author: O’Brien, J. Finch, J.

text:
    George V. R. Lewis, as Administrator, etc., App’lt, v. The President, Managers and Company of the Delaware and Hudson Canal Company, Resp’t.

      (Court of Appeals,

      Filed April 9, 1895.)

    1. Carrier-4Passenger.
    The fact that a person is, by mistake, in the wrong train, does not affect or change the measure of duty which the company owes him as a passenger, or the degree of protection to which he is entitled against the negligent acts of the company or its servants.
    2. Same—Conductor.
    A conductor who, with knowledge of the existence of a latent danger, not known to the passenger, requests or invites him to encounter such danger without informing him of it or guarding against it, fails to perform that duty to the passenger which the law requires.
    3. Negligence—Contributory.
    Contributory negligence cannot be predicated upon the fact that the passenger attempted to alight from a train in motion, at a low rate of speed, at the request, direction or suggestion of the conductor, without being aware of the presence of an approaching train, which caused his death, or any other danger except such as was involved in the act itself.
    Appeal from judgment of the general term of the supreme court in the third, judicial department, entered upon an order which affirmed a judgment in favor of defendant, entered upon a decision of the court on trial at circuit dismissing the complaint.

      James W. Verbeck, for app’lt; Lewis E. Carr, for resp’t.

       Reversing 61 St. Rep. 773.

   O’Brien, J.

The plaintiff’s intestate was killed in an accident on the defendant’s railroad, near Central Bridge station, on the 18th of September, 1889. This action was brought upon the theory that the defendant is legally responsible for the injury which resulted in his death. On the trial, and at the close of the plaintiff’s case, the learned trial judge granted a motion for a non-suit, to which the plaintiff excepted.

The appeal to this court presents the question whether, upon the proof given, the plaintiff was not entitled to have the case submitted to the jury. The trial court having disposed of the case as presenting only a question of law the judgment must be upheld, if at all, upon the principle that upon no reasonable view or construction of the evidence could the action be maintained. If' the proof given was of such a character as to warrant opposing inferences, or to justify different conclusions of fact in the minds of reasonable men, the case was for the jury.

On the day of the accident the deceased, who lived in Schenectady, got on to á train on the defendant’s road at Oobleskill, for the purpose of reaching his home, but in order to do that by the regular route it was necessary to change cars at Quaker Street station. It appears that it was what was called a through train, that made no stop at any station between Oobleskill and Albany, but whether the deceased knew it or not when he boarded the train does not conclusively or satisfactorily appear. Before reaching the next station, which was Central Bridge, about three miles further east, the deceased was informed by the conductor that no stop would be made at Quaker Street After passing the Central Bridge station and reaching a point about a thousand feet west of it, where a bridge crosses a stream, the train slowed up and, in the language of one of the witnesses, came almost to a stop. The conductor then told the deceased that he would have to get out quick, that the train would not stop at Quaker Street, and would be running faster very soon. The deceased immediately got up from his seat went to the rear of the car and stepping down had just reached the ground when in some way he lost his balance and was thrown under a freight. train passing rapidly in the other direction, close to the train from which he had just landed. The tracks at this point, it seems, are close together, and the reason, apparently, for reducing the speed of the passenger train, till it came almost to a stop, was to enable the freight train going in the other direction to pass it.

There were two witnesses sworn who witnessed the transaction and it will be perhaps best described in their own language. The first one was Tracey, who was evidently traveling with the deceased, and his version is as follows:

“Was acquainted with Moses Lewis in his lifetime; remember September 18, 1889; I was at Oobleskill on that day; saw Mr. Lewis there on that day walking around the streets; afterwards he and I took the train at Oobleskill to go to Quaker Street, and just before we got to Central Bridge the conductor came in and said ‘ Tickets,’ and Lewis handed him his mileage book; Lewis said, ‘Two to Quaker Street;’ conductor said, ‘I don’t think we will stop at Quaker Street;’ he took the book and tore out some tickets, and said, ‘I will see;’ he went on to the other end of the car and came back, and in the meantime Lewis said, ‘You have stopped there before;’ he said, ‘I will see;’ he came back in about a minute or so and said, ‘We will not stop at Quaker Street; you have got to get off here, and get off here quick; the train will be moving faster soon;’ we started and walked to the rear platform ; we walked there with a quick step ; we walked quick. Lewis was first and got down and took hold of the railing, and stepped off on the right hand side; as we went to the rear end of the car he turned to the right and took hold of the railing and stepped off, and about the time he stepped off the train gave a sudden jerk and threw him against the rear end, and he seemed to whirl right round over the track and fell in under a freight train; when he got out on the platform I did not see the freight train; it was not in sight.”

In response to some direct questions he further stated:

“ Q. As Lewis started to get off the train, describe what movements, if any, he made ?
“ A. After he had hold of the railing, when it gave the jerk, he-tried to get back.
“ And when Lewis got off the last step the freight train was not visible to me, standing on the rear platform.
“ It was the freight train that ran over Lewis; I do not know what part of the train he fell under ; I could not see ; the engine of the freight train did not get by him before he finally let go ; it was not by ; it was just there.”

This statement was not materially changed on cross-examinatian, and being re-examined he further said that there was no freight train to be seen when he started to go down the ¡steps. “ We were trying to get off on the side where .the depot was. Lewis took hold of the railing and was stepping off; the train gave a jerk and that threw him against the railing, and he seemed to hang on for a second and fell down. This was all done in a second ; done quicker than you could tell it ' When he whirled and fell down that was the first time I saw the freight train.”

The other witness, a man named Burns, a passenger on the train, thus describes what took place : “ I was at the time in Gobleskill; have heard Mr. Tracy testify as to the accident that occurred near Central Bridge; I remember that occasion; I got on that train at Cobleslcill; was going to Albany; got in the rear car;, sat on the north side of the car facing the rear end; saw the witness Tracy ; he sat next to the window facing me; Lewis sat with him; did not know him at that time; Lewis sat on the outside facing me in the same seat with Tracy.

“Q. Do you remember j ust before you got to Central Bridge, the conductor came through?
“ A. I think I can.
“Q. What happened?
“A. The conductor came in for his ticket and this man, Mr. Lewis, took a ticket out of his pocket, or a book; I think it was black, and gave it to the conductor, and the conductor returned it to him again.
“ Lewis said he wanted to get off at Quaker Street to go Schenectady ; the conductor told him to wait a minute, to wait and see, he would come back; something like that, and he returned the book to him, aud he put the book in his pocket.
“ The conductor went to the rear of the car; then he came back and touched Lewis on the shoulder and told him he would have to get off there before they were going any faster than they .were going.
“ He got up and went to the rear of the car, and Tracy and four or five men at the rear, I could not tell exactly, and started to get off on the right; the last time the conductor came back he said to-Lewis: ‘ It is going pretty slow now, and it will be going faster, and you better get off now ; that is all I have to say about it;’ he-told him it was a through train and did not stop at Quaker Street; when Lewis and Tracy got to the rear platform I. was looking to the rear ; looking right at them; they went off at the rear of the car ; it was all done in a minute; somebody pulled the bell; before that, when they got out on the platform, the train was just about going, and that is all there was of it; it was not going very fast; as they got out there it began to pull up all of a sudden; it did not stop ; it went quicker; the next thing I saw, somebody came and says : ‘ Mow you have got to stop, you have killed a man ;’ but I could not say who it was; then the train stppped and backed up, and I got off and saw this man lying there with his legs cut off; at the time the conductor spoke to him first, when he came to take his ticket, it seemed to me that the train was just about pulling in pretty fast, but I could not tell how many miles an hour; we had not quite got then to the Central Bridge depot”

The judgment proceeded upon the ground that this testimony was not sufficient to warrant a finding of negligence on the part of the defendant, and that it did show affirmatively that the deceased was chargeable with contributory negligence. Whether the deceased had paid fare as a passenger to some point east of Cobleskill or not is left in some doubt by the testimony. The conductor was not sworn, or any evidence given in behalf of the defendant. If that was a material fact it should have been passed upon by the jury, as the proof was prima facie sufficient for their consideration on that point But we think it was not material. The most that can be urged by the defendant in thig respect is that the deceased was by mistake in the wrong train. But that circumstance did not affect or change the measure of duty which the defendant owed him as a passenger, or the degree of protection to which he was entitled against the negligent acts of the carrier or its servants. It is true that unless he took passage and paid fare to Albany, the next station where the train stopped, he could have been required to leave the train, but while on it the company owed him the same duty of protection against negligence as the other passengers.

One of the questions for our consideration is whether upon the evidence given the jury could have found that the defendant did not perform that duty. It is not very material whether the language of the conductor to the deceased be regarded as a request, a direction, or an advice to leave the train. It might have been understood as a direction. The witnesses differ somewhat as to the words he used, and the construction tobe placed upon his language was for the jury if that question was of any importance. The jury could have found that the deceased left the train, not of his own motion or upon his own judgment, but in obedience to the wish and suggestion of the conductor, and, but for what the conductor said to him, he would have remained in the car. The conductor’s action must be judged by the circumstances existing at the time. He brought the train almost to a stop while approaching the bridge and the corning freight train, and it could be inferred from the general situation that this was for the purpose of allowing it to pass. The presence of this freight train was an element of danger not necessarily known to the deceased, but which was or should have been known to the conductor. It was the passage of that train at the time the deceased was alighting from the passenger car that caused his death. Had the request, direction or invitation to get off been given at some other time or at some other place where the only danger to be feared was that incident to getting off from a train moving at a slow rate of speed, there is no reason to believe that the deceased would have been injured. The deceased was induced to leave the train in the face of a danger which he may not have been aware of, but which must have been known to the conductor. It cannot be said as matter of law upon this evidence that the deceased knew of the approaching train which caused his death or could have seen it in time to avoid the danger. That was a proper question for the jury, but we cannot say that the deceased in the hurry and excitement of the. moment and in the suddenness of the emergency either knew or could have known of the dauger that awaited him on leaving the car, while the conductor did, or at least the jury could have taken that view of the evidence. Had the conductor stopped the train and requested the deceased to get off at a place where another train was passing at the same time, without warning him of the danger, it would be for the jury to say whether the carrier had used that degree of care which the law exacts of it under such circumstances. So we think that the conduct of the defendant’s conductor in this case presented a question for the jury. Bucher v. N. Y. C. & H. R. R. R. Co., 98 N. Y. 128 ; McIntyre v. N. Y. C. R. R., 87 id. 287 ; Weiler v. Manhattan Railway Co., 53 Hun, 372; 25 St. Rep. 543; Reid v. Mayor, etc., 68 Hun, 110 ; 52 St. Rep. 69 ; 139 N. Y. 584; 54 St. Rep. 841; Pool v. Chicago, etc., Railway Co., 53 Wis. 657; Wharton on Neg. § 371; Keating v. N. Y. C. & H. R. R. R. Co., 49 N. Y. 673.

The language of the defendant’s servant, whatever its fair construction may be, was calculated and intended to put the deceased in motion, and may be regarded as the moving cause of his attempt to leave the train at the time and place that be did. The conductor, it must be presumed, knew the exact situation, the distance between the tracks which brought the trains close to each other, the presence of the coming freight train and the other' elements of danger, if any, to which the deceased would be exposed in leaving the train. If, with knowledge of the existence of a latent danger, known to him but not to the deceased, he requested or invited him to encounter this danger without informing him of it, or guarding against it, he failed to perform that duty to the passenger which the law requires.

In dealing with the passenger the conductor represented the corporation, and any omission of duty or neglect on his part may be imputed to the defendant.

Nor do we think that the evidence was of such a character as to warrant the learned trial court in deciding that the deceased was, as matter of law, guilty of negligence contributing to the injury resulting in his death. It cannot be affirmed, as a legal result of the evidence, that h.e was aware of the presence of the approaching freight train, or that, in the hurry and excitement of the moment, he could or ought to have seen it. The evidence on that point is not very clear, but as it appears in the record the question could not properly have been taken from the jury. So far as appears the deceased had no reason to believe when he left his seat in the car that the conductor had invited him to alight from the train at a point where he was liable to encounter another, running at a high rate of speed in an opposite direction, and whether he discovered it on reaching the platform or before alighting was, upon the evidence, a question of fact. In this view the only other ground upon which contributory negligence could have been predicated is the undisputed fact that the deceased attempted to alight from a train while in motion, at a low rate of speed, at the request, direction or suggestion of the conductor. It is urged that negligence on the part of the deceased follows from that fact as a necessary legal inference, irrespective of what the conductor said or of the circumstances under which the passenger acted. This proposition is asserted upon the authority of the Hunter Case, which was considered in this court upon two occasions, 112 N. Y. 371; 21 St. Rep. 1; 126 N. Y. 18 ; 36 St. Rep. 367. The deceased in that case attempted to board a moving train in the face of a situation and under circumstances attended with peculiar danger. Here the deceased attempted to alight from one without being ■aware, so far as appears, of. the presence of the approaching train which caused his death or any other danger except such as was involved in the act itself. The Hunter Case recognizes a manifest •distinction between the case of a passenger getting on and off a moving train. In the latter case the act may be justified or excused by a necessity or what is termed a stress of circumstances that cannot exist in the former. It is not necessary now to point out all the reasons upon which this distinction rests since this court has held upon full consideration that a passenger in attempting to alight from a moving train, under circumstances not unlike those appearing in this case, was not guilty of negligence per se, but that the question was one of fact for the jury. Filer v. N Y. R. R. Co., 49 N. Y. 47. The same principle was assumed or decided in some of the other cases above cited.

There is no inflexible rule of law that determines the nature of the act of the deceased in attempting to alight from the train. It must be viewed in the light of the actual situation as it appeared to him and judged by that measure of care and caution which a person of ordinary prudence is expected to observe under like circumstances. The conductor had°presented to the mind of the deceased the alternative of leaving the train immediately in order to reach his destination or of being carried out of his way to a distant point. There was but little time for thought or reflection, and whether, under such circumstances, the passenger made a prudent or a reckless choice was a question to be determined by the judgment of reasonable men. He had a right to assume that the conductor would not expose him to any concealed danger from a passing train. Had he been informed of that element of risk he might not have assumed it or might have guarded against it. Whether, under all these circumstances, his conduct was careless or prudent was a question which could not properly be determined by the court, but belonged to the jury.

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

Finch, J.

(dissenting).—The plaintiff’s intestate was crushed under the wheels of a freight train and died from the effect of his injuries. The administrator sued to recover damages, but was non-suited at the trial and the general term have affirmed the consequent judgment. I think the decision was clearly right and beyond any reasonable criticism.

The intestate boarded the defendant’s train at Cobleskill, desiring to go to Schenectady. That he was no stranger to the situation is indicated by two facts.' He had a mileage book of the company containing its tickets, which he would not have purchased unless in the frequent habit of passing over the road, and his remark to the conductor about the previous stopping of the same train at Quaker Street indicates his familiarity with its character and his habitual use of it. It was a through train bound to Albany, not scheduled to stop at Quaker Street, and inviting no passengers for that station. This fact the intestate perfectly well knew, and it was his duty to have known it before be went upon the train. What he desired to do was to leave the car at Quaker Street and go by another train direct to Schenectady, instead of following the two sides of the triangle and traveling first to Albany and then to Schenectady, which was the longer and more expensive route. He took the through train, hoping it would stop at Quaker Street, but without any invitation to enter based upon that possibility. He could reach his destination safely by either route, and he simply took his chances of being able to get off at the point which he preferred. He had no right to any such permission, and it is quite obvious that he knew it. The intestate was in the rear car of the train. When the conductor appeared and asked for tickets the intestate gave him his mileage book, saying, “Two for Quaker Street.” The deceased was sitting by the side of Tracy, who was a witness for the plaintiff, and gave his testimony with a very commendable fairness and intelligence. It is his evidence that I shall follow for an account of the accident. In answer to intes-, tate’s announcement of his proposed destination “conductor said,, I don’t think we will stop at Quaker Street; he took the book and tore out some tickets, and said, I will see; he went on to the other end of the car and came back, «and, in the meantime, Lewis said, You have stopped there before; he said, I will see; he carne back in a minute or so and said, We will not stop at Quaker Street; you have got to get off here and get off quick, the train will be moving faster soon.” When this conversation began the train was moving rapidly. When it ended the brakes had heen applied and it was moving, very slow, but still in motion. It did not stop at all until after the accident. That i§ what every witness testifies to except one. He was a Presbyterian minister sitting in a different car from deceased, and with nothing to draw his attention to the precise facts. He said : “The train nearly stopped; I don’t know but it did come to a stand-stillbut, on cross-examination, he said : “Am not able to say whether the train came to a stop or not.” The uncontradicted evidence, therefore, is that it greatly .abated its speed, but was in motion when the accident happened. Tracy’s account of the conversation is varied somewhat in its form by the testimony of Burns, who said : “The conductor went to the rear of the car; then he came back and touched Lewis on the shoulder and told him he would have to get off there.” The witness stated the conductor’s language thus : “It is going pretty slow now, and it will be going faster, and you better get off now; that is all I have to say about it.” No other witnesses describe the •conversation. It is not easy to misunderstand what was said. It was not a command to leave the train, nor a direction to do so, nor a statement in any manner controlling the free action' or free choice of Lewis. It informed him of two facts bearing upon his •convenience; one, that the train would not stop at Quaker Street, the other, that, if he chose not to go to Albany, his only opportunity was to get off at once while the train was going slow, and, if he preferred to do that, he must do it quickly, for the train would ;SOon be going faster. Any different construction of the conductor’s words would be possible only as a last resort in the technical atmosphere of a law suit. They simply notified Lewis of an opportunity to be availed of promptly, if at all, and left him to choose between a safe ride to Albany and the experiment of leaving the train while moving slow. Lewis chose to avail himself of the opportunity and get off of the train while its motion was slight He made this choice, not under a stress of circumstances occasioned by the neglect or wrongful act of the company, which we have sometimes admitted as an excuse, but solely for his own convenience and as the result of his own voluntary act The company had in no manner created or caused the emergency which occasioned his choice.

It is probable that the train slackened its speed to enable a freight train approaching on the other track to first cross the bridge on which the two tracks were so close together that only one train ■could pass at a time. ’ The proof does not show whether this was a usual or an exceptional circumstance. If usual, it would be a just inference that the conductor, knowing the place at which the brakes were applied, would infer the approach of a coming train first reaching the bridge. If, however, the express train, as is generally the case, had the right of way and it was the ordinary duty •of the freight train to wait on the other side for the express to pass, or the coming train was “belated,” as the plaintiff’s counsel says, though I see no such proof in the case, or if from any other cause the slackening of speed at that point was exceptional, then it will not follow that the conductor knew, or ougbtto have known, that the freight train was approaching. The proof permits only of a guess on that point more or less reasonable according to the general knowledge with which one looks at it

Returning to Tracy’s account of the accident, and he is the sole and only witness who saw it and was able to describe it, it appears that he and Lewis both at once arose at the end of the con'duclor’s statement, and came out upon the rear platform of the car. Lewis had in his left hand an umbrella and an overcoat, approached the steps leading to the side of the train and with his right hand took hold of the iron rail fastened to the body of the car. What then occurred should be repeated in the words of the witness. Lewis was first and got down and took hold of the railing and stepped off on the right-hand side; as We went to the rear end of the car he turned to the right and took hold of the railing and stepped off, and, about the time he stepped off, the train gave a sudden jerk and threw him against- the rear end and he seemed to whirl right around over the track and fell in under a freight train ; ” * * * “I saw what he had hold of; he had hold of the railing that was on the end of the body of the car; I saw him step down ; saw him step off; step down on the ground ;”***“ When Lewis stepped down that way he had an umbrella and. an overcoat in his left hand; when he stepped down I saw his feet strike the ground; his feet did strike the ground; when he stepped on the ground he had hold of the railing of this car; he did not continue to hold on to it more than a second I think; and it was after he had fairly alighted on the ground; the sudden motion of the passenger train I spoke about was just about as he was in the act of stepping off; his feet had not struck the ground then; then after that he stepped down from the step and struck on the ground with both feet fairly, and retained his hold of the railing after that.” * * * “I saw him spin around; that was when he was yet holding on the railing ;, when he was turning round; it was just after that; the jerk of the train came before that, when he was still on the steps?; I could not say as to whether the jerk of the train threw him off under that train; it threw him against the rail; I saw him get on the ground with both feet; sa.w him still hold on the-railing .with his hand ; he was still upright, with his face toward the -engine ; I noticed that he was moving along in the same direction as the train at that time.” * * * “So far as I observed, when he came out on the platform, Lewis did not make the slightest observation.” * * * “ He took hold of the railing and was stepping off, and, as he was stepping off, the train gave a jerk, and that threw him against the railing, and he seemed to hang on for a second and fell down ; this was all done in a second ; done quicker than you could tell it.” That is the whole evidence of the accident and its cause.' It puts an end utterly to the theory that getting off of the moving, train had nothing to do with the injury, and shows that it had everything to do with it, and was its sole explanation and cause. We see Lewis at the very last moment with his hold on the train unloosened, pulled along in its direction and spinning round with a fall. The whole thing occupied but a second. In telling it it seems longer, and the effort of* the witness to analyze the sudden jerk and whirl makes it appear slower than the almost instantaneous event. That he might have seen the approaching freight train if he had looked ; that he might have heard it if he had listened; that he took no observation whatever; that the jerk of his own. train •threw him off the step, and as his feet struck the ground his hold on the railing swept him from his balance; these are facts, obvious and beyond reasonable question, and which show that the deceased, instead of being free from negligence, met his death from that cause. We have held too often that it is a negligent act for one to get on or off of a moving train to discuss the subject anew, and the only condition which we have ever allowed to make it excusable did not, as I have shown, exist in this case. That excuse, allowed so far to modify the character of the act as to permit a jury to regard it as not necessarily negligent, was first stated in Filer v. N. Y. Central, 49 N. Y. 47, in which it was held that where the passenger by the wrongful act of the company is put to an election between leaving the cars while moving slowly or losing the station where he has a right to stop, the question of negligence becomes one of fact. It was not denied that alighting from a moving train was wrong or dangerous, but the decision went upon the ground that the act was not one of free agency, but was the product of coercion produced by the wrongful act of the company. In this case the election was occasioned solely by the fault of Lewis himself. He voluntarily and deliberately put himself in a position where there was but a possible chance of alighting at Quaker Street, and when that chance was gone the choice between leaving the train moving slow and going safely to his destination, flowed from his own fault, and was not produced by any wrongful act on the part of the company. A man cannot himself occasion the stress of circumstances under which he chooses, and then put them upon the company as an excuse for a dangerous act. We refused after a deliberate discussion to extend the principle of that rule so as to destroy it, in the case of Hunter v. C. & S. V. R. Co., 126 N. Y. 18; 36 St. Rep. 367. -We there held that the person injured acted as a free agent, that is, not coerced or compelled to choose by any fault or wrongful act of the company, and that his convenience or inconvenience was a matter of no account, and further that the invitation of the conductor did not alter that free agency, or put any sort of coercion upon it. The same thing is true here. I do not regard the words of the conductor as amounting even to an invitation. They furnished a possible alternative having a risk about it which the passenger was free to accept or not, and left him to choose. Between these words, however regarded, and the accident lay the free agency of the passenger, not coerced by the company, and which it had not lessened, warped or controlled by any wrongful act of its own. No responsibility for the choice rested upon it.

Beyond that, we held in the Filer Case, in spite of the stress of circumstances and the invitation of the train agents, that the passenger was not absolved from prudence and care in alighting from the moving train. We said of the then plaintiff that “ if, in leaving the cars, she did not exercise the care and catition which she might and ought to have done, and was careless and negligent in her movements, or in the care of her dress, and by reason of such want of care caused or contributed to the injury, she ought not to recover.” Here, not only is no care or caution affirmatively shown, but the absence of it is proved. The passenger put his convenience above his safety. He knew it was risky and unsafe to alight from a moving train; that he was about to take that risk; that another track was alongside warning him of peril from that direction; that a train might pass at any moment and increase the danger of his intended act, but, instead of exercising a care commensurate with the known danger, Lewis rushed off hastily in the face of the freight train, without making the slightest observation, when he might easily have seen it if he had looked. It is said the conductor should have warned him. But Lewis knew everything except one, and that one he was bound to expect might occur. Possibly the conductor did know that the freight train was approaching, although there is no proof of the fact. It is equally possible that he did not know. He was inside the cars where he could not see and might not have heard; the slowing of the train may have been a common and prescribed act before crossing, and not indicative of an approaching train having a right of way, and the train which did come out of its time, even if the conductor knew what its regular time was. If we are to guess about it, the chance of guessing right is very slender. But what the conductor may have known, the passenger was bound to expect, whether warned or not, and the duty of care and prudence which he did not exercise remained.

These views accord with those expressed in the courts below, and the judgment should be affirmed, with costs.

Andrews, Ch. J., Peckham and Bartlett, JJ., concur with •O’Brien, J., for reversal; Gray and Haight, JJ., concur with Finch, J., for affirmance.

Judgment reversed.


source: Caselaw Access Project

author: Peckham, J. Bartlett, J.

license: Public Domain

text:
    Porter M. French, as Receiver, etc., App’lt, v. Ezra R. Andrews, Resp’t.

      (Court of Appeals,

      Filed April 9, 1895.)

    Corporations—Insolvency—Transfer.
    Merely permitting a creditor to obtain a judgment in the regular course of legal proceedings is not, on the part of the officers of the corporation, a transfer or assignment of the property of the corporation within the meaning of § 48, chap. 564 of 1890.
    Appeal from judgment of the general term of the supreme court in the fifth judicial department, entered upon an order which affirmed a judgment in favor of defendant entered upon a decision of the court on trial at special term.
    This action was brought to set aside and have declared illegal and void eleven judgments recovered by defendant against the James Vick, seedsman, company.

      Joseph S. Sunn, for app’lt; William F. Cogswell Co. for resp’t.

       Affirming 62 St. Rep. 759.

   Peckham, J.

The plaintiff is the receiver of the James Vick) seedsman, Company. The defendant was a creditor of that company and the debt was due in March, 1891. He was unable to obtain payment in cash, and he took notes, which, when due, were not paid in full, and renewal was made, and on the 10th of September, 1891, the defendant held notes to the amount of $7,000, not yet due, representing that amount of the indebtedness of the company due to the defendant in the March preceding. The company also owed the defendant on that day over $3,000 on a current account then due. The defendant on that day also loaned the company $500 to pay its employees. Defendant at the same time gave up the old notes and took eleven others of $1,000 each, except one which was $976.19, all being dated on the 1st of September, 1891, and payable on demand.

The treasurer of the company and the defendant on this 10th Sept, believed the company had assests more than sufficient to pay its debts, although such turned out subsequently not to be the fact, while each knew at that time that the company was not able to pay its debts as they matured, and that it was in that sense insolvent.

These several notes of $1,000 each were thus, given to defendant so that he might have suit commenced upon each of them forthwith in the Municipal Court of Rochester, in which a judgment could be obtained by default in six days, and which court had no jurisdiction to render judgment in any one action for the full amount of the indebtedness of the company to defendant. Accordingly suit was commenced and judgment by default obtained in each case, and this action is brought to have each of such judgments set aside as illegal and void because contrary to the provisions of section 48 of the Stock Corporation Act. (Laws of 1890, chap. 564, p. 1075.) That section reads as follows :

“Ho corporation which shall have refused to pay any of its notes or other obligations when due, in lawful money of the United States, nor any of its officers or directors, shall assign any of its property to any of its officers, directors or stockholders, directly or indirectly, for the payment of any debt; and no officer, director or stockholder thereof shall make any transfer or assignment of its property or any stock therein to any person in contemplation of its insolvency; and every such transfer or assignment to such officer, director or other person or in trust for them or for their benefit shall be void.”

The defendant was neither a stockholder nor officer of the corporation and his liability to respond to the plaintiff in this action rests upon the last clause of the above-quoted section.

The meaning of this section was under investigation in this court in the late case of Varnum v. Hart, 119 N. Y. 101; 28 St. Rep. 262. In that case oue of the directors of the corporation upon whom the summons and complaint of the creditor were served, acting in concert with the creditor, knowing the company to be insolvent and meaning to permit the creditor to obtain a preference in payment of his claims over other creditors, kept the fact of the service of the papers upon himself concealed from the other officers of the company, and a judgment by default was the result. We held the statute was not violated ; that neither the creditor nor the director was under any statutory restraint and that there was no violation of the statute by the failure of the director to disclose the fact of the service of the papers on him whereby a debt really existing and honestly due obtained a preference. Neither the director who was served nor the other officers, if they had known of the service of papers, were bound to interpose a defense and whatever was done or authorized to be done or oinit•ted, the fact remained there was no assignment or transfer of property, and hence no violation of the statute.

The fact was also alluded to in that case that where the. legislature had undoubtedly intended to prevent a preference by the recovery of a judgment, that prohibition was inserted in terms-in the statute, and that such was the case in regard to moneyed corporations. (Laws of 1882, ch. 409, sec. 187, p. 655), and also in regard to limited partnerships (1 R. S. 766, sec. 20), and the National Bankrupt Act by its express language. We see no occasion to take back or explain our language in the Varnum case.

Merely permitting a creditor to obtain a judgment in the regular course of legal 'proceedings is not on the part of the officers of the corporation a transfer or assignment of the property of the corporation within the meaning of the statute quoted. And the conduct of the treasurer in giving notes which might be sued by the defendant in the Municipal Court, did not so far altér the facts as-to call for a different decision from that made in the Varnum case.

The case of Throop v. Hatch, etc., 125 N. Y. 530; 35 St. Rep. 816, was decided upon the first portion of the statute relative to the company or officer thereof assigning or transferring any of its property, directly or indirectly, to any officer or stockholder of-the company. We thought there was a difference in the two-cases and that an officer of an insolvent company could not obtain a indirect transfer through means of an attachment of the.property of the company. The statute has. now been changed so that it is no longer permissible to suffer a judgment, to be recovered against a corporation of this kind. Laws of 1892, ch. 688, sec. 48, page 1838. Remembering the fact that it is only by a statutory prohibition that a transfer of property in order to prefer an honest debt due from an insolvent corporation is made illegal, Coats v. Donnell, 94, N. Y. 168, and bearing in mind the difference between those statutes which in terms prohibit the company from suffering the recovery of a judgment and this one, we are unable to say the corporation violated the statute, and we must, therefore, affirm this judgment, with costs.

Bartlett, J.

(dissenting).—If this insolvent corporation had only suffered the defendant to recover judgments against it on notes which were due, there would, doubtless, be no violation of the statute.

It was found, however, by the trial court that on the 10th of September, 1891, the defendant held four notes of the corporation aggregating $7,000, none of which was then due; that a balance of indebtedness, amounting to $3,976.19, remained in open ac: count; that' defendant had previously advanced to the corporation in cash $500 ; that upon the suggestion of the treasurer of the corporation, and with knowledge of its insolvency, the defendant surrendered the four undue notes and received for the indebtedness due and not Hue eleven notes due on demand, ten of one thousand dollars each and one for a less amount; that the notes were so made to enable the defendant to bring actions upon them in the municipal court of the city of Bochester at once; judgments were recovered on the notes and. executions issued thereon September 17th, 1891, and the next day the corporation was placed in the hands of a receiver.

Under these peculiar circumstances, and in view of the active participation by the treasurer of the corporation in this transaction changing the legal status, it seems clear that the result accomplished was a transfer of the property of the corporation by one of its officers, in contemplation of insolvency, to the defendant, thereby securing to him a preference which the statute forbids.

I think the judgments should be modified so as to set aside seven judgments representing the indebtedness that was not due of $7,000, and, as modified, affirmed, with costs to the plaintiff.

All concur, with Peckitam, P., for affirmance, except Bartlett, J., who reads for modification of judgment, and Haight, J., not sitting.

Judgment affirmed.


author: Andrews, Ch. J.

text:
    Charles Jones, App’lt, v. Orin S. Bacon, as Surviving Executor, etc., Resp’t.

      (Court of Appeals,

      Filed April 9, 1895.)

    Statute of frauds—Consideration.
    An oral promise by one to indemnify another for becoming a guarantor for a third person' is not within the statute of frauds and need not be in writing, and the assumption of the responsibility is á sufficient consideration for the promise.
    Appeal from judgment of the general term of the supreme court in the fifth judicial department, entered upon an order which denied a motion for a new trial and ordered judgment in favor of defendant entered upon an order non-suiting plaintiff.
    This action was brought to recover damages for a breach of an oral contract alleged to have been made by James McKechnie, defendant’s testator, to indemnify him in case of his endorsement of certain notes made by one Kingsbury.
    Upon the trial plaintiff called Kingsbury as a witness to prove the alleged promise. His testimony on that subject was objected to by defendant’s counsel on the ground that the witness was incompetent to testify in regard thereto under section 829 of the Code of Civil Procedure. Plaintiff thereupon produced and proved and gave in evidence an instrument executed by plaintiff under seal, by the terms of which, in consideration of the sum of one dollar, he released Kingsbury from “all liability, responsibility or damages ” sustained or which might thereafter be sustained by him by reason of his indorsement. This release was by an amended answer set up as a defense.

      William H. Smith, for app’lt; Henry M. Field and Frank Rice, for resp’t.

         Affirming 54 St. Rep. 764.

   Andrews, Ch. J.

The oral promise of the defendant’s testator to the plaintiff was, in substance, a promise of indemnity in case the plaintiff would become indorser on the note of Kings-bury to the banking firm of McKechnie & Co. for a debt of Kingsbury to the bank. The plaintiff thereupon indorsed the note of Kingsbury to the bank, and has been compelled to pay thereon the sum of about $16,000, Kingsbury having made default and being insolvent. This is a statement of the facts in the simplest form, and the question arises whether the oral promise by the defendant’s testator to indemnify the plaintiff was void under the Statute of Frauds, as being a promise to “answer for the debt, default or miscarriage of another person.” (2 Rev. St. 135, sec. 2, sub. 2.) This is no longer an open question in this state. It was decided in Chapin v. Merrill, 4 Wend. 657, that a promise by one person to indemnify another for becoming a guaranty for a third is not within the statute and need not be in writing, and that the assumption of the responsibility was a sufficient consideration for the promise. The doctrine of Chapin v. Merrill was approved in Mallory v. Gillett, 21 N. Y. 412, in Sanders v. Gillespie, 59 id. 250, and Tighe v. Morrison, 116 id. 263; 26 St. Rep. 178, and in other cases in this court. The same doctrine now prevails in the English courts. Thomas v. Cook, 8 Barn. & C. 728 ; Reader v. Kingham, 13 Com. Bench, N. S. 344; Wildes v. Dudlow, L. R., 19 Eq. Cas. 198. We do not deem it proper to re-open the discussion or to refer to cases where a different view has prevailed. The court below considered the subject at large, and the able opinion of Bradley-,, J., refers to many of the cases on the subject. '

The plaintiff was, therefore, entitled to maintain an action except for his act in releasing Kingsbury from his liability for the money he was compelled to pay on account of the indorsement. The release was probably essential in order to enable the plaintiff to make any proof of the agreement for indemnity, since he could establish the promise only by Kingsbury, the plaintiff himself not being a competent witness by reason of the death of the promisor McKechnie, and there being no other person cognizant of the transaction. By the release Kingsbury was discharged from all responsibility to the plaintiff. The plaintiff having paid the debt in part out of his property, could prior to the release, have maintained an action against Kingsbury to recover the sum so paid. Butler v. Wright, 20 Jo. 867 ; Hunt v. Amidon, 4 Hill, 345. The indemnitor of the plaintiff, on restoring to him this sum in performance of the contract of indemnity, would be entitled to be substituted to the claim of the plaintiff against Kingsbury. This stands upon the most obvious principles of-natural justice. The money paid by the plaintiff was at the request of Kingsbury, implied from the legal liability as indorser assumed by him, and Kingsbury was bound to reimburse the plaintiff. But, by an independent contract between the plaintiff and his indemnitor, McKechnie, the latter was also bound to save the plaintiff harmless. On performance of this obligation by the indemnitor, he would be entitled to stand in the shoes of the plaintiff as to his right to call upon Kingsbury. By equitable substitution the indemnitor would take the right which the plaintiff had against Kingsbury. There was no privity of contract between the indemnitor and Kingsbury, but there was between the plaintiff and Kingsbury. On paying the plaintiff what he had been compelled to pay for Kingsbury, pursuant to the contract of indemnity, the indemnitor would stand as the equitable assignee of the plaintiff of the obligation of Kings-bury to him. Kingsbury had no equity to be relieved from his obligation, because the plaintiff had recourse against McKechnie. The.plaintiff, though not strictly such, had the equities of a surety against Kingsbury, and the equities by operation of law would pass to McKechnie on his performing his contract of indemnity, except for the release. The release of Kingsbury by the plaintiff materially changed the rights and remedies of the defendant against Kingsbury. It barred any claim against Kingsbury in behalf of the estate of the indemnitor, to recover as the representative of the rights of the plaintiff against him, in case the plaintiff should prevail in the action. Such an interference plainly operates to discharge the estate of the indemnitor.

Upon the ground that the release defeated the right of action, the judgment should be affirmed.

All concur, except Haight, J., not sitting.

Judgment affirmed.


author: Gray, J.

text:
    The People, Resp’t, v. Benton Turner, App’lt.

      (Court of Appeals,

      Filed April 9, 1895.)

    1. Taxes—Assessment.
    That the unpaid tax, for which the tax sale was made, was based on an assessment roll verified before the third Tuesday of August, and that the assessors omitted to meet on that day, are not jurisdictional defects, but simply irregularities in the proceedings; if such irregularities render the sale invalid, the owner has his remedy and an opportunity to be heard, by appeal to the board of supervisors, and also by appearance before the comptroller and demand for the cancellation of the tax; but, after the expiration of the six months, the defects are cured by the statute.
    2. Same—Possession.
    Where the land sold for unpaid taxes is included in the “ forest preserve of the state of New York,” the state, through the comptroller's purchase and conveyance to it, is constructively in possession, which becomes an actual possession by the powers and duties devolved upon the forest commission as its representative by chap. 448 of 1855.
    3. Same.
    The proof was held not to establish such actual occupancy on the part of the defendant as called for a compliance with the statutory provision, requiring service, upon the occupant, of notice to redeem.
    Appeal from judgment of the general term of the supreme court in the third judicial department, entered upon an order, which affirmed a judgment in favor o£ plaintiff entered upon the report of a referee.

      Frank E. Smith, for app’lt; Albert Hessberg, for resp’t.
   Gray, J.

The appellant in this case is the same person whose appeal was recently under review by us. (117 N. Y. 227). The decision there made must be regarded as operative in the present appeal. In the former case the action was to recover penalties for cutting trees upon certain lands in Franklin county, in this state; while in this case the action is one of replevin to recover logs taken by the defendant from other lands in that county. The facts, affecting the defendant’s position towards the lands, differ in the two cases, .in this; that in the earlier case the defendant was not in possession and showed no title to the lands and was, therefore, a trespasser: while in the present case he claims to have acquired the title and to have been in possession. Although we might safely rest the determination of this appeal upon the decision rendered in the previous case, where the question was treated as though the defendant had a right, as an owner of the property, to rebut the plaintiff’s proof of title, I will, nevertheless, state, briefly, the reasons for affirming this judgment.

The facts respecting the acquisition of title by the defendant are these; viz.: that the defendant received in 1886 a deed from one Riley, who in the same year, had acquired an interest in the lands by a conveyance from six of the eight children of one Norton. Norton had acquired the lands in 1872 from the Barnards, who appear to have held the same by tax title. Norton died in 1882 and, subsequently to his death, the conveyance to Riley was made by six of his children, which I mentioned. The plaintiff’s title to the lands was acquired through a conveyance by the comptroller to the state, October 12th, 1877. He had purchased "the same at tax sales, made for the unpaid taxes of the years 1866 to 1870, inclusive. His deed was made June 9th, 1881, and was recorded June 8th, 1882. The two years allowed for redemption had expired October 12th, 1879. Three years after the record of the People’s deed, chapter 448 of the Laws of 1885 was enacted. That act provided that, “All conveyances that have been heretofore executed by- the comptroller * * * after having been recorded for two years in the office of the clerk of the county, in which the lands conveyed thereby are located, * * * shall, six months after this act takes effect, be conclusive evidence that the sale and all proceedings prior thereto * * * were regular.” The section further provided that, “ All such conveyances and certificates, and the taxes and tax sales on which they are based, shall be subject to cancellation, as now provided by law, on a direct application to the comptroller or an action brought before a competent court therefor, by reason of the legal payment of such taxes, or by reason of the levying of such taxes by a town or ward having no legal right to assess the land on which they are laid.” The lands in question are within what is known as the “Forest Preserve of the State of New York;” and the second section of the act of 1885 makes its provisions applicable to those counties which include the Forest Preserve. The six months mentioned in the act, within which tax sales and proceedings might be open to question after the act went into effect, expired December 9th, 1885. The forest commission had been established in May, 1885, and, by the act creating that commission, it was given the care, custody, control and superintendence of the Forest Preserve. A warden was employed by the forest commission, who discovered the cutting of the timber by the defendant, and this action was then brought, in behalf of the people, by the forest commission.

Referring now to the points taken by the appellant, in objection to the right of the people to maintain their action against him, he claims that the tax sale of 1877 was illegal and void ; for the reasons that the tax for the year 1867 was based on an assessment roll verified before the third Tuesday of August and, as to the tax for the year 1870, that the tax assessors had omitted to meet on the third Tuesday of August, as required by law. He further claims that these were jurisdictional defects, which the act of 1885 could not cure, and he also asserts the unconstitutionality of the act. As to the first objection, relating to the proceedings of the tax assessors, I would observe, in the first place, that they were not jurisdictional defects, in any proper sense. They were irregularities in the proceedings for the assessment of the tax. Some confusion of thought may be occasioned by the unguarded language of Chief Judge Ruger in People v. Turner, 117 N. Y. 227; 27 St. Rep. 158, who speaks of the irregular proceedings by the assessors as jurisdictional defects. But it is very clear that he did not intend the full force of that expression and that he used those words in the sense in which they were used by Judge FlHCH in Ensign v. Barse, 107 N. Y. 829; 12 St. Rep. 89. In the latter case it was held that those defects, only, which went to the jurisdiction and authority of the assessors were not cured by the act of 1882. The defect there considered was the defective date of the assessor’s certificate and that was deemed to be in the nature of an irregularity, merely. In Joslin v. Rockwell, 128 N. Y. 338; 40 St. Rep. 274, it was held that the act of 1885, now in question, did not differ, in any material respect, from the act of 1882, which was discussed in Ensign v. Barse. The defects, which the appellant here points out in the proceedings of the tax assessors, are not unlike, in their effect, to those which were relied upon in his former case. There they consisted of the alleged omission by the assessors to give notice of a review of the .assessments in the years referred to, or to hold a meeting for such purpose, as required by the statute, and in closing and verifying the assessments prior to the time provided by law. Those irregularities of the assessors were considered by judge Ruger in connection with the effect to be given to the comptroller’s deed, after a certain lapse .of time, under the act of 1885. It was held that the act, in its principal aspect, was one of limitation and that, as ■ such, it was within the constitutional power of the legislature to enact as affecting future cases and, as well, existing rights. The .appellant concedes that under that decision the act of 1885 must be regarded as a statute of limitation; but he, nevertheless, insists upon a distinction in the facts between the two cases. He claims here to stand in the shoes of Norton^ who was the owner of the lands at the time of the tax sale and the passage of the act of 1885. As I apprehend, his proposition, it is about this, viz.: that while the act is operative in cases where the purchaser at a tax sale is in actual possession, it is invalid as against the owner of the lands who, at the time of the sale and of the passage'of the act was, and remained, in possesssion, actual or constructive. By a process of ingenious reasoning upon the theory of statutes of limitations, the appellant undertakes to show that the theory is inapplicable to the case of the owner in possession ; to whom there does not, merely by reason of,the tax sale, accrue any cause of action either to obtain title or possession, or to cancel the sale as a cloud upon title. The argument is that the sale was void and that the owner could rest upon its invalidity and defend himself whenever attacked. All that the appellant says, however, is practically an argument upon our previous decision and to obviate its effect. In the other ease, while it was doubted whether a stranger, not in possession or claiming title and, therefore, not aggrieved, could raise the question of the invalidity of the act of 1885, in its operative effect upon the property of another, the opinion proceeded upon the assumption that the defendant had the right to rebut the plaintiff’s proof of title and took up the question whether the owner of the property had been deprived of it without due process of law and an opportunity of being heard. That question enters the case in this way, namely, that the opportunity for the appellant to be heard before the assessors, at a meeting to be held, as provided by law, on the third Tuesday of August, was taken away from him by the fault of the assessors. In the other case, it was said, that the argument that a lawful exercise of the taxing power by the legislature requires that an opportunity to be heard before the taxing officers, in respect to the imposition of a tax, should be afforded to the taxpayer, or otherwise, he is deprived of his day in court,-fails if it can be shown that he was not actually, or substantially, deprived of that opportunity. Upon an examination of the statute under which the tax was levied, we thought that the taxpayer was not deprived of such notice and opportunity to be heard as the nature of the case required. We thought that, while the act gave the taxpayer the right to appear before the assessors at the time stated, in order to persuade them to modify, or vacate, his assessment, he still had, under the law, the right, in case of a neglect of the assessors to meet, of appeal to the board of supervisors at their next annual meeting; they having power to review and correct the assessment. “Ample opportunity is thereby given the taxpayer, if he feels aggrieved in respect to assessments of his property, to be heard before the board of supervisors, who-- are vested with full power to afford all and any relief which was possessed by the assessors.” The opinion was there expressed that, “the opportunity afforded the taxpayer, to appear before the board of supervisors and challenge the legality and fairness of his assessment, was a satisfaction of his rights in respect to a hearing on the subj.ect. It would have been competent for the legislature, while authorizing the imposition of taxes, to-have omitted- altogether the provisions requiring notice and a meeting by the assessors to review assess-merits, and to have provided only for a hearing before the supervisors in the first instance. * * * So long as the taxpayer is given the equivalent, therefore, the legislature has done all that is required of it under any view of the taxpayer’s constitutional rights.” The opinion then proceeds as follows: “But more than this. After the tax has been returned to the comptroller, the taxpayer has still the right, both before and after the sale of his property, to appear before that officer and make proof of any illegality in the tax levy, and demand that such tax, and any sale made thereon, shall be canceled by him. (Citing the statutes.) And finally the act of 1885 itself provides for the exercise of the right of the comptroller to cancel taxes and sales illegally made, where the taxes have been legally paid, or where the town or ward had no legal right to assess the land. These rights were not only open to the taxpayer to exercise at any time previous to the act of 1885; but the right of all persons to exercise them was also preserved in all cases for six months after the passage of that act. * * * It would seem that the right of a property owner to assert his title to property claimed by him, after such ample opportunities to protect such right had been afforded, could be regulated by a law of limitation without incurring the objection that his property had been taken without due process of law.” The authoritative expressions, in the opinion referred to, are applicable to the present case. Conceding the irregularity in the assessment proceedings to have been such as rendered the sale invalid, nevertheless, the assessors had the jurisdiction and authority to assess and if they erred in their proceedings, and neglected to take the steps which the statute required, there was, in the first place, the remedy of an appeal to the board of supervisors; and, in the second place, there was the opportunity to appear before the comptroller. By virtue of the act of 1885, that opportunity to appear before the. comptroller and to demand the cancellation of the tax sale, because of irregularities in the proceedings leading to the sale, was continued for six months after the passage of the act. Differing from a case between the owner of lands and the purchaser thereof at the tax sale, where the comptroller would not liave the power upon the application of the owner to cancel a tax title, here the state became the owner through the purchase and it was open to the owner to come before the comptroller and to make proof of the invalidity of the sale through which the state derived its title. With the knowledge of the law, the person claiming to be the owner of the land sold was chargeable; and when put upon his. inquiry, as to the result of the proceedings he discovered the state to have become the purchaser, it was incumbent upon him to take affirmative steps to cancel the sale, if he would recover his title to. the lands. There may be considerable doubt with respect to the nature of the possession by Norton and of this appellant; but, however that may be, the state was constructively in possession through the comptroller’s purchase and deed. The effect was that the state had resumed its ownership of the land and its title thereto was assured, as the result of the proceedings, until invalidated by proof respecting the illegality of the proceedings leading to the "tax sale. That title, by force of the provisions of the act of 1885, became unquesfionable upon the expiration of the six months after it went into effect. While we think the People were not bound to take any steps towards actual possession, after the conveyance to them of the land, any doubt upon the subject would seem to be eliminated by virtue of the provisions of the act which created the forest commission and placed the Forest Preserve, within which are the lands in question, in the care, control and supervision of the commission. The constructive possession which the .state had acquired, I think, was made an actual possession by the powers and duties devolved upon the forest commission as it's representative.

The appellant raises a final point, there was an actual occupancy of part of the lands proven and, as no notice was served on the occupant, no title was acquired under the sale of 1877. It would seem that that objection was oue of those which should be taken upon an application to the comptroller by the owner, within the time allowed by the act of 1885 to complain of the invalidity of the sale. But the objection in any view is quite untenable. The finding of the referee was that the land was wild, uncultivated ■and unimproved forest land; with a small natural meadow of about ten acres, upon which, some time after the year 1870, by the leave of Norton, the then owner, one Moody entered and cut and hauled away grass. Upon two occasions he had scattered a little grass seed and at times he had dammed up the brook, so as to overflow about half an acre. There was no residence, nor building upon the land, nor any cultivation or inclosure thereof, as was the case in People ex rel. Chase v. Wemple, 144 N. Y. 478 ; 63 St. Rep. 738. We think the proof fell far short of establishing any such actual occupancy of the lands by any person, as called for a ■compliance with the provision of the law that a written notice to redeem must be served on the occupant.

I do not think it necessary to consider, at further length, the questions argued by the appellant. Enough has been said, in connection with our previous decision in this appellant’s other case, to show that the judgment recovered by the People in this case was correct and should be affirmed, with costs.

All concur.

Judgment affirmed.


author: Peckham, J.

text:
    Randolph F. Purdy, Resp’t, v. Agnes Lynch, as Executrix, etc., et al., App’lts.

      (Court of Appeals,

      Filed April 9, 1895.)

    1. Trustees—Liability.
    A trustee, in accepting a trust created either by deed or will, while not bound to the greatest possible vigilance in the execution of his duties, is yet bound to give such care and attention to their performance as intelligent men, acting in like circumstances, would give to their own affairs ; but unusual and exceptional facts may take the case out of the ordinary rules for the conduct of trustees and leave it to be judged with reference to its own peculiar and extraordinary surroundings.

      3. Same.
    A trustee, who necessarily does an act by which the funds are transferred from the joint possession of all to the sole possession of one, is not liable for the due application of the fund by his co trustee.
    '3. Same.
    In determining whether the trustee has employed the proper prudence and diligence, the court will look at the facts as they exist at the time of their occurrence, not aided or enlightened by those which subsequently ' take place by reason of which the loss has occurred.
    4. Same—Agent.
    When necessary in the performance of their duties,-trustees have the right to appoint an agent to do some portion of their work, and, in making such appointment, they are not precluded from appointing one of their own number.
    Appeal from judgment of the general term of the supreme court in the first judicial department, entered upon an order which modified and affirmed as modified a judgment in favor of plaintiff entered upon the report of a referee.

      Charles E. Miller, for app’lt; David Thomson, for resp’t.

      Reversing 55 St. Rep. 360.

   Peckham, J.

This action was brought to obtain an accounting from the defendants Quinlan, Lynch, and Develin, as trustees under a deed of trust executed by Walter Roche to them in 1872. The action was commenced in 1875, and John T. McGowan, who subsequently died, was at that time plaintiff. The defendant John Develin died February 23, 1888, and the defendant James Lynch •died August 5, 1888. The action was continued against the respective executors of the deceased defendants.

The material facts in regard to the action are these: For some time prior to November 17, 1871, Walter Roche had been vice-president of the Guardian Savings Institution. The bank was doing business in the city of New York, and on the date mentioned it was insolvent. Mr. Roche had been one of the managing officers of the bank, and through his influence quite a number of individuals and institutions had become depositors therein, among them being the Foundling Asylum, which had a deposit of nearly $100,000 on that day. Mr. Roche being desirous of securing, as far as possible, the depositors in the bank, went, in company with a friend, to the office of the defendant Develin for the purpose of consulting as to the course to. be pursued. Upon such consultation it was decided that a receiver ought to be appointed at once for the savings bank, and it was the subject of discussion as to who should be chosen. Finally it was determined that Jeremiah ■Quinlan, a friend of Mr. Roche, should be the receiver, and then the question of Mr. Roche’s individual action was discussed. Ultimately he decided to execute a trust deed to the defendants Develin, Lynch, and Quinlan, by which a large amount of real property owned by him was to be conveyed to the trustees, who were to sell the same and with the proceeds pay the depositors of the savings bank that proportion of their deposits which might be Owing to them and which would not be paid by the receiver of the bank. Payments were only to be made to those who would execute subrogations to Mr. Roche of their rights against the bank to the extent of such payments, and they were to be executed by a time specified in the trust deed. Mr. Quinlan, the receiver and one of the trustees, was well known to Mr. Boche- and was entirely acceptable to him, both as a receiver and as a trustee. He was a well-known business man of high character and considerable-financial ability, residing and doing business in the city of New York. Mr. Lynch was also a resident of the city, engaged in business there, and a man of integrity and good business capacity. Mr. John E. Develin was a well-known lawyer of good standing in his profession, and he was also the general counsel and adviser for the Foundling Asylum. The trust deed conveyed to these trustees a large amount of real estate situated in the city of New York, and it was conveyed to them upon a trust to sell and convey the same, or so much as might be necessary, and with the proceeds pay the depositors of the bank as already stated. By the terms of the deed the time within which the payments were to be made was stated, but it was subsequently extended until some time in October, 1874. This trust deed was not joined in by Mrs. Boche, and subsequently, and on the 24th day of January, 1872, the trustees re-conveyed the real estate mentioned in that November trust deed back to Boche and received at the same time another deed substantially the same as the November deed, in the execution of which Mrs. Boche joined.

The present plaintiff, Bandolph F. Purdy, is the successor of McGowan, the original plaintiff, who was made the grantee under a deed subsequently executed by Boche, conveying to McGowan his remaining interest in the property conveyed to these three trustees and which might remain after their performance of the duties devolved upon them by that deed. The plaintiff claims a right to call these trustees to an account, because by the terms of the trust deed to them they were to pay only such depositors as gave subrogations within the time limited in the trust deed, and after such time no payments could be made and the property was then to be conveyed back to the grantor whose1 residuary interest the plaintiff represents. We do not deem it necessary upon this appeal to decide upon the objections raised by the defendants as to the right.of the plaintiff to maintain this action for an accounting. We assume he has such right, and the question remaining is whether any cause of action has been proved against the defendants Develin and Lynch to account for moneys which were turned over to Quinlan under the circumstances hereinafter referred to.

.The trustees sold a large amount of real property and realized large sums from such sales. Part of the proceeds of the sales they deposited with a trust company in the city of New York, but subsequently and from time to time drew it from such company and transferred it to Mr. Quinlan for the purpose of having him at once proceed and pay the depositors and take the subrogations as provided for in the trust deed. The trustees also appointed an agent for the purpose of collecting the rents of the real estate while it was in their hands' and before it was sold by them, and such agent collected a little over $18,000, and turned it over to Mr. Quinlan as one of the trustees. Several sums amounting in the aggregate to over $17,000, being the proceeds of sales of a portion of the real estate, came into Mr. Quinlan’s hands directly and were never in the possession or under the control of the other trustees. Altogether there came into Mr. Quinlan’s hands, including the items of $18,000 for rents, and the $17,000 proceeds of sales of real estate above mentioned, a total of $262,254.25 (being the whole amount of the trust fund converted into money), and he is credited with having paid out $229,291.29, leaving a balance of $32,962.96 of the trust fund to be accounted for.

The referee to whom the action was referred found these facts •and charged all three of the trustees with the total amount that had come into Quinlan’s hands, and credited them with the amount paid out by him, and charged them with the balance as dire by reason of their position as trustees. The referee charged the trustees with interest on the balance unaccounted for from the time when the demand was made for it up to the date of his report, in January, 1880, which interest amounted- to a little over $10,000, and upon the whole sum, amounting to over $43,000, interest was cast from the date of the report until the day of the entry of judgment, February 10, 1883, amounting to-over $8,000, and these items, together with over $1,800 costs, made a total of $53,420.58, for which judgment against these defendant trustees was entered February 13, 1883. The ground of liability upon which the referee proceeded was that the defendants Develin and Lynch were guilty of negligence in transferring to their co-trustee, Quinlan, the moneys arising from the sales of the real estate, wrhich had come into their hands and which had been deposited in their names to their joint credit with a city trust company, although such transfer was made for the purpose of immediate distribution by Quinlan; and the referee held that such act was a negligent one, and on account of such neglect the two trustees were liable for the failure of Quinlan to account for the whole of the trust moneys that actually came into his hands.

Upon appeal by Develin and Lynch to the general term that court held that the $17,000 item above referred to, being the proceeds- of the sales of real estate which never had come into the actual possession or control of the two trustees, but which had been paid directly to Quinlan, ought to be deducted from the amount of the recovery, and it directed that such sum, with interest, amounting in all to over $20,000, should be deducted from the judgment with the consent of the plaintiff, or else that the judgment should be reversed and a new trial granted. The plaintiff consented and the amount was deducted from the judgment in the action, and the defendants Develin and Lynch appeal to this court.

The learned judge at general term who delivered the opinion of that court stated with his usual accuracy and clearness the general rules governing the liability of trustees in cases of this nature. We fully agree with that court as to the rules which usually obtain regarding the liability of trustees in such cases. It is exceedingly important that they should not be relaxed in any case where the facts bring it within their fair application. Trustees should understand that in taking responsibility as such they do not enter upon merely formal obligations. The one who creates a trust either by deed or will has the right to understand that the trustee in accepting it, while not bound to the greatest possible vigilance-in the execution of his duties, is yet bound to give such care and attention to their performance as intelligent men acting in like circumstances would give to their own affairs. In applying, however, the general rules of liability to this case we think the .court below has not given full weight to the peculiar circumstances, surrounding it, and it'is upon those unusual and most exceptional facts that we base the decision of this case. Such facts take it out of the ordinary rules for the conduct of trustees and leave the case to be judged with reference to its own peculiar and extraordinary surroundings.

When the first trust deed was executed Mr. Quinlan was to be the receiver of this savings institution. This fact was known to Mr. Boche, and, indeed, the designation of the receiver may be said to have been liis own. Aside from that Mr. Quinlan was a business man whose capacity and judgment were well known and whose character and integrity were unblemished. The evidence would seem to show that he was probably named as one of the trustees in this trust deed because of his being also named as receiver. The fact was also patent that some office would be necessary for the receiver in which to discharge his duties. He would necessarily have possession of all the books and papers belonging to-the bank and it would be necessary to refer to them in making up a list of- its depositors and the amount due each respectively. Most of the depositors it may be assumed were personally unknown to the trustees and in many instances it would be necessary to resort to the identification book in order to determine the fact of identity of depositor and claimant. Ho. payment could properly bp made on the part of the trustees to any depositor until reference had been made to these books, and the amount of the payments by thé receiver, if any, had been ascertained. Under these circumstances what would be more natural than to select that trustee who was also receiver as.the proper party td make those payments ? There were over 700 depositors.* Their debts were due at once, and it could not be accurately .known what amounts ought to be in the hands of the paying trustee at any one time in order to permit him to meet all demands. Mr. Quinlan was known and respected for his ability and integrity. He was. the receiver, and he alone had all conveniences for ascertaining the depositors and the amounts due them. There was absolutely no reason to fear or suspect him, and the payments were to be made at once as the creditors should appear. Taking all these circumstances into consideration, we are unable to see that the-defendants Develin and Lynch were guilty of such negligence in transferring these funds as to make them liable for the failure of Quinlan to account for all the money that came into his possession as one of such trustees. There is no evidence and no claim that the trustees were guilty of any neglect in the management of their trust, so far as the sale of real estate and its conversion into money is concerned. There is no claim made and no evidence given upon the subject of any alleged neglect to sell in the best mode, or that on account of any neglect the highest price was not obtained which the property could be fairly expected to bring. The whole charge of the neglect lies in the fact that after the conversion of this portion of real estate into money and the deposit of a portion thereof with the trust company subject to the order of all three trustees, the portion so deposited was subsequently from time to time transferred to Quinlan for the purpose of immediate payments by him to the depositors of this broken bank. If the funds had been transferred to Quinlan at a time when there was no pretense of their being needed in order to pay the depositors, and had been thus transferred for his simple convenience, and so. that they were liable to be used in the private business of the trustee, a very different case wojuld be presented. But here there is no evidence that the sums transferred to Quinlan were out of proportion to the probable needs of his payments, as those needs, existed from time to time. We do not think the trustees were-bound to limit their payments to those which might probably be-necessary for each day’s disbursements by their co-trustee; they were entitled, under all the circumstances of this case, taking into consideration the large amounts due some of the depositors, to transfer to such trustees funds enough to answer all contingencies and more than enough for any one day’s or one week’s payments. It is unquestionable that in the performance of their duties as-trustees they had a right to appoint an agent to do some portion of their work, and it is equally undoubted that in appointing an agent they were not precluded from appointing one of their own number. On the contrary, it would seem as if every argument which might be urged in favor of the right to appoint an agent-generally, would apply with greater force to the appointment of one of their own number. Here in about two yearn the trustees, sold the real estate which has been sold and collected quite large sums in rents and made payments to the depositors and otherwise accounted for the moneys which came into their possession, so that out of a total of $262,000 only $32,000 remained unaccounted for in the hands of Quinlan. Payments were being made from time to time by Quinlan during this whole period, and there is nothing in the record here that we can see from which the inference ought to be drawn that there was any actionable neglect by either of these two trustees in the performance of their trust.

We have read many of the authorities on this branch of the law. They are numerous and the courts have said that if the trustee unnecessarily do an act by which the funds are transferred from the joint possession of all to the sole possession of one, the trustee who does this unnecessary act must be held liable for the due application of the fund by his co-trustee. The question is what is meant by the word “ unnecessarily,” and it would seem to be that an act is unnecessary when done outside of the usual course of business pertaining to the subject. In Bruen v. Gillett, 115 N. Y. 10 ; 23 St. Rep. 780, the funds were turned over to one of the assignees without the slightest necessity, and they continued in the possession of. the assignee with the knowledge of his colleague that they were being used in his private business. In Gasquoine v. Gasquoine, 1894, 1 Ch. 470, an act which was done in the regular course of business in administering the property was held not to be unnecessary, and the trustee was held not liable for a resulting loss by the dishonesty of his co-trustee. Numerous authorities are cited in these two cases upon this subject.

In this case we must say that it was within the fair meaning of the word a necessity; that is, it was an usual, proper and ordinary way to make payments to these 700 odd creditors under the circumstances above detailed, through the hands of one who was acting in the double capacity of trustee and receiver, and who in his latter character had all the data requisite to make the payments and to obtain accurate information as to the amount of the indebtedness in each case. And we do not think it -was necessary for each trustee to attend and sign each check and make such payment instead of placing sums from time to time in the hands of the trustee-receiver and permitting him to make the payments.

Although these general views lead to a reversal of this judgment, yet we desire to say that we agree with the general term that the $17,000 received by Quinlan directly from the sale of some portion of the real estate was a sum which he had the right to collect as trustee, and, having collected it, his co-trustees, under the circumstances of this case, were not responsible for the proper distribution of such fund by him. On the other hand, we think the general term and the referee have held the defendants Develin and Lynch to a liability based upon a presumption untrue in fact with regard to the item of about $18,000, rents received by the appointed agent of the trustees and paid by him over to Quinlan. They have held the two trustees chargeable with this sum on the ground that, as this agent to collect the rents had been appointed by all of the trustees, such rents, when collected by that agent, were legally in their joint possession, and that when the agent paid them to Quinlan it must be held that they were paid by the direction of Develin and Lynch, and hence those defendants are liable to account therefor. We do not think that this is a solid ground of liability in this case, even if we assumed they would be liable if they directed the payments. Upon a question of title, the moneys as soon as they came into the hands of the agent became the property of the trustees, but in this case it is not a question of title. The" ground of liability is personal neglect, and it must be remembered that the joint appointment of the agent to collect the rents and his collection of them did not, in point of fact, bring those moneys into the actual possession of either Develin or Lynch. The title was in all three trustees; the actual physical possession was in the agent; and when that agent paid them over to one of the trustees without in fact any direction from either of the others, such direction ought not to be imputed to them by a legal fiction when in truth it was not given. The agent, under the circumstance of this case, might naturally pay the rents over to Quinlan, because the latter was at the receiver’s office in the discharge of his duties as receiver of the bank at a known place of business, and where the agent could at all times find him to make payment, and where the business of the trustees might very properly have been conducted. Under those conditions we think we should not indulge in legal conclusions for the purpose of holding the trustees to an accountability by reason of implied directions by them when the fact of such directions was not proved and did not exist.

If this item of $18,000 were added to the $17,000 item deducted by the general term, the total of these two sums would be greater than" the amount which the referee found had not been accounted for out of the whole amount that had been received by Quinlan, and so there would be nothing due the plaintiff for which Develin and Lynch could be held liable.

We think, upon a careful deliberation over this unusual and exceptional state of facts, that the plaintiff failed to make out a •cause of action for negligence against the defendants Develin and Lynch; and while, as we said before, the rules governing the liability of trustees should be strictly maintained,.and they should be held to the most rigid accountability for the performance of all their duties as such, yet in all cases the true question is, taking into consideration all the facts and circumstances, has the trustee employed such prudence and diligence in the discharge of his duties as in general men of average prudence and discretion would under like circumstances employ in their own affairs, and in determining the proper answer to be given to that question we are to look at the facts as they exist at the time of their occurrence, not aided or enlightened by those which subsequently take place by reason of which the loss has occurred.

Judged by that standard we think the conclusions of law of the referee holding these defendants Develin and Lynch liable are erroneous, and the judgment as to them should, therefore, be reversed and a new trial granted, with costs to abide the event.

All concur.

Judgment reversed.


text:
    M. Wallace Clarke, App’lt, v. Eliza W. Clarke, Individually, etc., Resp’t.

      (Court of Appeals,

      Filed April 9, 1895.)

    Taxes—Remainder.
    Where it is the intent of the testator that the general estate should bear the burden of the expenses connected with the maintenance of the life estate, and that," in no event save in case of a rental by the life tenant, should the life estate be charged with the taxes, it is the duty of the remaindermen to pay them.
    Appeal from judgment of the general term of the supreme court in the fifth judicial department, entered upon an order, which affirmed a judgment in favor of defendant entered upon an order dismissing the complaint on trial at special term.
    This action was brought for a construction of the will of David Clarke, deceased, and for the appointthent of a receiver of certain premises in which defendant has a life estate under said will, for the purpose of renting the same and paying taxes out of the rents.
    W. T. Dunmore, for app’lt; Charles W. Williams, for resp’t.
   Gray, J.

It was held below in this case that the defendant, as the life tenant of certain premises, consisting of a house and lot in the city of Rochester, was not, as between herself and the heirs of the testator, who were remaindermen, chargeable with the taxes upon that property and that the rents and profits thereof could not be compulsorily applied for that purpose. The testator, David Clarke, died in 1874, leaving a will upon which letters testament.ary were issued to the executor named therein. The executor was subsequently removed from his office and then letters of administration with the wilhannexed were granted to this defendant who was the testator’s widow. The will devised to the widow “the use during her life of said homestead premises ;”and it was therein directed that the taxes, repairs, etc., should be paid by the executor from the general estate in his hands “and without burden or charge from the annuity,” which was given to her by subsequent provisions of the will. It was also, further, therein directed, that, in case his wife “should rent the whole or any part of said homestead, she shall pay a part of the taxes, etc., proportionate to the part so rented.” The executor on paying such taxes, etc., which the wife should pay, in that case, might retain such payment out of the wife’s annuity. The testator gave to his widow an annuity of $400, besides a small sum of money outright. The residue of the testator’s estate,' after certain bequests which were to be paid after the widow’s death, was given to his executors, with power to sell and make distribution among his legal heirs. The general estate became exhausted and then the taxes ceased to be paid. The widow’s annuity also, as it seems, was not paid for several years. The property, had been sold for unpaid taxes and had been redeemed by the plaintiff; who was one of the testator’s heirs at law and who now seeks by this action to compel the payment of the taxes imposed upon the life estate by the widow, or, through a receiver to be appointed thereof, an application of its rents and profits thereto.

In the consideration of this will, with reference to the question raised by the appellant, we are to be guided by what may be apparent as the testator’s intention. Any general rule, which has been established by the courts with reference to the construction of testamentary provisions, must give way to an evident intention to the contrary. So, here, though bjr the general rule the life tenant, as between berself and the remaindermen, would be bound to pay the taxes imposed, it is sufficiently clear, upon a consideration of the several provisions which .the testator has made in his will, that he intended no such liability,ever to rest upon his widow. The negation of any such idea on his part, appearing at first in the direction with respect to the payment of the taxes by the executor from the general estate, is made certain by the subsequent clause which provides for a case when the wife should pay the taxes, viz.: if she should rent the property. This direction for her to pay the taxes in a particular event seems, logically, to exclude the obligation for her to pay them in any other event. The scheme of the will seems to be that the general estate should bear the burden of the expenses connected with the maintenance of the life estate, which was the only real property left by the testator; and whether the testator did or did not suppose that it would be at all times sufficient for that purpose, and for the purpose of paying the bequests and annuities, is not shown and is not very material in view of such express provisions as we find. Upon the cessation of the life estate in the realty, by the death, or re-marriage, of the widow, as the case might be, that, as well as what might exist of other property, was given to the legal heirs of the testator. The legal effect was to vest in those persons, answering the description of testator’s legal heirs, the title to the realty, subject only to the life estate of the widow. Possessing that interest, it was the duty of the testator’s heirs, in view of the positive direction in his will with respect to the life estate, in their own interests, to beep down the taxes. This case differs from that of Woodward v. James, 115 N. Y. 346; 26 St. Rep. 147, upon which the appellant places great reliance. In that case we do not find that clear negation of any liability resting upon the widow, in the contingency that the general estate might prove insufficient to pay the taxes, which we think exists in the present case. As Judge Finch said in the case cited: “The language of the will, freeing her half from any deductions, was used in connection with the provision imposing the burden on the other half and without reference to an emergency which the testator did not contemplate and for which, therefore, he did not provide.” In the James will the income from the estate was divided, one-half to the widow, and the other half to the testator’s heirs, after first discharging from their half all taxes, assessments and charges against the testator’s estate. When it was found that half the income was insufficient to discharge those obligations of the estate, the question arose as to whether the widow’s half of the income might be resorted to to pay the deficiency; or whether the corpus of the estate should be drawn upon. The inference could be indulged in that case of a contingency not anticipated by the testator, and the construction, not in apparent viola- • tian of any intention of the testator, was adopted, that, rather than resort to the corpus of the estate, the widow’s income should be applicable. But here a construction upon similar lines must violate what, as I have endeavored to show, was the clear intention of the testator that in no event save one should the life estate be chargeable with taxes, etc.

These views are in harmony with those expressed upon this question by Mr. Justice Bradley, in his opinion at the special term, and lead to the conclusion that the judgment appealed from should be affirmed, with costs.

All concur, except Haight, J., not sitting.

Judgment affirmed.