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

text:
    James B. Corbett, App’lt, v. Twenty-third Street Railway Company, Res’pt.

      (Supreme Court, General Term, First Department,

      Filed December 30, 1886.)

    1. Railroads—Street railroads—Passenger may reimburse himself FOR MONET DEPOSITED BY MISTAKE IN THE BOX IN EXCESS OF HIS FARE BY RECEIVING THE FARE OF OTHER PASSENGERS.
    Plaintiff was a passenger in the car of the defendant company which was operated by the driver himself without a conductor. On entering the car he put into the box used for that purpose five fares for himself and three companions, and upon discovery of the mistake he applied to the driver for the restoration of the excessive fare placed in the box. This was refused by the driver, who having no authority himself to return the fare or correct the mistake, directed plaintiff to repair to the company’s office for his money. This refusal resulted in a wordy altercation between plaintiff and the driver, which continued until the time when a lady entered the car, who delivered her five cents fare to plaintiff, which he placed in his pocket. The driver afterwards insisted upon his depositing this fare in the box, which he refused to do, and the driver removed him from the car and delivered him into the custody of a policeman, and he was confined in the station house over night, and in the morning a charge was preferred against him by the driver. When it came before the police justice plaintiff was discharged. He then brought this suit for false imprisonment. etc., and the trial court dismissed the complaint. Held, that the regulation requiring plaintiff to go to the office was unreasonable: that as the driver was not authorized to reimburse him he was at liberty to do so by receiving for that l.urpose the fare of any passenger entering the car. Davis, P. J., dissenting.
    2. Same—Liability of company for acts of servants.
    A railroad company is liable to the same extent as an individual for any injury done to a passenger by a person in the course of his employment, who is in the service of the company. This liability will include the entire injury and indignity to which plaintiff was subjected, not only by his removal from the car, hut by his subsequent imprisonment and detention at the station house. Davis, P. J., dissenting.
    Appeal from a judgment dismissing the plaintiff’s complaint, on a trial at the circuit.

      Harmon H. Shook, for appl’t; O. E. Bright, for resp’t.
   Daniels, J.

The cause of action set forth in the plaintiff’s complaint, was for his assault and false imprisonment, occasioned by his removal from, one of the defendant’s cars and his delivery by the driver into the custody of a policeman, and his detention in a station-house during the succeeding-night. He was a passenger in the car which was operated by the driver himself without a conductor. On entering the car, he put into the box Used for that purpose five fares, for himself and three companions. Upon the discovery of the mistake, he applied to the driver for the restoration of the excessive fare placed in the box. This the driver refused, having no authority himself to return the fare, or correct the mistake, and he directed the plaintiff to repair to the company’s office for his money. This resulted in a wordy altercationbetween the plaintiff and the driver, which continued to the time when a lady entered the car, who delivered her five cents fare to the plaintiff, which he placed in his pocket. The driver afterwards insisted upon the plaintiff depositing this fare in the box. 'That, the latter declined to do, and after the lady had reached her destination and left the car, the driver removed the plaintiff from it, and delivered him into the custody of the policeman. When the matter came before the court on the following morning the plaintiff was discharged. The plaintiff was clearly entitled to a restitution of the money deposited by him by mistake in the box placed in the car, to receive the fare of the passengers, and as the driver himself was not authorized to return the fare, and in that manner correct the mistake, it was an entirely reasonable course to adopt, for the plaintiff to receive the fare, which he did of the other passenger, and in that manner reimburse himself for the money inadvertently placed in the box. The regulation of the railway company requiring a passenger who may be deprived of his money by his own mistake in this manner, to go to the office of the company for its reimbursement, and the correction of the mistake, is entirely unreasonable. As long as the car is placed under the charge and management of the driver, he should be, as a necessary part of that management invested with authority to reimburse fares inadvertently placed in the box in this manner. The time to correct the mistake is when it may be made and discovered, and the facts attending it fully known to the defendant’s agent.

To require the passenger to go to the company’s office, which may be miles away from the place where the mistake may occur, and there establish his right to the reimbursement of the money, is so unreasonable in itself as to be exceeded only by the further regulation that when the money may be so deposited the party depositing it shall forfeit all right to claim its return. For, in most cases, to go the company’s office and there satisfy the officials of the right to the return of the money, and defray the expenses attendant upon the journey, and submit to the necessary loss of time, would be no less than a serious aggravation of the injury itself. The officers would probably require the statement of the driver before they would feel justified in acting at all, and in that manner render necessary more than one journey and one hearing to recover the amount the passenger would be entitled to receive. • The large majority of people would prefer submitting to the first loss rather than enhance it, as they necessarily would, in endeavoring to obtain redress in this manner. And they should not be subjected by the regulations or rules of the company to any such risks and loss. As long as the company does not authorize the driver himself to rectify the mistake, it is no more than reasonable that the passenger should be at liberty to do so, by receiving for that purpose the fare of any passenger afterwards entering the car. The driver, therefore, had no right because of the refusal of the plaintiff to place this additional fare in the box, to remove him from the car. He was a wrong-doer, and his act in laying his hands upon the plaintiff for that purpose was an assault and battery for which he might well himself have been indicted and punished.

But as he removed the plaintiff from the car and placed him in the custody of the officer, under the authority conferred upon him for the management of the car by the defendant, the latter became legally hable to the plaintiff for the damages to which he in that manner had beenBubjected. For as the law has been settled a railroad company is liable to the same extent as an individual for any injury done to a passenger by a person in the course of his employment, who is in the service of the company. Ramsden v. Railway Co., 104 Mass., 117; Higgins v. W. T. and R. Co., 46 N. Y., 23; Hoffman v. N. Y. C. R. Co., 87 id., 25; Flynn v.H. R. R. Co., 49 Sup. Ct., 81; Stewart v. Brooklyn and C. R. R. Co., 90 id., 588.

And this liability will include the entire injury and indignity to which the plaintiff was subjected, not only by his removal from the car, but by his subsequent imprisonment and detention in the station house. Rown v. Christopher, etc., R. R. Co., 34 Hun, 471.

It has been urged in support of the action taken at the trial, that the dismissal of the complaint was justified under chapter 186 of the Laws of 1880. But while there was evidence in a measure tending to prove disorderly conduct on the part of the plaintiff, it was controverted by his own testimony and that of other witnesses taken at the trial.

Upon that subject a question of fact was created by this state of the evidence, which could only be legally solved by submitting the case to the jury. It was likewise in the same condition as to the charge made at the station house against the plaintiff.

On his part it was affirmed that he had been charged with a larceny, for which under the circumstances there was no possible excuse. But on the part of the defendant it was averred that the charge was that of disorderly conduct. So far as it was material to settle the precise character of the charge in the disposition of the case, the evidence was such as required it to be submitted to the jury. In no view was it a case for the dismissal of the complaint.

The judgment should be reversed, and anew trial ordered with costs to abide the event.

Brady, J., concurs.

Davis, P. J.

(dissenting).—I cannot concur with views of my brother Daniels in this case. Assuming that the plaintiff put the wrong amount of fare in the box, it was no fault of the driver that he did so. There was no evidence of it but the plaintiff’s assertion, but if there were the driver had no authority to correct the error. He had no access to the box and could not return the deposited fare, and an attempt to do so by forcing open the box would have been unjustifiable on his part; as he was not permitted to receive fares he had no money of the company which he could use to correct the mistake. To clothe drivers with power to refund for alleged mistakes would subject the company to such frauds by collusion with claimants as would overturn all the safeguards adopted by the company to prevent the embezzlement of their fares by the driver or persons in collusion with him. A person who makes the mistake of depositing the wrong fare is responsible for the consequences of his own act, and is subject to all reasonable rules as to the mode of its correction. It is not unreasonable that he shall apply to the company and not the driver. His carelessness brings this upon himself, and though it may be onerous to seek relief at the office, it is not unreasonable to require him to do so. But to hold that such a person, by reason of his mistake, is authorized to collect and keep the fares of other persons is going altogether too far. It makes him judge, jury and executioner in his own case, a procedure which the law does not sanction. It would open a wide field for fraud and larcenies if every person who makes or asserts a mistake on depositing his fare may at once collect from incoming passengers whatever amount he chooses to assert that he has paid. The thieves -of the city would do a thriving and profitable business on the cars if such a practice were held lawful. Besides the taking of another fare by such a person is not payment of the fare by that person. He or she is bound to put it in the box, and entrusting it to a stranger is not discharging the obligation of the passenger, and especially is that the case when the passenger knows that the stranger intends to keep it on his claim of overpayment of his own fare. Such a rule as the opinion asserts would lead to the great embarrassment of innocent persons whose fares happened to be captured by one who had made a mistake, or claimed he had made a mistake, in depositing his own fare. The plaintiff in this case was guilty of a wrong in his attempting to rectify his mistake if he had made one in the manner he did. It led to the alleged arrest for which he was alone to be blamed. I think also if he were charged by the driver the next morning with larceny the company were not responsible for that act. The plaintiff was in custody for disorderly conduct. The company had not authorized the driver to make' another charge on the following day, and were not responsible if it were done.

I think the judgment should be affirmed.


source: Caselaw Access Project

author: Davis, P. J.

license: Public Domain

text:
    Isaac Moog, App’lt, v. James Keogh et al., Resp’ts.

      (Supreme Court, General Term, First Department,

      Filed December 30, 1886.)

    Jurisdiction—City marshal—Bond on how prosecuted—Laws 1868, chap. 484.
    Plaintiff wishing to prosecute the official bond of a certain city marshal for official misconduct, under the Laws of 1862, chapter 484, section 6, made a motion before a judge of the court of common pleas for an order granting leave to prosecute sáíd bond in his name in the supreme court, and an order to that effect was granted by the judge. Held, that the judge had no power to make such an ordr r, and that plaintiff had not acquired the right to prosecute the bond. That said judge only had the power to grant the right to prosecute said bonds in the city court of New York or one oí the district courts. See section 7 of said act.

      Appeal from judgment dismissing complaint on trial at circuit and from order denying motion for new trial.

      Anthony JR. Lyett & I. L. Bamberyer, for app’lt; H. H. Glass and L. L. Kbllogg, for resp’t.
   Davis, P. J.

This action was brought on a city marshal’s bond, executed under the provisions of chapter 484, of the Laws of 1862, to the mayor, aldermen and commonalty of the city of New York. Section 6 of that act provides that any person who shall be aggrieved by any official misconduct on the part of any marshal, and who may desire to prosecute his official bond, etc., may move before a justice of the court of common pleas in and for the city and county of New York, at chambers, after notice for leave to prosecute such official bonds in his own name. And section 1 of the act provides that such justice of the common pleas may order such bond to be prosecuted in any of the district courts of the city of New York, or in the marine court of the city of New York.

A motion was made before a judge of the court of common pleas under-these provisions for leave to prosecute the bonds in the name of the plaintiff in the supreme court, and an order to that effect was granted by the judge.

This action was thereupon commenced, and at the trial at circuit the court dismissed the complaint on the ground that the plaintiff could not maintain an action in this court in his own name under the order granted by the judge of the common pleas. A motion was afterwards made before the justice holding the circuit for a new trial, which motion was denied, and this appeal is from the judgment dismissing the complaint, and from the order denying the motion for a new triaL „

The act of 1862 provides a special form of procedure under which an aggrieved party may obtain an order from a judge of the court of common pleas at chambers author izing the prosecution in his own name of a marshal’s bond, and the act prescribes the order that such judge may make by enacting that he may order such bond to be prosecuted in any of the district courts of the city of New York or in the marine court of that city, and conferring jurisdiction upon either of those courts to entertain the action. No power is given to the judge of the common pleas to make any other order than that prescribed in those sections. His jurisdiction is a special and limited one restricted to the form of order prescribed by the Statute. He had no power to direct the prosecution of the bond in this court in the name of the plaintiff and the order which purported to do so conferred no greater right upon the plaintiff than he previously possessed. The right of the plaintiff to maintain an action in Ms own name on the bond in this court cannot be upheld by the order of the judge of the common pleas and the learned justice was right in dismissing the complaint unless the plaintiff was entitled independently of the order to bring an action on the bond in his own name. The bond was given to the mayor, aldermen and commonalty of the city ef New York. Undoubtedly this court has jurisdiction to entertain any action that the obligees may see fit to bring upon the bond, but no person other than such obligees can maintain an action thereon in his own name in this or any other court unless specially authorized by some statutory provision. The plaintiff is not an obligee of the bond and for that reason cannot sue in his own name without showing some special statutory authority authorizing him so to do. He wholly fails to show that, because the order of the judge of the common pleas which he produced, was not one which such judge had power to make. By consent of the obligees the plaintiff probably could have brought an action for his own benefit in their name. But no such consent appears to have been given. On the contrary, he undertakes to sue without the consent of the obligees and in his own name relying' for his right to do so upon the order of the judge of the common pleas, which order such judge had not power to make. It is not a question of jurisdiction of the subject-matter in tins court, but of the right to maintain an action upon a bond of a public officer given to the mayor, etc., by an alleged injured party without having taken the steps necessary to acquire that right, and upon the order not of a court, but of a judge whose powers were restricted and limited by statute and cannot be extended beyond such limitation.

We think, therefore, that the court below was right in dismissing the complaint and denying the motion for new trial and that the judgment and order should be affirmed.

Daniels and Brady, JJ., concur.


author: Churchill, J.—The

text:
    Charles Wehrhane et al., Executors, etc., of Julius Hallgarten, deceased, App’lts, v. Nashville, Chattanooga and St. Louis R. R. Co. and the Louisville and Nashville R. R. Co., Resp’ts.

      (Supreme Court, General Term, First Department,

      Filed December 30, 1886.)

    1. Corporation (railroad)—Acts within the powers of the company —Not void as ultra vires.
    The charter of a corporation read in connection with the general laws applicable to it, is the measure of its powers, and whatever under the charter and such general laws, reasonably construed, may faiily be regarded as incidental to the objects for which the corporation was created, or to which its powers have been extended, will be treated within its powers. Corporations, in addition to the express and substantial powers conferred upon them by their charters, or such general laws, take by inference or implication all the reasonable modes of executing the powers conferred upon them which a natural person would have in the exercise of similar powers, and by such general laws may be enabled to do acts or make contracts which otherwise would be void as ultra vires. (Gases cited.)

    3. Same—Authority to purchase other railroads.
    The charter of the M., C. and St. L. It. R. Co., a Tennessee corporation, gave it the power to buy, hold and sell real and personal estate, to make contracts, and to do all lawful acts properly incidental to a corporation. And such additional power was given as might be convenient for the due and successful execution of the powers granted by its charter and for the successful construction and management of its work. The statutes of said state in the most general terms gave to any railroad corporation in the state the right and power to acquire by purchase or other lawful contract and to hold, use and operate any railroad, with its franchises, belonging to any other railroad corporation, and to borrow money and issue its bonds for that or for any other debt or liability incurred in the exercise of its lawful purposes, and to consolidate itself upon such terms and conditions and under such name as might bo agreed upon, with any connecting or intersecting railroad corporation, whether of that or any other state, and did not attempt to define the manner in which such end should be attained. Held, that the purchase by the said company of a majority of the stock of the O. and ÍT. R. R. Co., a Kentucky corporation, for the purpose of gaining the control and practical ownership of the railroad of the latter, with its franchises, and the issue of its bonds for the construction and equipment of the road, is in the direction, among the purposes and within the powers granted and authorized by said general laws.
    3. Same—Ratification—Of acts of. officer of corporation.
    Where the president of a railroad clearly exceeded his authority in making a contract, it is not binding on the company unless ratified by the company, but such ratification may be by express assent, or by acts or conduct of the principal, inconsistent with any other supposition than that he intended to adopt the act done in his name. And this principle applies to corporations as well as individuals.
    Appeal from judgment dismissing complaint, and from order denying motion for new trial on the ground of newly discovered evidence. *

      Everett P. Wheeler and Thomas O. Shearman, for app’lts; John L. Cadwalader and William Allen Butler, for resp’ts.
   Churchill, J.—The

Nashville, Chattanooga and St. Louis Railroad Company, one of the defendants in this action, was originally incorported by the state of Tennessee as the Nashville and Chattanooga Railroad Company, to establish railroad communication between Nashville and Chattanooga, but prior to May, 1879, it had become the Nashville, Chattanooga and St. Louis Railway Company, with communications extending southeast from Chattoonga, and from Nashville northwest by railroad line to Hickman on the Mississippi River, and by the river to St. Louis. Just before May, 1879. the St. Louis and Southeastern Railroad had been sold in foreclosure proceedings. That road consisted of two branches; one running from Nashville to Henderson on the Ohio River in Kentucky, a distance of 146 miles, and the other running from Evansville on the Ohio River in Indiana to St. Louis, a distance of 163 miles. The two branches were connected by a river ferry ten miles long, from Henderson to Evansville. The Nashville, Chattanooga and St. Louis Railroad Company intended to purchase the entire road, which would have given it a new and direct route of its own from Nashville to St. Louis, and at Evansville connection with railroads running north directly to Chicago. The road was sold in two sections; the Chattanooga Company buying the northern section running from St. Louis to Evansville, while the southern section, extending from Nashville to .the Ohio River, was bought by the Louisville and Nashville Railroad Company, the principal rival, of the Chattanooga Company for through traffic. To make its new purchase of any value for the purpose for which it was bought, the Chattanooga Company was compelled to secure a new connection between Nashville and Evansville, and the evidence shows this to have become at once a leading consideration with that corporation.

Three existing corporations with their franchises covered the distance. The Owensboro and Nashville Railroad Company was a Tennessee corporation, extending from Nashville north fifty miles to the Kentucky line at Adairsville. The Owensboro and Nashville Railroad Co. was a Kentucky corporation, extending north from Adairsville across Kentucky to Owensboro, on the Ohio river, and along the south side of the Ohio river to a point four miles north of Owensboro, a distance of about ninety miles. The Evansville, Owensboro and Nashville Railroad Company was an Indiana corporation, extending from Evansville seventeen miles east along the north side of the Ohio river to a point four miles west of Owensboro. No part of these railroads was built, except that the track of the Owensboro and Nashville Railroad was laid from Owensboro to Owensboro Junction, a distance of about thirty-five miles, and the grading was extended and right of way secured from that point to the Tennessee line. The franchises of the other two companies had in some way become the property of the Owensboro and Nashville Railroad Company, but all these existed as distinct corporations.

May 13, 1879, one Anderson agreed to sell to the Chattanooga Company a majority, or $758,000 of the stock of the Owensboro and Nashville Railroad Company (the whole capital stock being $1,156,000), for $145,000, payable one-half in cash on the delivery of the stock and the remainder in nine and twelve months, to be satisfactorily secured. He at the same time guaranteed that the floating debt of that company did not exceed $20,000, and also that the title of the company to the franchises, rights and immunities of the companies “known under the name of the Owensboro and Russellville, and the Evansville, Owensboro and Nashville, and now the Owensboro and Nashville Railroad,” was a good and valid one, and if such title was not satisfactory to the Chattanooga Company the sale was to be void.

On the 20th of May this agreement was communicated to the Chattanooga Company and accepted by them, and the president of the company (E. W. Cole) was directed to carry it into execution, and also to purchase, if possible, the balance of the stock of the Owensboro and Nashville Company.

On the 30th of May, 1879, Cole reported in writing to the Board of Directors of the Chattanooga Company, at a meeting held in Nashville, that in accordance with their orders he had closed with Anderson, and had received from him a certificate for $738,000 of the stock of the Owensboro and Nashville Railroad Company, and had given him the company’s secured notes for one-half of the purchase price and had paid him one-half the balance ($36,250) in cash, and had retained the rest of the purchase price until the title papers could be fully examined. He also reported that he had paid $17,441.71 in full of the floating debt of the company, so far as known, and had received $50,000 of the first mortgage bonds of the Owensboro and Nashville Company, properly executed by its president and secretary, and $300,000 unexecuted blank bonds of the same mortgage and series, and also that he was trying and hoped to buy the balance of its stock, but had not yet succeeded. The board received the report and ordered it spread upon their minutes, and thereupon unanimously adopted the following resolution:

Resolved, By the directors of the Nashville, Chattanooga and St. Louis Railway, that the president of this company is hereby authorized and directed, as soon as the attorneys of this company are satisfied as to the title of the Owensboro and Nashville Railroad Company, to proceed, in his discretion, to complete and equip the Owensboro and Nashville Railroad from its present terminus at Owensboro Junction, Kentucky, to Springfield, in Robertson county, or to Nashville, Tennessee, as well as to put the present track of that road—thirty-five miles—in running order, and to raise the money to do the same by the sale or hypothecation of the first mortgage bonds of the Owensboro and Nashville Railroad, endorsed and guaranteed, piincipal and interest, by the Nashville, Chattanooga and St. Louis Railway; or by the sale or hypothecation of six iter cent forty-year bonds of the Nashville, Chattanooga and St. Louis Railway, with first mortgage on the Owensboro and Nashville Railroad, not to exceed in either case twelve (IS) thousand dollars per mile.

August 5, 1879, the stockholders of the Owensboro and Nashville Railroad Company adopted resolutions authorizing their president and directors, instead of issuing the bonds of the Owensboro and Nashville Railroad Company, to receive as a loan from the Chattanooga Company, upon such terms as might be mutually agreed upon, the bonds of the latter company, not to exceed $1,750,000, and to execute such mortgages or other conveyances as might be necessary to secure said bonds upon the properties of the Owensboro and Nashville Railroad Company, whether situated in Kentucky or Tennessee; and also authorizing their president and directors to contract with the Chattanooga Company to immediately undertake the completion and equipment of the Owensboro and Nashville Railroad from Owensboro to Nashville, and to pay therefor a sum not to exceed ten per cent in excess of the actual cost of such construction and equipment. On the following day (August sixth) the board of directors of the Owensboro and Nashville Railroad Company adopted resolutions directing their president to carry into effect the resolutions of their stockholders by making the contract and agreement therein provided for with the Chattanooga Company.

Between the 30th of May and the 10th of September, 1879, additional purchases of the stock of the Owensboro and Nashville Railroad Company had been made by the Chattanooga Company, and also a quantity of the first mortgage bonds of the Owensboro and Russellville Railroad Company had been purchased. On the 10th of September, 1879, at a meeting of the stockholders of the Chattanooga Company, held at Nashville, the action of their directory in the original purchase of the stock of the Owensboro and Nashville Railroad Company, with the additional purchases just referred to, was unanimously approved, and at the same time a resolution was unanimously adopted, reciting at length the resolutions of the stockholders and directors of the Owensboro and Nashville Railroad Company of August fifth and sixth, and above referred to, and concluding as follows :

“Resolved, That the directors of the said Nashville, Chattanooga and St. Louis Railway he, and they are hereby authorized to execute a contract with said Owensboro and Nashville Railroad Company for the building, completion and equipment of said Owensboro and Nashville Railroad upon such terms as said directory may deem best for the interest of this company.”

The contract contemplated by this resolution was soon after and before November 25, 1879, entered into, but the precise date does not appear.

It remained to provide the necessary funds. The resolution of May 30th, authorized the president (E. W. Cole), of the Chattanooga Company to do this by the sale or hypothecation, either of the first mortgage bonds of the Owensboro and Nashville Company guaranteed by the Chattanooga company, or of the six per cent forty year bonds of the Chattanooga Company, secured by first mortgage on the Owensboro and Nashville Railroad, but not to exceed $12,000 per mile. The action of the stockholders and directors of the Owensboro and Nashville Company above referred to, had in effect, limited the raising of the money to the latter of these methods. Under this resolution and for the purpose indicated by it, and without other authority, so far as appears from the evidence, Cole on the 20th of October, 1879, entered into the contract in suit. The contract appears in the following exhibits:

EXHIBIT A.

New York, October 20, 1879.
The Nashville, Chattanooga and St. Louis Railroad propose to issue its six six per cent forty years’ gold bonds, free from any tax that may be levied on such bonds by the United States government, for §14,000 per mile cf completed road, Chicago division, with first mortgage on the road, road-1 ed, rails, superstructure, right of way, locomotives, cars tools, franch ses, and all other property of every description, belonging to said Chicago division, extending from the city of Nashville, Tenn., Da. Owensboro, ICy., to the city of Evansville, Ind., being about one hundred and fifty-seven miles. Said railroad to he finished as a first-class road, with steel rail from the beginning, with the exception of twenty (20) miles of heavy fish-bar iron already laid, ballasted track, first-class oak cross ties, iron combination bridges, etc.
E. W. COLE, President.

EXHIBIT B.

We, the undersigned, propose to take and pay for the amount of bonds annexed to our name, as indicated above at ninety (90) cents on the dollar. The whole issue to he engraved and deposited iu trust with the Central Trust Company, to he delivered to us by said company, upon payment to the Nashville, Chattanooga and St. Louis railway, our respective proportion at ninety (90> cants on the dollar, as the road is completed.
The following payments, or any part of the same, to be made on account of the road already completed, if called for by the said railway : One installment of §150,000 on the 15th day of November, 1879; §100,000 on the 1st day of December, 1879; and §150,000 on the 1st day of January, 1880, and so on until the W'hole is completed.
Title to property to be approved by attorney for said Trust Company:
George I. Sene)', for self and others............................. §698,000
Kuhn, Leob & Co............................................. 150,000
Edmund D Randolph, President, for self and others.............. 330,000
Kountze Brothers........................................... 150,000
E. D. Tapran, President........................................ 25.000
Roosevelt & Son................................................ 250,000
Julius Hallgarten, self......................................... 25,000
W. T. Walters,.Baltimore, Md., (by telegraph).................... 100,000
J. S. Kennedy & Co............................................ 195,000
G. G. Williams............................................... 25,000

EXHIBIT O.

P. D. Tapper, Pres’t, City: 23d October, 1879.
My Dear Sir—Enclosed please find copy of agreement, from which you will see that the syndicate is made up, the subscription completed. Nothing more can be done until the title to the property has been passed upon by the attorney of Central Trust Company and the bonds are ready for delivery according to the agreement. I go home to NashDlle to-morrow, and will return to New York before anything further has to be done.
Very respectfully your obedient servant,
E. W. COLE, President.
Have sent copy of agreement and note to each subscriber.

This offer as made by Cole exceeded his authority in that it proposed an issue of §14,000 of bonds instead of $12,000 per mile; and for 157 miles, the distance from Evansville to Nashville, instead of 140 miles, the distance from Owensboro to Nashville; and offered security by a mortgage on a completed road for the entire distance or for seventeen miles more than contemplated by the resolution of May 30th.

From the importance to the Chattanooga Company of a connection at Evansville with its recently acquired road from St. Louis to that point, it is very likely than an extension of the Owensboro and Nashville road to Evansville as indicated in the paper of October 20th, was in the minds of its directors before that date, but the first official action taken in that direction, so far as ajypears from the evidence, was on November 25, 1879. Before that day the city of Evansville had offered $100,000 toward the construction of the road if it should be extended to that city. On that day a meeting of the directors of the Chattanooga Company was held in Nashville, and also a meeting of the stockholders of the company at which 39,251 shares of stock were represented and voted upon. At the latter meeting a resolution was adopted ratifying and approving the contract which had been entered into between the Chattanooga Company and the Owensboro and Nashville Company. At both meetings resolutions were adopted accepting the offer of the city of Evansville, approving the extension of the Owensboro and Nashville Eailroad to that city and authorizing its construction and equipment under the contract made between the two companies. On the same day the following contract was approved and executed:

“ Contract between the Nashville, Chattanooga and St. Louis Railway and the Owensboro and Nashville Railroad Company.
“In pursuance oí resolution heretofore passed by both boards of directors and by the stockholders of both the Nashville, Chattanooga and St. Louis Railway and the Owensboro and Nashville Railroad Company.
“The Nashville, Chattanooga and St. Louis Railway agrees to loan a sufficient amount of money to the Owensboro and Nashville Railroad Company with which to build and equip the ro.id of the Owensboro and Nashville Railroad Company from Nashville, Tenn., to Owensboro, ICy., said sum of money to be reimbursed by the latter company to the former company out of the proceeds of the sale of the bonds secured by a mortgage on the property of the latter company when made, including the ten (10) per cent profit allowed the said Nashville, Chattanooga and St. Louis Railway in said resolutions.
“In witness whereof, the Nashville, Chattanooga and St. Louis Railway has caused this contract to be signed by its secretary and its corporate seal attached, and the Owensboro and Nashville Railroad Company has also executed this instrument by its president, this 25th day of November, 1879.
“ The Nashville, Chattahooga and St. Louis Railway,
“By R. C, BRANSFORB, Secretary.
“The Owensboro and Nashville Railroad Company,
“ By E. W. COLE, President.”

It appears from the proceedings of these meetings that E. W. Cole was at this time president of both the Nashville, Chattanooga and St. Louis Railway Company and of the Owensboro and Nashville Railroad Company, and for that reason the secretary of the former was specially authorized to execute the contract for that company. It also appears that Cole was present in Nashville at this time since he executed on that day the contract on behalf of the latter company. At each of these meetings the following resolution was adopted:

“Be it Resolved, that the contracts made hy the president of this company for the building and equipping of the Owensboro and Nashville Railroad, or any contracts that he may hereafter make, be and the same are hereby ratified and confirmed.”

This resolution and all the other proceedings of both meetings were adopted by a unanimous vote.

December 30, 1819, at a meeting of the directors of the Chattanooga Company, resolutions were adopted directing its president (E. W. Cole) to subscribe $800,000 to the capital stock of the Owensboro and Russellville Railroad Company, $600,000 to that of the Owensboro and Nashville Railroad Company, and $600,000 to that of the Evansville, Owensboro and Nashville Railroad Company, and to issue in payment therefor the six per cent forty-year gold coupon bonds of the Chattanooga Company, under agreements existing between it and the_ several companies; and also directing that the Evansville, Owensboro and Nashville Railway be operated and run as the St. Louis and Chicago division of the Nashville, Chattanooga and St. Louis Railway. From the preamble to these resolutions, it is fair to infer that the interests of the three companies other than the Chattanooga Company had been combined into one company, known as the “Evansville, Owensboro and Nashville Railway Company (consolidated),” and that the Chattanooga Company owned more than three-fourths of its stock, and that the officers and directors of the two companies were the same. How this combination had been effected does not appear, but as against the defendants in this action it is enough prima facie that it was recognized as a fact by the Chattanooga Company. At a meeting of the stockholders of the Chattanooga Company, held January 6, 1880, the action of the directors on December 30, above referred to, was ratified and approved.

From the evidence, it appears that in the ordinary course of business from two to four months would be required to produce the engraved bonds called for by the contract in suit, after the form had been agreed upon and submitted to the engraver, and it does not appear that any had been received from the engraver at the date last mentioned. Not long after that date it was discovered that the Louisville and Nashville Railroad Company (one of the defendants) had succeeded in purchasing a majority of the stock of the Chattanooga Company. This had been done to prevent the construction of the road from Nashville to Evansville by the way of Owensboro, which would be parallel to and a formidable rival to its own line from Nashville to Evansville by the way of Henderson. The result was, the abandonment by the Chattanooga Company of the plan which had occupied its attention since May, 1879, and had so largely involved its means and credit. A part of the plan so abandoned was the issue of the bonds in question.

, At a meeting of the stockholders of the Chattanooga Company, held at Nashville, February 26, 1880, the directors of that company were

“Instructed to settle upon an equitable basis with the subscribers to the $2,198,000 of six per cent bonds, either in connection with the disposition of the Owensboro and Nashville Railroad or without it.”

And afterwards, at the same meeting, they were directed

“To at once offer for sale to the Louisville and Nashville Company the St. Louis and South Eastern Railway and their interest in the Owensboro and Nashville Railroad Company.”

and in selling the interest in the Owensboro and Nashville Railroad Company they were

“ Authorized and instructed to consider the equities of the subscribers to the $2,198,000 of six per cent forty year bonds of the Nashville, Chattanooga and St. Louis Railway, to be secured by first mortgage on the Evansville, Owensboro and Nashville Railroad, and to adjust the same.”

On the 28th of February the directors of the Chattanooga Company appointed a committee of three (including their president, E. W. Cole), to make the sale, subject to their approval. On the third of March this committee submitted terms of sale to the Louisville and Nashville Company. These terms, as to the interest in the Evansville, Owensboro and Nashville Railway were that the Louisville and Company should reimburse the Chattanooga company for all expenditures of every kind made by them on account of that road, and also should.

“ Settle any damages that may accrue on account of the claim of subscribers in New'York or elsewhere, to a certain paper dated the 21st of October, 1879, by which the Nashville, Chattanooga and St. Louis Railway proposed to issue and said subscribers to take two thousand one hundred and ninety-eight ($2,198,000) six per cent forty year bonds, to be secured by a first mortgage on the Evansville, Owensboro and Nashville Railway, if any damages have or shall legally accrue to said parti< s, and to hold said Nashville, Chattanooga and St. Louis Railway harmless on account of the failure to deliver said bonds caused by the sale of and change in the ownership of the stock in the Nashville, Chattanooga and St. Louis Railway.”

On the following day (March 4th) this proposition was accepted by the board of directors of the Louisville and Nashville company, and approved and confirmed by the board of directors, of the Chattanooga company and the presidents of each company were directed to go forward and close a contract accordingly.

March 16, 1880, the following letter was sent by the vice-president of the Louisville and Nashville company, in pursuance of a resolution of the directors of that company, to the Chattanooga company.

New Yobic, March 16, 1880. Col. E. W. Cole, President N., G. and St. L. li’way:
Deab Sib—In order to relieve you from any further attention with regard to the subscription to the bonds of the Nashville, Chattanooga and St. Louis Railway (Chicago division) as per subscription paper, dated the 21st day of October, 1879,1 request to say üiat the Louisville and Nashville Railroad Company, by agreement with a committee from the stockholders of the Nashville, Chattanooga and St. Louis Railway and by resolution passed by its directors on the ¿id day of March, 1880, assumes the settlement of the question of the delivery of said bonds to the subscribers, a list of whom you have kindly furnished me, and said company assumes the settlement of any damages that have been or may hereafter accrue to said subscribers, and you are at liberty to furnish each of the subscribers with a copy of this letter.
Yours truly,
H. VICTOR NEWCOMB, Vice-President.

This letter was on the same day read to the board of directors of the Chattanooga Company by their president, to whom it was addressed, and accepted by them, and a copy sent to each subscriber to the bonds referred to.

Afterwards at a meeting of the stockholders of the Louisville and Nashville Company, held March 26th, and of the stockholders of the Chattanooga Company, held March 30, 1880, the action of the directors of the two companies was ratified and confirmed; and at the latter meeting, the acceptance of the proposition contained in the above letter of H. Victor Newcomb, to settle with the subscribers, was especially ratified and approved.

Afterwards, May 4th, 1880, the board of directors of the Louisville and Nashville Railroad Company adopted the following resolution:

Resolved, That the president be and he is hereby authorized to settle the claims of the subscribers for the contemplated issue of bonds on the Evansville, Owensboro and Nashville branch of the Nashville, Chattanooga and St. Louis Railway, allowing said parties to the extent of four per cent on the amount of bonds contracted to be issued upon such terms as the president may agree upon.

As early as March 25, 1880, the defendants positively refused to issue the bonds referred to.

The complaint was dismissed on the ground that the plaintiffs had failed to show Cole authorized to make the contract in suit, or that his acts were afterward ratified by the company, or that such contract was within the power of the Chattanooga Company, or that the Louisville and Nashville Company had become bound to pay the damages claimed in this action, and leave to go to the jury upon any of these questions, and particularly upon that of ratification, was denied, and judgment entered accordingly from which this appeal is taken.

The first question to be considered is whether the purchase by the Chattanooga Company of a majority of the stock of the Owensboro and Nashville Railroad Company, a Kentucky corporation, and the consequent direction to their president to complete and equip that road, and to raise the money therefor by the sale of the bonds of the company secured by mortgage on that road was within the power of the company or void as ultra vires. '

The charter of the company gave it the power to buy, hold and sell real and personal estate, to make contracts, and to do all lawful acts properly incidental to a corporation. And such additional power was given as might be convenient for the due and successful execution of the powers granted by its charter, and for the successful construction and management of its work. A subsequent law of Tennessee provided that every existing railroad corporation in this state shall have the right and the power to acquire by purchase and other lawful contract, and have, hold, use and operate any railroad with its franchises belonging to any other railroad corporation, and also the power to borrow money and to issue its bonds therefor, and to secure the payment of such bonds with the interest thereon, by the mortgage of the whole or any part of its railroad and equipments and other property containing such provisions as its directors shall approve; and also the power to consolidate itself with any other railroad corporation whose railroads shall connect with or intersect the road of such existing railroad corporation, or any branch thereof, and so to consolidate itself upon such terms and conditions, and under such corporate name as shall he agreed upon in writing between such corporations. Laws Tennessee 1871, chap 69, § 1.

This act was afterwards extended and applied to “consolidations between railroad companies existing under joint legislation of this and another state or states, and railroad companies incorporated by this or another, or other, state or states, whose roads connect with or intersect each other in this or any other state, and the said act shall be so construed.” Laws Tennessee 1875, chap. 57, § 1.

The charter of a corporation read in connection with the general laws applicable to it is the measure of its powers, and whenever under the charter and such general laws, reasonably construed, may fairly be regarded as incidental to the objects for which the corporation was created, or to which its powers have been extended, will be treated as within its powers. Corporations, in addition to the express and substantial powers conferred upon them by their charters or such general laws, take, by inference or implication, all the reasonable modes of executing the powers conferred upon them, which a natural person* would have in the exercise of similar powers, and by such general laws may be enabled to do acts or make contracts which otherwise would be void as ultra vires. 1 Wood’s Railway Law, 468, 474; Gfreen’s-Brice’s Ultra Vires, 90, 309; Green Bay R. R. Co. v. Union Steamboat Co., 107 U. S. Rep., 98; Branch v. Jesup, 106 id., 468; Vennor v. A. T. and S. F. R. R. Co., 28 Fed. Rep., 581.

In Green Bay B. B. Co. v. Union Steamboat Company, (supra), where the rule is very clearly stated, the charter of the plaintiff in error was for a railroad from Green Bay to the Mississippi River, and authorized it to make such contracts as the convenience and interest of the company might require. By the general laws of Wisconsin any railroad company in that state was authorized to make such contracts with any railroad terminating on the eastern shore of Lake Michigan in Michigan as would enable the roads to be run in connection with each other, and to build and run as a part of their corporate property, such number of steamboats or vessels as they might deem necessary to facilitate the business operations of the company or companies; and also to exercise its rights and franchises in any other state subject to the law of that state. Under its charter and these general laws, a contract with the Union Steamboat Company, a New York corporation, to put two of its steamers on the route between Buffalo and Green Bay to carry freight and passengers, and agreeing that the gross earnings of each should not be less than $45,000 a year, was held not to be beyond the corporate powers of the railroad company. The charter of a Georgia railroad provided that it might at any time incorporate its stock with the stock of any other company on such terms as might be mutually agreed upon. This was held to authorize the transfer of the railroad and all its franchises to another company and the extinguishment of the corporation. On the principle that the greater included the less this power to alienate or extinguish all its franchises was held to include the lesser power of alienating its road or a part of it and the franchises incident thereto and necessary to its operation. Accordingly, a contract to transfer a part of its line to another company, including the franchise for constructing and using the same, and to construct the same for that company, was held to be within its corporate powers. Branch v. Jesup (supra).

The purchasing company in that case had the general power to purchase property of every kind (limited of course by the general objects of its charter) but without the power to incorporate its stock with that of another company; and also had the power by its charter to construct its road over and beyond the line it proposed to purchase.

Its agreement to purchase a part of the line of the other company and to pay for it by the issue of its own stock therefore was also held to be within its corporate powers. A statute of this state (Laws 1839, chap. 213) authorizing any railroad corporation to contract with any other railroad corporation for the use of their respective roads and thereafter to use such roads in the manner prescribed by such contracts has been repeatedly held to authorize contracts by which the one company transferred to the other the exclusive possession and control of its property. Woodruff v. Erie R. Co., 93 N. Y., 609, 616, and cases cited; Ogdensburgh R. R. Co. v. Vermont R. R. Co., Abb., N. S., 249.

The statutes of Tennessee in the most general terms gave to any railroad corporation in the state the right and power to acquire by purchase or other lawful contract, and to hold, use and operate any railroad with its franchises belonging to any other railroad corporation, and to borrow money and issue its bonds for that or for any other debt or liability incurred in the exercise of its lawful purposes, and to consolidate itself upon such terms and conditions and under such name as might be agreed upon with any connecting or intersecting railroad corporation whether of that or any other state, and did not attempt to define the manner in which such ends should be attained. The purchase by the Chattanooga Company of a majority of the stock of the Owensboro and Nashville Eailroad Company for the purpose of gaining the control and practical ownership of the railroad of the latter with its franchises, and the issue of its bonds for the construction and equipment of the road seems clearly in the direction, among the purposes, and within the powers granted and authorized by these general laws.

It is said that a corporation cannot invest its money in the stock of another corporation unless invested with the express or implied authority so to do. But such authority will be implied when the investment is made for a purpose within the powers of the corporation Thus a national bank, though having no authority to deal in stocks, mad take such stocks in payment of a doubtful debt and holy and dispose of the same. If (as we conclude) the purpose for which the stock of the Owensboro and Nashville Eailroad Company was bought, was within the powers of the Chattanooga Company under the laws of Tennessee, then the purchase itself was lawful. Bank of Charlotte v. Bank of Baltimore, 92 U. S. Rep., 122; 1 Wood’s Eailway Law, 517-518.

But the contract in suit, if within the powers of the corporation, was, in the respects heretofore pointed out, clearly in excess of the authority given Cole, and not binding unless ratified. Such ratification may be by express assent, or by acts or conduct of the principal, inconsistent with any other supposition than that he intended to adopt the act done in his name. And this principle applies to corporations as well as individuals. Peterson v. Mayor of New York, 17 N. Y., 449; Hoyt v. Thompson’s Executor, 19 id., 207.

On the 25th of November, 1879, thirty-six days after the contract in suit was made, the directors of the Chattanooga Company adopted a resolution ratifying and confirming the contracts made by Cole for building and equipping the Owensboro and Nashville Railroad. The resolution of May 30th authorized Cole to complete the road, and also to raise the money to do the same, and a contract for either purpose would come within the terms of the resolution of November 25th. If the evidence is such as to warrant a finding that the contract in suit was within the knowledge and in the minds of the directors when this resolution was adopted, it must be held to have been one of the contracts intended to be confirmed by it.

The evidence shows Cole to have been present at that meeting. It shows the fullest accord existing between himself and the directors and stockholders of the company, with respect to the extension of their road to the Ohio river and to Evansville, and the action taken looking to that end, and it fails to disclose any reason why he should have desired to keep the knowledge of this contract to himself. It was his duty to communicate to the directors and stockholders of the company what he bad done with respect to raising money. On that day both the directors and stockholders of the company approved and authorized the extension of the road to Evansville, and removed the limit of $12,000 per mile fixed by the resolution of May 30th, by agreeing without limit “to loan a sufficient amount of money to build and equip the road.” By this action all reason for hesitancy on the part of Cole in making known his action to the company, if any had existed, was removed.

In the subsequent proceedings of the directors and stockholders of the two defendant companies, numerous references are made to the contract in suit, and nowhere is it suggested that it was unauthorized or not the acb of the Chattanooga company. On the contrary, in the resolution adopted by the stockholders of the Chattanooga company, February 26, 1880, the bonds are described as the “bonds of the Nashville, Chattanooga and St. Louis railway.” In the report of this committee, dated March 3, 1880, and which was accepted by the directors and stockholders of both companies, the paper of October twentieth is spoken of as one by which 1 ‘ the Nashville, Chattanooga and St. Louis Railway proposed to issue ” the bonds in question. The report assigns a single reason for the failure to deliver the bonds, viz.: “The sale of or change in the ownership of the stock in the Nashville, Chattanooga and St. Louis Railway.” llExpressio unius est exclusio alterius.”

Nowhere is it intimated that the contract had come recently to their knowledge.

All these are circumstances proper to be considered on the question whether the directors of the Chattanooga Company had not knowledge of this contract when adopting that resolution of ratification of November twenty-fifth, and whether it was not within the scope of that resolution; and also upon the question whether the acts and conduct of the company are not inconsistent with any other supposition than that it intended to adopt and had adopted the act done in its name. The inference to be drawn from such variety of circumstances is for the jury and not for the court.

The court erred in holding the contract beyond the power of the company, and in refusing to submit the question of its ratification to the jury.

An appeal has also been taken in this action from an order denying a new trial asked for on the ground of newly discovered evidence.

The new evidence sought was important both on the question of ultra vires and of ratification.

The new evidence as to the proceedings of the meeting of the board of directors of the Chattanooga Company, December 30, 1879, shows that their attention was called at that time by their president (Cole) to this contract and to the fact that it proposed an issue of $14,000 per mile; and in such way as to imply a previous familiarity on the part of the board with the contract. The report of February 26, 1879, is material to show the purposes for which the stock and franchises of the Owensboro and Nashville Railroad Company were bought, and whether it was a claim of admitted or disputed liability to which the subsequent action of the defendant companies referred. It was the misfortune, not the fault, of the plaintiff that the evidence was not present and offered at the trial.

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

• Daniels and Brady, JJ., concur.


text:
    Catherine Mendel, Resp’t. v. Morris Mendel, App’lt.

      (Supreme Court, General Term, First Department,

      Filed December 30, 1886.)

    Practice—Contempt for non-payment of alimony—When order defective—Code Civ. Pro., §§ 1773, 2266, 14.
    An order to punish one for contempt in the non-payment of alimony must adjudge that the failure to pay had defeated, impaired, impeded or prejudiced the party applying therefor in her rights. If this is omitted, the order is radically defective, and the punishment cannot be inflicted.
    Appeal from an order adjudging the defendant to be in contempt for the non-payment of alimony, and directing his commitment to prison until such payment shall be made.

      August P. Wagener, for app’lt; Ii. F. Andrews, for resp’t.
   Daniels, J.

The affidavit upon which the motion was made, in the absence of any explanation on behalf of the defendant, did prove him to be in default for not making the payments to the plaintiff which he was required to make by the judgment. And as security for such payment could not be obtained from him, he could legally be punished for his failure to comply with the directions contained in the judgment. But as the order from which the appeal has been brought did not adjudge that his failure to pay had in any manner defeated, impaired, impeded or prejudiced the plaintiff in her rights, it has been objected to as insufficient for this purpose. And this objection seems to be well grounded. For while by section 1773 of the Code of Civil Procedure, the defendant may be punished for his failure to comply with the judgment the proceedings to be taken for that purpose must still be “as prescribed in title 3 of chapter 17 of this act.” And that title, by section 2266, has authorized the proceeding only when “a right, or remedy, of a party to a civil action, or special proceeding, pending in court, or before the judge, or the referee, may be defeated, impaired, impeded or prejudiced thereby.” And by section 2281 of the same Code, a commitment of the defendant can only be made when “it is determined that the accused has committed the offense charged, and that it was calculated to, or actually did, defeat, impair, impede, or prejudice the rights or remedies of the other party.” And to the like effect is section 14 of the same Code, providing power to punish by fine and imprisonment, or either, a neglect, or violation of or other misconduct, “by which a right or remedy of duty a party to a civil action or special proceeding pending in the court may be defeated, impaired, impeded or prejudiced.” This qualification of the power of the court is made to include each of the following subdivisions of the section. And by subdivision 3 it has been applied to a party to the action, or other person, for the non-payment of a sum of money ordered or adjudged by the court to be paid, in a case where by law an execution cannot be awarded for the cohection of such sum.

These sections of the Code clearly subject the right of the . plaintiff to punish the defendant for the non-payment of this alimony, to the necessity of such an adjudication, which can no otherwise regularly appear than by the order, and they have been considered as requiring this construction and application on preceding occasions. Matter of Swenarton, 40 Hun, 41; Sandford v. Sandford, id., 540; Fischer v. Raab, 81 N. Y., 235. This order is, therefore, materially and radically defective, not authorizing the punishment proposed to be inflicted upon the defendant.

It should therefore be reversed, with the usual costs and disbursements, and the motion denied, without prejudice to another application to the court for the same relief.

Brady, J., concurs, except as to costs.

Davis, P. J.

I think the costs and disbursements should not be allowed. It is not usual to allow costs against the wife in actions for divorce. In this case the defect in the order is not the fault of plaintiff, but the omission by the court to insert the facts (which were shown) which gave jurisdiction to make the order. I concur, except as to costs.


author: Lawrence, J. Brady, J.

text:
    Corn Exchange Bank, App’lt, v. Farmers’ National Bank of Lancaster, Pa., Resp’t.

      (Supreme Court, General Term, First Department,

      Filed December 30, 1886.)

    1. Bills—Notes—Collection of—When correspondent cannot retain THE AMOUNT COLLECTED AGAINST REAL OWNER.
    The property in business paper received for collection by one engaged in the business of banking and collections forwarded by him to his correspondent in the usual course of such business, without any express agreement in reference thereto, does not become vested in the correspondent, although he may have remitted upon general account in anticipation of collection.
    2. Same—When correspondent can retain proceeds.
    It is-,only, where, by express contract or well established course of dealing, the correspondent becomes responsible for the collection, and cannot seek reimbursement of advances in case of non-payment; that the correspondent can retain the draft or the proceeds of the collection as against the real owner.
    Appeal from a judgment of the court at circuit without a jury.

      John M. Bowers, for app’lt; Jefferson Clark, for resp’t.
   The findings of fact and conclusions of law and the opinion of the learned justice in the court below are as follows:

First. That plaintiff is a banking association, duly incorporated under the Laws of the state of New York, and carrying on business in the city of New York, and the defendant is a banking association incorporated under the laws of the United States, and carrying on business at Lancaster, Pennsylvania.

Second. That on the 18th day of July, 1884, the defendant, at said Lancaster, drew a bill of exchange in writing, and directed the same to the First National Bank at the city of New York, and thereby required the said First National Bank to pay to Loftin Love, cashier, or order, the sum of $1,870, and sent the same to the plaintiff by mail.

Third. The said Loftin Love was then plaintiff’s cashier, and said draft was made payable to said Love, as such cashier, and not to him individually, and the same was in reality payable to the plaintiff.

Fourth. That said draft was drawn for the special purpose of paying a check drawn by Mary 0. Melson, executrix, on defendant, payable to the order of John J. Cameron, for the sum of $1,871.84, and bearing date July 9th, 1884, and was drawn for no other purpose.

Fifth. That on the 14th day of July, 1884, said check was the property of John J. Cameron, of Indianapolis, Indiana, and was in his possession, and oh that day he endorsed the same in blank and delivered it to the firm of A. & J. C. S. Harrison, of said Indianapolis, then doing business there as bankers, for collection, and received no consideration therefor, said firm receiving the said check for collection only.

Sixth. That said firm indorsed said check in the following words: “Pay to Loftin Love, Cr., or order, for collection, amount of A. & J. 0. S. Harrison, Indianapolis, Ind.,” and sent the same to the plaintiff by mail with other inclosures in a letter addressed to said Love, and dated Indianapolis, July 15, 1884, the body of which letter, including the signature, was printed, and was in the following words: “ Dear Sir: Your favor of , with inclosures, received. We inclose for credit as stated below. Respectfully yours, A. & J. C. S. Harrison,” at the foot of which was the following in writing:

Farmers’ National.......... $1,871 84
Sperry, B..................................... 6,755 98
Verbach....................... 1,199 63
Total..................................... $9,827 45

Seventh. That plaintiff endorsed said check to defendant’s cashier for collection, and sent the same to defendant for payment, whereupon the said draft was drawn for the purpose of paying said check.

Eighth. That said Harrisons failed and suspended payment on the seventeenth day of July, 1884.

Ninth. That immediately after learning of said failure said Cameron, through said Mary C. Melson, requested defendant not to pay said check. That said draft had already been drawn and mailed to plaintiff.

Tenth. That subsequently, and before said draft was presented for payment, said Cameron, through said Mrs. Melson, requested defendant to stop payment of said draft, and pursuant to said request defendant notified the said First National Bank not to pay said draft, and said draft has not been paid.

Eleventh. That said check was returned by defendant to the drawer thereof, said Mary C. Melson, and was charged to her upon her account with defendant, upon which said check was drawn.

Twelfth. That said check was received by plaintiff on the 17 th day of July, 1884, and at that time and for several years prior thereto plaintiff had an account current with said Harrisons, and upon receiving said check credited the amount thereof upon said accomit.

The plaintiff kept only one form of account with said Harrisons.

Thirteenth. That neither Mary C. Melson individually or as executrix, nor John J. Cameron, were known to plaintiff at the time said check was received by plaintiff.

Fourteenth. That said check was so credited on said account, upon condition that if not collected it should be charged back to said Harrisons upon said account, and it was so charged back to said Harrisons upon said account,. on refusal of payment of said draft.

Fifteenth. That at the commencement of business on the 17th day of July, 1884, there was a balance to the credit of said Harrisons on said account.of the sum of $4,169.54; that on the same day the further sum of $8,306.96 was placed to the credit or said Harrisons on said account in addition to the amount of said check.

Sixteenth. That plaintiff paid certain drafts and certified a check for account of said Harrisons on said 17th day of July, 1885, but the amount of such payments and certification was less than the amount of said credits, not including the check in question, and there were no other payments or advances made by plaintiff on account of said Harrisons after receipt of said check and said certification and payments were not made by plaintiff on account of any particular item of commercial paper remitted to plaintiff by said Harrisons, but only upon general account.

First. That at the time of the commencement of this action plaintiff was not the owner of the check in question, or its proceeds, and defendant was not indebted to plaintiff on account of said check in any sum whatever.

Second. That plaintiff was the agent of Cameron in the collection of said check, and Cameron was authorized to revoke such agency, and to direct the defendant not to pay the same or its proceeds to the plaintiff.

Third. That the debt represented by said draft was not due to, and did not belong to the plaintiff, and plaintiff, at the time of the commencement of this action, was not entitled to receive payment of the same, and said draft was then void and of no effect in plaintiff’s hands.

Fourth. That defendant is entitled to judgment for the dismissal of the complaint on the merits, with costs.

Lawrence, J.

I am of the opinion that there should be judgment for the defendant. Cameron delivered the check to the Harrisons for collection, and it was transmitted by them to the plaintiff also for collection. Cameron did not part with his title to the check or to its proceeds, and he could, as owner, if the draft had been paid, demand the payment of the money directly from the plaintiffs, and forbid their paying it to the Harrisons. Comstock v. Hoag, 5 Wend., 600; Sickles v. Gillies, 35 Supr. Ct., 14; Barker v. Prentiss, 6 Mass., 430; Dickerson v. Wason, 47 N. Y., 439. In point of fact he notified the defendants not to pay the check, which empowered them to stop the payment of the draft which they had forwarded to the plaintiff. In the case of the City Bank of New Haven v. Perkins (29 N. Y., 554), cited by the plaintiff’s counsel, the bills of exchange had been transferred to the plaintiff by the cashier of the bank which owned them. The bank had made no claim upon the defendant that such transfer was invalid, and had not forbidden the defendant to pay the bills.

A very different state of facts is presented in this case. The case, as it stands upon the evidence, does not seem to me to differ in principle from Dickerson v. Wason (47 N. Y., 439). There the court held that the property in business paper received for collection by one engagéd in the business of banking and collections, forwarded by him to his correspondent in the usual course of such business, without any express agreement in reference thereto, does not become vested in the correspondent, although he may have remitted upon general account in anticipation of collections. It was also held that it is only where, by express contract or well established course of dealing, the correspondent becomes responsible for the collection and cannot seek reimbursement of advances in case of non-payment; that he can retain the draft or the proceeds of the collection as against the real owner.

I find nothing in the testimony which shows that there was any express agreement or well established course of dealing between the Harrisons and the plaintiff which will bring this case within the exception to the general rule stated in the case of Dickerson v. Wason, supra.

In the case of Metropolitan National Bank v. Lloyd (90 N. Y., 530), the check was, by depositor’s direction, credited to him as so much cash upon his pass-book, and it was held that the title to the check thereby passed to the bank.

In this case the testimony was uncontradicted that the check was delivered to the Harrisons for collection, and that it was not entered as cash in Cameron’s pass-book. It is true that it appears that the check was passed to his credit upon the books of the bank, but there is nothing to show that he was ever notified of the fact, or assented thereto.

In Metropolitan Bank v. Lloyd, after speaking of the facts shown by the evidence, Danforth, J., says: “These show that it was the intention of both parties to make the transfer of the check absolute, and not merely to enable the bank to receive the money upon it as Murray’s agent.”

Here the evidence is, that it was not the intention of the parties to make the transfer of the check absolute, but that the Harrisons should be Cameron’s agents for its collection.

For these reasons I shall render judgment for the defendant.

Brady, J.

We discover in the examination of this case nothing which will warrant us in disturbing the findings or enlarging them, and we think the opinion of Justice Lawrence, pronounced upon rendering his decision herein, expressive and conclusive. Having arrived at this conclusion it becomes a duty to affirm the judgment. Ordered accordingly, with costs.

Davis, P. J., concurs.


text:
    John L. Dodge, App’lt, v. James Havemeyer, Resp’t.

      (Supreme Court, General Term, First Department,

      Filed December 30, 1886.)

    1. Trial—Complaint—Motion to dismiss—Effect op, in submitting QUESTIONS OF FACT TO COURT.
    At the close of the evidence on a trial, defendant moved for a dismissal of the complaint upon several grounds, and neither party asked to go to the jury upon any question of fact. Hi Id. that the effect of submitting the mot on to dismiss to the decision of the court, and the omission of the plaintiff 11 ask to go the jury upon the questions of fact specified as grounds of the motion, or any other question of fact, vías to submit these questions to the court upon the evidence. • '

      2. Fraud—Must be affirmatively shown. '
    Fraud will not presumed, it must be affirmatively shown.
    3. Corporations—Action against stockholders in, under Laws 1884, chap. 40, § 10.
    Under Laws 1848, ch. 40, § 10, all the stockholders of every company incorporated under that act are severally and indvidually liable to the creditors of the company to an amount equal to the amount of stock held by them respectively, for all the debts and conti acts of the company until the whole amount of its capital shall have been paid in and a certificate made and recorded, as thereafter provided by that act. Held, that under the section quoted the remedy is by a suit for an accounting to fix the pm mta liability of the stockholders, and not by a suit to recover the whole debt from an individual stockholder.
    Appeal from judgment entered upon the dismissal of the complaint at circuit.

      Smith & Bowman, for app’lts; Thomas H. Barrowshy, for resp’t.
   Davis, P. J.

At the close of the evidence in this case the defendants moved to dismiss the complaint upon the following grounds as specified in the order of the court:

First. That no fraudulent overvaluation of the property of the Bald Mountain Mining Company, for which its stock was issued has been shown.

Second. That the plaintiff was himself a stockholder of the Bald Mountain Mining Company, and consequently was not in a position to maintain this action.”

Neither party asked to go to the jury upon any question of fact. The effect of submitting the motion to dismiss to the decision of the court, and the omission of the plaintiff to ask to go to the jury upon the questions of fact specified as grounds for the motion, or any other question of fact, was tp.submit to .the court those questions upon the evidence.The appellant is not now at liberty to say that it ought to' have, been submitted to the jury to * determine whether or not there was a'fraudulent, overvaluation of the property of the Bald Mountain mining company, for which its stock was issued; nor whether or not the plaintiff was a stockholder of the Mining Company. The court upon the evidence was in effect allowed to pass upon those questions, and it is now too late to say that they should have been submitted to the jury.

On looking into the evidence we are unable to see that the court was not right in finding and holding that there was no evidence of fraudulent overvaluation of the mining property taken for the stock of the company. The parties seemed to have acted in good faith "in estimating the value of the property at the whole amount at which it had been capitalized in the certificate of organization of the company. The property was not susceptible of exact valuation. The ■ circumstances surrounding it; the known enormous value of the mines then being actually worked adjoining it, the veins of which were supposed to extend into the property sold to this company, as described by the witnesses, tend rather to show that the company and all parties interested acted in good faith in the purchase, rather than with any actual fraudulent intent. They were deceived by appearances, and by honest expectations into the belief that the mines expected to be opened and worked by the company, were of the great value placed upon them. The learned judge was quite right in holding that the plantiff had failed to show the essential element of fraud in the sale and purchase of the mining property at the price of the whole capital of the company; and if any just view of the evidence warranted that conclusion, we are not at liberty to disturb it, though it may be possible or probable even, that the jury might have found otherwise.

Fraud was the important element, and fraud must be affirmatively shown. Brown v. Smith, 13 Hun, 408; S. C., 80 N. Y., 650; Schenck v. Andrews, 57 id., 133; Boynton v. Andrews, 63 id., 95; Lake Superior Iron Co. v. Drexel, 90 id., 93; Douglass v. Ireland, 73 id., 104.

The defendant was not a stockholder at the time of the organization and of the transactions supposed to show the alleged fraud. He became one subsequently, and so did the plaintiff. The evidence tends to show that both plaintiff and defendant were stockholders and participated in the efforts to launch the company into active life by raising funds to commence its operations to develop and work the mines. Neither seems to have participated in any of the acts now alleged to be fraudulent. The court substantially found this to have been the case, and the plaintiff did not ask to have the jury pass upon that question. The same remarks are therefore applicable to this ground' of the motion as those above made relating to the first ground.

If that were the case, these parties could not sue each other in an action at law. It is settled in Mathez v. Neidig (72 N. Y., 100), McMaster v. Davidson (29 Hun, 542), Bailey v. Bancker (3 Hill, 188), Richardson v. Abendroth (43 Barb., 162) that the remedy is by a suit for an accounting to fix the pro rata liability of the stockholders, and not by a suit to recover the whole debt from an individual stockholder. The plaintiff became a stockholder apparently at the time of making the loan for which the note was given to him and as a part of that transaction. If this were so, the court was right in holding that there could be no recovery in this action.

We think the judgment should be affirmed.

Daniels and Brady, JJ., concur.


author: Daniels, J.

text:
    Martha W. Leach, Resp’t, v. James A. Flack et al., Ex’rs, etc., App’lts.

      (Supreme Court, General Term, First Department,

      Filed December 30, 1886.)

    Practice—New trial—Excessive verdict—How rectified.
    An action was brought for the value of goods wrongfully taken by the sheriff on an execution; the jury gave a verdict for more tlian the value of said goods. The error of the jury was not in allowing the value of one or more articles which should not have been in luded, but in placing too h'gh a valuation upon the aggregate of the property itself. Held, that the error could not be rectified by a deduction from the judgment, but that a new trial must he ordered.
    Appeal from a judgment recovered on the verdict of a jury, and from an order denying a motion for a new trial.

      Treadwell Cleveland, for app’lts; E. Van Ness, for resp’t.
   Daniels, J.

A decision has been announced upon this appeal, directing the judgment to be reversed and a new trial of the issue to take place, but since then the fact has been brought to the attention of the court that the case on which the decision has been made was that which was examined and considered on the preceding appeal, when another judgment was also reversed and a new trial ordered because of the excessive amount of damages included in the verdict. The verdict which was then recovered was for the sum of $2,960.90, while it appears from the case upon the last trial that the verdict was for the sum of $2,855.90. The' items entering into the verdict of the jury on each occasion were the same and subject to the same deductions. And, notwithstanding the fact that the decision already announced has proceeded on a preceding case, it still does not require any different direction from that which has been given. For by the case made upon the last trial it appears that the jury by their verdict have exceeded the amount which, by the most liberal construction of the evidence, the plaintiff was proved entitled to receive.

The action was for the conversion of property taken under an execution issued against the person who sold the property to the plaintiff, who is his mother. It was used in carrying on the business of a coal yard at the foot óf East Thirty-sixth street, in the city of New York. And the sheriff, assuming from the fact of the property being in the .possession and use of the judgment debtor that he was its owner, levied upon it and sold it to satisfy the execution. He, as well as the creditors in the execution, appear to have proceeded in good faith, but they were not protected by that circumstance from liability for the value of the property seized and sold, and it was found to belong to the plaintiff, but they were by reason of that fact not liable for anything beyond its value. In other words, the case was such as to require the recovery to be limited to the actual loss of the plaintiff from the sale and conversion of the property. And this under the evidence, by the ■ most liberal construction which can be given to it in her favor, did not •exceed the sum of $1,803.15. The property was taken on the 12th of December, 1876, and allowing interest to her upon that valuation from that time to the recovery ofe the verdict, on the 12th of January, 1886, entitled her to* no greater sum than $2,775.97, being less than the amount of the verdict by the sum of $79.93.

If the recovery could be reduced by deducting this amount, further litigation between these parties would in that manner be avoided; but as the practice is now settled that cannot be done, for the error of the jury has been in allowing to the plaintiff not the value of one or more articles, which should not have been included, but in placing too high a valuation upon the aggregate .of the property itself, and where that is the source of the error it does_ not appear to be capable of being rectified by a deduction from the judgment. Whitehead v. Kennedy, 69 N. Y., 462, 468; Andrews v. Tyng, 94 id., 16.

At the time when the verdict was returned, the excess over and above what the plaintiff, in the most liberal view of the evidence was entitled to recover, might have been remitted, and in that manner another trial of the action could have been avoided. But that was. not done. The jury were still too liberal to the plaintiff in the estimate they put upon the property taken and converted, and the error into which they were in this manner drawn can only be corrected by the reversal of the judgment, and another trial of the issue as that has already been directed. No change in this respect should be made, but the order of the court as it has already been provided for should be allowed to stand.

Brady and Davis, JJ., concur.


text:
    Bowery National Bank of New York, Resp’t, v. Mayor, etc., of the City of New York, App’lts.

      (Supreme Court, General Term, First Department,

      Filed December 30, 1886.)

    Practice—Interpleader—Ween entiti.ed to order—Code Civil Pro.. § 820.
    A party defendant to an action asked for an order allowing him to pay the money into court and that certain other parties be interpleaded as defendant. Held, that in order to succeed.it was not necessary for the affidavit in support of the motion to show that the demands made on the money, etc., would probably be successful, but only that there was a person, not a party to the action, who makes a demand for the same debt wit .out collusion with defendant.

      Appeal from an order denying a motion made to join and implead certain parties as defendants in this action.

      Arthur H. Masten, for app’lts; James B. Marvin, for resp’t. ■
   Daniels, J.

The action was brought by the plaintiff as assignee of Alexander Y. Davidson, late sheriff of the county of New York, to recover the sum of $5,485.75 for services rendered by the sheriff for which he was entitled to payment from the city of New York. The latter did not deny its liability to pay this sum of money upon the account and for the services rendered by the sheriff. But other parties had claimed the money; and the object of this motion was to permit the city to pay the money into court and for an order bringing in these other parties' as defendants to contest and determine their conflicting claims to the fund in controversy.

It was shown in support of the application that attachments liad been issued in different actions to the sheriff, upon which he had become liable to the respective plaintiffs and for which it was insisted they had the right to resort to this fund for payment. The names of the plaintiffs in five of these different actions were not given in full, but .one símame in each case was given, followed by the abbreviations “et al.” This was an inartistic mode of presenting the fact that there were adverse claims to this fund, but the motion does not appear to have been denied for this cause. If it had been the court would probably have extended leave to the defendant to renew it upon a more complete state of the papers. And besides that, the plaintiff was in no manner seriously injured by this defect, for no difficulty could arise in the settlement of the order preventing the insertion of the full names of these different individuals. And the city should not because of this defect be exposed to the risk of paying this fund to the plaintiff and one or more of the other claimants. But it should be protected by the court, even though its own counsel may not have been quite as precise in the proceeding as the rules of practice require them to be. The affidavits, independently of this defect, did show that in these different suits the plaintiffs looked to this fund for the recovery of the amounts for which the sheriff is alleged to have become liable. And while it very well may be that they will not be able to recover the sums claimed by them in this manner, still the city should not be exposed to the risk of a litigation of that description, when it can well be avoided before the fund itself has been placed beyond the reach of these parties.

It further appeared, that proceedings supplementary to executions taken against the sheriff had resulted in the appointment of a receiver upon three different judgments, and this receiver also claimed to be entitled to resort to this fund for the payment of the judgments. Notice of these respective claims had been given to the city authorities; and while it may be probable that they will not be maintained as they have been made, that probability is not so clear as to require the application to be denied even under the rule and authorities referred to in Pustet v. Flannelly (60 How., 67).

By section 820 of the Code of Civil Procedure, the right of the defendant to succeed in an application of this description has not been restricted to demands which may probably be made successfully against the subject of the controversy, but what the legislature has required, is, that where a person, not a party to the action, makes a demand for the same debt, without collusion with the defendant, the latter may apply to the court upon notice to the claimant and the adverse party, for an order to substitute the claimant in his or its place, and to discharge the defendant from liability on paying into court the amount of the debt or dehvering the possession of the property or its value to such person as the court directs. That is all which the law has required to be proven to authorize the making of the order, and that was proven in support of this application. It was made to appear that there were these claimants to a part or the. whole of the fund and that no collusion existed between them and the defendant. And that under the language of this section, as .well as the construction given to it in Barnes v. Mayor, (27 Hun, 236) entitled it to the order. The right to the order was not excluded by the fact that the apparent right to the money may have been transferred to the plaintiff, for these parties were entitled to contest the legality of the transfer upon a trial before it could be determined that they should receive no part of this fund. And it does not follow because the plaintiff had received a formal agreement entitling it to this fund prior to the rendition of the services, or a copy of the sheriff’s account after that had been rendered intending thereby to transfer the title that it will be able to succeed in maintaining its right against these adverse claims. That is a matter which can be only ascertained after a trial shall have taken place. And as the defendant has no interest in that trial and claims no part of the fund itself it should not be required to contest with each of these different individuals, the priority or lights to this sum of money. The case of Baltimore, etc., R. R. Co. v. Arthur (90 N. Y., 234), does not refer in its decision to the point now in controversy. The interpleader was there denied because of the fact that there was a contest as to the legality of the debt, for a part of the demand in suit. The order in this case should be reversed with the usual costs and disbursements and an order should be entered permitting the defendant to pay the fund in controversy into court, and thereupon be discharged from the action and directing these different claimants to be made defendants in the suit in its place and stead.

Davis and Brady, JJ., concur.


author: Brady,- J.

text:
    Phinney Ayres et al., App’lts, v. Sarah J. Doying, Resp’t.

      (Supreme Court, General Term, First Department,

      Filed December 30, 1886.)

    Bills and notes—Equities—When person not a bona fide holder for VALUE.
    It is always competent for the maker of a note to fix the condition upon which the note shall he transferred, and to prohibit its transfer unless that condition be complied with, and one who takes a note, the use of which is restricted, as collateral securtiy for an antecedent debt cannot recover upon it.
    Appeal from judgment overruling a demurrer interposed to the second defense.

      James B. Lockwood, forapp’lt; John O. Shaw, for resp’t.
   Brady,- J.

This action was predicate of a promissory note given by the defendant to one John D. Taytor, and transferred before maturity for a valuable consideration.

It is alleged in the complaint that the defendant gave the note to John D. Taylor, in payment for work and labor performed, and materials furnished by him to her, and which allegation is admitted.

The defendant, however, for a separate defense, set up that Taylor was indebted to John 0. Shaw, in the sum of $150, for services rendered in obtaining for him the contract for the work done, and which sum was to be paid out of the last payment for the work performed and materials furnished, and supplied by Taylor at the request of, and upon the houses belonging to the defendant; and i hat thereafter and before the last payment became due, which was to be made to Taylor, under the contract, he applied to the defendant for notes, aggregating the sum of $250; that the defendant refused to give him the notes, as she had agreed, in consideration of his promise, to satisfy and pay the claim of Shaw out of the proceeds of the last payment; and that thereupon Taylor promised that, if the notes were made out and divided in amounts, that is, one for $150, he would deliver it to. Shaw in payment, and that thereupon and upon his express agreement that the note of $150 would be delivered to Shaw in payment of his claim against Taylor; the defendant made and delivered the note for that amount mentioned in the complaint; that Taylor unlawfully and wrongfully failed to deliver that note to Shaw, but diverted the same from the purpose for which it was made and delivered, and finally, the defendant, upon information and belief, charged that no consideration or value was given for the note by the plaintiff, who received the same as collateral and in consideration of an antecedent indebtedness of Taylor to them.

The learned justice in the court below held the defense set up a good one, and in this view we concur. In the case of the Grocer's Bank v. Penfield (69 N. Y., 502), it was held, after a full examination of the authorities, it is true, that where a promissory note was made for the consideration of the payee, but without restriction as to its use, an indorsee taking it as collateral security for an antecedent debt of the indorser, without other consideration, but in good faith and before dishonor, occupied the position of a holder for value. But, at the same time, the courts declared it to be undoubtedly the rule, that where the note was diverted from the purpose for which it was intrusted to the payee, and some other equity existed in favor of the maker, it was necessary that "the holder should have parted with value on the faith of the note, in order to cut off the equity. See Pool v. Watson, 50 Supr. Ct. Rep., 53; Continental National Bank v. Townsend, 87 N. Y., 18.

The rule applicable to the defense set up herein by the defendant is well stated in Tinsdale v. Murray (9 Daly, 449), in which it said that it was always competent for the maker to fix the condition upon which the note shall be transferred and to prohibit its transfer unless that condition be complied with and further that one who takes a note, the use of which is restricted, as collateral security for an antecedent debt cannot recover upon it.

The learned counsel for the plaintiff thinks that whatever happened between Shaw and Taylor is res inter alla acta and did not concern the defendant and that there was no obligation on her part to pay Shaw anything, and the case of Wheeler v. Allen (59 How., 118), is cited as demonstrating the instability of the defense which has just been considered. But in that case, although it was held that if an indorser had no interest in the way in which the proceeds of a note were to be used, it was no defense to him that he was told thé note was to be discounted at a bank, though it was in fact the intention of the maker whom he accommodated to use the note to pay an antecedent debt and though the note be so used; it was nevertheless said that there was nothing in the case to show a misappropriation of the note.

Assuming the doctrines of that case to be perfectly well settled, it has no application to the facts developed. If the defendant chose, as she has dope to protect a creditor of her contractor and he assented to the arrangement by which such protection was accomplished, the agreement between them is controlling, and any departure from it must be governed by the rules of law which may be invoked under the circumstances. She had a perfect right to say: “ I will give you a note for $150, but it is upon the express understanding that it shall be delivered to one of your creditors, whose claim grew out of the contract between you and me.” Of course, he might have declined to accept a note under the circumstances, and to have prosecuted his claim, if he had one, against her. But having submitted to the condition imposed, it is binding upon him and upon his creditor who accepted a note thus restricted and diverted only as collateral and in settlement of an antecedent debt.

For these reasons the judgment should be affirmed with costs.

Daniels and Davis, JJ., concur.