author: LyKMAN, J.:

text:
    FRANK HEEG, Appellant, v. PHILIP LICHT, Respondent.

      Storing of gunpowder, not a nuisance per se — •party storing, only liable if negligent.

    The defendant owned a little over two acres of land, upon which were several shops and his dwelling-house, where he was engaged in making fire-works. On one corner of the ground he constructed a magazine, about eig'ht feet square on the inside, consisting of two buildings, one within the other, in which was stored some five kegs of powder.
    In an action to recover damages for injuries to plaintiff’s premises occasioned by the explosion of the powder, held, that the judge properly charged that the jury must find for the defendant, unless he carelessly and negligently kept the gunpowder on his premises.
    The storing of gunpowder upon one’s premises is not per se a public nuisance.
    Appeal from a judgment in favor of the defendant, entered on the verdict of a jury, and from an order denying a motion for a new trial, made upon the minutes of the justice before whom the action was tried.
    The defendant is the owner of a block of ground in East Wil-liamsburgh, Queens county, upon which he has carried on the business of manufacturing fire-works. Previous to September 16, 1877, the defendant had a powder magazine upon his premises. On Sunday, September 16, 1877, while no work was being done on said premises, and when said magazine had not been open for two weeks, an explosion took place from some unknown cause, which scattered the bricks of said magazine over a portion of plaintiff ’s property, and damaged plaintiff’s house. The plaintiff commenced this action to restrain defendant from carrying on the business of making and storing fire-works upon defendant’s premises, and to recover damages for the explosion of said powder magazine, but did not allege that the defendant carried on said business negligently, or that said explosion occurred through any negligence on the part of the defendant. The court charged the jury that the verdict must be for the defendant, unless the jury found that the defendant carelessly and negligently kept the gunpowder on his premises. The jury found for defendant, and plaintiff appealed.

      Philip 8. Croolee, for the appellant.
    The judge erred in charging the jury, “that they must find for defendant, unless they found the defendant carelessly and negligently kept the gunpowder on his premises.” (Wood’s Law of Nuisance, § 142; Hay v. Gohoes Company, 2 N. Y., 159; Tremain v. Cohoes Company, 2 id., 163; Aldred’s Case, 9 Coke, 58.) Under the rule laid down in the case of The People v. Bands (1 Johns., 78), and cases involving questions of public nuisance, the doctrine in Hay v. ■Cohoes Company (2 N. Y., 159), has been followed and approved in many cases since, especially in Pixley v. Ciarle (35 N. Y., 523).

      Pawning & Stanbrough, for the respondent.
   LyKMAN, J.:

Gunpowder is an article of commerce, and may be lawfully manufactured, kept and sold. The right to store and keep it must ensue from the right to make and sell it. There is nothing inherent in the thing itself which makes it obnoxious to the senses, or dangerous to either life, health or property. Its character and qualities are well understood, and with proper care and caution it may be handled with security and used with safety. The danger of the article consists in its liability to ignite and cause an explosion, and the necessity for interfering with its use, or the place of its deposit, arises from this quality. If it be kept in such a place and in such a manner as to be dangerous to life or property, it is doubtless a public nuisance, and whether or not it be such, in any particular case, depends upon circumstances, the most prominent and important of which are the place and mode of keeping, and the quality kept. These observations have the sanction of reason, experience, and the law books. Sir William Blackstone, in his commentaries, speaks of the making, keeping, or carriage of too large a quantity of gunpowder at one time, or in one place or vehicle, and says it was prohibited by statute of George III (ch. 61), under heavy penalties and forfeiture.

The People v. Sands (1 Johns. R., 78) was the case of an indictment for a nuisance in keeping fifty barrels of gunpowder in a certain house, near the dwelling-houses of divers good citizens and near a public street 'which was the peoples’ common highway, and it was held that the fact so charged did not amount to a nuisance, but that it would have been otherwise if it had been charged to have been negligently and improvidently kept. Iu that case the judges disagreed, and all but one gave a written opinion, and Chief-Justice KeNt in his opinion said: “ The only question is, whether the facts laid imply a common nuisance. I am clearly of opinion that they do not, and that a powder-house near dwelling-houses may or may not be a nuisance, according to circumstances, and which circumstances must be explicitly stated in the indictment, so that the defendants may be prepared to meet them, and so that the court may judge of their force.”

Myers v. Malcolm (6 Hill, 292) was an action to recover damages for an injury to the plaintiff occasioned by an explosion, caused by the burning of a quantity of gunpowder belonging to the defendants. In that case, the defendants had stored about 600 pounds of powder in kegs, in the loft of a -store, in the village of Syracuse. They were notified to remove it by the trustees of the village, and did so by depositing it in the upper story of a carpenter’s shop, which was built of wood, near a lumber yard and several inhabited wooden dwelling-houses and stables. The shop took fire, and the powder was ignited and caused an explosion, which killed several persons and wounded and injured others, among whom was the plaintiff. The plaintiff had a verdict at the Circuit, but the case went to the Supreme Court, where a new trial was granted for an error of the trial-judge in the reception of testimony. The whole teaching of the case, however, is that the depositing and keeping of the powder in such an exposed situation amounted to a public nuisance, and that any individual sustaining special injury therefrom was entitled to his private damage. These are the two leading cases in our own State on this subject, and they show how the law now stands with us. Guided by what has already been said, we may now examine this case.

The defendant has a little over two acres of land, upon which are several shops and one dwelling-house, where he resides. Here he carries on the business of manufacturing fire-works. On one corner of this lot he constructed a small powder magazine of brick. It consisted of a four-inch wall arched up, then a space of four inches, and then an arched wall outside of that, and cemented both outside and inside; There were two doors; one inside and one outside. It was, practically, a building within a building, with a space of four or five inches between them for ventilation, and was about eight feet square on the inside. The premises were neatly kept and carefully provided with apparatus for extinguishing fires, and with hose to put out fire on any portion of the grounds. On Sunday, the 16th day of September, 1877, the powder was ignited and the magazine exploded, and did damage to the plaintiff’s premises. The proof does not show the quantity of powder' in this magazine at this time, but it is stated in the answer that there were four kegs of fine meal powder, and a keg and a half of grain powder. Neither does the proof show where or how the plaintiff’s premises are situated with reference to those of the defendant, but it is alleged in the complaint that they are about 175 feet westerly therefrom.

At the close of the testimony the judge charged the jury that they must find for the defendant, unless they found ho carelessly and negligently kept the gunpowder on his premises. This was excepted to by the counsel for the plaintiff, who requested the judge to charge the jury, “ that the powder magazine was dangerous in itself to plaintiff and his property, and was a private nuisance, and the defendant liable to the plaintiff whether it was carelessly kept or not.” The judge refused so to charge, and the plaintiff excepted. The jury found for the defendant.

A motion for a now trial on the minutes was denied, and an appeal has been taken from that order and from the judgment.

So far as we can find, no reported case has held that storing powder is a nuisance per se, and no elementary writer has so declared. Mr. Blackstone, in the passage we have quoted above, was very careful not to say that, but only speaks of keeping or carrying too large a quantity at one time, or in one place or vehicle. In all the opinions delivered in the case of the People v. Sands, the same care is manifested, and all seem to agree that whether the deposit of powder in that case was or was not a public nuisance, depended on all the circumstances of the case. The same thing may be said of the case of Myers v. Malcolm, where Chief-Justice NelsoN says : “ I think the jury would have been well warranted in finding the defendants guilty of the offense, upon the facts disclosed in this case, as it cannot be doubted that the gunpowder was deposited in a building insufficiently secured and protected, and altogether unfit for the safe-keeping of so large a quantity of the article.”

It seems, therefore, to resolve itself into a question whether there is negligence or the absence of it. A small quantity of powder well secured may be deposited and kept at a reasonable distance from human habitation, but a large quantity insecurely kept in the midst of a thick population may be a nuisance.

Here in this case there was a small quantity of powder in a well-built and well-secured magazine, at some considerable distance from any dwelling but that of the owner, and the judge left it to the jury to say whether the defendant had been guilty of any negligence in so keeping the powder. We .think this was a proper disposition of the case, and that the verdict of the jury was right.

It follows from what has been said that the request to charge, made by the plaintiff’s counsel, was properly refused.

The judgment must be affirmed, with costs.

Barhard, P. J., concurred; Gilbert, J., dissented.

Judgment and order denying new trial affirmed, with costs.


source: Caselaw Access Project

author: Dykman, J.:

license: Public Domain

text:
    In the Matter of the Application of the PROSPECT PARK & CONEY ISLAND RAILROAD COMPANY to Acquire Title to Lands of MOYNAHAN and others.

      Land taken for public highway — subjected to the additional burden of a railroad thereon — measure of compensation.

    "Where land, has "been taken by right of eminent domain for a public highway, and the damages awarded therefor are all assessed back upon the adjoining land for benefits supposed to be derived from the opening of the highway, and thereafter the land so taken for a highway is sought to be subjected to the additional burden of having a railroad constructed thereon, the compensation for such additional use should be the same as if the highway had not been opened.

      In such case the land-owners are entitled to the actual value of the land taken, and also to recover for the depreciation of the residue of the lot from which it is taken, and for any depreciation caused by the use to which the land taken is appropriated.
    MotioN for a reargument of an appeal from an order confirming the report of commissioners of appraisal, appointed to appraise the compensation to be made by the petitioner, the railroad company, for certain real estate proposed to be taken by the company for the purpose of their incorporation.
    The strip of land proposed to be taken by these proceedings is in the centre of a public highway, called Gravesend avenue, which had been opened and graded by commissioners, pursuant to chapter 531 of the Laws of 1873, and an act amendatory thereof, being chapter 276 of 1874. The company did not seek to extinguish the fee, but to acquire the easement for railroad purposes. The strip in question is owned in fee by twenty-two different owners, subject to the perpetual easement of the public therein as a highway. The act allowing the railroad company to construct a steam road had been passed, and had become a law before the commissioners for opening Gravesend avenue had done any act under their appointment except to organize.
    The commissioners herein awarded one dollar in each case, except three ; in one of these three dollars, and in the other two six cents. The opinion delivered on the argument of this appeal will be found in 13 Hun, 345.

      Benjamin G. Hitchings, for the land-owners.

      John II. Bergen, for the company.
   Dykman, J.:

There is no necessity in this case for a reargument. The questions involved were fully argued, and received a thorough examination by all the members of the court, and there was no difference of opinion between them. The commissioners of appraisement gave nominal damages, only, to the land-owners, on the theory, probably, that the land had been already taken for Gravesend avenue, a public highway. We thought this was erroneous, and that the damages should be substantial, and, therefore, set aside the report of the appraisers and appointed new commissioners. It seems now that the opinion prepared was not so explicit in relation to the damages as to place our views beyond doubt, and all we have to do is to express ourselves more plainly upon that subject. The owners of the land over which Gravesend avenue was constructed received no pay for the land. The damages awarded were assessed back on the adjoining land for benefits which it was supposed to derive from the opening of the avenue. The additional burden of the railroad for another public use cannot be imposed upon this land without compensation, and we think that compensation in this particular case should be the same as if the avenue had not been buiLt — that is, that the land-owers are entitled to the actual value of land taken, and the depreciation of the residue of the lot from which it is taken, and also to any depreciation caused by the use to which the land taken is to be appropriated.

BaeNAED, P. J., concurred; Gilbeet, J., dissented.

Motion denied.


author: Gilbert, J.;

text:
    WILLIAM DEMPSEY, Respondent, v. MARINUS WILLETT, FREDERICK R. JONES, G. W. THORN and JAMES RAY, Appellants. OBADIAH PARKER, Respondent, v. SAME, Appellants. JOHN HART, Respondent, v. SAME, Appellants. CHARLES BARNES, Respondent, v. SAME, Appellants. PATRICK O'CONNELL, Respondent, v. SAME, Appellants. JAMES McGRATH, Respondent, v. SAME, Appellants.

      Stockholders of manufacturing corporations — action to enforce personal liability — loJien the coinplaint therefor is sufficient.

    Appeal from orders overruling demarrara to tbe cemplaint.
    In actions brought against the defendants as stockholders in a corporation known as “ The Highland Chemical and Mining Company,” organized under the act of the Lcgislatui-e of 1848, concerning manufacturing and other companies. The defendants demurred to the complaint in each action, on the ground that it did not state facts sufficient to coixstitute a cause of action. The court at Special Term overruled the demurrer, and defendants appealed to this coui’t.
    The complaint alleged the incorporation of the company under the act of 1848, and proceeded as follows: “ the plaintiff further says that he has performed work and labor of said company for two years prior to February 16, 1878, and that on said 16th day of February, 1878, the said Highland Chemical and Mining Company was indebted to him in the sum of $178.49, for work and labor performed for said company in their factory in Phillipstown aforesaid, at their request. That on the 13th day of March, 1878, the said plaintiff recovered a judgment against said Highland Chemical and Mining Company for said work and labor performed for them at their request, as aforesaid, for damages and costs, $200.07; the judgment roll whereof was duly filed in the Dutchess county clerk’s office on that day, and that a transcript of said judgment was duly filed in the Putnam county clerk’s office, the county in winch said company conduct and carry on their business, on the 14th day of March, 1878. That on said 14th day of March, 1878, an execution on said judgmout was duly issued and delivered to the sheriff of Putnam county, who has returned the same wholly unsatisfied. The said plaintiff further shows that during the time that he worked for said company, as aforesaid, the said defendants were and still are stockholders of said company.”
    The court at General Term said: “The averments in the complaint are, that the plaintiff performed work and labor for the company in their factory, at their request; that on the 10th February, 1878, the company was indebted to him in $178.49 for said work and labor, and that he recovered a judgment therefor against the company on the 13th of March, 1878.
    The Code of Civil Procedure (§ 519) requires that the allegations of a pleading must be liberally construed, with a view to substantial justice between the parties. According to the application which has been in most instances made of this provision, I think the demurrer was properly overruled. In Zabriskie v. Smith (3 Ker., 322), it was hold that a complaint is sufficient, if the requisite allegations can be fairly gathered from all the aver-ments, though the statement of them may be argumentative, and the complaint is deficient in technical language. To the same effect are Olcott v. Gan-oll (39 N. Y., 436, and Barber v. Morgan, 51 Barb., 116). The Code makes no exception of an action upon a statute, and I know of no reason that would require or justify the application of a different rule to such an. action.
    The debt in this case arose upon an implied assumpsit to pay for work and labor. It was, therefore, necessarily to be paid — i. e., payable within one year from the time it was contracted. The debt was due in February, 1878, and a judgment for the same was recovered in March following. That shows that the suit must have been brought within a year after the debt became due. An execution upon that judgment has been returned unsatisfied. That shows that the debt has not been paid. The plaintiff sues for work and labor in a factory. I think, therefore, that it sufficiently appears that he was a laborer within the meaning of the statute, which gives the right of action.”

      Q. Frost, for the appellants.

      II. II. Hustis, for the respondents.
   Opinion by

Gilbert, J.;

DyigmaN, J., concurred ; BaeNaed, P. J., not sitting.

Orders overruling demurrers affirmed with costs and disbursements.


author: BarNard, P. J.;

text:
    THOMAS FALLON, Respondent, v. MICHAEL KELEHAR and BARTHOLOMEW KELEHAR, Appellants.

      Award — when void for uncertainty — hut one award can he made'.

    Appeal from an order confirming an award of arbitrators, and directing judgment thereon in favor of the plaintiff entered therein.
    The plaintiff had an action pending in this court against the defendants, wherein the plaintiff’s claim was stated at $211.85 for “•work, labor, and services performed, and materials furnished to the defendants by the plaintiff.” The defendants in their answer denied the claim, and averred that the work was done “negligently and unskillfully.” The issue or difference “ arising out of the said suit ” was submitted to arbitrators. On the 20th March, 1878, the arbitrators made an award as follows, in writing, and-delivered it to the parties : “ By virtue of the powers vested in us, by the submission to arbitrate between Thomas Fallon and Michael and B. Kelehar, declare that the contractor is entitled to his full bill, after deducting all the bills that Michael and Bartholomew have paid him, and also fifteen dollars for taking down side wall.”
    The court at General Term said : “It seems very clear that there is nothing stated in this award from which any definite sum can be produced. No sum is stated and no dates are given from which, by calculation, any certain sum can be obtained. An award must be certain or it is void. (Purdy v. Delevan, 1 Cai., 304; Jackson v. Ambler, 14 Johns. R., 96.)
    On the next day after the award above mentioned was given, the arbitrators made another award giving precise figures, which resulted in a judgment in favor of plaintiff for $190.66. By this award the arbitrators directed the discontinuance of the suit pending in the Supreme Court. The second award was unauthorized and is void. The arbitrators could make but one award. (Dolce v. James, 4 N. Y., 568.)”

      Jos. F. Daly, for the appellants.

      Martin J. Keogh, for the respondent.
   Opinion by

BarNard, P. J.;

Gilbert, J., concurred; Dtk-maN, J., not sitting.

Order reversed, with ten dollars costs and disbursements, and motion granted.


author: BarNArd, P. J.;

text:
    MARY A. BOWERS, Respondent, v. ALONZO BEEKMAN, Impleaded with others, Appellants.
    Will— construction of — when power of alienation illegally suspended.

    Appeal from an order overruling a demurrer to the complaint interposed by the defendant, Alonzo Bookman. The action was brought for the partition or sale of the premises described in the complaint; whether or not it could be maintained depended upon the validity of an attempted devise thereof.
    Thomas Bcekman, the testator, died leaving seven children and real and personal property. The testator in his will says, that three of his children “ are well off as to wordly goods,” and that, therefore, he gives to each of them ten dollars as a remembrance. The will then provides as follows : “ As to all the rest, residue and remainder of my estate, real and personal, I give, devise and bequeath, in manner following, to my children, Alonzo, Malvina, Oscar and Amanda Matilda; the personal estate to bo divided between them or to be sold, and the moneys arising therefrom to be divided between them by my executors as they may think best. As to the real estate, the said Alonzo, Malvina, Oscar and Amanda Matilda to have and to hold the same for and during the life of the longest lives of them, they, during that time, equally to receive the rents, issue and profits thereof; and whereas my son Gerard holds real estate in common with me, and whenever he chooses to dispose of the same, which I give him hereby power to do, my portion of the proceeds of such sale to be placed out on good bond and mortgage on real estate by my executors, and the money arising from the interest thereof to be equally divided between my children, Alonzo, Malvina, Oscar and Amanda Matilda, or the survivor or survivors of them during the life of the longest lives.”
    The court at General Term said: “It would seem that the testator designed to give nothing beyond ten dollars to the three children who were well off; but, in devising the real estate, he seems carefully to give only a life estate to the four remaining children. He seems so careful to do that, that in case of sale by the co-owner, tbe proceeds were to be put at interest, and the interest only to be paid to them during the life of the longest lives of them. The will goes no further. It does not dispose of the land after the end of the life estate, nor of the proceeds of the land, if the same should be sold by the joint-owner. The life estate in the land is not good. It suspends the power of alienation for more than two lives. There is no disposition of the fee after the life estate thus attempted to be created ends. The land must, therefore, have descended to the heirs-at-law, and the plaintiff’s complaint should be sustained.”
    Judgment affirmed, with costs.

      P. L. McClellan, for the appellant.

      Q. W. Pleasants, for the respondents.
   Opinion by

BarNArd, P. J.;

Gilbert, J., concurred; Dyk-maN, J., not sitting.

Order overruling demurrer affirmed, with costs and disbursements.


author: Beady, J.: Davis, P. J.,

text:
    THE PEOPLE’S BANK OF THE CITY OF NEW YORK, Appellant, v. ORLANDO M. BOGART and others, Respondents.

      Sale of acceptances by note-brokers — what suppression of facts not fraudulent— when an implied warranty cannot be established by usage.

    On July 20, 1875, the defendants, note-brokers in New York, wrote to plaintiff that they had purchased $70,000 of the acceptances of Duncan, Sherman & Co., and offered them for sale. Plaintiff’s president called the next day and purchased $15,000 of the acceptances, and on subsequent occasions $15,000 and $5,000 thereof. Defendants had purchased these acceptances of Duncan, Sherman & Co., and paid their own money for them. The acceptances were drafts drawn by one Burgess upon, and accepted by Duncan, Sherman & Co. Burgess was a clerk of the latter firm, and had no funds deposited with, or debt due from it, and had nothing to do with the drafts except to sign them. Similar acceptances had been bought before by plaintiff, which had been paid. A few days after the last purchase, Duncan, Sherman & Co. failed. Plaintiff claimed that defendants had knowledge of the circumstance attending the giving of the acceptances, and that they were liable to plaintiff for a fraudulent concealment of such facts.

      Held, that the suppression of such facts was not fraudulent, and that the defendants were not liable. (Davis., P. J., dissenting.)

      Held, further, that the acceptances being valid obligations, and no express warranty, having been made in regard to them, no implied warranty could be estab- ■ lished by proof of any local usage or custom, as to what' acceptances were understood to be, in the commercial community of New York.

      Appeal from a judgement in favor of the defendants, entered upon an order dismissing the complaint.

      Luther R. Marsh and John Q. Gray, for the appellant.
    The law is well-settled that a holder of commercial paper, offering it for sale, is bound to disclose any knowledge he may have of any facts materially affecting and depreciating its value. (Brown v. Montgomery, 20 N. Y., 287; and, see, Lancey v. Clark, 64 id., 212; Kerr on Fraud, p. 94, 95; Addison on Torts, p. 399; Olark v. Banner, 2 Lansing, 67; 2 Kent, 483; Rawdon v. Blatch-ford, 1 Sandf. Ch., 344; Allen v. Addington, 7 Wend., 9, 23, 24; Paddock v. Strowbridge, 29 Vermont, 470; Bench v. Sheldon, 14 Barb., 73; MeTlish v. Motteux, Peake’s N. P. Cases, 115.) A party who offers a piece of paper for sale, which has all the form and appearance of a bill of exchange, thereby represents it to be a bill of exchange, to wit: a bill drawn by a drawer upon a drawee upon consignments, values, funds or credit, and accepted on such consideration ; and if the seller knows that it is not such a bill, but is a sham or deceit, and withholds that knowledge, or the facts which would warrant that belief from the purchaser, he suppresses a material fact which will make him liable to the purchaser to refund the amount of the purchase-money. (Lancy v. Olark, 64 N. Y., 212; 2 Parsons, B. & N. ch. 2, sec. I. and cases cited in note; Addis. onContr., 232; Azemar v. Oasella, L. R., 2 C. P., 678; 2 Blackstone, 466, 469, marg; 3 Kent, 745, marg.; Horts-manv. Henshaiv, 14 How. [U. S.] R , 177-183; Baborg v. Peyton, 2 Wheat. [U. S.] R., 386; Mechanics' Bank v. Livingstone, 33 Barb., 458; 1 Parsons on Bills, 323; 2 Greenl., § 169; 1 Daniel on Negotiable Instruments, § 534; Story on Bills of Exchange, § 12; Atlantic Ins. Oo. v. Bores, 6 Duer, 583; Thurman v. VanBrunt, 19 Barb., 409; Verev. Lewis, 3 T. R., 182 [1789]; 2 Greenl., § 160; Roachv. Ostler, 1 M. & R., 120; Fairchild v. Ogdensburg R. R. Oo. etc., 15 N. Y., 337; Davis v. Clarice, 6 Q. B., 19.)

      William Allen Butler, for the respondents.
   Beady, J.:

The object of this action was to recover from the defendants, who composed the copartnership of Orlando M. Bogart & Co., note-brokers and dealers in commercial paper in the city of New York, the sum of $34,455.83 damages for alleged fraud in the sale of certain acceptances by the copartnership firm of Duncan, Sherman & Co., a banking firm doing business m the city of New York, of drafts drawn on them by one Alexander Burgess. The complaint contains the necessary allegations to present fully the theory upon which the plaintiff’s expected to succeed, and the answer controverted the material averments therein. The proofs upon the trial established the following facts, namely: that the plaintiff’s were and have for many years been a bank of discount and deposit in the city of New York,- and that the defendants were and had for many years been note-brokers in that city ; that Duncan, Sherman & Co. were at, and prior to the time of the purchase of the paper, bankers in said city, and had a commission business besides in merchandise, but particularly in cotton ; that the defendants had been in the habit for many years of buying and selling the paper of that firm; that on the 20th of July, 1875, the plaintiff’s received a letter from the defendants stating that they had purchased $70,000 of the acceptances of Duncan, Sherman & Co., at a certain price, and would sell them at a certain rate therein mentioned; that Mr. Hunter, the plaintiff’s president, in response to the letter, went to the office of the defendants on the same day and bought $15,000 of the acceptances, and went again on the twenty-first of July and bought $15,000 more, and on the next day went again and purchased $5,000 additional; that the plaintiff paid for each day’s transaction on the day it was consummated, and at the rate of six per cent interest per annum discount for the time the paper had to run. It further appeared that the amount paid out was $34,455.83 ; it further appeared that the defendant had purchased all of the acceptances from Duncan, Sherman & Co., the acceptors, directly, $70,000 of the paper on the nineteenth of July, and $30,000 on the twenty-first of July. That the plaintiff’s president, who made the purchase, and their vice-president had no knowledge as to the manner in which the paper was made and issued, nor did they know Alexander Burgess, whom they had never seen, but who appeared on the paper as the drawer. It was further shown that about a week after the purchase, Duncan, Sherman & Co. failed, and also that subsequent to the purchase it was ascertained that Alexander Burgess, who appeared as the drawer, was a clerk in Duncan, Sherman & Co.’s office at a salary, having no separate business of his own and sustaining no business relations with his employers other than as such salaried clerk. That the paper was prepared by Duncan, Sherman & Co.’s cashier in the form of drafts on them which Burgess signed as drawer, and that Burgess knew nothing about the making and issuing of the paper, and had nothing whatever to do with it beyond signing it. It also appeared that the defendants had paid for the paper which they bought and sold to the plaintiffs, and that they were not acting in the transaction between them and the plaintiff in any way on behalf of the firm of Duncan, Sherman & Co., having bought the paper in the usual and ordinary course of business, and paid for it with their own money ; it also appeared that their business was large, and that they sold to merchants, capitalists and bankers, and were in the habit of sending notices to their customers to inform them what paper they had on hand for sale, and that they sent such a notice to the plaintiffs informing them that they had for sale Duncan, Sherman & Co.’s paper. It appeared also that the house of Duncan, Sherman & Co. was in high credit at the time of these purchases by the plaintiffs ; that their name was regarded as a first-class one in every respect; that the plaintiffs had before that time frequently bought their accept' anees with Burgess’ name on them; that such purchases were made from brokers other than the defendants, and that the paper had always boon paid by Duncan, Sherman & Co. at its maturity, It also appeared that the insolvency of the latter firm was the sole reason for the non-payment of the paper. The transactions between- the plaintiffs and the defendants, to which, reference is thus made, were based upon the offers of the paper by the defendants for sale, no representations of any kind having been made by the defendants to induce the purchase, other than that which is claimed by the plaintiffs to have arisen from the use of the word “ acceptances.”

The plaintiffs sought by a series of questions to establish the fact that the defendants knew the relations existing between Alexander Burgess and Duncan, Sherman & Co., and were therefore well aware of the fact that the bills of exchange sold by them to the plaintiifs were drawn by a clerk in the office of Duncan, Sherman & Co., and were to be sold for the benefit of the acceptors, and rested their right to recover upon the suppression of this as a material fact by the defendant, which if it had been revealed, as they assert, the paper would not have been purchased. The case discloses no other element of fraud, and therefore, if the action is to be regarded as one ex delicto, the question presented is whether such a suppression would constitute fraud or covin in the transactions by the defendants, which invalidated the contract and makes them liable to respond in damages. There is nothing in the case to show that the defendants had any reason to suspect the insolvency of Duncan, Sherman & Co., other than that they were selling acceptances, which might, perhaps, be regarded as an extraordinary circumstance. But there is little force in this suggestion, for the reason that similar acceptances had for some time been in the market, had been negotiated, and had been paid at maturity. Indeed, it appears that the defendants had great confidence in the validity of this paper, and in the solvency of Duncan, Sherman & Co., because they paid cash for the purchases made, and with their own money. This, as prudent men, they were justified in doing, because, as appears from the plaintiffs’ case, the firm of Duncan, Sherman & Co. stood high in the commercial sense of the term, and their paper was regarded as first-class. It may be said in relation to the chai-ge of fraud, that the plaintiifs undoubtedly relied chiefly upon the credit and responsibility of Duncan, Sherman & Co. in the purchase of the paper, and were not influenced in such purchase by any other circumstance than its being offered for sale. This is fully established by the fact that their president having made the first purchase returned voluntarily to the office of the defendants, on two subsequent occasions close to each other, for similar purchases, thus indicating an eagerness to get possession of it. It is quite apparent, therefore, that unless the mere suppression of the fact that Burgess was a clei’k of Duncan, Sherman & Co., and was used by them for the purpose of creating bills of exchange in form was in itself fraudulent, the plaintiffs are remediless on that branch of the case.

The plaintiffs place great reliance upon the proposition that the paper sold were not acceptances, because Alexander Burgess had neither funds in the banking-house of Duncan, Sherman & Co. nor property placed in their custody, nor a debt due to him from them, against which he could draw, and that they -were in fact promissory notes. Assuming that as to the form of the paper this proposition was correct, it cannot aid the plaintiffs, for the reason that Duncan, Sherman & Co. and Alexander Burgess were liable to them on the paper, as innocent holders, and that it was valid as an existing liability, the payment of which could be enforced, if the drawer or acceptors, either or both, had the means to pay. We have not been referred to any case in which such a suppression as that complained of, affecting only the form of the paper and not its validity as a legal instrument, has been declared to be fraudulent, and we have sought in vain to find the enunciation of any such doctrine. In the sale of negotiable commercial paper, there is no implied warranty except first, that the paper is genuine and that the seller has a good title and right to transfer the instrument by delivery ; second, that he has no knowledge of any fact which if proved would show the instrument, if originally valid, to be worthless, either by failure of the maker or by its being already paid, or from some other circumstance to have become void and discharged. (Curtís y. Brooks, 37 Barb., 476; Bell v. Bcigg, 60 N. Y., 528.) Giving effect in the broadest possible manner to the facts shown by the plaintiffs and sought to be established by them, they would not demonstrate that any one of these implied warranties had been broken. The defendants had a good title and a right to transfer by delivery. The instruments were genuine; that is, they were not forged, and the parties were real parties who are liable upon them; and the defendants had no knowledge that the bills of exchange were worthless by the failure of the drawer or acceptors or by their having been paid, or in any other way discharged, whether in fact or by operation of law. ;

Those views ai’o all that we deem it necessary to express in relation to the asserted right of the plaintiff to recover upon the ground of fraudulent suppression. The plaintiffs, however, seem to have presented their case in two aspects : one upon the charge of fraud, which has been considered, and the other upon a contract growing out of the custom or usage in reference to the sale of bills of exchange of the particular character of the paper in question. It has been held that where fraud is the basis of the complaint, a recovery cannot be had as for a breach of contract (Ross v. Mather, 51 N. Y., 108); but viewing the case as one in which a remedy might be had in the latter aspect, the plaintiffs are remediless because the acceptances in question being valid obligations, as they purported to be on their face, and no express warranty having been made in regard to them, no implied warranty can be grafted on the transactions in relation to them by evidence of any local usage or custom, as to what acceptances are understood to be, in the commercial community of New York. No custom in the sale of any particular description of goods can be deemed to control the general rules of law. (Thompson v. Ashton, 14 John., 316; Beirne v. Dow, 5 N. Y., 95; Wheeler v. Newbould, 16 N. Y., 392; Haskins v. Warren, 115 Mass., 514; Commercial Bank v. Varnum, 3 Lans., 90.) The exclusion of testimony in reference to the custom of note-brokers and purchasers, in regard to dealing in that class of paper, and what an acceptance was understood to be or to import, or what such dealers, when they are called upon to purchase that class of paper, understand that they are purchasing, and kindred matters, was correct, and the exception to the numerous questions put upon that subject are not available. If a consideration of all the authorities bearing upon the question here' considered, and their application to the various relations created by drawer and acceptor, and by maker, payee and indorser' of commercial paper, justified the conclusion that the defendants, by the offer and sale of the paper which they know was not strictly in form and substance a bill of exchange, had by an implied warranty asserted the paper to be valid in form and substance — that is, a bill of exchange containing all the essential elements of such an instrument, viz., a drawer against a fund or property, or a debt, either in the possession of or due from the acceptor — there would be little hesitation in declaring that the plaintiffs were entitled to submit the questions to the consideration of the jury, and to let •them determine whether the transactions between the plaintiffs and the defendants were marked by good faith on the part of the latter ; but, as already suggested, tbe authorities lead to no such result.

Perhaps morally, inasmuch as the instruments would seem to have been departures from the ordinary mode of doing business, being innovations upon bills of exchange proper, the defendants, assuming them to have known the manner in which they were made, should have disclosed the fact, and left the plaintiffs to the option of a purchase or a declination to do so ; but the rules of law do not impose any such obligation. The only burdens assumed by vendors of commercial paper, according to the law of this State, have been considered and they do not include one such as that stated. It becomes our duty, therefore, notwithstanding the very able, elaborate and ingenious argument of the learned counsel, on behalf of the plaintiffs, to affirm the judgment appealed from.

INGALLS, J., concurred.

Davis, P. J.,

dissenting.

The instruments sold by defendants to plaintiff were not bills of exchange, or “acceptances,” in the commercial sense of those terms, either in law or in fact. They were simulated bills and acceptances, having the form merely of such instruments, without the reality or substance. The evidence tended to show that these facts were known to the defendants and unknown fo the plaintiffs. It ought, I think, to have been submitted to the jury to determine whether they 'were fraudulently concealed.

I think it is a fraud, for which the law affords redress, for a party having the possession of a negotiable instrument which bears on its face every appearance of the commercial paper which it purports to be, and having knowledge that it is in fact not such paper, but is simulated for the purposes of sale, to sell the same to another who purchases in- good faith for full value, relying on such appearances and believing it to be what it purports, without disclosing to him its true character and giving him an opportunity to decide whether or not he will purchase with such knowledge.

Fair dealing and moral honesty require that known latent defects, which in themselves falsify the appearances written on the face of the instrument and change it from what its appearance imports, to something intrinsically and materially different, should be disclosed to the buyer, or certainly should not be knowingly concealed.

I think the judgment should be reversed and a new trial granted, with costs to abide the event.

| Judgment affirmed,


author: Beady, J.: LAWRENCE, J. :

text:
    GUSTAVE SHIFF and WILLIAM D. CLARK, Appellants, v. THE NEW YORK CENTRAL AND HUDSON RIVER RAILROAD COMPANY, Respondent.

      Bill of lading — when a prim' vei'bal agreement is not merged in it — when a common carrier is not liable for an injury sustained beyond its route.

    The pfiaintiffs made an oral contract with the agent of the “ Bed Line” to transport goods from New York to St. Joseph in a refrigerator car. The contract was made January 27, 1872, hut the hill of lading was not received by plaintiffs until between five and six in the afternoon of that day, when it was too late to retake the goods, as the train on which they were, left at half-past five. The bill of lading omitted to state “ refrigerator car, throughbut, when spoken to, the agent said that it did not make any difference; that the car would go through all right. Held, that the verbal agreement was not merged in the bill of lading.
    The “ Bed Line ” consisted of several connecting common-carriers, of which the defendant herein was one, and the bill of lading provided that the responsibility of the companies should terminate on the delivery of the freight, as per bill of lading, to the connecting company. The freight was carried by the defendant and delivered to the connecting carrier, as required by the contract. Held, that it was not liable for any subsequent injury to the goods.
    Appeal from a judgment in favor of tbe defendant, entered upon tbe trial of tbis action by tbe court without a jury.
    This action was brought to recover tbe value of oranges and lemons shipped by tbe plaintiffs at New York, 27th of January, 1872, to St. Joseph, Mo., by tbe “Red Line,” under an agreement calling for tbe carriage through of tbe goods in a “ refrigerator car,” and which agreement was broken by tbe transfer of the goods from a refrigerator car to an ordinary box-car, and by delay in performing tbe carriage, so that tbe goods arrived at St. Joseph frozen, and worth not more than the freight, charges.
    The court in its decision found, among other things, that the one hundred and thirty-four cases of oranges and twenty-five boxes of lemons mentioned in the complaint Avere delivered to the defendants on the 27th day of January, 1872, and were loaded by defendants into Refrigerator Red Line car No. 3,699; that said Refrigerator Red Line car No. 3,699, containing said oranges and lemons, ivas run by the defendants to Buffalo, the western terminus of their railroad, and there delivered by the defendants on the 29th day of January, 1872, at five o’clock p. m., to the Lake Shore and Michigan Southern Railroad Company, a railroad company whose line formed a part of the route to the place of destination of said oranges and lemons, viz., St. Joseph, Mo., to be forwarded from Buffalo aforesaid; that' said Refrigerator Red Line car No. 3,699, containing said oranges and lemons, while on the way to the place of destination aforesaid, became disabled at Toledo, and the said oranges and lemons were therefore, on the 6th day of February, 1872, transferred from said refrigerator car No. 3,669 to a box car and therein forwarded from Toledo to St. Joseph, and arrived thereafter at St. Joseph with said oranges and lemons frozen; that the plaintiffs, who are and were merchants doing business in the city of New York, were the owners of said goods, which they desired to ship and send through in a refrigerator car from New York to St. Joseph, Mo., consigned to Foster & Touslcy at that place, the plaintiffs having an order for these goods to be shipped through in a refrigerator car, and it was verbally agreed between the plaintiffs Clark and Cross, representing the Red Line, that the goods should be sent in a refrigerator car through to St. Joseph, said agreement being made January 27, 1872; that after the goods were shipped in the afternoon of Saturday, the 27th January, 1872, the plaintiffs sent their clerk, Wandell, to the office of the defendants for a bill of lading in accordance with said contract. Wandell, at said office, requested Mr. Cross to have the words “in a refrigator car” put in said bill of lading. Cross said ho could not put it in, and it was not necessary. He had arranged about having the goods go through and would telegraph on. He said it was not necessary to put in the words “refrigerator car.” That said Wandell went back to plaintiffs’ office and reported to Mr. Clarke what Cross had told him. That the bill of lading received by said Wandell from said Cross is in' the words and figures following, to wit:

      GREAT AMERICAN “RED LINE” ROUTE.
    FROM THE ATLANTIC TO THE PACIFIC OCEANS WITHOUT CHANGE of Cars.
    By arrangement between the following railroad, companies, viz.: Boston and Albany R. R., Providence and Worcester R. R., Housatonic R. R., Worcester and Nashua R. R., N. Y. Central and Hudson River R. R. Lake Shore and Mich. Southern Railway. * * *
    New Yore, Jan. 27, 1872.
    Received from Shift* & Clark the following packages in apparent good order, contents and value unknown: * * '* To bo transported over the line and delivered in like good order to the consignee or owner at St. Joseph, or to the next company or carriers (if the same are to be forwarded beyond) for them to deliver to the place of destination of said goods or packages, it being distinctly understood that these companies shall not bo responsible as common-carriers for said goods while at any of their stations awaiting delivery to such consignee or carrier, the companies being liable as warehouse men only. * # #
    C. Y. CROSS,

      W. Y Agent.

    That it was between five and six o’clock in the same afternoon that said bill of lading was received by the plaintiffs at their office from Wan dell with the words “in a refrigerator car” omitted, and it was then too late to do anything about it, as the train went out at half-past five o’clock; that on Monday morning following Mr. Clarke, one of the plaintiffs, saw Mr. Cross and asked him why they did not put in the words “ refrigerator car through” in the bill of lading, and he (Cross) said “he did not like to put that in; it did not make a particle of difference, the car would go through all right; they had telegraphed to have it go through and that I need not worry a particle.” The court found, as conclusions of law, First. That the verbal agreement be•tween Clarke, on the part of the plaintiffs, and Cross, representing the Red Line, was not merged in the bill of lading hereinbefore set forth, but that said bill of lading was to be read and construed as if the same contained, in addition to its other provisions, said verbal agreement. Second. That the defendants were not liable for any delay in the arrival of said oranges and lemons at St. Joseph, nor for any injury to the same by being frozen or otherwise, which occurred after the delivery of the same by the defendants in due time and in good order and condition to the Lake Shore and Michigan Southern Railroad Company. Third. That the defendants were entitled to judgment against the plaintiffs, dismissing the complaint herein with costs.

      F. R. Sherman, for the appellants.

      Frank Loomis, for the respondent.
   Beady, J.:

Upon the decision of this case in the court below, the learned judge delivered the following opinion :

LAWRENCE, J. :

The evidence appears to me to establish, that the agreement between the plaintiff Clark, and Cross representing the Red Line, was that the goods should be sent in a refrigerator car through to St. J oseph ; nor do I think that the plaintiffs were precluded by the receipt of a bill of lading, in which this provision was omitted, from insisting upon the agreement as made verbally between Clark and Cross. The evidence establishes that shortly after the young man Wandell came back to the plaintiffs’ office, one of the plaintiffs saw Cross and asked him why “they did not put in the words ‘ refrigerator car through,’ ” and he (Cross) said he did not like “ to put that in ; it did not make a particle of difference, the car would go through all right; they had telegraphed to have it go, and I need not worry a particle.” Clark further testifies that it was between five and six o’clock when they received the bill of lading, and after the goods were shipped ; and that it was too late to see anybody or do anything about it, because the train went out at half-past five o’clock. The verbal agreement was not, therefore, merged in the bill of lading. (See Bostwick v. Baltimore and Ohio R. R. Co., 45 N. Y., 712.)

The contract then being that the goods should be sent in a refrigerator car through to St. J oseph, the question is, are the defendants liable upon the facts proven for the neglect or failure to transport the goods in such ear ? The contract was for transportation over lines of several distinct and independent companies, and the bill of lading provides that the responsibility of those companies is to terminate on the delivery of the freight, as per this bill of lading, to the company whose line may be considered a part of the route, to the place of destination of said goods or packages. The “Red Lino,” over which those goods were to be carried, being made up of several different companies, it was perfectly competent for those companies to limit their liability by contract as expressed in the bill of lading. (Richetts v. Baltimore and Ohio R. R. Co., 59 N. Y., 637; Belger v. Dinsmore, 51 id., 166; New Jersey, etc., Navigation Co. v. Merchants' Bank, 6 How. [U. S.], 384; Dorr v. New Jersey Nav. Co., 1 Kern., 485; Nicholas v. N. Y. C. and H. R. R. R. Co., 4 Hun, 329.)

It is not pretended that the goods were not safely carried by the defendants over their route in a refrigerator car, nor that they were not delivered by the defendants to the Lake Shore and Michigan Southern Railroad Company, the next line, in good time and in good order and condition. The Court of Appeals held in Ricketts v. Baltimore and Ohio R. R. Co. (59 N. Y., 637) that, where a bill of lading contained a provision, in substance, that no connecting carrier should bo held liable for any loss or damage to goods, except what occurred on its own route, the defendants could not be held responsible for loss or injury arising from the negligence of another carrier. I am, therefore, of the opinion that as the default alleged occurred upon one of the roads which took possession of the plaintiffs’ goods, after the defendants had carried said goods over their oavii route safely and in good time, order and condition, and had delivered them to the next continuing line, any right of action which may have accrued to the plaintiffs does not exist against the defendants. I have examined the numerous cases cited by the learned counsel for the plaintiffs in his elaborate brief, but none of them appear to me to decide that, under such a bill of lading as I have had under consideration in this case, a company which has safely transported goods delivered to it over its own route, and transferred them to the next continuing 1 ine, is liable for any injuries which may happen to the goods at a subsequent period in their transportation. There must, therefore, be. judgment dismissing the complaint, with costs to the defendants.”

We are entirely satisfied that the disposition of this case by the learned judge was in accordance with the law of this State, and we adopt his opinion as that of this court.

The judgment should be affirmed.

Davis, P. J., and Ingalls, J., concurred.

Judgment affirmed.


author: Bradt, J.:

text:
    In the Matter of the Petition of ROBERT SCHELL to vacate an Assessment.

      Assessments in New York — when valuations of lots established.

    The petitioner’s lots in the city of New York were valued for the purposes of taxation at §900 each in 1873 and at §1,000 each in 1874. The tax valuations are made in each year, between the first Monday in September and the second Monday of the following January, and are open to alteration and correction until May first, when they become absolute. An assessment against the lots was filed March 5, 1874, and confiimed September 29, 1874.

      Held, that the valuation for the year 1874 having become established when the assessment was confirmed, each lot was liable to an assessment of §500.
    . Appeal from an order reducing an assessment on the petitioner’s lots for regulating and grading One Hundred and Thirty-fifth street from Eighth avenue to the Harlem river, in the city of New York, from $752.25 to $450 on each.

      J. A. Beal, for the Mayor, etc., of New York, appellant.

      8. Jones, for the petitioner, respondent.
   Bradt, J.:

The petitioner sought to vacate assessments upon certain lots, relying chiefly upon the ground that the assessment upon each lot exceeded half its value. It appears that the assessment was completed by the board of assessors, and filed in their office on the 5th day of March, 1874, and that it was transmitted by them to the board of revision and correction of assessments on tbe same day, but that it was not confirmed by the last-named board until the 29th day of September, 1874.

The lots were valued by the tax commissioners, for the year 1873, at $900 each. The books containing the annual record of the assessed valuations of real and personal estate for that year having-been closed on the 1st of May, 1873, pursuant to section 8 of chapter 302 of the Laws of 1859. They were valued by the commissioners for the year 1874 at $1,000, each and such valuation became absolute on the first of May in that year. It appears, therefore, that when the assessment of which the petitioner complains were confirmed, the valuation of the lots affected was $1,000 each. The valuations are made by the deputy tax commissioners, pursuant to chapter 302 of the Laws of 1859, sections 7, 8, and between the first Monday of September and the second Monday of January, but from the latter date, and until the first of May following, they are subject to alteration and correction; if not altered, they become absolute on the first of May. The assessment of the lots was made, therefore, after the valuations for the year 1874 had been declared and adopted, subject only to any correction which might be made of them prior to the first of May. No alterations were made, however, and therefore when the' assessments were confirmed, namely, on the 29th of September, 1874, the valuation of the lots at $1,000 each was an absolute determination of that question. Until the confirmation by the board of revision and correction, the assessment list might be sent back to the assessors for correction, and therefore the filing on the 5th of March, 1874, was not conclusive, but was an incident only in the progress of the proceedings. When, therefore, the assessment was confirmed, the valuation of the lots -was established at $1,000 each, and as the sum assessed was more than one-half of such value, it was a valid assessment to the extent of such half, and should be sustained. The proposition which is meant to be declared as controlling, is this, that the assessment of the petitioner’s lot, not having been confirmed until after the valuation for the year 1874 had been established, was incomplete when the latter event occurred, and that such valuation having intervened and become absolute should be resorted to to sustain the assessment to the extent of one-half of such value. There is no adjudication in conflict with this view, and the order of the Special Term must, therefore, be modified by reducing the assessment to $500 instead of $450.

Ordered accordingly.

Davis, P. J., and Ingalls, J., concurred.

Order modified by reducing the assessment to $500 instead of $450 without costs to either party.


author: Brady, J.:

text:
    JOHN L. DODGE, Respondent, v. THE COUNTY OF PLATTE, in the State of Missouri, Appellant.

      Special privileges given to a corporation b'y its charter ■ — •when not affected by a subsequent constitutional provision — -Negotiable bonds — right to rely on recitals in them.

    The Platte City and Port Des Moines Railroad Company, the plaintiff’s predecessor, was incorporated by an act of the Legislature of Missouri, passed January 4, I860. By the seventh section of the act it was provided that the inhabitants of a strip of country — not to exceed ten miles on either side of the road • — • through which it mig-ht pass, might, by a vote of a majority of the tax-payers thereof, to be taken as therein provided, issue bonds to aid the road. In 1865 a new Constitution was adopted, which forbade the General Assembly to authorize any county, city or town to become a stockholder or to loan its credit to any corporation, unless two-thirds of the qualified voters thereof should assent thereto at a regular or special election.
    In 1S69 an election was held in pursuance of the act of 1S60, at which a majority of the tax-payers of a certain strip of country through which the road ran voted to issue bonds to aid it. This election was set aside by the County Court as unauthorized under the new Constitution. In 1870 an act was passed providing that where, by the provisions of the charter of any railroad, the taxable inhabitants of a portion of any town had voted or might thereafter vote to take stock in such company, they should be entitled to and should have all the privileges, rights and benefits in such act conferred. In February, 1871, bonds were issued in pursuance of the vote taken in 1869.
    Held, that corporations having at the time of its adoption special charters authorizing subscriptions by towns to their stock, upon terms therein prescribed, were not affected by the new Constitution, and that the bonds issued were valid.

      Bona fide purchasers of negotiable bonds, so issued, may rely upon the recitals therein contained, as to all matters except the legislative authority for their issue.

      Appeal from, a judgment in favor of the plaintiff, entered upon the report of a referee.
    The action was brought to recover the amount of certain coupons attached to bonds issued by the defendant to the Chicago and Southwestern Railroad Company, which was the successor of the Platte City and Fort Des Moines Railroad Company of Missouri. The answer, among other things, put in issue the allegation that the plaintiff was the lawful owner and holder - of the coupons. The plaintiff bought the bonds with the coupons attached, and subsequently sold them to several of his neighbors, who authorized him to collect the coupons in question, and payment not having been made, to sue them in his own name. The action was brought in his name by their written consent.

      R. O'Oarman, for appellant.

      W. 8. Ojpdylce, for respondent.
   Brady, J.:

By the sixth section of the act passed January 4, 1860, to incorporate the Platte* City and Fort Des Moines Railroad Company, it was provided that it should be lawful for the County Court of any county, through which any part of the route of the said road might be located, to subscribe to the stock of said company, and that it might invest its funds in the stock of said company and issue bonds to raise funds to pay for the stock so subscribed. It further provided that it should be lawful for any city or incorporated town to subscribe for the stock of said company, and authorized them to issue their bonds to pay for tho stock thus subscribed. By section seven, it was also provided that upon the presentation of a petition of the president and directors of said company to the County Court of any county through which the road might be located, praying that a vote might be taken in any strip of country through which it might pass, not to exceed ton miles on either side of the road, that the inhabitants thereof were desirous of taking stock in said road and of voting upon themselves a tax for the payment of the same, it should be the duty of the County Court to order an election therein, and declared that if a majority of the taxable inhabitants thereof should determine in favor of the tax, it should be the duty of the court to levy and collect from them a special tax, which should be kept separate from all other funds and appropriated to no other purpose, and as fast as collected should cause the same to be paid over to the treasurer of said company. Subsequent to the passage of this statute, but in 1865, the State of Missouri adopted a new Constitution, the fourteenth section of the eleventh article of which is as follows : “ Section 14. The General Assembly shall not authorize any county, city, or town to become a stockholder in, or to loan its credit to, any company, association, or corporation, unless two-thirds of the qualified voters of such county, city or town, at a regular or special election to be hold therein, shall assent thereto.” See 1 Wagner’s Statutes of Missouri, page 62, section 14, and section 8 of the same article declaring “that all statute laws of this State now in force, not inconsistent with this Constitution, shall continue in force until they shall expire by their own limitation, or be amended or repealed by the General Assembly.” (Wagner's Statutes, vol. 1, p. 61.)

In 1868 (March 23) another act of the Legislature of Missouri was passed which provided, inter alia, that whenever twenty-five resident tax-payers in airy municipal township should petition the County Court, setting forth their desire, as a township, to subscribe to the capital stock of any railroad, etc., it should be the duty of the court to order an election to be held in such township, etc. ; and if it should appear from the return that two-thirds of the qualified voters voting at the election were in favor of such subscription, it should be the duty of the court to issue county bonds therefor, etc. (Laws of 1868, p. 92.)

On the 10th July, 1869, the president and directors of the Chicago and Southwestern Railway Company, to which the name of the Platte City and Fort Des Moines Railroad Company had been changed by act of the Legislature, passed March 23, 1869, presented a petition under the act of 1860 {supra), praying that an election should be held in a strip of country described as a part of the municipal township of Greene, and such election was thereupon ordered by the court to take place on the seventeenth of August following. The election took place, but on objections duly presented, the vote taken was declared by suck court to be a nullity, and the decision so made was not subsequently reversed or modified by any order or decree to that end. Assuming that such a proceeding by the inhabitants of a strip of land less than a township was one authorized by the laws of Missouri, it had failed because the result was set aside and declared to be void. It is very clear, therefore, that no taxation or the issue of any bonds based upon that proceeding was warranted. On the 4th of March, 1870, however, the act of 1868 was amended by the Legislature, and by adding a section as follows: “ Section 7. In all cases where, by the provisions of the charter of any railroad company organized under the laws of this State, the taxable inhabitants of a portion of a municipal township of any county in this State have voted, or may hereafter vote to take stock in such railroad company, they are hereby declared entitled to, and shall have all the privileges, rights, and benefits in said act conferred upon counties or townships, and the county court of such county shall exercise the same powers and perform the same duties in issuing bonds, levying, collecting and paying over the taxes, which it is required to do in the case of a county or township under the provisions of said act; provided, however, that no part of such township outside the limits of the district voting shall be taxed to pay any of the bonds or coupons so issued by the county court.” (Laws of 1870, p. 92.)

The object of this act is apparent, and it was to cover and include elections which had been held by the inhabitants of strips under the provisions of the act of 1860, and upon which no bonds had been issued, and as a consequence of its passage the bonds in controversy were issued. This was done in February, 1871, and on the fourteenth day of that month by the county court of Platte county, and by an order which recites that by an order of July 10, 1869, there was submitted to a vote of the taxable inhabitants of the strip a proposition to subscribe for $50,000 of the capital stock of the company, and that “at an election' held at Camden Point on the 17th of August, 1869, by virtue of the provisions of the act to incorporate the Platte and Fort Dos Moines Railway Company, approved January 4, 1860, the taxable inhabitants aforesaid voted in favor of said subscription.” It then recites the act of March 24, 1870, and tbe fact of the construction of a railway through this strip, and thereupon directs the fifty bonds of $1,000 each to be issued. It will be observed that although by the amendment of the act of 1868, by the act of 1870 the bonds are to be issued in accordance with the former act, no part of the township outside the limits of the district voting shall be taxed to pay any of the bonds or coupons issued by the county court, thus relating to and carrying out in that respect the provisions of the act of 1860, and confining the burden to the inhabitants of the strip who had assumed it by the vote. It will also have been perceived, as already suggested, that the amendment legalizes the vote which was rejected by the county court, and which, had it not been rejected, would have authorized a tax under the act of 1860. We thus have all the facts affecting this controversy. The defendant insists that the result of a due consideration of them must be a decision against the validity of the bonds, because the act of 1870 is unconstitutional and void. The plaintiff claims that the act is not subject to this objection. The defendant’s proposition would seem at first blush to justify the conclusion that the act of 1860, so far as it related to the tax, was repealed, and that the act of 1870, containing the amendment, was unconstitutional, but an examination of the question presented corrects this impression. It is corrected, because the court of Missouri, competent to do so, have held (Smith v. Clarke Co., 54 Mo., 58 ; State v. Green Co., id., 540 ;) that corporations having a special charter when the new Constitution took effect, by which the County Court was authorized to subscribe without the vote of the people, were not affected by that instrument, and we can discover no distinction between the cases named and this. Here, by the charter of the company, the right is given to apply for an election, and it is a right secured therefor. The new constitution prohibits the issue of bonds without the vote of a majority of qualified voters of a county, city or town, and if a previously existing power to issue them without any vote be allowed to continue, there can be no doubt that a previously existing power to do it after a vote taken must also continue, as more in accord with the spirit and requirements of the new Constitution. This court, however, considers the adjudication mentioned controlling upon this subject, and is called upon, therefore, to declare the act of 1870 constitutional, because it only provides a different mode of carrying out a valid power, without creating or conferring a new one. It does not invade the inhibition established by fundamental law. The act of 1870 being valid, and the act of. 1860 still existing, and not being-repugnant to the Constitution, it follows that the bonds are binding obligations, unless there is some other reason for assailing them. We discover none. The recitals in the bonds are conclusive in favor of a bona fide purchaser without notice. Unless there is something in the form of the bonds to put the purchaser upon inquiry, he is not bound to seek any other legislative authority for their issuance. He may rely on the bond as to all other matters, because it is a negotiable instrument, and the courts have substantially invested it with all the attributes of such papers in the hands of an innocent holder. (Commissioners, etc., v. Bolles, 94 U. S. Rep., 104 ; Town of Coloma v. Eaves, 92 id., 484; Town of South Ottawa v. Perkins, 94 id., 266; Commissioners, etc., v. Clark, id., 278; Steins v. Franklin Co., 48 Mo., 167; State ex rel. Neal v. Salvee Co., id., 390 ; Ramsey v. Baeder, 50 id., 600 ; Smith v. Clark, 54 id., 76.)

The recitals are sufficient to show the origin of the bonds, and contain nothing which creates a duty of making any examination except as suggested, of the legislative authority to issue them, which, as we have seen, existed. We do not consider it necessary to elaborate the views of the referee on the right of the plaintiff to maintain this action in his own name, entertaining no doubt about the correctness of his conclusions on that question. We do not discover, therefore, any reason for disturbing the judgment herein, and it must be affirmed.

Ordered accordingly.

Davis, P. J., and INGAlls, J., concurred.

Judgment affirmed.


author: Beady, J.:

text:
    In the Matter of the Controversy Between WILLIAM B. CROSBY, Receiver of the United States Glass Company, Respondent, and AUSTIN G. DAY, Appellant.

      Action by a receiver of an insolvent corporation — power of the cowrt to discontinue the action and order a reference under Revised Statutes, 469, § 73.
    An action was commenced by the plaintiff, as receiver of the United States Glass Company, to recover the amount due upon three promissory notes given to the company by the defendant, who defended the action on the ground that he was induced to sign the notes throug-h fraudulent representations made by the president of the company. While this action was pending, plaintiff applied under section 73 of 2 Revised Statutes, 469, for a reference of the controversy, which was ordered, on condition that the pending action be discontinued, which was done.

      Held, that the order was proper, and that the fact that defendant’s defense involved a charge of fraud did not entitle him to a trial by jury.
    Appeal from an order appointing a referee on the application of the respondent, and also from a judgment entered on the report of the referee in favor of the plaintiff.
    This action was commenced in this court by the plaintiff’s predecessor, now deceased, against the defendant, to recover the amount of three promissory notes, given by him to the United States Glass Company in payment for stock of said company, and which the defendant in his answer says he was induced to purchase by means of false and fraudulent representations, made to him by the president of the company as to the financial condition of the company ; he further alleges that the notes have no consideration.
    While this action was still pending, the said receiver made an application to refer an alleged controversy between himself as receiver and said Austin G. Day, in relation to the identical notes sued upon. This application was opposed by Day, on the ground that an action was pending in relation to said notes; that they having been obtained from him by means of false and fraudulent representations, it was a matter which should be submitted to a jury, and that a reference without his assent was prejudicial to his rights -and privilege of a trial by jury. Upon this application and against Day’s protest, an order was made referring said controversy, and discontinuing the action then pending.

      Amos G. Hull, for the appellant.
    A reference of such a controversy under the statute is subject to agreement between parties. It is only mandatory in that it requires a justice to appoint the referee, after such agreement' has been made. There is no express provision in the statute giving the justice power to direct a reference in such a matter as this. (3 R. S., 39, §§ 21, 22, 23 [Bank’s 6th ed.] ; see, also, 3 id., 748, § 48 [Bank’s 6th ed.] ; see, also, id., 75, §§ 87, 88 [Bank’s 6th ed.].) The question between the parties being one of fraud it should be left to the consideration of a jury. {Thompson v. Blanchard, 4 N. Y., 306; Gardner v. McEwen, 19 id., 126; Smith et al. v. Acker, 23 Wend., 753; Ford v. Williams, 24 N. Y., 359; Erwin v. Voorhees, 26 Barb., 127; Kellogg v. Wilkie, 23 How., 234; Van Bruch v. Peyser, 28 id., 292; Vance v. Phillips, 6 Hill, 433; Erancheris v. Hen-riques, 24 How., 165.)

      Van Wyck <& Green, for the respondent.
   Beady, J.:

The application for the appointment of a referee, under the statutes to which reference will be presently made, was made while an action was pending between the receiver and the defendant in relation to the subject-matter of the action. The application was, however, granted upon condition that the action referred to should be discontinued, and it was discontinued. The claim rests upon notes made by the defendant, and given in part payment for the purchase of stock; and his defense -was that he was induced to purchase, by means of false and fraudulent representations made to him by the president of the United States Glass Company as to the financial condition of the company, and that the notes, therefore, were given without consideration. The defense involving the charge of fraud secured, the appellant thinks, a right to a trial by jury, and he insists that the appointment of a refei’ec against his consent, and in opposition to his express objection was therefore a violation of a constitutional privilege. In this he is mistaken. The statutes authorize the proceeding which culminated in the appointment of a referee. (2 Edmunds’ Statutes at Large, § 36, p. 483; § 42, p. 484; §§ 68 and 73, pp. 490, 491; §§ 19, 20 and 21, p. 46.) The result of these various sections is that the receiver of an insolvent company has the power to settle any controversy that may arise between him and any person in the settlement of any demand against such persons, or of the debts due to the estate by a reference upon consent, or upon application to the court if consent be withheld. The validity and constitutionality of such a proceeding has been declared by the court of last resort and by its unanimous judgment. (Sands v. Kimbark, 27 N. Y., 147, and cases. cited.) The appeal from the order is for these reasons not available.

Upon the merits, it is’ not necessary to indulge in an elaborate review. The charges of fraud made by the defendant were not sustained, in the judgment of the referee, and a careful consideration of the evidence given, pro and con, does not justify us in declaring that the referee was mistaken or in error, in his estimate of the testimony, or his conclusions resulting therefrom.

If the statement of the defendant be accepted as truthful, it is undoubtedly clear that he should succeed in this controversy; but it was denied in all its material features by the president of the company, Mr. Green, by whom it was said the representations were made. There are, perhaps, circumstances corroborative of the defendant’s charge, but it must also be said that there are circumstances equally corroborative of the statements of Mr. Green, which, as just stated, were absolute denials.

The referee had in this case the great advantage of having seen the witnesses and heard them testify, and was susceptible, therefore, of impressions with regard to them, which cannot be reproduced or photographed by the perusal of recorded testimony.

We have had occasion to remark, in a case decided at the present term of this court, that in cases of conflict, and where the testimony may be regarded as balanced, it is just to yield to convictions arising from the advantage just referred to. (See Godfrey v. Moser, 66 N. Y., 250.) Under the circumstances, therefore, we cannot say that the findings oí fact by the referee were erroneous. We are obliged to declare, also, that none of the exceptions taken, on behalf of the defendant, require us, in the exercise oi our power and duty, to grant a new trial. The most important exception in the case is the supposed exclusion of any explanation on the part of the witness, who is apparently assailed by an article in the newspaper, to which attention was called on cross-examination and which was read to him. But the exclusion seems to have been predicated of the form of the question, and occasioned no prejudice to the witness or to the defendant’s case, because the witness was subsequently allowed to make any explanation or statement in regard to the article as fully as he desired, and availed himself of the privilege. We do not deem it necessary to consider in detail the other exceptions, but to dispose of them by the general observation that they are unavailable, unsound, or relate to subjects that could by no possibility affect the result.

The order and judgment should be affirmed.

Davis, P. J., and Ingalls, J., concurred.

Order and judgment affirmed.