text:
    HENRY R. PIERSON, as Receiver of the RESERVE MUTUAL LIFE INSURANCE COMPANY, Appellant, v. RICHARD A. McCURDY, Respondent.

      Unlawful purchase of stock Iry a corporation — the sale cannot he rescinded without restoration being made of what was'received, under it — wrongful receipt and conversion of corporate property hy an officer — when the right of action against him is hwrred in six years.

    This action was brought by the receiver of the Mutual Protection Life Assurance Society to compel the defendant to account for certain moneys of that company alleged to have been received by him and to recover the same. In 1871 a plan was devised by the officers of the company and the defendant, by which the company was to acquire the assets and stocks of the Widows and Orphans Benefit Life Insurance Company, and reinsure, the risks of the latter. The. defendant was a trustee and one of the officers of the Widows and Orphans” Company. Thereafter the Mutual Company acquired a majority of the stock of the Widows and Orphans’ Company, paying therefor its par value and accrued interest in gold. At that time the assets of the Widows and Orphans’ Company were not equal to their liabilities and capital stock. Some^fieO.OOO of the money of the Mutual Company was paid to the defendant, who’paid it all out in the purchase of shares of the Widows and Orphans’ Company, which were transferred-to the Mutual Company, except about $1,868.61. He retained $8,592.68 for stock owned by himself, which he so transferred. It also appeared that $25,000 of the money of the Mutual Company was paid to the defendant, who retained' $15,000 for his services and paid $10,000 to the president of the Widows and Orphans’ Company, who lost his place by virtue of the consolidation.

      Held, that although the purchase of the stock was unlawful, yet as no offer torestore the shares of stock received had been made, and as no such offer could, owing to the change in circumstances, be now made, the purchase could not be-rescinded and a claim made for the purchase-money.
    That any liability which was imposed upon the defendant by the part he had-taken in the various transactions, and by the receipt and misappropriation of the money of the Mutual Company, could be enforced in an action at law.
    That such being the case this action was barred by the statute of limitations, because not brought within six years from the time it accrued.
    Appeal from a judgment in favor of the defendant, recovered on* a trial at a Special Term.

      W. O. Trull, for the appellant.

      Robert Sewell and John JE. Devlin, for the respondent.
   Daniels, J.:

The object of the action was to obtain an accounting and recovery of certain moneys received by the defendant in October, 1871,. which were the property of the Mutual Protection Life Assurance Society. The company was organized and incorporated under the-general laws of this State to transact the business of life insurance. It continued to do so under that name until 1872 when its name-was changed to the Reserve Mutual Life Insurance Company,, under which name it continued business until March, 1877, when the plaintiff was appointed the receiver of its property and effects,, the company then being insolvent. The capital of the company was fixed at the sum of $100,000, and its assets in September, 1871,. amounted to $335,994.80. Early in October, 1871, a scheme was-set on foot by its officers and the defendant in this action, for the-acquisition of the assets and stock of the Widows and Orphans’ Benefit Life Insurance Company, and for the reinsurance of the risks of’ that company. The defendant was a trustee and one of the officers of the Widows and Orphans’ Benefit Life Insurance Company, and was the person principally engaged in carrying this purpose into effect. To accomplish it an agreement was made with the 'president and other officers of the Mutual Protection Company, under which that company agreed to purchase, and afterwards did purchase, the majority of the stock and all ,the assets of the Widows and Orphans’ Company, and reinsured all the risks and assumed the liabilities of this company. By the ’ agreement which was entered into it was intended to acquire all the stock of the Widows and .Orphans’ Company, and to pay for its purchase its par value and accrued interest in gold, and under the agreement there was after-wards acquired by officers of the Mutual Protection Company a majority of the stock of the Widows and Orphans’ Company, for which payment was made as that had been stipulated in the agreement. At the time of this purchase the Widows and Orphans’ Company was well established in the life insurance business, and it was to acquire the advantages of that business that the officers of the Mutual Protection Company entered into the agreement which has already been stated. At the time when the agreement was made, and also when it was carried into effect, the Widows and Orphans’ Company was the owner of property and ■assets to the amount and value of $1,599,068.71, and its liabilities upon its outstanding risks and otherwise, and for its capital stock amounting to the sum of $200,000, was the sum of $1,667,975.65. The ex’cess of its liabilities over its assets and property was such as to leave its capital impaired to the extent of $68,906.94, and adding to that its probable liability upon what were called Tontine risks,” ■amounting to $20,445.40, its capital would be reduced $89,352.34. This was relied upon as an unlawful transaction in the suit brought by the receiver; and as these corporations were limited in the exercise of their authority to the powers conferred upon them by the ■statutes of the State, that probably was its nature, for it was practi•cally and in effect an amalgamation of two separate and independent ■corporations into one, the larger being absorbed by the smaller, and that was authorized by no provision contained in any statute relating at that time to corporations of this description. The law did •allow one company to reinsure the risks taken by another, but this was not an agreement or arrangement of that character. Tbe purpose and design was not so much to reinsure the risks of the Widows and Orphans’ Company as it was to acquire its property and management and afterwards to proceed with the transaction of its business. What was intended to be and was actually accomplished was not the reinsurance of the risks of one company by the other, but it was the bodily acquisition of the company itself and all its property and the agreement to reinsure its risks as an incident only in' the transaction, and- that was clearly an unauthorized and unlawful proceeding.

In the course of the consummation of the business about the sum of $160,000 was delivered to the defendant by the officers of the Mutual Protection Company, to be used and disbursed by him in the purchase of capital stock of the Widows and Orphans’ Company. This money was derived mostly, if not entirely, by means of checks drawn upon the account of the Mutual Protection Company, and that it was obtained from that source must accordingly have been well understood by the defendant at the time when he received the money. This money was held in trust by the Mutual Protection Company to meet its liabilities and protect the parties dealing'with it in the course of its life insurance business, and'its .appropriation to this purpose by its officers, with the concurrence of the defendant, was unwarrantable and unauthorized. The object was not to invest it for the benefit of the Mutual Protection Company, under the authority of chapter 318 of the Laws of 1868, allowing the funds or accumulations of a life insurance company to be invested in any stocks created under the laws of this State, which at the time should be at a market value in the city of New Yorir at or above par, but it was to obtain the control of the affairs of the Widows and Orphans’ Company in such manner as to subordinate them entirely to the management of the officers of the Mutual Protection Company and those elected to fill vacancies in the board of trustees of the Widows and Orphans’ Company, which it was stipulated should be created, and werfe afterwards in fact created for that purpose.

The money so received by the defendant, with the exception probably of a balance of $1,868.61, not paid, specially claimed by the receiver, was mostly disbursed and paid out by him in acquiring the title to stock of the Widows and Orphans’ Company, which he afterwards transferred to the officers of the Mutual Protection Company for its use and benefit. Of these moneys $3,592.63-were retained by him as the price of thirty-five shares of the stock owned by himself in the "Widows and Orphans’Company;, but these shares, as well as those otherwise acquired by him,, were transferred in the manner already stated to the officers of the-Mutual Protection Company, and they were afterwards retained and apparently used for the benefit of the Mutual Protection. Company, and continued in that condition until the appointment, of the receiver. Neither before that time, nor at any time since then, were the shares offered, or proposed, to be returned to the defendant, or the persons from whom he had obtained them, in carrying out this arrangement. Previous to the time of the transfer of the shares, other shares in the Widows and Orphans’ Company had been sold in the city of New York at a premium above their .par value, but as a matter of fact that was more than they were-worth, for as the liabilities of the Widows and Orphans’ Company exceeded its assets, and to a very considerable degree would absorb-its capital, the actual value of the shares was much less than their par value. If the Tontine liabilities were not to be included in the-liabilities of the company, then the actual value of the stock was shown to be about sixty dollars a share. If such liabilities were to-be added, then the value of each share of $100 would be a fraction over fifty dollars; and at the time of these transactions it was known to the officers of the Mutual Protection Company, who were principally concerned in them, that the capital of the Widows and Orphans’" Company had been impaired to the extent of about $60,000, while the-defendant himself testified that it was known to him to be impaired to the extent of about double that amount. In that, however, the-evidence tended very decidedly to prove that he was mistaken,, and that the actual deficiency in the capital by reason of liabilities was the amount which has already been mentioned. It was stated in the course of the evidence that this increase in. the liabilities of the. company was occasioned by distributing or dividing its earnings among its policy-holders by crediting proportionate parts of it to-them in their accounts upon the books of the company, and that the deficiency could be corrected or removed by withdrawing these-credits. But as the credits had in fact been made and were at no-■time withdrawn, bnt were assumed to have been proper in the transactions of these parties, the power previously to expunge them in that manner would not change the liabilities of the company. If that had been done, then there would be reason for excluding these credits from consideration, but it was not and they were left to remain upon the books without any change being made as distributions of so much of the accumulations or earnings of the company, and in that manner contributed to produce this deduction in the capital which was shown to exist by the evidence. But it is not probably' very important to determine whether these credits formed irrevocable liabilities on the part of the company or not. If they did, and they had been canceled, then the stock of the company would-be of a correspondingly greater value than it was. But without that change its actual value was shown to have varied from fifty dollars to sixty dollars for each share of $100, and that-rendered the acquisition of the stock so far valuable to the Mutual Protection Company to whose officers it was transferred evidently for its uses, and as no offer was at any time made to return the stock, neither the company nor the receiver himself could rescind this purchase and recover from the defendant the purchase-price. For’ even though the transaction may have been an unauthorized and unlawful one, for the reason that it was not within the power of the Mutual Protection Company to acquire the stock in this manner, it could not be disaffirmed and the money recovered without either returning or offering to return this stock. (Woodruff v. Erie R. R. Co., 93 N. Y., 609.)

To rescind an unauthorized pqrchase of this description or one that may have been fraudulently induced, the law requires that the party entitled to disaffirm it shall surrender up and return to the other what was received.in the process or consummation of their dealings. It will not permit a party who may have been imposed upon or illegally induced to purchase another’s property to retain it, and still recover back the consideration which was paid for it. This is a very general principle applicable to the right of one party to disaffirm or rescind a transaction into which he may have been drawn by the misconduct of another; and where, after discovering the cause of his complaint, he shall fail to return, or offer to return, what he himself may have received, the law will not permit him to recover back tbe consideration which he may have parted with in the transaction. (Hammond v. Pennock, 61 N. Y., 145; Gould v. Cayuga Co. Natl. Bank, 86 id., 75, 79, 80.)

Exceptions exist to this rule where the wrong-doer himself may by his own conduct have disabled.the other party dealing with him from fully restoring what he may have obtained, or where the judgment itself in the action secures to the wrong-doer complete relief and full protection, or where the securities which have been received are at the time entirely worthless. (Allerton v. Allerton 50 N. Y., 670.) But this case is not included within either of these exceptions, for by no act of the defendant did he disable or prevent the Mutual Protection Company or its officers from returning this stock. Neither can the advantage which the defendant might have derived from it, if it had been within a reasonable time returned to him, be measured by anything included in the plaintiff’s case, nor was the stock without substantial value. What the law required, therefore, if the transaction was to be annulled, was the return of these shares to the defendant, and that was neither proposed nor attempted. Chapter 314 of the Laws of 1858, under the authority of which the receiver brought this action, does not relieve him from the necessity of observing this general rule of law governing this class of cases. It simply removed the preceding disability under which executors, administrators, receivers, assignees and trustees of estates were precluded from questioning the disposition previously made by the persons or bodies, whose property should be committed to their charge and management, and invested them with the power to dis-affirm fraudulent or unlawful transactions, which they otherwise would not have been able to do. They were in no manner by any of its provisions relieved from the obligations to comply with well settled legal principles otherwise affecting the subject matter of the controversy, and consequently where it should be intended to dis-affirm or annul the fraudulent or unlawful disposition of the debtor’s property or estate, it could only be effectually done by complying with and observing the other rules of law applicable to the disposition of such a case. That is what the receiver did not propose to do in this action, and he was not in a position in which he could do it, for as the Mutual Protection Company had at the time of his appointment become insolvent, and the stock of the Widows and Orphans’ Company was then practically worthless, he could not return what had been received for the benefit of the Mutual Protection Company at the time when the money was delivered to the defendant. He was not in a condition to rescind the transaction, but if he bad been and had done so his right to relief wouid still be only a right to recover the money which had been received by the defendant, and that could have been as successfully secured in an action at law as in an action-in equity (Masson v. Bovet, 1 Denio, 69,) and consequently he was-limited in this ground of complaint to what was in substance a claim of damages for the unlawful appropriation of the money of the company for which he was appointed receiver.

The fact that this money was impressed with a trust in favor of’ the creditors and stockholders of the Mutual Protection Company will not aid the plaintiff in maintaining this action in the form in-which it was designed to maintain it by the complaint. Por while it is true it was in the charge and under the control of the-officers of the Mutual Protection Company as a trust fund, and' they were personally bound to protect and maintain it as such, and violated the obligations of their trust in transferring it, as they did, to the defendant; as it did not remain in his hands but was disbursed, as it was agreed and intended it should be, with the exception of a small portion of it, the receiver did not establish his right, on this ground to recover the trust fund from the defendant. It is-to be assumed that in parting with the money the officers of the-Mutual Protection Company violated the obligations of their trust and became liable for damages occasioned to the company by their' misconduct. (Angell & Ames, on Corp. [10th ed.], § 312 ; Blake v. Buffalo Creek R. R. Co., 56 N. Y., 485; Barnes v. Brown, 80 id., 527; Jackson v. Ludeling, 21 Wall., 616.) And the defendant being himself aware of this misappropriation and unlawful use of the money would be equally liable. But as the fund with the exception of a comparatively small amount had been made use of by him in the manner in which it was provided and intended it should be used, and had mainly passed into other hands, an action for the return of the identical money as trust money could not be maintained. Neither could it be for the amount retained by him as the purchase-price of his own stock, without the return to him of the stock in the condition in which it was-when, the transaction became known to the stockholders and other ■ officers of the company, and no such return was at any time proposed or offered to be made. As to him, as the facts were 'proven, .the right of the Mutual Protection Company or its receiver was to .recover damages for the extent to which it had been injured in its affairs and property by this unlawful disposition of its moneys, and that redress would be fully and properly obtained by what is known .as a legal action. As to the balance remaining in his hands unexpended, that also was substantially money held by him for the use ■of the Mutual Protection Company and could be recovered in an appropriate action for that purpose; for neither was the intervention of a court of equity exclusively required. But, whatever authority it had was concurrent with this court as a court of law.

It was also alleged aS a ground of the action, and proof was given tending to establish the truth of the allegation, that an unlawful ■confederation or conspiracy was formed by the defendant and the officers of 'the Mutual Protection Company, who were parties to .the business, to defraud it out of these moneys. But if that view should be taken, and the action held so far capable of being maintained, it would still be an action for the recovery of so much money .■or for damages sustained by the company by reason of the consummation of the unlawful confederacy. (Place v. Minster, 65 N. Y., 89, 95.) And neither of these grounds of liability will be of any practical benefit to the plaintiff, for as he cannot maintain an exclusively equitable action for the rescission of the transactions, by reason of the position in which he has been placed by the facts already mentioned, then surely as his action was not commenced until April, 1879, as will be more fully considered hereafter, the statute of limitations has deprived him of this remedy.

In the early part of the progress of the business in which - the ■defendant was engaged he received the further sum of $25,000 from Freeman, who was an officer of the Mutual Protection Company, ■co-operating with him in the acquisition of the property, effects and stock of the Widows and Orphans’ Company. This money is stated to have been claimed by Freeman, who delivered him the check for it, to have been his own money, but that it evidently was not, and ■the fact was so stated by the witness Morg’an, who at the time was .president of the Mutual Protection Company; and as it was paid to the defendant by the cheek of that company, which was indorsed to him, he had very good reason for knowing that it was in fact the money of the company. This money was not used by him in pur.chasing stock or any other commodity for the Mutual Protection Company, but it was, as he said, delivered to him to pay him for his services in conducting this business. Of that $15,000 was. so retained by him, and the remaining $10,000 was paid to Raymond, who was the president of the Widows and Orphans’ Company, but ■displaced and removed from his office by means of this transaction. It is not necessary, in terms, to .characterize this disposition of the money of the Mutual Protection Company. Its consideration and object are entirely obvious, and the result derived was that which was .expected to be accomplished by the parties. But while this was a misappropriation of so much of the money of the Mutual Protection Company, and was probably so understood by the defendant, and consequently received by him, impressed with the trusts to which it had been subjected as the money of the company, still the lapse of time between its receipt and the commencement of the suit seems' to be an insuperable obstacle in the way of the plaintiff’s right to recover it. As to this money and the balance of the residue of that paid to the defendant remaining in his hands, and also the other and larger sum, no equitable action to enforce the trust impressed upon it was absolutely required by the law. The action, when brought, could not be for the maintenance and administration of the trust, but in either case only for the recovery of so much money still in the hands of the defendant, or for damages for that which he had converted to another purpose or which he was not entitled to withhold from the Mutual Protection Company, or its receiver, or an action for the recovery of these sums under the facts as they were presented by the evidence, if a legal rescission of the purchase of the stock had taken place,'as so much money received by the defendant to and for the use of this company. An equitable action was not strictly required for either purpose, for what has been known as an action for money had and received, or for the conversion of property lawfully belonging to another, could be maintained and would be sufficient to redress the wrongs set forth. This subject was partially considered in the early case of Neilson v. Blight (1 Johns. Cases, 205), where upon the assumption of a promise, although none was in fact made, an action at law for money held in this manner was maintained, and Weston v. Barker (12 Johns., 276), McCrea v. Purmort (16 Wend., 460, 465), Dias v. Brunell (24 id., 9) and New York Insurance Company v. Roulet (Id., 505), maintain the same proposition, and that is that where a sum of money may be in the hands of a party belonging to another, from whom it cannot conscientiously be withheld, an action for money had and received, to recover it, may be sustained. And in Wetmore v. Porter (92 N. Y., 77) it was further held, that “ whoever receives-property, knowing that it is the subject of a trust, and has been transferred in violation of the duty or power of the trustee, takes-it subject to the right not only of the cestui qui trust, but also of the trustee, to reclaim possession of the specific property or to-recover damages for its conversion in ease it has been converted.” (Id., 81.) These authorities abundantly sustain the point that ample redress may be obtained for the wrongful withholding or conversion of trust moneys by a person occupying the relation to-them which the defendant did, in an action brought for their recovery or for their conversion, and they consequently subject the-claims for the recovery of the money or other redress to the provisions of the statute prescribing the time within which such an action must be commenced.

It has been urged as the money in controversy was the subject-of a corporate trust that the statute of limitations is not applicable-to the action, and a position analogous to this was sustained under circumstances in their legal effect quite similar to those presented in this action, in the case of Ernest v. Croysdill (2 De Gex, Fisher & Jones, 175.) But the exposition of the law made in that authority is not now entitled to be followed. It is true it has generally been stated to be the law governing the time within which an action may be commenced for the recovery of moneys received-by collusion from a trustee, or with express notice of the trust in 2 Perry on Trusts (§ 840). But while this rule is entirely applicable to actions against the trustee himself, brought during the continuance or subsisting of the trust, it is not applicable to, neither does it control the case of a party receiving and appropriating to his own use or otherwise disposing of trust moneys. There the party is subjected, by the operation of well established legal principies, to the obligation only of refunding or returning the money burdened with the trust. ' And in that class of cases the time within which an action may be maintained has been regulated in this State by the statute of limitations, which will begin to run from the actual miappropriation of the funds, or at farthest from the discovery of the fact, by the use of reasonable diligence by the party entitled to its benefit. Upon this subject it has been stated to be the law, that it is indeed perfectly clear that when a person takes possession of property in his own Dame, and is afterward by matter of evidence, or by construction of law, changed into a'trustee, lapse of time may be pleaded in bai\ (Angel on Limitations [3d ed], §§ 178 and 471; Hill on Trustees [3d Am. ed.], 388, p. 3 ; Hawley v. Cramer, 4 Cow., 718; Wisner v. Barnet, 4 Wash., 631 and 640; Walker v. Walker, 16 Sergt. & Rawle, 379; Kane v. Bloodgood, 7 Johns. Ch., 90.) In the latter case the rule has been said to be that when there is a subsisting or continuing trust acknowledged and acted upon by the parties, the statute does not apply, but as to those other1 trusts which are the ground of an action at law, the statute is, and in reason ought to be, as much a defense1 in one court as in the other.” (Id., 114.) Where there is a legal and equitable remedy in respect to the same subject-matter, the latter is under the control of the same statute bar with the former. (Id., 118.) The case of Ernest v. Croysdill (supra) was decided before the enactment of chapter 69 (36, 37 Vict.) in 1873, which followed this rule and only excepted the claim of a cestui gue trust against his trustee for property held on an express trust, or for any breach of trust, from the statute of limitation, and chapter 27 of 3 and 4 William IV, section 25, does not seem to have been considered in its decision, for it carried the rule of exemption further than had been provided for even by that statute. The error, however, which may have intervened in this decision, was afterwards fully corrected by the controlling principal of Knox v. Gye (5 L. R., H. L. English and Irish Appeals, 656), where it was generally held that the same limit would be imposed upon an action in equity which had been prescribed for the commencement of an action at law by the statute of limitations where redress could be obtained in that form. And it was also held in Harston v. Tenison (20 L. R, Ch. Div. 109), that lapse of time would bar an action brought by a cestui que trust against a stranger, although it would not against the trustee himself. The prevailing tenor and effect of these authorities is to subject an action of this description to the direct operation of the statute of limitations; and this was the evident design and intention of the enactment of the provisions contained in the Code of Procedure, which are applicable to this case, for as the right of action accrued before the Code of Civil Procedure went into effect, and the suit itself was commenced in April. 1877, less than two years after that time, by subdivision 3 of section 414 its disposition in this respect is subjected to the government and control of the preceding law. That was enacted in such terms as to include civil actions generally without distinguishing between those previously known as legal or equitable, and by the provisions contained in the Code it was designed to prescribe the time within which all such actions might be commenced. By section 97 of the Code of Procedure an action for relief not before therein provided for might be commenced within ten years after the cause of action had accrued. But this section was not intended to include an action of the nature of that brought by this receiver, for it was an action which had been provided for by preceding sections of that Code, and therefore by its terms not within section 97. It was to enforce an obligation or liability implied from the facts disclosed by the evidence, and required to be commenced within six years after the right to commence it had arisen by subdivision 1 of section 91. Certainly, if the suit' in form had been brought to recover the balance of money remaining in the defendant’s hands, and the $25,000 delivered to him as he stated to compensate him for the services which were to be performed or for the damages sustained by the misappropriation of the other moneys delivered to him, it would beyond dispute have been within this subdivision of section 91. And that it might have been brought in that form is clearly sustained by the authorities which have already' been referred to; and as it then would have been within this subdivision it was an action previously provided for within the phraseology of section 97, and by merely changing its form from such an action to one for specific relief, by way of an accounting predicated upon the receipt of these trust moneys, would not so far change its nature or effect as to exclude it from the operation of this provision. It would be entirely unreasonable to hold that upon the same state of facts the plaintiff would be limited in one form of action to the period of six years, and in another form allowed the period of ten years, within which the action could be commenced. And the law contains nothing which would justify such a distinction. In this respect it is substantially the same in its effect as were the provisions contained in the Revised Statutes, which while they provided that bills for relief in case of the existence of a trust not cognizable by the courts of common law, and in all other cases not therein provided for, might be filed within ten years after the cause thereof should accrue, still declared that whenever there was a concurrent jurisdiction in courts of common law and in courts of equity of any cause of action, the provisions limiting the time for the commencement of a suit for such cause of action in a court of common law, should apply to all suits brought for the same cause in the Court of Chancery. (2 R. S., 301, §§ 52, 49.) The section last referred to in express terms applied to the limitation of actions over which concurrent jurisdiction existed in courts of law and .equity, the same legal principle which has been shown to have been finally maintained by the courts themselves; and that was to render the time uniform in all tribunals'in which actions for the same cause might be commenced and prosecuted. It was not necessary in terms to continue this section in the Code of Procedure for its provisions were so framed as to include all actions alike, and they prescribed uniform rules declaratory of the times jn which they might be commenced, and excepted only from those rules the classes of cases not in terms provided for, or including them, and as they were so framed as to include these claims and limit an action for their recovery to the period of six years, and this action was not commenced within that time, the answer setting up the statute they presented a complete defense to the suit.

Subdivision 6, of section 91, did not include this action for the reason that it was not for a cause of action, previous to that enactment solely cognizable by the Court of Chancery. It was, on the contrary, an action over which concurrent jurisdiction existed in courts of law and equity, and for that reason was excluded from that subdivision of this section. A similar subject was considered in Foot v. Farrington (41 N. Y., 164), where this provision was held to be inapplicable when the right to redress would be fully protected by an action at law. This decision seems to have led to a change in the subdivision when to a certain extent it was re-enacted and made a part of the Code of Civil Procedure. But it has been there, so limited as it was then framed as not to include an action of this description, for its terms have been restrained to an action to procure a judgment other than for a sum of money. (Code Civil Pro., § 382, subd. 5.) And that restraint would prevent it from including this suit, which has been brought, so far as these claims are concerned, and it could be sustained if at all, solely for the recovery of sums of money.

But if subdivision 6 of section 91 of the Code of Procedure would include the case, it would not advance the plaintiff’s right of recovery, for the transaction through which the Mutual Projection Company practically absorbed the Widows and Orphans’ Company was neither concealed nor obscured. An early part of the proceeding was enjoined to be regarded as confidential, but after it had been consummated no such restraint as that was imposed upon it, but it was known and understood and regarded as an advantage obtained by the Mutual Protection Company. That was made to appear not only by the evidence of the witness Mason, who had been a clerk in the employment of the company, but also by that of the witness Morgan, who was its president, If any desire had existed on the part of any person interested in either of the companies to ascertain all the détails connected with this business, no difficulty whatever appears to have stood in the way of their discovery, and in that state of the evidence the case certainly could not be regarded as being brought within the language of this subdivision of section 91. In the object to be obtained it differed entirely from that of Salisbury v. Morss (7 Lans., 359 and 368). That was for equitable relief which could not be obtained by means of a mere action for the recovery of the debt, while in this case the sole object of the action was to recover equivalent sums of money for those received by the defendant, and whether such an action be brought in the form heretofore known as an action at law, or an action in equity, the rule of limitation prescribed by the law is the same, and that is the period of six years after the time when the right to institute the action has ai’isen.

The evidence disclosed no right to recover so much of the money as had been paid for the stock transferred for its benefit to the officers of the Mutual Protection Company. And as the claim for that and the residue of that money remaining unexpended, and also for the balance which may have remained in the defendant’s hands of the $25,000 received by him, and applied in part by way of compensation for his services, and the residue of which was paid to the deposed president of the "Widows and Orphans’ Company, were barred by the statute of limitations, this action could not be maintained. It cannot be necessary to consider the objections that were taken to evidence received and excluded during the progress of the trial. If these rulings had been different the plaintiff’s right to recover could in no possible view have been maintained by them. The defects in his case were wholly unsurmountable as the facts existed at the time when the suit was commenced. It was rightly disposed of at the trial, and the judgment from which the appeal' has been taken should therefore be affirmed.

Davis, P. J., and Brady, J., concurred in the result.

Judgment affirmed.


source: Caselaw Access Project

author: Daniels, J.: Davis, P. J.:

license: Public Domain

text:
    HARRIET B. BERDELL, Respondent, v. ROBERT H. BERDELL, Appellant.

      E¡jeg¿ment — wiU not lie by the grantee in an instrument which purports to be a deed, but is in fact a mortgage.

    Where a deed absolute in form, but which, is in fact intended as a mortgage, has been executed and delivered, neither the grantee, nor a purchaser from him who had notice of the nature of the first deed and parted with no valuable consideration upon receiving his conveyance, has a title to the land which will sustain an action of ejectment against the mortgagor.
    Appeal from a judgment in favor of "the plaintiff, entered on the report of a referee.

      Herman Aaron and Alfred Taylor, for the appellant.

      8. W. Fullerton, for the respondent.
   Daniels, J.:

The action was ejectment for the recovery of the possession of real estate situated in the city of New York. By the judgment the plaintiff’s right to the possession of the property was maintained,, and she was held entitled to recover it. After the report was made, and upon the settlement of the ease, additional findings of fact and law were presented to the referee, which he declined to consider, for the reason that they were made after the decision of the action. This decision was placed upon the language and effect of the twenty-'third rule of the courts which, however, did not take effect until March, 1881. But it will not result from this misapprehension that the referee’s refusal to consider the additional requests was erroneous. Eor by section 1023 of the Code of Civil Procedure the requests have been required to be submitted at or before the time when the decision or report shall be rendered. And under that section the referee was not obliged to act upon the requests submitted after the decision and the report had been made and delivered. (Palmer v. Phœnix Ins. Co., 22 Hun, 224.) He was right, consequently, in refusing to consider the requests submitted to him at the time when the case was presented for settlement.

After the decision was made by the referee, exceptions were filed to his report presenting the- point upon which the right of the plaintiff to maintain the action was dependant, and that was whether she had acquired such a title to the land in dispute as entitled her to maintain an action of ejectment for the recovery of the possession of the property. ' Her title consisted of a deed made and executed to her by Eliza W. Parkhurst. Before the execution and delivery of her deed to the plaintiff, she herself had received a deed of the same property from the defendant. But while that' deed was absolute in its form, it was proved to have been executed and delivered, and received by the grantee, as a security for a loan of money. And that proof, under the law as it has been settled in this State, rendered this deed a mortgage, having no other or greater effect upon the title in the hands of the grantee than a mortgage formally executed and delivered for the same purpose. (McBurney v. Wellman, 42 Barb., 390; Murray v. Walker, 31 N. Y., 399.)

The plaintiff understood that this deed was given to Mrs. Parkhurst as a security for the defendant’s indebtedness to her, and she parted with nothing as a consideration for the deed executed and delivered to her by Mrs. Parkhurst. That deed, according to the finding of the referee, which was sufficiently supported by the evidence to prevent his decision upon this point from being disturbed,, was executed and delivered at the request of the defendant and without any actual consideration being received by the grantor in the conveyance. It was in fact, therefore, no more than the assignment of her mortgage interest in the property, and gave to the plaintiff no other or greater title than Mrs. Parkhurst herself had in or to it. "Where real estate may be held under such a conveyance a bona fide purchaser from the grantee will acqnire the title to the propety. Such a purchaser has a right to act upon the faith of the appearance of title in the grantor. (Whittick v. Kane, 1 Paige, 202; White v. Moore, Id., 551.) But the plaintiff was not such a purchaser, for she received her conveyance knowing the fact that the formal grant to Mrs. Parkhurst was only a security, and for the additional reason-that she advanced no consideration whatever for the title apparently conveyed to her. ( Williams v. Thorn, 11 Paige, 459.) The deed,, although absolute in its form, conveyed to the plaintiff no more than a defeasible title (Dexter v. Arnold, 2 Sumner, 109); even if it could have as much effect as that, as long as no part of the mortgage debt was transferred to the plaintiff.

"Upon such a title the plaintiff could not maintain an action of ejectment for the recovery of the possession of the property against the defendant, who was in fact, as well as legally, the mortgagor. (Carr v. Carr, 4 Lansing, 314; Murray v. Walker, 31 N. Y., 399; Teal v. Walker, 111 U. S., 242.) The legal title to the property still remained in him. It was so while Mrs. Parkhurst continued to retain her rights under the deed to her, and that continued to be the defendant’s relation' to the property after the deed was made and executed to the plaintiff herself. (Trimm v. Marsh, 54 N. Y., 599.) The deed to Mrs. Parkhurst created in her favor' a lien only for the payment of her debt, and the legal estate itself remained vested in the defendant. And that estate, according to the statute, could only be granted by a deed or conveyance in writing, subscribed by him or by his lawful agent thereunto authorized by writing or by act or operation of law. (3 B. S [6th ed.], 141, § 6.) No conveyance of this estate was at any time made or executed by the defendant. And as no estoppel arose out of the transaction, it cannot be held that he divested himself of the right to this estate-by his own conduct or any act or opei’ation of láw. Por to con-■ stitute such an estoppel it is required that the party acting upon the appearance or representations should be misled by it to his or her prejudice. It is only where one party has deceived another by his representations or conduct that he can be precluded on the ground of estoppel from asserting and showing the truth. (Winegar v. Fowler, 82 N. Y., 315; Blair v. Wait, 69 id., 113.) The plaintiff has not been able to bring her case within the protection of this rule, for she did not act to her predudice in any respect upon the fact that the deed to Mrs. Parkhurst was absolute in its form. Neither did she receive her conveyance from Mrs. Parkhurst in ignorance ■of the extent of the right of the latter under the conveyance executed to her by the defendant. She advanced nothing whatever for the deed which was delivered to her, and received it, according to her own evidence given upon another trial, knowing the fact that Mrs. Parkhurst held her deed from the defendant only as a security. As against these deeds the defendant was entitled to the continued possession of the property. And the judgment, instead of being against him, should have been in his favor for a dismissal of the plaintiff’s complaint.

It should be reversed, therefore, and new trial ordered, with costs to abicle the event.

Davis, P. J.:

I think the referee did not err upon the question of practice, and it is therefore not necessary to send the case back for correction.

On the merits of the case I concur in the conclusion reached by Daniels, J. The deed was a mortgage only, but it carried all the ■rights of the mortgagee and might therefore be enforced as a mortgage to the same extent that the deed executed by defendant to his ■original grantor or mortgagee could.

There must be a new trial, with costs to abide the event.

Brady. J., dissenting as to the question of practice.

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


author: Daniels, J.;

text:
    THE HANOVER FIRE INSURANCE COMPANY, Respondent, v. THE GERMANIA FIRE INSURANCE COMPANY and JOHN E. KAHL, Appellants, and ALEXANDER STODDARD, Respondent.

      Injunction — when a mandatory clause may be ins&i'ted in a ps'elvminarry injunction — when one of the parties to a business agreement may be appointed a receiver to alose up the business, against the objections of one of his associates.

    Appeal from an order made at a Special Term, continuing an injunction and appointing the respondent Stoddard as receiver and manager of the business of an insurance agency in New York.
    The plaintiff and the Germania Insurance Company entered into -an agreement on the 24th of December, 1873, for the establishment of a general insurance agency under the management of the defend.ant Stoddard to continue for the period of ten years from the 1st of January, 1874; and they also entered into an agreement with the ■defendant Stoddard, employing him as such agent and placing the business of the agency under hi§ charge and management. The .agency established in 'this manner continued until the fall of the year 1883 without any disagreement of the parties concerned in it. But early in the fall dissatisfaction arose between the president of the Germania Insurance Company and Stoddard, which led to a refusal 'on the part of each of them to renew their agreements after the ten years specified in them should expire. Succeeding this •disagreement acts were performed on the part of each of these per■sons which were claimed by the other to be a violation of the ^obligations they had entered into. And that finally resulted in litigation at the suit of the Germania Fire Insurance Company, in which an injunction was issued restraining the other parties from violating any of the duties arising out of these obligations. For that, and because of further alleged improper acts of interference-with Stoddard in the management of the business of the agency, this action was commenced practically to secure him in the exercise of his authority and the discharge of his duties in closing the business of .the agency.
    By the last clause of the agreement entered into between the insurance companies, it was agreed in case the stipulated period should not be extended that they should through this géneral agent close up its business under the direction and management of their general agent Stoddard. This clause is in the following words r This agreement shall continue for ten years from the 1st day of January, 1884, subject to the right of either party to terminate the same at the expiration oE any calendar year on giving throe months’ notice to that effect in writing to the other; and at the end, or other sooner determination thereof, the said companies through their general agent shall make arrd state a final account to and with each other, in which shall be inserted all matters connected with said business appropriate to be inserted therein, and the business of the said agency shall be closed up under the direction and management of the general agent unless both said parties object to his so acting, and the assets and property, debts and charges, shall be divided, shared and paid equitably according to the true intent of this agreement.
    And by a preceding article contained in the agreement, it was further agreed that the general agent should be under and subject to the control, advice and suggestions of the presidents for the time-being of both insurance companies, jointly and not severally. Notwithstanding these stipulations, the president of the Germania Fire Insurance Company undertook, by his own act, to dismiss Stoddard from the business of the agency, and prevent him from continuing • in its transaction and management, and the defendant Kahl, who was selected to act as the treasurer of the business of the agency, afterwards withheld the funds which were to pay and extinguish the demands ultimately made upon it. And it was for these reasons and further apprehended interference that the action was-brought in which the order was made, from which this appeal has been taken.

      The General Term, after holding that Stoddard was entitled to close up the business, as provided in the agreement, and that it was not shown that he had been guilty of any improper .acts disqualifying him from so doing, said : “ By the terms of the injunction, the object of .which was to secure the defendant Stoddard in the exercise of the authority required for the final settlement of this business, the defendant Kahl was restrained from refusing, neglecting or omitting to pay the proportions of the companies of the losses, debts or expenses requiring to be paid in the adjustment of the affairs of the agency. This direction has been objected to as a mandatory clause which should not be inserted in the preliminary injunction. But something of this nature was required to allow the settlement of the business of the agency to proceed. That could not be done without the use of some of the funds passing into the hands of the treasurer, and if he persistently withheld them, the business itself would necessarily be brought for the time to an end, and that would violate the obligations of the agreement which these companies had entered into for the settlement of the • affairs of this agency, and it was as important that this should be prevented, as it was that the defendant'Stoddard should be secured in the exercise of his authority to close- the affairs of the agency. And some effectual direction was accordingly necessary to prevent the agreement which the parties had entered into for this purpose from being defeated. "Whether an injunction is merely restraining in its effect or mandatory, is often a subject which, cannot be clearly defined. The dividing line must necessarily, to some extent, be shadowy and intangible. That is shown by the authority of Rogers Locomotive Works v. Erie Railway Company (20 N. J., 579), where it was held that the court will not ordinarily award a mandatory injunction until the final hearing and disposition .of the action. But that the court will do by means of this process what is necessary to prevent a defendant from defeating and frustrating the rights of other parties is maintained by the authorities referred' to in this decision, and by those referred to in Hilliard on Injunctions (3d ed., 7 — 11.)
    “This subject and the authorities relating to it were elaborately considered in the opinion of Sharswood, J., appended as a note to page 7 of this work, and both from the text of the work itself and cases referred to in this opinion, it is evident that the court may extend its restraints by means of an injunction so far as that may be necessary to meet the emergencies of the particular case and prevent injustice. Possibly in this instance the injunction has gone further than the authorities will maintain it. But there certainly will be no impropriety in prohibiting the defendant Kahl, as the treasurer of this agency, from withholding the funds in his hands or under his control, in that capacity, from the payment of any proper demand arising in the course of the settlement of the business of this agency. While that would not be precisely in the form,in which the injunction has been issued, and therefore not obnoxious to any of these authorities, it would still be as effectual for all the purposes of this business. Although the objection that this injunction has been extended too far may be well made, it may be modified in this manner without reducing its efficiency. For if the defendant Kahl should while under such a restraint withhold the funds from the uses which the business requires should be made of them, he would be as much liable to punishment as he probably would be under the broad language of the present injunction, to which exception may probably be taken. The facts of this case require no further modification. For this restraint imposed by the injunction will not be obnoxious to any of the cases' which have been referred to, nor to that of Almll v. Selden (1 Barb., 316), but will be sustained by the legal principles required to be observed in the issuing of injunctions.
    “As the parties themselves had agreed that the defendant Stoddard should manage and close the affairs of this agency, it was entirely regular, so long as he had been interfered with on the part of one of them, that he should be appointed managing receiver by the court, and placed under its special control and protection. This was no more than carrying into effect the agreement the parties themselves had voluntarily made; and it was alike beneficial to both of them that this appointment should take place. It would not seem to require authority to sustain this part of the order, it was so obviously and entirely proper. But other cases similar in their controlling features have previously arisen in which the court has interposed in the same manner, and they fully justify what was directed by this portion of the order.” (Waters v. Taylor, 15 Tes., 10; Lawson
      v. Morgan, 1 Price, 303; Bindley on Partnership [3d ed.], 618;. Id. [2d ed.], 1069.)

      Luther R. Mcwsh, for the appellants.

      Grosvenor P. Lowery and G. W. Ootterill, for the respondents.
   Opinion by

Daniels, J.;

Brady, J., concurred; Davis, P. J.,.

taking no part.

-Judgment modified as directed in opinion, and affirmed as modified, with costs to abide event. '


text:
    EDWARD C. SHEEHY, Appellant, v. JOSEPH J. KELLY, Respondent.

      Additional allowance — upon what it is to he computed in an action to restrain the enforcement of a final determination in summm'y proceedings.

    Appeal from a judgment, recovered on a trial at a Special Term, and from an order directing an additional allowance of costs.
    The action was brought to restrain the execution of a final determination -in proceedings for a forcible entry into certain demised premises.
    The court at General Term said: “ But it did not result from the fact that the action was without merit that the court could lawfully make an allowance against the plaintiff, as it did, in the sum. of one thousand dollars.
    “ All that was in controversy, as the subject of the action, was a leasehold interest for the period of one year. The title of the lessor was averred not for the purpose of establishing it as an independent fact, but to maintain the validity of the demise. It was-incidentally, therefore, and not directly in controversy. It was not brought into the case as the subject of the action, but to support the lease, upon which alone the right to maintain the action-depended. The sole and only purpose was to' support the lease and under it to secure the possession and occupancy of the premises during the term for which it had been taken. The leasehold interest was therefore the subject of the action, and upon its value alone-the allowance should have been estimated if the case was deemed proper for the exercise of that authority. The value of that would' .-sustain no such, direction as was given on this subject. For it was not to exceed the sum of one hundred dollars.
    “ It may well be doubted whether any allowance whatever could regularly be made in such an action. (Grissler v. Stuyvesant, 67 Barb., 81.) But even if the action should be deemed a proper one •for an allowance, it should, in no event, have exceeded the sum of five dollars. And that was too small an amount to require the exer■cise of doubtful authority.”

      James Uenderson, for the appellant.

      John Townshend, for the respondent.
   Opinion by

Daniels, J.;

Davis, P. J., and Brady, J.,

concurred.

Judgment modified as directed in opinion, and as modified .affirmed, without costs.


text:
    PRATT MANUFACTURING COMPANY, Respondent, v. JORDAN IRON AND CHEMICAL COMPANY, Appellant.

      Pleading — a denial wgon information and belief is bad — Code of Owil Procedure, see. 500.
    Motion for a reargument.
    The appeal in this case was decided in May, 1884, the opinion of Davis, J;, being reported supra (p. 153). The defendant’s answer had been stricken out, on the ground that the denials therein contained did not conform to the requirements of section 500 of the Code of Civil Procedure. They were made upon information and belief.
    The court, at General Term said: “ The motion has been made because of the omission of the court, in its opinion, to consider section 524 of the Code of Civil Procedure, and the case of Brotherton v. Downey (21 Hun, -436). This section relates to .and prescribes the manner in which a pleading is to be verified, and is declaratory of the effect of the verification; while the controlling difficulty found by the court in the case was the form of the pleading itself, and that cannot be changed by the ■circumstance that the affidavit verifying the ' answer was not entirely consistent in its form with the answer itself. The difficulty with the pleading has already been pointed out. It contained no denial in the form in which the Code has positively provided that denials shall be made, but it alleged that upon information and belief the defendant denied each and every allegation in the complaint contained, except those stating that the plaintiff and defendant were domestic corporations. And this form of denial was not permitted by section 500 of the Code of Civil Procedure, prescribing the only forms in which denials may be made. The answer was not framed in such a manner accordingly as to create a denial, and as long as it contained no denial, the allegations of the complaint were required to be regarded as admitted. Whatever may have been the form of the affidavit verifying the answer, it could not in any way change the answer itself, and that under this section of the Code was insufficient. In Brotherton v. Downey (supra), the answer was partially framed in this form, but other denials were contained in it which were made as the Code required that to be done. The others framed a substantial issue, and it was not important therefore that those inartificially inserted should be stricken out. The particular defect existing in their statement does not seem to have received attention. It may very well have been diverted from them by reason of the circumstance that the more material averments in the complaint were properly denied, and it may have been inferred from that fact that the inartistic or unauthorized manner in which the other denials were made, was of no importance. In Swinburne v. StoekweTl (58 ITow. Pr., 312), a denial in the form of that contained in this answer was deemed to be unauthorized, and so it was by the General Term of the Third Department in Powers v. Rome, etc., Railroad Company■ (3 Hun, 285). In addition to these authorities, the statutory provision contained upon the same subject in the Code permits no such form of pleading.
    “A reargument of the motion would be of no advantage to the defendant therefore, and it should be denied, with the usual costs of motion.”

      Dill db Chandler, for the appellant.

      Charles H. Knox, for the respondent.
   Opinion by

Daniels, J.;

Davis, P. J., and Beady, J.,

concurred.

Motion denied, with ten dollars costs.


author: Per Curiam.

text:
    DANIEL T. HEDGES, Respondent, v. WILLIAM S. WILLIAMS, Appellant.

      Bmdenae — when the deposition of a witness talcen out of the State may be read although the witness be in court — the deposition cam, only be suppressed by a special motion — Code of Oivil Procedure, sec. 910.
    Appeal from a judgment in favor of the plaintiff, entered upon the report of a referee.
    The action was brought to recover the amount of a promissory-note made by the defendant.
    The court at General Term, after considering other objections, said: “The depositions of two of the witnesses who had been examined upon an. open commission out of the State were read upon the trial, although the witnesses themselves were personally present before the referee. To this the counsel for the defendant objected and moved that the depositions should be suppressed. The referee overruled the objection and denied the application to suppress the depositions and the defendant’s counsel excepted. The section of the Code now relied upon as supporting both the objection and the application does not go to that extent. It merely permits the court, on motion, to suppress the deposition of a witness for this as well as other causes. (Code, § 910.) It contemplates a special motion, on the hearing of which all the facts may be brought before, and considered by, the court. The section has not been framed in such a manner as to permit the party to proceed to the trial and then, while it is in progress, for the first time present the application as a legal point to be ruled upon in the course of the hearing. If a further examination of either of these witnesses was desirable for any reason, the defendant himself could have secured that as they were personally present during the trial; or the proceedings could have been suspended and a motion made to the court for the suppression of the depositions. The section of the-Code does not authorize their exclusion as evidence as long as they have not been suppressed. And whether they should be is a mattei resting in the discretion of the court, to which a motion for that purpose may be addressed. This section has not changed the former practice tvhen no order for the suppression of the depositions lias been obtained. And that allowed them to be used as evidence even if the personal attendance of the witness could be secured. (Phenix v. Baldwin, 14 Wend., 62.) A deposition taken out of the State differs in this respect from one taken conditionally within the State. In the latter case it cannot be read if the personal attendance of the witness can be secured, while in the former it may be read, unless for reasons satisfactorily shown it has been suppressed by an order made for that purpose.”

      Robert Sewell, for the appellant.

      M. C. Addoms, for the respondent.
   Opinion

Per Curiam.

Present — Davis, P. J,, Brady and Daniels, JJ.

Judgment affirmed.


author: Davis, P. J.;

text:
    JAMES E. BRETT, Respondent, v. GUSTAVUS A. BRETT and Others, Appellants.

      Contempt of court, by the violation of am, injunction — the expenses of the proceedings to punish the guilty party may be included in the fine — \Oode of Civil Procedure, sec. 2284.
    Appeal from an order of the Special Term, overruling exceptions to a referee’s report; confirming the report and imposing a fine for a violation of an injunction issued in this action.
    This action was commenced to set aside an alleged fraudulent agreement touching the copartnership of the several parties to the action, and to obtain a dissolution of such copartnership and an accounting. An injunction order was obtained which restrained the defendants from intermeddling with the property of the firm. This order was subsequently continued. A receiver was appointed of all the property and effects of the firm. The issues of the action were afterwards tried at Special Term, and the plaintiff recovered judgment vacating the fraudulent agreement and establishing his alleged rights in the firm and its assets, and awarding an accounting and appointing a referee to take the same. This proceeding was commenced by the receiver, in the action, of the property and assets of the firm upon allegations that the defendants had wrongfully violated the injunction by so meddling with the affairs and business of the iirm as to prejudice the rights of- the receiver. A referee was appointed to take proofs and report the same with his opinion whether the defendants had been guilty of the alleged violations of the injunction, and if so to what extent, and what injury to the receiver h?d resulted therefrom, and what punishment should be imposed for such violations, as for a contempt of court.
    The referee found and reported that the receiver by reason of the violations of the injunction by the defendant had sustained, among other damages, damages in the form of expenses in this proceeding for counsel fees to the extent of at least $500, in addition to disbursements for referee’s fees and stenographer’s fees, on the reference, and that these should be paid by the defendant in addition to the liquidated damages ascertainable from the evidence.
    The court at General Term, after holding that the other items of damages, found by the referee to have been occasioned by the violation of the injunction, were properly included in the'fine, said: “ The other principally litigated question is as to the award by the court of the sum incurred by the receiver, as expenses in prosecuting these proceedings, for his counsel or attorney’s fees. The amount of that expense was proved before the referee, and by him found and reported to be the sum of five hundred dollars.
    “ The court on such proof and report adjudged that to be a part of the expenses of the receiver proper to be included in the fine imposed. This we think was correct. The five hundred dollars is not awarded as an e additional allowance,’ but as an actual and necessary expenditure. It is not claimed by the appellants’ counsel, as we understand, that the sum is greater than was actually earned, or more than a reasonable compensation for services actually rendered. The objection is put altogether upon the ground that the Code does not permit, as the Court of Appeals have distinctly held, the granting of additional allowances in this kind of proceedings. Such an allowance would be, if granted in addition to the actual expenses. The coui’t below attempted to do nothing of that kind.
    “ The Revised Statutes provided that a fine should be imposed in such cases £ sufficient to indemnify the injured party for the loss and injury produced by the misconduct, and sufficient to satisfy costs and expenses.’

      . “ Under this provision it was held that expenses actually incurred for counsel in such cases were properly included in the fine. (People v. Compton, 1 Duer, 512; S. C., on appeal, 5 Seld., 263; and see Dams v. Sturtevant, '4 Duer, 148; Van Valkenburgh v. Doolittle, 4 Abb. N. C., 72; The People ex rel. Garbutt v. Railroad Co., 76 N. Y., 294.) The provision of the Code of Civil Procedure is to the same effect. (Code, § 2284.)

      “ These expenses steer quite clear of the section of the Code giving power in certain cases to make an additional allowance, and are therefore not obnoxious to the condemnation of the cases cited by the appellant’s counsel, as we think.” (See People ex rel. Woolf v. Jacobs, 5 Hun, 428; Power v. Athens, 19 id., 171; People ex rel. Seudder v. Cooper, 20 id., 488; Sudlow v. Knox, 7 Abb. [N. S.], 419, per Grover, J.)

      Goodrich, Ready <& Pratt, for the appellants.

      L. Laflvn Kellogg, for the respondent.
   Opinion by

Davis, P. J.;

Daniels, J.,

concurred.

Present — Davis, P. J., and Daniels, J.

Order affirmed, with ten dollars costs, and disbursements.


author: Davis, P.; J.

text:
    GEORGE F. VICTOR and Others, Respondents, v. MOSES HENLIEN and Others, Appellants. WILLIAM E. ISELIN and Others, Respondents, v. THE SAME, Appellants. EMIL OELBEMAN and Others, Respondents, v. THE SAME, Appellants.
    Attachment— when issued beccmse of fraudulent statements made by a vendee to induce a sale — statements of the vendee made to a mercantile agency — when the retention of money for family expenses prior to the making of a general assignment will not authoi'ize the issuing of cm attachment.

    Appeals from orders made at Special Term denying motions to vacate attachments.

      .The affidavits in these several cases were all of the same kind, changes of names and amounts being made.
    The General Term, after holding that the debts were not by the terms of the sales due when the actions were commenced, said: “The second ground is that the debts for the goods sold were presently due because the sales were procured by fraudulent representations. No such fraudulent representations are claimed to have been made to the plaintiffs at the time of the purchases to induce the sales, but it is claimed that misrepresentations were made to mercantile agencies, who furnished the same to the several plaintiffs, and they acted in dealing with defendants on the credit of such statements. The defendants appear to have been for a long time in-business with an established credit. The mercantile agencies from time to time had entered on their books what are said to have been statements substantially made by the defendants as to their capital stock on hand and condition generally. And these statements were furnished by the agencies to the plaintiffs as their customers. The affidavits on the part of the defendants show or tend to show that the alleged statements were not made, as reported, by the agencies, but. that portions of them as made were materially different from the mercantile reports. On -looking through the affidavits it is quite apparent that this ground for claiming the maturity of the debts is an afterthought, not relied upon on the first motion, but growing out of an intimation in the opinion of the court granting the motions, to the effect that fraud in contracting the debts might be shown upon the trial to establish that they were due when the suits were brought. ' We are not satisfied by the affidavits that any such alleged fraud was committed. To accomplish the purpose in view the plaintiffs should be held to show in substance that the goods were obtained on credit by false pretenses, otherwise every merchant who buys a bill of goods is at the mercy of the mercantile agencies and liable to immediate suit, arrest and imprisonment for discrepancies which appear between the agency reports and his real condition. Where the only representations made are those furnished to sellers by the agencies, it must be clearly shown that the accused buyer made the statements to the agency with fraudulent intent to use such agency as an instrument in accomplishing a fraud upon his vendor or some other dealer. In this case that fact is not so clearly disclosed as to justify us in saying that a fraud was perpetrated through the medium of the agency of a character sufficient to justify proceedings therefor, either criminal or civil.

      “ The question whether the evidence shows a fraudulent disposition of the property of the defendants sufficient to justify an attachment is a secondary one. The defendants made an assignment for the benefit of their creditors. Within a few weeks before retaking the assignment they, in contemplation of it, paid off a considerable indebtedness owing to a former partner who had some years previously retired from the firm, leaving his liquidated capital and profits in the business, as a loan to the new firm, subject to call. The payment of such a debt, if actual and honest, would he no fraud per se. It in that case would be as much a debt of the firm as any other for borrowed money, and being due presently could be either paid or preferred, if genuine, at the option of the debtors. The defendants also, in contemplation of the assignment and within a few preceding weeks, drew out respectively from the firm certain sums of money to meet their small individual debts then owing for expenses of living already accrued, and to provide funds for the support of their families for a few months, till they could settle their affairs and resume business in some form. Whether this transaction would avoid the assignment when assailed by creditors is one question. Whether it is such an actual fraudulent disposition of property as entitles creditors to proceed by attachment or warrant of arrest is quite another. The latter question would depend largely upon the intent or good faith of the debtor — whether he acted upon advice or a belief of legal right to make such withdrawal to meet the exigencies of his family, with no intent to defraud creditors, or with design to conceal property for the purpose of defrauding them. In this case the defendants stated frankly and fully to the creditors what they had done, and seem to have concealed nothing in that regard. The act was a mistake as to these rights, and doubtless an illegal one; but, as shown by the affidavits in this case, we think it was not such a fraudulent disposition of property as entitles a simple creditor to attachment under the provision of the Code.”

      Bhimenstiel & Kirsch, for the appellants.

      James Dwrme, for the respondents.
   Opinion by

Davis, P.; J.

Brady and Daniels, JJ.,

concurred.

Order reversed, with ten dollars costs and disbursements, and motions to vacate granted, with ten dollars costs of one motion.


author: Bradley, J.:

text:
    In the Matter of the Assignment by DE WITT C. HOOVER to GEORGE H. HOOVER for the Benefit of Creditors.

      Statute of frauds — when an aooeptanee must he shown, though the goods wrn'e in the possession of the vendee at the time of the agreement to sell.

    Upon the accounting of an assignee he was allowed to apply as a payment on a note for $200 held by one of the creditors the price of a horse, wagon and harness alleged to have been sold to the creditor by the assignee. Subsequent to the making of the assignment this property had been placed in the creditor’s' hands, and he had been authorized to sell it and apply the proceeds upon the note. In April, 1881, the creditor and the assignee agreed verbally that the-former should take the property which was in his hands in satisfaction of the note. The wagon had been sold in the previous September for seventy-five dollars, and the horse was thereafter sold in July for $140.

      Held, that the assignee could not enforce the agreement to take the property in satisfaction of the note as it was void under the statute of frauds, no act an the part of the creditor which could be treated as an acceptance of the property having been shown.
    Appeal by Jeremiah C. Lamphier, a creditor of the assignor, from, the decree of the county judge of Erie county, discharging the assignee.
    On the 20th of August, 1879, De Witt O. Hoover made an assignment to George H. Hoover, and one Getz, for the benefit of his creditors. Getz afterwards died and the survivor became sole assignee. In the course of the subsequent proceedings the-county judge made an order stating tbe amount of money in tbe hands of the assignee to be applied to the payment of debts, and directing payment thereof to the creditors entitled to it, according to their pro rata shares, and specifying the amounts to be paid to them respectively. The amount thus specified for the appellant was $281.28. Afterwards the assignee made his report to the County Court that he had executed that order by paying to the creditors the amounts so directed to be paid; that the amount to which the appellant was entitled was paid by the sale to him some time previously of a horse, wagon and harness, in satisfaction of his note of $200, and by the tender to him of the amount due on another note of $100, and on his refusal to accept, such latter amount that the assignee had deposited the same with the county treasurer to the credit of the appellant, and taken the treasurer’s .receipt, as directed by the order, and had so advised the appellant. Thereupon the latter presented an affidavit stating reasons why he should be heard in the matter, and denying any satisfaction of his $200 note, as claimed by the assignee. And the County Court directed that the matter in question be tried before the court. Trial was had, and resulted in a decree discharging the assignee, from which this appeal is taken.

      J£. B. Yedder, for 4. C. Lamphier, creditor, appellant.

      Norris Morey, for the assignee, respondent.
   Bradley, J.:

The appellant held a note of $200 made by the assignor, and .another note of $100, made by him, and indorsed by George H. Hoover, who afterward became such assignee.

In September, 1879, the assignor placed in possession of the appellant a horse, wagon and harness, to dispose of and apply the proceeds in payment of those notes, and the latter received them for that purpose. This was done with the consent of the mother-in-law of the assignor, who owned that property. And he informed the assignee of this transaction with the appellant. .About the first •of August, 1880, the appellant offered to the assignor, to give up to him and satisfy the $200 note for the property, who said he was willing, if the assignee was, to do it, but the attention of the latter was not called to tbe offer. The assignee testified to a conversation had between him and the appellant in April, 1881, which fairly-construed was in terms an offer on the part of the latter to take the property in satisfaction of the §200 note, and an acceptance by the assignee of the offer, which was distinctly contradicted by the testimony of the appellant. The County Court decided that the offer was so made and accepted, and we treat that finding so made as the fact.

Then follows the contention of the appellant’s counsel that the agreement, not being in writing and. no delivery or acceptance of the property pursuant to it having been made, was within the statute of frauds and ineffectual to vest any right in either party under it. At that time the appellant had the horse and harness in his possession. He had sold the wagon in September before for seventy-five dollars; and in July, 1881, he sold the horse for $140. This trial was had in December, 1881, and the County Court held that the oral agreement was, and became effectual to vest the title to the property in the appellant, because he then had it in his possession ; that such possession thereafter must be deemed to be, and the subsequent sale of the horse to have been made by him as owner, and therefore be treated as an acceptance under that agreement of sale. It was upon this ground that the court declared 'that the note was paid and made the decree in question.

It is difficult to see how that position of the court below can be supported. The purpose of the statute was to require something more than mere words to make a contract within it valid, when not evidenced by writing. Here no act whatever appears of delivery, receipt or acceptance. The fact that the property was in the possession of the appellant may have obviated the necessity of any act of delivery on the part of the assignee, further than a recognition and assent by him of an act of acceptance by the appellant under the agreement. But some act on the part of the latter which may be construed as an unqualified acceptance was essential to constitute a sale and purchase. That may be evidenced by an act inconsistent with any other relation than that of owner of the property, such as a pledge (or sale of it, or retaining and using the property after its receipt by the buyer. There must, however, be both a receipt and acceptance by him to be effectual to vest the title, and that must be manifested by some act as distinguished from, and in addition to the words of the parties constituting the agreement. (Caulkins v. Hellman, 47 N. Y., 449; 7 Am. R., 461; Stone v. Browning, 51 N. Y., 211; Cooke v. Millard, 65 id., 352; 22 Am. R., 619 and cases there cited; Allard v. Greasert, 61 N. Y., 1 [distinguishing Cross v. O' Donnell, 44 id., 661]; Hewes v. Jordan, 39 Md., 472; 17 Am. R., 578.)

The receipt of property is not necessarily an acceptance; they are or may be distinct and different acts of the buyer. While the-acceptance includes the receipt, the latter does not include the former, but may be evidence of acceptance if the circumstances under which the property is received permit. (Remick v. Sandford, 120 Mass., 309; Heermance v. Taylor, 14 Hun, 149; Hewes v. Jordan, 39 Md., 582; Curtis v. Pugh, 10 Ad. & Ellis [N. S.], 111; Ham v. Van Orden, 4 Hun. 709; and cases before cited.)

At the time this agreement was made the appellant had possession of the property as bailee, with full power to sell it and apply the proceeds on his claim, and that relation and right existed at the-time of the sale of the horse, and were necessarily not affected by the agreement in question. There is nothing appearing in the record which characterized any act of his in respect to the property as that of owner, as distinguished from that as such bailee. The agreement itself did not change his relation to the property or the character of his possession. Simply saying that what he did with the property came within his power and authority as bailee of it, which is all that can be said, does not permit the conclusion that he has by any act' accepted the property under the oral agreement of sale. That agreement therefore is not supported by any act, but rests wholly on the force of the words used by the parties to express it. And by giving effect to it as a sale and purchase of the property, not only the language of the statute, but the beneficial purpose and policy of it are defeated. (Shindler v. Houston, 1 N. Y., 261.) The assignee, having the burden, failed to show title to the property in the appellant under the agreement in question, or that the $200 note was paid. The analogy between the delivery and possession of property requisite to constitute a pledge, and the delivery and acceptance required to effectuate a sale within the purpose of the statute of frauds is not such as to permit the rule which may be applied in the former to necessarily govern in the latter. The reasoning of the court in Markham v. Jaudon (41 N. Y., 241, 242), in respect to a pledge has no material application to this case. The question of application of the proceeds of the property on the note, is not here for consideration. The assignee, so far as appears, has acted in good faith in his effort to close the trust.

The decree of the County Court appealed from should be reversed.

Smith, P. J., Barker and Hai&ht, JJ., concurred.

Adjudication reversed, and a rehearing before tbe County Court of Erie county ordered; costs of tbis appeal payable out of tbe fund in tbe bands of tbe assignee, to abide tbe event.