text:
    Elizabeth Wilcox, as Administratrix, etc., App’lt, v. Harriet E. Gilchrist, as Executrix, etc., Resp’t.

      (Supreme Court, General Term, Fourth Department,

      Filed February, 1895.)

    1. Trust—Creation.
    It is essential to constitute a valid trust that the instrument or agreement, by which it is sought to be created, should show §. sufficient intention to create a trust, and a beneficiary that is named or can be ascer- . tained.

      2. Judgment—Reference op disputed claim.
    The judgment, on confirmation of a referee’s report upon a reference of a disputed claim, is conclusive as to the rights of the parties thereto.
    3. Same.
    In an action to recover a debt, litigated on the theory that the defendant is liable individually, the judgment is a bar to a subsequent action to charge him as a surviving partner.
    Appeal from a judgment, entered on a decision, dismissing the complaint, with costs.
    It was alleged in the complaint in this action that the plaintiff was the duly-appointed administratrix with the will annexed of William Gilchrist, Sr., deceased ; that the defendant was the duly-appointed executrix of the last will and testament of Truman C. Gilchrist, deceased ; that the defendant's testator was a member of the firm of T. 0. & W. Gilchrist; that that firm was engaged in the grocery business at Oswego, N. Y; that the partnership continued until the death of the other partner, William Gilchrist, Jr., which occurred November 8, 1888 ; that the defendant’s testator was the sole surviving partner of that firm ; that during the continuance of the partnership, and on November 22, 1880, the plaintiff’s testator “placed in the hands and deposited with said firm of T. 0. & W. Gilchrist the sum of $8,210, in trust to be accounted for at the death of the said Betsey Gilchrist, wife of said William Gilchrist, Sr., deceased”; that the plaintiff’s testator died in January or February, 1882, leaving a last will and testament, whereby he appointed Betsey Gilchrist executrix thereof, and left the income of his estate, real and personal, to her during her natural life; that she died about April 5,1890 ; that no part of said sum had been paid except $250 ; that a demand for said money was duly made of the defendant, who refused to pay the same, and that a duly-verified copy of said claim was served upon the defendant, who rejected it. The demand for judgment was that the defendant be compelled to account to the plaintiff for the sum of $3,210 and interest, to pay over the same to her, and for such other and further relief as to the court might seem just, with costs.
    The defendant by her answer admitted the appointment of the parties as administratrix and executrix; that Truman G. Gilchrist was a member of the firm of T. C. & W. Gilchrist; that William Gilchrist, Jr., died as alleged in the complaint; that Truman G. Gilchrist was sole surviving partner of the firm of T. G. & W. Gilchrist; that William Gilchrist, Sr., died at the time alleged; that Betsey Gilchrist was duly appointed as executrix of his last will and testament; that the will of William- Gilchrist, Sr., left the income of his estate to Betsey Gilchrist during her life ; that she died about April 5, 1890; that a copy of the claim herein was served upon the defendant, 'and that she rejected it.' All the other allegations of the complaint were denied. As á second defense, the defendant alleged payment; as a third defense, set up a judgment in a former action or proceeding between the parties as a bar to this action ; as a fourth defense, set up a general release by Betsey Gilchrist, as executrix of the will of William Gilchrist, Sr., to TrumanC. Gilchrist; and as a fifth defense, set up a general release by Betsey Gilchrist-'to Truman G. Gilchrist.
    The action was tried at a special term of this court held in the county of Onondaga, November 14, 1893. The course pursued on the trial was somewhat unusual, and hence it becomes necessary to a proper understanding of the questions involved to state-the facts and proceedings had upon the trial somewhat in detail.
    After the case was opened by the plaintiff, a judgment roll, in an action or proceeding in which a judgment in favor of the defendant against the plaintiff had been entered, and which was pleaded as a bar to this action, was offered- and admitted in evidence. It was then admitted by the parties that the plaintiff i n this action was the plaintiff in the former action or proceeding, and instituted it in the same capacity as she commenced this action ; that the defendant in this action was the defendant in the former action or proceeding, and defended that proceeding in the same capacity as she was sued and was then defending the action at bar. The parties further admitted that the same money and the proceeds of the same check which were.the subject of the first proceeding were also the subject of the present action ; that the Betsey Gilchrist mentioned in the judgment roll in the former action or proceeding was the same Betsey Gilchrist mentioned in the complaint in this action; and that the will of William Gilchrist, Sr., mentioned in such-judgment roll, was the same will of the same William Gilchrist mentioned in the pleadings in this action.
    ' After these admissions were made, the plaintiff called William Hancock as a witness, who testified that he knew William Gilchrist, Jr., and Truman C. Gilchrist, who were partners doing business as grocers in Oswego, N. Y.; that they were the sons of William Gilchrist, Sr., and that he also knew .William Gilchrist, Sr.; that he was in the employ of the firm, as- their bookkeeper, and to a certain extent had charge of their financial matters. He was then shown the check of Beulah Hibbard for $3,210, which was the basis of the plaintiff’s claim, and testified that he. could not identify it, ok say that he had ever seen it before. The plaintiff then offered to prove the facts alleged in the complaint herein. The evidence was objected to, and the court excluded it. The witness then testified that he received a check ; did not recollect whose it was, or the form of it; did not know that he received it for the firm; should judge that he did not, from what occurred afterwards; that it was given to him by Truman G. Gilchrist, and that he thought it was for about $3,000; that he deposited the check he received from Truman G. Gilchrist in the First National Bank, but could not identify the check presented as the check received and deposited. The parties then admitted that Beulah Hibbard put a check into a letter and mailed it to Oswego to T. G. & W. Gilchrist, and that she paid the money on the check. The check was payable to bearer, was unindorsed, and as follows:
    “ $3,210. • Fayetteville, Nov. 22, 1880.
    “ The Farmers’ Bank, pay to T. G. & W. Gilchrist or bearer thirty-two hundred ten dollars. Beulah Hibbard.”
    At the left, upon the face of the check, appeared the bank stamp, apparently dated November 24, 1880. At the right, upon the face, appeared' the bank stamp, November 22, 1880. The check was canceled by being cut or punctured. About one year before the commencement of this action the plaintiff presented to the defendant a claim against the estate of Truman 0. Gilchrist, which was as follows:
    “ Harriet E. Gilchrist, executrix of the. estate of Truman O. Gilchrist, deceased, to Elizabeth Wilcox, administratrix with the will annexed of the estate of William Gilchrist, deceased, Dr.:
    - To cash................................... $3,000 00
    To interest on $3,000 from January 1, 1880, to
    January 1, 1892........................... 2,160 00
    $5,160 00”
    This claim was verified by the plaintiff January 12,1892. The defendant, doubting the justice of the claim, rejected it. Thereupon the parties duly entered into an agreement to refer the claim to S. 0. Huntington, Jr., as a referee to hear and determine it. This agreement was approved by the surrogate of Oswego county, April 27, 1892, and on the following day an order was duly entered appointing Huntington a referee to hear and determine the matter in controversy between the parties. It was subsequently tried before the referee, and, after hearing the evidence and the counsel for the respective parties, he duly made and filed his report, whereby he, in substance, found, as matters of fact, that the plaintiff’s testator, on October 16, 1871, duly made and executed his will, by which he gave the use of all his property to his wife, Betsey Gilchrist, for life, and after her death to his five children, and appointed his wife and Franklin Hibbard executrix and executor thereof; that he died in or about February, 1882; that his will was duly admitted to probate, and letters testamentary duly issued thereon, to Betsey Gilchrist, February 13, 1882, who from that day to the day of her death, April 5, 1890, was the sole executrix and representative of the estate of William Gilchrist, Sr., deceased; that Truman 0. Gilchrist died August 24, 1891, leaving a last will and testament, which was duly admitted to probate, and letters testamentary issued thereon to the defendant herein before January 14, 1892; that Truman C. Gilchrist and William. Gilchrist, Jr., were copartners engaged in business at Oswego, N. Y., under the firm name of T. 0. & W. Gilchrist, from January 1, 1873, to November 8,1888, when William Gilchrist, Jr., died ; that before November 22, 1879, Franklin Hibbard died .intestate, and Beulah Hibbard, his sister, having been appointed administratrix of his estate, gave to William Gilchrist, Sr., her note for $3,000 in settlement of a claim William Gilchrist, Sr., had against Franklin Hibbard ; that on November 22, 1880, by direction of William Gilchrist, Sr., Beulah Hibbard sent her check for $3,~ 210, the amount of such note, to T. 0. & W. Gilchrist; that they received thereon said sum, and $3,000 thereof was by Truman C. Gilchrist’s direction credited on the books of said firm to William Gilchrist, Sr., in an open account for that purpose, and charged to Truman 0. Gilchrist in a special account, and deposited in an Oswego bank to the credit of Truman C. Gilchrist; that said sum of $3,210 was so sent by direction of William Gilchrist, Sr.,- and was received by T. 0. & W. Gilchrist under an agreement theretofore existing between them that said firm should retain $3,000 of •said sum as a deposit, and not as a loan, and thereafter pay or account for the same under the terms of said agreement; that Truman C. Gilchrist never agreed to receive, and did not receive said $3,000' from the plaintiff’s testator, and did not agree to pay, and did not pay, said sum, or any part thereof, or interest thereon, as an individual, or otherwise than as a member of said partnership for said firm ; that it was not proved that the plaintiff’s testator ever loaned $3,000, or any other sum, to Truman 0. Gilchrist individually; that it was not proved that the plaintiff’s testator ever deposited $3,000, or any other sum, with Truman 0. Gilchrist individually; that it was not proved that the plaintiff’s testator ever intrusted to Truman 0. Gilchrist $3,000 as agent or trustee; that in .the years 1886 and 1887 said partnership drew and sent at least ten checks, of $25 each, to Beulah Hibbard, who received the same, and delivered them, or cash obtained thereon, to Betsey Gilchrist, and, as far as appeared from the evidence, as part payment, on account of said $3,000 and interest; that on December 3, 1888, Harriet 0. Gilchrist, as administratrix, etc., of William Gilchrist, Jr., commenced an action in the supreme court against said Truman 0. Gilchrist for an accounting of the matters of said firm of T. 0. & W. Gilchrist; that on the 18th of April, 1889, the said Betsey Gilchrist signed, acknowledged and delivered to Truman C. Gilchrist two sealed instruments in writing, the first of which was a. general release by her as sole acting administratrix of the last will and testament of William Gilchrist, Sr., to Truman G. Gilchrist, whereby she released all manner of actions, causes of actions, debts, etc., against him, which she then had as such administratrix, or which she, or her heirs, executors, or administrators and successors, or said estate, might have by reason of any matter or thing whatsoever, from the beginning of the world to the day of the date of those presents, and the second was a general release in substantially the same form as the other, except that it was given by Betsey Gilchrist individually, and not as the representative of her husband’s estate; that each of said releases was executed without any fraud or undue influence, and with a full knowledge on the part of Betsey Gilchrist that she thereby released all claims that she and the estate of her said husband had to the said $3,000 and interest, or so much thereof, if anjq as was unpaid thereon under any agreement made between her husband and Truman C. Gilchrist as an individual; that on August 4, 1890, letters of administration with the will annexed of William Gilchrist, Sr., de bonis non, were duly issued to the plaintiff, and she has ever since been and acted as such administratrix; that it was not proven that any demand had been made on the defendant’s testator or the defendant for the amount of said deposit, or any portion thereof, or the interest thereon, that has not been paid; that on the 14th day of January, 1892, the plaintiff duly presented to the defendant the claim hereinbefore set forth ; that the defendant rejected said claim, January 15, 1892; that the agreement to refer was made April 26, 1892 ; and that the order of reference was granted April 28, 1892. The referee also found “that both parties have tried this proceeding before me on the theory that the claim was only on a liability incurred to the plaintiff’s testator by Truman 0. Gilchrist individually, and not by the firm of T. C. & W. Gilchrist; that the death of William Gilchrist, Jr., was not proved as a part of plaintiff’s case; and that plaintiff has not requested me to find that any cause of action ever existed against said firm of T. C. & W. Gilchrist, or against said Truman 0. Gilchrist as surviving partner.” As matters of law the referee held: “First. That on or about November 23, 1880, the firm of T. C. & W. Gilchrist became liable thereafter to pay or account for said.$3,000 as a deposit Second. That Truman C. Gilchrist individually, or otherwise than as a member of said firm, never became indebted or liable to pay or account for said $3,000 to plaintiff’s testator, his representatives or assigns, or any part thereof, or any interest thereon. Third. That the plaintiff in this proceeding is not entitled to recover on said or any claim that existed or accrued .against said partnership, or against said Truman C. Gilchrist as surviving partner. Fourth. That except as to creditors of said William Gilchrist, Sr., the release executed by Betsey Gilchrist as administratrix was a valid release and bar to all right of the said Betsey Gilchrist and of plaintiff to recover said $3,000 or interest thereon from Truman C. Gilchrist, or his estate, arising out of any obligation or liability of the said Truman 0. Gilchrist individually to pay or account therefor. ■ Fifth. That, except as against creditors of the said Betsey Gilchrist, the release executed by said Betsey Gilchrist individually, April 18, 1889, was and is a valid release and bar to a recovery of said $3,000 or interest thereon, or any part thereof, from Truman 0. Gilchrist, or his estate, arising out of any obligation of the said Truman C. Gilchrist individually to pay or account therefor to the said Betsey Gilchrist individually. Sixth. That the plaintiff is not entitled to recover anything of the defendant in this proceeding, and the defendant is entitled to judgment accordingly.”
    Upon reading and filing the report of the referee, an order was duly entered at a special term of this court held in the city of Syracuse bn the 15th day of November, 1892, by which it was ordered that said report be and the.same was confirmed, and judgment thereon was directed in favor of the defendant therein against the plaintiff; that the plaintiff was not entitled to recover anything of the defendant in that proceeding, and that said defendant have judgment against the plaintiff dismissing the plaintiff’s claim therein, and have costs and disbursements as in an action. In pursuance of that order, a judgment was duly entered December 19, 1892, whereby it was ordered, adjudged, and decreed that the report of said referee be, and the same was, confirmed; that the plaintiff was not entitled to recover anything of the defendant in that proceeding; that the plaintiff’s said claim be, and the same was thereby, dismissed upon the merits ; and that the defendant recover of the plaintiff the sum of $213.12 as for her costs therein, to be levied and collected of the goods, chattels, and credits of William Gilchrist, deceased, in the hands of the plaintiff -as ad-ministratrix with the will annexed.
    After the admission in evidence of the judgment roll in the former proceeding, and after the evidence and admissions hereinbefore referred to had been made and admitted, the plaintiff rested. Thereupon the defendant moved for a nonsuit and a dismissal of the plaintiff’s complaint upon the following grounds: “First. Upon the ground that the statute (chapter 185 of the Laws of 1882) precludes the possibility of this action being maintained, either by this plaintiff or against this defendant, for the alleged cause of action set up in the complaint, it being based upon the theory of a trust, and the complaint charging that it is based upon a trust. Second. Upon the ground that the matter involved in the action is res judicata, as shown by the judgment roll in the prior action or proceeding between the same parties. Third. Upon the ground that the release, which is shown by the judgment roll in the prior action or proceeding to have been executed and delivered by Betsey Gilchrist as executrix of the will of William Gilchrist to Truman C. Gilchrist, after the death of William Gilchrist, Jr., removed all basis for the claim made here.” This motion seems to have been granted, and the plaintiff duly excepted. Thereupon the court made and filed findings of fact and conclusions of law. The findings of fact were, in substance, that the plaintiff was the duly-appointed administratrix with the will annexed of the estate of William Gilchrist, deceased ; that the de~ fendant was the duly appointed executrix of the last will and testament of Truman 0. Gilchrist, deceased ; that Truman C. Gilchrist and William Gilchrist, Jr., were partners doing business as grocers at Oswego, N. Y., under the firm name and style of T. C. & W. Gilchrist, for several years prior to and until November 8, 1888, when said firm was dissolved by the death of William Gilchrist, Jr., leaving Truman C. Gilchrist surviving him; that Beulah Hibbard mailed to T. 0. & W. Gilchrist the bank check hereinbefore set forth, which check and amount thereof were duly paid; that the check as put in evidence was unindorsed, but canceled; that the proceeds of the check and the amount thereof paid were the same moneys mentioned in the complaint herein, and for which recovery is herein sought, and also the same moneys which were sought to be recovered in a former proceeding in this court between the same parties, in which judgment was entered in this court, December 19, 1892. The court also found that a former proceeding was instituted in this court to enforce the claim made by the plaintiff herein, wherein the parties were the same as in this action ; that it was instituted under the statute, referred to S. 0. Huntington, who reported thereon in favor of the defendant; that a final judgment was duly entered therein in pursuance thereof against the plaintiff, and in* favor of the defendant, December 19, 1892, whereby it was duly adjudged that the plaintiff was no’t entitled to recover of the defendant; and that the action was brought to. recover the same moneys and indebtedness which the proceeding, in which judgment was entered December 19, 1892, was instituted and prosecuted to recover. As conclusions of law the court held: “ First. The above-named plaintiff * cannot maintain this action against the defendant above named on the ground that a trust was created as alleged in complaint herein, nor recover judgment herein on such ground. Second. The complaint herein would allow the plaintiff to sustain, by proof of appropriate facts, a claim that the defendant is indebted to the plaintiff for the money and amount mentioned in said complaint. Third. The judgment mentioned in the finding of facts * * * entered December 19, 1892, * * * is a final determination upon the claim of said plaintiff herein to recover of said defendant herein, and the estate by her represented as such executrix as aforesaid, the moneys mentioned in the complaint herein on the ground that said defendant, as executrix of said will of Truman 0. Gilchrist, deceased, or the estate of said Truman C. Gilchrist, deceased, is indebted to said plaintiff, as administratrix with said will annexed of the estate of said William Gilchrist, deceased; therefore said claim is made res judicata by said judgment, and said judgment is a bar to action thereon and therefor. - Fourth. The defendant above named, Harriet E. Gilchrist, as executrix of the will of Truman 0. Gilchrist, deceased, is entitled to judgment herein against the above named plaintiff, Elizabeth Wilcox, as administratrix with the will annexed of the estate of William Gilchrist, deceased, dismissing the complaint herein upon the merits, and for the costs and disbursements of this action.”" Judgment was directed for the defendant. The plaintiff excepted to the fourth, fifth, and sixth findings of fact, and to the first, third, and fourth conclusions of law. Afterwards, and on February 17, 1894, a judgment was entered in accordance with such decision, dismissing the plaintiff’s complaint upon the merits with costs. From this judgment the plaintiff appealed. .

      F. D. Gardner and Homer Weston, for app’lt; W. H. Kenyon, for resp’t.
   Martin, J.

It becomes obvious from a review of the proceedings in this action that the special term awarded the judgment herein upon the grounds that the plaintiff could not maintain this action on the theory that a trust was created by a delivery to T. C. & W. Gilchrist of the check in question, and the agreement under which it was delivered, and that the judgment entered in the proceeding between the parties, under the statute relating to-claims against the estate of deceased persons, was a bar to this action, so far as it was based upon the claim that the estate represented by the defendant was indebted to her or the estate she-represented for the money received by the defendant’s testator or by the firm of which he was the surviving partner. It follows, therefore, that the judgment should be reversed, unless it can be-sustained upon those grounds. Thus, we are led first to the consideration of the question whether this action can be maintained on the ground that the money in question was placed in the hands of the firm of T. C. & W. Gilchrist by William Gilchrist, Sr., in trust to be accounted for at the death of Betsey Gilchrist. It is essential to constitute a valid trust that the instrument or agreement by which it is sought to be created should show a sufficient intention to create a trust, and a beneficiary that is named or can be ascertained. 4 Kent, Comm. (11th ed.) p. 305, note 2. This doctrine seems to be recognized, if not affirmed, in Gilman v. McArdle, 99 N. Y. 458, In Holland v. Alcock, 108 N. Y. 312, 318 ; 14 St. Rep. 761, Rapallo, J., said:

The absence of a defined beneficiary is, as a general rule, a. fatal objection to any attempt to create a valid trust. It is said by Wright, J., in Levy v. Levy, 33 N. Y. 107, that ‘if there is a. single postulate of the common law established by an unbroken line of decision, it is that a “trust without a certain beneficiary, who can claim its enforcement, is void, whether good or bad, wise or unwise.’ ”

The same doctrine was held in Fosdick v. Town of Hempstead, 125 N. Y. 581, 591; 35 St. Rep. 863, where the Holland case was cited, and Peckham, J., said that the opinion of Rapallo, J., in that case left nothing to be added on that subject, and that “ that case leaves the doctrine no longer in doubt that to constitute a valid trust there must be a defined beneficia^, and the absence of such is, as a general rule, fatal to the validity of a testamentary trust.” See, also, Tilden v. Green, 130 N. Y. 29 ; 40 St. Rep. 512. Hence it would seem that the allegations of the complaint were insufficient to sustain a recovery upon the theory of a trust.

Moreover, if, as claimed by the plaintiff, there was an express-trust created by the deposit of the check in question, or the money received thereon, it would not descend to the next of kin or personal representatives of the trustee, but upon his death would vest in the supreme court, under chapter 185 of the Laws of 1882, which provides:

“Upon the death of a-surviving trustee of an express trust, the trust estate shall not descend to his next of kin or personal representatives, but the trust, if unexecuted, shall vest in the supreme court, with all the powers and duties of the original trustee, and shall be executed by some person appointed for that purpose under the direction of the court. But no person shall be appointed to execute said trust until the beneficiary thereof shall have been brought into court by such notice and in such manner as the court may direct.”

It follows, we think, that if a valid trust had been created, under this statute the trust estate would not descend to or vest in the plaintiff, but would vest in the supreme court; that a new trustee should have been appointed, who alone could have maintained an action, Matter of Waring, 99 N. Y. 114; Matter of Carpenter, 131 N. Y. 86; 42 St. Rep. 627; and that the special term correctly held that the plaintiff could not maintain this action on the ground that a trust was created.

This brings us to an examination of the question whether the proceedings instituted under the statute by the plaintiff against the defendant, for the enforcement of the claim made therein, were a bar to this action, if regarded as an action to recover the moneys in question, independent of the claim that it was delivered to the firm of T. C. & W. Gilchrist in trust. The proceeding which resulted in the judgment which the court held was a bar to this action was instituted under and in pursuance of the provisions of sections 35, 36, arid 37 of article 2, tit. 3, c. 6, pt. 2, Rev. St. It is provided by section 37 that where the justice of a claim presented is doubted, and a reference is had, the judgment of the court, upon the confirmation of the report of a referee therein, shall be valid and effectual in all respects as if the same had been rendered in a suit commenced by the ordinary process.. Therefore, under the provisions of the statute,'the former judgment between these parties had the same binding effect, and is to be treated in all essential respects the same, as though it had been entered in an ordinary action. The parties to the former action or proceeding were the same as in the case at bar. It was instituted to recover the same moneys which were sought to be recovered in this action. The only pretended difference between the former proceeding and this action is that the original action or proceeding was sought to be maintained, and the debt in question recovered, upon proof that the defendant’s testator was individually liable therefor by reason of his having received the money -in question, while this action is sought to be maintained upon proof that he was liable as surviving partner of the firm of T. 0. & W. Gilchrist. As we have seen, the report of the referee, which is a part of the judgment roll in the former proceeding, discloses that it was tried upon the theory that the claim there sought to be recovered was a liability incurred to the plaintiff’s testator by Truman C. Gilchrist individually, and not by the firm of which he was a member. From this finding of the referee it must, I think, be assumed that upon the former trial the plaintiff did not, in fact, attempt to-prove any liability against the defendant upon the ground that her testator was the surviving partner of the- firm of T. C. & W. Gilchrist, and as such liable for the debt in question. That upon such trial the plaintiff might have proved a cause of action against the defendant, upon the theory of her testator’s liability as surviving partner, there can, I think, be no doubt. In Nehrboss v. Bliss, 88 N. Y. 600, 604, where the question of the rights of a surviving partner was discussed, it was in effect said that, upon the death of a partner, the legal right under the firm contracts or causes of action, and the sole right to collect the partnership debts, remained in the survivor, Vin. Abr. “Partners,” D; 1 Lindl. Partn. p. 505 ; Voorhis v. Child's Ex'r, 17 N. Y. 354, and vested so effectually that upon his death it would have devolved upon his personal representative, who alone could sue upon it, 1 Williams, Ex’rs, 1585; Copes v. Fultz, 1 Smedes & M. 623, that in such a case the right of action would so completely vest in the survivor that a demand against him in his own right might have been set off in diminution of his claim as surviving partner, Slipper v. Stidstone, 5 Term. R. 493 ; that a debt due from the plaintiff as surviving partner to the defendant might be set off against a debt due from the defendant to the plaintiff in his own right, French v. Andrade, 6 Term. R. 582 ; that as surviving partner he might join in one action a count for a debt due him in his own right and one due him as survivor, Adams v. Hackett, 27 N. H. 289; and that a plaintiff,- in an action charging him in his own right, might recover a demand due from him individually, and another due from him as surviving partner, Richards v. Heather, 1 Barn. & Ald. 29. In the Richards Case, it was expressly held by the court of king’s bench, that “ under a declaration containing only one set of counts, charging the defendant in his own right, the plaintiff may recover one demand due from the-defendant individually, and another due from him as surviving partner.” In Ferrris v. Burrows, 34 Hun, 104, it was held that, upon the judicial settlement of his accounts, an executor was entitled to set off against a legacy a debt due to the testator from a firm of which the legatee was, at the time of the death of the testator, the sole surviving partner. This case was affirmed in 99 N. Y. 616. In Miller v. Bank, 1 Paige, 444, Chancellor Walworth said:

Thus, a surviving partner is, in equity, only a trustee for himself and the representatives of the deceased partner. Yet he may sue or be sued in his own name, and debts due to or from him in his own right may be offset against debts due to or from him as-surviving partner.”

In Goelet v. McKinstry, 1 Johns. Cas. 405, it was held that if one of two partners in trade purchase goods for both, and one of them dies, an action of indebitatus assumpsit may be brought against the survivor, without taking notice of the partnership or the death of one and the survivorship of the other.

In Hyat v. Hare, Comb. 383, Holt, C. J., said:

“ If there be two partners in trade, and one of them buy goods for them both, and the other dieth, the survivor may be charged by indebitatus assumpsit generally, without taking notice of the partnership, or that the other is dead and he survived.”

The doctrine of these authorities renders it obvious that the plaintiff could have proved on the former trial a cause of action, and recovered in that proceeding against the defendant, as the representative of the surviving partner of the firm of T. C. & W. Gilchrist, under her claim as presented, unless it had been paid or released. Thus the precise question to be determined is whether, as the right .of recovery now insisted upon by the plaintiff could have been litigated and determined upon the former trial, the judgment in that case was a bar to a second action. The rule seems to be well settled in this state that a former judgment of a court of competent jurisdiction is final and conclusive between the parties, not only as to the matters actually determined, but also as to every other matter which the parties might have litigated and had decided, essentially connected with the subject-matter of the litigation, within the purview of the original'action, either as matter of claim or defense. Embury v. Conner, 3 N. Y. 511, 522; Doty v; Brown, 4 id. 71; Clemens v. Clemens, 37 id. 59, 74; Dunham v. Bower, 77 id. 76, 79; Smith v. Smith, 79 id. 634; Jordan v. Van Epps, 85 id. 427, 436; Patrick v. Shaffer, 94 id. 423, 430; Pray v. Hegeman, 98 id. 351, 358 ; Griffin v. Long Island Railroad Co., 102 id. 449, 452; 1 St. Rep. 56; Goebel v. Iffla, 111 N. Y. 170, 177; 19 St. Rep. 105; Campbell Printing Press and Manufacturing Co. v. Walker, 114 N. Y. 7, 12; 22 St. Rep. 173; Lorillard v. Clyde, 122 N. Y. 41, 47; 34 St. Rep. 224. In the Embury Case, Jewett, J., says:

“ That the judgment or decree of a court possessing competent jurisdiction is, as a general rule, not only as to the subject-matter thereby actually determined, but as to every other matter which the parties might litigate in the cause, and which they might have had decided, can admit of no doubt. The general rule is that an allegation on record, upon which issue has been once taken and found, and a judgment has been rendered, is, between the parties 'taking it and their privies, conclusive, according to the finding thereof, so as to estop the parties, respectively, from again litigating that fact once so tried and found, whether it is plead in bar or given in' evidence.”

In the Clemens Case, the court cited und approved of the rule laid down by Judge Hogeboom in Harris v. Harris, 36 Barb. 88, which was:

“The general rule on this subject is well known .to be that a forrher judgment of the same court, or of a court of competent jurisdiction, directly upon the point in issue, is, as a plea in bar or as evidence, conclusive between the same parties, or others claiming under them, upon the same matter directly in question, in a subsequent action or proceeding. Such judgment or adjudication in final and conclusive, not only as to the matter actually determined, but as to every other matter which the parties might have been litigating, and have had decided, as incident to, or essentially ■connected with, the subject-matter of the litigation, and every matter coming within the legitimate purview of the original action, both in respect to matters of claim and of defense.”

In the Dunham Case it was held that a judgment in favor of a carrier, in an action by him to recover freight, was a bar to an action by the owner of the goods shipped to recover damages for the destruction of the property, caused by a failure on the part of the carrier to perform his contract of transportation.

In the Smith Case it was held that an estoppel by judgment in a former action arises when the same matter was at issue therein, and was either litigated by the parties and determined, or.might have been litigated, and a decision had upon it; and that it was not necessary that it should appear by the record of the prior suit that the particular controversy sought to be precluded was then necessarily tried and determined, but it was sufficient if there might have been judgment in the first action for the same cause alleged in the second.

In Jordan v. Van Epps, which was an action by the plaintiff for dower in certain land, and there had been a former action of partition, to which she was made a party, and in the complaint in which action it was alleged that she claimed an in choate right of dower in the premises, wherein she did not appear, and the final judgment made no provision for dower, it was held that the judgment in the partition suit was a bar; that she should have presented her claim in some form in that action; and, having failed to do so, could not in another action claim that she was unlawfully deprived of her dower rights.

In Pray v. Hegeman it was held that it was not necessary to the conclusiveness of a former judgment that issue should have been taken upon the precise point controverted in the second action; that subordinate rights or questions, which are branches of a larger right or question put in issue, and which, under the pleadings in a former action, might have been decided, and as to which relief might have been granted, although the principal or main relief was denied, are conclusively determined by a judgment therein upon the merits denying all relief.

In the Lorillard Case it was held that a judgment rendered on the merits is coextensive with the issues upon which it is founded, and is conclusive between the parties thereto, not only as to the matters actually proved and submitted for decision, but also as to every other matter directly at issue by the pleadings which the defeated party might have litigated, and that testimony is incompetent which merely tends to show that a.party omitted to produóe upon the former trial all the evidence that was admissible in his behalf.

The appellant, however, has called our attention to the case of Rose v. Hawley, 141 N. Y. 366; 57 St. Rep. 441, as an authority for the-proposition that, “to constitute a bar, the [plaintiff's] claim should have been presented to defendant as the representative of the survivor of the firm.” In the case cited it was held that, where a cause of action was imperfect when the action was brought a judgment therein was not a bar to a subsequent action. While the doctrine of that case must be recognized as correct, it has no application here.

He also cites the cases of House v. Lockwood, 137 N. Y. 259; 50 St. Rep. 787, and Belden v. State, 103 N. Y. 1; 3 St. Rep. 8, as sustaining the doctrine that “a judgment does not operate as as estoppel between the same parties, except where the facts litigated and decided have such relation to the issue that their determination was necessary to the determination of that issue ; that is, the facts may be used to establish another issue without destroying the right of action thereon.” Those cases hold that “a judgment does not operate as an estoppel, in a subsequent action between the parties, as to immaterial or unessential facts, even though put in issue by the pleadings and directly decided. But it is final as to every fact litigated and decided therein having such a relation to the issue that its determination was necessary to the determination of the issue. Whenever the same question arises between the parties, in whatever form of action, and whether involved directly or collaterally, they are forever precluded from averring and proving the fact to be otherwise.” Assuming, as we do, the corrrctness of the principle decided by the cases cited, we think it does not affect this case, as no such question is here involved. The issue in the first case, as well as in this, was whether the defendant, as the personal representative of Truman 0. Gilchrist, was indebted to the plaintiff or the estate represented by her for the money in question. If the defendant was liable as the representative of Truman 0. Gilchrist, it was only because he was individually liable for the debt in suit. The issue was the same in both cases, and if the estate represented by the defendant was liable, either by reason of her testator’s having received the money as an individual, or by the reason of his having become individually liable as the surviving partner of the firm of which he was a member, neither of those facts, if it existed, can be said to be immaterial or unessential. If either existed, proof of it was necessary to a determination of the issue between the parties. At most, the case here presented is one where the proof existed by which it is claimed that the debt against the defendant could be established, but the plaintiff failed to introduced it on the former trial.

Again, the appellant cites the case of Collins v. Hydorn, 185 N.Y. 320; 48 St. Rep. 370, as sustaining the principle that, “while the admissions show the persons to be the same the first claim was litigated as a personal one in the proceedings, and the referee was not asked to pass upon the claim as' against the copartnership. Here the claim was charged as a firm liability, and the defendant is sought to be charged as the representative of the survivor of the firm.” The case cited holds that a former judgment concludes a party only in the character in which he is sued. That the parties to this action sued and were sued in the same capacity as they appeared in the former proceeding is undisputed. Hence it is difficult to perceive how the doctrine of the case is applicable.

The appellant likewise refers to the cases of Dickinson v. Price, 45 St. Rep. 159; Zoeller v. Riley, 100 N. Y. 102, and Lewis v. Ocean N. & Pier Co., 125 N. Y. 341; 34 St. Rep. 973, as sustaining bis claim that the former judgment was not a bar to this action. In the Dickinson case, which was an action brought to recover damages for the alleged illegal discharge of the plaintiff by the defendant, his employer, it appeared that, as an inducement to the plaintiff to enter his service for a period of one year, the defendant agreed to let him have a certain house at seven dollars a month. After his discharge the plaintiff continued to occupy the house, until, about two months later, the defendant began summary proceedings against the plaintiff, who put in an answer denying any indebtedness for rent, setting up the contract for services, and that under it he was to have the house for a year at seven dollars a month ; that the contract had not expired; that he had been improperly discharged, and that the defendant had agreed to take his rent from the plaintiff’s earnings, which were payable weekly. On the trial of the summary proceedings, the plaintiff did not appear, and the defendant took judgment by default for one month’s rent. An action was subsequently brought to recover damages for the discharge of the plaintiff, when the judgment entered in the summary proceedings was admitted in evidence, and held to be a bar to the action. Upon an appeal to tMsscoWt, it was held that that was' error; that the judgment by cMatuS in summary proceedings was conclusive only as to those allegations which the petition therein stated as grounds for' a recovery under the statute; that the affirmative allegations of the' pfeiiistiff in the answer to the petition did not widen theissue; that if tire fact established by the judgment, that some rent was' due,, was to- be taken to prove, inferentiall'y, that the defendant had noi broken the contract, and that, therefore, he had not discharged the plaintiff improperly, the burden was upon the defendant to show affirmatively that the judgment went upon that ground", and not simply on the ground that the contract did not apply to the rent; and that, as the present action and the summary proceedings were entirely different causes of action, one claiming an estoppel -by the former judgment must show that the issuable fact was determined in the summary proceedings.

In the Zoeller case, which was an action against the sheriff to' recover for the conversion of a carriage taken by him under an execution, it was held that a judgment in an action brought for a conspiracy to defeat the collection of certain judgments held by other parties, to which action the plaintiff was not a party, was not a bar to the plaintiff’s action, and that, before it could affect the plaintiff’s recovery, it must at least have been shown that there was an adjudication in the conspiracy action condemning the plaintiff’s mortgage, and that the burden of establishing that fact was upon the defendant. It was also held that, as neither the plaintiff nor his assignor were made parties to the action, they were not bound by the adjudication, therein.

In the Lewis case it was said :

‘“Where a judgment may have pTctceedéR upon either or any oí two or more different and distinct facts,-, the party desiring to avail himself of the judgment, as conclusive evidence upon some particular fact, must show affirmatively that it went upon that fact, or else the question is open for a new contention.”

i

I am unable to see how the doctrine of any of the eases cited is applicable to the question under consideration. The only issue between the parties either in the case tried before the referee, or in the case at bar, was whether the defendant, as the legal representative of her testator, was liable to the plaintiff or the estate she represented for the debt in question. The principal and the only fact at issue between the parties was whether the defendant’s testator was individually liable to the plaintiff for the amount of such debt. Whether such indebtedness arose from the defendant’s testator having received the money personally, or whether he became personally liable to repay it as surviving partner, the liability was the same, and whether it arose in the one way or the other was only an incident relating to the manner of proving the principal fact. In the cases cited by the appellant, the causes of action in the former and subsequent suits were different, and the facts as to which it was held that the former judgments were,, not an estoppel were immaterial and unessential to establish the cause of action in suit. Here the cause of action sought to be enforced in the former proceeding and that upon which the plaintiff seeks to recover in this action were the same. In discussing the question when the cause of action is the same in two cases, Allen, J., in Stowell v. Chamberlain, 60 N. Y. 272, 276, said :

“The rule is that the judgment of a court of competent jurisdiction directly upon the point is, as a plea, a bar, and as evidence conclusive, between the same parties, upon the. same matter, directly in question in another action or court. A matter or cause of action is res judicata when it is actually merged in a judgment, or the same point has already been decided between the same parties ; and if, by law, a judgment could have been given for the plaintiff in a former suit, for precisely the same cause of action as that for which the present suit is brought, it has, within the rule, passed into judgment, and is res judicata. But in order to bar the second action the circumstances must be such that the plaintiff might have recovered in the first for the same cause alleged in the second. The question is whether the same evidence will maintain both actions. If the evidence which will sustain the second wonld have authorized a recovery in the first, under the allegations of the complaint, the first judgment is an absolute bar to the second.”

In Bell v. Merrifield, 109 N. Y. 202, 209; 14 St. Rep. 796, the doctrine of the Stowell case is approved. In Miller v. Manice, 6 Hill, 121, Walworth, Chancellor, said :

“The question whether a verdict and judgment for the defendant in a former action is a bar to a second suit for the same cause or matter does not depend upon the fact that the proof in the former suit was sufficient to sustain the action; for where the same matter was in issue, and submitted to the jury in the former suit without sufficient proof, the decision of the jury upon the matter in issue, and thus submitted to them, followed by the judgment of the court upon their verdict, will be a bar to another action for the same cause or matter, where the same evidence which is necessary to sustain the second suit, if it had been given in the former action, would have authorized a recovery therein.”

While from the referee’s report it may seem that he was of the opinion that the plaintiff could not recover in that proceeding against the defendant as the representative of the surviving partner, yet the quotation from his opinion contained in the respondent’s brief, if correct, shows that he entertained the opposite opinion, and that the plaintiff’s failure to present the proof was not in any way induced by the action of the referee. If, however, it were otherwise, and the referee had erroneously held that she could not recover upon such proof, or that it was inadmissible, her remedy was by appeal, and not by bringing a new action. The weight of authority seems to he adverse to the plaintiff’s claim that the former judgment was not a bar to this action. As already suggested, the principal fact in Issue between the parties in the proceedings under the statute was whether the defendant, as the - personal representative of the estate of Truman 0. Gilchrist, was liable to the plaintiff for the claim presented by her. The claim presented was for $3,000 and interest against the defendant, without any specification or suggestion as to whether the liability sought to be enforced was based upon the claim that the defendant’s testator had the money in question personally, or that it was not based upon the claim that he was liable therefor as surviving partner of the firm of which he was a member. If the defendant was liable, it was because her testator had either had the money sought to be recovered, or because it has been had by the firm of which he was a member and the surviving partner. Under these circumstances, the plaintiff, upon introducing the proper proof, might had recovered against the defendant upon the ground that, as such surviving partner, her testator was liable for the money in question, as well as if she had been able to prove that the money was originally deposited with him. It was a matter of proof only. The plaintiff in that proceeding might have produced the evidence upon which she now claims the right to recover. It was as admissible there as it would have been in this action if no former proceeding had been had. The liability, in either case, was one that could have been enforced against the defendant’s testator as an individual, and it is only upon the ground that as surviving partner he was individually liable that this action could be maintained against the defendant, if there was no former judgment between the parties. That this matter might have been litigated and determined in the former proceeding is manifest, and the fact that -the plaintiff omitted to produce upon the former trial all the evidence that was admissible in her behalf does not entitle her to retry the question of the defendant's liability. Having considered all the authorities to which our attention has been callqd, and without attempting to explain or harmonize all that may have been sa'id by judges and text writers upon the question of estoppel by judgment, we are of the opinion that the rule that a former judgment is final and conclusive between the parties, not only as to the matters actually determined, but as to every other matter within the legitimate" purview of the original action, which might have been litigated and decided, was properly applied in this action, and that the judgment should be affirmed. Judgment affirmed, with costs.

All concur.


source: Caselaw Access Project

author: Martin, J.

license: Public Domain

text:
    Isaac P. Powers, App’lt, v. Hiram Knapp, Resp’t.

      (Supreme Court, General Term, Fourth Department,

      Filed February, 1895.)

    Corporations—Stockholders—Liability.
    Where any part of the stock of a corporation, organized under the Act of 1848, has been issued in payment of the purchase price of property, without fraud in its valuation, the holders thereof cannot be made liable to creditors, either by a failure of the stockholders to pay the remainder of the capital, or by an omission of the officers of the company to record the certificate of such payment.
    Appeal from a judgment dismissing the complaint on the merits, entered on a verdict for defendants, and from an order denying a motion for a new trial.

      Hannibal Smith, for app’lt; Watson M. Rogers, for resp’t.
   Martin, J.

This action was brought against the defendant, as a stockholder of the Winslow & Knapp Lumber Company, to recover a debt held by the plaintiff against that corporation. The Winslow & Knapp Lumber Company was incorporated under the provisions of chapter 40 of the Laws of 1848 and the subsequent acts amendatory thereof and additional thereto. The action was founded upon the provisions of section 10 of that act, which reads:

“All the stockholders of every company incorporated under this act, shall be severally individually liable to the creditors of the company in which they are stockholders, to an amount equal to the amount of stock held by them respectively for all debts and contracts made by such company, until the whole amount of capital stock fixed and limited by such company shall have been paid in, and a certificate thereof shall have been made and recorded as prescribed in the following section ; and the capital stock, so fixed and limited, shall all be paid in, one-half thereof within one year, and the other half thereof within two years from the incorporation of said company, or such corporation shall be dissolved.”

The defense is based upon the provisions of section 2 of chapter 333 of the Laws of 1853, which was an act to amend chapter 40 of the Laws of 1848. Section 2 declares :

“The trustees of-such company may purchase mines, manufactories, and other property necessary for their business, and issue stock to the amount of the value thereof in payment therefor; and the stock so issued shall be declared and taken to be full stock, and not liable to any further calls ; neither shall the holders thereof be liable for any further payments under the provisions of the tenth section of the said act; but in all statements and reports of the company, to be published, this stock shall not be stated or reported as being issued for cash paid into the company, but shall be reported in this respect according to the fact.”

On the trial, at the close of the evidence, the court, following a former decision of this court, 71 Hun, 371; 58 St. Rep. 231 held that the defendant was a stockholder in the Winslow & Knapp Lumber Company, and liable for the amount of the plaintiff’s debt, unless the stock held by him was issued under the provisions of the amendatory statute passed in 1853. The questions whether the stock held "by the defendant was issued in payment for property purchased by the corporation, whether, if the stock was issued for property, it was fairly worth the face value of the stock, or, if the property was valued too high, whether such valuation was fraudulent, were submitted to the jury in a charge to which there was no exception. The jury found for the defendant. While the evidence bearing upon these questions was conflicting, still a careful reading of it renders it clear that it was sufficient to justify the verdict if the jury gave credit to the testimony of fhe defendant’s witnesses. The question of the credibility o'f the witnesses was for the jury. We are of -the opinion that, under the evidence, the questions submitted were questions of fact for the jury; that the evidence was sufficient to justify its verdict; that the verdict was not so clearly against the weight of evidence as to authorize this court to disturb the judgment; and that the finding of the jury upon the questions submitted should be regarded as final. Therefore, in the further discussion of the case, it will be assumed that the stock held by the defendant was issued in payment for property purchased by the corporation; that the nroperty so purchased was fairly worth the face value of the stock issued therefor, or, if not, that the over-valuation of the property, was the result of an honest mistake as to its value, and was not the result of dishonesty or fraud. Assuming these to be the facts, it would seem that the provisions of the amendment .of 1853 were sufficient to relieve the defendant from the liability sought to be enforced by this action. The only liability incurred by the defendant, if any, was that created by section 10 of the statute of 1848, and but for the amendment of. 1853 the defendant would have been liable under section 10, and the court so held. Obviously, the purpose of that amendment was to authorize the creation of a class of stockholders who would be free from the liability imposed by section 10, and as to whom none of the provisions of that section should apply. The amendment of 1853, in clear and positive terms, declares that such stockholders shall not be liable “for any further payments under the provisions of the tenth section.” Clearly, the purpose of the legislature was to exempt the holder of such stock from any liability under the provisions of section 10 of the original act, and no stronger or plainer language could have been employed to express that purpose. Under that amendment, a part or the whole of the stock of such a corporation may be paid for by the purchase of property at its fair value, and, when thus paid for, the holder of the stock is not afterwards liable either for calls bv the corporation or for claims against it. Schenck v. Andrews, 46 N. Y. 589. If any part of the stock of such a corporation has been so issued without fraud in the valuation of the property, the holders thereof cannot be made liable to creditors, either by a failure of the stockholders to pay the remainder of the capital, or by an omission of the officers of the company to record the certificate of such payment. Brown v. Smith, 13 Hun, 411, affirmed 80 N. Y. 650. A mere mistake or error of judgment of the trustees, either as to the necessity of the purchase or as to the value of the property, if made -in good faith, and not in evasion of the statute, will not subject the holder of stock issued for property to the liability provided by section 10. Section 2 of the statute of 1853 gives the trustees a discretion, and they are to-be the judges both as to the necessity for the property purchased and as to the value of it. Good faith and the exercise of a proper discretion and honest judgment are all that is required. Schenck v. Andrews, 57 N. Y. 133; Boynton v. Andrews, 63 N. Y. 93; Douglass v. Ireland, 73 N. Y. 100. The questions in the case whether the property purchased was worth the nominal value of the stock, or believed by the trustees to have been of that value, or whether the transaction was a sham by which the trustees sought to evade the statute, were questions of fact, and properly submitted to the jury. Lake Superior Iron Co. v. Drexel, 90 N. Y. 87, 94. “A discrepancy in the opinions of witnesses upon the question of value cannot be considered as sufficient to establish fraud, so as to render a stockholder individually liable.” Boynton v. Andrews, 63 N. Y. 95. One who seeks to attack stock issued for property, and thereby to create a cause of action in his favor against a stockholder, must allege that such stock was issued for property received by the corporation at a fraudulent valuation, and the burden of establishing fraud is upon him. Rowell v. Lambert, 66 Hun, 4; 49 St. Rep. 179. We think the principle of these cases fully justified the court in submitting the questions it did to the jury, and requires us to uphold the judgment upon the merits.

Our attention is called by the appellant to several rulings made by the trial judge as to the admission and rejection of evidence. Bach of the exceptions to such rulings has been carefully examined, but we find none that present any error that is prejudicial to the plaintiff. It should be borne in mind that the only questions submitted to the jury were whether the stock held by the defendant was property stock, and if so, whether it was fraudulently issued. While evidence was admitted which tended to show that the defendant was not a stockholder in the corporation against which the plaintiff’s debt existed, yet, at the close of the evidence, the court held, as a matter of law, that the defendant was such a stockholder. This did not render the evidence which tended to show that he was not a stockholder inadmissible at the time when it was admitted, as the court could not then have known that the defendant would not be able to furnish sufficient proof to establish that fact. Therefore it cannot be said that, when the evidence was offered, it was inadmissible, Moreover, if the evidence was inadmissible, its admission could not? have prejudiced the plaintiff, and the error should be disregarded.

Thus, we are led to the conclusion that the questions at issue between the parties in this case were properly submitted to the jury; that the evidence was sufficient to uphold its verdict; that none of the exceptions taken to the admission or rejection of evidence are sufficient to justify a reversal; and that the judgment, should be affirmed.

Judgment and order affirmed, with costs.

All concur.


text:
    Augusta Jones et al., Resp’ts, v. Ezekial B. Hoyt, App’lt.

      (Supreme Court, General Term, Fourth Department,

      Filed February, 1895.)

    Champerty—What not.
    Section 147 of 1 E. S. 739, has no application to a conveyance of land, a portion of which is in the possession of an adjoining owner merely through the incorrect location of the boundary line.
    Appeal from a judgment entered on a verdict in favor of plaintiff and from an order denying a motion for a new trial, made on the minutes.

      George Barrow, for app'lt; Hunt & Everson, for resp’ts.
   Martin, J.

This action was ejectment. It was brought to recover a strip of land in the possession of the defendant, which was about eight and one-half feet in width, lying immediately north of the premises occupied by the plaintiffs. Both the plaintiffs’ and the defendant’s lots were on the east side of West street, in the city of Syracuse. They were a part of what was known on the trial as “ Block 69,” which was divided into five lots, numbered from 1 to 5, inclusive. The defendant was the owner of lot 3, while the plaintiffs claimed to own the northern portion of lot 4. One of the questions which arose upon the trial was the true location of the line between lots 3 and 4. The plaintiffs claim that they were the owners and entitled to the possession of thirty-five feet of the northern portion of .lot 4, and that it included the land in question. The defendant denied that the plaintiffs owned or were entitled to the possession of any portion of the strip in question. He also claimed that he had acquired title to it by adverse possession, and that the line between the parties had been established by practical location. On the trial the court submitted to the jury three questions: (1) Whether the plaintiffs had the record title to the strip of land in question; if so, (2) whether the defendant had acquired title to it by adverse possession ; and (3) whether there had been a practical location of the line between these lots so as to leave the strip in question as a part of the defendant’s premises. Upon all these questions the jury found in favor of the plaintiffs. A careful, and somewhat critical, examination of the evidence has led us to the conclusion that it was sufficient to justify the court in submitting those questions to the jury and to uphold its verdict. The appellant, however, now contends that the deed to the plaintiffs’ grantor or predecessor in utle was void under the provisions of section 147. art. 4, tit. 2, c. 1, pt. 2, Rev. St., which declares that “ every grant of lands shall be absolutely void, if, at the time of the delivery thereof, such lands shall be in the actual possession of a person claiming under a title adverse to that of the grantor.” It is manifest, we think, that this statute has no application to this case. Here the question, so far as it is claimed that that statute has any bearing, was one merely of the location of the proper line between lots 3 and 4. It does not appear that either the defendant or any of his grantors ever had or claimed to have any title to lot 4 or any portion of it There must be a specific adverse title before there can be any adverse holding under this statute. To constitute a violation of this statute, a possession under some specific title, which in itself is adverse to the title of the plaintiff, must have been shown. Crary v. Goodman, 22 N. Y. 170; Sands v. Hughes, 53 id. 296; Christie v. Gage, 71 id. 192 ; Higinbotham v. Stoddard, 72 id. 94, 100 ; Matter of Department of Public Parks, 73 id. 560, 567; Pope v. Hanmer, 74 id. 240, 245 ; Dawley v. Brown, 79 id. 390; Danziger v. Boyd, 120 id. 628; 30 St. Rep. 889 ; American Bank Note Co. v. New York El. R. Co., 129 N. Y. 253, 263 ; 41 St. Rep. 531. The doctrine of these cases fully sustains the proposition stated. It follows, therefore, that as in this case neither the defendant nor his grantors claimed under any specific title which was in itself adverse to the title of the plaintiffs, the defendant’s contention cannot be sustained. We are of the opinion that the questions in this case were properly submitted to the jury, that there were no exceptions which would justify an interference with the verdict, and that the judgment should be affirmed.

Judgment and order affirmed, with costs.

All concur.


author: Kennedy, S.

text:
    In the Matter of the Estate of Samuel R. Weed, Deceased.

      (Surrogate’s Court, Madison County,

      Filed December, 1894.)

    Tax—Transfer—Assignment of legacy.
    The amount paid by the assignee to the legatee, upon the assignment of the legacy, is not the proper basis for the assessment of the transfer tax. Such right is based upon the existence of assets in the hands of the executor.
    Assessment of the collateral inheritance tax against the estate of Samuel R. Weed, deceased.
    ■ M. H. Kiley, for administrators of S. Henry Davis, deceased; E. N. Wilson, for Carrie W Johnson ; J. A. Johnson, for comptroller.
   Kennedy, S.

Samuel R. Weed died at the town of Cazenoviar N Y, on the 20th day of August, 1891, leaving a will in and by which, among other legacies, he gave to Carrie W. Johnson $2,-000 and appointed his nephew, S. Henry Davis, one of his executors. At the date of his will, July 15, 1887, he was supposed to be worth $20,000 or more. Immediately after his death his legatees learned that said Davis had destroyed the will, and also claimed that the testator left no property. Investigation showed that said Davis had obtained substantially all the money and securities owned by the testator, and invested them in his own name, or in the name of another in his interest, in speculative schemes or property in other states which were of very little value and practically worthless. Within a day or two after Mr. Weed’s death, Mrs. Johnson demanded of said Davis the amount of her legacy, .and, by means of threats of prosecution for his criminal act in destroying the will, procured from him the amount of her legacy, she at the same time assigning it, and all her interest in and to the same to said Davis. This legacy was paid for with the individual . property of said Davis, no part of the consideration having ever belonged to Mr. Weed, nor was any part of it the avails of prop•erty which said Davis ever obtained from the testator. Within a few days after the payment of this legacy said Davis died, and administrators were appointed to settle his estate. Proceedings were thereafter commenced in the surrogate’s court to establish and probate said destroyed will, and, after considerable time spent in litigation, the same was duly admitted to probate. The total assets of the Weed estate, as ascertained by the parties interested and by the appraiser appointed for the purpose of assessing the inheritance tax, amounted to the sutn of $719.50, from which is to be deducted $150 for funeral expenses, leaving only the sum of $569.50 to be distributed among the legatees. The pro rata shares of this sum among the legatees of said will, omitting some expenses of administration, are as follows: Carrie W. Johnson, niece, $112.76; ' Susan Davis, sister, $169.14 ; Edwin R. Davis, nephew, $112.76 ; S. Henry Davis, nephew, $169.14; Presbyterian Church, $5.63.

Assuming that the amounts of the shares of the niece and nephews are as above stated, they are not liable to any tax, for the reason that all of them amount only to the sum of $394.66. A tax, however, of five per cent, was assessed upon Mrs. Johnson’s legacy of $2,000, being the sum paid to her by S. Henry Davis, upon the theory that, having received the amount designated in Mr. Weed’s will as her legacy, it was liable to the tax. Mrs. .Johnson claims that she is not liable to pay any tax upon the .amount paid her, for the reason that her legacy was not paid with funds that were ever a part of the Weed estate, having been sold and assigned to Davis for the sum of $2,000. The administrator of •S. Henry Davis claims that his estate is in no event liable to a tax, because the sum going to his estate as assignee and legatee amounts only to the sum of $281.90, and the total assets of the Weed estate are less than $500, going to nephews and nieces. We think the •claim of each appellant is correct, for the reason that the only property liable to the inheritance tax is that of which a person died seized or possessed, and Mr. Weed was never seized of any portion of the $2,000 paid to Mrs. Johnson. Previous to Mr. Weed’s death, S. Henry Davis had obtained possession of nearly •all of the testator’s property, and squandered it in worthless investments, so that at the time of his death he was' only seized or possessed of the sum of $719.50 and a worthless claim against his nephew for the property taken from him. But it is claimed that because S. Henry Davis was named as executor in the Weed will, and paid Mrs. Johnson $2,000 for her legacy, and took an assignment thereof to himself, either Mrs. Johnson or the estate of said Davis is liable for the tax on the amount paid her. We do not think the fact that Davis was named as executor in the Weed will is of any importance in determining the question at issue, because at the time of the payment to Mrs. Johnson the will had not been probated, and he, therefore, sustained no official relations to the Weed estate. As lie had not assumed to act and did not propose to qualify asan executor, he had the same riglit to take an assignment of Mrs. Johnson’s legacy as any other individual, and pay therefor any sum that Mrs. Johnson would consent to accept, and when he purchased it with his individual funds he took the assignment burdened with the hazard that upon the settlement of the Weed estate there might not be sufficient funds to pay it in full, or any portion of it, and impressed with any inheritance tax that the law might impose upon Mrs. Johnson’s share of the assets. The assignment could only carry with it whatever interest Mrs. Johnson might ultimately have in the Weed estate; nor could said Davis recover from said estate as assignee any larger sum than her pro rala share of the assets. It is not the legacy that is taxable, but the property of which a testator dies seized or possessed applicable to the payment of the legacy. The fact that Davis paid Mrs. Johnson $2,000 for legacy, then worth but $112.76, is a matter which does not concern the state. It can derive no benefit from the private contract of legatees. If the inheritance tax can be based upon the amount paid on such contracts, instead of upon property seized or possessed by the deceased at his death, there would be no sure standard for the assessment of the tax. The state having declared what property is assessable, and how the tax thereon is to be collected, its officers can do no more than enforce the law as they find it. Having provided a method for the assessment and collection of the tax, such officers must accept it in the discharge of their duties. The statute, which clearly defines the duty of the executor in the collection of a tax, is in part as follows :

“ Any administrator, executor, or trustee having in charge or trust any legacy or property for distribution subject to the said tax shall deduct the tax therefrom, or if the legacy or property be not money, he shall collect the tax thereon upon the appraised value thereof from the legatee or person entitled to such property, and he shall not deliver, or be compelled to deliver, any specific legacy or property subject to tax to any person until he shall have collected the tax thereon." Laws 1892, c. 399, § 5.

It will be seen that when the executor has collected the tax upon the appraised value of property, except money, his duty is ended. If he pays the legacy, or any portion of it, without first deducting the tax, he becomes personally liable to the state for the amount He must collect the tax upon personal property from the assets within his hands, and he is not authorized to collect it from any other source. Whether a legacy is of much or little value, or whether it will sell for its face or not, is a matter with which he has nothing to do, and over which he has no control. The tax thereon can neither be increased nor diminished by any act of the legatee. An assignee purchasing a legacy buys it at his peri], and has no remedy against the estate if there should be a loss from his investment. In the present case Mrs. Johnson has received no property from the Weed estate in payment of her legacy, and makes no claim for it. She owes it nothing, and is under no obligation to it, because she has received nothing from it. The estate owes her nothing, and can demand nothing from her. She has parted with her legal right to the legacy bequeathed to her, but in parting with it neither she nor her assignee could deprive the state of its legal right to collect the tax that might become due upon the decedent’s property if it were of sufficient amount to be taxable. This right is based upon the existence of assets in the hands of an executor. He must deduct the tax or collect it from the property in his hands. He can maintain no action against the legatee for the recovery of the tax on personal property. He must get it from the assets in his hands, and, having done this, his duty is ended. In this proceeding the total assets of the Weed estate are $719.50, and yet Mrs. Johnson or her assignee is asked to pay a tax on $2,000, being $1,280.50 more than the testator was seized or possessed of at the time of his death. These figures are an unanswerable argument against the claim of the state for the recovery of any tax whatever. An order may therefore be entered vacating and setting aside the former assessment of the tax in this matter. An order may also be entered allowing each appellant $20 costs and expenses on each appeal, payable from any inheritance taxes in the hands of the county treasurer; but this order is conditioned upon and subject to the approval of the comptroller of the state of New York. Ordered


author: Coffin, S.

text:
    In the Matter of the Judicial Settlement of the Accounts of Archibald A. Skillman, as Administrator of Edward A. Skillman, Deceased.

      (Surrogate's Court, Westchester County,

      Filed December, 1894.)
    Tax—Transfer—Exemptions.
    Where the distributive shares of children in the estate of their deceased father are less than $10,000 each, they are not taxable, though they exceed, in the aggregate, the sum of $10,000.
    Judicial settlement of the accounts of an executor.

      M. J. A. McCaffery, for the administrator; John Hoag, county treasurer, in pro. per.
   Coffin, S.

The late decision of the court of appeals in Matter of Hoffman's Estate, 148 N. Y. 327; 62 St. Rep. 245, confronts me in this case. If it is to be followed, then thedisti’ibutive shares of these sons, although less than $10,000 each, should be decreed to be subject to a tax of one per cent. It is abundantly shown in the opinion in that case that'it was the settled doctrine of that court that the tax is one upon the right of succession, levied upon-successors in respect to the estates to which they succeeded, and not upon the decedent’s estate as such, upon which, in the aggregate, no tax was imposed. The case hinged upon the construetian of section 22, c. 399, Laws 1892, which provides that “ the words ‘estate ' and ‘ property, as used in this act, shall be taken to mean the property or interest therein of the testator, intestate, grantor, bargainor, or vendor, passing or transferred to those not herein specifically exempted from the provisions of this act, and not as the property or interest therein passing or transferred to individual legatees, devisees, heirs, next of kin, donees or vendees,” etc. The learned judge proceeds to say:

“ We must look for some place in the act where the word ‘property ’ is used by itself, and to some extent, ambiguously, anu therefore needs the help of a definition. We find such a possible place in section 2, where the phrase is, ‘ unless it is personal property of the value of ten thousand dollars or more.’ That may mean the aggregate value of all the property transferred to taxable persons, or the separate value of each several transfer. We had said that it meant the latter, but now comes the legislature declaring that the word ‘ property ’ shall mean what property passes to those not exempted, and not what passes to individual transferees. While the prohibition cannot apply to the general theory of the tax, it can apply to this description of a specific limitation. We had said that it related to the property of individual transferees, but that construction section 22 was intended to forbid and to prevent. If it does not mean that, I am unable to perceive any office it can perform or any purpose it can subserve.”

It may seem presumptuous for this court to present a solution, other than the above, of the difficulty encountered by the able jurist who delivered the opinion, but it may, with hesitation, be attempted, and is this : It had been held by this court in Matter of Peck, 30 St. Rep. 209, and in Matter of Underhill's Estate, 20 N. Y. Supp. 134, that the fair market value of each several transfer to legatees, to be fixed by the appraiser, was not the amount given, but the amount, less the interest to the time w hen it became payable to , the legatee or transferee, and hence that a legacy of $500 to a collateral was not subject to the tax.' Interest was, in like manner, deducted from taxable legacies. This practice was thereafter followed in this and some other like courts, except that of New York (In re Bird's Estate [Surr.] 11 N. Y. Supp. 895,) until the enactment of the section in question, which rendered it necessary to tax them as of the value they possessed in the hands of the testator, and not of their value when reaching the hands of the legatees,' etc. These cases must have been known to the person or committee who prepared the act of 1892, and section 22 was inserted, presumably, in order to settle the question effectually ; and that, it strikes me, was the only object of that section in this regard. If we are to follow the decision in the case of Hoffman's Estate, where othe interest of the mother was less than $10,000, and was held to be taxable at one per cent, because all of the interests transferred exceeded that sum, then if ¿legacy of $5,000 be given to a widow, $2,500 to a son, $2,500 to a daughter, and $2,000 to a niece, all are alike subject to a tax, the sums gi yen to the widow and children at one per cent., and to the niece at five per cent.

Now, by section 22, the property or interest therein referred to relates only to sucli as is not specifically exempted from the provisions of the act; and section 2 expressly provides that transfers by will or intestate law to the widow or any child, etc., shall not be subject to any tax where the personal property so transferred is less than $10,000 in value, and, if more than that, it shall be subject to a tax of one per cent. The words, “of any father, mother, husband, wife, child,” etc., are to be taken distributively, so that $50,000 in legacies may be bequeathed to them in sums less than $10,000 each, and thus they shall be exempt from” taxation. If this be so, then it seems to me that the doctrine laid down in Be-Hoffman's Estate is subversive of the provisions of the act itself, pro tanto. It, doubtless, will be considered in a high degree presumptuous also for a court, so very inferior as this, to even question, much more to have the assurance to disregard, the dictum of the most exalted tribunal in the state ; but it is believed that, if the reason above assigned for the enactment of the section in question had been brought to the attention of that court, the result might have been different. It says, in the opinion: “We had said it [the former act] related to the property of individual transferees, but that construction section 22 was intended to prevent. If it does not mean that, I am unable to perceive any office it can perform, or any useful purpose it can subserve.” Without the necessity there of groping for a hidden and doubtful meaning and purpose, it is here attempted to be shown that the meaning is clear, and the purpose to be subserved was the imposition of the tax upon the value of the legacy, etc., in the hands of the testator or intestate, and not its value to the legatee or distributee, shorn of interest until payable. The situation is very embarrassing; nevertheless I must declare my conviction that the distributive shares of these sons are not subject to the tax. Ordered accordingly.