text:
    John G. Avery, Resp’t, v. N. Y. C. and H. R. R. R. Co., App’lt.

      (Court of Appeals,

      Filed June 7, 1887.)

    1. Deed—Construction of.

    Plaintiff was the lessee of a hotel, which originally belonged to W., who had, in 1844, granted a portion opposite the hotel for railroad purposes, describing a strip luirty feet wide, between it and the hotel, as dedicated for the purpose of a public street. In 1857, W. being dead, the trustees of W.'s grandson and the guardians of an infant heir, quit-claimed to the railroad an undivided half of part of the strip, allowing it to build a depot thereon, but conditioned that it should at all times maintain an opening for access of passengers to the hotel, etc., and this was so used up to 1881, when the hotel was leased to plaintiff, Defendant, in 1881, built a fence the whole length of the strip, completely excluding plaintiff and his guests. This action was brought to enjoin the continuance of the fence, to obtain the use of the strip for a street, and for damages. Plaintiff obtained judgment for the destruction of the fence and damages. Held, that as the street was never legally accepted, and as plaintiff claimed under the grantor of the deeds in 1857, he must depend entirely upon the proviso as to the opening for access of passengers, etc., and that the judgment in his favor should be confined to a reasonable opening into the strip.
    2. Same—Amendments—Complaint.
    Defendant asked that the complaint be dismissed on the ground that plaintiff was an entire stranger to the whole matter, as he was simply in possession, and plaintiff was allowed to amend by setting up his lease from the owner. Held, no error, as it was in no sense the introduction of a new cause of action.
    Appeal from judgment of supreme court, general term, fifth department.

      George C. Greene, for app’lt; Truman G. White, for resp’t.
   Peckham, J.

The plaintiff is lessee of certain premises in Buffalo which were originally divided from premises of defendants by a strip of land thirty feet wide, and running from east to west 240 feet, and thence north about 100 feet. All of the property once belonged to one James Wadsworth, who, in 1844, granted and conveyed a portion of it to defendant’s predecessor for the purpose of a passenger and freight depot, and for no other purpose, and described this above-mentioned strip of land, thirty feet wide, as thereby dedicated for the purpose of a public street. Some question was made upon the trial as to the right of defendant to use, for the purpose of a railroad restaurant, any portion of the property thus conveyed, but the court held, under the other facts in the case, that defendant’s right to so use it could not now be successfully questioned, and there has been no appeal from such decisión, and so the question may be dismissed from our consideration.

In 1850 James Wadsworth died, leaving a will by which he devised to his children the land not theretofore conveyed to defendant’s predecessor, being one-quarter to each of his two sons, and one-quarter to his executors in trust for his daughter, Elizabeth Wadsworth, and one quarter to his executors in trust for his grandson, Martin Brimmer, Jr. So far as the evidence in the case shows, this left the title, not only to the premises leased by the plaintiff, but also to the thirty-feet strip of land already mentioned, in the devisees under the will of James Wadsworth, because of the lack of any acceptance of the dedication on the part of the public authorities, which will be again referrrd to

In 1853 partition of the lands now leased by plaintiff (which lands excluded the thirty-feet strip) was made, by which one-half of such premises was conveyed to the trustees of Martin Brimmer, Jr., and one-half to Charles James Murray, who was then an infant. Both conveyances bounded the premises by the line of this thirty-feet strip called therein an “alley.”

In 1857 the trustees of Brimmer, and the general guardian of Murray, conveyed by quit-claim deeds to defendant’s predecessor an. undivided one-half part of that portion of the strip in question, being twenty feet wide, and adjoining the lands of the said predecessor theretofore conveyed to it by James Wadsworth in his lifetime. This left the title to the remaining ten feet of such strip unaffected, while an undivided half of the interest in the twenty feet just mentioned remained in the other devisees under the will of Wadsworth, assuming that Brimmer’s and Murray’s trustees and guardian held title to one-quarter each, and that it was conveyed to the defendant’s predecessor by the deeds above mentioned.

These deeds of the twenty feet contained a provision permitting the construction of a building thereon, at the discretion of the railroad company, by a wall along the line bounding on the remaining ten feet, and with roof projecting over such ten-feet strip a reasonable width for eaves-trough and water conductor, such projection to be on sufferance of the grantors, provided they should want at any time to build on the land. Both these deed also contained the following language: “This conveyance is upon the express condition that the said railroad company, their successors or assigns, shall at all times maintain an opening into the premises hereby conveyed opposite to the Exchange Hotel, so called [the premises now leased by plaintiff], adjacent to the premises hereby conveyed, for the convenient access of passengers and their baggage to and from said premises hereby conveyed, which opening shall at no time be closed against such passengers and their baggage, subject, however, to all proper regulations of police and railroad discipline of persons on the said premises.”

Subsequent to the execution of these deeds, and in May, 1857, defendant’s predecessor executed quit-claim deeds to the trustees of Brimmer, above mentioned, and to the general guardian of Murray, of an undivided half of the remaining ten feet of said alley, although it nowhere appears that such predecessor had any title to such ten feet. By mesne conveyances in or about September, 1873, Edward R. Hammatt, having become trustee for Brimmer, Jr., as such trustee became, and has ever since been, the owner of the premises now leased to plaintiff, which premises are bounded by, and do not include in the conveyances or lease any portion of the strip of land heretofore spoken of, although plaintiff claims a right of way over the thirty-feet strip dedicated for a public street by said James Wads-worth in his deed of January, 1844.- Soon after the execution of the deeds to the rairoad company above mentioned, the company laid its tracks along this twenty feet of the thirty- ■ feet strip which lies south of the premises, leased by plaintiff, and has ever since used the tracks for running its cars into and out of its depot at the west end of such strip. It appears also that there has been since the conveyance by Wadsworth in 1844, and upon the premises retained by him, and bounded by this thirty-feet strip, a hotel which has been accessible from defendant’s depot across its tracks, and which has depended largely for its patronage and custom upon the passengers arriving at and departing from such depot of defendants; and up to August, 1881, this thirty-feet strip (excepting as twenty-feet of it were used by defendant’s tracks as above stated) has been open and used by the occupants of the hotel, and by travelers as above described, and by the public. In May, 1881, the said Hammatt, as trustee of Brimmer, leased to plaintiff the hotel spoken of for three years, at the annual rent of $4,000, and the plaintiff entered into possession under such lease, and has been, and is now, carrying on such hotel and restaurant. The further fact was proved that the right of way across this thirty-feet strip is beneficial to the hotel and restaurant, and to the plaintiff’s possession, and is an appurtenance thereto of great value.

In August, 1881, the defendant entered upon the said strip or alley, and built a high and substantial fence the whole length of the strip, and on the edge of the twenty feet bordering on the remaining ten feet thereof, and such fence has been kept closed against the plaintiff and all others, and the defendants have thus wholly excluded the plaintiff, his servants, the guests of the hotel and all others, from entering upon such twenty feet. The fence is thus a total obsti’uction in the way of any passage across such twenty feet to all persons coming from the depot to the hotel, or from the hotel to the depot, who might otherwise reach either place by traveling over this twenty feet; and in this way such obstruction has very greatly lessened the patronage of the hotel, and damaged thereby the plaintiff, up to the commencement of this action, in the sum of $300, as found by the trial judge. This action was brought to enjoin the continuance of such fence, and to recover damages for the time which it had stood.

The complaint contained two counts; the first one stating the facts of the conveyance to defendant’s predecessor, and the dedication of the strip as a public street, and that the parties to the conveyance agreed mutually that the strip should remain and be a public street, and that it was necessary for the proper enjoyment of the hotel and restaurant that this strip should remain a public street. The plaintiff "then set forth the erection of the fence, and thus, as he said, defendants wrongfully excluded him from the public street; and he further alleged that such fence was a nuisance. In the second count the strip was called an alley or public highway, and the plaintiff claimed to have an easement or right of way or access across or to the twenty-feet strip in question. The plaintiff also alleged (evidently with reference to the language of the deeds to the railroad company in 1857) that the defendant had not, since the erection of the fence, maintained an opening into that part of the alley appurtenant to the southerly side of said hotel for the convenient access of passengers and their baggage “to and from the alley or public highway, as of right it should have done and was bound to do,” and that it had thereby deprived passengers and their baggage of convenient access to said •alley or public highway, and thus prevented such passengers and their baggage from entering said hotel at all, across or ■ by means of said alley or public highway. The plaintiff then alleged the tracks and the fence to be a nuisance, and asked for an injunction restraining defendant from continuing to permit its tracks to remain in the public street or alley, or from continuing the fence, etc. The answer of defendants was substantially a general denial.

When the case came on for trial, the counsel for the defendant moved to dismiss the complaint, because, so far as the complaint therein showed, the plaintiff was an entire stranger to the whole matter, as the only allegation on that subject was that he was in possession of the premises, and he did not appear as party or privy to any covenant or provision whatever. The plaintiff then moved to amend by, in effect, setting up his lease from the owner, to which defendant’s counsel objected that the amendment was not such a one as could be made upon the trial, and that it set up a new and distinct cause of action, and one which was on contract or covenant, and which could not be joined with an action for damages for a nuisance. The objections were overruled, and the trial proceeded. The facts heretofore stated were found by the judge who tried the cause without a jury, and a judgment was decreed enjoining the continuance of the fence, and providing for its removal, and for the recovery of the damages sustained by plaintiff, being the sum of $300.

The general term affirmed the judgment, and the defendants appealed to this court. We think the amendment allowed by the court was a proper exercise of discretion. It was in no sense the introduction of a new cause of action. Upon defendant’s own objection, and assuming it to be well founded, the cause of action in the complaint was defectively stated, because it showed no right or interest on the part of plaintiff to take advantage of the rights, if there were any, of the owner of the premises known as the hotel property. For the purpose of obviating that objection, and to show that the plaintiff had the same rights in the property so far as to take advantage of the covenants in regard to it which its owner had, the allegation of the lease was added to the other allegations in the complaint.

The defendant’s counsel now claims that it appears from the uncontradicted facts that there never was any public street over or on this thirty-feet strip because there never was any acceptance of the dedication on the part of the city authorities, or any control over it ever assumed by them. He further argues that the plaintiff, under the pleadings, is not entitled to any relief, for the reason that his rights are therein based upon the alleged fact of the strip being a public street; and, when -that fact fails, his rights fail with it.

The concession that there was no public street must be made, and for the reasons stated. It must also be conceded that the plaintiff does in his complaint allege, especially in his first count, that this strip is a public street or highway, and he alleges the fence to be a nuisance for that reason. In the second count, however, we think there are facts enough alleged, especially when the question does not appear to have been very clearly raised before, upon which can be spelled out the assertion of a right on the part of the plaintiff to have access to, and to some extent a right of way over, this strip, even if it be not, to all intents and purposes, a public highway.

In the second count the plaintiff speaks of there being, as appurtenant to the hotel, an easement which he describes, it is true, by metes and bounds, but which a reading of the whole count enables one to say is the allegation of an easement consisting of a right of way over or across some portion of this strip of land for passengers and their baggage; and that the defendants, having erected the fence, had left no opening therein at certain places which were appurtenant to the southerly side of said hotel, which of right the defendant should have done.

This is clearly a claim founded, not upon the fact that-this strip was a highway, and that as such any obstruction thereof was illegal, but it is a claim founded upon a totally different basis—a claim of a right to an opening into the alley appurtenant to the southerly side of the hotel, and for the convenient access of passengers and their baggage; and it was a statement that, by erecting this fence, the defendant has violated that right, and has thereby prevented such passengers and their baggage from entering said hotel, to plaintiff’s damage. Ah that was lacking in this language to show exactly what fact the claim was founded upon was the statement that the right of way was reserved by the deeds of Wadsworth, as trustee and guardian, executed in 1857. It might have been ground for a motion to make the complaint more definite and certain, but the claim is obviously not based upon rights arising solely from the assumption that the strip of land was at all events a public highway. If the plaintiff is, therefore, entitled to any relief on this branch of the case by virtue of the preservation in those deeds, and which he could obtain on no other ground, I think it should be granted him without the necessity of the reversal of the judgment, because that ground was not specially alleged, and an application to amend his complaint by setting up that right in exact and plain language before entering upon the new trial which would be awarded.

By the failure to accept the dedication, tne thirty feet in question remained the property of Wadsworth, and descended to his devisees at his death. By the deeds of the trustees of Brimmer and the guardian of Murray, all the estate of Brimmer and Murray in the twenty feet of the strip in question was conveyed to the railroad company. Such interest was said to be the equal undivided one-half part of such portion. But whatever it was, up to that amount, such estate was conveyed to the company. The title of Murray to about one-half of the property upon which the hotel stands, and which was bounded upon the said strip, was substantially conveyed to the trustee of Brimmer, who is the lessor of the plaintiff. Whatever rights, therefore,, which the other devisees under the will of James Wads-worth may have in this twenty feet of the original thirty-feet strip, as tenants in common with the company, about which we say nothing, as nothing is required to be said in this case, it is clear that the present plaintiff, who claims as lessee of the lessor who executed these deeds of 1857 to the railroad company, cannot raise the question of their invalidity to convey the interest of the cestui que trust and infant Brimmer and Murray. They must be regarded as valid deeds, and as conveying all the interests of Brimmer and Murray in this twenty feet to the railroad company, and such grantors must be regarded as thereby abandoning all claim to the same as a public street or highway. They are no longer tenants in common with any one.

The sole remaining question therefore is, what rights, if any, were reserved to Brimmer and Murray by those deeds of 1857? The grantors in those deeds contemplated the possible, if not probable, erection of a building over this twenty feet, showing thereby a clear intent to abandon all pretense of a claim for its use as a public street or highway, even if such abandonment were not otherwise conclusively shown by the execution of the- deeds. But the deeds contained, in addition, language providing for an opening and access to this twenty feet, which language has already been quoted, and the plaintiff claims that, if the deeds are valid, this language, under all circumstances, must be construed to be a covenant, and the burden thereof as running with the land conveyed, and in favor of those having a legal interest in the hotel lands, and that such covenant makes the right of access and transit to and across this twenty feet a right or easement appurtenant to the hotel premises. On the other hand, the defendants claim that the language used makes a condition subsequent which cannot be taken advantage of by any but the grantor and his heirs. We incline to the construction contended for by the plaintiff. The fact that the deed uses the language “upon -condition,” when referring to the conveyance by the grantors, is not conclusive that the intention was to create an estate strictly upon condition. The question is always, what was the intention of the parties ? And, while such intention is to be gathered from the language used, yet its construction may frequently be aided by reference to all the circumstances surrounding the parties at the time of the execution of the deeds, because the court is thus enabled to be placed exactly in their situation, and to view the case in the light of such surroundings.

From the language of the first deed from Wadsworth to defendant’s predecessor, in which the land is conveyed to it for the purpose of a passenger and freight depot only, taken in connection with the fact of the existence of a hotel and restaurant at that time on the land retained by him, and looking at the further fact that from 1844 to 1857 this strip in question had been kept open, and full access to the depot and the hotel on Wad worth’s property was had over this strip by passengers, guests, and the public in general, and that the patronage of the hotel was largely dependent upon the traveling public coming to and departing from said depot, all these facts would lead one to the unhesitating conclusion that the language used in those deeds in 1857 was for the benefit of the hotel property, and was not meant to create a condition subsequent, which courts regard with no very friendly eye, upon a failure to perform which the estate was to be forfeited, and which none but the grantor or his heirs could take advantage of. It was intended to be an agreement or covenant between the parties running with the land, providing for this access or right of way so as to continue or enhance the value of the hotel property by providing for such easy access to it from defendant’s depot for passengers and baggage. See Stanley v. Colt, 5 Wall., 119; Countryman v. Deck, 13 Abb. N. C., 110. Courts frequently, in arriving at the meaning of the words in a written instrument, construe that which is in form a condition, a breach of which forfeits the whole estate, into a covenant on which only the actual damage can be recovered. See Hil. Real Prop. (4th ed.), p. 526, § 13; 2 Washb. Real Prop. (3d ed.), chap. 14, subd. 3, p. 3, et seq.

It is asserted, however, that if this language be treated as a covenant, still the plaintiff cannot take advantage of it, as he is not a party or privy to it. The grantors in these deeds were also the owners of the hotel property, and the easement provided for in the deeds for the transit of passengers and their baggage over this twenty feet must be construed as reserved, not for their benefit in any sense, but as an easement reserved for the benefit and in favor of the grantors, being owners of the remaining hotel property, and as appurtenant to it, and fairly necessary for its full and proper enjoyment. It, therefore, runs with the hotel property, and in favor of its owner or lessee, the latter of whom has such an interest in its existence as courts will recognize and protect.

As the rights of the plaintiff are, in our view, dependent upon the deeds of 1857, the judgment must be in accordance with their terms. The courts below erred in not limiting the relief granted to plaintiff by the language of such deeds. As the judgment provided for a full and entire destruction of the fence in question, it must be reversed, and a new rial ordered, or else it must be modified so as to provide for an opening into the strip through that or any other fence or obstruction, of a size reasonable, proper, and fit, which shall be opposite to the hotel, and adjacent to the premises conveyed by the deeds, and large enough for the convenient access of passengers and their baggage to and from the said strip, which opening must at no time be closed against such passengers and their baggage, and which access must be subject to all proper regulations of police and railroad discipline of persons on the said premises. We shall order a reversal of the judgment, although a modification, as above stated, could be easily provided for, unless the plaintiff consents to waive the damages he recovered in the courts below. We do this because we aré greatly dissatisfied with the evidence upon which the recovery as to the damages was based. It was exceedingly vague and loose, if not, to some extent, guess-work. It seems also to have been made, to some extent at least, upon a mistaken view as to the defendant’s rights and liabilities under its deeds from Wadsworth to the trustee and guardian. Evidence seems, also, to have been offered and received upon assumption of the right of the plaintiff to a totally unobstructed access to and transit across this whole thirty feet in controversy at all times, ignoring the limitations of the right as contained in the deeds of 1867 to the railroad company. Some portion of the damages may also have been awarded on account of the restaurant in defendant’s depot, and its consequent effect upon the patronage of plaintiff’s restaurant, and upon the rental value of plaintiff’s hotel, which the learned judge thought after all was the criterion for the damages sustained by plaintiff. Under these circumstances, we are disposed to order a new trial for the errors as to the general rights of the parties contained in the judgment appealed from; so that upon a new trial, with those rights plainly defined, the evidence on the subject of damages may be more direct, and confined within smaller limits than it was upon the trial. This réversal, however, may be avoided, in the discretion of the plaintiff, by his consenting to waive the damages. If the plaintiff choose, he may consent to waive and remit his recovery for the past damages which he alleges he has sustained, and in that case we will then modify and affirm the judgment as modified in accordance with this opinion,, and after striking out the amount recovered for damages.

The order will, therefore, be that the judgment of the court below is reversed, and a new trial granted, unless plaintiff stipulates to waive the damages contained in such judgment, in which case the judgment will be modified as already stated in this opinion, and, as modified, affirmed, without costs to either party in this court.

All concur.


source: Caselaw Access Project

author: Peckham, J.

license: Public Domain

text:
    Northampton National Bank, Resp’t, v. Amos M. Kidder et al., App’lts.

      (Court of Appeals,

      Filed June 7, 1887.)

    1. Bonds—Purchase of, when stolen—When overdue.
    Plaintiff, in January, 1876, owned two $1,000 second mortgage bonds, payable April 1, 1911, with semi-annual interest. Each bond contained a clause that in case of non-payment of interest for six months, after demand, and in case of default for six months in a stipulated contribution to a sinking fund for ultimate redemption, the principal was to become due si í months from such default, with interest. The bonds were stolen by burglars, and in 1881 purchased by defendants. No interest was paid for 1877-78 and April, 1879, nor was any contribution'made to sinking fund, and a foreclosure of the mortgage had been commenced. Held, that as the bonds were overdue, and a demand had been made, or the company had dispensed with it, defendants were not bona fide holders, for they purchased paper overdue at the time, and even if they could succeed to the rights of bona, fide holders, there was no proof that any previous holder acquired the bonds before their dishonor, and there is no presumption in their favor that the thief negotiated the bonds before they become overdue.
    2. Same—-“Default.”
    The word “default,” as used in a statement of fact in a case of this kind, means the failure or default of the company to do that which it was under a legal obligation to do, and such default may have occurred by a refusal to pay any coupons upon the presentation of a part only, and by the action of the company in publicly announcing its inability to pay and its purpose to default as to all its legal obligations of this nature.
    8 Same—Waiver.
    Where some portion of past due coupons were paid to the plaintiff on the foreclosure suit, in accordance with a provision in the mortgage, in case of foreclosure, and in recognition of the legality of the foreclosure proceedings. Held, that the receipt of the money was not in any manner intended as a waiver of the election once and conclusively made by the bondholders or their trustees.
    Appeal from general term, superior court, of the city of New York.

      W. M. Safford, for app’lts; W. G. Peckham, for resp’t.

       Affirming 17 J. & S., 246.

   Peckham, J.

In the year 1871 the Ohio and Mississippi Railroad Company issued what was termed a “ second consolidated mortgage ” to secure the payment of a large amount of its bonds. The bonds on their face were payable on the 1st day of April, 1911, with interest in the meantime semi-annually at the rate of seven per cent on the first days of April and October in each year until the principal was paid upon the presentation and surrender to the company of the coupon or interest warrant attached for each installment of interest as it became due. Each bond contained this clause: “In case of the non-payment of the interest for any half year when demanded, and the same remaining unpaid for six months, and likewise in case of default for six months in the stipulated contribution to the sinking fund hereinafter referred to, the principal shall, without further demand or notice, become due and payable from and after the expiration of six months from the date of such default, with interest then accrued and in arrear.”

The bonds, in referring to the mortgage which secured their payment, also contained a statement as follows: “And said mortgage also provides a sinking fund for the ultimate redemption of said bonds, commencing with payments into the sinking fund at the rate of $20,000 a year, and so graded and regulated as to provide for talcing up the whole amount of the bonds before their maturity.”

By a written statement contained in the case, and headed “facts,” (the case containing none of the evidence given on the trial,) it appears that the plaintiff was, on the 26th day of January, 1876, the owner of two $1,000 second mortgage bonds of the issue above described, and on that day they were stolen from it by masked burglars. It further appears in the statement that no interest was paid on any of the second mortgage bonds for the years 1877, 1878, and April, 1879, nor was any contribution made to the sinking fund during the period from 1876 to December, 1882, inclusive, “and the defaults have never been made good for any of the payments which became due from 1876 to 1882.” A foreclosure of the second consolidated mortgage, the statement continues, ‘ ‘ because of the above mentioned defaults in the interest and sinking funds on the bonds in suit, was begun shortly before the appointment of receivers, who were appointed on the 17th of November, 3876.” At the time of the trial of this action (December, 1882), the foreclosure suit was still pending, and had been from the time of its commencement.

The defendants, on the 28th of April, 1881, had orders to buy $2,000 of these bonds, and they purchased the bonds in question, and acted through brokers in their purchase. Whether they paid a valuable consideration for the bonds or not. is a disputed inference from the language used in the statement of facts, and the general term held that the fact of such purchase for value did not appear, and upon that ground gave judgment for the plaintiff on a verdict directed for it at circuit, subject to the opinion of the general term.

Whether the court was right in that construction of the meaning of the language used is not important in the view we take of the case. The bonds when they were purchased by defendants in April, 1881, were overdue, and had thus ceased to be negotiable in the sense which frees the transaction from all inquiry into the rights of antecedent holders. Vermilye v. Adams Exp. Co., 21 Wall., 138, at 145; Morgan v. United States, 113 U. S., 476, 499 ; Hinckley v. Merchants’ National Bank, 131 Mass., 147. After maturity a purchaser for value is not a bona fide purchaser to the extent of being protected in his purchase (unless he succeeds to the rights of such a holder who became such before maturity); for the fact of non-payment discredits the instrument, and deprives it of any immunity which before maturity was secured to it in favor of a bona fide purchaser for value, without actual notice of any defect' either in the obligation or the title. The defendants’ counsel, however, very strenuously denies the statement that the bonds were overdue when purchased. He says that no legal demand of the interest on the coupons was ever proved, and that, by the terms of the bonds, the interest must remain unpaid for six months after demand before the principal could become due. The language heretofore quoted, which was used in the statement, implies, however, that a demand was made, or that the company had done that which dispensed with its necessity.

In a legal document of such precision as a statement of facts should be and is, where the vital point of the case rests upon the language used in this regard, the word “ defaults ” would never be used to describe a mere failure to' pay money as interest on coupons which had not been presented, or any demand of payment made, or any action taken by the company to dispense with such demand. The word means, as thus used, the failure or default of the company to do that which it was under a legal obligation to do, and such default may have occurred by a refusal to pay any coupons upon the presentation of a part only, and by the action of the company in publicly announcing its inability to pay and its purpose to default as to all its legal obligations of this nature This meaning of the word is rendered still plainer when, in the same statement, there is contained the further fact that the defaults have never been made good for any of the payments which became due from 1876 to 1882, and that the foreclosure of the second mortgage was commenced because of the defaults in the payment of the interest, and of the amount due the sinking fund. It is idle to claim that such language would be used in regard to any fact other than a legal default consequent upon a proper demand, or else in regard to some action which dispensed with its necessity, and was equivalent to a refusal to pay upon demand. Under no other circumstances could it be justly or truly said that the company had made any default in the full performance of all its obligations as to payments, and under no other circumstances would such a word be used in a legal document of this character.

Two cases were cited by the counsel for appellants to show that a default in the payment of interest did not make the bonds overdue. They were Railway Company v. Sprague (103 U. S., 756), and Morgan v. U. S. (113 U. S., 476. Both of these cases have been already •cited upon another proposition. Neither of them sustains this claim. In the first the condition was that the principal of the bond should become due if an installment •of interest due should remain unpaid for six months after a demand should be made for the payment of the same. There was no evidence that any demand had ever been made, and it was not stated that the company had made .any default in the payment of interest, and the court held that the mere presence on the bond of a past-due and unpaid coupon was not evidence of a default. In regard to .such coupons the court said: “Coupons are separable obligations for the interest payable on demand. It constantly arises that they are not demanded for weeks and months, and sometimes years, after they are due. As they bear interest after maturity, it will frequently happen that the owner of a bond who holds it as an investment will keep the coupon for the same purpose.” In the present case the statement that there had been a default for which a foreclosure was commenced, and receivers appointed, is, as has been said, equivalent to a statement that the company had been guilty of such a violation of the stipulations of the bond as made the principal due at once.

In the second case the court held that a so-called 5-20 government bond, which had been called for payment after the lapse of five years, and' a day named for its payment, after which interest would cease, was not an overdue bond; that the penalty for the non-presentment for payment by the day appointed was only the loss of interest from that time; .and that the bond was not overdue within the principle permitting inquiry regarding overdue paper, as to its origin or title in the hands of a bona fide purchaser for value, and without actual notice, until after the lapse of the twenty years named in the bond for its unconditional payment. It was stated that there was a distinction to be observed between a bond which was redeemable after five and within twenty years, at the discretion of the government, and one which was payable absolutely at a certain time, and that, in the case then before the court, the only penalty prescribed for the non-presentment for payment on or before the day named in the call was the loss of future interest. In no ■other way was the original contract altered, and no other disability was imposed upon the holder, nor any other immunity taken from him, and the bond continued to stand upon its statutory basis as a bond redeemable at the treasury on demand, without interest, after the maturity of the call, payable according to its original terms, and not overdue in the commercial sense till after the day of unconditional payment. In the case at bar, when the defaults had occurred, and the condition of the bond had therefore attached, the principal, by the very terms of the bond, became due at once.

Again, there can be no doubt as to there having been a default arising from the non-payment of the promised amounts into the sinking fund, as provided for in the bonds. This failure is stated'in plain language in the case. It cannot even be argued here (assuming the argument would be sound, which we do not decide) that the mere failure to pay either the interest or the promised amount into the sinking fund would not in and of itself render the principal of the bonds due, without some action looking to that end on part of the bondholders or the trustees under the mortgage, because it was simply a privilege extended to them to" so consider it at their election, which, until some action looking to its enforcement should be taken on their part, rested in abeyance, and might be waived. The answer is, there was an election in this case. The action to foreclose the mortgage, based upon both these defaults, was such election, and the defendants, when they purchased the bonds, knew that the company was in the hands of receivers.

The case, therefore, stands in this condition: The plaintiff proved that in January, 1876, it was the owner of these bonds, and at that time they were stolen from it by means of a burglary. The thief, of course, got no title to them. The ownership and the theft of the bonds having been proved (and assuming them to have been commercial paper), the onus was cast upon the defendants to show that they were, or had succeeded to the rights of bona fide holders. Bank of Cortland v. Green, 43 N. Y., 298; Farmers’ National Bank v. Noxon, 45 id., 762; Bank of New York v. Carll, 55 id., 440, per Church, C. J. They were not bona fide holders, for they purchased paper which was overdue at the time of their purchase, and, if it be conceded that purchasers of such paper can succeed to the rights of bona fide holders (see Miller v. Talcott, 54 N. Y., 114), yef there is no proof of that nature in this case, as there is no proof that any holder succeeding the thief acquired the bonds before their dishonor as overdue paper, and there is no presumption to be indulged in favor of defendants that the thief negotiated the bonds before they became overdue. This precise question as to the presumption in such case has been thus decided in Massachusetts, and, as we believe, correctly. Hinckley v. Merchants’ National Bank, 131 Mass., 147.

Lastly, we think ■ there was no evidence of any legal waiver of the election to consider the principal of the bonds due. Some portion of past-due coupons, it seems, was paid to the plaintiffs in the foreclosure suit (in which this plaintiff had intervened, and become a party plaintiff); but it seems that it was paid in accordance with a provision contained in the mortgage in case of foreclosure thereof, and evidently was a payment made in recognition of the legality of the foreclosure proceedings, and the receipt of the money was not in any manner intended as a waiver of the election once and conclusively made by the bondholders or their trustees. At all events, there was no pretense of a waiver of the default as to the payments into the sinking fund.

The defendants have failed to show any defense to plaintiff’s demand, and the judgment in its favor must be affirmed, with costs.

All concur.


author: Andrews, J

text:
    Jefferson County National Bank, Resp’t, v. John C. Streeter, App’lt.

      (Court of Appeals,

      Filed June 7, 1887.)

    1. Bankruptcy—Fraud in preference—United States Statutes, 1867 —Section 39, as amended 1874.
    The effect of section 39 of the bankrupt act of 1867 as amended 1874, prohibiting a creditor who had obtained a fraudulent preference from proving more than a moiety of his debt, was to mitigate the harshness of the original section 39, which prevented him from proving any portion of his debt, although he had to be deprived of the benefit of the preferential provision, and to confine the prohibition to cases of actual fraud, and even in cases of actual fraud limited the penalty to the right to prove a moiety only.

      2. Same.
    Where judgments were obtained by default against the makers of promissory notes, by an attorney who has notice of their insolvency, and the judgments were set aside by the United States courts, as a fraudulent preference, because of the knowledge of the attorney, it is not a case of actual fraud within the act of 1874, and would not preclude plaintiff from prov its debt against the estate of the bankrupts or against the indorser of the notes.
    Appeal from supreme court, general term, fourth department.
    In 1877 H. V. Caldwell & Co. made three promissory notes, had them indorsed for accomodation by defendant and negotiated them with plaintiff. The notes were not paid and were duly protested, and notice given defendant. Judgment was obtained against the makers of the notes April 6, 1877, execution issued and a levy made upon their property more than sufficient to satisfy the judgment. On the same day a petition in bankruptcy was filed against the said makers in the United States court, and on the ninth April plaintiffs and the sheriff were enjoined from selling the property levied upon, and the said makers were adjudged bankrupts on the first of May, and an assignee appointed, and the sheriff appointed special receiver of their estate and directed to sell the property levied upon, and deposit the money in the court of bankruptcy, the lien of the judgment creditors not to be affected, which he did. The assignee afterwards brought an action in the United States court to have plaintiffs judgment adjudged void as against such assignee, and the money be paid to him, in which he was successful March 30, 1880. The bank took an appeal to the United States circuit court, but the judgment was affirmed. This action was then brought on the same notes, against the indorser, and the defendant moved the court to dismiss the complaint on the grounds, among others, that the plaintiff, having obtained a fraudulent and preferential judgment, and levy under the bankrupt law, against the makers of the notes, who were primarily hable for their payment, it thereby precluded itself and the defendant, the indorser, from proving the notes or any part thereof in bankruptcy, against the makers’ estate, and so released the said defendant as indorser. The court denied the motion. Defendant excepted. The court, on a finding of facts, ordered judgment for plaintiff, from which this appeal is brought.

      D. O’Brien, for app’lt, John Lansing, for resp’t

       36 Hun, 40, mem.

   Andrews, J

There has been some conflict of judicial opinion in the courts of the United States as to the true construction of that part of the amendment to section 39 of the bankrupt act of 1867, made by the act of congress of June 22, 1874, which relates to the proof of debts by creditors who had obtained. a fraudulent preference on the property of the bankrupt. The original section 39, authorized the assignee of a bankrupt to maintain an action to recover back money or property paid, conveyed, sold, assigned, or transferred by the bankrupt contrary to the act, ‘ ‘ provided the person receiving such payment or conveyance had reasonable cause to believe that a fraud on the act was intended, or that the debtor was insolvent;” and the proviso is followed by the declaration that “ such creditor shall not be allowed to prove his debt in bankruptcy.” The amendment of 1874 substitutes for the last clause in section 39 the following: “And such person, if a creditor, shall not, in .case of actual fraud, be allowed to prove for more than a moiety of his debt.”

It was held by Judge Blatchford, while sitting as district judge in the case of In re Stein (16 N. B. R., 569), that the only effect of the amendment of 1874 was to create a limitation upon the right to prove debts on a voluntary surrender under section 23 of the act of 1867, and to forbid a creditor, in case of actual fraud on his part in obtaining the preference, to prove for morfe than one-half his debt, notwithstanding he may have surrendered what he had received. But this construction of the amendment of 1874 has not been generally adopted. On the contrary, it has been held in several cases, both in the district and circuit courts of the United States, that the intention and true construction of the amendment was to mitigate the harshness of the rule prescribed in.the original section 39, which prohibited a creditor who had obtained a preference in fraud of the act from proving his debt, although he had been deprived of the benefit of the preferential provision, and to confine the prohibition to cases of actual, as distinguished from constructive, fraud; and, even in cases of actual fraud, to limit the penalty of the fraud to a denial of the right to prove the debt as to a moiety only. In re Black, 17 N. B. R., 399 (Dist. Ct. Mass.); In re Newcomer, 18 N. B. R., 85 (Dist. Ct.); 19 N. B. R., 283 (Dist. Ct., N. J.); Burr v. Hopkins, 12 N. B. R., 211 (Cir. Ct., Wis.); In re Reed (Cir. Ct., Mass.); In re Cadwell (Dist. Ct., N. D., N. Y., 1883), affirmed in circuit court.

This construction is sustained by a large preponderance of judicial authority, and what is especially important to notice, it has the sanction of the district and circuit courts of New York, having the original and final appellate jurisdiction in cases of bankruptcy arising within this state. We think the construction is sensible, and, although there may be reason for doubt, we are disposed to follow the general current of authority upon the question, and to hold that, in cases coming within section 39 of the act of 1867, the effect of the amendment of 1874 was to remove the prior absolute prohibition against the proof of a debt by a creditor who had obtained a preference which had been annulled, and to confine the prohibition to cases of actual fraud, and to limit it even in those cases to a disability to prove more than one-half of the debt.

The original judgments in favor of the bank against Cadwell & Co. were recovered on notes made by Cadwell & Co., indorsed by the defendant Streeter. They were obtained in due course, on default, after personal service of process on the defendants in the action. Executions on the judgments were issued to' the. sheriff, and were levied on a stock of goods of Cadwell & Co. prior to the commencement of the bankruptcy proceedings against the firm. By an order of the district court, made after the filing of the petition in bankruptcy, upon the application of the petition ing creditors, the attorney for the bank consenting thereto, the sheriff was appointed special receiver of the estate of the bankrupts, and was directed to sell the property levied on, and deposit the proceeds of the sale with the usual depository, subject to the further order of the court; but the order provided that “ the hen of the judgment creditors, if any,” should “follow and attach to the moneys arising from the sale.”

It was adjudged in the action subsequently brought by the assignee in bankruptcy that the judgments of the bank were void as against such assignee, and that he was entitled to the fund, the proceeds of the goods sold by the sheriff under the order of the bankruptcy court. The judgment in the action by the assignee in bankruptcy does not, on its face, disclose the particular grounds upon which the adjudication therein proceeded. Without going into detail, it is sufficient to say that it is to be collected from the pleadings and the opinion of the court that the judgments and executions in the state courts were set aside as a fraudulent preference, not on the ground of any actual fraud on the part of the bank or its officers, but for the constructive fraud growing out of the fact that its attorney who procured the judgments had notice of the insolvency of Cadwell & Co. at the time of commencing the action in favor of the bank, and designed to obtain a preference by means of the proceedings in the state courts, which was imputable to the bank, and rendered |the judgments void. See opinion of Wallace, J. MS.; Brown v. Jefferson Co. Bank (19 Blatchf., 315). It was not, therefore, a case of actual fraud, within the act of 1874. It is not very easy to define what is meant by actual fraudin this statute.

Judge Lowell, in the case of In re Black (17 N. B. R., 399), referring to these words, said-: “The meaning of the statute appears to be plain that, after a recovery of the damages and costs, the creditor may prove his debt, if he have not actually assisted in the fraud.” It would seem to require something more than mere imputable fraud to debar a creditor who has acquired an unlawful preference from proving his claim after he ’has been deprived of his security. The words “actual fraud” were apparently employed in contradistinction to legal or constructive fraud, and are only satisfied, we think, where actual complicity or a conscious purpose on the part of the creditor to accomplish a known fraud upon the act is shown.

The evidence comes far short of this proof in this case, and the bank was not, therefore, debarred from proving its debt, provided the obtaining of the judgment, and the levy upon the property of the bankrupts under the executions, was a conveyance, sale, assignment, or transfer of the property of the bankrupt within section 39 of the act of-1867. We think these terms must be construed to embrace such a transaction as this; otherwise it would happen that a creditor who merely proceeded to judgment, execution and levy, that afterwards were set aside at the suit of the assignee in bankruptcy as constructively fraudulent, would be in a worse plight, as to proving his debt, than, a creditor who had actually taken and applied the property of the bankrupt upon his debt by way of preference. It cannot be supposed that this, discrimination could have been intended. The right of the bank to prove its debt was affirmed by the district and circuit courts in this state in respect to another debt held by the bank against the same bankrupt under precisely similar circumstances. It follows that the defendant was not prejudiced by the act of the. bank in its dealings with Cadwell & Co. It did not thereby preclude itself from proving its debt against the estate of Cadwell & Co. in bankruptcy, nor interfere with the right of the defendant as indorser. The consent of the bank to the order of the district court appointing the sheriff as special receiver, and directing a sale of the goods levied upon, is not a defense. The order preserved the lien of the execution, if any, and transferred it from the goods to the proceeds. It was subsequently decided by a court of competent jurisdiction that no lien was aquired as against the assignee in bankruptcy. The judgment of the bankrupt court was conclusive upon the bank, and the question is not open for contestation by the defendant.

We think the judgment below is right, and it should, therefore, be affirmed.

All concur.


text:
    Elizabeth A. L. Hyatt, Resp’t, v. Dale Tile Manufacturing Co. (limited), App’lt.

      (Court of Appeals,

      Filed June 7, 1887.).

    1. Patents—Royalties— Consideration fob.
    Where the owner of a patent agrees to refrain from manufacturing, in consideration of a promise by another to pay royalties, the latter cannot escape liability for royalties while continuing to manufacture, on the ground that there was no valid patent in existence, and that so the consideration had failed, so long as the patent has not been legally annulled.

      2. Same.
    Under a clause on the agreement plaintiff gave notice of forfeiture of defendant’s rights thereunder, through its willful violation thereof, in refusing to pay royalties due. Subsequently plaintiff withdrew the notice at the request of defendant, and upon its promise to pay the royalties. Held, that a failure to carry out such promise gave a good cause of action.
    Appeal from judgment of general term of the court of common pleas of New York city, affirming a judgment of the general term of the city court of New York city, affirming a judgment entered in favor of plaintiff, in an action to recove* royaWe^, as assignee of a patent known as “Illuminated Basements and Basement Extensions.” Letters patent were granted in 1867 and re-issues granted in 1868 and 1881. Plaintiff, in 1878, licensed defendants and others to manufacture and sell within a certain territory.

      Edward D. McCarthy, for the company, app’lt; George W. Van Slyck, for Hyatt, resp’t.
   Peckham, J.

We think this case is controlled by that of Marston v. Swett, reported upon two appeals to this court. See 66 N. Y., 206, and 82 N. Y., 526. The general and material features of the two cases are similar. In both there was an agreement on the part of the plaintiff to refrain from manufacturing, in consideration, among other things, of the promise of defendant to pay the royalties. While continuing the manufacture under the license, the defendant ought not to escape liability to pay the royalties. The defendant’s counsel, it is true, seeks to distinguish this case from Marston v. Swett (supra), because, as he says, since the re-issue of the patent in 1881, which he insists was wholly void, the defendant has had no protection from the manufacture by others, for the reason that by the surrender of the patent of 1878, and the re-issue of 1881, there was no valid patent in existence, and the consideration for the promise to pay royalties had therefore wholly failed. There was consideration enough for the promise to pay such royalties, in that the plaintiff bound herself not to manufacture. and because the defendant could not be called to account as an alleged infringer while manufacturing under the license.

If it were a question of the validity of the reissue of 1881, and a decision of that question were necessary to the decision of this case, the defendant is of course correct in his claim that a state court has no jurisdiction to determine such an issue; but within the decision of the Marston Case, no such question arises. The defendant has protection enough to base its promise to pay royalties upon, as long as it so conducts itself towards plaintiff as to prevent her from treating it as an infringer. In other words, so long as the defendant continues to manufacture under its license (the patent not having been legally annulled) and thus elects to treat the agreement as in existence, it prevents, the plaintiff from treating defendant in any other light than that of a licensee. If defendant desired to repudiate any obligation under this agreement, it should have given notice to plaintiff that it refused to longer recognize its binding force, and that it would thereafter manufacture under a claim of right founded upon the alleged invalidity of the patent. Otherwise the defendant, in claiming to manufacture under the license, and in refusing to pay the royalties thereunder, would, if successful, prevent the plaintiff from recovering anything from it. She could not treat the defendant as an infringer because it was manufacturing under a license from her, and she could not collect the royalties under the license (although herself refraining from manufacturing, ás she had agreed), because the defendant would allege the invalidity of the patent, although continuing to manufacture under cover of a license from its owner. Such doctrine cannot stand a moment. Of course, as is said in the Marston Case, from the time that the patent is annulled by proper legal proceedings, no royalties could be collected, even though no notice of a. repudiation of the agreement had been thereafter served.

There is another ground upon which it seems to me this judgment might well rest. Under the clause in the agreement between the parties, which provided for a forfeiture of all rights thereunder, if one party should willfully violate one of its provisions, the plaintiff gave notice of such forfeiture to defendant, based upon its refusal to pay the royalties which it had acknowledged to be due for the quarter ending October 31, 1881 (the very quarter in question here), an account of which it had rendered under the oath of its secretary, as provided for in such agreement. Subsequent to the service of such notice the plaintiff withdrew the same at the request of defendant, and upon its-promise to pay these very royalties which it had already acknowledged to be due. A failure to carry out such promise gives, as it seems to me, a good cause of action.

The defendant says there was no consideration for such a promise, because there was no patent upon which to ground a license, and the defendant therefore had no license and no protection. But the plaintiff, of course, contended that the re-issued patent was valid, and, at the request of defendant, the plaintiff withdrew her notice of forfeiture of the license, and thus reinstated the defendant in its possession, and freed it from the liability to be proceeded against as an infringer, and put to expense and inconvenience in the defense of such a litigation. This was saved at the request of defendant, and upon its special promise to pay the royalties. Plainly, here was a good and sufficient consideration for defendant’s promise.

■ The judgment should be affirmed, with costs

All concur.


author: Earl, J.

text:
    People ex rel. Isaac W. Peck, App’lts, v. Com’rs of Department of Fire and Buildings of the City of Brooklyn, Resp’ts.

      (Court of Appeals,

      Filed June 7, 1887.)

    1. Certiorari—Return to.
    Where a writ of certiorari was granted, directed to the fire commismissioners of Brooklyn, reciting that an acting detailed fireman was unjustly removed hy them from his position, and commanding them to make return to the writ, and they simply returned that in September, 1879, they adopted the following resolution: “Resolved, that Isaac W. Peck, inspector of kerosene oil, he dismissed.” Held, that such return is a plain, unambiguous admission that, while Peck occupied the position of detailed fireman in the department of fire and buildings of the city of Brooklyn, he was summarily dismissed by the resolution returned.

      3. Same—Code Civ. Pro., § 2138.
    Under section 2138 of the Code of Civil Procedure, requiring that the hearing upon a writ of cei'tiorari must be had “upon the writ and return, and the papers upon which the writ was granted,” where the return admits the facts stated in the writ, or the papers upon which it was granted, or is silent as to them, then such facts become important, and must be considered and have effect upon the hearing.

      3. Same—Laws 1873, chap. 863, title 13, § 14—Employee entitled to notice.
    Before there can he any conviction of a fireman by the commissioners in the city of Brooklyn, the member proceeded against is entitled to notice of the charge made against him and to a hearing and trial.
    Appeal from supreme court, general term, second department.

      Edward F. O'Dwyer, for app’lts; Almet F Jenks, for resp’ts.

       Reversing 37 Hun, 644, mem.

   Earl, J.

The petitioner presented to the supreme court a verified petition in which he represented that he was, and had been for a longtime, a member of the department of fire and buildings of the city of Brooklyn; that on the 15th day •of September, 1819, he was a duly appointed and acting detailed fireman of that department, having been appointed hy the commissioners of that department; that on that day the commissioners irregularly, illegally, and without .authority or jurisdiction, and without cause, removed him from his position; and he prayed for a writ of certiorari directed to the commissioners, commanding them to certify and return to the court all proceedings had before them in reference to his removal. Thereupon a writ of certiorari was granted, directed to such commissioners, reciting that Isaac W. Peck, a duly appointed and acting detailed fireman of the department of fire and buildings of the city of Brooklyn was, on the 15th day of September, 1819, removed by the commissioners of that department from such position, and commanding them to make return to the writ. In obedience to that writ the commissioners returned simply that, at a meeting of the board of commissioners held September 15, 1879, they adopted the following resolution: “ Resolved, that Isaac W. Peck, inspector of kerosene oil, be dismissed.” The return did not deny that Peck, at the time of his dismissal, was a member of the department of fire and buildings of the city of Brookly, or that he had been duly appointed and was then acting as a detailed fireman of that department, as alleged in his affidavit. Neither did it deny the allegation in the writ that he was a duly appointed and acting detailed fireman of the department. It did not allege that Peck was appointed inspector of kerosene oil, or that that was the official position which he occupied in the department. Consistently with the facts alleged in the affidavit and the writ, he was a fireman, detailed, at the time of his dismissal, as an inspector of kerosene oil. Indeed, nothing is returned except the facts of Peck’s dismissal. The return, therefore, is a plain, unambiguous admission that, while Peck occupied the position of detail fireman in the department of fire and buildings of the city of Brooklyn, he was summarily dismissed by the resolution returned.

The practice prior to the adoption of the present Code required that the hearing upon the return to a writ of certiorari should be solely upon the return. People v. Fire Commissioners, 73 N. Y., 437. But by section 2138 of the present Code it is now required that the hearing upon the return to a writ of certiorari must be had “upon the writ and return, and the papers upon which the writ was granted.” Under this section, where the. return meets all the allegations of fact contained in the writ, and the papers upon which it was granted, and traverses them, then the hearing must be confined to the facts stated in the return; but where the return admits the facts stated in the writ, or the papers upon which it was granted, or is silent as to them, then such facts become important, and must be considered and have effect upon the hearing. People v. French, 25 Hun, 111. Therefore, looking at these papers, —the affidavit» writ and return,-—it appears that, without any trial or hearing, the commissioners summarily dismissed the relator from his position as a detailed fireman and member of the department of fire and buildings of the city of Brooklyn. The case, therefore, as it appears in the record, is precisely like that of People v. Commissioners (103 N. Y., 370), and upon that authority this appeal must prevail

Since writing the above, me learned counsel for the respondents has submitted an additional brief, in which he makes for the first time the point that “there was no provision of law at the time of the removal of the relator which prohibited the dismissal of any member of the department of fire and buildings, whatever his position; ” and he claims that the point was not decided in the case of People v. Commissioners, because it was not there made, and that it was there assumed after convictions. We-think it clear that the point is not well taken.

The Brooklyn charter act (Laws 1873, c. 863, title 13, §• 14), provides as follows: “It shall be the duty of said commissioners to make suitable regulations, under which the officers and men of the department shall be required to-wear an appropriate uniform and badges, by which, in case of fire and at other times the authority and relation of such officers and" men may be known; and the commissioners shall have power, in their discretion, on conviction of a member of the department for any legal offense, or neglect of duty, or violation of rules, or neglect or disobedience of orders, or incapacity, or absence without leave, or any conduct- injurious to the public peace or welfare, or immoral conduct, or other breach of discipline, to punish the offending party by reprimand, forfeiting or withholding, pay for a specified time, or dismissal from the department; but no more than ten days’ pay shall be forfeited and withheld for any offense.” This section, standing alone, specifies the cases in which, and the causes for which, dismissals may be made, and the plain implication is that they cannot be made in any other cases, or for any other causes. The' Latin phrase ‘ ‘ expressio unius exclusio alterius,” furnishes the rule of construction which must be applied. By well-settled rules applicable to such cases, before there can be any conviction under this section, the member proceeded against is entitled to notice of the charge made against him, and to a hearing and trial. It would, therefore, be quite absurd, to hold that a worthy and competent member of the department, who was guilty of no offense or delinquency of any kind, could be arbitrarily dismissed without a charge, hearing or trial, but that a member guilty of some of the-offenses or delinquencies mentioned could be dismissed only after a trial and conviction.

But it is claimed that' section 9 of the same title throws some light upon the meaning of section 14; and that section, as originally enacted in 1873, was as follows: “ The said commissioners shall have power' to elect a secretary, chief and assistant engineers, and as many officers, clerks, firemen, engineers, drivers, inspectors and bell-ringers as may be declared necessary by the common council; and the same shall at all times be under the control of said commissioners, and'perform such duties as maybe imposed upon them .by the said “ commissioners, and may be removed by said commissioners.” But the conflict between that section and section 14 having probably been perceived, the legislature, the next year, by section 20 of chapter 589, amended section 9 to bring it into harmony with section 14, so as to make it read as follows: The said commissioners shall have power to elect a secretary, chief and assistant engineers, and as many officers, clerks, firemen, engineers, drivers, in- ■ spectors and bell-ringers as may be necessary, provided that the salaries of such employees, in the aggregate, shall not exceed the amount annually raised by the proper officers for such purpose. The said employees shall at all times be under the control of said commissioners, and perform such duties as may be imposed upon them by the said commissioners ” The omission from the section of the absolute power of removal is quite significant, and leaves no doubt as to the proper construction of section 14.

The last paragraph of section 7 of the act, chapter 377 of the Laws of 1880, passed after the dismissal of the relator, made no new provision, but applied the prior law to the new state of things.

The orders of the general and special terms, and the proceedings of the commissioners .of the department of fire and buildings of the city of Brooklyn, should be reversed, with costs to the relator in the supreme court and in this court.

All concur


text:
    John H. Starin, App’lt, v. The Mayor, etc., of New York et al., Resp’ts.

      (Court of Appeals,

      Filed June 7,1887.)

    1. Attorney—Fees op—Compensation por services.
    Plaintiff’s assignee was employed by the excise commissioners of the city of New York from 1589 to 1863. He commenced 14,915 actions for violation of excise law. The data for drawing the complaints were furnished by the commissioners, and he filled in blank forms already prepared, except as to names and dates. In 8,656 actions the defendants appeared and answered. In . ,054 actions, judgments were taken by default. 1,243 cases were placed on the calendar and remained twelve terms, although after the trial of four or five the judge refused to try any more. There was an understanding that the cases were not to be moved until a test case had been decided by the court of appeals, and they never were moved. The county paid - the disbursements. The attorney had no agreement as to compensation. He expended about $4,000 and received in costs $10,000. In a suit against the city a referee allowed him the taxable costs, viz., $388,-156.41. Held, error, that upon a question of compensation for services performed in an enormous number of cases involving no complicated questions of law, and only the most simple of all questions of fact, taxable costs granted in each case, as a measure of compensation, would make it most grossly excessive.
    2. Same—Rule op damages.
    That under such circumstances the value of such services should be measured as being an employment by the year, judging of such value by considering it with reference to each suit.

      Appeal from supreme court, general term, first department.

      A. J. Vanderpoel, for app’lt; D. J. Dean, for resp’ts.
   Peckham, J.

The plaintiff sues as assignee of one who was appointed by the excise commissioners of New York, their attorney to prosecute actions for violations of the excise laws in their county. He was appointed such attorney in 1858, but only actively commenced his work in 1859, and. from then until 1863, his whole time, he says, was taken up in this business, but more actively at the commencement of the season when the board would meet. From 1863 his services were so slight that he did not keep a book, and it was not worth making even a memorandum of the amount of costs collected by him. His active-work was thus shown to have been included within about the period of four years. The amount of the work done may be thus summarized: He commenced 14,915 actions for violations of the law by selling liquor without a license. The names of the defendants were reported to him from the commissioners of excise, with the dates of the alleged violations, and he then filled in such names and dates in blank summons and complaints, which required only such names and dates to make a perfect writ and pleading. Five minutes spent in this business was ample to fill out each case, and indorse it, etc. In 8,656 of such actions the defendants appeared, a majority by one attorney, and put in answers, which were simply general denials. In 1,054 of these actions judgments were taken by default, on application to the court, and executions issued thereon. In 1,243 of the actions, notices of trial were given, and they were placed on the calendar, and remained thereon twelve terms, for although after the trial of four or five the judges refused to try any more, and none was tried; and the evidence shows pretty conclusively that they were not necessarily on the calendar, nor did they require any attention, owing to an understanding that they were not to be moved until a test case had been decided by the court of appeals, and they never were moved. The county paid the disbursements for printing, for county clerk’s and for sheriff’s fees. The whole sum disbursed by the attorney for clerk hire, and every other expense, amounted to between $3,000 and $4,000. There was no agreement between the attorney and the board as to compensation. He collected and appropriated to his own use, of costs and penalties in these actions, the sum of $10,000. This is the character of the services performed by the attorney, and their amount has-been thus substantially detailed, and upon this branch there was no contradictory evidence.

The plaintiff, to prove their value, called six witnesses,, one of whom had been one of the commissioners of excise during the time inquired about; and they substantially said that, in their opinions, in the absence of any agreement, the attorney was entitled to be compensated at the rate of the statutory posts, and that the number of the cases would not alter their view of the matter in the least; that, if it was worth that sum for one case, it was for 14,000. One witness seemed to regard the matter much in the same light as if the attorney had discovered a gold mine, and was entitled to the rewards of his good fortune. He thought that, if 200 suits were commenced in one day (in the manner above described, by the mere filling in of a name and a date in blanks left for that purpose), it was worth ten dollars in each suit; and therefore $2,000 a day for that service would be a fair and reasonable charge against the county. He said he looked at the whole thing, “it would only occur once in his life, probably.” At the same time he said that an attorney capable of doing this business could probably have been hired by the year for from $1,500 to $2,000. This he subsequently explained by saying he meant one could be hired for that sum who superadded to his clerical ability a sufficient quantity of character to intrust him with the charge of the papers in the office—not performing the “brain work,” but the mere manufacture of the paper after he had been advised by the counsel in the case. The compensation which this witness would award, including $2,000 per day for the commencement of 200 suits, and $12,000 a month for term fees for cases on the calendar which required no attention, and other things in like proportion, the witness said he regarded as compensation for the attorney, for “him for the moments of leisure in his life spent in the acquiring of sufficient knowledge to carry on and conduct a prosecution successfully through.”

Another witness who estimated the same amount of ten dollars for a term fee in each case, which would amount to $12,000 a month, said such amount was, in his opinion, fair and just,‘even when nothing was done in the causes, they being simply on the calendar and requiring no watching, so long as he had cases enough to make up such total at the specified sum for each. He said, in regard to all the services for which he gave an opinion as to their value, that he did not regard them “as services which involve the question of ability or professional skill,” and that was the reason he gave the answer he did, which was that services of a skilled nature should be compensated more liberally in the case of an experienced lawyer than another, but that for such services as their attorney performed he would maite no difference in the compensation, so far as regarded any reputable member of the bar.

The matter is alluded to only to show what is, indeed, otherwise perfectly plain, that even in the opinion of at least one of plaintiff’s witnesses the services of the attorney were not of a high grade, certainly, of skilled labor. The rest of the evidence for the plaintiff is substantially of a like nature, and based upon the same principles and reasoning, viz.that, however large might be the difference between the taxable costs in all these causes, the amount for which such services could have been obtained by making an agreement with a perfectly reputable and competent attorney in regard to it beforehand, yet, if that precaution happened to have been neglected, such fact was entirely unimportant in forming an opinion as to the value of those services. It is to be gathered that this surprising fact was based upon the belief of the plaintiff’s witnesses that, in the absence of an agreement, the attorney was entitled to be compensated for his services in any and in all cases, no matter how great then number, at the rate of the taxable ■costs in each case. •

The defendants, on their side of the case, called tmrceen witnesses, many of them among the leading members of the bar in New York city, and they one and all declared that while, in the ordinary run of suits of a not very intricate nature, the compensation of an attorney might be reasonably based upon the taxable costs in a case, yet in their judgment, where the cases were of the simplest possible nature, and were of such an enormous number, and the labor involved was so largely reduced to that of mere machinery as is the case under discussion, the compensation under such circumstances, at the rate of taxable costs, was enormously extravagant, and each one gave his opinion as to the value of such services taking it as an employment by the year (as the attorney was appointed annually), and also judging of such value by considering it with reference to each suit.

The difference between the highest amount, as given oy the defendants’ witnesses, and the lowest, as measured by the plaintiff’s witnesses, amounted to the difference between about $40,000 or $45,000 and $313,510. The referee signed a report for the sum last named, with interest, amounting in all (after deducting what the attorney had received) to the sum of $388,156.41, for which sum, with costs, judgment was entered. The defendants appealed, and the general term of the supreme court reversed the judgment, as well upon the facts as the law, and so stated in its order of reversal. The plaintiff then appealed to this court from the order granting a new trial, and gave the usual stipulation.

The order of the general term reversing the judgment entered upon the report of the referee, and granting a new trial, should be affirmed. The most limited construction of our power in reviewing questions of fact, arising, as they do in this case, by a reversal in the general term of the findings of fact by a referee, is broad enough to permit and to compel an affirmance of the general term order. The result arrived at by the referee ought to shock the common sense of every intelligent man. The idea that a lawyer of respectable character could by any possibility earn over $300,000 in the space of four or five years, by services of a legal nature requiring.no more legal ability than was involved in making out a summons and complaint, and taking judgments by default, in these excise cases, is a delusion simply, and any judicial tribunal that should determine it to be a fact would be absurdly at war with the truth and the common and universal experience of mankind.

As I have said, the testimony of plaintiff’s witnesses seems to- have been based upon the assumed law that, if no bargain were made, the attorney was entitled to the taxable costs in every case. As a mere measure of compensation for services as an attorney performed in an ordinary case, or in a very small number of such cases, that rule may be very well, and may furnish under such circumstances, a fair rate of compensation. But upon a question of compensation for services performed in an enormous number of cases involving no complicated questions of law, and only the most simple of all questions of fact, taxable costs granted in each case as a measure of compensation would' make it most grossly excessive. I do not think there is, in truth, any general rule of law that, since the Code, makes the compensation of the attorney necessarily co-extensive with the taxable costs, in the absence of an agreement. The counsel for the plaintiff cites, to prove that there is such a rule, certain cases, and among them Scott v. Elmendorf (12 Johns., 315), and Brady v. Muyor (1 Sandf., 569), and some cases in the supreme court since the Code. The cases just above cited arose under the old fee-bill, and do not touch the question under the Code.

In Rooney v. Railroad (18 N. Y., 368), which was only a question as to an attorney’s lien on a judgment under the Code, Harris, J., said, as a mere expression of an opinion on a subject not decided by the court, that, “in the absence of any ageement on the subject, I suppose the sum recovered by the party as an indemnity for his expenses would be the measure of compensation allowed to the attorney.” Comstock, J., in the same case, said: “It is not important now to determine what may be the implied agreement of the client with his attorney.” There are some cases in the supreme court which say that prima facie the implied agreement is to pay at the rate specified by the statute. I assume this statement to mean that it is in the absence of every other fact which courts might think material in judging what the implied agreement was; and, as thus construed, no fault need be found with it as furnishing, under such circumstances, prima facie evidence of what is the reasonable value of the services. But this court has said substantially what the implication is in case no special agreement was made. In People v. Supervisors of Delaware County (45 N. Y., 196), at page 202, Folger,. J., said: “By the Code (section 303), the measure of such compensation is left to the agreement, express or implied, of the parties. There was no express agreement between the relator and the board of commissioners of excise what should be his compensation if it became a charge against the county. He should be paid, then what his services were reasonably worth,—not according to what they produced to his client, but what such services, in themselves considered, were reasonably worth, looking at the labor, time, talent and skill expended in the bestowal of them. In Van Every v. Adams (42 Supr. Ct., 126), the same rule is laid down, that the attorney, in the absence of an agreement, is entitled to recover what his services' were reasonably worth.

If this explanation of the basis for the opinion of the plaintiff’s witnesses be not accepted, and their testimony is to be construed as holding that the number, simplicity and perfect similarity of cases put in an attorney’s hands by his client should have no weight in determining the principles upon which compensation is to be made, or its amount in each case, then such evidence disregards the general ex ■ perience of men, which teaches all of us that in all dealings between man and man, whether of a mercantile or a professional nature, the mere fact of a large number of precisely similar things sold or services rendered is one of the most important factors in its bearing both upon the price of the commodities sold and the amount of compensation for professional services. A lawyer who does all the busi - business of a solvent client, where the business amounts to a great deal, will, of course, take such fact into account in making up his charges, and to a still greater extent where the services were all of a similar nature, and almost clerical in their character. Every lawyer knows this, and has a right to remember it, whether acting as a judge or referee. Looking at it in this light, the evidence for the plaintiff appears to have been given under a misapprehension of the law, or else in defiance of facts which are known to every intelligent man—lawyer, judge, or layman.

Under such circumstances the evidence on the part of the plaintiff, as to value, appears to1 be worthless, and to be wholly overwhelmed by the evidence given on the part of the- defendants.

. The learned referee says that all the witnesses agree that, in the absence of an agreement, the reasonable and usual charge is. at least, the taxable costs. I have looked through the evidence very carefully, and have been unable to concur in that view On the contrary, there is a singular unanimity of dissent on the part of all the witnesses for .defendants as to the existence of any such rule under the circumstances herein detailed. If the referee were at first inclined to believe that there was any such rule applicable to a case like this, yet, when he saw the enormous proportions which the compensation based thereon would assume, he might well have paused, and made a most thorough review of his opinion as to the existence of any rule which, in the application to the case before him, would lead to so unprecedented an award. In our judgment, based upon the whole case, the evidence was overwhelming in its nature and degree in favor of the contention of the defendants as to the value of the services performed by the plaintiff’s assignor.

The order of the general term, reversing the judgment in favor of plaintiff, and granting a new trial, should, therefore, be affirmed, with costs, and judgment absolute awarded against him upon his stipulation.

All concur.


author: Andrews, J.

text:
    Franklin Woodruff et al., Resp’ts, v. Frederick C. Havemeyer et al., App’lts.

      (Court of Appeals,

      Filed June 7, 1887.)

    1. Common carriers—Shipping—Discharge op cargo.
    Where parties to a contract of shipping made a special agreement as to the mode of delivery, and fixed the amount which the shipper or consignee should pay for landing and wharfingers charges, in case the car riers elected to discharge the sugars on the wharf at Brooklyn, such agreement is binding upon such consignees and they have no right to insist that for their convenience the sugar should be delivered from the side of the ship, and cannot escape paying the fees by offering to take it off in lighters..
    2 Same—Parties.
    There is such a privity between the wharf-owner and the carriers as will support an action by the former to recover the stipulated compensation

      3. Same—Laws 1872, chap. 320.
    Chapter 320, Laws 1872, allowing owners of wharfs, etc., to charge five cents per ton on all goods remaining on the wharf after the expiration of twenty-four hours, does not prohibit the owner of a private wharf from entering into a contract, for the landing and deposit of goods upon his wharf upon such terms as may be agreed upon between himself and the owner of the goods, nor can, it be construed as requiring him to store goods for any period of time without compensation.
    Appeal from judgment of supreme court, general term, second department.
    The plaintiffs were owners of certain wharves, piers and warehouses at the foot of Joralemon street, in the city of Brooklyn, within the port of New York, erected on land under water within the boundaries mentioned if chapter 156 of the Laws of 1848 and chapter 254 of the Laws of 1860. The defendants were owners and consignees of certain cargoes of sugar imported from Havana by Ward’s line of steamers, between November, 1880, and November, 1882, which, upon the arrival of the vessels transporting the same, were landed by the carrier upon the plaintiff’s wharves, and were, within twenty-four hours thereafter, delivered by them to the defendants. The sugars were transported from Havana to New York under bills of lading by which the carrier agreed to carry them from Havana to the port of New York, “to be there delivered, within reach of the steamship’s tackles, unto Messrs. Havemeyer and Elder, or his or their assigns,”’upon payment by the consignees of the freight and primage specified. This primary clause in the bill of lading was followed by a provision out of which, and the action of the carriers thereunder, arises the present controversy. That provision is as follows: “It is expressly stipulated that the articles named in this bill of lading shall be at the risk of the owner, shipper or consignee thereof, as soon as delivered from the tackles of the steamer in the aforesaid port of New York (steamer has option of discharging cargo at New York or Brooklyn, consignees of cargo to pay charges thereon as expressed in the margin), and they shall be received by the consignee thereof, package by package, as so delivered,” etc. In the margin of the respective bills of lading is this printed notation: “Landing and wharfinger’s charges, including storage on wharf not exceeding six days, 17 cts. per hhd. lo cts. per t’ce, 8 cts. per box, and 4 cts. per bag, commencing immediately upon delivery from steamer.” The vessels on which the sugars were shipped carried general cargoes; and on reaching New York stopped, in the first instance, at the regular pier of the company in New York, at the foot of Wall street, and there discharged light cargo other than sugar, and thence proceeded, under the option reserved in the bill of lading, to the wharves of the plaintiffs in Brooklyn, and there delivered the sugars. The defendants were ready with lighters to receive the sugars from the vessels, and demanded that they should be delivered directly into the lighters. They were, however, delivered upon the wharf, and not directly into the lighters, for the convenience of the steamers in sorting the defendants’ sugars from other goods and sugars on the vessels; the cargoes in most cases including other sugars than the defendants.’ This action is Brought to recover the landing and wharfinger’s charges at the rate expressed in the hills of lading.

      John E. Parsons, for app’lts; S. P. Nash, for resp’ts.

       Affirming 35 Hun, 668, mem.

   Andrews, J.

The defense to this action on the merits, if it' has any foundation, rests upon the assertion by the defendants of the right to disregard and repudiate their written contract contained in the bills of lading to pay landing and wharfinger’s fees at the rate specified in •the margin of the bills, although the carriers exercised their option to discharge the sugars in Brooklyn. It is manifest 'that this defense cannot be maintained upon the ordinary and general rules applicable to contracts. The option reserved by the carrier to discharge the sugars in Brooklyn contemplated a delivery upon a wharf in case the option was exercised, as is shown by the notation in the margin of the bills. It is inferable from the agreed facts that the option was reserved by the carriers for their convenience in unloading and assorting cargo. At all events, the shippers, by the bills of lading, assented to this mode of delivery, and they had no right to insist that for their convenience the sugars should be delivered from the side of the ship. The parties to the contract not only made a special agreement as to the mode of delivery, but they fixed, by the same agreement the amount which the shipper or consignee should pay for landing and wharfinger’s charges in case the carriers elected to discharge the sugars in Brooklyn. It is plain that this agreement also was within the general competency of contracting parties, and was binding upon the defendants, unless they are freed from liability to perform their contract upon some special ground.

It is claimed that, assuming the contract was valid and enforceable between the carriers and the defendants, there was no privity between the plaintiffs and defendants which will support an action by the plaintiffs to recover the stipulated compensation. It is unnecessary to invoke the doctrine of Lawrence v. Fox (20 N. Y., 268), in order to support the judgment below; and it is not important to consider whether the doctrine of that case is applicable. The plaintiffs came into possession of the sugars through a delivery by carriers duly authorized by the shippers and consignees to make delivery on such wharf in Brooklyn as the carriers might select, subject to the payment by the consignees of wharfinger’s fees at a specified rate. The receipt of the cargo on the wharf was in legal effect a service rendered by the plaintiffs for the defendants, upon the employment of the carriers duly authorized to contract in behalf of the defendants, for the service at the rates agreed upon in the bill of lading. _ The defendants were parties to the bills of lading. The plaintiffs received the goods under the terms expressed therein, and thereby became entitled to enforce the contract made for the benefit of such wharfinger as should render the contemplated service. In general, a bill of lading is binding upon and protects all persons who by means of or under it become the owners or custodians of the goods. See Whitworth v. Erie R. Co., 87 N. Y., 413; Morse v. Pesant, 41* N. Y., 16; The Delaware, 14 Wall., 579.

But the defendants mainly rely for their defense upon the act, chapter 320 of the Laws of 1872, entitled “An act to amend an act in relation to the rates of wharfage, and to regulate piers, wharves, bulkheads and slips in the cities of New York and Brooklyn, passed May 6, 1870.” The first section of the act prescribes the rates of wharfage and dock-age within the cities of New York and Brooklyn. Wharfage is a charge against a vessel for lying at a wharf, and is not a charge for caring for the goods. The plaintiffs are not seeking to recover wharfage, and the first section of the act has therefore no direct bearing upon the present controversy. But it is claimed that by the second section the defendants had the right to have the sugars remain on the plaintiff’s wharf for a period not' exceeding twenty-four hours without charge. The second section is as follows: “It shall be lawful for the owners or lessees of any pier, wharf or bulkhead within the cities of New York and Brooklyn to charge and collect the sum of five cents per ton on all goods, merchandise and materials remaining on the pier, wharf or bulkhead owned or leased by him for every day after the expiration of twenty-four hours from the time such goods, merchandise and materials shall have been left or deposited on such pier, wharf or bulkhead, and the same shall be a lien thereon.” It will be observed that the section does not in terms prohibit wharfingers from entering into special contracts for the use of their wharves for the storage or deposit of goods thereon during the first twenty-four hours. It simply declares it to be lawful for owners or lessees of wharves or piers to charge the rate specified upon goods remaining thereon more than twenty-four hours. The public wharves in New York and Brooklyn are, in general, extensions of public streets, and the second section of the act may have been enacted for the protection of wharfingers on the public wharves against the annoyance and obstruction which might be occasioned by the accumulation of goods, merchandise and materials thereon, and to furnish a motive to the owner of property for its prompt removal. This view is quite consistent with the course of legislation and the decisions. But, however this may be, we think the statute cannot be construed to prohibit the owner of a private wharf from entering into a contract for the landing and deposit of goods upon his wharf upon such terms as may be agreed upon between himself and the owner of the goods, nor can it be construed as requiring bim to store goods for any period of time without compensation. Assuming that such a regulation would be within the competency of the legislature, as to which we express no opinion, nevertheless, the intention of the legislature to exercise such an exceptional power cannot be inferred from the language of the act of 1872. The act can have scope and effect without imputing to the legislature the design attributed to it by the defendants. See Wetmore v. Brooklyn Gaslight Co., 42 N. Y., 384.

We tbinTr the plaintiffs were entitled to maintain the action, and that the judgment should be affirmed.

All concur.