text:
    THE MARINE NATIONAL BANK OF NEW YORK, Respondent, v. FERDINAND WARD, ULYSSES S. GRANT and Others, Defendants. GEORGE C. HOLT, as Assignee of FERDINAND WARD, Appellant.

      Attachment — affidavit by agent — it must show the source from which the information is derived — Code of Oivil Troeedm'e, sea. 636
    An attachment against the property of the defendants was granted, upon the . application of the plaintiff, on the ground that the defendants had fraudulently disposed of their property with intent to defraud their creditors. The affidavit upon which it was issued was made by one Snow, the vice-president, and a director of the plaintiff, a national bank. It stated “ that the plaintiff, the Marine National Bank, is, as deponent is informed and verily believes, entitled to recover of the defendants * * * the said sum of $7,000, over and above all counter-claims known to the plaintiff or to deponent.”

      Held, that it was fatally defective in faying to show that the plaintiff was entitled to recover the sum stated therein, over and above all counter-claims known to it, as required by section 636 of the Code of (Jivil Procedure.
    Although such an affidavit may be made oy an agent of the plaintiff where the facts are within his personal knowledge, or where the facts upon which his information and belief are based are disclosed by the affidavit, and are such as to show satisfactorily that the plaintiff is entitled to recover the sum named, over and above all counter-claims known to the plaintiff and the affiant, yet it is not sufficient, where the agent or officer makes such statement upon information and belief, without showing whence and from whom the information was derived, and why the affidavit of his informant was not produced.
    The allegations in this affidavit, all of which were made upon information and belief, were also held to he insufficient to show that the defendants had fraudulently disposed of any of their property.with intent to defraud their creditors.

      Appeal from an order of the Special Term denying a motion to vacate an attachment.

      T. H. Hubbard, for the appellant.

      F. N. Bangs, for the respondent.
   Davis, P. J.:

The motion to vacate the attachment in this case was made by George O. Holt as general assignee of the property of Ferdinand Ward for the benefit of creditors, under the provisions of section 682 of the Code of Civil Procedure. The motion was made upon the papers upon which the attachment was granted, and upon an affidavit showing that an assignment had been executed and delivered by said Ward to said Holt for the benefit, first, of the individual creditors ofWard, andsecondly, of the creditors of the firm of Grant & Ward without preferences, and that as such assignee said Holt had an interest in the property of Ward which had been attached, which interest was acquired after the property was so attached.

Additional affidavits were made on the part of the attaching creditor tending to show that said Holt had no interest in the property attached, on the ground that prior both to the attachment and the assignment Ward had conveyed a parcel of the real estate attached to his wife, and other parcels to one Warner, and claiming that if said Holt had any interest therein, it was because the conveyances were fraudulent as against the creditors of Ward, which fact would sustain the allegations of fraudulent transfer upon which the attachment was granted. We have looked carefully into these affidavits and are of opinion that enough is shown by the affidavits of Holt, notwithstanding the affidavits on the part of the plaintiff bearing upon the question of his interest, to sustain the right of Holt as such general assignee of the property of Ward to make the motion under the provisions of section 682 of the Code. It is now settled that a person who has acquired a lien upon or interest in the property after it has been attached may found his motion to vacate the attachment upon the insufficiency of the papers upon which the warrant was granted. (Steuben Co. Bank v Alberger, 75 N. Y., 179; Id., 78 id., 252 ; Jacobs v. Hogan, 85 id., 243.)

It is asserted by the appellant that the affidavits upon which the warrant was granted are fatally defective in two particulars : First. That they fail to show that the plaintiff is entitled to recover the sum stated therein over and above all counter-claims known to plaintiff, as required by section 636 of the Code; and second, that the alleged fraudulent disposition of property by Ward is not sufficiently shown by the affidavits because the material allegations in that behalf are made chiefly upon the information and belief of the affiants. As to both of these objections it may be said that the principal affidavit upon which the attachment was granted was made by one Ambrose Snow on behalf of the plaintiff, thé Marine National Bank. He is described therein as the vice-president and a director of that bank, who has been such for several years past. There is' no statement that the affiant has had any special knowledge of or connection with the business affairs of the bank, beyond what may be implied in the statement that he is and has been its vice-president and one of its directors.

The statement of his affidavit, upon which the first objection arises, is in these words :

“ And deponent further says that the plaintiff, the Marine National Bank is, as deponent is informed and verily believes, entitled to recover of the defendants, composing the firm of Grant & Ward, the said sum of seven hundred thousand dollars over and above all counter-claims known to the plaintiff or to deponent.”

The Code (§ 636) provides that the affidavit must show that the plaintiff is entitled to recover a sum stated therein over and above all counter-claims known to him. This is an essential part of the affidavit, and if it is omitted or not complied with the attachment will be sot aside. (Lyon v. Blakesly, 19 Hun, 299 ; Trow’s Printing Co. v. Hart, 9 Daly, 413 ; S. C., 85 N. Y., 500). In several cases the courts have held that this provision of the Code must be rigidly complied with, and that a defect in the proof in this respect is jurisdictional. (Ruppert v. Haug, 87 N. Y., 141; Murray v. Hankin, 30 Hun, 37; Donnell v. Williams, 21 Hnn, 216; Dickey v. Coe, 13 Weekly Dig., 318). It is very clear that, in the portion of the affidavit above quoted, there is no statement that the plaintiff is entitled to recover the sum named over and above all counter-claims known to it, based upon the knowledge of any affiant. The affiant states that, as he is informed and verily believes, that is the case. He does not assert that he has any knowledge on the subject whether or not Grant & Ward have any counter-claims against the sum demanded, and he does not give the source of his information nor the grounds of his belief, nor state any facts from which the judge granting the attachment can see that his belief is well founded. This requhement of the act is intended to protect defendants against attachments for amounts beyond sums actually due to plaintiff after deduction of all counter-claims which he knows are possessed by defendant. Hence a compliance with it is rigorously required, as otherwise the plaintiff might be able to seize property of the defendant far greater in value than the amount which can be recovered in the action, and thus unjustly injure and oppress the party whose property is attached. The affidavit in this respect may undoubtedly be made by an agent of the plaintiff or an officer of a corporation to whom facts are personally known, or, where his information is based upon such facts disclosed by the affidavit as show satisfactorily that the plaintiff is entitled to recover the sum stated over and above all counter-claims knoupi to the plaintiff and the affiant. But it cannot be enough for such agent or officer to make this statement simply upon information and belief, without showing whence and from whom his information is derived, and why the affidavits Of the informants are not produced. In Cribben v. Schillinger (30 Hun, 248) it was said by the court, when the affidavit is made by an agent and not by the plaintiff, “ there should be proof that he has knowledge, or at least satisfactory information, as to the essential facts stated by him, and when he acts upon information only the sources of this information should be stated, and the reason why the affidavit is not made by some one having knowledge of the facts.”

It is impossible to find in the affidavit of Mr. Snow that he has any knowledge, or that he was in a situation to know whether or not Grant & Ward have any counter-claim against the bank, and in the absence of any further proof on that subject, beyond his expression of information and belief, it is, we think, impossible to uphold the affidavit in this case as a compliance with the requirements of the Code. (Barnard v. Kobbe, 54 N. Y., 516; Yates v. North, 44 id., 214; Bennett v. Edwards, 27 Hun, 352.)

In respect to the second objection the affidavits tending to show a fraudulent transfer of property are made chiefly upon information and belief. It appears that the alleged fraudulent disposition of property by Ward, on wbieb the right to the attachment in this case is claimed, consisted of a conveyance made by him on the 13th of March, 1884, of his residence on Pierrepont strept, in the city of Brooklyn, described in the affidavit of one Patrick Nolan, to one Sidney Green for the nominal consideration of one dollar; and a conveyance on the same day by Sidney Green to Ella O. Ward, the-wife of said Ferdinand Ward, for the same nominal consideration; and for the purpose of showing that these conveyances were fraudulent as against the creditors of Ward, the affiant states that as he is informed and believes “said firm of Grant & Ward are indebted in addition to their indebtedness to said Marine National Bank of seven hundred thousand dollars, before mentioned, to numerous-other persons, corporations and firms in the amount of several hundred thousand dollars ; that said firm of Grant & Ward, who were stock brokers and bankers doing business as such in the city of New York, openly failed in their business and suspended payment of their obligations as such bankers and brokers on the 5th day of May, 1884, and publicly announced such failure upon the Stock Exchange, in the city of New York; and said firm are openly and notoriously insolvent and have made a general assignment of their copartnership property for the benefit of their creditors; and that as deponent is informed and believes that said firm have been, and the defendant Ferdinand Ward, one of the members of said firm,, has been insolvent for several months past; * * * and deponent is informed and believes that said conveyances of said premises by said Ferdinand Ward to said Green, and by said Green to said Ella C. -Ward, were without any actual consideration, and that at the time the same were conveyed, as aforesaid,, the said. Ferdinand Ward was largely indebted to the plaintiff and other creditors, and was insolvent and in contemplation of insolvency, and that said conveyance by said Ward to said Green was made, and said conveyance by said Green to said Ella O. Ward was procured by said Ferdinand Ward to be made, and the property of said Ferdinand Ward thereby conveyed was assigned and disposed of by said Ferdinand Ward with intent to defraud his, said Ferdinand Ward’s, creditors.”

• Each of these allegations is made solely upon information and belief. They are supported (so far as it goes) by an affidavit of Patrick Nolan to the effect tbat a conveyance, as appears by the records of the register of the county of Kings, was executed by Ward to Green, of the property described in the affidavit, and by Green to Mrs. Ward, on the 13th of March, 1884, for the nominal consideration of one dollar.

It is also stated by the affiant Snow as a fact “ that said firm of Grant &■ Ward have been indebted to said Marine National Bank for loans and advances to a large amount for several months past, and were so indebted on the thirteenth day of March last; ” and a further statement is added on information and belief that “said firm of Grant & Ward were, and the defendant Ferdinand Ward was, at the said time insolvent, and in contemplation of insolvency.” But it is not shown anywhere in the affidavit that the indebtedness to the plaintiff existing on the thirteenth of March, at the time the conveyance to Mrs. Ward was made, still existed, 'or that it had not been fully paid off prior to the commencement of this action. The indebtedness for which the attachment was obtained was incurred on the 5th day of May, 1884, and as that is the only sum for which the suit is brought and the attachment obtained, the fair inference from the facts stated is that the previous indebtedness existing on the 13th of March, 1884, had been fully paid and no longer existed. With these facts in view it will be seen that every material circumstance in the affidavit tending to show that the conveyance of the property was fraudulent and void, as against the creditors of Ward, is stated solely on information and belief. The existence of the indebtedness to other creditors and the amount thereof; the fact of the insolvency of Grant & Ward, and the intention with which the premises were conveyed through the medium of Green to Mrs. Ward, are all stated on information and belief. If it be conceded that an attachment can be obtained by a creditor upon an indebtedness arising several months after such a conveyance was made, on the ground that at the time the conveyance was made the defendant was largely indebted to other creditors so that the transfer might be regarded as fraudulent as against them, yet the facts to sustain such an allegation of fraud should be shown by something more than mere information and belief. The affidavits of the other creditors, or at least their names and the amounts due to them, and the kind of information tliey have communicated, ought certainly to have been set forth. But nothing of that kind appears here, and no analysis of the affidavits that we have been able to make satisfies us that sufficient facts were laid before the judge who granted the .attachment to warrant him in so doing.

The order should be reversed and an order entered vacating the attachment, with the usual costs and disbursements.

Brady and Daniels, JJ., concurred.

Order reversed; order entered vacating attachment, with ten dollars costs and disbursements.


source: Caselaw Access Project

author: Davis, P. J.:

license: Public Domain

text:
    ROBERT WILLETS and Others, as Executors, etc., of SAMUEL WILLETS, Deceased, Appellants, v. SARAH A. WILLETS and Others, Respondents.

      Will — when an absolute gift to persons named, is not converted into a trust by an expression of the testator’s wishes as to the disposition to be made of'the funds.

    In an action to procure a judicial construction of a will it appeared from the evidence, and the will itself, that the testator was a man of a charitable and i benevolent disposition; that he fully understood the nature of trusts and the proper modes of creating them, and the distinction between gifts in trust and such as were intended to be personal or direct and not charged with any trust. Numerous trusts were created by the will, and it contained various devises and bequests to his executors in their official capacity, or as trustees for purposes indicated, which showed that he fully understood the distinction between them as persons and as executors or trustees.
    One clause of his will was in these words: “ I do give and bequeath to my son Bobert Willets, my friends William H. Macy and Charles Q-riffen, and my nephews John T. Willets and Bobert B. Willets and Edward B. Willets, and my son-in-law Edward Merritt, the survivors and survivor of them, the sum of one hundred thousand dollars, relying upon them to dispose of the sa,me for the benefit of such charitable and benevolent and educational purposes as they shall judge will most promote the comfort and improve the condition of the poor; or in case any of my descendants should become poor and needy, then to apply in whole or in part to such descendants.”

      Held, that this was an absolute gift to the persons named, free from all legal trusts or conditions, and that it operated as a valid, effective bequest of the amount named to them individually. .
    That the words of survivorship related to the time of the death of the testator.

      Appeal from a judgment of the Special Term, construing the will of Samuel Willets, deceased, and adjudging one of its provisions to be invalid.

      Wilson M. Powell, P. J. Fuller and William M. Hoes, for the appellants.

      H. I). F. Weekes and George H. Forster, for the respondents.
   Davis, P. J.:

It is impossible to read the will of the testator Samuel Willets,. without being impressed with profound respect for the charitableness of his nature. It is shown in the care with which he provides for his family, his relatives, the servants of his household, the poor, and the numerous institutions of charity and learning, which he makes the objects of his bounty. It is apparent that he was a man, who not only took in his lifetime great interests in the many public charities named in his will, but who bore, through his kindness and bounty, close and tender relations toward the poor and the needy.

In construing the provision of his will brought under our consideration by this appeal, it is proper, in seeking for the intention of the testator, not only to bear these facts in mind, but also to observe, what is equally apparent from that instrument, that the testator fully understood the subject of trusts, and the proper modes of creating them, and the distinction between gifts in trust and such as are intended to be personal or direct and not charged with any trust. There are numerous trusts created by the will for various purposes, the validity of none of which are disputed. And so there are various devises and bequests to his executors in their official capacity, or as trustees for purposes indicated, which show that he fully understood the distinction between them as persons and as executors or trustees. It is in the light of all these several facts as they are disclosed by the will, that we come to the consideration of the clause which the court below has adjudged to be void as creating an illegal trust.

That clause is in these words: “I do give'and bequeath to my son Eobert Willets, my friends William H. Macy and Charles GrifEen, and my nephews John T. Willets and Eobert E. Willets, and Ed'ward B. Willets, and my son-in-law Edward Merritt, the survivors and survivor of them, the sum of one hundred thousand dollars, relying upon them to dispose of the same for the benefit of such charitable and benevolent and educational purposes as they shall judge will most promote the comfort and improve the condition of the poor; or in case any of my descendants should become poor and needy, then to apply, in whole or in part, to such descendants.”

The first thought that is suggested by the reading of this provision is that the testator’s heart was full of an intense desire that his death should not be, so to speak, at the expense of the poor and needy who had been in life the subjects of his care. He meant to prevent that affliction to others, which often attends the decease of such a benefactor, when death closes his own hand against them, and withdraws forever the kindly ministrations upon which their necessities had more or less depended. This is by no means an unlawful intention, although the policy of our statutes prevents its execution by the creation of general trusts.. It can be lawfully carried out by absolute gifts and bequests to donees and legatees who are thus made almoners of the dead, but only in fore consoientiae. Of this fact Mr. Willets was doubtless well informed, when he set about putting $100,000 of his large estate in a position of confidence and hope which, while it should not conflict with the enactments of law, would as he believed enable him to continue even in his grave to be the friend and helper of his clientage of poverty. It is apparent from the provisions of the will touching the trusts he had created, that he well knew he could not do this by the creation of any trust not expressly sanctioned by the laws of the State; and he understood also that he could not give any sum for that purpose to his executors as such, or to them as trustees, or in any other mode than by making them absolute donees, and in some form indicating to them his wish and hope that they would apply the money thus donated to his cherished purposes. In selecting the same persons whom he afterwards nominates as his executors, and frequently creates in other provisions of his will his trustees, he was careful to name them in this provision only as his relatives and friends. They were persons who were largely objects of his bounty in other provisions of his will. They were men in whose integrity and honor he doubtless had unbounded faith, and "to whom he was willing to hand over the large sum of $100,000 as an absolute gift, untrammeled by any trust or legal obligation that could, if valid, be enforced by suit at law or equity, accompanied only with a simple expression of his desire that it might be applied by them, to benefit whatever “ charitable, benevolent and educational purposes they shall judge will most promote the comfort and improve the condition of the poor,” or relieve the necessities of any of his descendants who might become poor and needy. He doubtless felt that they were gentlemen upon whom the simple expression of his wish would impose a moral obligation stronger than any bond of the law. He had a right so to feel and to act in that belief, provided he did not impress upon the gift itself the conditions of an invalid trust. The sole question for the court to determine is whether in seeking to accomplish his purpose he has wholly defeated it, by creating a trust .which is condemned by the statutes of the State. If he have not, then the court, since in testamentary cases it “ accepts the will for the reason,” will not be in haste to condemn provisions which aim to carry out intentions commendable in morals if of doubtful'expediency. The words of gift in the provision in question are clear and positive: “I do give and bequeath to my son * * * and my friends * * * and my nephews * * * and my son-in-law * * * the survivors and survivor of them the sum of $100,000.” These are the operative words of the bequest, and they are words of absolute gift. to the donees named;' and if the provision stopped with them there would be no question but that the persons named, or the survivors of them living at the testator’s death, would have taken the sum named as personal bequests. It is well settled in this State that the words “ survivors and survivor ” used, as in this case in connection with the persons named as donees, have relation solely to the death of the testator. (Moore v. Lyons, 25 Wend. 119 ; Weed v. Aldrich, 2 Hun, 531; 2 Redf. on Wills, 488, and cases there cited.) We think it is undoubtedly so in this case, and that the well settled rule controls their construction. The' gift was therefore one to the individuals named or such of them as should survive the testator; and as they all survived him it is a gift to the several persons named of the whole sum in equal shares. In making the bequest the testator is careful to avoid naming the donees as “ executors ” or as “ trustees,” or using the word “ trust ” in any form. The ques- ' tion then is whether in the language that follows the words of gift there is any manifest intention to impose a limitation upon the gift which cuts down the estate given by the preceding language to one of mere trust for any purpose whatever. Unless such a purpose is manifest a court will not thrust one into the provision for the purpose of defeating the wishes of the testator. It is not a legitimate province of a court of law or equity to create trusts by construction for the mere purpose of destroying them by adjudging them illegal. Plain words of gift are not to be cut down by implications which do not arise from necessary construction. It wa-s said in Parsons v. Best (1 N. Y. Sup. Ct. [T. & O.], 211), that “a devise or bequest made in clear, positive and express terms, in language known to the law, and which calls for no interpretation, is not controlled or overcome by subsequent ambiguous words inferentially to’ another intent.” The words of gift in this case are followed by language simply descriptive of the motive that inspired the gift. Everything is left to the discretion of the donees, and the language used implies nothing more. The word “relying” is only an utterance of confidence. It is not an imperative expression. It neither commands nor imposes a duty, but at most indicates the faith of the person using it in the honor or honesty or affection of the person addressed. After an absolute bequest, precatory words of desire, recommendation or confidence will not convert the legatee into a trustee unless it appear affirmatively that they were intended to be imperative. (1 Jar-man on Wills [5th Am. ed.], 385-693 ; Story Eq. Jur., 1069.) We think it well settled upon authority that no such force is to be given to the language used by the testator in this case. In a late ease in this court (Lawrence v. Cooke, 32 Hun, 126), this question of construction came under our careful consideration. In the opinions of the majority of the court (who in that case held that a trust was created) the authorities bearing upon the subject were very fully collated and examined by Justices Brady and Daniels. T was unable to concur in their views as to the construction of the will in that case, but was glad, under its circumstances, that they were able to reach the conclusion at which they arrived. They held in substance that the language used by the testator in that case was not merely a hope, wish, desire, or recommendation or suggestion. “It was,” said Beady, J., “a command established by the use of the- word 1 enjoin,’ by which he ordered or directed a certain thing to be done with urgency, admonished or instructed with authority, commanded and coupled to his confidence already 'expressed, a pressing admonition with authority.” The words used were regarded as imperative and- not precatory, and it was held that their mandatory character created a trust in favor of the plaintiff in that case. The distinction between that case and the numerous authorities cited and examined by Mr. Justice Brady is very clearly pointed out. For example, in Sale v. Moore (1 Simons, 584) the testator gave the residue of his estate to his wife, recommending to her, and not doubUng, that she would consider his near relations. In Meredith v. Heneage (1 Simons, 542) the testator gave his real and personal estate to his wife m me juii confidence that in her future disposition of it she would distinguish the heirs of his late father, by devising it to such of them as she might think best deserved her preference. In Bardswell v. Bardswell (9 Sim., 319) the estate was given to a son, well Imowing that he will discharge the trust that the testator reposed in him by remembering the testator’s sons and daughters who were named. In Lambe v. Eames (L. R., 10 Eq. Cases, 267) the testator by his will gives to his wife his real ■and personal property to be at her absolute disposal in any way she might think best for the benefit of herself gnd family. In Reeves v. Balter (18 Beav., 372) the devise was to the wife, befiig fully satisfied that she will dispose of the estate given by will or otherwise in a fair and equitable manner. In Curtis v. Rippon (5 Mad. Ch., 434) the testator gave all his property to his wife trusting that she would use it for the spiritual and temporal good of herself and children, remembering always the church and the poor. • In Winch v. Brutton (14 Simons, 379) the testator recited that he was desirous of making suitable provision for his wife as well as for his daughter and grandchild, but in order to mark his abundant confidence in his wife, and his belief that she would be actuated, by the most maternal regard towards his child, he gave her all his property for her own use and benefit absolutely, “ implicitly relying ” on her attachment to his daughter and granddaughter. In Greene v. Greene (3 Irish Rep. Eq. Series, 629), the testator gave his property to his wife well knowing her sense of justice and love of her family, and having perfect confidence that she would manage the same to the best advantage and benefit of her children. In Hess v. Singlar (114 Mass., 56) the testator, after giving his property to his son, said: “ I hereby signify to my son my'desire and hope that he will provide by will or' otherwise, if he shall have no lawful issue living, that the property he will take under my will shall go in equal shares to the children of my brother and sister.” In Jackson v. Housel (17 Johns., 281) the words were: “ I leave and bequeath to my beloved wife and wish her to educate my two daughters with care, and to treat them with kindness and affection,’’without any devise or bequest. In Gilbert v. Chapin (19 Conn., 342) the words were: “After the payment of my just debts I give, devise and bequeath all my estate, real and personal, to my wife A., to her and to her heirs and assigns forever; recommending to her to give the same to my children at such time and in such manner as she shall think best.” In Foose v. Whitmore (82 N. Y., 405) the language was: “ I give and bequeath all my property, real and personal, to my beloved wife Mary, only requesting her at the close of her life to make such disposition of the same among my children and grandchildren as shall seem to her good.” In Clarke v. Leupp (14 Week. Dig., 206) the testator bequeathed to his wife all his property, real and personal, to retain or dispose-of the same for the benefit of herself and children above named. In the case of Reid v. Atkinson (5-Irish Rep. Eq. Series, 373), also cited in Lawrence v. Cooke, the testator used the words “ relying with implicit confidence,” but the court held that the language was precatory and did not create a trust, and the wife took the property absolutely. In view of these authorities it is impossible, we think, to hold that' the word “ relying,” as used in this case, or the phrase “ relying with implicit confidence,” as used in Reid v. Atkinson, or the words “ implicitly relying,” as used in Winch v. Brutton, can have any stronger significance and effect than the words “ having confidence,” which have been used frequently in similar wills. But those words have always been held by the courts not to impose any obligation, or to create any trust. They are not apt words to such a purpose and would not be used by an intelligent testator or scrivener when the .design .is to make an obligatory charge or trust. (In re Hutchinson and Tenant, 8 Eng. L. R. Ch. Div., 542; Green v. Green, supra: Lawrence v. Cooke, supra ; Webb v. Wools, 2 Sim. [N. S.], 267; Lambe v. Eames, supra ; Roseboom v. Roseboom, 81 N. Y., 359 ; Clarke v. Leupp, supra ; Campbell v. Beaumont, 91 N. Y., 465 ; Foose v. Whitmore, 82 id., 405; 1 Jarman on Wills [5th Am. ed.], 693, 694; 2 Kedfield on Wills, 422, 423 ; Tiffany & Bullard on Trusts, 224, 225 ; Lewin on Trusts [2d Am. ed.], 174; Pennock’s Estate, 20 Pa., 268.) The cases cited in the opinion of the learned judge, in the court below, do not seem to us to sustain the conclusion of the court. 'In Levy v. Levy (33 N. Y., 97) there was very plainly a trust created in terms by the will, and the case can only be regarded as holding that where a charitable trust is founded upon the assumption of the validity of a devise of lands situated in another state, in which state the devise is void, the trust cannot be sustained in this State. Bascom v. Albertson (34 N. Y., 584), held that a bequest by a New York testator to such persons as the judges of another State may appoint after his death to receive it, is ineffectual for any purpose, if unlawful in the state of his domicile, and an express trust created by will, to be executed in the State of Term on t, was held to be void because invalid under the laws of this State. In Le Fevre v. Le Fevre (2 T. & C., 330), the language of the will in question was : “ The remainder of this third, after deducting the above mentioned sums, is to be left to the care of my wife to be disposed óf as she shall see fit in charitable purposes.” And of this bequest the court said: “ It is not given to his wife to use for herself or in such manner as she may deem best, but it is placed in her care to be applied to such charitable purposes as she shall think proper.” The failure to make any gift to the'wife of'the property in that case, presented a very different question from that now under consideration. The later cases of Prichard v. Thompson (95 N. Y., 76), and In the Matter of O’Hara, and O’Hara v. Dudley (Id., 403, 420), relied upon by the respondent’s counsel as controlling of this case, do not appear to us to have any such effect. The case of O’Hara turns upon a transaction which it is held would operate as a fraud upon the law and the heirs or next of kin if allowed to be enforced. Nothing of that kind was, or can be, suggested as affecting this case. The donees to whom the bequest is given are not shown to have had any knowledge of the gift and it is not suggested nor can it be presumed that they exercised any influence over the mind of the testator by promise or otherwise upon which a suggestion of fraud could be based. In Prichard v. Thompson (95 N. Y., 76), it was held that where a trust was created by will in favor of beneficiaries so indefinite as to be incapable of ascertainment or identification by a judicial decree, it is invalid. That case has no application to this unless it first be determined that a trust is created by the provision of the will in question.

The court below seems to have been strongly impressed with the fact that the donees, if the gift were not held to be in trust, could disregard the wish of the testator and keep the gift as their own. But that fact is no reason why a trust should be imposed by judicial construction where none has been created by the testator. He acted with knowledge, but with intentional disregard of such a possibility. He was content to rely on his own confidence in their integrity and willingness to heed his wishes, taking knowingly the chances of disappointment. A testator who can give the whole of'a thing absolutely by will can give it with any wish he chooses to express as to its disposition by an absolute donee, when that is not an enforceable limitation for the benefit of another. The execution of the wish is simply the exercise of the absolute ownership given. The disappointment of it is only another exercise of the same absolute ownership, not commendable it is true in morals, but justifiable in law because the only appeal is to the forum of fhe donee’s conscience, unless some fraud by way of inducement has been practiced on the testator or some other instrument in writing has been executed which evidences an intention of the testator to accomplish a purpose in fraud of the statutes of trust.

This case stands concedely free of all such elements and the court has nothing more to do than to hold the gift a valid one adopted, as to its form, by the testator as a means to an end not unlawful and therefore not void. His anxiety to have a comparatively small portion of his large accumulations, still continue to keep alive even in his ashes, the wonted fires ” of his beneficence need not be thwarted by the courts. Our examination of the ease, both upon authority and upon its merits, appears to us necessarily to lead to a reversal of the judgment of the court below in so far as it affected the provision of the will now in question.

This however, we think, under the circumstances, should be with •costs of this appeal both to the.appellants and the respondents, to be paid out of the fund in controversy on the appeal.

Brady, J., concurred.

Present — Davis, P. J., and Brady, J.

Judgment reversed, with costs of appeal both to appellants and respondents to be paid out of the fund in controversy on the appeal, ■ and judgment ordered declaring the bequest in question valid.


author: Davis, P. J.: Beaby, J.:

text:
    JOHN P. HOLLINGSHEAD, Appellant, v. WILLIAM WOODWARD, Jr., Respondent.

      Diability of a stockholder — when released by a cancellation of his stock — a corporation can only be dissolved by a formal judgment —form of demurrer.

    In an action by a creditor of an insolvent manufacturing corporation to enforce the individual liability of the defendant, a stockholder therein, the- latter set ,up as a second defense that as to twenty-five shares of the stock held by him they had been issued by the oificers of the company as a stock dividend pursuant to a resolution of the board of directors, under the pretense that the company had earned surplus profits; that in fact the company had not earned any surplus profits; that thereafter, and before the plaintiff’s debt was created, the board of directors passed a resolution rescinding the former resolution directing the increase of the stock and the stock dividend, thereby annulling the certificate for said shares, which the defendant had been and was ready to surrender to the court. ,
    Held, that this was a good defense as to the said twenty-five shares.
    For a third defense the defendant alleged that more than four years prior to the commencement of this action the property of the company had been sequestrated and a receiver thereof appointed, in an action brought in the Supreme Court, and the officers and agents of the company had been restrained from all interference with its stock, property or effects; that since that time it had not elected officers or transacted business and that its property had been distributed among its creditors by the receiver, and that these facts were equivalent to a dissolution of the corporation so as to entitle the defendant to the benefits of the statutory provision terminating the liabilities of stockholders two years after they ceased to be such.
    Held, that the facts alleged did not show a dissolution of the corporation; that it could only be dissolved by the judgment to that effect of a court of competent jurisdiction.

      Kincaid v. Dwindle (59 N. Y., 548) followed.

      The plaintiff demurred “to the second and third defenses set up in the defendant’s answer herein for the reason, appearing on the face thereof, that neither of the said alleged defenses stated facts sufficient to constitute a defense to this action.” The court below overruled the 'demurrer as to both of the defenses.

      Meld, that as the demurrer was good as to one defense and bad as to the other, it should be sustained as to one and overruled as to the other, and that neither party should have costs below or on this appeal. (Brady, J.; dissenting.)
    Appeal from a judgment, entered upon an order made at a Special Term, overruling a demurrer to the second and third defenses set up in tlie answer.

      T. 8. Moore, for the appellant.

      J. O. Bostelmcmn, for the respondent.
   Davis, P. J.:

This is an action brought by a creditor of an insolvent manufacturing corporation to enforce the individual liability of one of the stockholders on account of the failure of other stockholders to pay up all the capital. The answer sets up three defenses. The plaintiff demurs to the second and third defenses in the following form: “The plaintiff demurs to tlie second and third defenses set up in the defendant’s answer herein for’the reason, appearing on the face thereof, that neither of the said alleged defenses states facts sufficient to constitute a defense to this action.”

On the hearing of the demurrer in the court below it was adjudged that the answers set up a good and sufficient defense, and judgment overruling the demurrer with costs was given to the defendant. The defendant is alleged in the complaint to have been the holder of 125 shares of the stock of the corporation. The second answer alleges in substance, as to the twenty-five shares, that a certificate thereof was issued by the officers' of the company (of whom defendant was not one) as a stock dividend, under the pretense that the said company had earned surplus profits to the amount of twenty-five per cent upon its capital stock, and a resolution was passed by the board of directors of the said company declaring that such profits had been earned, and directing that they be divided among the stockholders by means of a stock dividend, in place of cash, to the amount of twenty-five per cent of the stock he-ld by such stockholders respectively; but in truth and in fact no such profits had been earned or any part thereof; and the said board of directors, after issuing such certificates, and before any of the notes mentioned in the complaint had been made or indorsed, passed another resolution rescinding their former resolution directing such increase of capital and such stock dividend, thereby, in substance, annulling the certificate for twenty-five shares, which the defendant has befln at all times ready and willing to surrender to the said company.

We think this defense is good so far as relates to the twenty-five shares, and that the act of recission operated to annul the previous illegal action of the board, and to cancel the certificate which had been issued, and that the defendant cannot be held to any liability upon or by virtue of the alleged twenty-five shares thus issued to him and afterwards annulled. So far, therefore, as related to this defense the judgment was right and should be sustained.

As to the third answer we do not concur with the court below that it alleges sufficient facts to^ constitute a defense. It is averred by it in substance that more than four years prior to the commencement of this action, a judgment was rendered by the Supreme Court of this State against the corporation, whereby'it was adjudged that all the stock, property and effects of the said company be sequestrated for distribution among its creditors, and that a receiver should be, and one was, appointed of all the stock, property and effects of the said corporation, and vested with the exclusive control thereof; and the officers and agents of the said company were thereby restrained from all interference with such stock, property and effects, and that such receiver took possession of all the stock,, property and effects of the said corporation on the same day upon which judgment was entered as aforesaid, and since that date, and for more than four years prior to the commencement of this action, the said corporation has not transacted and could not transact any business; has not elected any trustees or other officers, and has not' had any, and no transfers of its stock have been permitted or possible. That all the property and effects of the corporation have been distributed among its creditors by the said receiver, under direction of the said court, in pursuance of the said judgment; and that the same were not sufficient to satisfy the debts due from the said. corporation to its creditors, and there is not, and never will be, any surplus for the stockholders thereof. And he avers that these several facts were equivalent in law to the dissolution of the corporation, and that by reason thereof he ceased to be a stockholder thereof from the date of the judgment, more than four years before the commencement of this action. The statute which creates the personal liabilities of stockholders also provides that their liability shall cease at the end of two years after they cease to be stockholders.

The question presented by the demurrer is whether upon the allegations of the third defense the defendant, more than two years before the beginning of this action, ceased to be a stockholder of the corporation. We think this case is controlled by the decision in Kincaid v. Dwinelle (59 N. Y., 548), which in effect holds that such a judgment as is set forth in this case does not operate to dissolve the corporation, and that although a corporation may be enjoined from the exercise of its corporate franchises and deprived of its property, and thus cease to exist for all practical purposes, it is not thereby actually dissolved. It cannot be dissolved except by the judgment of a court of competent jurisdiction. Upon this defense the judgment should therefore have been in favor of the plaintiff. There is some question whether under the form of demurrer interposed in the case the defendant is not entitled to a judgment because one of his defenses is sustained. Strictly speaking, separate demurrers should have been interposed to each defense. In this case the ground of demurrer is that “ neither of the alleged defenses states facts sufficient to constitute a defense to this action; ” and the demurrer being to both the second and third defenses, and one of them being held good, it cannot be said to be true that neither answer states facts sufficient to constitute a defense. But under the present system, in which pleadings are to be construed liberally, with a view to ascertain the intention of the pleader, this rule may be regarded as too technical in its application. We think, therefore, that the judgment in respect to the third answer should be reversed, and judgment ordered for the plaintiff. As both parties are successful on appeal neither should have costs against the other; and so of the trial of the demurrer below, neither should have costs as against the other, or if costs be awarded to them they should be offset against each other.

The judgment should be modified by directing judgment for the plaintiff upon the demurrer to the third defense, and for the defendant upon the demurrer to the second defense, and that neither have costs as against the other, and that each be at liberty to amend within the usual period of twenty days after entry of order hereon.

Daniels, J., concurred.

Beaby, J.:

One of the defenses having been sustained, the judgment should be affirmed m toto. I dissent therefore.

Judgment modified as directed in opinion, and affirmed as modified, without costs to either party.


author: Daniels, J.: Davis, P. J.:

text:
    In the Matter of the Petition of the NEW YORK ELEVATED RAILROAD COMPANY, relative to Acquiring Title to Certain Property in the City of New York.

      Appraisal of damages for land, talcen by a railroad — mode of remewing the report of the commissioners.

    Commissioners were appointed, under the provisions of the general railroad act, to appraise the compensation which should he made by the New York Elevated Railroad Company for certain rights, privileges and easements belonging to one Story which had been taken by it. A report made by the commissioners was sent back to them with directions to set forth what they considered to be easements, for which they had allowed damages, and what damages they had allowed for such easements respectively. A second report was made stating the subjects included in their award of damages so far as the commissioners deemed it practicable so to do. Thereupon the petitioner moved to set aside the report, for the appointment of new commissioners, or for such other or further relief as to the court might seem just.

      Eeld, that as no irregularity in the proceedings before the commissioners was alleged, the court could not set aside the report or remove the commissioners but should enter an order confirming the report.

      That, under the prayer for “other or further relief,” the court, upon this application, should make an order so confirming the said report, leaving to the petitioner his right to review the report upon the merits, upon an appeal therefrom-taken under section 18 of the general railroad act.
    ■ Motion by the petitioner to set aside the report of commissioners, and for the appointment of other commissioners, or such other or further relief as to the court may seem just.
    This matter' comes before the General Term upon a report made by certain commissioners appointed under the provisions of the general railroad act, to ascertain and appraise the compensation which ought to be made by the New York Elevated Railroad Company for certain rights, privileges or easements of one Rufus Story, in the city of New York. Upon the petition of the company, an order was made by the General Term appointing commissioners “to. ascertain and appraise the compensation to be made to the said Rufus Story, as the owner or person interested in the property proposed to be taken for the purposes of the incorporation of the said company, which said property is situated in the said county of New York, and is described as follows: “ So much of the privilege, easement or other interest in Front street belonging to the said Rufus Story, or appurtenant to the lots numbered seven and nine on that street, as is taken by the petitioner for its use as an Elevated Railway Company.” The commissioners who were appointed having declined to act, others were subsequently appointed in their place, who proceeded to take testimony and hear the parties.
    The matter coming on to be heard before the commissioners, the railroad company put in testimony to show the nature and extent of their structure in Front street in front of the premises of Mr. Story, and the amount of interference caused by the structure with light, air and access, which interference the company claimed to be inappreciable and of merely nominal amount. Evidence was introduced on behalf of the claimant Story, intended to show depreciation in the value of his property by reason of the existence of the elevated railroad in Front street, this depreciation being caused, as claimed by Mr. Story’s witnesses, by the operation of the railroad and by the smoke, noise and other annoyances caused by the running of the trains as well as by the unsightliness of the structure, and by the obstruction to light, air and access. After the close of the testimony the commissioners made a report, dated the 23d day of July, 1884, to the effect that they had “ examined the real estate and property owned by said Rufus Story, and described in said petition and order,” and had heard the proofs and allegations of the parties in respect thereto, and ascertained and determined the compensation which ought justly to be made by the said company to the said Rufus Story “ for the said real estate, easements and property above described, to be the sum of $15,000.”
    Counsel for the company thereupon served upon the attorneys for Rufus Story, a notice dated September 24, 1884, to the effect that they should present the appraisal and report to the General Term on the 6th October, 1884, and should move “ that the said appraisal and report be set aside and a new appraisal be made, for the reason that the said appraisal and report do not properly or ' sufficiently describe the land or property to be taken by the said railway.” The notice further reads as follows: “ But if the said motion is denied, we shall move for a confirmation of the said report, subject to the said objection, and subject to the right of appeal from the said appraisal and report of the said commissioners, which appeal will be taken soon as the said report is confirmed.” The matter coming on to be heard before the General Term upon this notice, and having been argued by counsel for both parties, the court made an order as follows :
    “ Ordered, That the report of the commissioners in this matter be sent back to such commissioners, with directions to make a further report, setting forth what they have considered to be easements, for which they have allowed damages in and by their report, ^,nd what damages they have allowed and awarded for such easements respectively.”
    A further hearing having been had before the commissioners, they made a further report, dated January 17, 1885, in which they report:
    “ 1. That they have been attended by the counsel for the parties interested, but that neither party offered any evidence or claimed the right to offer any upon the rehearing before them.
    2. That the easement for which they allowed compensation in their report, is the right or privilege of Mr. Story to have Front street, opposite to his premises, kept open and unobstructed^ and continued as a public street for the benefit of his abutting, property.
    “ 3. That while on the original hearing before them, the easements of light, air and access were the only ones considered, no testimony was given, nor have your commissioners any knowledge upon which these easements. can be divided so as to attach values to each of them separately, or to so much of each of them as has been taken ■by the petitioner.
    “ 4. That their personal observation satisfied your commissioners that the easements of light, air and access of Mr. Story’s property were all seriously interfered with and impaired by the construction and operation of the petitioner’s- railroad in front of the property.
    “ 5. That your commissioners, in their report, described the property taken in the words of the petition, which was the only attempt at precise description furnished to them, and that, in the opinion of your commissioners, the easements taken are not susceptible of more definite and accurate description.

      “ 6. Your commissioners stated, in a memorandum accompanying their report, the rule of compensation adopted by them, and the authorities which led them to believe that to be the rule of law in such cases in the State of New York. If a new and different rule ©f compensation is to be adopted, they felt it to be for the court, and not for them as commissioners, to indicate what it should be.”
    This further report having been filed, counsel for the company gave notice to the counsel for Mr. Story that they should bring the same to the attention of the General Term on the 23d day of January, 1885, and should “ ask that the court make such disposition thereof, or such further directions thereon as may to them seem proper in connection with the report heretofore filed, and with the proceedings herein and the notice of motion heretofore served upon you upon the coming in of the former report.”
    Counsel for both parties were present on the day named, but counsel for Story insisted that he was entitled to a more definite notice of the application which the railroad company sought to make, and the matter was accordingly adjourned in order that such notice might be given. The company thereupon gave notice to counsel for Story, that they should move “ that the said report of the commissioners heretofore made, and the said further report of the said commissioners, be set aside, and that new commissioners be appointed by the court, and that the matter be referred to such new commissioners for consideration, in accordance with the statutes in such cases made and provided, or that such other or further relief be granted in the premises as to the court may seem just.”

      Henry H. Anderson and William, B. Hornblower, for the motion.

      John E: Parsons, opposed.
   Daniels, J.:

The commissioners were appointed to ascertain and appraise the compensation to be made by the petitioner to Rufus Story for so much of the privilege, easement or other interest in Front street belonging to him, or appurtenant to lots 1 and 9 on the street, as was taken by it for its use as an elevated railway. The right of the owner to compensation was determined in his favor in Story v. New York Elevated Railroad Compamy (90 N. Y., 122), and also that this proceeding was authorized by the statute to ascertain the amount of such compensation. The ■ railroad was constructed over the carriage-way of the street, and stood upon columns placed on the curb-line of the sidewalk in front of these premises. It was about fifteen feet above the surface of the street, and is alleged to have interfered with the light and air previously enjoyed by the owner in the occupancy and use of his premises, and in the means of access to and from such premises, and it was to compensate him for this interference that the proceedings were ihstituted. They resulted after a hearing before the commissioners, in an award in his favor, amounting to the sum of $15,000. The report of the commissioners was made in very general terms, and on the application of the petitioner an order was afterwards made requiring them to make a further report setting forth the easements for which they had allowed such damages, and what damages they had allowed and awarded for such easements respectively. In compliance with this order they have made a further report, staging as far as they appear to have regarded that as practicable, the subjects for which the owner was entitled to be compensated by their first report. This report has also been objected to, as not sufficiently definite or explicit to enable the parties, or the court, to understand precisely for what the amount allowed is intended to be a compensation. But the supplementary report does state the subjects included in the determination of the commissioners, and for wbicb they have allowed the sum in bulk mentioned in tbeir original report. Under . the evidence, they regard these subjects as incapable of any more definite or accurate description than that wbicb they bave given of them, and it would accordingly be useless to send the reports to them again for any more detailed description of the items intended to be included in tbeir award.

1 From the reports which they bave made it can be ascertained what subjects they considered as the basis of tbeir award, which will enable the company, as it is dissatisfied with the amount, to secure as intelligent a review of the proceedings and determination of the commissioners as may ordinarily be afforded in proceedings of this description.

No irregularity appears to have intervened in any form in what has taken place before the commissioners, and no ground therefore has .been presented for setting aside the report under the authority of the case of the New York Central, etc., Company (64 N. Y., 60). Where that cannot be done by section 17 of chapter 140, Laws of 1850, the report of the commissioners is required to be confirmed, and that was considered to be the obvious effect of the act in the Rochester, etc., Railway Company v. Beckwith (10 How., 168, 175), and also in the Application of New York Central Railroad Company to Acquire Lands of Pierce and Others (recently affirmed in the Fifth Dept.) The order of confirmation follows as a matter of course, where the proceedings bave been regular, upon the presentation of the report of the commissioners. The railroad company has not, by its notice, specially asked for such an order, but under the concluding clause of the notice, by which other or further relief has been ajoplied for, as to the court may seem just, and the owner being entitled, upon the'facts appearing, to bave that relief directed, an order to this effect may be made, for under that clause in the notice it has been held that relief may be awarded to such an extent as is warranted by the facts plainly appearing in the papers on both sides (Thompson v. Erie R. R. Co., 45 N. Y., 468, 476); and that order is plainly warranted by the facts now appearing before the court. Its entry does not deprive the railroad company of its right to draw in question the legal accuracy of the proceedings before the commissioners, including their final determination. For by section 18 of the same act the right of appeal has been secured to either party dissatisfied with the report, by the service of notice within twenty days after its confirmation, and that appeal may be heard at the General or Special Term of the Supreme Court; and on its hearing the court may direct a new appraisal before the same or other commissioners, in its discretion. That is the legal and appropriate mode of reviewing and considering the effect of the evidence, and the proceedings of the commissioners depending upon it, and involving the merits of the controversy. (Matter of N. Y. Central R. R. Co., supra.) The confirmation of the award of the commissioners has been in no manner allowed to stand in the way of this appeal, or of the complete review of the decision and determination made by the commissioners, and the rights of the railroad company, whatever they may be alleged to be, will be in no way prejudiced by this confirmation; and it seems to be a precedent circumstance to the right of review provided for by the statute.

An order should be made confirming the report of the commissioners, and deferring the consideration of the objections presented by the counsel for the company, until an appeal from the award may be taken and brought to a hearing before the court.

Brady, J., concurred.

Davis, P. J.:

The confirmation of the report is under the statute necessary to put the case in position for a review of the merits of the several questions sought to be raised. An appeal can then be taken as shown by Daniels, J., on which all the questions both of law and fact that can in any form be reviewed by this court will be presented. It is to be regretted that the commissioners found themselves unable to designate more specifically the particular easements they had considered in making their award, and the respective values of such easements to which they thought the owner of the lot entitled, because that course would remove difficulties that may prove very embarrassing on an appeal. But the certificates of their inability to do that must be taken as sufficiently showing that they have done all that seemed to them to be in their power to comply with the suggestions of the court. This is not such an irregularity as permits or requires the setting aside the report and vacating the appointment of the commissioners.

I concur therefore in the making of the order of confirmation as suggested in the opinion of Daniels, J., without prejudice to any appeal that may be taken by either party pursuant to section 18, of the general railroad act.

Order directed confirming report of commissioners.

       Reported ante, page 806.


author: Daniels, J.:

text:
    THE DIAMOND MATCH COMPANY, Respondent, v. WILLIAM ROEBER, Appellant.

      Agreement not to carry on business within a certain territory — when it will be sustained— a molation of it may be restrained by an injunction, tlumgh a specific amount is to be paid by the ten'ms of the agreement ft»’ its breach — Metra allowance — when it cannot.be granted.

    Prior to July, 1880, the defendant was engaged in the business of manufacturing and selling friction matches in the city of New York. In the months of July and August of that year he entered into agreements with’ a foreign match manufacturing company, to the rights of which the plaintiff has succeeded, by which he agreed to sell a lot of land in the city of New York, with the buildings and match manufactory thereon, together with all machinery and materials, for a price named, part of which was paid by the company making the agreement, and the residue of which was thereafter paid by the plaintiff. By the agreement the defendant bound himself not to engage, either directly or indirectly, in the manufacture or sale, or to be in any way or manner whatever interested in the manufacture or sale, of friction matches within any of the several States of the United States of America, or the territories thereof, or the District of Columbia (excepting, however, the right to manufacture and sell friction matches in the State of Nevada and the territory of Montana),unless he did so'in the capacity of agent or employee of the company with which he made the agreement.
    The instrument then provided that it was upon the express condition ■ that if the said defendant should not so engage in the manufacture or sale of friction matches, then the obligation should he void, otherwise to be and remain in full force and virtue, and that the sum of $15,000 should be recovered by and paid to the company as and for liquidated damages. After having .been in the employment of the plaintiff for some time the defendant left it, because it would not comply with Ms demand for an increase of salary, and entered into the employment of another company engaged in the manufacture and sale of matches.

      Sold, that upon the application of the plaintiff the court properly granted an injunction perpetually restraining the defendant from manufacturing or selling friction matches in violation of the terms and provisions of his agreement.
    'That as it was shown that the business of the company with which the agreement was made, and that of the plaintiff, extended all over the country, and that the country, generally, furnished a market for the goods manufactured by that ■company, the restriction imposed upon the defendant could not be held to be of an unreasonable character and, therefore, invalid.
    'That it was not invalid as preventing the defendant from pursuing his occupation as a manufacturer and dealer in matches, as he retained the unqualified right to carry on that business in the State of Nevada and the territory of Montana, and as he was at liberty to enter intó the service of the company for whose benefit the agreement was made.
    That the fact that the agreement provided for the payment of a specific amount as liquidated damages for a breach of its conditions, did not render it improper for the court to grant an injunction restraining the defendant from violating its provisions.
    An extra allowance of $400 was awarded to the plaintiff.

      Reid, that as no basis for the allowance of this sum was shown, the order granting it should be reversed.
    Appeal from a judgment in favor of the plaintiff recovered on-a trial at Special Term, and from an order directing an additional allowance of costs..

      Robert Sewell, for the appellant.

      Edwcvri, Patterson, for the respondent..
   Daniels, J.:

The judgment perpetually enjoined and restrained the defendant from manufacturing friction matches within the United States except in the State of Nevada and the territory of Montana, and from selling them, with the same exception, either on.his own account, or in conjunction or association with any other person or persons, or as agent, superintendent, manager, employee or. servant of any partnership, or association, or corporation carrying on the business of manufacturing and selling friction matches, other than those manufactured by the plaintiff. It was recovered to carry into effect an agreement made by the defendant with Joseph Swift as trustee of the Swift & Courtney & Beecher Company, a corporation created under the laws of the State of Connecticut, and a further agreement executed by the defendant to that company its successors or assigns. The first agreement was made on the 27th of July, 1880, and the later agreement was executed on the twenty-ninth of August in the same year. Previous to the execution of these papers the defendant was engaged in the business of manufacturing and selling matches in the city of New York, and by the first agreement which he •executed he agreed to sell and convey to Swift as such trustee the lot of land on the southerly side of West Fiftieth street, upon which his match factory and buildings had been ereeted, and also the machinery, tools, implements and appliances of every kind in the buildings used, or designed to be used, in the manufacture of matches, and to sell and deliver all the finished and unfinished goods and materials for making matches, and the prices of which were to be agreed upon as would be fair and equitable between such parties. The land was subject to a mortgage of $5,000, and the plaintiff was to be paid as the further consideration for the sale of it, together with the buildings, machinery, tools, implements and appliances the sum of $28,000, which he was to receive in the shares of the increased capital stock of the Swift & Courtney & Beecher Company at the par value thereof. This purchase-price, together with the stock and materials for making matches at the prices for which they were taken, amounted to the sum of $46,724.05, on which the defendant was paid in cash $18,724.05, leaving the balance of $28,000 to be afterwards satisfied.

By the agreement which he entered into for the sale of the property the defendant covenanted and agreed that he should and would become bound to Swift, the trustee, and to the company respectively, in the penal sum of $20,000, as liquidated damages, that he, the said William Boeber, should not, and would not, at any time thereafter, directly or indirectly, engage in the manufacture or sale of matches within the limits of the United States and the territories thereof; nor aid or assist any one else to do so within said limits; nor have any interest, directly or indirectly, in the business of manufacturing and selling matches within said limits, except as an employee of the said the Swift & Courtney & Beecher Company, or its trustees aforesaid. The final agreement was after-wards taken to the company itself, and was in the sum of $15,000. by which the defendant, for the period of ninety-nine years, bound himself not to engage, either directly or indirectly, in the manufacture or sale, or to be in any way or manner whatsoever interested in the manufacture or sale, of friction matches within any of the several States of the United States of America, or the territories thereof, or the District of Columbia, excepting, however, the right to manufácture and sell friction matches in the State of Nevada and the territory of Montana, unless he did so in the capacity of agent or employee of the Swift & Courtney & Beecher Company. And added to that agreement was the following condition:

“ Now, the condition of this obligation is such, that if the above bounden William Roeber shall not, and will not, at any time or times within ninety-nine years from the date hereof, directly or indirectly engage, or be in any manner whatsoever interested in the manufacture or sale of friction matches within any of the several States of the United States of America, or within the District of. Columbia, excepting within the State of Nevada and territory of Montana as aforesaid, then this obligation to be void, otherwise to be and remain in full force and virtue ; and the said sum of fifteen thousand dollars to be recovered and paid to the said the Swift & Courtney & Beecher Company, as and for liquidated damages.”

The company named in the agreements discontinued the business of manufacturing and selling matches, and the plaintiff was incorporated under the laws of the State of Connecticut as a corporation for the manufacture and sale of matches and the transaction of other business. It became the successor of the company mentioned in the agreements executed by the defendant, and those agreements were assigned by the Swift & Courtney & Beecher Company to the plaintiff, and the defendant afterwards settled with the plaintiff for the balance remaining unpaid to him upon the sale of the property. This settlement was made by the execution and delivery to him of two notes for the sum of $3,000 and $2,000, respectively, and issuing to him seventy shares of preferred and one hundred and thirty shares of common stock of the plaintiff for the remaining sum of $20,000, and he entered into the employment of the plaintiff. These facts entitled the plaintiff to the right to insist upon the observance of the agreements entered into between the defendant and the preceding corporation. As much as that was contemplated by the agreement last executed by the defendant, in the sum of $15,000, for he bound himself by that agreement not only to the Swift & Courtney &. Beecher Company, but also to its successors or assigns. And by the facts that the plaintiff became the successor of the other company, and the assignment was made to it of these agreements, the defendant became bound to observe their stipulations and abide by them in its favor.

Pie did not do that, but afterwards entered into the employment of another company engaged in the manufacture and sale of matches, and it was to restrain and prevent him from continuing in that employment that this action was brought against him. He appears to ha.ve left the employment of the plaintiff of his own volition, xipon a disagreement arising concerning the amount of his salary, he claiming more than the officers of the plaintiff were willing to pay him. It was stated by him in the course of his evidence that he previously bought out the stock of another person engaged in- the business of selling matches, with the consent of one or inore of the defendants’ officers, and that by such consent the restraints imposed upon him by his agreements had been removed. But the evidence proved that the person who was engaged in this business was under a contract with the plaintiff to sell only their matches and those of no other person. Assenting, therefore, to the purchase by the defendant of that business, when he declined to remain longer in the service of the plaintiff, did not relieve him from the obligations assumed by him in his agreements. Further evidence was given also, very clearly showing that it was not intended at any time to release the defendant from these obligations, but that they were designed to be insisted upon, and in the event of a violation of them by him, that resort would be had to legal proceedings for the purpose of preventing its continuance. The pláintiff in no form subjected itself to the forfeiture of its right to insist upon the observance of the agreements made by the defendant, but it was entitled to maintain the action against him, if the agreements, as they were entered into, became legally binding upon the defendant. That they were not so obligatory was the main ground of defense taken upon the trial of the action, as.it also has been in support of the appeal from the judgment. It has been urged that the agreement entered into by him to abstain from the manufacture and sale of matches throughout the United States, with the exception of the State of Nevada and the territory of Montana, was too broad to be legally sanctioned or sustained. And in support of this objection, the authorities have been relied upon, in which it has been said that an agreement in restraint of trade was unlawful when not by its language limited to a particular place, or within certain restricted limits, and that it could in no event transcend the bounds of the State in which it should be made. That is the tenor and effect of what was said in Chappel v. Brockway (21 Wend., 157); Dunlop v. Gregory (10 N. Y., 241), and Lawrence v. Kidder (10 Barb., 641). But these cases were presented upon facts which were of a local description, or included within circumscribed limits, and 'what was said in the opinions beyond the consideration of their effect was not presented by the controversies before the court and was not required to make a disposition of them. What it was stated in general terms could not be done through the intervention of an agreement of this nature was obiter, and therefore not binding as authority in succeeding controversies.' When the 'rule which was announced as prevailing was adopted, traffic and trade were ordinarily confined to limited localities, and it was an entirely proper one therefore for that state of business affairs. But since that time business and commercial transactions have transcended the limited bounds to which they were then subjected, and by means of the great advantages supplied by railways and telegraphs, have extended over nearly limitless ranges of country. Classes and descriptions of business confined to restricted localities previous to the development of these inventions and enterprises are now able to extend their transactions legitimately not only beyond the bounds of the State in which the business itself may be carried on, but to the outmost bounds of the United States itself, and even into foreign countries. The rules therefore which were deemed to be controlling under the preceding state of business affairs are entirely too restricted for the control and government of the wide-spread transactions of business in more modern times. The business of the civilized world has been progressive, and by means of these advantages capable of extending itself to the outwai’d bounds of civilization, and its transactions requires that the legal principles previously observed should in like manner be enlarged, extended and applied. That has ordinarily been done to meet the developments and extensions in the transaction of business; and the reason upon which the principle has been maintained, by which a person was permitted to bind himself upon a proper consideration that he would not engage in a competing business within a prescribed locality, will authorize and sanction its extension in an equal degree and render it applicable to the enlarged bounds which may now be prescribed for business transactions. What the courts have endeavored to do at all times has been to adjust the application of legal rules to what may appear to be just and necessary; and accordingly it has been held that only such restraints upon trade will be held to be invalid as violating public policy as are unnatural and unreasonable, and not required by the parties for their protection in the ordinary and legitimate course of their dealings. Upon this subject it has been said that the restraint on one side, meant to be enforced, should in reason be co-extensive only with the benefits meant to be enjoyed on the other.” * * * “ If it affords only a fair protection to the interests of the party in favor of whom it is given, and not so large as-to interfere with the interests of the public, it will be sustained.” (Collins v. Locke, L. R., 4 App. Cases, 674, 686.) And it has been further declared that “ if considered with reference to the situation, business and objects of the parties, and in the light of all the surrounding circumstances, with reference to which the contract was made, the restraint contracted for appears to have been for a just and honest purpose, for the protection of the legitimate interests of the party, in whose favor it is imposed, reasonable as between them, and not specially injurious to the public,.the restraint will be held valid.” (Hubbard v. Miller, 27 Mich., 15, 19.) And that was approved as a just explanation of the law in Hedge v. Lowe (47 Iowa, 137). And substantially the same view of the law was declared in Rousillon v. Rousillon (L. R., 14 Ch. Div., 351, 368); and also in Morse, etc., Company v. Morse (103 Mass., 73), ■where two'cases were approved of, which generally restrained the, ■defendant from writing for, or publishing, periodical papers in which the other party had acquired the right by contract to insist upon the restraint. The same yiew was taken in Leather Cloth Company v. Lorsont (L. R., 9 Eq-, 345). It is true that another element entered into the consideration of that case as a business secret, but still it was considered that the obligation not to manufacture leather cloth in any part of Europe was good and binding upon the defendant. This case was approved, although not followed, in Allsopp v. Wheatcroft (L. R., 15 Eq., 59, 65). But the doctrine acted upon in the last case was not approved in Rousillon v. Rousillon (supra), which by implication has been sanctioned in Printing, etc., Company v. Sampson (L. R., 19 Eq., 462). A like case in its legal effect was presented by Stearns v. Barrett (1 Pick., 143), where an agreement not to use certain machines in any of the United States, except Massachusetts and Rhode Island, was held to be legal. A like view of the law was sustained as proper in Oregon Steam Navigation Company v. Winsor (20 Wall., 64), where it.was said that “a stipulation is unobjectionable and binding which imposes the restraint to only such an extent of territory as may be necessary for the protection of the party making the stipulation, provided it does not violate the two indispensable conditions that the other party be not pi’evented from pursuing his calling, and that the country be not deprived of the benefit of his exertions.” (Id., 69.) Authorities have been cited which are not in harmony with this broad and liberal rule, but it has been maintained to such an extent as to render them ineffectual as legal guides. The prevailing tenor and effect of the law is now as it has been stated, and no time therefore should be devoted to consider these conflicting cases.

Evidence was given upon the trial which sufficiently sustained the fact to justify its adoption by the court, that the business of the Swift & Courtney & Beecher Company, and afterwards of the plaintiff itself, as it was described, extended all over the country; that the market'for the goods manufactured was generally throughout the country, and that the defendant himself had previously carried on a widely extended business of the same description. The contract taken from him was, therefore, not of an arbitrary character, but it was to protect the business of the Swift & Courtney & Beecher Company, and the plaintiff, its successor, from injurious competition by subsequent acts and conduct on the part of the defendant; and under the authorities, to which reference has been made, it was not broader in its restraints than the profitable and prosperous transaction of the business of the companies probably required that to be made.

The agreements did not deprive the country of the defendant’s services, nor prevent him from pursuing his occupation as a manufacturer and dealer in matches. He retained the unqualified right to carry on that business in the State of Nevada and the territory of Montana, and he was at liberty to enter into and continue in the service of the company for whose benefit the agreements were made; and it seems to have been contemplated that he should be retained in that employment and the employment of the succeeding corporation. He was not prevented from carrying on or pursuing his occupation, but was at liberty to do that in either of the excepted modes, and the occupation afforded to him by the companies was only terminated by himself when he was unable to obtain the advancement of his salary from the sum of $2,500 per year to that of $3,600. These facts prevent the agreements from being brought in conflict with any legal principle sustained by the authorities. They were, on the other hand, such agreements as it was competent for the defendant to make; and he did make them as-an inducement for the purchase of the property and business he was willing to sell. In that manner a corresponding advantage was secured to him, one that, in his judgment, was a fair equivalent for the restraints he voluntarily imposed upon himself. And as these restraints were no broader than the business of the company required they should be, and no broader than the courts have sanctioned in other cases, they should be sustained and the defendant prevented from violating the obligations imposed by them upon his future conduct.

The agreements as they were made cannot be held to have been inequitable under the. circumstances existing at the time when they were entered into by the defendant, and their observance may be appropriately maintained by an action of the description of that brought by the plaintiff against the defendant. The judgment awarded was the ordinary one pronounced to secure the observance of similar obligations. The fact that a specific amount was agreed upon by him, which he might be obligated to pay in case of a violation of his agreements, did not render -this intervention of the court improper. In other cases the same course has been followed. (Coles v. Sims, 5 De Grex, McN. & G., 1; Long v. Bowring, 33 Beav., 585 ; Phœnix Ins. Co. v. Continental Ins. Co., 87 N. Y., 400.)

Other points were presented' upon the argument in support of the appeal, but as those which have been considered are controlling-over the controversy it has become unnecessary particularly to examine them. The same observation is applicable to the evidence which was offered and excluded upon the trial. If it had been received, it would not have changed the aspect' of the case in any material respect; for the facts would still remain that the defendant had imposed, by his agreements, these restraints upon himself; that they were not unreasonable in their extent, and he had violated them by entering into an employment which he had agreed-hot t'o follow. The judgment accordingly seems to have been right, and it should he affirmed, with costs.

The court made an allowance to the plaintiff of the sum of $400, but there seems to have been no basis supplied by the case for the order. It is obnoxious to the ruling made in Conaughty v. Saratoga County Bank (92 N. Y., 401), and People v. Genesee Valley Canal Railroad Company (95 id., 666).

This order should he reversed,-together with ten dollars costs and disbursements, to be set off against the judgment for costs recovered by plaintiff.

Davis, P. J., concurred; Brady, J., concurred in the result.

Judgment affirmed, with costs; order reversed, with ten dollars costs and disbursements, to be set off, against the judgment for costs recovered by plaintiff.


text:
    JULIEN T. DAVIES, as Receiver of the Assets and Effects of the Firm of GRANT & WARD, Appellant, v. JAMES D. FISH, Respondent, Impleaded with Others.

      Examination of a pa/i'ty before trial — when not refused beca/ase it might tend to show the party to be guilty of a criminal offense — Code of Civil Procedure, sec. 870.
    This action was brought by the receiver of an insolvent firm of brokers against one of the partners, and against the general assignee of the said partner and • the general assignee of the firm, to enforce an equitable lien upon the assets-in the hands of the assignee of the defendant partner, for money wrongfully withdrawn from the firm by his assignor. The plaintiff procured an order for the examination, before trial, of the defendant partner, upon an affidavit alleging that the partner withdrew money from the firm as profits, when he knew that no profits had been realized and that the firm was insolvent, and that he withdrew the said funds with the intent to hinder, delay and defraud the creditors thereof.

      Held, that it was error to set aside the order, upon the ground that the examination would tend to establish the commission of some criminal offense by the witness.
    That the wrongful withdrawal of the moneys from the firm did not constitute a criminal offense under the laws of this State.
    That on his examination he would have the protection afforded to witnesses examined in open court, and could shield himself from injury under the rules applicable in such cases.
    Appeal from an order made at a Special Term, vacating an order requiring the defendant Fish to appear and be examined as a witness before the trial.
    The action was brought by the receiver of the firm of Grant & Ward against James D. Fish, one of the partners thereof, and against his assignee for the benefit of creditors, and against Julien T. Davies as the assignee of the firm.

      William B. Hornblower, for the appellant.

      S. G. Clarice, for the respondent.
   Daniels, J.:

The order directing the appearance and examination of the defendant seems to have been vacated upon the understanding that.his examination as a witness would tend to establish the commission of some criminal offense by him, and therefore he was privileged from answering. If the facts sustained this position, then under the authority of Yamato Trading Company v. Brown (27 Hun, 248); Andrews v. Prince (31 id., 233), and Corbett v. De Comeau (5 Abb. N. C., 169), the order requiring the appearance and directing the examination of the defendant was improperly made. But that does not seem to have been the object or intended as the effect of the defendant’s examination. He was a partner in the firm of Grant & Ward, and it is claimed in support of the application for the order directing his examination as a witness that he drew from the firm large sums of money which he was not entitled to receive, and' invested them in property which it is the object of the action to reach as the representative of the moneys so misappropriated. The controlling statements in the affidavit upon the receipt and appropriation of the money are: That this is an action brought by the plaintiff as receiver as aforesaid, to enforce his claims as receiver, to an equitable lien upon the assets in the hands of John IT. Morris assignee, for moneys fraudulently and wrongfully withdrawn by the said James D. Fish from the firm of Grant & Ward prior to the failure of said firm, and while the said firm was insolvent, and to reach the proceeds of said moneys so withdrawn, so far as the same can be traced into the hands of John H. Morris, assignee as aforesaid, and that the plaintiff, as receiver as aforesaid, be adjudged to have a lien upon the assets in the hands of the said Morris, as assignee as aforesaid, to the extent of the moneys thus fraudulently withdrawn by said Fish from the assets of said firm of Grant & Ward, and that the said Fish well knew there were no profits realized by the said firm, and well knew that the credits made to him for alleged profits were fictitious, and well knew that he was not entitled to draw from the assets of Grant & Ward any sum whatsoever for alleged profits, and that said firm was insolvent and continually becoming more and more insolvent; and this deponent avers, on information and belief, that said Fish withdrew said funds with the intent to hinder, delay and defraud the creditors of the firm of Grant & Ward, and that this deponent is entitled to recover the same back for the benefit of the creditors of said firm. A large portion of the moneys thus withdrawn by him from the firm of Grant & Ward was invested in said property, but what particular pieces of property were purchased with the funds of Grant & Ward or what particular sums of money were invested in particular pieces of property this deponent cannot ascertain from the books or papers in his possession, and it is necessary to examine the defendant in order to prove the details of these transactions.

If he did withdraw from the firm the moneys here charged to have been fraudulently received by him, that act did not create a criminal offense under the laws of the State. The facts charged would not embody a crime as the statute has been enacted. (3 K. S. [6th ed.], 969, § 3.) It may very well have beeiua fraud upon the other members of the firm and the parties interested in the disposition of its property, for the defendant to withdraw mo.npy which, as a partner, he was not entitled to receive. But it was a private, and not a public, violation of duty on his part, rendering him in no, manner amenable to the criminal laws of the State. He would not, therefore, be privileged from answering as a witness any questions which might be put. to him for the purpose of ascertaining whether he did, in fact, draw moneys from the firm which he was not entitled to receive, and appropriated such moneys to the purchase of, or invested them in, property which it is the object of the action to proceed against and apply to the extinguishment of the liabilities of the firm. Those liabilities are legally payable out of the firm property before any of its assets could be taken by or appropriated to the use of either member of the firm. And it is to restore them and subject them to the satisfaction of the obligations of the firm, that the action has been brought, and not to present a case against the defendant upon which in any possible view he might hereafter be criminally prosecuted. He would be bound to answer, as a witness, all pertinent inquiries made of him upon this subject. And where, as it appears to be necessary, the examination should be now had to enable the plaintiff to prepare his complaint, it may be taken under the authority of the Code, as that has already been construed by the courts for this purpose.

The order should be reversed, with ten dollars costs besides disbursements, and an order entered denying the motion made to vacate the order for the defendant’s examination.

Brady, J., concurred.

Davis, P. J.:

I concur that the order should be reversed and the motion denied. There is no sound reason why the defendant should not be called and examined as a witness, even as to matters upon which criminal charges may be predicated. He has all the usual protection of witnesses in open court upon the trials of actions, and can shield himself under the rule applicable in such trials. This is an adequate protection, and all which any witness or party is entitled to el aim on any examination allowed by law.

Order reversed, with ten dollars costs and disbursements, and motion denied.