text:
    In the Matter of the Account of James L. Truslow et al., as Surviving Executors, etc.; Josephine C. B. Canfield et al., App’lts; Gilbert Potter, Resp't.

      (Court of Appeals,

      Filed January 16, 1894.)

    1. Will—Children.
    The term “ children ” may include “ grandchildren," hut to give it that meaning, the court should be able to find such an intention on the testator’s part from other expressions or clauses in the will.
    Where it is possible to favor the issue of a deceased child of the testator, consistently with a fair reading of the will and with an equitable view oi the disposition of the estate, it should be done upon principles of justice, as well as upon authority.
    3. Same.
    The will was so construed, in this case, as to entitle the issue of a child who died before the widow's decease, if such issue survived her, to take such portion of the trust fund as the parent would have taken, if surviving.
    Appeal from, judgment of the general term of the supreme court in the second judicial department, entered upon an order made July 28, 1893, which reversed a decree of the surrogate’s court of the county of Kings construing the will of Gilbert Potter, deceased, in connection with a judicial settlement of the accounts of his executors.
    Gilbert Potter died in Brooklyn in 1883, leaving a widow, two daughters, named Mrs. Beard and Mrs. Curtis, and a son named Gilbert. Mrs. Beard had two children, who were testator’s only grandchildren. By his will, he devised his residence, and certain land connected therewith, to his executors, in trust to apply the net rents and income therefrom, or, if in the exercise of their discretion, and with the wife’s consent, they should sell the same, then, the income of the invested proceeds of the sale, to the use of his wife for life. After her death the said real estate, or the proceeds thereof, were to form a part of the residue of his estate, and to be held under the same trusts. All the rest of the estate, real and personal, his executors were directed to turn into money. Thereof they were to invest the sum of $120,000, and to apply the income to the use of the widow for her natural life. The remainder they were to divide into three parts or shares, and they were to hold one for each of the children, and to apply its income to the use of the child during his or her life. Then follow the testamentary provisions which call for construction and application, because of events happening after the testator’s death:
    “ And upon the further trust, at the decease of my said wife, to divide the aforesaid sum of one hundred and twenty thousand dollars into three equal parts or shares, and designate and set apart one for the use of each of my three children, and apply the income arising from each to the use of the child for whom it shall have been designated during his or her natural life.
    “ Upon the death of either of my children leaving issue, I au« thorize, empower and direct my executors and trustees to pay to such issue equally the capital of the share held by them in trust for the use of the parent so dying; but if either of my said children shall die and leave no issue surviving them, I direct my said executors to pay, divide and distribute the capital of the share held for the use of the one so dying to and among my surviving children equally.
    “ If at my decease, or the decease of my wife, either of my children shall have died leaving issue surviving me, or surviving my wife, I direct my executors to pay, divide and distribute to and among such issue equally, the share which would have been set apart for the use of the parent, if he or she had survived me, or had survived my wife, such payments and distribution to be made by my executors and trustees to, and among, such issue as and when they respectively attain the age of twenty-one years. But if either of my children shall die before me, leaving no issue surviving me, then I direct my executors to divide the residue of my estate into two equal shares, and designate one for the use of each of my surviving children, and hold the same upon the trusts , hereinbefore created and declared, unless,” etc.
    First, after testator’s death, died Mrs. Beard, leaving two children, and next died Mrs. Curtis, leaving no child. When the testator’s widow died, subsequently, there survived her, of testator’s descendants, his son, Gilbert, and two grandchildren, the issue of his daughter, Mrs. Beard.
    The surrogate, in construing this will, held that the grandchildren were not limited to the shares appointed for their mother in the testator’s estate, but took one-half of the shares which were given and intended in trust for Mrs. Curtis therein. This view he entertained from regarding the word “ children ” as including the issue of deceased children. The general term reversed his decree in that respect, and held that Gilbert took both shares appointed to Mrs. Curtis, as being testator’s sole surviving child. The grandchildren are appellants to this court.

      Charles W. Truslow, for app’lt; Jos. A. Burr, Jr., for resp’t.

      Modifying 54 St. Rep., 225.

   Gray, J.

I quite agree with the general term justice that the word “children” is used in this will in its primary signification. It is very clear that the testator thus refers to his immediate descendants and not to grandchildren. When he has remote descendants in view, he refers to them through the use of the word “issue.” It is undoubtedly true that the term “children” may include “ grandchildren : ” but to give to it that very comprehensive meaning, we should be able to find such an intention on the testator’s part from other expressions or clauses in the will. I am not aware of any case, in which the term “children” has been given a broader signification than it naturally imports; except there was" something in the will which called for and j ustified it. In this will, wherever a reference is made to other descendants than the testator’s immediate offspring, they are spoken of as the “ issue,” or the “ lawful issue ” of his children and in one notable instance, in the seventh clause, the testator makes a certain disposition of his estate, “ in case of the death of my wife and all my children and their descendants before me.” That emphasizes his understanding of the term “ children ” as excluding such remote descendants as grandchildren. Therefore, in directing his trustees, “if either of his said children shall die and leave no issue surviving them * * * to pay * * * the capital of the share held for the use of the one so dying, to and among my surviving children equally,” the testator meant his immediate descendants, and that the application of that language to the case of Mrs. Curtis’ death, childless, is to hold that, certainly, the trust fund set apart for her at testator’s death belonged to Gilbert, testator’s son. Mrs. Beard had predeceased Mrs. Curtis and her children were certainly not accorded a participation in that particular trust fund. Thus far, then, there is no difficulty in agreeing with the opinion of the general term, as to what should be ■done with so much of the estate. But I do find great difficulty in reaching a conclusion that, as to the trust fund created and held for testator’s widow, during her life, when, by her death, it was ready for distribution, the grandchildren were confined to a one-third share. Restricted as we are to the reading of this instrument, in our search for the intentiou which underlay its execution, I am strongly inclined to judge that an intention is manifest, from certain differences in the testamentary directions, if not from anything very positive in the expressions, of making the final division of the estate upon a more equitable basis, as to the members who should then compose the family of. testator’s descendants. If there is that difference apparent in the disposition of the trust fund, before and after the death of the widow, and the balance, if it it does not incline in the grandchildren’s favor, at least, is equal with respect to their interests, I think the courts should uphold their right to share in the fund in controversy. Language should not be strained, nor words given an unusual meaning, in order to work out a result favorable to the issue of a deceased child; but where it is possible to favor them, consistently with a fair reading of the will and with an ■equitable view of the disposition of the estate, it should be done, upon principles of justice, as upon authority. Scott v. Guernsey, 48 N. Y., 106; Matter of Brown, 93 id., 295. Now in this will it is to be observed that, after directing what disposition shall be made of the share of his child, who dies with, or without, issue, the testator proceeds to direct that: “If * * * at the decease of my wife either óf my children shall have died leaving issue * * * surviving my wife * * * my executors shall pay * * * to and among such issue, equally, the share which would have been set apart for the use of the parent, if he or she had survived * * * my wife, such payments * * * to be made * * * when they attain the age of twenty-one years.” If, in this case, Mrs. Beard had lived to survive testator’s widow, what share would have been set apart for her ? It has been, and it is, said that it would be only a one-third of the trust fund held for the widow; by force of that previous direction, at her death to divide it into three parts and to set apart one for the use of each of his three children. The argument in aid of this answer is, unquestionably, very forcible. But while a literal reading upholds it, there is, in the rest of the will, the indication of an intention that the clause shall not be limited in its operation to a literal reading. The testator looked forward to a survival by his three children of their mother’s death and, accordingly, made the provision given in the clause just mentioned. He anticipates the possibility of a child’s death, intermediate his own and his widow’s death, and without issue; and he directs, in such event, a payment of the capital of the share held for that child to his surviving children. Now the trustees, in a sense, were holding, not only the particular share, or fund, taken out of the residue for the child, at the time of testator’s death, but also a one-third share of the trust fund created for the widow, to be enjoyed upon her death. In the event of the child’s death, his or her interest in that trust fund would shift, and, under the earlier direction in the paragraph, would vest in his or her issue; or, if having left none, in the surviving children of the testator. But a qualification of that direction is introduced in the later paragraph, which respects the rights of the issue of a deceased child, if surviving testator’s widow; to the effect that they shall receive what their parent would then have been entitled to, if living. So that while, by reason of Mrs. Curtis’ death, childless, after Mrs. Beard and before her mother, that part of the trust fund presently held for her, according to an explicit direction, went wholly to Gilbert; yet, upon the widow’s death, as Mrs. Curtis’ interest in that trust fund would have been distributable, if Mrs. Beard were living, equally between her and Gilbert, her (Mrs. Beard’s) previous decease, leaving issue, brought into operation that later direction to pay to such issue, if they survived the widow, “the share which' would have been set apart for the use of the parent ” and, thus, gave to them one-half of the trust fund to be distributed. That the testator intended that the issue of a child should never receive more than one-third of the residuary estate is very strongly negatived from the following provision, in which he says: “ If either of my children shall die before me leaving no issue surviving me, then • I direct my executors to divide the residue of my estate into two equal shares and designate one for the use of each of my surviving children,” etc. If that was his intention, in the event of a death of a child before him, shall we, and must we, not say that the same intention dominated future occurrences, such as we have here ? I think that he did intend, upon his wife’s death, if a child had previously died, leaving issue who survived, not merely that they would take the one-third intended originally for their parent, but that they would take just what their parent would have been entitled to, if surviving, and the previous event of a brother's or sister’s death, childless, had happened. I recognize the obstacles in the way of this construction ; which are interposed by a sort of preciseness in expressions, and, particularly, by the testator’s directing, upon his wife’s death, a division into, and a setting apart of, three shares and by his failing, specifically or in exact terms, to provide for the case, which has happened, of the death of two children before his wife’s; the one with and the other without issue. But I am influenced to hold that such a construction is right, because of the absence of any evidence of a reason for wholly discriminating against issue of his children and because the only explicit discrimination against them, which we seem compelled to follow, is with respect to the three particular trust funds which are set apart for testator’s children at his death. With respect to them, the survivors of that class take, upon a death without issue.

The general term justices, to sustain their views, say, as to those provisions of this fourth clause by which the trustees are directed, upon the death of a child without issue, to pay the “ capital of the share ” held for the deceased, to the testator’s surviving children, that they comprehend, or refer to the one-third part of the entire residuary estate and not merely that particular fund created and set apart upon testator’s death for the child. In this view, upon Mrs. Curtis’ death, her brother Gilbert thereby became alone entitled to the fund presently held for her, and eventually, upon the death of testator’s widow, to the one-third appointed for Mrs. Curtis in her fund. Upon the same theory, Mrs. Beard’s children must, also, upon her death, have become thereby entitled, at once, to their mother’s trust fund and, eventually, to the one-third appointed for her in the widow’s trust fund. The paragraph of the will, to which the general term opinion refers, applies to both cases. If the child die leaving issue, the trustees are directed to pay to the issue the “ capital of the share ” held for the deceased ; and if dying without issue they are to pay the “ capital of the share ” held, etc., to the surviving children. But such a construction makes the later direction in the clause to the trustees, as to their duty upon the death of testator’s widow, quite unnecessary, if it is only meant thereby to give to the surviving issue of a deceased child the share originally appointed to the parent in the trust fund held for the widow’s life. The counsel for the respondents attempts to supply a meaning to this later paragraph, which the general term seems to have ignored, and he says that its purpose was to limit the time of the payment to a grandchild of the portion of its parent’s share to its coming of full age. I cannot agree with either reasoning. Under the one the later paragraph seems to be regarded as useless; while under the other it seems emasculated of that force which its explicitness and the form of its expression entitle it to. In the application which I advise our giving to it, it has an office to perform in governing the disposition of testator’s estate, as reasonable as it is equitable. I think, too, it has much importance in preventing a possible intestacy in the event of the death of the testator’s widow and the liberation of her trust fund.

Our conclusion is that the fund set apart at testator’s death for Mrs. Curtis should be paid over to Gilbert Potter ; and that the fund held in trust for the testator’s widow should be divided; one-half to be paid to Gilbert Potter and the other half to be paid, in equal portions, to the daughters of Mrs. Beard, to wit; Josephine Canfield and Anna Beard, these appellants.

The judgment of the general term should be modified, so as to direct the surrogate’s court to proceed to make a distribution of this estate in accordance with this opinion and as so modified it is affirmed, with costs to the parties appellants and respondents to be paid out of the estate.

All concur, except Bartlett, J., not sitting.

Judgment accordingly.


source: Caselaw Access Project

author: Andrews, Ch. J.

license: Public Domain

text:
    Leopold Wise et al., Resp’ts, v. Hugh J. Grant, as Sheriff, etc., App'lt.

      (Court of Appeals,

      Filed January 16, 1894.)

      1. Sale—Rescission.
    Where a sale and delivery of goods are procured by fraudulent representations on the part of the purchaser, the title and possession pass to him notwithstanding the fraud, subject to the right of the vendor to rescind the contract of sale.
    2. Same—Replevin.
    An action of replevin is not maintainable to recover the goods where, prior to the rescission of such contract, the goods had been levied upon by virtue of an attachment against the purchaser.
    3. Same—Sued. 3 op § 1690.
    The words “ right to reduce” to possession, in § 1690 of the Code, do not cover a case where the right to reduce to possession is potential only, and which requires for its existence the doing of some act which shall terminate a legal possession in another as owner, and transfer the right of possession to the plaintiff.
    Appeal from judgment of the general term of the supreme court in the first judicial department, entered upon an order made November 22, 1892, which affirmed a judgment in favor of plaintiffs entered upon a verdict, and also affirmed an order denying a motion for a new trial.
    This action was an action of replevin to recover possession of certain goods, which the complaint alleged had been wrongfully obtained from plaintiffs by the defendant Maier Rothschild, and which the defendant Hugh J. Grant, as sheriff, obtained possession of by virtue of an attachment issued against said Rothschild and others.
    The goods in question were sold and delivered by plaintiffs to said Rothschild, the sale having been induced by false and fraudulent representations on the part of the purchaser as to the property owned by him and "the amount of his indebtedness.
    Plaintiffs did not discover the fraud until after the goods had been levied upon by the sheriff and taken into his possession. Upon discovering the fraud they demanded possession of the sheriff, and upon his refusal to deliver brought this action. Abraham Gruber, for app’lt; Otto Horwitz, for resp’t.
   Andrews, Ch. J.

The only question of any difficulty relates to the right of the plaintiffs to the remedy by replevin. There was abundant evidence that the sale of the goods to Rothschild was procured by him by fraudulent representations. But the title and possession passed to the purchaser by the sale and delivery, notwithstanding the fraud, subject, however, to the right of the vendors to rescind the contract if they should so elect. Powers v. Benedict, 88 N. Y., 605. There can be no claim that the contract had been rescinded when the sheriff seized the goods on the attachment against Rothschild. It was not until after the seizure that the plaintiff became aware of the fraud. The seizure under the attachment was the first notice they had. Prior to that time the plaintiffs had done nothing to disaffirm the contract, and nothing had occurred to put them on inquiry as to the bona Jides of the purchase. On being apprised of the seizure under the attachment, they demanded the goods of the sheriff, and then brought this action. Section 1690 of the Code of Civil Procedure declares that no action to recover a chattel can be maintained (sub. 3) “ when it was seized by virtue of an execution or a warrant of attachment against the property of a person other than the plaintiff, and at the time of the seizure the plaintiff had not the right to reduce it into his possession.” The question is whether the plaintiffs, at the time of the seizure by the sheriff under the attachment against Rothschild, had the “right to reduce” the property seized to their possession. If they had such right at that time, within the meaning of § 1690, they can maintain the action; if not, the remedy by replevin against the sheriff does not lie, but they are remitted to an action for conversion. Notwithstanding the seizure they could rescind the contract of sale. Neither the sheriff nor the creditors in the attachment were, by-reason of the seizure, in the situation of purchasers for value, and it is only persons in that situation, purchasing in good faith, who are protected against the title of the defrauded vendor who seasonably, on coming to a knowledge of the fraud, elects to rescind the contract. The bringing of the replevin was an act of rescission. Moller v. Tuska, 87 N. Y., 166 ; Powers v. Benedict, 88 id., 605, and restored to the plaintiffs the title to the goods and put them in a position to assert that title, and in ordinary cases would give them a right to proceed either in replevin or for damages on the refusal of the person in possession. The sheriff, having refused to deliver the goods to the plaintiffs on demand, might have been sued for conversion, but the test whether they can maintain replevin against the officer is made by § 1690 to depend upon the fact whether, “ at the time of the seizure ” under the attachment, they had the right to reduce the goods to their possession. The meaning of the words in the section, “the right to reduce it (the property) into his possession,” is the point in controversy. Did the plaintiffs, “ at the time of the seizure ” by the sheriff, have this right? At that time Rothschild had both the possession and the legal title to the goods. The plaintiffs, at that time, had neither title nor possession. They had a right to rescind the contract of sale for the fraud of Rothschild, upon doing which their right to the possession would accrue, but they had not rescinded for the reason that the fraud was not then known to them. If they had known it and had exercised the right of rescission, or done any act in disaffirmance of the sale before the seizure a different question would be presented, It is plain that so long as, the contract remained unrescinded Rothschild had a leviable interest in the goods. It was the duty of the sheriff to seize the property under the attachment, and in doing what he did he simply performed his duty as a public officer. He acquired by the seizure a legal lien on the property. The plaintiffs might not elect to rescind when they came to learn of the fraud. If they did not so elect the lien would continue ; if they did elect to rescind the lien would, on such election, be displaced in favor of their original title. We think it cannot be said that the plaintiffs had a right to reduce the property to possession when the seizure was made. They had no such right except upon rescission, and this, as we have said, had not taken place. The right would arise upon and in consequence of a rescission, and not otherwise. The last clause of subdivision 37 of § 1690 was, we think, intended to exempt from the prohibition of that section cases of constructive as distinguished from actual possession, and to give the remedy to the true owner where the possession by the attachment or execution debtor was without right, or a mere custody for the true owner, the legal possession being in him at the time of the seizure, through his agent, servant or naked bailee. Prior legislation and the course of decisions reflect some light on the interpretation of the clause in question. It has been the policy in this state from an early period to restrict the remedy of replevin in cases of seizure by sheriffs or other officers on legal process. It was decided at an early day that a defendant in a process could not maintain replevin against the officer for goods seized in execution. Thompson v. Button, 14 John., 86 ; Gardner v. Campbell, 15 id., 402. Theywere deemed to be in the custody of the law. The principle was sought to be extended to all cases where the goods were taken from the possion of the defendant in the process, although he was a custodian merely, and it was asserted that the true owner, although a stranger to the process, was precluded from maintaining replevin. This extension of the doctrine of custodia legis to goods taken from the possession of agents or servants was distinctly repudiated in Clark v. Skinner, 20 John., 465, in which it was held that replevin lies at the suit of the true owner of a chattel against a sheriff, constable or other officer who has taken it from the owner’s servant or agent while employed in the owner’s business by virtue of an execution against such servant or agent. It was, the court held, sufficient to maintain replevin that the property, when taken, was in the actual or constructive possession of the true owner, and that the possession of an agent or servant was the possession of the master or principal. The court, in its opinion, used the phrase “right to reduce to possession,” being the-same phrase substantially as the phrase in § 1690 of the Code, and it was used as the equivalent of “constructive possession.” The court said: “But the question is, what is meant by the possession in such case. I understand by it not only the actual but the constructive possession of the owner, and by constructive possession I mean a right to reduce the chattel to immediate possession.” In Marshall v. Davis, 1 Wend., 109, Savage, Ch. J., uses substantially the same language. After stating that replevin will lie where trespass can be maintained, he says: “ And in trespass, it is well settled, that .the plaintiff must have either actual possession, or property and constructive possession; by which is meant the right to redeem the article to his possession at pleasure.” Section 1690 of the Code is taken in most part from the Revised Statutes. 2 Rev. St., 523, §§ 4, 5. Section 5 of the title of the Revised Statutes, relating to the action of replevin, prohibits the remedy by replevin at the suit of the defendant in an execution or attachment for goods seized thereunder, unless they are exempted by law from such seizure, and proceeds: “ Mor shall a replevin lie for such goods or chattels at the suit of any other person unless he shall at the time have a right to reduce into his possession the goods taken,” using the same phraseology in substance as is contained in § 1690 of the Code. Section 5, as reported by the revisers, was framed to prevent replevin in any case where goods are taken in execution from the possession of the defendant, no matter to whom they belonged. The revisers intended by the section to change the rule established in Clark v. Skinner, that if the possession of the defendant in the execution was that of agent or servant, this would not prevent a replevin by the master or principal. See note 5, Ed. St., 497. But the legislature changed the section as reported, obviously for the purpose of sanctioning the rule declared in Clark v. Skinner. It is quite reasonable, therefore, to suppose that the phrase, “ unless he shall at the time have a right to reduce into his possession the goods taken,” was inserted in the section of the Revised Statutes referred to as a paraprase of the words “ constructive possession,” in accordance with the definition of those words given in the cases then recently decided. We think the words “ right to reduce ” to possession, in § 1690 of the Code, were intended to cover a case where the possession of the plaintiff was constructive, and not actual, and that they do not cover a case where the right to reduce the possession was potential only, and which required for its existence the doing of some act which should terminate a legal possession in another as owner, and transfer the right of possession to the plaintiff.

These views lead to a reversal of the judgment and a new trial

All concur.

Judgment reversed.

      Reversing 49 St. Rep., 439.


author: Gray, J.

text:
    John E. Phillips, as Receiver, etc., App’lt, v. The Mercantile National Bank of the City of New York, Resp't.

      (Court of Appeals,

      Filed January 16, 1894.)

    1. Banks—Power op cashier.
    Where a cashier of a hank, who has the power to hind it by Ms checks, for the purpose of converting its funds; to his own use, draws checks as cashier upon defendant, with whom his bank has a deposit account, makes them payable to persons who are dealers with the bank, but without their knowledge, and then indorses them in the names of the payees to parties who collect them from defendant, the bank is so far concluded by the acts of its cashier as to be estopped from denying the validity of the checks.
    2. Same.
    So far as the deposit bank is concerned, the intent of the cashier is the intent of his bank.
    3. Same.
    In such case the payees are to be considered as fictitious persons.

      George W. Wingate, for app’lt; Charles A. Davison, for resp’t.

       Affirming 51 St. Rep., 918.

   Gray, J.

The plaintiff is the receiver of the National Bank of Sumter, in South Carolina, and through this action seeks to recover a balance alleged to be due on a deposit account with the defendant bank. The question presented by the record is whether certain twelve checks, drawn by the cashier of the Sumter bank, which were paid by the defendant bank, could properly be debited in account to the Sumter bank. Bartlett, its cashier, had drawn them upon the defendant for various amounts; some to the order of A. S. Brown and some to the order of C. E. Stubbs. In the check book he would enter sometimes the real amount of the checks and sometimes an amount much less than the checks actually were drawn for. The names of these payees were those of persons who actually resided in Sumter and were dealers with the bank ; but they knew nothing of these checks and had no connection whatever with the transactions of the cashier in issuing these checks. Bartlett, after having drawn the checks, indorsed them in the name of the payee; making them payable to the order of some firm of stock brokers in New York, who collected them from the defendant. By subsequent manipulations of the books of his bank, Bartlett was able to prevent a discovery of his dishonest acts, until after he had absconded and the insolvency of the bank was disclosed. The learned trial judge, in dismissing the complaint, discussed the question of what the act of the cashier of the Sumter bank amounted to in law. In his judgment, the cashier’s indorsement of the checks in the name of the payee, which he had written in the body of the check, was not, in a legal sense, forgery. He said that act did not defraud the persons whose names were used as payees, nor the bank in New York, nor his own bank ; but that the fraud consisted in the unlawful drawing of the check for his own purposes, with the intent to convert his own bank’s funds. Regarding the transaction in that light, and the indorsement as a part of one continuous act of preparing the check so that the New York bank should pay the funds drawn upon to the indorsees, he'very properly reached the conclusion that, so far as the New York hank was concerned, the cashier’s intent was the intent of his bank and, hence, the payment of the checks was conclusive upon it.

At the general term, the opinion of the court again carefully reviews the legal questions and sustains the judgment below. Upon the question of the effect upon the transaction of the use .by Bartlett of names, as payees, of persons who were customers of the bank, it is said in the opinion that that fact did not prevent the application of the principle which would govern, if fictitious names had been selected and used for payee. They held, in substance, that the bank, through its authorized officer, had put in circulation paper, with knowledge chargeable to it that the names of the payees did not represent real persons, and with the intention to indorse thereon the names of the payees; who, for all intents and purposes, were fictitious payees, and whose names were adopted and resorted to as a device to avoid suspicion.

We'think the judgments below were right. Whether indorsing the check in the name of the payee therein was a forgery in the legal sense, or not, is not the important question. In a general sense, of course, the cashier did forge the payee’s name, but that fact did not affect the title or rights of the defendant. Coggill v. American Exchange Bank, 1 N. Y., 113. In the case cited, a bill was drawn upon the plaintiff to the order of one Truman Billings and was discounted at a bank. The drawer had indorsed' it with the name of the payee, Truman Billings; a person who in fact had no interest in the bill. It was held that the defendant in the case, who had accepted and ptiid the bill, held it by a good title. Bronson, J., said: “ As the payee had no interest and it was not intended that he should ever become a party to the transaction, he may be regarded, in relation to this matter, as a nonentity, and it is fully settled that when a man draws and puts into circulation a bill, which is payable to a fictitious person, the holder may declare and recover upon it as a bill payable to bearer. In legal effect, though not in form, the bill is payable to bearer.”

The case of Shipman v. Bank of the State of New York, 126 N. Y., 318 ; 37 St. Rep., 376, which was recently before us, did not decide any question inconsistently with what the courts below have decided. There it had been found that the checks were signed by the firm, in the belief that the names of the payees represented real persons entitled to receive the amounts of the checks, and with the intention that they should be delivered to real payees and should not go into circulation otherwise than through a delivery to and an indorsement by the payees named. Bedell was their clerk, whose employment did not comprehend the drawing or indorsing of checks or drafts; and, in indorsing upon the checks the names of the payees, he committed the crime of forgery, because he was without authority in that respect and did so with the intention to deceive his employers, the makers, and to put their checks in circulation for his account. That was a case wholly other than was made out here. It was stated in the Shipman case that the maker’s intention is the controlling consideration, which determines the character of the paper, add that the statutory rule, which gives to paper drawn payable to the order of a fictitious person, and negotiated by the maker, the same validity as paper payable to bearer, applies only when such paper is put "into circulation by the maker with knowledge that the name of the payee does not represent a real person. The principal of that decision is quite applicable to the case at bar. Though Bartlett selected, for the execution of his dishonest purposes, the names of persons who were dealers with his bank, it was, in legal effect, as though hé had selected any names at random. The difference is that, by the methods resorted to, he averted suspicion on the part of the directors or other officers of his bank. The names he used were, for his purpose, fictitious, because he never intended that the paper should reach the persons whose names were upon them. The transaction was one solely for the fraudulent purpose of appropriating his bank’s moneys, by a trick which his position enabled him to perform. Concededly, if the names of the payees were of fictitious persons the Sumter bank would have had no claim upon the defendant; how, then, can the transaction be said to assume a different aspect because the names adopted were of known persons ? That the intention was to treat them as being of fictitious persons is manifest. As cashier, invested with the authority to draw checks upon the bank’s accounts with its correspondents, instead of drawing them directly to the order of the parties, who he intended should get the moneys, he drew them to the order of persons who had no interest in them, and thereupon wrote their names under a direction to pay to the real parties, who were intended to be the recipients of the funds drawn upon. If the checks had been drawn directly to the order of the real parties, the defendant would undoubtedly have been protected in paying, them. As it was, the payees were fictitious persons in the eye of the law, and the only real parties were the firms in Hew York, to whom the cashier sent them in such form as that they could draw the moneys upon them.

The fictitiousness of the maker’s direction to pay does not depend upon the identification of the name of the payee with some existent person,' but upon the intention underlying the act of the maker in inserting the name. Where, as in this case, the intent of the act was, by the use of the names of some known persons, to throw directors and officers off their guard, such a use of names was merely an instrumentality or a means which the cashier adopted, in the execution of his purpose to defraud the bank, in an apparently legitimate exercise of his authority. The cashier, through his office and the powers confided to him for exercise, was enabled to perpetrate a fraud upon his bank, which a greater vigilance of its officers might have earlier discovered, if it might not have prevented. If his position and the confidence reposed in him were such as to enable him to escape detection for the while, then the consequences of his fraudulent acts should fall upon the bank, whose directors, by their misplaced confidence and gift of powers, made them possible, and not upon others who, themselves acting innocently and in good faith, were warranted in believing the transaction to have been one coming within the cashier’s powers.

It may be quite true that the cashier was not the agent of the bank to commit a forgery, or any other fraud of such a nature; but he was authorized to draw or check upon the bank’s funds. If he abused his authority and robbed his bank, it must suffer the loss. The distinction between such a case and the many other eases, which the plaintiff’s counsel cites from, is in the fact that it was within the scope of this cashier’s powers to bind the bank by his checks. In transmitting them, made out and indorsed as they were, the bank was so far concluded by his acts as to be estopped from now denying their validity.

For the reasons given, the judgment should" be affirmed, with costs.

All concur, except Bartlett, J., not sitting.

Judgment affirmed.


author: Beckham, J

text:
    Augustus H. Vanderpoel, as Substituted Assignee, etc., App’lt v. John J. Gorman, as Sheriff, etc., Resp’t.

      (Court of Appeals,

      Filed January 16, 1894.)

    1. Corporation—Foreign—Assignment for creditors.
    An assignment for creditors, made in this state by an insolvent foreign corporation and valid under the law of its domicile, is valid here.

      2. Same.
    Such an assignment is not violative of the provisions of § 48, chap. 564 of 1890.
    8. Same—Monp of execution.
    In the absence of any statute or of a by-law of the corporation providing otherwise, such an assignment may be executed by the president and secretary of its board or managers.
    Appeal from j udgment of the general term of the court of common pleas for the city and county of New York, entered upon an order made August 23, 1893, which overruled plaintiff’s exceptions and directed judgment in favor of defendant to be entered upon a verdict directed by the court.
    This action was brought by plaintiff as substituted assignee for the benefit of the creditors of the North River Lumber Company, to recover from defendant the value of certain property levied on by him as sheriff of the county of New York, by virtue of certain attachments against the corporation.

      Gibson Putzel, for App’lt; S. F. Kneeland, for resp’t.

      Reversing 51 St. Rep., 862.

   Beckham, J

The North River Lumber Company was a company incorporated under the laws of New Jersey, and transacting, its business in the city of New York. On the 24th of February, 1891, the corporation made in this state a general assignment to the predecessor of the plaintiff of all its property for the benefit of its creditors and without any preferences.

Subsequent to the assignment, certain of its creditors commenced actions against it to recover the amounts of their debts respectively, and in those actions attachments were issued and delivered to the defendant, who was the sheriff of New York county, and he subsequently levied by virtue of such attachments upon property which was alleged to belong to the corporation.

The plaintiff as its general assignee has commenced this action to recover from the defendant the value of the property thus-levied on by him. The question turns upon the validity of the general assignment of the corporation to the plaintiff. If it were a legal and valid act, it carried the title to the property in question to the plaintiff, and if not, then the defendant was justified in his levy. The defendant on the trial objected to evidence of the assignment, and urged as grounds for his objection (1) that a foreign corporation cannot, under the laws-of this state, while insolvent or in contemplation of insolvency, make a general assignment for the benefit of creditors; (2) that if such corporation could make that kind of an assignment it could not make it in the manner of this instrument, viz., by the signature of an alleged president and secretary; (3) there is no sufficient proof of any authority on the part of the persons executing this assignment to make a general assignment for the benefit of ceditors.

The trial court sustained the defendant’s objections, and upon appeal the judgment entered in defendant’s favor was affirmed by the general term of the New York common pleas. The plaintiff has appealed from such j udgment of affirmance to this court.

The defendant’s first ground of objection must mean that the courts of this state, will not recognize as valid, so far as respects property within their jurisdiction, a general assignment of its property made for the benefit of its creditors by an insolvent foreign corporation. The law of the domicile of the foreign corporation may, of course, permit it, upon insolvency, to assign all its property to an assignee in trust for its creditors, and it also-might permit it to make such an assignment through its agents, who were at the time domiciled in a foreign state. But the state-which created the corporation could not exercise jurisdiction in another state where the corporation might have property, and in such case the question would be one for the state in which the-property was situated to determine as to the validity of the attempted transfer of title to an assignee. Assignments of personal property which are valid by the law of the domicil of the assignor, are generally recognized as valid by the law of the state where the property may be situated, unless they violate its-statutory law or its "known and public policy. Cases cited in Barth v. Backus, decided by this court in November, 1893, and not yet reported.

In the case just cited we-refused to recognize the validity of the assignment of a foreign corporation to a foreign assignee as against those who took title to the property of the assignor in this state by virtue of proceedings under our attachment laws. The-refusal was based upon our holding that the law under which the general assignee of the Wisconsin corporation claimed title was in effect a bankrupt law enacted by the legislature of Wisconsin, and laws of that nature are within one of the admitted exceptions to the general rule which recognizes the validity of assignments of personal property if valid by the law of the domicile of the party making them. (Authorities in the case cited.)

There can be no doubt that an insolvent corporation could at common law make a general assignment in trust to an assignee for the benefit of its creditors. Haxtun v. Bishop, 3 Wend., 13 ; De Ruyter v. Trustees of St. Peter's Church, 3 Barb. Ch., 119,124; S. C. on appeal, 3 N. Y., 238; 2 Mor. on Corp., § 802, and note. Under the law of Mew Jersey, in which state the corporation was created, its right to make an assignment of this nature seems to be established. Wilkinson v. Bauerle, 41 N. J. Eq., 635. At any rate no statute of Mew Jersey prohibiting such an assignment was proved by defendant, and we cannot presume that the common law has been altered in Mew Jersey upon this subject without some proof to that effect-.

The assignment of property by an insolvent corporation for the purpose of paying its- debts is a very different action from so disposing of its property while solvent as to make its continued exercise of its franchises impossible. People v. Ballard, 134 N. Y., 269, 294; 48 St. Rep., 166.

The Ballard case was subsequently brought to the attention of this court on a motion for a reargument upon the question whether such a sale or transfer of property as appeared to have been made by the corporation was not valid upon the ground that the corporation could not operate the business except at a loss, and it was not bound to do that. 136 N. Y., 639; 48 St. Rep., 846. The question was left open for the reason mentioned in the opinion given upon denying the motion. The case is no authority for the proposition that an insolvent corporation cannot make a. general assignment for the benefit of creditors.

As the common law permit such an assignment and the state of Mew Jersey also permits it. and as it does not appear that the charter or by-laws of this particular corporation prohibit it, we are left to the question whether there is any statute or public policy in this state which would be violated if the courts should recognize the validity of an instrument good át common low and good in the state which created the corporation.

The power of the legislature to impose terms upon a foreign corporation as a condition for granting it leave to do business within another state is admitted. Paul v. Virginia, 8 Wall, 168; Liverpool Ins. Co. v. Massachusetts, 10 id., 566.

The sole - question now is as to what has been the legislative action of this state upon this subject. The defendant alleges that there is a statute of this state which prohibits such action on the part of a foreign corporation. The statute referred to is chapter 564 of the Laws of 1890, § 48. Session Laws, p. 1075. It is, in substance, the same as § 4, title 4, article 3, ch. 18, part 1 of the Revised Statutes (1 R. S. 603, § 4), after its amendment by subd. 4 of § 1 of chapter 245 of the Laws of 1880. It provides, among other things, that no corporation shall make any transfer or assignment to any person whatever in contemplation of its insolvency, and every such assignment is declared to be void. We have no doubt that this section refers solely to domestic corporations. The whole of the chapter from which the section is taken is, in substance, a revision of the law relating to certain classes of corporations as contained in the Eevised Statutes and their amendments, and it is plain that those statutes generally, if not in every provision, referred to domestic corporations only. This opinion is arrived at by a reference to the whole subject-matter treated of in this portion of the Eevised Statutes, and it becomes apparent, from a perusal of those general provisions, that the statutes were designed for the government and regulation of corporations created by this state.

When -the language used in the particular section is referred to it becomes still more apparent that it is only applicable to domestic corporations.

The legislature declares, as above stated, that certain transfers or assignments made by the corporation shall be void. What power had the legislature to enact any such provision as to a foreign corporation ? There is nothing in the section limiting its scope and effect to such property as the foreign corporation might have within this state. It is a broad enactment affecting every assignment made by a corporation under the circumstances mentioned. Can it be supposed that the legislature had in mind a foreign corporation and intended to assume a jurisdiction to declare such an act, even when done outside this state, and in respect to property also outside of its boundaries, to be void and of no effect ? This cannot be supposed, for we cannot impute to the legislature such ignorance upon the subject of its inability to give extra-territorial effect to its own laws. And if it had foreign corporations in mind when proposing to legislate upon the subject, ana knew it could not affect the validity of such transfers outside this state, and intended to provide that snch transfers should not carry the title to property of the corporation held within this state and subject to our jurisdiction, it must be clear that language somewhat appropriate to express such purpose- would have been used. The language actually used was neither apt nor pertinent for this purpose. It is both appropriate and pertinent when applied to domestic corporations only.

The language of the section clearly implies full and complete jurisdiction over the whole subject-matter. It implies the right to forbid absolutely. It also implies the right to declare the consequences of a violation of the prohibition, not in regard to some particular property, but generally and absolutely. The legislature has such jurisdiction in the case of domestic corporations, while in the case of foreign corporations it has not. To render the section applicable to foreign corporations would be to discard the plain meaning of the language used. The provisions of the Eevised Statutes (1 R. S. 591. § 9), as to transfers by a corporation when insolvent or in contemplation of insolvency, prohibiting them when made with intent to give preference, etc., were said to apply only to domestic corporations. Coats v. Donnell, 94 N. Y., 168. We have no doubt of the correctness of the statement. The same reasons are applicable in both cases, and if § 9 does not apply to foreign corporations, nothing can be found in the language of §48 of the Laws of 1890 (cited supra) which would extend it to other than domestic corporations. As the prohibition is not contained in any statute of the state, we are unable to discover any public policy of the state which would stand in lieu of a positive statute, and prohibit our recognition of the validity of this transfer.

It is urged that such a policy is to be found in this same statute, even though it in terms applies only to domestic corporations.

The argument is that if the state refuses to its own corporations the privilege of making such an assignment; it surely cannot be consistent with its policy to permit the exercise of the same privilege by a foreign corporation. The statute while only applicable to domestic corporations is thus used as evidence of the public policy of the state with regard to foreign corporations. If it were a question of the simple grant of a privilege, it may well be that what this state denied to its own corporations it would not grant to those from a foreign state. . It is not, however, the mere question of the exercise of a certain privilege which is to be affirmatively granted in order to exist. The right to make such an assignment exists inherently in all corporations unless specially forbidden. In regard to domestic corporations it has been specially forbidden. Does that prohibition furnish any legitimate evidence of the existence of a public policy in this state which forbids in the case of a foreign corporation the exercise of this inherent right? It seems to us that it does not. The two kinds of a corporation, domestic and foreign, stand with reference to this subject in very different circumstances and positions towards the state. What might be proper or necessary in one case might be wholly inappropriate or impossible of complete execution in the other. As to domestic corporations we assume certain responsibilities arising out of the very liberty given by the state for their creation or formation. We provide for their birth, for their regulation and government during life and for their death. Upon their dissolution, which no other power than the state itself, acting through its legislature or its courts, can pronounce, the whole power of the corporation ceases and the property which the corporation leaves passes under the dominion of the sovereignty which created it Eesponsible for its creation, for its government and for its death, the state has assumed in such cases complete and full jurisdictiou over the corporation and its property, and, accordingly, the state has in a series of statutory provisions made certain that the corporate property shall be distributed in accordance with its own ideas of justice. On the other hand, in the case of a foreign corporation, the same kind of responsibility does not obtain. Our courts cannot dissolve it, nor can we, by virtue of our laws, in any way affect its property situated outside of the state, nor call it to any account therefor. Hence, while as to a domestic corporation, we provide the distribution of its property equally to all its creditors, foreigners as well as residents, we could as to a foreign corporation simply affect the property which it had in this state.

It is true that even with regard to a domestic corporation we cannot give an extra-territorial effect to our laws. Property of a domestic corporation, situated outside of the state, would not be subject to our jurisdiction. In such case, however, the principle of comity operates, and we should expect recognition of the validity of a disposition of the personal property of a domestic corporation situated outside the state, provided it was valid by our law; unless it were subject to some of the well-known exceptions to such recognition. As to a foreign corporation with property here, if we refused to recognize as valid the disposition made of its property within this state, it would probably in that case remain subject to be seized by the vigilant creditor, resident or non-resident, and a preference be thus obtained which is at war with the policy of our state as to domestic corporations.

It is thus seen that there are differences of a marked character between a domestic and a foreign corporation in relation to this subject. The differences are so marked that the statute regarding domestic corporations can furnish no proof as to the existence of a public policy which, in the case of foreign corporations, should stand in the place of and be equivalent to that statute.

Again, this assignment is valid by the law of Rew Jersey, which is the domicile of the corporation. It provides for an equal distribution of all the property of the corporation among all of its creditors, being in this respect in entire conformity with our own policy regarding the distribution of the property of insolvent domestic corporations. Is not the argument quite strong under such circumstances which favors the application of the general rule that an assignment of personal property, valid by the law of the domicile of the owner, will be recognized as valid everywhere ? Can it be said in such a case that the interests of our own citizens are in any manner neglected by their own state when they are to share equally in the assets with all the other creditors of the corporation? • If it were a domestic corporation they would get no more than an equal rate of division. Can they bo said to be legally harmed when they get the -same rate of division under such an assignment ? Are we not in such case only following the general doctrine which refers the validity of the transfer of personal property to the law of the domicile of its owner ? It is true that the assignment in this case was made by the corporation through its officers in Rew York, where it was doing business, but, nevertheless, it was a Rew Jersey corporation, and the assignment was valid by the law of that state. Whether, if the law of Rew Jersey prohibited such an assignment, and it -was then executed under the same circumstances in this state, it. would be valid here, is a question not involved in this case, and, therefore, neither discussed nor decided.

It is said that our own creditors, that is, I suppose,.those who reside in this state, may in this manner be defeated of satisfaction of their debts by the participation of foreign creditors in the only accessible funds of the insolvent company. We have seen that our policy is just such a participation with regard to creditors of a domestic corporation. Why should we .find fault with such a result in the other case ? The general term of the supreme court in the first department has decided that the statute, in relation to a transfer of any part of its property by a corporation in eontemplation of insolvency and for the purpose of giving preference, does not apply to a foreign corporation. Lane v. Wheelwright, 69 Hun, 180; 53 St. Rep., 368.

The same question is touched upon, although, perhaps, not necessarily decided in Coats v. Donnell, supra. In that case the agreement for the lien was made at the same time and as part of the agreement to make the -advances, and such agreement was held valid. It was added, however, that if the act were regarded as the giving of a preference by a failing debtor, it was good because the law against preferences by an insolvent corporation did not apply to a foreign one.

Here there is no preferencee, and hence there is no occasion to examine the Coats case to see if the question of a preference in contemplation of insolvency was involved and decided in it. It may be that there is no difference in principle between an assignment of part of the property of a corporation to a creditor as a preferred payment of its debt to him and a general assignment of all its property to an assignee for the benefit of creditors and giving preferences, and that if the former be valid the latter must also be good. In regard to such a general assignment it has been urged that it ought to be held invalid because of the fact that the property of ■a corporation is a trust fund for the benefit of creditors, and that any creditor ought to have the right to resort to chancery to compel the application of this trust fund pro rata for the benefit of all creditors, upon the principle that equality is equity,

As the question does not arise in this case it is unnecessary to further pursue the inquiry.

The counsel for the defendant cites the statute prohibiting a corporation from setting up the defense of usury, and he suggested that it had been held to include foreign corporations, Life Ins. Co. v. Packer, 17 N. Y., 52. There is no doubt that it was so intended and the language is apt and appropriate to -express the idea. The legislature had perfect and complete control in such respect over the foreign as well as over the domestic corporation, and there was no reason for denying to the statute its natural meaning, which would include a foreign corporation when suing or being sued in the courts of this state. The case of In re Estate of Prime, 136 N. Y., 347; 49 St. Rep., 658, is an authority in favor of the view here taken. It is there stated that generally a statute giving powers and privileges to corporations must, in the absence of plain indications to the contrary, be held to apply only to domestic corporations. The remark was made in the case that a general law of the state prohibiting corporations from exercising particular powers would operate upon foreign corporations, not because the act ex proprio vigore would bind such a corporation, but for the reason that the exercise of such a power by the foreign corporation would violate the public policy of the state indicated by the general restraint imposed upon our own corporations. Considering the question which was under discussion and the facts which called forth the remark, it is entirely plain that the proposition as really intended is perfectly sound.

If the exercise of certain powers by a foreign corporation in this state would violate our public policy, there is no doubt that the corporation could not here legally exercise such powers, and the fact that it did not violate our public policy might in many cases be proved by our1 statute in regard to our own corporations. But it was not intended to assert that in all cases where a statute did prohibit corporations from doing certain things, it necessarily included foreign corporations, or that such corporations could not thereafter exercise any power prohibited to a domestic corporation, because in such case its exercise by a foreign corporation would be a violation of a public policy evidenced by the statute. I think I have shown in the case at bar that the difference between the two classes of corporations, with reference to the thing prohibited to the domestic corporation, precludes this kind of proof of a public policy in this state upon this subject with regard to a foreign. We think there is no such public policy, and so far as this gound is concerned, we have no doubt that the assignment is valid.

As to the other grounds of invalidity, we are of the opinion that there is nothing in them. The corporation had the power to make an assignment. It was a corporate act and neither the statute nor any by-law, so far as the record shows, provided that it should be otherwise done than by the president and treasurer, under the authority of the board of directors. This sufficiently appears to have been so done and that is enough. Beveridge v. Elevated Railway Co., 112 N. Y., 1; 20 St. Rep., 962.

The judgment should be reversed and a new trial ordered, costs to abide the event.

All concur, except Bartlett, J., not sitting.

Judgment reversed.


author: Earl, J.

text:
    Hugh Merancy Murphy, Resp’t, v. James W. Whitney et al., App’lts.

      (Court of Appeals,

      Filed January 16, 1894.)

    1. Agreement—Perpetuities.
    An agreement between tenants in common of a farm to own it together as joint tenants, and that, upon the death of either, the farm should pass, by devise or descent, to the survivors, and that, upon the death of the last survivor, it should pass to the plaintiff, is neither against public policy nor does it contravene the statute against perpetuities.

      2. Same—Statute op prauds.
    Though such agreement is not in writing, it is not void under the statute of frauds, where it has been substantially kept by all the parties thereto until the land became vested in the last survivor.
    3. Same—Conveyance.'
    Where a conveyance of such land has been procured from the last survivor, with knowledge of the agreement, the plaintiff can pursue it in the possession of the grantee, and, if it has been converted into money, he can pursue the proceeds.
    4. Same.
    In such case it is no defense that the time has not arrived when, under the agreement, the plaintiff is entitled to possession.

      5. Same.
    As remainderman he has a right to protect the estate.
    6. Same.
    Though the plaintiff is not a party to the agreement, he can enforce it on his own behalf, as it was made for his benefit.
    Appeal from judgment of the general term of the supreme court, in the fifth judicial department, entered upon an order made June 23, 1893, which affirmed a judgment overruling a demurrer to the complaint entered upon a decision of the court on trial at special term.
    This action was brought to establish a trust agreement, to set aside various conveyances of real estate from the defendant, Mary Murphy, to the defendants, James W. Whitney and Aurelia W. Moore, and for an accounting.
    The defendants demurred to the complaint on the ground that it did not state facts sufficient to constitute cause of action.

      Quincey Van Voorhis, for app’lt; Myron II. Pede, for resp’t.

       Affirming 53 St. Rep., 334.

   Earl, J.

The defendants’ demurrer to the complaint, on the ground that it does not state facts sufficient to constitute a cause of action, having been overruled in the courts below, they have appealed to this court

The complaint is very verbose and lengthy, occupying more than fifty pages of the printed record. We will not attempt to make a precise or comprehensive abstract of it. It is sufficiently accurate for the present purpose and for the exposition of the principles of law applicable to this case to state that it alleges in substance the following facts: That Hugh Murphy died in the town of Le Roy in this state in 1826, leaving three sons and four daughters, of whom the defendant Mary Murphy, now about ninety-five years old, is the last survivor; that none of these brothers and sisters was ever married except the father of the plaintiff, who was married in 1837 and died in 1861, leaving the plaintiff his only child and heir at law; that plaintiff was born in 1839; that at and after the death of Hugh Murphy his seven children became and were tenants of a farm situated m the village of Le Roy ; that they all lived together upon the farm until the marriage of the plaintiff’s father, and he sometime after his marriage moved to the state of Michigan ; that prior to that time they had made valuable improvements upon the farm and had mutually agreed to own the same together as joint tenants, and that upon the death of either the farm should pass by devise or descent to the survivors; that after the birth of the plaintiff, and in or about the year 1857, at a family meeting of all the brothers and sisters, there was a mutual agreement entered into, by parol as we may assume, by which the prior agreement was re-affirmed, and it was then mutually again agreed that the farm should be owned together, and that as fast as either of them died it should by devise or descent pass to the survivor, and upon the death of the last survivor it should by devise or descent pass to the plaintiff and belong to him; that this agreement was kept and performed by brothers and sisters until by the successive deaths, the title became vested in the defendant Mary, the last survivor of them; that the defendants Whitney and Moore came to live in the Murphy family many years before the commencement of this action, and several years before, they commenced by fraud, falsehood, undue influence and coercion to obtain from the defendant Mary conveyances of portions of the real estate to themselves and to others; that the defendant Mary is feeble in body and mind and incompetent to manage her affairs, and that by fraud, artifice, undue influence and coercion they have procured her to* convey away all of the real estate, and that they are appropriating the proceeds thereof to themselves; that during all this time they were well aware of the family arrangement and agreement which had been made for the benefit of the plaintiff in reference to the Murphy farm, and that their fraudulent acts were intended and designed to entirely deprive him of the benefit of that agreement; and he asked for relief, among other things, that the conveyances of the real estate made to the defendants Whitney & Moore be set aside and vacated, and that they be required to account for the proceeds of the real estate sold, and that a receiver be appointed, and for other relief.

We think it cannot be said that the complaint, although imperfectly and inartificially drawn, failed to allege a cause of action. It is claimed on the part of the defendants that the agreement alleged in the complaint, as to the holding and transmission of the real estate, was against public policy as contravening the statutes against perpetuities. 1 R. S., 723, §§ 14 and 15. Section 14 is as follows: “ Every future estate shall be void in its creation, which shall suspend the absolute power of alienation for a longer period than is prescribed in this article. Such power of alienation is suspended when there are no persons in being by whom an absolute fee in possession can be conveyed.” And § 15 is as follows: “The absolute ■ power of alienation shall not be suspended by any limitation or condition whatever for a longer period than during the continuance of not more than two lives in being at the creation of the estate, except in the single instance mentioned in the next section.” This agreement, assuming it to be valid and binding upon the parties, does not violate either of these sections. The absolute power of alienation is not suspended because there were at all times persons in being who could convey an absolute fee in possession. All the brothers and sisters uniting with the plaintiff could at any time have conveyed a perfect indefeasible title to the real estate. Estates can be rendered inalienable by vesting them in trustees upon some one of the valid trusts mentioned in § 55 of the article upon trusts, so that they become inalienable under § 65 for a period of more than two lives in being at the creation of the trust, or by the creation of future, contingent or expectant estates so that there are no persons in being during the two lives who can convey a perfect title. Smith v. Edwards, 88 N. Y., 104. Here none of these conditions existed. The agreement did not contemplate that the persons interested were bound to keep and hold the land. It was an agreement for the benefit of all the brothers and sisters and of the plaintiff, and no other persons were interested therein, and if they had all, at any time, united in a sale and conveyance of the land, a perfect title would have passed and no rights under the agreement would have been violated.

It is further claimed on the part of the defendants that the .agreement was void under the statute of frauds, because not in writing. But here there was part performance sufficient to take the agreement out of the statute of frauds. The agreement alleged in the complaint had been substantially kept by all the parties thereto until the land became vestsd in the defendant Mary, and she had thus been largely benefited by the agreement, and had received all the fruits thereof which were to come to her. She could not, therefore, urge against this agreement that it was void under the statute of frauds, because not in writing.

It is no answer to this action, assuming that the plaintiff is •able to establish the agreement which he alleges, that the real estate has all been conveyed, and that the title to the farm has thus passed out of the defendant Mary. As the agreement related to land the plaintiff is bound in this action to show that the facts are such that he would have been entitled to maintain the action if the defendant Mary had still retained the land, and having established such a state of facts he can pursue the land in the possession of those who have taken it with knowledge •of the agreement; and where the land has been converted into money he has the same right to pursue the proceeds thereof. This is not a case where the plaintiff was bound to pay anything more for the land, or to perform any further act on his part. The defendant Mary, before she made the conveyances of the land, bad 2’eceived the whole consideration which upholds the plaintiff’s rights, and whoever takes and withholds the lands or its proceeds from him with knowledge of his rights is in equity just as liable to him as the defendant Mary can be ; and this is certainly so as against the defendants Whitney and Moore, who are alleged to have obtained the property by fraud and to have paid no consideration therefor.

It is no defense to this action that the time has not yet come when the plaintiff could come into possession of the property under the terms of the agreement. The time had come when, assuming the validity of the agreement, he hada vested remainder in the property, and the right that the defendant Mary had to the real estate or its proceeds was a life estate — the right to the income thereof during her life. As a remainderman he had the right to protect the estate so that he might receive the same when it ought to come to him by the terms of the agreement. If the defendant Mary still held the land, and there was danger in consequence of her age and feeble mind, and the undue influence, artifice and fraud of the other defendants that she might convey it to a bona fide purchaser ignorant of the agreements, he could come info a court of equity and restrain the conveyance thereof. And, so far as the land has been converted into money and the •defendants Whitney and Moore are appropriating the same to their own use, and there is danger that it may be dissipated and diverted from the plaintiff, so that he may not be able to get it at the death of Mary, it would be a reproach to equity if its jurisdiction were not sufficient to give him some relief, so that the proceeds of the real, estate maybe preserved, not only to Mary during her life, but for his benefit at her death.

Although the plaintiff was not a party to the agreement alleged in the complaint, it was made ultimately for his benefit, as finally tiie whole Murphy estate, under the agreement, was to reach him. The defendant Mary having received the full consideration of the agreement made for his benefit, it cannot be questioned, under many authorities, that he lias a standing to enforce it on his own behalf. Garnsey v. Rogers, 47 N. Y., 233 ; Vrooman v. Turner, 69 id., 280.

We do not now determine what relief the plaintiff shall have, nor the extent, nature or measure thereof. The defendants must answer the complaint, and if the plaintiff, under the principles of law herein announced, shall be able to establish a cause of action upon the trial, the relief to which he may be entitled will depend upon the case he will be able to make. All we determine now is that upon the facts alleged he is entitled to some relief.

The judgment should, therefore, be affirmed, but with leave to the defendants to withdraw their demurrer and answer within twenty days, upon payment of all the costs of the action subsequent to the interposition of the demurrer.

All concur, except Bartlett, J., not sitting.

Judgment affirmed.


author: Davy, J.

text:
    Thomas R. Norris, v. Herbert A. Jones et al.

      (Supreme Court, Monroe Special Term,

      Filed December, 1893.)

    1. Replevin—Affidavit.
    . An affidavit to replevy goods taken for school tax, which states that the said tax contains moneys to he raised thereby, which were not legally, properly and jnstly chargeable to said district, is insufficient.
    3. Schools—Taxes.
    The fact that a portion of the tax is unauthorized, does not make the taking of the property by the collector unlawful, provided the trustee had jurisdiction of the subject-matter and authority to issue the tax warrant.
    3. Same.
    Where the trustee has jurisdiction, the fact that ho made the assessment for a larger sum than he was authorized by law to make, does not invalidate the whole assessment.
    4. Same—Replevin.
    Replevin cannot he maintained, in such case, unless the whole tax is-illegal.
    '5. Same.
    The replevin proceedings, in such case, will he set aside by the court, if application is made, at the proper time, by the officers.
    Application to dismiss the complaint, with costs,' against the plaintiff.

      M Fiero and John Gillette, for deft’s; Briggs & Sunderlin, for
   Davy, J.

It appears from the undisputed evidence taken upon the trial in this case, that the defendant, Herbert A. Jones, was duly elected trustee of school district No. 2, in the town of Milo, in the county of Yates, for the year 1893; that on the second day of March of that year he made out an annual tax list for said school district, and attached thereto his warrant for the collection of the school district taxes, and delivered the tax list and warrant to the defendant, Josephine E. Jones, who was the duly appointed collector for the school district. After’ she received the tax list and warrant she called upon the plaintiff and demanded the payment of his tax, which amounted to $15.38, which he refused to pay. On the 30th day of March, 1893, she duly levied upon personal property belonging to him to satisfy said tax. The property was at once replevied by the plaintiff, and the question now arises whether the action of replevin can be maintained.

The plaintiff contends that the Code of Civil Procedure §§ 1690-1695, authorized the bringing of this action to replevy his goods because the assessment was for a larger sum than the trustee was authorized by law to make.

Section 1690 provides that an action to recover a chattel cannot be maintained when the chattel was taken by virtue of a warrant against the plaintiff for the collection of a tax, assessment or fine issued in pursuance of any statute of the state or of the United States, unless the taking was or the detention is unlawful, as specified in § 1695. Subdivision 4 of that section provides that the affidavit to be delivered to the sheriff must particularly describe the property to be replevied and must state that it has not been taken by virtue of a warrant against the plaintiff for the collection of a tax, assessment or fine issued in pursuance of a statute of the state or of the United States, or if it had not been taken under color of such warrant, either that the taking was unlawful by reason of defects in the process or other cause specified, or that the detention is unlawful' by reason of facts specified, which have subsequently occurred.

The affidavit which was delivered to the sheriff states that the taking and detention of plaintiff’s property was unlawful by reason of the following defects in the process, to wit: “The said tax contains moneys to be raised thereby, which were not legally, properly and justly chargeable to said district. It also alleges that the defendants were not legally competent to hold the offices as claimed by them.” The affidavit was wholly insufficient to authorize the taking of the property from the collector. It did not state any facts showing that the taking of the property was unlawful by reason of any defects in the process or by reason of facts which had subsequently occurred. The allegation is but a mere legal conclusion. Talcott et al., v. City of Buffalo, 125 N. Y., 280; 34 St. Rep,, 871 ; Emery v. Baltz et al., 94 N. Y., 408. It should have specified or stated what moneys were included in the assessment not legally chargeable, to the district, so that the court could determine from the facts alleged whether the taking was unlawful or not. The provision of the code upon this point is imperative and any attempt to evade its letter or spirit will be regarded as an attempt to evade one of the vital prerequisites of the issuing of the writ.

Assuming that a portion of the tax was unauthorized, that fact would not, in my opinion, make the taking of the property by the collector unlawful, providing the trustee had jurisdiction of the subject matter and authority to issue the tax warrant.

The trustee of every school district in this state is authorized by law to expend in the necessary and proper repairs to the school-house under his charge, a sum not exceeding twenty dollars in any one year, and he may also expend a sum not exceeding fifty dollars in the erection of necessary out-buiTdings when authorized by the school commissioner or the superintendent of public instruction. He is also authorized to make repairs and abate any nuisance, and provide fuel, pails, brooms and other implements necessary to keep the school clean and make it reasonably comfortable for use. He may also provide for building fires and cleaning the school-room, and he may expend for books a sum not exceeding fifteen dollars, all of which shall be a charge upon the district. When the trustee is required or authorized by law to incur any expense for school purposes it shall be a charge upon the district, and he may raise the amount thereof by tax in the same manner as if a definite sum to be raised had been voted by a district meeting. Laws of 1886, chap. 292, § 1; 1 Birdseye’s Rev. Stat., 565, §§ 135, 136. The statute also provides that the trustees' warrant for the collection of the school district tax shall have the like force and effect as a warrant issued by a board of supervisors 'to a collector of taxes in a town, and the collection shall be thereby authorized and required to collect from every person in such tax-list named, the sum set opposite to his name, in the same manner as collectors are authorized to collect town and county taxes. Laws of 1867, chap. 406, § 81; 1 Birdseye’s Rev. Stat., 570, § 164. The laws seem to be quite uniform in all the states, that goods seized on legal process for the collection of a tax by a tribunal having jurisdiction of the subject matter, and of the person cannot be re-talcen from the officer by a writ of replevin, even though the warrant may have issued erroneously or irregularly. This rule is founded upon the necessity for the prompt collection of the public revenue.

The remedy afforded the individual, by law, in this state, whose property is seized to satisfy a tax levied under an unconstitutional law, or levied without authority or jurisdiction to levy it, is clear. He may bring replevin for his property seized to satisfy such tax, or he may, in a proper action, make the collector or those under whose direction he acts, personally liable for the damages resulting to him by reason of such tax. The warrant in this case was in the form prescribed and adopted by the department of public instruction and used in the school districts throughout the state. It contains all the requirements prescribed by law. Code of Public Instruction, 1887, p. 331. Ihe tax list was attached to the warrant, and contained a list of the names of the taxable inhabitants of the district, and the items for which the tax was imposed. There was nothing upon the face of these papers to notify the collector of the alleged irregularity, and hence it was her duty to execute the warrant. Southern R'y Co. v. Roach, 80 N. Y., 340 ; Hersee v. Porter, 100 id., 410; Niagara Elevating Co. v. McNamara 50 id., 653-4; Troy & L. R. R. Co., v. Kane, 72 id., 614.

The learned counsel for the plaintiff conceded, upon the argument, that the trustees were legally authorized to expend and assess upon the taxable property of the district a portion of the money included in the tax assessment; but he contends that a portion of the assessment was unauthorized, and, therefore, the whole tax assessment is void.

There is always the legal presumption that public officers will properly discharge their duties, and when a party claims that a public officer has failed to discharge a statutory duty, the burden is upon him to show that such duty was not performed. It appears from the evidence that a portion of the amount expended by the trustees and included in the tax levy was ordered by the school commissioner and a portion thereof the trustee was authorized by statute to raise, irrespective of any vote of the district, and a portion of the tax was ordered by a previous vote of the district.

The law, therefore, made it the duty of the trustee to make out a tax list and to issue a warrant for its collection. In performing this duty he acquired jurisdiction of the plaintiff and of the subject matter, and being clothed with legal authority to make the assessment, any irregularity, such as making it for a larger sum than he was authorized by law to make, did not invalidate the whole assessment; it was simply an irregularity that could have been corrected in proceedings by certiorari under the code. Sec, 2241. Or the plaintiff might have requested the trustee to correct the error, if any, in the tax list who, with the consent of the superintendent of public instruction, was authorized under the statute to make the correction. Laws of 1867, chap. 406, § 87. There is a clear distinction between a case of erroneous or over assessment and a case of an assessment without any authority, such as an assessment made under an unconstitutional law, or the assessment of property which the law has made no provision for assessing. The distinction is the same, in effect, as an erroneous judgment of a court having jurisdiction of the person and subject-matter and the judgment of a court having no such jurisdiction. To illustrate still further: a tax warrant, regular on its face, issued for the collection of a tax levied under such erroneous assessment, would afford protection to the officer serving it, while a tax warrant issued for the collection of a tax levied under an unconstitutional law or without authority of law, would afford no protection whatever. The distinction between an erroneous and an illegal assessment is clearly stated in Weaver v. Devendorf 3 Den., 117, and in National Bank of Chemung v. City of Elmira, 53 N. Y., 49.

The former case was an action by a clergyman for an alleged refusal to allow him the statutory exemption ; it appeared that he had more property than the amount of the exemption for which he was liable to be taxed. It was held that the assessors had jurisdiction to act and were not liable for making the assessment too high, however erroneous their decision might have been.

It is a well recognized fact that more or less errors have always been connected with the assessment, levy and collection of taxes, and if every taxpayer is at liberty to controvert the correctness of his assessment by replevying property levied upon by the collector, it would stay the collection of the revenue in every school district, town and city in the state.

It will not do to permit the collection of taxes to be interfered with by such proceedings, unless it clearly appears that there was a want of jurisdiction in the assessing or collecting officers. The effect of permitting such actions to be maintained would soon prove disastrous to our system of taxation. It may be stated as a general rule, supported by numerous authorities in England and in this country, that replevin is not the proper mode of testing the regularity of a tax assessment. It has been repeatedly decided in this class of cases that when the proper tribunal has made an assessment, which the collector is called upon to enforce, .no action will lie against him; were it otherwise, there would be no safety for the collector, and no certainty in the collection of the public revenues. Wells on Replevin, § 224; Van Deventer v. Long Island City et al., 139 N. Y., 138; 54 St. Rep., 510.

Cooley, in his work on taxation (page 540), says: “A tax will not be restrained on the ground merely that it irregular or erroneous. En-ors in the assessment do not render the tax void, nor, as a general rule, do they constitute any reason whatever against its being strictly enforced; but, however that may be in any particular case, the law has provided remedies for all such mere irregularities and errors as do not go to the foundation of the tax and parties complaining must be confined to such remedies.”

The court of appeals held, in the case of the Susquehanna Bank v. Sup’rs of Broome Co., 25 N. Y., 312, 313, that there is no more reason for entertaining a suit to restrain the collection of a tax than there would be where, in an action for the recovery of money, a party had a judgment against him upon erroneous rulings of law. Western R. R. Co. v. Nolan, 48 N. Y., 516.

The case of the D. & H. Canal Co. v. Atkins, 121 N. Y., 246; 30 St. Rep., 928, was an action brought to restaiu a collector from collecting a tax levied and assessed upon the plaintiff’s property, and to have the assessment declared void on the ground that the assessment was out of due proportion, and too large in its valuation, and was void for the reason that the persons who assumed to make it were not assessors either dejure or defacto.

It was held in that case that the action was.not maintainable, both because public policy would not sanction such an interference with the process of taxation and that ample remedies existed at law.” The court also held that for the first wrong complained of a certiorari is an entirely adequate remedy, and for the other an action against the collector for executing a warrant void on its face.

In the case of The Western R. R Co. v. Nolan, supra, the court says: The rule denying the right to interfere by injunction restraining the collection of a tax is one of public policy and it is equally applicable to the case of an assessment. The measures adopted for equalizing and gathering the public revenue and the means of paying the demands of creditors of the government, as well as carrying on or continuing the public business, ought not to be restrained or delayed at the suit of private parties.” The legislature has provided a tribunal where any person may have an erroneous assessment of his property corrected by instituting certiorari proceedings and in this way the operation of the various branches of the state government are not materially interterfered with. This remedy has been" repeatedly adopted and sustained by the court of appeals in such cases, which is adequate for the correction of all errors liable to be committed by assessors or trustees of school districts in the performance of their official duties.

Cooley on Taxation page 573, says: “In some cases, one whose goods have been seized for the satisfaction of a tax; may recover them by writ of replevin, but to justify this process the tax must be absolutely void and not merely. unjust, excessive or irregular. Where replevin is allowed it cannot be maintained by the party taxed unless the whole tax is illegal, as it must appear that the seizure of the goods is without warrant of law. ” He also says: “ That the liability of this process to vexatious use is so considerable that it has been deemed proper, in some of the states, on the ground of public policy to provide that replevin shall not lie for property distrained for taxes.”

In the case of Woolsey v. Morris, 96 N. Y.. 315, Judge Andrews says: That a ministerial officer is protected in the execution of process, regular on its face, issued by the court, officer or body, having jurisdiction of the subject-matter. He also says that the rule is founded in public policy for the protection of public officers charged with the duty of executing processes.” The court also held that “ where ah officer having several processes in his hands, some valid and some invalid, levies under all of them, upon the personal property of the party against whom they are issued, the bare levy does not constitute the officer a trespasser. What he did was no more than the officer was justified in doing under the valid process.

What the collector did in making the levy in this case was no more than she was authorized to do, providing the assessment had not been excessive. She was not bound to inquire whether a portion of the plaintiff’s assessment was excessive or illegal. She was justified in obeying the command of the warrant, especially when it was regular on its face and issued by the trustee who was authorized by law to issue it.

Judge Finch, in United Lines Tel. Co. v. Grant, 137 N. Y., 7; 49 St. Rep., 886, says: The protection given to the collecting officer is where his process emanates from a competent judicial authority and is regular on its face. He is not bound to look beyond it and may assume its validity.” The learned judge also says, at page 12, if it appears that the warrant is valid, but “ that the officer did not lawfully and regularly make the assessment, it is sufficient to say that the plaintiff had an ample and sufficient remedy by certiorari.” Mayor v. Davenport, 92 N. Y., 610; D. & H. Canal Co. v. Atkins, 121 id., 296; 30 St. Rep., 928 ; Code, 2140-2141.

In the case of Kennedy v. City of Troy, 77 N. Y., 493, the court, held that where assessors for a local improvement determined that all the property benefited must be assessed, an. error in determining what property is in fact benefitted must be reviewed by certiorari and not by action. Troy & Lan'h R. R. Co. v. Kane, 72 N. Y., 614; L. S. & M. S. R’y Co. v. Roach, 80 N. Y., 342 ; Hersee v. Porter, 100 N. Y., 410.

Judge Earl, in Strusburgh v. Mayor of the City of New York, 87 N. Y., 455, says: “An action in equity to vacate an assessment and restrain its collection cannot be maintained merely because the assessment is for any reason invalid or illegal.

This rule, he says, has its foundation in public policy for the reason that it would lead to great embarrassment and inconvenience if the collection of taxes and assessments were to be delayed by such actions. Heywood v. The City of Buffalo, 14 N. Y., 534.

These proceedings would no doubt have been vacated and set aside by the court, if application had been made at the proper time by the defendants.

The case of American Tool Co. v. Smith, 32 Hun, 121, was an action to replevy certain articles of personal property seized by the marshall of the city of New York under a warrant for the collection of a tax. The plaintiff claimed that the seizure was-illegal for the reason, among others, that the amount of the tax did not appear upon the warrant, the dollar sign not having been placed before the figures. Upon a motion made by the defendant the replevin proceedings were set aside. The court, at general term, said: “ The change from the Revised Statute, made by the Code, would leave the door open to the greatest embarrassments in the collection of taxes, if such objections could be brought- and sustained, especially where no proceedings could be had to get rid of the action until the final trial.”

It is also claimed by the plaintiff that the case of Haley v. Whitney, 53 Hun, 121; 25 St. Rep., 765, is controlling in this case. That was not an action in replevin, but an action in trespass against a school district trustee. The question presented in that case was, whether the defendant had jurisdiction to issue the tax warrant ? and the court held that he did not have; that the defendant, in levying the tax upon the plaintiff’s property and issuing the warrant for its collection, acted without jurisdiction over the subject matter. In this case, the trustee had jurisdiction over the subject matter and authority to issue the tax warrant, and if any improper items were inserted therein by mistake, it did not make the process void, nor the taking of the property by the collector unlawful. Parish v. Golden, 35 N. Y., 567.

The complaint, therefore, must be dismissed, with costs against the plaintiff.


author: Barnard, P. J.

text:
    The Upper Nyack Methodist Episcopal Church, Resp’t, v. John A. Bennett et al., App’lts.

      (Supreme Court, General Term, Second Department,

      Filed December 1, 1893.)

    Trespass—Damages.
    Where, in an action for trespass, the injury to the entire premises was proved to have reduced their value nearly or quite $1,000, a verdict for $300 is not excessive under the evidence.
    Appeal from a judgment in favor of the plaintiff, and from an order denying a motion for a new trial

      Snider & Hopper (Thomas Lawrence, of counsel), for app’lt; Abram A. Demarest (Wm. T. B. Storms, of counsel), for resp’ts.
   Barnard, P. J.

The plaintiff established a good and valid title to the premises in question. The land 'was conveyed in 1813 by one William Palmer to certain trustees “ to erect a house of worship for the use of the members of the Methodist Episcopal Church in the United States of America.” Subsequently, under a general act for the incorporation of religious societies the plaintiff was incorporated by certificate duly filed, and, in 1859, the sole surviving trustee named in the deed conveyed the property to the plaintiff. The church has been used for religious services for many years. The defendants entered upon the property by force, and without permission of the owner, and cut down two beautiful shell bark hickory trees and one cedar. The hickories were proven to be worth $200 each, and the injury to the entire lot by digging up sod and removing fences, including the trees, was proven to have reduced the value of the premises nearly or quite $1,000. The jury found the value of the trees to have been $300, and the injury from the trespass otherwise at fifty dollars. These amounts were not excessive under the evidence. The injury was great. The trees were in their prime, and made the church, with them, “ a picturesque thing,” as described by the defendant Bennit. This picture was destroyed, and the plaintiff is entitled to recover the amount given by the jury as the damages sustained thereby.

Judgment and order denying new trial affirmed, with costs.