author: Yan Brunt, P. J.

text:
    The American Water Works Co. of New Jersey, Resp’t, v. Clarence H. Venner et al., App’lts.

      (,Supreme Court, Central Term, First Department,

      Filed March 31, 1892.)

    1. Corporation—Power of officer to bring suit.
    An officer of a corporation has not the power, simply because he is an officer, to bring suit on its behalf, even if, in his opinion, it may be necessary to protect the interests of the corporation.
    2. Same—Consolidations—Title of stock.
    A corporation, formed by the consolidation of two others, by agreement issued a portion of its stock to one of the consolidated corporations for its interests, and the latter delivered part of this stock to a third person for negotiation. Held, that the new corporation had no title to the stock so delivered and could not restrain the third person’s dealings with it.
    3. Same—Pleading.
    An allegation of the complaint that the new corporation became the owner of the rights and interests of the consolidated corporations, does not show ownership of the stock issued by it to one of those consolidated in payment for its interests.
    4. Same—Contract—Rescission.
    A corporation agreed to deliver certain stock to induce the purchase of bonds and to obtain advances of money, and, after the bonds were purchased aud the advances made, the stock was delivered. Held, that the stocks could not be recovered because the purchaser had not paid the full purchase price, unless the benefits received by the seller were returned.
    5. Same.
    Under such agreement the purchaser cannot be compelled to pay for the .bonds until he has received the stock.
    8. Insolvency—Evidence of.
    The fact that defendants, subsequent to tile commencement of the action, suspended business because of difficulties arising out of such action, does not necessarily prove their insolvency.
    7. Injunction—Cannot be sustained by facts occurring after complaint.
    A preliminary injunction cannot be sustained by facts occurring after the service of the complaint.
    8. Same—Foreign corporation—Action on notes.
    A foreign corporation will not be allowed to restrain a threatened suit on its notes,^ or to prevent their transfer for the purposes of a suit because in the state in which their property is situated the creditors might pursue their rights by issuing an attachment before judgment,
    9. Same.
    Where a party has a defense at law to an obligation, an injunction will not be granted to prevent an action at law being brought upon such obligation.

      Appeal from an order continuing injunction pendente lite.

      S. B. Clarice, for app’lts; David McClure, for resp’t.
   Yan Brunt, P. J.

The complaint in this action alleges the; incorporation of the plaintiff in New Jersey, and that on the 1st of May, 1891, it became the owner and entered into possession of certain real and personal property rights, franchises, choses in action and assets situated in the states of Nebraska and Colorado,, namely, the water works, franchises, property, estate and assets which had belonged to a corporation under the similar and same-name organized under the laws of Illinois, and which was know Li-as the Omaha Water Works, by which the cities of Omaha, South Omaha and Florence, Douglass county, Nebraska, and the inhabitants thereof, were supplied with watei’, and the property which had belonged to the Denver City WaterWorks Co., a coi’poration organized under the laws of Colorado, consisting of the waterworks situated in and by which the city of Denver and the towns of Barnham, Highlands, Ellyria and Montclair, in the county of Arrapahoe and State of Colorado, and the inhabitants thereof, are supplied with water; that on or about the first day of March,. 1891, a contract was entered into between said The American Water Works Go. of Illinois, then being the owner of said water works in Nebraska, and the Denver City Water Works Co. aforesaid, 'then being the owner of the said water works in Colorado, wherein it is recited, among other things, that, whereas, the said companies regard the consolidation of their respective property and assets as advantageous both for economy and convenience of operation and maintenance of their respective properties, and for the strengthening of their respective positions, and whereby it was agreed that a new corporation should be formed whose name should be the American Water Works Company, with a capital stock of $13,000,000; $3,000,000 of preferred stock and $10,000,-000 of common stock, $1,501,000 of said preferred stock to be given to the Denver City Water Works Co. for distribution-among the preferred stockholders of that company and $1,000,000 to the-American Water Worses Co. of Illinois for the same purpose: $499,000 of said stock to be kept in the treasury of the consolidated company as treasury stock, and the $10,000,000 of common stock to be divided equally between the two companies. The agreement further provided'that each company was to convey to the new company its respective property and assets.

The complaint further alleged that upon the same day another contract was entered into between said two companies and the firm of H. Yenner & Co., whereby it was provider! that the Denver City Co. should forthwith, upon the execution of the agreement, deliver to Yenner & Co. a large number of its general mortgage five per cent, twenty year gold bonds (apparently of the face value of $1,000 each, although it nowhere distinctly appears), and that Yenner & Co. was to make disposition of these bonds in the-manner named in said agreement, with the exception of 640 of the bonds, which were to be taken by Yenner & Co. at the price of ninety and interest to date of delivery, and the purchase price credited to au account called the Denver construction account. The agreement further recited that as it was estimated that it would take a large amount of money in addition to the proceeds of said bonds to complete the work contemplated by the contract, provision was made for the sale of certain real estate and that whatever sums should not be paid by the sales of real estate should be paid by the withdrawal of certain other bonds which Venner & Co. were to take at ninety and interest, Venner & Co. to make advances and be repaid each month either by moneys from the sales of real estate, or by said new bonds at said prices. This agreement further recited that as the Denver Company had found itself unable to raise money with which to complete its proposed work and to secure the refunding of its seven per cent bonds, and that the agreement to transfer the properties of both said waterworks companies to a new company was largely to aid in the accomplishment of this purpose, and to induce Venner & Co. to enter into the undertakings in said agreement contained upon their part to be performed, it was necessary to agree with Venner & Co. to give them with the bonds a certain amount" of common stock in the new company which under the agreement between the two companies was to be given to the Denver Company ; and the said Denver Company thereby agreed that upon the delivery to it of the $5]000,000 of the common stock of the new company it would forthwith deliver to Venner & Co. the amount of $8,595,000 of said common stock as a part of the consideration to said Venner & Co. for their undertakings in the agreement contained. The new company appears to have been organized on the 81st of March, 1891; and the complaint alleges that on the 1st of April, 1891, there were delivered to the firm of Venner & Co. 647 of the mortgage bonds of the Denver City Water Works Company mentioned in the contract, and that the same were then and there purchased and accepted by said last mentioned firm at the price of ninety and interest and credit therefor given under the terms of the agreement

The complaint further alleges that Venner & Co. began to make and did make payments against said credit upon the account of said water works companies, so that in August, 1891, there remained due from them the sum of about $200.000; that in said month of August the firm of Venner & Co., who entered into the .agreement, was dissolved and a new firm formed under the same firm name who assumed and accepted all the benefits and obliga? tians of said agreement, and since said time have continued under the terms of said agreement to perform the same as the same had been demanded, until on or about the 23d day of September, 1891, when they, having to the credit of the plaintiff the sum of $184,000, notified the plaintiff that they would pay no further moneys on account of said indebtedness under said contract, and would not complete the performance of the same ; and that they refused the acceptance of a draft which was drawn against the account, and which was duly presented to the defendants for acceptance.

The defendants denied their refusal to carry out. the contract, but admitted that they refused to accept the draft in question because it had been drawn by a person unauthorized to draw said draft and bind the plaintiff thereby, which fact is not controverted.

The complaint further alleges that at the time of the dissolution of the firm of Yenner & Co., the plaintiff was indebted on an open account to said firm, not referred to in the agreement above-mentioned, in a sum which the firm claimed to be about $73,000-but the exact amount of which the plaintiff was not able to state; that the new firm of Yenner & Co. claimed that this account had been transferred to it, and that after the formation of said new firm of Yenner & Co. the said last mentioned firm paid out some-further amounts on the same account as said $73,000, so that the-defendants claimed that the whole amount due to them on account of payments by them aside from their obligations under the agreement in question amounted to about the sum of $110,000, but the-accuracy of this claim the complaint states is unknown to the plaintiff.

It further appears that in August a meeting of the finance committee of the plaintiff was held and a resolution was passed authorizing the making of notes to the defendants on such time or times as might be found suitable, for such amounts of money as might from time to time be outstanding and ipwing by the-company; and that notes (which it is admitted were demand notes) were thereupon made for the sum of $1Q0,000 and delivered to the defendants ; and that at a meeting of the board of directors of the plaintiff on the 23d of September, 1891, the defendants demanded payment of said notes, and of a further sum said to be $10,000 on open account for which no note had yet been given.

The complaint further alleges that the plaintiff company was-on the 1st day of May, 1891, and ever since has been and now is, the owner of the credit mentioned in and all the rights under said contract between said companies and Yenner & Co. which belonged -to either of said companies parties thereto.

It is further alleged that at the meeting of the 23d of September, 1891, the plaintiff demanded of the defendants that.-they should fulfil their obligations under said contract, and make the-payments thereby required, and in response the defendants answered that they w'ould not perform said agreement and would, make no further payment of the notes and open account. What this last paragraph of the allegations means we are unable to comprehend.

Then follows an allegation that the meeting of the 23d of September, 1891, having been adjourned to the 3d of October, 1891,. the defendant Yenner stated that when the directors assembled on that day they would assemble at a funeral.

The complaint further alleges that the plaintiff is a solvent corporation, and from the statements made at the meeting of the said board of directors by the defendants as to their inability to make the payments under their said agreement the plaintiff was led to-the conclusion that the defendants were insolvent; and further that the plaintiff believes that it is the intention of the defendants-to either transfer the aforesaid notes of the defendant for the purpose of having an action brought upon them against the plaintiff,, or bring action upon them themselves, or to transfer them by-assignment to creditors, and by reason of the laws of the states of Colorado and Nebraska upon an action being brought in such states, or either of them, for the collection of the aforesaid notes, writs of attachment would issue against the property of the plaintiff, the result whereof would "be that it would be prevented, from performing its contracts and obligations to the cities and people to which it is bound in those states and would practically uspend the operation of its business and destroy its property.

For a second cause of action the plaintiff, adopting many of the-allegations above mentioned, further alleges that the defendant Tenner and one Sullivan were the two vice-presidents of the plaintiff corporation; and that by resolution of the board of directors, passed on the 1st of May, 1891, the said Tenner & Co. were appointed transfer agents of the company, and as such transfer agents had possession of the stock books of the company; and that under and by virtue of the tenth paragraph of the contract before referred to (being the paragraph wherein said Denver Waterworks Company agreed to deliver to Tenner & Co. $3,599,000 [sic] of the common stock received from the plaintiff), said Tenner & Co. caused to be issued to themselves the amount of $3,499,000 of said common stock for the purposes in said tenth paragraph mentioned; and further,, that said amount was so fixed in order that Tenner & Co. might-have $2,500,000 of said stock for the purposes in said paragraph mentioned, and deliver $999,000 of the same to the order of divers parties in Denver on account of services which had been rendered to the company; and that Tenner & Co. did deliver said $999,000 to said parties in accordance with the understanding and agreement concerning the same, and retained $2,500,000 of said stock.

It further alleged that the sole consideration for the delivery of said stock to said Tenner & Co. was the performance by them of their agreement, namely, the furnishing of money to the amount-of $1,250,000 ; and that the plaintiff, by reason of the breach on the part of the defendants of their several agreements, is entitled to have said $2,500,000 transferred to it, or its order, for use for the purposes of the company; and that should said stock be-transferred by said defendants to strangers, the plaintiff would he deprived of a large and valuable consideration to give to othereto induce the furnishing of the moneys and procure the finishing-of the work of construction contemplated by the contracts ;* and that the defendants had lately given out and threatened that notwithstanding the failure and refusal on their part to keep their contract, the plaintiff should never have any benefit of said stock, and the plaintiff believed that unless restrained therefrom and said stock placed in the hands of a receiver, the defendants, to avoid the result of actions by the plaintiff, would transfer the stock, put the same afloat in the .markets of the world, and-put the same beyond the reach of the plaintiff.

The complaint then prays judgment, first, for an accounting; second, for an injunction restraining the transfer of the $100,000 notes, or from in any way prosecuting, or continuing to prosecute, any action in any courts whatsoever for the recovery of the amount alleged to be due the defendants by reason of said notes or on the said open account of $10,000 ; third, that defendants be adjudged to return and transfer to plaintiff the said $2,500,000 of common stock, and that the defendants be enjoined and restrained pending the action from in any manner transferring, assigning or disposing of said $2,500,000 of stock, or any part thereof, and that a receiver be appointed, etc.

This complaint was verified by a vice-president and an affidavit made by the secretary, who swore that the allegations contained in the complaint were true of his own knowledge.

The defendants denied having made any statements as to their inability to carry out their contract; and alleged that all they had .stated was that they could not make payments under said agreements and also go on making advances for other purposes, and so carry the entire burden of the enterprise without assistance from other people interested in it; and that the fact was that they had not only advanced money under the credit called for in the contract, but also advanced large sums of money which they were under no obligation to advance, and were the only ones connected with the company who advanced money for any purpose.

They denied that they were insolvent, and alleged that although they subsequently suspended it was caused by the institution of this suit, the result of which was to injure their credit and induce creditors to call loans which could not be met immediately, although their assets were amply sufficient to pay such debts.

The defendants further allege, in respect to the $8,499,000 of stock which was issued, that, in fact, the whole amount of $5,000,000 of said stock was issued to the Denver company, which transferred $2,500,000 thereof to them, and that no more had ever been transferred to them. They denied that the sole consideration for the delivery of said stock was the performance Try Yenner & Go. of their agreements in the said contract.

They also allege that there was no authority whatever for the commencement of this action; and that at the meeting of the 23d September the subject of adjusting the account between the company and the defendants was referred to the finance committee with instructions to report at the time to which said meeting might be adjourned, and that since said 23d of September there had been no meeting of the board of directors.

Upon the 29th of September, 1891, upon the complaint above mentioned, verified as above stated, this action was commenced, and a preliminary injunction granted, with an order to show cause returnable on the 2d of October. Upon the hearing of this motion, the foregoing facts appearing, the injunction was continued pendente lite, and from the order thereupon entered this .appeal is taken.

We do not see upon what theory this action can be maintained.

In the first place it seems to have been instituted absolutely without authority. The complaint is verified by the vice-president, who does not appear to have been clothed with any power to bring an action of the nature of the one at bar. The defendant Yenner seems to have occupied precisely the same position as the person who verified the complaint, and to have been clothed with equal authority. We do not understand that an officer of a corporation has the power, simply because he-is an officer, to bring any suits which his fancy may dictate, even if, in his opinion, it may be necessary to protect the interests of the association.

The defendant Yenner has precisely the same authority to direct the discontinuance of the suit as Yice-President Sullivan has to direct its institution. ■

But there are other points which seem to be equally fatal to the maintenance of the action. It is difficult to see what interest the plaintiff has in the $2,500,000 of stock issued to Yenner & Co. Although by the allegations of the complaint it seems to be alleged that this stock was issued by the plaintiff to the defendants Yenner & Co., yet the allegation of Yenner & Co. that this stock was issued to them by the Denver Co. is undoubtedly the fact, because such an issue harmonizes with the provisions of the contract which the defendants had entered into with the water works companies, and no other issue of stock could be a compliance with, the provisions of that contract, as this issue of stock is in the complaint alleged to have been. The agreement between the WaterWorks Companies for the formation of the new company shows that the Denver Company was to be entitled to $5,000,000 of the common stock of said new company; and then the contract between the companies and Yenner provides that the Denver Co., as soon as it receives the $5,000,000 of the stock from the plaintiff, shall deliver a certain amount to Yenner & Co. Where the title of the plaintiff to this $2,500,000 of stock is acquired is not. shown.

There is not a single allegation in the complaint tending to show the slightest particle of title in the plaintiff to this stock.

If it be said that the allegation in the complaint that on or about the 1st of May, 1891, the plaintiff became the owner and entered into the possession of certain real and personal property rights, franchises, dioses in action and assets situated in the states of Nebraska and Colorado, namely, the water works, franchises, property, estate and assets which had belonged to a corporation under the similar and same name, organized under the laws of Illinois, and which was known as the Omaha Water Works, and the property which had belonged to the Denver City Water Works Co., a corporation organized under the laws of the state of Colorado, comprised an allegation of title to this stock, it will be seen by a further reference to this allegation that the real and personal property, rights, franchises, choses in action and assets consisted of the water works by which the cities of Omaha, South Omaha and Florence, Nebraska, and the water works situated in and by which the city of Denver and towns of Barnham, Highlands,* Ellyria and Montclair, in the county of Arrapahoe and state of Colorado, are supplied with water; and that these are the properties and assets which they became owners of, and none others. How the plaintiff could become the owner of the consideration which was paid to the Denver Company for the transfer of its property remains unexplained.

But reference may be had possibly to another allegation of the complaint, which is to the effect that the plaintiff company was on the 1st of May, 1891, and ever since has been and now is the owner of the credit mentioned in and all the rights under said ■contract Ex. B (being the contract between the companies and the defendants), which belonged to either of said water works companies and had succeeded to the same. But it appears that this was a succession to the rights under the contract between the water works companies and Yenner, and nothing more; whereas, the Denver Company’s right to the stock arose under the contract between the two companies, to which contract Yenner & Co. were not parties. It would appear, therefore, that the plaintiff was absolutely without the shadow of a title or claim, so far as these papers disclose, to a single share of the stock in question.

But if this were not so, there is another complete answer to the claim of the plaintiff, so far as this stock is concerned. By this agreement, Yenner & Co. agreed to purchase certain bonds at a given price and make certain advances; and as an inducement to the purchase, these shares of stock were to be delivered to them as soon as received by the Denver Co.

The allegation in the complaint is that the bonds were purchased and the stock delivered, and that Yenner & Co. paid out ■of said purchase money upon account of the plaintiff a large amount of money, although a balance still remained due at the time this action was commenced.

Upon what theory can the plaintiff rescind this contract in part, and retain the benefits in part ? It claims the right to recover the balance of the purchase price of the bonds from Yenner & Co., and yet denies the right of Yenner & Co. to hold the stock which was delivered to them to induce them to purchase the bonds. Yenner & Go. have precisely the same title to this stock as any other purchaser for valúa They have the same title to this stock that they have to the bonds. They agreed to pay ninety per cent, for the bonds. The stock was to accompany the bonds, and if there has been a failure of. consideration (even if the plaintiff was the owner and seller of the stock) it could not recover it back without returning that which it had received. Simply because ■a party has not paid the full purchase price which he has agreed to pay for articles, does not justify the purchaser in taking some of them out of his possession unless some such provision is made in the agreement

But it is said that the consideration for this stock was the performance of the agreement between the water works companies and Yenner & Co., and that they have failed to perform their agreement. The construction of the agreement does not bear out this contention. The tenth paragraph of the contract is that the Denver Co. has found it is unable to raise the money with which to complete the proposed works, etc., and that Yenner & Go. were not willing to take the bonds unless accompanied by the stock, and it was necessary to agree with Yenner to give them with the bonds a certain amount of stock in the new company, which, under the agreement between the two companies, was to be given to the Denver Co.; and it was for this reason, to induce Yenner & Co. to enter into the contract, to undertake its obligations and to agree to take the bonds, that this stock was delivered.

Now, there is no question but that Yenner & Co. have taken a large amount of these bonds and paid ninety and interest for them, and it is claimed by the plaintiff that they are indebted to it for a large amount of said bonds in addition to the amount of money which they have already paid. Can it be possible that they can be compelled to pay for these bonds, and not have that which was to accompany them ?

The claim that- defendants were insolvent is certainly not substantiated. The fact that they suspended subsequent to the commencement of the action does not establish that result. It does not follow that they would have suspended had it not been for the difficulties arising out of the commencement of the action.

The claim that they have refused to continue their advances is entirely unsubstantiated, the foundation of the allegation being the refusal to accept a draft which defendants allege, and which is not denied, was irregularly drawn. And there is not the slightest pretence that the defendants had failed up to that time in performing any of the obligations of this contract; and certainly the failure to accept an irregular draft could not be considered such a violation. It appears from the allegations in the complaint that the defendants had been advancing money to the plaintiff outside of and beyond anything which they were required to do by their •contract, and beyond that which they were to make for the purposes of Denver construction.

Thus it would seem that all the equities of the bill have been met, because this injunction cannot be sustained by anything that may have occurred afterwards.

It is claimed in the points of the counsel for the respondent that Yenner & Co., subsequent to the commencement of the action, made an assignment But there is no evidence to that effect; -and even if the fact were so, it could not support an injunction which had no foundation whatever at the time it was made.

There, therefore, seems to be no basis whatever for the injunction restraining the defendants in respect to the stock.

We next come to that part of the injunction which forbids the defendants from in any manner bringing any actions upon or assigning the notes of the plaintiff or the open account due from the plaintiff. This claim for injunction is apparently founded upon the allegation that the plaintiff believed that it is the intention of the defendants to either transfer the aforesaid notes of the plaintiff for the purpose of having an action brought upon them against the plaintiff or bring action upon them by themselves, or transfer the same by assignment to creditors, and by reason of the Jaws of the states of Colorado and Nebraska upon an action being brought in such states, or either of them, for the collection of the aforesaid notes, writs of attachment would issue against the properties of the plaintiff, the result of which would be that it would be prevented from performing its contracts and obligations to the-cities and people to which it is bound in those states, and would practically suspend the operation of its business and destroy its property.

In other words the plaintiff, a foreign corporation, being indebted to the defendants in a certain sum of money, and claiming an indebtedness from the defendants to it in another sum of money, comes into the jurisdiction where the defendants reside (we say where the defendants reside, because they are presumed to reside in this state, they doing business here and no other place of residence being given) and does the very thing which it alleges the defendants intended to do, viz.:-issue an execution before judgment. We say issue an execution before judgment, because the injunction which they have issued serves the same purpose.

Mow apart from any other consideration; can a foreign corporation be permitted to use the courts of this state for any such purpose? Gan the plaintiff be' allowed to issue execution before' judgment against the property of the defendants (these notes being their property), founded upon another claim against the defendants because the defendants may in the.state where the plaintiffs have property pursue their rights by the issuing of an attachment before judgment. We think not.

Besides, it is well settled that where a party has a defense at, law to an obligation a court of equity will not interfere to prevent an action at law being brought upon such obligation.

In Grand Chute v. Winegar, 15 Wall, 373, it was held that a municipal corporation, the obligor in a bond, cannot .ask in equity that the obligee be enjoined from proceeding at law and that the bond be surrendered, where the bill alleges that the bond was issued without authority, in violation of law.and in fraud of the plaintiff and that the obligee knew this when he took it and his possession is merely colorable and that be gave no value for it, and never had any right or title to it. It was held that such allegations show a complete defense at law, and a judgment, against the obligee at law would give as full’ protection to the obligor as a decree in equity.

Mr. Justice Hunt uses language as follows: “And the result of the argument is that wherever a court of law is competent to take cognizance of a right, and has power to proceed to a judgment which affords a plain, adequate and complete remedy without the aid of a court of equity, the plaintiff must proceed at law because the defendant has a constitutional right to a trial by jury. The right to a trial by jury is a great constitutional right, and it is only in exceptional cases that a party may be deprived of it.”

In Allerton v. Belden, 49 N. Y., 373, it was held that the right to apply to a court of equity to avoid a eontraet exists only where from the form of thé security the defense cannot be made available at law, or where the instrument sought to be avoided is a cloud upon the title to land or some other necessity for the interposition of a court of equity is shown. The opinion of Rapallo, J., reads as follows : “ The allegation in his complaint discloses a perfect defense at law to any action which might be brought against him on his endorsement; and no fact is stated showing any necessity for the interposition of a court of equity or entitling the plaintiff to become an actor in the matter.

“ The most usual ground for going into equity in such cases formerly was the necessity for a discovery to prove the usury. Bills of discovery being now abolished, some other of the grounds which formerly would have justified the filing of a bill for relief must appear in the complaint or it shows no right of action.”

No authority has been cited sustaining an equitable action on such ground, but on the contrary it has been uniformly held that where a perfect remedy both as to discovery and relief can be had at law, the action in equity cannot be maintained, and that the objection is available on demurrer.

So in the case of Town of Venice v. Woodruff, 62 N. Y., 462, the same principle is laid down. And in Fowler v. Palmer, 62 N. Y., 533, which was an action to compel the surrender of a note based on the ground that it had been paid but not taken up, the court held that the action could not be maintained in equity, and that the defense of payment was available in an action upon the note and no transfer could prejudice it.

In the Globe Mut. L. Ins. Co. v. Reals, 79 N. Y., 202, it was held that an action to procure the cancellation of a written instrument cannot be maintained unless some special circumstance exists establishing the necessity of a resort to equity to prevent an injury which may be irreparable, and which equity alone is competent to avert. It is not sufficient that a defense exists against the instrument, or that evidence may be lost.

To the same effect is the case of Troy & Boston R. Co. v. Boston, Hoosac Tunnel, etc., Co., 86 N. Y., 107.

Many other cases might be cited to show that courts of equity will not take cognizance of a cause of action simply to perpetuate a defense.

In the case at bar, if the plaintiff has any defense to the notes held by the defendants it is available to it.

The notes are payable on demand, have been demanded, and are due, and any defense which the plaintiff has against the notes may be available. But in the complaint they do not allege any defense, they virtually acknowledge that $100,000 is due upon the notes and $10,000 on the open account. They set up no defense whatever, but simply that they do not know what amount is due.

As far as their claim of indebtedness from the defendants to them is concerned, if the defendants proceed upon the notes in question the plaintiff has a right to offset or counterclaim the indebtedness. And it is no reason for the issuing of an execution before judgment that these reciprocal demands exist. It is impossible for the plaintiff by this method of procedure to prevent the defendants from having that trial of th$^ claim against the plaintiff before a jury which the constitution guarantees to them.

Upon the whole case, therefore, the order should be reversed, with ten dollars costs and disbursements, and the injunction dissolved, with ten dollars costs.

O’Brien" and Patterson", JJ., concur.


source: Caselaw Access Project

author: Lewis, J.

license: Public Domain

text:
    Simon Butts, App’lt, v. Addison B. Fillmore, Resp’t.

      (Supreme Court, General Term, Fifth Department,

      Filed April 13, 1892.)
    New tbiae—Code Civ. Pro., § 1525.
    A party by bringing an action in equity to set aside a deed instead of an action of ejectment, thereby waives any right to a new trial under the provisions of § 1525 of the Code. ■
    Appeal from a judgment of the supreme court entered in the Monroe county clerk’s office on the 11th. day of December, 1890, upon the decision of the trial court, equity term, dismissing the plaintiff’s complaint, with costs, and from an order denying a motion for a new trial.

      John Desmond, for app’lt; George D. Forsyth, for resp’t.
   Lewis, J.

The action was brought to set aside a deed of conveyance from Christian Butts, deceased, to the defendant, of twenty acres of land in the town of Greece, Monroe county, New York, on the ground that the conveyance was obtained by undue influence, and on the further ground that the grantor was at the time he executed the deed so infirm in mind as not to be competent to make the deed.

The plaintiff claimed in his complaint to be the owner of the premises as a devisee under the will of Mr. Fillmore, and demanded judgment that the deed to the defendant be adjudged void and of no effect, and awarding the possession of the land to him, with damages for the withholding thereof from him by the defendant, and for such other or further relief as-to the court shall seem just. The action was tried at a Monroe equity term, and upon abundant evidence to sustain the findings the trial court found against the plaintiff upon all the1 issues presented by the pleadings, and directed judgment against, plaintiff for the costs of the action. Judgment was entered, the plaintiff paid the defendant’s costs, and thereupon moved the court for a new trial under § 1525 oE the Code of Civil Procedure, which provides for a new trial in actions to recover the possession of real property upon payment of the costs of the action. The motion was denied. The plaintiff appealed to this court.

The purpose of the action, as we have seen, was to obtain the judgment of the court adjudging the deed executed by the deceased to the defendant null and void,' for' the reasons above stated; and for the possession of the premises. The plaintiff’s right to the possession of the land depended upon the result of his efforts to have the deed adjudged to be void. Failing in that, he had no cause of action against the defendant. He could have brought' his action, if he had so desired, in the form of ejectment, but he elected to so frame his complaint as to' make it an equity action. It was tried by bis consent at an equity term before the court without a jury. Having selected that court as the proper tribunal to adjudicate upon his cause, he must he held to have waived any right to relief under the provisions of the Code relating to new trials in actions for the recovery of the possession of real property. Shumway v. Shumway, 42 N. Y., 143.

The judgment and order appealed from should be affirmed, with costs.

Dwight, P. J., and Macomber, J., concur.


author: Macomber, J.

text:
    In the Matter of the Judicial Settlement of the Accounts of the Executors of John A. Rumsey, Deceased.

      (Supreme Court, General Term, Fifth Department,

      Filed April 13, 1892.)

    1. Will—Direction to executors to continue business.
    A direction in a will to the executors to carry on testator’s business for a specified time, unless in the judgment of a majority of them it should prove “ unprofitable or disastrous to my estate to continue the business,” in' which case they are to dispose of it and divide the proceeds, is valid.
    2. Same.
    Where it appears that the indebtedness owing by deceased at his death has been largely decreased, and there is nothing to indicate that the same degree of prosperity will not continue, and only one executor, who has no personal interest, and one creditor, who is secured, object, the executors should he permitted to continue the administration of the estate in the manner laid down in the will.
    3. Executors and administrators—Accounting—Parties.
    An executor of a will, although he has no pecuniary interest in the estate, may maintain a proceeding against his co-e^eculors for an accounting.
    Appeal by Samuel Waller and Andrew Gr. Mercer, two of the executors of the last will and testament of John A. Eumsey, deceased, and by Anna Eumsey, Muriella E. Whitman, Ariana E. Micks, Lillias E. Sanford and Elizabeth E. Mercer,- legatees under said will, and by Eumsey & Company, limited, a creditor, from a decree of the surrogate’s court of Seneca county, entered on the 1st day of August, 1891.

      J. IT. Hammond and F. L. Manning, for app’lts.; G. A. Hawley, for Jennie B. Eumsey and others, resp’ts; P. H Van Auken, for resp’t Eugene A. Eumsey, one of the executors.
   Macomber, J.

John A. Eumsey, the testator, died at Seneca Falls, H. Y, May 30, 1888, leaving a last will and testament, which was duly admitted to probate by the surrogate’s court on the 11th day of June, 1888, and letters testamentary thereon were on that day issued to Eugene A. Eumsey, the petitioner, and Samuel Waller and Andrew Gr. Mercer, executors named in the will, all of whom, having qualified, have acted as such executors since that time to the present.

This proceeding was instituted by the executor, Eugene A. Eumsey, for leave to render his own account and to compel his associates, Samuel Waller and Andrew G\ Mercer, to render their accounts. The prayer of the petitioner further is, that a citation issue to the persons interested in the estate to attend a judicial settlement of these accounts ; that such accounts be judicially settled, and that the court thereupon make such decree in the matter as the best interests of the parties and justice and equity require.” The petition also contains an allegation to the effect that the best interests of all parties interested in the estate demand that the same shall be closed up and settled. .

The assets of the estate consist almost wholly of the ownership, by the deceased, of 1,010 shares of capital stock of a corporation known as Eumsey & Company, limited. The entire stock of such company consisted of 1,200 shares, of the par value of $100 each. The other shares of stock of this company, at the time of the death of the testator, were held by the petitioner, Eugene A. Eumsey, the testator’s daughters, who held five shares each, and 170 shares stood in the name of the widow of the deceased.

By the fifth, sixth and seventh clauses of the testator’s will, the business of this corporation was directed to be carried on by the executors for a period of five years, unless, in the judgment of a majority of the executors, it should prove “ unprofitable or disastrous to my estate to continue the business of- said corporation,” in which case they were authorized to dispose of the business and divide the proceeds as directed by the will. The will furthermore directed that from the profits of the business of this corporation there should be paid annually the sum of $1,000 to the widow, $1,000 to the petitioner, Eugene A. Eumsey, and $500 to each of his four daughters.

The executors, deeming it advisable to carry on such business, substantially conformed to the direction contained in the will, and to that end the executor, Eugene A. Eumsey, was made president and general manager of the corporation, and he took charge of this business as well as that of the rest of the testator’s estate. The executor, Samuel Waller, was the principal bookkeeper of the company, and he also had charge of the books pertaining to the other affairs of the estate of the decedent.

The testator was liable, at the time of his death, upon commercial paper as first endorser for the sum of $22,000, which had been made for the accommodation of this corporation, and upon which a company named as The L. M. Eumsey Manufacturing Company of St, Louis was a second endorser. In order to liquidate this paper, the widow and the children of the testator agreed with the L. M. Eumsey Manufacturing Company that they, respectively, should not receive any money from the estate until the paper upon which the L. M. Eumsey Manufacturing Company was the second endorser had been paid and such company released from liability thereon.

The whole business of the company and of the estate was under the same management, and was conducted by Eugene A. Eumsey and by Waller in the company’s office. All moneys received were turned over to the corporation, and the corporation in form made all payments in behalf of the estate, although separate books of account of the estate and of the corporation were kept. In the month of November, 1890, Eugene A. Eumsey ceased to be president of the corporation, and the other executor of the will, Andrew (y. Mercer, was put in his stead. During this time the indebtedness of the corporation which, at the time of the decease of the testator, was §140,000, had boon reduced to the sum of $117,000. In the year 1890 this indebtedness was increased six or seven thousand dollars by permanent improvements made, and expenses incurred in providing greater facilities for performing the business ■of the corporation. As a part of such reduction of the liabilities of the corporation the outstanding paper upon which the deceased and the L. M. Bumsey Manufacturing Company were endorsers had been reduced by the sum of $10,000.

We think that this petition was, on its face, sufficient to give the surrogate jurisdiction to require an accounting by all of the executors. Sections 2723-2726 of the Code of Civ. Pro.; Wood v. Brown, 34 N. Y., 337; Buchan v. Rintoul, 10 Hun, 183.

It is true the petitioner has no pecuniary interest in the estate, for it appears that all provisions made in the will for him. had been assigned by him to his wife, Jennie B. Bumsey, before these proceedings were instituted ; but he is still an executor, and as such has a proper standing in court.

It also appears, that of the creditors of the estate, all of whom were cited to attend the accounting, only three actually appeared, no one of whom filed any claim against the estate; and two of these three subsequently filed a written paper with the surrogate to the effect that they did not desire to interfere with the conduct of the business of the corporation as directed by the will of the testator. There was left, therefore, only one creditor of the estate who appeared and united in the petition for an accounting and for a division of the property under other provisions of the will, and this creditor is shown to have been amply protected by real estate security.

Aside from the principal question in issue, the learned counsel for the appellants claim that the decree appealed from contained certain erroneous provisions which should be reversed. Among these was the finding by the surrogate, that the executors had received up to the date of the filing of the accounts, the sum of $280-for dividends upon bank stock. It is true that this bank stock was specifically bequeathed by the will to the widow, Anna Bumsey, and the same had been delivered to her and she had received the dividends thereon. But there is nothing in the decision of the surrogate to show that Anna Bumsey would not be entitled to this sum of money after the debts of the estate are satisfied. The finding is, as we understand it, that as to creditors only the executors are chargeable with this stock and with the dividends paid thereon. There is nothing in such finding to preclude ultimately the transfer of this property by the executors to the widow.

The same course of reasoning would also apply to the finding in respect to the annuity payable to the widow, as directed by the will, out of the profits of the business. This finding, also, is only as against creditors, and clearly, in both instances, the executors are chargeable with both the principal and dividends or earnings to the extent of satisfying fully the demands of creditors.

As applicable to these two findings, and possibly to others, it may be said generally, that while it was competent for the executors to carry on the business of this corporation in the manner provided for by the will, Willis v. Sharp, 113 Y. Y., 586; 23 St. Rep., 670, and cases there cited, such business was largely at the risk, of the executors themselves. If any profits were derived therefrom they went into the corpus of the estate. If losses were sustained through the fault or negligence of the executors, they would fall upon the executors personally.

. But the decision of the surrogate is to the effect that not only was the provision of the will permitting the executors to carry on the business void, but that such business had become “ unprofitable and disastrous.” In this conclusion we are constrained, under the facts disclosed, to differ from the learned surrogate. The duty of passing upon the facts is especially enjoined upon us by the Code of Civ. Pro., §§ 2586, 2587.

A very substantial diminution of the indebtedness of the testator was shown during the time that the business was carried on, and there is nothing in the record before us to indicate that the same degree of prosperity would not attend the business in the future. We should not, as it seems to us, be inattentive to the almost unanimous wish of the parties interested in this estate to permit the executors to conduct the business under the provisions of the will, if they deem it for the best interest of the 'estate so to do. We do not find in the case any allegation or proof that the business had been or is likely to be disastrous or even unprofitable ; nor any allegation or proof that the executors, other than this petitioner, are not able to respond to the demands of creditors in case the business so conducted by them should prove to be unprofitable through any fault of theirs. In these circumstances we think that a proper course would be to permit the executors to continue the administration of the estate in the manner directed by the will, at least until a case differing in its essential facts from this one is presented to the court.

It follows that that part of the decree appealed from by which it was adjudged that the executors have no power to carry on the business oLthe corporation of Rumsey & Company, limited, and that they proceed immediately to sell the personal estate not specifically bequeathed, including the one thousand and ten shares of the capital stock of the corporation of Rumsey & Company, limited, and to convert the residue of the testator’s estate into money, should be reversed, but in other respects affirmed.

Decree of the surrogate of Seneca county modified as indicated in the opinion, and as so modified affirmed, without costs of this appeal to either party.

Dwight, P. J., and Lewis, J., concur.


author: Dwight, P. J.

text:
    Emma B. McCabe et al., Resp’ts, v. The City of Buffalo, App’lt.

      (Supreme Court, General Term, Fifth Department,

      Filed April 13, 1892.)

    Weguagence—Contributory.
    A street of defendant was excavated for paving, there "being no crosswalk left on the line of the sidewalk, but planks were laid in line with the centre of the intersecting street. Plaintiff, with her husband, passed there before dark, crossing on the planks, and returned after dark, when they continued on in the line of the sidewalk, and plaintiff was thrown down and injured. Held, that the facts did not show a want of negligence on her part.
    Appeal from a judgment in favor of the plaintiffs, entered on the verdict of a jury at the Erie circuit, and from an order denying the defendant’s motion for a new trial, made on the minutes of the court.

      F. B. Perkins, for app’lt; A. Wilcox, for resp’ts.
   Dwight, P. J.

The action was to recover damages for a bodily injury sustained by the plaintiff, Emma McCabe, as the result of a fall on a crossing of one of the defendant’s streets. The plaintiff Joseph was joined with her as her husband, and no question is made in respect to the practice.

The plaintiff lived on Ellicott street, which was crossed by Genesee street at some distance north of her house. At the date of the accident Genesee street was being laid with the asphalt pavement, and, at its crossing with Ellicott street, was torn up, and excavated for the foundation of the new pavement on both sides of the street railroad tracks which ran in the centre of the street, while a temporary crossing of planks had been laid in line with the centre of Ellicott street.

Early in the evening of September 28th the plaintiff and her husband set out from their home to go to a market situated on Ellicott street, north of Genesee. It was not yet dark when they reached Genesee street and, seeing the condition of the crossing, they took the plank way and passed over without difficulty. The plaintiff testifies “ I did not take any particular notice of the street, only I saw it was torn up ; when we were going up to the market we walked on the planks that were laid across Genesee street; these planks were laid right on the centre of Ellicott street across Genesee street; there was not anything laid in the place where the crosswalks ordinarily were; * * * the street was torn up on each side of the railroad track when we went up; the pavement was all taken out; 1 saw there was no pavement or crosswalks there."

After doing their marketing they returned on the west side of Ellicott street. It was dark.yrhen they reached the crossing and there were no lights at the corners ; an electric lamp suspended from a pole at the corner which they first came to was not lighted ; but instead of taking the plank way, as before, they continued on, in the dark, in the direct line of the sidewalk of Ellicottstreet, across the unpaved space which they had observed in going up, from which, as "they had observed, the crosswalk had been removed, and across the railroad tracks. All this was accomplished in safety, but when stepping off from the south side of the railroad track the plaintiff’s foot went into the excavation and she was thrown down and received the injury of which she complains. The only explanation which the plaintiff and her husband attempt to make of their failure to cross by the plank way on their return from the market, is that there was a carriage on it as they crossed. But the husband testifies that he did not see the carriage until he and the plaintiff were on the railroad track, and the plaintiff testifies that the carriage was going in the same direction in which she was going. With facts such as these in proof by the testimony of the plaintiff herself, it can hardly be said that she has made a case in which she is shown to have been free from negligence contributing to produce the injury of which she complains. The fact of her recent observation of the condition of the street, that she knew that it was torn' up on both sides of the railroad track, and that there was neither pavement nor cross-walk on either side, if not sufficient to charge her with knowledge of the danger which she actually encountered, was certainly sufficient to warn her against making the experiment of crossing, in the dark, outside of the plankway. It was a case in which she was denied the right to presume that the crossing outside the planks was in a safe condition, because she had just before observed what its condition was.

The particular fact here pointed out, of the plaintiff’s knowledge of the condition of the crossing, seems not to have attracted the attention of the court at the circuit. It is not mentioned in the charge to the jury, nor was the attention of the court directly called to it by any request to charge. But the question was raised by the motion for a non-suit at the close of the evidence, whether the plaintiff had shown herself to have been free from negligence in the attempt to make the crossing at the place she did, and under the circumstances shown to have existed.

For the reasons stated we think the motion for a non-suit should have been granted.

Judgment and order appealed from reversed and a new trial granted, with costs to abide the event.

Macomber, J., concurs; Lewis, J., not sitting.


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    Luman H. Tucker, App’lt, v. Sarah A. Tucker et al., Resp’ts.

      (Supreme Court, General Term, Fifth Department,

      Filed April 13, 1892.)

    1. Partition—Settlement of issues.
    On motion for settlement of issues in an action for partition brought notwithstanding a conveyance and devise of the land on the ground of undue influence, the court directed that the cause be tried at circuit, and that on the trial “ the issues proper to be submitted to a jury be so submitted under the direction of the court as to form and substance.” Held, that this amounted to a refusal to specify the issues to be tried, and that there being no evidence in support of plaintiff’s allegations there were no issues proper to be submitted to the jury, and a nonsuit was proper.

      %. Same—Undue influence.
    Undue influence can only be presumed in a case where the relation between the parties is one of dependence on the one hand and control on the other; merely confidential and affectionate relations have no such effect.
    Appeal by the plaintiff from a judgment dismissing the plaint, entered on a nonsuit granted at the. Niagara circuit.

      D. M. Silver, for app’lt; M. Ashley, for
   Dwight, P. J.

The action was for the partition of lands in Niagara county, of which the plaintiff claimed an estate in fee in an undivided one-third as heir-at-law of his deceased mother, in common with his two sisters, who were made defendants in the action.' This claim was made notwithstanding the conveyance by the mother, in her lifetime, of the entire estate to her tyro daughters mentioned, and the devise by her will, which had been duly admitted to probate, of all her property to the same persons, after the payment of debts and funeral expenses; and the burden of the plaintiff's complaint consisted of allegations that such conveyance and devise were obtained by means of undue influence exerted by his sisters upon their mother, and were, therefore, void.

Issue having been joined in the action by a denial of all the allegations of the character mentioned, a motion was made by the plaintiff at special term for the settlement of the issues therein to be tried by a jury, and the court made an order reciting that the action was in partition and that issues of fact as to the title of real property were raised by the pleadings, and directing that the cause be placed on the calendar of the circuit court for trial, “ and that upon the trial the issues proper to be submitted to a jury be so submitted under the direction of the court as to form and substance.” Accordingly, the cause was brought on for trial at the circuit, before a jury, without any specification by the court of the issues to be tried, and after hearing the evidence on the part of the plaintiff, the court directed a nonsuit, and judgment was entered thereupon dismissing the plaintiff’s complaint.

Counsel for the appellant, here, assume that issues of fact had been settled by the court and ordered to be tried by a jury, and are thereupon inclined to argue that the court at the circuit was bound to take a verdict of the jury, and that the direction of a non-suit constituted a mis-trial. Both the assumption and the argument are fallacious. There was no settlement or specification of the issues to be tried. The practice was entirely correct. The action was by statute triable by jury, and upon the issues as framed by the pleadings. Code of Civ. Pro., § 1544. By the order at special, term the court declined to specify the issues to be tried, and only directed that the issues proper to be submitted to the jury should be so submitted. If there prove to be no evidence in suppo-rt of the allegations of the plaintiff, there were no issues proper to' be submitted to the jury, and in that case the direction of a non-suit was properly made. And such was very clearly this case. The record presents no evidence of any influence exercised by the sisters to induce their mother to make either the deed or the will, and it would have been error to deny the motion for a non-suit. There was evidence tending to show that the son “ by his habits and conduct had forfeited, in large measure, the affections of both his mother and his sisters, and that his mother had, long before the making of the deed and will, resolv-xl that he should have no portion of her property,” but there is no evidence that she was instigated to that resolution by any influence or persuasion of her daughters.

The proposition that the case is brought within any rule which shifts the burden of proof, or was one in which undue influence will be presumed, is wholly untenable. It is only in a case where the relation between the parties is one of dependence on the one hand and control on the other, that any such presumption will arise ; merely confidential and affectionate relations have no such effect.

The case was properly disposed of and the judgment must be affirmed.

Judgment appealed from affirmed, with costs.

Macomber and Lewis, JJ., concur.


text:
    Esther O’Hara, App’lt, v. Lewis W. Robinson, Resp’t.

      (Supreme Court, General Term, Fifth Department,

      Filed April 13, 1892.)

    Contract—Consideration.
    Plaintiff conveyed land to defendant by a deed with covenant only of quiet and peaceable possession. It being discovered that a judgment was-a lien on said land, plaintiff agreed to deposit defendant's notes received for the purchase price in the hands of a justice as security for the satisfaction of the judgment, and in case it was not satisfied defendant could pay it and keep the money paid out of the amount due on the notes. The judgment was not discharged, nor was defendant’s possession disturbed. Seld, that plaintiff’s agreement was without consideration and of no effect, and furnished no defense to an action on the notes.
    Appeal from a judgment dismissing the plaintiff’s complaint, entered on the direction of the court at the Niagara circuit.

      If. M. Davis, for app’lt; O. W. Pond, for resp’t.
   Dwight, P. J.

In May, 1883, the defendant' was indebted to the plaintiff on two promissory notes, one of $250, for a part of the purchase price of lands sold by the latter to the former; and one of $50 for borrowed money; both due on the 1st day of April, 1884. In June, 1883, the defendant learned that a judgment of $226 had been docketed in Niagara county in the year 1876 against John O’Hara (since deceased), the grantor of the plaintiff, and Robert O’Hara, his son, which had never been discharged, and was then an apparent lien on the premises which the plaintiff had conveyed to the defendant with covenant only for quiet and peaceable possession. The defendant thereupon applied to the plaintiff, as he testifies, to secure him in some way against the judgment, and the result of the negotiation, and of the defendant’s urgency, was that the plaintiff, who was an aged woman, entered into an agreement in writing with the defendant, by which she agreed to place her two notes in the hands of a neighboring magistrate as collateral security for the satisfaction of the judgment mentioned, to be given up to her only on the satisfaction of such judgment; and in case the judgment was not satisfied, the defendant was to pay it, and keep the money paid out of the amount due to the plaintiff on the notes. The two notes and the agreement were accordingly deposited with the person named.

In March, 1890, a few days before the statute of limitations had run against the notes, the plaintiff by her agent applied to the defendant for their payment, and, that being refused, she accepted a renewal note for the amount of the two, with interest, payable in one year, and executed with the defendant a second agreement of the same character as the first, relating to the renewal note, and placed it, with the new agreement, in the hand: of the same depositary.

When the extension of time given by the new note had expired, this action was brought, wherein the complaint alleged the giving of the original notes, and the extension of time by the new one, and asked judgment for the amount of the latter, with interest.

On the trial the plaintiff made proof of all the notes; the defendant proved the two agreements, and the plaintiff offered to prove that the judgment was paid. The last mentioned evidence was excluded; the court holding that the notes were not enfcreíble until the judgment was discharged of record. At the close of the evidence the defendant moved for a nonsuit on the ground that the agreement in evidence had not been complied with, and the plaintiff moved for the direction of a verdict on the ground, .among others, that the agreement was void for want of consideration. The court denied the plaintiff's motion and granted that •of the defendant, holding that there was a moral obligation on the part of the plaintiff to remove incumbrances from the title to the land conveyed by her, which afforded a sufficient consideration for the agreement in question.

In this ruling we think the learned court was in error, and that the motion for the direction of a verdict should have been granted, on the ground, if no other, that the plaintiff’s agreement to delay .the collection of her notes until the judgment mentioned was .satisfied was without consideration and of no effect.

A mere moral obligation is not a sufficient consideration to support a promise. It must be founded upon a previous legal liability, or it must be one which can be enforced at law, or which, at least, furnishes an available defense; or be based upon facts which •estop the promisor to deny a legal obligation to the same effect • Goulding v. Davidson, 28 Barb., 438; Watkins v. Halstead, 2 Sand., 311; Geer v. Archer, 2 Barb., 420; Smith v. Ware, 13 Johns., 257; Ehle v. Judson, 24 Wend., 97.

But there was no moral obligation resting upon the plaintiff to discharge the judgment. The only obligation assumed by her, in connection with her conveyance to the defendant, was that embodied in her covenant for quiet and peaceable possession, of which there had been no breach. Indeed, the learned judge at the circuit seems to have based his theory of moral obligation upon the assumption that some representation had been made by the plaintiff at the time of. the conveyance, to the effect that the title was free from incumbrance. But we find in the case no evidence whatever upon which to base such an assumption, and the case stands simply on the plaintiff’s covenant contained in her deed, from which it is certain that no obligation has yet arisen which could be the ground either of an action or a defense on the part of the defendant.

Such being the case, there was no consideration for the agreement of the plaintiff to postpone the collection of the original notes beyond the time to which they were extended by the renewal The agreement embraced no element of benefit to her, nor of harm or detriment to the defendant. She was in no case to receive nor he to pay anything more than the amount actually due on the original notes, and the agreement of the defendant to pay the judgment (at such time as he should see fit), only provided a mode in which he might pay a portion of his debt to the plaintiff.

For the error here indicated the judgment should be reversed.

Judgment appealed from reversed, and a new trial granted, with costs to abide the event.

Macomber and Lewis, JJ., concur.


text:
    William M. English, Resp’t, v. Henry S. Sill et al. Def’ts.

      (Supreme Court, General Term, Fifth Department,

      Filed April 13, 1892.)

    1. Mechanics’ lien—Assignment.
    A contractor executed to plaintiff an assignment of all his right, title ' and interest to a mechanics’ lien, which was not filed until two days later by reason of the clerk’s office being closed. Held, that no lien existed at the time the assignment was made, and that all that passed under it was the contractor’s right to acquire a lien thereafter.
    2. Same—Consideration.
    The evidence showing that the assignment was made for the purpose of collection, the avails to be applied as collected in payment of an antecedent debt, it was error for the court to refuse to find that plaintiff did not part with anything of value in consideration of the assignment.
    3. Same—Priority.
    Defendants were sub-contractors, whose lien was filed on the same day, but later than the contractor’s lien. Held, that their lien was superior to that held by plaintiff by virtue of the assignment, notwithstanding the fact that a portion of the indebtedness due plaintiff from the contractor was for materials which went into the building, as he did not file a lien as sub-contractor.
    Appeal by the defendant James H. Lee and others, composing the firm of Lee, Holland & Co., from a judgment of the county court of Erie county in favor of the plaintiff, entered on the findings and decision of the court in an action to foreclose a mechanic’s lien.

      J. L. Homer, for app’lts; F. G. Pede, for resp’t.
   Dwight, P. J.

The controversy is between a sub-contractor and an assignee of the contractor, as to the superiority of their respective liens on a fund paid into court by the owner of the property against which the liens were filed.

One Catton was the contractor to do the carpenter work of a house to be erected by the defendant. Sill. The contract was substantially performed, and there was unpaid to the contractor thereon, on the 1st day of February, 1890, the sum of $430.13. On that day Catton made and verified the required notice of lien for the sum of $595, which was the amount claimed by him to be unpaid on the contract, and on the same day (February 1), and before the notice was filed or lien acquired, executed, aeknowledged and delivered to the plaintiff an instrument which purported to assign to the plaintiff “all my (his) right, title and interest in and to a certain mechanic’s lien filed by me in Erie county clerk’s office on the 3d day of February, 1890; said lien being filed by me as contractor, for the sum of $595, due from .11 'iiry S. Sill of,” etc. The explanation given of the fact that the assignment anticipated the filing of the lien by two days, is that the 1st day of February was Saturday, and that the clerk’s office was closed from the noon of that day until Monday morning; but the fact remains that no lien existed at the time the assignment was made, and, therefore, all that passed by the assignment was the right of Oatton to acquire a lien thereafter. Catton’s nqtic© of lien was actually filed, with the assignment attached, at nine o’clock A." M. of February 3.

The assignment purports to have been made in consideration of a present payment of money, but such was not the case; the claim was, in fact, assigned to the plaintiff for collection, the avails to be applied only as collected in payment of an antecedent debt due from Catton to'the plaintiff. This is the precise effect of the plaintiff’s own testimony 'reiterated several times.. There is no evidence to the contrary, and the defendant’s exception to the refusal of the court to find in accordance therewith, viz.: that the plaintiff did not part with anything of value in consideration of the assignment, was well taken.

The defendants Lee, Holland & Co. were sub-contractors under a contract with Oatton to furnish doors, sash and other woodwork, and did furnish such work and materials to the amount of $842, which remained unpaid on the 3d day of February, 1890, and on that day at 2.15 P. M. they duly filed their notice of lien for that amount.

We can have no doubt that the last mentioned lien was superior to that of the plaintiff. It is impossible that the plaintiff, as assignee of Catton, should acquire any greater rights than those of his assignor. And the lien of the latter is expressly postponed to that of Lee, Holland & Co. by the terms of the statute (Laws of 1885, chap. 342, § 20), which, after defining who are sub-contractors, provides that “ the court, in the judgment, shall direct the amount due sub-contractors and workmen to be paid out of the proceeds of sales in their order of priority herein provided before any part of such proceeds are paid to the contractor; ” and this is without reference to the time of filing the contractor’s notice of lien. It seems that a portion of the indebtedness due from Catton to the plaintiff was for materials which went into the building on the premises in question ; and so far as that was the case the plaintiff was probably a sub-contractor, and if he had filed notice of lien as such, then, as between himself and Lee, Holland & Co., the question of superiority of lien would have depended on the priority in filing their respective notices. But he did not file a lien as subcontractor, but relics upon his assignment of Catton’s lien (or right to acquire a lien) as contractor. Doing so he must stand in the place of his assignor, and be content to take what the statute would give to the latter if no assignment had been made. He had no claim to the position of a “ bona fide purchaser for value.” He neither paid nor surrendered anything of value in consideration of the assignment. His own statement is that he took the claim to collect, and apply the avails as collected in payment of the debt due to him.

No one questions the good faith, in the general sense, of this-transfer; but it is familiar law that a transfer made upon such a consideration is not a transfer “ for value ” in such sense as to prevail over the equities of third persons against the transferor. Here the sub-contractors, Lee, Holland & Co., were, by the statute, entitled to priority over the contractor Catton, though the notice of lien of the latter was filed some hours before that of the former, and the plaintiff, as assignee of the contractor, was subject to the same equities in favor of the sub-contractors as those which affected his assignor. Upon this ground, alone, without considering others suggested, we are clearly of the opinion that, the learned county court erred in awarding the superiority of lien to the plaintiff.

The judgment appealed from should be reversed, and a new trial granted.

Judgment of the county court of Erie county, appealed from, reversed, with costs to the appellants to abide the final award of costs.

Macomber and Lewis, JJ., concur.


text:
    Mary Ann Noonan, Adm’rx, App’lt, v. The New York, Lake Erie & Western Railroad Co., Resp’t.

      (Supreme Court, General Term, Fifth Department,

      Filed April 13, 1892.)

    Appeal—Case—Abandonment.
    After judgment of nonsuit plaintiff’s attorney procured the settlement of a case and exceptions, but thereafter served notice that they were abandoned, and commenced a new action. Held, that his practice was correct, and that he could not he required, on motion of his opponent, to file the case and exceptions.
    Appeal by the plaintiff from an order of the special term dated December 7, 1891, entered in Genesee county, December 9, 1891, directing her attorney to file a case and exceptions.

      M. F. Brown, for app’lt; George F. Brownell, for resp’t.
   Macomber, J.

plaintiff brought this action to recover damages sustained by the next of kin by reason of the death of her intestate, caused by the alleged negligence and unskillful ness of certain physicians employed by the defendant to attend the intestate, who had been injured on its railway while working as an employe of that corporation.

On the trial the plaintiff was non-suited. Upon application to the court there was granted to her ninety days time in which to make a case with exceptions, which was ordered to be heard at the general term in the first instance. Subsequently, the justice making this order modified the same by striking out that portion directing the exceptions to be heard in the general term in the first instance. The case with exceptions was settled October 14, 1891, by the justice who directed the same to be filed. Subsequently to this, it was determined by the plaintiff’s counsel to abandon further prosecution of that action; for what reason it is immaterial to this appeal. Accordingly, on the 19th day of October, 1891, there was served upon the defendant’s attorney a notice that the case with exceptions had been abandoned, and that an order might be entered as of course declaring the same abandoned without notice to the plaintiff. The case was not, in fact, filed under rule 35. A new action was begun October 28, 1891, and the motion, the order made upon which is now appealed from, was made in December, 1891, to compel the plaintiff to file the-case and exceptions.

We know of no rule of the court which forces a party to proceed with a hearing upon a case and exceptions; and, consequently, we know of no practice by which, after the abandonment of such case and exceptions, a party on motion of his opponent can be required to proceed in that mode to review the decision at the trial. Rule 35, of the Rules of General Practice, cannot bear any such construction. By that rule, unless the time in which a party is required to file a case after the same has been settled and signed shall be enlarged, the case is abandoned, and the party may proceed as if no case or exceptions had been made. There remains to either side the privilege, of course, to proceed to a • hearing upon the judgment roll, if it is deemed advisable. The case for review, therefore, is not by any means, under rule 35, thrown out of court by the practice here pursued by the plaintiff’s attorney. There is still open to him an appeal upon the judgment roll. As the defendant cannot compel him' to proceed originally to review the decision by making a case and exceptions, so he cannot, after notice received to the effect that the case with exceptions has been abandoned, take any step to that end which he could not originally have taken. Rule 35 affords an easy, expeditious and ample mode of procedure in the event that the case and exceptions, after settlement by the judge, be not filed, and contains, if filing be omitted, a complete, and in truth the only penalty known to our practice against the party proposing such case and exceptions; and no exigency is perceived, by the light of these appeal papers, for enlarging its provisions.

We think that the practice of the plaintiff’s attorney in this particular was authorized, and that, consequently, the order appealed from should be reversed.

Order appealed from reversed, with ten dollars costs and disbursements of the appeal, and the motion denied, with ten dollars costs.

Dwight, P. J., and Lewis, J., concur.


text:
    Charles A. Drefs et al., Resp’ts, v. Henry C. Wadsworth, Impl’d, App’lt.

      (Supreme Court, General Term, Fifth Department,

      Filed April 13, 1892.)

    Deed—Fraud—Bona ride purchaser.
    Plaintiffs, a land company, conveyed certain land to a manufacturing company in consideration of its erecting a factory thereon, and conducting its business therein for three years, in default of which the title was to revert. The factory was not built, but the land was conveyed to defendant, and the factory was built on land conveyed by him in exchange therefor. In an action to set aside the deeds, no fraud on defendant's part was found, but it was found that he knew that the conveyance to his grantors was conditional, and that the entire consideration thereof had failed. Held, that he was not a bona fide purchaser, and that a judgment in favor of plaintiffs was properly granted.
    Appeal by the defendant, Henry C. Wadsworth, from a judgment entered in Erie county, February 20,1891, upon the decision ■of the court at special term.

      Henry ■ G. Wadsioorlh, app’lt in person; • H. M. Silver, for resp’ts.
   Macomber, J.

This action was brought to set aside the record ■of two deeds of conveyance of the lands described in the complaint, and to obtain possession of the premises. The first of these ■deeds was executed by the plaintiffs - and one William 0. Smith to David P. Stewart and George A. Otis, on the 9th day of July, 1887, and acknowledged on the 12th day of that month. The other one, being a quit-claim deed, was made by Stewart and Otis to the appellant Henry 0. Wadsworth, bearing date the 7th day ■of January, 1888, and acknowledged on the same day. .

In the mohth of February, 1887, the plaintiffs and one William C. Smith formed a copartnership under the firm name of the Le Roy Avenue Land Company, and as such firm bought a tract ■of land in the suburbs of the city of Buffalo and called it Kensington, and divided the same into lots for market. The lands ■described in the complaint were a portion of the Kensington tract. This land company, in the month of May, 1887, entered into a verbal contract with the defendants, Stewart and Otis, by which it .agreed to convey to the latter, who were doing business under the name of the Stewart Heater Company, the lands described in the •complaint, and the purchasers agreed to construct a factory upon the lands so conveyed, and to carry on their manufacturing business in such factory for the period of three years after the ■erection of the building, which was to be done at once, in default of which the lands should revert to the Le Roy Avenue Land ■Company. The deed was accordingly given to the defendants, Stewart and Otis, but the latter failed and refused to execute and deliver to the Le Roy Avenue Land Company the agreement in writing which they previously agreed to make. Stewart and Otis .also failed and refused to build their factory upon the lands •described. In violation of their agreement and of the condition, upon which the deed had been delivered to them, Stewart and Otis, on the 7th day of January, 1888, conveyed these premises to the defendant, Henry C. Wadsworth, by deed which Wadsworth procured to be recorded in the proper county clerk’s office.

The trial court has found as a fact, that at the time of receiving this deed of conveyance the defendant, Wadsworth, had full knowledge as to the consideration of the conveyance of the premises by the Le Boy Land Company to the defendants, Stewart and Otis, and of the failure and refusal of said Stewart and Otis to perform their agreement. Stewart and Otis, after receiving the deed from Wadsworth, built what" is called the Stewart Heater Company buildings upon such lands, and not upon those that had been conveyed to them by the plaintiffs.

There is but one disputed question of fact in the case, and that relates to the knowledge of the defendant, Wadsworth, of the consideration and condition upon which the conveyance of the plaintiffs had been delivered to Stewart and Otis and of the failure of Stewart & Otis to perform their agreement. Without referring to the testimony of the defendant Wadsworth, in detail, it appears that no other reasonable conclusion could have been reached by the learned trial justice, even had the case of the plaintiffs depended on it alone.

The court has found that Stewart and Otis were guilty of fraud in their part of the transaction, by which they, in violation of the condition of their agreement with the plaintiffs, conveyed these lands to Wadsworth. Though it has not found, as against Wads-worth, the existence of any fraud, yet, it has held him liable for receiving the deed of the lands when he had actual knowledge that the conveyance to his grantors was made conditionally, and that the entire consideration of the deed had failed. This finding was. just and discriminating; for, in respect to motive and interest; there appears nothing against the appellant beyond a great anxiety to exploit his own lands lying in the same neighborhood, in which effort zeal of competition seems momentarily to have smothered his appreciation of the facts relating to the title of Stewart and Otis.

We think, also, that the special term made a correct disposition of the question of costs, and that the judgment appealed from should be affirmed.

Judgment appealed from affirmed, with costs.

Dwight, P. J., and Lewis, J., concur.


author: Maoomser, J.

text:
    Marena Snyder, App’lt, v. William P. Brooks, Resp’t.

      (Supreme Court, General Term, Fifth Department,

      Filed April 13, 1892.)

    Estoppel—Monet had and received.
    A cow "belonging to plaintiff was included in the inventory of the estate of her husband, of which she and defendant were the executors, and the inventory was verified by both. Before doing so plaintiff claimed that ' the cow was hers, but defendant advised her not to insist on her claim. The cow was sold with the other property and defendant received the purchase price thereof, and thereafter had a final settlement. Held, that plaintiff was not estopped by her acts from claiming the purchase price of the cow as money had and received by defendant to her use.

      Appeal by the plaintiff from a judgment of the county court of Allegany county, reversing a judgment of a justice of the peace, entered November 1, 1890.

      II. H. jRelya, for app’lt; Frank Harding, for resp't.
   Maoomser, J.

This action was originally begun in-a court of a justice of the peace to recover for moneys had and received by the defendant to the use of the plaintiff, being the amount of tlie proceeds of the sale of a cow belonging to plaintiff.

Evidence before the justice was given showing that the cow in question belonged to the plaintiff.

The plaintiff and defendant were the administrators of the -estate of one David C. Hopkins, deceased, the latter being the husband of the plaintiff at the time of his death. This cow was put in the inventory of the estate by the defendant; but the plaintiff informed the latter at the time that the cow belonged to her. Nevertheless the plaintiff, together with the defendant, verified the inventory and the cow was sold, together with other property, at a public auction, and the defendant received for her $18.50 at such sale.

The learned county judge, in reversing the judgment of the justice, put his decision upon the ground that -it would be gross injustice to allow the plaintiff to waive the claim after so long a time, and have the estate of her husband increased by the amount received for the cow, after a final settlement of the estate when the defendant has no chance to reimburse himself, or get a further adjustment of his accounts. But we do not understand that there is any principle of estoppel in the facts disclosed which could be Applicable to this case. The plaintiff, evidently, was not well acquainted with the mode of. conducting the buáiness in the surrogate’s court, though the defendant apparently was. She did no .act which led the defendant into doing anything, or incurring any ■obligation, which he would not have done or incurred except for such acquiescence. He admits that the plaintiff told him that the cow was hers, and then he advised her not to insist upon her •claim. But she did insist upon it, as to the defendant, consistently.

For this reason we think that the judgment of the county court should be reversed, and that of the justice affirmed.

Moreover, we think there was some misapprehension on the part of the county judge of the testimony of the defendant. The latter testified that when a demand for the proceeds of the sale was made upon him, he then had in his hands sufficient moneys to pay the same, which fund had " been realized from the sale of real estate of the decedent for the payment of debts.

There is another question in the case, not considered by the learned county judge, relating to testimony touching the declaration of the deceased to the effect that the cow did not belong to him. But we deem this not of sufficient moment to cause a reversal of the judgment of the justice, because there was other and satisfactory evidence establishing the fact of ownership in the plaintiff. Indeed, there is no evidence in the case seriously contro verting that fact; and, consequently, there being no estoppel, the plaintiff had a right to recover the money.

Judgment of the county court reversed and that of the justice -of the peace affirmed, with costs in both courts.

Dwight, P. J., and Lewis, J., concur.


author: Brown, J.

text:
    Edgar B. Taylor, App’lt, v. Charles G. Saxe et al., Resp’ts.

      (Court of Appeals, Second Division,

      Filed May 31, 1892.)

    Sale—Defect in quality of goods sold.
    Defendants, as partners, agreed to sell a boat load of lumber, then in Canada, to plaintiff, to be delivered upon plaintiff’s dock at Poughkeepsie. Upon inspection at his dock plaintiff refused to accept it as not being of the quality represented. Thereupon defendants' agent examined it and found it inferior to that agreed upon, but at defendants’ request the captain was permitted to unload upon plaintiff’s dock, where it was stored for defendants’ benefit. Held, that there was no rescission of the contract by plaintiff, and he was entitled to recover damages for failure of defendants to deliver lumber of the quality specified, in addition to the amount paid by him for freight and duties and storage of the lumber.
    Appeal from such part of a judgment of the general term of the second judicial department as modified a judgment in favor of the appellant theretofore entered upon the report of a referee.

      Thompson & Lown, for app’lt; William P. Rudd, for resp’ts.

       Reversing 32 St. Rep., 727.

   Brown, J.

The facts of this case, so far as they are material to the questions presented on this appeal, are as follows: The defendants, being partners, agreed to sell to the plaintiff a boat load of lumber then in Canada, of a specified size and quality, to be delivered upon the dock of the plaintiff at Poughkeepsie at an agreed price. Upon inspection of the lumber after its arrival at his dock plaintiff refused to accept it on the ground that it was not of the quality represented. The defendants upon notification of such refusal sent their agent to examine the lumber, who also pronounced it inferior to the kind and quality the •defendants had agreed to sell, and thereupon at the defendants’ request the captain of the boat was permitted to unload the same upon the dock, and it was there stored for defendants’ benefit.

Subsequently this action was commenced to recover (1) the amount paid by plaintiff for freight and duties which under the contract he was to pay and deduct from the purchase price; (2) storage of the lumber, and (3) damages for failure of the defendants to deliver lumber of the quality specified.

Upon the trial before the referee plaintiff recovered upon each one of said claims and the damages for breach of the contract were assessed upon the basis of the difference between the value •of the lumber at the place of delivery and the contract price.

Upon appeal to the general term the recovery for damages for breach of the contract was stricken out and the judgment so modified affirmed, from which determination plaintiff appealed to this court.

The judgment of the general term was based upon the fact, assumed to exist, that there had been a rescission of the contract by the plaintiff. In this conclusion we think that learned court erred. The referee made no finding of that kind, nor was the fact asserted in the pleadings. The complaint alleged the arrival at plaintiff’s dock of a boat load of lumber and its" rejection because it was inferior to the quality agreed to be delivered, and damages by reason of such failure to carry out the contract. The answer asserted the execution and performance of the contract on defendants’ part It was essential to plaintiff’s rights under the contract that he should promptly examine the lumber tendered him by the defendants, and his right to recover from them damages for a failure to deliver the kind and quality specified would not in the absence of proof of fraud or latent defects have survived the acceptance and retention of the property. Studer v. Bleistein, 115 N. Y., 316; 26 St. Rep., 400; Pierson v. Crooks, 115 N. Y., 539; 26 St. Rep., 492.

The referee found that the plaintiff did not receive or accept the lumber, and the case made upon the evidence and the referee’s conclusion thereon was one of a breach of an executory contract.

The plaintiff’s remedy upon such a case was not limited to the right to rescind the contract and refuse to accept the lumber and recover the payments made for freight and duties, as was held by the general term, but he could recover such damages as he had suffered from a breach of the contract. Dana v. Fiedler, 12 N.Y., 40; Highlands Chemical & Mining Co. v. Matthews, 76 id., 145.

The conclusion of the referee was well sustained upon the facts as determined by him, and it follow's that the judgment of general term so far as it modifies the judgment entered upon the referee’s report must be reversed, with costs of this court and, of the general term.

All concur.