author: O’Brien, J. Earl, J.

text:
    Louis M. Kimball, Resp’t, v. The Farmers & Mechanics’ National Bank of Buffalo, App’lt.

      (Court of Appeals,

      Filed June 13, 1893.)

      1. Chattel mortgage—Vessels—Earrings.
    Plaintiff held a second mortgage on a vessel and defendant a third one, the first being held by S., defendant's president. Each mortgage was due when the subsequent one was made. On default plaintiff seized the vessel, but consented to allow it to make two trips on the execution by the mortgagor of an assignment of the freight to he earned. The first trip was not completed, the vessel being frozen in port, when defendant paid certain liens and seized it under its mortgage, completed the voyage and received the freight. In an action to recover such freight, Held, that plaintiff’s right to the freight moneys in equity was prior in time and superior to that of defendant; that S., not having taken possession, acquired no right to the moneys and could confer none on defendant by consenting that it might take them, and that plaintiff was entitled to recover such moneys, less expenses.
    (Earl and Peckham, JJ., dissent.)
    Appeal from judgment of the superior court of Buffalo, general term, reversing judgment in favor of defendant entered on report of a referee.

      Spencer Clinton, for app’lt; Sherman S. Rogers, for resp’t.

       Affirming 43 St. Rep., 223.

   O’Brien, J.

The appeal involves but a single question, and is right to a representing freight earned by a vessel, each party claiming to be entitled to it. The material facts out of which the controversy arises are these: On December 22, 1871, Mrs. Sarah E. Nims, being the owner of the schooner George D. Russell, mortgaged her to the firm of George D. Russell & Co. to secure the payment of her three notes of $2,000 each, payable, respectively, one, two and three years from date. The mortgage was duly recorded in the proper office January 31, 1872, and on December 21, 1872, was duly assigned with the debt to Elbridge G. Spaulding. On April 16, 1873, she executed another mortgage on the vessel to the plaintiff to secure her note for $8,000 and interest, payable in ninety days from that date, and this mortgage was duly recorded June 18,1873. On October 27, 1873, she executed a third mortgage to the defendant upon this and another vessel to secure the payment of .$20,000, which was to become due December 1, 1874. This mortgage was also duly recorded in the proper office.

On the 5th of November, 1875, all these mortgages were due and the owner had made default in the payment of the moneys to secure the payment of which they were given. They all contained the usual power of sale in case of default, the proceeds of the sale in each case to be applied in satisfaction of the debt On the day last mentioned the plaintiff, being the owner of the second mortgage, took possession of the vessel under it and was proceeding to execute the power of sale. While all the mortgages were due, the plaintiff’s superior vigilance may be accounted for by the fact that the holder of the first mortgage felt perfectly secure and the holders of the third mortgage had other security. The owner and mortgagor then applied to the plaintiff to permit her to make two round trips from Buffalo to Chicago, for the purpose of earning freight before the close of the season of navigation. He consented to allow the vessel to sail for that purpose upon condition 'that the freight earned upon the voyages should bepaidto him and applied upon his mortgage. Thereupon the owner and mortgagor-executed and delivered to the plaintiff an instrument in writing which recited the execution of the mortgage, the default in payment and the seizure of the vessel by the plaintiff, and then' in terms assigned to the plaintiff, to be applied upon his mortgage, the .entire freight or earnings of the vessel upon the two trips, exclusive of charges for towage, and the vessel having been thus permitted by the plaintiff to sail, proceeded on her voyage to Chicago. Not having obtained freight at that place it proceeded to Milwaukee and took on a cargo of wheat for Buffalo, but before sailing on her return voyage was frozen in and remained there till the-spring of 1876. While there she was attached under state process. at the suit of an insurance company and delivered to the sheriff. The defendant then asserted its right under the third mortgage and took the vessel from the sheriff and towed her to Buffalo, having been first obliged to pay $538.76 in claims that, had accrued against the vessel while in the port of Milwaukee and which were liens, and it is admitted that $500 was a proper-charge for towing the vessel and cargo from the latter place to Buffalo; On the 15th of May, 1876, she arrived at Buffalo, delivered the cargo, and the freight earned, amounting to $2,748.10, was paid to the defendants, without notice of the assignment of the same by the owner to the plaintiff, but the néxt day the plaintiff demanded the money thus received of the defendant and it refused to pay it to him. This action was brought to recover the money thus paid to the defendant for freight. It has been twice tried before referees and each trial resulted in favor of the defendant and was followed by a judgment of reversal at the general term.

When default is made in the payment of the debt secured by a mortgage on personal property the legal title to the property becomes vested in the mortgagee, and thereafter the mortgagor, or anyone holding his title, has but the equitable right of redemption. Butler v. Miller, 1 N. Y., 496; Judson v. Easton, 58 id., 664 ; Tremaine v. Mortimer, 128 id., 1; 38 St. Rep., 740; Leadbetter v. Leadbetter, 125 N. Y., 290; 34 St. Rep., 929; Champlin v. Johnson, 39 Barb., 606.

Therefore, the legal title to this vessel passed to. Mr. Spaulding, the holder of the first mortgage; upon default of the mortgagor to pay the debt when due, and thereafter the only interest which the mortgagor had was equitable, and she could, of course,, transfer no greater right to her assignees. Default having been made in the payment of the first mortgage before the second was executed, and in the second before the third was executed, the last two mortgages transferred nothing but the equity of redemption, because the legal title had become vested in the first mortgagee, who could at any time assert that title by taking the-property into his possession. Therefore, when the plaintiff took the vessel into his possession, as the holder of the second mortgage, his equitable title was subject to the whole claim of the first mortgagee. The latter was satisfied to wait, and while, by taking that course, he lost nothing, neither did his superior title or interest confer any right upon the defendant as the holder of the third mortgage. As against the defendant the plaintiff had the prior right and the greater equity. This was the situation when the plaintiff seized the vessel and took her into his possession. He had the right to retain the vessel as against the defendant, though not as against Spaulding. So long as the latter did not interfere, the-plaintiff, as to the defendant, was the owner of the vessel in equity from the time that he took possession, and entitled to the freight-earned while in his possession, the same as a mortgagee of land in possession is entitled to the use or rents after such possession is-taken. But while the holder of the first mortgage, after default, in payment of his debt, became vested with the legal title to the vessel, yet, as he never took possession, he did not acquire all the-rights nor subject himself to all the duties and responsibilities of owner. So long as the possession of the mortgagor was not disturbed she was entitled to receive the earnings of the vessel and was liable for supplies and repairs and for the discharge of those-duties and obligations which are due from the owner of a ship or vessel to the crew. These obligations generally devolve upon the-person who has the possession and control of the vessel and who-navigates her, and he is entitled to receive the freight earned and paid while this possession and use is permitted to continue. The mortgagee, though having the naked legal title after default, is not charged, with any of these obligations, in the absence of express contract, until he assumes them by taking possession of the vessel, and then he becomes, entitled to receive the earnings or moneys due for freight. These principles are quite familiar in maritime law, having been settled by numerous cases in this country and in? England. Miln v. Spinola, 4 Hill, 177; Champlin v. Butler, 18 Johns., 169; Thorn v. Hicks, 7 Cow., 697; Hesketh v. Stevens, 7 Barb., 488; McIntyre v. Scott, 8 Johns., 159; Delano v. Wright, 1 Robt., 298; Weston v. Wright, id., 312; Weber v. Sampson. 6 Duer, 358; Scarff v. Metcalf, 107 N. Y., 211; 11 St. Rep., 396 ; Gabrielson v. Waydell, 135 N. Y., 1; 47 St. Rep., 848; Wilson v. Wilson, L. R., 14 Eq. Cases, 40; Brown v. Tanner, L. R., 3 Ch.,, 597; Liverpool Marine Credit Company v. Wilson, 7 id., 507.

When the plaintiff took the vessel into his possession he acquired these rights and subjected himself to all these duties and responsibilities, and it would be quite difficult to show that he lost the one or relieved himself from the other by permitting the original owner to use the vessel for a special voyage which was to inure to his benefit. He did not release any right that he had acquired by the seizure of the vessel in express terms, and, as the voyage was undertaken for his benefit and depended upon his assent, it is quite likely that he remained charged with all the obligations of owner during the trip. The paper that he took from the general owner had no other effect than to secure to him, so far as she was concerned, the freight earned upon the voyage. The fact that plaintiff contracted with her to make a special trip for his own profit had no more effect upon his status as a mortgagee in possession than if he had made the same contract with a stranger.

The right of the mortgagor to receive the earnings of the vessel was interrupted by the plaintiff’s seizure and never restored to her. After that, she made the voyage by his permission and for his benefit, and while the holder of the first mortgage might have asserted his superior right to the possession at any time and to the freight, which was but an issue or incident of the vessel itself, yet, as he did not, the right to the moneys in controversy became a question of prior or superior equities between the plaintiff and the defendant. We have seen that a mortgagee of a vessel in possession is, for all practical purposes and for the time being, the owner, and, therefore, the plaintiff’s right in equity to the freight must prevail unless it was displaced by some superior equity in favor of the defendant. The mortgagor, if she had any right whatever to the freight in question, had expressly assigned it to the plaintiff, and such a transfer, though tne subject had no actual existence at the time, but rested in expectancy merely, is good in equity and takes effect in favor of the assignee when the thing or demand assigned comes into existence, and when no superior right of third parties has intervened in the meantime. This equitable principle has been applied to freight to be earned in the future as well as other demands and to property potentially but not actually in existence at the time of the assignment. McCaffrey v. Woodin, 65 N. Y., 459; Coats v. Donnell, 94 id., 177; 2 Story Eq. Juris., § 1055, etc.; Fiero v. Mayor, etc., 2 Seld., 179 ; Stover v. Hycleshimer, 3 Keyes, 620; Douglas v. Russell, 4 Simons, 524; Curtis v. Auber, 1 Jac. Walk., 506; Langlon v. Horton, 1 Hare, 540 ; Mitchell v. Winslow, 2 Story, 630.

It is apparent, therefore, that up to the time that the defendant seized 'the vessel and took her from the sheriff at Milwaukee, by virtue of its mortgage, the equity of the plaintiff and his right to the unearned freight was prior and superior to that of the defendant. The equity of the plaintiff, under his mortgage, was prior in point of time. He was the first to seize the vessel and assert his right of possession as against tbe defendant, and this right was not waived by contracting with the owner to make a special voyage for his benefit. He was the assignee of the freight and a party to the arrangement under which the vessel sailed upon the last trip and the cargo was procured and loaded which produced the freight in controversy and, unless the parties changed places when the defendant took the vessel from the sheriff in Milwaukee and towed her to Buffalo, the plaintiff has the greater equity still.

Suppose that the vessel had not been frozen in at Milwaukee but had completed the voyage, as was expected, in the fall of the year 1875, and the defendant had seized her when within a few miles of Buffalo, or even in the harbor, before she had delivered her freight, and then had received the money and retained it as it has in the present case. Upon such facts the right of the plaintiff in equity to the freight moneys would be so manifest as scarcely to permit of argument, and yet the case now is not essentially different if we eliminate from its consideration two facts, not at all material, but which tend to confuse the question and possibly mislead the mind in the progress of the investigation.

(1.) The defendant paid certain sums of money in Milwaukee which were charges or liens upon the vessel in order to obtain the possession, and it also incurred certain expenses in towing the vessel with her cargo to Buffalo. The plaintiff admits that the defendant should be made good for all moneys thus paid and expenses incurred. This concession cancels all equities arising from such facts and reduces the controversy to the balance of the fund, and in determining who is entitled to that the case stands in the same position as if the defendant took possession of the vessel, for the first time, after she had arrived with her cargo at Buffalo.

(2.) The holder of the first mortgage had the legal title to the vessel, and it may .be admitted also that be had a prior right to the freight earned and payable after he elected to take possession, but that consideration is entitled to no weight whatever, for the plain reason that he never took possession, and the defendant can claim no right under his mortgage. The controversy is between the plaintiff and the defendant as the owners of the second and third mortgages, and the admitted superior right of Mr. Spaulding, as owner of the first mortgage, plays no part in the contest, The defendant must stand upon its own mortgage, and can derive no aid from the prior claims of others. The rights of the defendant and those of the first mortgagee must be kept distinct from each other in ■order to get a clear and correct view of the question. It is apparent from the findings of fact and law made by the learned referee that he has been misled by blending these rights together. He has found as a fact that the defendant took possession of the vessel, which was then in the custody of the sheriff, and received the freight, upon delivery of the cargo, with the knowledge, consent and approbation of Spaulding, who held the first mortgage, and from this fact he draws the legal conclusion that the possession of the defendant was the possession of Spaulding, and that as lie could and did waive his superior right to the freight in favor of defendant, the plaintiff could not recover. The meaning of the finding of fact is perfectly evident from the record. Spaulding was the defendant’s president As such he, no doubt, had- knowledge of the defendant’s proceedings in Milwaukee to get possession of the vessel, and of her arrival atBuffalo and the receipt of the freight money by the defendant. As the principal officer of the defendant he was naturally interested in the collection of the debt, and, of course, approved of and consented to the proceedings. But there is no finding that the defendant or anyone else asserted any right under the first mortgage. On the contrary, the finding is that the defendant took possession under its own mortgage. Spaulding could have taken possession under his prior mortgage, or he could have assigned it to the defendant, but he did neither. He simply held his security, undiminished by any payments, for three months after the defendant had received the moneys in question, and then he assigned it to the plaintiff, receiving from him the whole amount, principal and interest.

Of course neither he nor the defendant could assert any right, to the freight moneys under this mortgage without applying them, upon it Then the plaintiff could not complain, as the fund would have gone in reduction of a claim to which his qwn was subject and the transaction would accrue to his benefit. But Spaulding could not keep his own mortgage intact, and at the same time, by his mere knowledge, consent or approbation, confer a right upon the defendant to receive the freight moneys, to the prejudice of the plaintiff, who, as between himself and the defendant, had the first claim and the superior equity. Until possession was taken under the first mortgage no right could be acquired in virtue of it to appropriate the earnings of the vessel, and hence Spaulding could confer no right to the freight moneys by consenting that defendant might take them, because he had no more right to them himself than an ordinary mortgagee of land, out of possession, to the rents and profits. The findings of the learned referee were, therefore, obviously insufficient to uphold any claim on the part, of the defendant to the freight based upon the first mortgage. The equities of the parties rest wholly upon their respective mortgages, and what was done under them. When all other considerations are eliminated from the case it will be seen that every fact upon which the plaintiff’s claim rests is prior in point of time, and this gives him the prior equity. As between him and the defendant he is in equity a first mortgagee, with all the rights and equities incident to such relation. Pomeroy’s Eq. Juris., § 413, et seq.; Story’s Eq. Juris., § 64; Moore v. Prentiss Tool Company, 133 N. Y., 144; 44 St. Rep., 68.

The defendant’s claim to the fund rests wholly upon the seizure of the vessel at Milwaukee under its mortgage. If it appeared" that the plaintiff had abandoned her at that port and, with knowledge of the situation, had refused to redeem her from the claims that accrued there and which were liens, so as to enable her to-complete the voyage and earn the freight, then the case would present some equitable features in favor of the defendant that do not exist now. It does not appear that the plaintiff knew of the detention of the vessel under state process, or that he abandoned her or refused to pay the charges incurred while the vessel was in port. For aught that appears the plaintiff would have done in due time just what the defendant did, namely, pay the charges against the vessel and complete the voyage. The fact that the defendant had no notice of the assignment to the plaintiff is not important. An unknown equity is sometimes postponed in favor of one subsequent in time, but that is when it appears that the party has done-some act, incurred some obligation or made some advances that he would not have incurred or made had the true situation been disclosed to him. The record discloses nothing of that kind in favor-of the defendant, except, possibly, the advances made or expense incurred in completing the voyage, and when indemnified for this out of the fund any equity arising from that circumstance is satisfied.

The judgment of the general term reversing that of the referee should, therefore, be affirmed, and judgment absolute ordered for the plaintiff, with costs in all the courts.

Earl, J.

(disenting.) a vessel in this is precisely like other chattel mortgages, except that it must be registered as required by the federal law, and it is not claimed by the counsel who argued this case that the mortgages in question .are not to be treated just as if they were upon other chattels.

The facts are undisputed, and there is no real dispute about the principles of law. The dispute is as to the application to the facts of this case of principles of law recognized by both parties and «established beyond controversy by numerous decisions.

There were three chattel mortgages upon the vessel. The first was held by Spaulding, the second by the plaintiff and the third by the defendant The first mortgage was in default when the other two were given.

A chattel mortgage carries the legal title to the property mortgaged to the mortgagee conditionally, and if the condition be not performed the mortgagee at once upon the default becomes the absolute owner of the property at law. The only right then remaining to the mortgagor is an equity of redemption, a right which he can enforce only in equity. He has no title, legal or ■equitable, to the property. The mortgagee may permit him to remain in the lawful possession of the property; but his use and possession of the property are merely permissive,.and the mortgagee may at any moment put an end to the same. If anyone wrongfully takes the property out of the possession of the mortgagor, the mortgagee can sue him in trover, trespass or replevin; -and if anyone, without authority of legal process, seizes the property against the will of the mortgagor upon any pretense, he is in like manner liable to the mortgagee; and one interfering with the property left in the possession of the mortgagor by the mortgagee •after default may be liable to the latter. If either of the subsequent mortgagees, the plaintiff or defendant, bad seized and sold the vessel, he would have been a wrongdoer against the first mortgagee. The mortgagee of a vessel has no lien on the freight she earns, or absolute right to the freight as an incident to his mortgage. He can obtain the freight by taking possession of the vessel, or doing something equivalent thereto, after default in the con<dition of the mortgage, at any time before the cargo has been fully discharged and the freight thus fully earned.

I do not understand that these principles of law are in any degree disputed by the learned counsel for the plaintiff, and they are substantially laid down in many cases, among which are the following: Butler v. Miller, 1 N. Y., 496; Judson v. Easton, 58 id., 664; Casserly v. Witherbee, 119 id., 522; 30 St. Rep., 92; Leadbetter v. Leadbetter, 125 N. Y., 290; 34 St. Rep., 929; Moore v. Prentiss Tool Co., 133 N. Y., 144; 44 St. Rep., 68; Esson v. Tarbell, 9 Cush., 407 ; Ring v. Neale, 114 Mass., 111; Pecker v. Silsby, 123 id., 108 ; The Brig Wexford, 7 Fed. Rep., 674, 681; Wilson v. Wilson, L. R. 14 Eq., 32; Brown v. Turner, L. R., 3 Ch. App., 597 ; Collins v.. Lamport, 11 Jur., N. S., 1; Liverpool Marine Credit Co. v. Wilson, L. R., 7 Ch. App., 507; Kerswill v. Bishop, 2 Cromp. & J., 529; Rusden v. Pope, L. R., 3 Ex., 269.

The plaintiff does not base any substantial right here upon his mortgage. By virtue of that taken after default in the first mortgage, he obtained no title, interest or property in the vessel. He did not, as against the first mortgagee, obtain even a lien on the vessel. All he got was the mortgagor’s right of redemption. His mortgage was, however, of some further value to him against the mortgagor. . As against her he could, after default in the payment of his mortgage, if the first mortgagee did not interfere, take possession of the vessel, and might thus intercept freight which she had earned, in the manner above stated; and be could retain the possession of the vessel as against the defendant, the third mortgagee. But the seizure and possession of the vessel, in this case, by the plaintiff were of no value or importance, as there was no freight to intercept, and he could not sell her or make any profit out of her, having no right or title whatever to her. Therefore, when he surrendered the possession of the vessel, he parted with no valuable right. He then obtained from the mortgagor an assignment of the freight to be earned by the vessel upon the two round voyages to-Chicago and back to Buffalo. His surrender of the possession of the vessel was absolute, and it was-the inducement to and consideration for the assignment of the freight. The mortgagor resumed the possession of the vessel as she had her before. She was not to navigate her in any sense as the agent of the plaintiff, nor upon his responsibility, but she was to navigate her in her own right, for her own benefit and at her own expense, except that she was to apply the freight earned,, less the towage charges, in discharge of her debt to the plaintiff.

The position of the plaintiff, then, is as assignee of the freight, and only that. His position as 'assignee is not improved or strengthened by the fact that he also held the second mortgage. His rights, whatever they may be, are as such assignee, and his counsel does not contend that he has any other upon which to base his action. But here occurs the fallacy in his counsel’s argument. What right had the mortgagor to assign the freight ? She had no title to or property in the vessel. She could assign freight which she expected to earn, and if she earned it it would belong to her assignee. But she could not in any way bind the vessel by such an assignment for freight which she never earned. Plaintiff’s counsel does not take notice of the fact that all she owned as to the vessel at the time of the assignment was a mere equity of redemption, enforcible in equity. Whatever right, therefore, the plaintiff as assignee got was the right, not to the-freight which the vessel might earn, but only to the freight she-might earn with the vessel and which would, thus, otherwise be-payable to her.

But even if she had been the legal owner of the vessel at the time of the assignment of the freight to the plaintiff, it would make no difference. The unearned freight of a vessel may be assigned, in equity, and such an assignment is governed by the same rules which govern the transfer of anything not in esse. The assignment can have no positive operation to transfer in presentí property in a thing not in esse; but it operates by way of present contract to take effect and attach to the thing assigned when and as soon as it comes in esse. Mitchell v. Winslow, 2 Story, 630, 639. Suppose Mrs. Nims, after the assignment of the freight, had sold the vessel to a bona fide purchaser, and he had made the voyages and earned the freight: or, suppose some mere wrongdoer had taken the vessel against her will and had earned the freight, could the plaintiff, in either case, have claimed the freight ? Suppose the owner of a farm assigns the crops to be grown upon his farm the ensuing year, and he afterwards sells his farm to a bona fide purchaser who sows and harvests the crops, can the assignee claim them? Or, suppose the owner of a farm, to secure an antecedent debt, or money presently advanced, assigns the proceeds of all his crops for the ensuing year, and the owner, after sowing, the crops, is ejected from the farm, either by legal process or by a wrongdoer, and the person thus taking possession cares for the crops, harvests them, sells them, and thus obtains the proceeds, can the assignee maintain an action against him for such proceeds, claiming to be the legal owner thereof? All that is assigned or can be assigned in such cases is the freight or property to come in esse in the future, which, but for the assignment, would belong to the assignor. His assignment operates to take the property away from him then, and vest it in his assignee. But when be never brings the property in esse, there is nothing for his assignment to operate on.

Now what happened here? The vessel was taken to Chicago and then to Milwaukee where, after taking on a cargo, she was frozen in for the winter. Then toward spring she was attached for liens and claims against her, and the defendant found her in the possession of the sheriff under his seizure. It then, knowing nothing about the claim of the plaintiff, using its mortgage, replevied the vessel from the sheriff and paid $538.76 to discharge the claims; and then it took possession of the vessel and navigated her to Buffalo, paying all the expense, and discharged the cargo and received the freight before it knew anything about the claim of the plaintiff.

It probably knew of her mortgage, but that gave the plaintiff no lien upon the freight. All this the defendant did by the consent, permission and authority of the first mortgagee, the general, absolute owner-at-law. The defendant was thus a wrongdoer to no one in taking possession of the vessel at Milwaukee. Its act was not a wrong to the plaintiff as mortgagee, because as such he had no title or property, legal or equitable, in the vessel, and no lien upon or right to the freight. It was not a wrong to him as assignee of the freight, because the vessel had been lawfully taken out of the possession of the mortgagor, and her voyage thus broken up, and because, for reasons above stated, he acquired no right to unearned freight, and had no lien on or interest in the vessel for the freight. It was not a wrong to the owner, the first mortgagee, because be consented to and authorized it Having taken possession of the vessel with the consent of the owner, its possession was lawful against the whole world. The mortgagor did not earn the freight, but the defendant earned it We are not necessarily dealing here with the rights which the owner can give to an assignee of freight, but with the rights which one not having an atom .of ownership or property in the vessel can give. We are not dealing with freight earned by the assignor, but with freight earned by the defendant. Under such circumstances there is absolutely no authority, absolutely no principle which sanctions the maintenance of this action by the plaintiff as assignee of the freight. He could not even have maintained the action against a wrong-doer who had seized and navigated the vessel to Buffalo and had thus earned the freight Much less can he maintain it against one who had the consent and sanction of the true owner.

It is probably true that the first mortgagee by expressly assenting to and countenancing the action of the defendant in taking the vessel and the freight became just as accountable 'for the freight in an action for redemption from his mortgage as if he had actually himself received the freight Liverpool Marine Credit Co. v. Wilson, supra. But he could be made liable for it only in an equitable action for redemption brought against him by the mortgagor or one of the subsequent mortgagees. In such an action he could be compelled to account for all the profits he had permitted and allowed anyone else to make. But no action whatever can be maintained against the defendant for the freight, because its receipt of it was rightful against the whole world; and certainly a legal action like this cannot be maintained against it by the plaintiff, claiming to be the legal owner of the freight.

Much has been said in this case about the superior equity of the plaintiff to this freight. Upon the trial he planted himself upon his legal rights as assignee, and no proof was given as to the equities, and there are no findings of factor law as to the equities. There are no findings from which we can know or determine anything except the legal rights of the parties. As we have shown, plaintiff’s mortgage gave him no equitable right to the freight, and he obtained no equitable right to it as assignee. Where, then, does his equity come from ? What equity has he against the defendant, which took the vessel at Milwaukee, paid the charges upon which she had been seized and was detained, navigated her to Buffalo at its own risk and expense and thus earned the freight? If we were willing to dispose of this case upon mere humanitarian views, guided by our feelings of beneficence, we cannot even determine, upon this record, which of the two parties will suffer or lose the most by being deprived of this freight. All we have showing the relations and equities between these parties is the three mortgages, and their amounts, the assignment and earning of the freight, and the fact that the plaintiff finally took an assignment of the first mortgage, paying the full amount due thereon. For .aught that appears in this record, he may have full security for all that is due to him from Mrs. Hi ms. We know nothing about the equities and we must dispose of this case upon the facts as they appear, applying to them the rules of law, mostly elementary, which we are bound to administer.

The order of the general term should be reversed, and the judgment entered upon the report of the referee affirmed, with costs.

Judgment affirmed, and judgment absolute ordered for plaintiff, with costs in all courts.

All concur with O’Brien, J., except Earl and Beckham, JJ., who dissent


source: Caselaw Access Project

author: O’Brien, J.

license: Public Domain

text:
    Horace C. Sylvester et al., Resp’ts, v. John F. Crohan et al., App’lts.

      (Court of Appeals,

      Filed June 13, 1893.)

    1. Bills and kotes—Pbotest.
    Plaintiffs received on Friday a draft drawn by defendants on a banker here, which they deposited in bank, by which it was presented to the drawer the following day, and being requested by him. to present again, did so on Monday, demanded payment and protested it. On Saturday, drawee had funds sufficient to pay the draft in full, but on Monday he was insolvent. Held, that, aside from the statute, this was a sufficient presentation, demand and notice.
    3. Same—Laws 1887, chap. 289.
    Under chap. 289, Laws 1887, a party whose duty it is to collect or present for payment a bill, note or draft which falls due upon Saturday, is not chargeable with neglect or omission of duty because of failure to present it on that day, providing he does present it on Monday or the next secular day, and then, on that day, gives notice of dishonor in case of nonpayment.
    Appeal from judgment of the supreme court, general term, first department, affirming judgment for plaintiffs entered after decision of the court without a jury.

      Arthur Furber, for app’lts; John B. Green, for resp’ts.

       Affirming 48 St. Rep., 320.

   O’Brien, J.

On Wednesday, .July 29, 1891, the defendants, residing and doing business at Savannah, Gra., for the purpose of paying their promissory note held by the plaintiffs, residing and doing business in the city of Hew York, which was to fall due two days later, drew and mailed to the plaintiffs a sight draft for $1,263.72 payable to the plaintiffs’ order upon one Becker, a banker in Hew York. The plaintiffs received this draft through the mail on Friday, July 31st., at eleven o’clock in the forenoon, and, without presenting it to the drawee, indorsed and deposited it to their credit immediately in their own bank, and returned the note to the defendants. On Saturday,. August 1st, a messenger of the bank in which the draft had been deposited presented it to the payee for payment between ten and half-past ten o’clock in the forenoon of that day and was directed to leave notice and present it again on Monday. It was again presented on Monday, August 3rd., and payment demanded and refused, and on that day it was protested for non-payment and notice of protest mailed to the defendants. The plaintiffs took back the draft from the bank where it was deposited, and still hold the same. When the draft was drawn and received by the plaintiffs, and when presented on Saturday, and during all of that day, the defendants had funds, not otherwise drawn, on deposit with the drawee, sufficient to pay the draft in full, and other checks or drafts drawn upon him by other parties were paid and honored on that day. On,Monday, August 3rd., the drawee made a general assignment for the benefit of his creditors and became insolvent. The plaintiffs’ place of business and that of the bank in which they deposited the draft, upon receipt of the same, and that of the drawee were all on Broadway in the city of New York.

The plaintiff, brought this action against the drawers of the draft and have recovered. The defense, in substance, is that the amount of the draft was lost to the defendants in consequence of the neglect and failure of the plaintiffs to present the same to’ the drawee for payment in due time. The draft, though made in another state by parties residing there, was payable here, where the drawee resided, and the legal questions involved are to be determined by the law of this state. Hibernia Bank v. Lacombe, 84 N. Y., 367.

The plaintiffs, the payees of the draft, were bound only to use-reasonable diligence in presenting it in order to charge the drawer and presentation to the drawee within twenty-four hours or the next day was in time under the circumstances of this case. Burkhalter v. Second Nat. Bank, 42 N. Y., 538; Syracuse, Bing. & N. Y. R. R. Co. v. Collins, 57 id., 641; First Nat. Bank v. Fourth Nat. Bank, 77 id., 320. The duty which the plaintiffs owed the defendants, with respect to the presentation of the draft, is not the same as the duty which the bank, in which the draft was deposited, owed to the depositor. St. N. Bank v. S. N. Bank, 128 N. Y., 26; 37 St. Rep., 829. Irrespective of the statute, which will presently be referred to, the case stands thus: The plaintiffs presented the draft for payment in due time after they had received it by mail. It was not paid, and, therefore, in the absence of some agreement, express or implied, to wait or present it again, the paper was dishonored and could have been protested and notice thereof given within a reasonable time thereafter or on the next secular day. Farmers' Bank v. Vail, 21 N. Y., 485. The draft was protested on Monday and notice thereof mailed to the defendants. Aside from the statute this would seem to be, under the law formerly governing such cases, a sufficient presentation, demand and notice. The finding is that the draft was presented for payment on Saturday, and, therefore, there was a demand of payment, because the presentation of a check or draft at the bank upon which it is drawn for payment, when it is due, is a demand. The drawee did not pay, and, therefore, there was a refusal.to pay, though the person who presented it was told to leave notice and present it again on Monday. But the rights, duties and obligations of parties to commercial paper of this character are somewhat modified by the recent statute on that subject. Laws 1887, chap. 289.

It' is there provided that every Saturday, from twelve o’clock at noon until twelve o’clock at midnight, shall be a public holiday for all purposes in regard to the presentation for payment, demand and notice of protest of commercial paper. As to the other holidays named in the statute, it is provided that such paper as would otherwise be payable or presentable on any of these days shall be deemed to be payable or presentable on the secular or business day next succeeding such holiday, but in the case of Saturday, a half holiday, it shall be presentable for acceptance or payment at or before twelve o’clock noon of that day. Therefore, the draft in question was properly presented up to noon of Saturday. But the following proviso, the meaning of which is not very clear, was added, and seems to apply to the facts of this case:

“ Provided, however, for the purpose of protesting or otherwise holding liable any party to any bill of exchange, check or promissory note, and which shall not have been paid before twelve o’clock at noon on any Saturday, a demand of acceptance or payment thereof may be made, and notice of protest or dishonor thereof may be given, on the next succeeding secular or business day. And provided, further, that when any person shall receive for collection any check, bill of exchange or promissory note, due and presentable for acceptance or payment on any Saturday, such person shall not be deemed guilty of any neglect or omission of duty, nor incur any liability, in not presenting for payment or acceptance, or collecting such check, bill of exchange or promissory note on that day. And provided, further, that in construing this section every Saturday, unless a whole holiday as aforesaid, shall, until twelve o’clock noon, be deemed a secular or business day.”

The legislature in enacting this statute curtailed the business day within which this draft could formerly have been presented by one-half, and to that extent limited the opportunity of the holder to demand payment.

The intention was to enlarge the time within which the holder of a bill or note could demand payment and give notice of dishonor. It did not change the time within which the paper fell due, nor when it became dishonored. If it fell due by its terms on a Saturday, the holder could present it up to noon of that day, and if he did, and payment was not made, the paper was dishonored' and protest could then be made and notice served. But in such case the statute also permits the holder, at his discretion, in case payment is not made before noon of Saturday, to present it again on Monday, or the next secular day, and if not then paid protest must be made and notice given on that day. The holder of the bill or note due and presentable on Saturday may, if he so elects, rest upon the demand and presentment made before noon of that day, and if he does, notice of demand and protest given on that day or the succeeding Monday or next secular day is good, but if he elects to make demand on Monday and payment is not made then he must, in order to hold the indorser or other antecedent parties entitled to notice, give the notice of dishonor on that day. A party whose duty it is to collect or present for payment a bill, note or draft which falls due upon Saturday is not chargeable with neglect or omission of duty because of failure to present it on that day, providing he does present it on Monday or the next secular day, and then, on that day, gives notice of dishonor in case of nonpayment This, we think, is what the legislature intended, and to this extent only has the statute changed the law on this subject as it previously existed. As the paper in question was again presented on the following Monday and notice of nonpayment given on that day, the defense was not established, and the plaintiff was entitled to recover.

The judgment should, therefore, be affirmed.

Judgment affirmed, with costs.

All concur.


author: Bookstaver, J.

text:
    Samuel Baumann, App’lt, v. Thomas Jefferson, Resp’t.

      (New York Common Pleas, General Term,

      Filed June 5, 1893.)

    1. Conversion—Assignability of cause of action.
    A right of action for the wrongful taking and conversion of personal property is assignable, even though the assignor apparently retains title to the property. Such an assignment is as much an election of remedies as if the assignor had commenced an action for conversion, and thereafter neither he nor those in privity with him could maintain an action to recover the property.
    2. Same—Demand.
    A personal demand upon the person converting property is not necessary. A demand made upon his servant or agent who is charged with the duty of receiving, keeping or caring for and delivering the property for his principal or master is sufficient; and for that purpose the title to the property need not be exhibited.
    3. Same—Warehousemen.
    v Where a chattel mortgage prohibiting the removal of the goods without consent of the mortgagee has been duly filed, a warehouseman subsequently receiving it has no lien and cannot withhold the same from the rightful owner.
    Appeal from a judgment rendered in the district court oT the city of New York for the ninth judicial district.

      George Hahn, for app’lt; Theodore F. Friend, for resp’t.
   Bookstaver, J.

This action was brought against the defendant, who is a warehouseman, to recover damages alleged conversion of personal property. On the trial the plaintiff proved that one Maggie Kane purchased of plaintiff’s assignor certain goods, including those in question, for which she agreed to pay $65.10, of which she paid only five dollars, and executed to the plaintiff’s assignor a chattel mortgage upon the goods to secure payment of the remainder of the purchase money, and that she never paid more of that remainder than five dollars. A copy of the mortgage was duly filed in the office of the register of the city and county of New York. The justice rendered_ judgment against the plaintiff for the dismissal of the complaint on the ground that the assignment under which he claimed was insufficient and did not assign to him the chattel mortgage covering the goods for the alleged conversion of which this action was brought

Whether an action for the conversion of personal property is assignable or not was a moot question as far back as 1837. In People v. Tioga Common Pleas, 19 Wend., 73, the leaiped Judge Oowen, in speaking of choses in action, said, “ that for the purposes of any sort of assignment, legal or equitable, I cannot find that the term has ever been carried beyond a claim due either on contract or such whereby some special damage has arisen to the estate of the assignor; ” and his conclusion is that demands arising from injuries strictly personal, whether arising upon tort or contract, were not assignable, but that all others were. Notwithstanding this conclusion of Judge Cowen, there was a conflict of opinion on this question among the judges of the supreme and other courts, and the cases quoted by the respondent were decided during that time. But after the passage of the Code of Procedure in 1855, it was finally and authoritatively decided by the court of appeals in McKee v. Judd, 12 N. Y., 622, that a right of action for the wrongful taking and conversion of personal property was assignable. And this decision has been followed ever since. Drake v. Smith, 12 Hun, 532; McKeage v. Hanover Ins. Co., 81 N. Y., 38. Indeed, this rule has been adopted and included in the Code of Civil Procedure, § 1910, which expressly provides, “ any claim or demand can be transferred except in one of the following cases; ” then follow the exceptions, which are the recovery of damages for a personal injury, or for a breach of promise to marry, or where the claim is founded upon a grant made void by a statute of the state, or upon a claim to interest in real property, a grant of which by the transferee would be void by statute, and where a transfer is expressly forbidden by statute of the state or United States, or would contravene public policy.

There has also been felt to be a difficulty in allowing a recovery upon the mere assignment of the chose in action for conversion where the assignor apparently retains title to the property. To overcome this the courts have suggested that such an assignment, although it does not so state in express words, carries with it the title to the property. And this was held in McKeage v. Hanover Ins. Co., supra. But we think it can be put upon a stronger ground, and one that will be applicable to any case that might arise under such an assignment. When the owner of personal property has been deprived of it by the wrongful acts of a stranger, amounting to a conversion of it, two courses are open to him; he may sue in conversion to recover the value of the property, or in replevin to recover the property itself and damages for its withholding. But he cannot simultaneously pursue both remedies, for to, allow him so to do would be to enable him to recover both the property and its value. Accordingly it has been held in such cases, as in all others where two or more inconsistent remedies are open to an aggrieved party, that by commencing an action upon one he makes his election to surrender the others. Van Orden v. Van Orden, 10 Johns., 30; Winter v. Livingston, 13 id., 54; Oatman v. Taylor, 29 N. Y., 649; Rodermund v. Clark, 46 id., 354; Bridgford v. Crocker, 60 id., 627 ; Moller v. Tuska,, 87 id., 166; Linden v. Fritz, 3 Am. L. J., N. S., 421; Benedict v. Bank, 4 Daly, 171; Becker v. Walworth, 45 O. St., 169; Yate v. Liggatt, 2 Leigh, 84; Lane v. Lutz, 1 Keyes, 203; Morris v. Rexford, 18 N. Y., 552; Blessy v. Kearney, 24 La. Ann., 289; Philadelphia, etc. Co. v. Howard, 13 How., U. S., 307. Where after the conversion by a wrongdoer, and before action is commenced, the property is wholly destroyed by fire or otherwise, there can be no doubt but that an action for the conversion could be maintained by an assignee, and yet it is clear that in such case there could be no title to the property, for it has ceased to exist. So, also, where one holds a chattel mortgage upon personal property to secure the payment, say of $1,000, and only a part of the property has been converted, there is no doubt but that an assignment might be made to a third party of the right to recovér for the property so converted, and yet in that case it could not be said that such an assignment carried with it the whole mortgage. In such case the mortgagee would have the right not only to sue for the property actually converted, but also the right to retain his mortgage upon the property not converted.

In the case under consideration, the assignor before making the assignment had duly demanded the property of the defendant It is true that a mere demand would not determine his election, but the commencement of an action would; and we think an assignment of the right of action to the plaintiff herein equally concludes him, for thereafter neither he nor anyone in privity with him could maintain an action for the recovery of the goods, which would be in bad faith both to his assignee and to the wrongdoer, and would enable him to do that which the doctrine of election forbids him to do. As assignment of the claim we hold to be as much an election as if he had actually commenced his action in conversion.

It is claimed by the respondent that no demand was made, but it is sufficient to make it upon the person having the possession of the property at the time, or upon his agent, or upon the person having control over the chattel; and a demand of property made upon a servant or an agent of the defendant who is charged with the duty of receiving, keeping or caring for and delivering the property for his principal or master is a sufficient demand. 4 Am. & Eng. Ena, 115; 5 id., 528, note 4. And for the purpose of making the demand, one need not exhibit his title to the property when he makes it. Cass v. R. R. Co , 1 E. D. Smith, 522. In this case it was proved that a demand had been made on behalf of plaintiff's assignor upon the brother of the defendant who was behind the desk at the time and who looked through the books and admitted that the goods were there; and the defendant upon the trial admitted that this brother had full charge of the business. It was also proved that the mortgage was shown to that brother at the time. It further appeared that the defendant refused to deliver the goods without the payment of his charges as warehouseman. The defendant was not entitled to exact the payment of storage charges. The mortgage, prohibiting a removal of the goods from the residence of the mortgagor without the -consent of the mortgagee, and had been duly filed, so that the defendant in contemplation of law had notice of it Under such circumstances we have held that a warehouseman has no lien upon the property and cannot withhold the same from the rightful owner. Baumann v. Post, 16 Daly, 385; 34 St. Rep., 308; Eisler v. Union Transfer & Storage Co., 16 Daly, 456; 35 St. Rep., 374.

The judgment should, therefore, be reversed and a new trial ordered, with costs to the appellant

Bischoff, J., concurs.


author: Bischoff, J.

text:
    In the Matter of the Final Accounting of Frederick E. Barnes, Assignee.

      (New York Common Pleas, General Term,

      Filed June 5, 1893.)

    1» Assignment for creditors—Liability of assignee for interest on
    FUNDS DEPOSITED IN HIS BANK ACCOUNT.
    Where an assignee for creditors deposits the funds in his' personal bank account, and allows them to remain there during the pendency of an action to set aside the assignment, he is properly chargeable with interest thereon at the statutory rate from the time of the commencement of such action.
    3. Same—Taxable costs collected.
    Where the assignee has been credited in his account with the reasonable expenses for counsel fees incurred in litigations, heshould be held accountable for taxable costs collected by him in such litigations.
    Appeal from an order made at special term which directed that the assignee be charged with interest on the moneys of the assigned estate remaining in his hands and that he be charged with $100, the amount of taxable costs received by him in an action affecting the assigned estate, which was omitted from his .account.

      Howard Y. Stillman, for assignee-app’It; Winthrop Parker, Geo. H. Culver, Palmer & Boothby, Herman G. Loew and Marquis D. Curtis, for creditors-resp’ts.
   Bischoff, J.

Appellant is the assignee of Zenos G. Grooker for the benefit of the latter’s creditors. On January 8, 1888, an action was instituted against him to have the assignment adjudged void. At this time the assignee had remaining in his hands a balance of assets amounting to $3,000.47. Thereafter he received other moneys and made certain payments on behalf of the assigned estate. All the moneys received by him, including the balance above-mentioned, were deposited by the assignee to the credit of his personal bank account kept for the convenience of his business as a real estate agent; but no interest was derived therefrom nor does it appear that the assignee’s drafts for his business purposes at any time encroached upon the moneys derived from the assigned estate. In April, 1892, the assignee applied for a judicial settlement of his accounts preliminarily to the distribution of the assigned estate Pending the action to set the assignment aside the distribution was necessarily kept in abeyance and the assignee admits that during all this time he was aware that interest could be earned by deposit of moneys with the trust companies in the city of New York, and that some time before the-assignment to him he had maintained an- account with the Real Estate Trust Company upon which he was allowed interest at the-rate of two per cent, per annum; but that notwithstanding he-suffered the moneys of the assigned estate to remain in his personal, bank account a

Upon these facts the referee appointed to take the account, charged the assignee with interest at the rate of two per cent, per annum on the balance on hand at the time of the commencement of the action to set the assignment aside, from the time of its commencement, and on the moneys thereafter received from the time of the receipt, and credited him with interest at the same-rate on the sums disbursed from the time of the disbursement.

Exceptions were filed to the referee’s report on behalf of theassignee as well as the creditors, the former contending that he was not chargeable with any interest whatever, and the latter that, the charge should have been at the statutory rate. On the hearing of the exceptions the learned judge at special term sustained the contention of counsel for the creditors and directed that theassignee be charged with interest at the rate of six per cent per annum on the sums, and for the periods mentioned, subject to the credit allowed by the referee at the same rate. Therefrom the assignee appeals.

We apprehend the rule to be firmly established that a trasteéis in any event chargeable with the gains made from the employment of trust funds, be they interest, profits or otherwise.

If he has neglected merely to place the funds at interest when he might reasonably have done so, he is chargeable with simple interest only, not as punishment, but as compensation to those who would ultimately have to bear the loss occasioned by his neglect. But if the neglect was wilful or fraudulent, then he may be charged with compound interest by way of punishment as well as compensation. Bundle v. Allison, 34 N. Y., 180, 184; Gray v. Thompson, 1 Johns. Ch., 82; Dunscomb v. Dunscomb, id., 508; Stephens v. Van Buren, 1 Paige, 479; Hasler v. Hasler, 1 Bradf., 248.

The facts before us relieve the assignee from any imputation of wilful or fraudulent conduct in the omission to place the funds at interest, but we agree with the learned judge at special term that the assignee’s neglect is sufficiently apparent to warrant a charge of simple interest against him. We think that when the action to set the assignment aside was commenced he could have-reasonably apprehended a delay in the distribution of the funds of the assigned estate for a considerable time at least, and that an ordinarily prudent person, in view of that fact, would have placed his own money at interest with one of the trust companies, subject to the common conveniences of a bank account respecting drafts or withdrawals. We further think that the judge at special term was justified in. dating the charge of interest from the time of the commencement of the action to set the assignment aside, in the absence of any excuse for delay. If there were circumstances tending to excuse delay for a reasonable time in depositing the funds with the trust company, it was incumbent upon the assignee to show them. This he has failed to do.

Nor can it be said that the assignee has derived no personal advantage from the deposit of the funds of the assigned estate to his personal credit in his business bank account. Interest is not the only advantage which can be derived therefrom. The deposit enhances the personal or business credit of the depositor, and though this may not be capable of exact measurement by a money standard, it is none the less a personal advantage and an employment of the funds foreign to the trust. Such were the views of the English court of chancery and the late court of chancery of this state. “ I do not quite agree with the Solicitor General,” said Lord Chancellor Thurlow in Matter of Hilliard, 1 Vesey, Jr., 90, “ that it is to be concluded that no advantage was made of the money, because it was permitted to lie at his banker’s, for if it is. necessary for a man to keep a sum of money at his banker’s, and he makes use of his. constituent’s money for that purpose, he does make advantage of it.”

So Sir William Grant, master of the rolls, in Rocke v. Hart, 11 Vesey Jr., 58, says, “I rather agree with Lord Loughborough, that if a trader lodges money at his banker’s he has, in effect, a benefit from that. As he must generally keep a balance in his banker’s, it answers the purpose of his credit, as if it was his own money, and I should hold that to be employment in his trade; ” and Chancellor Kent in Brown v. Rickets, 4 Johns. Ch., 303, says, “ It is the established doctrine of the court that an executor or other trustee cannot be permitted to convert trust funds. to his own use, without being responsible for the profits of the money. He is riot to make any gain to himself from the use of the funds, but it must all be accounted for to the cestui que trust. So, if an executor or other trustee, mingles the trust moneys with his own, so as to answer the purpose of credit, or if he puts the money in jeopardy, by involving it in the risk of his trade, he must answer for what it may reasonably be supposed to have made; ” and “ from the time of Lord Thurlow we find the true doctrine of the court asserted with uniformity and precision and placed upon the soundest principles of policy and justice ; ” citing Treves v. Townsend, Loughborough, Ch., 1 Bro., 384; S. C., 1 Cox, 50; and Matter of Hilliard, Thurlow, Ch., 1 Vesey, Jr., 89.

Careful examination of the cases demonstrates that the rule enunciated by Chancellor Kent has not been departed from by the court of chancery or the court of appeals. Rapalje v. Hall, 1 Sandf. Ch., 399, 404; Jacot v. Emmett, 11 Paige, 142, and Price v. Holman, 135 N. Y., 124; 48 St. Rep., 381, are to the effect only that a trustee who mingles the trust funds with his own is not to be charged with interest, unless it further appears that interest could have been earned with the exercise of reasonable care and diligence, which the trustee has omitted. Wilnerding v. McKesson, 103 N. Y., 329, 340; 3 St. Rep., 108, decides no more than that an executor, or other trustee, who has been guilty of no intentional wrong, cannot be charged with more than simple interest.

We also agree with the judge at special term that the rate of interest with which the assignee is chargeable should be -six per cent per annum. It may be that where the assignee, or other trustee, has merely neglected to place trust funds at interest when he might reasonably have done so, and has not used them for purposes of his own, that the correct measure of compensation to the cestui que trust is the amount which the funds could or would have earned had the trustee availed himself of the opportunities presented; but when, as here, the trustee has used the funds for purposes of his own and foreign to the trust, and the value of such use to him is not capable of exact measurement, there does not appear to be any sufficient ground for imposing a rate less than that recoverable from other debtors and fixed by statute to prevail in the absence of an agreement for a lesser rate.. Laws 1879, chap. 538. The interest is allowed by way of damages and in in such cases the statutory rate will control. Sanders v. The Lake Shore & Mich. R'way Co., 94 N. Y., 641. In Duffy v. Duncan, 35 N. Y., 187, 191, the full legal rate (seven percent at the time), was approved; in King v. Talbot, 40 N. Y., 76, it was six per cent (seven per cent still being the legal rate); and in Wilmerding v. McKesson, 103 N. Y., 340; 3 St. Rep., 108, the court said that the executor was chargeable with no more than five per cent (the legal rate being then six per cent). The report in neither case shows that the question before the court was other than whether any interest whatever should be charged. In Matter of Myers, 131 N. Y., 409; 43 St. Rep., 265, it was, however, explicitly ruled that a delinquent trustee is properly chargeable with interest for the unauthorized use of trust funds at the rate prescribed by statute to prevail, in the absence of an agreement fixing a different rate.

The learned judge at special term also directed that the assignee be charged with $100, the amount received by him for the taxable costs of the action to set the assignment aside. The assignee had been credited with the payment of $2,000 for reasonable expenses incurred for counsel fees in the litigations affecting the assigned estate, and the referee found the services of counsel to have been worth that sum. The costs, therefore, which the assignee received, or to which he was entitled if paid to his attorney or counsel, reimbursed him to the extent of their amount, but were omitted from his account. Under the circumstances the charge directed by the court was proper.

The order appealed from must be affirmed, with costs.

Pryor, J., concurs.


text:
    Bernard S. Clark, App’lt, v. Frank Tryon, Resp’t.

      (New York Common Pleas, General Term,

      Filed June 5, 1893.)

    1. Bills and notes—Evidence—Promise by indorser to pay subsequent TO DISHONOR.
    An unconditional promise to pay a bill or note, made by the indorser after dishonor, and with full knowledge of real or alleged laches, is admissible as legal evidence of due presentment and notice.
    35. Same—Ownership.
    After dishonor, the note was assigned to plaintiff as part of a large sum to go to the credit of a large debt, under an agreement that he should collect it and give the assignor credit for what he collected. Held, that while this did not constitute plaintiff, technically speaking, a liona fide holder, so as to cut off any equities if any existed, it invested him with the legal title to the note, and authorized him to bring action thereon.
    Appeal by plaintiff from a judgment entered upon an order of the general term of the city court, reversing a judgment entered upon the verdict of a jury rendered at a trial term.

      Francis M. Scott, for app’lt; E. J. Myers, for resp’t.

       Reversing 51 St. Rep., 146.

   Bookstaver, J.

This action was brought against defendant as indorser upon a promissory note made by C. B. Keogh & Co., and the complaint averred presentment, demand for and non-payment, «due protest and notice to the defendant. The answer, with affidavit in due form, puts in issue the failure to protest and notify the defendant as indorser of the presentment and refusal to pay. On the trial the plaintiff gave no direct evidence of actual presentation, protest and notice of dishonor,but in place thereof introduced a letter written by the defendant to the Kentucky Union Lumber Company, his indorsee, in which he complained that he had not received notice of protest in proper season, but stated that he would not take any advantage of the failure of the notice of protest and would pay the note if insisted upon. The trial court admitted this letter under defendant’s objection that the action was brought upon a promissory note against an indorser upon allegations of demand, non-payment and protest, which had not been proved, and that it was not admissible under the pleadings, they being founded upon the theory of a protest and not for a subsequent promise to pay. The court, in effect, held that the letter was sufficient evidence of the demand and notice alleged in the pleadings, and constituted a waiver of any defense the defendant might otherwise have asserted by reason of the alleged laches in protest. The defendant appealed to the general term of the city court, and the particular point of contention there was that the letter referred to was inadmissible under the pleadings. Upon this ground alone was the judgment reversed by the city court, and the question before us for consideration is whether or not in a complaint against an indorser of a promissory note the usual allegation of demand, non-payment and notice of dishonor admits and is sustained by proof of a promise to pay by the indorser after maturity of the note and with full knowledge of real or alleged laches on the part of the holder in giving notice of dishonor.

It is elementary law that, as a general rule, in order to charge the indorser of a promissory note, it is necessary to allege and prove presentment of the note at maturity, and. due notice to the indorser of its non-payment. There are, however’, cases in which it is not necessary to give notice of dishonor to an indorser, and in such case it is not necessary either to allege or prove such notice. For instance, where the indorser before maturity has waived notice, or where he has taken an assignment of the maker’s property, or in which other circumstances exist which excuse notice. In all such cases the complaint must contain a statement-of the facts, and as notice cannot be alleged, it is necessary to allege the reasons why notice was not given and the facts relied upon to excuse such notice. It is evident that the court below regarded this as one of those cases, for the learned judge who delivered the opinion of the court stated the question on this appeal to be, “ Can the plaintiff, declaring against the indorser on presentation and protest of a promissory note in due form, prove excuse for failure to protest without any averment of that character in the complaintand then cites Clift v. Rodger, 25 Hun, 39; Garvey v. Fowler, 4 Sandf., 665. In the first of these cases the plaintiff failed to prove due notice of dishonor, and sought to recover by. showing that no notice was necessary, and the case turned on the question whether an averment of performance will or will not be sustained by proof of legal excuse for non-performance, and of course was decided in the negative..

The second case cited is authority only for the proposition that in an action upon a bank check the fact that the defendant had no money in the bank was a circumstance tending to dispense with demand and notice and should be pleaded. Crandall v. Clark, 7 Barb., 169, might also have been cited as sustaining the position, but it only sustained the familiar doctrine that under a pleading alleging the performance of a condition precedent it is improper to admit evidence tending to shoyv a dispensation with such performance.

But we think that the court below misapprehended the true question to be determined upon this appeal on the facts as developed on the trial. It seems to us that the question is whether or not an unconditional promise to pay a bill or note, made by the indorser after dishonor and with full knowledge of real or alleged laches, is admissible as legal evidence of due presentment and notice. The record does not disclose that plaintiff offered any evidence to show waiver of presentment and notice, or any excuse for nonpresentment and non-notice, but on the contrary it shows that the plaintiff admits the defendant was entitled to due notice of the nonpayment of the note, and maintains that the note was in fact presented for payment and that the defendant in fact received due notice of its nonpayment, and the evidence offered by him, consisting of defendant’s promise that he would not take any advantage of the failure of notice of protest and would pay the note, was offered not in derogation of the allegations of the. ■complaint, but in support of them. It is not denied on the part of the defendant that the new promise contained in the letter continued and restored his liability as indorser, but he contended that it was not admissible under the pleadings; that the evidence would have been sufficient if pleaded, and would in that event have obviated the necessity of any other proof, is conceded by the •defendant, and the whole question at issue, therefore, resolved itself into one of pleading, and of the evidence admissible under the pleadings. The Code provides that the complaint shall contain a plain and concise statement of the facts constituting eacli cause of action; and it has been frequently held that the words ■“facts constituting a cause of action mean those facts which the ■evidence upon the trial will prove and not the evidence which will be required to prove the existence of the facts. In other words, what the pleader is called upon to allege in the complaint are the substantive facts constituting the cause of action, and not the evidential facts from which the existence of the substantive facts are to be inferred.

In the case before us the substantive facts are the due presentment of the note and timely notice of its non-payment; the evidential fact is that after dishonor of the note, and with knowledge of its dishonor, and a belief that there had been laches in giving the notice, the defendant unconditionally promised to pay the note. The distinction between substantive facts and evidential facts is illustrated in the case of Ferris v. Fisher, 67 Hun, 134 (adv. sheets); 51 St. Rep., 536, where in a partition suit the complaint set up a will and codicil, and alleged that the testator executed them by reason of undue influence and while mentally incompetent to make a will. To prove this incompetency, the plaintiff was allowed to put in evidence a judgment between the same parties by which the mental incompetency of the testator was determined.

The court said: “ The appellant also objects that the former judgment not being pleaded could not be admitted in evidence, and cites authorities that where a former adjudication is relied on as a bar, it must be pleaded, or is not admissible, -x -x •* The record was not offered in bar of the suit, but in its •support. To plead evidence is contrary to the present rules. The plaintiff pleaded that the codicil in question was executed by the testator when of unsound mind, and was, therefore, void; and proved that allegation by producing the record wherein it had been so adjudged in a previous action between the parties. When received in evidence it was conclusive.”

Mr. Daniel, in his work on Negotiable Instruments, vol. 2, ■§ 1157, makes this distinction very clearly and gives the reasons for it: “A failure to discriminate between the promise to pay as a waiver of demand and notice, and as a waiver of proof of demand and notice, has led to much confusion in the adjudicated cases. There is certainly great force in the view that a distinct promise to pay, made after maturity, ought to be regarded ■either as conclusive evidence that there was due demand and notice, which the promisor is estopped to rebut, or as an abso-' lute waiver of all proof to that effect. But a majority of the cases consider it prima facie evidence of demand and notice merely, and open to rebuttal; and that if the defendant does rebut it with evidence of laches, the plaintiff must rejoin with proof that the defendant had knowledge of the laches, his position being shifted from a reliance on his own diligence to proof that his negligence was waived. * * * The order in which the burden of proof shifts and is borne may, therefore, be stated as follows: (1) Plaintiff must prove demand and notice. (2) By proving a promise to pay after maturity this proof prima facie is supplied. (3) Defendant rebuts this proof by showing laches in respect to demand and notice. (4) Plaintiff makes sufficient rejoinder by showing that defendant had knowledge of laches when promise to pay was made.”

In this case this practice was followed almost exactly except that the promise to pay after maturity, and the knowlege of the laches at the time the promise was made, were proved simultaneously by the same letter, which, of course, rendered immaterial and incompetent any evidence on the part of the defendant as to -the laches themselves. The rule thus laid down by Mr. Daniel is abundantly supported by authorities in this and other states of the Union, as well as the federal courts. In Tebbetts v. Dowd, 23 Wend., 379, Judge Cowen, who wrote the opinion, said: “The question is whether an explicit promise by a drawer or an indorser of a bill or note will, of itself, dispense with the usual direct proof of regular demand and notice. That it will has been the stated and undisputed law, as understood and acted upon at Westminster Hall for more than a century,” and then goes on in a very elaborate and learned opinion to a discussion of all the cases both in England and in this state which had been decided down to that time, and arrives unhesitatingly at the conclusion, both upon principle and authority, that the promise by an indorser of a bill or note to pay the same accompanied by a knowledge of laches either in the presentation or the notice of dishonor, would, of itself, dispense with the usual direct proof of demand and notice, and constitutes conclusive evidence that due demand and notice had been given. In the same case, Judge Bronson, after stating that he was at first inclined to hold a contrary view : “ On proof of a promise by an indorser with knowledge that he was not liable on the bill, the holder may recover; not, however, on the ground that the indorser is bound by the promise as matter of contract, for it wants consideration; but on the ground that the promise amounts to a waiver of the objection that the proper steps had not been taken to charge the indorser.” In Meyer v. Hibsher, 47 N.Y., 265, the complaint alleged the maturity of the note, its presentment at the place of payment, demand of payment, refusal to pay, and due notice to the indorser of its nonpayment; after the note fell due, and after the appellant had been informed by one of the makers that the note had not been paid, he (the appellant) stated that a new note would be made, and he and the other indorser promised the respondent to pay the note. The court said: “An indorser of a bill or note after full knowledge of an omission to-make full presentment, may promise to pay the same, such promise will amount to a waiver of such presentment and bind the promisor to pay it * * * Had there been no proof at all of the manner of presentment and demand, this promise of the appellant would be presumptive evidence of a legally formal demand and notice. * * * Proof of the promise without proof of presentment and demand would have furnished to the jury grounds for the presumption that there was due presentment and notice.” See, also, Ross v. Hurd, 71 N. Y., 14-18; Trimble v. Thorn, 16 Johns., 152 ; Duryee v. Dennison, 5 id., 248; Patterson v. Stettauer et al., 40 Super. Ct., 54; Sherman v. Clark, 3 McLean, 91.

First Nat. Bk. v. Moffatt, 39 St. Rep., 668; S. C.15 N. Y., Supp., 389, was decided by the same general term which decided Clift v. Rodger, supra, and in that case the question here presented arose directly. The defendant Moffatt, being the indorser of a promissory note, defended, denying presentment and notice, and to sustain the allegations of the complaint proof was offered that the defendant Moffatt, after the dishonor of the notes and with knowledge of such dishonor, had made a promise that he would pay them. The court, quoting with approval Tebbetts v. Dowd and Meyer v. Hibsher, supra, as well as other cases, said : “ The plaintiff had alleged and was seeking to prove protest and notice to the indorser. Evidence was given tending to show an unconditional promise to pay, an acknowledgment of the debt, a part payment. The point was as to the effect or force to be given to this evidence. Very clearly, under the authorities above referred to, it was presumptive evidence_ that the indorser had been properly notified and was sufficient to carry the case to the jury. ’ And in Bank v. Lyman, 1 Blatch., 297; affirmed 12 How., U. S., 225. the court said: “ It has been often held that part payment, a-promise

to pay, or an acknowledgment of liability by the indorser after the note became due, is prima fade evidence not only of notice, but of presentment.” See also Thornton v. Wynn, 12 Wheat., 183 ; Hyde v. Stone, 20 How., U. S., 175. The same rule also prevails in Oonnecticut. In Camp v. Bates, 11 Conn., 487, the very question under consideration was decided. The action was upon a promissory note and the declaration alleged demand and notice of non-payment. The defendant answering alleged no demand. Whereupon the plaintiff read in evidence a writing signed by defendant in which he acknowledged that plaintiff made due demand of the maker, and gave to the defendant as indorser legal notice, and that he, the defendant, was bound for the payment of the note as indorser. It appeared that in point of fact no demand or notice had been given, and that the writing had been signed for the purpose of supplying the deficiency, and the judge charged that if the jury should find that the defendant subscribed the writing with full knowledge that no demand of payment had been made, and no notice of non-payment had been given, it amounted to a waiver of the consequences of such neglect to make demand and give notice, and was admissible under the averment in the declaration that a demand had been made and notice given. Upon this point an appeal was taken to the supreme -court, which sustained the ruling of the trial judge, and said : “ The latitude of proof which is allowed the plaintiff under declarations so drawn is not opposed to any technical rule of pleading, but is founded on a very obvious principle.

“ It is this: the proof offered of a waiver is not strictly matter in excuse, but of facts which in their legal effect and by the customs of merchants are equivalent to a demand and notice, nor does it change the contract of the indorser (which is that he will pay the note provided the holder made due demand and gave due and reasonable notice), and created a liability at all events,whether such a demand be made and notice given or not, but merely shows that the defendant has waived the performance of a condition made or implied for his benefit.” See also Chitty on Bills, p. 501; also see 503; Story on Prom. Notes, §359; Bayley on Bills, 375-6, citing Lundie v. Robertson, 7 East, 231; Greenl. Evid., Vol. II, Part 4, § 196; Tiedeman on Commercial Paper, § 365 ; Hicks v. Beaufort, 4 Bing. N. C., 229; Lewis v. Brehme, 33 Md., 412, and 3 Am. Rep., 190, at p. 202; Hopley v. Dufresne, 15 East, 275; Oglesby v. Stacy, 10 La. Ann., 117; Union Bk. v. Grimshaw, 15 La., 240.

We have the more carefully examined this case because our first impression was favorable to sustaining the view taken by the general term of the city court, and at first sight it seemed, under the system of pleading we have in this state, that the facts should have been alleged in order to permit the plaintiff to avail himself of them. But an examination of the authorities leads us to believe that they are in substance and effect pleaded, and that the letter was properly admissible. The distinction between a waiver and dispensation of notice given before maturity and a waiver of the proof of presentation and notice made after maturity is clear. In the former case the waiver is used as excuse for non-presentment and non-notice, and must, therefore, be pleaded. In the latter case the waiver is received as evidence of due presentment and notice and should not be pleaded, because it is the province of the complaint to state facts and not the evidence which will establish those facts. On this trial the defendant did not make any attempt to show that he had not full knowledge of the laches when he made the promise to pay the note, nor did he ask to go to the jury on that point nor request the judge to submit the question of notice to them.

The plaintiff, although he acquired the note after dishonor, was entitled to avail himself of the defendant’s waiver of laches. While it is true that the plaintiff took this note subject to all equities and defenses which the defendant might have availed himself ■of if the action had been brought by the Kentucky Union Lumber Co., so it is equally true that all intendments and assurances which the Kentucky Union Lumber Co. could have availed themselves of in an action against the defendant have enured to the plaintiff. In other words, he stands precisely where the Kentucky Union Lumber Company would have stood had it sued upon the note. Williams v. Matthews, 3 Cow., 252, 260 ; Britton v. Hall, 1 Hilt., 528; Miller v. Tulcott, 54 N. Y., 114; Tiedeman on Gom. Paper, § 295; Chitty on Bills, 503, citing Potter v. Rayworth, 13 East, 417; Kennon v. McRea, 7 Porter, 175.

We also think the plaintiff was the lawful owner and holder of the note and entitled to maintain the action and recover judgment théreon. The evidence was that after dishonor the note in suit was indorsed over to the plaintiff by the lumber company, as part of a large sum to go to the credit of a large debt. The agreement between the company and the plaintiff was that the plaintiff should collect the note and retain whatever he might collect upon it, giving the Kentucky Lumber Company credit upon its indebtedness for whatever might be collected, thus cancelling pro tanto the indebtedness of the Kentucky company. While this transaction did not make the plaintiff, technically speaking, a bona fide holder, so as to cut off any equities, if such existed, between the defendant and the lumber company, it invested the plaintiff with the legal title to the note and authorized him to bring suit and recover judgment thereon. Cummings v. Morris, 25 N. Y., 625; Hays v. Hathorn, 74 id., 486 ; Freeman v. Falconer, 45 N. Y. Supr., 383; Green v. Swink, 9 St. Rep., 646.

The exceptions taken by the defendant on the trial may be grouped under three heads: (1) Those which have reference to the admissibility and conclusiveness of defendant’s letter as evidence ; (2) those which have reference to the bona fides of the plaintiff’s ownership of the note in suit, and (3) that which had reference to an alleged conversation with a Mr. Bostwick. As to the exceptions taken under the first head, the principle on which they rest has been discussed in considering the main question involved on this appeal, and they fall with the defendant’s contention. As to the exceptions to the second class of evidence offered, the proof showed that plaintiff was the lawful owner of the note, and whether or not he was, technically speaking, a bona fide •owner was immaterial, as no equities between defendant and the lumber company were asserted or even suggested on the trial. As to the exceptions to the alleged conversation with Mr. Bostwick, it clearly appeared from defendant’s own testimony that Mr. Bostwick was merely a selling agent of the lumber company and was not authorized to bind them.

The judgment of the general term of the city court .should, therefore, he reversed, and the judgment of the trial term affirmed, with costs of the appeal in the court below and in this court to the appellant.

Bischoff and Pryor, JJ., concur.


text:
    Emma T. Green, Adm’rx, Pl’ff, v. Joseph G. Roworth et al., Def’ts.

      (New York Common Pleas, General Term,

      Filed June 5, 1893.)

    Mew tbial—Case—Code, § 1001.
    A motion for a new trial on exceptions under § 1001 of the Code will not be entertained where it does not appear that the case and exceptions were settled and signed by the judge or referee by or before whom the action was tried.
    Motion for a new trial of an issue of fact tried by the court without a jury. Action to set aside a conveyance of real and personal property on the ground that the same was procured by fraud.

      John S. Davenport, for pi’if; Thomas Darlington, for def’ts.
   Bischoff, J.

Section 1001 of the Code of Civil Procedure authorizes a motion at general term, after interlocutory judgment has been entered, for a new trial of an issue of' fact tried by the court without a jury or by a referee, when exceptions taken to rulings on the trial are thus sought to be reviewed. Section 997 however requires that the motion be made upon a case and exceptions which must be settled and signed by the judge or referee by or before whom the action was tried as prescribed by the general rules of practice. See rule 32. Obviously the approval of the case to be presented to the general term is required to afford the judge or referee before whom the action was tried opportunity to direct the insertion of omitted evidence which appeared on the trial and may be necessary in support of the rulings which the general term is asked to review on the motion for a new trial. Brayton v. Sherman. 119 N. Y., 623; 28 St. Rep.. 854; Halpin v. Phenix Ins. Co., 118 N. Y., 165 ; 28 St. Rep., 788.

We are unable to ascertain from the case submitted to us for the purposes of this motion that it was settled and signed as required by the Code, and the motion must for that reason be dismissed. Dwiqht v. R. R. Co., 5 Silvern Supreme. Ct., 596; 29 St. Rep., 250.

Motion dismissed, with costs.

Pryor and Giegerich, JJ., concur.


author: Bookstaver, J. Pryor, J.

text:
    Joseph Greenburg, App’lt, v. Mary A. Early, Individually and as Executrix, Impl’d, Resp’t.

      (New York Common Pleas, General Term,

      Filed June 5, 1893.)

    Master and servant—Termination of employment by death of
    ^PARTNER IN EMPLOYING FIRM:.
    A contract of employment as salesman for a fixed term by a firm ends
    on the dissolution of the firm by the death of a member thereof.
    Appeal from a judgment entered upon the dismissal of the complaint at trial term.

      Waller M. Rosebault, for app’lt; John Delahunty, for resp’t.
   Bookstaver, J.

This action was brought to recover $874 for breach of a contract of employment. The detense was substantially a general denial. The plaintiff was a salesman in the employment of John Early & Co., a firm composed of John Early and Patrick Cavanagh, únder a yearly contract expiring January 1st of each year. On the 23rd of March, 1891, Mr. Early died, leaving a will which was probated, under which the defendants qualified as executors. When Mr. Early died the plaintiff was traveling for the business and was allowed to continue on his trip for three weeks longer, and when he came back the defendants, or one of them, said to him, “You boys can consider yourselves discharged.” In reply to which the plaintiff said, “I told him that I did not consider myself discharged; that I held the estate of John Early responsible for the year 1891, according to my agreement.” It is claimed on behalf of the respondent, Mrs. Early, that the death of John Early put an end to the contract between the plaintiff and the firm of Early & Co., and that the new employment of the plaintiff by Mrs. Early not having been, according to the testimony adduced by the plaintiff on the trial, for a fixed period, either party was entitled at any time to terminate it, and Mrs. Early having done so in the month of June, 1891, and paid the plaintiff in full up to that time, the contract was terminated. And this contention we think is well sustained. Campbell v. Jimines, handed down herewith, 52 St. Rep., 495 ; Wood's Master & Servant, 2nd ed., 483.

Where there is no provision in a copartnership for its continuance after the death of any of the partners, the copartnership is thereby dissolved. There did not ‘ seem to have been any such provision in the copartnership under consideration, and, as a matter of fact, it was dissolved, and the other member of the firm went out, and the business was turned over to Mrs. Early to wind up. In Wood’s Master & Servant (2d ed.), § 165, it is said: “ Where a servant is employed by a firm, a dissolution of the firm dissolves the contract, so that the servant is absolved therefrom, but°if the dissolution results from the acts of the parties, they are liable to the servant therefor; but if the dissolution results from the death of a member of the firm, a dissolution resulting by operation of law, not from the act of the parties, no action for damages will lie. * * * The test is whether the firm is dissolved. So long as it exists, the contract is enforced; but when it is dissolved, the contract is dissolved with it, and the question as to whether damages can be recovered therefor will depend upon the question whether the dissolution resulted from the act of God, the operation of law or the act of the parties.” And in this case it is clear that it resulted from the act of God and operation of law, and consequently there can be no recovery. Lacy v. Getman, 119 N. Y., 109; 28 St. Rep., 546; Griggs v. Swift, 82 Ga., 392. In Addison on Contracts, p. 653, .bottom paging, Abb. ed., 1883, it is said: “ A contract of hiring and service is dissolved by the death of the master or servant. If the contract is made with" a. firm in partnership to serve the firm for a certain term, the contract is dissolved by the death of one of the parties.” Citing-Farrow v. Wilson, L. R., 4 C. P., 744; Tasker v. Shepherd, 6 H. & N., 575; 30 L. J., Ex., 207.

As far as we have found, there .is no case in this state in conflict with these decisions. They are founded on the principle alluded to by Judge Bischoff in Fisher v. Monroe, 16 Daly, 464; 34 St. Rep., 760, where he says : “ To render the contract operative and binding upon the parties at its inception, the obligation of the contracting parties must-be mutually dependent, that is to say, the obligation of the party who is to receive .the services, to pay, is conditioned upon the obligation of the party who is to render the services; to perform, and vice versa." If the employe dies, the employer has no remedy against his estate; his death puts an end to the contract; it is but just that the same results shall follow from the death of the employer. The principle is still more obvious in the case of a copartnership which is dissolved by operation of law when one of the partners dies.

Another reason that the authorities assign for putting an end to the contract is that the services which the plaintiff was employed to perform were, skilled services, where the .employe is not a mere laborer. And the plaintiff as a salesman was expected to perform skilled services, and in such a case the death of either party terminates the contract. Spalding v. Rosa, 71 N. Y., 40 ; People v. Globe Ins. Co., 91 id., 179 ; Martin v. Hunt, 1 Allen, 418.

We have carefully looked over the evidence in this case, and do not find that there is any proof to sustain the plaintiff’s contention that the contract of employment previously existing with the firm of John Early & Co. was assumed by the executrix, or that there was a new contract of hiring for the remainder of the year. The contract with the executrix, as before stated, being without any fixed time.

The judgment should, therefore, be affirmed, with costs.

Bischoff, J., concurs.

Pryor, J.

— On the 1st of January, 1891, the firm °of John Early & Co. hired the plaintiff as a travelling salesman period of one year. On the 23d of March next ensuing the copartnei'ship was dissolved by the death of Early, and the defendant. as executrix of his will, took possession and control of the firm assets and' business; but whether for the purpose of winding up or continuing the business is disputed upon the evidence, and is unimportant in the disposition of the appeal.

That a contract of service of the kind before the court is canceled by the death of the employer is. not now an open question in this state. Lacy v. Getman, 119 N. Y., 109; 28 St. Rep., 546.

The proposition that such a contract is terminated by the dissolution of a copartnership employer seems not to have been adjudged in this state, and may not be affirmed on the authority of uniform decision. In this country, it is supported by one express adjudication, Griggs v. Swift, 82 Ga., 392; 14 Am. St., 176; and disputed, by another. Fereira v. Sayres, 5 Watts & S., 210; 40 Am. Dec., 496. The text writers appear to accept it implicitly. Wood on Master & S., § 163; 2 Addison on Cont. (Morgan’s ed.), § 901; Lawson on Rights, etc., § 283. The preponderance, therefore, of authority is ■ in favor of the proposition. How stands it on principle ?

If the plaintiff be regarded as an agent of the firm, on its dissolution. the relation undoubtedly ceased, because an agent is merely the representative of his principal, and if there be no principal there can be no agent. “ There is a manifest absurdity in doing an act in the name of a person no longer in being.” Bank v. Vanderhost, 32 N. Y., 553, 555. The death of a partner operates an immediate dissolution of the copartnership, Parsons on Partnership, 397, and, therefore, the authority of a previously appointed clerk absolutely ends. McNaughton v. Moore, 1 Hayw., 189. The rule, of course, is inapplicable to an agency coupled with an-interest; but the right of the plaintiff to.a commission proportioned to sales, does not constitute a power coupled with an interest within the exception" to the general principle. Houghtaling v. Marvin, 7 Barb., 412.

Supposing the plaintiff to be a servant rather than an agent, still the conclusion is inevitable that the dissolution of the partnership by death terminated his employment. The decision in Lacy v. Getman, 119 N. Y., 109, 115, 116; 28 St. Rep., 546, proceeded upon the ground of a personal trust- and confidence between the employer and the employe, and held that such trust and confidence on the part of the employe cannot be transferred by operation of of law to a substituted employer. The reason of the rule is equally prevalent between a copartnership employer and its servant. In the case at bar, for instance, the plaintiff had engaged to serve John Early and Patrick Kavanagh, not Patrick Kavanagh alone; still less Patrick Kavanagh and Mary A. Early, executrix of John Early. He might be willing to trust and obey John Early and Patrick Kavanagh," but not at all willing to trust and obey Kavanagh alone, or Kavanagh and Mary A. Early, just as the employe of a single person might be willing to engage- service with him, but not with his executor.

Employed by the partnership and not by its individual members; engaged to serve the partnership and not its individual members, plaintiff’s relation to the partnership-was dissolved necessarily by its dissolution.

As well, therefore, upon principle as authority, we conclude that the contract of the plaintiff with the firm of John Early and Company terminated on the dissolution of the copartnership by the death of Early.

The defendant is sued, however, as well in her personal as her representative capacity; and plaintiff’s alternative claim is upon a contract- with her. Conceding his employment by the defendant, it was terminable at will, because for no definite period, Campbell v. Jimenes, decided the present term, 52 St. Rep., 495, and he was duly discharged upon payment for his services.

Judgment affirmed, with costs.