text:
    James Stark, Resp’t, v. The United States National Bank, App’lt.

      (Supreme Court, General Term, First Department,

      Filed October 15, 1886.)

    1. Bills and notes—Convebsion—Dbaft sent fob collection not subject TO BE HELD FOB GENEBAL BALANCE DUE BETWEEN COLLECTING BANKS.
    Mohler & Sons, who owned a certain note and draft, endorsed them in blank and delivered them to the State Bank of W. Va. for collection, and accompanying them was a letter of instruction to that effect. The State Bank sent them to the defendant herein with an endorsement that they were sent for collection. Afterwards, and before either was collected the State Bank failed, and M. & S. demanded the note and draft of defendant, which refused to deliver them up, claiming to hold them on account of overdrafts previously made by the State Bank and paid by the defendant. M. & S. thereafter assigned the note and draft and their right of action for damages to the plaintiff herein, Sold, that defendant had no legal right to hold the paper for its security on account of the general balance of its account against the State Bank, hut was legally bound to return' it to the owners, and, as it had failed to do that when a proper demand for it was made, and afterwards proceeded and collected the note and the draft, it was chargeable with a conversion of those instruments.
    3. Same—When assignee of claim has bight to sue.
    When the State Bank became insolvent and incapable of performing the functions of its agency, the owners of the note and draft were entitled to interpose in their own behalf and to repossess themselves of it, and proceed with its collection themselves, and, having disaffirmed the agency, M. & S. could, by assignment, give plaintiff right to sue.
    Appeal from a judgment recovered on a referee’s report.

      Charles B. Alexander, for appl’t; Andrew SMland, Jr., for resp’t.
   Daniels, J.

The complaint in this action set forth two grounds of action; the first for the recovery of a promissory note made by the firm of Allen & Leuce for the payment of $500 to the order of Mohler & Sons in sixty days after the 25th of April, 1884. The other was for the recovery of a draft, or bill of exchange, drawn by A. B. Lewis on the firm of Dannatt & Pell, for the sum of $138.29, in sixty days after the 26th of April, 1884. This draft and note were alleged to have been received by the defendant and converted to its own use. And as that conversion was found to .be proved by the evidence, and the amounts had in the meantime been collected, a judgment was directed in favor of the plaintiff for damages amounting to the sums received upon the paper, with interest thereon.

The note and the draft were owned by the firm of Mohler & Sons, and they were endorsed in blank and delivered to the State Bank of West Virginia for collection. Accompanying them were letters of instructions to that effect, and this bank transmitted them to the defendant, with an endorsement that they were sent for collection.

After that, and before either demand was collected, the State Bank of West Virginia became insolvent and failed in its business, and Mohler & Sons, by an instrument in writing, assigned the note and draft and then right of action for damages to the plaintiff. After the failure of the State Bank of West Virginia, Mohler & Sons demanded the note and draft of the defendant, which refused to deliver them up, claiming to hold them on account of overdrafts previously made by the State Bank and paid by the defendant.

But it appeared by the evidence that no draft or check was drawn upon the defendant by the State Bank of West Virginia against either of these demands, nor was any advancement at any time made upon either the note or the draft by the defendant or the State Bank. What the defendant had done, was to pay the drafts drawn upon it by the State Bank of West Virginia, having no reference whatever to either of these demands. And in paying the overdrafts the defendant did not do that under any special reliance placed upon this paper, but it was still insisted in its defense that it was entitled to the benefit of the paper against the owner, for the general balance accruing in its favor on the account.

This point, however, is not sustained by the authorities in this state relating to this transaction. It is true that the State Bank might have negotiated the note and the draft to the defendant on the faith of the general endorsement of the payees. And if that had been done, and the defendant had advanced its money upon the paper, it would have been entitled to hold it against the parties delivering it to the State Bank for collection. But that was not done, neither did the State Bank obtain any title to the paper, otherwise than in its agency for the collection, by the delivery of the draft and note to it. For that delivery was accompanied by written instructions, that it was made to enable the State Bank to forward and collect the paper. And accordingly, as between the State Bank and the indorsers it had no title whatever to the paper, beyond the duty and obligation to collect it and return the proceeds to the parties from whom it had been received, or the plaintiff as their assignee.

In transmitting the paper to the defendant it was in■dorsed for collection, and the letters of instructions accompanying the note and draft further apprised the defendant of this fact. And from this information it was to be inferred by the defendant that the State Bank was acting in behalf of some other party in the collection of the paper for that party, and the defendant undertook the performance of the same duty with the knowledge of the existence of that fact. The paper was not credited in the defendant’s account with the State Bank, neither was it asked to, nor did it, deal with the paper in any other form or manner than that of a collection agent. And that was the extent of its relation to this paper when the State Bank failed, and it was demanded by the parties who had delivered it to the State Bank to be collected. And in this state of the facts the defendant had no legal right to hold the paper for its security on accomit of the general balance of its accounts against the State Bank. Scott v. Ocean Bank, 23 N. Y., 289; McBride v. Farmers’ Bank, 26 N. Y., 450; Dickerson v. Wason, 47 id., 439; Jessop v. Miller, 1 Keyes, 321.

What it was legally bound to do, as the State Bank had failed and discontinued its business, was to return the paper to its owners, and as it failed to do that, when a proper demand for it was made, and afterwards proceeded and collected the note and the draft, it was chargeable with a conversion of those instruments. Spraights v. Hawley, 39 N. Y., 441; Bank of Rochester v. Jones, 4 Com. 497; Cayuga Co. Bank v. Daniels, 47 N. Y., 631, Jessop v. Miller, 1 Keyes, 321.

It has been objected that the plaintiff as the assignee of the owners of the paper cannot maintain this action, but when the State Bank became insolvent and incapable' of performing the functions of its agency, the owners of the paper were entitled to interpose in their own behalf, and for their own protection. They were not bound after that to permit the State Bank to proceed with the transaction any further than it had. It had become incapable of discharging the duties of its agency, and the owners of the paper were entitled to repossess themselves of it and proceed with its collection themselves. A point of this description was ■considered in Lindauer v. Fourth Nat. Bank (55 Barb., 75) and Dod v. Fourth Nat. Bank (59 Barb., 265), where it was held that the action by the owner of the paper might be maintained. The cases holding that the bank transmitting the paper can alone maintain an action against its agent are not in conflict with this proposition. For the plaintiff here, as well as the parties from whom he derived his title, proceeded in disaffirmance of the agency, because of the insol-. vency of the immediate agent and the refusal of the defendant to observe and fulfill the obligations of the agency which were to collect, preserve and remit the proceeds of the paper for the benefit of the parties, for whom the collection should in fact be made.

It is not important to consider whether any of the objections taken to the admissibility of portions of the evidence were well founded or not, for the controlling facts of the case are free from all possible dispute, disclosing the legal condition of the rights and obligations of these parties. And that the witnesses were permitted to proceed further than they should have gone in giving their evidence, in no manner changed the state, or condition, of these facts. The judgment which has been recovered was well sustained by the proof, and it should be affirmed.

Macomber and Brady,'JJ., concur.


source: Caselaw Access Project

author: Daniels, J.

license: Public Domain

text:
    Ann Ford, Adm’x, etc., Resp’t, v. Jeremiah C. Lyons, App’lt.

      (Supreme Court, General Term, First Department,

      Filed October 15, 1886.)

      1. Negligence—Master and servant—Contractor—Liability of, for damages resulting from lack of reasonable care in providing SAFE PLACE TO WORK.
    The intestate was injured by some hard substance falling upon his head while he was at work, in the cellar of a building in process of erection, preparing mortar to be used by the bricklayers. His duties required him to go to a tub of water in that portion of the cellar under the space left for the stairways, and he was near this tub at the time when he was struck. There were sixteen bricklayers laying brick on the fourth story at the time. There was evidence that there was either no covering over this space or a defective one. Held, that the failure of the defendant (who was the contractor) to provide a reasonably safe and secure covering for this space was negligence on his part, even though he may have intrusted the immediate performance of the duty to the foreman in charge of the work.
    2. Same—When master responsible for default of servant.
    The employer cannot delegate such a duty to another and relieve himself from legal liability because of the carelessness or default of that other.
    S. Same—Servant can assume that place is safe to work in.
    The servant is not required to assume that the master would assign him a dangerous place to work in.
    Appeal from a judgment upon the verdict of a jury, and from an order denying a motion for a new trial.

      Alex. Thain, for app’lt; James P. Nieman, for resp’t.
   Daniels, J.

The intestate was injured by some substance falling upon his head while he was at work in the cellar of a building being erected on Monroe street in the city of Hew York. He was preparing mortar to be used by the bricklayers, and, in the performance of his duties, was required to go to a tub of water in that portion of the cellar under the space left for the construction of the stairway. At the time o£ his injury the evidence tended to show that there were sixteen bricklayers at work on a scaffold in the fourth story, all laying brick. The deceased was near the tub at the time when he was struck, but by what he was struck was not shown by any direct evidence taken upon the trial. But the facts were such as to warrant the jury in concluding that it was by some hard substance falling upon him from the top of the building. One witness who was also at work at the time in the cellar stated that he heard a noise which he described as a kind of thud; that he looked up and saw the deceased stagger over towards the wall, in close to the wall, and that he himself caught him as he just struck the tub and was falling into it. And another witness who was also present observed him as he was stretched against the wash-tub. The post mortem examination disclosed the fact that he had been struck upon the top of his head, the blow producing a fracture at the base of the skull. It was not probable as the evidence was given that the deceased was injured in this manner, either by coming in contact with the wall or with the tub itself, but the decided probability was that he was struck by a . substance falling from the upper part of the building upon his head as he was engaged in the rendition of the service required to be performed by him at the water tub. The law does not require positive evidence to establish a fact of this description, but it may be inferred from circumstances with reasonable certainty indicating its existence, and those circumstances were made to appear upon the trial. It was further proved that broken portions of brick did fall from the upper part of the building where the bricklayers were at work, and the probability was that it was by a substance of this description falling in this manner that the deceased was injured, for both a heavy substance and a fall from a considerable height would be requisite to produce this fracture of the skull.

It was proved upon the trial that the defendant had the contract for and was constructing the brick work of the building. And evidence was. given tending to establish ■ the fact that above the tub, to which the men preparing the mortar were required to resort in the performance of their duties, there was no safe or secure covering which would protect them from exposure to these falling pieces of brick. One of the witnesses testified that there was no covering over head where this man was at work; that there were a few barrels there, but that they did not fill the space so as to exclude falling substances from above. And the evidence of another witness sworn on behalf of the plaintiff who was at work in the building described the covering as having been made of barrels and boards. He was unable, however, to state whether open spaces existed in this covering, but he did not think that any were large enough for a brick or stone of the size mentioned to pass through. It was, however, made the subject of complaint in the building between some of the men and the foreman that the covering was not sufficient to protect the men who were working about the tub. On the part of the defence evidence was given tending to prove that a complete and secure covering was placed and maintained in this part of the building. But this evidence was not entitled to be adopted as controlling over the jury for the reason that it did not permit as a possibility the occurrence of the injury happening to the deceased. As the case was made to appear there was no other probable source from which he could have been injured in the manner in which he was than by the falling of some hard substance upon his head from the upper portion of the building, and that could have only fallen upon him through an opening in the covering over the space where he was at work. The jury did, therefore, have evidence before them sustaining the probability of the statements made by the witness Hughes that the covering was defectively insufficient, and that this man received a mortal injury by reason of that fact. It was for the jury, as the evidence was given, to determine whether this was so or not, and their verdict finding the existence of that fact cannot be held to have been so conspicuously against the weight of the evidence as to either justify or require the court to set it aside.

Assuming the fact to have been as it must have been found by the jury before they could render the verdict which they did, then there was evidence from which it could reasonably be concluded that the defendant had been careless and negligent in not providing a proper covering for the protection of his men who were required to render services in this portion of the cellar of the building. For as the law has been repeatedly affirmed, “as between servant and employer, the latter is bound to use reasonable care in the prosecution of the business in which "he engages the former, and it cannot be made out upon principle, or from any case of authority, that he shall not be liable for damages arising from a failure to do so.” Sheehan v. N. Y. C., etc., R. R. Co., 91 N. Y., 332, 334; Pantzar v. Tillyfoster Iron Co., 99 N. Y., 368.

The failure of the defendant to provide a reasonably safe and secure covering for this space was negligence on his part, even though he may have entrusted the immediate performance of the duty to the foreman in charge of the work, for the employer cannot delegate such a duty to another and ■ relieve himself from legal liability because of the carelessness or default of that other.

The evidence was not such as necessarily to attribute carelessness to the intestate. He was in the discharge of his duties as that was required in the course of his employment. It was part of his service he owed to his employer, and he was not required to assume that the latter would assign him to a dangerous place for the rendition of that service. Neither was it made to appear that he was awaie of the fact that the covering over this space was insufficient or insecure. And as the evidence was presented, the jury could very well conclude that he appeared to have been without fault contributing to the production of this injury. And for these reasons it cannot be concluded that the deceased took this risk upon himself as a necessary incident-of his employment.

The evidence which was made the subject of exception was not improperly received, but if it was, no legal harm was produced by it in the case, for it was entirely obvious1 without it," that if planks had been placed across the beams-over the place where the deceased was at work no substance could have fallen through from above that would have resulted in injury to himself. The charge was in all respects as favorable to the defendant as it could be claimed under the authorities, and as no error has been found either on the part of the jury or of the court, the judgment and the order should be affirmed.

Macomber and Brady, JJ., concur.


text:
    James Talcott, Resp’t, v. Walter P. Hess, Assignee, etc., App’lt.

      (Supreme Court, General Term, First Department,

      Filed October 15, 1886.)

    1. Assignment—When set aside as fraudulent—Intent of assignor.
    At the time of executing an assignment for the benefit of creditors, the judgment debtor was owing the firm of G. & A. the sum of $512 for goods and merchandise for which said firm was preferred. There-was also a preference to G., one of the members of said firm, for $1,000, secured by a mortgage stated to be a debt owing by the assignor, partly f or* goods, wares and merchandise and partly for money owed. The fact being that no such indebtedness in fact existed and that the assignor did not owe either G. or his firm anything for money loaned. There had been, money so owed before, which had been repaid. The said firm had also lent the assignor their note, but it was separately preferred in the assignment. This mortgage, as the assignor’s estate was disposed of at the time of the ássignment, was stated as a distinct and separate incumbrance: upon the property unconnected with any indebtedness preferred by the-assignment. In the inventory of the estate, the property on which this mortgage was a lien was stated to be worth $2,5.00, subject to'two mortgages, and this was particularly described as one of them. 'Held, that there* was sufficient evidence of an intent to defraud and hinder creditors to set aside the assignment. "

      3. Same—Evidence that pbopebty is wobthless does not affect intent.
    Evidence was given to show that the property’on which this mortgage was executed was worthless beyond the prior mortgage and taxes and assessments. Held, not sufficient to overcome inference of fraudulent intent.
    3. Same—When pbesentation of claim to assignee does not bob action to set aside assignment.
    Where a debtor has derived no benefit whatever from or through an assignment the fact that he presented proof of his indebtedness under the-assignment, will not preclude him from asserting its legal invalidity.

      4. Same—Evidence—"Wiiat admissible.
    The plaintiff had alleged in his complaint other grounds for setting aside the assignment not attempted to he supported by evidence. Held, it was not competent or relevant for the defendants to prove that in other respects the assignment and schedules were unobjectionable. They were to be inferred to be so as long as no evidence assailing them was given on the trial.
    Appeal from a judgment recovered on trial at the special term.

      L. Birdseye, for app’lt; D. 8. Biddle, for resp’t.
   Daniels, J.

The action was by the plaintiff as a judgment creditor of Alice Hazzard, whose execution against property had been returned unsatisfied, to set aside as fraudulent a general assignment of her property made by her for the benefit of her creditors. It was previously tried when a judgment was recovered dismissing the plaintiff’s complaint. This was afterwards reversed on appeal to the general term, and a new trial ordered. The case as it was then considered and decided will be found reported in 31 Hun, 282. Upon the trial resulting in the judgment from which the appeal has been brought evidence was given upon which it was claimed that that the infirmity in the assignment upon which the preceding judgment had been reversed, was explained and removed. This evidence consisted chiefly of an agreement executed by the firm of Graham & Aitken, declaring that they held the mortgage of $1,000 upon the property in East Hew York as security for any debt due, or to become due, to the firm for goods and merchandise sold to the assignor, or her husband as her agent, or for moneys then or afterwards to become due. But this instrument was not within the knowlege of the assignor at the the time when she made and delivered her general assignment. It was made in March, 18'T'T, while the assignment was not executed until December, 1880, when this agreement appears by the evidence to have-been lost sight of and forgotten by the assignor. It did not, therefore, influence her in the least in the disposition made of her property by the assignment and the schedules afterwards forming a part of it, but they were made entirely independent of the statements contained in this instrument. And from the manner in which they were executed, delivered and filed, it was considered when the case was before this court on the preceding occasion that the evidence indicated the assignment to have been made with intent to hinder, delay or defraud creditors.

The fact that it might have been otherwise, if the assignor had acted upon the obligations expressed in this instrument does not control the case, for the assignment is to be sustained or condemned according to the intent of the assignor at the time when it was made and delivered. For the statute has provided that every assignment or conveyance in writing or otherwise of any estate or interest in lands or in goods or things in action, or of any rents or profits issuing therefrom and every charge upon lands, goods or things in action, or upon the rents or profits thereof made with intent to hinder, delay, or defraud creditors or other persons, etc., shall be void as against the persons so hindered, delayed or defrauded. 3 Rev. Stat., [6th ed.], 145, § 1. And the plaintiff is a person who was hindered, delayed or defrauded by the mortgage intended to be continued as a lawful incumbrance upon the property described in it. It is, upon the intent alone, that the statute has empowered the creditor to proceed, and not upon the failure, or success of the party in carrying the intent into execution. And as this instrument was not within the knowledge or information of the assignor at the time when the assignment was executed and delivered by her or when the schedules were made or filed it could not very well affect the intent with which those acts were done.

At the time when the assignment was executed the judgment debtor was owing the firm of Graham & Aitken the sum of $512.78 for goods and merchandise. But this was not in the mind of the assignor in any manner connected wdth the $1,000 mortgage which had been executed and delivered to William Graham, who was a member of that firm. And by the assignment the firm was preferred for the payment of this debt after the payment of the costs charges and expenses of making, executing and carrying into effect the assignment itself. And in addition to that preference the mortgage by the schedule was stated to be a debt owing by the assignor to William Graham, “partly for goods, wares and merchandise and partly for money owed.”

This is described as a debt due to Graham himself in the the sum of $1,000 while no such indebtedness in fact existed, nor did the assignor owe either himself or his firm anything for money loaned. Before the assignment, money had been loaned by the firm to the assignor to reheve her stock from an attachment, but according to the evidence of Mr. Graham,, which was not contradicted, the only debt owing to the firm at the time of the assignment was that owing for the goods, which was made the subject of this preference. For money loaned or advanced, the assignor was not indebted to the firm. That must consequently have been refunded prior to the time when the assignment was made. If the case could be relieved from the imputation of a fraudulent intent to the extent of the indebtedness from the assignor to the firm of Graham & Aitken, that would still leave the amount of $487.27 for which the assignor was in no respect owing or indebted upon the mortgage. So far it was no possible encumbrance, upon her property, and it could not be made so or so regarded, by reason of the fact that Graham & Aitken had previously loaned their note to the assignor for the sum of $715.55, which she had procured to be discounted, for that was not within the language, or effect, of the instrument made by the firm on the 10th of March, 1877. They had advanced nothing whatever upon the note, and the obligation of the assignor consisted solely in her duty to protect them against liability upon it at the time when it should become due which was not until the 4th of January, 1881. This note in like manner with the indebtedness itself, was preferred in the assignment, and in no way in the mind or intent of the assignor connected with or secured by the mortgage. But as her estate was disposed of at the time of the assignment this mortgage was stated as a distinct and separate encumbrance upon the property unconnected with any indebtedness preferred by the assignment. In her mind the two things appeared to have been distinct, as well as, distinguished for she preferred the firm of Graham & Aitken for their indebtedness and the note they had loaned her and still declared the property included in the mortgage to be hable to William Graham for this sum of $1,000. That this was no oversight on her part appears further by the inventory of her estate, in which the property in East Hew York was placed at a cost of $2,500, subject to two mortgages, one of $1,000 to Daniel McGowen, and the other of $1,000 to William Graham.

The assignor was not relieved from the imputation of a fraudulent intent in this disposition of her property by the evidence given tending to show that this land was worth but little, if anything, beyond the first incumbrance upon ifc, together with the/taxes and assessment against it. Ho such qualification of her statements was contained either in the assignment or the schedules, but in that including her property she stated that it contained a full and true inventory of all her estate and the incumbrances existing thereon, and in that relating to her indebtedness -she unqualifiedly asserted the fact that she was indebted to Graham. in the sum .of $1,000. Both these statements manifestly related to the mortgage and the bond it secured, and tended to discredit the evidence given by her upon the last trial, as well as that given by her husband, to the effect that the property was worthless beyond the first incumbrance upon it and the taxes and assessments standing against it. This evidence given by her was also in decided contrast with that which-she gave upon the first trial concerning the value of this property, which was not then in her judgment placed below the two mortgages stated as incumbrances upon it. The evidence also failed to establish the amount of the taxes and assessment against it, or to' whaLextent they remained unpaid. Estimates were given, upon this subject by the husband of the assignor, but his evidence failed to show that he was speaking from actual knowledge as to the items or amount of taxes and the assessment in arrear. He thought they aggregated in the neighborhood of three, four or five hundred dollars, but his-evidence wholly failed to establish any definite amount which could be legally charged against the property on this account. The court was, therefore, correct in declining to find that the property was worth no more than the first mortgage upon it, for the probabilities were quite decided that it did considerably exceed the amount of that incumbrance, and that of the taxes and assessment then in arrear. The testimony of Hr. Graham has no greater definiteness or reliability in this respect. He would have been unwilling to have given anything for the property beyond the first mortgage upon it, but it is apparent that his evidence, as well as that of the assignor and her husband, was given under a conscious necessity of endeavoring to relieve the case of this fraudulent imputation, and was on that account subject to a very strong qualifying consideration in the mind of the judge presiding at the trial The case was one in which the evidence indicated an effort on the part of the assignor to subject the property to encumbrance to such an extent as to induce the unpreferred creditors to believe that nothing could be derived from it by them for the payment of their debts. In great part the encumbrance was in fact fictitious, and as the transactions of her business were known to the assignor at the time when the assignment and schedules were made, the mortgage was wholly so, for she was not then aware of any right on the part of Graham & Aitken to hold it as a security for their firm indebtedness amounting to this sum of $512.23. And from these facts the conclusion of the court that the assignment was in this respect made to hinder, delay or defraud the creditors of the assignor, was very well supported.

It has been insisted that this conclusion is at variance with what was held in Kavanagh v Beckwith (44 Barb., 192), where the amount of a preferred indebtedness was overstated in the assignment. But it appeared thero to have been the result of a mistake which was corrected in the inventory afterwards made, rebutting as chat did, the inference of any fraudulent intent. In this case no such correction was at any time made. The assignor had time to prepare her schedules with deliberation and accuracy, and it is in what she did in their preparation that this fraudulent intent on her part was disclosed. That was not corrected neither was any effort made for its explanation until after this action had been first tried and a. new trial had been ordered in it.

The plaintiff presented proof of his indebtedness under the assignment, and upon that fact it has been urged that he has precluded himself from asserting its legal invalidity. But as he has derived no benefit, whatever, from or through the assignment, this position cannot be maintained. The rule relied upon has proceeded no further than to preclude a party who has derived some actual benefit under an instrument from afterwards disaffirming it. Babcock v. Bill, 43 Barb., 577; Haydock v. Coope, 53 N. Y., 68.

It proceeds upon the principle that a party should not enjoy an advantage under an instrument, and at the same time insist upon its invalidity. It has no application to this case.

A large number of exceptions were taken, during the trial, to evidence which was received and also to evidence excluded by the court, but no special ruling has been pointed out as erroneous. The exceptions, on the contrary, have all alike been inserted in and referred to by the points, whether plausible or entirely devoid of every vestige of legal foundation. And for that reason they might not improperly be all disposed of as not worthy of special consideration from the court, as long as they do not seem to have been so regarded by the counsel. But for their disposition, it may very well be said that the exclusion of the statement of Mr. Graham that the mortgage was held as a legal security for everything, was in no way erroneous, for the statement would have been no more than his judgment or opinion upon this controverted subject, and whatever the rights of his firm were they were defined in the written instrument. Other litigation had taken place concerning this assignment in which the assignee proved to be successful. But proof of that litigation was entirely irrelevant in this case, for the plaintiff was not a party to it and had the legal right to have his controversy determined upon the evidence applicable to this particular case. There was no ground for controversy -as to the circumstances under which the discharge of the mortgage was finally given by Graham. There was no consideration for it, no money was paid to him, or property delivered to him for that, but he simply received the fifty per cent under the assignment which his firm were entitled to because of their debt contained in it. As the trial took place the objections urged against the assignment arose out of the statement of this mortgage as a valid encumbrance upon the property to the extent of the amount mentioned in it. And because the plaintiff had alleged in his complaint other grounds for setting aside the assignment not attempted to be supported by evidence, it was not competent or relevant for the defendants to prove that in other respects the assignment and schedules were unobjectionable. They were to be inferred to be so, as long as no evidence assailing them was given upon the trial. The court, therefore, was correct in excluding ¿he evidence tending to prove that the assignment in other respects had not been fraudulently executed. Neither was there error in excluding the questions put to the assignor and her husband concerning the intent of the assignor, for she was permitted to swear that she had no intent to hinder, delay, or defraud creditors, and that the assignment was made in good faith, and that included the entire ground over which her testimony as to her intention was entitled to be received. It was not important what took place between herself and her counsel, oi between her husband and the counsel, concerning the assignment and the schedules,'as long as no proof was offered beyond that which was received explanatory of the manner in which the statements concerning this mortgage were made a part of her schedules. As to that part of the case, which was the real controversy between the parties at the trial, all the evidence pertinent to it and offered on behalf of the defendants was received by the court, and after hearing and considering that, it was concluded that this assignment had in part resulted from a fraudulent intent on the part of the assignor. The witnesses were seen and heard by the tribunal before which the trial took place. The statements made by them, as well as their respective interests in the subject-matter of the controversy, were fully considered and determined, and that determination this court has no right to set aside, even though 'it might have been obliged to have supported a different judgment if that had been deemed to be warranted by the circumstances. No ground of error has been found in the case which would justify any interference with this result, and the judgment which has" been recovered should be affirmed, with costs.

The appeal in the case of Lewis Mayer and others, against the same defendants, depends upon the same evidence, except that their claim was not made the subject of proof under the assignment. And as the judgment in the other case should be affirmed, the same dispositio should be made of the appeal in this action.

Macomber and Brady, JJ., concur


author: Beady, J.

text:
    Robinson Consolidated Mining Company, Res’pt, v. William H. Craig and William B. Scott, App’lt.

      (Supreme Court, General Tern, First Department,

      Filed October 15, 1886.)

    1. Surety—Extent oe liability—Court oe equity,
    A surety will not be held beyond the precise terms of his contract, and except in cases of accident, mistake or fraud a court of equity will never lend its aid to fix a surety beyond what he is fairly bound to at law. The contract of a surety must be construed favorably to him, and in accordance with all the facts and circumstances surrounding it.
    2. Same—Liable to pay wbat is due and nothing more.
    Where the undertaking made to secure the payment of certain rent, etc., recited “ that so far as the lease related to the payment of royalties therein provided to be paid, it being understood that the royalties in arrears and owing by ” the lessee to the lessor “now amount to §10,933.20 for all ores already settled for,” and the undertaking on the part of the sureties which relates to those royalties was that they guaranteed that the lessee “ will well and faithfully perform and fulfill every covenant and condition expressed in said lease on the part of the said G. (lessee), to be kept, performed and fulfilled in the manner and at the times as provided in said lease.” In the action against the surety he attempted to avail himself of the payment of $3,765.21 by the lessee. Held, that the obligation of the sureties was not to pay what the lessee said was due, but to pay exactly what was due, and nothing more, and he was entitled to have the amount paid by the lessee allowed to him.
    This is an appeal by the defendants from a judgment against them for $13,470.44, November 16, 1885, in New York county.
    The trial was had at the New York circuit, November 14, 1885, before Mr. Justice Barrett and a jury, and a verdict had by the plaintiff for $13,319.01, under the direction of the court.
    On June 27, 1883, the plaintiff, an incorporation, leased, in writing, to one Thomas H. Greer, the plaintiff’s mine, mining tools and properties at Robinson, Summit county, Colorado, from the first day of July then next (1883), to the 4th day of March, 1884, the said Greer to pay therefor as rentals or royalties different prices, dependent upon the richness of the ore, varying from three dollars to eighteen dollars per ton.
    The payment to be made monthly, and to be “ based on the smelter’s return.”

      On the same day, June 27, 1883, these defendants executed an instrument, as sureties or guarantors for said lessee Greer, an instrument in writing, which is set out in the complaint.
    Afterward, and on the 20th day of October, 1883, and before the expiration of the term of the above lease, the plaintiffs as lessors, and said Greer as lessee made another or a new lease of the same mine or mines and tools and properties, for the term of from November 1, 1883, to the 4th of March, 1884 (the day on which the term of the first mentioned lease was to end).
    The lessee, Greer, therefor to pay the plaintiffs one-half of all the money to be realized from the working of said mines, monthly from the first of December then next after deducting the expenses incurred'in the production, transportation, treatment, etc., of said ores, and attending said business.
    Four days afterward, and on October 24, 1883, these defendants executed another instrument of guaranty to the plaintiff, and therein “agreed that the execution of the above (the last mentioned) lease, and this, our guaranty thereto * * * shall not be held to change or impair our liability to pay the balance of the royalties now due and owing from said Greer to said mining company under the former leases to him as -recited in the annexed lease and as previously guaranteed by us.”
    There had been a lease prior to either of the leases in evidence and above mentioned, but not counted on as a part of the cause of action in this action.
    It is recited in the last lease that there had been two former leases, that one was dated March 21, and the other June 27, 1883 (the last being the first lease counted on m the complaint).
   Beady, J.

The lease of which this action is predicate is dated October 20, 1883, and the agreement to which it relates is dated October 24, 1883. The provisions in reference to the amount due and in arrear from the lessee are as follows:

It is further understood and agreed that the execution of this lease shall not in any sense change or impair the covenants contained in two leases heretofore executed between the said parties, the first thereof bearing date March 21, 1883, and the second bearing date on the twenty-seventh day of June of the same year, so far as the same relates to the payment of royalties therein provided to be paid, it being understood that the royalties in arrears and owing by the said party of the second part to the said party of the first part now amount to the sum of ten thousand, nine hundred and thirty-three dollars and twenty cents ($10,933.20) for all ores already settled for, and the undertaking on the part of the defendants which relates to those royalties is as follows :

In consideration of the sum of one dollar, to us severally paid by the Robinson Consolidated Mining Company, the receipt whereof is hereby acknowledged, we do hereby guarantee, promise and agree to and with the said company that Thomas H. Creer, who has leased the mines of the • said Robinson Consolidated Mining Company, at Robinson, Colorado, upon the terms and conditions expressed in the within lease, will well and faithfully perform and fulfill every covenant and condition expressed in said lease on the part or behalf of the said Thomas H. Creer, to be kept, performed and fulfilled in the manner and at the times as provided in said lease.

And we do hereby expressly waive and dispense with any demand upon the said Thomas H. Creer, and any notice to either of us of any non-performance on his part.

And we further agree with the Robinson Consolidated Mining Company that the execution of the above lease and this our guarantee thereto, in behalf of Thomas H. Creer, shall not be held to change or impair our liability to pay the balance of the royalties now due and owing from said Creer to said mining company under the former leases to him, as recited in the annexed lease and as previously guaranteed by us.

Upon the trial the defendant attempted to avail himself of the payment of the sum of $3,765.71 by t^.e lessee, the payment of which was alleged in the answer and denied in the reply. Whereupon the plaintiff’s counsel admitted the payment and that the lessee was not credited with the samo, but objected to the admission of a receipt for the money which was offered. It may be noted here that the fact of payment having been admitted, the receipt was wholly immaterial to the defendant’s case, and there was really no necessity for presenting it. But the defendant's counsel was not satisfied with that condition of tho subject, but proceeded to offer to show by a witness as follows :

Defendant’s counsel—I offer to prove by the witness that the agreement for the lease of October 20, 1883, was discussed and concluded upon by the witness and others, a committee of the plaintiff on the one side and Thomas H. Creer on the other, and at that time, and at the execution of said lease, Mr. Creer claimed he had made a payment for which he had not been credited, amounting to the sum stated in the receipt that was offered; that that claim’s correctness was disputed on the part- of the company; that it was then stated that Mr. Creer could at any time bring in any just claim that he had for any moneys paid on account of royalties which were not then allowed.

Plaintiff’s counsel—I object to the offer as immaterial and irrelevant, not competent to vary the terms of a written agreement, and also on the ground that no such defense is interposed.

The latter statement, namely in reference to the defense, was erroneous. The defense of this payment was sufficiently interposed in the answer. The rejection of the offer, however, seems to have rested upon the proposition that it was an attempt to contradict the terms of the lease, by which it was claimed, and is now claimed upon the argument, the amount due at the time of its execution was settled. But a reference to the language will show that it was a mere understanding—the phraseology being: “It being understood that the royalties in arrear,” etc. The plaintiffs claim that according to the terms of the agreement that sum was absolutely accepted by the defendants and their promise extended to it, by the force and effect of the words: “ as recited in the annexed lease.”

But this relates to the former leases which were recited in the lease of October, 1883, and their engagement upon a proper understanding of what they undertook was to pay the royalties due and owing from Greer. So that it is questionable whether the lease actually states the amount due, and perhaps not at all doubtful that the engagement of the defendants as sureties was nothing more than to pay the amount due without .reference to the sum stated in the lease.

It is a general rule affecting the obligations of a surety that both at law and in equity he is not to be held beyond the precise terms of his contract and that except in certain cases of accident, mistake or fraud a court of equity will never lend its aid to 'fix a surety beyond what he is fairly bound to at law. Ludlow v. Simond, 2 Caines Cases, 1; Walsh v. Bailie, 10 Johns., 180; Penoyer v. Watson, 16 id., 100. And in Ward v. Stahl (81 N. Y., 406), it was held that the liability of a surety was limited to the express terms of his contract and his obligation should be construed strictly and favorably to him so far as is warranted by the terms employed. The obligation of the sureties in this case was not to pay what the lessee said was due, but to pay exactly what was due and nothing more; and that this principle should be established beyond all question as one governing the relations of a surety and creditor cannot very well be doubted. Hence we find stated in DeColyar on Guarantees (2d ed.), 182, that the debtor’s admission of liability does not dispense with proof thereof in an action against the surety brought by the creditors as the contract of a surety is to be favorably construed, must be favorably construed, with all the facts and circumstances surrounding it. If he is to be held chargeable upon a statement of the amount of indebtedness by his principal it should be made with such clearness and certainty as to leave no question whatever, about its existence exactly as stated.

In this case we have the somewhat astounding revelation that the payment of a sum admitted to have been made and not credited shall, nevertheless, be rejected from the accounts of the parties. It would seem to be difficult to conceive anything much more inequitable than the enforcement of such a rule, but the doctrines of the comm 1 la founded upon technical rules of pleading present several similar improprieties.

The judgment should be reversed and a new trial ordered with costs to abide event.

Daniels and Macomber, JJ., concur.


author: Macomber, J.

text:
    Frederick P. James, App’lt, v. James A. Cowing and The New York Elevated Railroad Co., Resp’t.

      (Supreme Court, General Term, First Department,

      Filed October 15, 1886.)

    1. Practice—Complaint—An action ex delictu cannot be changed into one ex contractu—Code Crv. Pro., § 1207.
    Where an action is- founded upon the alleged fraud of the defendants, and the relief sought is based upon such allegations, after failing to establish the fraud upon the trial, the action cannot be turned into an action on contract.
    1. Same—When finding to be submitted.
    While a judge has discretionary power to entertain proposed findings of fact and conclusions of law presented to him after he has delivered his opinion, it is a practice which ought not to be encouraged.
    Appeal from a judgment entered upon the decision at special term dismissing the plaintiff’s complaint upon the merits upon the trial of the issues.

      Abram, WaJceman, for app’lt; Julien T. Davies and David Dudley Field, for resp’t.
   Macomber, J.

On the first day of August, 1868, the West Side Elevated Patented Railway Company, ,a corporation organized under the laws of the state of New York, executed and delivered a mortgage deed of trust to two trustees, to secure the payment of an issue of bonds amounting to $750,000; the property covered by the mortgage being the railroad and appurtenances from the Battery to Thirtieth street, in the city of New York, including the franchises of the company. The defendant Cowing, who succeeded to the trusteeship of the mortgage, brought an action to foreclose the mortgage for the benefit of the bondholders. In that action it was ascertained that the amount of bonds outstanding and unpaid was $876,628.37.

Before the sale under such action, the plaintiff, who held bonds of the par value of $22,500, intervened by action and obtained an order for the postponement of the sale of the premises. Such order was subsequently set aside by consent, and, upon a stipulation made in open court, an order was entered in that action directing the trustee, the defendant Cowing, on the sale of the mortgaged premises, to bid for the premises as trustee for the benefit of all the holders of the bonds secured by the mortgage up to the sum of $450,000. The mortgage itself contained a provision that, in case of a foreclosure by judicial sale, the majority of the owners of the bonds might, in writing, request the trustees to purchase the premises for the use and benefit of the holders of all the outstanding bonds secured by the mortgage. The mortgage further provided that the right and title should vest in the trustee or trustees, and that no bondholder should have ally claim to the premises, or to the proceeds thereof, except his pro rata share of the proceeds of such purchased premises as represented in a new company or corporation to be formed for the use and benefit of the holders of the bonds secured thereby. It also empowered the trustees to take lawful measures for the interest of the bondholders, to organize a new company or corporation for the benefit of the holders of the bonds secured by the mortgage, which new company should be organized upon such terms, conditions and limitations, and in such manner as the holders of the majority of the outstanding bonds secured by the former mortgage should in writing direct! An agreement was made between the plaintiff and Cowing and others, at the time that the order before mentioned was made, whereby the plaintiff agreed to carry his bonds into the new corporation.

Upon the other hearing, no other facts upon this branch Of the case appearing, and it not being disclosed that the new company or corporation contemplated by the agreement of the parties was in fact the defendant, The New York.Elevated Railroad Company, the decision (17 Hun., 256) was that the trustee was required to organize a new company composed exclusively of former bondholders, and that the sale by him to the New York Elevated Railroad Company, was unauthorized and in violation of the trust, and the defendants were accordingly held liable to the plaintiff for the breach of trust. Upon appeal to the court of appeals, (82 N. Y., 449), while this principle does not seem to be controverted nor the decision of this court disturbed upon that ground, yet the judgment was reversed for the reason that it was legally error for the trial judge to refuse to find, as matter of fact, as requested to do by the defendants counsel, that the new corporation so contemplated by the agreement of the parties was in truth the defendant, the New York Elevated Bailroad Company. On the re-trial of the issues, the evidence upon this question seems to be conclusive and the learned judge has found as a fact, that the defendant, The New York Elevated Bail-road Company was the corporation that the plaintiff agreed with the defendant Cowing and others should be the successor of the West Side Elevated Patented Bailway Company, and accordingly the complaint was dismissed upon the merits with costs. The learned counsel for the plaintiff, though he excepted to the findings of the court has not urged upon us any argument to show that the trial judge erred in this conclusion of fact. An argument however has been addressed to us based upon the proposition that though the plaintiff in his testimony failed to establish the claim made and awarded to him upon the first trial, yet he was entitled to some relief, namely, the payment by Cowing of the proportionate share of the money received by the trustee from the New York Elevated Bailroad Company which the plaintiffs’ $22,500 of bonds bore to the whole amount of bonds outstanding.

This contention must be determined by the cause of action which the plaintiff has stated in his complaint. After alleging the facts substantially as they have already been stated to be, the plaintiff then proceeds to allege in his complaint that the defendant Cowing, with full knowledge of the intent, meaning and terms of the mortgage and order and of the trust thereby imposed upon him, wholly failed to comply with or to perform the same, and that he ■wrongfully, fraudulently and contrary to his trust and contrary to the mortgage, conveyed away and converted said property to purposes other than those set forth and designed in the mortgage; that instead of conveying the property and franchise to a new corporation, with such franchise and property as the capital of a new corporation to be formed for the use and benefit of the holders of the bonds, the defendant Cowing, wrongfully, fraudulently and illegally conspired with the officers and directors of another corporation named and known as The New York Elevated Bailroad Company, and illegally and fraudulently bargained and sold and conveyed all of the franchise and property of the old corporation to the New York Elevated Bailroad Company, without any written request from the plaintiff and without any consideration to or consent or knowledge of the plaintiff.

It is further alleged that m order to induce the plaintiff, who had begun proceedings in the common pleas of New York to restrain the transfer of the property to the New York Elevated Railroad Company, to discontinue such proceedings, represented to the plaintiff and his attorneys that all the charges of want of good faith and conspiracy and fraudulent intentions were wholly false; that thereupon the plaintiff consented to the entry of an order in the-foreclosure action, declaring that Cowing should purchase at said sale for the benefit of the bondholders, and that he (the plaintiff) relied upon such representations and signed the stipulation in question, “which was also signed by said Cowing for himself and his said co-conspirators,” naming them. That such representations were made by Cowing falsely and in order to induce the plaintiff to discontinue the action and injunction and so as to leave him (Cowing) unrestrained ‘ in executing said conspiracy. That after-wards the defendant Cowing, after he had bought in the property upon the sale upon the foreclosure, neglected and. refused to make a new organization, as he had agreed to do with the plaintiff, but on the contrary conveyed the whole of it, as stated before, to the defendant, The New York Elevated Railroad Company, as is alleged, in violation of the trust in the mortgage and agreement with the plaintiff. He further alleges that the Elevated Railroad Company and its officers were parties to the wrong and fraud of the trustee, and that by and through such wrong they have acquired the property of the old company. The prayer of the complaint is that the property and franchise of the old company be adjudged to be held in trust by the defendants for the benefit of the plaintiff and subject to the lien of the' mortgage and trust to the extent of the bonds held by him; that the same or so much thereof as may be necessary be sold to pay these bonds, with interest, and that the plaintiff have judgment against both defendants for the amount of such bonds and interest “by reason of their fraud and conspiracy and the violation of said trust and agreement with the plaintiff.”

It will thus be clearly seen that the action is founded upon the alleged fraud of the defendants, and the relief sought is based upon such allegations, though of course there being a general prayer for relief, the particular phraseology or form o°f the prayer, where an answer has been interposed, is not of much importance in determining what relief shall be awarded to the plaintiff. Section 1207 of the Code of Civil Procedure requires that where there is an answer, the court may permit the plaintiff to take any judgment consistent with the case made by the complaint and embraced within the issue. It has been frequently decided by the courts of this state that an action based upon allegations of fraud cannot, after failing to establish the fraud upon the trial, be turned into an action _on contract. Barnes v. Quigley, 59 N. Y., 265. This claim now made and the argument of counsel are not in any respect consistent with the case made by the complaint; for the case so made was ex delictu and the claim now made is ex contractu. The latter would be a simple action in equity for an accounting, or at law for moneys had and received to the use of the plaintiff.

It appears, moreover, that the moneys which were derived by the defendant Cowing from the New York Elevated Railroad Company upon the transfer by him of the property and franchises of the old company, were all properly distributed and the share thereof belonging to the plaintiff was placed in the hands of the United^ States Trust Company, for the benefit of the plaintiff as is disclosed by the case, and he can receive it by calling for it.

Even if there were any merits in the claims as now presented, the application has come too late. The learned judge who tried the case, after much examination and having passed upon all of the questions which were presented to him, filed his opinion with the evidence and other papers which included the findings of fact and conclusions of law proposed by the defendants’ counsel himself as the same had been awarded and approved and settled by the judge. The court directed an engrossed copy of the findings as settled, to be presented for his signature, to be accompanied by a form of judgment; and it was not until the • presentation to the judge of the formal findings, long after the decision had actually been made and the opinion filed that the plaintiff’s counsel asked him to make the proposed findings and conclusions for the refusal to find which he now complains. The learned judge says that he concluded to give the plaintiff the benefit of any doubt he had upon the subject of his right to submit findings at that time, and accordingly he passed upon them and rejected them, adhering to his former conclusions. And he says no such claim as is proffered in the plaintiff’s fifth conclusion of law was made on the trial, by the plaintiff, or at any time previous to the submission of these findings and conclusions after the decision of the case. Though the judge doubtless had a discretionary power to entertain these findings provided they were not of such a character as to shift entirely the claim made by the complaint and the issues as presented by the pleadings; yet they were not, in the language of the section permitting such proposed findings to be submitted to the judge, seasonably made. It is, besides, a practice which ought not to be encouraged, for after the trial court has come to a conclusion upon the facts and the law of the case and has stated such conclusions in an opinion, he ought not to be required to revise the case upon amere possibility that a party is entitled to some relief which was not thought of until after it was known he had been unsuccessful in the action.

The judgment should be affirmed with costs.

Daniels and Brady, JJ;, concur.


text:
    People ex rel. Charles H. Kimball v. Nicholas Haughton et al., Commissioners of Excise of the City of New York.

      (Supreme Court, General Term, First Department,

      Filed October 15, 1886.)

    1. Excise law—Commissioners—Annulling license—Practice—When irregularity in service of summons waived.
    In proceedings "before the commissioners of excise to annul a license objection on account of the irregular mode of serving the summons is waived by appearing and obtaining an adjournment of the hearing.
    2. Same—When two commissioners can act.
    The objection that the order and decision were made by two of the three commissioners is without force where it appears that the third had notice of the time and place to which the hearing was adjourned. That being the fact, the action and determination of a majority will be effectual for all purposes.
    3. Same—Proof necessary—Laws 1873, chap. 649.
    The statute does not require the same strictness by way of proof in proceedings taken to annul a license for the sale of intoxicating liquors as is. required in an action or special proceeding in court. It has not prescribed the legal mode through which the commissioners may become satisfied, that the’person proceeded against has failed to observe the statutory provisions upon which the continuance of his license depends.
    Certiorari to review the order and decision of the commissioners of excise vacating and annulling a license-issued to the relator.

      John 0,Byrne, for "relator; Elliot Sandford, for resp’ts.
   Daniels, J.

The objection taken to the proceeding that, the summons was not served upon the relator himself, but upon the person who, in his absence, was found in the-possession and control of his establishment, is deprived of' its force by the fact that an attorney and counsellor appeared for him at the time and place designated for the-return, and, without objection to the mode of service, "moved for and obtained an adjournment of the hearing. If it had been intended to resist the proceeding on account of this irregular mode of service, the objection should have-been taken before the commissioners, when it might have-been obviated by issuing another summons and securing the -service of it personally upon the relator.

The objection that the order and decision were made by two of the three commissioners is also without "force, for it appeared that the third had notice of the time and place-to which the hearing was adjourned by having participated in the making of the order for the adjournment. And when that is the fact, under the statute defining the powers and course of proceedings of such officers, the action and determination of a majority will be effectual for all the purposes of the case.

The statute does not require the same strictness by way of proof in a proceeding taken to annul a license for the sale of intoxicating liquors as is required in an action or ■ special proceeding in court. By section 4 of chapter 549 of the Laws of 1873, the board of excise of any city, town or village may at any time, and upon the complaint of any resident of said city, town or village, shall summon before them any person or persons licensed, and if they shall become satisfied that any such person or persons has or have violated any of the provisions of this act, or of the acts amended by it, they shall revoke, cancel and annul • the license of such person or persons, which they are thereby empowered to do. It has not prescribed the legal mode through which the commissioners may become satisfied that the person proceeded against has failed to observe the statutory provision upon which the continuance of his Ecense may depend. But it has provided in very general language that.when the commissioners shaU become satisfied of the necessary fact, after summoning before them the person proceeded against, they shaU revoke, cancel and annul his Ecense. The proceeding is evidently designed to be summary, and to depend upon such reEable imformation as the commissioners may be able to obtain to a reasonable certainty establishing the existence of the necessary fact. In the present case they received information from the district attorney of the county that the relator’s estabEshment was of a disreputable character and made the resort of evil disposed persons. And this was further proven by the evidence which had been taken upon the trial of JamesMcQuade in the court of sessions concerning a criminal offense aUeged to have been committed at the saloon of the relator. No objection was taken by his counsel, who was present at the hearing, to this evidence, but an appEcation was made for the further adjournment of the proceeding on the ground that the relator himself was unable to attend by reason of the fact that he was confined in prison'. The evidence submitted to the commissioners was such as to prove that the relator’s place was an improper one t'a be Ecensed under the provisions of the statute, and they were accordingly authorized upon the proof to annul, cancel and vacate his Ecense as they did.. The evidence was sufficient for that purpose, as long as no proof whatever was given, on behalf of the relator tending to reduce its effect, or in any manner excuse him from the truth of the charge it tended to prove.

It is not necessary to determine the objection whether or not a writ of certiorari can be issued to review the proceedings and decision of the commissioners of excise under this act, for in this case neither of the objections which have been taken in support of the writ is well founded. The decision of the commissioners should therefore be affirmed, with costs, and the writ dismissed.

Macomber and Brady, JJ., concur.


text:
    Herman Weckherlin. App’lt, v. Henry Kirk White et al., Resp’ts.

      (Supreme Court, General Term, First Department,

      Filed October 15, 1886.)

    1. Fraud—Obtaining goods under false pretences—What does not PROVE INTENTION TO DEFRAUD.
    Where the complaint in an action charged that the defendants acted together in a conspiracy to defraud the plaintiff, and that they did so defraud him out of the value of the goods, which he was induced to sell to W (one of the defendants), on credit, and the evidence disclosed that W. made no representations to the plaintiff concerning his. financial condition; except that a long time prior to the sale of the goods to him by the plaintiff, and more than a year before his failure, he stated he was doing a prosperous business. Held, that W. could not be held for fraud in procuring the sale, of the goods to him and that a non-suit was proper.
    3. Same.
    Intent to defraud may not be imputed to a purchaser of property on credit, merely from the facts that he was, to his knowledge, insolvent at the time of the purchase, and that he omitted to disclose such condition to his vendor. These must he accompanied by other facts disclosing an intent to acquire the property without paying for it. A party seeking to establish a cause of action or a right to a remedy against another based upon alleged fraud, must show affirmatively facts and circumstances necessarily tending to establish a probability of guilt. Place v. Minster, 65 N. Y., 89, distinguished.
    3. Same—Conspiracy—Proof of.
    The fact that certain of the creditors of W. after he became embarrassed allowed him to increase his indebtedness to them and that they advanced considerable sums of money to him does not show a conspiracy on their part to defraud creditors generally.
    Appeal from a judgment entered upon direction of the trial court at circuit dismissing the complaint.

      E. N. Taft and E. D. Benedict, for app’lt; George P. Hooteling, for resp’t White; William B. íHornblower and Walter B. Leggat, for resp’t Shether; Luther B. Marsh and William G. Wilson, for resp’ts Coffin and Hurlburt.
   Macomber, J.

The plaintiff, who is an importer and seller of straw goods in the city of New York, brings this action to recover damages for the alleged fraud committed upon him by the defendants. The defendant White is a manufacturer of straw goods at Stamford, in the state of Connecticut, where he resides. The defendants Charles H. Coffin, William H. Huriburt and Samuel Shether compose the firm of Coffin & Huriburt, in the city of New York, Coffin and Huriburt being general partners, and Shether a special partner, the latter haying an office and desk room at the place of business of the firm. This firm was engaged in selling on commission the goods of the description manufactured by White, and had a general arrangement with White by which the latter consigned to them all his goods for sale on commission.

This agreement continued from September, 1879, to May, 1883, when White failed. On the 24th day of October, 1882, the Metropolitan Bank held notes of White to the amount of about $95,000, which had been bought mainly of a broker named Taylor. The sales of White’s paper to that bank ceased on October 24, 1882, when the bank declined to buy any more of it. After that date Coffin & Huriburt advanced to White, or paid on his account, large sums of money, the net result of which transactions was to increase White’s liability to them from $28,429.92 to $38,510.04 between October, 1882, and May, 1883. At the time of White’s failure Shether held of his paper the sum of $44,500, upon which or a portion of which he had procured an attachment against the property of White, in the state of Connecticut. After White’s failure several meetings of his creditors were held, at which Shether was present, when the subject of White’s indebtedness at large was discussed and means suggested for an equitable and proper distribution of his property among them. Shether had offered twenty-five cents on the dollar upon all of White’s indebtedness other than his own, which had been declined by the other creditors. Thereupon White made a general assignment of all his property for the benefit of his creditors. White paid $24,000 of notes held by Shether by the sale of merchandise to the latter on June 4, 1883, and on June 8th of the same year a further sum of $4,500 likewise in merchandise, leaving outstanding and unpaid in Shether’s hands six notes, amounting to the sum of $16,000.

It is claimed by the counsel for the plaintiff that the condition of White in October, 1882, was that of insolvency, and that facts and circumstances attending the business relations between him and the firm of Coffin & Huriburt showed knowledge on the part of that firm, as well as on the part of the defendant Shether, of such insolvency, and that the subsequent operations of these defendants with White were undertaken and carried out, including the discharge of an indebtedness to the Metropolitan Bank and the substitution of themselves for a good share of it for the purpose of enabling White to get into his possession large quantities of merchandise from different dealers, and among them the plaintiff, and then to repay themselves for the moneys loaned and which was unpaid upon their commercial paper by receiving into their hands the merchandise so bought by White. It is claimed, too, that the evidence shows that this plan was carried into effect, and that in so doing White purchased of the plaintiff to the amount of $23,388.79 on credit, the first credit expiring shortly after the failure of White, but before his assignment for the benefit of creditors. And that he also purchased of other importers and dealers in large quantities The complaint charges that the defendants acted together in a conspiracy so to defraud the plaintiff, and they did so defraud him out of the value of the goods which he was induced to sell to White on credit.

Upon the examination of the case the fact is disclosed that White made no representations to the plaintiff concerning his financial condition, except that in the early part of the year 1882, he stated that he was doing a prosperous business. Mr. Taylor testified that the defendant Shether told him that White was all right and he would be taken care of. The case, therefore, lacks any direct evidence of the truth of the charge stated in the complaint. It is claimed, however, that the plaintiff should have been allowed to go to the jury upon the case at large by reason of the surrounding facts attending the business connection of the defendants. The actual insolvency of White, if it is shown at all, in October, 1882, is shown only by the testimony of the expert book-keeper Yesey, from'whose figuring it would seem that White was in error in supposing that he was doing a prosperous business for a considerable period preceding October, 1882. This being the only representation which White made to the plaintiffs, it is difficult to see how he could be held for the fraud in procuring the sale by the plaintiffs to him of the goods. An intent to defraud may not be imputed to a purchaser of property on credit, merely from the facts that he was, to his knowledge, insolvent at the time of the purchase, and that he omitted to disclose such condition to his vendor. _ These must be accompanied by other facts disclosing an intent to acquire the property without paying for it. Morris v. Talcott, 96 N. Y., 100. Even this assertion by White was not a représentation of solvency. It was only to the effect that he was doing a prosperous business, and was made a long time Erior to the sales to him by the plaintiffs; and it seems to ave had no necessary connection with the acts of the plaintiff as an inducement to him to part with his goods.

If any conspiracy was formed by the defendants to defraud creditors generally, it was so formed in the month of October, 1882. After that time, as has already been pointed out, the indebtedness of White to the firm of Coffin & Hurlburt was increased upwards of $10,000. The defendant Shether seems also to have advanced moneys in considerable sums to White and to have largely increased White’s indebtedness to him during the same period. This is not the way in which conspirators to defraud commonly act. It is a matter of common knowledge that merchants often are assisted in critical times by aid furnished in this manner, and thereby enabled to extricate thomselves from financial difficulties. Of such efforts the courts hear only of those which are unsuccessful. There is nothing discoverable in this case that would warrant any inference that the defendants did anything in the premises except to aid the defendant White in carrying on his business and in affording him a fair opportunity by a favorable turn in trade to discharge his debts and to do thereafter a prosperous business. That they were unsuccessful in their efforts ought not to be charged against them. When in the month of May, 1883, it was found that White could no longer carry on his business, but was hopelessly insolvent, the firm of Coffin & Hurlburt, as well as the defendant Shether, had the same rights as all other creditors to pay themselves out of the property of their debtor, provided “ they used no other than lawful means to that end. The same diligence which was shown by them was available also to the plaintiff and other creditors.

The counsel for the plaintiff seems to rely largely upon the case of Place v. Minster (65 N. Y., 89), and urges upon us a contention that the doctrines of that case are sufficient to enable the plaintiff to recover in this action. The decision of the commission of appeals in that case was based wholly upon positive, direct and conclusive testimony of the organization, the existence and the carrying into effect of a flagrant conspiracy to defraud the plaintiff in that action. It is for the reason that the case before us lacks the evidence which existed in the case before the commission of appeals that we think that the trial judge was correct in directing the plaintiff to be non-suited. For, as was decided in Morris v. Talcott, already alluded to, a party seeking to establish a cause of action or a right to a remedy against another based upon alleged fraud, must show affirmatively facts and circumstances necessarily tending to establish a probability of guilt. If the evidence is capable of an interpretation equally consistent of the innocence or of the guilt, the former meaning must be given to it.

The judgment should be affirmed.

Daniels and Beady, JJ., concur.


author: Davis, P. J.

text:
    Warren Beaman, Appl’t, v. Louis L. Todd, Resp’t.

      (Supreme Court, General Term, First Department,

      Filed October 15, 1886.)

    1. New tbial—Ground fob—Refebee cannot compel pasty to call a WITNESS AS HIS OWN.
    Where the referee required the plaintiff to call as a witness on his own behalf one who the plaintiff claimed had become hostile to him and whom he did not wish to accredit by placing him on the stand, Held, error, and ground for a new trial.

      2. Lis pendens—Poweb of court to require amendment.
    Where the plaintiff in an action to establish the relation of equitable mortgagee against the defendant and in favor of himself filed a Us pendens against all the real estate of the defendant, and it is clear that plaintiff could have no lien on certain parcels of property, I-Ield, that the court in granting a new trial has power to require plaintiff to amend the lis pendens by striking out of it all claim of lien on those parcels of property.
    Appeal from judgment on report of a referee dismissing complaint.

      Clinton Sutphen, for app’lt; Edward Patterson, for resp’t.
   Davis, P. J.

On the former hearing a new trial was granted on the ground that the referee erred in requiring the appellant to call as a witness on his own behalf, one Woodworth, who, as appellant claimed, had become hostile to him and whom he did not wish to accredit by placing him upon the stand. See MSS. of Davis, P. J.

The respondent on this re-argument insists that wholly excluding the testimony of Woodworth so far as it operated against the appellant, there was a complete failure to establish his alleged case; and the conclusion of the referee should therefore be sustained. This view might be a sound one if the failure of the plaintiff to make a case were so palpably manifest that no other result than a dismissal of the complaint could be sustained upon the papers before us. We are not able to see that this is so; for several reasons. We have not the witnesses before us and cannot tell how far the referee may have considered their testimony affected by any conflict between it and that of Woodworth. It is not impossible that he might for instance, have believed the evidence of the plaintiff himself to a greater extent than he seems to have done if there had been no conflict between his testimony and that of Woodworth. Of course there would have been no conflict of that kind if Woodworth’s testimony had not been in the case.

This remark is equally true of the testimony of each of the witnesses whose evidence came in conflict to any extent with that of Woodworth.

Besides if Woodworth had been called, by the defendant the plaintiff would have been at liberty to have assailed his credibility by attempting to impeach his character for veracity. How far that might have gone to strengthen the version of facts alleged by the plaintnf it is now impossible for ús to see or say.

Again, the exclusion of the considerations of Woodworth’s testimony only reminds us to consider the numerous objections and exceptions to the rulings of the referee in receiving and rejecting offered evidence. It is enough to say that some of these exceptions appear to have been well taken and would lead to a new trial if carefully scrutinized. It is hardly worth while to do this since we are of opinion that the ground on which the former decision was based cannot be obviated.

The respondent complains, and very properly, that the allegations of the complaint touching other property of defendant of large value situate on Broadway and Twenty-seventy street and Forty-first street, in the city of Hew York, and asserting liens thereon, taken in connection with the Us pendens on file, operates seriously to prejudice and injure his rights and greatly to embarrass his business affairs.

In respect of that property the referee found as follows: X The defendant is the owner of the premises on Twenty-seventh street in the city of Hew York, and of the premises on Forty-first street and on Broadway near Forty-first street in the city of Hew York, but the evidence in this cause fails to establish that either of said pieces or parcels of real estate was bought with or paid for in whole or in part out of the moneys realized by the defendant on the sale of the Fifty-ninth street houses and lots.”

An examination of the case shows that this finding was fully justified, and that nothing tending to establish the alleged lien on that property was proven on the trial.

It is a gross wrong in such a case as this that a plaintiff on unproven allegations in a complaint and the filing of lis pendens asserting a hen should be able to tie up and embarrass all the real property of his antagonist when it is clear that he can have no such relief as he asks for in the way of enforcing an alleged lien.

In this case, if the referee had found altogether in favor of plaintiff’s alleged right to recover, and have an accounting against the defendant, he could have gone no further than to have adjudged such an accounting.

Under the evidence he could have established or adjudged no Hen on the parcels of property above mentioned.

There ought, therefore, to be power in this court in granting the new trial to prevent the gross injustice that has already, for several years, been successfuHy practiced to the prejudice of the defendant.

We think we can properly direct that the new trial be granted, so far as relates to claim for an accounting by defendant for the proceeds of the Long Island and Fifty-ninth street properties, if the plaintiff shall succeed in establishing the alleged relations of equitable mortgagee against the defendant and in favor of himself, and that he be required to amend and correct his lis pendens so far as to strike out all claim of lien on the property mentioned in the above quoted finding of the referee.

An order to that effect will be entered, and the case sent for a new trial to another referee on the issues affecting the relation of the parties to the Long Island and Fifty-ninth street properties and the plaintiff’s right to an accounting, and the taking of such accounting if the right be established.

The referee will be named in the order, and, if not agreed upon by the parties, nominated by the justice settling such order. Costs of appeal to abide the event of the action.

Daniels and Brady, JJ., concur.


text:
    D. Willis James v. The Mayor, etc., of the City of New York.

      (Supreme Court, General Term, First Department

      Filed October 15, 1886 )
    Merges—Unpaid taxes—New York (city of)—Conveyance to city MERGES RIGHT TO COLLECT.
    Where, after an action was commenced and at issue against the city of New York to recover damages for infringment of the city upon certain rights of the plaintiff therein to certain wharf property m said city, an agreement w. s entered into between the parties thereto, by which the city agreed to pay plaintiff a certain sum for the release and extinguishment of these rights to the wharfage, etc., and the plaintiff agreed to execute and deliver a deed, with the usual full covenants for the conveyance of the premises to the Mayor, etc., of New York, “free from all incumbrances except such grants or leases as the mayor, aldermen and commonalty m- y have themselves made,” the city claimed that under the agreement the amount of certain unpaid back taxes should be deducted from the purchase price. Held, that they could not survive the completion of the transaction, as it was specified and defined in the -agreement which was made, for by the conveyance to the city the taxes would necessaiily be merged and extinguished, and would not from that time be incumbrances against the property That it was not such an incumbrance as was intended to be reserved by the agreement.
    Case submitted upon facts agreed upon between the parties.

      Edmund Coffin, Jr., for pl’ff; Frank A. Irish, for def’t.
   Daniels, J.

The controversy includes the liability of the plaintiff for the payment of certain taxes imposed upon property in the city of New York from the year 1878 to the year 1884, inclusive. In the year 1804 the Mayor, etc., of the city of New York conveyed to Andrew Hunt lands on the west side of Greenwich street, between high and low water mark, and a new street of seventy feet in width in tended to be laid out and made fronting on the North River, called West street. A similar conveyance was made of the adjacent lot by the Mayor, etc., in the same year to John Houseman. By these conveyances the land under water was conveyed to the grantees to the easterly side of the street called West street, which was then designed to be made. The westerly side of this street was intended to be the'water front of the city, upon the Hudson river, and in addition to the conveyance of the land the respective grantees were by their deeds secured the right or privilege of taking, having and enjoying “all manner of wharfage, cranage, advantages and emoluments growing to or accruing by or from the said wharf or street of seventy feet in breadth called West street, fronting on the said North river opposite to the said premises hereby granted and every part thereof.” By the terms, and as a condition of the conveyances, the grantees assumed the obligation of making and constructing West street and the bulkhead upon the water front whenever they should be directed so to do by the common council of the city. And in 1818 the common council, by resolution, directed the construction of the street and the erection of the bulkhead in front of the premises described in these deeds, but the location of the street was advanced from twenty-two to twenty-six feet farther to the west than it had been previously contemplated it should be. After the adoption of this resolution the parties acquiring title under the grantees in the deeds filled up the land and constructed the street and bulkhead, and received the wharfage, cranage, advantages and emoluments growing out of or accruing from the use of the - wharf. After that and in December, 1878, William E. Dodge, Jr., and D. Willis James obtained the title to the property, including the rights and privileges of talcing the wharfage and emoluments, for the use of the bulkhead on the westerly side of West street as a wharf.

Prior to that time and in September, 1871,_ the preceding owners of the property, including these privileges, leased and demised the wharf, or bulkhead, in front of their lands, with the rights and privileges belonging thereto, to Francis W J. Hurst for and during and until the month of May in the year 1878. He also acquired from another source the right to use and occupy a pier extending about five hundred feet into the river, and in part bounded northerly by the southerly fine of these lands. After acquiring the right to use this property, and on the 3d of August, 1871, permission was obtained by him from the department of docks to widen this pier on the north side to the extent of fifty feet, and adjacent to the bulkhead as far up as the new bulkhead line which had then been adopted by the department, extending that line two hundred and fifty feet westerly from the easterly line of West street into the river. This extension of the .pier was made by Hurst building the easterly portion of the addition to the westerly line of West street, and for the use of that addition the department reserved a rental from him of- $1,750 per annum. This wharf and the addition to it, together with a shed erected over it, was used by the lessee until the expiration of the term created by the lease, when he vacated and surrendered its possession. On the 28th of July, 1876, the dock department, pursuant to legislation which was supposed to authorize that action on its part, by a resolution, directed the engineer-in-chief to build the section of a bulkhead wall to extend from the northerly end of the King street section then constructed, to the southerly end of the pile foundation between piers 46 and 47, on the North river, upon the plans submitted by him in April, 1876. This direction included this bulkhead on the westerly bounds of West street, and for this purpose piling was driven across the water front of this property between December 1, 1879, and March 5,1880, and a certain erection which had been maintained over the bulkhead by the owners of the property was removed by the authority of the corporation. And after that was done the construction of the work directed by the department was continued into the river for the purpose of erecting and maintaining the new bulkhead line. These proceedings were taken for the permanent appropriation of this property to the use of the public, and completely destroyed the bulkhead on the westerly side of West street as a wharf, rendering it wholly incapable of being devoted afterwards to that object. The owners of the property thereupon brought an action against the city to recover damages alleged to have been sustained by what was considered by them' an infringment upon their rights, and an answer to their complaint was interposed on behalf of the city.

After this litigation was at issue and the plaintiff in this action had acquired the title to the property, which he did on the 6th of March, 1882, overtures were made for its settlement, including the release of the cause of action and the extinguishment of private rights and interests in this bulkhead on the westerly side of West street. They finally resulted in a contract between the plaintiff and the other person previously interested with him and the department of docks, which was approved by the commissioners of the sinking fund, to pay to him the sum of $27,500 for the release and the extinguishment of these rights to the wharf-age, etc., collectible for the use of the bulkhead. By the agreement which was entered into it was agreed that the plaintiff should execute and deliver a deed with the usual full covenants for the conveyance of the premises to the mayor, etc., of the city of New York, “free from all incumbrances except such grants or leases as the mayor, aldermen and commonalty may have themselves made.” The agreement was entered into on the 1st day of January, in the year 1885, and under this covenant it has been insisted on the part of the defendant that the taxes for the years already mentioned shall be deducted from this sum of money.

But it appears by the case that the taxes were assessed and imposed for the year 1878 and each year following down to and including the year 1883, upon what were designated as ward numbers 44 and 2640 together, at a valuation of $4,500, said 44 being designated as pier on West street. This pier, as has already been stated, was constructed, so far as it was in front of the lands conveyed by the city, by Hurst, the tenant, under a demise of the right to do so from the dock department to him. And conformable with that authority he extended the pier structure from the southerly bounds of the land northerly for the distance of fifty feet across the entire bulkhead on the westerly side of West street, which the plaintiff and his grantors were entitled to use under the conveyances executed and delivered by the city. No part of the tax, or assessment, was made upon the bulkhead itself, or upon any of the rights or privileges which the grantees under the city were entitled to enjoy for the maintenance or use of the bulkhead. But as the premises were described they were mentioned as pier on West street, and probably had reference to the enjoyment of pier 44 as that had been extended by Hurst and to no other proprietary interest. For by the diagram exhibiting the property assessed pier 44 seems to include the extension made by Hurst and the premises referred to by the number of 2,640, are mostly northerly of the extension of that pier including the land between it and pier 45. The assessment and tax being restricted in this manner from the year 1878 to and including the year 1883, was not within the covenant that the rights and interests should be conveyed free from all incumbrances, for it was specified and mentioned in the agreement that “the covenants and warranty in said deed shall not, however, extend to said piers, or the wharfage, etc., that may or can arise therefrom.” This exception had reference to the piers previously mentioned in the contract, one of which was the pier next southerly from the pier at the foot of Charlton street,- as that had been enlarged and extended by Hurst under the authority of the dock department which in language provided for that, as the widening of the pier on the north side, to the extent of fifty feet, and it was accordingly within this restriction imposed upon the covenants to be inserted in the deed, and that seems to be broad enough to •exclude the claim made for these taxes against the plaintiff. '.They were not upon the rights or interests to be conveyed to the city, for notwithstanding the general language made use of in the contract it was still the intention of the parties that the city should acquire under it only the rights and interests of its grantees to the bulkhead and the release of all claims for damages because of its unwarranted act. What was added beyond this was to include any possible incidents that might be tributary to the right to collect and receive the emoluments for the use and enjoyment of the wharf. But no distinct or additional right to them had in any form been conveyed away by the city west of the westerly bounds of West street, but its grant was limited to the enjoyment by its grantees of the privileges enumerated in the deeds. And they included no more than the right to •take the wharfage, cranage and emoluments growing or accruing out of the use of the westerly side of the street as a wharf or bulkhead. Neither the pier itself as it was originally ■constructed, nor the land over which it was extended under the authority given by the department of docks to Hurst, was in any form conveyed to or vested in the grantees of the city, and were not to be conveyed by the deed to be executed under the contract. For that, according to the negotiation as well as all the contemporaneous facts, was designed to extend no further as a conveyance than the full relinquishment of the rights acquired under the deeds executed and delivered by the city. And as neither of these years’ taxes was upon this right, interest, or privilege, but was upon the pier extended in front of West street alone, and upon the ward number 2640, and the covenants of warranty were so restricted as not to be applicable to the piers, the defendant had no right to charge these taxes against the plaintiff in the settlement.

In 1884 the tax was assessed in the roll on what was called “Bulkhead, Ward number 2640,” and that, according to the diagram then made, was designed to include this bulkhead. But before that time the city had taken possession of it and had excluded the grantees from the enjoyment of the rights or privileges created by its own deeds for the use of the bulkhead as a wharf. That had been rendered impracticable in part by the piling extended across the front of' the bulkhead between the last of the year 1879 and the 5th of March, 1880. It had also taken down and removed the structure which had been erected and maintained there contributory to the convenient use of the bulkhead and commenced the construction of its own works for permanently extending the bulkhead line of the city out into the Hudson river to the extent of two hundred and fifty feet westerly of the easterly fine of West street. From that time the owners of this property had been wholly and completely excluded from its possession and enjoyment by the authorities of the city, and it had been appropriated to the object of making and maintaining this permanent improvement, so far carried into execution as to render the bulkhead itself as it had been built entirely useless when the tax of 1884 was assessed against it, and as much as that is conceded by the statements contained in the agreement. And it could not have been the design of the parties, in the execution of the agreement which was made, that the taxes imposed for that year after these events had transpired should be in any form charges against the property, which by the agreement should be deducted from the purchase price. Neither this nor the other taxes were such incumbrances as could possibly exist against the property in any form after the execution and delivery of the papers provided for by the agreement. They could not survive the completion of the transaction, as it was specified and defined in the agreement which was made, for by the conveyance to the city the taxes would necessarily be merged and extinguished and would not from that time be incumbrances against the property. What was designed by the agreement was that the city should be protected in the title it was to receive from conflicting incumbrances which might be entitled to be satisfied and extinguished after the deed was executed and delivered to it. This was not such an incumbrance, and could not have been intended to be reserved by this part of the contract. The imposition of these taxes was known and understood on the part of the city, and if it had been intended to deduct them from the sum which it was agreed should be paid to the plaintiff for the property and the release of the right of action, it is only reasonable to suppose that the contract would have contained some language clearly expressive of this intention. None was inserted in it, but the city took upon itself the positive obligation to pay this sum of money for the proprietary rights, to be conveyed and released free from incumbrances, except grants or leases made by the city itself. And that, under the circumstances, wpuld not be held to have been intended to include the taxes which are now claimed in this action. As the case upon the facts has been presented, the plaintiff is entitled to judgment directing the payment of the $2,000 on deposit to him, together with his disbursements in this proceeding.

Macomber and Brady, JJ., concur.