text:
    John J. Goodrich, Resp’t, v. John Gillies, Impl’d, App’lt.

      (Supreme Court, General Term, First Department,

      Filed December 31, 1891.)
    1. Municipal cobpobations—Lien upon moneys due upon contbact.
    In order to entitle a party to file a lien under § 1824 of the Consolidation Act he must either have performed labor or furnished material toward the performance or completion of a contract made with the city; and such work must he performed or material used in the execution and completion of the contract.
    2. Same.
    In the absence of a finding that the material furnished by the plaintiff' was actually used in the performance of the contract with the city, he is not entitled to a judgment impressing alien on the funds of the contractor in the hands of the city.
    Appeal from judgment of the special term.

      Thomas F. Magner, for app’lt; G. 8. Hastings, for resp’t.
   Van Brunt, P. J.

This action was brought to foreclose am alleged lien of the plaintiff upon moneys in the hands of the-comptroller of the city of Rew York, and due from said city to-the defendant Gillies upon a contract between him and the city to build a pier and bulkhead at the foot of Rivington street, East, river.

Upon the trial of the action the court found that the plaintiff' was a -dealer in builders and contractors’ materials, having a place of business in the city of Rew York; that on the 23d of April, 1889, the plaintiff made a proposal to the defendant Gillies to-furnish certain material; that on the 26th of April the defendant Gillies accepted the proposal with a modification; that in pursuance of the agreement the plaintiff did furnish and deliver to-the defendant Gillies certain sticks of timber and material of a certain value; that the defendant Gillies has failed to pay the claim of the plaintiff for said merchandise, and that there was-justly due on the 15th of July, 1889, for the material delivered by the plaintiff and accepted by the defendant Gillies a sum stated that the defendant Gillies had at the time of the agreement and , delivery of the merchandise pursuant to the agreement, and at. the time of filing the notice of claim thereinafter mentioned, entered into a certain contract with the defendant, the Mayor, etc.,, for building a wooden pier on the East river; and that at the time-of the filing of the notice of claim by and on behalf of the plaintiff as thereinafter set forth, certain moneys in control of the defendant, the Mayor, etc., were due and to grow due to the defendant Gillies under said contract; that on or about the 15th-of August," 1889, before the completion of the whole work to be performed by the defendant Gillies, and while said moneys; were due and owing to said defendant Gillies on account of said work of construction, the plaintiff duly filed a notice of his claim in the form required by law for the perfecting of a lien against, the city of Rew York upon the said moneys so due to said defendant Gillies; that the comptroller of said city duly entered the-claim described in said notice in a book kept for that purpose by him, called the lien book, and that neither the lien nor the claim upon which the same is founded had been paid, waived, satisfied or discharged, and that no other proceedings had been commenced for the foreclosure of said lien, or the recovery of said demand, and that one Murray had some interest in or lien upon the moneys; which was subsequent to the plaintiff’s. „ And the court, as conclusion of law, adjudged that the plaintiff has a lien to the extent. of the value of the merchandise furnished, upon the money due on said contract between the Mayor, etc., and the defendant Gillies, with costs, and the defendant, the Mayor, etc., and the comptroller of said city were adjudged to pay to said plaintiff the amount due to said defendant Gillies.

From this judgment, this appeal is taken by the defendant Gillies.

Various objections -in support of the appeal were urged, arising upon the evidence which it was claimed was introduced upon the trial, and brought up by exceptions to the findings of the court But as we have been unable to find in the case any statement that all the evidence given upon the trial is contained within it, questions of fact are not before the general term for review; and the only questions which we can properly consider are those of law. Howland v. Howland, 20 Hun, 472; Spence v. Chambers, 39 id., 193; Davis Sewing Machine Co. v Best, 50 id., 76; 23 St. Rep., 876; Wellington v. C. C. & I. C. Co., 52 Hun, 408; 24 St. Rep., 678; Murphy v. Board of Education, 53 Hun, 171; 25 St. Rep., 154; Brayton v. Sherman, 28 id., 854; Porter v. Smith, 107 N. Y., 531; 12 St. Rep., 479; Halpin v. Phenix Ins. Co., 118 N. Y., 165; 28 St. Rep., 788; Aldridge v. Aldridge, 120 N. Y., 614; 31 St. Rep., 948.

There are no questions of law presented by exceptions to evidence. But the exceptions to the conclusions of law of the learned court bring up for review the question as to whether the facts found by the court sustain those conclusions; and it will be seen by a brief examination of the law under which this lien is claimed that they do not.

Section 1824 of chapter 410 of the Laws of 1882, provides as follows:

“Any person or persons who shall hereafter as laborer, mechanic, merchant or trader, in pursuance of or in conformity with the terms of any contract made between any person or persons and the city, perform any labor or furnish any material toward the performance or completion of any contract made with the city, on complying with the next section, shall have a lien for the value of such labor or material upon the moneys in the control of' the city, due or to grow due upon said contract with said city, to the full value of such claim or demand.”

The next section reads as follows: “At any time before the whole work to be performed by the contractor for the city is completed or accepted by the city, and within thirty days after the same is so completed, or accepted, any claimant may file with the head of the department or bureau having charge of said work, and with the comptroller, notices containing, amongst other things, a statement that the work was done and materials were furnished to the contractor and were actually performed.or used in the execution or completion of said contract with said city; but no variance as to the name of the contractor shall affect the validity of said claim or lien.”

Then follow various provisions in reference to the docketing of the lien, and a provision that any claimant who has filed the noticé in question may enforce his lien against the fund therein designated ■and against the person or persons liable for the debt by a civil action in any court of competent jurisdiction.

It will thus be seen that in order to entitle a party -to file a lien, he must either have performed labor or furnished material toward the performance or completion of a contract made with the city ; .and such work must be performed or material used in the execution and completion of the contract. And these requisites are absolutely essential to the existence of a lien and in their absence no lien can be acquired.

It is, therefore, necessary, in order ,to establish a lien as against -the fund, to establish these facts. And in order to entitle the court to grant a judgment enforcing the lien these facts must appear.

In the findings of the learned court upon which the judgment in this action was based, there is no finding that a single particle •of this merchandise which was furnished by the plaintiff to the •defendant Gillies was furnished towards the performance or completion of any contract made with the city, or that any part of these materials were used in the execution and completion of any •contract with the city.

It is true the court found that the defendant Gillies had a contract with the city and that the plaintiff furnished material to the defendant, but there is no intimation or finding that this material was furnished for the completion of that contract or had any connection with it; except, perhaps, as it is stated in the lien filed, that all of the materials specified therein had actually been used in the execution and completion of the contract between the defendant Gillies and the city. But this allegation of the notice of ■claim is not found by the court to be true and the findings are .silent in this respect.

It is undoubtedly true that the court may look into the evidence to support a judgment where there is no express finding upon a particular point. Marvin v. Iron Mining Con 55 N. Y., 547. But as the case at bar, as already stated, nowhere shows upon its face that all the evidence is contained in the record, the •court cannot examine this imperfect record for the purpose of determining whether there is evidence sufficient to justify the finding which is necessary to support the judgment. Upon this point, therefore, the appeal comes up upon the judgment roll alone.

We think, therefore, that without a finding showing that the material was actually used in the work of the city no lien could be filed, and the plaintiff was not entitled to a judgment impressing a lien upon the funds of the defendant Gillies in the hands of the city.

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

Barrett and Daniels, JJ., concur.


source: Caselaw Access Project

author: Barrett, J.

license: Public Domain

text:
    Ruth Torbett, Resp’t, v. Parke Godwin, App’lt.

      (Supreme Court, General Term, First Department,

      Filed December 31, 1891.)

      1. Business corporations—Liability op directors por signing false report.
    A director of a corporation organized under chapter 611 of the Laws of 1875 who has signed a false report, filed pursuant to the act, is not liable, under § 21, for debts of the corporation contracted before the report was made.
    2. Same—Evidence.
    In an action against a director to charge him with liability under such section, it is error to admit in evidence the record of a judgment recovered against the corporation, as the recovery of such judgment is neither conclusive nor prima facie evidence of the debt.
    Appeal from a judgment in favor of the plaintiff entered upon a verdict had at circuit, and also from an order denying the defendant’s motion for a new trial.

      Nelson Smith (with him L. G. Waehner, of counsel for def’ts in like cases), for app’lt; W. W. Badger, for resp’t.
   Barrett, J.

The plaintiff brings this action as the assignee of five employees of a corporation known as The American Opera Company, Limited, to recover from the defendant the claims of these employees against such corporation. It is sought to charge the defendant as a director of the company under § 21 of chapter 611 of the Laws of 1875, pursuant to which act the corporation was organized. The section referred to reads as follows :

“ If any certificate or report made, or public notice given by the officers of any such corporation shall be false in any material representation, all the officers who shall have signed the same shall be jointly and severally liable for all the debts of the corporation contracted while they are officers thereof.”

The first point presented by -the appellant is that this section of the statute does not apply to a liability contracted by the corporation before the report was made. As matter of fact the liability matured before the report was filed. The contracts with the plaintiff’s assignors were made on the 1st day of July, 1886. The breach occurred on the 11th of December, 1886, and the report was filed on the 20th of January, 1887.

It is apparent at the outset that the plaintiff’s assignors were not prejudiced or affected in the slightest degree by the filing of this report. Their contracts were not made, nor were their services rendered upon the faith of it. It was not, in fact, in existence until after their claims had matured. They have, therefore, no possible claim, legal or equitable, against the defendant, except such as the statute expressly gives them.

Now this statute is highly penal, and the plaintiff must, therefore. show, as was said by Danforth, J., in Van Dyck v. McQuade, 86 N. Y., 56, “ that the words of the statute distinctly enact that, under the circumstances, the penalty has been incurred, or that there has been a clear intent to embrace it.” Provisions of this character must be strictly construed, and they cannot be extended by implication. Potter’s Dwarris, page 245, and cases there cited. We have said that this section is “ highly ” penal, and we have used the expression advisedly. It seems to have been taken literally from the manufacturing act of 1848, chap. 40, § 15, except that the'expression, “ knowing it to be false,” which, in the latter act, follows the words “who shall have signed the same,” are •omitted. Thus the penalty which formerly attached to downright fraud is now imposed upon mere negligence or inadvertence. A penalty is defined to be a punishment inflicted by a law for its violation. Bouvier’s Law Dictionary, vol. 2, page 399. Certainly the canons of construction should not be strained to add one iota to the punishment here inflicted, or to extend its sphere.

We think that neither the words nor the spirit of this § 21 •cover debts of the corporation contracted before the making of the •certificate or report. Looked at grammatically, the language used refers to debts contracted in the future and not to those contracted in the past. The director is not made liable for all the -debts of the corporation, but only for all those “ contracted while they are officers thereof.”

What does that mean but contracted while they remain officers thereof; that is, contracted during the period of their continuance in -office?

And why should we construe this sentence so as to make it read “ contracted while they were or are officers thereof ? ”

That would not be construing the statute, but altering it. See In re Sneezum, L. R., 3 Ch. Div., 472, and Underhill v. Longridge, 29 L. J., M. C., 65, cited in Van Dyck v. McQuade, supra.

This interpretation is emphasized by the use of the preceding ■words “ who shall have signed the same.” That implies a looking backward (after the debt has been contracted) for the subjects of liability. The words “ shall have” were, in this connection, quite unnecessary unless the legislature contemplated debts contracted by the corporation after the making of the report.

What they mean is this: That as to debts thereafter contracted, the officers who shall have signed .the false report, and who are still in office, shall be liable. Otherwise the legislature might as well have said, in plain words, that all officers “ signing the report shall be liable for all debts of the corporation contracted during their entire term of offi'ce.” But this the legislature has not said, certainly not in so many distinct words, and there is no clear intent to embrace such a sweeping liability as would be comprehended within the words which we have para-phased. The literal meaning is reasonably plain, but even if it were doubtful, the plaintiff must fail under the canons of construction with regard to penal statutes already referred to.

We, think, however, that a consideration of the entire act, read in the light of its object and purpose, renders our construction still clearer.

This purpose was defined by Judge Bapallo, in Pier v. Hanmore, 86 N. Y., 101, as follows: “The purpose for which the .annual reports are required to be published is that the public may be .correctly informed of the financial condition and re•sources of these companies, in order that they may judge of the credit to which they are entitled.”

This doctrine was amplified by Mr. Justice Daniels, in Walton v. Godwin, 58 Hun, 91; 33 St. Rep., 886, where this language was used: “ The report has evidently been required as information to the public concerning the financial condition and responsibility of the corporation. This information is intended as a security to persons dealing with' the company. And whatever would materially affect their judgment in their dealings should be regarded as a material representation in the report itself, but if a report proves to be untruthful in representations which would have no effect whatever upon the judgment or ■conduct of persons dealing with the corporation, such representations could not be consistently held to be material. And it must be by this criterion that the question of the liability of the persons signing the report should be determined, for if it contains untruthful statements, and those statements appear to be so entirely unimportant that they would not affect in the least degree the credit of the company or the conduct of persons dealing with it, then they cannot legally be held to be material misrepresentations.”

The construction to be given to the section in question should, if possible, be in harmony with its object and purpose as thus ■defined. That will be accomplished by confining the liability to cases where credit may possibly have been given to the corporation upon the faith of the report. In other words, to debts ■contracted after it is filed.

This gives force also to the word “ representation ” as used in the section. That section does not read, false in any material “statement” or material “fact,” but false in any material “representation.”

Representation implies an object addressed.

Representation to whom, then?

Plainly, to any one who contemplates trusting the company .thereafter.

And this view is reinforced by the fact that the false representation which creates liability is not limited by the section to a cerifícate or report, but may be embodied in any public notice given by the officers of the company.

Shall it be said, then, that for any negligent or inadvertent publication the officers of the company are to be mulcted, not only for the possible consequences of such publication, but for debts -contracted before it was thought of?

These views are further strengthened by the non-adherence of ■the court of appeals, in several cases, to the literal wording of penal provisions contained in the act of 1848, and by a fair construction of such provisions in the interest of reason and good sense, and to prevent oppression and injustice.

Thus, in Garrison v. Howe, 17 N. Y., 458, it was held that to -charge the trustees with individual liability for a debt of the corporation, by reason of the failure to file the annual report required by law, such debt must have been payable during a default, and that the signing of the contract (under which the company subsequently became liable) during the period of such default was not enough.

Denio, J., speaking for the court,said that “if the statute were simply a remedial one, it might be said that the plaintiff’s case was within its equity; for the general object of the law doubtless was, besides enforcing the duty of making reports for the benefit of all concerned, to enable parties dealing with the corporation to see whether they could safely do so.”

So, in Boughton v. Otis, 21 N. Y., 261, it was held that although the statute said that “ all the trustees ” of the company shall be-jointly and severally liable for “all the debts of the company then existing and for all that shall be contracted before such report shall be made,” yet, that such trustees were not so liable for debts contracted after their retirement from office, and that new trustees coming into office after a default are liable only for such debts as are contracted while they are in office. In this case it was said that a literal interpretation would give to the language a broader significance than the legislature intended, and that “ the equity and good sense of the statute” must prevail.

The latter rule was again applied in Shaler & Hall Quarry Company v. Bliss, 27 N. Y., 299, Selden, J., observing that the “ object of the provision, so far as relates to creditors or persons dealing with the corporation, appears to have been to give such notoriety to the pecuniary condition of the company, through the publication of its annual statements, as to deprive it of credit if if shall be unworthy of it.”

There is still another consideration which should be adverted to,, for it seems crucial. We find that when the legislature, in the act under consideration, thought proper to include debts contracted in the past, it used unmistakable language! For instance, in § 18, providing a penalty for failure to file a report, the language is, that “if any corporation shall fail to do so, all the directors thereof shall be jointly and severally liable for all the debts of the corporation then existing, andfor all that shall be contracted before such report shall be made.”

So in the next section (19) with regard to the declaration of a dividend when the company is insolvent or embarrassed. There it is provided that the directors voting in favor of declaring such dividend shall he jointly and severally liable for all the debts of the corporation “ then existing, and for all that shall be thereafter contracted while they shall respectively continue in office.”

Substitute for the latter phraseology that used in the section under consideration, namely, that the directors who shall have. voted for the dividend shall be jointly and severally liable for all! the debts of the corporation contracted while they are officers thereof Could it be successfully contended that the then existing debts, (contracted while the same directors were in office), would be covered by this substitute ? And if such contention were made,, would not he who made it have to stand, not upon the literal words of the statute, but upon the more reasonable position that existing debts were as much affected by an improper reduction of the company’s assets as debts subsequently contracted, and that for that reason it must have been the intent to embrace such existing debts?

And is not this latter suggestion a perfect answer to the question, why were the words “ then existing ’’ and “ thereafter contracted ” used in the one section and not in the other? Is it not ■apparent that, in the one case, existing debts would necessarily be affected by the fraudulent act of the directors, and, consequently, they were distinctly specified, while in the other such existing debts would not be affected by the false report, and consequently they were omitted ?

We think it is quite evident, in view of these divergences of phraseology, that the legislature here intended to convey different meanings by the use of different words, and thereby to widen or narrow the sphere of penal action accoi’ding to the legislative view •of what varying circumstances called for.

Looking, then, at the statute as a whole, we perceive a distinct and reasonable policy with regard to these reports. That policy proceeds upon two lines. First, to require a report and to punish the omission to file it. Second, to require accuracy in the report when filed and to punish material inaccuracy.

To secure compliance with the first requirement, a continuous punishment is inflicted. The directors are made liable for all debts contracted until they obey. Every day that they fail in their duty is a day of continuous liability. It is thus that the law enforces its mandate. When, however, the main requirement is complied with, the liability resting upon non-action ceases, and a penalty adequate to redress an infraction of the second requirement is prescribed. The latter penalty has relation to the wrong to be then redressed. That wrong consists in the possibility of credit being given to the company on the faith of the report. Past credit is not affected by the misfeasance, nor is the existing creditor concerned therewith. Thus, the intention was, first, to compel the filing of the report, to make the directors liable for all debts in case of failure in this particular, and to continue this liability until compliance; then, upon compliance, to create a new liability in favor of all subsequent creditors who might possibly be affected by the falsity of any material representation in the report as filed.

Such is our conclusion upon both the words and the intent of the statute. Any other conclusion would not only be contrary to these words and to this intent, but it would create a double penalty where the failure to file the report was followed subsequently by inaccurate compliance. For instance, the directors who fail to file a report, as required by law, are made liable for all debts then ■existing and for all that shall be contracted before the report is filed. JSTow, according to the plaintiff’s contention, when the retarded report is filed, if it be inaccurate the same directors are again made liable to a new penalty for the same previous debts covered by the first penalty. This surely could never have been intended, while the construction which we have given to the sectian under consideration harmonizes the devised system and leaves, each section to work out what it was designed to effect.

In view of the conclusion thus arrived at, it is unnecessary to pass upon the numerous other questions presented. We may say, however, that we might not have felt justified in reversing the judgment on the second point presented, namely, the non-assign-ability of the penalty. It is true that the question does not seem to have been squarely presented to the court of appeals by the record in any of the cases. Bolen v. Crosby, 49 N. Y., 187; Pier v. George, 86 id., 613; Stokes v. Stickney, 96 id., 327; Brackett v. Griswold, 103 id., 428; 4 St. Rep., 219. But the dicta are so numerous, and from so many distinguished sources, in favor of the assignee’s right, that we should have hesitated before expressing a contrary opinion. It may be difficult to appreciate the distinction between ownership of the debt by direct assignment and ownership by legal devolution. The effect would seem to be equivalent, whether the debt comes to the owner by transfer from the living or by representing the dead. Yet it is said, that while in the latter case the owner of the debt cannot maintain an action for the penalty, an assignee can. In our judgment the debt merely measures the penalty, and that is the true reason why the penalty does not survive. If the penalty, instead of being measured by the debt, had been a fixed sum recoverable bjr each creditor, without regard to the precise amount of his debt, probably it would not have been suggested that even an assignee of the debt could recover such penalty. But we need not pursue this subject further, as the judgment must be reversed, not only upon the question already discussed, but upon still another ground.

We think the admission of the judgment recovered by the present plaintiff against the company was error*. It has been expressly held by the court of appeals that in actions of this character proof of the recovery of such a judgment is neither conclusive nor prima facie evidence of the debt Miller v. White, 50 N. Y., 137. This case has since been followed and its doctrine reaffirmed. McMahon v. Macy, 51 N. Y., 155; Rorke v. Thomas, 56 id., 565. These cases were distinguished, but in no respect overruled or even questioned, in Stephens v. Fox, 83 N. Y., 313, and Allen v. Clark, 108 id., 269; 13 St. Rep., 609. On the contrary, Miller v. White was referred to with approval in both of these later cases. Stephens v. Fox was the case of a stockholder wlm was indebted to the corporation to the amount unpaid upon his. stock. The creditor sought to recover that indebtedness in satisfaction of his claim against the company. It was held that as the creditor claimed through the company and was simply subrogated to its claim against the stockholder, the judgment was admissible. “A judgment,” said. Rapallo, J., “against the corporation, being the highest evidence against it, should be as effectual to pass its-title to the fund in question (the fund being the company's claim against the stockholder for his unpaid assessment), as a deed or any other form of transfer.”

In Allen v. Clark, the judgment was for costs recovered against. a manufacturing company, plaintiff, by a defendant in an action brought by it. It was held that this judgment was a debt of the company which it was under the same obligation to pay as any other debt. The reason upon which the decision in Miller v. White is based, “ can have,” said Earl, J., “no application to a case like this, where there was no liability on the part of the company to pay the costs antecedently to or independently of the judgment”

In the present case, the plaintiff introduced evidence tending to support the claims upon which this judgment was recovered. But the learned judge did not submit this evidence to the jury. On the contrary, he held that the defendant was concluded by the judgment, and instructed the jury that if the plaintiff was entitled to recover, it should be the amount of the judgment including interest and costs.

The judgment and order appealed from should be reversed and a new trial granted, with costs to the appellant to abide the event.

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


text:
    Jessie Watson, Resp’t, v. Parke Godwin, App’lt.

      (Supreme Court, General Term, First Department,

      Filed December 31, 1891.)

    Appeal from a judgment in favor of the plaintiff, entered upon a verdict had at circuit, and also from an order denying the defendant’s motion for a new trial.

      Nelson Smith, for app’lt; W W. Badger, for resp’t.
   Barrett, J.

For the reasons stated in the opinion handed down herewith, in the case of Ruth Torbett against the same defendant, the judgment and order appealed from should be reversed and a new trial ordered, with costs to the appellant to abide the event.

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


author: Daniels, J.

text:
    In the Matter of the Application of George W. McLean, Rec’r of Taxes, Resp’t, v. Walburger Horn et al., Adm’rs, App’lts.

      (Supreme Court, General Term, First Department,

      Filed December 31, 1891.)

    1. Taxes—Personal—Executors and administrators.
    An assessment for personal property against executors or administrators by name, “ as administrators, etc., of the estate of,” is not an assessment against the estate, but against the administrators as such, and is valid.
    2. Same—Misnomer.
    A misnomer of one of the administrators is not sufficient to invalidate the proceedings.
    Appeal from an order directing the commitment of the appellants to the jail of the city and county of Hew York until they shall have paid the amount of a personal tax imposed upon them in the sum of $394, anrl the sum of eighteen dollars for the lawfui interest thereon, and the costs and disbursements of tire-proceedings.

      John Fennel, for app’lts; John Q. H. Meyers, for resp’t.
   Daniels, J.

The petition upon which the application was- ■ founded states the assessment to have been made and the tax imposed, for personal property, upon the respondents as the ad ministrators, with the will annexed, of Felix Horn, deceased, and that the anterior proceedings provided for by the statute had been taken for the collection of the tax without obtaining that result, and thereupon the application was made for the punishment of the appellants pursuant to § 857 of chapter 410 of Laws of 1882. The application was resisted solely upon the ground that the-assessment was unlawfully made on account of being made against, the estate and the misnomer of Anna Fennel, one of said administratrices. This misnomer consisted in giving her name as Anna.Fennel, instead of Anna Fennel.

There is ho foundation for the objection that the assessment, is made to the estate and not to the persons who have been appointed as its administrators. The statute has provided for the assessment of administrators by adding to their names this description of their offices, 1 E. (6th ed.),-936, § 10, and that was-complied with in the proceedings by which the assessment was-made and this tax was imposed. For the assessment was against Walburger Horn and the other two persons associated with her as-administrators, with the will annexed, of the estate of Felix Horn. It was not an assessment of the estate alone, as was the fact in Trowbridge v. Horan, 78 N. Y., 439, and in Haight v. The Mayor, etc., 99 id., 280. What were held to be illegal proceedings in those cases were assessments against the estate of the deceased person, while here the assessment is against the persons named as administrators, with the will annexed, “estate of Felix Horn.” The description is slightly elliptical, it is true, but it appears from the face of it that the intention was to assess these persons as. administrators of the estate of Felix Horn, and the abbreviation and statement clearly evinces that to have been the object and design of the assessors. It was not an assessment against the: estate, therefore, but it was an assessment made against the administrators of the estate, as that was authorized and provided for by the statute to which reference has been made.

In the assessment two of the administrators are correctly named, and the misnomer affects only the other one of the three. But that misnomer is not sufficient to invalidate the proceedings, for the assessment itself discloses the fact that it was made against, these persons as administrators of the estate, which is sufficient to avoid all objection on the ground of this misnomer. For the-identity of the individual administratrix in this manner misnamed,, is ascertained and determined by the fact that the person so misnamed was one of the persons included in the assessment as an administratrix of this estate: and that substantially complied with the directions contained in the statute for the making of the assessment, and the collection of the tax.

So strict a construction of the statute has not been warranted by anything contained in it, or in the nature of the proceedings, as would justify the determination that this assessment was illegally made, because of this misnomer of this individual. The ■case might be otherwise if she was the only person named in the assessment, and she were assessed solely as an individual, but as it has been made in this instance against three individuals, each of whom is and has been named as being an administratrix of this estate, the tax may well be collected from them under the provisions of the statute prescribing this proceeding. It would be altogether too strict to exact from the assessors the literal naming of one of the administratrices as well as of the other two, to authorize the collection of the tax, under the provisions directing and permitting this proceeding.

There is no merit in this objection, and the order from which the appeal has been taken should be affirmed, with ten dollars costs and disbursements.

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


author: Daniels, J. Ingraham, J.

text:
    John D. Wing et al., Resp’ts, v. Amos Rogers, App’lt.

      (Supreme Court, General Term, First Department,

      Filed December 31, 1891.)

    Undertaking—Stay until return of commission.
    A commission to take the testimony of a witness in a foreign country was granted in certain actions brought by plaintiffs, and a stay granted until the return of the commission on the giving by defendant of an undertaking to pay any judgment that might be recovered in such actions. The commission was given to the witness, who wrote out his answers, but did not appear before the commissioner to verify them, and the commission was not returned. About two years later, the witness having returned, the stay was vacated, and the witness testified on the trial. Held, that defendant could not be held liable on the undertaking, as there had been no return of the commission.
    (Ingraham, J., dissents.)
    Appeal from a judgment recovered upon a verdict directed by the court.

      B. Floyd Clarice, for app’lt; John W. Houston, for resp’ts.
   Daniels, J.

The verdict was recovered for the sum of $10,-521.69 upon an undertaking given by the defendant to pay any judgments that might be recovered in three different actions brought by the plaintiffs against Rowland 1ST. Hazard, two of which had previously been consolidated. In those actions the defendant obtained leave to issue a commission to Carlos Walker Martinez, or to Jorge Huncues, residing at Santiago, in Chili, to take the deposition of Jared E. Lewis, as a witness on behalf of the defendant. The defendant applied to the court for a stay of proceeding until the return of the commission. And after directing the commission to be issued, this stay was ordered in case the defendant should file an undertaking, with one or more sureties conditioned to pay any judgment or judgments which might be recovered against him in the three actions, or in either of them. An undertaking was presented in compliance with this order subscribed by the defendant, but the attorneys for the plaintiffs in the actions were unwilling to receive it, and refused to accept it because they deemed the responsibility of the defendant to be inadequate by way of this security. And while this disagreement existed, and for the purpose of arranging it, the attorneys for the plaintiffs consented to accept the undertaking of the American Surety Company for the sum of $7,500 in part compliance with the order, and an undertaking subscribed' by the defendant as. surety for the residue. And these undertakings were given pursuant to this arrangement, and in that manner the conditions prescribed by the order upon which the stay was directed were complied with.

The commission was then sent to the commissioners, one of whom passed it over to the witness to write out his answers to the-interrogatories. And that was done by him and the commission with the answers returned to the commissioner. But the witness-never appeared before the commissioner to verify the answers by his oath. And the commission accordingly was not returned. The witness remained in Santiago from early in December, 1888,. until the middle of September, 1889, and in May, 1890, arrived in the city of New York, and was examined as a witness upon the-trial. Prior to the trial of the action, and in August 1890, the-plaintiffs moved to vacate the stay in this manner provided for by the order directing the commission which was entered on the 7th of December, 1888. And an order was entered vacating-the stay, and it was after that time that the plaintiffs brought this-action to trial. Upon this state of facts this action was brought, against the defendant as surety in the undertaking subscribed by him to recover so much of the judgments as would not be satisfied by the obligation of the American Surety Company. And it was-for that residue that the verdict was directed against the defendant.

In his behalf it has been contended that no legal liability had arisen against him under the terms of the undertaking. This undertaking is as follows:

“Whereas, Rowland N. Hazard, the defendant in the above-entitled actions, on December 7, 1888, obtained from this court an order in both of said actions, staying the trials thereof until a return of a commission issued to take testimony of Jared B. Lewis, as a witness for the defendant, provided that the said defendant, should give an undertaking with sufficient sureties conditioned that said defendant will pay any judgments that may be recovered against him in these actions; and
“ Whereas, the defendant has given an undertaking executed by the American Surety Company, conditioned to pay any judgments that may be recovered in these actions, or either of them,, up to the amount of $7,500 ; and
“ Whereas, Amos Rogers has given a bond for any amount which may be recovered against the defendant, which bond upon the execution hereof is to be considered cancelled and null and void ;
“ Whereas, the plaintiffs have stipulated to accept as sufficient, themndertaking by the American Surety Company and this undertaking,
“Now, therefore, in consideration of the premises and one dollar to me in hand paid, I, Amos Rogers, of No. 45 Broadway, New York city, etc., pursuant to the above order and stipulation, undertake that the said Rowland N. Hazard will pay any judgments-that may be recovered against him in these actions, or either of them, over and above the sum of $7,500, secured to be paid by the American Surety Company, as aforesaid.
“It being understood that my liability hereunder is limited to the amount of the said j udgment or judgments with interest, less $7,500.
“ In witness whereof, I have hereunto set my hand and seal, this-12th day of April, 1889.
“Amos Rogers (Seal./’

And by its recital it appears to have been given to secure to the-defendant in the other actions this stay of proceedings until the-return of the commission. And further to exhibit that to have been the design and purpose of the undertaking, the order containing the provision for the stay of proceedings mentioned in this recital is also entitled to be considered. For they are both together-necessary to exhibit the object by way of consideration, as well as the extent of the obligation entered into by the defendant. Sonneborn v. Libbey, 102 N. Y., 539, 550; 2 St. Rep., 507.

This order is in these words:

“Upon reading and filing the order to show cause, the affidavit, of Rowland N. Hazard, on which said order to show cause was granted, and due proof of service of said order and the affidavit upon the attorneys for the plaintiffs, and the affidavits of Paul D. Cravath and Julius M. Ferguson hereto annexed, and upon all the. papers and proceedings herein, and after hearing Mr. Lockwood, of counsel for defendant, in support of said motion, and Mr. Cravath, of counsel for plaintiffs, in opposition thereto,
“Now, on motion of Crane, Lockwood & Fowler, attorneys for the defendant, it is
“ Ordered, that this motion for a commission to take the testimony of Jared A. Lewis, as a witness for the defendant, be and it hereby is granted, and that a commission issue in the ordinary-form in both of the above entitled actions to Carlos Walker Martinez, or to Jorge Huncues, counsellors at law, at Santiago, Chili, at South America, to examine under oath, upon interrogatories and cross-interrogatories to be annexed to said commission, Jared E. Lewis, as a witness on behalf of defendant at said Santiago, Chili, at South America, and that plaintiffs be at liberty to join in said commission by preparing and annexing thereto' cross interrogatories.
“ And it is further ordered, that the trial of these actions be stayed until the return of said commission, provided defendant shall within ten days from the date of this order give and duly file an undertaking with one or more sureties; to be approved by the-court, conditioned that said defendant will pay any judgment or judgments that maybe recovered against him in the above entitled, actions, or either of them; and, if defendant shall fail to justify to the satisfaction of the court, upon notice of exception from plaintiff’s attorney, then this stay shall be vacated without further order.”

And it is clearly to be inferred from the order and the undertaking5 considered together, although the latter expresses an absolute obligation to pay the judgments, that this obligation was intended to be and was in fact conditional upon the defendant in the other actions having a stay of proceedings until the return of the commission.

That was the advantage secured to that defendant by the order, and it was the foundation or consideration on which this defendant became a party as a surety to this undertaking. It was, therefore, conditional in its effect, binding the defendant to the payment of these judgments only in case the defendant in the other actions was secured this stay until the return of the commission. That was not only the language but the effect, and the entire effect, of the obligation which the defendant entered into. And before an action for the recovery of this amount of the judgments could be maintained against him it was essential that this condition should appear to have been observed. Oakley v. Morton, 1 Kern., 25.

If its performance had been defeated by any act of the defendant, that would have avoided the effect of the condition. But there was no act, either upon his part, or on the part of the defendant in the original actions for which this surety became responsible, which prevented the return of the commission. And compliance with the terms of the order as to the stay was therefore not dispensed with, either by anything which was held in Weeks v. Little, 89 N. Y., 566, or Hudson Canal Co. v. Penn. Coal Co., 8 Wallace, 276.

The undertaking construed with the order provided for the payment of this excess of the judgments by the defendant only incase the defendant in the original actions was secured this stay of proceedings until the return of the commission. There was no obligation, either expressed or implied, by any language contained in the order, or the undertaking, imposed upon the defendant to pay in case the order staying proceedings should be vacated, or the witness named in it should return to the city of ¡New York. Bach was an entirely different state of facts from those upon which the surety became bound. And it is no answer to the objection which has been made that it could have been no benefit to the surety, or the defendant in the other suits, that the stay of proceedings should be prolonged beyond the time when the order was made vacating it. Bor the contract entered into by the undertaking was not to become operative by the vacation of the order, or the return of the witness, but the sole and only condition upon which its validity rested was that the stay should continue until the return of the commission. That was the obligation, and the only obligation, into which the defendant entered by this undertaking.

It was not absolutely necessary that the commission should be fully executed before it was-returned, but it was competent for the commissioner to return it when the witness failed to appear before him and verify the answers which he had written to the interrogatories. And the plaintiffs in the action, as well as in the other suits, were entitled to have the commission returned in case of a failure on the part of the commissioner, through the absence of the witness, to complete its execution. There was no want of power therefore on the part of the plaintiffs to comply literally, as well as substantially, with this condition on which the liability of the defendant had been made to depend. They failed to do that. And having so failed, and the commission never having been returned, the event has not arisen on which the defendant undertook to pay this amount of the judgments recovered against the defendant in the other suits. But by the judgment which has been recovered in this suit, the defendant has been held liable upon a state of facts on which his liability was in no manner made to depend. He had agreed to become-liable in one event only, and that event has not yet transpired. And for that reason he was not liable in this action upon his undertaking, and a verdict, instead of being directed against him,, should have been directed in his favor. This seems to be the fair effect of Collins v. Ball, 31 Hun, 187, and of Hemmingway v. Poucher, 98 N. Y., 281. The undertaking construed with the-order was a security to the plaintiffs for the payment of this residue of their judgments only when the commission should be returned. It never has been returned, and no right of action consequently accrued to them, and the judgment should be reversed,, and a new trial ordered, with costs to the defendant to abide the event.

Van Brunt, P. J., concurs.

Ingraham, J.

(dissenting.)—The bond or undertaking upon which plaintiff seeks to recover in this action was given to make effectual a stay of the trial of certain cases until the return of a. commission issued under the order of thenourt in the actions.

The bond recites the order, the provision for the stay until the-return of the commission issued to take the testimony of the-witness named, and then provides as follows: “I, Amos Rogers, of Ho. 45 Broadway, Hew York city, do, pursuant to the above-order and stipulation, undertake that the said Rowland H. Hazard will pay any judgment that may be recovered against him in; these cases, or either of them, over and above the sum of $7,500, secured to be paid by the American Surety Company as aforesaid.”

And it is to recover the amount of these judgments subsequently obtained against Hazard over and above the sum of $7,500 that this action is brought.

The order of the court recited in this bond or undertaking provides for the issuing of a commission and then contains a provision that the trial of the actions be stayed until the return of the commission, provided the defendant shall within ten days file an undertaking to be approved and conditioned that said defendant will pay any judgment or judgments that may be recovered against him in the above entitled actions or either of them.

The order granting the stay having been recited in the bond,, and the bond having been given in pursuance of the order, we must construe the bond and the order so far as they throw light upon each other and thus arrive at the intention of the court and of' the parties, Sonneborn v. Libbey, 102 N.Y., 550; 2 St. Rep., 507, and •construing them together it seems to me that the intention of the court and the parties is obvious.

The order was entered in pursuance of §§ 887 and 888 of the Code, and it was to obtain the deposition of a witness not within the state, material to the defendant, as testimony upon the trial on the issues raised by the pleadings.

The Code provides for the issuing of such commission, and the court has power to stay the trial of the action until the return of such commission. • ,

The sole object for such commission is to obtain the testimony of a witness who is without the state and whose presence at the trial cannot be enforced by subpoena, and provision is made by § 910. of the Code that where it appears by affidavit that the personal attendance of the witness upon the trial could have been procured with due diligence, an order for the suppression of the deposition may be made by the court upon the application by the party aggrieved upon notice to the adverse party.

Considering the undertaking and the order together with these provisions of the Code, it seems to me that the intention of the court and the parties was to procure the testimony of the witness whose deposition was to be taken.

To do that it was necessary, as he was then without the state, to issue a commission to take his deposition, and it was also necessary in order to have the benefit of the witness’ testimony upon the trial, that the trial.of the action should be stayed until the return of the commission or the return of the witness to the state.

The court granting the stay required as a condition that the defendant in that action give a bond to secure the payment of any judgment that the plaintiff should obtain against him, and that bond was given. The commission was issued and the stay became operative. The object of that stay however was simply to make the order for the commission effective for the purpose for which it was given, viz, to procure the testimony of the proposed witness for use at the trial. There was no express condition in the bond that the stay should continue until the commission was "returned, and as soon as the witness returned within this state with intention of remaining here so that his attendance at the trial could be procured the commission issued to take his testimony became inoperative. It could not then be executed and returned because the witness was not at the place to which it had been issued to execute it

The return of the commission therefore became impossible. By the stay, the defendant in the action had obtained what he desired. He was in a position to have the benefit of the testimony of the witness on the trial of the action.

The witness was within the jurisdiction of the court subject to its subpoena and the defendant had the opportunity of obtaining his testimony upon the trial of the action.

The return of the commission became impossible, but if it had "been possible it would have been unavailing, because under § 910 of the Code the court would have been justified in suppressing the commission upon evidence that the witness had returned and could be produced on the trial.

The stay that was procured by the giving of the bond was -effectual until the return of the witness to the jurisdiction of this court, and upon such return the advantage to the defendant in the suits in question had been gained just as much as if the commission had been returned, and the consideration for the giving of the hand or undertaking was complete.

The subsequent vacation of the stay had no more effect than if it had been vacated by the return of the commission so far as the liability of the defendant was affected.

I think therefore the court below was right in directing a verdict for the plaintiff and the judgment should be affirmed, with ■ costs.

Judgment reversed and new trial granted, with costs to defendant to abide the event.


author: Earl, J. O’Brien, J.

text:
    Charles R. Johnson, App’lt, v. The Union Switch & Signal Co., Resp’t.

      (Court of Appeals,

      Filed January 20, 1892.)

    1. Contract—Construction—Termination.
    A contract between the parties hereto provided that plaintiff should be the general manager of defendant, and assign to it the exclusive right to use all his inventions; that the contract should continue for a period of ten years, subject to termination by either party by one year’s notice in writing after the second year, or by the death or inability of plaintiff. By the 8th clause, it was provided that, on the termination of the agreement, said company (by reason of the expenditures that shall have been made during the continuance of this agreement) shall have a license (not exclusive) to use all the inventions that may have been used by it, on payment of $6,500 a year, payable quarterly. In an action for an-instalment of the sum last mentioned, Held, that a discharge of the plaintiff did not “terminate” the agreement within the meaning of the 8th clause, and that plaintiff was not entitled to recover.
    S. Same.
    Even if the contract had been terminated by a breach thereof by defendant, plaintiff could not recover, as it was optional with the defendant to accept a license and use the inventions, and it could be liable under the agreement for their use only during the time it actually used them.
    (O’Brien and Pecbham, JJ., dissent.)
    Appeal from judgment of the New York superior court, general term, reversing judgment for plaintiff, and directing that the complaint be dismissed.

      George W. Miller, for app’lt; John W. Houston, for resp’t.

       Affirming 87 St. Rep., 876.

   Earl, J.

In September, 1886, the plaintiff and defendant entered into a written contract whereby he became its manager at a salary of $5,000 per year, and gave it the exclusive right to use all the inventions relating to the signal business which he or Henry Johnson then had or might thereafter make or acquire, and it agreed to pay for the use of such inventions the sum of $3,000-per annum. In addition to these compensations for patents and salary, it further agreed to pay him ten per cent of its net profits. Then in the seventh clause of the contract it was provided as follows : “It is mutually agreed that this contract shall continue for a period of ten years, subject to termination by either party, however, by one year’s notice (in writing) to the other party at any time after the second year, or by the death of Charles R. Johnson, or by his permanent inability to perform his duties as general manager.”

The “ termination ” here spoken of is of the entire contract, and after such termination all parts of the contract would cease to-have further operation, and no other termination was contemplated by the parties. Except by his death or permanent inability, the-contract could not be terminated in less than three years.

The right to use the inventions given in the third clause of the-contract was intended to be co-extensive with the stipulated lime-of service of the plaintiff, as the ten per cent, of net profits was-, to be paid tohim, not for service alone, and not alone for the use of the inventions, but for both. I can perceive no reason for-supposing that the parties intended that the right to use the inventions provided for in the third clause should survive the termination of the contract as specified in the seventh clause.

Upon the termination of the contract as specified in the seventh clause, the parties were to be brought into new relations by the operation of the eighth clause, which is as follows: “It is further mutually covenanted and agreed that in the event of the termination of this agreement, the said company, by reason of the expenditures that shall have been made during the continuance of this, agreement, shall have a license (not exclusive) to use all of the inventions that may"have been used in carrying on the business of the company, on the payment pf sixty-five hundred dollars per year, said sum to be paid quarterly, and shall be entitled to purchase from the said Charles R. Johnson, or his executors, the exclusive right to use all of the inventions upon as favorable terms-as he or his executors may be willing to grant to any other parties.”

This clause was to have operation only after the termination off the contract, of the whole contract and all the stipulations therein contained as embodied in the prior seven subdivisions thereof. It was intended to secure to the defendant some advantage on account of the expenditures made by it “ during the continuance; of the agreement,” that is, during the continuance of the agreement by its terms. The “ termination ” which the parties had in mind was the same termination spoken of in the prior clause. It is entirely improbable that they meant any other termination off the agreement than those they had just provided for, and which were then in their contemplation. If they had meant to embrace-in the language used by them a termination of the agreement by a breach thereof, it is probable that they would have used some language appropriate to express that meaning. A breach by one party to a contract signed by two parties containing mutual stipulations does not terminate the contract unless the other party assents thereto. The obligation of the contract remains, and in a proper, case the other party can enforce specific performance thereof, and if it be a case in which specific performance cannot be had, he may recover his damages for a breach in an action at law, and the damages thus recovered will stand in lieu of performance. If the plaintiff's contention be right that this contract could be terminated by a breach thereof, then the plaintiff could have terminated the same at any time by a breach on his part, and could thus have put the eighth clause in operation and could thus place himself, upon his construction thereof, in a position to recover the amount stipulated therein at the end of every quarter. The action in such a case to recover the amount stipulated would not be founded upon the broken contract, but upon the contract which came into operation upon the termination of the broken contract. The parties certainly could not have contemplated that, the language used by them should place them in such a position.

We are, therefore, of opinion that the contract between the parties was not terminated and that therefore the eighth clause did not come into operation, and that this action based thereon cannot be maintained

But there is still a further answer to this action which is at least equally obvious and satisfactory, even upon the assumption that the contract had been terminated by a breach thereof on the part of the defendant.

The claim of the plaintiff is that upon the termination of the contract the defendant became absolutely bound to pay him for the license to use the inventions the sum of $6,500 per year during at least the whole of the ten years mentioned in the seventh clause of the contract, whether it used the inventions or not; and I do not perceive from any language used in clause eighth any reason, for limiting the obligation of the defendant, if it exists, to any period of time less than the life of the patent; and thus upon the plaintiff’s construction of the clause an extraordinary burden rests upon the defendant, and the intention to impose it on the one side and to assume it on the other should be clearly found in the language used.

Upon the plaintiff’s contention, for what was the $6,500 to be paid ? Hot for any exclusive license to use the inventions for any time or at any place, for the plaintiff might license, and had the right to license, any and all persons to use them at all times and places, and in the same business carried on by the defendant. By the payment of $6,500 the defendant could procure no monopoly at any time or place and no advantage whatever over any competitor or any other person to whom the plaintiff might give a license to use his inventions. Can it be believed that the officers of the defendant, looking after its interests, could have intended to bind it to pay this large sum of ¿money for a series of years, without securing to it any monopoly or exclusive advantage whatever? Such an extraordinary responsibility should be imposed upon the defendant only by very clear and plain language showing that such was the intention.

The language used shows quite plainly that such was not the intention of the parties. The defendant did not bind itself to take a license, or to use the inventions. The effect of the eighth clause is to secure to the defendant the right to use the inventions upon the payment of the sum stipulated. It did not bind itself to use the inventions or to pay for their use unless it did use them. It was clearly optional with it to use or not to use them ; but in casé it did take a license to use them then it was to pay the stipulated sum. It was to have the "option “by reason of expenditures that shall have been made during the continuance ” of the agreement. It was a privilege secured to it to indemnify itself against such expenditures ; ■ and as it was optional with it, the term and duration of the license were not specified. They were left to be’arranged when the time came for the use of the inventions by it, and then it could stipulate as to the places where and the time during which, and the terms upon which, the inventions were to be used. It was to have the privilege, if it desired, to use. the inventions, and-also to purchase them upon as favorable terms as the plaintiff might be willing to grant to other parties. There is no allegation in the complaint that the defendant ever exercised its option to take'any license, or to use any invention of the plaintiff’s. There is not even an allegation in the complaint that during the quarter commencing on the 1st day of December, 1888, and ending on the 1st day of March, 1889, for which the stipulated compensation is claimed in this action, the defendant used any of the inventions. The defendant in its answer denied that it did use them, and there was no evidence whatever showing that during that time it used any of the inventions; and more than this, the learned counsel for the plaintiff does not claim in his brief submitted to us that the defendant used the inventions during'that time, or that there was any evidence that it did. He plants the plaintiff’s case upon the broad ground that he has the right to recover in this action without any evidence whatever that the defendant used the inventions and whether it used them or not. As it was optional with the defendant to accept a license and use these inventions, it could be liable, under its agreement, for their use, only during thé time when it actually used them.

The plaintiff testified that at the time of the breach of the contract on the part of the defendant he had an interview with its president, in which he said: “ Of course, you will pay me the $6,500 a year royalty,” and the president answered: “ Yes; oh yes, we shall pay the royalties.” These declarations of the defendant’s president are not, and are not claimed by plaintiff's counsel to be important in this case. There is no proof whatever that he had any authority to exercise the option on the part of the defendant, and even if he did have, the language does not import that the defendant would pay the royalties for an indefinite time in the future or for the whole term of ten years, or for the life of the patent. All that can be fairly inferred from the language used is that he would pay the royalties for the use of the patents so long as the defendant used them, and so far as the evidence in this case discloses the facts, it has paid the royalties during the time it used the inventions.

The view I take of this contract and of the rights of these parties can work no injustice whatever to the plaintiff. He is left with the absolute control of his inventions, and if the defendant shall use them without his license it can be prosecuted for infringement of his patents. If it has any rights still subsisting under the eighth clause, it can use the inventions only upon payment of the large compensation stipulated, and then it can use them only in common with every other person whom the plaintiff may also choose to license as its competitors.

We are, therefore, of opinion that the judgment should be affirmed, with costs.

O’Brien, J.

(dissenting).—This appeal involves the construction of a written instrument executed by the parties to this action on the 20th day of September, 1886. The plaintiff sought to recover $1,625, that being the sum which he claimed was due to him from the defendant under the terms of the instrument, for license fees, for the quarter ending March 1, 1889, at the rate of $6,500 per year. The courts below have given to the instrument an interpretation that has thus far defeated the plaintiff’s claim. A brief analysis of the language used by the parties is necessary in order to understand the intention. The paper begins with a somewhat elaborate recital of the relations which the parties held to eacli other for some considerable time prior to its execution, and is in these words:

“ Whereas, by various agreements now in force between the Union Switch & Signal Company and Charles R. Johnson, said Johnson acts as the signal engineer of the said company, makes contracts to erect the interlocking apparatus, and has over and above his salary a portion of the profits as compensation, and has licensed the company to use certain inventions necessary in connection with the interlocking business, all of which agreements are to terminate on the 30th day of June, 1888, or as soon thereafter as present contracts are completed; and
“ Whereas, in lieu of these agreements above terminated, a new agreement has been determined upon, now to evidence the same this memorandum of agreement between said Union Switch & Signal Company, party of the first part, and Charles R. Johnson, party of the second part; witnesseth as follows: ”

These recitals reveal the fact that the parties were contracting with reference to inventions in the railroad signal business that had been in use for some time, the utility and value of which the defendant knew by actual test and practical experience. The prior contract, under which the defendant was permitted to use the inventions, had yet about a year and a half to run, and it is reasonable to conclude that the parties intended to make a permanent and well-defined arrangement in regard to the right to use inventions of the plaintiff in the business that had passed beyond the experimental stage, and were understood by both parties to be of substantial value and benefit to the defendant in the prosecution of its business. The instrument then proceeds, in distinct clauses, to state the rights and obligations of the respective parties.

By the first and second clauses the plaintiff is appointed general manager of the defendant company at a salary of $5,000 per year. The third clause licenses the defendant to use the inventions, and the fourth fixes the license fee. These two clauses are in the following language:

Third. Said Charles E. Johnson hereby grants, sells and conveys to the said company the exclusive right, except as hereinafter provided, to the use of all of the inventions that he, said Jonhson, now has, relating to the signal business, or that he may hereafter make or acquire, and also the right to use the present inventions of Mr. Henry Johnson relating to signals and-switches, and any others which he may hereafter make, including all which the said Charles E. Johnson has acquired or may hereafter so acquire.
Fourth. Said company hereby covenants and agrees to pay for the use of the said inventions the sum of three thousand dollars per annum, settlement to be made quarterly.”

It will be observed that this provision by its own terms confers upon the defendant the right to use the inventions for a specified compensation. In the numerous litigations that have grown out of the instrument it was held by at least one of the courts belew that it was but a mere option or an executory agreement to give a license at some future time, and that construction is now urged in this case in behalf of the defendant. But it is plain that the words “hereby grants, sells and conveys to the said company the exclusive right, &c.,” import a complete executed license conferring upon the dei'endant a present exclusive right to use the inventions without any further act on the part of the plaintiff. The fifth and sixth clauses provide for the employment of Henry Johnson, who, we may assume, was a relative of the plaintiff, as mechanical manager, at a salary of $4,000 per year, and that the plaintiff in addition to the compensation secured for services and the Inventions should have ten per cent of the net profits of the company. The important part of the instrument and that upon which the plaintiff’s right to maintain the present action turned is to be found in the seventh and eighth clauses, which are as follows:

“ Seventh. It is mutually agreed that this contract shall continue for a period of ten years, subject to termination by either party, however, by one year’s notice (in writing) to the other party at any time after the second year, or by the death of Charles E. Johnson, or by his permanent inability to perform his duties as general manager.
Eighth. It is further mutually covenanted and agreed that in the event of the termination of this agreement, the said company, by reason of the expenditures that shall have been made during the continuance of this agreement, shall have a license, not exclusive, to use all the inventions that may have been used in carrying on the business of the company, on the payment of sixty-jive hundred dollars per year, said sum to be paid quarterly; and shall be entitled to purchase from the said Charles B. Johnson, or his executors, the exclusive right to use all of the inventions upon .as favorable terms as he or his executors may be willing to grant to any other parties.”

It is apparent that the contract expressed in this instrument is not entire, but separable and divisible. It provides for two things, namely: the personal services of the plaintiff to be rendered to the defendant, at an agreed compensation, and the right of the defendant to use certain inventions of the plaintiff in the business, for a certain period of time and upon payment of a specified license fee. A contract is several or distributive when the part to be performed by one party consists of several distinct and independent items, and the price tobe paid by the other is apportioned to each item. A breach of any part of such a contract, while it may entitle the injured party to damages, will not as a general rule discharge him from the performance of -the remainder, unless the breach be such as to amount to a refusal to perform the balance of the contract, or be of such a character as to wholly frustrate its object. 2 Pars. on Cont., 517; Hare on Cont., 618; Tipton v. Feitner, 20 N. Y., 423; Pierson v. Crooks, 115 id., 539; 26 St. Rep., 492; Lee v. Bebee, 13 Hun, 89; Talmage v. White, 3 J. & S., 218; Swift v. Opdyke, 43 Barb., 274; Newton v. Winchester, 16 Gray, 208; Miner v. Bradley, 22 Pick., 459.

The contract of employment and the license to use plaintiff’s inventions might in this case have formed the subject of two separate agreements, and the fact that but one instrument was used •to express the intention of the parties as to both matters does not necessarily show that there is but one contract. It is import-an t in construing the instrument to keep in view its distributive ■character, because it is manifest that the parties have used some terms which apply to the whole writing, others that apply only to -that part relating to the employment of the plaintiff as manager, .and still others that apply only to the license.

It is conceded that the defendant on the 1st of March, 1888, dismissed the plaintiff from his position as manager without cause, and thus prevented him from performing the service part of the contract, and his further connection with the defendant’s business ceased. The plaintiff thereupon brought an action against the defendant to recover his damages for such wrongful dismissal. In that action he recovered a judgment, not for a breach of the whole contract, but that part which secured him employment with the defendant at a stated compensation. Indeed, as I understand the record, the court at the trial of the cause expressly held that a recovery could be had on no other ground in that action, and this view seems to me to be entirely sound. Perry v. Dickerson, 85 N. Y., 345. Aside from the fact that the royalties or license fees which the plaintiff seeks to recover in this action were not due when he brought the suit for damages, as they fell due quarterly in the future from time to time, it is also apparent that there was no breach or termination of the license or right to use the inventions. The court below in dismissing the complaint in this action assumed that during the period for which royalties are claimed in the complaint the defendant had the use and enjoyment of the inventions as the plaintiff’s licensee. Evidence was given by the plaintiff on that question, and as the trial court held that there was no question of fact to submit to the jury, we must assume that the defendant is in the enjoyment and use of the inventions under the contract, if the fact is material. But it seems to me much more important to ascertain whether the defendant has the right, under the written instrument, to the use and enjoyment of the inventions, for if it has, then it is bound to pay the plaintiff the stipulated license fee whether it uses them or not. Indeed the true test of the defendant’s liability in this action would seem to depend upon its right, under the contract, to the use of the inventions. If it has such right against the plaintiff himself and all the world, there can be no reason in law or justice why it should not pay the compensation that it agreed to pay therefor. It is-certain that the instrument in question granted a license to the defendant to use the inventions for ten years upon certain conditions, and that this license is still in force unless revoked.

There was no provision for the revocation of the license before the time of the contract expired except that contained in the seventh clause, providing for a notice of one year in writing after the expiration of the second year, and it is not claimed that such notice has been given. The only thing that has happened since the execution of the contract is the wrongful discharge of the plaintiff from his place as manager, and the defendant has been obliged by the judgment of the court to make that breach good by the payment of the damages sustained. But neither that breach nor the judgment therefor and satisfaction thereof has touched or impaired the license any more than if it was contained in a separate instrument The defendant might break that part of the contract of service, and the plaintiff might recover damages therefor, but that-would not revoke the license or impair the defendant’s right to use the inventions. The paper contained a fully executed," irrevocable license by the plaintiff to the defendant to make, use and sell the inventions for ten years, and this is not affected in the least by the fact that the defendant has violated another and independent part of the contract. The integrity of the license is not affected by the wrongful discharge of the plaintiff from his position of general manager any more than it would be in case of the wrongful discharge of his relative, Henry Johnson, from his position as mechanical manager. The license fee -was subject to change. While plaintiff was general manager it was to be $3,000. If displaced from that position, it was to be $6,500 per year, payable quarterly, but the right to use the inventions remained the same as before. The only way in which the defendant’s wrongful act affected the contract was to increase the license fee, and to-convert what was before an exclusive right into one noh-exclusive.. The eighth clause uses the words “ in the event of the termination of this agreement,” etc. What agreement? Certainly not the-license or permission that the plaintiff gave to the defendant to-use the inventions, for that very right is recognized in the same sentence as still existing.

It would be manifestly unfair to impute to the parties such a, careless use of language as to describe in the same sentence a license as terminated and yet existing. A license is the permission to do an act or a series of acts which might be unlawful or an infringement upon the property rights of another without it. While in a certain sense it may be said to be an agreement or a, contract, yet it is not designated by either of these terms in common parlance, and there is not the slightest reason to believe that when the parties to the instrument in question spolce of “ the termination of this agreement” they referred to that part of the-paper which granted a license to use the inventions. On the contrary, it is quite apparent when the whole of section eight is read in connection with other parts of the instrument that they referred to the agreement by which the plaintiff was appointed manager at a stated compensation. That was the only part of the contract as to which a breach was possible and the only part involved in the suit for damages. It is quite clear, therefore, that-the right conferred upon the defendant by the license still exists-notwithstanding the breach by the defendant of another and divisible part of the contract. The defendants are, therefore, in the enjoyment and use of every right and privilege conferred by the license, not wrongfully, as has been suggested, but under its-sanction and express authority, and the obligation to pay the license fee would seem to follow this right of enjoyment. The dismissal of the plaintiff from his position as manager of the company, without excuse or cause, followed by the action for damages- and the satisfaction of the judgment, terminated the contract relations of the plaintiff and defendant as master and servant, or employer and employee, and this was the termination or contingency contemplated by the parties in order to bring the eighth section into operation. Suppose that the plaintiff instead of granting a license in the instrument in question had leased to the defendant for ten years, in the same or in equivalent words and subject to the same conditions, the lands and buildings in which its manufacturing operations were carried on. Would the wrongful dismissal of the, plaintiff as manager in that case terminate the defendant’s lease or estate for years in the real estate, or would it impair the obligation of the defendant to pay the rent ?

There can be, in my opinion, but one answer to this question. We would then be compelled to hold, as we ought to hold now, that the words in the event of the termination of this agreement, etc.”, in»§ 8, applied to the contract of employment and not to the lease, and that as the defendant still retained, under a divisible and independent part of the writing, the right to enjoy the demised premises, during the term, so its obligation to pay the rent as it fell due, from time to time, still remained. To say in such a case that in order to give a right of action under § 8 for the instalments of rent the plaintiff must first show that the service part of the contract was terminated in some particular way, that is to say, in the way provided in § 7, namely, by written notice, •death or inability to perform the service, would be to give an extremely narrow and artificial construction to the language used by the parties and to attribute to them an intention without any apparent basis in common sense. Y/hen the parties spoke of the termination of the agreement for personal services they meant just what the words import, a complete severance of these relations how ever brought about. When the distinct parts of this contract and their relations to each other are kept in view, the intention of the parties is manifest. The defendant employed the plaintiff as manager at a salary of $5,000 per year and ten per cent of the net profits. A possible breach of this part of the .agreement was contemplated and actually took place and had the effect of terminating the relation of employer and employed and no other. The plaintiff licensed the defendant to use his inventions for ten years, subject to be terminated by either party on a written notice of one year after the contract had existed and been in force two years, at a stipulated license fee and the character of the license and the amount of the fee was changed upon the happening of a certain contingency, namely, the termination of the relation of manager and employer. In that event what was before •an exclusive license at $3,000 per year became non-exclusive at $6,500 per year. When the plaintiff's salary and interest in the profits ceased and he had to seek employment elsewhere, then the license fee was to be more than doubled with the right to the plaintiff to grant the privilege to use the inventions to others. But although the scope and compensation of the license varied or changed according to circumstances, there was but one license and that was granted by the execution of the instrument in question .and it still remains intact, neither revoked nor terminated in any way, and it constitutes a perfect protection to the defendant in the use of the inventions against the plaintiff or any one else. It follows that the plaintiff’s complaint was improperly dismissed.

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

Judgment affirmed, with costs.

Andrews, Finch and Gray, JJ., concur; O’Brien, J., reads for reversal, with whom Beckham, J., concurs.


author: Earl, J.

text:
    The New York, Lake Erie & Western R. R. Co., App’lt, v. The Atlantic Refining Co., Resp't.

      (Court of Appeals,

      Filed January 20, 1892.)

      1. Negligence—Railroads—Contributory.
    Plaintiff had, the day before the accident in question, brought to a station and left on a switch track a car load of lumber for defendant, which the latter partially unloaded by knocking off the cross pieces and left the remainder in a dangerous condition. In the night a high wind arose which blew the lumber on the tracks and plaintiff's train, dashing into it, was wrecked. Reid, that plaintiff was not guilty of contributory negligence in failing to superintend the unloading of the car or in omitting to watch and take care of the car during the night of the accident.

      .2. Same—Evidence.
    As the plaintiff was not bound to keep a watchman at this side track, the trial judge committed no error in refusing to admit defendant's proof that no watchman was kept there.
    3. Same. -
    It was not error for the trial judge to refuse to allow defendant to prove that the car which plaintiff furnished was not a lumber car, boarded up part way, but a flat car, as the lumber fell, not from imperfection in the car, but from the careless manner in which the lumber was left upon the car by defendant.
    Appeal from judgment of the supreme court, general term, ■first department, reversing judgment in favor of plaintiff upon verdict of jury.
    The material facts of this case are substantially as follows: On the night of October 31, 1882, the plaintiff’s west bound freight train left Hornellsville about eleven o’clock for Wellsville, a station about twenty-six miles further west. About three miles east of Wellsville there was a side track known as Dyke’s switch. As the train going at the rate of forty or forty-five miles an hour upon the main track approached this side track, the head light of the locomotive illuminated the track for some distance, and the engineer, Chapman, perceived an obstruction upon the track, which looked to him like a pile of lumber, about 250 feet ahead. He immediately applied the air brakes and reversed his engine, but was unable to stop the train before it struck the lumber. He was badly injured, the train was derailed, and the locomotive and cars broken and damaged. It was then ascertained that the lumber had fallen from a car which had .been delivered to the defendant upon the siding, and which it had partly unloaded and then left over night standing on the siding adjacent to the main track, without replacing the fastenings which it had removed in order to unload lumber. The car had been transported from Olean and delivered to the defendant about four o’clock in the afternoon at Dyke’s switch, where it was engaged in building some oil tanks. In order to keep the lumber safely on the car, there were stakes set in sockets along the sides of "the car, and these stakes were supported by cross-pieces, or braces, nailed to the tops of the stakes, extending across the top of the lumber, thus preventing the stakes from being pushed out of place or broken by the weight of the lumber. The defendant’s agent, in order to unload the lumber, knocked off these cross-pieces, took out the stakes on the side of the car furthest away from the main track, and removed from the car several wagon loads of lumber, not unloading it evenly from the top, but taking it mostly from the side of the car away from the main track, and taking out a number of pieces from the middle or under part of the load, thus leaving the lumber on the car in a high narrow pile next to the plaintiff’s main track, without putting back the cross-pieces which formed the chief support of the stakes.
    The defendant’s agents went away and left the car over night. During the night, between eight and eleven, o’clock, there was á storm of wind and rain, and before the plaintiff’s train reached the spot the lumber fell, or was blown from the car upon the main track, and the accident was thus occasioned. The plaintiff brought this action to recover the damages it sustained from the accident, alleging that the lumber came upon its track through the negligence of the defendant. The plaintiff recovered a verdict at the circuit, and from the judgment entered thereon the defendant appealed to the general term, where the judgment was reversed and a new trial granted, and then the plaintiff appealed to this court.

      Charles Steele, for app’lt; John Brooks Leavitt, for resp’t.

       Reversing 36 St. Rep., 658.

   Earl, J.

Chapman, the engineer upon the plaintiff's engine at the time of the accident, was severely injured, and he brought an action against the defendant to recover for his injuries. His recovery was sustained in the general term and in this court. 38 Hun, 637; 108 N. Y., 638; 13 St. Rep., 900. In that action it. was finally determined in this court that there was sufficient evidence of the defendant’s negligence to uphold the.plaintiff’s recovery. Upon the trial of the action which resulted in the judgment now under review, the plaintiff called no witnesses, but b)r consent read the evidence given on behalf of the engineer in his action, and most of the defendant’s evidence was also read as it was given in that action. Thus the evidence given on the trial of this action is substantially the same as that given upon the trial of that action.

Without, therefore, further examining the evidence, we may properly hold that the negligence of the defendant was sufficiently established and proceed to the main contention now made on its. behalf, that there was contributory negligence on the part of the plaintiff which forbids its recovery. It was upon this ground that the judgment entered upon the verdict was reversed by the general term.

This car load of lumber was transported by the plaintiff and placed upon the side track for the defendant, and there it received the delivery of the lumber. At the time of its delivery it was in a safe condition on the car, properly loaded and fastened. If tlie defendant had removed all the lumber from the car on that day, as it undoubtedly could, no accident would have happened. And if, as the jury must have found, after removing a part of the lumber, it had left what remained on the car properly loaded and properly fastened, no accident would have happened. But because of negligence attributable to it, and solely because of that, the lumber in some way and from some cause-fell from the car upon the main track and thus caused the accident. The plaintiff owed no duty to the defendant to unload the-car or to superintend the unloading of the car, or to watch and take care of the car during the night of the accident. It had no-watchman at that place and owed no duty to the defendant to keep one there. It was not bound, as between it and the defendant, to anticipate any danger from the lumber upon that car after it had been delivered to the defendant. It had the right to assume that the defendant would discharge its duty, and that it would not negligently place the lumber upon the plaintiff's track or permit it to be placed or come there. Therefore, it had the right to run its train on the assumption that the track at that point was clear and safe; and the defendant, through whose negligence the accident was caused, has no right whatever to charge the plaintiff with negligence. We have not here an inquiry about the duty which the plaintiff, as a carrier of passengers, owes to its passengers or to the employees upon its trains. As to them it is under the duty of active vigilance to guard them from danger. But as to a stranger with whom it has no relations, and to whom it owes no duty, it is not bound to active vigilance to guard him from damage, or in any way to avoid the consequences of his negligence. If the plaintiff had been aware of the defendant’s negligence, or had known that the lumber was upon the track, or that it was likely to be there, or its engineer had seen it in time to avoid the accident, then the duty would have devolved upon it to guard against the danger by active vigilance on its part. But having no knowledge or notice of the danger, it owed no duty whatever to act upon the assumption that the danger might exist, and thus to take affirmative measures to protect itself against any wrong which the defendant might inflict upon it. Any citizen, in the prosecution of his own business, may everywhere act upon the assumption that no other citizen will by misfeasance cause him an injury, unless there is something in the circumstances of the case which casts upon him the duty of active vigilance for his own safety. The trial judge, therefore, did not err in holding that there was no evidence in this case of contributory negligence on the part of the plaintiff which shielded this defendant from liability for the consequences of the accident. The plaintiff was not bound to keep a watchman at this side track; hence the trial judge committed no error in refusing to admit the defendant’s proof that no watchman was kept there.

Neither did the trial judge err in' refusing to allow the defendant to prove that the car which the plaintiff furnished to it for transporting the lumber was not a lumber car, boarded up part of the way around the sides, but a flat car. The lumber was transferred in safety to this side track, and when delivered was safely fastened on the car, and it fell from the car, not from any imperfection in the car, but from the careless manner in which the lumber was left upon the car after a portion of it had been removed by the defendant.

The following requests to charge made on the part of the defendant were properly refused: “ If you find that the accident occurred through the negligent omission to foresee that the lumber was not left in a condition to withstand a storm, then the plaintiff is equally negligent.” “If you find that the accident occurred through any negligent omission of plaintiff to have a track walker, a person in charge of the tracks, the verdict should be for defendant.” “Plaintiff was bound to keep its tracks in a safe condition.” “Plaintiff was bound to see that this car was in a safe condition over night.” “Plaintiff had the custody of this car over night.” “ If you find that this car was over night in the custody of the railroad company the defendant is not liable. ” And the following portion of the judge’s charge which is complained of by the defendant, and which the general term held to-embody error, we think contains an accurate statement of the law applicable to this case: “ I have already stated to you that the-negligence upon the part of the railroad company in not having a. watchman upon the track, if you please, or in running its engine at a high rate of speed, or anything of that kind, has nothing to-do with the question of absolving these defendants from their liability. The plaintiffs were not bound to assume that these defendants were going to put their lumber upon the track, and therefore have a watchman for the purpose of seeing they kept it off. The law does not require a railroad company, or anybody else, to provide a guard to keep trespassers off 'their property, or to keep-persons from putting obstructions upon their tracks. If' persons do put obstructions upon the tracks of a railroad company they are responsible for it under all circumstances. But if' the engineer saw this obstruction in time to have stopped that train, then he was bound to use all reasonable efforts for the purpose of so stopping it. If, however, he did not see it, and ran into it, no matter whether he ought to have seen it or ought not to have-seen it, is immaterial so far as these defendants are concerned; his-negligence in not seeing it would not absolve them from the liability which otherwise would have existed. If he willfully ran into the danger of course there would be no right of action upon the part of the plaintiffs here.”

In this portion of the charge the judge evidently did not intend to say that the defendant was guilty of a trespass or of willfully placing this lumber upon the track. Assuming that the lumber canoe upon the plaintiff’s track through the negligence of the defendant, the rules of law stated by the trial judge are precisely applicable.

We are, therefore, of opinion that the order of the general term should be reversed and the judgment entered upon the verdict affirmed, with costs. ’

All concur.