text:
    Matter of the Petition of the New York, Lackawanna and Western R. R. Co., Resp’ts, for the Appointment of Commissioners to Appraise Certain Rights in Real Estate of Catharine Miller, Impleaded With Others, App’lt.

      Supreme Court, General Term, Fifth Department,

      Filed April 19, 1887.)

    1. Railroad crossings—Right to farm crossings—Laws 1850, chap. 140, §44.
    The appellant owned about ten acres of land, and conveyed to the railway company a strip of it upon which its railroad was constructed. This so severed her land, that the portion on which her buildings were located was north of the road and about five acres south of it. Puisuant to the conditions of the deed the company made and maintained a grade crossing over its railroad. Later these proceedings were taken to extinguish her easement in said grade crossing. The land was used for farm purposes and she had no means of access to the southern portion of her land other than by crossing the railroad. Held, that she cannot, by any proceeding in invitum taken by the petitioner, be denied the right of a passageway across the railroad lands to and from these sections of her farm. That this right is preserved to her by the statute, which in like manner imposed upon the company the duty of providing the means of such passage, Laws 1850, chap. 140, § 44. In doing it, regard must be had to the convenience of the land owner.
    2. Same—Location mat be changed.
    Assuming that the land owner could be provided with a proper crossing, and that the appropriation of the right and means reserved and provided pursuant to the covenant in the said deed, did not defeat her statutory right in that respect. -Held, that the private easement as located could be taken under the statute. That the order should provide for maintaining a suitable farm crossing.
    Appeal from order of the Erie special term appointing commissioners to ascertain and appraise the compensation to be made to Catharine Miller, as the owner or person interested in a right or easement in certain real estate. She appeals.

      J. L. Romer, for app’lt; J. G. Milburn; for petitioner.
   Bradley, J.

The appellant owned about ten acres of land, and conveyed to the railway company a strip of it, upon which its railroad was constructed. This so severed her land that the portion on which her buildings were located was north of the road, and about five acres south of it. By this deed of conveyance it was provided, and such was the covenant, that the company should make and maintain for her use a grade crossing over its railroad. The road was constructed and this was done. The petitioner now alleges that it requires the land described in the conveyance for the purpose of constructing thereon warehouses and trestles, and facilities for handling and storage of coal and other freight, and for the transfer of it from car to car, and other lawful yard purposes, and, therefore, seeks to extinguish her easement.

This the appellant resists, and by her answer, which was-at the special term, and must, for the purposes of this review, be taken as true, it is alleged that she has no means of access to the southern portion of her land other than by crossing the railroad; that the land is used for farming purposes, and.it is necessary for such purposes to pass to and from the southern portion to the northern portion of her land. She cannot, by any proceeding in invitum taken by the petitioner, be denied the right of a passageway across the railroad lands to and from these sections of her farm. This right is preserved to her by the statute, and in. like manner is imposed upon the company the duty of providing the means of such passage. Laws of 1850, chap. 140, § 44. And in doing it, regard must be had to the convenience of the land owner. Wademan v. A. and S. R. R. Co., 51 N. Y., 568; Smith v. N. Y. and O. M. R. R. Co., 63 id., 58; Jones v. Seligman, 81 id., 190.

If, therefore, as contended by the appellant’s counsel, the purpose and effect, if successful, of this proceeding is not only to extinguish the right of way already provided for her over the railroad, but to entirely defeat her right to any means of crossing the petitioner’s lands, the prayer of the petition was improperly granted. That purpose and such effect are disclaimed here by the counsel for the company. -The purposes for which it is alleged that the premises embracing the location of the present crossing are-required, are within those which support the exercise of the right of eminent domain. Laws 1850, chap. 140, § 21, as amended by Laws 1881, chap. 649; Laws 1882, chap 82. Treated as a proceeding merely to extinguish the easement-at the place where it now is, and as located, without thereby denying to the appellant the right to a farm crossing, there seems to be no want of power to accomplish that result, provided it will not have the effect of such denial. It is not alleged in the answer to the petition that such would be the effect of the appropriation by the company of this particular place of crossing. And it will not now be assumed that the consequence will be to deprive her of the right which the statute gives, or that the duty imposed by it upon the company of providing for her a suitable crossing may not be observed and performed.

This duty is imperative, as applied to railroad companies seeking to appropriate land so situated as to require farm crossings for the convenience of the land owners, and in such case the taking of lands for those purposes is in some sense subject to tho right of provision for such crossings. Assuming for the purposes of this review, that the land owner can and may be provided with a proper crossing, and that the appropriation of the right and means reserved and provided pursuant to the covenant in the deed does not defeat her statutory right in that respect, we see no reason why the private easement as now located may not come within the property which the statute permits to be taken for the purposes in question.

But as the prayer of the petition and the terms of the order are such that they may have produced apprehension that the purpose and effect of the latter may have been to wholly extinguish her right to a crossing, and deny to her the benefit of the statute as applied to the premises, we think the order should by its terms qualify the effect of the proceeding in that respect.

The order should therefore be modified by adding thereto the words: “This proceeding shall not have the effect to deny to the said Catharine Miller the right to a suitable farm crossing through the lands of the petitioner, or to relieve the latter from the statutory duty of providing it for her, but is subject to such right and duty.” And, as so modified, affirmed, with ten dollars costs and disbursements of this appeal, to the appellant.

Angle, J., concurs.


source: Caselaw Access Project

author: Haight, J.

license: Public Domain

text:
    Joseph Doll and Elizabeth Doll, Pl'ffs, v. Euphie R. Ingram, Def’t.

      (Supreme Court, General Term, Fifth Department,

      Filed April 19, 1887.)

    1. Recording of contract for sale of land—Effect—1 Rev. Stat., 762, §39. •
    The only effect of the statutory provision for the recording of contracts for the sale of land (1 Rev. Stat., 762, 65 39), is to preserve evidence and facilitate the proof thereof, and the record is not constructive notice to subsequent purchasers or encumbrancers, and no action can be maintained to cancel it as a cloud upon the title.
    2. Specific performance of contract for the purchase of land—When decreed.
    In an action to compel the specific performance of a contract for the purchase of land, the defense was that the title was defective because of a recorded contract of sale. Said contract was signed by a third party, “agent of M. Doll,” and there was annexed the following certificate: “ For a valuable consideration to me in hand paid, I hereby certify the above and agree to make perfect title within the time agreed upon,” and signed by Michael Doll. The said Doll was only entitled to one-tenth of the premises, had no power to convey, and the time mentioned in the said contract had passed long before the contract for which specific performance was asked was given. Held, that it was no cloud upon the title. Performance decreed.
    3. Same—When not decreed—What proper remedy.
    The rule is that specific performance will not be decreed when performance is impossible. That in such cases the proper remedy is in an action for damages.
    Submission of controversy upon facts agreed upon.

      George Wadsworth, for pl’ffs; H. J. Swift, for def’t.
   Haight, J.

The facts agreed upon are in substance as follows: Maria Anna Doll,in her lifetime and at the time of her death, owned and possessed about twenty-eight and one-half acres of land, situate in the city of Buffalo, being part of lot number fifty-one, in township eleven, range seven, in the Holland Land Company’s survey; that she died in the month of January, 1819, leaving a last will and testament which was duly proved and admitted to probate as and for the last will and testament of real and personal estate, before the surrogate of Erie county, on the 5th day of February, 1819; that in and by such last will and testament, and after providing for the payment of her debts and funeral expenses and certain legacies, she gave, devised and bequeathed all the rest and remainder to her children, naming them, to be divided between them share and share alike, and nominated and appointed her sons, Michael Doll and Joseph Doll, to be executors, with power to sell and dispose of her real estate at public or private sale at such time or times, or upon such terms and in such manner as to them shall seem meet.

Thereafter by deed bearing date the 1st of July, 1881, Michael Doll and Caroline, his wife, conveyed to Elizabeth Doll, all their right, title and interest in the premises. Thereafter by deed bearing date, September 10, 1881, Joseph Doll and Michael Doll, as executors, and all the legatees and devisees, named in the will, with their respective husbands and wives, excepting Michael Doll and Joseph Doll (the said Michael having previously conveyed his interest as aforesaid), conveyed all of their interest in such lands to Elizabeth Doll. Thereafter, and on or about the 1st day of November, 1886, Joseph Doll and Elizabeth Doll, the plaintiffs, entered into a contract with the defendant for the sale of such lands to her; that subsequently they made and executed a deed duly acknowledged, and tendered the same to the defendant in accordance with the provisions of the contract, and she refused to accept the same or to pay for the premises as specified in the contract; that her reason for such refusal was that the title in Joseph and Elizabeth Doll was not perfect by reason of the contract hereinafter set forth. Upon search of the records of the clerk’s officer the following was found: “For a good, and valuable consideration to me, the undersigned, Patrick T. Bierne, agent for M. Doll, administrator and others, owners of the land below, of the city of Buffalo, in the county of Erie, and state of New York, in hand paid by James S. Lyon, of the city of Buffalo, and for one dollar, the receipt of which I hereby acknowledge, I do hereby covenant and agree for the owners thereof, their administrators, heirs, executors and assigns, to sell and convey to said James S. Lyon, his heirs, executors, administrators or assigns, by a good and sufficient deed containing covenants of seizin and warranty, and free from all right of dower or incumbrances, whatever, upon the payment by said Lyon, his heirs, executors or assigns, if made within eight days from the date thereof, the following described premises, to wit: (Then follows a description of the premises including the lands in question). Known as the Doll estate, situate on the southwest corner of Walden avenue, late Best street, and the Williamsville road, containing twenty-eight acres and one-half of an acre. Terms of sale. If the said Lyon shall conclude to purchase, as follows: “$6,000 on delivery of deed and $6,000 within five years, to be secured by bond and mortgage, one and one-half per cent commision to be allowed said Bierne by purchaser. The deed shall be delivered upon payment to me of the sum of $6,000, within eight days from the date thereof. This agreement, however, shall be absolutely void and have no effect unless payment of the above-mentioned sum be made or tendered within eight days from the date hereof.

Witness my hand and seal, this 16th day of May, A. D., 1881.

P. T. BIERNE, agent M. Doll.

For a valuable consideration to me in hand paid, I hereby certify the above, and agree to make perfect title within the time agreed upon.

May 17, 1881.

MICHAEL DOLL. [l. s.]

The plaintiffs ask judgment that the defendant accept the deed and perform the contract on her part. The question thus presented is whether or not this contract between Bierne and Lyon forms a cloud upon the title. It will be observed that there is no evidence that Bierne was the agent of the executors or any of the devisees under the will. No power of attorney appears of record or in the facts agreed upon. The only ratification is by Michael Doll, which is embraced in his certificate attached to the contract. Michael was but one of the ten devisees and individually was entitled to but one-tenth part of the premises. As executor he could only convey when joined with his co-executor, and his ratification is not as executor. The case fails to show whether or not Lyon demanded conveyance and tendered the $6,000 within the eight days limited by the contract. Within two months thereafter we find Michael Doll and wife conveying his interest to Elizabeth Doll, one of the plaintiffs, and a short time thereafter joining with his co-executor in a conveyance to her as executors under the power given by the will. There is no evidence that Elizabeth Doll, in so taking title, had any notice of the contract of Lyon. True, the contract had been recorded, but its record in no way added to its force or validity. The only effect of the statutory provision for the recording of contracts for the sale of lands (1 R. S., 762, § 39) is to preserve evidence and facilitate the proof thereof, and the record is not constructive notice to subsequent purchasers or encumbrancers, and no action can be maintained to .cancel it as a cloud upon the title. Boyd v. Schlesinger, 59 N. Y. 301; Washburn v. Burnham, 63 id., 132, 135.

It would consequently appear that Elizabeth Doll acquired the title of Michael Doll, and that that title is good as against any claim that can be made under the contract.

Again, it appears that the executors have joined in a conveyance of the land with the devisees, under the will. It consequently would not be possible for Michael Doll to now specifically perform the contract. The rule is that specific performance will not be decreed when performance is impossible. That in such cases the proper remedy is in an action for damages. Sternberger v. McGovern, 56 N. Y., 12, 20; Peters v. Delaplaine, 49 id., 362; Dixon v. Rice, 16 Hun, 422.

Judgment should be awarded in favor of the plaintiffs, that the defendant accept the deed tendered and perform the contract, or her part, but without costs of this action,

So ordered.

Bradley and Lewis, JJ., concur.


author: Smith, P. J.

text:
    People of the State of New York, Resp’ts, v. Emil Meyer, App’lt.

      (Supreme Court, General Term, Fifth Department,

      Filed March, 1887.)

    1. Criminal law—Bigamy—2 Rev. St., 687, §§ 8 and 9—What necessary TO CONSTITUTE AN EXCEPTION TO THE STATUTE.
    It is provided by 2 Revised Statutes, 687, § 8, that every person having a husband or wife living who shall marry any other person, whether married or single, shall, except in the cases specified in the next section, be adjudged guilty of bigamy. • In the next section, among other classes of persons, it is provided that the provision before stated shall not apply to any person by reason of any former marriage, whose husband or wife, by such marriage, shall have been absent for five successive years, without being known to such person within that time, to be living. On the trial of the defendant for bigamy, the court charged the jury in substance that the defendant must have believed that his wife was not living, in order to bring himself within the exception. Held, That the charge was correct.
    2. Same—What dobs not constitute exception. •

      Held, That although the wife of the defendant might have been absent for the length of time required by the statute, yet if he contracted the second marriage while she was in fact alive, and he had reason to believe her to be, and did so believe, although he did not have actual knowledge of the fact, he was guilty of bigamy.
    S. Same—Penad Code, § 299 — Meeely expbesses what was befobb IMPLIED.

      Held, That Penal Code, § 299, which makes the defendant’s balief of the death of the husband or wife one of the elements essential to exemption, merely expressed what was previously implied.
    4. Same—Evidence—What is not competent.
    The defendant was asked whether he stated to a lawyer that his wife had been absent over five years, that he had made diligent search to ascertain her whereabouts, and w¡ s unable to do so, and that he believed her to be dead. Also, whether the lawyer did not inform him that he had a right to marry. Held, That the questions had no material bearing on the question of his belief in the death of his wife, and were incompetent.
    Appeal from a judgment of the court of sessions of Erie county, convicting the defendant of the crime of bigamy.

      Edward W. Andrews and Albert J. Signan, for app’lt; George T. Quinby, dist. att’y, for resp’t.
   Smith, P. J.

The indictment alleges, and the evidence warrants, the finding that the defendant was married to Marie Harrer, at Schwertneitz, in Prussia, in July, 1868, and that, in June, 1882, while said Marie was living, he married Carrie Dietz, in the city of Buffalo. He was thus, apparently, within the statute which enacts that every person having a husband or wife living, who shall marry any other person, whether married or single, shall, except in the cases specified in the next section, be adjudged guilty of bigamy. 2 R. S., 687, § 8. The next section provides that "the enactment above stated shall not extend to certain persons or cases, specified in the several subdivisions of said section, the first of which is as follows: “To any person, by reason of any former marriage, whose husband or wife, by such marriage, shall have been absent for five successive years, without being known to such person, within that time, to be living.” At the trial it was attempted to show that the defendant was within that exception. The following facts appeared: About four years after his marriage with Marie Harrer, he and his wife emigrated to America, reaching Hew York in May, 1872, and stopped with a Mr. Wunder till the following August. They then went to Patterson, N. J., where defendant was employed in a silk manufactory, and remained there till May, 1873, when defendant went to Troy and obtained employment in a shirt factory, and his wife returned to New York and was employed in Wunder’s family as a nurse to his children. In September of that year defendant returned to New York, and in February, 1874, he went to Detroit, Michigan, leaving his wife in New York His wife knew of his going there, advised it, supplied him with money of her own to pay his fare, and accompanied him to the depot, in Jersey City, when he left. She testified that they talked the mattter over, and agreed that it was best for him to go to Detroit; that he wished her to go with him; that she did not want to go with him, because she did not trust him; and that she told him that if, in one year, he could show her that he could get a situation in which he could support her, she would go there; that he need not send her anything, she would take care of herself. He wrote her several letters in the course of the first six weeks after reaching Detroit, in one of which he informed her that he had a good position, asked her to come to him and proposed to pay her fare. She answered that six weeks was not sufficient proof, and that was the last of their correspondence., Mrs. Meyer remained in the family of Wunder and her husband’s letters to her were addressed to Wunder’s. care.

Meyer obtained employment in Detroit for a few months, and there is some evidence tending to show that he then went to Canada, but how long he remained there does not. distinctly appear. He never wrote to his wife after he left Detroit, nor did he inform her of his leaving there. He testified that he was employed in Buffalo for a billiard company from 1880 to 1884, and that he formed the acquaintance of Miss Dietz in the fall of 1881, but she testified that their acquaintance began in 1875.

The defendant testified that in 1877 he went to New York and searched for his wife Marie. He sent a note to Wunder’s store addressed to her, requesting her to meet him at a place named; she received the note but did not go, and sent Wunder to say to defendant that she did not want to see him; that she wanted to be separated from him. The defendant testified that Wunder met him and told him he did not know where Mrs. Meyer was. He also testified that Wunder had previously forbidden him to come to his house. He also testified that in the fall of 1881, and again in March or April, 1882, he went to New York and made search and inquiries for his wife, but did not see her or learn anything about her. It appeared that Marie lived, in Wunder’s family till October, 1883, but that the family moved several times and occupied different residences in the city during that period.

She testified that part of the time she kept a kindergarten school in the city, and advertised the same, over her own name, in a newspaper called the Staats Zeitung, for five or six months “during the years 1879-1883 inclusive.”

It appeared that defendant never told Miss Dietz he had been married previously. They lived together as man and wife at Buffalo till the morning of the 3d of May, 1886, when he left her to go down town, as she supposed, and she never saw him again, nor heard from him, till she saw him in the court room at his trial.

The defendant testified that when he left oh that occasion he went to St. Catharines, Canada, without baggage, as he “saw the whole matter about having a wife come out in the papers.” From there he went to New York, by rail, by way of Niagara Falls, and from there to Berlin, Germany, and came back six or seven weeks before the trial, when he was arrested. He also testified that in 1884 a cousin of his wrote him that his wife was living, and he continued living with his second wife two years after that without telling her.

It is not very material, as the case stands, to inquire which of the parties to the first marriage absented himself or herself from the other, or whether the defenant, in case he is to be held, to have absented himself from his wife, is for that reason deprived of the benefit of the exception to the statute above referred to. In view of the aspect in which the case was submitted to the jury, as will be seen presently, the more material questions relate to the defendant’s knowledge that his wife was living during her absence from him for five successive years, next preceding his second marriage. The trial court charged, in substance, that the defendant must have believed that his wife was not living in order to bring himself within the exception. The appellant’s counsel contend that such instruction was erroneous in that it imposed upon the defendant the burden of establishing a fact which the statute does not make an element of the exception. In support of their position they refer to section 299 of the Penal Code, which, although it took effect subsequently to the commission of the alleged offense, and, therefore, does not control the case, they suggest, throws light upon the meaning of the previous statute which it supersedes.

That section, in express terms, makes such belief an element of the exeption. But we do not regard it as a change of the law. We conceive that it is simply declaratory of that which, by proper interpretation, was the meaning of the prior statute. It would be absurd to hold the defendant innocent, within the intent of the former statute, if he contracted a second marriage, his first wife being in fact alive and he not believing her to be dead.

Although the defendant may not have had actual knowledge that his wife was living, yet, she being alive, if he had reason to believe, and did believe, that such was the fact, he was guilty of bigamy in contracting the second marriage. The second marriage must have been contracted in good faith in order to exempt the party.

The Penal Code has introduced no new rule in this respect, but has written out what before was implied. See Cropsey v. McKinney, 30 Barb., 47, per Sutherland, J., bottom of page 54 and top of page 55.

There was evidence in the case warranting the conclusion that when the defendant contracted the second marriage he did not believe his first wife was dead. His concealment from his second wife of the facts of his first marriage, and of the fact that his first wife was living, and his flight when he saw that his duplicity was about to be exposed, were sufficient, with the other circumstances, to authorize the finding of a guilty intent.

We have examined the several exceptions taken during the progress of the cross-examination of the defendant. Many of the questions specified in the points of the appellant's counsel were not objected to. In respect to others, the witness was instructed by the court that he need not answer if an answer would tend to convict him of a crime, and after being so instructed he declined to answer. Each of the questions of that class called for a fact, and not for a mere charge or accusation, and, in our opinion, was within the range of a legitimate cross-examination. To all the other questions specified in the points, the answers rendered were negative and harmless. None of the exceptions to the rulings admitting testimony point to error.

The defendant testified that in 1881 he had a conversation with a lawyer in New York name Nagel in reference to his rights in this matter. He was then asked whether he stated to Nagel that his wife had been gone over five years; that he had made a diligent search in New York city and elsewhere to ascertain her whereabouts, and that he was unable to ascertain her whereabouts, and that he believed she was dead; also, whether Nagel said to him at that time that he had a perfect right to marry. The questions were objected to, the objections sustained, and the defendant’s counsel excepted. We think the ruling was not erroneous. The advice was given upon the statement made by the defendant to his counsel, one of the ingredients of which was that he believed his wife to be dead. The testimony offered had no bearing upon the material question whether he so believed in fact, and it was, therefore, wholly immaterial. If he believed his wife to be dead, that fact, established to the satisfaction of the jury, would have constituted a defense, and so the jury were instructed in substance; if he did not so believe, the advice which he obtained by making a false statement in that respect could not shield him from the consequence of his acts.

There is a class of civil cases where, upon the question whether a party believed that he had a good cause of action, as in a defense to an action for malicious prosecution, or whether a purchase alleged to be fraudulent was made in good faith, where testimony that the party received legal advice before acting has been received. Among them . are Jackson v. Mather (7 Cow., 301); Hall v. Suydam (6 Barb., 83); and Sherman v. Kortright (52 Barb., 267), cited by the defendant’s counsel. But they are distinguishable from the present case by reason of the features of the latter already stated.

We think the judgment should be affirmed.

Haight, Bradley and Lewis, JJ., concur.


author: Bradley, J.

text:
    In the Matter of Charles C. Potter, App’lt, v. Oliver Durfee, as Assignee, etc., of Leroy B. Howd, Resp’t.

      (Supreme Court, General Term, Fifth Department,

      Filed April 19, 1887.)

    1. Assignment—General assignment act—Laws 1877, chap. 466, §§ 22’ 25, AND § 26, AS AMENDED BY LAWS 1878, CHAP. 318, § 7—SCOPE OF ACT"
    It is provided by the general a-signment act, Laws 1877, chap. 466, § 25, that any proceeding under the act shall be deemed, for all purposes, to be a proceeding had in the county court, as a court of general jurisdiction, and the court shall have full jurisdiction to do every act relating to the assigned estate, the assignee, assignors and creditors, and jurisdiction shall be presumed in support of the order and decrees therein, unless the contrary be shown, and that the court may exercise the powers of a court of equity in reference to the trust and any matter involved therein. It is further provided by the following section, as amended by Laws 1878, chap. 318, § 7, that the court may order a trial by jury, or before a referee of any disputed claim or matter arising under the provisions of the act, and that all orders or decrees in proceedings under the act shall have the same force and effect, and may be entered, docketed and enforced as if made in an original action brought in the county court. By section 22 the clerk of the court shall record the orders and decrees of the court settling, rejecting or adjusting claims, and directing the payment of money and releasing of assets by the assignee in a book kept for that purpose. Held, that the general assignment act, and those amendatory of it, relate solely to the subject of assignments for the benefit of creditors of the assignors, and create a system relating to and for the execution of the trusts arising out of the relation of assignees as such trustees; which includes the adjustment of matters between the creditors claiming the benefit of the assignments, but not proceedings in hostility to the assignment and its execution.
    2. Same—Claim to property in the hands of the assignee cannot be DETERMINED ON PETITION.

      Held, that the statute vested no power in the county court to determine the title to property on the petition of a claimant to property in the possession of the assignee which the latter claims to have taken under the assignment and refuses to deliver.

      3. Same—Section 22—Construction of.

      Held, that section 22, providing for entering orders and decrees of the court releasing assets by the assignee, contemplated only cases in which the assignee himself should be satisfied that a release should be made, and be willing to make it, so that in such cases the court might have the power, if satisfied, that the release was a proper one, to approve it, and thus furnish by the record protection to the assignee.
    4. Same—Relief in case of denial of claim is by action.

      Held, that in case of a denial of the claimant’s right to the property by the assignee, the only relief was by action.
    5. Same—Proceedings under—Are special proceedings—judgment cannot BE ENTERED ON REPORT OF REFEREE.

      Held, that the proceedings provided for by the statute'were special proceedings; that, without the authority of some statute permitting it, no judgment in cases of that character could be entered upon the report of a referee, and that such authority was not given by the act in question.
    6. Same—Judgment—Entry of upon report- of referee—Code Crv. Pro., § 1228, relates only to actions.

      Held, that Code Civ. Pro., § 1228, providing for the entry of judgment upon the report of a referee, related to actions merely. .
    7. Same—Proceedings are of an equitable nature — Report of , REFEREE, ETC., ANCILLARY TO DIRECTION OF COURT.
    The proceedings under the general assignment act are of an equitable nature and the verdict of a jury or the report of referee must be deemed ancillary to the direction of the court and do not express its judgment until approved and confirmed by its order.
    8. Same — Costs—In special proceedings — Allowance of, rests in DISCRETION OF THE COURT.
    The allowance of costs in special proceedings rests in the cuscretion of the court, except when the right to them is expressly given by statute. Code Civ. Pro., § 3240.
    Appeal from order of the Wayne county court setting aside á judgment entered in favor of the appellant.

      S. B. McIntyre, for app’lt; Charles McLouth, for res’pt.
   Bradley, J.

The claimant Charles C. Potter presented to the county court of Wayne county, his petition praying that Oliver Durfee, the assignee for the benefit of the creditors of Leroy B. Howd, be directed to deliver to him on demand certain property in his possession as such assignee. The petition set forth the facts upon which the petitioner relied to support his title and right to the relief asked for. The assignee upon affidavits presented opposed the application. The court directed a reference to a referee of “the issues made by said petition and said affidavits * * * to hear and determine. ”

The hearing was had before the referee, who made his report, finding the fact that property in question belonged to the petitioner, and as conclusion of law, that he was entitled to judgment requiring the assignee to return it to him. Upon this report the petitioner entered judgment for such relief with costs, without any direction of the court. And on the motion of the assignee upon notice to the petitioner, the judgment was vacated and set aside by the order of the court, from which this appeal is taken. The questions presented are:

1. Whether there is any power in the county court, on petition of a party claiming property of which the assignee has taken possession under the assignment, to determine the controversy between him and the assignee when the claim is contested by the latter; and, if so, 2, whether the judgment upon a report of the referee to whom the issues thus presented are referred to hear and determine, can be legally or regularly entered without any confirmation or direction of the court.

The power to take any proceeding in that manner depends upon the statute, which provides that any proceeding under the act shall be deemed for all purposes to be a proceeding had in the court as a court of general jurisdiction, and the court shall have full jurisdiction to do every act relating to the assigned estate, the assignees, assignors, and creditors, and jurisdiction shall be presumed in sup port of the orders and decree therein unless the contrary be shown. And the court may exercise the powers of a court of equity in reference to the trust, and any matters involved therein. Laws of 1877, chap. 466, § 25. That the court may order a trial by jury, or before a referee, of any disputed claim or matter arising under the provisions of the act Id., § 26, as amended by Laws of 1878, chap. 318, §7. And that all orders or decrees in proceedings under the act shall have the same force and effect, and may be entered, docketed and enforced the same as if made in an original action brought in the county court. The clerk of the court shall record the orders and decrees of the court, settling, rejecting, or adjusting claims, and ■directing the payment of money, and releasing assets by the assignee, in a book kept for that purpose. Id., § 22.

These are the only provisions of the statute to which it it will be necessary specifically to refer.

It is contended on the part of the petitioner, that in them is embraced the power in view of the practice given and recognized in actions, to accomplish all that was done in this case in his behalf. The act of 1877, and those amendatory of it, relate solely to the subject of assignments made for the benefit of the creditors of the assignors, and create a system relating to and for the execution of the "trusts arising out of such relation of assignees as such "trustees; which includes the adjustment of matters between the creditors claiming the benefit of the assignments. But the statute does not in its provisions and purposes contemplate any proceeding in hostility to an assignment and its execution. And so far as powers of the court are given by this statute, they are in harmony with the existence of the trust, and in support of its execution. In re Assignment of Holbrook, 99 N. Y., 539; In re Witmer, 40 Hun, 64.

The contest in the matter at bar has relation to property which the assignee claims was embraced within the assignment, and that he took title to it as such. The proceeding, therefore, is founded upon an alleged claim adverse to that of the assignee, and in that respect, and so far as relates to such property, is in hostility to the execution of the trust.

We think no power is vested in the county court by the statute to determine the title to property in such a proceeding as that taken in this matter when it is contested by the assignee. The remedy sought by a claimant to obtain property in the possession of an assignee, and which the latter claims to have taken under the assignment, and refuses to deliver, is in the nature of that of an action of replevin, and the statute evidently was not made with any view to confer power upon the court by a summary proceeding like this, to divest the assignee of the property which he should claim to have taken by the assignment.

The provision of section 22, providing for entering orders and decrees of the court “ releasing assets by the assignee,” evidently contemplated cases where the assignee should himself be satisfied that release should be made, and be willing to make it, and that in such case, the court might have the power if satisfied that the relinquishment was proper, to authorize and approve it, and thus furnish by the record protection to the assignee. And while the manner adopted with the consent of an assignee, for investigation of such a claim made by a third person with a view to information, and to guide his way to a conclusion on the subject, is not important, the court could not in such a proceeding, against the objection of the assignee or without his consent, effectually direct the release or surrender of the property. The claimant must in such case seek his relief by action.

In this case the assignee has denied, and continues to contest and deny the claimant’s right to the property. The proceedings provided and permitted by the statute referred to, are special proceedings. And no judgment can be entered upon the report of a referee in cases of that character without the authority of some statute permitting it. The act in question does not provide for the entry of judgment upon a report of a referee.

And our attention is called to no general statute providing for the entry of judgment upon a referee’s report in a special proceeding.

It is not within the provisions of section 1228 of the Code Civil Procedure. That section has relation to actions only, and to entry of judgments in actions; as it may be observed by reference to section 3343, subdivision 20, that the word “ judgment,” when used in the Code refers to a judgment in an action, while the word “order” when so used refers to an order in an action or special proceeding. And in fact there seems to be no general provision in the Code for entry of judgment in special proceedings.

The subject of entry generally in them is defined as an order.

The proceedings under the assignment act are of an equitable nature. The verdict of the jury, or the report of the referee is not there made the decision of the court on the matters submitted. They must be deemed ancillary to the direction of the court, and do not express its judgment, until approved and confirmed by its order, and no judicial force can be given to them without the direction of the court, and then in legal effect it comes from its determination.

It seems to follow that the judgment was entered without authority.

And the allowance of costs in special proceedings is. wholly in the discretion of the court, except when the right to them is expressly given by statute. Code Civil Pro., § 3240; Matter of Prot. E. Pub. School, 86 N. Y., 396.

The order should be affirmed.

Haight, J., concurs; Barker, J., not voting.


text:
    Henry Martin, as President of Manufacturers and Traders’ Bank, Resp’t, v. The Niagara Falls Paper Manufacturing Company and Thomas V. Welch, as Receiver of the Property of said Company, Impleaded, etc., App’lts.

      (Supreme Court, General Term, Fifth Department,

      Filed March, 1887.)

    1. Corporations—Power to mortgage real estate—When mortgage. NOT TO SECURE FUTURE ADVANCES—LAWS 1844, CHAP. 40.
    In an action brought to foreclose a real estate mortgage purporting to have been executed by the defendant company as a collateral and continuing security for the payment of all promissory notes or bills of exchange which had been or should be thereafter made, etc., by said company and discounted by ‘' The Manufacturers and Traders’ Bank.” The notes in this suit were the outcome of successive renewals of a debt which existed at the time the mortgage was executed. The defendant company was incorporated under Laws 1844, chap. 40. Held, that the corporation did not exceed the limit of power to mortgage, suggested in Carpenter v. Black Hawk Gold Mining Co. (65 N. Y., 43), and that the mortgage was valid under that decision; that the mortgage was not given for future advances.
    2. Same—Power to mortgage real estate for future advances — ULTRA VIRES—WHO MAY TAKE ADVANTAGE OF.

      Quaere whether the corporation had power to make a mortgage for future advances. Also whether, if the mortgage was ultra vires, any one hut the state could take advantage of the defect of power. See Jones v. Mew York Guaranty and Indemnity Go. (11- Ottto, 63á).
    3. Same—Bills and notes—Authority to make notes—Burden of proof.
    The notes in question were in the form of notes of the company and were made by Woodruff, as the president of the company, to himself, individually, and discounted by said bank. Held, that authority to borrow money for the company could be inferred from the general manner in which for a period sufficiently long to establish a settled course of business he was allowed, without interference, to conduct the affairs of the company. That it being within the scope of his apparent authority, .the burden of showing that they were accommodation notes and that the bank had notice of it was on the defendant.
    4. Same—Accommodation notes—Notice—What is not.
    Notice that the company was doing a profitable business, and that Woodruff was depositing a portion of its earnings from time to time in a common account with his own money was not notice that the notes were made for his accommodation.

      5. Same—Number- of trustees—When statutory number may be dispensed with.
    The statutory provision as to the number of trustees of a corporation is intended for the benefit of the stockholders which they may dispense with by unanimous consent, and it is immaterial whether they do it by previous or cotemporaneous action, or by subsequent ratification.
    6. Same—When act of less than statutory number binding.
    The reduction of the board of trustees to a less number than is authorized to act by the charter, will not relieve a corporation from the obligations of a contract beneficial to itself entered into in its name by the authority of its acting trustees with the consent of all its stockholders and the repudation of which would operate as a fraud upon others.
    7. Same—By-laws—Duty of secretary when can be performed by PRESIDENT.
    The by-laws of a certain corporation provided that the notes, etc., of the company be signed by the secretary, but no secretary was ever chosen. There was no provision in said by-laws that the lack of the secretary should render the instrument void. Held, th-1 the by-laws did not prohibit the performance of the duty in question by another officer to whom by law or usage it ordinarily pertains. That the signature of the secretary was not essential to the validity of the notes signed by the president in the name of the company.
    8. Evidence—When stricken out for non-production of account books.
    A witness called by the defendants stated that he had examined certain books of the company. He also testified that what he said was the result of his examination as to the state of the accounts. On cross-examination he stated that the books which he examined were then in the court house, and, it was admitted, could be produced, but defendant declined to do so. Held, that it was not necessary to make an order that the books be produced before the evidence, given from the abstract of the books, was stricken out.
    9. Principal and agent—When agent can act in oppposjtion to his principal—Waiver.
    The rule that no person can act as agent in regard to a contract to which he is a party on the side opposite to his principal is for the protection of the principal, and may be waived by him. The waiver may be effected by a previous authorization of the agent, or a subsequent adoption of his act.

      Appeal from a judgment entered upon the decision of the court, rendered at the Erie circuit, on a trial by the court without a jury.

      George Wadsworth, for Welsh, receiver, app’lt; Lucius N. Bangs, for Manufacturing company, app’lt; Sherman S. Rogers, for resp’t.
   Smith, P. J.

The plaintiff is a banking association, organized under the laws of the state of New York, doing business at the city of Buffalo. The company, defendant, was organized mider the general manufacturing law of such state, in the year 1856, or thereabouts, doing business at Niagara Falls. The action is brought to foreclose a real estate mortgage purporting to have been executed by said company, dated the 18th of November, 1882, as a collateral and continuing security for the payment of all promissory notes or bills of exchange which then had been, or should be thereafter made, drawn, indorsed or accepted by said company and discounted by said bank, and all sums of money, which should at any time be due and owing by said company to said bank upon any account whatever, to the amount of $60,000. In November, 1884, certain promissory notes amounting in the aggregate to over $80,000, which purported to nave been made by the company and were discounted by the bank, having become due and not having been paid, this action was brought, and the defendants, who now appeal, appeared and answered. The trial court adjudged that certain of said promissory notes amounting to the sum of $67,000 were the valid notes of said company, and that the mortgage is a valid and subsisting security for the payment of said notes to the amount of $60,000, with interest thereon from the 20th of January, 1884; and judgment of foreclosure was ordered accordingly. From that judgment, this appeal is taken.

In behalf of the appellants it is contended that the mortgage is void because the company had no power to make it. The original act under which the company was organized, provided that a corporation formed under it should not mortgage its property, or give any hen thereon. Laws 1844, chap. 40, § 2. Subsequently that provision was modified, so as to permit the mortgaging of the real or personal property of the corporation, to secure the payment of debt, “heretofore contracted, or which may be contracted by it in the business for which it was incorporated, every such mortgage to be as valid, as if executed by an individual owning such estate, provided that the written assent of the stockholders owning at least two-thirds of the capital stock of such corporation, should first be filed as specified in the act.” Laws 1864, chap. 517, as amended by Laws 1871, chap. 481.

Those statutes, the appellants contend, do not authorize a mortgage to secure the payment of debts to be contracted in the future, and consequently the mortgage in suit can not be resorted to as a security for the payment of the promissory notes above referred to, which were made after the mortgage was executed. There are some adjudications bearing more or less directly upon the point. In Carpenter v. Black Hawk Gold Mining Co. (65 N. Y., 43), Commissioner Earl, in considering the statute above referred to, said: “A mortgage upon real estate is allowed only to secure the payment of debts. It cannot be made to raise money merely to carry on the operations of the company.” But each of his associates declined, in terms, to express an opinion on that point.

In the case of Greenpoint Sugar Co. v. Whitin (69 N. Y., 328), Ch. J. Church, in delivering an opinion in which a majority of the court seem to have concurred, said that the purpose of the statute as amended was in the interest of stockholders only, it being designed to protect them from improvident or corrupt acts of the officers of the company; that the act of mortgaging is not to be deemed illegal or improper, per se, but the principal must assent in writing. And see Coman v. Lakey (80 N. Y., 345), opinion of Church Ch. J In Crocker v. Whitney (71 N. Y., 161) cited by the appellant’s counsel, as giving construction to an analogous statute, it was held that under the National Bank act of 1864 a national bank is prohibited from taking a mortgage upon real estate, except for debts contracted prior to the giving of the mortgage; and that a mortgage given to secure future indebtedness is void. The eighth section of that act authorized banks formed under it to loan money on “personal security,” and the twenty-eighth section permitted them to take and hold real estate mortgaged to it in good faith by way of security for debts “ previously contracted.” But the supreme court of the United States held, in National Bank v. Matthews, that a security of that nature is not void, but may be enforced by the bank (19 Alb. L. J., 132; S. C., 8 Otto, 621). And in Jones v. New York Guaranty and Indemnity Co., the same court construed the statutes now under consideration, and held that a corporation formed under them has power to give á mortgage for future advances (11 Otto, 632).

It also held that if the mortgage be ultra vires, no one but the state can take advantage of the defect of power. The reasoning of Judge Swathe in that case is very cogent and convincing. The case of Carpenter (supra), was brought to the attention of the court in that case, it having been cited in the briefs of counsel (L. C. P. Co.’s Ed. U. S. Sup. Ct. Rep., book 25, p. 1033), and it must be regarded as havbeen disapproved so far as it is in conflict with the decision. We might properly dispose of this point upon the authority of that case, since there is no adjudication of this court or of the court of appeals in conflict with it. But it is needless to do so. In the later case of Lord v. The Yonkers Fuel Gas Co. (99 N. Y., 547), a trust mortgage was given by a corporation formed under the act of 1844, to secure the payment of its negotiable bonds to be thereafter issued; and the proceeds of the bonds, when issued, were used in paying debts of the company contracted in carrying on its business after the execution of the mortgage.

It was held that the mortgage was valid, the court being of the opinion that the statute was complied with if the bonds were negotiated only for the purpose of securing or paying debts contracted before the negotiation; the security for the creditors then, for the first time, comes into being, and is as effectual as if the mortgage was executed at the same time with the delivery of the bonds. Mr. Justice Rapallo, in delivering the opinion of the court, referred to each of the cases above cited, in which the acts of 1848 and 1864 were considered. That case seems to be analogous to this, so far as the mortgage under consideration is sought to be enforced as a security for notes given by the paper company in the course of its business for debts contracted subsequently to the execution of the mortgage, and if it were necessary, we think the decision of the trial court upon this point might be upheld on the authority of that case.

But it appears that the notes in suit are the outcome of successive renewals of a debt of over $60,000 which existed at the time when the mortgage was executed, so that the mortgage does not exceed even the limit suggested in the Carpenter Case. We think the contention under consideration was properly overruled by the trial court.

It is also contended that the debt which the mortgage was intended to secure was not a debt contracted by the corporation in the business for which it was incorporated, and that for that reason the mortgage is not authorized by the statute and is void. The several notes in suit were signed in the name of the company by L. O. Woodruff, its president, payable to the order of himself and endorsed by him. Upon their face, therefore, they represented a debt owing by the company to Woodruff, primarily, which, by his endorsement and the discount, was transferred to the bank. But the contention of the appellants is understood to be that the evidence shows that during all the time of the transactions evidenced by the notes, Woodruff was the debtor of the company and not its creditor, and that the notes were made and discounted for his accommodation and benefit, and that those facts were known to the plaintiff. The facts bearing upon that branch of the case, as shown by the findings or uncontradicted evidence, are substantially as follows: The paper company was organized, as has been said, in or about the year 1856. Woodruff was one of its original organizers. At all times after 1858 he was the president of the company and its principal stockholder, and had the general management of its affairs, and he and his daughter, Mrs. Winslow, owned all the stock when the mortgage in question was given, except one share standing in the name of H. G-. Cowley to qualify him to act as a trustee, but which really belonged to Woodruff. . For twenty-five years and more, no new election of officers had been made by the stockholders; and it is apparent from the testimony, and especially that given by Woodruff himself, that during all that time the affairs of the company were practically under his exclusive control and were managed by him as if they were a part of his personal and private concerns.

The paper company received and paid out large sums of money in its business, but it kept no bank account in its own name, except for a short time, when it had a small account with a bank in the village of Niagara Falls. Wood-ruff lived in Buffalo, and opened an' account there with the plaintiff .which was continued for many years in his individual name, and subsequently to October, 1883, in the name of L. C. Woodruff & Co. During all that time he was engaged in business of his own, as well as in the management of that of the paper company, and all the money deposited or drawn out by him, whether in the name and for the benefit of the company, or of himself, individually, was entered in one and the same account at the bank, without anything to designate to whom it belonged or for whose benefit it was used, as between him and the company. A large portion of the earnings of the company, from its business, and of the proceeds of the paper of the company discounted by the plaintiff, was deposited there, and carried into such account. For some time Woodruff gave the bank monthly statements showing how much money the company would need during the month, and, as he testified, he very frequently drew from the account at the bank to-pay the expenses of the mill. A similar account was kept in the name of L. C. Woodruff, at a bank in the city of New York, into which a portion of the earnings of the-company entered, and from which moneys . were drawn, ■ from time to time, to meet its expenses. It" also appears that, at the mill, an account was kept with Woodruff, individually, in which he was charged with all the earnings of the mill taken by him, and credited with what he paid out for the mill, and there is evidence, on the part of the defendants, tending to show that the mill made money, and that every year except one or two, Woodruff received more for the mill than he paid out for it. The president of the bank was told by Woodruff that the paper company was making money, but he testified that he did not know the state of the accounts between Woodruff and the com pany, or that any of the notes of the company were accommodation paper, or were not made in the course of its business.

The mortgage in suit was executed in November, 1882. In December, 1883, the paper company, by its president,, made a contract with the bank, which is set out in the case, by which the amount due the bank, from the company, on certain specified notes, was adjusted at $80,409.17, and the bank agreed to lend the company that amount for at least thirty days. The contract also recognized the authority of Woodruff, as president, to bind the company in future transactions, and expressly stipulated that when the name of the company should be used by him, as president, as the maker of any promissory note, or the drawer of any draft or bill of exchange, it should be held and conclusively deemed to be for the benefit of said company and in the transaction of its business, and binding upon said company. The contract was entered into in pursuance of a resolution adopted by the entire board of trustees of the company, which then consisted of but two members, Woodruff and Mrs. Winslow, and who were also the sole stockholders. • /Pursuant to such contract the notes in suit were executed.

The trial court found that each of said notes was discounted by the plaintiff for the benefit of said company, and that the avails thereof were paid by it to said company upon the faith of the security afforded by said mortgage. We think the finding is supported by the evidence.

In view of the circumstances disclosed by the evidence, Woodruff, as the president of the company and its general manager and financial agent, may be regarded as having had authority to borrow money for the use of the company in its business, and to give the paper of the company therefor. Kraft v. Freeman Pub. Company, 87 N. Y., 628.

Such authority may be inferred from the general manner in which, for a period sufficiently long to establish a settled course of business, he was allowed, without interference to conduct the affairs of the company. Martin v. Webb, 110 U. S. S. Ct. Rep., 7.

His authority does not rest on such inference alone. The contract of November, 1883, expressly recognized his authority and ratified his giving of notes. Furthermore, without reference to his actual authority, the notes were in form the notes of the company, and within the scope of his apparent authority, and the burden of showing that they were accommodation notes, and that the bank had notice of it, is on the defendants. That burden has not been met. There is nothing in the case to show that any of said notes were made when the money was not needed by, and used for, the mill. The fact that from year to year Woodruff .received from the mill more than he paid out for it does not show that the notes were not made for the use of the mill. Some of the notes appear to have been for balances ■of account, or overdrafts, but for aught that appears those overdrafts may have arisen from the payment of money for the purposes of the mill. So that the presumption arising from the form of the paper, that it was made and used for the benefit of the company, is not overcome.

Again, if any of the notes were made for the accommodation of Woodruff, there is no evidence that the plaintiff had notice of the fact. Notice that the company was doing a profitable business, and that Woodruff was depositing a portion of its earnings from time to time in a common account with his own money (and that is the extent to which notice was shown), was not even notice that he was indebted to the company much less than the notes were made for his accommodation.

Besides the agreement of November, 1883, if binding upon the company, concludes the question of its liability on the notes then existing. And out of that agreement arose a new consideration, to wit, the surrender of the old notes and the extension of the time of payment of the debt evidenced by them for which Woodruff was liable, if the company was not, so that the transaction put it out of the power of the bank to proceed at once, even against Wood-ruff There is no evidence that, as between Woodruff and the company, the adjustment of November, 1883, was not warranted by the accounts between them, and if there were, there is no evidence that the bank knew it. On the assumption that the agreement and the notes thereafter executed were binding upon the company, those instruments were representations by the company to the bank, that the debt was its own, relying upon which the .bank extended the credit, discounted the new notes and surrendered the old ones.

The appellant’s counsel invokes the rule that no person can act as agent in regard to a contract to which he is a party on the side opposite to his principal, and he contends that such rule avoids the notes made by Woodruff, as the president and agent of the company, in the name of his principal, payable to his own order. The rule is for the protection of the principal and may be waived by him. The waiver may be affected by a previous authorization of the agent, or by a subsequent adoption of his act. The case is like that of a purchase by a trustee of trust property which although voidable at the election of the cestui qui trust, may be validated by his ratification. The agreement of November, 1883, executed in the name of the company, pursuant to a resolution signed by all the trustees and stockholders, was an express ratification of the act of Woodruff in making the notes described in the schedule attached thereto. The agreement provided, in terms, for the removal of those notes, and the retention, by proper indorsement upon the paper to be given in renewal of all claims then existing against any indorser of the notes so described. The notes in suit were ..made and endorsed in accordance with those stipulations; and in view of the circumstances, the company and its stockholders must be regarded as having waived the protection of the rule above referred to.

But in view of that rule what foundation is there for the claim set up by the appellants, that the earnings of the mill, from to time, became the individual property of Woodruff ? There was nothing to effect or indicate a transfer of ownership, in such earnings, except the mere act of his charging himself with them in the books of the company. Being the agent of the company, he could not make both sides of a contract transferring the money or other property of the company to himself, unless his act in so doing was expressly authorized or adopted by the company and its stockholders, of which we have failed to discover any proof; nor even then, would the transfer be valid if its effect was to defraud the creditors of the company. But-it is not necessary to put the decision of the point under consideration upon the ground last suggested; the reasons previously stated, suffice for affirming the finding' of the trial court that the notes in suit were discounted for the benefit of the company.

It is also contended by the appellant’s counsel that when the notes in suit-were made, the company was incapable of executing them, or of transacting any business, as.it had but two trustees and two stockholders, to wit, Woodruff and his daughter, who assumed to act as trustees and bind the company by a resolution authorizing the agreement. This contention rests upon the provision of the act of 1848, that the affairs of every corporation formed under said act shall be managed by not less than three nor more than nine trustees, ■ who shall be stockholders. Section 3. According to what has been said already, the president had authority to make notes in the name of the company, and for its use, without a resolution of the board.

We are inclined to the opinion that he had the like authority in respect to the agreement in question, so far, at least, as such agreement recognized the authority of the president to bind the company by executing new paper of the same character as that which he had long been accustomed to make in the name of the company. But however that may be, the resolution, if not valid as an act of the board for want of the number required by the statute, was an assent by all the stockholders, and that we think was enough. A previous assent is certainly as effective as a subsequent ratification, and that a .ratification by all the stockholders of the unauthorized act of the president in. making the notes of the company, or agreeing to make them, would cure the defect, is well settled. Kent v. Quicksilver Mining Co., 78 N. Y., 159; Sheldon Hat Bl. Co. v. Eikemeyer Hat Bl. Co., 90 id., 607.

The act of the president was not malum in se or malumprohibitum. We regard the statutory provision for the management of the affairs of the corporation by a board of trustees, as intended for the protection and benefit of the stockholders, which they may dispense with by unani mous consent, and it seems quite immaterial whether they do it by previous or cotemporaneous action, or by subsequent ratification.

A reduction of the board of trustees to a less number than is authorized to act by the charter, may, in certain cases, work a suspension of the franchises of a corporation until its functions are restored by legislative action, or by filling the vacancies in the board, but that rule cannot be invoked, we apprehend, to relieve the corporation from the obligations of a contract beneficial to itself, entered into in its name by .the authority of its acting trustees, with the consent of all its stockholders, and the repudiation of which would operate as a fraud upon other parties.

It is contended that the mortgage and notes are void because not signed by the secretary of the company as provided by one of its by-laws. The by-law seems to have been adopted soon after the organization of the company, but, so far as the case shows, it has never been followed, and the notes and other obligations of the company were signed by the president. The by-law does not provide that the lack of the signature of the secretary shan render the instrument void. Its design is, evidently, to prescribe the duties which the secretary may be called on to perform, but it does not prohibit the performance of the duty in. question by the president or other officer to whom, by law or usage, it ordinarily pertains. We think the signature of the secretary was not essential to the validity of the instruments signed by the president in the name of the company.

The written assent of Woodruff, as a stockholder, to the giving of the mortgage, was sufficient. He was then the owner of at least two-thirds of the stock, and his assent was enough, without that of the other two stockholders. Laws 1864, chap. 517, § 2. •

Several exceptions were taken to rulings of the trial court upon the admission or rejection of evidence, to findings of the court, and to refusals to find as requested. Most of them have been met in what has already been said.

The only exception to which it is necessary to advert particularly is that which relates to the striking out of the evidence of Cordley respecting the state of .the account between the company and Woodruff as shown by the books. The witness was called by the defendants and he stated that he had examined certain books of the company. He also testified to what he said was the result of his examination as to the state of the accounts. He stated, on cross-examination, that the books which he examined were then in the court house. The defendant’s counsel admitted that he could produce the books, but he declined to do so. The plaintiff’s counsel then moved that the evidence given from the abstract of the books be struck out on the ground that the books were not produced from which such abstract could be verified. The motion was granted and the evidence was struck out. In that there was no error. The appellant’s comisel contends that it was erroneous to strike out with out ordering the defendants to produce the books. Such order was unnecessary, since the defendants refused to produce the books, although they were in their possession. The refusal was not put upon the ground that no order had been made by the court, nor did the counsel propose to produce the books, if ordered to do so The refusal was peremptory and unconditional.

We think the judgment should be affirmed with costs.

Haight and Bradley, JJ., concur; Lewis, J., not sitting.


text:
    Auburn Savings Bank v. Jacob Brinkerhoff.

      (Supreme Court, General Term, Fifth Department,

      Filed March, 1887.)

    1. Savings banks—Loans by—Laws 1875, chap. 371, § 30, and Laws 1882, chap. 409, § 260—What does not invalidate.
    Savings banks are by Laws 1875, chap. 371, § 30, and Laws 1882, chap. 409, § 260, prohibited from making loans on notes, bills of exchange or other personal securities. Held, That being authorized to loan money upon bond and mortgage, a loan made by a savings bank as security for which notes were taken in addition to bond and mortgage, was valid. 3. Same—Laws 1849, chap. 93, § 7; Laws 1875, chap. 371, § 36, sued 5; Laws 1883, chap. 409, § 360, shed. 5—Borrowers can not set up as defense irregularities in making loans.
    The plaintiff’s charter (Laws 1849, chap. 93, § 7) provided that its funds might be loaned on improved, unincumbered real estate, in this state, worth, exclusive of buildings thereon, at least double the amount to be secured thereby; and the general statutes relating to savings banks (Laws 1875, chap. 37, § 36, -subd. 5; Laws 1883, chap. 409, § 360, subd. 5) require that the real estate upon which loans are made shall be unincumbered. Held, That these provisions were for the benefit of the depositors, and that the fact that the rule requiring the real estate upon which the mortgage rested, which was given as security for a loan, was not observed in making the loan, would not be matter of defense in an action against the borrower
    3. Evidence—What incompetent under Code Civ. Pro., § 839.

      Held, That questions relating to personal transactions had by the defendant with one of the assignors of the plaintiff, subsequently deceased, were incompetent under the provisions of the Code Civ Pro., § 839.
    4. Evidence—Declarations of a party not competent in his own BEHALF.

      Held, That the defendant’s declarations were not competent as testimony in his own behalf.
    5. Stipulation—Oral, when binding.
    A stipulation made before trial, and not questioned upon the trial, binds the parties to it, although not in writing
    Motion by plaintiff for new trial on exceptions taken at the Cayuga circuit, and ordered to be heard at general term in first instance.

      W. E. & F. E. Hughitt, for pl’ff; Woodin & Warren, for deft.
   Smith, P. J.

Action on a bond executed by the defendant to David Brinkerhoff and Albert H. Goss, on or about 16th December, 1873, and by them assigned to the plaintiff, conditioned for the payment of the sum of $3,400, on the first day of June, 1875, with interest, semi-annually.

It appears that the bond was accompanied by a mortgage on real estate, of even date with the bond and collateral thereto, executed by the obligor to the obligees, and that the bond and mortgage were transferred by the obligees to the plaintiff as security for the payment. of two promissory notes made by the assignors to the order of the defendant, and endorsed by him—one for $1,000, dated 1st December, 1873; the other for $2,400, dated 20th December, 1873—each payable 1st June, 1875, with interest, semiannually.

The notes and the bond and mortgage were transferred and delivered to the plaintiff, in consideration of the sum of $3,400, in money, made by the plaintiff, and as security for the repayment thereof. The'- assignment of the bond and mortgage to the plaintiff contained a covenant that there was then to become due thereon the sum of $3,400, with interest, from their date. The plaintiff is a savings bank, incorporated under chapter 92, Laws of 1849.

The defenses set up in the answer and relied upon at the trial are, first, that defendant executed the bond and mortgage and endorsed the notes without consideration and for the accommodation of Goss and David Brinkerhoff, and that the" notes were discounted by the plaintiff, a savings bank, in violation of the statute, and,' consequently, the notes and the boiid and mortgage which were assigned to the bank, solely as collateral security for the payment of the notes, are void; and, secondly, that the defendant was a mere surety of Goss and David Brinkerhoff, to the knowledge of the plaintiff, and the plaintiff neglected to collect of them while it could, after request by the defendant, and the principal debtors thereafter became insolvent.

In support of the first defense, it is contended by the defendant’s counsel that the transaction on the part of the savings bank was a discounting of the notes, which, by the provisions of the restraining act (1 R. S., 600, § 4; id., 712, | 3), it was prohibited from doing. But it does not appear that the notes were discounted. Discounting of a note by a bank has been held to mean lending money upon the note and deducting the interest or premium in advance. City Bank of Columbus v. Bruce, 17 N. Y., 507, 575; Borne Savings Bank v. Kramer, 32 Hun, 270, 272. It appears by the uncontradicted testimony of the plaintiff’s treasurer that the full face of the notes was advanced by the bank and nothing was reserved.

The defendant’s counsel also contends that the loan made by the plaintiff was a violation of the statutes prohibiting savings banks from making loans on notes, bills of exchange or other personal securities. Laws 1875, chap. 371, § 30; Laws 1882, chap. 409, § 260. That position is untenable, for the reason that it appears without contradiction that the loan was made upon the three securities, the notes, the bond and the mortgage. The plaintiff was authorized to lend on bond and mortgage, and if the loan was in other respects valid, it was not vitiated by the fact that notes were taken in addition to the bond and mortgage.

Upon this branch of the case, another question arises: The charter of the plaintiff provides that its funds or deposits may be loaned * * * on improved, unincumbered real estate, in this state, worth, exclusive of buildings thereon, at least double the amount to be secured thereby. Laws 1849, chap. 92, § 7. The general statutes relating to savings banks also require that the real estate upon which loans might be made, should be “unincumbered.” Laws 1875, chap. 371, § 26, subd. 5; Laws 1882, chap. 409, § 260, . subd. 5. It is proved that the mortgage in this case was upon real estate which was covered by eight prior mortgages; and it is not shown that there was a compliance with the statutory requirement that no investment in bond and mortgage shall be made by a savings bank except upon the report of a committee, etc., who shall certify to the value of the premises mortgaged. Id. But are these facts available to the debtor as a defense to an action upon his bond ? The bank has power, as we have seen, to make loans upon bond and mortgage. The provisions requiring the mortgage to be a first lien, and the value of the mortgaged premises to be certified, are intended for the protection of depositors and others whose funds are held and managed by the bank as a trustee. The statute does not declare that non-compliance with those provisions shall render the bond and mortgage void. Nor is there anything in the statute to indicate that a result so hostile to the interests of cestius que trust and creditors of the bank was intended.

In Davis Sewing Machine Co. v. Best (30 Hun, 638), it was held that a security taken by a trust company, contrary to an implied prohibition in its charter, upon a loan made by it", could be enforced for the benefit of the depositors of the company, notwithstanding the prohibition. In Gold Mining Company, etc., v. The Rocky Mountain National Bank, etc. (96 U. S. R., 640), it was held that a person who has borrowed money from a bank and failed to pay it, cannot make the defense when sued for it, that the bank had no right to loan the money. See, also, National Bank v. Matthews, 98 U. S. R., 621; National Bank v. Whitney, 103 id., 99. We think the irregularities above pointed out, do not furnish a defense to the bond.

In regard to the other defense, we do not think it is - shown that the defendant executed the bond as the surety of the obligees. On the contrary, the inference to be drawn from that instrument is that he was their debtor. If the form of the note raises the presumption of surety-ship, it is not conclusive, and is overcome by other evidence in the cas,e. The defendant admitted on the stand that he was not a surety for David Brinkerhoff. And David testified that he never had a penny of the loan, and was surety for the defendant. He, also, testified that he signed the $2,400 note at the request of the defendant, who stated that he was in need of money, and asked David to go security with Gross for $3,400, and promised to give them a bond and mortgage. David consented, and in pursuance of that arrangement, the papers were drawn and executed. That testimony was not controverted by the defendant, although he was put upon the stand after it was given.

Upon the question whether the defendant was surety-for Goss, the only oral testimony is that of the defendant. Its admissibility is questioned by the plaintiff’s counsel. It was proved that Goss was dead. Subsequently, the following questions were put to the defendant as a witness in his own behalf, to wit: “At the time you indorsed that note, or at the time you executed the bond and mortgage did you receive anything for it?” “Did you ever receive any money upon this note, or mortgage, or bond, from anybody ? ” Each question was objected to as incompetent under section 829 of the Code, the objection was overruled, an exception was taken, and the witness answered: “No.” The only legitimate tendency of the testimony thus elicited was to show that the defendant was not a principal debtor, and was a surety, in the transaction. The questions being general, embraced, of course, his dealings with Goss, in respect to this transaction. To that extent, it seems to us they were within the prohibition of the section. The testimony related to a personal transaction between the defendant and Goss, then deceased, who was one of the assignors of the plaintiff, and its reception was error.

The learned counsel for the defendant invoke the rule declared in Comstock v. Hier (73 N. Y., 280), and Kale v. Elliott (18 Hun, 198), that the death of one of one of two persons jointly interested does not render a party incompetent to testify to transactions with the decedent, at which the survivor was present, or to transactions with the sursurvivor. The questions objected to went beyond that rule, they being so broad as to cover transactions with Goss, at which no third person was -present, and the defendant, by his answers to them, was permitted to say, in effect, that he never received any consideration for signing the papers from Goss, either alone or jointly with David Brinkerhoff.

It is also contended by the defendant’s counsel that the plaintiff is not an assignee, within the meaning of section 829. Comstock v. Hier (supra), is cited as authority for that position also. It was there said that a maker of a note, or acceptor of a bill, negotiating his own paper, or procuring it to be discounted, is not an assignor of the note or bill, but, by the transaction, assumes the ordinary obligations of a party to negotiable paper, as maker of a note or acceptor of a bill. If this action were upon the notes, and it appeared that they had their inception when they were delivered to the bank, the rule referred to would be applicable. The action is on the bond, which, for aught that appears in the case by legitimate evidence, is presumed to have been a valid instrument in the hands of the obligees therein named, and which is admitted by the defendant, in Ins answer, to have been executed and delivered to said obligees and to have been assigned and transferred to the plaintiff.

As the testimony above considered was improperly received, there is no legitimate evidence in the case that the defendant was the surety of Goss, and as the defendant admitted on the stand that he was not the surety of David Brinkerhoff, the defense founded on the alleged suretyship fails.

The declarations made by the defendant to the treasurer of the plaintiff, orally and in writing, as. to his relations to the debt, are not competent in his behalf to show that he was a surety.

If it be assumed that the defendant was a surety, yet, as in view of his admission already referred to, he is to be regarded as the surety of Goss only, his defense fails for an ■ other reason. The printed case shows that during the progress of the. trial the plaintiff’s counsel stated to the court that Mr. Cox, one of the counsel for the defendant, had stipulated orally, before the trial was begun, that, at. the time when the request to prosecute was made, Goss was insolvent, and that consequently he (the plaintiff’s counsel, was not prepared with evidence upon that question, to which Mr. Cox assented. The case proceeds to .state that consequently no further evidence was given on the subject of Goss’ insolvency. If this statement in the case has any practical significance (and it is be presumed that if it had none it would have been struck out), it is equivalent to saying that, before the trial, the defendant’s counsel stipulated orally that Goss was insolvent when the request was made, and that the plaintiff’s counsel, relying on the stipulation, omitted to produce evidence of the fact which was within his reach, or went to trial supposing that the fact would not be questioned. And it does not appear that the fact was questioned by the defendant’s counsel. In those circumstances we think the defendant was bound by the stipulation, although it was not in writing (People v. Stephens, 52 N. Y., 306), and that, for the present purpose,, the fact is to be assumed to be as stipulated. In that view of the case the defendant suffered no harm from the plaintiff’s omission to sue..

For these reasons we think a new trial should be ordered, costs to abide event.

Haight and Bradley, JJ., concur; Barker, J., not voting.


author: Barker, J.

text:
    John McConn, App’lt, v. The Wrought Iron Bridge Co., Resp’t.

      (Supreme Court, General Term, Fifth Department,

      Filed March, 1887.)

    Judgment entered on referees’ report—Appeal from—Court will. NOT SEARCH FOR GROUNDS TO UPHOLD JUDGMENT OTHER THAN THOSE SET FORTH IN REPORT.
    Upon an appeal to the general term of this court from a judgment-entered upon the report of a referee the court may not go to the body of the evidence as set forth in the case for the purpose of finding a state of facts against the appellant other and different from those found by the referee in order to sustain the legal conclusions set forth in his report. But where, upon the facts as found by the referee, the plaintiff was entitled to a judgment in his favor as a matter of law for a greater sum, the judgment will be reversed.
    Appeal from a judgment in the defendant’s favor for the-sum of $14.25 damages and $341.89 costs, entered upon the* report of a referee.

      E. M. & F. M. Ashley, for app’lt; J. S. Davenport, for resp’t.
   Barker, J.

The record discloses, in my judgment, an error in law for which the judgment should be reversed. The referee has found, as matter of law, that the plaintiff was indebted to the defendant in the sum of $14.25, and. ordered judgment in its favor for that sum, with costs.

The plaintiff acted as the defendant’s agent for many years in selling and erecting iron bridges, which were manufactured by it, for which service he was to receive a compensation by way of commissions. The plaintiff also collected moneys from the defendant’s customers due on. sales for bridges made by him, which he disbursed on the defendant’s account and remitted portions of the sale to the defendant at its home office. Each party kept an account, of the business connected with the plaintiff’s agency. The plaintiff claimed that there was due him the sum of $555.02 which the defendant disputed, and this action was brought by the plaintiff to recover that sum.

The commissions claimed by the plaintiff are for sales subsequent to the 28th day of February, 1882. On that day the parties had a settlement of all their prior dealings, which the referee found to be correct in all respects except as to two items which are mentioned in the report, and which will hereinafter be referred to.

After - that settlement the plaintiff continued to act as agent, making sales of bridges and erecting the same on the defendant’s account, collecting, remitting and disbursing moneys connected therewith. Annexed to the com- and which is made a thereof reference, is the plaintiff’s account, in items, charging the defendant with commissions on sales made and for services rendered and moneys remitted and disbursed by him, also giving credit for all the moneys collected and received by him connected with those transactions.

The defendant, by its answer, put in issue all the items in the debtor’s side of the account, and admitted the items of credit given therein.

The plaintiff ’claims, that upon the facts as found by the referee, he was entitled to a judgment in his favor, as a matter of law, for a sum above $50, and that it was error on the part of the referee in rendering judgment for the defendant.

I am satisfied that the plaintiff is correct in his contention. The facts specifically found as to the state of the accounts between the parties conclusively establish that the plaintiff was entitled to a judgment in a sum sufficient to carry costs in his favor. On this appeal this court may not go to the body of the evidence as set forth in the case, for the purpose of finding a state of facts against the appellant other and different from those found by the referee, for the purpose of sustaining the legal conclusions set forth in his report.

The referee has found that between the twenty-eighth day of February, 1882, and the time of the commencement of this action, the plaintiff, as agent, sold and erected a number of bridges for the defendant, and paid out various sums of money in and about the erection of the same, and that the plaintiff’s services or commissions for selling bridges "and for the erection of the same, together’with the expenses and the expenditures, amounted in the aggregate to the sum of $4,309.33. And that from time to time during the same period, the plaintiff received as payments upon his account for services and expenses various sums of money, amounting in all, as admitted by the pleadings and upon the trial, to the sum of $3,719.72. See findings, 7, 8.

It will be observed that these findings covering the entire period of time set forth in the complaint, and do not relate to any transaction prior to the said twenty-eighth day of February, 1882, and brings the account down to the time of the commencement of this action. This shows a balance due the plaintiff of the sum of $589.61. If the effect of these findings of fact is not changed by some other fact found, it would entitle the plaintiff to a judgment for that sum, based upon the cause of action set forth in the complaint. But the referee has found certain facts, which show that the plaintiff was not entitled to a judgment for that entire sum, and they will now be referred to.

On the settlement which took place on the 28th of February, 1882, the referee has found that by the balance then struck, there was due the plaintiff the sum of $667.87, but that in making such settlement there was, by mistake, an item of $400 in the defendant’s favor omitted, and one in the plaintiff’s favor, for the sum of $99,99, as appears by his twenty-second finding. By the twenty-fifth finding, it is found that subsequent to the settlement and on the ninth day of May, 1882, the plaintiff applied to his own use from moneys collected, the said balance of $667.87, and the item in his favor omitted from the account of $99.99. The defendant is therefore entitled to have deducted from the balance found in the plaintiff’s favor (as per the seventh and eighth findings) $589.61, the sum of $400, which was by mistake omitted from the settlement which took place on the 28th of February, 1882. Adding interest to this item of $400 from the time it was collected to the date of the referee’s report, it equals $495.63. This, deducted from the said balance in the plaintiff’s favor ($589.61), entitles the plaintiff to judgment for the sum of more than fifty dollars.

The referee has in his report passed upon several other questions of fact which are set out in detail therein, but none of them have the effect to change these specific findings as to the several balances mentioned, which clearly entitle the plaintiff to a judgment in a sum sufficient to carry costs in his favor.

The referee has not in any of the conclusions of law set forth in his report attempted to point out the process adopted by him upon the facts found to produce the legal result that the defendant was entitled to judgment in the sum of $14.25. We may not conjecture how this legal conclusion was reached in the mind of the referee. The error is obvious. If interest had not been allowed upon the item of $400, then, according to the referee’s views, the plaintiff would have been entitled to a judgment in the sum of $81.65. Upon the facts found, the defendant was not entitled to interest upon that item.

The $400 was collected the 17th of November, 1880, from which time interest was allowed thereon down to the date of the referee’s report. At the time of the settlement on the 28th day of February, 1882, the defendant was indebted to the plaintiff in the sum of $667.87, which was not paid until May 9, 1882, and if the item of $400 had been properly credited, there would have still been a balance due the plaintiff upon the transactions prior to that settlement. At the time this action was commenced, the referee finds that there was a balance due the plaintiff above $400, not crediting the defendant with the item of $400, so that from the time the plaintiff ceased to be agent to the date of the referee’s report there was no time but what there was a balance due the plaintiff upon a correct statement of the accounts based upon the facts founded by the referee.

The plaintiff’s counsel claims there were other errors which should lead to a reversal of the judgment, but as those indicated necessarily lead to a reversal, they have not been considered with much attention.

Judgment reversed, new trial granted before another referee, with costs to abide the event.

Smith, P. J., Haight annd Bradley, JJ., concur.