed June 17, 1896.)
    1. Game law—Private park—Notice.
    The sign hoards, require^ by section 212, chapter 488 of 1892, should give notice that it is a private park, as well as warning all persons against trespassing thereon.
    2. Same.
    If the lands are inclosed or cultivated and sign hoards are posted warning against trespassing, it is sufficient to make the trespasser a criminal by virtue of sections 210, 211 of the statute. But, if they are not so inclosed or cultivated, the notice should substantial^ state that it is a private park-, etc., for the propagation of fish, etc., or in other equivalent words.
    8. Same—Proof,
    Where there is no evidence of any act done for the purpose of such propagation and protection, and the only evidence of any act done towards propagating fish is that the lake or pond was stocked' with carp about five years before, but no quantity is specified, it is not a sufficient compliance with the requirements of the statute, and the owners or lessees are not entitled to its protection against interference with their hunting and fishing.

      4. Same—Uses.
    Where a statute requires that the lands or lands and water shall be used for a specified purpose,—whether for the propag-ation and protection of fish, or ,of wild birds or game,—the evidence of user for propagating purposes must be ample and sufficient to warrant-a conviction.
    Appeal from a- judgment convicting defendant of the crime of shooting wild ducks on lands used as a private park, in violation of chapter 488 of 1892.
    Frank S. Coburn, for app’lt; Hammond & Hammond, for resp’t.
   GREEN, J.

The defendant was convicted of the crime of shooting wild dueles upon certain lands and water claimed to have been devoted and used as a private park, for the purpose of propagating and protecting fish, birds, and game, “without the consent of the owner or person having the exclusive right to shoot,, hunt, or fish thereon.” The prosecution and conviction seem to have been based exclusively upon sections 212-215, 217, c. 488, Laws 1892, as amended by chapter 573, Laws 1893. It is so-stated in the respondent’s brief, and so it would appear from the printed case; and it is not contended that the appellant was guilty of violating sections 210 and 211, relating to trespassing upon “inclosed or cultivated land for the purpose of shooting or hunting any game.” The affidavit of Edward Lay, upon which the warrant was issued, stated that the lands were “partially inclosed ;’r and he testified tbat his lands consisted of 106 acres of marsh, swamp, and water, and 85 acres of upland. “We pasture the-marsh land in the summer time, and we have inclosed the marsh- and water for hunting purposes. The marsh part is fenced down the water.” Hiram Lay testified that the lands were fenced on the north, south, and west, but not on the east; that the fence was-for keeping cattle off the hard land, and was there before the passage of this statute. But the contention upon this appeal is that the lands were regularly devoted and used as a private park, for the purpose of propogating and protecting fish, birds, and game; but this is controverted by the appellant, and that is the main question to be considered and determined. Is the respondent’s contention supported by adequate "proof of user for the- purposes of propagating and protecting birds and game?

The “private park or territory” claimed by the complainants consisted of about 250 acres, about 106 or 125 acres being of' marsh, swamp, and water, the body of water being designated as Black lake or pond, and connected by an outlet into Seneca river. At times the low lands would be covered by overflow water from-Seneca river, and at other times the water would be so low that the .pond would be greatly reduced from its normal size, by reason of low water. Evidence was given tending to show title in the prosecutors of the land surrounding and .under the said pond, except a part of a small cove on the extreme southern edge of the pond, and said to contain one-half or three-quarters of an acre of land. Edward Lay testified that, before he put up the signboards everybody hunted and fished on that lake or pond, and have done so as long as he could remember, without hindrance from him; and that there are about 50 acres of marsh land between the hard land and the pond; that in time of high water the marsh and swamp lands are covered with water, also the lands belonging to Carey, Hammond, and Charles Lay; that “the identity of the lake is lost in time of high water. I do not know just where the lines •are. I don’t know the exact location of the north line of lot 63. The lake and marsh is all one body of water in time of high water. The water in the lake rises as the water in the river rises. The lake connects with an inlet and outlets The water rises in the river first, and sets back in the lake. There are springs in the lake. In time of low water the water runs from the lake to the river.” A witness (Carey) called by defendant testified that he owned lands north of the complainants’; that a “slank” of the lake runs up into his land at time of medium water, 50 or 60 rods; that he shot and fished on the waters covering his land in the spring of the year, to the knowledge of the complainants; that he has known of 50 acres of his land covered with water four feet deep in the spring of the year; that there are times when the lake is fed by waters from the river, and times when it is not; that a south wind raises the water in the lake and marshes; that the inlet is not •a very large body of water, and is not fed by the spring; that this “slank” is a low piece of land, and in low places the water cannot .get out, and the low places are sometimes connected with the lake, and sometimes not. Hall testified that the lake is fed from the river in high water, but at times it gets so dry that there is but little water in it. This is about all the material evidence that is necessary to be presented in the determination of the matters in controversy. The defendant was shooting on a small island in about the center of the pond. Respondent says that the complainants do not claim the exclusive right to the whole of Black lake, but only to exclude people from the lands described by them in tho’r published notice, and no more; that they make no claim to hir, t. or fish in the cove referred to, situated at the extreme southerly point of the lake; that it is no part of the lake proper.

By section 212, c. 488, Laws 1892, it is provided that:

“A person owning or having the exclusive right to shoot, hunt or fish on lands, or lands and water, desiring to devote such lands, or lands and water, to the propagation or protection of fish, birds' or game, may publish in a paper printed in the county within which such lands, or lands and water, are situate, a notice substan* tially describing the same and containing a clause, declaring such lands or lands and water will be used as a private park for the purpose of propagating and protecting fish, birds and game.”

Sections 213 and 214 provide for posting notices or signboards upon the premises:

By section 215:

“Hpon compliahce with the foregoing provisions for preventing trespassing or for devoting lands to propagation of fish, birds and game, no person shall disturb or interfere in any way with the fish or wild birds or mid animals while on the premises so protected, excépt with the consent of the owner or person having the exclusive right to shoot, hunt or fish thereon.”

By section 217, as amended by chapter 573, Laws 1893, any Isolation of the provisions of this article is made a misdemeanor; and, in addition, the violator is subject to exemplary damages, tin an amount not less than $15, nor more than $25, in addition to the actual damage sustained by the owner or lessee.

By section 245, any person convicted of a misdemeanor under the provisions of this chapter shall be punished by a fine of not less than $10, or be imprisoned in the county jail or penitentiary for a period of not less than one day, nor more than at the rate of one day for every dollar of such fine, or by both such fine or imprisonment.

It is not disputed but that the complainants fully complied with the statutory requirements as to publication in the newspaper, and also placed signboards warning trespassers. The purpose of this statute is to make it a criminal offense, and therefore an offense against the people at large, for one to enter upon the lands of another, who has complied with the conditions prescribed, for the purpose of shooting wild birds or animals, or of fishing in the pond, lake, or streams thereon. Evidently, the provisions referred -to are of a highly penal character, and, by all canons of construction, they must be strictly construed, and not be extended by implication. The leading rule of construction of statutes is, of course, to ascertain fairly the intention of the legislature; but in statutes giving a penalty, if there be a reasonable doubt of the case, made upon the trial or in the pleadings, coming within the statute, the party of whom the penalty is claimed is to have the ’benefit of such doubt. Chase v. Railroad Co., 26 N. Y. 525.

A pp.1imiua.ry question arises as to whether the signboards placed /upon the private park or territory should contain a notification of ¡the fact that the land or lands and water are devoted to the purpose of propagating and protecting fish, birds, and game, or whether asimple notice warning all persons from trespassing upon the lands or water is a sufficient compliance with the statute. It will be observed that the notice required to be published in the newspaper (of which one publication is sufficient) must expressly declare that such lands or lands and water will be used as a private park, for the purpose of propagating and protecting fish,, birds, etc. In addition to that, the statute requires the placing of notices or signboards “warning all persons against trespassing thereon;” that is to say, upon such private park or territory. It would seem to be a fair and reasonable interpretation of the statute-that the signboards should give notice that it is a private park, as well as warning all persons against trespassing' thereon. If the lands are “inclosed or cultivated,” and signboards are posted warning against trespassing, that is sufficient to make the trespasser a criminal, by virtue of sections 210 and 211 of the statute. But, if they are not so inclosed or cultivated, the notice should substantially state that it is a private park, etc., for the propagation of fish, etc., or in other equivalent words. The “warning” must be that of a private park, etc., and that treepassing is forbidden.

Authority is not wanting for the adoption of such a construction of the statute. The game laws of Pennsylvania provide that:

“Any person trespassing on any lands, for the purpose of taking fish from any private pond, stream or spring, after public notice on the part of the owner or occupant thereof, such notice being-posted adjacent to such pond * * *• provided, however, this section shall apply only to such ponds, streams, or springs as shall be used or improved by the owners or lessees for the propagation of fish or game.” Act June 3, 1878, § 21.

Notwithstanding the particular form or character of the notice-is not prescribed by the statute, the court held that a notice warning, “All persons are hereby notified not to trespass on these lands, or fish in this pond, under penalty of the law,” is not sufficient,, but that the notice must indicate that such pond was a private pond, used or improved for the propagation of fish. Benscoter v. Long, 157 Pa. St. 209, 216, 218, 224; 27 Atl. 674; Reynolds v. Com. 93 N. Y. 458.

Another matter for determination is whether such lands oi-lands and water were actually “used as a private park for the purpose of propagating and protecting fish, birds, and game,” as required by the statute. The evidence is insufficient to show that the lands or waters were used or devoted for any such purpose, within the true intent and meaning of the statute. The notice-published in the newspaper is dated October 13, 1893. The witness, Edward Lay, who is one of the prosecutors,- testified that “they put a rack in the pond after putting in carp, and it was taken down, but they could not find out who- took it down; also, that we have inclosed the marsh and water for hunting purposes.” TTiram Lay testified that the rack was put in the channel about five years ago, before the notices were published. On cross-examination, he said that the lake “has been stocked with carp. “I have sold leases to parties to hunt on this land. There is apartv that has leased the land, and has the privilege to shoot and hunt there for three years.- We have let it to about ten persons and ourselves. We only reserved the right to shoot in the lake, so that, if we wished to, we could take a party in there to shoot. We or they could permit any reasonable number to go in there and shoot. The company made their own rules as to whom they should permit to go and hunt in the lake.” It is to be inferred from this that the owners leased their lands to a hunting or hunting and fishing club, and thus devoted their lands to the purpose of hunting and fishing. This is hardly consistent with the idea of propagating and protecting wild birds or game. Indeed, there is no evidence of any act done for the purpose of such propagation and protection; and the only evidence of any act done towards propagating fish is that lake or pond was stocked with carp about five years ago, but no quantity is specified. This will not do. That is not a sufficient compliance with the requirements of the statute, and the owners or lessees are not entitled to its protection against interference with their hunting and fishing. The main or principal purpose to which the lands and waters are devoted and "used is that of hunting and fishing, and not for the purpose of propagating and protecting fish, birds, or game. In a prosecution under the Pennsylvania statute, the court, in charging the jury, said that they must first inquire whether the pond was “used or improved by the owner for the propagation of fish.” “What evidence is there that it was so improved? What improvements for the propagation of fish were put upon this pond? Propagation of fish means the increase and spread by artificial and natural means, by the spawn and by the placing of fish in the pond. Is there any evidence that he did anything to improve the pond for that purpose? The court does not remember any evidence of that kind. Ton will then inquire, also, whether it was used by him for the propagation of fish? On that branch of the case, what was done? He testified that several years ago he purchased and stocked this pond with 115 black bass and other sorts of fish, so that it would seem to a certain extent that he stocked the water. The evidence is that the fish did propagate, and that there were black bass and -other fish in the pond on the 5th of September, 1889, and for a short time before that. The stocking of this pond, and the care which he says he exercised over it afterwards, is perhaps sufficient to warrant the jury in finding that it was used by him for the propagation of fish.” Upon appeal, the court observed that the testimony of the plaintiff was insufficient to warrant the jury in finding such use or improvement of the pond as is necessary to bring the case within the statute; that it practically amounted to nothing. Benscoter v. Long (Pa. Sup.), 27 Atl. 674. It is true that the defendant here is not charged with fishing in a private pond or lake devoted and used for the propagation and protection of fish. Still, the decision quoted is not without application to the case brought up for review. The principle of that adjudication is that, where a statute' requires that the lands or lands and water shall be used for a specified purpose,—whether for the propagation and protection of fish, or of wild birds or game,—the evidence of user for propagating purposes must be ample and sufficient to warrant a conviction. Here there is but very slight evidence tending to show that the lake or pond was used, or intended to be used, for propagating fish, while there-is no evidence whatever of any act done for the propagation of wild birds or game, or for their protection and preservation. The public declaration and notice of the owners that they devoted the lands and waters for both these purposes is false as to both.

Appellant also contends that, even though the proprietors of this pond had actually devoted and used the waters for the primary purpose of propagating and protecting fish, they could not claim for it as a private pond, under the provisions of the statute; that, to bring the case within the statute, the whole of the pond must be so far private property as to confine therein the fish with which it is stocked; that the ownership of a part only of the land covered by the water is not sufficient to give to the whole water the distinctive character of private; that the question is not whether the complainants have rights which may be trespassed upon, but is the whole body of water private, within the meaning of the statute? It is argues that the complainants must show exclusive right to fish in these waters, and this they did not have, because it appears that in time of high water there are several persons owning land in the vicinity who have the right to fish therein; then,-again, a portion of the waters of this pond enters into the cove owned by one Hammond; the nature of this body of water is such that the idea of propagating and protecting fish is entirely out of the question, because at time of high water the identity of the lake is lost, and it becomes a part of the river. There is much to be said in favor of this contention (see Reynolds v. Com., and Benscoter v. Long, supra; Hill v. Bishop, 17 Supp. 297); but it is unnecessary for the decision of this appeal to determine the matter. Nor are we called upon to determine whether, under the provisions of the statute, this property could1 he devoted and used as a private park or territory for the propagation and protection of wild birds and game, for there is no evidence that it was used for any such purpose, or for the propagation of fish, subsequent to the publication of the declaration and notice. =

Assuming that the conviction was legal and proper, the judgment is clearly erroneous. The judgment imposes a fine of $10 and costs, amounting to $20.91, and directo that the defendant “stand committed until the same shall be paid, not exceeding thirty days.” Such a judgment plainly violates the provisions oi section 245 of the statute, quoted above.

Judgment reversed, and defendant discharged.

HARDIN, P. J., and FOLLETT, J., concur. ADAMS and .WARD, JJ., concur in result.


source: Caselaw Access Project

author: GREEN, J.

license: Public Domain

text:
    Commercial Bank of Rochester, Resp't, v. Macdougal and Southwick Company, App'lt.
    (Supreme Court, Appellate Division, Fourth Dept.,
    Filed June 17, 1896.)
    1. Payment—Mistake.
    Where a person, when under no legal obligation but in belief that he is liable, pays money to another who, with no legal right to demand it, does demand and receive it and then refuses to-return it or apply it to a legal claim, such money is paid over by reason of fraud or under a mistake of fact and can be recovered.
    2. Bills and Notes—Wrongful diversion.
    The makers of a note are precluded by the rules of law applicable to negotiable paper from setting up as a defense to an action by a bona fide purchaser for value a wrongful diversion of the note.
    3. Same.
    The ground of the maker’s liability is that the' purchaser advanced moneys or parted with value on the faith of the note, and without notice of the wrongful diversion, and he is entitled to be protected only to the extent of the value which he has paid.
    4. Payment—Mistake.
    Where a party assumes the indebtedness of a firm and the firm renews a note so assumed, which is paid by him through mistake, the payment of the second note discharges the original one and he is entitled to its surrender and cancellation.
    Motion for a new trial on exceptions ordered to be heard in the appellate division in the first instance.
    Walter S. Hubbell, for pl’ff; William N. Cogswell, for def’t.
   GREEN, J.

Toklas, Singerman & Co., prior to July 15, 1891, .was a firm doing business in the city of Seattle, Wash. On that day they sold and transferred all their firm property to the defendant, and as part consideration the defendant assumed and agreed to pay all the debts and liabilities of the firm, due or to become due. Holland & Co. were creditors of that firm for goods sold and delivered, and received the film’s promissory note, payable to the order of Holland & Go., who, prior to said assignment or transfer, indorsed and delivered the same to the plaintiff hank for value. At the time of thp transfer of the firm property to defendant-, this note was not due, hut would mature in about eight days. Defendant knew nothing of the giving of this note, and was in no way a party to it; hut it will be assumed, for the sake of argument, that this is one of those cases coming within the principle of Lawrence v. Fox, 20 N. Y. 268, and subsequent decisions, and that the plaintiff "bank could maintain an action upon the defendant’s agreement to pay the debts of its assignor or vendor. On the day prior to the making of defendant’s agreement, Toklas, Singerman & Co., in pursuance of a prior agreement with Holland & Co. to that effect, forwarded by mail another promissory note, in renewal of the original one, payable at three months. A day or two subsequent to the execution of defendant’s contract, Holland & Co. took this note to plaintiff bank, and transferred it to the bank as collateral for money which the bank advanced upon the faith of it, and as collateral security for a past-due indebtedness. This was a wrongful diversion of the note, but the bank claims that it had no knowledge of the fact that it was given as a renewal note, although it was for the same amount exactly ($1,970.30), until after it had received it, but supposed and believed that it arose out of a, new, independent, and distinct transaction. Defendant was not cognizant of the existence of this note until it became due. Plaintiff claims that it had no knowledge of the fact that the defendant had assumed to pay the debts of the firm of Toklas, Singerman & Co. until, after the second note became due, and consequently it parted with nothing on the faith of that agreement. The bank called upon the defendant to pay the second note, and we must assume that it founded its demand on the agreement made by defendant with Toklas, Singerman & Co.; otherwise it would be a most extraordinary circumstance that it should demand payment of a party who was an entire stranger to it. The defendant paid to plaintiff the amount so demanded. The bank concedes that it had no right whatever to make that demand, and that defendant was under no obligation at all to answer it,—that the money was voluntarily paid.

It is argued that the renewal or second "note, although mailed to Holland & Co. before the making of the defendant’s agreement, had no legal inception until it was indorsed to the bank subsequent to such agreement, and that, therefore, it was not an exisjjng debt or liability against the firm of Toklas, Singerman & Co., which the defendant could be held bound to pay. Conceding this, for argument’s sake, and what does it lead to? With what purpose did the bank demand and receive the payment? Did the bank appropriate or apply this money to the purpose for which it was paid? In so far as the defendant is concerned, these two notes represented but one indebtedness, of $1,970.30, which defendant assumed and was bound to pay; but the plaintiff, by retaining the money paid, insists that the defendant must pay double that sum. “Nat so,” says plaintiff’s counsel. “We make no such claim. Our position is that defendant is legally liable1 to us only in the sum of $1,970.30, due upon that first note, which it refuses to pay and discharge. • But you have that amount of money in your hands, belonging to defendant, which you are bound either to return, or to apply to the purpose for which it was paid, to wit, in discharge of defendant’s liability for the indebtedness of said firm. You received that money for the same purpose for which it was paid, and, if yon refuse to so apply it in discharge of defendant’s indebtedness to you, the law will direct its application.” Upon no other ground than that the second note was an obligation of the firm, for the payment of which defendant was liable, could the plaintiff call upon it for payment; but it is now admitted that defendant was under no legal obligation to pay it, and that pi a in - tiff had no legal right to demand it, and yet plaintiff did demand and receive the money, and now refuses to apply it either to the legal claim, or to return it. If, at the time of receiving the money, the plaintiff had knowledge of the fact that defendant was not legally liable to pay this note, then it practiced a fraud upon the latter. If it did not have such knowledge, then it received-it under a mistake of fact. And in either view it has no legal or equitable right to retain this money, unless it consents to apply it to the indebtedness for which defendant is liable. Having retained the money, the law makes the proper application. It appeal’s here that the defendant paid the note under a mistake of fact, believing that it represented an indebtedness of the firm, and without knowledge of the prior note. If it had possessed knowledge of the true facts of the whole transaction, would it have paid both notes? Surely not, and yet that is what plaintiff is here demanding that it should do. Thus it appears that according to plaintiff’s admissions, and the conceded facts of the case, it is justly indebted to the defendant in the amount of the note upon which recovery is sought. True, this indebtedness is not pleaded as a counterclaim, or by the way of set-off, hut that is not necessary, in the view of the court that the money constituted a payment, and that is alleged in the answer. How, suppose that defendant had, prior to the institution of this action, brought an action against plaintiff for money had and received; what would! have been the answer in that suit, in bar of a recovery? Why, the answer would he not that the money was voluntary paid upon the note, to which the plaintiff was not a party, nor under any obligation to pay, but that the payment was made in discharge of a certain indebtedness of a third party, which the plaintiff had assumed and agreed to pay, and that the defendant held the legal title to the claim, either as indorsee or assignee. That would be the objection which the defendant here would encounter. If the defendant in that action should omit to set up such defense, it is clear that the money, having been paid under a mistake of fact, could be recovered back. Bank v. Elting, 40 N. Y. 391; 66 id. 625; Union Nat. Bank v. Sixth Nat. Bank, 43 id. 452.

It is contended with all seriousness that, so far as the equities of the case are concerned, they are with the plaintiff, for it acted innocently, and, in good faith, advanced money on both of the notes, and is not responsible for the fact that the defendant paid the note for the payment of which it is not liable; that the trouble was all caused by Holland & Co.; that Toldas, Singerman & Co. carelessly put it into the power of Holland & Co. to divert second note; and defendant voluntarily paid it, as to each of which transactions plaintiff was not negligent, nor did it lose its original right to recover upon defendant’s promise to pay the note in suit. The fallacy of the argument consists in eliminating the important circumstance that the defendant was not a party to either of those notes, nor to any of the transactions connected "with their execution, indorsement, or transfer to the bank, and the latter never parted with a farthing upon the faith of defendant’s agreement, of the existence of which it was entirely ignorant. We are unable to conceive of any principle of equity, or any rule of law, that would warrant a recovery in such a case as this. Even though defendant was aware of the fact that the second note was a renewal note, at the time he made the payment, that circumstance would be wholly immaterial, for it could not create a right of action upon his agreement to pay the original note. They both represented one indebtedness, in so far as the defendant was concerned, and it was immaterial whether payment was made in form upon either one or the other. Such a payment would discharge his obligation. So, if the defendant had paid both notes under the mistaken assumption that both were distinct obligations of the firm, which he had assumed to pay, the amount he paid under •a mistake of facts could be recovered back. The defendant’s obligation arises out of its contract, and is not created by the notes, or either of them. By that contract it assumed and agreed to pay the specific sum of $1,970.30 due to Holland & Co-.; and the simple-question is, did they fulfill their agreement and discharge their obligation by making payment of that indebtedness to the rightful party? If so, what more can be required of the defendant? Plaintiff here is seeking to hold defendant responsible for the wrongful and fraudulent acts of its assignors (Hollard & Co.), who were the- creditors of the firm, and whose claim the defendant agreed to pay. Surely, it cannot be pretended that the defendant assumed any responsibility for the acts or conduct of the creditors of the firm. If the plaintiff has sustained loss by reason of the insolvency of the makers and indorsers of the note, it is a consequence of the wrongful act of the person with whom it dealt, and for whose conduct defendant assumed no responsibility. The makers of the note were precluded by the rules of law applicable to negotiable paper from setting up as a defense to an action by a bona fide purchaser for value the wrongful diversion of the note. But, since the defendant was not a party to the notes, the law merchant has no application to his obligation, nor may his liability be extended beyond its terms. The ground of the maker’s liability is that the purchaser advanced moneys or parted with value on the faith of the note, and without notice of the wrongful diversion, and he is entitled to be protected only to the extent of the value which he has paid. Huff v. Wagner, 63 Barb. 215; Harger v. Wilson, Id. 237; Stevens Bank, 3 Hun, 147; Todd v. Shelbourne, 8 Hun, 512; Fairbanks v. Sargent, 104 N. Y. 122; 5 St. Rep. 531. The plaintiff advanced but $400, I believe, on the second note, and to that extent only could it recover from the makers. The bank parted with nothing upon the strength of defendant’s contract.

Another thing: The cashier of plaintiff’s bank was informed on the day the first note, fell due that the second note was a renewal note. Plaintiff claims that it acted innocently when it received payment of the second note. It had in its possession two notes for the exact sum, $1,970.30, and yet it claims to have had no suspicion that one might be a renewal note. How was it that the payment of the original note was not required of defendant ? How was it that defendant was not informed of its existence when he paid the second? For what reason was it that a stranger to the note was requested to pay it, or was looked to for payment? If we assume that plaintiff’s officers acted in ignorance of the exact nature- of the transactions, must the defendant suffer for it? Should it be held responsible not only for the fraudulent acts of the plaintiff’s assignors, but also be saddled with responsibility for the mistakes and blunders of plaintiff’s officers?

It becomes unnecessary to consider the question that has been so elaborately and learnedly argued,—whether, if this payment had not been made, the plaintiff would have been entitled to maintain an action upon the agreement and guaranty executed by the defendant, though it must be confessed that grave doubts exist as to whether the instruments in question are of such a character that a third party may assert a right of action upon them.

Plaintiff derives its title to both notes through Holland & Co., and, if it has sustained damage, it must look to them for redress, and may also hold the makers responsible to the extent of the moneys advanced, upon the strength of their signatures to a negotiable instrument, for the reason that their promise was, in the view of the law merchant, a promise to be answerable for the wrongful and fraudulent negotiation of the paper to a bona fide holder for value. But the defendant’s agreement or guaranty was .not of that character, and, in a legal sense, it can hardly bo maintained that any damage whatever was sustained by the plaintiff, for it received what it bargained for, viz. the valid promissory note of the makers, who are liable to the extent of the value parted with on the faith of the note. The fact that the plaintiff may have been prejudiced in their rights by forbearing to enforce the past-due indebtedness of Holland & Co., for which the note was received as collateral security, does not-constitute' damage, in a legal sense. That indebtedness still exists, and has always existed. In respect to defendant’s rights and liabilities, the payment of the second note discharged the original one, and he was entitled to its surrender or cancellation. Story, Prom. Notes, §§ 106-112.

There is no element of estoppel in the case, for the defendant here has done nothing, by act, word, or deed, to mislead the plaintiff to its prejudice, or to cause it loss or damage, and is not, therefore, precluded from contesting its liability to pay the amount of the first note by showing that it paid a sufficient sum of money in satisfaction and discharge of the only claim for which it was liable.-

The motion for a new trial should be granted, with costs to abide the event of the action. All concur, except WARD, J., who dissents.

Motion for a new trial granted, with costs to abide the event.


author: PRYOR, J.

text:
    Eliza W. Patrick, Pl'ff, v. Theodosia J. Underwood, Def't.
    (Supreme Court, New York Special Term,
    Filed July, 1896.)
    1. Mortgage—Foreclosure—Deficiency.
    Where, in an action by a vendor against the vendee for so much of the purchase price of land as remains unpaid after foreclosure of a mortgage security, there is no express covenant for such payment contained in the mortgage and no bond or other separate instrument to secure such payment, the remedies of the mortgagee are confined to the land mentioned in the mortgage.
    2. Bills and notes—Liability of persons not party thereto.
    A person not a party to a negotiable paper cannot be charged upon proof that the ostensible party signed or indorsed as his agent.
    3. Mortgage foreclosure—Declaration of trust.
    Where, upon a joint purchase of land, an associate or agent pays part of the purchase price ratably contributed by defendant, executes his mortgage for the balance and takes title in his own name, and makes the declaration of trust acknowledging the respective interests of the associates in the land, and stating that “the same are liable in the same proportion upon the mortgage given to secure the deferred payments upon the said property,” such declaration of trust is not the separate instrument of the defendant nor a security from her to the vendor for the price of the land.
    Demurrer to the complaint.
    E. Wakely, for pl’ff; Samuel F. Jarvis, Jr., for def’t.
   PRYOR, J.

A demurrer challenges for insufficiency a comnlaint which alleges that one Allen, as associate and agent of defendant and others, bought land of plaintiff for the price of $510,-000; that of this sum $110,000 was paid in cash; that in payment of the residue Allen executed his promissory notes, took title to -himself, and gave back a purchase-money mortgage as security for the notes; that defendant contributed her share of the cash' payment, and acquired a proportionate interest in the land; that_ Allen made and delivered a “declaration of trust” acknowledging the respective interests of the associates in the land, and stating that “the same are liable in the same proportion upon the mortgage given to secure the deferred payments upon the said property;” that defendant, with her associates, caused Allen to convey the land to a corporation which they had organized, and for her interest received a proportional part of the stock of the corporation; that upon default in the payment of interest on the mortgage debt, plaintiff procured a judgment of foreclosure; that on the foreclosure sale a deficiency resulted of $101,27.8.76, for which judgment was entered against Allen; that defendant here was a party defendant in that suit, but no personal judgment was entered against her; and the prayer for relief is that plaintiff recover “the portion of said judgment”—of deficiency—“for which defendant is liable,” namely, $38,705.21. That the defendant was a purchaser of the land, and that the mortgage was made on her behalf to secure payment for her interest, is an express allegation of the complaint, and, indeed, is a fundamental fact in plaintiff’s case. Hence it was that defendant was made a party in the foreclosure suit, and hence this action to recover of her a proportion of the deficiency on the foreclosure sale. In legal effect, then, the action is by vendor against vendee for so much of the purchase price of land as remains unpaid after foreclosure of a mortgage to secure it. But, by positive provision of statute, “no mortgage shall be construed as implying a covenant for the payment of the sum intended to be secured; and where there shall be no express covenant for such payment contained in the mortgage, and no bond or other separate instrument to secure such payment, the remedies of the mortgagee are confined to the lands mentioned in the mortgage.” 1 Rev. St. p. 738, § 139. This enactment, being a remedial regulation, is the law of the forum, and determines plaintiff’s right of recovery.

Conceding defendant a party to the mortgage through the agency of Allen, still upon the complaint it is not apparent that the mortgage contains an express covenant for payment of the money, and none can be interpolated by construction of the pleading. Clark v. Dillon, 97 N. Y. 370. Nor was Allen’s note such “separate instrument” as imposes upon the defendant a personal obligation for the price of the land. It is not her promissory note, and “a person not a party” to negotiable paper “cannot be charged upon proof that the ostensible party signed or indorsed as his agent.” Briggs v. Partridge, 64 N. Y. 357, 363; Tuthill v. Wilson, 90 id. 423. Neither is the declaration of trust by Allen the “separate instrument” of defendant, nor a security from her to the plaintiff for the price of the land. Indeed, the learned counsel for plaintiff asserts no express engagement bv defendant for the mortgage debt, and in the absence of such obligation the plaintiff can have recourse only to the land. Mack v. Austin, 95 N. Y. 513 Gaylord v. Knapp, 15 Hun, 87; Hone v. Fisher, 2 Barb. Ch. 559; Severance v. Griffith, 2 Lans. 38; Coleman v. Van Rensselaer, 44 How. Prac. 368; Vrooman v. Dunlap, 30 Barb. 202. Upon the facts of the complaint the inference is obvious that the plaintiff sold the land on the personal responsibility of Allen and the mortgage security, and, these failing her, she cannot recur to the defendant, especially after pursuing Allen to judgment. Apart, then, from the statutory obstacle to her suit, she shows no right of recovery. Williams v. Gillies, 75 N. Y. 197; Tuthill v. Wilson, 90 id. 423; Patterson v. Brewster, 4 Edw. Ch. 352, 355; Coleman v. Bank, 53 N. Y. 388. And such is the justice of the case between the parties. The plaintiff has now the cash payment of $110,000, and the price of the land on foreclosure. For the deficiency she has a judgment against Allen, and rightfully, too, because he expressly agreed to pay the purchase money. Why should she fasten on the defendant a liability for which she did not stipulate, and which defendant did not assume? In any aspect, the complaint is untenable.

Demurrer sustained, with leave to amend.


author: ADAMS, J. HARDIN, P. J. (concurring).

text:
    William Deininger et al., Resp'ts, v. Christian J. Miller et al., as Executors, etc., App'lts.
    (Supreme Court, Appellate Division, Fourth Dept.,
    Filed June 17, 1896.)
    1. Bills and notes—Protest.
    In case of a deceased indorser the holder is required to use the same degree of diligence in giving notice of protest as though the indorser was living.
    3. Same.
    Such notice may be served upon the representatives of the deceased indorser by inclosing the same in an envelope directed to the indorser himself, at his last place of business, and depositing the same in the postoffice, although he has previously died.
    3. Same.
    In such case, a notice served some ten or eleven days after the indorser’s death is insufficient.
    Appeal from a judgment rendered in favor of plaintiffs.
    The defendants’ testatrix, Charlotte Miller, indorsed the note in suit, made by one Amelia Witzelben, and the same was subsequently indorsed by Christian J. Miller, the husband of the first indorser; both of such indorsements being for the accommodation of the maker. The note was thereafter delivered to the plaintiffs, who also indorsed it, and procured it to be discounted by the Germ an-American Bank of Rochester. Charlotte Miller died September 11,1894, leaving a last will and testament, which was duly admitted to probate upon the 22d day of October, following, and letters testamentary were upon the same day issued to the defendants by the surrogate of Monroe county. The note fell due September 24,1894, and the day previous one of the plaintiffs called at the bank where the note was held, and gave directions not to protest the same, giving as a reason therefor that the indorser relied upon was dead, and also directed the bank, in case the note was not paid at maturity, to charge it to the plaintiffs’ account. Iff obedience to such instructions, the note was not protested at its maturity, but was charged up to the plaintiffs’ account, and thereafter, and about October 4th, the plaintiff sent a party to see Christian J. Miller, who was then informed that the note was due, that it was the note that his wife had indorsed for Witzleben, and that the holders looked to him for its payment; and he replied that the matter was in the lawyer’s hands,—referring to his co-executor, Mr. Roe. Shortly thereafter, and about the middle of October, the plaintiffs’ attorney met the defendant Roe, and gave him verbal notice of the nonpayment of the note, and that the plaintiffs would look to the estate of Mrs. Miller for its payment, whereupon Roe directed him to draw up an affidavit of the claim, and present it. Subsequently, and upon the 7th of Rovember, following, the claim was presented in due form, and it was at once rejected by the defendants, and a reference, under the statute, agreed upon. The referee thereafter reported in favor of the plaintiffs for the full amount of the note, with costs.
    Charles Roe, for app’lts; H. Perry Blodgett, for resp’ts.
   ADAMS, J.

The only question in the case is whether or not, upon the facts above stated, it can be said that sufficient notice Avas given of the demand and nonpayment of the note in suit to charge the estate of the deceased indorser. The learned referee, in reaching a conclusion favorable to the plaintiffs’ contention, obviously bases his decision upon the assumption that the personal representatives of the deceased testatrix were notified, within a reasonable time after its maturity, of the nonpayment of the note by its maker, and that a notice of that character was all that could be required. While not intending to be understood as laying doAvn any arbitrary rule to govern in all cases where an indorser dies prior to the maturity of a note, Ave are constrained to differ from the learned referee, and to hold that in the circumstances of this case, at least, the estate of Mrs. Miller is not charged Avith the payment of the note in question. Prior to the statute of 1857, it was the universal rule, under the law merchant, to give notice of dishonor, in case of a deceased indorser, either to his personal representative, or to some agent or person interested in his estate, or by a written notice addressed to the indorser, and left at his last place of residence. Bigelow, Bills & N. (last Ed.) p. 122. But, Avhatever the form of notice, the holder Avas required to use the same degree of diligence in giving it as if the indorser were living. The rule is thus stated by an elementary writer whose authority to speak upon the subject is recognized by every one:

“Where the indorser is dead, notice must be sent to his executor or administrator, and if no person has been appointed, or it cannot be ascertained by the use of due diligence who or where he or they who have been appointed can be found, notice must be forwarded to the last place of residence of the deceased. Hence the death of the indorser is no excuse for neglect to give notice.” Pars. Bills & N. p. 526.

The first inquiry, therefore, which suggests itself, is, what diligence is necessary in order to charge a living indorser? Formerly it was held that any notice which was “reasonable” in point of time was sufficient, but this expression was found by experience to be tO'O general to convey a correct idea of the requirements of the law, and later on the period allowed the holder became fixed, and was confined to the expiration of the day following the dishonor of the note. Daniel, Neg. Inst. §§ 1035, 1038. And such is the rule which still obtains. Whiting v. Bank, 77 N. Y. 363. In course-of time, however, an in the year 1857, the legislature of this state prescribed an exact form for notifying an indorser of the nonpayment of a note, which has ever since been aop-ted and followed in the commedcial circles of this state, and which is expressed in the following language, viz.:

“Whenever the residence or place of business of the endorser of a promissory note, or of the drawer or endorser of a check, draft or bill of exchange, shall be in the city or town, or whenever the city or town indicated under the endorsement or signature of such indorser or drawer, as his or her place of residence, or whenever in the absence of such indication, the city or town where such endorser or drawer, from the best information obtained by diligent inquiry, is reputed to reside or have a place of business, shall be the same city or town where such promissory note, check, draft or bill of exchange is payable or legally presented for payment, or acceptance, all notices of non-payment and of a nonacceptance of such promissory note, check, draft or bill of exchange may be served by depositing them, with the postage thereon prepaid, in the post-office of the city or town where such promissory note, check, draft or bill of exchange was payable or legally presented for payment or acceptance, directed to the endorser or drawer, at such city or town.” Laws 1857, c. 416, § 3.

By this provision of the statute, it would unquestionably have been competent for the plaintiffs to have served notice of the demand and nonpayment of the note in suit upon the representatives of the deceased indorser by inclosing the same in an envelope directed to the indorser herself, at her last place of residence, which it is conceded was in the city of Rochester, and depositing the same in the post office; and, although she had previously died, such a notice would, have operated to charge her estate (Bank v. Birch, 17 Johns. 25); for it not only would have been one which complied literally with the requirements of the statute, but it would have been the one most likely to have conveyed the requisite information to the persons directly interested in obtaining the same (Stewart v. Eden, 2 Caines, 121, 127). The plaintiffs, however, did not avail themselves of this statute. Indeed, they appear to have assumed that the death of Mrs. Miller released every one who was liable upon the note, except the maker; for upon the day preceding its maturity, as we have seen, one of them went to the bank, and gave express directions that the note should not be protested,—thereby releasing, beyond all question, the second indorser. It was not until some ten or eleven days-thereafter that any attempt whatever was made to notify any one representing the deceased indorser of its nonpayment, and then only in a very informal and casual manner; and, when notified by Christian J. Miller that the matter was left with his associate, the plaintiffs waited about ten days longer before giving any notice to Mr. Ene, and more than six weeks were permitted to-elapse before proof of plaintiffs’ claim was finally filed. Had no directions to the contrary been given the bank, it is entirely safe to assume that the note would have been protested and notice thereof given in the ordinary manner, and in a manner which would have been effectual to preserve the rights of all parties.

As before stated, it is foreign to the purpose of this court to establish, as a rule applicable to all cases, that the statute of 1857 furnishes the only method by which due notice of the dishonor of a note can be given where the indorser has departed this life intermediate its inception and maturity. We simply mean to say that it provides a course which can be followed with entire safety in such cases, and that any other course which involves unnecessary -delay cannot be regarded as sufficient without doing violence to the plain intent and meaning of the statute, and to well-settled principles of commercial law. In other words, we think the statute furnishes a simple method by which the required notice can be given, and that it ought to be adopted save in exceptional circumstances.

The judgment appealed from should be reversed, and a new trial granted, with costs to abide the event.

FOLLETT, GREEN and WARD, JJ., concur.

HARDIN, P. J. (concurring).

In Stewart v. Eden, 2 Caines, 121, the note was due on the 8th of Hovember, 1798. “A notice in the usual form was carried to the dwelling house of Medcalf' Eden, the indorser, which was found fastened up; and on this the-bearer of the notice rolled it up, and put it into the keyhole of the louter door.” Eden, shortly after the note was made, retired to-his country seat, where he died on the 13th of September, 1798. In the course of the opinion it was said:

“Nor was it fatal to direct the notice to the indorser himself, for it was not known whether he had made a will, nor who his-executors were, until long after. It was full as probable that it would reach the parties interested by this address as by any other. Some one of the deceased’s family would either open it, or see it safely delivered to an executor. The notice, therefore, was well served, and its address proper.”

That case was referred to with approval in Bank v. Birch, 17 Johns. 24, and in the course of the opinion approving of the case it was said, xiz.:

“If an indorser be dead at the maturity of a note, and there be executors or administrators, at that time, known to the holder, notice must be given to them; for they represent the testator or intestate, an are as fully entitled to notice as he would be, if alive. But it is a novel principle, 'unsupported either by precedent or authority, that notice is to be given to the representatives of the indorser, and who become such long after the note had fallen due. The rights of a holder of a note or bill are to be determined by his acts, when the note or bill becomes due; and if he then gives such notice as, under the existing state of facts, the law requires of him, his rights are fixed, and he cannot be required tosuperadd any other-notice at a future period.”

In the case cited no notice had been given to the executors, and we perceive that a. notice delivered at the dwelling house of a deceased indorser was pronounced to be well delivered.

In Whiting v. Bank, 77 N. Y. 363, it is assumed that it is the duty of a holder of a note, who would charge an indorser for its nonpayment, to give notice “on the next business day after the note became due.” In Willis v. Green, 5 Hill, 232, the plaintiff failed to show that the estate of Johnson had been charged by notice of nonpayment. The note had been indorsed by two persons. It was protested for nonpayment on the 4th of January, 1828, an on that day notice of nonpayment was sent by mail to each of -the indorsers, directed to Little Falls. When the note was made, Johnson resided in the town of Salisbury, where he remained until his death, which took place on the 27th of December, 1827,—-a few days before the note fell due. Johnson died intestate and insolvent, and no letters of administration were granted until after the note fell due. In that case, Nelson, C. J., said:

“But the plaintiff failed to show that the estate of Johnson had been charged by notice of nonpayment. If the notice relied on for that purpose had been sent to the proper place, no doubt, it would have been sufficient, under the circumstances of this case, though directed to Johnson after his death. Stewart v. Eden, 2 Caines, 121; Bank v. Birch, 17 Johns. 25. But the notice was sent to Little Falls, instead of Salisbury, where Johnson resided; and, if there was nothing else in the case, I think the failure to charge the estate by due notice would operate a discharge of both indorsers.”

That case was decided in 1843.

In Bank v. Bennett, 5 Hill, 236, it was held, where a notice of nonpayment had been sent by mail, directed to the deceased indorser, instead of his personal representatives, in a case where the holder of a note was appraised before it fell due that the indorser was dead, that, “had the notice reached the personal representatives of the indorser within the time which would have ordinarily elapsed if directed to them,” it would have been sufficient. In that case the notice was addressed to the testator, but did not come to the knowledge of any one of the executors in due time, and it was irregular, because the party resided in Auburn, and the notice was put in the post office of Auburn, addressed to the party, “instead of sending the notice to his dwelling house or place of business.” That case was decided prior to the statute authorizing the mailing of notices to parties residing in the same town where the note is made payable. In Sheldon v. Benham, 4 Hill, 129, decided in 1843, it was held that service of notice of protest cannot be made through the mail, where the party giving it, and the one to whom it is sent, reside in-the same village. It is said in 3 Rand. Com. Paper, § 1244, viz.:

“Where the party to be notified has died before the paper matures, the notice should be given to his personal representatives, if any is appointed. * * * And a notice so addressed, and sent by mail to the proper post office, is sufficient to bind the estate, where the notary knew of the indorser’s death, but did not know whether an executor or administrator had been appointed. But if the names of the executors are known, or can be known by reasonable diligence, it will not be sufficient to give notice To the executors’ of the indorser.”

Arid the same author, in section 1245, says:

“Before an executor has been appointed, a notice mailed to the indorser’s legal representative’ has been held to be sufficient.”

And in support of that proposition he cites Boyd v. Bank, 15 Grat. 501. And again he says:

“Where the drawer or indorser dies before the paper matures, it has been held that, before the appointment of an administrator, notice may be left at his residence in town (which was closed), and put into the keyhole there, although he had gone to his country house for the summer, and had died there.”

And in support of that proposition the author quotes Stewart v. Eden, 2 Caines, 121. The same author says further:

“So if he died before the maturity of the paper, and that fact is unknown to the holder, and no personal representative has been appointed, it will be sufficient if the notice is left at his last resideuce, and mailed to- his family, who had removed into the-country.”

For that proposition he seems to rely on the case of Bank v. Birch, supra.

Prof. Parsons, in his book of Law of Business Persons, states, at page 182, that the holder should use due diligence in presenting a bill to a drawee, and adds:

“And, if he be dead, the holder should ascertain who is his personal representative, if he has one, and present the bill to-him.”

Again, the same author, in speaking of a notice to an indorser,, at page 189, says:

“If the party to be notified is dead, notice should be given to-his personal representatives. A notice addressed to the ‘legal rep' résentatives’ -of, etc., and sent to the town in which the deceased party resided at his death, has been held sufficient.”

The quotations are made from a revised edition of 1894.

In the ease of Bank v. Darling, 91 Hun, 236, an action was-brought upon a promissory note made by Grould, indorsed by Jeremiah Darling, which became due on the 6th day of February,' 1894, and was on that day protested against the maker. Darling died on the 18th day-of January, 1894, and letters testamentary were issued to his executors on the 12th of February, 1894. In that case it appeared that at the time of the protest two notices were sent by the notary who protested the note—

“One addressed to ‘K. Darling, and the other to ‘The Estate of J. Darling,' both being enclosed in an envelope, and directed to the ‘Estate of J. Darling, Stony Brook, L. I.' which'was the place of his residence at the time of his death, but these notices were-not received by the defendants.”

The learned judge, after quoting Willis v. Green, Stewart v. Eden, and Bank v. Birch, supra, says:

“True, it was directed to his estate, but no other direction would be more likely to bring it to his family. * * * Hpon reason and authority, the notice must be deemed sufficient.”

The foregoing authorities, as well as the reasons stated in the-opinion of ADAMS, J., lead me to concur in this opinion favoring a reversal.


author: PER CURIAM.

text:
    Bank of the Metropolis, App'lt, v. Jacob L. Lissner, Resp't.
    (Supreme Court, Appellate Division, First Dept.,
    Filed June 5, 1896.)
    1. Pleading—Supplemental.
    An application for leave to file a supplemental answer, is within the discretion of the court.
    2. Same.
    Such application will be denied if the facts sought to be pleaded can be proved and have the same effect under the original issue,, as though the new pleading had been served.

      Appeal from an order granting defendant leave to serve a supplemental answer.
    Geo. Putnam Smith, for app’lt; D. Leventritt, for resp’t.
   PER CURIAM.

In spite of the mandatory language of section 544 of the Code of Civil Procedure, it is nevertheless within the discretion of the court to. grant applications of this kind or to refuse them (Fleischmann v. Bennett, 79 N. Y. 579), and they will be refused whenever it appears that an injustice would be worked by allowing a supplemental answer to be served (Holyoke v. Adams, 59 N. Y. 237). It is quite clear in this case, we think, that it would be unjust so far to decide the puestion of the admissibility of this evidence as might even inferentially be done by permitting the supplemental answer to be served. Eo injustice can be done to the defendant by denying this motion, because, if the adjudication in the former action is admissible in this case, it will have the same effect, when proved as evidence, as it would if pleaded and proved after the pleading had been served. Krekeler v. Ritter, 62 N. Y. 372.

The order is reversed, with $10 costs and disbursements, and the motion denied, with $10 costs.


author: VAN BRUNT, P. J.

text:
    Peter B. Olney, as Receiver, etc., Resp't, v. Matthew Baird, et al., App'lts.
    (Supreme Court, Appellate Division, First Dept.,
    Filed June 29, 1896.)
    COEPORATIONS—INSOLVENCY—PllEEEBENCE.
    A bill of sale by the officers of an insolvent corporation to one of the directors, of all its property, is void, though he resigns his position and transfers his stock to some of its employes conditionally and without consideration, while he remains in full control and management of its affiairs after the same as before such transfer.
    Appeal from an interlocutory judgment in favor of plaintiff.
    Joseph Fettretch, for app’lts; G. C. Comstock, for resp’t.
   VAN BRUNT, P. J.

This action was brought by the plaintiff, as receiver of the Sargent Granite Company, to vacate and set aside certain transfers of personal property made by the Sargent Granite Company to the defendant Matthew Baird during the year 1892, upon the ground that said company was insolvent at the time of malting such transfers, and that the same were made in contemplation of insolvency; and also to set aside a certain lease made to him of property which had previously been leased to the Sargent Granite Company, and to have declared fraudulent and void-a judgment obtained by the defendant Matthew Baird in the state of Maine against the said company, and the execution and sale thereunder. We might well dispose of this appeal upon the. very satisfactory opinion rendered by the learned judge at special term, were it not for the circumstance that the learned counsel for the appellant insists so strenuously that the evidence contained in this record was misconceived by the court below, and that a mistaken view as to its probative force was the- reason why the court reached the conclusion which it did. It seems to us, however, that a very brief statement of the facts as they appear upon the record will show that no other conclusion could have been arrived at, and that the transfers in question were made to the defendant when he knew that the company was insolvent, and that it. was in contemplation of the stoppage of its business that they were made, and that during all the time he was in reality a stockholder of the corporation, although he had nominally transferred his stock for the purpose of freeing himself from the disabilities-attending that position. It appears that the Sargent Granite Company was a corporation organized as a mining corporation under the laws of the state of Mew York on the 7th of April, 1889. The capital of the corporation was fixed at $20,000, represented by two hundred shares, all of which except five were issued for property which was transferred to it. Prior to the 28th of May, 1890, Mr. Schramme, who was one of the stockholders and directors of the company, had advanced considerable sums of money, and upon which day the company gave to Schramme a bill of sale of all its property, consisting of stock in trade, tools and machinery, as security. In the latter part of August, 1890, Schramme, Ms advances being about $10,000, became dissatisfied, and asked Mr. Prank T. Sargent, the president of the company, to get some one to buy him out, and take his place. Sargent thereupon called upon Mr. Matthew Baird, and told him that Schramme was willing to transfer his bill of sale and give all the stock he had in the company—which at this time amounted to one hundred shares— to Baird, if he would take Schramme’s place. Sargent and Baird had some further conversation in regard to Baird furnishing money to the company for the purpose of doing its business, and it was agreed that the company should ship all its products to Baird, and that he should collect the accounts, and apply the proceed to the payment of any money that he had advanced to the company. Mr. Baird testified that it was further a part of the agreement that he was to receive from time to time from the company security in the form of bills of sale for the moneys which he might advance. This portion of the agreement is denied by Sargent. The court below, upon considering all the evidence, came to the conelucion that, although Sargent’s testimony was not to be accepted in all other respects, he had given the true version of the-arrangements between Baird and himself upon the occasion mentioned. It is urged upon the part of the appellants, however, that the learned court was mistaken, and that Baird s version of the transaction was confirmed by the witness Schramme and by tire probabilities of the case. It is contended that, because Schramme testified, “Thereupon Mr. Sargent came to me, and told me that he had made an arrangement with Mr. Baird to take my place,” he corroborates Baird in regard to the transaction. We are unable to agree with the learned counsel for the appellants upon this proposition. There is nothing in the testimony of Schramme, so far as we have been able to ascertain by a reading thereof and a careful examination of the points of the appellants, to indicate that there was any arrangement by which S chramme was to receive from the company, from time to time, security in the form of bills of sale for the moneys which he might advance. It is claimed upon the part of the appellants that the evidence may be so construed as to hold that Schramme received his bill of sale before he made the advances which were repaid by Baird at the time of the substitution of the latter for him; and this construction undoubtedly may be putuponthe evidence, but it in no way corroborates the appellants’’ claim that there was any continuing agreement that bills of sale were to be executed from time to time for moneys which might be advanced by Schramme, and there is no proof that any agreement-of the description claimed by the appellants ever existed in favor of Schramme. At the time of the negotiation with Baird the company was indebted to Schramme in something less than $10,000, the amount of the bill of sale. If we concede that the agreement between Baird and Sargent was of the character testified to by Baird, it is difficult to see how such an agreement could be binding upon the company. Mr. Sargent, the president, had no authority,, by virtue of his office, to make an agreement by which at any moment the company could be stripped of all its property, and prevented from conducting the business for wlpch it was organized. And even if such an agreement could have been made by the trustees of the corporation, there is no evidence that Mr. Sargent was authorized to make any such contract. But it may be said that the corporation, by its duly-constituted officers, subsequently executed bills of sale of the character claimed by Mr. Baird; and that this was a ratification of the authority of the president to make such an agreement, if it had been made. We fail to see that any such effect can be given to the action of the board of trustees authorizing bills of sale made long after this alleged arrangement with Mr. Baird. Those were transactions by themselves, and there is no evidence that, they had any relation to any undertaking or agreement between Sargent and Baird, and no evidence that the trustees of the corporation, other than Sargent and Baird, had any knowledge of the existence of such an arrangement, even if it- was made; and one of the principles of ratification is that the party ratifying must have knowledge of all the material facts. Therefore, upon a consideration of all the evidence, in view of the fact, as urged by the court below, that no transfers by the company to Baird were made for advances for a long period of time after this arrangement, and no demand was made by Baird for such transfers based upon any previous agreement, it is evident that no such agrément was made, and the appellants cannot claim any rights founded upon its existence.

Without going into details, it appears that subsequent to the arrangement with Baird he virtually transacted the business of the company, received all the output of the company, sold it, received the money, and advanced moneys for the carrying on of the work. It does not seem to have been a particularly successful adventure, since the indebtedness of the company to Baird kept increasing and increasing, until in March or April, 1892, the company owed him something over $100,000, besides an amount of other indebtedness for merchandise used at the quarries, the wages of the men there employed, and the relit of leases unpaid. At this time Mr. Baird concluded that his situation as a creditor of the company was not an absolutely safe one, and he demanded from Sargent a bill of sale of all the property of the company, and on the 19 of April, 1892, a bill of sale was executed by the president and secretary of the-company of all its property, and delivered to Mr. Baird. There is no evidence that the president and secretary were authorized by the stockholders to execute this bill of sale, or that they in any manner assented to its execution. It is claimed, however, that subsequently the stockholders, at a meeting at which all were not present, ratified its execution. Whether such ratification amounted to anything or not, it is not necessary to discuss or determine. It appears from the evidence that about this time Baird came to the conclusion that his position as stockholder and treasurer and secretary and assignee by virtue of the bill of sale of all the property of this company as security for alleged indebtedness was somewhat inconsistent, and he resigned as director, secretary, and treasurer, and transferred his stock to certain of his employes. One of said employes, named Clark, was elected secretary and treasurer in Mr. Baird’s place; and another, named Harrington, was elected director in his place. It is claimed upon the part of the appellants that thus the confidential relations existing between himself and the company were severed, and that the inhibitions of the statute no longer applied to him. The business of the company, however, was conducted in the same manner as before. Baird directed all its affairs, and assumed the same control as he had previously exercised, and the evidence of Harrington shows beyond dispute that the transfer of the stock was not absolute, but that it was understood by the transferees that they were acting for Baird, and in his interest, and that they were not the absolute owners of the stock, and had paid nothing therefor. He says that Baird told him that anything that would come from the stock after he (Baird) was paid would be his, and that, if any profit or income came from it, it would be his to get the profit on it. In other words, Harrington was to have anything that was left after Baird was paid, but he was to have no right to receive anything until that event occurred. It is manifest from the manner in which and. the persons to whom these transfers were made, the fact that they took the place in the board previously occupied by Baird, the fact that the latter still managed the company notwithstanding the alleged change of relationship, and the clear intimation by Harrington that he was to have no interest in the stock until the indebtedness to Baird was paid, that Baird transferred this stock, not in good faith, but for the purpose of removing the supposed disability. ' We do not think that such a transfer (not being made in good faith, and Baird not parting with the absolute ownership of the stock) could relieve him from the disability which attached to the position of a stockholder of this company.

It further appears that other bills of sale were executed, and that when Baird thought it necessary for the protection of his interests to bring an action in the state of Maine against this corporation, at his expense and request the secretary and treasurer of the company went to the state of Maine in order that they might be served with process in that action,—another indication that these persons were put into the corporation by Baird, and were his representatives and tools. It cannot be that by such an arrangement the disability imposed by statute upon stockholders and officers of corporations can be avoided.

That at the time of receiving these bills of sale and the commencementof this action Mr. Baird was aware of the insolvency of this company is amply established by the evidence, although he claims he was unaware of the existence of any debts except his own. It appears that he knew that the company was in debt for rent of its quarries, and that it had no money with which to pay such rent; and he also knew that it was indebted for merchandise used at the quarries, and also for wages, and that the company was desirous of getting machinery, and had no money with which to get it, except such as they should get from him. And he knew further that he was taking from this company, by absolute bills of sale, every bit of property which'it owned, and that any moment the business of the company could be stopped by him. It is clear that he must have known that the company was absolutely insolvent, and that it had no hope of continuing its business, except from moneys which might be advanced by him. It may be that, prior to the time of taking the security for his indebtedness, which commenced in April, 1892, he may have hoped that the business of the company would be prosperous, which led him to advance large sums of money, until they amounted to about $100,-000. But it then appears that he became alarmed at the condition of the company, and began to seize everything in sight. He then knew, as already stated, that the company was in arrears for rent of the property necessary for the conduct of its business, and that it had not the requisite tools and machinery to carry on its business, and, knowing these facts, and therefore knowing that the corporation could not continue its business, he proceeds to become the owner of the lease of the only quarry of the company which it was thought might be successfully worked. With all these facts and circumstances before us, it seems impossible to come to any other conclusion upon the questions of fact than that reached by the court below.

The judgment should be affirmed, with costs.

All concur.


author: MARCUS, S.

text:
    In the Matter of Application to Compel Frank P. Manhart, as Administrator of Margaret Seitz, Deceased, to Account.
    (Surrogate’s Court, Erie County,
    Filed April, 1896.)
    Executors—Accounting.
    Where testatrix, at the time of her decease, had money deposited in hank in her own name given to her for life by her deceased husband, her administrator, who was also the administrator with the will annexed bonis non of her said husband’s-estate, will, after his removal, be required, on his accounting, to pay-over and deliver such money to his executor.
    Jacob Stern, for William B. Frye; Hamilton Ward, Jr., for Frank P. Manhart.
   MARCUS, S.

Margaret Seitz, who was the executrix of the last will and testament of Charles L. Mary, died in 1895, at Buffalo, N. Y.; and Frank P. Manhart was appointed administrator of her estate, and also administrator with the will annexed de bonis non of the estate of Charles L. Mary. Thereafter an application was made for the removal of said Manhart as administrator of the estate of Margaret Seitz, and s-aid application was granted, and William B. Frye appointed administrator de b'onis non, on the 18th day of February, 1896. The administrator de bonis non now seeks to compel the removed administrator to-render and settle his account, and pay over and deliver all moneys and property which came to his hands. An account has been filed by said Manhart, which states that no real or personal property of any kind or nature was left by Margaret Seitz. The administrator de bonis non of Margaret Seitz seeks to charge the removed administrator with the sum of $6,857.92, now on deposit in the Erie County Savings Bank and the Buffalo Savings Bank, of this city. It is admitted that, upon, the death of Charles L. Mary, Margaret Seitz changed the deposits above mentioned to her individual name, Margaret Mary, in 1873; that thereafter she was married, in 1875, to one Joseph Seitz, and again changed the acount to her individual name, the moneys in said banks standing to the credit of the estate of Margaret Seitz at this time; that, upon the death of said Mary, she took possession of his property, Avhich consisted of a farm, farm stock, cask, notes, and mortgages, which, after being gradually realized on', resulted in the moneys now in the banks, in addition to a bond and mortgage made by Frank P. Manhart to the deceased, Margaret Seitz. The cousel for Manhart contends that if the property which came into his hands was property left by Charles L. Mary to Margaret Seitz, and which, under the Avill of said Mary, he gave to her, “to have and to hold the same during her natural life, with poAver and authority to sell and dispose of the same as she shall see fit, or think it to her interest to do so, but at her death Avhatever property remains, after paying all expenses, shall be divided into three equal parts, one of these parts to go to her heirs, and two parts to my heirs,” then, Margaret Seitz being only a life tenant, the remainder-men or representatives of the estate of the original testator are entitled to possession, the title vesting in them at once. Therefore the administrator of Margaret Seitz would be accounting in this proceeding without a purpose, and to a court Avithout jurisdiction; the letters upon the estate of Charles L. Mary haw ing been granted in Genesee county.

It would seem that the controlling question to be determined is whether the property in the Seitz estate has been fully administered. Are there creditors with claims against the Seitz estate in existence? Has the time for creditors to present their claims expired? Can it be said, assuming debts are in existence, contracted by Margaret Seitz in her lifetime, that there are no assets in this estate from Avhich said creditors could be paid, or would the Avill of Charles L. Mary, directing one-third part of the remaining amount after the death of Margaret Seitz, which was to go to her heirs, control to the extent of compelling creditors to present their claims to the administrator de bonis non of the estate of Charles L. Mary? To whom should Manhart pay the amount loaned of Margaret Seitz upon the bond and mortgage, in which Margaret Seitz is named as mortgagee indidually ? Under the ruling in the case of Caulkins v. Bolton, 31 Hun, 458; 98 N. Y. 511, he could not pay it to himself, as administrator de bonis non of the Mary estate, but it would haA^e to be paid to the administrator de bonis non of the Seitz estate; that is, to her personal representatives. Who could execute a legal discharge of the mortgage but the present administrator de bonis non of the estate of Margaret Seitz? Can there be a question but that the estate of Charles L. Mary is indebted to Margaret Seitz for commissions allowed her by laAV in her capacity as executrix, and who is to receive the same? If it Avere held that the present administrator de bonis non of the Seitz estate was not entitled to the moneys iioav in the banks, who could draw the same? Surely, not Manhart, who is removed and without standing; nor could Manhart, in his capacity as administrator with the will annexed de bonis non of the Charles L. Mary estate, since the moneys on deposit are to the credit of the estate of Margaret Seitz. If the hanks with whom the moneys are now deposited refuse to pay the same to any one but the personal representatives of Margaret Seitz, on the theory that the money is credited to the “Estate of Margaret Seitz,” and therefore payable only to her personal representatives, would not their action be upheld, within the case of Caulkins v. Bolton, already'cited? Assuming that Margaret Seitz had but a life interest in the estate of Charles L. Mary, of which there can be no doubt, the remainder-men can only take title after proper administration; and it cannot be said that the representatives of Margaret Seitz are foreigners to this remainder, in its entirety, with the property standing in the name of Margaret Seitz.

The question as to the ownership of these assets is not now to be disposed of; and, while I have no doubt that the legal representatives of the Margaret Seitz estate may have to account to the legal representatives under the will of Charles L. Mary before the court which issued the letters upon that estate, I am satisfied that the more proper and regular way to relieve Manhart of any liability would be to have him account and deliver all money and property to his successor. This accounting does not determine any questions affecting the Mary estate. They may all be raised between the representatives of both estates in the proper forum. A decree may'therefore be entered directing Frank P. Manhart to charge himself with the sum of $3,615, now on deposit in the Erie County Savings Bank, to the credit of the estate of Margaret Seitz, and with the sum of $3,242.92, now on deposit in the Buffalo Savings Bank, to the credit of the estate of Margaret Seitz, together with accumulated interest on said sums, if any, and to deliver same to William B. Frye, the present administrator de bonis non, together with the bond and mortgage executed to Margaret Seitz, and now in his possession.

Ordered accordingly.


author: BISCHOFF, J.

text:
    Henry T. Buell, App'lt, v. Frank G. Hollins, Resp't.
    (Supreme Court, Appellate Term, First Dept.,
    Filed April 27, 1896.)
    1. Appeal—Appealable order.
    An appeal lies from an order denying a contested motion to vacate an order entered by the court on its own motion.

      2. Same.
    n An appeal does not lie from an order imposing costs conditionally, where the event of the action is undetermined and the notice of appeal does not specify this ground.
    3. Same.
    "Where the trial of a cause on the short calendar does not occupy one hour’s time, the justice’s action in placing it at foot of general calendar is based upon no grounds calling for the exercise of discretion and an appeal lies from an order denying a motion to vacate such order.

      4. Same.
    Where there is no admission by the respondent of the appellant’s averments that the trial was discontinued by the justice before one hour had elapsed, and the record of the court shows that the fact was directly to the contrary,' the record presents merely a question of fact, without the slightest basis for á determination of the matter as one of law.
    5. Same.
    In such case, the respondent is not called upon to make oath in support of this recital in the order signed by the trial judg-e, where the particular matter was peculiarly within the knowledge of that officer.
    Appeal from an orerder of the general term, affirming an order of the trial justice.
    Edward C. Perkins; for app’lt; Henry B. Johnson, for resp’t.
   BISCHOFF, J.

This cause was placed upon the calendar of short causes for trial in the court below, and before the completion of the trial it was of the court’s own motion sent hack, to he placed at the foot of the general calendar, with $30 costs to défendant abide the event, by an order which recited the fact that the trial had occupied more than one hour. City Ct. Rule 14. Thereafter, at the same term, a motion was made before the trial justice vacate this order, the motion being based upon affidavits, verified, respectively, by the plaintiff’s attorneys and their clerk, alleging that the trial had proceeded for a period of less than one hour when terminated by the court, and tending to show that it would not have been protracted beyond the limited time. This motion was denied, and form an affirmance by the general term of the order thereupon entered the appeal is taken. Ho counter affidavits were submitted on behalf of the defendant, who, however, opposed the motion, -and has responded to the appeal below and that before us.

This plaintiff, if prejudiced, is not to be denied a hearing in this court upon the authority of Hayes v. Gas Co., 143 N. Y. 641; 60 St. Rep. 480, relied upon by the defendant, since in that case the controversy was between the plaintiff and the trial judge as to the right to a preference, the adverse litigant assuming no position with regard to the matter whatsoever, whereas here there is a respondent in active and continued opposition. We may grant that the imposition of costs by the- court below did not render this order appealable as affecting a substantial right, since they were imposed conditionally (Bergen v. Carman, 79 N. Y. 146), the event of the action was undetermined (De Barante v. Deyermand, 41 N. Y. 355), and the notice of appeal did not specify this ground (Crosby v. Stephan, 97 N. Y. 606; Code Civ. Proc. §§ 1300, 3192); but it appears that a substantial right was affected by the order, since the right to a preference of the cause in the court below, as a short cause, after an order had been made placing it upon the special calendar, was as complete as though the action fell within section 791 of the Code (City Ct. Rule 14; Code, § 323), and the right to a preference under that section is a substantial legal right, enforceable by mandamus in a case where a remedy by appeal may, through circumstances, be unavailing (Hayes v. Gas Co., supra). So, too, if the fact be, as contended for, that the trial did not occupy one hour’s time, then the justice’s action was based upon no grounds calling for the exercise of discretion (City Ct. Rule 14), and the appeal was properly taken from this order, .rather than from, the order first made, since .in no other manner could the facts have been presented in behalf of the plaintiff, assuming his allegations to have been admittedly true. But while we entertain the appeal, we may only affirm the order, since, taking the view most favorable to the appellant, the record presents merely a question of fact, without the slightest basis for a determination of the matter as one of law. There is no admission by the respondent of the plaintiff’s averments that the trial was discontinued by the justice before one hour had elapsed, and the record of the court shows that the fact was directly to the contrary. Certainly the respondent was not called upon to make oath in support of this recital in the order signed by the trial judge, when the particular matter was peculiarly within the knowledge, of that officer. Doyle v. Railroad Co., 1 Misc. Rep. 376; 49 St. Rep. 118. Whether or not the original order truthfully recited the facts was a question to be determined by the court below; and it assumed, as it might, that the statement made of record by the justice, in the exercise of his official functions, was correct. This presents no error for us to review. Thus it must be held that the first order was properly within the power of the court to make, and that the order before us did not proceed upon an unauthorized disregard of the affidavits presented upon the motion.

Order affirmed, with costs and disbursements. All concur.


author: RUMSEY, J.

text:
    Henry L. Sayles, App'lt, v. Leonard Kerr, Resp't.
    (Supreme Court, Appellate Division, First Dept.,
    Filed April 24, 1896.)
    Lease—Assignment.
    The assignee of a lease, who enters under the assignment, becomes liable to pay the rent, though the lease contains a provision that the lessee should not assign or sublet without the consent of the lessor.
    Appeal from a judgment in favor of defendant entered on the report of a referee.
    M. G. Holstein, for app’lt; Samuel G. Adams, for resp’t.
   RUMSEY, J.

The plaintiff occupied for a short time the Putnam House, in. this city, which was owned by the defendant. On the 2d of June, 1893, the plaintiff was put out by summary proceedings; and, at the time of his leaving, he left in the house, pursuant to an arrangement with the defendant, a considerable quantity of liquors and other property, and he brought this action for the purpose of recovering the purchase price thereof. The defendant, among other defenses, sets up as a counterclaim-that lie was the owner of the Putnam House, and had leased it to Alonzo and Augustus W. Foster; and that- about the 14th of April, 1893, the two Fosters, being then in possession of the premises, assigned the lease and their interest in it to the plaintiff, who entered under the assignment, and remained there until June 2, 1893; and that the plaintiff had failed to pay the rent of said premises for the month of May, which fell due on the 31st day of that month; and the defendant demanded judgment for the amount of his counterclaim. The referee found the value of the goods which had been delivered, and that the defendant had not paid for them. Pie found the fact of the lease as alleged in the answer; its assignment to the plaintiff; that the plaintiff remained there until the 2d of June; and that he did not pay the rent for the month of May, or any part thereof. And, as a conclusion of law, he found that the plaintiff was indebted to the defendant for the difference between the value of the property which the plaintiff had sold to the defendant and the amount of rent for the month, which -was $1,033.29; and for that amount, with interest, he ordered judgment, which was accordingly entered, and from that judgment the plaintiff takes this appeal.

The single question presented is whether the plaintiff, who became the assignee of the lease of the premises of which the defendant was the lessor, was liable to pay the rent during the time for which he was in actual possession of the premises under the assignment. That question must be answered in the affirmative. The rule is well settled that the assignee of the lease, who enters under the assignment, becomes liable to pay the rent, and that liability arises by reason of the privity of the estate which is created because of his taking possession under the assignment. Frank v. Railroad Co., 122 N. Y. 197; 33 St. Rep. 235; Dolph v. White, 12 N. Y. 296, 300. It seems that this lease contained a provision that the lessee should not assign or sublet without the consent of the lessor; and the plaintiff insists that, that covenant being in the lease, no privity arose between himself and the landlord, because the landlord refused to recognize him as tenant, lost that should release the lessors. But that fact is of no importance. The liability to pay rent arose by operation of law, and from the fact of possession as assignee under the lease; and, as long as that existed, the liability to pay rent followed as a inecessary incident. Blake v. Sanderson, 1 Gray, 332.

Judgment must be affirmed, with costs.

All concur.


author: ANDREWS, J.

text:
    Elias C. Benedict et al., Pl'ff, v. George T. Arnoux et al., Def'ts.
    (Supreme Court, New York Special Term,
    Filed January, 1895.)
    Appearance—Attorney.
    A general appearance of a defendant in an action cannot be made in any manner other than that prescribed by section 431 of the Code.
    Arnoux, Ritch & Woodford, for pl’ffs; Frank G. Wilde, for def’ts.
   ANDREWS, J.

Since the adoption of the Code of Civil Procedure, it has been held in a number of cases that a general appearance of a defendant in an action cannot be made-in any manner other than that prescribed by section 421 of that Code. Couch v. Mulhane, 63 How. Prac. 79, Arnoux, J.; Douglas v. Haberstro, 8 Abb. N. C. 230; Valentine v. Myers’ Sanitary Depot, 36 Hun, 201. Most of the case referred to by plaintiffs* counsel, in which it was held that obtaining an extension of time to answer, or serving a notice of motion, was an appearance, or equivalent to it, were decided under the old Code of Procedure, and -are not applicable. So far as the actual decisions went, neither Krause v. Averill, 4 Civ. Proc. R. 410, nor Davis v. Jones, 8 Civ. Proc. R. 43, appears to me to conflict with the cases above cited; but, if either does, it cannot be considered as a controlling authority.

It follows that the motion to compel plaintiffs’ attorneys to-accept the answer of Hannah Campbell must he granted, with $10 costs to her, to abide the event, and that the motion for judgment must he denied, with $10 costs to said Hannah Campbell, and $10 costs to the defendants executors; such costs, iu each case, to abide the event of the action.