text:
    John H. Ming et al., App’lts, v. Austin Corbin, Resp’t.

      (Supreme Court, General Term, First Department,

      Filed June 29, 1892.)

    Contract—Severance.
    Plaintiffs sold to defendant through an agent certain county bonds and warrants, but through a misunderstanding of letters and telegrams of the agent failed to send the warrants and sold them to other persons. Defendant demanded the warrants and correspondence followed, from certain portions of which it would appear that defendant treated the contract as severed, and from others that he treated it as an entire contract. In an action for the value of the bonds, Held, that under these circumstances the question of severance should have been submitted to the jury, and that it was error to dismiss the complaint.
    Appeal from judgment dismissing complaint on the merits, and. from an order denying motion for new trial.

      C. N. Morgan, for app’lts; W. J. Kelly, for resp’t.
   Van Brunt, P. J.

—We have searched the record in vain for any authority upon the part of the clerk to enter a judgment dismissing the complaint in this action upon the merits. In fact the record contains no authority whatever for the entry of any judgment, the minutes of the circuit court being conspicuously absent from the judgment record; and there is nothing certainly in the case which justified the entry of any such judgment, the recital in the judgment being absolutely untrue that the court at the conclusion of all the evidence ordered the complaint dismissed upon the merits. The record contains no such order or direction.

This action was brought to recover an alleged balance due upon the sale by the plaintiffs to the defendant of certain securities in the month of March, 1872; and the facts developed upon the trial show that the plaintiffs were at said time merchants doing business at Helena, Montana; and that the defendant was a banker in New York city: and that one Sherwood was also engaged in. business at Helena, and being about to visit New York had a conversation with one of the plaintiffs, in which he was authorized to sell for them $5,000 Louis & Clark County Bonds, and $5,000 Fundable Territorial Warrants, at eighty-five, for which Sherwood was to get a commission of $200. Upon his arrival in New York, Sherwood offered the $10,000 worth of securities to the defendant, and told him they were worth eighty-five, and he said he would take them. Thereupon, on the 6th of March, 1872, Sherwood wrote to Ming, one of the plaintiffs, stating that he had an opportunity to place a limited quantity of county bonds or scrip drawing interest, and also territorial scrip, $5,000 of each. Upon the receipt of this letter on the 19th of March, 1872, it taking about eleven days for a letter from New York to reach Helena, Montana, the plaintiffs telegraphed to Sherwood as follows: “ Will sell $5,000 each of bonds and territorial warrants at eighty-five for face and interest, and give you $200. If wanted, telegraph.” On the 20th March, 1872, Sherwood telegraphed to the plaintiffs as follows: “ Send them. Draw on me ten days.” And upon the same day a telegraph was sent, apparently coming from Sherwood, “ Send bonds. Cannot use warrants unless to be bonded in June.” Thereupon on the same day the plaintiffs wrote to Sherwood acknowledging the receipt of the two telegrams and stating that they would ship the $5,000 bonds the next night, arid that all territorial warrants issued prior to December 1, 1871, under which head theirs came, were to be bonded in June at twelve per cent interest; and then stated further that they would not ship the territorial warrants until they heard further from him, and that he could be allowed but $100 for the sale of the bonds alone. On the 21st of March the bonds were shipped; and on the 9th of April, prior to their arrival, the defendant telegraphed to the plaintiffs: “ Send the $5,000 territorial warrants; county bonds not yet arrived.” A day or two prior to the 13th of April the bonds were received by the defendant, who upon said day wrote a letter to the plaintiff acknowledging their receipt and expressing his surprise that they were twelve per cent and not fifteen per cent securities, and stating that they were not as good by seven' and one-half per cent as those which ,he had purchased, but that he had sold them and placed to the plaintiff’s credit the sum of $4,400, which was subject to their draft at sight, etc., and concluding the letter with a statement that “without anybody being particularly to blame, and under all the circumstances I" am willing to do my part to harmonize, so that no one "will be very much the loser and all will be content. And to this end I will say to you if you will discount $100 from the amount, as you state it, including a doubtful item of interest of $36.77, making net $4,341.77, and call the bonds very well sold at that, as I know they are, I will be satisfied, and try to make up the deficiency on something else.” As a postscript to this letter the following paragraph appears: “ I received your letter as to territorial warrants and ordered them forward by telegram some days ago.”

Prior to the receipt of the telegram of April 9th it would appear that the plaintiffs had sold these warrants in Helena. In answer to said telegram on the 10th of April a letter was written by the plaintiffs to the defendant, which was received by the defendant on the 22d of April, 1872, which, however, does not appear in the record; and the defendant thereupon telegraphed to the plaintiffs,I have sold the territorial warrants and must insist upon delivery.” ' And the next day he wrote the plaintiffs to the effect, that he was a good deal surprised to get their letter of the 10th and that he had immediately telegraphed them as above stated; that he purchased the bonds and warrants from Sherwood, who acted under their telegram. He stated that he took twelve per cent bonds and made no words about it, notwithstanding that he expected to have and purchased fifteen per cent bonds ; that he was bound to take the warrants under the contract with Sherwood and~he could not see why they were not bound to deliver them, and he could not consent that it should be otherwise.

On the 29th of April, 1872, the plaintiffs wrote to the defendant acknowledging the receipt of said letter of April 13th, in which they stated that in view of the fact that Sherwood’s telegram stopped the shipment of the territorial warrants, a portion of which you could have used (as it afterwards seemed) to good advantage, and that the transaction was conducted by you without any profit, we accept the changa” The territorial warrants were never delivered.

Upon this state of facts the court dismissed the complaint upon the ground that the contract for the delivery of the bonds and warrants was one contract, and it had not been fulfilled upon the part of the plaintiffs. The plaintiffs asked to go to the jury upon the question as to whether the defendant had not agreed to the severance of the original contract, and whether he had not agreed to accept and receive the bonds without regard to the territorial warrants; which request was refused, and to such refusal an exception was taken and the complaint dismissed, and from the judgment thereupon entered this appeal is taken.

Upon the previous trial of this case, the same state of facts was presented to the court, and the court held as matter of law that the receipt of the bonds was a severance of the contract, and submitted the question to the jury as to the damage which the defendant sustained in consequence of the failure of the plaintiffs to furnish him with the $5,000 warrants.

An appeal having been taken to the general term of this court, from an examination of the opinion of the court it would appear that the learned judge who wrote the opinion was under a misapprehension of the precise extent of the ruling upon the previous trial, because it states in the opinion that the learned justice presiding arrived at the conclusion, and so ruled, that the receipt of' the bonds was a severance of the contract, and that the defendant had no cause of action for thb warrants. It would appear that the learned judge was laboring under an erroneous impression as to the last proposition mentioned, because the question as to the damage sustained by the non-delivery of the warrants was submitted to the jury, and therefore the court could not have held that, the defendant had no cause of action because of the non-delivery of the warrants.

The learned judge further called attention to thej facts going to show that there was not a severance of the contract or an abandonment upon the part of the defendant of any portion of the original ■contract, and because the court held as matter of law that there had been a severance the judgment was reversed.

We do not think that this decision went to the extent of determining, as far as the question of severance was concerned, that there was no question whatever for the jury. It simply held that as upon the conceded facts different inferences might be drawn, the court should not dispose of the question as matter of law. From certain portions of the correspondence it would seem as though there was an intention upon the part of the defendant to treat the contract as severed; and from other portions it would appear as though he was treating the contract as still an entire contract, and insisting upon its performance.

Under these circumstances, the question as to whether there had been a severance of this contract was one which the jury should have been allowed to pass upon, as in view of this correspondence it cannot be held as matter of law that there was no severance, because the jury might very well conclude that it was the intention of the parties that the two classes of securities should'be treated upon different bases, notwithstanding the fact that the ■contract originally was an entire one. It would, therefore, seem to have been error to have refused to submit the question to the jury, as to whether or not there had been a severance.

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

O’Brien and Patterson, JJ., concur.


source: Caselaw Access Project

author: Van Brunt, P. J.

license: Public Domain

text:
    Amelia Bernstein, Resp’t, v. James Nealis, App’lt.

      (Supreme Court, General Term, First Department,

      Filed June 29, 1892.)

    1. Vendor and purchaser—Deficiency in quantity.
    Where a contract for the sale of a house and lot describes them by the street number and a reference to a former deed, in which they were described with reference to adjoining property, and by dimensions more or less, the fact that the lot was smaller than the dimensions so given is not material, as a deed of the premises by the street number will convey all that was contracted for.
    3. Same—Title.
    Where the title comes through a mortgage foreclosure, in which the premises were described as beginning at a certain distance from the corner of a street, without reference to any deed or street number, the fact that the premises contracted for were two feet nearer the corner constitutes a fatal defect in the title, and entitles the purchaser to be released from the contract, and recover back the money paid thereon.
    Appeal from.judgment entered on verdict directed in favor of the plaintiff.

      T. J. McKee, for app’lt; A. Stern, for resp’t.
   Van Brunt, P. J.

—The plaintiff brought this action to recover the amount paid on a contract between the plaintiff and the defendant, whereby the defendant agreed to convey to the plaintiff the house and lot known as No. 237 Elizabeth "street, together with all the fixtures therein, being the same premises as are particularly described by a deed made by Charles A. Binder to the defendant.

It was claimed that the defendant failed to perform the agreement on his part, because the premises which he offered to convey are described in said deed as being twenty-three feet three inches in width in front and rear, whereas in reality they are only twenty feet in front and rear.

Another objection stated iii the complaint is that the defendant’s title is defective, because in the deed of Binder to the defendant the premises are described $s being 123 feet two inches from the corner of Prince and Elizabeth streets, while in .reality the premises are 121 feet two inches from said corner.

It was proved upon the trial that the defendant offered performance by tendering a deed describing the property as being known as No. 237 Elizabeth street, and situated between 239 and 235 Elizabeth street, having a frontage of about twenty-three feet three inches, more or less, and a depth of ninety-one feet three inches on each side. The plaintiff also established by the evidence that a survey had been made of the premises, and they were 121 feet two inches from the corner and twenty feet two inches in width. Both parties having moved for the direction of a verdict, the defendant’s motion was denied, and the plaintiff’s motion was granted; and from the judgment thereupon entered this appeal is taken.

It would appear from an examination of the various conveyances introduced in evidence in respect to the property in question,, that the locality of the premises had been determined by the houses and lots upon either side and by the street numbers, rather than by any definite distances or dimensions which may have been mentioned in the deed. The description contained in the deed of Binder to the defendant described the property as being on the westerly side of Elizabeth street between Prince and Houston street, and bounded easterly in front by Elizabeth street, 23 feet 3 inches more or less; northerly on one side by a house and lot now or formerly of John R. Livingston, and now known as number two hundred and thirty-nine (239), formerly number 219, Elizabeth street, ninety-one feet, more or less; westerly in the rear by a lot of ground now or formerly of William Lawrence, twenty feet three inches more or less; and southerly on the other side by a house and lot of land now or formerly of W. and dr. Post, and now known as number two hundred and thirty-five (235), formerly number 215, Elizabeth street, ninety-one feet three inches, be the said dimensions more or less. The above described premises being now known as number two hundred and thirty-seven (237), formerly 217, Elizabeth street.”

It is to be seen that the lot is twenty feet three inches in the rear, and twenty-three feet three inches in front, but its precise location is designated as being between 239 and 235 Elizabeth street, and that the various dimensions in Binder’s deed are stated to be indefinite, the words more or less being applied to each. Therefore, so far as compliance with the contract is concerned, the conveyance tendered was that of the property attempted to be conveyed by Binder to the defendant.

In fact, Ho. 237 Elizabeth street, as it then stood, was what was contracted for, and what was mentioned in Binder’s deed, and what was mentioned in the deed from the defendant to the plaintiff ; and therefore the point that the premises were not twenty-three feet three inches in front, but only twenty feet three inches, is not material, as a conveyance of the whole thing contracted for was tendered.

But the point that the premises commenced 121 feet 2 inches from the corner of Prince and Elizabeth streets and not 123 feet 2 inches, becomes material because of the chain of title. It appears that one Gfeorge P. Stutzman acquired the title to the premises in question from Rosamond M. Floyd on the 26th of November, 1869, by a deed in which the premises are described substantially as they are described in the deed from Binder to the defendant.

In 1870 Stutzman mortgaged the premises. to one Cauldwell, in which he described the premises as commencing 123 feet 2 inches northerly from the “ northwesterly corner of Prince and Elizabeth streets, running thence northerly along the said westerly line of Elizabeth street 20 feet 3^ inches; thence running westerly and parallel, or nearly so, with the said northerly side or line of Prince street 91 feet; thence running southerly and parallel with the said westerly line of Elizabeth street 20 feet 3J inches, and thence running easterly parallel, or nearly so, with the northerly line or side of Prince street 91 feet 3 inches to the point or place of beginning. Being the same premises which were conveyed by deed, bearing date the 26th day of November, 1869, to the party of the first part by Rosamond Floyd.”

This mortgage was assigned to Christopher K. Markling, who foreclosed the same against one Maria Venter, who at the time of the foreclosure suit owned the fee. The complaint in the foreclosure action followed the description contained in the mortgage, without any reference to the deed through which the mortgagor had acquired title, or the street number, and the decree also followed this description.

Hence, it would appear that the mortgage was foreclosed upon premises distant 123 feet 2 inches northerly from the northwesterly corner of Prince and Elizabeth streets; whereas, the premises actually were 121 feet 2 inches from said corner, leaving two feet not covered by the proceedings in foreclosure.

This, we think, is fatal to the title. If in the foreclosure proceedings reference had been made to the previous deeds, perhaps this difficulty might have been cured, although there may be some question upon this point. But the complaint and the decree in foreclosure described the premises particularly as commencing 123 feet 2 inches from the corner, and no other or different construction can be placed upon it. There was no reference to the street number, and no reference to any other deed or conveyance by which any discrepancy in this description might be cured. Therefore, the two feet nearest the corner seem not to have been included in the foreclosure proceedings, a very material part of the premises which the plaintiff was entitled to get under her contract.

Some criticism has been made in reference to the accuracy of the survey, that the corner was not well defined, and that the surveyor may have been mistaken. That is undoubtedly true. But the plaintiff was entitled to have a title fre'e from reasonable doubt, and the evidence tended to show that the surveyor was correct in his location of the premises; and there was nothing to contradict that evidence.

We think, therefore, there was a fatal defect, and that the plaintiff could not be called upon to take the title under the circumstances, but was entitled to be released from her contract and to recover back the amount paid thereon and the expense of the examination of the title. .

The judgment should be affirmed, with costs.

O’Brien and Patterson, JJ., concur.


author: O’Brien, J. Van Brunt, P. J.

text:
    John C. Bundy, Resp’t, v. Henry J. Newton, App’lt.

      (Supreme Court, General Term, First Department,

      Filed June 29, 1892.)

    1. Champerty and maintenance—Abolition.
    The common law regarding maintenance and champerty, except so far as embodied in our statutes with reference to certain cases affecting titles to real estate, has heen abolished.
    2. Same—Indemnity bond for expenses of suit—Validity.
    Plaintiff, a publisher in Chicago, having published certain charges concerning one W., living in this state, which he claimed to be true, defendant, in consideration of a consent by plaintiff that an action for libel might be brought in this state against him, executed a bond to pay his personal expenses in coming to and returning from this state and in defending the action in case he should obtain final judgment. Held, that such bond was founded on a good consideration, was not invalid as against public policy, as the convenience of witnesses and the subject of the controversy demanded a trial in this state, and that plaintiff was entitled to recover. .
    3. Same.
    Such bond includes the expenses of procuring the depositions of witnesses and sums paid for subpoenaing them.
    Appeal from judgment in favor of plaintiff upon a trial by the court without a jury.

      E. H. Benn, for app’lt; Frederick E. Crane, for resp’t.
   O’Brien, J.

—The case contains no statement that it embraces all the evidence, nor does it comply with another rule which requires, in the absence of an opinion from the record, a statement that no opinion was delivered by the court below. We are left, however, to consider the questions of law which may be presented by exceptions taken ; and with respect to these, the only two that require any comment are those relating to the validity of the bond sued upon, and the construction of its terms.

In determining the questions thus presented it will render the views we desire to express more definite and certain if we give the bond, which is short, in full. It is as follows :

Know all men by these presents, that I, Henry J. Newton, of the city of New York, am held and firmly bound unto John C. Bundy, of the city of Chicago, in the sum of five hundred dollars, good and lawful money of the United States, to be paid unto the said John C. Bundy, his executors, administrators and assigns, to which payment, well and truly to be made, I do bind myself, my heirs, executors and administrators, firmly by these presents.

Sealed with my seal, dated the 27th day of August, 1888.

Whereas, Elizabeth A. Wells, of the city of New York, is about to commence an action in the supreme court of the state of New York, and in the city and county of New York, against John C. Bundy, of Chicago, Illinois, for libel ;

And whereas, I, the above named Henry J. Newton, have agreed that in case the said Eliza A. Wells shall fail to recover in said action, and final judgment shall be recovered by said John C. Bundy against her therein, I will pay or cause to be paid to said Bundy his personal expenses of coming to New York and defending the suit, not exceeding five hundred dollars.

Now, therefore, the condition of this obligation is such, that if the above bounden Henry J. Newton, his heirs, executors, administrators, or any of them, in- case of the failure of the said Eliza A. Wells to recover in said action, and the recovery of final judgment by said John C. Bundy against her therein, shall and do well and truly pay or cause to be paid to said John C. Bundy, his executors, administrators or assigns, his personal expenses incurred in coming to New York, defending the action, and returning therefrom, not exceeding $500, on demand (after the amount shall have been liquidated, or determined), without fraud or delay, then this obligation to be void and have no effect, otherwise to remain and be in full force and virtue.

In witness whereof I have hereunto affixed my hand and seal this 27th day of August, 1888.

Henry J. Newton (Seal).

In the action brought upon this bond plaintiff recovered the full amount thereof, upon proof that his traveling expenses, the expenses of attending the taking of depositions, and counsel fees, in the action brought by Mrs. Wells against him, exceeded $500, the amount fixed as the penalty of the bond. When the cause was moved for trial the defendant’s counsel moved to dismiss the complaint on the ground that it did not state facts sufficient to constitute a cause of action against the defendant, and that the bond set forth in the complaint was illegal and without consideration. Similar views are urged upon this appeal; and it is here insisted that if there was any consideration it was illegal; that the allegations of the complaint bring the case within the statutes against barratry ; that the bond is void, not only because contrary to public policy, but also because it is a wager contract

A cursory review of the facts which led to the giving of the bond will dispose of many of these contentions. It appears that the plaintiff, who resided in Chicago and published a newspaper there, published concerning one Eliza A. Wells, who resided in the city of New York, tin article which she and the defendant here alleged to be libelous, but which the plaintiff believed to be true. After having urged Mrs. Wells to sue the plaintiff, and some difficulty arising as to service upon the plaintiff, the defendant opened a correspondence, part of which is set forth in the record, which in effect stated that it was the duty of the plaintiff, if he believed the charges and could prove them as stated, to do so in a court of justice ; and as all the testimony was to be had in the city of New York it would be for the mutual convenience of the parties to have the trial here. The defendant finally wrote that if the plaintiff would consent to come to New York, or permit or authorize some attorney to appear for him here, any expenses that might be incurred in defending the action, or in coming to New York for the purpose of preparing for the defense, would be reimbursed by the defendant in the event of the plaintiff succeeding in the action which Mrs. Wells was to bring against him for libel.

Upon these facts, at first blush, a court would be at a loss to determine which of two views should prevail.

First, whether from the nature of the contract it should be held to be illegal and void, and thus relieve the defendant from his voluntary obligation; which the court under the facts here appear-' ing would be very lath to do. Because whatever may be said of the attitude of any other party in the cáse, assuming the old statute still existed relating to maintenance, champerty and barratry, to which defendant now appeals for his release from the bond, he undoubtedly subjected himself to the penalties imposed by such statutes, and is in an equally unenviable position in the attitude which he now assumes of having practically stirred up a litigation between others, upon promises under seal, from the consequences of which by repudiating he now seeks to be released.

With respect to the defenses based upon the old common law doctrine relating to maintenance, champerty and barratry, there are two answers thereto, either of which effectually disposes of appellant’s view. The first is, that even though the statutes were still in force, it would be difficult to see how the plaintiff is to be charged with any of these offenses in accepting indemnity for costs and disbursements in a suit which he was notified was to be brought against him, and which he had no hand in promoting or inciting. Under the old statutes of England, the act or deed constituting the offense must have had a tendency to pervert justice and unlawfully uphold quarrels. Am. & Eng. Encyc. of Law, vol. 3, p. 68. On the other hand, if any one, the defendant here was guilty of the very offenses with which he now charges this plaintiff. However, the second and conclusive answer is to’ be found in the fact that the old common law regarding maintenance and champerty, except so.far as embodied in our statutes having reference to certain cases affecting titles to real estate, has been abolished. Sedgwick v. Stanton, 14 N. Y., 296.

Secondly, the court is always lath to enforce a contract of this kind, which would seemingly permit the plaintiff to wager upon the result of a litigation to the extent of being reimbursed in the action which was brought against him by Mrs.'Wells, in the event of his obtaining final judgment in his favor in such action.

We think, however, a distinction is to be made between a bond, such as this, given to a defendant to waive a right to have the place of trial in one rather than another city, and the case of a bond given to a plaintiff to commence an action and prosecute it to final judgment. Our Code, in the case of a non-resident plaintiff suing, does not leave it optional, but will exact as a matter of right, in favor of a resident defendant, a bond for costs.

But after all, in determining the question here presented as to the legality of this bond, resort should be had to well settled and elementary principles, from which, as far as may be, the proper deductions-may be drawn. A voluntary bond, when entered into by competent parties, founded on a good consideration, and for a .lawful purpose, is good and valid at common law. Am. & Eng. Encyc. of Law, Vol. 2, p. 467 a. Here the parties were campe-" tent to contract; and so far as the consideration is concerned, the record shows that the bond was under seal, that no evidence to rebut the presumption thus arising in favor of the consideration was offered by the defendant. And, even if, from a reading of the bond, and the surrounding circumstances, we are at liberty to determine the true consideration, we fail to see why the giving up of the right which this plaintiff had of insisting upon the trial of the suit of Mrs. Wells in Chicago instead of New York, and the expense which he was thereby put to, was not a good consideration. We might go further, and assert that this imported a valuable consideration into the contract, which, it was stated in the case of Rector v. Teed, 120 N. Y., 583; 31 St. Rep., 908, “may consist of some right, interest, profit or benefit, accruing to one party, or some forbearance, detriment, loss or responsibility, given, suffered or undertaken by the other.”

This brings us to consider the third element essential to make a good bond in common law, and that is as to whether or not it was entered into for a lawful purpose. The appellant insists that it is contrary to public policy to get up and prosecute in our courts unnecessary suits, merely to gratify a party who is willing to have a suit, notwithstanding he has nothing to gain by it. This, it is claimed, was the situation of the plaintiff here, who, it is insisted, had nothing to gain or recover of Mrs. Wells, even if he defeated her action. We think that the appellant’s counsel continually loses sight of the position in which his own client has pla'ced himself, and would attribute to the plaintiff all the bad and evil features which his own client alone possesses. It was the latter and not the plaintiff that got up and introduced the prosecution in our courts of the suit of Mrs. Wells against this plaintiff; and the part that the plaintiff here played in that suit was the result of an appeal made by this very defendant to his sense of honor and of what was due the public, and to his sense of duty. There no doubt were controlling causes leading the plaintiff here to waive a right which he had to have the suit .brought in Chicago, to the end that he might expose the fraud -and swindling practices with which he charged Mrs. Wells in the article complained of, and which in a suit he insisted he would be able to prove were true.

Appellant’s final claim against the legality of the contract is the assertion that it is against public policy and therefore void.

In Sedgwick v. Stanton, 14 N. Y., 291, it is said: “ Contracts illegal at common law, as being contrary to public policy, are such as injuriously affect or subvert the public interest, 1 Story Eq. Jur., § 259, note, such contracts as by their terms or contemplated manner of performance, must work some mischief affecting the body politic. Comyn, in his work on contracts, page 53, says : ‘ All contracts or agreements which have for their object anything which is either repugnant to justice or in violation of religion or public decency, are void. So are all contracts made in contravention of the general policy of the common law, or in direct opposition to the provisions of an act of parliament, for ex-turpi contractu actio non oritur is a rule both of law and equity.’ * * * The cases where the doctrine of public policy has been applied most commonly are in respect to contracts made in restraint of trade, of marriage, those which affect injuriously the legislation or administration of justice of the state, wager contracts and contracts affecting the public morals. The adjudications in this class of cases proceed on the ground of some public injury which the performance of the stipulations of the parties would be likely to produce.” What was further on said in that case also applies here: “ In the case at bar, no public interest was violated in the execution of the contract.”

It cannot be said to have injuriously affected or subverted a public interest to have brought within the jurisdiction of our courts one residing without the state by contracting to pay his expenses in coming here for the purpose of standing a trial for an attack upon the character of a citizen of this state, where, as in this case, it is shown the convenience of witnesses and the subject of the controversy demanded a trial in this state. On the contrary, it would seem to be assisting in the administration of justice to arrange for a trial here by agreeing to pay the expenses of the defendant should he come and be sued here, instead of compelling the plaintiff and her witnesses to go to Illinois. It was to induce the plaintiff here to give up his right that the defendant here, on behalf of Mrs. Wells, the plaintiff in the libel suit, gave the bond which is the subject of this action. Nor can we think of any ground of public policy which would hold such a contract or agreement to be illegal or void.

Apart, however, from the validity of the bond, appellant insists that there were erroneous rulings of the court on the trial sufficient to entitle him to have the judgment reversed. These, as we have already said, related to evidence which the plaintiff was allowed to offer showing the amounts paid tq,his attorneys in the libel suit brought by Mrs. Wells for expenses in coming from Chicago on taking the depositions of witnesses before trial, and of sums paid for subpoenaing witnesses. The objections to the admissibility of such evidence were all based upon the appellant’s construction of the terms of the bond, which he insisted was an obligation to pay nothing more than the personal expenses of the plaintiff here, who was the defendant in the action brought by Mrs. Wells.

This construction we think is strained. It must be remembered that the bond was drawn by this defendant; and if any doubt exists as to what his intention was, it should not be resolved to the injury of the plaintiff, particularly in view of the light thrown upon the bond itself by the letters written to the plaintiff here by the defendant, which show exactly what he intended should be covered by the terms of the bond. Its terms were not, nor were they intended to be limited to paying the expenses of the plaintiff in coming to New York to defend the suit, but the view taken by the learned trial judge we think was the proper one, that they included, first, his personal expenses incurred in coming to New York; second, the personal expenses incurred in defending the action; and, third, his personal expenses incurred in returning to Chicago. We do not see how any other construction than this can be given to the language employed. Under this construction, the evidence offered as to the disbursements made was properly received.

Upon the record, therefore, as presented, we are of opinion that the judgment should be affirmed, with costs.

Patterson, J., concurs.

Van Brunt, P. J.

—I concur in the result of foregoing opinion. Although it is extremely doubtful if expenses coming on to take depositions are within terms of bond, there being more than sufficient of other items to exhaust the bond the judgment should not be disturbed.


author: Patterson, J.

text:
    Gotthelf Pach et al., Resp’ts, v. Nicholas Geoffroy, Impl’d, App’lt.

      (Supreme Court, General Term, First Department,

      Filed June 29, 1892.)

    1. Injunction—Stay on appeal—Undertaking.
    An undertaking to stay an injunction pending an appeal should not be conditioned for the payment of liquidated damages in case of affirmance, hut for the payment of such damages as the respondent will suffer by reason of the continuance during the pendency of the appeal of the acts enjoined.
    2. Same—Affidavit.
    An affidavit of an attorney of statements made to him by his clients as to the damages sustained by them will not be regarded by the court where the client himself can make the affidavit.
    Appeal from order staying proceedings pending an appeal on condition that defendant furnish an undertaking to pay fifteen thousand dollars as liquidated damages in case of affirmance.
    Action to restrain the use by defendants in their business of certain machinery causing vibration.

      D. C. Crosby, for app’lt; Abram Kling, for resp’ts.
   Patterson, J.

—The order made staying proceedings on the appeal from the judgment herein was within the discretion of the judge to whom the application was made, and we see no reason . for disturbing that order so far as the stay is concerned. But the conditions imposed we regard.as onerous in the extreme. There was nothing presented as reliable proof which justified fixing the amount of the undertaking to be given at fifteen thousand dollars or establishing that amount as liquidated damages. The plaintiffs did not nor did either of them make affidavit as to the expenses they had incurred or thé amount of damage they had suffered or probably would sustain by reason of the acts of the defendant enjoined by the decree appealed from. All that appears is a statement in the affidavit of the plaintiffs’ attorney “ that the said plaintiffs have informed your deponent that expenses of this liti- ■ gation have, independent of the suffering and annoyance caused by the acts of the defendants, amounted to the sum of five thousand dollars.”

Why neither of the plaintiffs have deposed as to this statement does not appear, and we have held time and time again that such a statement as this, made by an attorney where the party himself can make the affidavit, will not be regarded by the court. It is perfunctory swearing and must be discouraged. There was nothing before the court to justify the requirement of an undertaking in so large an amount; nor is it proper to require on such a motion that the undertaking shall be for liquidated damages. This order should be modified. The stay of proceedings will be maintained for the present, but the appellants must within ten days apply anew to the special term to fix the amount of an undertaking to be given as a condition of continuing the stay until the decision of the appeal from the decree, and on that application whatever is to be presented on either side for the consideration of the court must be by affidavits of persons competent to make them. The undertaking must be filed within a time to be fixed by the special term, and be conditioned that the defendants will pay to the plaintiffs such damage as may be sustained by the plaintiffs by reason of the defendants continuing during the pendency of the appeal the acts enjoined by the decree. No costs of this appeal to either party.

Van Brunt, P. J., and O’Brien, J., concur.


text:
    The People ex rel. Samuel Rey, App’lt, v. The Court of Special Sessions, Resp’t.

      (Supreme Court, General Term, First Department,

      Filed June 29, 1892.)

    Certiorari—Criminal proceedings—Abandonment.
    • Certiorari does not lie to review an affirmance bv the special sessions of an order of a magistrate in abandonment proceedings. The only mode of review is by appeal.

      (People ex rel. Gunther v. Murray, 62 Hun, 30; 41 St. Rep., 301, followed.)
    Certiorari to review the determination of the court of special sessions affirming'an order of a police magistrate in abandonment proceedings.

      Fromme Bros., for app’lt; H. J. Appel, Jr., for resp’t.
   Van Brunt, P. J.

—In view of the decision of this court in The People ex rel. Gunther v. Murray, 62 Hun, 30; 41 St. Rep., 301, it does not seem necessary to discuss the points which are presented upon this appeal, as they were all disposed of in that case, and we see no distinction which possibly can be drawn between the case as there presented, and the one at bar in respect to the reasons for the conclusion arrived at.

The writ should be dismissed, with $10 costs and disbursements.

O’Brien and Patterson, JJ., concur.


author: O’Brien, J.

text:
    James H. Lusbie, Adm’r., Resp’t, v. Richard Meares, Impl’d, App’lt.

      Supreme Court, General Term, First Department,

      Filed June 29, 1892.)

    Bill of particulars—Negligence.
    In an action to recover damages for the death of plaintiffs intestate at the time of the destruction of defendant’s hotel, alleged to have been caused by negligence in failing to furnish proper and necessary means of escape from the building in case of fire, where the defendant has testified before the coroner, upon an inquest, that he was thoroughly familiar with everything relating to the, management of the hotel and construction of the building, and the means of escape, it is not an abuse of discretion to deny a motion for a bill of particulars.
    Appeal from order denying motion for bill of particulars.

      William Allen, for app’lt; Solon P. Rothschild, for resp’t.
   O’Brien, J.

—The question presented upon this appeal is similar to that involved in the case of Donohue against the same defendant, argued at this term of the court, and a decision in which is herewith handed down. 46 St. Rep., 188. This will render unnecessary a discussion of what we regard to be the considerations which should control determining a motion for a bill of particulars in actions of negligence. It is true that the particulars sought in this are necessarily different from those asked for in the Donohue cáse, because the complaints in each case are themselves different.

This complaint alleges that plaintiff’s intestate died “ by reason of carelessness and. negligence ” (of the defendants) their agents or servants, in the care, management and conduct of the hotel, and by reason of the improper construction of said building used for hotel purposes, and of the want of proper appliances, conveniences and appurtenances, essential to the safety of ?the guests thereof, and required by law, and by reason of the negligence and carelessness of the defendant Heim an Israel, or want of care on his part, and of his failure to furnish proper and necessary means of escape from said building in case of fire, as required by law.”

In this, as in the Donohue case, it was shown that the whole subject of the causes leading to the fire and the death of the inmates at that time of the hotel, was the subject of an investigation before a coroner, in which the defendant here moving furnished undoubted evidence that he was thoroughly familiar with everything relating to the care and management of the hotel and the construction of the building, and the appliances used and appurtenances supplied for the safety of the guests, together with the means of escape from the building in case of fire. Though the allegations of this complaint are broader and more general than those in the Donohue case, we think, in view of the knowledge possessed by the defendant and of the other facts appearing by affidavit, and for the reasons assigned by the judge in his opinion, that the discretion vested in him was not improperly exercised in denying the motion, and with that disposition we should not interfere.

The order appealed from should therefore be affirmed, with ten dollars costs and disbursements.

Van Brunt, P. J., concurs.


author: Andrews, J.

text:
    G. Weld Thomas, App’lt, v. The New York & Greenwood Lake Railway Co. et al., Resp’ts.

      (Supreme Court, General Term, First Department,

      Filed June 29, 1892.)

    1. Railroad—Income bonds—Pleading.
    The complaint in an action upon railroad income bonds which provide that no more interest shall be payable than shall be certified by the board of directors to have been earned over and above all expenses, including necessary repairs, and in default of such certificate no interest shall he payable, must allege that such certificate has been given, or a request made that one be given, and a neglect or refusal to give the same after such request.
    2. Same.
    Allegations in such complaint that the company has wrongfully and improvidently incurred great and unnecessary expenses which it has wrongfully charged against and paid out of the earnings, and wrongfully prevented'the accumulation of a fund to pay said interest; that the directors used a large part of the money in rebuilding the railroad and building new railway and structures which were not necessary, and improvidently leased another road, and operated the same at a loss, are mere allegations of opinion or conclusions of law, and insufficient to constitute a cause of action in the absence of a charge of bad faith ; the facts should be stated upon which the couit could determine whether the work alleged to have been done could be considered necessary repairs.
    Appeal from an order in favor of defendants after the trial of an issue of law at the special term.

      Oliver P. Buel, for app’lt; Cortlandt Parker, for resp’ts.
   Andrews, J.

—The complaint alleges that the defendant is a New Jersey corporation; that on November 30, 1878, it issued first mortgage income bonds to the amount of $900,000, and that on the same day it issued second mortgage income bonds to the amount of $1,800,000; that the principal of each of said bonds was payable thirty years after the date thereof, and interest was also payable at six per cent, per annum, on the first days of April and October, out of the earnings of said company; that a large portion of such bonds were sold; that the plaintiff is the owner and holder of five bonds of each class, and that he represents other holders of said first and second mortgage income bonds to" the aggregate amount of $425,000; that no interest has ever been paid on any of said bonds; that each of said bonds contained the following proviso : “ Provided always, nevertheless, that no more interest shall be payable by virtue hereof than shall be certified by a vote of a majority of the board of directors for the time being to have been by said corporation earned over and above all expenses, including necessary repairs, during the six months ending one month before such time fixed for such half-yearly payments, or theretofore to have accumulated during the current year, so as altogether to make enough to pay at the rate of six per cent per annum, and in default of such certificates no interest shall be payable; ” that the defendant railway, for many years past and in each of said years, has earned -enough money over and above its operating expenses, including necessary repairs, and including all expenses properly chargeable against or payable out of gross earnings, to pay said interest in full at the rate of six per cent per annum on both said classes of bonds; that the defendant railway company has, nevertheless, wrongfully neglected and refused to pay said interest or any part thereof, and the board of directors have wrongfully neglected and refused to certify that ■said interest or that any interest whatever has at any time been earned over and above said expenses; that said defendant company has, through its directors, wrongfully and improvidently in■curred great and unnecessary expenses, which they have wrongfully charged against and paid out of the earnings of said defendant railway company properly applicable to the payment of interest, and thereby at all times wrongfully prevented the accumulation of a fund to pay said interest; that said directors used .-and appropriated a large part of said moneys to rebuilding the railway of the defendant company and to building new railway and structures, and that such rebuilding and such building were not necessary for the maintenance and operation of the defendants’ railway ; that the defendant railway company wrongfully charged the moneys so used and appropriated as expenses against its gross earnings; that the defendant railway company also improvidently leased the railroad known as the Watchung railroad, and operated said road at a loss, and thereby prevented the accumulation and appropriation of money to pay such interest; that the defendant Hewitt is •president and director of the defendant railway, and that the ■defendant King is president of the Erie Railroad and a director of the defendant road, and that the defendant road has been leased to the Erie Railroad and operated by it; that said defendants Hewitt and King participated and aided in such wrongful neglect and refusal, and that the same defendants consented to, ■or procured, moneys expended in the manner aforesaid to be chargedas expenses against gross earnings. The complaint demands judgment that the defendants, other than the defendant ¡trustees, account for all income and earnings of the defendant railway company, and that the defendants, other than the defendant trustees, pay the amount of said net earnings into the hands of a ■ special receiver, to be appointed by the court, to be disposed of under the direction of the court for the benefit of the plaintiff and .all other tona fide holders of such income bonds.

The defendant Hewitt and the defendant railway company joined in a demurrer to the complaint on various grounds, and, among others, that it did not state facts which constituted a cause of action; and the defendant King also demurred separately upon similar grounds. The special term sustained the demurrers, and final judgment was entered dismissing the complaint, with costs, and from that judgment this appeal is taken.

The special term placed its decision upon the ground that if interest was due to the plaintiff upon the bond held by him, he had a cause of action at law against the defendant corporation, but that no relation existed between the plaintiff and the defendants which entitled him to a judgment compelling the defendants to account in a court of equity.

We do not consider it necessary to determine at the present time whether the grounds upon which the special term placed its decision were wtell founded, because we think the judgment should be sustained upon other grounds.

First. The plaintiff cannot maintain either an action at law or an action in equity, unless a majority of the directors of the defendant railway have previously given the certificate provided for in the bonds themselves, or unless such certificate has been unreasonably withheld; and the complaint in either form of action must allege a request that such certificate be given, and a neglect or refusal to give the same after such a request has been made. The only allegation on this subject contained in the complaint is as follows : “But that the defendant railway company has, nevertheless, at all times wrongfully neglected and- refused to pay said interest or any part thereof, and the board of directors thereof have wrongfully neglected and refused to certify that said interest or that any interest whatever has at any time been earned over and above said expenses. And that the defendants Hewitt and King have at all times participated and aided ■ in such wrongful neglect and refusal." This is not an allegation of a request, and the want of such an allegation renders the complaint demurrable.

Secondly. If the complaint contained a proper allegation of a request for the giving of such certificate, it would not then state a good cause of action against any of the defendants. According to the terms of the proviso contained in each bond, such certificate must be tp the effect that the corporation has earned moneys “ over and above all expenses, including necessary repairs.” The language employed is not “operating” expenses, but “ all ” expenses.

In determining whether the complaint sets forth a cause of action, it must be taken as a whole. As above stated, it contains. general allegations of the earning of money which should ■have been appropriated for the payment of interest; the failure to pay interest; the neglect and refusal of the board of directors to give the certificate; the wrongful and improvident incurring of great and unnecessary' expenses, which were charged against and paid out of earnings; and then proceeds to specify how such alleged great .and unnecessary expenses have been incurred, namely: in re-building the railway of the defendant company and in building new railway and structures, and in improvidently leasing and operating the Watchung Railway. These are substantially all the specific charges made against the defendants.

There is no allegation that the earnings have been appropriated by defendants to their own use, or that they have intentionally done anything wrong. Indeed, one allegation of the complaint, if true, renders it in the highest degree improbable that the defendants Hewitt or King should have wrongfully or improvidently used moneys, applicable to the payment of interest, for any other purpose, and that allegation is that a great majority of both said first and second mortgage income bonds are owned or controlled by the defendants Hewitt and King, or by said firm of Cooper & Hewitt, and by the said Brie Railroad Company. As the two issues of bonds amount to $2,700,000, it is difficult to understand what ob-. ject Hewitt or King, or the Brie Railroad, could have in expending moneys, applicable to the payment of interest on the bonds, in the improvement of the defendant railroad.

There are several reasons why the allegations in regard to expending the earnings for rebuilding the railway of the defendant company and building new railway and structures, when taken in connection with the rest of the complaint, do not state a good cause of action against the defendants or either of them.

The various allegations that the defendants did certain things “wrongfully ” amount to allegations that they did such things “ unlawfully,” and are merely allegations of conclusions of law. The allegations that the defendants did certain things “ improvidently,” and that that rebuilding of the railway of the defendant company and the building new railway and structures were not necessary for the maintenance and operation of the defendants’ railway, are not allegations of facts, but are merely allegations of the opinion of the plaintiff; and neither such allegations as to the law, nor as to the opinion of the plaintiff, are admitted by the demurrer; and if such allegations are disregarded, the remaining portions of the coipplaint do not state a good cause of action.

iLgain, the moneys alleged to have been expended for rebuilding the defendants’ railway, and for building new railway and structures, may be considered as covered by the term contained in the proviso inserted in each bond, “all expenses, including necessary repairs.” There would be no question on this point if the words “ all expenses ” stood alone, there being no allegation of bad faith ; and, assuming that the words including necessary repairs ” operate as an implied limitation of the scope of the words “ all expenses,” we still think that, upon these demurrers, the term “all expenses,” as so limited, should be regarded as covering the work which, it is alleged, the defendants have done upon the defendant railway. As in the case of a house or a ship, where a large amount of work is necessarily done to put a railroad, which is old, or was originally badly constructed, or has become very much out of order, into a first class condition, such work may be, and is in many cases, with equal propriety and accuracy, termed indifferently “repairing,” “rebuilding,” or “doing new work.” Of this kind of work are the replacing of old or worn-out rails, ties, culverts or bridges with new ones, enlarging insufficient stations and shops, improving the road-bed, and renovating and reconstructing engines and cars according to new and improved models. When a large amount of such work has been done, it is a question of the use of terms, and to some extent a matter of opinion, whether it should be called repairing, rebuilding or doing new work. In common parlance it is frequently said that the work done upon the house, or ship, or railroad, has been so great that it is practically a new house, ship or railroad; and yet all the repairs made may have been necessary to put either in a first class condition.

It was the duty of the plaintiff to set forth in his complaint facts upon which the court could determine whether the work alleged to have been done upon the railway of the defendant company could be considered “ necessary repairs.” He has not, however,'stated any specific facts, but has made general allegations, which are partly merely expressions of opinion; and, so far as they can be regarded as statements of facts, are so vague, indefinite and uncertain, that it is difficult, if not impossible, to determine what they do mean. There is no allegation as to how much of the defendant company’s railway has been rebuilt, nor how much new railway, or how many new structures, have been built; and the allegations in regard to the rebuilding of the railway of the defendant company, and in regard to building new railway and structures, might be true, although the actual rebuilding and building, as distinguished from “ necessary repairs,” were of the most trifling and insignificant amount

These features of the complaint are not aided by § 519 of the Code. In Clark v. Dillon, 97 N. Y., 373, Ruger, Ch. J., delivering the opinion of the court, said: “ It was formerly the settled rule to construe doubtful pleadings most strongly against the pleader, but this rule has been so far modified by the Code as now to require them to be liberally construed, with a view to substantial justice between the parties. This modification has, however, been held to extend only to matters of form, and not to apply to the fundamental requisites of a cause of action.” (Citing authorities.)

“ A construction of doubtful or uncertain allegations in a pleading which enables a party by thus pleading to throw upon his adversary the hazard of correctly interpreting their meaning, is no more allowable now than formerly; and when a pleading is susceptible of two meanings, that shall be taken which is most unfavorable to the pleader.” (Citing authorities.)

“ It is in the nature of things that a party who is required to frame his issues for the information of his adversary and the court must be responsible for any failure to express his meaning clearly and unmistakably. While it is competent for a party to move to make the pleadings of his adversary more definite and certain, yet, inasmuch as it is the primary duty of the party pleading to present a clear and unequivocal statement of his allegations, the onus of having them made so cannot be cast upon his adversary by his own fault in failing to perform his duty.”

We think that, applying the rule thus laid down, the allegations of the complaint as to the rebuilding of the defendants’ railway, and the building of new railway and structures, taken in connection with the other allegations of the complaint, do not state a good cause of action against either of the defendants, because upon these demurrers they cannot be considered as sufficient allegations that the money expended for those purposes was not covered by the term “ all expenses, including necessary repairs,” contained in the proviso inserted in each bond.

So far as the leasing of the Watchung railroad, and the operating the same are concerned, the allegations of the complaint in effect amount to a charge that the board of directors acted improvidently in making such lease, and in operating that road at a loss. It is sufficient to say that the question whether such lease should be made, and upon what terms, and whether the road should be operated, was devolved by law upon the board of directors of the defendant railway ; and as there is no allegation that they acted in bad faith, or exceeded their powers, in this respect, the alleged improvidence in making the lease, and operating the road, does not, in connection with the other allegations of the complaint, constitute a good cause of action against either of the defendants.

The judgment should be affirmed, with costs.

Van Brunt, P. J., and O’Brien, J., concur.


text:
    The First National Bank of Springfield, Mass., Resp’t, v. Peter Haulenbeek, App’lt.

      (Supreme Court, General Term, First Department,

      Filed June 29, 1892.)

    Bills and notes—Evidence.
    In an action by a national bank upon several promissory notes, where the defense is that they were given by the maker to the payee, without consideration, for the purpose of borrowing money; that the payee had the same discounted at a usurious rate of interest, and retained the money, it is error to exclude testimony of the defendant as to whether there was any consideration for the notes, and as to the circumstances under which they were delivered, as such evidence was admissible upon the question as to the amount actually paid by plaintiff for the notes, and as to whether any interest should be allowed upon them.
    _ Appeal from judgment in favor of plaintiff, entered upon verdict directed by the court.

      Nelson Smith, for app’lt; Charles A. Wendell, for resp’t.
   Patterson, J.

—The complaint in this action is upon four promissory notes made by the defendant; one dated September2, 1886, for $995.50, payable to the order of the maker four months afterdate; another dated September 27th, 1886, for $1,050.05, payable to the order of the New York Textile Filter company, payable four months after date, at the North Eiver Bank; the third dated September 30th, 1886, for $1,050.40, to the order of the New York Textile Filter Company, payable four months after date at the North River Bank; the fourth for $1,050, dated October 29, 1886, payable four months after date, to the order of the New York Textile Filter Company, payable at the North River Bank.

The answer sets up several distinct defenses. It is necessary to consider only the second and third.

The second defense relates to the note dated September 30, 1886, and it is averred that it was made without consideration; was obtained from the defendant by one Morris, who when be received it promised to deliver to the defendant coffee therefor, at the market price, before the note was put in.use; that Morris diverted the same from its purpose and wrongfully delivered it to one Hotchkiss under and pursuant to a corrupt and usurious agreement, by which Hotchkiss was to be paid a greater rate of interest than six per cent, per annum.

The third defense relates to the three other promissory notes, and as to them it is alleged that they were given without consideration to Morris and for the purpose of borrowing money on them, and that instead of so doing, Morris negotiated and delivered the notes to Hotchkiss under a corrupt and usurious agreement, by which Hotchkiss reserved more than six per cent, per annum on' the amount of the notes respectively, contrary to the statutes of this state arid of the state of Massachusetts (the plaintiff is an incorporated national bank located in Massachusetts), and of the statutes of the United States by which the plaintiff, as a national bank, was prohibited from taking interest in excess of that which was allowable by the law of the states of New York, Massachusetts and of the United States.

On the trial the cashier of the plaintiff was examined. The notes were shown to him and he testified that he bought them before maturity of Hotchkiss, who was a note broker in the city of New York. Hotchkiss testified that he personally took the notes to Springfield, Massachusetts, and there sold them to the plaintiff. The precise amount paid for each of the notes was not proven, but Morris, to whom they were delivered by the defendant and who gave them for sale to the broker,' testified that the discount upon the notes was either ten or twelve per cent, and not less as to either of them than ten per cent. At the close of the plaintiff’s case the defendant was called as a witness on his own behalf, to prove that the paper and all of it was diverted paper, and he was asked to state as to the note dated September 2, 1886, whether it had any consideration and the circumstances under which it was delivered.

That was objected to and the objection was sustained; the court stating that it would allow the defendant to show that the notes were given to Morris for the purpose of having them discounted, and that they were accommodation notes, but that was not the exact aspect in which the defendant intended to present the case, for it was distinctly claimed that as to the notes of September 2d, September 27th) and September 30th, that they were made without any consideration, were delivered to Morris to be discounted, and that the defendant Haulenbeek never received anything for them. With reference to the note of the 30th of September, the offer made was to prove that that note w&s. parted with on the promise of Morris that coffee would be ffurnished for it, and that the consideration had wholly failed. The learned judge excluded all the testimony thus offered and to that an exception was taken. Thereupon the learned judge directed a verdict for the plaintiff for the amount of all the notes, including interest from the dates at which they respectively matured. As the case was tried, we consider these offers broad enough to cover what is contained in the second and third defenses, as they are .set forth in the answer, and we are of opinion that the learned judge was in error in not allowing the testimony to be given. If proof could be made, as to the three notes, that they were given to Morris in order that money might be raised upon them for Haulenbeek, and instead of their being applied to that purpose they were discounted by Morris either for himself or for the company of which he was treasurer, then there certainly was a misuse amounting to a diversion of the notes; and under such circumstances all that a bona fide holder could recover would be the amount actually advanced on the notes, and there is nothing to show the exact amount the plaintiff paid. As to the third note, the diversion, if the facts appeared in evidence as they are ■claimed by the defendant to exist, the same rule of recovery would apply. But there is another aspect in which this testimony was material, at least to reduce the amount of the obligation of the defendant on each of the notes. If the defendant’s claim were established that all these notes were originally discounted at usurious rates of interest of from ten to twelve per cent, then the plaintiff, being a national bank, would not be entitled to recover any interest whatever on those notes under the statutes of the United States (§§ 5197 and 5198, U. S. Revised Statutes), which provide that an association organized under the National Banking Law may only take and reserve such interest as is allowed by the laws of the state, territory or district where the bank is located and no more, except where by the laws of any state a different rate is limited for a bank of issue organized under the state law ; in which event the National Bank may charge the rate so limited; and the consequences of taking usurious interest are declared by § 5198, namely: that there shall be a forfeiture of the entire interest which the note, bill or other evidence of debt carries with it, or which has been agreed to be paid thereon.

We think the testimony ‘ that was offered to be given by Mr. Haulenbeek was clearly admissible at least upon the question of the amount actually paid for these notes by the plaintiff, and also upon the question as to whether or not any interest should be charged against the defendant upon them. These items of interest amount to a considerable sum, nearly a thousand dollars; and for the error in rejecting the testimony referred to we think that this judgment must be reversed, with costs to appellants to abide the event.

Van Brunt, P. J., concurs.