author: Brown, J.

text:
    Hudson C. Bush, Pl’ff, v. Board of Supervisors of Orange County et al., Def’ts.

      (Supreme Court, Orange Special Term,

      Filed August, 1895.)

    1. Constitutional law—Commutation oe military service.
    Any statute, which, purports to empower a town to repay to one of its citizens money which had been expended for a purely private purpose, is to authorize a gratuity and is consequently void.
    2. Same.
    Chap. 664 of 1892, which authorizes the levy of taxes to repay money paid by drafted men during the war to procure substitutes, is unconstitutional.
    Action to enjoin the board supervisors of Orange county from paying out certain moneys of the town of Woodbury. Demurrer to complaint.

      Wm. D. Guthrie, for p’i’ff; Louis Hasbrouch, for def’t board of supervisors; Wm. D. Vicky, for def’t town board of Woodbury; Taylor & Gardner, for def’ts Ostrander.
   Brown, J.

The principal question presented in this action is as to the constitutionality of chapter 664, Laws 1892, which is entitled “An act to enable the several cities and towns of this state which have not already done so, to refund the money expended in furnishing substitutes or in commutation by the men who were •drafted into the, military service of the United States and held to service in the several drafts under the conscription act of the United States, entitled ‘An act for enrolling and calling out the national forces and for other purposes,’ approved March 3, 1863, .and the acts amendatory thereof, while the option of commutation by the payment of three hundred dollars remained, and for the relief of the men who entered the service under said drafts." This act directs that, upon the conditions therein stated, the board of supervisors shall raise by taxation a sum sufficient to pay $300, with interest, (1) to each man or his heirs who was drafted, served and was honorably discharged, etc.; or (2) to each man or his heirs who having been drafted, furnished a substitute; or (3) to each •drafted man or his heirs who had paid the commutation of $300, for the procuration of a substitute. Under an act of congress of 1863 (12 Stat. p. 733, § 13), any person drafted could obtain his discharge from liability under the draft by furnishing an acceptable substitute to take his place in the draft, or by paying to the government agent the sum of $300 for the procuration of such substitute. Legislation of a character precisely similar to that under consideration has been held to be unconstitutional in the courts of the states of Maine, Massachusetts, Pennsylvania, Kentucky. Perkins v. Milford, 59 Me. 315; Moulton v. Raymond, 60 id. 121; Freeland v. Hastings, 92 Mass. 570; Mead v. Inhabitants of Acton, 139 id. 341; Kelly v. Marshall, 69 Pa. St. 319; Ferguson v. Landrum, 1 Bush (Ky.) 548. In all these cases the decision of the «court was placed upon the ground that the right of a drafted man to furnish a substitute was a personal privilege conferred upon him by act of congress; that money paid in the exercise of that privilege was not paid for a public object, but for the sole benefit of the drafted man; and that it was not a valid exercise of the power of taxation to raise money for the purpose of the repayment of sums expended by individuals for their sole benefit. A distinction is drawn in the opinions of the courts between acts of the legislature authorizing the raising of money for the payment of bounties to induce men to enlist in the army, and also for the repayment of money which had been advanced by the town or by individuals to a public fund for the purpose of procuring enlistments, and laws the object of which was to refund moneys paid by individuals for their private benefit alone. This distinction is very clearly stated in Cooley, Tax'n, as follows:

“The several municipal divisions of the state, under proper enabling legislation, may promise and pay bounties to those who will volunteer to fill any call made upon their people for their proportionate contribution to the public armies in time of actual or threatened hostilities. They may also pay bounties to those who have voluntarily entered the public service from or as representing their locality in advance of any such promise. And they may raise moneys by tax in order to refund to individuals any sums advanced by them to relieve the municipality from a draft, or to fill its assigned quota of a call, on an understanding, based upon informal corporate action, that the sums should be refunded when legislation could be had permitting, and perhaps also where the advancements were made without any such informal action. But they cannot be empowered to refund to individuals sums which such individuals may have paid in order to procure substitutes in military service, for themselves as individuals, in an impending draft. Such payments being made by the parties in their own interest, the repayment of them by the public could be nothing else than an appropriation of public moneys to a private purpose.”

See, also, Burroughs, Tax’n, pp. 18,14.

The same distinction is also very clearly illustrated in the cases decided by the supreme court of Massachusetts. Thus, in Freeland v. Hastings, supra, the town voted to raise a sum to repay voluntary contributions made to pay bounties for the purpose of procuring volunteers to enlist, and also the sum of $1,000 to repay to ten drafted men the sums which they had paid to procure substitutes. In voting this tax the town acted under a statute which authorized any town to raise by taxation money to pay and refund any money which had already been paid by such town or contributed by individuals in aid of and for the purpose of filling its qnota or furnishing men for the war, etc. The appropriation to-repay the sum paid for substitutes was held illegal, the court saying:

“We know of no rule or principle on which a valid authority to raise money by taxation to be appropriated to the repayment of money expended by individuals for such a purpose could be granted by the legislature. A statute conferring such power would be obnoxious to the objection that it authorized the raising of money by taxation for the exclusive benefit of particular individuals ; that it relieved one citizen from the performance of a legal duty at the public expense, and appropriated money for a private purpose which could only be raised and used for public objects. It is hardly necessary to say that a statute designed to accomplish such purposes would be against common right, and would transcend the authority conferred on the legislature by the constitution.”

This ruling was reaffirmed and applied in the case of Mead v. Inhabitants of Acton. In the latter case the court said:

■ “ In any view we can" take of the statue, the payments it contemplates are mere gratuities or gifts to individuals. The principle would be the same if a town should vote a gratuity or a pension to one who had rendered services as an officer, or was in any way entitled to its gratitude. This a town has not the power to do, even with the sanction of the legislature. A statute conferring such power is unconstitutional, because it authorizes raising money by taxation for the exclusive benefit of particular individuals, and appropriates money for a private purpose, which can only be raised and used for public objects. The right to tax is the right to raise money by assessing the citizens for the support of the government and the use of the state. The term ‘taxation’ imports the raising of money for public use, and excludes the raising of it for private uses.”

The power of taxation possessed by the legislature is of the broadest character possible, and includes the power to recognize claims against the state or its subdivisons founded only in equity and j ustice, or in gratitude or charity. In the absence of express constitutional restriction, the legislature can make appropriations of public money whenever the public well-being will be promoted. But the question whether the purpose for which the money is raised is public or private is one for the courts to determine. That question stands upon the.same footing as the question of the pub-lie use of property sought to be taken under the power of eminent domain. When the purpose of an act of the legislature is thus assailed, the courts must determine whether its object is to promote the public good or private interest; and, if there is no possibility that it will promote in any degree the public welfare, it transcends the power of the legislature, and is void. Judge Cooley, in his work on Constitutional Limitations, thus states his conclusions from a review of manjr cases:

“ However broad are the terms employed in describing the legislative power over taxation in these cases, it is believed that no one of them has gone so far as to sanction taxation, or the appropriation of the public revenue, in order to refund to individuals moneys which they may have paid .to relieve themselves from an impending draft, or may have voluntarily contributed to any public purpose from motives purely personal to themselves, without any reason to rely upon the credit of the state or of any municipal corporation for reimbursement, and where the circumstances are not such as fairly to challenge the public gratitude. Taxation, in such a case, where no obligation, honorary or otherwise, rests upon the public, would be nothing else than a naked case of appropriating the property of the taxpayer for private purposes, and that without reference to anticipated public benefits.”

Independent of any constitutional restraint upon the legislature, it would, in my opinion, be difficult to uphold the validity of the law under consideration. The money paid by the drafted man to escape personal service in the army was in no sense beneficial to the public. The sole object of the payment was to escape the performance of a public service, and it was an affair which concerned the drafted man alone. Not in the slightest degree did it promote the public good. But the statute falls directly within the prohibition of section 2, art. 8, of the constitution of this state. That-section, so far as material to this case, is as follows:

“ No county, city, town or village shall hereafter give any money or property * * * to or in aid of any individual, association or corporation. * * * Nor shall any such county, city, town or village be allowed to incur any indebtedness except for county, city, town or village purposes.”

What these municipal corporations are forbidden doing by the constitution, the legislature could not empower them to do; and it seems to me quite plain that any statute purporting to empower a town to repay to one of its citizens money which had been expended for a purely private purpose is to authorize a gratuity, and is consequently void.

The counsel for the defendants Ostrander has referred to an opinion given by Judge O’Brien, when attorney general, to the-effect that the law under consideration was valid. That opinion appears to be based on the rule that the legislature may authorize the payment of claims against the state or its municipal corporations that are supported only by a moral or equitable consideration, and that laws directing the payment of such are not within the limitation of the provision of the constitution quoted. That rule does not, however, in my opinion, embrace the claim in question. The town derived no benefit from the procuring of a substitute by a drafted man, and no moral or equitable consideration exists why money paid for such a purpose should be reimbursed by the town.

In Tabor v. Board, 131 N. Y. 432; 43 St. Rep. 177, Judge1 Finch, in referring to this class of claims, said:

“I am not impressed by the argument that the reimbursement given to localities for an excess, which operated to relieve them in the December assignment of quotas, ought to extend to individuals whose substitutes affected pro rata the same relief. The cases are widely different. The individuals either owed military service or they did not. If they did, what they paid for a substitute simply performed their own duty by proxy, and the state owed them nothing. No equity of theirs called for reimbursement, while the taxation of localities, when replaced by a general taxation for bounty purposes, did call for some scheme which, to a limited degree, would equalize the burden.”

And in this opinion Judge O’Brien appears, from the record, to-have concurred. There is no analogy between such a claim as Ostrander’s and that of a person who has performed services for a municipal corporation, the benefit of which the corporation receives and enjoys, but which, owing to defective laws, or failure to comply with legal provisions, the claimant cannot enforce. In such a case a moral obligation rests upon the community to payr and a law which authorizes payment cannot be said to be within the provision of the constitution referred to. The cases referred to in Judge O’Brien’s opinion are of the latter class. But the-claims before the court, as already stated, are not supported by any moral obligation resting upon the town. Hence their payment is a gift pure and simple, and falls directly within the restraint of the constitution. No case has been cited which upholds legislation of this character, and, in view of the numerous authorities . cited by the plaintiff, sustaining the contention that the law is unconstitutional, the injunction must be granted.

The argument that the town received the money from the state to pay the claim of the Ostranders has been considered, but it is not regarded as of any weight in this action, and need not, therefore, be further referred to.

The plaintiff may maintain this action to restrain the defendant from acting, under the statute; and the allegations of the complaint are sufficient under section 192 of the Code. The fact that a mandamus was heretofore granted, directing the board of supervisors to levy the tax, does not affect the plaintiff. The order in that proceeding concludes only the parties to it. The plaintiff alleges that he was not advised of the mandamus proceedings, and had no knowledge or information thereof, until about July 10th. So far as he is concerned, the case docs not differ from what it would be if the board of supervisors had acted upon its own motion. The demurrer must, therefore, be overruled, and there must be final judgment in plaintiff’s favor quashing the writ of mandamus heretofore issued to tbe board of supervisors, and restrain ing said board from levying or assessing any tax on the town of Woodbury, and restraining the defendants, who are officers of said town, from paying out any money or funds of said town for any of the purposes of chapter 664, Laws 1892.


source: Caselaw Access Project

author: Mayham, P. J.

license: Public Domain

text:
    First National Bank of Amsterdam, Resp’t, v. Elizabeth N. Shuler et al., Def’ts. Elizabeth N. Shuler, Individually and as Executrix, etc., App'lt.

      (Supreme Court, General Term, Third Department,

      Filed September 10, 1895.)

    1. Parties—Substitution—Executrix a party.
    "When a person is already a party individually and before the court and entitled to be heard in his representative capacity, a refusal to make him a party in his representative capacity is not error.
    9. Creditor’s bill—Lien.
    The commencement of an action in the nature of a creditor’s bill creates a lien on all the debtor’s assets which survive his death, occurring before the appointment of a receiver, and is good against his personal representatives.
    Appeal from a judgment, and from an order, denying a motion to correct the interlocutory judgment and to be made a party in a representative capacity.

      Hale, Bulkeley & Tennant (Matthew Hale, of counsel), for app’lt; Westbrook, Burke & Hover {Z. S. Westbrook, of counsel), for res’pt.
   Mayham, P. J.

This appeal arises out of the following facts: The plaintiff in this action, being a judgment creditor of Isaac 0. Shuler, in his lifetime commenced a creditor’s action to set aside certain conveyances and assignments made by him to Mary A. Booth and Elizabeth N. Shuler, and a general assignment for the benefit of creditors, made by the judgment debtor to Hicks B. Waldron, all of whom were made defendants in this action. The defendants Isaac 0. Shuler and Elizabeth N. Shuler answered in the action, taking issue upon the allegations of the complaint therein. After the issue was joined, and before the trial of the action, Isaac 0. Shuler died, leaving a last will and testament, wherein he named Elizabeth N. Shuler as sole executrix, and made her the sole devisee and legatee of all of his estate, real and personal; whereupon the plaintiff obtained an order of the court for leave to file and serve a supplemental complaint. That complaint, in addition to the allegations of the original complaint, alleged the death of Isaac 0. Shuler, making execution and probate of" his will, and the appointment and qualification of Elizabeth N. Shuler as sole executrix of that will. That motion was made, and the relief granted, upon notice to all the surviving defendants in the action. No issue was taken by the defendants upon the allegations of the supplemental complaint, and the same were, therefore, admitted. The cause was tried before Hon. Charles R Ingalls, as sole referee, who, after hearing the case, made his report, wherein, among other things, he found and adjudged several of the conveyances and assignments made by Isaac C. Shuler, and his final assignment for the benefit of creditors, fraudulent and void, and directed judgment setting aside such conveyances and assignments, and adjudging them void as against the plaintiff, as judgment creditor. To some portions of the findings of fact and conclusions of law in the report of the referee, the defendant Elizabeth N. Shuler, by her counsel, excepted. Upon the filing of the report, an application was made by the plaintiff to the special term for a confirmation of the same, and for judgment upon the report in favor of the plaintiff. Upon notice of such application, Elizabeth N. Shuler, by her attorney, gave notice of a motion to set aside the report, or correct or modify the same, and also for an order that she, as executrix of the last will and testament of Isaac C. Shuler, be made a defendant in the action. The motion for confirmation and judgment, and the motion made by the defendant Elizabeth to set aside the report, and to be made a party defendant, were all ordered to be heard before Mr. Justice Landon, at special term, who subsequently heard the applications on behalf of the plaintiff and defendant, whereupon he denied the motion of Elizabeth N. to set aside the report, and to be made a party, with costs, and granted the motion of the plaintiff for interlocutory judgment, and, in and by such interlocutory judgment, appointed a receiver of the property and effects of Isaac 0. Shuler, deceased, and also a referee to take and state the accounts of the assignee for the benefit of the -creditors of Isaac C. Shuler, and also of Elizabeth N. Shuler, for any property in their, or either of their, hands, belonging to the estate of the deceased. On the hearing before said referee, in taking the account directed by said interlocutory judgment, the appellant, Elizabeth N. Shuler, appeared by counsel, as did the counsel for the plaintiff; and the referee, after hearing counsel, made his report, wherein he followed the. directions of the report of the referee made in the trial, and fixed and adjudged the amount and kind of property found by him in the possession of the assignee for the benefit of creditors, and also of that in the hands of Elizabeth N Shuler, belonging to the estate of the deceased. That report of the referee was duly filed, and upon it and the report of the referee in the action, and the interlocutory judgment entered thereon, final judgment was, on motion at special term, held by Justice Landokt, entered in the action, from which the defendant Elizabeth N. Shuler appeals to this court, bringing up, as well, the interlocutory judgment for review.

We think the learned trial judge at special term was clearly right in denying the application of Elizabeth N. Shuler to be brought in as executrix. Within the authorities referred to by him, she was properly before the court in her representative capacity after the filing of the supplemental complaint. There can be but little doubt but that, if she had so desired, she could, after the service of the supplemental complaint upon her, have interposed an answer in her representative capacity, without any further leave of the court to do so. She was, therefore, for all the beneficial purposes of her defense as executrix, before the court, and entitled to be heard in that capacity in this action. That being so, there could be no good reason for allowing her, after the case had been finally disposed of, to present new issues, and render the work already accomplished in the case, perhaps, entirely nugatory. The order, so far, at least, as it refuses her application to be made defendant. should be affirmed, with costs.

We have also carefully examined the various questions raised by the learned counsel for the appellant in reference to a modification of the interlocutory judgment, as asked for by them, as well as their application, on the whole case, for a reversal or modification of the decree entered therein, and are of the opinion that the •same should be affirmed upon the opinion rendered by the judge at special term. Most, if not all, of the questions raised by the learned counsel on this appeal, were clearly and succinctly examined and passed upon in the opinion handed down by the special term judge. We think the interlocutory and final judgment should be affirmed upon that opinion. Judgment affirmed, with costs.

All concur.

The opinion of Mr. Justice Landon at special term was as fol. lows:

The objection that the defendant Elizabeth N, Shuler, as executrix, was not named as a party defendant in the supplemental complaint, is not a substantial or fatal objection. She was a party defendant in the original action, and, after the death of her husband, also a defendant in that action, and her qualification as the executrix under his will, an order was made, pursuant to which a supplemental complaint was served, reciting such death, and her qualification as executrix. The supplemental complaint is ample to charge her as executrix. Patterson v. Copeland, 52 How. Prac. 460; Beers v. Shannon, 73 N. Y. 292; Stilwell v. Carpenter, 2 Abb. N. C. 238; 62 N. Y. 639. In the original complaint, Mrs. Shuler was charged in her individual capacity. The function of the supplemental complaint was to charge her as executrix of her husband, as well as individually. The plaintiff, by commencing this action, obtained a lien upon the assets of Isaac 0. Shuler which survived his death, though the receiver was not appointed until after his death. Brown v. Nichols, 42 N. Y. 26. It is urged in behalf of Mrs. Shuler that this lien only applied to intangible and equitable assets, not subject to levy upon execution, and that, as to tangible assets, subject to levy, the lien did not attach, and therefore, upon the death of Mr. Shuler, they passed to her as his executrix. As Mr. Shuler had made a general assignment of his assets, good against himself, though bad against the plaintiff, they did not pass, under his will, to his executrix. Clearly, if the lien of the plaintiff was good against Shuler himself, his executrix, who stands in his shoes, has not better right. The cases cited to support the proposition that the lien acquired by the commencement of an action in the nature of a creditors’ bill does not attach to tangible assets, subject to levy, are to the effect that such lien, before the actual appointment of a receiver, does not prejudice the lien of the levy under an execution of another judgment creditor. Davenport v. Kelly, id. 193. Something more than a Us pendens is required to prejudice such a levy. Becker v. Torrance, 31 N. Y. 631. Bank v. Schermerhorn, Clarke, Ch. 303, was a contest between receiver and the sheriff, who made his levy after the actual appointment of the receiver. Kitchen v. Lowery. 127 N. Y. 53; 37 St. Rep. 327, was by a judgment creditor who did not commence his action to set aside an unfiled chattel mortgage until after the mortgagee had sold the chattels, and realized his money upon them. The mortgage was good between mortgagor and mortgagee., though not filed, and the judgment creditor was beaten because the mortgagee realized upon his lien before the judgment creditor attacked it. There are expressions in the opinion that seem to support Mrs. Shuler’s contention. They are probably true, as applicable to the facts there presented, but not true if sought to be extended to Mrs. Shuler’s position.

I think the rule is that, by the commencement of an action in the nature of a creditors’ bill, a lien is acquired upon all the choses in action and equitable assets of the judgment debtor, and also upon all his tangible assets; that, as to the intangible assets, since they can only be reached in equity, the first in diligence is first in lien, and, as to the tangible assets, the law affords the creditor a remedy by execution, which equity does not supersede or exclude; which, if resorted to before a receiver is appointed, takes the preference. It is probably true that a chattel-mortgage sale, or any other honest transfer of the. tangible property, before the commencement of the creditor’s action, will be upheld. The cases are contests between creditors, in which an actual lien, or title accompanied with possession of the property, or the right to it, is better than the attempt to perfect it by resort to equity. I notice the remark of Mr. Justice Gilbert in Smith v. Edwards, 23 Hun, 229, to the effect that Judge Grover’s remarks in his dissenting opinion in Brown v. Nichols, 42 N. Y. 26, have not the force of authority. But Judge Grover’s opinion consists of two parts,—one in which he dissented from the majority, and the other in which he agreed with them,—and the remarks referred to are in the second of his opinion. I think Judge Grover, in these remarks, was right, and I do not see that they did not receive the approval of the majority.

The motion of Mrs. Shuler is denied, and the referee’s report confirmed, except as modified, as to the value of a horse charged to-Mrs. Shuler, $75, and interest, and final judgment directed for plaintiff.


author: Larremore,

text:
    Ursula McKee, as Executrix, etc., Pl’ff, v. Frank B. Rapp et al., Def’ts. (Four cases).

      (New York Superior Court, Reference,

      Filed June, 1895.)

    1. Mechanic’s lien—Abandonment of contract.
    Where a contractor abandons the contract and the owner completes the work under the contract, the material men have a lien, to the extent oí any balance after deducting amount paid to the contractor and the expenses of completion, on the original contract price.
    2. Same—Deductions.
    Where no actual damage is shown and no presumption thereof raised, a claim for deduction, in the nature of liquidated damages, for delay in the completion of the work, will be denied.
    Four actions by Ursula McKee, as executrix of the will of John B. McKee, deceased, against Frank B. Bapp and others, to enforce material men’s liens.

      James Kearney and John Mulho Hand, for pl’ff; fackeli & Mc-Quade, for deft Eben Peek; John J. Gleason, for def’t J. L. Mott Iron Works; Reed & McKewen, for def’t John J. Bowes; Rufus G. Beardsley, for def’t Board of Education ; C. 0. Clarice, for def’ts Fox & Baxendale ; Thomas C. Enneyer, for deft Henry McShane Co.; Francis M. Scott, Corp. Counsel, and John L. O'Brim, for def’t city.
   Larremore,

Referee.—The defendant Frank B. Bapp, during the summer of 1890, entered into contracts with the defendant the mayor, aldermen and commonalty of the city of New York, to make certain sanitary alterations and improvements in public schools Nos. 57, 60, 76, and 83. Said Bapp thereafter commenced the work required by such contracts, but personally abandoned the same prior to the completion thereof, and the work called for by the contracts was thereafter completed under the direction of the boards of trustees of the wards in which 'said schools were respectively situated. The plaintiff above named, as a subcontractor under said Bapp, furnished materials for use, and which were actually used, in prosecuting the work in the school buildings. A number of actions were brought in different courts, by different subcontractors so furnishing materials, to foreclose mechanic’s liens filed by them, and all of such actions have been consolidated into the four actions, entitled as above, in this court, each of such consolidated actions relating to one of the public schools aforesaid. It appears that with regard to each of said schools a balance remains in the hands of the comptroller, on account of the contract price originally agreed to be paid to Bapp, after all payments made to Bapp, and by the trustees in the completion of the various jobs which he undertook. Some of the materials furnished by the various lienors were used by Bapp before he abandoned ; and some of the same, under the direction of the trustees, in completing the contracts after his abandonment. The various material men claim that as their property was actually used in the prosecution of the work, and balances remain upon the contract prices, such balances represent the value of their property which has gone into the improvements, and that they should be entitled to payment out of the same in the order of the priority of the their respective liens.

It has been held by the general term of the supreme court, in the First department, in Wollreich v. Fettretch, 4 N. Y. Supp. 326, that when a builder abandons his contract, but leaves materials on the ground, which the owner accepts and uses, the relations of seller and buyer is created, and the builder is entitled to a material man’s lien for the price. This decision, however, would not help the present plaintiffs. If a new relation of vendor and purchaser, as to the materials, were supposed to have arisen, it could only benefit Rapp, the original contractor. Strictly speaking, the material men sold the material to Rapp in the first instance ; and, on any theory, he would be the only party in whose favor a contract of purchase by the city of the materials could be implied from their appropriation and use in the improvements after he abandoned. In my opinion, however, the principles laid down in one of the latest decisions of the court of appeals on the subject of mechanic’s liens aré decisive in favor of the rights of the material men to maintain mechanic's liens upon the various balances now in the comptroller’s hands. In Ogden v. Alexander, 140 N. Y. 356; 55 St. Rep. 744, the court, by Judge Finch uses this language:

“The facts are that Hill (a building contractor) abandoned the contract and never performed it. He made an assignment and discontinued work entirely. He thereby forfeited all right to the final payment at the option of the owner, and with that forfeiture fell any possible right of the lienor (a subcontractor who had furnished material), unless the owner waived the forfeiture, as by the terms of the agreement he was at liberty to do, and elected to complete the work under the contract at Hill’s expense. If he made that election, and so completed the work, and the cost proved to be less than the payment due at the end, the difference would be Hill’s profit, and payable to him, and upon that the lien could rest. If, on the other hand, there was no such .waiver, and no such election, but Alexander (the owner) chose to insist upon the forfeiture, and went on, not under the contract, but in his own way, and at his own expense, then the final payment never at all, or to any extent, became due to Hill, and there was nothing upon which plaintiff could have alien. It does not answer this difficulty to say, as did both the referee and the general term, that, after appropriating from the last stipulated payment all that it actually cost to complete the house, there still remained a balance unappropriated, and representing Hill’s profit, The materiality of that fact depends wholly on the question whether the owner stood upon the forfeiture, or-completed the house under the contract, and in behalf and at the risk of the contractor. Wheeler v. Schofield, 67 N. Y. 311. The written agreement permitted the latter choice by the owner upon giving three days’ notice, but there is no finding of any such fact; and unless we can supply it in some manner, there is nothing due to Hill, and no fund to feed the lien. I incline to the opinion that we can supply the missing fact.”

The court then proceeds to spell out a finding that the owner had waived the forfeiture, and elected to complete under the contract, preserving both the liability of the contractor and the rights of the subcontractor, from, declarations made by the owner that were inconsistent with an intention upon his part to complete at his own expense, and on his own responsibility. The case at bar, which involves an essentially similar state of facts, is a stronger one in favor of the material men than was Ogden v. Alexander, because the record contains evidence, not only of acts in recognition and confirmation of the contract after its abandonment by Rapp, but also of the giving of the three days notice provided for. It would seem that the peculiar phraseology of section 1824 of the consolidation act, regulating mechanics’ liens against the city, granting a lien for work or materials performed or furnished, “ in pursuance of or in conformity with the terms of any contract made between any person or persons and the city,” and causing such lien to attach, not to buildings themselves, but to the moneys due or to grow due under the contracts, makes the principles enunciated in Ogden v. Alexander fully as applicable, if not more so, to mechanics’ liens for work done for the municipality than to cases of private building operations. The fourth section of the contracts in suit reads as follows:

“Fourth. That in case the party of the second part shall at any time refuse or neglect to supply a sufficiency of workmen and materials of the proper skill and quality, or shall fail in any respect to prosecute the work required by this contract with promptness and diligence, or shall omit to fulfill any provision herein contained, this contract, after three days’ notice in writing to the parties of the second and third parts, shall be, and shall be held to be, voided and forfeited; and the parties of the first part, or a majority of them, shall have the right and power to procure and employ other persons to perform and furnish the work and materials required by this contract, so as fully to execute the same in every respect, and the eost and expense thereof, at the reasonable market rates, shall be,a charge against the party of the second part, who shall pay to the parties of the first part the excess thereof over and above the unpaid balance of the amount to be paid under this contract ; and the party of the second part shall have no claim or demand to such unpaid balance, or by reason of the nonpayment thereof to said party.”

In my view, the true interpretation of this clause is that the city was authorized to complete the work under the contracts, and on the account of the contractor, who is expressly required topay any excess over and above the unpaid balances of the amounts payable to him under the contracts. The learned counsel for the corporation place great stress upon the final sentence of such clause, “and the party of the second part shall have no claim or demand to such unpaid balance, or by reason of the nonpayment thereof to said party.” Interpreting the clause, however, as a whole, the effect of this final provision is to deprive the party of the second part of any right to a personal payment to him of said balance unless he himself completes the job. The agreement does not contemplate or provide for the contingency of the work being finished at a less total expense than the original contract price. It provides for the completion of the work under the contract in any event, either by Rapp himself, or by the trustees in his behalf and at his risk. Completion under the contract, and not aside from it, is the only form of completion which it contemplates. Nor do I think that the mere use of the word “ forfeited ” in the clause in question would compel a court to hold that a “forfeiture,” in the technical sense, had taken place, where, as here, the context and subsequent acts of the parties show that a “ forfeiture,” within the meaning of Ogden v. Alexander, supra, was not intended. See Ward v. Hudson River Building Co., 125 N. Y., bottom pages 234, 235; 34 St. Rep. 934.

The forms of the notices served on the ¿ontractor, Rapp, under the three-days provision, strengthen the position that the trustees completed under the contract. It appears that these notices were not personally served on Rapp, but were mailed to him and his sureties at the addresses given in the contracts. By a singular misconception, according to my view, of the respective interests of the parties, counsel for the lienors have contended very strenuously against the sufficiency .of such notice by mail; while, on the other hand, it has been equally sternuously contended on the part of the city that such notice was valid and regular. Upon this point I agree with the learned counsel for the corporation that the form of the service in question was proper and regular, especially in view of the fact that, the mailing of the notices having been testified to without contradiction, neither Mr. Rapp, who has attended on various occasions during the sessions of this reference, nor either of his sureties, was called to prove that they did not receive them. McCoy v. Mayor, etc., 46 Hun, 269; 11 St. Rep. 504; Beakes v. Da Cunha, 126 N. Y. 293; 37 St. Rep. 14. With regard to schools Nos. 57 and 83, the notice sent to the contractor and his sureties was as follows :

“In pursuance of the provisions of the contract between the trustees of the Twelfth ward and yourself for work on Gf. S. 57 and Gf. S. 83, we hereby notify you that you having failed to prosecute the work under the said contract, and having omitted to fulfill the provisions of the same, we shall, after three days, consider said contract voided and forfeited, and shall proceed with the completion of the work under the said contract, and hold you, and each of you, responsible for the cost of completion.”

The notice sent with regard to school No. 76 was in substantially the same form. The notice sent with regard to school No. 60 was to the effect that “ the trustees will avail themselves of the power granted by the fourth provision of the said contract.”

Reading these contracts according to their substantial intent, as a whole, and also considering the notices sent by the trustees of the different wards in pursuance thereof, it seems tome perfectly plain that the intention was not to insist on a technical forfeiture,—not for the trustees or for the city to go on with, the work in their own way, and'at their own expense,—-but to proceed under the contracts and on the account of, and at the expense of, the contractor. If this view be correct, the balances on hand on account of these contract are under the doctrine of Ogden v. Alexander, subject to the liens of the material men. I have, in this discussion, relied principally upon Ogden v. Alexander, because it is the latest casein point in the court of last resort; but to the same substantial effect is Foshay v. Robinson, 137 N. Y. 134; 50 St. Rep. 192. The case at bar is distinguishable from Larkin v. McMullin, 120 N. Y. 206; 30 St. Rep. 902, and Hollister v. Mott, 132 N. Y. 18; 42 St. Rep. 848. Because in neither of the cases last named did the contract involved contain a provision by which the owner could complete the contract in case of the contractor’s default. See, also, Blakeslee v. Fisher, 49 St. Rep. 474.

It also appears that some of the material men have been paid for materials furnished to Rapp, and used in the schools in question, out of the funds appropriated to these contracts, and since Rapp’s abandonment thereof, and that, as to one of the schools, a final certificate of the completion of the work has been given. These circumstances are in my judgment, fully as inconsistent with the theory of a technical forfeiture of the contracts as the declarations made by the owner, relied upon to negative the theory of a forfeiture by the court of appeals in Ogden v. Alexander. It seems to me, therefore, as above intimated, that the rights of the material men to their liens are more clear in the present cases than was the subcontractor’s right in the case last cited, because here we have, not only, as in that case, evidence to estop the owner from asserting a forfeiture, but also—what was there wanting—the regular notice called for and contemplated by the contracts. By reason of the facts and circumstances above discussed, I am of the opinion that the final certificates, as to' the other three schools, have been unreasonably withheld.

The claim of the city for liquidated damages has caused some difficulty and uncertainty in determining these actions. There is no doubt that provisions for such damages in building contracts are enforceable in proper cases. Where, as here, the owners place no obstruction or hindrance in the contractor’s way, and do not waive their rights, expressly or impliedly, they may, if the contractor exceed his time, accept the job, and recover damages for the delay. Grannis & H. Co., v. Deeves, 72 Hun, 171; 55 St. Rep. 674; Dunn v. Steubing, 120 N. Y. 232; 30 St. Rep. 653. In the present cases the contracts, read in connection with the specifications, provide for the completion of the work on or before the 25th day of August, 1890, and it is also stipulated that the contractor shall forfeit twenty-five dollars for every day of delay beyond that date. The owners did not, although under the specifications, they might have done so, interfere with or take any action with regard to said work until after September 1st, at about which time the notices hereinbefore referred to were sent to the contractor and his sureties, and the trustees of the respective schools undertook the completion of the contracts; and the same were substantially finished on or before September 11th, when the schools opened for the new year. There is a substantial and equitable reason for-recognizing the right, under building contracts, to deduct stipulated damages, and not treating such clauses as penalties. If a contractor fails to complete a building job on time, the owner usually suffers real loss, but loss of a character exceedingly difficult to definitely measure. The owner himself may be delayed in moving into the new building, or his business may be embarrassed by postponement of the use of additions or improvements to the structure, or he may lose rents from tenants who were prepared to go into possession at the time fixed for completion. As such damages would be uncertain, if expressly sued for, it is only just to effectuate the agreement of the parties as to the sum at which they shall be allowed. One of the latest utterances of the court of appeals on this subject is Ward v. Hudson River Building Co., 125 N. Y. 230; 34 St. Rep. 934, and certain passages from Judge Gray’s opinion therein furnish tests to dispose of the present question:

“If it then appear that the damage and loss which may be presumed to result from nonperformance are uncertain, and incapable of exact ascertainment, then the payment or liability fixed by them must be deemed to liquidated damages, and recoverable as such. Where, however, a sum has been stipulated as a payment by the defaulting party, which is disproportionate to the presumable or probable damage, or to a readily ascertainable loss, the-courts will treat it as a penalty, and will relieve, on the principle that the precise sum was not of the essence of the agreement, but was in the nature of a security for performance. * * * The result of an examination of cases to confirm the idea that it is difficult, if it is even possible, to lay down a general rule applicable to all the cases which arise, where parties have undertaken to-provide against a loss consequent upon a breach of an agreement. We may, at most, say that where they have stipulated for a payment in liquidation of damages, which are in their nature uncertain, and uncertain able with exactness, and may be dependent upon extrinsic considerations and circumstances, and the amount is not, on the face of the contract, out of all proportion to the probable loss, it will be treated as liquidated damages.”

The exercise of these tests seems to involve a certain amount of discretionary power in the court to determine whether or not a stipulated sum or rate shall be treated as liquidated damages under the circumstances of a given case, and the tests themselves presupposed actual damage, or at least probable or presumable damage, as essential to treating the specified amount as liquidated damages. The contracts in question in-the present cases were for sanitary improvements to public school buildings. The only serious necessity was that the work should be finished in time for the opening of the schools on September 11th. As matter of fact, it was substantially finished by that time; the respective board of trustees having, as above shown stepped in, and completed Rapp’s contracts. The opening of the schools was not delayed by the contractor’s default, and contrary to the rule in ordinary building agreements, it would seem that no damage could have resulted. Considering. the special character of the work, and its actual completion in good season for every practical purpose, not only is there nothing fro rn which damage can be presumed, but in. my judgment, an affirmative presumption is raised that there was no damage. The most that can be said is that the trustees were put to additional exertion and extra trouble. But their personal damage or loss so occasioned is not allowable for under a public contract In Ward v. Building Co., supra, the nature of the building transaction was taken into consideration; and it was shown, as part of the argument allowing liquidated damages, that a presumption of pecuniary damage by the delay was raised. Under the doctrine of that case, it would seem that a fair presumption of actual damage is essential to the enforcement of provisions of this kind; and, as such prerequisite does not exist in the case at .bar, the claim of the municipality for deductions in the nature of liquidated damages must be disallowed.

I am glad to be able to arrive, upon what I conceive to be sound technical principles, at a clearly equitable result, According to the opposing views, the defendant, through the allowance of a purely arbitrary penalty, would be enabled to eat its cake and have its cake. The liens of the material men upon the balances of the respective contract prices should be allowed in the order of priority.


author: Bischoff, J.

text:
    Herman D. Berner, Resp't, v. Soloman L. Kaye, App’lt.

      (New York Common Pleas, General Term,

      Filed August 22, 1895.)

    1. Chattel mortgage—Consideration.
    An agreement not to sue on an overdue note, though the time for which forbearance is given is not fixed, is a sufficient consideration to constitute the holder thereof a chattel mortgagee for value, as against the vendor in a conditional sale who fails to file a copy of the contract of sale. •
    2. Same—Burden op proof.
    A person, who claims property under a chattel mortgage as against the vendor thereof under a conditional sale, who has failed to file his contract of sale, has the burden of establishing that the mortgage was accepted without notice of the vendor’s right.
    3. Appeal—Change of position.
    The appellant cannot assume, on appeal, a position in opposition to the one taken by him on the trial in the court below.
    Appeal from a judgment in favor of plaintiff.

      B. Lewinson, for app’lt; Edward J. Krug, Jr., for resp’t.
   Bischoff, J.

Defendant obtained possession of the chattel in suit as purchaser upon a sale under foreslosure of a chattel mortgage, and his defense to this action rests upon the title of his vendors, the mortgagees. Plaintiff sold and delivered the chattel to one Magnus, che sale being conditional upon the payment of the purchase price, title to remain in the vendor meanwhile; those terms being expressed in a bill of sale, which was never placed, upon record. Magnus subsequently mortgaged this chattel to Hartman, Goldsmith & Co., as security for the payment of certain promissory notes held by that firm ; that promising, in return, to forbear suit upon one of the notes, which was lately due and protested. It does not appear that such forbearance was to endure for any fixed period. Upon foreclosure of the mortgage, defendant purchased the chattel, and on his refusal of plaintiff’s demand for its return this action was brought.

The judgment in favor of the plaintiff was based upon the theory that the defendant’s vendors were not mortgagees “in good faith,” such mortgagees alone being protected by the statute which declares that “ all conditions and reservations which provide that the ownership of such goods and chattels is to remain in the per son so contracting to sell the same, or other person than the person so contracting to buy them, until said goods or chattels are paid for, or until the occurring of any future event or contingency shall be absolutely void as against subsequent purchasers and mortgagees in good faith, and as to them the sale shall be deemed absolute, unless such a contract for sale with such conditions and reservations therein, or a true copy thereof, shall be filed as directed in the succeeding section of this act.” Laws 1884, chap. 315, section 1. We agree with counsel for the appellant that the promise to forbear suit upon the note matured, and at the time enforceable against the mortgagor, constituted the mortgagees such “ for value,” and, though such forbearance was not to endure for any fixed time, the agreement was to be construed to imply forbearance for a reasonable time, the measure of which time was supplied by the circumstances of the particular case. Traders’ Nat. Bank v. Parker, 130 N. Y. 415; 42 St. Rep. 506. But that the mortgagees where such “ for value ” alone did not constitute them mortgagees “ in good faith.” It was requisite to invest them with the latter quality that at the time of the taking of the mortgage the mortgagees acted in honest ignorance of the adverse claim of the plaintiff to the mortgaged chattel. 8 Am. & Eng. Enc. Law, p. 151; Bronner v. Loomis, 17 Hun, 442; Institution v. Duryea, 67 N. Y. 84. Obviously, if the mortgagees, though parting at the time with adequate consideration therefor, accepted the mortgage with notice of the plaintiff’s rights, and with intent to defeat his claim to the mortgaged chattel, or to secure some advantage over him, they were not such “in good faith.” To say that a man takes in good faith when he acts with notice, and, of course, under conscious hostility to another, who has before taken a similar title, would be a legal solecism. The object of the statute here is that of all the other registry acts,—to prevent imposition upon sudsequent purchasers and mortgagees, who must many times govern themselves by appearances. When everything is actually explained to them, they have the best kind of notice, and must be holden to take subject to the prior incumbrance. Gregory v. Thomas, 20 Wend. 17, 19. For omission to file the contract, or a copy thereof, the statute declares that the sale shall be deemed absolute only as to subsequent purchasers and mortgagees in good faith. “ Good faith,” therefore, is the tabula in nauifragia of the mortgagees who claim in hostility to the vendor’s otherwise superior rights. With its invocation by them, the mortgagees, and all persons claiming under them, necessarily assert that they are of the class of'persons the statute designs to protect; and assuming, as they do, the affirmative in that regard, the burden of proving their •“ good faith ” rests upon them. Abb. Tr. Ev. 715, and cases there •cited. Without proof of their “ good faith,” the statute has no application to them. Upon the trial of this action, however, the defendant utterly failed, even of the attempt, to show that at the time his vendors took the mortgage they were without notice of the plaintiff’s rights to the mortgaged chattel, and the record of the appeal is destitute of all evidence from which the absence of such notice can be inferred. A judgment for the plaintiff, therefore, for the value of the chattel, was the only conclusion which was warranted by the facts.

By stipulation of counsel, which appears in the trial minutes, the value of the chattel in suit was fixed at $100, and judgment was rendered for the plaintiff in that amount. Nothing in the record indicates that the value of the plaintiff’s interest in the chattel was reduced by payments on account of the purchase money which Magnus had agreed to pay. Hence the contention that the judgment was excessive is without support.

Lastly, it is urged' for reversal that there was no proof of default in payment on Magnus’ part, and, therefore, that the plaintiff’s right to the possession of the chattel, at the time of his demand for its return, did not appear. This position is in conflict with the one assumed by the defendant upon the trial, which conceded the plaintiff’s right to possession, except as against the defendant’s vendors as mortgagees “in good faith,” and those claiming title under them. The position last assumed is for that reason unavailing. Fay v. Muhlker, 1 Misc. Rep. 321, 323; 48 St. Rep. 699, and cases cited. The j udgment should be affirmed, with costs.


author: Giegerich. J.

text:
    Annie Hamilton, Plaintiff, v. John J. Gorman, Defendant.

      (New York Common Pleas, Special Term,

      Filed September, 1895.)

    Abatement and bevtvab—Subeties.
    An action against a sheriff to enforce his liability as bail, resulting from a failure to require justification of sureties on a bail bond on arrest, may be revived, upon his death, against his personal representatives.
    Motion to revive the action against the sheriff’s personal representatives.

      Charles C. Sanders, for motion; Archibald C. Shenstone, opposed.
   Giegerich. J.

This action was brought against the defendant upon his liability as bail, such liability arising from his failure to require the justification of sureties upon a bail bond given upon the issuance of an order of arrest in an action brought by plaintiff against one Salvador Parnella for personal injuries. In that action the plaintiff obtained judgment, and after the return of execution unsatisfied, and due demand made upon this defendant, this suit was instituted. Defendant having died pending the time for service of his answer, this motion is made, and I am constrained to-grant it. Unless the cause of action is one which abates by the death of the defendant, the court is bound to make an order such as is here sought. Code Civ. Proc. § 757; Coit v. Campbell, 82 N. Y. 509. Under the state of facts disclosed by the complaint the sheriff is liable to bail. Code Civ. Proc. §§ 578, 587. His position is in all ways assimilated to that of bail (Id. § 595), and his liability is to be enforced only by action (Id. § 596). No argument is required to demonstrate that the liability of bail is contractual ; and that the personal representatives stand in the place of deceased bail was recognized in Meddowscroft v. Sutton, 1 Bos. & Pull. 61. The fact that the action in which the order of arrest was obtained was of a personal nature does not affect the liability of this defendant, which is predicated upon the judgment entered in that action, the rights and remedies under which are not affected by the abatable nature of the cause of action itself. Wood v. Phillips, 11 Abb. Pr. (N. S.) 1; Carr v. Rischer, 119 N. Y. 117 28 St. Rep. 260.

Motion granted, with $10 costs to the plaintiff to abide the event-


author: Bischoff. J.

text:
    Thornton N. Motley et al., Plaintiffs, v. Charles M. Pratt, Defendant. New York Insulating Paint Company, Plaintiff, v. Same, Defendant. Abraham Abraham, Plaintiff, v. Same, Defendant.

      (New York Common Pleas, Special Term,

      Filed August, 1895.)

    1. Corporations—Directors—Liability.
    The liability, imposed upon a director of a corporation by section 34,. chap. 564 of 1890, is penal.
    3. Pleadings—Complaint—Joinder.
    Causes of action against a director of a corporation to enforce his personal liability for consenting to an excessive indebtedness of the corporation, under section 34, and for failure to file an annual report under section 80, chap. 564 of 1890, cannot be joined in the same complaint.
    Separate actions by Thornton ÉIMotley and others, by the New York Insulating Paint Company, and Abraham Abraham, respectively, against Charles M. Pratt, to enforce the alleged statutory liability of defendant as a director of the United States & Brazil Mail Steamship Company, for the debts of said company. Defendant demurs to the complaint for improper joinder of causes of action.

      D. M. Porter, for pl’ffs; Lewis Cass Ledyard, for def’t.
   Bischoff. J.

These actions are severally brought against the defendant, a director of the United States &Brhzil Mail Steamship Company, to enforce his alleged dual liability under the provisions of sections 24 and 30 of the stock corporation law (chapter 564, Laws 1890) for a corporate debt owing to the plaintiffs, and the complaint is therefore appropriately divided into the statement of two distinct causes of action,—the first setting forth that the company failed to file its annual report for the year 1892, as required by section 30 of the act above alluded to, and for which default the directors are thereby made personally answerable for the debts of the corporation ; and the second, that the defendant, while a director thereof, consented to the company’s creation, of an indebtedness not secured by mortgage, which was in excess of its paid-up capital stock, against the inhibition of section 24 of said act, for which consent the section likewise imposes upon the director a personal liability for such excessive indebtedness. Among others, the defendant has demurred to the complaint upon the ground that causes of action have been thereby improperly united. Code Civ. Proc. § 488, subd. 7. With that view I concur.

With regard to the first cause of action, the liability has been repeatedly held to be penal (Wiles v. Suydam, 64 N. Y. 173; Manufacturing Co. v. Beecher, 97 id. 651), and the only distinguishing feature between the several liabilities which are attempted to be enforced in this action is that the first is imposed for the omission of a statutory duty, while the second is imposed for the commission of an act prohibited by law. In each instance, however, the liability imposed is plainly within the definition of, and has every element essential to, a penalty. 18 Am. & Eng. Enc. Law, p. 269. Indeed, the courts of Ohio have in two instances held a statute of that state, the provisions of which are substantially the same as those of section 24 of the act under review, to impose a penalty. Lawler v. Burt, 7 Ohio St. 340; Sturges v. Burton, 8 id. 215. I have not overlooked the decision at general term of the supreme court in the First department, Bank v. Dillingham, 34 Supp. 267, which was made with reference to the particular section under review (24), to the contrary of the view that the section imposes a penalty. But the decision last referred to was made upon the authority of Patterson v. Robinson, 36 Hun, 622; 37 id. 341, and the last-mentioned case involved the construction of section 23, chap. 40, Laws 1848, which, because such was not thereby prohibited, did not render the creation of an indebtedness in excess of the amount of the company's paid-up capital stock unlawful. Judge Landon therefore distinguishes that case (36 Hun, 626) from the case of a penalty as follows :

“Unlike sections 12, 13, and 15 of the same act, section 23 commands nothing and forbids nothing, and therefore affixes no forfeiture as the penalty for the commission of what is forbidden or for the ommission of what is commanded.”

This reasoning certainly supports the view that the section now •under consideration creates a penalty. Obviously, therefore, the ruling in Patterson v. Robinson is not controlling of the question in the present case.

Regarding, as I do, the present action in the instance of each ■cause of action as one to recover a penalty, I find no jurisdiction in the Code of Civil Procedure for uniting the several causes of action in the same complaint. Code Civ. Proc. § 484. Neither cause of action is upon contract, express or implied, within the meaning of the Code. McCoun v. Railroad Co., 50 N. Y. 176; Wiles v. Suydam, 64 id. 173. They do not involve claims which arise out of the same transaction, or transactions connected with the same subject of action. The plaintiffs’ demand against the company is in each instance but the measure of the defendant’s liability. The subject of the action with regard to each cause of action is the penalty. The transaction in the one instance is the omission to perform an act required by law,—the filing of the report; and in the other the commission of an act prohibited by law,—the creation of a corporate indebtedness, not secured by mortgage, in excess of the amount of the paid-up capital stock. The several penalties sought to be recovered grow out of the violation of distinct provisions of law. Hence, neither the transactions nor the subjects of action are the same, or connected with each other. A misjoinder of causes of action being apparent, judgment must be for the defendant upon the demurrer therefor, though one or the other of such causes of action may be deficient in substance. Higgins v. Crichton, 11 Daly, 114.

The demurrer is sustained upon the ground that there is an improper joinder of causes of action, with costs, and with leave to the plaintiff to sever the action upon payment of costs.


author: Bartlett, J.

text:
    John Cunningham, App’lt, v. William B. Davenport, as Public Administrator, etc., Resp’t.

      (Court of Appeals,

      Filed October 8, 1895.)

    Tjkust—Deposit.
    Where a man takes his own money and deposits it to his own credit in trust for another, makes no disclosure or publication of the trust, treats it apparently as a mode of transacting his own business and survives the proposed beneficiary, such a transaction does not create a trust, though the-depositor does not disclose his reasons for opening the account in trust for the other person.
    Appeal from a judgment of the general term of the supreme-court in the second judicial department, entered upon an order, which affirmed a portion of a judgment of the special term in favor of defendant.
    This action was brougnt to recover possession of certain savings bank books of deposit.

      J. Stewart Ross, for app’lt; James J. Rogers, for resp’t.

       Reversing 56 St. Rep. 171.

   Bartlett, J.

The plaintiff appealed from the judgment of the general term, second department, which affirmed that part of the judgment of the special term adjudging that William B. Davenport, public administrator, as administrator. of the goods, etc., of Patrick Cunningham, deceased, recover of the plaintiff a judgment for $2,830.15.

The case presented questions between other parties that were determined by the judgment of the special term in plaintiff’s fa-var, and as to which no appeal is taken. In order to properly understand that portion of the special term judgment appealed from it is only necessary to examine a few of the facts as found.

It appears that the plaintiff, on the 2d day of July, 1869, opened an account in the Bowery Savings Bank in the city of Hew York by a deposit of his own money, and made other like deposits down to about the year 1881, when the account was transferred, at plaintiff’s request, to a new account entered on the books of the bank to the credit of “ John Cunningham, in trust for Patrick Cunningham, his brother,” and so remained until the 17th day of April, 1890, when plaintiff surrendered to the bank his deposit book and had the account transferred to his own credit, and on the 6th or 7th day of June, 1890, withdrew all of the money, amounting to $2,322.64.

It further appears that the plaintiff always retained possession of the bank books representing these accounts ; that there is no evidence that plaintiff ever informed Patrick Cunningham of the transfer of the account to the credit of plaintiff in trust for him ; that there is no evidence that plaintiff ever received any moneys from Patrick Cunningham, and plaintiff claims never to have intended to give the money contained in the account to Patrick Cunningham, or to have ever intended it for his benefit.

It also appears that Patrick Cunningham, the alleged beneficiary, died April 14, 1890, three days before the account in the Bowery Savings Bank was changed back into the name of plaintiff individually.

The question now presented is whether, under the facts as stated, the plaintiff created a trust in favor of his brother, Patrick Cunningham, when he opened the alleged trust account in 1881, which he could not afterwards revoke.

It is insisted by the learned counsel for the respondent that this is no longer an open question in this court, and that plaintiff’s action in 1881 created an irrevocable trust in favor of Patrick Cunningham, and that the administrator of the latter can recover of plaintiff the money he withdrew from the Bowery Savings Bank, with interest and costs.

We are of opinion that this case is distinguishable from the cases in this court to which we have been referred, and that the recovery against plaintiff by' the administrator of Patrick Cunningham’s estate cannot be sustained.

The first case is Martin v. Funk, 75 N. Y. 134. The account was here opened : “ The Citizens Savings Bank in account with Susan Boone, in trust for Lillie Willard.”

The depositor opened this account in 1886 and retained posession of the bank book until her death in 1875.

A like account was opened at the same time in trust for Kate-Willard, a sister of the other beneficiary.

Heither beneficiary was informed of the account.

The court held that such a transaction unexplained and followed by the death of the depositor with the accounts still existing, created a valid trust.

The case of Willis v. Smith, 91 N. Y. 297, was quite similar in its facts to Martin v. Funk, and the latter case was held to be a ■controlling authority.

In the case of Mabie v. Bailey, 95 N. Y. 206, the deposit was the same in form as in Martin v. Funk, but the intention of the depositor was not left to interference, it being shown that the pass book had been exhibited to plaintiff’s mother and was matter of conversation on several subssquent occasions.

Judge Andrews, after calling attention to this proof, also pointed out that Martin v. Funk, left undecided the point whether, in respect to such a transaction, surrounding circumstances may not be shown to vary or explain the apparent character of the acts and the intent with which they were done, and he then adds: If it was now necessary to decide that point, I should incline to the opinion that the character of such a transaction, as creating a trust, is not conclusively established by the mere fact of the deposit so as to preclude evidence of contemporaneous facts and circumstances constituting res gestae, to show that the real motive of the depositor was not to create a trust, but to accomplish some independent and different purpose inconsistent with an intention to divest himself of the beneficial ownership of the fund. ”

In the case of Beaver v. Beaver, 117 N. Y. 421; 27 St. Rep. 405, the matter of deposit in savings bank by father in name of ■his son was under consideration. Owing to the peculiar circumstances of that case it was held that the plaintiff's title to the fund depended upon the question of gift rather than trust.

Judge Andrews uses this language in a general discussion ■of the subject:

“It may be justly said that a deposit in a savings bank by one person of his own money to the credit of another, is consistent with an attempt on the part of the depositor to give the money to the other. But it does not we think of itself, without more, authorize an affirmative finding that the deposit was made with the intent, when the deposit was to a new account, unaccompanied by any declaration of intention, and the depositor received at the time a pass book, the possession and presentation of which, by the rules of the bank, known to the depositor, is made the evidence of the right to draw the deposit.” Judge Andrews, pointing out various motives that impel depositors to open accounts to the credit of third parties or fictitious persons, with no intention of divesting themselves of ownership, continues as follows:
“We are inclined to think that to infer a gift from the form of the deposit alone would, in the great majority of eases, and especially when the deposit was of any considerable amount, impute an intention which never existed and defeat the real purposes of the depositor. The relation of father and son does not in this case, we think, strengthen the plaintiff’s case.” *

We think the reasoning of this opinion is equally applicable to a case presenting the question whether a trust is created by opening an account in the name of, or in trust for, a third party.

The doctrine laid down by this court in the previous cases amounts to this, that the act of a depositor in opening an account in a savings bank in trust for a third party, the depositor retaining possession of the bank book and failing to notify the beneficiary, creates a trust if the depositor dies before the beneficiary, leaving the trust account open and unexplained.

If the intent can be strengthened by acts and declarations of the depositor in his lifetime amounting to publication of his intent a more satisfactory case is made out, but it is not absolutely essential, in the absence of explanation, where he dies leaving the trust account existing.

In the case at bar we have a state of facts in every way distinguishable from the cases heretofore passed upon by this court. John Cunningham, the depositor, is alive, denying the trust and seeking in his old age to hold his own money as against the administration of his deceased brother, the beneficiary under this alleged trust.

This case was tried at special term; the record does not contain the evidence, and the findings of fact are conclusive.

The findings show, as already stated, that this was a transaction between John Cunningham and the Bowery Savings Bank; that the depositor first opened the account in his own name, then changed it to his own name in trust for his brother, then changed it back to his own name three days after the death of the alleged beneficiary; that the depositor at all times retained possession of the bank books representing these accounts until delivered up to the bank; that Patrick Cunningham, the brother, was not informed of the account; that John never received any money from Patrick; that John claims never to have intended to give the money represented by the account to Patrick, nor to have ever intended it for his benefit.

Surely this is a full and complete explanation by the living depositor of his intentions in this matter. •

The learned trial judge uses this language in his opinion, viz.:

“ An intention not to give it to his brother is inconsistent with his act and the form of his deposit, and his evidence is insufficient, to my mind, of what would otherwise be the legal effect without some explanations of the reasons for making the deposit in the form he did.”

We think it was quite sufficient for the depositor to state, as he did, that he did not intend to create a trust and never intended to give his brother the money; he was not called upon to disclose his reasons for opening the account in trust for his brother.

We have presented here the case of a man who takes his own money and deposits it to his own credit in trust for another, making no disclosures or publication of the trust, treating it apparently as a mode of transacting his own business, and then survives the proposed beneficiary.

We are of opinion that such a transaction does not create a trust.

There are no sufficient circumstances or declarations from which a court of equity can spell out a trust even under the liberal rule as to the creation of trusts in personal property which holds no formal or written agreement or particular form of words necessary.

The death of the beneficiary three days before the trust account was closed is urged as a reason why this alleged trust should be sustained.

It is a circumstance of no moment, for the opening of the account, as now explained, did not create a trust.

The order and judgment appealed from are reversed, with costs to plaintiff in all the courts.

All concur.

Order and judgment reversed.


text:
    Elizabeth G. Hughes, App’lt, v. The County of Monroe, Resp’t.

      (Court of Appeals,

      Filed October 8, 1895.)

    1. Counties—Liabilities.
    The principle that, where the power is intrusted to a municipal corportion as one of the political divisions of the state and is conferred not for the immediate benefit of the municipality, but as a means to the exercise of the sovereign power for the benefit of all citizens, the corporation is not liable for non-user, nor for the mis-user by the public agents, is applicable-to counties.
    2. Same.
    Counties which have special charters, are not liable for the acts of their officers, when engaged in the discharge of public duties, and to that extent exercising acts of sovereignty.
    3. Same.
    The liability of a county which, with the consent of the legislature, has undertaken to care for its insane through the instrumentality of a county asylum, for an injury to an employe at such asylum is determined by its status at the time of the accident.
    ' 4. Same—Revenue from private sources.
    Where the expense of maintaining the insane at such asylum is, when-possible, collected from the estates of such insane or from those legally liable for their support, and the asylum receives a small sum annually from the sale of surplus farm products, such revenue is merely incidental and is in no sense a source of profit, which can be deemed to render the operation of the asylum a private business.
    Appeal from order of the general term of the supreme court in. the fifth judicial department, which sustained defendant’s exceptions ordered to be heard in the first instance at the general term,, set aside a verdict in favor of plaintiff and granted a new trial.
    The action was brought to recover damages for a personal injury sustained by the plaintiff, alleged to have been caused by the defendant’s negligence.

      Eugene Van Voorhis, for app’lt; F. E. Drake, for resp’t.

       Affirming 61 St. Rep. 392.

   Bartlett, J.

The plaintiff appeals from an order, made on a motion heard at the general term in the first instance, granting a new trial after verdict at the Monroe circuit in her favor.

The plaintiff, an employee at the Monroe Insane Asylum, was-severely injured while operating a machine known as a steam mangle, which was used in the laundry.

At the trial it was insisted on behalf of the defendant that the county of Monroe was not liable in any event; that, assuming its liability, the plaintiff had failed to make out a cause of action.9

As we are of the opinion that the county of Monroe is not liable under the facts as disclosed in this record, it is unnecessary to determine whether the plaintiff was entitled to go to the jury.

The plaintiff was injured February 11,1891. Before this action was commenced the County Law of 1892 was in force, but it is unnecessary to examine its provisions, as the status of the county of Monroe on the 11th day of February, 1891, must determiné its .liability.

Prior to the year 1863 the county of Monroe cared in part for its insane in a department of the county poorhouse. By chapter 82, Laws of 1863, it was enacted that the insane asylum of the county of Monroe should be a separate and distinct institution from that of the Monroe county poorhouse, and the board of supervisors were placed in control and authorized to elect a warden, who was to hold office for three years and a board of three trustees for a like term.

The warden was constituted the chief officer of the asylum subject to the regulations established by the board of supervisors; all purchases for the asylum were to be made by the warden under direction of the trustees; all contracts with the attendants and assistants were to be made in the official names of the trustees; the warden was also required to make out and deliver to the trustees annually an inventory of all property belonging to the asylum ; the warden was also authorized to make contracts for the support of insane persons of the county, and by the direction of the board of supervisors or the trustees to -demand from the state lunatic asylum all persons who were chargeable to the county of Monroe or to any town or city in the county.

it- was further provided that no insane person residing in the county of Monroe and likely to become a county charge should thereafter be admitted to the state lunatic asylum without the written consent of the trastees of the Monroe county asylum or the chairman of the board of supervisors.

By chapter 633, Laws of 1870, it was made the duty of the trustees to determine all questions in relation to the indigent insane as to whether their maintenance was properly a charge upon a specified town within the county of Monroe, or upon the city of Rochester, or upon the county of Monroe; the trustees were also empowered when any lunatic, not indigent, was placed in the asylum, to charge his estate, or the person legally responsible, for his maintenance and to collect the same.

It will thus be observed that the county of Monroe, being legally chargeable as one of the political divisions of the state w'ith the care or its insane, saw fit in 1863, with the consent of the legislature, to undertake the discharge of that duty through the instrumentality of a county asylum.

In other words, the county of Monroe from that time shared with the state the burden of caring for the insane withdrew, from the state lunatic asylum all indigent insane, for whose maintenance it was liable and secured legislation requiring all the pauper insane of the county to enter its own asylum.

When an insane person is deprived of his liberty and the custody of his property, placed in close confinement, and separated from family and friends, it is an extreme exercise of the police power by the state, or some political division thereof, for the protection of society and to promote the best interests of the unfortunate victim of mental alienation.

It, therefore, follows that the county of Monroe, while acting under the statutes referred to, was engaged in the discharge of a most important public duty and consequently, not liable to the plaintiff in damages by reason of her injuries. Dillon on Municipal Corporation (4th edition), § 693 ; Addison on Torts (Bank’s ed.), p. 1298, § 1526.

In Maxmilian v. Mayor of New York, 62 N. Y. 160, this court laid down the rules of law that control this case. The plaintiff sought to recover damages for the death of her intestate who was killed by an ambulance wagon whidh was driven by an employee of the commissioners of charities and corrections.

It was held that when the city of New York, by the legislative enactment, was required to elect or appoint an officer to perform a public duty laid not upon it, but upon the officer, in which it had no private interest, and from which it derived no special advantage, such officer is not a servant or agent of the municipality for whose acts it is liable even though the officer had in charge and was negligently using corporate property.

Judge Folger said (page 164): “There are two kinds of duties which are imposed upon municipal corporations; one is of that kind which arises from the grant of a special power in the exercise of which the municipality is a legal individual; the other is of that kind which arises, or is implied, from the use of political rights under the general law, under the exercise of which it is as a sovereign. The former power is private and is used for private purposes; the latter is public and is used for public purposes. Lloyd v. Mayor, 5 N. Y. 374. * * * But when the power is intrusted to it as one of the political divisions of the state and is conferred not for the immediate benefit of the municipality, but a- means to the exercise of the sovereign power for the benefit of all citizens, -the corporation is not liable for non-user, nor for misuser by the public agents. Eastman v. Meredith, 36 N. H. 284.”

In the case at bar, it is true, we are not dealing with a municipal corporation, for in February, 1891, the county of Monroe was a political division of the state, at most only a quasi corporation; but, nevertheless, the reasoning in che opinion just cited is applicable.

By the act of 1863 the county of Monroe, through its board of supervisors, was required by the legislature to elect a warden and trustees of its insane asylum to perform an important public duty in which it had no private interest, and from which it derived no special advantage. The warden and trustees, when so elected, were in no legal sense the agents of the county of Monroe, but were public officers engaged, in the discharge of duties which involved the exercise of the police power, and in which the general public were interested.

While the county of Monroe by its board of supervisors, was-empowered to enact general rules and regulations for the government of the asylum, and to elect its warden and trustees, it had no power to interfere directly with the management of the institution unless the warden so elected was guilty of misconduct, when he could be removed by the board of supervisors.

The non-liability of counties and also of municipal and other corporations having special charters for the acts of their officers when engaged in the discharge of public duties, and to that extent exercising acts of sovereignty, is established by many cases. Ensign v. Supervisors of Livingston County, 25 Hun, 20; Alamango v. Supervisors of Albany County, 25 id. 551; Ham v. The Mayor, 70 N. Y. 459; Smith v. City of Rochester, 76 id. 506; Benton v. Trustees of Boston City Hospital, 140 Mass. 13; Curran v. The City of Boston, 151 id. 505.

The learned counsel for the plaintiff, evidently appreciating the force of the general rule to which we have adverted, sought to show that the case at bar was, by reason of special facts, not within its operation.

It is insisted that the defendant, at the time of this accident, was not only caring for the pauper insane of Monroe county, but also for other patients through contracts made for that purpose.

There is no evidence that the county of Monroe was caring for insane patients not residing in the county, for a consideration, but if such were the case it would be without warrant of law, as we think a fair construction of section seven of chapter 82 of Laws of 1863, limits the contracts to be made “to any individual of said county” who wishes to contract as to the care of the insane of Monroe county.

There can be no doubt that the committee of a lunatic, or any one legally liable to support him, should, in the first instance, be required to pay for his maintenance, and the income derived in this manner is in no sense a source of profit to the county so that it would be deemed in law as conducting a private business.

We may also consider in this contention the suggestion that as the asylum received a small sum annually from the sale of surplus farm products it was to be treated as engaged in a private enterprise resulting in profits.

The revenue derived from both of the sources referred to is merely incidental and tends to some little extent to lessen the public burden assumed by the county of Monroe. Curran v. City of Boston, 151 Mass. 505, 510; Alamango v. Board of Supervisors of Albany County, 25 Hun, 151, 152, 153; People ex rel. Society of the New York Hospital v. Purdy, 126 N. Y. 679, and 58 Hun, 386; 34 St. Rep. 893.

We have considered the other suggestions of counsel for appellant contained in his brief and consulted the authorities to which he refers, but find nothing to take this case from the operation of the general rule.

The order of the general term should be affirmed and under the stipulation of plaintiff judgment absolute ordered for the defendant dismissing the complaint on the merits, with costs to defendant in all the courts.

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

Ordered accordingly.