text:
    DANIEL T. FOLEY, Respondent, v. JAMES J. FOLEY, PATRICK J. HENNESSY and THOMAS HARTE, Surviving Executors of JOHN HEALY, Deceased, and JAMES HEALY, Appellants.

      Estate — w7ien vested.

    A testator devised certain real estate to his wife, to be held for the benefit, support and maintenance of herself and daughter, and provided that if the* daughter should marry, or die without leaving children, her husband, if he; should survive her, should not inherit the property; but that if she left children, living at her death the property should be theirs. The will further provided, that “ should my said daughter Margaret die without leaving any issue, then the said property shall be left to my nephew John Foley.” The testator died. in 1872, the widow in 1874, John Foley in 1877, and the dang-hter, without ever having had issue, in 1878.

      Held, that John Foley took under the will a vested estate in remainder, and that his heirs-at-law were entitled to the property on the death of the daughter.
    Appeal from an order overruling a demurrer to the complaint. The action was brought for the partition of certain real estate, of which John Healy died seized in 1872. By his will he provided : First. “After all my lawful debts are paid and discharged, I give and bequeath to my dear wife, Catharine Healy, the house and lot in which I now reside, and which house and lot I now own, and which house and lot is situated on the northerly side of Xuqueer street, in the twelfth ward, in the city of.Brooklyn, aforesaid. The said described property is to be held by my said wife, after my death, to and for the chief purpose of keeping and protecting the same for her own and my daughter’s benefit, provided, however, that my said wife shall prudently use the rents and benefits, if any there may be, of said property for the maintenance and support of herself and said daughter ; and, also, that my said wife shall be and act as the sole guardian and protector of my said daughter as long as she remains unmarried; but if she, my said wife, should get married, or otherwise commit acts contrary to the wishes of my executors herein named, then my executors shall have the power to have the control of said property taken from my said wife, and also the guardianship of my said daughter. This use and privilege of my said property to my said wife is in lieu of her dower right.
    ‘ ‘ Second. I also wish and will that if my said daughter Margaret should get married, or die without leaving any children, and that .her husband should live after her death, he shall not inherit the said property or any part thereof; but if there are any children born of my daughter, and living after her death, the property .shall be theirs, share and share alike, and managed accordingly by my executors.
    “ Third. I wish and will that should my said daughter Margaret die without leaving any issue, then the said property shah ■be left to my nephew John Foley.”
    The widow died in 1874. John Foley died in 1877, unmarried, .and leaving the plaintiff and James J. Foley, his brothers and only heirs-át-law. The daughter died in 1878 without ever having-had issue.
    The question involved was as to the estate taken by John Foley-under the will, and as to whether it passed to his brothers upon, his death.

      jRobert Johnstone and James Qallanan, for the appellant Harte.

      John W. Weed, for the appellant James Healy. .

      McGuire <& .Kuhn, for the respondent.
   Dykman, J.:

At common law the rules, which governed the holding and transmitting of real property, were so complicated and so unsuitable to the development of a new country, that they began to be; modified here by various legislative enactments soon after the formation of the State governments. Our Revised Statutes took a, long step towards the simplification of those rules, and esjieciallyin relation to the vesting of estates in land and their alienability. By them estates in respect to the time of their enjoyment are; divided into estates in possession and estates in expectancy, and an. estate in expectancy is defined to be one to which the right of possession is postponed to a future period. Estates m expectancy are divided into future estates and reversions. Where a future; estate is dependent on a precedent estate it may be termed a, remainder, and such future estates are either vested or contingent. They are vested where there is a person in being who would have; an immediate right to the possession of the lands should the intermediate or precedent estáte cease. Expectant estates are descendible, devisable and alienable in the same maimer as estates in possession.

In the light of these plain and simple rules this case can b& examined with satisfaction, and reduced to its proper place without; elaboration or difficulty. In the first part of his will the testator evinces a plain intention to devise a life estate to his wife in the house; and lot in question, and" the fee to the children of his daughter Margaret, if any are born and living at her death. Then comes; this clause upon which the plaintiff’s right depends. “ I wish and will that should my said daughter Margaret die without having .any issue, then the said property shall be left to my nephew John Foley.”

The widow died in 1874. Foley died in 1877, and the daughter Margaret died in 1878, without children. What estate did John Foley take under this will ? The determination of the life estate of the widow was all that was necessary to entitle him to take the ■property. It is true the birth of children to the daughter Margaret, who should survive her, would defeat his estate, but they "were subsequent conditions, and it is no objection to the vesting ■of an estate that subsequent events may defeat it. If there be a person in being having an immediate right to the possession upon "the determination of the precedent estate, then he has a vested ■remainder under the provision of our statute, and John Foley •occupied that position in respect to this property, even though the ■wife and daughter both took life estates under this will which we •clo not decide. •

The plain intention of the testator was to give the fee to this ■property to his nephew, unless there were children of his daughter living at her death. That was a' subsequent event which might •defeat his estate, but until this happened the ultimate fee was in him, and he took the possession when the life estate ceased. The ■case of Wolfe v. Van Nostrand (2 N. Y., 436) turned upon the peculiar language of the will which was as follows : Speaking of the property “ which I do hereby give and devise unto my said ■dearly beloved wife Hannah during her life, and after her ■death in case my daughter Elizabeth should die without having named or without leaving a child or children, I give and devise "the house and lot of ground,” etc., “ unto William Newton.” The ■daughter survived the mother, but died without issue, and it was .'held that the devise over to Newton was contingent upon the death •of the daughter without children before the death of the mother ; "that the devise was to him after the death of the wife in case Elizabeth should die childless, which condition qualified what would ■otherwise have been an absolute devise, and made it contingent .and dependent upon a condition which never happened. The con■dition introduced into this will is a condition subsequent, which might have defeated the estate, but which never happened. The certainty of the enjoyment of an estate is not an element of its vesting. An estate in land may vest in interest and in right, and yet be defeated before enjoyment, and such is this case. Here, however, the event which was to defeat the estate of Foley never came to pass, and he died seized of the premises, and his brother took by descent as his heir-at-law.

The order appealed from must therefore be affirmed, with costs and disbursements.

Barnard, P. J., and Gilbert, J., concurred.

Order overruling demurrer affirmed, with costs.


source: Caselaw Access Project

author: Dykman, J.

license: Public Domain

text:
    THE FIRST NATIONAL BANK OF COOPERSTOWN, Appellants, v. JANE A. TOMAJO and others, Respondents.

      Referee — fees of — must be fixed by mitten agreement — entry of agreement in minutes not sufficient.

    Appeal from an order made at a Special Term, denying a motion for a readjustment of costs.
    This cause was tried before a referee, and on the trial it was stipulated between the counsel for the respective parties “that the referee shall be entitled to a just and reasonable compensation for his services, the amount of such compensation to be fixed by himself; ” and the stipulation was entered on the minutes of the trial. The referee heard the cause, made his report and fixed his compensation at $575, which was paid to him by the prevailing party. The taxing officer allowed this sum in the bill of costs adjusted by him, and a motion was made at Special Term for a readjustment of the costs and to strike out the item. The motion was denied and an appeal has been taken from that order.
    The court at General Term said: “It has just been held by the Supreme Court in the third department that an entry on the minutes of a referee of an agreement for his compensation beyond the legal rate is not sufficient, and that to be ■tfalid and effectual such an agreement must be signed by the parties or their attorneys. (Olíase v. James, N. Y. W. Digest, vol. 7, No. 18, p. 415; 8. Q., 16 Hun, 14.) We are inclined to concur in this view.”

      Estes <& Barnard, for the appellants. James E. Ohandler, for the respondents.
   Opinion by

Dykman, J.

Barnard, P. J., concurred; Gilbert, J., not sitting.

Order reversed, with costs and disbursements.


author: Dykman, J.,

text:
    JESSE ELDRIDGE, Respondent, v. MARY ANN UNDERHILL, Appellant.

      Section 1303 of the Code of Civil Procedure — not applicable to appeals from justieds court.

    Appeal from an order of the County Court of Queens county dismissing an appeal from a judgment rendered in a justice’s court, on the ground that the costs and return fees were not paid to the justice at the. time of serving the notice of appeal.
    The court at General Term said: “It was decided by this court in the case of Southard v. Bhilvps (7 Hun, 18) that the payment of the justice for making his return on appeal from a judgment of a court of a justice of the peace was jurisdictional, and the appeal was not perfect without it. The provisions of section 1303 of the Code of Civil Procedure are sufficiently comprehensive to allow the omission to be supplied ; but the section has no application to appeals from justices’ courts.”
    The order must be affirmed, with costs and disbursements.

      Okas. Be Kay Townsend, for the appellant. W. H. Van Wych, for the respondent.
   Opinion by

Dykman, J.,

Barnard, P. J., concurred.

Present — -Barnard, P. J., Gilbert and Dykman, JJ.

Order affirmed, with costs and disbursements.


author: Davis, P. J.:

text:
    THE MAYOR, ALDERMEN AND COMMONALTY OF THE CITY OF NEW YORK, Appellant, v. THE BROADWAY AND SEVENTH AVENUE RAILROAD COMPANY, Respondent.

      A corporation accepting a charter, cannot question the validity of a burden imposed/ thereby — Chapter 513 of 1860 — License fees to be paid wnder. ■

    Defendant’s charter- (chap. 513 of 1860) provided that defendant should “ be subject * * to the payment to the city of the same license fee, annually, for each car run therein, as is now paid by other city railroads in said city.” An ordinance of the city provided that each passenger-car running in the city should pay fifty dollars a year for a license, except one-horse passenger-cars, which should pay twenty-five. Two of the companies then running in the city, by virtue of a contract with the city, paid no license fee on their cars. Two others paid the fee required by the ordinance, and one, by virtue of a special charter, paid a license fee of only twenty dollars per car.
    In an action to recover license fees for the cars run by defendant^ held, that defendant having accepted its charter, could not question the validity of the provision in question.
    That the Legislature intended that the defendant should pay for its license the amount specified in the city ordinance.
    Appeal from a judgment in favor of the defendant, entered upon a verdict directed at the circuit.

      The action was brought to recover $62,300, with interest, on the several installments thereof, as license fees on cars of defendant, which fees were alleged to be due to the plaintiff.

      W. C. Whitney, for the appellant.
    It is a well-established principle of the English and American law, that all grants of privileges are to be liberally construed in favor of the public, and as against the grantees of the monopoly, franchise or charter, they are to be strictly interpreted. Any ambiguities in a grant must operate against the grantees, and in favor of the public. (Sedgwick on Statutory Law [2d ed.], 291; Gildart v. Gladstone, 11 East, 685; Stourbridge Ganal Company v. Wheeley, 2 Barn. & Ad., 792; Leeds and Liverpool Ganal v. Huster, 1 Barn. & Cress., 424; The Kingston- Upon-Hull Lock Company v. La Marche, 8 Id., 42; Priestly v. Foulds, 2 Scott’s New Reports, 205; Bradley ~v. New York and New Haven Railroad Company, 21 Conn., 294; Rice v. Railroad Company, 1 Black. [U. S.], 358; The Florida,etc., Railroad Company v. The Pensacola, etc., Railroad Company, .10 Florida, 145; Alleghany v. Ohio and Pennsylvania Railroad !Co.; 26 Penn. St., 355 ; Commonwealth v. Erie and Northeast Railroad Co., 27 id., 339; Commonwealth v. Central Passenger Railway, 52 id., 516.)

      Robinson & Scribner, for the respondent.
    The common coun•'cil had no power to impose any license fee upon the passenger-cars used on defendant’s railroad. (People v. Kerr, 27 N. Y., 188; .Milhau v. Sharp, id., 611; Lavis v. Mayor, etc., 14 N. Y., 506.) Whether the license fee claimed is regarded as a tax, or as a liability under contract, assumed by the grantees by acceptance of the grant, it is void in either case for uncertainty. (Green v. Craft, 28 Miss., 75; Blackwell on Tax Titles [4th ed.], *359, 396, and note; see also p. 381; Roberts v. Chan Tin Pen, 23 Cal., 259.) In the interpretation of statutes the same rule is applied as in the •construction of wills, contracts and other instruments. (Dwarris ■on Stat. [Potter’s ed.], 178.) The clause of the act of 1860 which is relied upon by plaintiff is void for uncertainty. (Rex v. The Poor Law Commissioners, 6 Ad. & Ell., 7 [Court King’s Bench] ; Dwarris on Stat. [Potter’s ed.], 203, 204;, Smith v.
      Mayor, 1 Iiun, 59; Green v. Wood, 7 Adol. & Ell. [N. S], 178 [7 Queen’s Bench]; Gwynne v. Burnell, 1 Scott [N. Ri], 818; Ball v. Franklin, 3 Mees. & Wei., 259-275; Jones v. Smart, 1 Durn & East, 52; The King v. Shorn, 6 East, 518; Haworth v. Osmerod, 6 Q. B., 307; People v. Woodruff, 32 N. Y., 364; United States v. Moi-se, 3 Story, 87; Commissioners of Louisburg v. Harris, 7 Jones Law R. [N. C.], 281; Peek v. Halsey, 2 P. Wms., 387; Webb's Gase, 1 Roll Abr., 609; Jubber v. Jubber, 9 Sim., 503; Winter v. Permit, 9 Clark & Fin., 687; Year Book,, 49 Ed., 3; Trippe v. Frazier, 4 Har. & John. [Md.], 446;, Bashiell v. Attorney-General, 6 id., 1; Jackson v. Graig, 3 Eng.. Law & Ecp, 173; Baker v. Newton, 2Beavan, 112; Bosenplaenter y. Boessle, 54 N. Y., 265.)
   Davis, P. J.:

The defendant was incorporated by cnapter 513 of the Laws of' 1860. (Session Laws of 1860, 1042.)

By the second section of that chapter it was declared that the. defendant “ shall be subject * * # to the payment to the city of the same license fee annually for each car run thereon, as is now paid by other city railroads in said city.” The defendant, accepted its charter with this burden, and of course cannot be heard to object that it was or is illegal. At the time the charter was granted there was, as appears by the case, an ordinance of the city, passed by the common council December 13, 1858, which provided as follows:

“ Section 1. Each and every passenger railroad car running in the city of New York, below One Hundred and Twenty-fifth street, shall pay into the city treasury the sum of fifty dollars annually for a license, a certificate of such payment to be procured from the mayor, except the small one-horse passenger-cars, which shall each pay the sum of twenty-five dollars annually for said license as aforesaid.
“Section 2. Each certificate of payment of license shall be affixed to some conspicuous place in the car, that it may be inspected by the proper officers.
“ Section 3. For every passenger-car run upon any of the city railroads below One Hundred and Twenty-fifth street, without the proper certificate of license, the proprietor or proprietors thereof shall be subject to a penalty of fifty dollars, to be recovered by the corporation attorney, as in the case of other penalties, and for the benefit of the city treasury.”

In The Mayor v. The Second Avenue Railroad (82 N. Y., 261), and in The Mayor v. The Third Avenue Railroad (33 id., 42), it was held by the Court of Appeals that this ordinance was inoperative as against those companies respectively, on the ground that they were organized under contracts with the corporation of the city of New York (based upon considerations expressed in such contracts), conferring their rights and powers, and defining upon what terms those companies respectively might use the streets and run their railroad cars. Those cases, however, do not decide that •such ordinances are invalid and inoperative upon street railroad corporations which are expressly subjected to the payment of license fees by their charters, which is the case of the defendant. The ordinance, therefore, remained in full force and vigor as against the defendant and all other street railroads, who are required, either by a legislative grant of power, or by any contract with the city conferring their powers, to pay such license. In all such cases a contract springs out of the charter or instrument creating the corporation, that it will pay the license, which the company is neither at liberty to repudiate nor refuse to perform. The defendant became, therefore, by the acceptance of the charter, liable to pay to the city the same license fee annually for each car run upon its road as was then paid by other city railroads in said city.

It appears that the defendant has never paid any license fees. The statement of the parties shows that the defendant, since the year 1864, has annually run a large number of cars upon its road ranging from seventy-three cars in the year 1864, to one hundred and twenty-eight cars in the year 1874, and that these cars were two-horse passenger-cars.

The plea of the statute of limitations was interposed, which would probably limit the right to recover for those run within the six years next previous to the commencement of the suit. In respect to the number of them upon which a right to recover ■exists (if it exists at all), the statute seems to leave no doubt. It prescribes that the payment shall be made annually for each car run on the defendant’s road; and this of necessity includes the whole number regularly run and used for the transportation of passengers during the whole or any part of each year. The-defendant would not be liable upon the whole number of cars, owned by it, but only upon the number actually run for the transportation of passengers continuously or occasionally in each year.

The averment of the complaint that in the year 1875 the ordinance ceased to operate by reason of the adoption of another ordinance upon the same subject is directly put in issue by the answer, and as no proof was given upon the question at the trial, if the fact was at all material, it is not before us at this time. This action is not brought to recover the penalty prescribed by the ordinance for the non-payment of the license, but upon the liability created by the ordinance and statute, in the nature of a contract to pa,y annually the sum for which the defendants should be adjudged liable. It is therefore, we think, not embarrassed by any question of failure on the part of the city to issue the license.

There remains only one question upon which we infer that the case was disposed of by the court below, and that is, whether or not the statute is void for uncertainty in not sufficiently defining; what license fee shall be paid.

The language is, that the defendant shall be subject to the payment to the city of the same license fee annually for each car run thereon as is now paid by other city railroads in the said city. It was shown on the trial, by stipulation, that the Second and Third Avenue Railroad Companies paid no license fees ; that the New York and Harlem Railroad Company paid in the year 1859 license fees of fifty dollars each on thirty-two horse-cars, but had paid none since. That the Sixth Avenue Railroad Company paid annually on two-horse cars license fees of fifty dollars, and on one-horse cars license of twenty-five dollars each. That the Eighth Avenue Railroad Company paid annually license fees of fifty dollars per car on two-horse cars, and twenty-five dollars per car on one-horse cars; and that the Ninth Avenue Railroad Company paid only a license fee of twenty dollars per car. It is claimed that this state of facts produces so much confusion, as to the amount paid by other city railroads, that that portion of the respondent’s charter becomes void for uncertainty. There is no ambiguity in the language of the charter itself. The uncertainty, if any, arises out of the extrinsic facts, and it is the duty of the court therefore to ascertain, if practicable, what the Legislature intended by the language used, in view of such facts, as they are shown by the case to have existed at the time the charter was granted.

It is quite manifest that the Legislature, in fixing the amount of the license to be paid by the defendant at the amount then paid by other city railroads in said city, had not in view railroads which were not liable, and therefore did not pay any license at all. The Second and Third Avenue Railroad Companies were in that condition; they neither paid nor were liable to pay, because they had contracts with the city which exempted them, according to the decision of the Court of Appeals, from any such liability. The Harlem railroad, so far as it paid at all, paid at the rate of fifty dollars per car. The Sixth Avenue and Eighth Avenue companies were then paying fifty dollars per car for each two-horse car, and twenty-five dollars for each one-horse car, and the Ninth Avenue Company were paying twenty dollars per car, which amount was specifically fixed by its charter. The words, “ as now paid by other city railroads,” must have reference to those roads which were actually then paying, and not to those which for. any reason were not liable to pay, or were not in fact paying any license fee.

The only doubt then is, whether the liability was to pay the same amount as that paid by the Sixth and Eighth Avenue Railroads, or the amount which the Ninth Avenue Railroad was paying under its special charter. It seems very clear that the defendant was liable to make payment of one or the other of these amounts ; either the fifty dollars paid by the companies first mentioned, or the twenty dollars paid by the last-named road; and that question depends upon whether the Legislature must be regarded as intending the amounts then fixed by the city ordinance, or the amount which had been specially fixed in a particular case by the Legislature itself.

It is the general rule, that in construing acts of the Legislature which confer rights and privileges upon corporations, and reserve rights and impose duties towards the public, such construction as is most favorable to the public shall be given. (Sedgwick on Stat. Law [2d ed.], 291.)

We are inclined to think that the language used by the Legislature requires us to hold that the intention was that the defendant should pay the license fees then paid by other city railroads under the ordinances of the city. The language is in the plural, which seems to exclude the idea that the Legislature intended that the defendant should pay a sum fixed by a special charter in any one particular instance. It meant to subject it to the general rule affecting all other like railroads then subject to such rules, and thereby produce equality between it and such railroads; and hence, in construing the statute, it seems to be entirely right to hold that the Legislature had in view the general rules affecting the railroads then paying fifty dollars per annum, rather than a particular law which allowed one railroad to pay less. And it is very clear that the Legislature did not intend that the obligation to pay should be affected by the fact that some railroads were not liable, and therefore paid no license fee. We are of opinion, therefore, that the defendant is subjected by its charter to payment of the amount fixed by the ordinance of 1858, and that the court below should have so held.

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

Brady and Ingalls, JJ., concurred.

Judgment reversed; new trial ordered; costs to abide event.


author: Brady, J.:

text:
    RICHARD C. FELLOWS and MICHAEL NOONAN, Appellants, v. THE MAYOR, ALDERMEN AND COMMONALTY OF THE CITY OF NEW YORK, Respondents.

      Contract with the City of New York — Right of the city to charge interest on admances made while work progresses.

    Where by the terms of a contract entered into with the defendant, the contractor was not to be entitled to demand or receive any payment for any portion of the work to be done, or materials furnished, until the same should be fully completed, and the assessment to be levied therefor duly confirmed; but it was provided that advances might be made in conformity with a city ordinance, which ordinance provided that seventy per cent might be paid on certificates, “the remaining thirty per cent to be reserved until the final completion of the contract,” but required that interest on such advances should be charged from the time of making them up to the time of the final payment.

      Held, that interest should be charged on the advances up to the time of the confirmation of the assessment.
    That proof that defendant, through its departments, had for a series of years charged interest only up to the time of the completion of the work, and not until the confirmation of the assessment was immaterial.
    To render the construction given to a statute by public officers admissible as evidence of its true meaning, the usage must have been general, continued and unquestioned.
    This rule does not apply to the interpretation of contracts.
    Usage is sometimes admissible to add to or explain, but never to vary or contradict expressly, or by implication, the terms of a written instrument, or the fair and legal import of a contract.
    Appeal by the plaintiffs from a judgment in favor of the plaintiffs, entered upon the verdict of a jury.
    Tbe action was brought to recover the amount due upon a contract for the construction of a sewer in Seventeenth street, Eleventh avenue and Twenty-third street, in the city of New York.
    The principal question involved in the appeal related to the right of the defendant to deduct interest on advances, made to the plaintiff during the progress of the work.
    The plaintiff, Richard C. Eellows, claimed an interest in the •cause of action under an assignment thereof, given as collateral to a claim held by him against Noonan.

      John H. Strahan, for the appellants.

      Francis Lynde Stetson, for the respondent.
   Brady, J.:

By the contract between the plaintiff Noonan and the defendants it was provided, that the former should not be entitled to demand or receive any payment for any portion of the work to be done or materials furnished until the same should be fully completed in the manner set forth in the agreement, and such completion should be duly certified, and the assessment to be laid therefor duly confirmed. Whereupon the defendants bound themselves to pay in one of two modes, excepting such sum or sums as might be lawfully retained under any provisions of the agreement contained for that purpose. It then contains the following condition: “But in case the amount payable under this contract be $5,000, or over, payments will be made to the said j>arty of the second part, by monthly installments of seventy per cent on the amount of work performed under and in accordance with the provisions and stipulations of this agreement, in conformity with, and subject to the terms and conditions of an ordinance of the mayor, aldermen and commonalty of the city of New York, passed December 30, 1854, entitled ‘ An ordinance to authorize the issue of bonds upon contracts, payable by assessments, in pursuance of the act of the Legislature, passed April 16, 1852 ’ (ch. 397), as amended March 8, 1861, excepting such sum or sums as may be lawfully retained under any of the provisions of this agreement; provided that nothing herein contained be construed to affect the right hereby reserved, of the said board, to reject the whole or any portion of the aforesaid work, should the said certificates be found or known to be inconsistent with the terms of this agreement, or otherwise improperly given.”

The sections of the ordinance referred to and bearing upon the question to be discussed are as follows :

Section 1. Whenever any contract shall be made hereafter by any of the departments of the corporation, the amount whereof is to be afterward collected by' assessments from the property-benefited by the work to be done under said contract, it shall be the duty of the head of the department making such contracts to cause to be inserted therein a clause that, as the work progresses, payments will be made to the contractors by monthly installments of seventy per cent on the work performed, provided, the amount of work done on'each installment shall amount to $1,500, and the head of the department making such contracts shall forthwith, file a copy thereof with the comptroller.

Section 2. The amount due contractors ■ on all contracts now confirmed by the common council, and on work now in progress, under contracts on account of regulating and paving streets, building sewers, and all other work ordered to be done by contract by virtue of ordinances of the common council, shall be paid by the comptroller from the proceeds of assessment bonds issued in accordance with the act of the Legislature, passed April 16, 1852 ; but no moneys shall be paid on account of said assessments or contracts until a copy of the original contracts has been filed with the comptroller of the city by the head of the department having such work in charge, with a certificate, in writing, from the head of such department, stating the amount of work that has been completed, and the amount due the contractor for such work, according to the terms of the original contract; upon the amount, thus certified and ascertained to be due to the contractor the comptroller shall pay seventy per cent, the remaining thirty per cent to be resolved until the final completion of the contract.

Section 3. For the purpose of providing for the payments contemplated under this ordinance it shall be the duty of the comptroller, from time to time, to borrow such sums as may be necessary, as provided in the act, entitled “ an act to authorize the mayor, aldermen and commonalty of the city of New York to issue assessment bonds,” passed April 16, 1852, upon bonds to be known as assessment bonds, at a rate of interest not to- exceed, six per cent per annum; and the bonds so issued shall be paid from the collections made on the assessment lists, when confirmed by the common council, and which are hereby specifically pledged for such purpose; and the contractors to whom payments shall have been made, in accordance with the provisions of sections one and two of this ordinance, shall upon the final payment of the amount due upon their several contracts be charged at the rate of seven per cent. por annum for all sums that may have been advanced to them, as provided in the foregoing sections of this ordinance ; and it shall be the duty of the comptroller to deduct from the amount due ■on each contract the interest money so charged.

It will be perceived on examination of the ordinance that its provisions relate to payments which may be made under certain circumstances, and does not in any way vary the contract in relation to the balance which may remain due after such payments made. The words “ the remaining thirty per cent to be reserved until the final completion of the contract ” is a sequitur merely, and necessarily follows from the payment of the seventy per cent. The provision of the contract which attaches the ordinance to the agreement relates to payments in advance only, and the terms and conditions' on which they may be made, and nothing more. It does not yield any of the covenants on the part of the contractor, and such was not the intention. All the rights and obligations imposed by the contract remain intact, and the quasi departure by payment on account is an advance on condition and on the supposition or assumption that the thirty per cent reserved will make up any deficiency, and cover any default of the contractor.

It does not, for example, in any way affect the covenant that the whole sum to be paid for the work and materials shall not become due or the contractor entitled to demand or receive payment for the same, until the assessments to be laid to pay for the work shall be duly confirmed; or the provision that when the work is completed a sum may be retained under any covenant contained in the agreement for that purpose. The payments of seventy per cent are for the benefit of the contractor, who is not obliged to wait until the work is completed before any compensation is made, .and as a penalty or quid pro quo he is required to pay the interest on the sums advanced to him. It will be perceived that in the clauses imposing interest the words “ for all sums that may have been advanced to them, as provided in the foregoing section to this ordinance,” are used, and it is quite clear that such was the intent of the common council in passing the ordinance. This is more apparent from the fact that the money out of which the payments are to be made is to be raised by bonds to be issued, and which are to be paid by collections from the assessment lists when confirmed. (Section 3.) The money is borrowed, therefore, and at six per cent. The effect of these provisions of the contract aud ordinance seems to be this : The city agrees to pay the contractor when the work is completed, and the assessment laid to meet the expenses is duly confirmed, but it will pay the contractor under certain conditions, seventy per cent as an advance for which interest will be charged ; and as the whole sum to be paid for the. work is not due, or and part of it, until the assessment is duly confirmed, the interest must be paid until that time; the payment thus to be made relates to the terms of the contract providing-for completion before compensation can be exacted. Where payments are made as the work progresses it is unusual to charge: interest, and would be iniquitous to do so, inasmuch as the money is given because it has been earned and is payable by the terms of the contract when so much of the work is done as to warrant it. Here, however, the money is not payable, and what is given is an advance necessarily and is so intended inasmuch as the interest is. charged upon it— charged because the money to pay the expense* cannot be absolutely obtained until the assessment is confirmed.

This view results from the use of the words quoted, and from the following clause hi connection with them, namely : “ And it shall be the duty of the comptroller to deduct from the amount-due on each contract the interest money so charged.” It is true-that the ordinance does not provide in express terms the period, for which interest shall be charged, and it was not necessary that it should do so, inasmuch as the contractor would necessarily be chai’ged with the interest until his contract matured ; or, in other words, until he became entitled to payment under the contract. If the contract were silent as to that, then he would be entitled to payment when the work was completed, but if otherwise, then at such time as the contract declared for that purpose. The result is that, as matter of construction, the payments made, being in the nature of advances, they must continue to be regarded as such until the maturity of the contract; in other words until!, the contractor is entitled to demand his payment. Unless, therefore, there is something in this case established, which has the: legal effect of changing this result, the ruling at the circuit was correct, and the plaintiffs properly charged with interest up to#the time of the confirmation of the assessment. It is said by the appellant’s counsel, who has presented an exhaustive brief, that •the defendant, through its departments, has for a series of years ■charged interest up to the time of the completion of the work, .and not until the confirmation .of the assessment, and invokes with great ingenuity the' proposition that the construction given a statute by public officers, and the practice under it, is evidence competent to determine the true meaning of the enactment, and las almost the force of a judicial construction. (See Easton v. Pickersgill, 55 N. Y. R., 310, 315.) This rule does not,-however, apply to the interpretation of contracts. Usage is sometimes ■admissible to add to or explain, but never to vary or contradict, -expressly or by implication, the terms of a written instrument, or •the. fair and legal import of a contract. (Collender v. Dinsmore, 55 N. Y. R., 200-209.)

Custom and usage it is said in that case are resorted to, only “to ascertain the meaning and intention of the parties to a contract when the same could not be ascertained without extrinsic evidence, but never to contravene the express stipulations, and if there is no uncertainty as to the terms of a contract, usage cannot he proved to contradict or qualify its provisions. We have already .attempted to demonstrate that there is no uncertainty, as to the provisions of the contract under consideration, in reference to the interest and the time for which it was to be paid on the advances made under its terms.

There is a further answer, however, to the proposition of the -counsel for the plaintiff on this subject, and that is, that the usage must be general, continued and unquestioned to give, it any of the weight of a judicial determination. This is not the case according to his proofs, because it appears that by one comptroller, and -down to the year 1858, the interest was exacted to the date of the ■confirmation of the assessment, as an invariable custom, and the .adoption of a different rule by his successor left the question open to discussion and doubt therefore, even when considered with reference to usage. The plaintiffs therefore gained nothing by invoking this element.

We do not think either that there is any value in the point .made by the plaintiffs counsel, in regard to the rebate of interest upon the sums advanced on account of the alleged delay of 120 days in the performance of the work caused by the defendant’s acts. The learned justice at the trial charged the jury that if there was any delay of the work by any act of negligence, on the part of the defendant, the plaintiff was not chargeable, and therefore he should suffer no deduction on that account, having previously stated that the plaintiffs claimed $45,000, by reason of the negligence on the part of the defendant and delaying the work. And upon the conclusion of the charge, was requested by the counsel for the plaintiffs to charge specifically that the time the work was necessarily protracted from any act of the defendant by altering the line of the sewer, or the change of the grade, the plaintiffs were entitled to have deducted from the defendant’s claim for interest on the seventy per cent advances, to which request the court answered : “I have charged that generally.” It further appears on this subject, that the counsel for the defendant requested the learned justice to charge the contrary proposition, namely, that the jury could make no allowance for rebate of interest on account of delaying the work, because they had not sufficient evidence on which to determine the amount, which request was refused and the defendant excepted. It appears that the plaintiffs’ claim was for the balance under the contract, namely, $69,227.89, with interest, and the further sum of $45,000 for damages. The jury found for the plaintiffs the sum of $55,460.14, with interest, to be computed from the date of the confirmation of the assessment. The interest, upon the theory that it was to be paid up to the time of such confirmation, and which amounted to $31,387.17, being deducted from the balance claimed under the contract, would leave $37,840.81, and it appears, therefore, that for damages the jury must have allowed $17,619.33, which added to the $37,840.81 makes the amount of the verdict. The subject of the rebate of interest was submitted to the consideration of the jury, because although the court refused to charge more specifically upon that subject than was done by the general charge, it distinctly refused, as we have seen, to charge that no allowance for such rebate could be made. The amount of damages awarded, as has been shown, was largely in excess of the amount of such rebate, and it is impossible for this court to say that the jury did not in estimating the damages include this sum. The only exception on that subject was taken to the refusal of the court to charge specifically in regard to it. But the effect of such refusal was entirely overcome by the specific denial of the request, on behalf of the defendant, that they could make no allowance for a rebate of interest.

For these reasons, we think, the point made in regard to such rebate is not available to the plaintiffs, and that no advantage can result therefrom on this appeal.

In conclusion, it is only necessary to say that the defendants are not chargeable, by any facts and circumstances developed on the trial of this action, for 'any delay in the confirmation of the assessment laid for the purposes of the contract made with the plaintiff Noonan.

Judgment must therefore be affirmed, with costs.

Davis, P. J., and Ingalls, J., concurred.

Judgment affirmed, with costs.


text:
    FREDERICK P. JAMES, Appellant and Respondent, v. JAMES A. COWING, Appellant, and THE NEW YORK ELEVATED RAILROAD COMPANY, Respondent.
    Mortgage— dmty unde)', of trustee for bondholders —■ when a trustee is personally liable for a conveyance made in violation of the mortgage — when a purchaser is bound by the trust.

    A mortgage executed to secure bonds issued by a railroad provided that, in case of any judicial foreclosure sale or other sale of the premises, the trustees should, upon the request of a majority of the bondholders, purchase the premises, and that no bondholder should have any claim upon the premises or the jn-oceeds thereof, except for his pro rata share of the proceeds as represented in a new company or corporation to be formed for the use and benefit of the bondholders. The trustees were authorized to organize such new company and reconvey the premises to it. The sole trustee having foreclosed the mortgage was, by an order of the court, directed to bid upon the sale for the benefit of the bondholders up to $750,000. He did so, and accepted a conveyance “ as trustee for the benefit of all the holders of the bonds secured by the mortgage foreclosed in said action.” He gave a receipt to the referee who conducted the sale acknowledging the receipt of $734,518.84.
    Subsequently and after issuing a circular requesting suggestions as to the time and manner of selling the premises, and upon the request of a majority of the bondholders, the trustee sold the same at public auction-to The New York Elevated Railroad Company for $100,000. Many of the incorporators of the latter company, were not holders of the bonds of the first company.
    The plaintiff, a holder of bonds issued by the first company, claiming that the sale by the trustee was in violation of the trust imposed by the mortgage, brought this action to recover his proportionate share of the proceeds of the foreclosure sale from the trustee, and also to hold the New York Elevated Railroad liable therefor.

      Held, that the trustee was required, by the mortgage, to organize a new company composed exclusively of the former bondholders, and that the sale by him at auction was unauthorized and a violation of the trust.
    That having made the sale without applying to the court for authority so to do, he was personally liable for any damage to the bondholders occasioned thereby. That the trustee was under the circumstances estopped from denying that he had received from the referee $734,518.84.
    That the New York Elevated Railroad Company, having purchased from the trustee with knowledge of the terms of the trust created by the mortgage, took the property subject to all the terms and burdens thereof, though it paid a valuable consideration therefor.
    Appeal from a judgment entered upon the trial of this action by the court, without a jury, in favor of the plaintiff as against the defendant Cowing and against the plaintiff, and in favor of the defendant, The New York Elevated Bailroad Company.
    The action was brought to recover the amount of certain first mortgage bonds issued by the West Side Elevated Patented Bail-road Company, secured by a mortgage of the property of said company given to the defendant Cowing, as trustee, and by him in alleged violation of his trust, conveyed to the defendants, The New York Elevated Bailroad Company.

      Abram Wakeman, for the plaintiff, appellant and respondent.

      David Dudley Field, for the defendants, appellant and respondent.
   Brady, J.:

The learned justice in the court below found the following facts and conclusions of law :

FACTS.

I. In the year 1868 the West Side Elevated Patented Railway Company was incorporated in the city of New York, under the general railroad laws of the State, with a board of seven directors and other proper officers, and with an authorized capital of $5,000,000 for the purpose of constructing and operating an elevated railway in the city of New York, from the Battery through Greenwich street and the Ninth avenue to Harlem river.

II. Prior to the 1st of August, 1868, the said company had proceeded to carry out the objects of its incorporation. It had taken possession of and used the franchises and the rights and privileges over the lands and premises described in its charter of incorporation, or over a part thereof, and had erected an elevated iron railway through Greenwich street from the Battery to Courtlandt street in the city of New York, which had been approved by the State authorities as required by law, and a continuation of said railway was being then made or projected under said franchise to the northerly line of Manhattan Island.

III. On the said 1st day of August, 1868, the said company executed and delivered to George S. Coe and James H. Benedict, as trustees, the mortgage deed of trust of their railway, mentioned in the complaint, and whereof a. copy is thereto annexed, as security for the payment of the 1,500 bonds of the said company, therein mentioned and described. The said mortgage was duly executed by both parties thereto, and the same was recorded in the office of the register of the city and county of New York, in liber 870 of mortgages, page 355, October 20, 1868.

IY. The company thereupon issued the bonds mentioned in the mortgage to the amount of $750,000, to wit: 1,500 bonds of $500 each; forty-five of which bonds being those numbered 29, 100 to 119, 221 to 240, and 336 to 339, all inclusive, amounting in face value to $22,500, were issued and delivered to the plaintiff, who has ever since remained, and still is the owner and holder of the same; and the same have not been paid to the company..

Y. On the 3d of January, 1871, a suit was commenced in the Supreme Court by William S. Woodward, David Dows, John F. 'Tracy, and William L. Scott (then actually constituting a majority of the board of directors), against the West Side and Yonkers Patent Railway Company, otherwise called the West Side Elevated (Patented) Railway Company (of New York city), for the recovery of the amount of advances and loans made by the plaintiffs in said suit to said railway company and interest thereon, and on the 24th of January, 1870, judgment was entered therein by ■default against the company for $214,405.93.

YI. Messrs. Coe and Benedict, the trustees under the first mortgage, in the month of July, 1871, resigned as such trustees, and ■bn the twenty-fifth of the same month the defendant, James A. •Cowing, was appointed sole trustee in their place. On the first of August following, he accepted the trust.

The signatures to the necessary notices and papers evidencing ■their proceedings were all acknowledged on the 9th of August, 1871.

Y1I. On the same 9th of August, 1871, David Dows, John F. 'Tracy and William L. Scott, claiming to be owners and holders of $100,000 and upwards of the first mortgage bonds of the said railway company, requested Mr. Cowing, the new trustee, in writing, to foreclose said mortgage, agreeing to indemnify bim against all costs and expenses of foreclosure, and all damages he might suffer by compliance with their request.

YIII. On the next day, August 10, 1871, Mr. Cowing as such trustee commenced an action for the foreclosure of the first mortgage in the Superior Court of the city of New York. On the seventh day of September following judgment of foreclosure and ■sale was entered, and J. C. Bushnell was appointed referee to make the sale, who advertised the sale for the 5th of October, 1871.

IX. Pending this advertisement, Mr. James, the plaintiff in this suit who until then was ignorant of the foreclosure and the proceedings therein, claiming that his interests as a stockholder ■of the company as well as a bondholder of the bonds secured by the mortgage were jeopardized, applied to the court, and obtained .a stay of proceedings and an order directing a postponement of the sale, to enable him to protect such interests; subsequently, upon a hearing of the parties, on the fifth October, and after negotiation and adjustment and agreement between the parties, am order was entered vacating the stay, and directing Cowing, the trustee on the sale, to bid for the premises, as trustee, for the benefit of all the bondholders of the bonds secured by the mortgage up to the sum of $750,000.

On the same day the referee executed and delivered to Mr.. Cowing, and.he received and accepted a deed, “ as trustee, for the benefit of all the holders of the bonds secured by the mortgage foreclosed in said action.”

The sum bid on this sale, as sworn to by the defendant in his answer, and as shown by the report of the referee who made the sale, and by the receipts and vouchers thereto annexed, was-actually paid, and the net proceeds thereof, after payments of costs and expenses, being the sum of $734,518.84 was ¡laid over to and received by said Cowing as such trustee, and for which h& gave the referee his receipts acknowledging the same.

X. A suit had also been instituted in the court of Common Pleas by Mr. Cowing to foreclose the third mortgage of May 9, 1871, judgment obtained therein on 22d August, 1871, and the-property advertised for sale for the 2nd day of October, 1871.

XI. The agreement above referred to of October 5, 1871, and upon which the order above mentioned of that date was made, embraced also a provision for the vacation of the stay of proceedings on the foreclosure in the Court of Common Pleas, and a consequent discontinuance of the action therein commenced by Mr., James, which was afterwards consummated by a stipulation in writing signed by the parties in interest, or their attorneys claiming to act as such, a copy whereof is annexed to the complaint.

XII. On the first of November, 1871, a circular was mailed by Cowing, the trustee, addressed to the bondholders, stating the foreclosure proceedings and sale under the mortgage of August 1, 1868 ; that the title and possession of the property were in him as trustee, with power to hold and convey the same for the benefit of all the holders of the first mortgage bonds, and inviting suggestions as to the time and manner of selling the same.

Several of the parties (not including the plaintiff in this suit), claiming to be holders of a majority of the bonds, united in a. request to Cowing the trustee, dated November 15, 1871, authorizing Mm to advertise and sell at public auction, for cash, the said road, appurtenances, rights and franchises, and all other property .acquired by him as purchaser on the foreclosure sale. The plaintiff made no suggestions as to the disposition of the property.

XIII. In pursuance of this request the road and property were .advertised and sold at pubic auction on 2d of January, 1872, at which it was bid off by David Dows in the name of the New York Elevated Railroad Company for $100,000.

On the same day Cowing, as trustee, executed and delivered to the New York Elevated Railroad Company a conveyance of the property.

XIV. The company thus named had been organized under the general law providing for the formation of railroad companies by the defendant Cowing and others, many of whom were not holders •of the first mortgage bonds of the original company.

XV. The plaintiff took no part in this new organization, expressly •declining to do so, on the ground it was not such an organization as was contemplated by the terms of the trust in the mortgage, and not such as was contemplated and intended by the terms of the stipulation entered into by Mm of the 5th October, and the 10th November, 1871.

XVI. Upon the sum of $100,000, the consideration expressed in the above conveyance to the new company, a cash dividend of $59.62 was finally declared by Cowing, the trustee, upon each of .said first mortgage bonds. Several of the bondholders purchased stock in the new company, for which their bonds were received as part payment, according to their dividend values as above declared, and which the plaintiff has declined or refused to accept.

XVII. In the course of alb these proceedings Cowing, the trustee, failed and neglected to apply to or take instructions and directions from the court, as under the circumstances of the case, he was in duty bound to do, and in the steps he took assumed a responsibility in direct violation of, because not authorized by the trust.

XVIII. The defendant Cowing, the trustee, commenced operating the said road immediately on Ms taking possession thereof under the third mortgage, and continued so to do to the time of the sale and conveyance by him to the defendants, the New York Elevated Railroad Company, and thereafter continued its operation under that corporation, in whose employ as an officer he at once entered and still continues.

XIX. The value of the said property in the hands of the said trustee, and of the said New York Elevated Railroad Company was, and is an amount more than sufficient to pay all the bonds, secured by said first mortgage, together with the interest, costs, and expenses thereon.

CONCLUSIONS OF LAW.

And I do find as conclusions of law :

I. That the defendant James A. Cowing, the trustee, having-purchased the property for the use and benefit of the holders of the bonds, secured by the mortgage of August 1, 1868, at the price or sum of $750,000, it was his manifest duty, under the trust contained in that mortgage, to proceed in the interest of all said bondholders to organize a new company or corporation for their benefit, and with said bondholders, and none others, as its members, and when formed and organized in the mode and manner prescribed by the terms of said trust, thereupon to reconvey, not. sell, the premises so purchased to such now company or corporation.

II. That by virtue of the terms of the mortgage, upon the purchase by defendant Cowing at the foreclosure sale, as aforesaid,' the right and title to the premises sold vested in him, and no. bondholder had any claim to the premises or the proceeds thereof, except for his pro rata share of the proceeds of the same, as represented in a new company or corporation, to be formed for the use and benefit of the holders of the bonds secured by said mortgage.

III. That by the sale of January 2, 1872, and the deed thereupon to it made by said Cowing, the defendant, the New York Elevated Railroad Company, acquired a good and absolute title to the said premises as against the plaintiff and all other persons or parties, holders of said fhsst mortgage bonds.

IY. That said defendant Cowing should have used the fund or property in his hands, as trustee, in the formation of a new company, as required by the terms of said mortgage; and having failed so to do is chargeable with the value of said fund or property.

Y. That under the admission of the answer and the receipt aforesaid, said Cowing is estopped to show that he did not receive the said sum of $734,518.84, .as specified in his said receipt, and he is therefore chargeable therewith in favor of the plaintiff.

VI. That the plaintiff is entitled to judgment against defendant Cowing for his proportionate share of said last-mentioned sum, to wit: The sum of $22,035.15, with interest from January 2, 1872, payment of said sum to be made out of the funds of the trust in his hands, and in default thereof by said defendant Cowing individually, and for his costs and disbursements of this action to be taxed by the clerk.

VII. That the defendant, The New York Elevated Railroad Company, is entitled to judgment against the plaintiff, dismissing the complaint, and for its costs and disbursements of this action, to be taxed by the clerk.

R. L. LARREMORE,

J. S. C.

OPINION.

Plaintiff is the owner of forty-five first mortgage bonds, issued by the West Side Elevated Railroad Company, and secured by a mortgage executed by said company to George S. Coe and James H. Benedict, August 1, 1868. Said mortgage conveys to Coe and Benedict, their successors or assigns, the said railway, extending from Greenwich street near the Battery, in the city of New York, and along the same and the Ninth avenue to West Thirtieth street, and all property and lands then owned or to be acquired on the line of said road, together Avith the franchise thereof, in trust and as security for the payment of 1,500 bonds of $500 each, of which series of bonds those held by plaintiff were part.

Said mortgage provided that, in case of any judicial foreclosure sale, or other sale of the premises embraced therein, said trustees, their successors or assigns, should purchase said premises for the use and benefit of the holders of the then outstanding bonds, secured by said mortgage, upon the Avritten request of a majority of the holders thereof; that upon such purchase the right and title to said premises should vest in said trustees, and no bondholder should have any claim to the premises or the proceeds thereof, except for his pro rata share of the proceeds of said purchased premises as represented in a new company or corporation to be formed for the use and benefit of said bondholders. It was further provided in said mortgage that the trustees therein named, their successors or assigns, might take such lawful measures as they deemed for the interest of said bondholders to organize a new company or corporation for their benefit upon such terms, conditions and limitations, and in such manner as the holders of a majority of said outstanding bonds should in writing request, and to thereupon reconvey the premises so purchased to said new company or corporation.

Subsequently two judgments were recovered against said company for the sums of $214,405.93 and $3,230.04, respectively, upon which an execution sale was had April 22, 1871, of all the right, title and interest which said company had on January 24, 1871, or at any time thereafter in and to.the said mortgaged premises. Such interest was purchased by Francis H. Tows for $5,000, and in pursuance of an assignment by him of such purchase to the defendant, the New York Elevated Railroad Company, said right, title and interest were duly conveyed to said last-named company.

On May 9, 1871, the said West Side Elevated (Patented) Bail-way, to secure its corporate obligation of that date to pay the sum of $213,949.08 on or before May 11, 1871, executed a certain other mortgage upon the premises heretofore described, and other premises, to wit: All and singular, the said railway, commencing near the Battery on Greenwich street and extending along the same and the Ninth avenue to Sixtieth street, and all property appertaining thereto.

By the terms of this mortgage, the trustee therein named was authorized to foreclose the same, in case of default in the payment of said corporate obligation; Coe and Benedict resigned their trusteeship under the said mortgage of August 1, 1868, and on July 25, 1871, said James A. Cowing was appointed their successor, and accepted the trust created by said mortgage. Subsequently Cowing, as such trustee, foreclosed said mortgage, and a judicial sale was made of the premises therein described on October 5, 1871, and the same was purchased by said Cowing for the sura of $750,000, who, ou that day, received and accepted a deed thereof as trustee for the benefit of all the holders of the bonds secured by the mortgage thus foreclosed. By an order of the court made in said action of foreclosure, said trustee was directed to bid for said premises the sum of $750,000 for the benefit of said bondholders. Cowing, as shown by his receipt annexed to the report of sale in said - foreclosure, received the sum of $734,518.84 as the net proceeds of said sale.

The mortgage of May 9, 1871, was also foreclosed, and a sale made pursuant to its provisions, December 6, 1871, at which the New York Elevated Railroad became the purchaser, aud received the deed of the premises described in said last mentioned mortgage for the consideration of $230,000.

On November 1, 1871, a circular was mailed by Cowing to said bondholders, stating the foreclosure proceedings and sale under the mortgage of August 1, 1868 ; that the title and possession of the property was in him as trustee, with power to hold and convey the same, and inviting suggestions as to the time and manner of selling the same. Plaintiff's testimony as to the non-receipt of this circular is purely of a negative character, and upon the whole proof he must be held to have received it in due course of mail.

Several of the parties (not including the plaintiff), holding a large majority of the bonds, united in a written request and authority to said trustee, dated November 13, 1871, to advertise and sell said road and property for cash at public auction, in trust for the bondholders. In pursuance of such request said road and property were thus advertised and sold January 2, 1872, to the defendant, the New York Elevated Railroad Company, for $100,000, and a conveyance thereof was duly made and recorded. Upon this named sum, as a basis, a cash dividend of $59.62 was declared upon each of said first mortgage bonds; several of the holders whereof purchased stock in the said New York Elevated Railroad Company, for which said bonds were received as part payment according to their dividend value. This privilege, as offered, was declined by plaintiff, who claims that the sale to said company was fraudulently and collusively made, and for an inadequate consideration, and he demands that the property conveyed to said company may be adjudged to be held by it in trust for the benefit of plaintiff and subject to the lien of said mortgage, and that he have judgment against the defendants for the amount of his said bonds and interest by reason of them fraud and- conspiracy and the violation of said trust.

The first question to be considered is that which relates to the rights and liabilities of the defendant, the Now York Elevated Railroad Company.

The purchase by it of all the right, title and interest of the West Side Elevated Railway Company, and the conveyances thereunder upon the execution and mortgage sales of April 22, 1871, and December 6, 1871, have not been impeached.

The company defendant (the New York Elevated Railroad Company) thus acquired an absolute right of property in the northerly half of said road, from Thirtieth to Sixtieth street, and the equity of redemption of the southerly half thereof from Thirtieth street to the Battery, subject to the lien of the first mortgage bondholders, the ownership of said road by said company is full and complete. It is equally clear to my mind that, as between Cowing and the said company, the conveyance of January 2, 1872, was valid and passed a good title to the premises in question. Prior to said conveyance, the legal title was in Cowing under the foreclosure of the first mortgage which, by its terms, precluded the claim of any bondholder to said premises, or the proceeds thereof, except for his jpro rata share of said proceeds as represented in a new company to be formed as thei’ein directed.

The testimony is insufficient to warrant a finding of fraud or collusion on the part of the company defendant. The sale was at auction after due publication and for a valuable consideration, and no covin or concealment is shown to have existed. (Franklin v. Osgood, 14 John., 527; Dillaye v. Commercial Bk., 51 N. Y., 345.) It was urged on the trial that the sale of property for $100,000, which originally costs $950,000, was of itself an indicium of fraud. If that fact stood alone, the good faith of the transaction might be seriously questioned ; but the witness (Harvey), who testified to so high an estimate of value, also admitted that about one-half of said amount was expended in stationary engines, endless chains, and experimental outlays which were of little value, as their use was discontinued. After a review of the evidence, I am not prepared to hold that the price paid for the road was so grossly inadequate as to raise a presumption of fraud.

The next question for consideration is the validity and good faith of the sale as between Cowing and the bondholders.

As a trustee in receipt of compensation for his services, he was bound to exercise ordinary diligence in the management of the trust property. (Litchfield v. White, 7 N. Y., 438; People v. Worton, 9 id, 176.)

Though not responsible for loss while acting in good faith and without fraud, (Thompson v. Brown, 4 Johns. Ch., 619; Brown v. Campbell, Hopkin’s Ch., 233; Pierson v Thompson, 1 Edw. Ch., 212), he is, nevertheless, personally liable for breach, or neglect of duty. (Green v. Winter, 1 Johns. Ch., 26; Duffy v. Duncan, 32 Barb., 587; Story’s Equity, § 1284.)

The proceeds of the property sold was the prhhary fund for the-payment of the bonds in question, and should have been so applied or used in the formation of a new company, as contemplated by the terms of the trust. No such company has been formed ; the incorporation of the company defendant did not meet the requirements of the trust. The proposed company was unquestionably to be formed for the benefit of the bondholders, in which they should have a controlling interest, and not a company in which claims of an inferior class were placed on an equal footing with, the first mortgage bonds.

Moreover, the plaintiff never assented, but refused to acknowledge the company defendant as the corporation contemplated by the trust deed. He, therefore, is not concluded by the sale and conveyance of January 2, 1872, of the corporate property for1 $100,000.

The trust deed did not authorize or contemplate such a sale,, and in such a case it was indispensable that the trustee should have sought the aid and direction of the court. Without any pressing necessity he assumed a responsibility in direct violation of, because not authorized by the trust, and is therefore liable to make good the loss sustained. The trust property is now beyond reach, but its proceeds are yet available as shown by the pleadings, and proofs.

The defendants in their answer state and admit that upon the foreclosure sale of October 5, 1871, “the bid of $750,000 mentioned in the eighth article of the complaint was duly made, and the same was duly paid, allowed and applied in pursuance of the judgment of sale and the terms of the mortgage.”

The referee who made said sale reports the payment to Cowing ■as said trustee of $734,518.84, as the net proceeds thereof, and for which amount he gave a receipt. As against the plaintiff Cowing is bound by these admissions, and is estopped from showing any other or ^different transaction -than that disclosed by the record. (Van Dyke v. Maguire, 57 N. Y., 429; Robbins v. Codman, 4 E. D. Smith, 315.) Judgment is therefore rendered in favor of the New York Elevated Railroad Company for a dismissal of the complaint and in favor of the plaintiff against the defendant Cowing individually, and as trustee for the pro rata ■share or dividend of the said sum of $734,518.84, upon the forty-five bonds now held by him, to wit: The sum of $22,035.15 •and interest. That payment of said sum be made out of said trust funds, or in default thereof by said defendant Cowing individually.

(Signed), R. L. LARREMORE.

The views expressed by the learned justice with regard to the liability of the defendant Cowing meet with our approbation. We regard them as a correct exposition of the law of this case applicable to him upon the facts stated which are supported by the ■evidence. In the mode selected in discharging his duty he did not perform the offices of his trust as he was required to do by the instrument conferring .it, and seems to have lent himself to a ■scheme which was not originally contemplated and not justified in the trust deed. The new company to be organized in accordance with its provisions was, as suggested by the learned justice below, one for the benefit of the bondholders after the purchase by him, and to this new company the trustee was to convey and not sell the franchise. When he designed a conveyance to any •other organization it became his duty to apply for leave to consummate such a transaction, and having omitted to do it necessarily assumed all the consequences of his act. These have been visited upon him by the judgment declared, and he must bear the penalty.

In regard, however, to the defendants, the New York Elevated Railroad Company, we think the learned justice erred.. It is clearly established that that company knew of the trust in. detail. The originators of it were connected with the Westside Elevated Patent Railway Company, and some of the officers and a number of the directors of that company were interested in the company defendant, and the deed of transfer from the trustee recited the trust. The charge then of knowledge by the new company defendant cannot be denied, and whatever that knowledge imposed must be borne by it. It is a well-settled principle of law that a purchase, though for a valuable consideration from a trustee* with knowledge of the trust, carries with it all the obligations of the trust. (Tiffany & Bullard on Trusts, page 107; Perry on Trusts, §§ 217-328; Wormly v. Wormly, 8 Wheaton, 421; Gautier v. Douglass Manuf. Co., 20 S. C. Rep. [13 Hun], 514.) The general doctrine is that wherever there is a misapplication of the assets* and they can be traced into hands affected with notice of such misapplication, a trust will attach upon the property or proceeds, in such hands. (Tiffany & Bullard [supra], 198, and cases cited.)> The defendants, the New York Elevated Railroad Company* having taken by purchase from the defendant Cowing, and in an. unauthorized mode are to be considered as substituted trustees to-the extent of the plaintiff’s claim, and as holding the property-acquired subject to his lien therefor. No other result can be-justly eliminated from the doctrine thus stated, and the judgment in favor of the company defendant was an error which must be corrected. Eor these reasons the judgment entered herein must be affirmed as to the defendant Cowing, and reversed as to the defendant, the company; and as to the latter a new trial ordered* but without costs to either party of this appeal.

Davis, P. J., and Ingalls, J., concurred.

Judgment affirmed as to defendant Cowing, and reversed as. to the Elevated Railroad Company ; and as to the latter new trial ordered without costs of appeal to either party.


text:
    THOMAS BOESE as Receiver, etc., of WILLIAM H. LOCKE, Respondent, v. WILLIAM H. LOCKE AND WILLIAM KING and others, as Assignees, etc., of WILLIAM H. LOCKE, Appellants.

      .Assignments for the benefit of creditors— when a State insolvent law is suspended by the U. S. bankrupt act.

      A statute of New Jersey entitled “an act to secure the creditors an equal and ■ joint division of the estate of debtors who convey to assignees for the benefit of creditors ” provided, among other things, that any creditor who shall fail to exhibit his claim, within three months after the time designated therefor, shall (except in one certain event therein specified) be barred from receiving any dividend from the estate assigned, and that all creditors presenting their claims shall be barred from afterwards maintaining any action at law or suit in equity against the debtor, unless they shall prove fraud in the assignment or a concealment by him of his property. -The debtor was not, however, discharged by the act from his liabilities to those of his creditors who did not present their claims.

      Held, that this act operated as an insolvent law.
    ,(2.) That as such, it was suspended, upon the passage by Congress of the United States bankruptcy act.
    •(3.) That as it operated on all assignments made in New Jersey, an assignment there made for the benefit of creditors, while the bankrupt act was in force, was void. (Davis, P. J., dissenting.)
    Appeal from a judgment, entered upon the trial of this action by tbe court without a jury, setting aside an assignment for the benefit of creditors, executed under and pursuant to the statute of New Jersey, by Wm. H. Locke to the other defendants, and 'directing them to pay the judgment in this action.

      A. P. Whitehead and M. W. Divine, for the appellants.
    'There is nothing whatever in any of its provisions which can be fairly claimed to render the law a bankrupt or insolvent law. Reading the assignment, then, in connection with the statutory provisions to which it refers, we submit that it is, in effect, nothing more than a common law assignment. (Mayer v. Hellman, 1 Otto, 496; Geni. Stats, of Conn., p. 385, § 32, subd. 3; Jn re Hawkins, 34 Conn., 548; Malibie v. Hotchkiss, 38 id., 80; Beck v. Parker, 65 Penn., 262; Thrasher v. Bentley, 59 N. Y., <649, more fully reported in 1 Abb. New Cases, 39; Haas v. O’Brien, 66 N. Y., 597; Shepardson’s Appeal, 36 Conn., 23; In re Winternitz, 4 B. B., 127; Cook v. Rogers, 13 N. B. B., 97; Reed v. Taylor, 4 id., 710; Ex parte Tiegenferss, 2 Ired. [N. C.], 463; Bostxoick v. Burnett, Ct. App. [18 Alb. L. J., 418].) Even-if the fourteenth section is repugnant to the bankrupt law, it is nevertheless the only part of that statute which can be claimed to be so; and if the bankrupt law have any effect upon that statute, it must be limited to that fourteenth section. (Vide authorities above cited; and, also, Burrill on Assignments [3d ed.], § 47 p. 59; Ex parte John Zeigenfuss, 24 N. C., 463; Barber v. Rogers, 71 Penn., 362; Glenn v. Humphreys, 4 Wash. C. C. B., 424; Fisher v. M’Girr, 1 Gray, 22; Commonxoealth v. Kimball, 24 Pick., 361; Morris v. Boston, 4 Met., 288; Ely v. Thompson, 3 Wash. C. C. B., 313; Gibbins v. Ogden, 9 Wheat., 1; City of New York v. Miln,' 11 Pet., 102.) If a State statute infringes the provisions, either of the Constitution of the United States, or of the State, “ it is so far void.” (1 Kent, 449; People v. Platt, 17 Johns., 195; Sturges v. Crowninshield, 4 Wheat., 122; Cohen v. Virginia, 6 id., 414; McMillan v. McNeill, 4 id., 409; Gibbons v. Ogden, 9 id., 207.)

      C. Bainhridge Smith, for the respondent.
    The bankrupt law of the United States, upon going into operation, suspended all action upon future cases arising under the State insolvent laws, and all proceedings under the latter, while such bankrupt law exists, are null and void. {(Griswold v. Pratt, 9 Mete. B., 16; Judd v. Ives, 4 id., 400; Ex parte Fames, 2 Story B., 322; 8. C., N. Y. Legal Obs., 212; In re Holmes, id., 211; S. C., 5 LawB., 360; Ex parte Jacobs, 12 Abb. [N. S.], 273; Van Nostrand v. Carr,, 30 Maryl. B., 128; Martins. Berry, 37 Calf., 208; Commonwealths. O’Hara, 6 Am. L. B., 765; Bays. Bar dwell, 97 Mass. B., 246; In re Reynolds, 8 B. I. B., 485; Chamberlins. Perkins, 51 N. H., 336; Mayer s. Heilman, 1 Otto B., 496; Sturgis s. Crowinshield, 4 Wheat., 122; Ogden s. Saunders, 12 id., 496.) The statute of New Jersey under which the assignment in question was executed is both an insolvent and a bankrupt law. (Burrill L. Die., title Bankrupt Law; id., Insolvent Law; 2 Steph. Com., 189-193; Wilsons. Day, 2 Burr, 829; 1 Dana Abridg., 317; Sackett s.

      Antlross, 5 Hill R., 331-341.) It acts upon the person as well as upon the property of the debtor, and this is the characteristic feature which distinguishes an insolvent or bankrupt law from a law merely regulating the disposition of the debtor’s property. (Gris-wold v. Pratt, 9 Mete., 16, and cases cited, supra.) The assignment in question is fraudulent and void under the laws of the State of New York. The statute, under which it is made, is equivalent to a stipulation for a release, as a condition of receiving a benefit under it, and the surplus is to be returned to the debtor, in exclusion of non-releasing creditors. (Hyslop v. Clark, 14 J. R., 458; Austin v. Bell, 20 id., 442, 448; Wakeman v.. Grover, 4 Paige, 23, 36, 38; 8. C., 11 Wend., 187, 202, 205; Goodrich v. Downs, 6 Hill, 438; Burrill on Assignments, 2 Ed., 175.) A statutable conveyance made under the authority of any Legislature cannot operate on any property except that which is within its own territory. (Story on Confl. of Laws, §§ 414-416.) The proceeds cf the assigned property arc within this State, and they are subject to its laws. {Kelly v. Crapo, 45 N. Y. R., 86; Varnum v. Camp, 1 Green, 326 ; Moore v. Bonnell, 2 Vroom, 90 ; Bentley v. Whitemore, 19 N. J. Eq., 462; Gillman v. Howell, 35 N. Y. R., 657; Ingraham v. Geyer, 13 Mass., 146; Zipsey v. Thompson, 1 Gray, 243.)
   Brady, J.:

On the 23d September, 1875, the defendant Locko made and delivered to the other defendants an assignment of his property, in trust, to take possession of and collect, and to sell and dispose of the same, at public or private sale, in their discretion, and to distribute the proceeds to and among the creditors of the assignor in proportion to their several just demands, pursuant to the statute in such case made and provided. The defendant Locke was at the time of the assignment a resident of New Jersey, and the statute referred to in the clause quoted was one of that State passed April 16, 1846, entitled “ an act to secure the creditors an equal and just division of the estate of debtors, who convey to assignees for the benefit of creditors.” The statute provides, among numerous other things, that if any creditor shall not exhibit his, her, or their claim within the term of three months after the time designated therefor, such claim shall be barred of a dividend, unless the estate shall prove sufficient after the debts exhibited and allowed are fully satisfied, or such creditors shall find some other estate not accounted for by the assignee or assignees, before distribution, in which case such barred creditor shall be entitled to a ratable proportion therefrom. (Section 11.) It also provides by section fourteen that although nothing in the act shall be taken or understood as discharging the debtor or debtors from liabilities to their creditors who may not choose to exhibit their claims, either in regard to the persons of such debtor, or to ány estate, real or personal, not assigned, yet with respect to the creditors who shall come in under the assignment and exhibit their demands for a dividend, they shall be wholly barred from having afterwards any action or suit at law, or in equity against such debtor ox their representatives, unless they shall prove fraud on the part of the • debtor “ with respect to the assignment, or concealing his estate, real or personal, whether in possession, held in trust or otherwise.” It will be perceived on examination of these provisions that they are at utter variance with the effect of a common law assignment for the benefit of creditors, either with or without preferences: In the first place the assigned estate is given to the creditors who come in and prove their claims, to the exclusion of the others, until the debts of the former class, allowed, are fully satisfied, unless a creditor who did not present his claim shall find some other estate not accounted for by the assignee or assignees before distribution, in which case such barred creditor shall be entitled to a ratable proportion therefrom. In the next place it is declared that the creditors who shall come in under any assignment and exhibit their demands for a dividend shall, as we have seen, be wholly barred from having any action, unless upon proof of fraud “with respect to the assignment, or concealing his estate, real or personal, whether in possession, held in trust, or otherwise.” The estate is therefore by the statute distributed among the creditors, only who- exhibit their claims for a dividend, and not generally; and upon those who receive the pro rata distribution, the statute operates as a release, and forever bars their remedy against the person and estate of the debtor or assignor. This is the condition upon which the creditor is paid his portion of the estate. These inhibitory and prohibitory provisions are not the characteristics of a common law assignment for the benefit of creditors. Such an instrument must be absolute and unconditional, imposing no coercive terms upon creditors for the advantage of the assignor as the condition of receiving its benefits. (Burrill on Assignment, 256, and numerous cases cited.) The statutes relating to insolvency, generally, and indeed uniformly provide either for the exoneration of the debtor from imprisonment, or from his debts on executing the assignment prescribed by the statute under which his application is made. No debtor could make a valid assignment at common law which would exact from the creditor a discharge, either relating to the person, property or liability of the debtor, as a condition of receiving a portion only of his debt, and the statute under consideration tested by that rule cannot be regarded as other than an insolvent law by which persons, unable to pay their debts, can secure immunity from prosecution by such of their creditors as accept a stipend under a distribution of the assigned estate among creditors. No debtor would be allowed either to declare, by way of assignment, that unless his creditors presented their claims within a certain time his estate should be given to those who came in within the period limited, and judged by this test the statute is an insolvent law designed to accomplish, what the debtor could not effect by any act of his own. In the elements of a prescribed period for the presentation of claims and the discharge provided for, the statute referred to assimilates to the insolvent laws of this State, and of the States of the Union in general. The statute in effect prohibits any assignment which is not to be followed by the results stated. It does not in express terms, but does by necessary implication, and accomplishes in that mode the prohibition. It declares that every assignment shall be made for the equal benefit of creditors, in the proportion of their several demands to the net amount that shall come to the hands of the assignee for distribution and prohibits preferences; and then provides what shall be done in relation to such assignments, including the provisions in the sections already stated and discussed. The effect is to compel an assignment in a particular mode, and to arrange the distribution of the property assigned, and the consequences of such distribution to debtor and creditor. It is true that no one is compelled to present his claim; but that does not at all affect the •character of the statute, because the conditions of acceptance remain and its coercive feature still exists. The question then ■springing from this view is whether the assignment is void, as in ■contravention of the bankrupt law which suspended the insolvent laws of the several States. The assignment, it is found by the ■court below, was made in good faith and without any intent to hinder, delay or defraud creditors, and with the intent bona fide "to make an equal distribution of the proceeds of the assigned ■estate among the creditors of the assignor, in conformity with the requirements of the Legislature. It may be said in addition that it was made in the only mode allowed by law in New Jersey, where it was executed. The precise question suggested has not been disposed of by the court of last resort in this State. It was held in Thrasher v. Bentley (59 N. Y. R., 649) that an assignment for the benefit of creditors by an insolvent debtor which .gave no preferences, no proceedings in bankruptcy having been taken against him, was not void as in hostility to the bankrupt law, and this adjudication was a result declared, conceding the law of 1860 of our own State to be suspended by the bankrupt law, and for the reason that an assignment for the benefit of creditors was not created by the act of 1860, but existed at common law.

The decision of the Supreme Court of Connecticut in Hawkins’s Appeal (see 34 Conn., 548) was approved. In the later case of Haas v. O’Brien (66 N. Y. Rep., 597) it was again declared that such an assignment made in good faith, without intention to defeat the object, impair or impede the operation, or evade any of the provisions of the bankrupt act, and which transferred all of the insolvent’s property without preference, was not a violation of the spirit and intent of said act, and was not void per se.

It was also held in that case, that the validity of an assignment was not affected by the fact that proceedings in bankruptcy were taken against the assignor within six months, and that the bankrupt act was not intended to interfere with the action of a debtor who, in good faith, without any fraudulent intent, voluntarily sought to apply his property to the payment of his debts in equal proportion, precisely as it would have been applied had proceedings been taken under that act. (See, also, the latest case, Bostwick v. Burnett, 18 Alb. Law Jour., page 418, to same purport.) In these cases the distinction between an insolvent act of the Legislature, per se, and an act regulating to some extent a voluntary assignment for the benefit of creditors was not discussed ; indeed, was not at all considered. It was not necessary that it should be, because the sphere of such an instrument was not enlarged, and there was no new force or effect given to it by the statute which related to its form and execution merely and not to its effect. The question was not discussed or considered either by the Supreme Court of Connecticut in Hawkins’s Appeal (supra), nor in the case of Maltbie v. Hotchkiss (38 Conn., 80), but seems to have been considered and disposed of in the case of Geery’s Appeal (43 Conn., 289) by a divided court, in which one of the judges concurred, with hesitation, in the judgment pronounced, and from which two of them dissented. It was conceded that the question was a close one, by no means free from doubt and difficulty, and that there was a conflict of decisions upon the general subject of the effect of the bankrupt act in reference to acts of insolvency. In the case of Shepardson’s Appeal (36 Conn., 23), which was an appeal from a decree of a probate court appointing a trustee in insolvency' on the estate of the appellant, in insolvent proceedings against him by his creditors under the insolvent law of the State, Park, J., stated in his dissenting opinion that if the debtor owed more than $300 (which was the lowest sum fixed for the application of the bankrupt act), the majority of the court conceded that the probate court had no jurisdiction of the case, because the bankrupt act then applied and suspended the insolvent act in cases of involuntary insolvency.

The question discussed seems to have been more distinctly presented in that case, than any of the other cases in Connecticut to which our attention was called. These adjudications are considered with more particularity because they were more prominently relied upon, with the exception of the case of Meyer v. Hellman, to which reference will be made, and were more prominently presented upon the argument than any other.

The writer of this opinion had occasion to examine a kindred question, and upon the consideration of the authorities, which. were found to be conflicting, arrived at the conclusion that the power conferred upon Congress by the Constitution to establish a uniform system of bankruptcy throughout the United States, having been exercised by the enactment of a law for that purpose, on the 2d of March, 1867, that law became paramount and exclusive, and suspended the operation of the insolvent laws of this State over all cases within its purview. (See Shears v. Solhinger, 10 Abb. [N. S.], 287, and cases cited.) It was stated in the case just mentioned that the converse of these propositions, if declared, might lead to conflicts between the State and Federal authorities in the administration of their powers over the same subject-matter in reference to which both had the right to legislate, and that the State law yielded therefore. In the case (supra) decided by our Court of Appeals, as already suggested, the distinction between an insolvent law jper se, and an act of insolvency, voluntary on the part of the debtor, and controlled by the rules of the common law, was not discussed. In the case in the 10th Abbott (supra), the question was distinctly presented, because the debtor had obtained a discharge from his debts under • an insolvent law of this State known as the “two-third act,” and which provides for a voluntary application by an insolvent, aided by consent of his creditors to the amount of two-thirds of his indebtedness, and "the discharge obtained in which, not only as to them, but as to the other third not assenting, operates as a release of the debts due. It may be here observed that the statute of Connecticut, on the .subject of voluntary assignments for the benefit of creditors, does not contain provisions kindred to those found in the statute of New Jersey, to which reference has already been made, and by which the whole subject, namely, the assignment and the disposition of the assigned assets, and the consequences, are regulated and determined. The case of Mayer v. Hellman (1 Otto, 496) does not sustain the appellant's view. The assignment considered in that case was one made for the benefit of creditors in the State of Ohio, and it appeared that there was a statute in that State regulating the mode of administering assignments for the benefit of creditors. It was held, however, that that statute did not in terms compel, or even authorize assignments, but assumed that such instruments were conveyances previously known, and pro-Tided only a mode by which the trust should be executed ; and, further, that there iyas nothing in the act resembling an insolvent law. It did not discharge the insolvent from arrest or imprisonment, and left his after-acquired property to his creditors precisely as though no assignment had been made. It was said, indeed, that the provisions for enforcing the trust were such as a court, of chancery would apply in the absence of any statutory provision, and further that the assignment must be regarded as though the statute of Ohio had no existence. There is a wide difference therefore between the act of the Legislature of New Jersey and that of Ohio, as we have seen.

There is no doubt, as suggested by the Supreme Court in Connecticut, that the subject discussed is not free from difficulty, and that there are conflicts in the adjudications relating to it; but. nevertheless, for the reasons assigned, the conclusion seems to be inevitable .that an insolvent law, created by act of the Legislature, in regard to assignments for the benefit of creditors, such as the statute of New Jersey (supra), is in conflict with the bankrupt law of the United States.

For these reasons the judgment must be affirmed.

With some hesitation I concur, Ingalls, J.

Davis, P. J., dissented.

Judgment affirmed.