author: Freedman, J.

text:
    Jesse C. Bennett, Pl'ff. v. John J. Egan et al., Def'ts.

      (New York Superior Court, General Term,

      Filed May 1, 1893.)

    1. Brokers—Commissions.
    To entitle a broker to commissions, his services must result in a complete meeting of the minds of both the vendor and vendee.
    3. Same.
    PlaintifE was employed by defendants to sell their real estate, and procured a purchaser. At a meeting in his office he procured both defendants and said purchaser to sign an instrument which he drew, reciting the payment of fifty dollars to bind contract to be executed elsewhere and on payment of a certain sum. and the balance according to contract, part cash and the rest by a purchase money mortgage. Thereafter the defendants and the purchaser disagreed as to the t rms of the mortgage, the latter having been assured by p’aintiff without authority that it should run five years, and the negotiations terminated and were never resumed. Held, that the instrument so executed was not a contract which could he enforced, but a mere option good until the time for executing a contract, and that plaintiff never procured a complete meeting of the minds of the vendors and purchaser, and hence did not earn his commission.
    Exceptions taken by the defendants ordered to be heard at general term in the first instance.

      Thomas E. Rochfort, for pl'ff; Edgar Whitlock, for def'ts.
   Freedman, J.

At the close of the whole case both parties moved for the direction of a verdict Neither requested that any question of fact be submitted to the jury. On the argument before us the counsel for the defendants conceded that the question to be determined is one of law. The substantial question, therefore, is whether upon the evidence the verdict should have been directed, as matter of law, in favor of the defendants instead of the plaintiff.

The action is brought by the plaintiff, a real estate broker, to recover the amount of commissions alleged "to be due to him from the defendants for services rendered to the defendants and at their request. There is no dispute about the employment of the plaintiff as a broker, and it is conceded that he rendered some services, and that, if entitled to recover at all, he is entitled to a commission of one per cent upon the purchase price. But thte defendants deny that the plaintiff did all he was bound to do and that he brought about an enforceable contract.

In employing a broker to sell real estate the vendor's liability for the broker’s services depends upon his contract with the broker, which may be express or implied. In the case of an express and special contract the broker, in order to recover his commission from the vendor, must establish that he performed the special contract in every particular by producing to the vendor a party able and ready and willing to take the property upon the precise terms prescribed by the vendor.

In the absence of an express contract the implication usually is that the broker becomes entitled to the usual commissions whenever he brings to the vendor a party who is able and ready and willing to take the property upon the terms then named by the vendor, although the particulars may be arranged between vendor and vendee directly. But in every case the broker’s services must result in a complete meeting of the minds of both vendor and vendee, for the duty he undertakes, the obligation he assumes as a condition of his right to demand commissions, is to bring the vendor and vendee to an agreement. Sibbald v. Bethlehem Iron Co., 83 N. Y., 381; Alden v. Earle, 121 N. Y., 688; 31 St. Rep., 375; affirming 56 N. Y. Superior Ct., 366; 23 St. Rep., 961. Whenever the broker’s services have resulted in such a complete, meeting of the minds of both vendor and vendee, he is, in the absence of an express stipulation to the contrary, entitled to the compensation agreed upon or to the usual commission, although the vendor changes his mind and refuses to enter into a written contract. In such a case the vendor cannot by his own wrongful act deprive the broker of his commission.

On the other hand, as long as the vendor insists upon something which he has a right to insist upon as a condition of sale, and to which the vendee refuses to assent, in consequence of which disagreement the vendee refuses to enter into an enforceable contract, it cannot be held that the broker procured a complete meeting of the minds of both vendor and vendee. This proposition is self evident. In Platt v. Kohler, 65 Hun, 557; 49 St. Rep., 12, it was expressly held that where the vendor stands ready to perform and to enter into a contract on conditions he has authorized, the broker’s right to commissions depends upon his procuring a person ready and willing to contract in such a way as to be legally bound to perform. To the same effect is Crombie v. Waldo, 50 St. Rep., 180.

Now the case at bar is not one where the broker, having been given definite terms on which to sell, produces a buyer able and willing and ready to comply with such terms. It is a case of implied contract. Before the defendants came to plaintiff’s office on the day the paper was signed, which will be presently considered, the defendants had not agreed to take $34,650. They only agreed to take that sum after much talking and bargaining had taken place, whereupon the plaintiff prepared the following paper upon which he rests his right to recover, and which he induced the vendors and the vendee to sign, viz. :

“ New York, November 10, 1890.
“ We, J. J. Egan and D. Hallecy, do hereby agree to sell the five-story house, situated on the southwest corner of West End avenue and Seventy-eighth street, to Henry Rothmann: and I, Henry Rothmann, hereby do agree to purchase the above described premises at the purchase price of ($34,650) thirty-four thousand six hundred and fifty dollars, and pay in hand to J. J. Egan and D. Hallecy fifty dollars, the receipt of which is hereby acknowledged to bind contract which is to be executed at the office of E. Whitlock, 291 Broadway, New York city, and upon payment of $1,000, and the balance according to contract, as follows: $8,650 in cash, and $25,000 in purchase money mortgage, property is to be delivered free and clear of all claim or claims up to the day taking title, except street assessments.
“On contract $1,000
“ For deed... 8,650
“Mortgage..., 25,000
$34,650
“ (Signed) J. J. Egan,
“ Daniel Hallecy,
“ Henry Rothmann.”

The said Rothmann, as vendee, and the defendants, as vendors, had no personal understanding with each other in the matter, except as expressed in the said written instrument, the bargaining having been carried on through the plaintiff as broker. Subsequently Eothmann and the defendant, Egan, met at the place specified in the written instrument to enter into a formal contract, and were unable to agree upon the terms of the mortgage, and thereupon Eothmann refused to enter into any further contract, and the negotiations were broken off, and were never resumed.

The question, therefore, arises whether the said written instrument of itself was or was not an enforceable contract for the sale and purchase of the real estate therein referred to. After much research and reflection I have come to the conclusion that it was not a contract upon which the vendors could rest an action to compel the vendee to perform, but was merely, at least so far as the vendee was concerned, an agreement that he would thereafter execute a contract to purchase or forfeit the fifty dollars paid as liquidated damages.

In other words, the vendors gave to the vendee an option, good until the meeting at which the contract was to be executed, for which option the vendee paid fifty dollars. At most it was a contract for a contract, for the whole instrument must be read together, in which case the opening words relating to buying and selling are clearly qualified by “pay in hand * * * fifty dollars to bind contract which is to be executed," and because the fifty dollars paid formed no part of the consideration of $34,650 to be paid for the property, for the whole of that sum was otherwise provided for. In - this respect the case is just the reverse of Simonson v. Kissick, 4 Daly, 143, in which seventy-five dollars had been paid on account of, and as part of, the purchase price.

So the paper itself, without the aid of other evidence, does not constitute a contract enforceable against the vendee, because it is too indefinite in terms. Passing over such matters as character of deed and time of closing, and considering only the question of the $25,000 mortgage, which was to be a purchase money mortgage, a question at once arises as to its terms. Should it ruii one, two, three, or how many years? What rate of interest should it bear, and how payable, quarterly, semi-annually, annually, or at the end of the term ? Should it contain clauses making principal payable on default in interest or taxes ? But why particularize further? Until the parties had agreed on these details, of great importance to both sides, it would be impossible to draw such mortgage. No court would have jurisdiction to determine it for them, for it is idle to contend that a mortgage payable on demand could be substituted as matter of law. The cases to which the learned counsel for the plaintiff has called attention are clearly distinguishable. Westervelt v. Matheson, Hoffman Ch., 37, and Bostwick v. Beach, 103 N. Y., 414; 3 St. Rep., 659, were cases in which the contract wrns sufficiently definite against the vendor, and the vendee elected to take title and to have incumbrances removed out of the purchase money. Dieter v. Fallon, 34 St. Rep., 680, turned upon its own facts, which were complicated, and it was held that it sufficiently appeared what mortgages were as matter of fact intended by the parties.

In Beebe v. Ranger, 35 N. Y. Supr. Ct., 452, the broker had fully performed all he was employed to accomplish, and the sale fell through because the vendor wrongfully persisted in inserting in the contract a forfeiture clause to which the vendee declined to accede. It was in view of the fact that the sale fell through solely in consequence of the vendor’s fault, that it was held that the fact that the interest, insurance clause and the time for the payment of the mortgage had not been arranged before the day the contract -was to be signed did not deprive the broker of his commission. No case has, therefore, been cited which is in conflict with the views expressed by me.

The defendants’ case becomes still stronger when the circumstances surrounding the execution of the written instrument and the reasons for the refusal of the vendee to execute a further contract are considered.

Aside from the claim of the defendants that they told plaintiff that they would sign no contract outside of Whitlock's office, which is denied by the plaintiff, the preponderance of evidence given at the trial is to the effect: 1. That the plaintiff, who drew the written instrument himself in order to secure, if possible, his commissions, procured the signature of the vendee to it upon the representation that the mortgage of $25,000 was to run for five years, although neither of the defendants had authorized him so to do or had, ever told him so, and although there was already on the property a mortgage for that amount having about a year to run;

2. That although nothing whatever was said by either of the parties concerning the terms of the mortgage, the plaintiff made the written instrument provide for a purchase money mortgage, a provision which the defendants did not intend to make and which the vendee did not understand, and

3. That the vendee at Whitlock’s office refused to enter into a formal contract for the sole reason that the mortgage could not be made to run for five years as had been represented by the plaintiff.

Upon the whole case it, therefore, fully appears that the plaintiff as broker never procured a complete meeting of- the minds of both vendors and vendee, either in writing or by parol, or part one and part the other, and that consequently he had never earned his commission.

That being so, and both parties having moved for the direction of a verdict, the verdict should have been directed for the defendants.

The exceptions taken by the defendants should be sustained, the verdict set aside, and a new trial ordered, with costs to the defendants to abide the event.

Sedgwick, Oh. J., and Me Adam, J., concur.


source: Caselaw Access Project

author: McAdam, J.

license: Public Domain

text:
    Mary Spencer, Resp't, v. The Citizens' Mutual Life Insurance Co., App'lt.

      (New York Superior Court, General Term,

      Filed May 1, 1893.)

    1. Insurance (Life)—Preliminary proofs not conclusive.
    The preliminary proofs of loss are not conclusive against the claimant. The statements therein are admissions and may be considered by the jury for what they are worth, but the party furnishing them may show that such statements were erroneous or inadvertently made.
    2. Same—Burden of proof.
    The giving of evidence sufficient to establish the fact prima facie does not shift the burden of proof; that remains throughout the trial on the party alleging the fact constituting the issue, and the jury must determine from the whole evidence where the preponderance lies.
    Appeal by defendant from a judgment entered on verdict in favor of plaintiff, and from order denying motion for a new trial.

      Louis C. Whiton, for app'lt; Carrington & Emerson, for resp't.
   McAdam, J.

The action is by the plaintiff as the beneficiary named in a policy of insurance issued by the defendant for $3,000 on the life of the plaintiff’s husband. It appears that the decedent failed to pay a premium which became due to the defendant February 9, 1890, in consequence of which default the policy lapsed and became void. The decedent, in order to renew his policy and induce the defendant to accept the overdue premium, made, and on February 13,1890, delivered to the defendant a warranty in writing, in the form of an application for reinstatement, in which he declared that he was then in sound health and free from any symptoms of disease, and there was then no condition of his person or occupation tending to impair his health, injure his constitution or shorten his life, and that he had not been sick or required the services of a physician, and that there had been no change in his family history or physical condition since the date of said policy. The defendant thereupon accepted the overdue premium and reinstated the policy.

The defense is that the statements and warranty aforesaid were false and untrue.

The decedent died May 7, 1890, and within three months of the time of his reinstatement. The proofs of loss first served by the plaintiff, and sworn to by her and the attending physician, state that the duration of the last illness of the decedent was “from Feby. 6th until May 7, 1890 that the remote cause of death was “ La Grippe ” and the immediate cause “ Acute Bright’s . disease.” On Nov. 1, 1890, and before suit brought, the plaintiff served upon the defendant supplemental proofs, in which she and the attending physician corrected the statement in the first proofs as to the time when the decedent was taken sick.

The defendant claims that the first proofs of loss, unexplained by the personal testimony of the plaintiff at the trial, establish the breach of warranty pleaded, and are conclusive against her right to recover, and if not so considered, they at least shifted the bur•den of proof from the defendant to the plaintiff. The proofs first served are certainly not conclusive against the plaintiff. Nothing 'but a technical estoppel will shut out the truth. The preponder■ance of authority shows that preliminary proofs may be used, First. For the purpose of showing that the requirements of the policy in that regard have been complied with. Second. As prima facie evidence of the facts stated therein against the insured and on behalf of the company, Ins. Co. v. Newton, 22 Wall., 32; Ins. Co. v. Higginbotham, 95 U. S., 380; but they are not conclusive against the claimant, Phillips v. Ins. Co., 31 St. Rep., 639; Cluff v. Ins. Co., 99 Mass., 317; for the statements contained in such proofs do not create an estoppel because all the essential requirements thereof are wanting. Smith v. Ferris, 1 Daly, 18. The statements made by the assured in the proofs of loss are admissions, and may be considered by the jury for what they are worth. But the party furnishing them may show that statements in the proofs were erroneous or inadvertently made. See cases collated in Bacon on Ben. Soc. and Ins., § 471,,and in May on Ins., 3d ed., § 465. The statement first made by the attending physician was in no manner binding on the plaintiff and was at all times open to explanation, Cushman v. Ins. Co, 70 N. Y., 72, and it was satisfactorily explained at the trial. Indeed, the evidence produced before the jury was of a character sufficient to justify them in arriving at the conclusion that the defendant had failed in its defense and there had been in point of fact no breach whatever of the warranty. The jury so found, and there is no satisfactory reason for disagreeing with the result arrived at. The defendant insists that the trial judge erred in declining to instruct the jury that in view of the proofs of loss first served upon the defendant the burden was on the plaintiff to prove that the decedent was not sick prior to February 13, 1890, and that such error was made more manifest by charging that such burden was on the defendant.

The claim is based on the erroneous assumption that the statement contained in the first proofs served shifted upon the plaintiff the onus of disproving facts which the defendant would otherwise have been bound in the first instance to satisfactorily establish in support of its affirmative defense. The true rule is that the burden of sustaining the affirmative of an issue involved in an action is upon the party alleging the facts constituting the issue, and so remains throughout the trial. The giving of evidence sufficient to establish the fact prima facie does not shift the burden ; the question is to be determined upon all the evidence, and the jury must be satisfied from the whole case that the allegation is established. Lamb v. Camden & A. R. R. & T. Co., 46 N.Y., 271: Heinemann v. Heard, 62 id., 448; Hale v. Smith, 78 id., 483; Heilman v. Lazarus, 90 id., 672; Goldschmidt v. Ins. Co.. 102 id., 486; 2 St Rep., 421; Blunt v. Barrett, 124 N. Y., 117; 35 St. Rep., 64; Stewart v. Stone, 127 N. Y., 506; 40 St. Rep., 314; Cent. B. Co. v. Butler, 2 Gray, 130; Perley v. Perley, 144 Mass., 104. In other words, where a defendant has, as in this case, the burden of proof, it remains with him.throughout the trial; and the jury must decide where the preponderance lies. If upon the whole case the jury is not satisfied that the defendant’s allegation is proven, the plaintiff is entitled to a verdict Vide supra. Apart from the arguments founded on the misstatements contained in the proofs served, there'is not a particle of defense to the action.

Common experience demonstrates that preliminary proofs are often drawn by unprofessional hands from the mere recollection of the witnesses at the time, without data or the care and precision which such documents deserve. They are generally considered by the assured as a mere formal requirement to satisfy the conditions of the policy preliminary to receiving the money thereon. To hold such proofs conclusive on«the beneficiary, in respect to dates and details, in the absence of fraud or estoppel, would, where the truth entitles the party to a recovery, be without warrant.

Where the dates or details given aid the defense, the proofs served upon the company may be used by it as evidence against the plaintiff, to be considered by the jury with the explanations offered and other proofs in the case. They were so used and considered here and the defendant received every benefit from them the law affords.

There is this additional feature in the case, the defendant never returned, nor offered to return, the dues received at the time of the reinstatement nor the payment made thereafter, and is not, therefore, in a position to urge that the contract has been rescinded by it. Harris v. Ins. Co., 64 N. Y., 196; Kabok v. Ins. Co., 21 St. Rep., 204.

We find no error requiring a new trial. The judgment and order appealed from must, therefore, be affirmed, with costs.

Sedgwick, Ch. J., and Freedman, J., concur. >


text:
    Minnie Gerber et al.; Resp'ts, v. The Metropolitan Elevated Railway Co. et al, App'lts.

      (New York Superior Court, General Term.

      Filed May 1, 1893.)

    1. Railroad—Elevated—Ini'ant owners of abut tino property.
    The fact that the owners of the abutting property in question are infants does not prevent the assertion of their legal rights, nor prevent the court from requiring as a condition of avoiding an injunction granted against the railroad that it pay for a release of the easements, as the release contemplated is a valid instrument capable of passing title to the easements, and if necessary a special guardian may be appointed to execute the same.
    2. Same—Value of easements—Findings.
    A refusal by the referee to find upon request that the easements taken for railway uses, aside from any damages to the said land from said taking, have in themselves only a nominal value, without further qualification, is not reversible error.
    3. Same—Evidence.
    The opinion of an expert who has a practical knowledge of the neighborhood and its surroundings, founded on actual experience and observation, as to how the fee and rental values on the avenue compared with the values before the building of the road, and how similar values compared in specified neighboring side streets, is competent

      Appeal from judgment entered on report of referee in favor of plaintiffs.

      Davies & Rapallo and R. L. Maynard, for app'lts; Sackett & Bennett., for resp'ts.
   McAdam, J.

The judgment restrains the defendants from maintaining and operating their railway in front of the plaintiffs’ premises, No. 949 Second avenue, unless within a time specified they pay $996 as past damages and $1,600 as the fee value of the easements upon receiving a lease thereof. The evidence sustains the awards made, and the questions requiring serious notice arc those presented by the exceptions taken during the trial, and to the findings of the referee and his refusals to find as requested by the defendants’counsel.

The action was originally begun by Edward Gerber, the owner of the fee, as plaintiff. He died before the trial, and his children, who are infants, and the widow, were substituted in his stead, and continued the action to judgment.

There was no question but that Gerber’s title descended to his children, subject to the widow’s dower right, but the referee found that in consequence of their infancy they could not give good title. It is objected that the court could not under such circumstances require the’defendants, as a condition of avoiding the injunction granted, to pay for a release by infants, which would be inoperative as a grant, and furnish the defendants no protection against a renewed attack by them after their arrival at age. Whether this result would follow a conveyance executed by them under an order of the court in an action prosecuted on their behalf by a guardian ad litem legally appointed, and whether a return by them of the consideration would mot be a necessary preliminary to such renewed attack, need not be decided now, for the reason that the release contemplated by the judgment is a valid instrument capable of passing title to the •easements, and if a release executed by a special guardian appointed in proceedings for the purpose instituted under the statute Code, §§ 2348, 2355, is necessary to pass title, then such is the character of the release required by the judgment. This question of form should have been-discussed and settled at the time the judgment was signed or brought to the notice of the court below on a motion for re-settlement. See Belgard v. McLaughlin, 9 St. Rep., 38; Bank v. Kupper, 63 N. Y., 617; Kraushaar v. Meyer, 72 id., 602; Beers v. Shannon, 73 id., at p. 297; Baylies on New Trials, pp. 6, 7; Simmons v. Craig, 50 St. Rep., 212.

Infants are wards of the court and under its protection. Their infancy does not prevent the assertion of their legal rights, nor does it permit the court to withhold from them the legal remedies necessary to their protection. If the defendants conclude that they require a modification of the judgment by directing that the releases be executed by a special guardian to be appointed for the purpose, they are at liberty to make that application at any time, and it will, no doubt, be considered and properly passed upon. The rule is settled, that while a decree cannot be varied in substance on petition without a rehearing, it may be corrected on motion as to mere clerical errors, or by the insertion of any provision or direction which would have been inserted as matter of course, if the same had been asked for at the hearing, as a necessary or proper clause to carry into effect the decision of the court Clark v. Hall, 7 Paige, 382; Sprague v. Jones, 9 id., 395. This disposes for the present of the objection now urged for the first time against the form of the decree.

The referee, at the request of the defendants, found that the plaintiffs did not own the bed of any pan of Second avenue in front of their premises, and that the only property in the street appurtenant to the premises were easements of light, air and access in and over the same, and on the refusal of the referee to find “ that said easements taken for railway uses, aside from any damages to the said land from said taking, have in themselves only a nominal value,” the defendants excepted, and now urge said exception as reason why the judgment should be reversed.

The request is put in disingenuous terms, and seeks to disconnect the easements from the land, and to have them valued aside-from the land to which they are appurtenant; in other words, as if there had been no land belonging to the plaintiffs capable of injury by the taking of the easements. Such a surgical operation cannot be required from a court or referee in a finding of facts.

In Bohm v. R. R. Co., 129 N. Y., 588; 42 St. Rep., 247, the court said: “When a person interferes with such light, air or access and takes it, he takes nothing which is alone and intrinsically valuable, hut only as its loss affects the adjoining land.”

In Mitchell v. R. R. Co, 132 N. Y., 552; 43 St. Rep., 476, the court, referring to a somewhat similar matter, said: “Such requests present only part of the case, and without more would not present the question now urged. Plaintiffs’ easements of light and air were taken to the extent that they were destroyed or fenced out, the taking and the permanent means of taking must, in measuring their value, he considered together.”

In Bookman v. R. R. Co., 50 St. Rep., 703, the request was limited to consequential damages, aside from any injury to the land. There was no such qualification here. The distinction may he subtle, but not more so than the request which, the referee refused in this case. Thp easements of light, air and access to avenue or street property are indispensable necessities, and have always been considered of a substantial character, sufficiently so to warrant substantial damages* .or the granting of equitable injunctive relief in case of their impairment. Bohm v. Met. El. R. R. Co., 129 N. Y., 576; 42 St. Rep., 247. The request as a whole, both in form and substance, was one which the referee properly declined, and his refusal to find thereon as requested is not reversible error.

The other exceptions in the case relate to the evidence of the experts.

Our attention, has been called to portions of this testimony wherein the defendants claim that the experts were allowed to make comparisons as to the value and damage to property in the avenue and neighboring side streets.

The expert, Curtis, was allowed to testify to how the fee and rental values on Second avenue, between Forty-ninth and Fiftieth streets, compared at the time of trial with the values in 1872, and how in like manner similar values compared in certain specified neighboring side streets. We think this testimony was competent. In Becker v. R. R. Co., 131 N. Y., at p. 511; 43 St. Rep., 726, the court remarked: “There was no intention * * * to hold evidence of value in the side streets to be inadmissible, or to deprive the court of a right to draw the inference from it, together with other evidence in the case, that the property of the plaintiff had been damaged by being deprived of a,greater increase in value by reason of the building of such a structure.” The opinions of experts as to the value of lands and rentals, and" of the rise and depreciation thereof, when such witnesses have a practical knowledge of the neighborhood and its surroundings, founded on actual experience and observation, are as a rule competent evidence as to such matters, and often the only attainable proof of the fact. Their testimony within properly defined limits cannot be arbitarily excluded, even in an elevated railway case. Though not of a conclusive character, such evidence, if satisfactory, at times furnishes a safe and reliable guide which it would be unsafe to dispense with. A defendant can always protect himself against any danger arising from it by furnishing in answer thereto evidence of the same general character.

There is no expert evidence in the case like that condemned in Roberts v. R. R. Co., 128 N. Y., 455; 40 St. Rep., 454; Doyle v. Same, 128 N. Y., 488; 40 St. Rep., 474; Gray v. Same, 128 N. Y., 499; 40 St. Rep., 478, and for this reason those cases are inapplicable. The action seems to have been fairly tried, and a proper result arrived at For these reasons the judgment appealed from must be affirmed, with costs, but without prejudice to any application the defendants may elect to make respecting any amendment to the decree they may deem necessary in regard to the form of release to be executed by the infant heirs on receiving compensation for the easements taken.

Sedgwick, Oh. J., and Freedman, J., concur.


text:
    Andrea B. Pensa, Resp't, v. Teresa Pensa, App'lt.

      (New York Superior Court, General Term,

      Filed May 1, 1893.)

    Attorneys—Appeal.
    An appeal cannot be taken by an attorney who has not been regularly substituted in place of the attorney who appeared in the action.
    Appeal from order denying defendant’s motion to compel plaintiff to receive notice of appeal, etc.

      Frank J. Keller, for app’lt; Robert H. Racey, for resp’t.
   Freedman, J.

The notice of appeal from the judgment, signed by Frank J. Keller, as attorney for the defendant, and all subsequent papers served by him as such attorney, having been severally returned to him by the attorney for the plaintiff on the ground that said Keller was not the attorney of record for the defendant, and had not been substituted as such, the question presented by the appeal is whether, on the motion below, plaintiff’s attorney should nevertheless have been compelled to accept service of the said papers.

An appeal from a judgment is not to be regarded as a new action or proceeding to enforce the judgment within the meaning of the decisions to the effect that in such a case a new attorney, duly authorized for the purpose, may appear without formal substitution, but it is a proceeding in the action for the correction of errors alleged to have been committed and to effect, if possible, the reversal of the judgment for error. The clear weight of authority is that the appeal cannot be taken by an attorney who has not been regularly substituted in place of the attorney who appeared in the action.. Shuler v. Maxwell, 38 Hun, 240; S. C., 101 N. Y., 657; Miller v. Shall, 67 Barb., 446; Thierry v. Crawford, 33 Hun, 366.

The contrary decision made at special term in Webb v. Milne, 10 N. Y. Civ. Pro., 27, should, therefore, be disregarded.

The conclusion already reached renders it unnecessary to consider whether the defendant was guilty of laches in' making the motion. 1

The order should be affirmed.

Sedgwick, Ch. J., concurs.


text:
    The Worthington Co. et al., Resp'ts, v. The Pfister Book Binding Co. et al., App'lts.

      (New York Superior Court, General Term,

      Filed May 1, 1893.)

    ’Corporations—Transfers by foreign, not prohibited by our statute.
    Section 48 of chap. 564, Laws 1890, prohibiting transfers by and dealings by its directors with an insolvent corporation, have no application to a foreign corporation.
    Appeal by defendants from a judgment entered in favor of the plaintiffs after trial of the issues at special term.

      William Sutphen, for app’lts; Bloomfied Littell, for resp’ts.
   Freedman, J.

The relief the granted by the judgment appealed from is based upon § 48 of chap. 564 of the Laws of 1890, entitled, “ An act in relation to stock corporations constituting chap. 38 of the general laws,” which took effect May 1, 1891. Under § 72 of the same act the section first referred to is to be construed as a continuation of the law as existing April 30, 1891, modified or amended according to the language employed in said chapter, and not as a new enactment. In fact § 48 is substantially the same as § 4, title 4, chap. 18 of part I of the Revised Statutes as amended by § 1 of chap. 245 of the Laws of 1880.

By this statutory provision certain transfers or assignments of stock or of the property of a corporation covered by it are prohibited.

The general assignment for the benefit of creditors made and. executed September 24, 1891, by the Pfister Book Binding Company was held to have been made and executed in violation of this statute, and the attachment and all the proceedings in the action commenced in the supreme court in the name of Hotchkiss against the said company were also held to come within the prohibition of the said statute, because they were instituted and maintained for the benefit of the defendant Avery, who was an officer, director and stockholder in the company.

The Pfister Book Binding Company is a foreign corporation, organized under the laws of the state of West Virginia, but located and having its principal office for the transaction of business in the city of New York.

A corporation has its domicil and residence only within the bounds of the sovereignty which created it, and is incapable of passing personally beyond that jurisdiction. Plimpton v. Bigelow, 93 N. Y., 592.

On the other hand it is firmly settled that the statutes of this state have no extra territorial force. Ho maxim of the law has been more firmly established by the decisions of the courts of all countries than: “Leges extra territorium non obligant.”

It must be conceded, however, that a state may make any laws deemed beneficial for itself or its citizens in reference to foreign corporations wishing to do business within the state, whether relating to jurisdiction over them, or to the terms and conditions upon which they may transact business within such state, even to tne extent of absolute exclusion. Bank of Augusta v. Earle, 13 Pet., 519; Paul v. Virginia, 8 Wall., 168; Philadelphia Fire Assoc. v. New York, 119 U. S., 110.

But the power of the court to reach* by its process the property of a foreign corporation within the limits of this state depends entirely upon statutory enactment and does not proceed from any inherent or general jurisdiction which the court‘possesses. Oliver v. Walter Heywood Chair Manuf. Co., 32 St. Rep., 542.

The fundamental, question involved in the case at bar, therefore, is whether the statute in question applies to a foreign corporation. In terms it does not, and under the decisions of Coats v. Donnell, 94 N. Y., 168, and Hill v. Knickerbocker Electric Light Power Co., 45 St. Rep., 761, it cannot be construed so as to have such application, and consequently the Pfister Book Binding •Co. as a foreign corporation was not bound by it. These authorities are decisive upon the point, and hence the argument that foreign corporations who do business within this state should be made to conform to and obey its laws is without force in the present case.

In the case of Hill v. Knickerbocker Electric Light & Power Co., supra, it was further held by the general term of the supreme court that the disabilities imposed by the statute upon the directors and trustees of every corporation covered by the said statute simply apply to the giving of preferences by the corporation and not to the ordinary procedure at law taken by a creditor of the corporation, although he may be an officer, for the purpose of securing his debt. I can perceive of no good reason why we should hold differently.

For the reasons stated the judgment should be reversed and a new trial ordered, with costs to the to abide the event

Sedgwick, Ch. J., concurs.


author: Per Curiam.

text:
    Howard A. Haven et al., App'lts, v. Samuel G. Meteer et al., Resp'ts.

      (New York Superior Court, General Term,

      Filed May 1, 1893.)

    Default—Want of notice of trial.
    Where the parties have both declared .themselves ready for trial and the case has been set down for a day chosen by plaintiff to enable him to examine the defendant before trial, to which the defendant consented, the plaintiff cannot afterwards object that no notice of trial had been served on him.
    Appeal by plaintiffs from order opening default on condition of the payment of forty dollars costs.
    The case was on the day calendar for January 23, 1893, and was answered ready on the 24tbü and 25th, but not reached. On the 26th plaintiffs asked that the case be set down for trial on the following day, so as to enable them to examine the defendant Meteer before trial, and was accordingly passed. On said day plaintiffs asked for a postponement, claiming that counsel was engaged in another court, which was denied and a motion was then made to discontinue without costs, which was also denied, and a dismissal ordered.

      Arthur H. Smith, for app’lts; Leonard Browner, for resp’ts.
   Per Curiam.

The appelantsclaim that the defendants had no right to move to dismiss the complaint on the non-appearance of the plaintiffs because there was no proof of a service of notice of trial by defendants upon plaintiffs.

Actual proof was not necessary, nor indeed was service. Without objection, both parties being present, the case was set down for trial and "the day was chosen so that the plaintiff might examine the defendant before trial. The defendant gave consent to the examination. This called the defendants into the trial, so that the plaintiffs could not object afterwards that they had no notice of trial from the defendants. The facts of the case were so peculiar that the discretion of the court below as to costs cannot be reviewed.

Order affirmed, without costs.

Sedgwick, Oh. J., Freedman and McAdam, JJ., concur.


author: Per Curiam

text:
    Florice Von Ax Halsted, Resp't, v. Jacob H. Halsted et al., App'lts.

      (New York Superior Court, General Term,

      Filed May 1, 1893.)

    Discovery—Letters
    A motion for an inspection and discovery of letters in the plaintiff’s possession is properly denied where it is uncertain whether they contain anything that will benefit defendant if offered in evidence, and the application does not avow specifically that the contents, if learned, will be offered on the trial.
    Appeal from order denying defendant’s motion for inspection of certain letters written to plaintiff and in her possession.
    This action was brought for the admeasurement of dower in certain real property in the city of New York, of which Jacob Halsted died seized.
    The complaint alleges that the plaintiff is the widow of Jacob Halsted; that he died on June the 6th, 1891, leaving him surviving the plaintiff, his widow, and five children who, with said Halsted’s executors, are the defendants herein.
    The answers of the executors and of the other defendants deny upon information and belief that the plaintiff is the widow of said Jacob Halsted.
    The plaintiff furnished a bill of particulars, which is in the words following:
    “The allegation of widowhood in the complaint is founded upon the non-ceremonial marriage contracted and consummated on or about April 4, 1889, in the apartments then occupied by the plaintiff at 356 West Fifty-sixth street, New York city, there being present at the time of the making of the marriage agreement one George Baillard and Helene D’Enghien as witnesses.”
    In a letter written by plaintiff to one of the defendants she enclosed a letter in the handwriting of the late Jacob Halsted, together with sixteen envelopes, stating that the letters contained therein were in her possession. From the postmarks on said envelopes it appeared that said letters were written between July 24, 1888, and December 24, 1890. The defendants thereupon made a motion for an inspection and discovery of the letters written by the said Jacob Halsted contained in said envelopes, which said motion was denied.

      John M. Bowers, for app’lts; Lewinson & Falk, for resp’t.
   Per Curiam

There were certain characteristics of the application below which justify the decision that was made. It was .uncertain that the letters contained anything that would benefit the defendants if offered as evidence. Indeed, the contents are undisclosed. The application does not avow specifically that the contents, if learned, will be offered in testimony upon the trial.

Order affirmed, with ten dollars costs.

Sedgwick, Ch. J., and McAdam, J., concur.


author: Rumsey, J

text:
    William E. Marks, Pl'ff. v. The Monroe County Permanent Savings & Loan Association, Def't.

      (Supreme Court, Monroe Equity Term,

      Filed March 6, 1889.)

    1. Building Loan Associations—Dividends.
    The constitution of an association organized under chap. 123, Laws 1851, provided that a dividend of the net profits should be declared at each quarterly meeting. Held, that if such provision was obligatory, the directors have a discretion, not limited by the provision, to declare the dividend, not on the earnings of the quarter in which it is declared, but on those of the previous quarter.
    2. Same—Rate in discretion or directors.
    Such provision does not require the directors to use all the profits earned at any time for ilie purpose of a dividend, but they have power to retain such money as may be necessary to pay debts to become due or for other purposes of the business of the association.
    8. Same—Earnings.
    In estimating the net profits of any quarter the amount of premiums which have been bid for loans during the quarter and included in mortgages, but not yet paid in cash, is not to be included, as it is uncertain whether they will constitute profits until the transaction is closed and the money in the treasury.
    Action" by a stockholder to require the defendant to increase a -dividend.

      John F. Kinney, for pl’ff; J. E. Durand, for def't.

       Published by request.—Ed.

   Rumsey, J

The defendant is a corporation organized under the authority of chap 122 of the Laws of 1851.

The plaintiff is a stockholder in the corporation, and at the time when the matters accrued which are alleged as the cause of action herein he had fifty shares in the stock of the defendant upon which he had paid $1,845.25, upon which sum he was entitled to dividends. The quarterly meeting's of the corporation are held on the third Saturdays of November, February, May and August respectively. Article 15 of the constitution of the defendant requires that a dividend of the net profits shall be declared at each quarterly meeting, to be credited to each shareholder in a way and upon an amount to be ascertained as provided in that article, but which, need not be referred to here. The statute, 2 R. S., 7th ed., 1763, § 7, makes it the duty of the directors to declare the dividends. At the quarterly meeting in August, 1888, the directors resolved to and did declare a dividend of four per cent, uponthe amount which each shareholder then had to his credit in the association. The amount of the dividend upon the plaintiff’s credits was $73.81, and the total dividend upon all the shares was $1,146. It was reckoned on the earnings, or what was claimed to he the earnings or net profits of the second, and did not include the earnings or profits of the third quarter, although declared the end of that quarter.

The plaintiff claims that the dividend declared at the third quarterly meeting should have included the net profits of the third as well as of the second quarter, and that it should have been over nine -per cent, instead of four per cent.

The power to declare dividends is by the statute given to the trustees of the corporation. 2 R. S., 7th ed., 1763, § 7. Usually the exercise of this power is largely, if not entirely in the discretion of the directors. Karnes v. R. & G. V. R. R. Co., 4 Abb., N. S., 107; Boardman v. L. S. & M. S. R. Co., 84 N. Y., 157, 180; Williams v. W. U. Tel. Co., 93 id., 162, 192. In the case of these societies the discretion is expressly vested in the trustees by the statute. It it said, however, that the article of the constitution above referred to makes it obligatory upon the trustees to declare a dividend at each quarterly meeting. A good deal may be said on the other side of that proposition, but for the purpose of this case the truth of it may be admitted.

The discretion of the trustees is then limited by article 15, and they are required to declare from the net profits a dividend at each quarterly meeting. But this article or by-law does not further limit the discretion which the law vests in the directors. The article does not say that the dividend must include the profits' of the quarter immediately preceding the meeting at which it is declared. Indeed, the latter part of it contains provisions from which it is necessarily to be inferred that the right- of a depositor to a dividend upon the profits of any quarter cannot be ascertained until the expiration of the next quarter. The amount of his credits for purposes of dividends is to be ascertained by taking the gross credits at the beginning of a quarter, deducting his withdrawals during the quarter, and using the remainder as the basis of estimate. It is apparent that this system' ignores entirely any de- ’ posits made during the three months.next preceding that meeting at which the dividend is declared. The result is that the money deposited during those months does not share in the dividend declared at the end of them. But that money has added to the earnings of the quarter during which it was deposited, and it ought to share in the dividends of that quarter. The theory of the by-law evidently is that all who are depositors at the end of each quarter are entitled to share in the dividend for that quarter; but that while his right to a dividend is fixed at the end of the quarter, the amount of his deposit on which the dividend is to be computed shall not be ascertained until the beginning of the next quarter. In this way, while one may become a depositor and entitled to a dividend by depositing on the day before the quarterly meeting, yet the dividend is only computed on the amount of deposit of which the corporation have had three months use, for "if he withdraws his deposit during the quarter before the dividend is declared he does not share in it. In this way it is secured that the deposits of each quarter share the earnings of that quarter. If the method insisted on by the plaintiff were adopted, it would happen that the earnings of any particular quarter, however large, would not belong to the members for that quarter whose deposits made the earnings, but to the members for the previous quarter.

It appears, too, that the business of any particular quarter is frequently unfinished at the end of it. Loans bid for and assigned to members during the quarter are frequently not perfected until some time afterwards, so that it is not easy to say at the end of each quarter just what has been the result of its business so that a dividend can be declared. For these reasons I think that the directors have a discretion, which the article in question does not limit, to declare their dividend, not on the earnings of the quarter in which it is declared, but on those of the previous quarter. I do not mean to say that the trustees are not at liberty when they declare a dividend to consider the total earnings or profits, but only that they are not by law compelled to do so, and that there are reasons in this case why they -should not do it.

The next claim of the plaintiff is that the dividend should be the whole of the net earnings or profits of the corporation, and be at a greater rate than four per cent on the deposits entitled to it.

In regard to this claim it may be said, first, that although there may be profits properly applicable to a dividend, yet usually when it shall be made, and if made how much shall it be, rests in the fair and honest discretion of the directors, uncontrollable by the courts. Williams v. W. U. Tel. Co., 93 N.Y., 162, 192, and cases cited. In this case the directors are bound by the by-laws or articles of association to declare a dividend of the profits, but I do not think that requires them to use all the profits earned at any time. There may be debts of the association not due, but to become due, or the business of the association may require the retention of money for some other purpose. In such case it is clearly within the power of the directors to retain such money as may be necessary, and the court will not interfere with that discretion.

It does not appear here what is the state of affairs in that regard, and for that reason.the court cannot say that the directors erred in refusing to declare a dividend greater than four per cent.

But passing that, let us see whether there was on the 18th of August any fund out of which the directors might have declared a .larger dividend. The statute says that they may declare dividends from the earnings, and' from the earnings only. 2 B. S. (7th ed.), 1763, § 7. This cannot mean, of course, that the directors are at liberty to devote all the earnings to dividends without providing for the debts of the company or the expenses of its maintenance. It must be construed to mean that the dividends may be declared out of the profits, which means out of the surplus of the earnings which may be left after paying the expenses of carrying on the business and all other current expenses. St. John v. Erie Ry. Co., 10 Blatch., 271; 22 Wall, 136; 99 Am. Dec., note, p. 762. That is the general statutory rule of this state with regard to corporations, and the one which I think should be applied here. 2 B. S. (7th ed.), 1533, § 2; Van Dyck v. McQuade, 86 N. Y., 38, 46, 47. The plaintiff claims that in computing the amount of this surplus the sum bid for premiums on each loan during the quarter should be estimated as earnings. This the defendant denies; and the question thus raised is the serious one on this branch of the case. To decide it, we must examine the way in which loans are made. It is this. When the money to loan is in the treasury, if more than one member applies for it, the loan is put up at auction and the member offering the highest premium for it is entitled to have it awarded to him. Bach member is entitled to borrow not more than the par value of the stock for which ho has subscribed, if he gives satisfactory security. When a loan to the amount of his stock is awarded to him, he gives to the association his bond and mortgage for the par value of the stock, and he receives for it, not the face of the bond, but that amount less the premium. For instance, if a member has five shares, the par value of which is $525, and bids $6 per share premium for a loan of that amount, he gives to the association his bond and mortgage for $525 and interest, and he receives from it the face of his bond less the premium, which is thirty dollars, the transaction netting $495. This he pays in weekly instalments of ten cents principal and ten cents interest on each share represented by the loan, or in the case used for illustration one dollar a week, until the payments and his dividends equal the amount of the bond and interest.

It will thus be seen that the premium on each loan is not paid in cash, but goes into the bond and mortgage and becomes a debt due to the association payable at the rate of ten cents a week for each share represented by it. The precise time when it will all be paid is not certain. It depends upon the amount chargeable to the member for insurance and taxes on the mortgaged property and for fines and penalties imposed on him, as well as upon the dividend he shall become entitled to. Indeed it may not be paid at all; but the member may default in his payments, leaving the association to repay itself by a foreclosure of the mortgage.

The transaction above set forth adds to the property of the •association; that is, the association has for $495 become the owner of a bond and mortgage worth $525; upon which it will eventually realize that sum with interest. But while its assets are increased by the sum of thirty dollars, it has not received that amount of money. It is probable that the amount will be received, but it may not. This mortgage for $525 has become an asset of the company, and when it is paid the company will have made a profit by the transaction of thirty dollars and interest But I do not think that the profit can be said to be earned until: the transaction is closed and the money is in the treasury. Until ¡ that is done there may be no profit. The failure to pay may make the asset worthless. This distinction between the gain by the appreciation in value of an asset and the final gain of money in hand by its sale at the enhanced value is taken and made the rule of the decision in Jennery v. Olmstead, 86 Hun, 536. In that case it appeared that the defendant Olmstead had been president of a savings bank under an agreement that he should have a salary out of the net profits. He credited himself with certain sums, and an action was begun to recover them back. It appeared that in 1869 the bank bought certain bonds which appreciated in value to the amount of $648.43, but which had not been sold. Olmstead claimed that this enhanced value was a profit which entitled him to receive that sum as a salary. The court held not, saying that to estimate the value of the bonds yet unsold, and on finding the estimated value to exceed the purchase price to call the difference profits, was not the way to ascertain the fact of profits, and that such appreciation was not profits in any sense of the term.

I think the holding of the court in that case, that profits are not realized because the value of the assets is enhanced, is controlling here against the plaintiff. It is to be noticed that while/ the by-law of the corporation uses the word “profits,” the statute says that dividends can be declared only from the earnings. The profits out of which the trustees may declare their dividend must be the profits out of the earnings. The earnings are the receipts, the sum which the association received or became entitled to receive during the quarter; not those which it might receive at some future time, but which it has now no right to demand. The-conclusion here reached is sustained by many cases in which the term profits and earnings has been defined, some of which are cited above. Boone on Corp’n, § 125; Morawetz on Priv. Corp’n, 487; Connolly v. Davidson, 15 Minn., 519. That conclusion requires that in estimating the net profits of any quarter the amount of premiums which have been bid for loans during the quarter and included in mortgages, but not yet paid in cash, is not to be estimated.

That conclusion puts an end to this case; for it is evident that without estimating these premiums the earnings of the association were not more than the dividend declared by them. Indeed the profits of the association for the second and third quarters were not as much as the dividend. The cause of action of the plaintiff fails when that fact appears. There is no question here whether the directors may not in declaring a dividend discount future earnings which are reasonably certain to be received, and no opinion is expressed upon that subject. There is in the complaint an allegation of fraudulent practices of the trustees, but no proof was given upon it, and nothing of the kind appears or was charged upon the trial.


author: O'Brien, J.

text:
    Henry G. Newhall, Pl'ff, v. Christopher A. Wyatt, Def't.

      (Supreme Court, General Term, First Department,

      Filed March 17, 1893.)

    1. Partnership—Liability of new firm for debts of old—Account stated.
    After defendant had converted most of the goods consigned to him by one 0., he formed a limited partnership with plaintiff under the same name, and thereafter rendered an account to 0., which admitted the receipt of the goods by the new firm. Held, that plaintiff was not bound thereby, as he was a special partner only and had no knowledge of such statement.
    2. Same.
    In the absence of an agreement that the new firm should be liable for the debts of the old, the fact that it continues under the old name and uses the same books is not sufficient to make it liable for such debts, where such books are largely fictitious and the partnership continues only four months.
    3. Same—Receipt of assets—Burden of proof.
    In order to charge the new firm on the theory that it had received money or assets of the old firm, it is necessary for the claimant to show that such money or assets came into the hands of the new firm.
    4. Same—Use of funds of hew firm.
    Testimony of the teller of the bank that acceptances of defendant given prior to the formation of the new firm were paid out of the firm account after the formation of the new firm, is sufficient to make out & prima facie case in favor of the view that they were paid with moneys of the new firm.
    5. Same—Set off.
    Where both the old and new firms were indebted to the claimant, moneys of the new firm so used to pay acceptances of the old may properly he applied upon the indebtedness of the new firm.
    6. Same—Dissolution—Amount of claim.
    Neither the referee in a proceeding for the dissolution of a partnership, nor the appellate court, can allow a claimant a greater sum than that originally presented and referred, in the absence of an amendment of his-claim.
    Appeal from an order overruling exceptions taken by James-B. Clark, claimant, to the report of the referee appointed to hear certain disputed claims, and confirming said report.

      Wm. Woodward Baldwin (James Byrne, of counsel), for app’lt; L. Laflin Kellogg, for resp’t; Durnin & Hendricks, for receiver.
   O'Brien, J.

The plaintiff, claiming to be a special partner in the firm of C. A. Wyatt & Co., brought an action against the only general partner, Christopher A. Wyatt, for the dissolution of the partnership, an accounting, receivership and for a distribution. In such action, the receiver, after his appointment, having advertised for claims, and that of James B. Clark, the appellant here, having been presented, an order was made referring it to a referree to hear and determine as to the validity of such claim. Upon such reference it was made to appear that in November, 1887, an agreement was made between the claimant, Clark, and one 0. A. Wyatt, doing business as C. A. Wyatt & Co., under which Clark was to send from his mills woolens to be sold by Wyatt, who was to be paid seven per cent commissions and expenses. On November 1, 1888, Wyatt, as shown by the certificate of the formation of limited partnership, took in the plaintiff as a special partner ; the firm continuing under the same style of C. A. Wyatt & Co. No proof was offered of any agreement by the new firm to be responsible for the debts or obligations of the old firm ; but the claimant insisted that the fact that the okl books were used by the new firm, and the course of dealing during the' few months of the new firm’s existence, were sufficient to create an obligation on the new firm to pay the debts of the old one. And, in this connection, great stress was placed upon the fact that during the first month of the new firm’s existence, in November, 1888, a statement of account was rendered, purporting to be an account of the new firm with the claimant^ in which the assumption of the liability of the old firm is recognized ; and upon this the claimant relies as being an account stated between the parties, and conclusive as to the indebtedness of the new firm to him upon the date of such account. The correctness of this contention will be considered when we take up the several claims made by appellant.

The appellant’s first claim, which was disallowed by the referee, is that the new firm should be charged with the full value of the goods shipped to the old firm, but admitted by the account rendered November 25th to have come into the possession of the-new firm ; and, upon the theory that this was an account stated, and binding upon the new firm, thajt this liability arose regardless of the fact as to whether the goods themselves came into the new firm or not. AYe think that in this argument the appellant overlooks the distinction between a general and a special partner, their duties and their responsibilities, and gives undue weight to a statement made by Wyatt, though it purports to have been made by the new firm, because, upon the facts here appearing, it being conceded that this was a fictitious and fraudulent account made up by Wyatt for the purpose of deceiving the claimant, Clark, after he had appropriated and converted to his own use most of the latter’s property, it would be a harsh rule of law that would hold, under such circumstances, that a special partner, who had no knowledge of the rendering of any such account, should be held responsible to the same extent as though it were made in good faith, or was true, and as though the firm had received the assets of the old firm, as stated in such account. Moreover, it must be remembered that the indebtedness for any goods consigned to the old firm was the individual indebtedness of O. A. Wyatt, who alone constituted the former firm of C. A. Wyatt & Co., and there is no rule of law to which we have been referred which goes to the extent of holding that one partner, by his declaration, even during the existence of the partnership, can change what on the face of the transaction appears to be his individual debt into a debt against the firm. In the absence of proof, therefore, of any agreement to pay the debts of the old Brm, we do not think that the claimant is entitled to any greater credit than the referee allowed, namely, $500, which, as shown, was the value of all the goods belonging to the old firm that came into the possession of the new; and, with respect to the claim for other-goods consigned to the old firm, we think the referee was right in disallowing it, because these goods were not consigned to the new firm, or on the credit of the new firm, and never came into its possession.

Appellant’s further contention, that the new firm is liable for the debts of the old firm upon the ground that it appears conclusively from the course of business, and from the evidence generally, that the new firm promised to assume the obligations of the old one, we think was also properly disposed of by the referee. It is true th,at the business was conducted by the new firm precisely as it was conducted by the old, and that the same books were used by both ; that the account with the claimant in the old ledger was transferred to a new one, called the “ Special Ledger,” and the balance claimed was brought forward in the new ledger, and carried on with new debts and credits. It should be borne i n mind, however, when it is sought to charge the plaintiff with the course of dealing, that the evidence shows that the books themselves, and the statement of assets therein contained, were fictitious and fraudulent, and that the failure to discover the falsity of such statement, or the taking of the firm assets for his own use by Wyatt, is in part explained by the short duration of the partnership, which, formed in November, 1888, was in the hands of a receiver in February, 1889, a period of less than four months, and the further fact that plaintiff was a special, and not a general, partner.

In the case of Hannigan v. Allen, 127 N. Y., 639; 37 St. Rep., 138, referred to by appellant, the facts were very different from those in the case at bar, as shown by the very quotation from the opinion of the court; for, as therein said, “the goods having been transferred to the firm, and the firm having assumed and agreed to pay the balance of the purchase price unpaid, the agreement of the firm will be deemed to have been made for the benefit of the ■creditors holding such claims, and an action may be maintained by such a creditor against the firm upon such agreement.” The cases more like in principle are those of Serviss v. McDonnell, 107 N. Y., 260; 12 St. Rep., 485, and Wheat v. Rice, 97 N. Y., 296, which go to the extent of holding (headnote Serviss v. McDonnell), that an incoming partner can only be made liable by agreement for the prior debts of the firm, whether he succeeds an outgoing-partner by purchase, or whether, upon the death of one partner, he joins with the survivor in carrying on the business; that an undertaking on his part alone, or in connection with others, that the new firm will pay the debts of the old firm, can be enforced only by the old firm. Its creditors may not sue for a breach of it. As farther shown by the dictum in that case, “ as the plaintiff's contract was with the members of the old firm, in the absence oí evidence that there had been a change of credit, or a promise on plaintiff’s part to accept the incoming members as his debtors, or some analogous act, no recovery could be had against them; (that) the obligation of the contract did not inure to plaintiff’s benefit.” There is no evidence here of any express agreement or undertaking on the part of the plaintiff to pay the debts of the old firm. Neither do we think the evidence sufficient to justify the •conclusion that from the course of dealing, considering the short life of the firm, an obligation to pay such indebtedness by plaintiff will be inferred or presumed.

Another claim made by appellant is that it was error on the part of the referee not to allow the value of certain goods which were sold before November 1, 1888, and which, by the terms of credit, were to be paid for after such date. The solution of this must necessarily depend upon the question as to which of the parties held the burden of proof. If, in order to charge the new firm with liability for such goods sold prior to the formation of the new firm, it was necessary for claimant to show that the money representing the goods was paid into the new firm, then the referee was correct, because there was no evidence to support this burden. It is true there was some evidence, given by one of the salesmen, that if there were any firms not paying their bills, lie would have heard of it from the office, and would go and collect such bills; that such were his personal customers. This testimony, however, is not of much greater value than would be a guess at the probability in favor of appellant’s theory that the new firm collected this indebtedness; and it can hardly be dignified or regarded as evidence tending to support or establish, as a matter of fact, that the new firm collected these moneys, and, if the burden was upon the appellant, it not having been supported, the referee was justified in not allowing it. On the other hand, if the receiver of the new firm was bound to show, to prevent a credit being given to the claimant, that the firm never received these moneys, then, there being no evidence offered to sustain this position of the receiver, it should have been allowed. We-think that the rule laid down by the referee was the correct one, that in order to charge the new firm upon the-theory that it had received money or assets of the old firm, it was necessary for the claimant to show that such assets or money came into the hands of the new firm, because it will not be presumed that the new firm took and retained moneys of the old firm in the absence of an agreement showing.its right to do so.

The third claim is that the referee should not have charged Clark, or credited the new firm, with the amount of acceptances given by the old firm to Conway, Gordon & Garner. These’ drafts were drawn b)r the claimant in favor of the parties named, and were accepted by Wyatt prior to the formation of the new firm. Appellant claims that the evidence did not justify the finding of the referee that these drafts were paid by the new firm. We think, however, that the circumstance, as testified to by the teller of the bank, that they were paid out of the firm account of Wyatt & Co., and subsequent to the formation of this new firm, is sufficient to make out a prima facie case in favor of the view that these drafts were. paid with moneys of the new firm, and that, in the absence of proof to the contrary, the finding upon the evidence was justified.

But, assuming the drafts to have been paid with the moneys of the new firm, appellant further insists that no credit should have been given, in adjusting accounts between them, to the receiver, and that the remedy, if any, of the latter would be against those who received the money on the drafts. That no injustice was done in allowing a credit for such amount to the receiver, instead of asserting the latter’s right to maintain an action either against the claimant, Clark, or the bankers to whom the drafts were made payable, and who received the money thereon, will be shown bjr a brief consideration of this point.

Assuming," as we must, from the evidence, that, without the knowledge of the special partner, Wyatt took the money of the new firm to pay the drafts of the old firm, which, as shown, was his individual indebtedness, and these debts, or the right to pay such drafts out of the assets of the new firm, never having been recognized or assumed, by agreement or otherwise, by the new-firm, so far as the evidence discloses, the appropriation of the moneys of the new firm to the payment of such drafts was illegal and unauthorized. It was shown that, at the time of.the payment, both the new and the old firm were indebted to the claimant; and while the receiver might have had his action to recover in full against Clark, the more liberal rule applied by the referee, of allowing the drafts so paid to be applied upon the indebtedness of the new firm, is the one most favorable to the claimant. Geery v. Cockroft, 33 N. Y. Super. Ct., 146. Admittedly, Clark, the creditor, got the benefit of these drafts; and when we remember that the question was as to what was due him from the new firm, upon it appearing that, for his benefit, one of the partners had, without authority, and illegally, applied the assets of such firm, it was but just that the amount of Clark’s claim should be offset by the credit which thus arose in favor of the receiver representing the other creditors.

This brings us to the last ground, which consists of a claim which does not seem to have been specially brought to the notice of the referee, but is now urged upon this appeal.

It appears that for goods shipped subsequent to November 1st, ■consisting of certain cheviots, the value was fixed in the claim presented to the receiver at $13,983.68. It would appear, however, from the evidence, that the actual market value of these goods was $15,531.50; the difference between these two amounts consisting of the commission of seven per cent and expenses, which was allowed to Wyatt & Co. by ■Clark, and which was deducted in presenting the claim as to the amount of goods for which Wyatt & Co. should give Clark credit. The referee held that no deduction should be made for commissions or expenses, etc., for services rendered or expenses incurred since November 1, 1888. It will be seen that upon these goods the commissions and expenses were allowed. The case, however, contains the evidence as to the value of the goods, showing that they were worth the difference between the amount of this item as inserted in Clark’s claim, presented to the receiver, and the amount shown to have been the true market price. • In addition, the referee was requested by Clark to find “ that the value of this cloth was $15,531.79, exclusive of expenses and commissions,” which was refused, and an exception taken. The principle which supports the referee’s refusal to allow the difference is obvious. It could not be done without increasing this item .$1,548.11, thus increasing the claim originally presented and referred. This the referee had no power to do, without some amendment having been made in the claim as originally presented. Eldred v. Eames, 115 N. Y., 401; 26 St. Rep., 277. The case of Canaday v. Stiger, 35 N. Y. Super. Ct., 433; affirmed 55 N. Y., 456, is seeming authority for the view that the appellate court can increase the judgment where, upon undisputed evidence, such increase is proper. That, however, was in an action at law, and not a special proceeding; and the appellate court did not increase the amount of the judgment so as to make it exceed the claim made by the complaint. We are, therefore, as powerless as was the referee to allow for an amount greater than the claim as originally presented and referred. We think that the referee was right in his ■conclusions, and that the judgment should be affirmed, with ■costs.

Van Brunt, P. J., and Follett, J., concur.