author: Hatch, J.

text:
    Otto G. Spann et al., Pl’ffs, v. Erie Boatman’s Transportation Company, Def’t.

      (Buffalo Superior Court, Trial Term,

      Filed March, 1895.)

    1. Carriers — Duty of.
    A carrier, which undertakes to carry goods by a canal boat shortly before the expected period of freezing, must make a special effort to perform his contract.
    3. Damages — Carriers.
    The measure of damages where a carrier, by failure to use due diligence, is able to transport the goods only part of the way, is the difference in the contract price and the increased cost of transportation in order to procure the delivery of the properly at its destination, and such further increased expense as was necessarily incurred as a consequence of the delay, without any pro rata allowance for the partial carriage.
    Action to recover damages for breach of contract.

      Charles B. Wheeler and Moses Shire, for pl’ffs; Benjamin H. Williams, for def’t.
   Hatch, J.

We have but little difficulty with the rules of law case, after a careful analysis of the evidence given upon the trial. Defendant, in the performance of its contract, is held to the exercise bi reasonable diligence, must use ordinary forecast in anticipating an obstruction, and due diligence in overcoming it when it arises, and, as soon as the obstruction ceases to operate, it must exercise diligence in the fulfillment of its contract. Bowman v. Teall, 23 Wc..d. 306; Parsons v. Hardy, 14 id. 216; Geismer v. Railway Co., 102 N. Y. 570. A freezing of the canal is such an act of intervention of the vis major as will excuse performance until the obstruction be removed. So, too, the existence of conditions produced without the fault of the carrier, and attributable to accident or misfortune, excuses delay in transportation; and, if such conditions arise as to render further progress so difficult and dangerous that a person exercising ordinary care, prudence, and forecast would deem it unsafe, then the carrier will be exonerated from failure to proceed, and can justify his act in selecting a place of safety and remaining there. But in each of these cases he must justify his delay by proof of conditions which bring him within the projection of the rule invoked, and upon him rests the burden of establishing the sufficiency of his excuse. Read v. Spaulding, 30 N. Y. 642 ; Bostwiclc v. Railroad Co., 45 id. 717.

Upon the application of these rules this case is to be determined. So far as there was delay in obtaining a load for the boats before the 29th of November it may be dismissed, except in so far as it furnished a sufficient excuse, and showed necessity for going upon the dry dock at Lockport. And it may be considered unfortunate, for, had there not been this delay of nine hours, defend- and would doubtless have seen its way clear for proceeding. But the fact cannot be considered as controlling, for defendant chose, notwithstanding the delay, to accept the cargo and enter upon its transportation. It is quite clear that, when the charter was made, both parties contemplated that it might be difficult of performance, and, considering the lateness of the season and the condition of the weather, it was clear to both that ice was likely to be met with, so the bills of lading provided with the respect to the obligations of each should the vessel be frozen in. The parties, therefore, had before them these contingencies, and contracted with respect thereto. This condition imposed upon defendant the obligation of a sturdy attempt to overcome such obstacles and fulfill the contract, and mere difficulty of performance from such cause cannot excuse him, for it was these difficulties that he expected to meet, and was also expected to overcome. Diligence, therefore, as applied to these facts, must be measured by what the parties clearly understood when the contract was made. Notwithstanding the expressed opinion of Capt. McCormick, supported by a large number of witnesses, that he could not have reached the Hudson river within the-time left him after, reaching Rochester before the canal closed, we have reached the conclusion that its accomplishment was not of extreme difficulty, and might have been achieved without extraordinary effort, but by ordinary diligence. It is demonstrated as a fact that the canal was quite easily naviable east of Rochester when defendant tied up its boats, for at that time or shortly thereafter two boats passed by defendant which had come from thts east, while the two boats which followed defendant continued on without stopping. These boats, although propelled by horses, found little or no difficulty in making their respective ports. Knapp, who ran the first of these boats, says that, he continued on, found some ice between Eochester and Fairport, a distance of fifteen miles, and was bothered some with it, but after that encountered none that amounted to anything; he was in motion all the time, except to change horses; that on Wednesday morning it began to thaw. McGrraw, .who ran the other boat, states that, he left Eochester, he found no more obstruction than in summer; that there was a little ice for seven or eight miles east, but that it did not obstruct him any. He further states that on Sunday it was cold and stormy, and made ice. On Monday it continued cold. On Tuesday it was warm and the sun shoné. Wednesday was warmer still, and where he was the ice had all disappeared from the canál. He is corroborated by the testimony of his son, who was on the boat.

So far as the fact of navigation is concerned this testimony is without dispute. • Upon the subject of temperature it is contradicted by a large number of witnesses. But in this respect it receives certain corroboration from the weather reports, which must be accepted as the fact. These show that on Sunday, the 29th, it was 10 degrees above zero about daylight at Buffalo, and rose to 20 about two o’clock in the afternoon, dropping to 14 degrees during the night and morning of the 30th, and rising to 34 degrees at eight in the morning. On the 1st of December, at eight in the evening, it was 42 degrees above at Buffalo, 34 degrees at Oswego, and between those two points at Eochester. On the 2d it was 44 at Buffalo and Oswego at eight p. m. The 3d it was 54 degrees at Buffalo, 46 at Oswego, and 42 degrees at Albany. The 5th : Buffalo, 38 degrees; Oswego, 36; Albany, 40 degrees. The 6th : Buffalo, 34 degrees; Albany, 50 degrees. It thus conclusively appears that from eight p. m. of November 30th, up to the 6th day of December the temperature was above freezing, and no ice could form. It is idle to urge the acceptance of recollection of witnesses that ice formed during this period when the certain record shows that such could not be the case. We thus have the fact that, when McCormick tied up his boats at Eochester, the temperature was between 42 and 34 degrees, boats were in fact running both east and west, and that with but slight obstruction. From Eochester to the Hudson river is 252 miles. The rate of speed necessary to have reached the river by midnight of the 5th of December was only 2-J- miles an hour, and when extended until two o’clock of the next day, when the last boat in fact passed out, reduces the rate to 2.19 miles an hour. According to McCormick’s testimony, his running time between Tonawanda and Loelcport, including passing the locks and reaching the dry dock, was 2.1 miles an hour. A slight increase in speed over this rate would have carried him to the river by midmight of the 5th, and by including the extended time at two o’clock of the next day, it did not require so fast a rate. But he made better time between Lock-port and Brockport, as he covered this distance at the rate of 2.2 miles an hour, although he encountered ice all the way, and quite heavy from. Medina, and he assures us that at this time he was running very slow. His actual running time between Tonawanda and Bochester, deducting the delay at Lockport, according to his testimony, was 2.07 miles an hour, although he passed through ice two inches thick the last part of the distance, and reduced his running time to 1.3 miles an hour. He also states that this boat, with this tow, would run nearly a third faster without obstructions than a horse boat, and the latter rates at about two miles an hour; while Hall, who built the boat, that she could “run perhaps a third faster, or it might be fifty per cent, faster.”1' It also appears that a very serious drawback to fast time is delay at the locks. ■ But here , was presented for his tow at all this time a practically free canal, and while much testimony was given about delays on account of ice incumbering locks, it simply clouds the issue, for it is an established fact that, at the outside, fifteen miles east of Bochester no ice remained to obstruct either canal qr locks. A like observation may be made concerning the large volume of testimony respecting ice at Montezuma. The ice there was encountered at the same time it was encountered by McCormick west of Bochester. But this ice melted away, and, had defendant gone on without stop at Bochester, there was no substantial obstacle in his way; and, measuring the distance by ordinary rates of speed and the rate of speed the tow in fact made against obstacles, we can find no reason for holding that defendant could not have made the river by the close of navigation, but can say with much certainty • that he could have reached the last seven mile level by the time the last boat passed through ; and this, by long custom, known to defendant, would have insured his passage into the river. The fact, however, that he could, by the exercise of diligence, have reached the river, does not conclusively establish that he was not justified in remaining at Bochester; for if the conditions which then confronted him were of such a character that an ordinarily careful and prudent person, under the same obligations, would have deemed it unwise, unsafe, and hazardous to proceed, then defendant must be held excused for so determining. The conditions upon which he bases his excuse are these: That the ice has formed heavy and thick west of Bochester, which caused him to greatly reduce his speed, accept assistance from the ice breaker, and raised grave doubt in his mind of his ability to reach Bochester; that his boat was severely cut by the ice already encountered; that he could only run at the risk of sinking, as the oakum had been torn from the seams; that he inquired of the boat running west as to the condition of the canal east, and was informed that it was bad; that he also made inquiry of the division superintendent, and was informed by him that ice had formed east of Bochester, and that it was unsafe for him to proceed ; that he was advised by several persons that it was unsafe to proceed, and that he could not make the river by the time the canal closed ; that he telegraphed the superintendent of canals, and received from him a telegram that canals would close on the 5th of December at midnight, unless sooner closed by the elements. All of these conditions find support in the testimony given by McCormick and by numerous other witnesses, and, the large majority of canal-men called expressed the opinion that stopping at Rochester was the most prudent thing to do, considering all the circumstances. We are now to see whether this claim can be sustained in the light of what certain established facts show.

We have already seen that due diligence would have accomplished the performance of the contract. Ought he to have exercised it? It appeared upon the trial that the most difficult place in the canal for ice obstruction was immediately west of Rochester. This was due to the "large body of still water through which it ran. This McCormick knew, and consequently knew that, when be reached Rochester, he had passed his most perilous point, so far as heavy ice was concerned. Had the temperature remained the same as on Sunday and Monday, but little doubt would remain but that it was wise to stop. But the temperature had risen, and, at the time he tied up the boats, it stood at Rochester between forty-two and thirty-four degrees. At this time there had been sent by the weather bureau a forecast of the weather, which stated that it would continue fair, with warm southerly winds, and this was published in the public journals. This condition of the temperature must lead to a rejection of McCormick’s statement and that of other witnesses that ice formed very fast Tuesday night, for we know that ice could not form in a temperature above thirty-four degrees. McCormick made no effort to'find out what the condition of the canal was east prior to the time he tied up. He simply acted upon the determination, which he said he already formed before he reached Rochester, of stopping there. After he had stopped, he made an inquiry of the boat which came from the east, and was informed that conditions were bad. This undoubtedly was true in a measure, for it was a late and bad time of year. But he knew from this circumstance that this boat had made a channel, and the temperature was such that no ice could form and that he could go ahead. He concluded, however, to wait, remained on his boat, and prosecuted no further inquiries to determine what he ought to do. The next morning he learned from the papers that it would be warmer, telegraphed the superintendent of the canals asking when the canal would close, and made an inquiry of the division superintendent about the canal east. This superintendent’s division was Ho. 9, extending twenty miles west of Rochester; consequently as to that portion of the canal McCormick knew as much as he. But it did appear that he lived at Rairport, and had come up from there on this morning, and here-ported the canal then was frozen over. In this respect his testimony is at variance with the weather report, the state of the temperature at this time, and the testimony of McGfraw. There were other sources of information open to McCormick which should readily have suggested themselves. He knew at this time that Knapp and McGraw had gone forward ; that, prior to their going, boats-had come from the east; and that there must be a channel open. There were several towns and telegraph stations along the route. This admitted of communication with them, and would have opened up information that they were proceeding with but little, if any, trouble, or communication with lock tenders or superintendent’s of the respective divisions would have produced like results. He knew that the weather report predicted warm weather ; that it was then quite warm for that time of year; and that what ice existed was melting. His obligation commanded him to move forward as soon as the obstruction ceased to operate. This he did not do, and consequently failed in a plain duty. It is stated that his boat was badly cut by ice, and that it was dangerous for him to go forward. There is much conflict in the- evidence respecting how badly the boat was cut. His fo'rward boat was not cut at all. The steamer was cut, according to McCormick and other witnesses, from two to two and a-half inches in depth > by others, less. - That she was cut sufficiently to cause some apprehension is clear, and had the weather continued cold, and ice formed, could be here pleaded as an excuse. Neither of the boats was leaking, and it had not been found necessary to repair the steamer on account of the cutting up to the time of this trial. Due diligence upon the part of McCormick, coupled with the fact that he had already passed the worst portion, would have informed him that there existed no ice, either thick or thin, to further damage the boat.

It is suggested that at Rochester was a good bottom, and an elevator where the cargo could be unloaded to the best advantage. But the same thing is true of several other places east. It does.not furnishing a controlling or mitigating circumstance in view of the other conditions. If we could see that it was proper for defendant to stop on Tuesday night, the conditions existing at an early hour of Wednesday morning showed necessity for further progress in the fulfillment of the contract, and he then had time for performance. McCormick could have known, by the exercise of diligence, the actual condition of the canal not later than ten o’clock of Wednesday. He then had left eighty-six hours to reach the river at midnight of the 5th. This would have made a running time of 2.86 miles an hour. By adding fourteen hours, the time when the last boat passed through, it would have reduced hia time to 2.52 miles an hour. Either of these rates of speed was clearly within the capacity of the boat, upon defendant’s showing. Starting at this time, he had before him a free canal, and could proceed without any delay at locks ; and, according to the custom of the canal, in entering upon the last level the boat would be let out, still further adding to the certainty of getting through. We are therefore convinced that defendant has not made a case showing the use of that diligence which it contracted to exercise, and is therefore liable for the damages sustained. The damage is measured by the difference in the contract price and increased cost of transportation in order to procure the delivery of the property at its destination, Ogden v. Marshall, 8 N. Y. 340; Briggs v. Railroad Co., 28 Barb. 515; 3 Suth. Dam. 213, and for such further increased expense as was necessarily incurred as a consequence of the delay. Farwel v. Davis, 66 Barb. 73 ; 3 Suth. Dam. 226. It also became the right of plaintiffs, under these circumstances, to retake possession of the grain, and forward the same to its destination. Laurent v. Vaughn, 30 Vt. 90.

As the fulfillment of the con tract determined the right of defendant to demand freight money, so its negligence in delaying the prosecution of the voyage defeated its right thereto, in consequence of which it had no right to demand, as a condition of delivery of the grain, pro rata freight money for the distance carried. Plaintiffs having been compelled to pay as a condition of recovering possession of their property, are entitled to recover it back, as money paid under compulsion. Scholey v. Mumford, 60 N. Y. 501; Harmony v. Bingham, 32 id. 99. Judgment is therefore ordered in favor of plaintiffs, in accordance with this opinion.

Judgment for plaintiffs.


source: Caselaw Access Project

author: Abbott, S.

license: Public Domain

text:
    In the Matter of the Accounting of the Trustees of Edmund W. Corlies, Deceased.

      (Surrogate’s Court, Kings County,

      Filed March, 1895.)

    Will — Porras of alienation.
    The provisions oí a will, which provide for suspension of absolute ownership of personal property and the power of alienation of real property, are valid to the extent of at least two successive lives in being at the date of the death of the testator, though he has attempted to accomplish a further suspension or to make any other unlawful disposition of the remainder.
    Accounting by the trustees under a will.
    Butler, Stillman & Hubbard, for trustees; Thomas B. Hewitt, for Mary A. Corlies; James McKeen, for special guardian.
   Abbott, S.

Edmund W. Corlies died on the 5th day of February, 1890. He left, him surviving, his widow and five children, three sons and two daughters. He left a last will and testament. By the fourth paragraph of his will he bequeathed to his executors $100,000, in trust, to collect the income thereof, and pay the same to his widow during her life. Hpon her death this fund of $100,000 was to become a part of the testator’s residuary estate. The testator disposed of his residuary estate as follows:

“Sixth. I give, devise, and bequeath all the rest, residue, and remainder of my estate to my executors, or to such of them as' may qualify and take upon themselves the execution of this will, in trust, to divide my said residuary estate into as many equal parts or shares as I may leave children surviving me, one share to represent each child, and to securely invest the principal of every such share, in trust for the benefit of the child whom it represents, and to collect and receive the income arising therefrom, and to apply the said income as fast as received to the use of the child whom it represents, if a minor, during the minority of such child, so far as may be necessary, and any excess of income not required for such purpose shall be added to the principal of such share during the minority of such child. In the case of a child who has attained the age of twenty-one years before my death, or when any child attains the age of twenty-one years, the entire income of the share of such child shall thereafter be paid to him or her as it is received during his or her natural life. I further authorize and empower my said executors, in their discretion, and of their survivors or survivor or successor, to advance to any one of my sons after he shall have attained his majority, upon his written request, and at any time, the whole or any part of the share in the principal of my estate representing such son. Such discretion shall be exercised by my said executors in view of all the circumstances-which, in their judgment and experience, ought to be considered, it being my intention to repose such discretion in my said executors as shall give my said sons the benefit of their judgment, whether, all things considered, it is best to retain the whole or some portion of their respective shares in trust, or to place the' same in their absolute control. I further authorize and empower my said executors, in the exercise of a like discretion as above, to advance to any one of my daughters, being of full age, upon her written request, out of the share representing such daughter, a sum or sums not exceeding in all twenty-five thousand dollars. And in every case the receipt of any son or daughter for the sum so advanced shall be a full and complete discharge of my executors-in respect thereto. And, on the death of my said wife, the principal sum of one hundred thousand dollars, constituting the trust, fund for her benefit, as directed in the preceding fourth article of this article of this will, shall be equally, divided into as many parts as I shall leave children at my death, and be added to the shares of said children respectively, and disposed of in like manner as hereinbefore divided in respect to the several trusts created for the benefit of my said children.
“ Seventh. In case of the death of any child of mine leaving lawful issue, such issue shall stand in the place of and represent their deceased parent, and take the share representing such parent remaining in the hands of my executors and trustees, with all accumulations and income thereon in equal proportionate parts; and, in default of issue, the share remaining in the hands of my executors and trustees of any child so dying, shall fall into and become a part of my residuary estate.” , .

One of the testator’s sons, Thomas Corlies, has died without leaving any issue surviving him. He was more than twenty-one years of age at the time of his decease. The trustees of the last will and testament liad not made any advances to him out of the capital of the estate, in the exercise of the discretion vested in them by the sixth paragraph of the will. The trustees now seek the instruction of this court, in their accounting proceeding, as to the disposition which shall be made by them of the one-fifth share of the residuary estate set apart by them for the benefit of testator’s deceased son Thomas.

I am of the opinion that the issues involved in this proceeding do not call for a general construction of all the provisions of the will and the present determination of the ultimate disposition which shall be made by the trustees of the respective trust funds in their hands. In I the of the rogate to make such general construction at this time. I do not understand that the validity of the provisions of the will is questioned by any of the parties to this proceeding, in so far as such provisions relate to the original trust fund set apart for the benefit of the widow and children, respectively, during their respective lives, or that there is any claim of right to an immediate and final distribution of any of the trust funds among the testator’s widow and next of kin, except that set apart for the benefit of testator’s deceased son, Thomas. Even if such claim be made, it is utterly untenable. Purdy v. Hayt, 92 N. Y. 447; Tiers v. Tiers, 98 id. 568. While these decisions both relate to real property, the principle there laid down should be extended by analogy to dispositions of personal property. In fact, the principal was recognized as applicable to personal property in Knox v. Jones, 47 N. Y. 389, 398. See, also, Henderson v. Henderson, 113 id. 1-15; 21 St. Rep. 800.

We are thus brought at once to the consideration of that portion of the will which provides for the disposition of the share of the residuary estate of a child who dies without issue : “ In default of issue, the share remaining in the hands of my executors and trustees of any child so dying shall fall into and become a part of my residuary estate.” The “ share ” here referred to is the original share set apart, less any sums which may have been advanced in pursuance of the discretion granted to the trustees by the sixth paragraph of the will. It may also include any income accumulated thereon during the minority of the child representing such share. Vanderpoel v. Leow, 112 N. Y. 167 ; 20 St. Rep. 654. Referring, again, to that portion of the will which makes disposition of the residuary estate, we find that the residue is given to the trustees in trust to divide into sh ares, collect and receive income, and pay over the same to adult children, and apply to support and maintenance of minor children during their respective lives. Therefore, upon the decease of Thomas without issue, the share of the residuary estate set apart for his benefit again fell into the residuary estate, to be disposed of as provided in the will. It passed again to the trustees, in trust, “ to divide * * * into as many equal parts or shares ' as I may leave children,” etc. An utterly absurd construction of these provisions of this will must not be adopted, although in accord with its literal and exact language. Such an absurdity would be involved in the subdivision of Thomas’ share into five parts, the number of testator’s children surviving him. The evident intention of the testator was to provide for his children and their issue to the extent of the full amount of his residuary estate, and, in the event which has happened in the case of Thomas, that testator’s children and their issue should still enjoy the entire residue. So long as such evident intention is lawful, and does not violate any provisions of the statutes of this state, it must be carried out by the trustees. To the extent of at least two successive lives in being at the date of the death of the testator, the provisions of his will which provide for a suspension of absolute ownership of personal property and the power of alienation of real property are valid, whetlier or not tne testator lias attempted to accomplish a further suspension or to make any other unlawful disposition of the remainder. Purdy v. Hayt, supra; Tiers v. Tiers, supra; Henderson v. Henderson, supra.

Applying the test of lives in being at the testator’s death to the effect of the subdivision of Thomas’ share, we find that the suspension as to the entire share of Thomas has already extended through Thomas’ life. That share is now to be subdivided into four parts, and the suspension as to such subshare may continue during the life of the person for whose benefit it shall be set apart, without doing violence to the statute against perpetuities. In the event of the death of a second child of the testator without leaving issue, it will become necessary to determine the ultimate and final ownership of the accretion to his share from the share of Thomas. As to such subshare, the limit of two lives .will then have been reached, and a final distribution thereof in absolute ownership must be made. But, until such contingency happens, it is unnecessary to decide this question.

I am of the opinion that, upon this accounting, it is the duty of the trustees to subdivide the one-fifth share of Thomas into four equal parts, and to hold one such equal part or subshare for the benefit of each of the surviving children of the testator, upon the same trusts and for the same purposes specified in the sixth paragraph of testator’s last will and testament.

I can see no objection to a statement in the decree that the same is made without prejudice to any rights of the widow, Mrs. Corlies, under chapter 452 of the Laws of 1893.

Decreed accordingly.


author: Daly, C. J.

text:
    Charles E. Orvis, Resp’t, v. William H. Curtiss, App’lt.

      (New York Common Pleas, General Term,

      Filed May 6, 1895.)

    1. Appeal — First instance.
    Where a defense in an action in the district court, though not pleaded on the return day, is pleaded at the trial and proof taken thereof without objection, the respondent cannot be heard to object for the first time upon appeal that the defense was not pleaded.
    3. Usury — What is.
    An agreement to furnish the capital to carry on business in consideration of an equal share of the profits and of a certain per cent in excess of the legal rate of interest, with guaranty against loss, is usurious.
    3. Same — Mote.
    A note, founded upon a usurious agreement, or in pursuance of a compromise thereof, is void.
    Appeal from a judgment in favor of plaintiff.
    The action was brought to recover six months’ interest, due July 3, 1893, upon the following promissory note:
    “ §4,000. New York, Jan. 3, 1893.
    “ Three years after date I promise to pay to the order of Chas. E. Or vis four thousand dollars, at Orvis Bros. & Co., interest to be paid semi-annually, at rate of five per cent, per annum. Value received. W. H. Curtiss.”

      The above note was given in settlement of a claim made by the plaintiff under a guaranty of $5,000 net profits mentioned in the sixth clause of the following agreement:
    “Yew York, January 3rd, 1887.

    “The following agreement is hereby made this 3d day of January, 1887, between William H. Curtiss and Charles E. Orvis, for the purpose of purchasing and carrying five hundred shares of the stock of the American Cotton Oil Trust, viz.: First. A joint account shall be opened at Orvis Brothers & Co., known as the 1 Account Japan,’ in which W. H. Curtiss and C. E. Orvis shall be equally interested. Second. Upon joint order, or the order of W. H. Curtiss, the account may purchase and sell at any time any portion of (500) five hundred shares, but at no time in excess of five hundred (500) shares). Third. W. H. Curtiss agrees to furnish at once to- Orvis Brothers & Co. such sums of money as may be the difference between the said price paid for the stock and forty-five per cent, of the par value of the same. Fourth. C. E. Orvis guaranties that the account shall be carried for a period of six months from this date, and agrees to furnish forty-five hundred dollars for each one hundred shares. Fifth. It is hereby mutually agreed that this account shall be closed up and terminated and settled in full on or before July 3d, 1887. Sixth. Such net profits as shall accrue in this account' shall be equally divided, and W. H. Curtiss hereby especially guaranties that the share of the profits of C. E. Orvis shall not be less than five thousand dollars, and agrees that when the account is closed he (W. H. Curtiss) will pay over and make good to C. E. Orvis any deficiency that there may be, so that C. E. Orvis shall within the period of six months receive, either from the account or from C. H. Curtiss, as guarantor, the sum of not less than five thousand dollars. Seventh. C. E. Orvis has agreed this day with Orvis Brothers & Co. that they will set aside the necessary amount to pay for this stock 'whenever called upon; therefore the account shall pay Orvis Brothers & Co. interest at six per cent, from this date, and they shall receive the brokerage on each transaction made for this account.
    “ (Signed) W. H. Curtiss. (Seal.)
    “(Signed) C.E. Orvis. (Seal.)
    “Signed, sealed, and delivered in the presence of W. E. Orvis, Jan. 3d, 1887.”

      Taylor & Parker, for app’lt; H. G. Harris, for resp’t.
   Daly, C. J.

The plaintiff and defendant operated under the agreement of January 3, 1887, and the result was a loss, which defendant fully paid up to plaintiff’s firm. The plaintiff then claimed the sum of $5,000 under the guaranty in the sixth clause of the agreement. Such claim remained unsettled until about January 3, 1893, when it was settled between the parties by defendant giving the note, bearing interest, which is the basis of the claim in this action. The defense upon the trial was that the agreement of 1887 by which $5,000 of profits were guarantied to-the plaintiff, was usurious, and that the note in suit, being given pursuant to such agreement, was void. This defense seems to have been established. While the defense of usury was not pleaded upon the return day, it was pleaded at the trial, and proof taken thereof, without objection. Respondent cannot be heard to object for the first time upon appeal that the defense was not pleaded.

Usury is made out by the contract itself, which clearly secured, and was intended to secure to the plaintiff, a compensation in excess of legal interest for advancing the sums necessary to carry on the defendants contemplated speculation in American Cotton Oil Trust stock. It is argued that the agreement on plaintiff’s part was not for a loan of money, but merely for a sale of his credit, by the aid of which defendant was enabled to procure money from plaintiff’s firm, and for which sale of credit the parties were entitled to agree upon whatever compensation they thought fit. Such is the rule where the agreement is for the sale of credit merely, and there is no negotiation nor agreement for or about a loan and no loan is made. A man has as good a right to sell his credit as he has to sell his goods or his lands; and, if he deal fairly, he may take as large a price as he can get for either of them. More v. Howland, 4Denio, 264. But this agreement was plainly for an advance of money by plaintiff on defendant’s behalf, and not a sale of credit, for the agreement between the parties provides:

“ Fourth. 0. E. Orvis guarantees that the account shall be carried for a period of six months from this date, and agrees to furnish $4,500 for each 100 shares.”

Besides this, the plaintiff’s own evidence was that he was the capitalist, to furnish the money,” that he “ advanced all the money,” that he “ was to furnish the capital,” that he “ furnished the money” ; and he did so through his own firm.

It is also argued that the agreement was between partners, and that such agreements are not affected by the usury laws. This is so because the relation of debtor and creditor does not exist, in the ordinary sense, between partners. 27 Am. & Eng. Enc. Law, 1016, and cases cited; Payne v. Freer, 91 N. Y. 43. The partners may stipulate for more than legal interest on overdrafts by each other, and the transaction is not usurious, because the excess of interest is paid into the firm, and swells the profits, in which the borrowing partner ultimately shares; and also because the proportionate amounts of capital contributed by each, as fixed in the copartnership agreement, are altered by such overdrafts : and, as pointed out in the last case cited, one partner might receive profits at the rate of twenty per cent, or more upon the amount he left in the business, while others would receive a much smaller percentage upon their investments. These reasons do not apply to the present case. The loan was not an incidentto a permanent and continuing partnership relation, but began and ended with and was the basis of the so-called partnership; the agreement in question being manifestly nothing more than an agreement for a loan to enable a customer of the plaintiff's firm to operate in a particular stock. No partnership, in a proper sense, existed between the parties. The plaintiff took none of the risks of a partner, as distinguished from those of a lender of money. He stood in no danger of losing the capital he furnished, because he was to receive that back in any event. He did not even stand in any danger of losing the use of his money, because he was to receive at least $5,000 profits in excess of six per cent, interest, however disastrously the venture might result. He. was not exposed to any liability as a partner for the acts of his copartner, because the transaction was such that the copartner could obtain no ostensible authority, and the agreement was such that he had no authority in fact to bind the plaintiff. He could deal only with the firm to which the plaintiff belonged, and the plaintiff was under no risk except that which pertains to every loan of money, i. e., the inability of his debtor to repay. In cases of ordinary partnership, the evils which the usury laws are designed to prevent are not likely to occur where overdrafts are contemplated as possible, and provided for on terms fixed in advance ; but it would be too easy to evade such laws if agreements like the present were exempted from their operation, for a more convenient cover for usury could not possibly be devised. Hot only improvident speculators, but necessitous borrowers, could be forced to pay illegal rates for money under the mask of a partnership between the lender, or one of the lender’s firm, and the speculator or borrower. Such pretended partnership could embrace operations in stock of some standard value, with a guaranty of exhorbitant profits to the ■ lender, and usury be thus legally protected.

As the usurious character of the original contract prevents its enforcement by the plaintiff,, he acquired no better right by taking the note of the defendant in pursuance of its terms, whether as security for the whole sum claimed or as a compromise of such claim. Contracts vpid by usury are capable of being made valid by a new agreement based upon the original consideration. Where a security void by usury is given up, and a new one taken, that is also void. Treadwell v. Archer, 76 N. Y. 196. Had plaintiff taken defendant’s note for the whole amount of the guaranty, it would have been void for usury if the agreement was void for that reason; and a note taken for a less amount than the guaranty stands on no better footing.

The fact that such note was received on what is called a compromise of the plaintiff’s demand under the agreement does not make it any more enforceable than the original agreement would have been. Otherwise, part of the usurious claim would always; be collectible under the pretense of a compromise. While it is-the general rule that upon the compromise of a disputed claim the original consideration will not be the subject of inquiry, nor the debtor be permitted to set up defenses based thereon, this rule does not apply to'claims made in contravention of public policy or express statute. The taking of usury is not only forbidden by statute, and all securities given in pursuance thereof declared void, but the act is made a misdemeanor by the criminal law. Ho-holder of usurious paper can therefore pretend to an honest belief cf a legal claim, such as is necessary to support a compromise and prevent an inquiry into the original consideration for securities taken in settlement. Any claim may be sufficient consideration to support a compromise, provided that the claimant honestly supposed that a valid claim existed, however mistaken he might have been. Dovale v. Ackerman, 66 St. Rep. —. But the holder of a usurious security can have no such honest conviction. The note which is the basis of this action is therefore affected by the illegality of the agreement and transaction which form the consideration of it, and no recovery should have been allowed the plaintiff. J udgment reversed, and a new trial ordered, with costs to appellant, to abide event.


author: White, J. Hatch, J.

text:
    Frank Bittner, as Administrator, etc., Resp’t, v. Crosstown Street-Railway Company, App’lt.

      (Buffalo Superior Court, General Term,

      Filed May 15, 1895.)

    Negligence — Error in judgment — Defense!
    Where the evidence which tends to establish that a motorman was solely at fault in running over a boy in the first instance, his subsequent efforts to extricate the boy from peril, however praiseworthy, will not relieve the company from the consequences of an error of judgment in making those efforts.
    Appeal from a judgment entered on a verdict in favor of plaintiff, and from an order denying a motion for a new trial on the minutes.

      Porter Norton, for app’lt; Emory P. Close, for resp’t.
   White, J.

I aiti of the opinion that the judgment and order appealed from should be affirmed. The controversy as to whether they should or not depends substantially upon the correctness of the ruling by the trial court upon the defendant’s request No. 4, as it appears in the appeal boob. As I construe the language of the request, the refusal was right, and the exception is not well taken. As the evidence then stood, the jury would have been justified in finding either way upon the question as to whether or not the emergency which the motorman was called upon to meet after he had run over the body of the deceased in the first instance was attributable solely to his own negligence. If it was, then his efforts to extricate the boy from peril, however, praiseworthy, would not relieve the defendant from the consequences of an error in judgment in making those efforts. Error in judgment on the part of one who negligently injures another cannot be invoked as a defense in behalf of him who causes the injury. With equal propriety might a cause of action in favor of the one injured be predicated upon his error in judgment in erroneously deciding that he could do with safety the act which resulted in his injury.

Judgment and order appealed from affirmed.

Hatch, J.

(dissenting). — The evidence in this case warranted the jury in finding that deceased was guilty' of contributory negligence in being upon the track at the time he was struck, and that defendant was guilty of no negligence in coming in contact with him. The jury was instructed and were authorized to find that, notwithstanding such contributory negligence, still if deceased, when first run over, was still alive with a probability of surviving the inj ury, and the defendant backed its car over him, extinquishing life, a recovery could be had for the damages sustained. We have no quarrel with the rule of law thus laid down, if defendant was guilty of negligence which produced the death. But such conclusion raised a question which defendant was entitled to have clearly submitted/to the jury. The evidence shows beyond question that the car was almost upon deceased when he was discovered by the motorman, and the latter testified that he instantly reversed the current of electricity which propelled, the car in order to avoid the casualty which occurred. The effect of this action was not only to stop the car, but to reverse its movement, causing it to run backward, and before it could be again reversed it had again passed over the boy. In this regard all of the testimony submitted upon that subject tended to establish that the car was thus caused to pass over the body at least once, and perhaps twice, before it was finally stopped, due, undoubtedly, .to the several reversals of the electric current. It is manifest that it was the duty of the motorman to do such acts as would prevent injury, and, if unable to do that, to prevent, so far as possible, its severity. If deceased was guilty of contributory negligence, he could not be heard to complain that the motorman did not do the best thing to be done under all the circumstances, if he did the best that his judgment dictated, in view of the impending peril. If, therefore, in attempting to prevent injury to the boy, he reversed the current, and omitted to restore the reversal when this car stopped, erring in judgment as to the best thing to do, or was unable, by reason of the quick action of the current, to do so, either of which conditions is permissible to be found from the evidence, no liablity could attach to defendant by reason of such acts, as deceased must then be held to have produced the peril, and liability does not attach for error in judgment or inability to remedy in time the effect of the first act. Rhing v. Railroad Co., 53 Hun, 321; 25 St. Rep. 563; Schimpf v. Sliter, 64 Hun, 463 ; 46 St. Rep. 225 ; Voak v. Railway Co., 75 N. Y. 323.

In view of the condition, defendant requested the court to charge “that the defendant is not responsible for the error in judgment, if there was any, on the part of the motorman, in the management of the car after it struck the boy.” The court replied: “I have already charged you upon this proposition.” An exception to this refusal was duly taken. Reference to the charge shows that the court had previously used this language:

“I may say, if the defendant was entirely free from fault in the first instance, or if the boy was guilty of negligence in running upon the track in the way he did, and the car had passed over him, a number of feet beyond him, and the boy was injured in his legs, as it is claimed by one of the plaintiff’s witnesses, and was attempting to get up from the track, and the motorman was careless in the management of his car by running back upon him, "* * * the plaintiff could recover, notwithstanding the boy was negligent in first going upon the track.”

I do not think this charge met the request. The jury might have thought, from the movement of the car and from what the motorman did, that the car was improperly managed, and yet, if the act of mismanagement was based upon the judgment of the motorman, no fault could be imputed to him, and this defendant was entitled to have clearly understood. It was not what was best to be done, viewed from the result after the completion of the act, but was the act done, in the judgment of the doer, best under his then condition? The defendant was entitled to have considered whether the act was based on the judgment of the operator or not, yet in the charge no word is said about any error in this regard, and we do not think that such significance is attached to the use of the word “careless” in the charge as to certainly convey to the jury a meaning that to find carelessness excluded a finding of error in judgment. The act of a person, done under great excitement and in much peril, may be the very opposite of what ought to be done, bringing a great calamity where security would attend proper action. But it would be working a still greater calamity to fasten responsibility where it be clear that the party acted the best that his light then presented. And it is the fact that such results are so likely to be reached that the person who is sought to be charged is entitled to full and explicit instructions upon the subject of which the charge here failed. The final qualification by the court upon exception by the defendant, “ if the car was negligently run back,” did not change the position, for it made no mention of the question which the request sought to present and have considered by the jury ; it added nothing to the charge already made, but only reiterated it by the use of a synonymous word. What the request aimed at had precise application to the evidence, the court said it had already charged, yet not a word upon the subject appears. I do not think that the general statement contained in the charge answered or complied with defendant’s rights in the premises. We cannot now say that this was harmless error, or that the error was cured by anything which was said; on the contrary, we think that it was a matter of vital importance, in view of the very serious conflict of evidence and the circumstances and surroundings of the accident, and can readily see that the jury may have been misled into attaching the same importance to a dangerous and improper act, resulting from poor judgment, as to an act in fact carelessly and negligently done, and it was this distinction that defendant sought to have, was entitled to have, clearly pointed out, and in respect to which the charge failed. The following cases authorize this conclusion : Brick v. Bosworth, (Mass.) 39 N. E. 36 ; Krudler v. Woolverton, 29 N. Y. Supp. 696; Zabriskie v. Smith, 13 N. Y. 322 ; Carroll v. Tucker, 7 Misc. 482 ; 58 St. Rep. 44; Hamilton v. Railroad Co., 53 N. Y. 27.

It is said that the charge is not broad enough to raise the question sought to be presented, and it may be subject to criticism in this respect. But it is clear what was intended. There was a very sharp conflict in the evidence, and, upon all the propositions of negligence of the defendant and contributory negligence of the deceased, the jury might have found either way, so far as the management of the car was concerned after the boy was first struck. But it is by no means clear that- defendant was guilty of any negligence in first running down the boy. So that the case is left largely, if not entirely, to depend upon the subsequent management of the car. In view of this condition, it is thought probable that the jury were misled as to the rule by which these acts were to be measured, and, if such be the fact, the court should order a new trial, even though the request and exception do not precisely meet the question. Shuttleworth v. Winter, 55 N. Y. 624; Johnson v. McConnel, 15 Hun, 295; Campanello v. Railroad Co., 39 St. Rep. 445 ; Cohen v. Kelly, 35 N. Y. Supr. Ct. 42. I reach the conclusion that the testimony in this case calls for the application of the rule established by the authorities cited, and that the judgment and order appealed from should be reversed, and a new trial ordered, costs to abide the event.


author: White, J.

text:
    Thomas M. Shields, Resp’t, v. Louis B. Clement, App’lt.

      (Buffalo Superior Court, General Term,

      Filed May 15, 1895.)

    Judgment — Default- 4Fkaud.
    A judgment, taken by default for fraudulent representations, will be set aside, where the intent to defraud was not alleged in the complaint.
    Appeal from a judgment by default for plaintiff in the municipal court.

      E. C. Robbins, for app’lt; William G. Fitch, for resp’t.
   White, J.

The only ground upon which a reversal of the-judgment appealed from is asked is that the complaint does not allege that in the transaction between the parties the defendant intended to cheat and defraud the plaintiff. It is well settled that, in order to justify a recovery for damage alleged to have been sustained as a consequence of false and fraudulent representations, the intent to defraud must be alleged as well as proved. Steamship Co. v. Mitchell, 1 Abb. Pr. (N. S.) 396; Cullen v. Hernz, 13 St. Rep. 333; Marsh v. Falker, 50 N. Y. 265. When, as in this case, no complaint is served with the summons, the relief granted the plaintiff by default should be limited by his allegations as well as by his proofs. Code, § 1207: Stevens v. Mayor, 84 N. Y. 296; Weatherby v. Wood, 29 How. 404; Beach v. Cooke, 28 N. Y. 508 ; Graham v. Read, 57 id. 681; Evans v. Burton, 42 Hun, 652. Theihtent to defraud being an essential element m the plaintiff case, it was necessary to allege as well as to prove it. No intent to defraud having been alleged in the complaint, the court below was not authorized to find any. Therefore, as the judgment establishes an intent to defraud, it is not warranted by the complaint, and should be set aside, and a new trial granted.

All concur.


author: Titus, C. J.

text:
    Bart Lobee, App’lt, v. Standard Live-Stock Insurance Company, Resp’t.

      (Buffalo Superior Court, General Term,

      Filed May 15, 1895.)

      1. Insurance — Live-Stock—Forfeiture.
    A provision in the certificate that, if any willful misrepresentation is made in the application for membership, or important information withheld, the certificate may be cancelled, does not ipso facto operate to annul the policy.
    2. Same — Waiver.
    When the company, with full knowledge of the facts which would work a forfeiture of the policy, if insisted on in time, requires the insured to perform his part of the contract, it is deemed to have waived its right to insist upon a forfeiture, and cannot on that ground avoid its contract obligation to pay the loss.
    3. Same.
    If the contract of insurance is void, the company has no right to insist upon the payment of an assessment made under it, no matter for what debt or for what purpose it was made, unless it intends to waive the forfeiture and pay the loss.
    Motion for a new trial on exceptions, ordered to be heard at general term in the first instance.

      Philip A. Laing, for pl’ff; Farrar & Wende, for deft.
   Titus, C. J.

This action was brought on a policy of insurance issued by the defendant on the plaintiff’s horse. The defendant is a mutual live-stock insurance company, with its home office in this city. At the trial term the plaintiff was nonsuited, and the exceptions ordered heard at the general term in the first instance. The policy was issued to the plaintiff October 17, 1893, for $150, and the horse in question was killed December 14,1893. The plaintiff took the required steps to become a member of the defendant company, and paid the premium required by its rules, and received his certificate or policy of insurance. The day after the horse was killed, the plaintiff called at the defendant’s office and got blank proofs of loss, but, at the request of the defendant, deferred presenting his proofs of loss until after the 1st of January, to enable-the defendant to make a better showing of its business. After presenting his proofs of loss, he was notified that they were defective in some particular. The plaintff then caused "them to be corrected, and again presented them; and on the 22d day of January, 1894, the defendant gave a receipt for the proofs of loss, and placed the same on file, and retained them, without objection, until April 25th, when it notified the plaintiff of its refusal to pay, because of the fact that, at the time of making the application for insurance, a chattel mortgage given as collateral security, was on file m the county clerk’s office, and unsatisfied, against the property, and that he had subsequently given another chattel mortgage on this horse without the knowledge or consent of the defendant. In the application for insurance, the plaintiff, in answering the question whether he was the sole owner of the property, free from incumbrance, gave an affirmative answer. This, it is claimed, was such a misrepresentation of a material fact, together with the subsequent incumbrance, as worked a forfeiture of the' policy, and is available to defeat a recovery upon it. It appears that on the 26th or 29th day of December, and after the loss, the defendant became possessed of the knowledge of these incumbrances, and made no objection to paying the loss on that account .until April 25th following. On the 26th day of, December, 1893, the defendant issued a “ mortuary call,” and made an assessment on the policy holders for the payment of losses reported since September 11, 1893, and required the plaintiff to pay his assessment on or before January 15, 1894. One of the losses for which this assessment was made was the plaintiff’s horse in question. On the 15th of January the plaintiff paid the amount of his assessment, which was receipted for by the company on the assessment notice. In his application for insurance, the plaintiff agrees to abide by the constitution and by-laws of the company, and to' conform to its rules and regulations and to the agreement set forth in the certificate of membership, and that a failure to do so forfeits all rights under the certificate issued on such application. One of the by-laws referred to provides that “ in the event of a member incumbering, by bill of sale, mortgage'or other lien, the animal covered by the certificate he holds, without first obtaining the consent of the company in writing, such company shall cause a forfeiture of such certificate.” The certificate of membership provides that “ the holder of this certificate agrees that it may be cancelled if it be found that any willful misrepresentations were made in the application for membership or important information withheld by the applicant” The plaintiff, in his testimony, claims that his statement in the policy that there was no incumbrance on the property was not a willful misrepresentation, but an inadvertence, which did not attract his attention at the time it was made. It is also'claimed by the plaintiff that the defendant has waived the right it concededly had to forfeit and declare invalid the policy by receiving payment for the assessment after it had full knowledge of all of the facts which it is now claimed worked a forfeiture of the policy, and in not canceling the same, and doing other acts after such knowledge, and' that he' should have been permitted to go to the jury upon this question. This presents the only question in the case for consideration.

In reviewing a judgment upon a nonsuit, the plaintiff is entitled to the benefit of every fact that the jury could have found from the evidence given, and to every legitimate inference warranted by the proofs ; and a motion for nonsuit should not be granted unless it appears the plaintiff is not entitled to recover 'after giving him the benefit of the most favorable view that the jury would be warranted in taking of the evidence. McNally v. Insurance Co., 137 N. Y. 389; 50 St. Rep. 680. The defendant being a mutual company, when a person desires to procure insurance he must become a member and pay a certain fee. A certificate of membership is then issued to him, containing a description of the property insured, and the terms and conditions to be complied with by the insured. It is provided in the certificate that if any willful misrepresentation is made in the application for membership, or important information withheld, the certificate may be canceled. The clause in the certificate of membership and application for insurance (which are in effect the same), authorizing the company to cancel the certificate of insurance for any misstatements, does not ipso facto operate to annul the policy. It is at the option of the company whether it will take advantage of that clause or not, and, until the company takes some affirmative steps manifesting its intent to enforce the condition, no forfeiture results, and the policy remains in force. Titus v. Insurance Co., 81 N. Y. 410.

ISTó action was taken by the company to cancel the policy, but, after it had discovered the fact that the property was encumbered at the time the application was made, it proceeded to collect of the plaintiff the assessment theretofore made for the purpose of paying the plaintiff’s and other losses. The constitution provides that each member shall abide by and conform to all the conditions and agreements made in his certificate of membership, and that a failure to do so shall cause a forfeiture of membership or certificate. The conditions here referred to evidently do not relate to misstatements in the application, because immediately following this is the clause “that the company shall have the right to cancel any certificate of membership or policy obtained by means of misrepresentations,” leaving it optional with the company to cancel or not, as its interest may dictate; and, as it appears no steps .were taken to cancel the policy, it remained in full force until such time as the company should elect to terminate it for a violation of its conditions. The constitution further provides that “the incumbering, by bill of sale, mortgage, or any other lien, of the animal covered by the certificate he holds, without first obtaining the consent of the company in writing, such company shall cause a forfeiture of such certificate.”

In Benninghoff v. Insurance Co., 93 N. Y. 495, the policy contained a clause similar to the one in this certificate and constitution ; and the court, in disposing of the question, said :

“It may be premised that the transfer of the title of the property insured under a policy prohibiting such transfer does not operate ipso facto to annul and destroy the policy, but simply confers upon the defendant the right to have it declared void by raising the question at the proper time, if it should eventually elect so to do.”

In Titus v. Insurance Co., supra, the court, at page 419, says:

“When there has been a breach of a condition contained in an insurance policy, the insurance company may or may not take advantage of such breach, and claim a forfeiture. It may, consulting its own interests, choose to waive the forfeiture, and this it may do by express language to that effect, or by acts from which an intention to waive may be inferred, or from which a waiver follows as a legal result.”

Many cases are cited in approval of this rule. Indeed, it does not seem now to be questioned, but regarded as the settled law of this state. This brings us to the question whether there was any evidence from which the jury might find that the right to cancel or forfeit the policy has been waived by the company. The testimony is undisputed, as the plaintiff was nonsuited when he rested his case. It has been seen from a statement of the facts that, before the proofs of loss were made to the company, it was in full possession of all of the facts on which it now seeks to avoid a recovery. The proofs of loss were presented and returned for cor- . rection because of the want of some information which the defendant wished supplied. They were corrected, returned.to the company, and received and filed. The assessment made for this and other losses was collected and receipted for on the “mortuary notice,” and no suggestion was made that the company claimed or intended to claim that it would cancel the policy or insist upon the forfeiture under either the application, the certificate or the constitution. It seems to me this is evidence, if not “ from which a waiver follows as a legal result,” which at least should have been submitted to the jury to pass upon as a question of fact. The company insisted upon its right to have proper proofs of loss, and the payment of the assessment only by virtue of its policy, and of its being in force. It then recognized the validity of the policy, and subjected the insured to trouble and expense after it knew of the facts which would entitle it to cancel the policy, and of the forfeiture now alleged, and it cannot now assert its invalidity. Titus v. Insurance Co., supra. This is, of course, on the theory that on a new trial the jury would find from all of the evidence that the facts here stated and claimed by the plaintiff from his proofs are the facts in the case.

In Roby v. Insurance Co., reported in 120 N. Y. 510, and 31 St. Rep. 560, the defendant company, after having knowledge of the facts upon which it is claimed a forfeiture, demanded of the insured further proofs of loss, as was its right under the policy of insurance, and the plaintiff complied with its demands, and furnished the required proofs. In deciding the case, the court says :

“The policy in question was void or valid as a whole. If any part was valid, it was all valid. The defendant could not enforce' any part without practically admitting that it was operative in all its parts. By demanding further proofs of loss, in fact and in , form it demanded that which it had contracted for, and thus attempted to enforce the contract in part. * * * After requiring performance from the insured, with knowledge of the facts, it could not refuse performánce on the ground that those facts had worked a forfeiture.”

And it was held that this fact constituted a waiver in law, and that the defendant could not insist upon a forfeiture.

In McNally v. Insurance Co., supra, the court say that:

“When an insurance company, with full knowledge of the facts constituting a breach of the condition or a warranty, requires the assured, by virtue of the contract, to do some act or incur some trouble or expense, the forfeiture is deemed to have been waived, as such requirement is inconsistent with the position that the contract has ceased to exist, and consistent only with the theory that the obligations of the contract are still binding 'upon both parties.”

Numerous cases might be cited, but enough have been referred to to illustrate the rule that when the company, with full knowledge of the facts which would work a forfeiture of the policy if insisted on in time, requires the insured to perform his part of the contract, the company is then deemed to have waived its right to insist upon a forfeiture, and cannot on that ground avoid its contract obligation to pay the loss.

The counsel for the defendant, in his brief, concedes that the company, on the 28th and 29th of December, 1893, had knowledge that the chattel mortgage or bill of sale had been executed and filed; but he contends that the receipt of the money afterwards did not operate as a waiver, for the reason that it was simply a payment of a debt that had accrued prior to the loss, and while the policy was in full force, and that the defendant had the same right to receive it that it had to receive a payment of any other debt due it. The difficulty with this position is that the horse was killed on the 14th of December; that the “ mortuary call” and assessment was made on the 26th day of December, 1893, and included an assessment to pay the loss of this identical horse and others which had died before plaintiff’s horse was insured. Another answer is that the assessment was made only by virtue of the contract of insurance, which the plaintiff and defendant had entered into, and, if the contract was void, the company had no right to insist upon the payment of an assessment made under it, no matter for what debt or for what purpose it was made, unless it intended to waive the forfeiture and pay the loss. As the case stands before us, with the plaintiff’s evidence undisputed, we must hold that such was the intention of the company, and it did in law waive its right to cancel or forfeit the policy. The case of Robertson v. Insurance Go., 88 N. Y. 541, cited in the counsel’s brief, is an authority upon that proposition. Judge Earl lays down the rule which is here followed, but the reason it had no application in that case was that the insurance company did no act after forfeiture of the policy which could be construed into a waiver. The plaintiff in this case had possession of the horse after he bought it until the time it was killed. The horse was his in fact and in law, and no feason appears from the case why the company should not pay the amount for which it was insured. The exceptions, therefore, must be sustained, and a new trial granted, with costs to abide the •event of the action.


text:
    Thomas H. McDonald, Resp’t, v. Frank P. Nuse, App’lt.

      (Buffalo Superior Court, General Term,

      Filed May 15, 1895.

    1. Justice's court — Proof.
    Upon default of appearance by defendant, the plaintiff is required to established his cause of action, in a justice’s court, by legal proof.
    S. Same.
    Where such proof is in writing, the writing is required, or its absence accounted for, before paroi proof is given.

      S. Same — Appeal.
    The defendant, on appeal from the default judgment, may avail himself of such error.
    Appeal from a j udgment in favor of plaintiff.

      A. J. Hibbard, for app’lt; Hull & Stewart, for resp’t.
   Hatch, J.

This action was brought to recover back the purchase price of a watch for an alleged breach of warranty in the sale thereof. The parties appeared, jointed issue, and the cause was adjourned. Upon the adjourned day, defendant did not appear. Plaintiff gave evidence of his claim, and the court rendered, .judgment for the amount thereof. Defendant now claims that there was no sufficient legal evidence to establish plaintiff’s claim. It is an ancient rule in justices’ courts that, in default of appearance, plaintiff is required to establish his cause of action by legal proof. Blair v. Bartlett, 75 N. Y. 150; Northrup v. Jackson, 13 Wend. 84.

Plaintiff resides in Denver, Colo., and the defendant in Buffalo. The parties have never met, and the whole transaction is contained in written correspondence. Consequently, the contract between the parties is to be found in the letters which passed between them. Upon the trial two letters were produced written by defendant, but nothing is contained therein which show what the contract of sale was. They admit the receipt of the first movement sent out, and acquiesce in its return as not fulfilling conditions, and sent back either the same or another movement, received from the factory, with a statement that the company does not like to admit or have it said that any of their movements fail to perform what is claimed for them to do. There is nothing in this which establishes that defendant warranted that the movement would answer any requirement. He accompanies it with no promise or agreement on his part. Plaintiff’s evidence was taken by commission, and upon the subject of warranty he says:

“About March 15,1892, I ordered a watch of the Appleton, Tracy & Co., movement of the American Waltham Watch Co. manufacture, the same to be nonmagnetic. The terms on which the watch was bought was such as govern the sale of any movement. I was governed by the warranty of the American Watch Co. The said company guarantees.their nonmagnetic movement to resist the most powerful magnetic currents.”

It is clear that all of this must have been in writing, and consequently the writing was required, or its absence accounted for before paroi proof could be given. He says, “I was governed by the warranty,” but that does not say that defendant was bound by it. What the terms were which govern the sale of such movements, and whether it was the same which he says he was governed by or whether it is a warranty by the same company, is not clear. Perhaps enough could be spelled out in that regard if the writing contained .what the testimony states it did. But that nowhere appears, and it was the legal proof which plaintiff was .required to-produced before the court was authorized to render judgment, and defendant may avail himself of such error on this appeal.

The evidence is abundant and legal to show that the watch did not perform what was expected of it, and defendant was prima facie in possession of the written order which he undertook to execute, and could have produced the same upon the trial. He did put in an answer, but failed to appear and offer proof. As he, probably, is in possession of the legal proof, and could have secured a proper disposition of the case by proof of the whole facts, we think we ought not to reverse the judgment, with costs, but set the judgment aside, and order a new trial in the municipal court, with $10 costs of this appeal to abide the event of the action. All concur.


text:
    Anne M. M. Kidder, App’lt, v. George Bork, Resp’t.

      (Buffalo Superior Court, General Term,

      Filed May 15, 1895.)

    Pleading — Warranty—Breach.
    Where a breach of the covenant of warranty and peaceful enjoyment is claimed on the ground of unpaid taxes at the time of the conveyance, the complaint, if it does not allege an eviction or a judgment that the tax was a lien, fails to state a cause of action.
    Appeal from an interlocutory judgment, sustaining the demurrer to the complaint.

      Ralph Slone, for pl’ff; George W. Cothran, for deft.
   Hatch, J.

The allegations of the complaint are, in substance,

that one Zieman and wife made and executed their certain bond and mortgage upon premises described for securing the payment of $940.12, and delivered the same to defendant; that on the same date defendant conveyed to said Zieman and wife, by deed of warranty, with covenant of quiet and peaceful possession, the premises described in the mortgage; that said mortgage and deed were duly recorded; that thereafter defendant, for a good consideration, assigned said mortgage to the plaintiff, and covenanted therein that there was due thereon $940.12, with interest; that at the time of the making and delivery of the said deed the premises were not free from incumbrance, but were subject to certain outstanding taxes, duly assessed, charged, and levied upon the premises by the city of Buffalo and the officers thereof in the sum of $137.65, which tax was due and unpaid, and at the time of the delivery of the deed was a lien and incumbrance upon the premises; that by reason thereof the said Zieman was obliged to and did pay the sum of $143.16 in extinguishing the lien of said taxes upon said premises, said premises having been sold therefor, and that said sum of money so paid is an offset against said mortgage in the hands of the plaintiff ; that an action was brought in the superior court of Buffalo to foreclose said mortgage, wherein this plaintiff was plaintiff and said Zieman and wife and another were defendants; that issue was joined therein, and the action tried before the court without a jury, and the court decided that the plaintiff was entitled to a judgment of foreclosure and sale of the premises for the amount due upon the bond and mortgage, less the sum of $143.16, and interest thereon; demands judgment for . said last-named sum, with interest and costs. There is nothing set out in the complaint showing any covenant in the deed against incumbrances. Plaintiff’s claim, therefore, rests upon a claimed breach of the covenant of warranty and peaceful enjoyment. But there can be no breach of such covenant without an eviction, or by the establishment of facts showing paramount title. Mead v. Stackpole, 40 Hun, 473: Boreel v. Lawton, 99 N. Y. 293. There is nothing appearing in the complaint to show that his possession was for a moment disturbed, or that a paramount title in fact existed, and consequently there was no breach of the covenant. There is no allegation that any judgment was ever entered adjudicating that the taxes were a lien upon the premises, or that any judgment whatever was entered in the foreclosure action. The decision of a court upon issues which never passed into judgment cannot avail the party. As this court is unable to see what the issue was presented by the pleadings, or if the pleadings were admissible for that purpose, or any other purpose, it would still be in the dark respecting what the court adjudicated. The judgment roll is essential and necessary to establish such facts. Forsyth v. Campbell, 15 Hun, 235; Baker v. Kingsland, 10 Paige, 366; Lansing v. Russell, 3 Barb. Ch. 325. The pleading, therefore, fails in the statement of a cause of action.1 Judgment should be directed sustaining the demurrer, with costs, with leave to the plaintiff to serve an amended complaint within twenty days on payment of costs.

All concur.


text:
    Le Roy Parker, Resp’t, v. David F. Day, App’lt.

      (Buffalo Superior Court, General Term,

      Filed May 15, 1895.)

    Partnership — Liability inter sbse.
    An executor, who employs his law partner to render legal services for the estate, is not liable for his compensation, where payments on account of such services were entered on the books as partnership funds and divided between the partners.
    Appeal from a j udgment in favor of plaintiff.

      George S. Wardell, for app’lt; Adelbert Moot, for resp't.
   White, J.

The parties to this action are lawyers, and the plaintiff is admitted to practice his profession in the state of Michigan. They became partners on May 1, 1887, with offices in this city. The copartnership was to continue from year to year, subject to termination on April 30th in any year, on one month’s notice. The firm was dissolved May 1, Í890. In June, 1887, the defendant qualified as executor of the last will and testament of Adeline C. Hotchkiss, deceased, in the state of Michigan. The estate of Mrs. Hotchkiss was worth, perhaps, $60,000. Claims to a large amount were made against the estate, and, in defending against them, the plaintiff, and the defendant too, performed legal services of considerable value. The plaintiff was requested by the defendant to perform or join him in the performance of those services, and the most important question about which the parties disagree is whether the plaintiff acted as an attorney and counselor at law in this state and in Michigan upon the retainer and implied promise of the defendant to personally pay him what such services would be worth, or whether the plaintiff performed the services as a copartner with the defendant, with the understanding that his compensation was to come from the estate of Mrs. Hotchkiss. To my mind there is a great preponderance of evidence in favor of the defendant upon this question. It appears without dispute that the books of account and office registers of the firm were kept, from the begin'ning to the end, almost exclusively by the plaintiff, and the correspondence of the firm was largely conducted by him. These records and this_correspondence covered the Hotchkiss estate business,, and clearly indicate that it was treated by the plaintiff as firm business ; at any rate, until about the time of the dissolution. Moneys in considerable amounts, from time to time received by each of the parties from the Hotchkiss estate, and on account of the services rendered by the plaintiff, were entered upon the firm books, and divided between the plaintiff and defendant in the proportions provided for in their articles of copartnership. A statement of the firm’s assets made up by the plaintiff at the time of the dissolution contains an item of $6,000, which the plaintiff even now testifies represented what he thought at the time should be paid by the estate to the firm or to him and the executor together. Ho claim of the character now sought to be enforced by the plaintiff was ever made until about the time of the dissolution, and up to that time his every act indicated that he expected his compensation with that of his partner to come from the estate. The rule of law that the defendant is not permitted, either in this state or in Michigan, to enforce any claim for legal services rendered by him or by the firm of Day & Parker as attorneys for the Hotchkiss estate is invoked as a reason why the plaintiff here should be allowed to recover. The rule is a salutary one, and might be applied with profit if either Day or Day & Parker were seeking to enforce such a claim against the estate. The reason is without force in this controversy, in my opinion.

If the question of fact whether the parties understood that the defendant, as an individual, was to compensate the plaintiff for his services, or that such compensation should be derived from the estate for the benefit of their copartnership business, were a close one, a desire to square the conduct of the partners with the strict rules of law would naturally lead to the conclusion that the arrangement under which the services were rendered by the plaintiff was as he contends. But from my point of view the question is not a close one at all. To my mind it is clear that the business was considered that of the partnership, and that to hold the contrary is to permit the parties to stultify themselves. Their every word and act to the time of the dissolution establishes the correctness of this position. The circumstance that in some instances the parties, in receiving moneys, went through a form which on its face might indicate that they were dealing with each other as individuals, and not as copartners, but strengthens my belief that those forms were used merely as forms, and in no-sense to represent the truth of the transaction. In each instasce the use of those forms was immediately followed by an actual division of the moneys between themselves in the proportion and in accordance with their partnership articles.

If the evidence of the plaintiff in this case were positive and direct to the point (which* as I read it, it is not) that he understood at all times down to the dissolution of the firm that his services were performed for the defendant as an individual, and not for the benefit of the firm, then, clearly, such testimony, being flatly contradicted by his acts while the partnership existed, would be entitled to but little weight. Lynch v. Pyne, 42 N. Y. Supr. Ct. 11 ; Keller v. Manufacturiny Co., 39 Hun, 348; Molloy v. Railroad Co., 10 Daly, 453; O'Brien v. McManus, 13 id. 37. But it is unnecessary to invoke the rule expounded in those cases, because the plaintiff does not testify to a single fact which is inconsistent with the view here taken. "I do not think that the plaintiff’s evidence that defendant requested him to perform these services conflicts with this view of the matter. Such a request is not at all inconsistent with the idea that they were in truth and in fact to be rendered for the benefit of the firm, in precisely the manner and to the extent that they were so considered and treated by both parties afterwards. Hor are we interested at, this time in the fact that the defendant, in rendering his account as executor to the court in Michigan, claimed under oath to have paid to the plaintiff all of the moneys theretofore received by both of them, except so far as that fact may help us to come to a correct decision of the vital question here. In the absence of such conduct on the part of the plaintiff as would tend to clearly establish the contrary to be the truth of the matter, it may well be that the forms adopted by the defendant in handling the moneys received from the Hotchkiss estate, and his claim of having paid all of those moneys to the plaintiff, as contained in his account rendered to the Michigan court, would be conclusive upon him upon that subject. Ho such conclusion, but the contrary, is inevitable, in the light of what the plaintiff himself did. The act of including those moneys in his account by the defendant, it. is true, was and is, so far as this record discloses, inconsistent with the idea that they had already been appropriated by him and the plaintiff as copartners. This is a collateral matter, however. It is not an issue between these parties. It may be open to explanation; and as for myself, under the circumstances, I am going to assume that it will be satisfactorily explained if any explanation shall be deemed necessary hereafter.

Upon the argument, of this appeal, it was contended by the plaintiff that it is proper, where one member of a firm of lawyers is an executor, for him to retain his partner as his attorney in matters relating to the trust, without any agreement or understanding between them in advance as to a division of the compensation thus earned by the attorney of record, and, after the business .is completed, for the attorney of record to divide his costs, or give to his partner who had thus employed him, a portion of the compensation which he had earned. Assuming, for the sake of the argument, the soundness of this lego-ethical proposition, it is quite possible that in this case the parties were attempting to put it into practice, but from necessity, or in their anxiety to realize before the business was completed, they violated one of the presumably essential conditions upon which the proposition is supposed to rest; that is, they began to divide from the beginning, instead of waiting until the business was finished.

I am not willing to permit a recovery by the plaintiff upon the undisputed facts of the case, and therefore the judgment appealed from should be reversed, and ,a new trial ordered, with costs to abide the event.


author: Hatch, J. Titus, C. J.

text:
    Peter Faltiska, Resp’t, v. New York, Lake Erie and Western Railroad Company, App’lt.

      (Buffalo Superior Court, General Term,

      Filed May 15, 1895.)

    Service and proof — Corporation.
    Process against the corporation may he served, under section 431 of the Code, upon a division superintendent, where he retains his position after the appointment of a receiver.
    Appeal from an order, denying a ■ motion to set aside the service of a summons. o
    Sprague, Moot, Sprague Brownell (George F. Brownell, of counsel), for app’lt; John R. Hazel, for resp’t.
   Hatch, J.

The summons was served upon Charles A. Brunn on December 26, 1893, it being claimed that he was a managing agent of the defendant. The affidavits show that said Brunn was, prior to July 25, 1893, in the employ of the defendant as a division superintendent of that portion of its road running between Buffalo and Hqrnellsville and between Buffalo and Jamestown; that on July 25, 1893, receivers were appointed of all defendant’s property, and immediately took possession thereof, and managed and operated the railroad. Brunn was retained in the position he had occupied prior thereto, and has so remained ever since. It does not appear that Brunn was ever discharged from his employment, or removed from his position by the defendant, or that any steps of any character were ever taken to cancel his capacity of representation in any manner. It is claimed that the appointment of- the receivers, and their retention of Brunn, operated as a discontinuance of his services and representation of the defendant for any purpose whatever. It appeared by the opposing affidavits that the attorneys who represent the plaintiff had prior to this time, in 1890, commenced an action against defendant by the service of process upon Brunn, and that the attorneys' who appeared for defendant upon this motion appeared therein without objection; and it has been judicially declared that said Brunn answered to the description of a managing agent, within the meaning of section 431 of the Code of Civil Procedure. Brayton v. Railway Co., 72 Hun, 602 ; 54 St. Rep. 763. Did the appointment of the receivers, and their retention of Brunn in his management, cancel all his relation, to defendant ? The appointment of the receivers did not work a dissolution of the corporation; that would not be accomplished except by judgment of dissolution, or possibly by the transfer of all its corporate rights, franchises, and property. Kincaid v. Dwinelle, 59 N. Y. 548. It was therefore capable of being sued; and was subject to the usual and ordinary procedure to such end, and process could be served upon it in like manner as before the appointment of the receivers, so long as no restraining order intervened. People v. Troy Steel & Iron Co., 63 St. Rep. 787. The retention of Brunn by the receivers was not per se antagonistic to the defendant or its rights. It is undoubtedly true that the servants and agents of the receivers are subject to their control, and that the defendant is not to be made liable for their acts, and has no-control over them; and it may be said, in a sense, that a compulsory receivership is antagonistic to the party of whose property he is receiver. But this is only true to the extent that he is made receiver against the will of the party, for the receiver acts, not as-the avowed opponent of the party, but as the representati ve of the court for the benefit of both party and creditor. Nothing appears to show that Brunn could not act for defendant in any matter, where he could or had acted before, that was not of itself inconsistent with the duty he owed the. receivers. That he had been by defendant invested with discretionary power is established; that among the things which he did was to report the service of process upon him in suits commenced against the defendant; and defendant reorganized that he acted in such capacity for it, and might lawfully represent it in such matters, as it acquiesced in such service. I can see nothing inconsistent in his so acting in such and other matters from the fact alone'of his retention in the employ of the receivers. The defendant had the power to remove or discontinue his service for it in any capacity, but this it has not done by any act, so far as this record shows, while it does appear that he has been held out to the public as acting in a capacity which authorized service of process upon him, and no affirmative act has been taken by the defendant which, either in terms or by inference, removed him from such situation, or which notified the public, or persons who had acted upon the standing which defendant gave him, that there had been any change. The fundamental-purpose of the statute is to bring notice to the defendant of the service of process, and such construction should be given as will not place unnecessary obstructions in the way of commencing actions. Barrett v. Telegraph Co., 31 St Rep. 465 ; affirmed on appeal, 138 N. Y. 491; 53 St. Rep. 86. Responsibility of the agent, to the corporation, from which the probability arises that, if he be' served, notice will be brought to the company, seems to be the test; and the fact that such service is brought to the notice of the company may be considered. Coler v. Bridge Co., 84 Hun, 285; 65 St Rep. 714. Brunn answered all of these requirements; the service in this case was brought to the attention of the defendant; all that the statute aimed as has been accomplished ; and I am led to the conclusion that there has not been such change in his relations to the defendant, under the circumstances of this case, as would render of no effect the service made, so long as his original appointment stands unrevoked and unacted upon by defendant. The order appealed from should therefore be affirmed, with $10’ costs and disbursements. Order appealed from affirmed by a divided court.

Titus, C. J.

(dissenting). — The question raised on this appeal relates to the service of a summons on the defendant in an action for damages for injuries sustained by the plaintiff while in the employ of the defendant, in January, 1891. The action was commenced by the service of a summons on Charles A. Brunn, formerly superintendent of the Western division of the defendant’s road, extending from Hornellsville and Jamestown to Buffalo. On July 25, 1893, in a suit brought in the United States circuit court for the Southern district of Rew York for that purpose, against the defendant, John King and John Gr. McCullough were appointed receivers of the defendant company, and were ordered immediately to take possession of the franchises, rights, and property of the company, to run, manage, and operate its property and railroads wherever situated and found, whether in this state or elsewhere, and to employ and discharge and fix the compensation of all such officers, attorneys, managers, superintendents, agents, and employes as may be needful to properly operate the road, and to pay all operating expenses; and said officers, agents, and employes were required to turn over to the receivers all the property of the company in their hands, and were enjoined from in any manner-interfering with the possession or management of its property. Under this order the receivers took immediate possession of all of the property of the defendant, and commenced the operation of the railroad, and have so continued up to the present time. It appears that the employes of the defendant at the time of the appointment of the receivers were not immediately dismissed, but were, including Division Superintendent Brunn, continued in the employ of the receivers, receiving their orders and pay from them, as they had before that time from the defendant. The defendant, as a corporation, has not since in any way interfered with the management of the business and the operation of the road, or with its property or assets. The summons in this case was served on Charles A. Brunn on the 26th of December, 1893, after the appointment of the receivers. He was at that time acting as division superintendent under the receivers, who had continued him in their employ. A motion was made to set aside the service of the summons on the ground that Brunn was not the managing agent of the defendant, within the meaning of section 431 of the Code of Civil Procedure. The court at special term denied the motion, and defendant appeals to this court from the order denying the motion.

If the question was whether the service of the summons on Brunn, as superintendent of the Western division, while the defendant still operated the railroad under its charter, was a good service, we should feel bound to follow the case of Brayton v. Rail road Co., 72 Hun, 602 ; 54 St. Rep. 763 ; and hold that the service on him was proper and sufficient, as that case involved that precise question, and was, we think, on principle and authority, correctly decided. Palmer v. Pennsylvania Co., 35 Hun, 369 ; affirmed, 99 N. Y. 679; Ruland v. Publishing Co., 10 N. Y. Supp. 913; Barrett v. Telegraph Co., 31 St. Rep. 465 ; Rochester, H. & L. R. Co. v. New York, L. E. & W. R. Co., 48 Hun, 190; 15 St. Rep. 686 ; Ives v. Insurance Co., 78 Hun, 32 ; 60 St. Rep. 495 ; Mullins v. Insurance Co., 78 Hun, 297; 60 St. Rep. 240.

The only question, therefore, which calls for any examination, is whether the service on Brunn, while temporarily in the employ of the receivers, is a good service on the defendant. It is claimed by counsel for the plaintiff that, inasmuch as Brunn was the division superintendent for the defendant prior to the appointment of the receivers, and so continued in the capacity by them, he is still to be regarded as the managing agent of the company for the purpose of making service upon it. A number of cases are cited in the plaintiff’s brief upon that proposition, but none of them seem to sustain the position taken, and I have been unable to find any case where the question has been directly passed upon. The only reason urged why the service on Brunn is sufficient is that he was continued by the receivers as division superintendent of the defendant’s railroad. While the appointing of a'temporary receiver does not operate to dissolve a corporation, Kincaid v. Dwinelle, 59 N. Y. 548, it suspends for the time being its right to manage the affairs of the company or to interfere with its property, and practically suspends its functions as a corporation. It may be sued by its creditors, and made liable as though no receivzr had been appointed. Hetzel v. Mining Co. 4 Abb. N. C. 40. But it ceases to have any control over its property. Its officers provided for by the statute continue, but, from the necessity of the case, its employes are deprived of any further right to interfere in any manner in the management of its affairs and cease to have employment under it. If the receivers, instead of continuing Superintendent Brunn in their employ, had engaged another person to act as superintendent, it could not be claimed, we think, that such person was still the managing agent of the defendant, so as to authorize the service of papers upon him as a representative of the corporation, From the fact that Brunn was at one time such agent of the defendant, it does not follow that he may served with process after he has ceased to represent the defendant as such agent. Beardsley v. Johnson, 121 N. Y. 224; 30 St. Rep. 691. Nor would it hardly be claimed that if Brunn had been removed, and then reappointed by the receivers, he could properly be served with a summons as managing agent of the corporation, within the meaning'of section 431 of the Code." How can it be said that he is still in the employ of the defendant, or it smanaging agent, simply because he was continued in the employ of the receivers ? No court has gone to the extent of holding that he is such a person as the Code describes, on which service must be made. Employes of the receivers are not in any sense in the employ of the defendant. Murphy v. Holbrook, 20 Ohio St. 137. The possession of the property is in the receivers, and not in the corporation. It cannot be held liable for any act of the receivers. They are officers of the court, with full power, under the order appointing them, to manage the affairs and "property of the defendant, and to employ and discharge at pleasure agents and employes necessary to conduct the business of the corporation. The receivers are only responsible to the court which appointed them. Railroad Co. v. Fitch, 20 Ind. 498. A person or corporation in possession of and operating a railroad is liable for negligence of its employes, and not the corporation owning it. Weyant v. Railroad Co., 3 Duer, 360; Norton v. Wiswall, 26 Barb. 618. It seems to me, from an examination of the authorities, that Superintendent Brunn is in no sense in the employ of the defendant as its superintendent or otherwise, and that the service of the summons on him was not a service on the defendant ; that since the appointment of the receivers only such persons as compose the corporation, such as officers and directors, are within the meaning of the section of the Code providing for the service upon corporations.

The order of the special term should be reversed, with ten dollars costs and disbursements.