text:
    Mary A. Caraher, Ex’rx, et al., Resp’ts, v. The Royal Insurance Company of Liverpool, App’lt. Mary A. Caraher, Ex’rx, Resp’t, v. The Standard Fire Insurance Co., App’lt. Mary A. Caraher, Ex’rx, Resp’t, v. The Newark Fire Insurance Co., App’lt. Mary A. Caraher, Ex’rx, et al., Resp’ts, v. The Home Insurance Co., App’lt. Mary A. Caraher, Ex’rx, et al., Resp’ts, v. The Springfield Fire & Marine Insurance Co., App’lt. Mary A. Caraher, Ex’rx, Resp’t, v. The American Central Insurance Co., App’lt.

      (Supreme Court, General Term, Fourth Department,

      Filed February 13, 1892.)

    1. Insurance (fire)—Proof of loss.
    Where a carpenter and builder has testified as to the amount of damage to a building b / fire, and has given an estimate of the cost of rebuilding, a question as to whether he would be willing to rebuild at those figures is immaterial, and is properly excluded on'that ground.
    '2. Same—Ownership.
    Where the pastor of a church purchases the edifice at a forelosure sale with his own funds and continues in possession thereof without opposition on the part of the corporation, and the insurer’s agents had notice of his purchase when the policy was issued to. Mm, it cannot claim that he was not the unconditional and sole owner within the meaning of the policy.

      Z. Same—Vacancy of building.
    Where the services in the church were discontinued about a year before the fire on account of the pastor’s ill health, but remained in charge of the sexton, and the pastor resided in an adjoining building, and .frequently visited it, Held, that a finding that the building did not become vacant or unoccupied by reason of the cessation of the services would not be disturbed.
    4. Same—Execution.
    The issuing of an execution, followed by a notice of sale, is not a levy upon the property within the meaning of a clause in the policy providing that in case of a levy on the property insured it should be void.
    5. Same—Additional insurance.
    The policies in question provided that they should be void if other insurance was procured without consent endorsed thereon. All were endorsed with consent for other insurance concurrent in form, and some had an endorsement that the loss should be payable to the mortgagee. Held, that the endorsements formed no part of the policy, and that these policies were not void because the others did not have the loss payable to the mortgagee.
    <3. Same.
    Possession of a church building under a deed given on a foreclosure sale affords no presumption of ownership of the organ in the building which was not included in the mortgage.
    Appeal in -each ease from, a judgment entered in Oneida bounty October 20, 1890, upon the report of .a referee.
    These actions were upon policies of insurance and were tried together, the evidence being deemed to be given in all the cases. There were separate reports and judgments and notices of appeal.
    The defenses litigated at the trial were (1) that the property was not of the value alleged ; (2) that other policies of insurance not concurrent in form had been obtained by plaintiff’s testator upon the property without consent as required by the policies; (3) that the interest of plaintiff’s testator in the property insured was not the entire, unconditional and sole ownership for his own use and benefit; (4) that the building insured for many months prior to the fife was vacant or unoccupied without consent of the-companies; (5) that prior to the fire the insured property had been levied upon by the sheriff by virtue of judgments and executions against the assured.
    The policy issued by the Royal Insurance Company was dated April 2, 1887, and insured Patrick Caraher, in the sum of $5,000, against loss or damage by fire for three years on the property described as'follows : “On the brick church edifice, with slate roof, known as the ‘St. Patrick’s Church,’ situate corner of Columbia and Huntington streets, Utica, N. Y.” This policy contained, among others, the following conditions: “If the assured shall have, or shall hereafter make, any other insurance on the property hereby insured, or any part thereof, without the consent of the company written hereon, * * * or if the property be sold or transferred, or any change take place in the title or possession (except in case of succession by reason of the death of the assured), whether by legal process or judicial decree, or by voluntary transfer or conveyance; or if this policy shall be assigned before a loss, without the consent of the company endorsed hereon, or if the interest of the assured in the property, whether as owner, trustee, consignee, factor, agent, mortgagee, lessee, or otherwise, be not truly stated in this policy, * * * then, and in every such case, this policy shall be void.”
    “ If the interest of the insured in the property be any other than the entire, unconditional, and sole ownership of the property for the use and benefit of the assured, or if the building insured" stands on leased ground, unless the lease be perpetual, it must be so represented to the company and so expressed in the written part of this policy, otherwise the policy shall be void.”
    This policy also contained, the following endorsements:
    “ Other insurance permitted concurrent in form herewith.
    “Loss, if any, payable to L. M. Thomson, executor, to the extent of his mortgage interest”
    The policy issued by the Standard Eire Insurance Company insured “ Rev. Patrick Caraher for the term of three years from January 20, 1888,” in the sum of $3,500, against loss or damage by fire on the following describéd property: “ $3,500 on his brick edifice, with slate roof, known as ‘ St. Patrick’s church,’ situate on the southeast comer of Huntington and Columbia streets, Utica, N. Y.”
    This policy was in the form known as the “ Standard Eire Insurance Policy of the State of New York,” and contained, among others, the following conditions:

      “ This company shall not be liable beyond the actual cash value of the property at the time any loss or damage occurs, and the loss or damage shall be ascertained or estimated according to such actual cash value, with proper deduction for depreciation, however caused, and shall in no event exceed what it would then cost the insured to repair or replace the same with material of like kind and quality.”
    “ This entire policy shall be void if the insured has concealed or misrepresented, in writing or otherwise, any material fact or circumstance concerning this insurance or the subject thereof; or ■if the interest of the insured in the property be not truly stated herein.”
    “ This entire policy, unless otherwise provided by agreement endorsed hereon or added hereto, shall be void if the insured now has or shall hereafter make or procure any other contract of insurance, whether valid or not, on property covered in whole or in part by this policy * * * or if the interest of the insured be other than unconditional and sole ownership * * * or if any change, other than by the death of an insured, take place in the interest, title or possession of the subject of insurance (except change of occupants without increase of hazard) whether by legal process or judgment, or by voluntary act of the insured, or otherwise * * * or if a building herein described, whether intended for occupancy by owner or tenant, be or become vacant or unoccupied and so remain for ten days.”
    There was written upon this policy the words: “Other insurance permitted without notice until required.”
    The policy issued by the Newark Fire Insurance Company insured “ Rev. Patrick Caraher for the term of three years from the 26th day of October, 1887,” in the sum of $3,000 against loss or damage by fire to the following described property: “$2,500 on his brick church edifice, with slate roof, known as St. Patrick’s church, situate on the southeast corner of Huntington and Columbia streets, Utica, N. Y., $500 on organ therein.”
    This policy contained the same conditions as the Newark company policy, and it had on it the clause in writing: “ Other insurance permitted, without notice, until required.”
    The policy issued by the Home Insurance Company insured “ Patrick Caraher against loss or damage by fire, to the amount of $5,000, on the brick church edifice, with slate roof, known as ‘ St. Patrick’s church,’ situate corner of Columbia and Huntington streets, Utica, N. Y.,” for the term of three years from April 2, 1887. _ -
    _ This policy contained, among others, the following conditions: “ If the assured shall have, or shall hereafter make, any other insurance on the property hereby insured, or any part thereof, without the consent of the company written thereon ; or if the above-mentioned premises shall be occupied or used so as to increase the risk, or become vacant or unoccupied, without notice to, and consent of, this company, in writing, * * * or if .the property be sold or transferred, or any change takes place in title or possession (except by such succession by reason of the death of the assured), whether by legal process or judicial decree, or voluntary transfer or conveyance; or if this policy shall be-assigned before a loss, without the consent of the company endorsed hereon, or if the interest of the assured in the property, whether as owner, trustee, consignee, factor, agent, mortgagee, lessee or otherwise, be not truly stated in this policy; * * * then, in every such case, this policy shall be void.”
    “If the interest of the assured in the property be any other than the entire, unconditional and sole ownership of the property, for the use and benefit of the assured, or if the building insured stands on leased ground it must be so represented to the company, and so expressed in the written part of this policy, otherwise the policy shall be void.” ■
    .“The cash- value of property destroyed or damaged by fire-shall in no case exceed what would be the cost to the assured, at. the time of the fire, of replacing the same.”
    . This policy also contained the following endorsements:
    “ Other insurance permitted, concurrent in form herewith.”' “ Loss, if any, payable to L. M. Thomson, executor, to the extent of his mortgage interest.”
    The policy of the Springfield Fire. & Marine Insurance Company insured “ Patrick Caraher against loss or damage by fire, to the amount of five thousand dollars, on the brick church edifice,, with slate roof, known as the 1 St. Patrick’s church ’ situate, corner of Columbia and Huntington streets, Utica, R. Y.,” for the term of three years from April 2, 1887.
    This policy contained, among others, the following conditions :
    “ If the assured, in a written or verbal application, makes any erroneous representation, or omits to make known any fact material to the risk; or if the assured shall have or shall hereafter make any other insurance on the property hereby insured, without the consent of the company written hereon ; * * * or if an execution be levied on the property insured, or foreclosure of mortgage be begun, or the property be sold under a deed of trust, or if the assured shall be adjudged a bankrupt, or if the property insured be assigned under any bankrupt or insolvent laws, or if any change takes place in the title or possession of the property, whether by sale, transfer or conveyance, legal process, or judicial decree.; or the policy is assigned without consent of the company endorsed hereon; or if the assured is not the sole, absolute and unconditional owner of the property insured ; or (if said property be a building or buildings) of the land on which such building or buildings stand, by a title in fee simple, and the interest of the assured be not truly stated in the policy;. * * * or if the premises hereby insured shall become vacated by the removal of the owner or occupant, and so remain for a period of more than thirty day's, without notice to the company, and consent endorsed thereon ; * * * then and in every such case, this policy shall be void.”
    This policy also contained the following endorsements :
    “ Other insurance permitted concurrent in form herewith.”

      “ Loss, if any, payable to L. M. Thomson, executor, to the extent of his mortgage interest.”
    The policy of the American Central Insurance Company insured “ Bev. Patrick Garaher for the term of three years, from the-23d day of August, 1887,” against damage by fire, to the amount, of $3,000, “ on the brick church building with slate roof situated on the southeast corner of Columbia and Huntington streets, Utica, N. Y.” This policy contained the same conditions as the-‘Newark Company policy, and on it was the clause in writing, “ Other concurrent insurance permitted.”
    On or about the lath March, 1871, the “ St. Patrick’s Church,. Utica, N. Y.,” was duly incorporated as a Boman Catholic Church or society under- the laws of this state, and on the 18th March, 1871, it received from John McOIosky a warranty deed of the-premises upon which the church stood at the time of .the fire. At the time of the execution of this deed Patrick Garaher was-the pastor of the church, and continued to be such until about October 1, 1888, and during that time he was, as pastor, ex-officioone of the trustees of the corporation. On the 14th September, 1881, the corporation executed and' delivered to the Mutual Life-Insurance Company of New York a mortgage upon the premises-for $21,000. On the 27th December, 1886, this mortgage not being paid, an action to foreclose it was commenced against the corporation and several other defendants, among whom was the said Patrick Garaher. In this action the usual judgment of foreclosure was entered on the 19th February, 1887, and under it a ‘sale of the premises was made on the 15th March, 1887, for the sum of $26,700 to Patrick Garaher, he being the highest bidder therefor. On the 2d April, 1887, in pursuance of the sale, the property was deeded to , Garaher, he paying therefor the full amount of his bid with moneys of his own. Garaher on receiving the deed, as the referee found, took possession of the property and so remained down to the time of the trial, and retained and held his title thereto. On. the 8th November, 1889, the church edifice and its contents were substantially destroyed by fire without, any fault on the part of Garaher.
    The referee also found that at the time of the execution and delivery of the policies, and during all the time down to and until after the destruction of the property by fire, the interest of Garaher in the property insured was the entire, unconditional and sole ownership thereof for the use and benefit of the assured; that the actual cash value of the damage to the property and the actual loss suffered was $25,500; that the building in question did not become and was not after the issuing of the policies down, to the time of the fire vacant or unoccupied; that all the policies were concurrent in form.
    It further appears that on May 21, 1889, John P. Kennedy recovered in the supreme court a judgment against Patrick Cara-■her for $5,347.28, which was duly entered and docketed in Oneida county on that day; that on the 25th June, 1889, William J. Garaher obtained in the supreme court a judgment against Patrick: Caraher for $245.35, which was duly entered and docketed on that day in Oneida county; that on or before October 19, 1889, executions in due form were issued on said judgments against the property of Patrick Caraher, and delivered to the sheriff of Oneida county, and he thereupon advertised the said real property to be sold on the 30th November, 1889, stating in his notice that he had seized and taken all the right, title and interest of Patrick Caraher in the real estate in question.
    Since the trial Patrick Caraher has died and the executrix in his will has been substituted in his place as plaintiff. Caraher, after his purchase, gave a mortgage on the property, and the mortgagee is a party plaintiff in the cases against "the Royal, the Home and the Springfield companies.

      A. H. Sawyer and I N. Amee, for app’lts; William Kernan, for resp’ts. .
   Merwin, J.

Two questions are presented which are involved in each of the cases. First, that the referee erred in finding the actual loss and damage to be $25,000; and, second, that the interest of Caraher in the property was not that of unconditional and sole ownership, and that therefore the policies, by their .terms, were void.

1. The evidence was conflicting upon the subject of the amount of the loss. Witnesses upon either side made their- estimates and stated the manner in which they arrived at results. We are of the opinion that the evidence warranted the conclusions of the referee upon the subject. In this connection the defendants ■claim that the referee erred in sustaining the objection of the ■plaintiffs to the question put by defendants to one of their witnesses : “Would you be willing to rebuild this building at these figures ? ” The witness was a carpenter and builder, called by the defendants, and he had testified to making measurements ■and an estimate of the cost of rebuilding, and had stated what that estimate was and what, in his judgment, was the amount of the damage to the building by fire. He was then asked the question above set out. What the witness would be willing, at the time of the trial, to do was not the test. He had given his estimates and the court already had the benefit of his judgment in the matter. The-objection was properly sustained.

'2. The proposition that the interest of Caraher was not that of •unconditional and sole ownership is based on - the circumstance that, at the time of his purchase at the foreclosure sale, he was one of the trustees of the corporation, which had given the mortgage.

The claim of the defendants is that Caraher, being a trustee, ■could not purchase for his own benefit, and that the interest which he acquired in the property was not that of unconditional and •sole ownership but that he thereafter held the same as a trustee lor the benefit of .the church.

The plaintiffs claim that the possibility that the corporation might have the'right in equity to pay Caraher what he had paid for the property and compel him to convey to the corporation is no defence to these actions; that this was a right which, if the corporation had it, it might or might not enforce at its option and that the defendants cannot take advantage of it.

Many cases are cited by the learned counsel for the defendants, to the general proposition that a trustee cannot deal with trust property to his own benefit, although he may hold it as security for what he has advanced. It is said that if he purchases such property the cestui que trust has the option of taking the benefit of the purchase. In Duncomb v. N. Y. H. & N. R. R. Co., 84 N. Y., 199, it is said the beneficiary may avoid the act of the trustee but cannot do so without restoring what it has received. The cases cited by the counsel- do not discuss the effect of such a situation upon a case like the one here in controversy.

The counsel for plaintiffs refers us to Olcott v. Tioga R. R. Co., 27 N. Y., 546, and Bicknell v. Lancaster Ins. Co., 58 N. Y., 677, as supporting his view of the matter.

In Olcott v. Tioga R. R. Co., it was held (p. 567) that a-purchase of trust property by a trustee at public sale is good at law, and is in equity not void but voidable only at the election of the beneficiary, and that the purchase cannot be impeached in a suit to which the beneficiary is pot a party. Judge Selden says : The mortgagor (the beneficiary) is the party most directly interested in the question and the validity of the sale cannot be impeached without its consent or at least without giving it an opportunity to-be heard.”

In Bicknell v. Lancaster City & County Fire Ins. Co., 1 Thompson & Cook, 215, the action was on a policy which provided that the company should not be liable for loss for property owned by any other party, unless the interest of such party was stated in-the policy. ■ The defendant alleged that Thompson & Judd were the equitable owners of the property and that their interest was. not stated in the policy. The plaintiff bid off the property at a receiver’s sale, and the defendant on the trial offered to prove that-the purchase at such sale, although in plaintiff’s name, was in point of fact for Thompson & Judd. This, being objected to, was ruled out. The general term sustained the ruling, it being said that the plaintiff was the absolute owner so far as the defendant was concerned. This was affirmed in the court of appeals, 58 N. Y., 677, it being said that plaintiff “ had the legal title as against the whole world, save, perhaps, Thompson & Judd and their creditors, and as the owner of the legal title he could insure.”

In Noyes v. The Hartford Fire Ins. Co., 54 N. Y., 668, the defendant insured plaintiffs for $3,000 on a quantity of cotton in the gin house. The policy contained a condition that “ if the assured is not the sole and unconditional owner of the property insured,” the policy should be void. It appeared that plaintiffs-made an arrangement with one Flournoy to operate his plantation in Arkansas for one year, they to furnish certain supplies and Flournoy to attend to the work, the crop of cotton to be delivered to plaintiffs at the river bank for transport to market and sale, and the proceeds to be applied first to reimburse the plaintiffs for .advances and the balance to be divided equally between the plaintiffs and Flournoy. While in the gin house, a portion of the cotton was destroyed by fire. It was held “ that by the terms •of the agreement plaintiffs were not necessarily the sole and u n-conditional owners of the cotton, but that they were either partners or tenants in common with Flournoy in carrying on the plantation. But it appearing that plaintiffs had expended more than the whole crop of cotton was worth, and as, therefore, they. were entitled under the contract to the entire proceeds, and Flournoy had no interest therein, within the spirit and meaning of the policy they were the sole and unconditional owners and entitled to recover the loss.”

In Carrigan v. Lycoming Fire Insurance Co., 53 Vt., 418, it was held that a conditional sale by the plaintiff, he remaining in possession, did not prevent his interest being the entire, unconditional :and sole ownership for his use and benefit as required by the policy, it being said that the vendees, until they had complied with the conditions entitling them to a conveyance, had no more interest in the property than a stranger. So it has been held that an outstanding lease does not prevent the existence of such ownership. Insurance Co. v. Haven, 95 U. S., 242; Dolliver v. St. Joseph Ins. Co., 128 Mass., 315.

In the present case, Caraher purchased at public sale upon a foreclosure judgment, to which he was individually a party defendant, paying from his own means the full value apparently of' the property and immediately entered into possession and so contiued until after the fire without any antagonistic action on the part of the corporation. If the corporation had an election, it failed to exercise it. The proceeds of the sale were applied to ' the benefit of the corporation.

Caraher when he obtained the insurance informed the agents of the respective companies that he had purchased the property. So that the companies knowingly dealt with him as individual owner.

The finding of. the referee on this subject should not be disturbed.

3. The further proposition is presented that the building insured became vacant or unoccupied, on or about October 1, 1888, and so remained without consent of the insurance companies down to the time of the fire, and that, therefore, under the provisions of the policies in several of the cases, the insurance became void.

The referee found as matter of fact that the building did not become vacant or unoccupied.

Mr. Caraher, from the time he purchased the-property, held therein public religious service until October, 1888. Soon after that time another pastor was appointed for the congregation and it worshiped at another place. INo religious service was held in the church after October, 1888. There is evidence tending to show that Mr. Caraher quit holding services on account of ill-health and that this disability continued until after the fire; that, •during all the time service was not held, and down to the fire, thechurch was in the care of the sexton who had been such for several years and that he substantially took the same care of it that he did when service was held. Mr. Caraher continued all the time to reside in the dwelling in the same yard and within fifteen feet of the church and he testifies that he went frequently into the church, that the ornaments and vestments used in the service of the church remained there down to the fire and that at the time of the fire there was everything in the church necessary for services. It appears that some months before the fire the gas meter was taken out of the church by the gas company.

The question seems to be whether, within the contemplation of • the contract, the building became unoccupied in October, 1888, by reason of the cessation therein of church services. There was no warranty that church service should .continue to be held there. ’The fact that the insurance was to Caraher, as individual owner, Father rebuts the idea "that the religious corporation and society that had previously owned and occupied were expected to continue to occupy for an indefinite period.

A condition of this kind is to be construed in view of the situation and character of the property insured, and in view of contingencies as to its use within the reasonable contemplation of the parties. Whitney v. Black River Ins. Co., 72 N. Y., 120. The occupancy to be expected was not such as a church corporation that had procured insurance would be expected to have, but such occupation as an individual would have who had for reasons satisfactory to h^nself purchased the property.

The case of Herrman v. Adriatic Fire Ins. Co., 85 N. Y., 162, is strongly relied on by the appellants. There the plaintiff had procured an insurance upon his dwelling house, and thereafter left it for the winter, leaving it, however, furnished and in charge of a servant who lived near and who opened and aired it once a week, and the plaintiff also visited it once a fortnight. While in this situation it was destroyed by fire, and it was held that it was not occupied within the meaning of the condition of the policy. It was said that for a dwelling house to be occupied, within the meaning of the policy, it must be used by human beings as their customary place of abode. That case would seem to be clearly distinguishable from the present. And so is the case of Halpin v. Phenix Ins. Co., 118 N. Y., 165; 28 St. Rep., 788. There the property insured was described in the policy as “ occupied as a morocco factory.” This indicated the use contemplated by the parties to the contract, and there having become a total and absolute suspension of business, it was held that the property became unoccupied within the meaning of the policy. In Halpin v. Ins. Co. of N. A., 120 N. Y., 73; 30 St. Rep., 261, it is said that forfeiture will not be permitted upon equivocal or doubtful language. When the terms used permit more than one construction, that will be adopted which supports the validity of the policy. Darrow v. Family Fund Society, 116 N. Y., 537; 27 St. Rep., 474.

■ Caraher, upon his purchase, became' owner and occupant. Whether he ceased to occupy, or whether the property became vacant or unoccupied within the meaning of the policy, was under the circumstances of this case a question of fact and the finding of the referee should not be disturbed.

4. The policy issued by the Springfield Company contained the condition that the policy should be void if an execution be levied on the property insured, and the other policies contained conditions rendering them void if any change take place in the interest, title or possession of the property, whether by legal process or judgment or by. voluntary act of the insured or otherwise. It "is claimed by the appellants that the issuing and delivery to the sheriff of executions on the property against Caraher, and the advertisement of sale by the sheriff, amounted to a seizure and levy and avoided the policies.

There was no possession in fact taken by the sheriff. It is not claimed that the recovery of the judgments simply made the policies void. It has been in effect held to the contrary. Chamberlain v Ins. Co. of N. A., 20 St. Rep., 546, arid cases cited. Nor was the issuing of the execution followed by the notice of sale a levy upon the property within the meaning of the policy. This was in substance held in Colt v. Phoenix F. Ins. Co., 54 N.Y., 595. It was there said that the “ levy of an execution ” referred only to a levy on personal property, as a levy upon real estate is unnecessary and is now unknown to the law. See also 1 May on Insurance, § 274. It follows that the issuing of executions and notice of sale did not affect the policies.

5. The policy issued by the Eoyal Co. on April 2, 1887, had upon its face in writing the following ^clauses or endorsements: “ Other insurance permitted concurrent in form herewith.” “ Loss, if any, payable to L. M. Thomson, executor, to the extent of his mortgage interest.”

The policies issued by the Home and the Springfield at the same date had similar clauses. The policy of the American Central, issued on the 23d August, 1887, had the clause “ Other concurrent insurance permitted,” but no -clause as to loss being payable to the mortgagee. The policy of the Standard Co., issued January 20, 1888, and of the Newark, issued October 26, 1887, had the clause, “ Other insurance permitted without notice until required,” and no clause as to the payment of the loss to the mortgagee.

It is claimed by the Eoyal, Home and Springfield companies that their policies are void because other policies were obtained that did not have the loss payable to the mortgagee, and it is claimed by the American Central that its policy is void because other policies were obtained or held that did have the loss payable to the mortgagee. The argument is that there was in effect a warranty by the assured that all other insurance should be concurrent in form and that this warranty was broken in regard to the three companies first named by the failure to make the loss in the other cases payable to the mortgagee, and was broken in regard to the American Central by the fact that the loss in first three cases was so payable.

This reasoning is founded on the idea that the provisions as to other insurance and as to the payment of the loss are parts of the policy, while in fact they are not They are simply endorsements and treated as such, and made by the companies in pursu.anee of provisions of the policy requiring endorsements in regard to other insurance or in regard to the payment of loss to other than the assured. The provision as to the payment of loss didn’t 'refer to the other permitted insurance, but to the loss on the policy upon which the endorsement was made. Besides it is not made clear that other insurance would fail to be concurrent in form because the loss, if any, in the one case would be payable to the •assured and in the other the company had by indorsement as•sented to its payment to a mortgagee as his interest might appear. The subject of the insurance and the interest insured would be the same in each case. The insurance in all the cases would run "together.

6. The policy issued by the Newark Company insured Mr. 'Caraher to the amount of $500 upon the organ in the church. 'The referee allowed the plaintiff upon this the sum of $433.33 ■with interest from February 1, 1890 and this forms part of the judgment against the Newark Co. The claim of that company is that there is no proof that Mr. Caraher had any title or interest in the organ. There seems to be no answer to this claim. The only proof of title or interest given by Caraher is the deed upon 4he foreclosure. The organ was not included in that or in the mortgage by the corporation. It was not real estate. The possession that Caraher had was under the deed and would not afford any presumption of ownership of the organ. The amount allowed for the organ must therefore be deducted from the recovery.

It is suggested on the part of the appellants that the altars in the church were personal property and therefore not covered by the insurance. We are however of the opinion that they were part of the real estate.

No other questions are presented. It follows that all of the judgments, except the one against the Newark Company, should be affirmed, with costs. The judgment against the Newark Company should be modified by deducting therefrom the sum of $433.33 with interest from February 1, 1890, and as so modified ¡affirmed, without costs upon this appeal to either party.

Hardin, P. J., and Martin, J., concur.


source: Caselaw Access Project

author: Merwin, J.

license: Public Domain

text:
    Alfred Higgins, Resp’t, v. Jacob Crouse, App’lt.

      (Supreme Court, General Term, Fourth Department,

      Filed February 13, 1892.)

    4. Contract—Rescission—When action maintainable in equity.
    An action to rescind a contract of sale of corporate stock, and to recover damages for fraud, is maintainable as an equity action where the transaction was entirely between defendant and plaintiff, and was not a purchase by plaintiff from the corporation, but from the defendant.
    2. Limitations—Discovery of fraud.
    Plaintiff brought an action to rescind a contract of sale of corporation stock, made in 1865, ’on the ground of fraud, and claimed that, as he did not discover the fraud until 1889, he had a right of action under § 882, subd. 5 of the Code. The evidence showed that no dividends or assessments were made on the stock, that plaintiff resided in the same city with the corporation’s officers and could have ascertained at any time when it stopped work, and that in 1871 he had made up his mind his money was. lost. Held, that plaintiff's delay showed a lack of reasonable diligence and that the action was barred, as the statute of limitations began to run from the time when, by reasonable diligence, knowledge of the fraud ought to have been obtained.
    Appeal-from a judgment entered in Onondaga county on June 2, 1891, upon the decision of the court after trial at special term.
    This action was commenced July 8, 1889. In the complaint, as originally framed, the plaintiff sought to recover damages for fraud in the sale to him by defendant on the 4th November, 1865, of 150 shares of the capital stock of the “ Shaffer Farm Oil Creek Company of Pennsylvania” at the price of $1,200/ the par value being‘$1,500. It was alleged that at the "time of the purchase plaintiff gave the defendant his note for $1,200, payable in three months with interest, and that at its maturity on 7th February, 1866, he paid it, and received from the defendant the certificate of stock. It was also alleged that the fraud was not discovered till May, 1889. Judgment was demanded for damages only, being the price paid with interest. The defendant answered, denying the fraud and setting up the statute of limitations as a bar. Afterwards, and upon leave of court, the complaint was amended. In this the allegations of fraud are more fully set forth, and it was also alleged that the stock sold by defendant to plaintiff was not issued as full paid stock, but was issued as liable to further calls and assessments; that the certificate of stock which the defendant caused to be issued by the company to the plaintiff was issued as liable to further calls; that the company is still in existence and has not closed up its business, and the plaintiff is liable to future assessments; that before the commencement of the suit he tendered to defendant the certificate of stock, with a transfer thereof and sought rescission of the sale, which was refused. Judgment was demanded that the contract of sale from defendant to plaintiff be rescinded; that the defendant be directed to procure a retransfer to himself on the books of the company to the end that plaintiff.be relieved from all liability as a stockholder'; that the defendant pay back the price and interest, and be decreed to hold plaintiff harmless from all assessments which have been made since the sale or which may be made before the retransfer on the books of the company.
    Upon the trial it appeared that on the 20th August, 1864, “The Shaffer Farm Oil Creek Company ” was organized under the laws of .this state, as a manufacturing and mining company for the purpose of producing petroleum oil, with a capital stock of $160,000, divided into 16,000 shares, the manufacturing and mining operations to be carried on in the town of Cherry Tree, county of Yenango, state of Pennsylvania, and its general business operations at the city of Syracuse in this state. The defendant and nine others were the incorporators, and upon the completion of the organization the defendant was elected president, and A. W. Blye secretary and treasurer. Prior to this time the defendant and others were the owners of about twenty-nine acres of land in the town of Cherry Tree, above named, and of a lease of three and & half acres of land in the immediate vicinity with the right to dig wells for petroleum. In that neighborhood there were wells,. one of which was a flowing well, others produced petroleum by pumping and others were non producing. The land and lease above described were transferred to the corporation soon after 'its organization, and defendant became the owner of one quarter of the stock. " ‘
    From September, 1864 to April, 1865, the corporation at considerable expense sunk two wells upon its property, both of which turned out to be non producing and were abandoned with the knowledge and assent of defendant The test of the last one was made in June, 1865, and soon thereafter the machinery, engine and tools employed by the corporation in the digging of wells were sold. This the defendant knew. Since then no wells have been dug by the corporation on its property.
    Upon conflicting evidence the court, found that in or about November, 1865, in a negotiation between plaintiff and defendant for the sale to plaintiff of'150 shares of• stock, the defendant represented that “ we have got the Shaffer farm property in the oil country,” “ we are putting down wells with every prospect of success,” “ it bids fair to be a big thing,” “ the stock is selling readily at par. ” The latter three of these statements the court found to be false to the knowledge of defendant and made with intent to deceive, and that. relying on these representations the plaintiff consummated the transaction, giving the defendant his note for $1,200, which he afterwards, and on the 7th February, 1866, paid. At the time of its payment he received from the company, upon the order off the defendant, a certificate for 150 shares of stock, which bears date February 7, 1866, and on its face purports to be “ liable to further calls.” ' It is signed by defendant as president and by A. W. Blye as secretary. No dividends have been received by plaintiff and no calls or assessments have been made upon him. Th.e court also found that the plaintiff did not learn of the falsity of the representations and the facts constituting the fraud until about May 1, 1889; that he thereupon tendered back to defendant the certificate properly endorsed, and demanded that his loss be made good, which was refused;' that the corporation is still in existence and plaintiff, under the certificate, is liable to future calls or assessments or other liabilities as stockholder; that the loss and damage to plaintiff was $1,200 and interest from November 4, 1865.
    As matter of law the court found that plaintiff was entitled to relief, as less than six years had elapsed since the discovery by plaintiff of the facts constituting the fraud; that he was entitled to judgment rescinding the contract for the purchase by him of defendant of the stock and revesting the title in defendant, and requiring “ the defendant to receive back the said certificate for 150 shares of said capital stock and to procure the same to be transferred to himself upon the books of said corporation, and also that he protect and save harmless the plaintiff from all future liability as a stockholder of said corporation,’’ and that defendant, pay the plaintiff the sum of $1,200, with interest from M ovember 4, 1865, amounting to $8,215.50. Judgment was ordered and. entered accordingly.
    The court further found, as matter of fact, that the corporation was not insolvent, had not closed up its business, and that it contemplated renewed efforts and operations in boring for oil.
    The court upon the request of the defendant also found that “The nature of the business of the corporation was such that their success or failure in obtaining oil was at all times contingent, depending upon the developments in the town where they were prosecuting their business and upon the course of business pursued by the corporation, and upon the contingency of their interest in successful experiments in any part of the town, and there was at all times a chance of fabulous wealth to • the corporation and its stockholders in case of developments disclosing amounts of oil in sufficient quantities within the town in any territory to which they might acquire the right to experiment for their own benefitbut it refused to find that “ In this contingency the plaintiff was as a stockholder interested, and he had the benefit, thereof at all times after February 7, 1866, and ordinary diligence-would have enabled him to discover at any time the precise nature of the abandonment, to have objected to it, to have made an effort, to induce the corporation to return to further experiment on the Shaffer farm, to have tested that farm sufficiently to show whether oil existed thereon.” To this refusal the defendant excepted.

      Waters, McLennan & Waters, for app’lt; T. K. Fuller, for resp’t.
   Merwin, J.

The defendant claims that the court erred in holding that this action was maintainable as an equity action. The court found that the transaction was entirely between defendant and plaintiff, and that it was not a purchase by plaintiff, from the corporation, but from the defendant. The evidence sustains this view. That being so, an equitable action would liBosley v. N. M. Co., 123 N. Y., 550; 34 St. Rep., 277. It would, have been appropriate for the plaintiff to have made the corporation a party. The relief granted would then have been more effectual. In its present form, the judgment is in some respects-unusual and no precedent is cited to sustain it. The case of Cohen v. Ellis, 16 Abb. N. C., 320, referred to by plaintiffs’' counsel, was afterwards reversed. Cohen v. Ellis, 4 St. Rep., 721. Still the corporation, according to the facts found, had no interest-in the matter. There were no outstanding assessments. Mo defect of parties was set up in the answer. If, in other respects, the theory of plaintiff was correct, it is not apparent that the defendant will be injured by the form of the judgment.

But the defendant says there is no evidence of the present value of the stock, and, therefore, no proper basis for the finding of damages. Still, if a cause of action for rescission is made out, then ordinarily by way of damages the party would be entitled to the return of his money, with interest.

The main, question, upon this appeal relates to the statute of limitations. The plaintiff has been- awarded relief under that provision of the Code of Civil Procedure, § 382, subd. 5, which provides that, in an action to procure a judgment, other than for a sum of money, on the ground of fraud, in a case which on the 31st day of December, 1846, was cognizable by the court of chancery, the cause of action is not deemed to have accrued until the discovery by the plaintiff, or the person under whom he claims, of the facts constituting the fraud. In the Code of Procedure, which was in force at the time of this transaction and for more than six years thereafter, § 91 enumerated the cases in which action must be brought within six years, and subdivision 6 thereof was as follows ■, “An action for relief on the ground of fraud in, cases which heretofore were solely cognizable by the court of chancery, the cause of action in such case not to be ■deemed to have accrued until the discovery by the aggrieved party of the facts constituting the fraud.”

The defendant claims that the rule upon this subject is that the statute begins to run, not from the time when knowledge of the fraud was obtained, but from the time when under the circumstances knowledge ought by reasonable diligence to have been obtained. And reference is made to 2 Story Eq., 13th ed., § 1521, note a, where the rule is so stated. The same is said to be the rule in 13 Am. & Eng. Ency. of Law, 730, and many cases .are cited.

In Mayne v. Griswold, 3 Sand., 464, it was held, under a similar provision of the Revised Statutes, 2 R. S., 2d ed., 229, § 51, "that a bill for relief on the ground of fraud, which shows that the fraud was committed more than six years before the filing of the bill, must not only state, by way of anticipation of the defense of the statute of limitations, that the fraud was discovered within six years, but must also show that it could not with reasonable diligence have been discovered sooner. I find no other -case in this state directly on the subject. A similar view,- however, has been taken in other states having a similar statutory provision. Penobscot Railroad v. Mayo, 67 Me., 470; Fritschler v. Koehler, 83 Ky., 78; Boyd v. Blankman, 29 Cal., 20; Parker v. Kuhn, 21 Neb., 413. The case of District Township of Boomer v. French, 40 Iowa, 601, and Commissioners of Mower County v. Smith, 22 Minn. 97, are in the same direction. The statutes on this subject are collated in the appendix to Angelí on Limitations.

The reason of the rule, as indicated m some of the cases, seems to be that as the time of discovery is generally entirely within the knowledge of the plaintiff or party in interest, and as therefore it is difficult or impossible for a defendant to negative or rebut the positive allegation on the subject, the discovery will be deemed to have been made or to exist when the plaintiff or party in interest in the exercise ot reasonable diligence ought to have found out the facts constituting the fraud.

In Angelí on Limitations, § 187, 6th ed., it is said: “ The presumption is that if the party affected by any fraudulent transaction or management might, with ordinary care and attention, have reasonably detected it, he reasonably had actual knowledge of it.’r In Kirby v. Lake Shore, etc., R. R., 120 U. S., 136, it is said: “ It is an established rule of equity, as administered in the courts of the United States, that where relief is asked on the ground of actual fraud, especially if such fraud has been concealed, time will not run in favor of the defendant until the discovery of the fraud,, or until with reasonable diligence it might have been discovered.”

The cases cited by the counsel for plaintiff to the point that the party defrauded owes no duty of diligence in' discovering the fraud to the party who defrauded him do not relate to the statute of limitations. On the other hand it is said in Upton v. Tribilcock, 91 U. S., 55, that parties who are shareholders, and claim to be relieved on "the ground of fraud, must act with the utmost diligence and promptitude.

Following, as I think we should, the case of Mayne v. Griswold, and the current of authorities in that line, the question here is-whether the evidence authorizes the conclusion that the plaintiff in the exercise of reasonable diligence could not have discovered the facts constituting the fraud prior to six years before the commencement of this action.

The main representation, and. the one which is evidently the gist of the action, was, “ we are putting down wells with every prospect of success.” The plaintiff testified : “ I relied upon his-statement that it was a big thing, and they were putting down wells and developing the property, and it was going to be a big thing.” The statement that it was- a big thing, or going to be a big thing, was clearly a matter of opinion, and the plaintiff gave-no evidence that the stock then was not readily selling at par. The fact as to wells was that in or before the June previous the-two wells which' they had dug had been tested and found non-producing, and had been abandoned, and in or before-July the-tools and machinery, which they had purchased for the purpose-of digging wells, had heen sold and removed from. the property. In other words they had, in November, 1865, stopped digging-wells, abandoned those they had dug and disposed of their tools and machinery. These were the facts upon which plaintiff based his claim, and the discovery of which led to the action.

The plaintiff testifies that when, in February, 1866, he paid his. note to defendant and received his scrip, he said to defendant that, he had heard-some rumors that their prospects were not very good for getting oil and he had no money to lose, and that defendant, told him there was no' truth in any such rumors, and reassured, him that everything was just as he stated when the note was given; that he made no inquiry of defendant as to what property the company had, and made no inquiries of Blye, the secretary, when he got his certificate of stock; that about a year afterward he asked defendant wdiat the prospects were, and defendant replied that everything was all right; that he made similar inquiries-of defendant several times prior to 1871, and then made" up his. mind that he had lost his money and said nothing more about it. From 1871 to May, 1889, the matter rested. The plaintiff testifies that at the latter date he wrote the defendant to take back his stock and make him good; that he had been unfortunate in speculations, and his health was poor, and he really wanted the money; that this was before he discovered the fraud; that the defendant came to see him, refused to pay him back, claimed it was a business transaction, and was all right and fair; that the next day, or within a few days, he discovered the fraud through Mr. Blye, the secretary, he giving him the information that the grounds were abandoned months before the negotiations between plaintiff and defendant in November, 1865, and referring him to Mr. Potter for the particulars. Potter was the foreman in charge of the digging of the wells. Plaintiff saw him a few days afterwards, and learnt farther particulars.

The plaintiff during all this time was a business man in Syracuse, and the officers and corporators of the company were also-there. The secretary and treasurer, Mr. Blye, and the foreman, Potter, were there. He at any time apparently could, by inquiry, have readily ascertained when the company stopped work. He, however, made no inquiries on the subject until May, 1889. He-says that he was satisfied in 1871 that he had lost his money. He must have known that the company had, prior to that time, stopped. No dividends or assessments were made. Having made, up his mind in 1871 that the company was a failure, he was then-put upon inquiry as to whether his purchase was genuine. Nothins was then put in his way. His delay from that time to 1889' is not consistent with reasonable or ordinary diligence. The case furnishes no sufficient or any explanation.

As the case stands before us, we think the evidence does not' authorize the conclusion that the plaintiff, in the exercise of reasonable diligence, could not have found out the facts constituting the fraud prior to six years before the commencement of this action. This calls for a reversal of the judgment.

Judgment reversed and new trial ordered, costs to abide the. event.

Hardin, P. J., and Martin, J., concur.


text:
    Mary E. Gilbert, App’lt, v. PerLee E. Shaw et al., Resp’ts.

      (Supreme Court, General Term, Fourth Department,

      Filed February 13, 1892.)

    Mortgage—Foreclosure—Default.
    Defendant mortgaged his farm to plaintiff as collateral security to a contract for the maintenance of plaintiff during her life. On default of any payment of interest on the mortgage, or on any payment on a' prior mortgage on the same farm to F., the mortgage was to become due, and in the absence of any default during plaintiff’s life, it was to be discharged. With the consent of F., certain payments on his mortgage were deferred, upon the agreement that defendant would put certain improvements upon the mortgaged farm, which he did, and made all subsequent payments. During all this .time prompt payments were made to plaintiff of her interest and accepted by her, without any objection as to the extension allowed by F. of which she could have learned by inquiry. Held, in a subsequent action by plaintiff to foreclose her mortgage for alleged default arising from the deferred payments toF., that, her security not having been impaired by such extensions, and defendant not having been in default for a long time prior to the commencement of the action, the court did not err in giving defendant relief from forfeiture, and in refusing to grant a foreclosure.

      Appeal from a judgment entered in Chenango county on 2d April, 1891, upon the decision of the court at special term, dismissing the complaint without costs.
    The action is brought to foreclose a mortgage, given by the defendants PerLee E. Shaw and Marium M., his wife, to the plaintiff dated July 1, 1884. At that date, in consideration of the sum of twenty-eight hundred and twenty-one dollars received by the defendant PerLee E.- Shaw from the plaintiff, which sum was made up of twenty-one shares of the capital stock of the Utica, Chenango & Susquehanna Yalley Railroad Company of the value of twenty-three hundred dollars in fact at the time, and as agreed upon by and between the plaintiff and said Shaw, and $421 in cash, tie said PerLee E. Shaw executed and delivered to plaintiff a bond dated July 1, 1884, in the penal sum of $5,642, and having1 the following condition :
    “ The condition of this obligation is such that, if the said Per-Lee E. Shaw, or his heirs, shall at his house, in the town of Norwich, aforesaid, furnish and provide the said Mary E. Gilbert with a room, board, fuel and light during the term of her natural life, she to provide furniture for the said room, and the said PerLee E. Shaw, or his heirs, shall pay to the said Mary E. Gilbert annually on the 1st day of July in each year interest on the sum of twenty-eight hundred and twenty-one dollars at threeper cent per annum, during the term of her natural life, and shall make all the payments required to be made on a certain bond ¿nd mortgage, given by the said PerLee E. Shaw to Delos Fowlston, on or about the 10th day of January, 1884, jo secure $5,000 and interest, both of interest and principal, without default or delay, promptly, according to the terms of the said bond and mortgage, then this obligation to be void, otherwise to remain in full force and virtue ; and it is further provided that in case of default in any of the foregoing conditions, including the provisions in relation to payments on the Fowlston bond and mortgage, then and in that case there shall immediately become due to the said Mary E. Gilbert hereon the said sum of $2,821, together with interest thereon from the date of such default at six per cent per annum and all interest accruing before such default
    “ In case no default occurs in the lifetime of said Mary E. Gilbert, then the said principal sum is not to be paid.
    “ PerLee E. Shaw. [l. s.]”
    As collateral security for the payment of the said indebtedness, and the performance of all the conditions of the bond, Shaw and wife upon the same day executed and delivered to the plaintiff the mortgage in suit, being upon certain premises in the town of Norwich. It was duly recorded July 5, 1885. No payments have been made on the bond and mortgage except the interest on the sum of $2,821 at three per cent per annum paid to July 1, 1890.
    The bond and mortgage to Fowlston, referred to in the condition above set out, were dated January 10, 1884. The mortgage covered the same property as the mortgage to the plaintiff, and was recorded January 10, 1884, and its condition, as well as. that of the accompanying bond, was for the pajment of the sum of “five thousand dollars ten years from date the 1st day of April then next with interest annually at five per cent per annum, from and after the said 1st day of April, $300 of said principal sum to be paid on the 1st day of Aprilj 1887, and $300 thereof on the 1st day of April in each and every year thereafter.”
    On the days when the interest. and payments of principal became due on the bond and mortgage to Fowlston for four years Shaw did not pay the same, but such non-payment was with the consent and acquiescence of Fowlston, who then held the bond and mortgage, and with the understanding and agreement that, instead of paying such principal and interest to Fowlston at the times when due, he, Shaw, would put improvements upon the. farm described in the mortgage in building a hop house and procuring hop poles or otherwise, and that Shaw did build a hop-house upon the farm and did put hop poles upon the farm which became a part of the real estate, and were of the value of twelve, hundred dollars.
    Long before the commencement of this action, and before the giving of any notice by the plaintiff in any way that she intended to foreclose, or should foreclose, her mortgage, Shaw paid to. Fowlston all payments of principal that had become due and all accrued interest that had become due, and at the time this action was brought no principal or interest upon the Fowlston mortgage-was due. The balance of the principal unpaid was $3,800. The payments were made in cash and were not the improvements referred to. The interest going to the plaintiff on her bond and mortgage has been promptly paid. On the 5th September, 1890, she demanded of Shaw payment of the principal sum of $2,821, which was refused, and this action was commenced on the 15th, September, 1890.
    The foregoing facts are admitted by the pleadings or conceded, at the trial. The court also found that the plaintiff, with full knowledge of the facts, accepted the payments to her of interest that the plaintiff’s security was not impaired by the failure to make payments to Fowlston as they became due; that the intent, and purpose of the provision in the bond and mortgage to plaintiff, that the sum of $2,821 should become due upon any default, was to prevent injury to plaintiff’s security from the enforcement of the Fowlston mortgage, and to secure to plaintiff the prompt-payment of her interest, and was intended as penalty or forfeiture.
    As conclusions of law it was held:
    “ 1. That this court has the power, in the exercise of its equitable jurisdiction, to relieve the defendant, PerLee E. Shaw, from the default claimed to have occurred by the non-payment of the principal and interest due to Fowlston on the days when due by the terms of the mortgage.
    “ 2. That the plaintiff not having suffered any damage, and her security not having been impaired, but in fact increased, and prompt payment having been made at all times of the interest due to her, and she having accepted and received such interest; and •all payments due to Fowlston, both of principal and interest, having been made long before the commencement of this action, and before any notice that the plaintiff claimed a default, or claimed the right to foreclose her mortgage, equity demands- that the defendant be relieved from such default
    “ 8. That the acceptance of the interest due to the plaintiff by her on the days when due, operated as a waiver of her right to ■claim the forfeiture of the $2,'821.00.
    “ 4. The defendants are entitled to a judgment relieving them from the aforesaid default, and declaring that the principal sum ■of $2,821, secured by the plaintiff’s mortgage, is not due or pay.able.
    “5. The defendants are entitled to a judgment dismissing the ■complaint of the plaintiff. -,
    “ 6. That under the circumstances of this case it is inequitable to permit an enforcement of the penalty or forfeiture by permitting & foreclosure of the plaintiff’s mortgage for $2,821, and a judgment of foreclosure is therefore refused.”

      Stephen Holden, for app’lt; George W. May, for resp’ts.
   Merwin, J.

It is not claimed that any default has been made ■except in failing to make the payments-'bn the Fowlston mortgage upon the days they became due. We must, therefore, assume that in other respects the defendant Shaw has fully performed thé •contract upon his part. The theory of the plaintiff is that the failure of Shaw to make any payment to Fowlston at the exact time it became due gave immediately to her the right to recover back the full amount' of the consideration that she parted with upon receiving the bond and mortgage, and that this right was not taken away or affected by any subsequent performance by •Shaw.

The,transaction between the plaintiff and defendant Shaw was in substance that plaintiff paid and transferred to Shaw certain money and property of an agreed value and Shaw in consideration thereof agreed to furnish plaintiff with a room, board, fuel •and light during her natural life, and also pay her annually during her life interest at three per cent per annum upon the amount of the consideration at the agreed value. To secure those things to the plaintiff, the defendant gave to plaintiff a mortgage upon his farm, which was at the time incumbered by a prior mortgage. In order to protect plaintiff’s security against being interfered with by this mortgage, the defendant ageed to make promptly the payments on the prior mortgage as they became due.

Then came the provision that in case of default in the performance by defendant of any of these agreements, there should immediately become due to the plaintiff the full consideration with interest from date of the default. According to the wording of the bond, it made no difference whether the default was great or small, or whether it was the first year of the contract or the last year of the plaintiff’s life. If he fully performed during the whole period, he then became absolute owner of the property or fund that he had received of plaintiff and was in possession of.

The l-ight of ownership dated from the time he made the contract and undertook its ' performance, and any condition which operated afterwards to take away or destroy this right, in effect -deprived the defendant of something of value which he otherwise would have possessed. Such condition was, therefore, in the mature of a forfeiture. Shaw, by his performance of the provisions of the contract, for several years had rendered to plaintiff the -compensation in part which she was to have for the money and property she gave to the plaintiff. In this view the case is in principle somewhat analogous to the sale of real estate by contract, which, by its terms, is to become void on failure by the vendee to perform in any respect. After part performance the vendee has ordinarily equitable rights, although the legal title is absolute in the vendor by reason of lack of strict performance. 2 Story Eq., § 1315. In such cases the title is deemed to be held .as security.

We are referred by the learned counsel for plaintiff to many cases where, in a security for a loan payable on time, there has been a provision that, if the interest was not paid promptly or at a certain fixed time the whole debt should become due, and it has been held that no relief would be given from the effect of a default in the payment of interest at the prescribed time, and that it was not a case of forfeiture. Those cases do not apply here. The money and property advanced by plaintiff were not at all -events to be returned. It was, therefore, not a loan. Payne v. Gardiner, 29 N. Y., 167.

Nor does the case of Trustees, etc., v. McKechnie, 90 N. Y., 618, apply. In that case the question was whether the event, upon the happening of which certain moneys advanced to the Ontario Female Seminary should be returned, had in fact happened. No -question was made as to the liability provided the event in question had happened. Nor does the case of Thompson v. Hudson, L. R., 4 H. L. App. Cas., 1, help us. There it was held that the reservation of a right to have full payment of money actually due ■on an existing contract, should there be a failure to pay a smaller sum on a day certain, cannot be treated as a penalty. In substance the creditor offered to compromise on certain terms; the debtor did not comply with the terms, and thereupon the creditor was remitted to his original rights. He'got nothing beyond his debt.

In Giles v. Austin, 62 N. Y., 486, relief was given from a forfeiture in a lease incurred by the failure of the tenant to pay taxes and assessments. The rule is there laid down that where the covenant is simply for the payment of money the forfeiture is regarded as a security merely for such payment, and equity will not allow it to be enforced after the party has obtained all that it was intended to secure to him. Mere delay is not a bar if no new rights have intervened or the position of the parties been changed. A similar doctrine was applied in Noyes v. Anderson, 124 N. Y., 175; 35 St. Rep., 94.

In that case there was an agreement by the owner of a mort.gage with the owner of the equity of redemption that he would not enforce the mortgage during the life of the latter, provided, among other things, that no taxes or assessments on the premises remained unpaid and in arrears for more than thirty days. Default was made in the payment of a sewer assessment, and thereupon foreclosure of the mortgage was commenced. It was held that the default would result in a forfeiture from which or its consequences a court of equity had power to relieve, it being said that a court of equity has power to relieve a party against forfeiture or penalty incurred by the breach of a condition subsequent, where no wilful neglect on his part is shown, upon'the principle that a party having a legal right shall not be permitted to avail himself of it for the purpose of injustice or oppression. A similar view was taken by Judge Daniels in Shaw v. Wellman, 59 Hun, 447; 36 St. Rep., 1002.

In Steele v. Branch, 40 Cal., 3, failure by the vendee in a land contract to strictly perform his covenant to pay a prior mortgage was held not to be fatal to the rights of the vendee, although by .the terms of the contract such failure made it void, it appearing that the vendee acted in good faith and the vendors were not damaged thereby. In Henry v. Tupper, 29 Vt., 358, it was held .that a court of equity might in its discretion give relief from a forfeiture occasioned by the breach of an agreement for support. In 1 Pomeroy Eq. Jur., § 450, the general doctrine is laid down as follows: “ In the absence of special circumstances giving the defaulting party a higher remedial right, a court of equity will set aside or otherwise relieve against a forfeiture, both where it is incurred on the breach of an agreement expressly and simply for the payment of money, and also on the breach of an agreement of which the obligation, although indirectly, is yet substantially a pecuniary one.” See, also, 2 Leading Cases in Equity, by White & Tudor, 4th ed., 2044,

In the present case it is conceded that long before the commencement of the action and before the giving of any notice by the plaintiff that she intended to foreclose, the defendant Shaw paid to Fowlston all. that was due. So that when this action was begun there was no actual default. . All payments of interest due the plaintiff had been promptly made, and the court, among .other things, found that such interest was accepted by plaintiff with full knowledge of the facts, and that, therefore, she waived her right to claim a forfeiture. It may be, as claimed by plaintiff, that-the evidence does not fully warrant the finding that she had full knowledge of the facts.

Still, presumptively she was living upon the premises and must, have known to some extent of the improvements going on. Apparently, if she had made inquiry, she would have found out that the payments were not being promptly made. If she did not inquire, it would indicate that she did not deem knowledge in that respect of vital importance, and so it would if she did inquire, and found out the situation, and still received her payments without question.

Her acquiescence in either aspect of the case, while it might not be a waiver, would have some bearing on the character or intent of the original transaction, and on the propriety of giving defendant relief. It is quite clear that the plaintiff’s security was not impaired. "It may also be said with a good deal of force as an inference from the conceded facts that the provision making the original amount collectible was intended only as security, so far at least as it related to the payment of the prior mortgage.

It seems to me that a proper case was presented for the exercise of the equitable power of the court, and that the special term did not err in giving defendant relief from the forfeiture and in refusing to grant foreclosure of plaintiff’s mortgage. The judgment should therefore be affirmed.

Judgment affirmed, with costs.

Hardin, P. J., and Martin, J., concur.


text:
    Robert Watkins, Resp’t, v. William P. Jones, Impl’d, App’lt.

      (Supreme Court, General Term, Fourth Department,

      Filed February 13, 1892.)
    Limitation—New promise.
    A letter written by an accommodation maker to the holder of the note stating that the other maker would pay some on it when he sold his horse; that the writer intended the previous fall to help the other maker pay something, but was unable to do so, and that he would help him pay some as soon as he could, is not sufficient to show an acknowledgment or promise that will relieve the bar of the statute.
    Appeal from a judgment entered in Oneida county May 22, 1891, upon a verdict for the plaintiff for $423.63, directed by the court at the Oneida circuit.

      Jones & Townsend, for app’ltRisley & Perry, for resp’t.
   Merwin, J.

This action is against William P. Jones and David T. Jones upon a note for $377, reading as follows :

“ On the 1st day of January next, we promise to pay Robert Watkins or order, three hundred and seventy-seven dollars, for value received, with use.
“Remsen, lí. Y., March 29, 1882.
“W. P. Jones.
“D. T. Jones.”

In the complaint it is alleged that the interest has been paid to March 29, 1889. The defendant, William P. Jones, alone answers. He admits the execution of the note, alleges that he signed solely for the accommodation of the other maker, denies that he has made any payments and sets up the statute of limitations.

"Upon the trial, the plaintiff, as a witness in his own behalf, testified that the defendant, David T. Jones, paid the interest on the note up to March 29, 1889; that after this and in October, 1890, he saw William P. Jones and told him he should have to look to him for the payment of the note, as he didn’t think David would ever pay it, and asked him what he proposed doing about it; that William replied lie would pay it but would have to have time and would see that the plaintiff got the interest and some of the principal that fall; that in January, 1891, he, the plaintiff* wrote William a letter, in which he said to him that he had promised to pay the interest and some of the principal, and that he had. "been waiting quite a while, and asked him what lie proposed doing about it; that in reply to this he received from defendant the-following letter:

“ Remsen, January 24, 1891.
Robert Watkins:
“Dear Sir—Your letter was duly received, and in answer will say that David is trying to sell the horse he has and I am trying to sell it also. As quick as he can dispose of it he will pay you some. I expected last fall to be able to help him some, but the cheese sold so slow that my dairy did not bring me enough to-pay my rent and help. Will help him to pay some as soon as I can. “W. P. Jones.”

No other evidence, material to the question here, was given. Thereupon the counsel for defendant asked the court to nonsuit, the plaintiff and dismiss the complaint on the ground that the note was outlawed; that the verbal promise did not take the case-out of the statute, and that the letter was not such a promise or recognition of liability upon the note as to take it out of the-statute, and also that it was conditional and not effective to aid the plaintiff except upon the happening of the condition. This, motion was denied and defendant excepted. Thereupon, upon motion of plaintiff, the court ordered a verdict for the plaintiff on the note and defendant excepted.

It .sufficiently appeared that the letter of defendant referred to the note in suit. The oral evidence was admissible to identify the debt. Manchester v. Braedrter, 107 N. Y., 346; 12 St. Rep., 263.

Beyond that, the oral evidence cannot be considered, as the-promise or acknowledgment required by the statute cannot be-partly in writing and partly by paroi. Ñor can the contents of the letter written by the plaintiff to the defendant be considered,, as the statute calls for a writing signed by the party to be charged.

Assuming, then, that the letter of defendant refers to the claim of plaintiff on the note, -the question is whether the letter contains an acknowledgment or promise sufficient to take the case out.of the statute. The defendant does not- say he will pay the-plaintiff anything, nor does he intimate that anything is due from him to plaintiff. He says .that the other maker will pay him something when he sells his horse. It does not appear that the horse has been sold. He says he will help the other maker pay some as soon as he can. It does not appear that he is now abiete do it He says he expected last fall to be able to help the other maker to pay some, blit failed for reasons stated. He indicates a willingness and expectation to help the other maker, but-does not acknowledge any liability from himself to the plaintiff. It does not appear what the relations were between the defendant, and the other maker except as it may be inferred from the fact, that defendant had paid none of the interest, and was not apparently called on for anything as long as the other maker was good.

Anderson v. Sibley, 28 Hun, 17, and Manchester v. Braedner, supra, are cited by plaintiff as applicable here. In the Anderson case, the plaintiff and defendant’s intestate entered into a written stipulation to submit their matters in difference to an arbitrator named and on the hearing before the arbitrator to waive the statute of limitations. The defendant’s testator the next day revoked the submission. Thereupon the plaintiff having sought to enforce his claim, the statute of limitations was set up. It was held that the agreement to waive the statute on the hearing before the arbitrator was a sufficient written acknowledgment to remove the bar of the statute. It was said that the stipulation and the facts attending it raised an implied promise to pay the claim, unless some defense should be found to exist to it other than the statute of limitations and that, no such defense appearing, the written promise or acknowledgment was sufficient. In the Manchester case, the defendant had given to the plaintiff written orders on a third party to an amount equal to plaintiff’s claim. The orders were not paid. It was held that the orders implied the relation of debtor and creditor between the plaintiff and defendant to the extent of the sums specified in the orders and a willingness ón the part of the defendant to pay the debt, and constituted a sufficient acknowledgment to avoid the statute. These cases do not reach the present. There is here no order in fact or substance upon a third party, nor is there any promise from which a recognition of the debt may be implied. The fact that defendant was willing, for some undisclosed reason, to help the other maker does not authorize the inference of a recognition of the existence of a debt from defendant to plaintiff On the contrary, the expressions used rebut the idea of any intention on the part of defendant to recognize any liability upon himself to plaintiff. He does not propose to pay anything to plaintiff, he only proposes to help the other party. At the timé the letter was written the six years had fully run as against the defendant, as it is not claimed that the payments made by the other party affected the defendant.

So far as there was any promise that was conditional, it was incumbent on the plaintiff to show the condition fulfilled, Cocks v. Weeks, 7 Hill, 45; Wakeman v. Sherman, 9 N. Y., 85; Tebo v. Robinson, 100 id., 27; Angell on Limitations, 6th ed., § 236.

The foregoing suggestions lead to the conclusion that the letter in question was not sufficient to show an acknowledgment or promise that would relieve the bar of the statute. It follows that the court erred in directing a verdict for plaintiff

Judgment reversed upon the exceptions and a new trial ordered, costs to abide the event.

Martin, J., concurs; Hardin, P. J., not voting.


author: O’Brien, J. Van Brunt, P. J.

text:
    James Hedges, Resp’t, v. William H. Payne Impl’d, App’lt.

      (Supreme Court, General Term, First Department,

      Filed February 18, 1892.)

    1. Replevin—Fraudulent intent—Evidence.
    In an action brought to replevin certain diamonds it appeared that an insolvent jeweler obtained them from the plaintiff on “ memorandum” to select such as he desired to purchase, and return the balance, title to remain in plaintiff until after the selection and bill of sale rendered. Shortly after the jeweler confessed judgment in favor of his wife and her relations, and on the same date made a general assignment for creditors and secreted himself in New Jersey. He had obtained diamonds from other deale: s in the same way; and the same attorney who drew the assignment and acted as his counsel also acted for the judgment creditors. Meld, that the evidence justified the submission to the jury of the question whether or not there was a fraudulent intent of defendant in obtaining the goods.
    2. Same—Pkesumption.
    Plaintiff’s failure to show that the judgments confessed were not bona fide debts did not exclude an inference of fraudulent intent on defendant’s part.
    3. Same—Evidence.
    It was not error to admit in evidence the assignment, the judgments confessed, and evidence of the fact that defendant had obtained from other dealers goods in a similar manner, as they were material as bearing on the question of defendant’s fraudulent intent.
    Appeal from a judgment in favor of plaiutiff, entered upon the verdict of a jury at circuit, and from the order denying the motion for a new trial.

      Jandine Lyng, for app’lt; Anderson & Howland, for resp’t.
   O’Brien, J.

The action was brought to replevin certain diamond stones, which the complaint alleged had been consigned on memorandum in December by the plaintiff to the defendant The complaint alleges a demand and a failure to return, and, “ That said defendant Payne wrongfully, unlawfully and fraudulently detained said property from the plaintiff. That the defendants have or the defendant Payne has concealed, removed or disposed of said jewelry or some part thereof, so that the same cannot be nor any part thereof found or taken by the sheriff, and with the intent that the same should not be so found and taken. That the jewelry had been-concealed, removed or disposed of so as to deprive the plaintiff of the benefit thereof.”

The defendant-appellant, Payne, for the purpose of reversing the judgment, asserts that there was no evidence at the close of plaintiff’s case to sustain the allegations of the complaint, and that the motion then made to dismiss the complaint should have been granted, and that no evidence was afterwards furnished to warrant the court in submitting the case to the jury. A mere glance at the testimony will demonstrate that this contention is not supported. The evidence offered by plaintiff tended to show that on December 12, 1887, Payne called upon Hedges and obtained the goods on memorandum. For these he was to pay spot cash, and obtain a bill of sale, or return the goods, as appears from the memorandum itself, which is offered in evidence, from which the following is an extract: “ Consigned on memorandum to Messrs. Payne, Steck & Company, by William S. Hedges & Company The under-mentioned goods are for your examination to enable you to select such as you desire to purchase. Hone of them are sold, nor does the title thereto pass until after we shall be apprised of your selection, and have rendered a bill of sale therefor.”

The diamonds were delivered on December 18th and 23d. Between the latter date and the 28th plaintiff sent several times, and though not seeing the defendant Payne, demanded of his clerk the return of the goods. On the 28th of December Payne confessed judgment to his wife for $14,504.05; to his wife’s uncle for $2,017.31: to his wife’s mother for $7,639.07; to his wife’s cousin for $1,853.31; and to other persons judgments amounting in all to about $4,000. Later on the same date he made a general assignment for the benefit of his creditors, which was tiled on the morning of the 29th of December. From the schedules it appears that the firm assets were about $30,000, and the liabilities $137,000. It was also shown that the same attorney who drew up the assignment, and has acted as Payne’s counsel since, also acted in behalf of the judgment creditors. It was also made to appear that about the same time the defendant obtained from other dealers in the trade goods on memorandum, which he never returned or paid for.

Ou December 26th Payne was seen in his office by the janitor of of the building, who testified that he was alone, that the safe "was opened, and some jewelry spread upon the table, and that subsequently he left the building, carrying a satchel with him. After the assignment on the 28th, and after the sheriff had made a levy under the executions on the confessed judgments, the plaintiffs endeavored to find the defendant Payne, and finally located him in Brick Church, Hew Jersey. He gave no satisfactory explanation of the disposition made of the diamonds, and an examination made of the firm’s sales book and memorardum book afterwards by one of the plaintiff’s clerks failed to show any entry during the month of December of any goods which resembled the goods consigned on memorandum by plaintiffs, except one entry, which, judging from the price, might or might not have been of the pair of diamonds consigned on December 13th.

Upon such testimony, we fail to see what the trial judge could have done otherwise than submit the questions involved to the jury, which were substantially two. The first, as to whether the plaintiffs parted with title, there was no dispute, it being evidenced by the writing, an extract of which has been given and which showed the terms and conditions upon which the diamonds were received, and the agreement of the parties themselves that the title thereto should remain in the plaintiff. The only question that remained in the case practically was as to whether or not there had been a fraudulent disposition of the. property, so as to deprive the plaintiff of the benefit thereof, and the testimony showed that the defendant had secured diamonds of other dealers in the same way, which he failed to account for or return; that when he obtained such goods, there was reason to believe that he knew that he was utterly insolvent, and that some of the property thus obtained, together with the balance of the assets of his firm, were subjected to a levy upon confessed judgments in "favor of relatives, followed so closely by a general assignment as to raise a strong presumption that both constituted but a single transaction, and that the intention was to give an unlawful preference to relatives. All these facts and circumstances were properly admitted and competent to be submitted to the jury upon the question of whether or not, in the absence of any explanation as to what disposition had. been made of plaintiff’s property, there was not a fraudulent intent in obtaining plaintiff’s goods and disposing of the same, so as to prevent his having the benefit thereof. Abegg v. Schwab, 31 St. Rep., 139.

This case is authority for the view that the plaintiff’s failing to show that the judgments confessed were not bona fide debts did not exclude fraudulent’ intent.■ As therein stated: “It is, of course, an important circumstance, but as was said in Billings v. Russell, 101 N. Y., 226: ‘ It is not inconsistent with an intent on the part of a debtor to defraud his creditors.’ ”

Upon a consideration of the above facts, the jury found that the defendant was guilty of fraud, and we see no reason for disturbing their verdict. Where, as here, the title to the property was shown to be in the plaintiff, all that was necessary to support a recovery was for the plaintiff to show that the goods had been removed, concealed or disposed of, so that they cannot be found or taken by the sheriff, and with the intent that they should not be so found or taken, or to deprive the plaintiff of the benefit thereof. Code Civ. Pro., § 549, subd. 2. It was not error to admit in evidence the assignments and the judgments confessed, as these were material to be considered in connection with all the other facts for the purpose of showing the intent The weight to be given them so that no injury might result to appellant, was clearly marked by the charge of the learned judge: “ That the mere fact that the defendant-became embarrassed in business and made an assignment and confessed judgment does not establish any wrongful or fraudulent intent.” The only other exception which has been pressed upon this appeal is that taken to the admission of evidence as to the contents of the book. That' all primary sources were exhausted before secondary evidence was allowed is evident by the record. The only suggestion made of any omission was the alleged failure of the plaintiff to show a notice served upon the defendant to produce the books. The respondent insists that such a notice was given, -but its failure to appear in the case compels us to regard the question as though no notice had been given. ' Under these circumstances, however, where there is a reasonable probability that such ’’notice was given because upon the argument of the appeal the original notice to produce was exhibited, it remains for the appellant, in order to gain any advantage from an objection based on such slender foundation as the omission to include “ the notice to produce ” in the printed case on appeal, to bring himself clearly within the rule entitling him to the benefit of an exception on this ground.

An examination of the case will show that when the secondary evidence was about to be given, the objection was interposed in the following language: “ Defendant’s counsel renews his objection to allowing the witness to answer what those books show. Objection overruled and defendant excepts.” It nowhere in the case, prior to the objection thus taken, appears that any such objection was made, nor was any evidence given of entries in regard to 'the books. It will be noticed, therefore, that the grounds of .objection when made were not stated, and a general objection of this kind is not available, particularly where, as here, it is not shown that any injury resulted by the exercise of the discretion which is vested in the trial judge, as to when and upon what proof he would admit secondary evidence of the contents of books. As has been said in the case of Naugatuck Cutlery Co. v. Babcock, 22 Hun, 487: “ It is so much a matter of discretion with the judge at the trial in determining whether a case is made for the introduction of secondary evidence, that his ruling should not be reversed unless it appears very clearly that error has been committed which has prejudiced the case of the party who complains.”

It appears from the evidence that these books were not in the possession of the defendant, but had been surrendered to the original assignee, subsequently to the substituted assignee, and had been seen for the last time when used upon the trial of an action in this court.

Under these circumstances, it can hardly be claimed that the defendant was prejudiced by a failure to serve him with a notice to produce books not in his possession and not under his control, even if we assume, what appears to be contrary to the real fact, that such notice was not given. We see no reason for disturbing the - judgment, and it should, together with the order appealed from, be affirmed, with costs.

Van Brunt, P. J.

I concur, but I do not concur in what is said as to production of notice to produce upon the argument. Sometimes appellate courts will receive record evidence, Dunham v. Townshend, 118 N. Y., 286; 28 St. Rep., 864, and cases cited, but no other kind of proof. The notice to produce was not a record and did not necessarily prove itself.

Lawrence, J., concurs in result.