text:
    John H. Ward, as Assignee, etc., of Howard & Co., App’lt and Resp’t, v. Henry B. Higgins, App’lt and Resp’t.

      (Supreme Court, General Term, Fifth Department,

      Filed June 25, 1887.)

    1. Trust property—misappropriation of—May be followed—Limit of THE RULE.
    A partnership made to this plaintiff a general assignment for the benefit of creditors of the firm, March 23, 1885. About July 1, 1884, this defendant placed in the hands of one of the members of the partnership a sum of money to invest for him in a manner specified. The investment was not made, and at the request of the defendant a portion of the money was repaid. The partners in whose hands the money had been placed having subsequently been requested to make a further payment on March 7, 1885, sent his check for the amount requested, which, on presentation, was dishonored for want of funds to his credit, and returned to the bank, where this defendant had deposited it for collection. Shortly after, and on or about Mar'bh 13th, the latter bank was advised by the bank on which the check was drawn, that it had funds wherewith to pay the check, the return of which was requested for that purpose. Upon its return the check was paid. The funds out of which this check was paid were supplied by a check payable to the order of the firm, obtained by the member above mentioned for firm property, sold to the drawer of the check, and left by him at the bank, with directions to pay his check to the defendant with the proceeds. The firm was at that time insolvent, and within ten days thereafter made the assignment. A portion of the money left for investment with a member of the firm as above stated, was by him used for the purposes of the firm, and the rest not repaid was appropriated to his own use. He is insolvent, and has made an assignment to this plaintiff This action was brought to recover the sum used for the payment of the check to the defendant, and the defendant set up a counter-claim for the money appropriated to the use of the firm. Held, that the partner had no right to use the funds of his firm to pay his individual debts, and that when such illegal appropriation is made by a partner, the firm, or its representatives or creditors, may follow and reclaim the funds or property until they reach the hands of a holder in good faith.
    2. Same—Rule how limited when applied to money.

      Held, that the purchaser of property is required to ascertain the title of his vendor, apparent or real," to protect his purchase, while the recipient, of money is not put upon inquiry, and his want of knowledge that the use made of it by the act of payment to him is illegal, gives protection to-his title.
    3. Same—Bona fide receiver op money in course op business not within THE RULE.

      Held, That the defendant having no notice that the money paid to him. upon the check of the parties was derived from the sale of firm property, and. receiving such money in good faith and in the regular course of business in payment of an amount due him, was not responsible for the fact, that the application of the funds to that purpose was a fraud upon the firm creditors.
    4. Same—Misappropriation by members op a pirm—When will not' MAKE THE OWNER A CREDITOR OP THE PIRM.

      Held, that the fact that the partner holding the defendant’s money in trust for certain purposes wrongfully appropriates some of it to the payment of debts of his firm and took credit upon its books for the sums so paid, his co-partner being ignorant of the source from which the funds were derived, did not make the defendant a creditor of the firm.
    5. Same—When impressed with the trust.

      Held, that if the money received from the defendant had been deposited in the bank, it or the account representing credit to the partner to whom it was entrusted would have been impressed with a trust, and that the same result might have followed had it been placed to the credit of the firm while it so remained, and thus far it might be followed for the purpose of equitable relief, but that in the absence of such circumstance or of its going into any specific property of the firm which passed to the assignee, no balance to the credit of the firm could be treated as representing any of the defendant’s money for the purposes of a trust in his behalf.
    Appeal from judgment entered upon decision of the court-at G-enessee circuit, a trial by jury having been waived. Charles H. Howard and Henry I. Glowacki, partners doing; business at Batavia, ¡N". Y, in the firm name of Howard. & Co . made to the plaintiff a general assignment for the benefit of the creditors of the firm March 23, 1885. About the first of January, 1884, the defendant placed in the hands of Howard $2,852, to invest for him in a manner specified. The investment was not made. At the request of the defendant Howard repaid to the defendant $200, and afterwards being requested by the defendant to let him have $500 more, Howard, on March 7, 1885, sent his check for that amount on the Farmers’ Bank of Batavia to the defendant, which on presentation was dishonored for want of funds to the credit of Howard to pay it and returned to the bank where the defendant had deposited it for collection. Shortly after and on or about March thirteenth, the last named bank was advised by the Farmers’ Bank that funds were there to pay the check, and requested its return for that purpose, which was done, and the check paid.
    It appears that this supply of means to pay the check was provided by a check payable to the order of Howard & Co., obtained by Howard for firm property sold to the drawer of the check, and by him left at the bank with direction to pay his check to the defendant with the proceeds. The firm was then insolvent, and within ten days thereafter made the assignment. This action is brought to recover of the defendant this sum of $500, used for the payment of the check which had been given to him by Howard. It further apgears that a portion of the money left by the defendant with toward was by him used for the purposes of the firm, and the rest of it not repaid to the defendant was appropriated by him to his own use, and that he is insolvent and has also made an assignment for the benefit of his creditors, with but very small amount of assets to pay them. And that the plaintiff is also his assignee. The defendant, by his answer, alleges the violation by Howard of the trust in respect to the funds placed in his hands, by appropriating them to the use of the firm, and to his own use, and demands judgment that the plaintiff, as such assignee, be directed to pay to the defendant the amount of the moneys so appropriated. The trial court determined that the defendant was not entitled to such relief, and that the plaintiff was not entitled to recover against the defendant, and directed judgment of dismissal of the complaint upon the merits. Both parties appeal from the portions of the judgment against them respectively.

      Myron H. Peck, for pl’ff; J. B. Adams, for def’t.
   Bradley, J.

The partner, Howard, had no right to use the funds of his firm to pay his individual debts. And when such illegal appropriation is made by one partner, the firm or its representative or creditors, may follow and reclaim the funds or property until they reach the hands of a holder in good faith. But for the purposes of such remedy and re-the rule in its application differs somewhat as to money and property other than money, and necessarily so for obvious reasons, having relation to commercial and other business transactions.' while the former has an identity and (excluding bills and notes), is without negotiability, money, as such, has no ear-mark, and has the negotiable quality essential to trade. In the one case the purchaser is required to ascertain the title of his vendor, apparent or real, to protect his purchase, while in the other the recipient of money in good faith is not put upon inquiry. And his want of knowledge that the use made of it by the act of the payment to him is illegal, gives protection to his title. Dob v. Halsey, 16 John., 34; People v. M. and M. Bank, 78 N. Y., 269; Stephens v. Board of Education, 79 id., 183.

The defendant had no notice that the money paid him by the Farmers’ Bank upon Howard’s check, was derived from the sale of the firm property, or that the proceeds of such sale supplied the credit of Howard at the bank for the amount requisite to pay his check. He received the money in good faith and in the regular course of business, in payment of such amount due him from Howard. The plaintiff, who was the cashier of the Farmer’s Bank, was in no sense the agent of the defendant, so as to charge the latter with his.knowledge. It is also claimed that this was a fraud upon the creditors of the firm, and therefore relief should be given in their behalf. This was a diversion of the firm assets from its creditors, and it was then insolvent.

In that sense it was a fraud upon them which the defendant is no more responsible for or chargeable with than would be the merchant to whom one partner should pay for goods the money taken from the funds of his firm. The cases to which reference is made by the plaintiffs counsel do not support his contention as applied to the facts here. Geery v. Cockroft (1 J. & S., 146), had relation to property not money, and Johnson v. Hersey (70 Me., 74, 35 Am. Rep., 303), was a case of attempted diversion of partnership funds with knowledge of the bank to charge, which as trustee the proceeding was taken. The complaint was properly dismissed, and we fail to see any support for the defendants alleged counter-claim. Howard holding the defendant’s money in trust for certain purposes wrongfully appropriated some of it to the payment of debts of his firm, and took credit upon its books for the sums so paid. His co-partner had not knowledge of the source from which the funds were derived. This diversion did not make the defendant a creditor of the firm. Jaques v. Marquand, 6 Cow., 497; Dounce v. Parsons, 45 N. Y., 180. When the money received from the defendant was deposited in the bank, it or the account representing credit to Howard for it was impressed with the trust, and the result we think may have been the same if it had been placed to the credit of his firm while it so remained to its credit there, and thus far it might be followed for the the purposes of equitable relief. Pennell v Deffell, 4 De G M. & G., 373. Knatchbull v. Hallett, L. R. 13 chap , div. 696., 36 Eng Rep., (Cook) 779, Dows v Kidder 84 N. Y., 121. But none of this money went into the bank to the credit of the firm, so that no balance to its credit can be treated as representing any of the defendant’s money for the purpose of trust in his behalf, nor has it gone into any specific property of the firm which passed by the assignment to the plaintiff as assignee. There seems therefore in the view taken no opportunity to charge the firm assets in the hands of the plaintiff with any trust in behalf of the defendant. Ferris v. Van Vechten, 73 N. Y., 113. The case cited of People v. Bank of Rochester (96 N, Y., 32), has no application. There the money was paid into the bank for a specific purpose to which it was not applied, and the assets or funds of the bank in the hands of a receiver, were charged with the trust arising out of the fraud on the part of the bank and from which it could not be permitted to profit. No other question seems to require consideration.

The judgment should be affirmed.

Smith, ¡P. J., and Haight, J., concur.


source: Caselaw Access Project

author: Smith, P. J.

license: Public Domain

text:
    Mary Cunningham, App’lt, v. Edward Turney, Resp’t.

      (Supreme Court, General Term, Fifth Department,

      Filed June, 1887)

    1. Venue—Change of place of trial—Motion for convenience of witnesses—When improperly granted.
    When upon a motion to change the place of trial for the convenience of witnesses the party moving for such change presented an affidavit that twenty-one persons therein named, whom he stated to be material witnesses for his defense, were residents of the county to which he moved that the trial should he transferred, and this was opposed on üie part of the plaintiff by the affidavits of nearly all those persons, staling that they knew nothing of and could not swear to any of the matters which in the defendant’s affidavit were stated as matters which he expected to prove by them. Held, that the order changing the place of trial was improperly granted.
    2. Objections—Not raised at special term—Cannot be heard for the first time on appeal.

      Held, that technical objections to the plaintiff’s affidavit not taken at the special term and of such a nature that they might have been obviated had attention been called to them, could not be heard for the first time upon appeal.
    Appeal from an order of Monroe special term changing the place of trial herein from Livingston county to Monroe, for the convenience of witnesses.
    Gk Fort Slocum, for app’lt; Thomas Ratnes, for resp’t.
   Smith, P. J.

Action under the statute known as the Civil Damage Act, to recover damages for the death of plaintiff’s husband alleged to have been caused by the wrongful acts of the defendant. The plaintiff resides in the town of Caledonia, Livingston county, and the defendant, lives near her in the town of Mumford, Monroe county.

For the purposes of the motion, the defendant made an affidavit in which he named twenty-one persons residing in Mumford, who, as he was advised and believed, were necessary and material witnesses for nis defense, and by whom, respectively, he expected to prove certain facts detailed in his affidavit.

In opposition to the motion, the plaintiff read the affidavits or depositions of nearly all of those persons, in which each of them alleged, in substance, that he knew nothing of and could not swear to, the matters which the defendant stated in his affidavit that he expected to prove by them, The plaintiff’s affidavit was also read stating the names of several persons residing in Caledonia, who, as she was advised, were material witnesses for her, and detailing the facts which she expected to prove by them.

There is no reason disclosed by the papers, for suspecting the good faith and honesty of the persons whose affidavits were produced by the plaintiff, in making such affidavits, or for supposing that they did not fully understand the contents of the affidavits when they made them. If their affidavits are true, they are not material or necessary witnesses for the defendant, and without characterizing the defendant’s affidavit as a fraud upon the court, it is apparent that his expectation in regard to what he can prove by the witnesses named is unfounded. It would be unwarranted and most unjust to the persons referred to, to assume without any proof whatever, that they have wilfully sworn falsely in their affidavits, to relieve themselves from the necessity of attending the trial as witnesses. It seems to us, therefore, that in determining what disposition of the motion will promote the convenience of witnesses, the persons referred to should not be taken into the account, and upon that basis, it is apparent that the place of trial should be retained in Livingston.

Some technical objections are made to the plaintiff’s affidavit, but as they do not appear to have been taken at the special term, and are of such a nature that they might have been obviated, if attention had been called to them, they can not be heard for the first time on appeal. Gorman v. South Boston Iron Co., 32 Hun, 71.

The order appealed from should be reversed and the motion to change place of trial denied, with ten dollars costs and disbursements of the appeal to abide event.

Haight and Bradley, JJ., concur.


author: Bradley, J.

text:
    Philip Green, Resp’t, v. Nelson H. Swink, App’lt.

      (Supreme Court, General Term, Fifth Department,

      Filed June 25, 1887)
    1. Promissory note—Holder before maturity presumed to be the OWNER.
    A party who holds a note before maturity is presumed to be the bona fide owner and holder of it.

      3 Same—Action on—May be shown as defense that plaintiff is not THE OWNER-
    In fan action brought on a note by the holder thereof it is a defense that the plaintiff is net the owner
    8 Same—Colorable title will support action.
    To"deieat such a defense it is sufficient that the title and the transfer to the plaintiff are colorable and such as bar another action against the defendant upon the subject of the action because in such case inquiry will not be made into the equities arising out of the apparent relation produced by the transfer when it is made by a person who has the title or right to make the transfer.
    4 Same—Who is not bona fide holder.
    A person merely taking the transfer of a note upon or on account of a precedent debt is not a bona fide holder.
    5 Same—Who is—Extension of time of payment of a debt is good CONSIDERATION FOR TRANSFER.
    The taking of a note with the agreement to extend the time of payment of an antecedent debt until the transferred note shall become due with a view to the payment of the debt out of the proceeds of the note constitutes a new consideration for the transfer and renders the person so taking it a bona fide holder.
    6 Jury—What is question for consideration of—When error to TAKE QUESTION FROM.
    Where the evidence of such a transfer is given by a party interested in the event of the action, the question of his credibility is for the jury and it is erroneous to rule as a matter of 1 aw that such agreement exists.
    Appeal from judgment entered on verdict of Steuben circuit.

      Bingham & Baine, for app’lt; J. A. Vanderlip, for resp’t.
   Bradley, J.

The action is upon a promissory note of date August 11, 1883, made by the defendant, by which he promised to pay Henry Swink, or bearer, $300 fifteen months after its date, with interest. The note was valid in its inception, and no defense is alleged or claimed going to defeat the liability of the defendant to pay it. But the defense is wholly founded upon the allegation that the plaintiff was .and is not the owner of the note. And there is evidence tending to prove that when the note was made it was delivered to one Jennie Green, the wife of Frederick Green, pur. suant to agreement between them that she should receive that amount in consideration of the release by her of her inchoate right of dower in certain land which was conveyed by him to the defendant by deed in which she joined. The plaintiff having obtained the note before maturity and thereafter having it in his possession, the presumption was that he was the bona fide owner and holder of it,

With a view to repel such presumption, the evidence tended to prove that the wife Jennie handed the note to her husband to put into a safe and keep for her, and that he, without her knowledge or consent, made a transfei of it to the plaintiff on account of a debt he owed the latter. And that the plaintiff then advanced no money to the husband, discharged no claim, incurred no liability and surrendered nothing, unless it was the then existing right to proceed to collect the debt' then due from Frederick to the plaintiff, which is a question that will be hereafter more particularly referred to. If the plaintiff was not the owner of the note, that fact was a defense to the action available to the defendant. But to defeat such a defense it is sufficient that the title and transfer are merely colorable, and such as to bar another action against the defendant upon the subject of the action, because in such case inquiry will not be made into the equities arising out of the apparent relation produced by the transfer when it is made by the person who has the title or right to make the transfer. Code Civ Pro . § 449 Hays v Hathorn, 74 N. Y., 486, reversing sub nom Hays v Southgate, 10 Hun, 511; Lockwood v. Underwood, 16 id , 592 Iselin v. Rowlands, 30 id , 488, M. L. and T. Co. v. Clair, 36 id., 362; Pritchard v. Hint, 39 id., 378 Freeman v. Falconer, 13 J. & S., 383. The evidence permitted the conclusion that Jennie Green was the owner of the note, and that the transfer of it was made by her husband to the plaintiff without right or authority. And if that conclusion, was reached upon the evidence, the remaining inquiry would arise whether the plaintiff, by such transfer to him, became the bona fide holder of the note, because if he did not she could not assert a title to it as against the true owner, and the defense would be effectual to defeat a recovery by the plaintiff upon the ground that he was not in fact the owner. And in this state the rule is well established that a person merely taking the transfer of a note upon or on account of a precedent debt, is not a bona fideholder. Turner v. Treadway, 53 N Y., 650: Moore v Ryder 65 id., 438, 441.

It appears that the plaintiff held a note against the husband of Jennie Green, which was due before this transfer, amounting to $110, upon which some endorsements has been, made. And the plaintiff testified that at the time of the transfer to him of the note the husband proposed to let him have it on what he owed him and to collect it when due, take out of the proceeds the amount owing to him, and keep the balance until called for by the husband, and that the plaintiff replied, that he would take the note for his pay, “and keep-the rest until he called for it. I was going to wait on him until it was due.” This is his statement of the arrangement under which he took the note. And it may be construed as an agreement to take the note and to extend the time of payment of the debt due him. until the transferred note became due with a view to the payment of the debt owing him out of the proceeds. Such an agreement would constitute a consideration for the transfer and render the plaintiff a bona fide holder of the note with the right to proceed to collect it, and if the wife was in. fact the owner at and before the time ofs such transfer she might treat the plaintiff as trustee in her behalf so far as related to the proceeds of the note beyond the amount so due him from the husband. Burns v. Rowland, 40 Barb., 369; Traders’ Bank v. Bradner, 43 id., 379. But the question arises whether as matter of law it could properly be held that such was the agreement at the time of the transfer of the note, or whether upon the evidence a question of fact was presented for the jury. In view of the relation of the plaintiff, as such, to the action and his interest in the event, the question of the credibility of his evidence was for the jury. Dean v. Van Nostrand, 25 N. Y. W. Dig., 97. Another witness, the son of the plaintiff, who was present at the time of the transaction of the transfer of the note testified that the husband told the plaintiff to take the note, collect it, and take out what he owed him, and keep the rest until he called for it, that the plaintiff looked at the note, thought it was good, and said he would. He does not include in his statement (as appears by the record) an express agreement on the part of the plaintiff to suspend proceedings to collect the debt against the husband until the maturity of the note which he then received. This question was clearly one of fact for the jury upon the evidence, which was sufficient to support a verdict for the plaintiff. The trial court treated the case as presenting no question for the jury, and directed a verdict for the plaintiff notwithstanding the request of the defendant to submit certain questions to them. We think this was error. And for that reason the judgment should be reversed and a new trial granted, costs to abide the event.

Smith, P. J., and Haight, J., concur.


text:
    George H. Terry, v. William Haitz et al.

      (Supreme Court, General Term, Fifth Department,

      Filed June, 1887.)

    Answer—Goods sold and delivered—Action for balance alleged to be due—What is good defense.
    This action was brought to recover a balance claimed to be due for goods sold and delivered by the plaintiff tó these defendants. The answer admitted the sale and delivery of the goods and alleged that it was agreed at the time of the sale, and as an inducement that the defendants should buy the goods, that the balance, claimed in the complaint to be due, should remain in the hands of the defendants, not to be paid by them until the plaintiff should? satisfy a certain judgment which might affect the title to the goods, and that such judgment had not been satisfied by plaintiff. Held, that the answer set forth a good defense.
    Motion by defendants for a new trial on exceptions taken at the Genessee circuit and ordered to be heard at the general term in the first instance.

      Myron TI. Peck, Jr., for def’ts; George Bowen, for pl’ff.
   Smith, P. J.

In this case the trial judge held that the facts alleged in the answer constituted no defense, and overruled the defendants’ offer to prove them, and ordered the jury to find a verdict in favor of plaintiff for the amount claimed. The action is for the sum of $376.41, with interest from 14th April, 1886, alleged to be the balance due for a stock of merchandise sold and delivered by thé plaintiff to the defendants, at the date above mentioned. The answer alleges, in substance, that a large portion of the goods sold by the plaintiff to the defendants was originally owned by Francis P. Terry, the plaintiff’s father, who sold his business, including said goods, to his wife, Sarah Terry, the plaintiff’s mother, and she sold them to the plaintiff; and that, at the time of such sale to the plaintiff, the said Francis and Sarah were owing debts to several persons growing out of said business and the purchase of said goods, and suits were pending and judgments had been obtained on account thereof, and it was claimed by many of their creditors that said sale of the goods to the plaintiff was fraudulent and void as against the claims of said creditors, and suits were commenced and threatened to be commenced to set aside said transfer to the plaintiff.

That for the purpose of obviating any question as to the title to the goods which defendants might acquire by such purchase, and as an inducement to defendants to purchase said goods and property mentioned in the complaint, and as a part of the consideration of said agreement of purchase by defendants, it was agreed between the parties thereto, among other things, that the defendants should retain in their possession a sufficient amount of money to cover the amount of a judgment obtained on 7th December, 1885, in this court, in favor of the New House Sewing Machine Company against Sarah and Francis Terry for $327.87 and $20.80 costs and the interest thereon, until said judgment should be paid by the plaintiff, which sum it was agreed between the parties to this action and to said agreement amounted to the sum of $376.41 as near as the same could be estimated, and that said sum has since been retained by them in pursuance of said agreement for that purpose, and for no other, and which sum is the only moneys unpaid on said purchase and is the same moneys referred, to in the complaint; and that when this suit was commenced, the judgment above described had not been paid by the plaintiff, but now remains of record, wholly unpaid and unsatisfied.

We cannot concur in the view taken of this answer at the circuit. It appears to us to set up a good defense. According to the terms of the agreement, as alleged in the answer, the sum claimed in the complaint was not due when the action was commenced. The defendants were under no obligation to pay that sum, while the judgment mentioned was outstanding, and that, as the answer avers, is still unpaid. The agreement of the plaintiff that the defendants might retain that part of the purchase money until the happening of the event mentioned, was founded on a good consideration, it having been made as an inducement to the purchase and in consideration of the same. It was not against public policy or void.

It is suggested by the plaintiff’s counsel that if the agreement is upheld the defendants would escape liability, even if the judgment should be paid, unless it be paid by the plaintiff. True, the language of the agreement, as set out in the answer, is that the defendants may retain the money till the judgment shall be paid by the plaintiff. For the present purpose, we are to assume that the agreement is correctly set forth, and that the plaintiff entered into it understandingly, and that he had reasons of his own for making it in that shape. It was entirely competent for him to do so He may have had some arrangement with the judgment debtors, his parents and vendors, whereby he assumed the payment of the judgment; or, if not, it may well be held that payment by the judgment debtors would enure to his benefit and satisfy the condition of his agreement with the defendants.

We think there should be a new trial, costs to abide event.

Haight and Bradley, JJ., concur.


author: Haight, J.

text:
    Lotta Weiler, Resp’t, v. William Mooney, impleaded, etc., App’lt.

      (Supreme Court, General Term, Fifth Department,

      Filed June 25, 1887.)

    Practice—Bill op particulars—When discretionary
    In a judgment creditor’s action to set aside a release as fraudulent, the answer denied the allegations of the complaint and alleged that at the date of the release the releasor was indebted to the defendant in a large sum of money, being for money advanced, etc., and that in consideration thereof he made and delivered the release to the defendant The court ordered a bill of particulars as to said clause in the answer Held, that if the clause was to be retained, the bill of particulars ordered was within the discretion of the special term.
    Appeal from an order of the Monroe special term, requiring the defendant to deliver to the plaintiff a bill of particulars.

      Harris & Harris, for app’lt; James Murphy, for resp’t.
   Haight, J.

This action was brought by the plaintiff as a judgment creditor to set aside the release set forth in the complaint, upon the ground that the same was made by collusion, with intent to defraud the plaintiff. The answer denied the allegations of the complaint in regard to fraud and want of consideration, and alleged that at the date of the release William Mooney, the uncle, was indebted to the defendant William Mooney, the nephew, m a large sum of money, to_wit: In the sum of upwards of fifteen hundred dollars, being for money advanced by the defendant William Mooney, the nephew, to William Mooney, the uncle, and for which the uncle had for or on account of the rent of the premises in the complaint referred to, and that being so indebted he, the uncle, in consideration thereof, made and delivered to the defendant, the nephew, the release in the complaint mentioned. It was upon this clause of the answer that, the court ordered a bill of particulars.

The appellant now contends that the allegation was unnecessary and that all the evidence he desired to give could be given under his general denial, and he now offers to amend by striking this clause out of the answer.

The inserting of the allegation in the answer doubtless led the plaintiff to suppose that it was there for some purpose, and if it is to be retained, the bill of particulars ordered is properly -within the discretion of the special term.

_ The order should be affirmed, with ten dollars costs and disbursements.

Smith, P. J., and Bradley, J., concur.


text:
    Joseph E. Leslie, Resp’t, v. Emma Walrath et al., App’lts.

      (Supreme Court, General Term, Fifth Department,

      Filed June, 1887.)

    1. Offer of judgment—Code Civ. Pro., § 738—Offers not in comFLIANCE WITH THE STATUTE MAT BE TREATED AS A NULLITY.
    Code Civ. Pro., g 738 provides that a defendant may, before trial, serve upon the plaintiff’s attorney, a written offer, to allow judgment to be taken against him, for a sum, or property, or to the effect therein specified with costs. Held, that an offer which does not comply with the statute is a nullity, and may be treated as such by the party upon whom it is served.
    3. Same—Offer limiting costs to those accrued at date thereof is UNAUTHORIZED.

      Held, that an offer which limits costs to those which have accrued at the date thereof is not in compliance with the statute.
    Appeal from an order of the Chautauqua county clerk defendant’s motion for re-taxation of costs.

      Lockwood & Shaw, for app’lts; Holt & Holt, for resp’t.
   Smith, P. J.

Action on a promissory note. The plaintiff claimed to recover the sum of $275, with interest from 4th September, 1884, besides costs. The defendants set up a counterclaim, and, before trial, served an offer of judgment “for the sum of $150, with costs to date.” The offer was dated, it was not accepted, a trial was had, and the plaintiff obtained a verdict for the sum of $112.50.

The plaintiffs’ counsel contends that the offer was ineffectual by reason of the limitation imposed by it in respect to costs, its effect being, if accepted, to subject the plaintiff to the costs of entering judgment upon the offer, and of execution and entering satisfaction. We think he is right in that contention. The statute authorizing the offer provides that it shall allow judgment “for a sum, or property, or to the effect, therein specified, with costs.” Code Civ. Pro., § 738 The party making the offer frames it to suit himself. If it does not comply with the statute, in all substantial respects, it is a nullity, and it may be treated as such by the party served with it. McFarren v. St. John, 14 Hun, 387; Riggs v. Waydell, 78 N. Y., 586. If the party served with a valid offer accepts it, he is entitled to enter judgment upon it, and to tax the costs of the entry upon the party making the offer. But the offer in this case was so framed, that the plaintiff, if he had accepted it could have taxed no costs accruing subsequently to the date of the offer. He would have been limited by the terms of the offer.

The appellant’s counsel suggest that the words, “to date,” mean the date of the judgment to be entered on the offer. We do not think they are fairly susceptible of that construction. It makes them superfluous and meaningless. But the case is not one for judicial interpretation. The offer should be specific and certain in all material respects.

It is also suggested by the appellant’s counsel that the' word “costs,” used in the offer does not include disbursements. We think otherwise. The word “costs,” is to be regarded as used in the same sense in the offer as in the section of the Code which authorizes an offer, and there it evidently includes disbursements.

The order should be affirmed, with ten dollars costs and disbursements.

Haight and Bradley, JJ., concur.


text:
    John R. Baker, Resp’t, v. The New York State Mutual Benefit Association, App’lt.

      (Supreme Court, General Term, Fifth Department,

      Filed June 25, 1887.)

    1. Insurance—Life—Payment op premiums a condition precedent.
    The defendant, a mutual life insurance association, was incorporated pursuant to Laws of 1848. The deceased, by his written application for membership, agreed that if he “neglected to pay any of the assessments or annual dues on or before the days on which they shall fall due, the contract shall become null and void, and moneys which have been paid shall be forfeited to the society,” and agreed to be subject to the by-laws and regulations of the association, and to pay all dues and assessments until he should give notice of his wish to withdraw from the association. It was provided that the member should pay his dues and assessments within thirty-five days from the date of notice, and in case these stipulations should not be complied with, the certificate of insurance should cease and determine without notice, and the payménts made thereon be forfeited to the defendant, and it should not he liable to pay the sum mentioned in the certifi • cate. The deceased failed to pay certain dues and assessments of which he had notice within the time prescribed. Held, that the provision of a policy declaring its forfeiture or invalidity on or by reason of default in the stipu lated periodical payments is a condition precedent which must be observed to support the contract of insurance.
    3. Same—Prompt payment can be waived—Consideration for waiver NOT NECESSARY.

      Held, that the prompt payment may be waived, and the right to treat the contract forfeited thus suspended. That no new consideration is needed in such case to constitute an effectual waiver.
    3, Same—Estoppel not necessary to support waiver.

      Held, that technical estoppel is unnecessary to the support of such waiver.
    4 Same—What sufficient evidence of waiver.
    The deceased failed to pay certain dues and assessments for January, the time for the payment of which expired February 6th. He afterward received notices of dues for March and May, the time for the payment of which expired April 5 and June 5 respectively. By letter dated May 30th, the secretary of defendant advised deceased that his assessment of Januuary had not been paid, and added “you make a great mistake in not keeping up the insurance. Let me hear from you by enclosed postal, if you want to drop it.” On July 8th deceased received a notice of dues and assessment (the same contained in the notice expiring February 6), the time for the payment of which according thereto did not expire until August 5th, and it contained a statement that having no deaths we omitted our usual assessment for March and May. The deceased died on July 9th. Held, There was sufficient evidence to sustain a verdict that the defendant waived the deceased’s failure to make the'payments promptly, and that they continued him as a member.
    5. Same—Termination of insurance contract—When optional with company.
    The by-laws of the association provided that the “ member shall be held liable to the association for all dues and assessments until such time as he shall have given notice of his desire to withdraw,” and also that in case of neglect to pay any dues and assessments as required, “ such membership shall cease and determine at once without notice, and all claims be forfeited to the association.” Held, That it was optional with the defendant to terminate, or treat as terminated the relation as member of one who was in default, or to continue him in the relation of membership, and charge him with liability to pay dues and assessments until he gave notice of his purpose or desire to withdraw from the association.
    6. Same—Proof of death—When waived.
    The by-laws of said association made it the duty of the secretary to furnish blanks for proofs of death. On being notified of the death of deceased, and requested to send said blanks to make formal proof of the death the secretary wrote he did not think the defendant would pay the claim, but would lay the matter before the trustees. Held, That these facts were sufficient to constitute waiver of such proofs.
    Appeal from judgment entered on verdict of Steuben circuit, and from an order denying motion for a new trial.
    The action, is brought to recover upon a certificate of membership, issued by the defendant to Samuel E. Baker, by which upon the terms and conditions therein mentioned and referred to, it undertook to pay to the plaintiff a sum not exceeding "$2,000 to be produced by assessment, etc.,

      after the death of the member whose life was insured. The member died July 9, 1884.
    The defendant declined to pay. And the trial of this action resulted in a verdict of $1,500 for the plaintiff. The defendant appeals.

      John J. Lamoree, for app’lt; Geo. U. Loveridge, for resp’t.
   Bradley, J.

The defendant was incorporated in 1881 pursuant to Laws of 1848, chapter 319, and the acts amendatory, and had power, which it exercised, to make by-laws, by which its membership was divided into two classes, known as class A, and “Assessment and Surplus Class.” In the case of death of a member in class A, it is provided the beneficiary will receive the ratio and net amount of one assessment not exceeding the amount represented in the certificate, and that the assessment of members be according to schedule, rates adopted by the board of trustees. It appears such assesment as of the time of the death of the member, Samuel E. Baker (whose membership was in class A), would produce net fifteen hundred dollars. But no assessment was in fact made, for the alleged reason that the member had by default in payment of his dues and assessments forfeited his right of membership, and his relation as such had ceased before his death. By his written application for membership by him subscribed, it was agreed that if he “neglected to pay any of the assessments or annual dues on or before the days on which they shall fall due, the contract shall become null and void, and all moneys which have been paid shall be forfeited to the society,” and agreed to be subject to the by-laws and regulations of the association, and to pay all dues and assessments until he should give notice of his wish to withdraw from the association. And by the certificate of date February 2, 1883, it was provided and agreed that the member should pay his dues and assessments within thirty days (which was afterwards made thirty-five days) from the date of notice. And in case the stipulation in the application and certificate should not be complied with, the certificate should cease and determine without notice and the payments made thereon forfeited to the defendant, and it not hable to pay the sum mentioned in certificate. The annual dues of this member were by his election payable in bi-monthly instalments. He paid his dues and assessments up to the end of the year 1883, the last of which was of November. It does not appear that he made any payments after that time, and the evidence tends to prove that he did not.

About the first of January, 1884, an assessment of $1.60 on account of death of a member, added to his instalment of dues, made $2.10, of which the member was advised by notice, and the prescribed time for payment expired on February 6, 1884.

It is alleged that the default in the payment of this sum terminated his relation as member of the association; that he also defaulted on the dues of March 1, and May 1, 1884, of which he had notice, and his time for payment expired April 5, and June 5,1884, with the like effect upon his relation to the association. The main question litigated at the trial was whether the default had been waived by the defendant. The defendant by notice in the usual form of date March 1, 1884, notified the insured member of the amount of his dues and that the amount might be paid within thirty-five days. And a like notice of date May 1, 1884, was sent him by the defendant for his dues chargeable to him at that date, and a notice of assessment on account of the death o£ two members, $1.60, and of his dues, fifty cents, making $2.10, in the usual form, of date July 1. 1884, came from the defendant’s office, addressed to the member Baker, and was taken from the post office at Hornellsville, his place of residence, on July 8, 1884, the day before his death, by which he was notified to pay the amount within thirty-five days, which would expire as therein expressed August 5, and it contains the further statement that “Having no deaths we omitted our usual assessment for March and May. This includes all deaths reported to date.”

The secretary of the defendant testified that in an interview had with the member Baker about February 20,1884, in which reference was made to the January assessment, the latter said he rather thought he should let the insurance drop, and was then informed by the secretary that he was then in a state of lapse, and nothing would be paid the beneficiary if he should then die, but that he could be restored in the manner then mentioned. By letter of date May 20, 1884, the secretary advised the member that his assessment of January had not been paid, and added: “You make a great mistake in not keeping up the insurance. Let me hear from you by enclosed postal if you want to drop out.”

This was subsantially the situation at the time of the death of the member, so far as relates to communications between the defendant and him after the January assessment. The secretary says that the books of the association show that Baker was canceled on the January assessment, and that he made the entry in March; that about February 26, 1884, he wrote him that he was canceled, and enclqsed him a reinstatement blank, and that no entry of his July assessment was made on the books. And he farther says that he had no knowledge that the notice of such assessment was sent to the member,

The evidence justified the conclusion that this notice was sent from the office of the defendant. It appears that the business of the association at the home office was under control and direction of the secretary, and that he has a beneficial relation to the defendant. And in view of the circumstances, including the letters and notices of later date already referred to, the question whether his recollection was entirely accurate in respect to the conversation, as testified to, had by him with Baker in February 1884, and as to the fact and time of the cancellation, was for the consideration of the jury And upon this question, the fact was before them that the defendant did not produce its books at the trial, although it had been requested by notice given by the plaintiff to do. so.

And a like remark is applicable to the evidence of the contents of the letter referred to of February, 1884, which was not nor was a copy of it produced at the trial. The provision of a life pohcy, declaring its forfeiture or invalidity and by reason of default in the stipulated periodical payments, is a condition precedent, which must be observed to support the contract of insurance. Roehner v. Knickerbocker Life Ins. Co., 63 N. Y., 160. The prompt payment, however, may be waived, and the right to treat the contract forfeited thus suspended. There has been_ some diversity of opinion in the courts as to the requisites of waiver after default has occurred. That some new consideration to support it as such was at one time suggested as necessary. Ripley v. Ætna Ins. Co. 30 N. Y. 136. And, this view is approved by the opinion of Earl, J., in Underwood v. Farmers Joint Stock Ins. Co. (57 N. Y. 500, 506 But the later cases are to the contrary. It must, therefore, be deemed established that no new consideration is needed in such case to constitute an effectual waiver. Prentice v. Knickerbocker Life Ins. Co., 77 N. Y., 483; Goodwin v. Mass. Life Ins. Co., 73 N. Y., 480; Brink v. Hanover F. Ins. Co., 80 N. Y., 108, 112; Titus v. Glens Falls Ins. Co., 81 N. Y., 410, 419. And by reference to the same cases it will be observed that technical estoppel is unnecessary to the support of such waiver. And in the Goodwin Case that of Underwood is limited and distinguished.

In Brown v. London Assurance Co. (40 Hun. 101), some remarks were made in the opinion not necessary to the result which, upon the facts, was deemed "supported. Devens v. M. and T. Ins. Co.. 83 N. Y., 168. In the case at bar the inference was permitted that the defendant in tended to and did treat Baker as a member of the association and liable to pay his dues and assessments up to the time of his death. Reference has already been made to the provisions of the application, certificate and by-laws. While the first has a provision that the contract will become void on default in payment, it also contains an agreement to pay all dues and assessments until the member should give notice of his wish to withdraw. The second requires compliance with the stipulations in the application as a condition to its continued validity and effect.

The construction of the contract, in view of the provision of section 1 of article 11 of the by-laws, that the “member shall be held hable to the association for all dues and assessments until such time as he shall have given notice of his-desire to withdraw,” and the provision of section 1 of article 13 of the by-laws, that in case of neglect to pay any dues and assessments as required by the trustees, “such membership shall cease and determine at once without notice and all claims be forfeited to the association,” seems such that it is optional with the defendant to terminate or treat as terminated the relation as member of -one who is in default or' to continue him in the relation of membership and charge him with liability to pay dues and assessments until he gives notice of his purpose or desire to withdraw from the association. This appears to be the interpretation which harmonizes the two provisions referred to of the bylaws, which might otherwise appear somewhat contradictory to their import.

In the charge of the trial court the question whether the defendant effectually waived the prompt payment by the member of his dues and assessments was submitted to the jury, wfith instructions to the effect that if they should find that a certain state of facts was established, and which there was evidence. tending to prove, they would be justified in the conclusion that the alleged default in payment was waived and that Baker continued a member of the defendant to the time of his death. No exception was taken to-submission of this question as one of fact to the jury, or to any portion of the charge in that respect.

The defendant’s counsel, on this review, contends that there is no evidence of waiver by the defendant, because it has not the support of estoppel. This was not in any manner distinctly suggested at the trial. But at the close of the evidence on the part c£ the plaintiff the defendant moved for a non-suit on the ground that the evidence did not entitle the plaintiff to a verdict. And at the close of the evidence a like motion was made on the ground that there was not evidence enough to go to the jury, and that the defendant was “ entitled to succeed upon the uncontradicted evidence.”

While these general grounds were broad enough to embrace every reason that existed upon the evidence in favor of such motions, the attention of the court was not by them necessarily called to the question now suggested. And it is questionable whether for that reason it can now be raised upon the exceptions taken to the denial of the motions. Thayer v. Marsh, 75 N. Y., 340; Langley v. Wadsworth, 99 id., 61. We are, however, inclined to think that there was sufficient evidence to properly present a question of fact for the jury in that respect, and to permit the conclusion that the defendant had intended to, and did, notwithstanding his default in payment, continue Baker a member of the association and his liability during his life to pay all dues and assessments of and after January, 1884, and thereby effectually waived his failure to make such payments promptly. And after his death, the plaintiff, as beneficiary, offered and tendered to the defendant (which was refused) the unpaid dues and assessments, of all which notices had been sent to the member prior to his death, and the time for payment of the last one had not then expired. The prescribed time for payment by the defendant is sixty days after satisfactory proof of death is furnished.

The fact that no such proofs were furnished in this case is made a question here. It appears that the plaintiff, a week after the death, sent a letter to the defendant advising it of the fact, and later he wrote again requesting the secretary of the defendant to send him blanks to make formal proof of the death. The secretary answered to the effect that if the board of trustees decided to pay the claim he would send blanks for proof, that he did not think they would so decide, but would lay the matter before them. The by-laws make it the duty of the secretary to furnish blanks for proofs of death. The blanks were not furnished. These facts were sufficient to constitute waiver of such proofs. Grattan v. Metropolitan Life Ins. Co., 80 N. Y., 281.

All the exceptions taken by the defendant’s counsel have been carefully considered. And no error seems to have been presented by any of them to the' prejudice of the defendant.

The judgment and order should be affirmed.

Smith, P. J., and Haight, J., concur.


text:
    Benjamin F. Rogers, App’lt, v. Andrew Murdock, as Ex’r, etc., et al., Resp’ts.

      (Supreme Court, General Term, Fifth Department,

      Filed June, 1887)

    1. Executor—Equitable lien on legacy for claims of testator against legatee.
    Among the assets which came into the hands of an executor was a judgment obtained by the testator against a person who was a legatee under the will, and also entitled to a distributive share as one of the next of kin, and also a promissory note drawn to the order of the testator by that person Held, that the executor had a lien upon the legacy and distrib utive share of such person for the payment of said claims, and should deduct their amount from the legacy and share
    2. Same—Equitable lien not affected by statute of limitations.

      Held, that the said lien and right of retainer were not affected by the fact that the remedy on such claims was barred by the statute of limitations.
    3. Statute of limitations—Code Civil Pro . § 380, et seq.—Not a statute of presumption.

      Held, that the statute of limitations Code Civil Procedure, § 380, et seq . does not raise a presumption of payment, but merely a bar to the remedy by action.
    • Appeal from a decree of the surrogate’s court of Cayuga settling the accounts of said executor.

      Howland & Wheeler, for app’lt; F. E. StooJse, tor in fant, resp’ts; D. W. Hurlbut, for executor and others, resp’ts.
   Smith, P. J.

The appellant is a legatee under the will of the said executor’s testatrix, and the amount of his legacy in the hands of the executor unpaid is $810.96, as stated in the account. He is also entitled, as next of kin, to a distributive share of the estate. Among the assets in the hands of the executor are two claims against the appellant, consisting of a promissory note made by him, for $267 with interest from 7th of April, 1875, and a justice’s judgment recovered against him on 31th of August, 1877, for $67.33, each of which is wholly unpaid, and each of which accrued more than six years prior to the death of the testatrix. On the accounting the infant respondents appeared by guardian and interposed an answer asking that the executor’s accounts be discharged with the amount of said claims against the appellant, and the sums charged to him. The appellant replied to the answer, admitting the claims and setting up the statute of limitations.

The surrogate found the facts as above stated, and held as matter of law that the executor has a lien on the legacy and distributive share of the appellant, so in the possession of the executor for the payment of said claims, and he directed that the amount of said claims be deducted from said legacy, and that the executor pay the remainder of the legacy to the appellant. From the judgment entered upon •that direction, this appeal is taken.

In Smith v. Kearney (2 Barb. Ch. R., 533) Chancellor Walworth said that the right of an executor or administrator to retain the whole, or a part, of a legacy or distributive share, in discharge or satisfaction of a debt due from a legatee or distributee to the estate, is not only consistent with the soundest principles of equity, but is perfectly well settled (p. 547). Hé also remarked, as the result of. the cases cited by him, that it is not a mere question of legal effect, but of equitable lien and right of retainer, and that the right to retain depends upon the principle that the legatee or distributee is not entitled to his legacy, or distributive share, while he retains in his own hands a part of the fund out of which that and other legacies or distributive shares ought to be paid, or which are necessary to extinguish other claims on that fund (p. 549).

The equitable lien and right of retainer referred to exist in this case, and are not affected by the statute of limitations. That statute (Code of Civ. Pro., § 380, et seq.) does not raise a presumption of payment, but merely creates a bar to the remedy of action. Smith v. Kearney, supra; Stagg v. Beekman, 2 Edw. Ch., 89; Kincaid v. Richardson, 25 Hun, 237; Matter of Bogart, 28 id., 466; Rose v. Henry, 37 id., 397.

The doctrine that where there is a legal and also an equitable remedy, in respect to the same subject matter, the latter is under the control of the same statute bar with the former, is inapplicable to the present case. The rule relates to an action, or a proceeding in the nature óf an action, brought to enforce an equitable remedy, in which the statute bar is set up as a defense. The cases cited by the appellant’s counsel are of that description. Smith v. Remington (42 Barb., 75), was a proceeding in a surro-, gate’s court, instituted by a legatee against an executor to" compel the payment of a legacy. Borst v. Corey (15 N. Y., 505) was an action to enforce a vendor’s equitable lien for purchase money. Rundle v. Allison (34 N. Y., 180) was an action against executors to recover certain moneys alleged to have been received by their testator in trust for the plaintiff. In McCartee v. Camel (1 Barb. Ch. R., 456) the rule was stated thus: In “analogy to the statute of limitations, suits by creditors, legatees or distributees, before a surrogate, to obtain payment of their debts or legacies, or distributive shares, should be instituted within the. time in which suits of the same character are required to be commenced in the courts of common law or of equity.”

If, in the present case, the executor were suing to recover the claims above mentioned, the rule would apply ; but that is not the case. The only object of .the proceeding instituted by the executor is to settle his accounts and distribute the assets of the estate. As the claims against the appellant have not been paid in fact, and no presumption of payment arises from the lapse of time, they are assets in the hands of the executor for which he must account. And as no affirmative action has been instituted, or is necessary on his part, to make his hen and right of detention available, the statute of limitations does not stand in his way.

The decree should be affirmed, with costs. We are asked to allow costs to each of the respondents separately. The question whether they are entitled to separate bills can only be raised by motion at special term. It can not be considered on this appeal.

Haight and Bradley, JJ., concur.


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    Emma C. Gaige, Resp’t., v. The Grand Lodge of the Ancient Order of United Workmen of the State of New York, App’lt.

      (Supreme Court, General Term, Fifth Department,

      Filed June 25, 1887.)

    1. Evidence—Secondary—When admissible.
    Before the copy of a letter is admissible as evidence upon objection being made, it must be shown that the original was lost or destroyed, that the opposite party has failed to produce it after notice served upon him, or other foundation laid for the introduction of it as secondary evidence.
    2. Same-Letters must be identified or proved.
    Letters before being read in evidence should be identified or proved.
    3. Same—Best evidence of contents of books,
    Where the contents of books are to be given in evidence the books are the best evidence.
    Appeal from a judgment entered upon the decision of the court on a trial without a jury, at the Orleans circuit.

      Leroy Andrus, for app’lt; Clark D. Knapp, for resp’t.
   Haight, J.

This action was brought to recover the sum of two thousand dollars,, the amount of a beneficiary certificate issued by the defendant to Joseph J. Gaige, the husband of the plaintiff, payable to her in case of his death.

The court has found as facts that in the month of February, 1884, the husband of the plaintiff became a member of Danolds Lodge, No. 224, at Eagle Harbor, Orleans county, New York; and that on the 21st day of February, 1884, the defendants, pursuant to the objects of the order, and the applications made therefor, by Joseph J. Gaige, made and executed and delivered to him its benficiary certificate, No. 23,854, wherein and whereby the defendant agreed to pay to the plaintiff as the wife of Joseph J Gaige, the sum of two thousand dollars in case of his death, that on the 15th day of August, 1885, Gaige was suspended from the lodge by reason of the non-payment of assessments Nos. 12 and 13, and that on the 20th day of September, 1885, he was in default and in arrears for the non-payment to the lodge $6 50, that previous to this date a resolution Was passed by the subordinate lodge, of which Gaige was a member, authorizing the receipt of payment of past dues and assessments by those suspended, and upon which payment the person should be re-instated, and that the suspension should be treated as a nullity; that on 20th day of September, 1885, Gaige, through his father, paid to W, H. Shelley, the financier of the subordinate lodge, the amount so in arrears, and on the next day he died.

As conclusion of law the court found that the plaintiff was entitled to recover the amount of the certificate, and ordered judgment accordingly. The evidence showed that Gaige committed suicide.

Upon the trial W. H. Shelley was sworn as a witness for the plaintiff, and testified that he thought that he wrote a letter to N J Horton, the recorder of the lodge, on or about the twenty-fourth of September, explaining the death of Gaige, his suspension, and the payment of the money. He was then shown a letter and asked whether it was a true copy of the letter so written by him, and answered, “I think it is. I think I mailed the letter in the post office, directed to Horton ” The letter was then offered in evidence and was objected to on the part of the defendant as incompetent and immaterial. The objection was overruled and exception taken, and the letter received and read in evidence. It is as follows:

“Eagle Harbor, September %1¡., 1885.
“JV J. Horton:
“Dear Sir and Brother,—On the fifteenth of last month Brothers H. A. Brown, J. J. Gaige and H. D. Bead were reported to you as suspended. Brother H. A. Brown sent his money to me the fifth of the present month and in my room for that evening I reported that I had received Brother Brown’s money, and he was declared re-instated and a resolution was passed authorizing me to take the two other brothers’ money and that they would be accepted in the same manner. September twentieth I received a letter from Brother Gaige, dated September sixteenth, which should have reached me before the next meeting, asking me to fix his insurance all right, which I should have done if I had received it in time. On the same day that I received his letter I also received money, viz., $1.50 dues and $5.00 beneficiary. On the twenty-first, at or about four o’clock p. M. he died. I make this explanation so that you may know the reason why his re-instatement did not appear on the September report.
“W. H. SHELLEY,
“Financier Demoléis Lodge, No. 'B'Bk, A. O. U. W.”

He was then asked: “Did the lodge, at a regular meeting, pass the resolution referred to in this letter?” This was objected to as incompetent and improper, and not the best evidence. The objection was overruled and exception taken. The witness answered: “ I think this was the first meeting, September 5, 1885, after they were suspended.”

Under the charter and by-laws of the grand lodge in force at this time, a member suspended for non-payment of assessments could only be restored to membership by making an application in writing, signed by himself, for such restoration, and the same had to be presented at a regular meeting of the subordinate lodge, accompanied with the amount due from him. Thereupon, if the lodge saw fit, by a majority vote, he could be restored. The trial court held that this provision was waived by the resolution of the subordinate lodge, referred to in the foregoing letter of Shelley to Horton; and therefore the plaintiff was entitled to recover.

It will thus be observed that the question as to whether or not there was such a resolution passed, becomes important, as the basis upon which the plaintiff’s right to recover stands. The letter introduced in evidence was a copy. It was not the original. It does not appear, nor is it claimed that the original was lost or destroyed. No notice appears to have been served upon the defendant to produce it, or other foundation laid for the introduction of secondary evidence.

Again, there is no evidence showing that this resolution was in fact passed except as the statement of it appears in this letter. The minutes of the meeting were not produced or read in evidence. True, the witness was asked if the resolution was passed, and the witness answered, under objection, that the minutes would be the better evidence. “I think this was the first meeting, September 5, 1885, after they were suspended.” It will be observed that the answer given does not answer the question, and that it falls short of showing that there was in fact such a resolution passed.

Upon the trial the plaintiff sought to show that the money paid to the financier of the subordinate lodge was by him paid over to the grand receiver of the defendant, and retained by him, and for this purpose offered in evi.dence a receipt dated Lockport, October 24, 1884, No 3,923, and purporting to be signed by John Hodge, grand receiver, and countersigned by H. J Horton, grand recorder This was objected to by the defendant upon the ground that no proper foundation had been laid for the proof. The objection was overruled, exception taken, and the_ receipt read in evidence. The signatures of the grand receiver and grand recorder were neither proved nor admitted. The receipt was consequently improperly admitted.

Other exceptions were taken upon the trial which we do not regard it necessary to here discuss, further than to suggest that where contents of books are to be given in evidence the books are the best evidence, and that letters before being read should be identified or proved.

For the reasons stated the judgment must be reversed and a new trial ordered, with costs to abide the event.

Smith. P. J . and Bradley, J , concur.


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    Ignatz Thalimer, Appl’t, v. Ferdinand Hays, et al, Respt’s.

      (Supreme Court, General Term, Fifth Department

      Filed June 1887)

    Judgments—Pbiobity of lien.
    On July 7, 1884, the sheriff seized the personal property of these-defendants by virtue of attachments issued in certain actions against them. On the following day he levied on the same property under an execution issued upon a judgment in favor of another person On July 11, 1884 an ordei of the court was made in these actions on the consent of the plaintiffs therein that the sheriff should sell the property seized by him and deposit, the proceeds of the sale, less his fees, in a bank therein designated to abide the further order of the court in said actions. Pursuant to that order the property was sold and the sale confirmed and the proceeds thereof deposited as directed to the credit of said actions Subsequently judgments were recovered against these defendants in favor of other plaintiffs and a receiver of the property of said defendant was appointed in supplementary proceedings upon those judgments, and the attachments granted were subsequently vacated upon his motion. In a controversy between the receiver and the assignee of persons who had obtained judgments before the sale, as to who vras entitled to the surplus after paying the judgment under the execution upon which levy had been made. Held, that the effect of the order and sale was simply to substitute the proceeds of sale for the property itself and that judgment obtained and docketed before the appointment of the receiver was entitled to the surplus.
    Appeal by Robert B. Wickes, receiver from order of Monroe special term denying his motion for payment of surplus moneys.

      Wm. Nafl Cogswell, for appl’t; J. 8. Oarlock, for resp’ts, Picard.
   Smith, P. J.

On the 7th of July, 1884, the sheriff seized the personal property of the defendants by virtue of attachments issued in these several actions against them, in favor of Ignatz Thalimer, Salie Frankel and Yette Thalimer, respectively. On the next day he levied on the same property by virtue of an execution issued on a judgment against said defendants, in favor of Susselia Hays, for $13,471.24.

On the 11th of July, 1884, an order of this court was made at special term in the actions of the four plaintiffs above mentioned, all said plaintiffs consenting, thereto, that the sheriff should sell the property seized by him, and pay the proceeds of the sale, less his fees, into the Monroe County Savings Bank, to abide the further order of the court in said four actions. Pursuant to such order the property was sold on the 25th of July, 1884, for $20,000, the sale was confirmed the twenty-eighth of July, and the proceeds of the sale less sheriff’s fees, amounting to $19,127.44, were deposited by the sheriff in the bank to the credit of said actions. Subsequently judgments were recovered against said defendants in five actions in favor of other plaintiffs, and on the 29th of November, 1884, Wickes, the appellant, was appointed receiver of the property of said defendants in supplementary proceedings upon those five judgments. The attachment of Ignatz Thalimer was vacated on the 19th of February, 1885, on motion of defendants, and in the same month, the attachment of Salie Frankel and Yette Thalimer were vacated on motion of the receiver.

A large number of executions against the same defendants came into the sheriff’s hands, some before and some after the sale, but all subsequent to the order for the sale, and they are still in his hands, no proceeding having been taken by any execution creditor to reach the proceeds of such sale. No appeal has been taken as against creditors who had issued executions before the sale. The contest on this appeal is between the receiver and. Abraham Picard, the respondent, who is the assignee of a judgment recovered against said defendants, subsequently to said sale. The only question between them is, which of them is first entitled to the surplus of the fund in bank after paying the judgment of Susselia Hays.

We think the question was properly disposed of at special term. The effect of the order and of the sale had under it, was simply to substitute the money realized from the sale for the property itself. It could have no greater effect, for the only authority of the court to make it was derived from the consent of the plaintiffs in the actions then pending, and they could not, by any agreement among themselves, divest the defendants of their interest in such of the property as should remain after satisfying the liens then existing, or prevent other creditors from obtaining liens upon such interest by appropriate legal proceedings. The judgment under which the respondent claims having been recovered and docketed before the appointment of the receiver, the respondent is first entitled to the surplus. These views are more amply stated in the opinion delivered by Mr. J ustice Dwight at special term, ana in that we concur.

The order should be affirmed, with ten dollars costs and disbursements, to be paid by the receiver out of any funds in his hands as such receiver.

Haight and Bradley, JJ., concur.


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    Elias M. Moyer v. Augustus Urtel and James C. Schad.

      (Supreme Court, General Term, Fifth Department,

      Filed June 25, 1887.)

    1. Bills and notes—Accommodation notes—When one taking it as collateral SECURITY IS A HOLDER FOR VALUE AND CAN RECOVER AGAINST MAKER.
    The rule is that where a promissory note is made for the accommodation of the payee, but without restriction as to its use, an endorsee taking it in good faith as collateral security, for even an antecedent debt of the \ ayee and endorser, occupies the position of a holder for value and can recover thereon against the maker.
    2. Co-partners—When co-partnership deemed to continue after dissolution.
    The plaintiff endorsed a certain note pursuant to an agreement executed the same day by J. C. & J F Schad as co-partners, which day was afler their dissolution in fact, but before it was known to the plaintiff. Ilehl, that the parties were in the same position as if the dissolution of the firm had in fact taken place after the agreement.
    Motion for judgment upon a verdict directed by the court at the Niagara circuit, subject to the opinion of the general term.

      E. G. Hart, for deft; David Miller, for pl’ff.
   Haight, J.

This action was brought to recover the amount of a promissory note made by the defendant on the tenth day of August, 1883, and delivered to J. C. & J. F. Schad, payable in three months after date. On or about the fifteenth day of Angust, 1883, the plaintiff endorsed a promissory note for one thousand dollars for the accommodation of J. 0. & J. F. Schad upon their turning out to him as collateral security the promissory note in suit with others. That such endorsement was made pursuant to a written agreement that day made between John F. & James 0. Schad as comprising the firm of J. 0. & J. F. Schad, in which it was agreed that the plaintiff should hold the notes so turned out to him, including the note in suit, as indemnity against all liability, losses, costs and expenses he had or may hereafter incur or pay upon and by reason of the endorsement upon the one thousand dollar note of any and all renewals thereof or of any part thereof.

The firm of J. 0. & J. F. Schad had in fact dissolved prior to the executing of this agreement and John F. Schad had taken the property and business of the firm and had assumed and agreed to pay the debts. This fact was however, not known to the plaintiff until after the making of the aforesaid agreement and the endorsing of the $1,000 note for their benefit and accommodation. Subsequently, and before the note matured, John F. Schad died and Charles H. Schad was appointed his administrator. When the note matured and became due he procured the plaintiff to endorse another note for $800, which was also endorsed by the defendant, Uriel, with which he agreed to renew and take up the $1,000 note, paying the balance thereof in cash. That upon receiving such $800 note, Charles H. Schad took the same to the National Exchange Bank of Lockport where the $1,000 note was held, procured the $800 dollar note be discounted and passed to his credit as administrator and then drew upon his account as such, a check with which the $1,000 note was paid and surrendered. When the $800 note became due the plaintiff at the request of Charles H. Schad the administrator, again endorsed another note for $800 on the promise of Charles H. Schad that he would use it to renew the $800 note then due. This note was used in like manner as the other-to pay and take up the $800 note at the bank. This note-was at maturity paid in like manner by the plaintiff;. Charles H. Schad and the plaintiff thereafter from time to time continued to endorse notes of like-amount for Schad, he paying the preceding notes so endorsed in the same manner, except two notes of $800 each, one maturing August 28, 1884, and the other February 13, 1886, which were both paid by and delivered up to the plaintiff.

The note in suit was an accommodation note, but this fact was not known to the plaintiff. J. C. & J. F. Schad having executed the agreement with the plaintiff as co-partners,, after their dissolution in fact, but before it was known to the plaintiff, doubtless leaves them in the same position as if the dissolution of the firm had in fact taken place after the agreement. We thus have the firm dissolved and John F. Schad taking the firm property and assuming and agreeing to pay the debts of the firm.

It is contended that the plaintiff had no right to allow any part of the one thousand dollar note to be renewed by endorsing the eight hundred dollar note, and thus relieving J. C. Schad, one of the members of the firm. But it appears, that the defendant also endorsed this note prior ¿o the plaintiff, and knowing the facts and the use that was to be made of it, he must thus be deemed to have assented to this arrangement; but if this were not so, James C. was an endorser upon the note in suit; the note was duly protested when it matured and became due, and he was charged as such endorser, so that his liability still continues, and to the same extent that the defendant’s does. It is further contended that the transactions between the plaintiff and Charles H. Schad operated as a payment of the thousand dollar note, and not as a renewal of it; that a renewal of it extended the time for payment, and that the defendant, being a surety merely was released; but upon referring to-the evidence, we find that on each occasion when Schad procured the plaintiff to endorse another note for eight hundred dollars, it was with the agreement and understanding: that it was to be used to renew the former note. This being the arrangement as between Schad and the plaintiff, it does not appear to us to be material as to the manner in which Schad procured the former note to be taken up. It is unquestioned that the money derived upon the discount of these notes was in each case used to take up the former note.

But it does not appear to us to be necessary to determine whether the thousand dollar note was in fact renewed or paid for if it was in fact paid for; eight hundred dollars of it was paid out of the money procured upon the discount of the plaintiff’s note, which he subsequently paid, and by referring to the agreement we find that it fully covers and protects him in the liability thus incurred and paid. The plaintiff is not seeking to recover of the defendant by reason of any liability of his upon the thousand dollar note, or either of the eight hundred dollar notes, that were subsequently given in renewal. He is only seeking to recover of him upon his note to the Schads, which was turned out to the plaintiff as collateral security, and which he took in good faith, relying upon the promise of the defendant as embraced in his note. Ho restrictions appear as to the manner in which the Schads were to use this note, and the rule is that where a promissory note is- made for the accommodation of the payee, but without restriction as to its use, an endorsee taking it in good faith as collateral security for even an antecedent debt of the payee and endorser, occupies the position of a holder for value and can recover thereon against the maker. The Grocer’s Bank v. Penfield, 69 N. Y., 502; Tinsdale v. Murray, 9 Daly, 446.

We are consequently of the opinion that judgment should be ordered for the plaintiff upon the verdict.

Smith, P. J., ana Bradley, J., concur.


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    Michael Auken as ex’r, etc., of Charles Auken, deceased, App’lt, v. John Kiener, Resp’t.

      (Supreme Court, General Term, Fifth Department,

      Filed June, 1887)

    1. Executor Settlement or action by—What will make contract BINDING ON ESTATE.
    In an action to recover for goods sold by the plaintiff's testator to the defendant, the latter interposed as a defense thereto that in an action brought by the testator in his lifetime, for the same cause, a settlement was made, after the death of the testator, by the present plaintiff as his executor, and the defendant, and that upon such settlement a release in writing and under seal was executed and delivered by the plaintiff as executor to the defendant. Held, that the executor having described himself as such in the instrument, and as such signed and acknowledged it thereby and by the description of the subject matter, indicated that it was the contract of the estate and not his own.
    2. Same—Has power to settle action brought by testator.

      Held, that it was clearly within the authority of the executor to consent to a discontinuance of the former action the arrangement being apparently for the interest of the estate. That no order of the surrogate was necessary to empower him to do so as the act was within his common law powers.
    3. Same—Mat settle action brought by testator without being sub" STITUTED AS PLAINTIFF.

      Held, that the executor as the representative of the testator, and legal owner of the claim which constituted the subject matter of the former action had the right to settle the same, and discontinue the action, without being formally substituted as plaintiff therein.
    4. Evidence—Leading question properly excluded.

      Held, that leading questions were properly excluded.
    Appeal from a judgment entered on a verdict directed by the court at the Erie circuit, and from an order of the Erie special term denying the plaintiff’s motion for a new trial made on the ground of newly discovered evidence and surprise.

      Frederick B. March, for app’lt; George J. Sicard, for resp’t.
   Smith, P. J.

Action to recover for goods sold by the plaintiff’s testator to the defendant. Defense that in an action brought by the testator in his lifetime, for the same cause, a settlement was made, after the death of the testator, by the present plaintiff as his executor and the defendant, and that upon such settlement, a release was executed and delivered by the plaintiff as executor to the defendant, in writing and under seal, which is a bar to this action.

The release was put in evidence by the defendant. By its terms, the plaintiff, sole executor, etc., of Charles Auken, deceased, in consideration of the discontinuance, without costs to either party, of the action above referred to and of one dollár to the plaintiff-paid by John Eiener, releases for himself as such executor, and for the heirs, devisees, legatees and next of kin of said* deceased, the said Eiener from all actions, claims and demands, which, against said Eiener, the said testator ever had, or the plaintiff as such executor then or ever had. It recited that the plaintiff “ as such executor” had set his hand and seal thereto; it was signed and sealed by “ Michael Auken, executor of Charles Auken, deceased,” and was acknowledged by the plaintiff to have been executed by him “ as executor,” etc.

The defendant also proved the bringing of the former action by the testator against the defendant for the same cause, and a stipulation signed by the attorneys for the original parties to that action, after the death of the testator, for a discontinuance of that action without costs to either party.

At the trial, the plaintiff claimed that he signed the release under a misapprehension, not knowing its contents, and it not having been explained to him. On that subject Mr. Calkins, who was one of the attorneys of the testator in the former action, and who acted as the legal advisor of the executor, and also as his attorney after the death of the testator, testified that at the time when the release was signed by the plaintiff, who was a German and talked with the witness in German only, he, the witness, translated the substance of it to him in German, and explained to him in German that it was a release of all claims he had. He also testified that shortly before the release was executed, the plaintiff told witness he had learned that the defendant was irresponsible, and asked if he would be justified, in the circumstances, in settling the suit without paying any money, and that witness told him that a counterclaim of quite an amount had been interposed, and that he thought that if the defendant was not responsible, the plaintiff would be entirely justified in settling and discontinuing the action; that a few days afterwards, the plaintiff came to witness’ office and informed him that the suit was settled, witness then entered a memorandum in his register in relation to the matter of which he was so informed; the amount of his charge for what he had done in the case was agreed upon between them; the attorney entered into the stipulation above mentioned, and the release was executed.

The plaintiff testified, in substance, that he never told Mr. Calkins that he had settled the suit, and never went to Kiener to settle it; that he was called by a postal card to go to Mr. Calkins’ office, that Calkins handed him a paper and told him he had got to sign it; that after he signed it, Calkins translated it in German; that he had signed it as a receipt, and that at that time he paid Calkins forty-one dollars, but did not know what it was for. When the release was shown to him at the trial, he admitted the signature to be his; said that he could not tell whether Mr. Calkins read it over to him, but if he did, he did not understand it and subsequently testified that after he had signed it, Mr. Calkins translated it in German “ as good as he could,” and told him it was a settlement of the suit.

There was nothing in this testimony to relieve the plaintiff from the effect of the instrument signed by him. Ho fraud or imposition was practiced upon him; according to his own testimony the nature of the instrument was stated and explained to him in his native language by his attorney; and there is no evidence of circumstances preceding or attending the execution of the paper calculated to induce a person of ordinary intelligence "to infer that the instrument was of some other nature than that which is truly disclosed by its contents. There was no conflict of testimony except as to the one point whether the plaintiff told Mr. Calkins that he had settled the suit. That point was of no consequence, in view of the uncontradicted testimony as to the execution of the paper, and the explanation of its contents, already stated. The trial court therefore ruled properly that there was no question for the jury.

The appellant’s counsel attacks the validity of the release (assuming that it was duly executed), on several grounds; that it is the personal promise of the executor, and does not hind the estate; that it is beyond the scope of his authority as executor, that it is in the nature of a compromise, and was executed without an order of the surrogate authorizing the compromise; that the stipulation to discontinue was a nullity, the authority of the attorneys of the testator having ceased at his death, and no substitution of party or attorney having been made; that the release is void for want of consideration; and that, viewed as a contract, it is void because the minds of the parties did not meet.

These positions are untenable. The release related solely to the interests of the estate. The plaintiff had no personal interest in the matter. He described himself in the instrument as executor, and as such signed and acknowledged it. Thereby, and by the description of the subject matter therein he indicated that it was the contract of the estate, and not his own.- Chouteau v. Suydam, 21 N. Y., 179, 183. It was clearly within his authority to consent to a discontinuance of the action, upon the terms agreed upon. The arrangement was apparently for the interest of the estate. An order oi the surrogate was not needed. An order pursuant to the acc of 1847, (c. 80), might have afforded additional protection to the executor, if he acted in good faith, but independantly of the statute or an order under it, the act was within his com mon law power. Chouteau v. Suydam, supra. The executor as the representative of the testator, and the legal owner of the claim which constituted the subject matter of the former action, had the right to settle the same, and discontinue the action, without being formally substituted as plaintiff therein.

Exceptions were taken to several rulings sustaining objections to questions put to the plaintiff on his direct examination as a witness in his own behalf. It is enough to say that each of the questions was leading, and for that reason the exceptions point to no error.

The appeal from the order denying the motion for a new trial has not been argued before us. We have examined it, however, and think it was properly disposed of.

The judgment and order should be affirmed.

Haight and Bradley,-JJ., concur.