text:
    George L. Pratt, App’lt, v. The Dwelling House Mutual Insurance Company of Orleans, etc., Counties, N. Y., Resp’t.

      (Court of Appeals, Second Division,

      Filed December 1, 1891.)

    1. Insurance (fire)—Contract of.
    The powers of the defendant company were vested in a hoard of twelve directors, the officers of which were constituted an executive committee, with all the powers of the board when not in session, which was to hold stated meetings to pass on policies previously written. The application could be made to any director, but must be approved by a member of the executive committee. The plaintiff, the secretary, in July filled out a blank application for insurance upon his own property, intending to present it to the executive c >mmittee meeting the same day, but no meeting was held, and in a day or two he secured the approval of the vice-president thereon, filled out a policy to himself, signing it as secretary, the vice-president having already signed it in blank, and plaintiff charged himself with the premium less his commissions. At the October meeting a batch of applications were presented to the president “inbulk,” none of those in the bundle were endorsed by names thereon. The president said: “If they have two names on I won’t bother with them. I want to make this next train.” The insurance was carried for two years, included in annual reports, etc., and a loss occurring .after considerable negotiation with a mortgagee, to whom it had been made payable, as to the amount of his loss, defendant refused to pay the loss. Held, that the jury could have found that there was a valid contract, and the question as to whether plaintiff procured the approval of the vice-president and executive committee by fraud was a question of fact, and a non-suit was error.
    2. Same.
    While the plaintiff had a right to fill out his application, he had no right. to_ approve it, either as a director or as a member of the executive committee, but the approval by the vice-president and the payment of the premium bound the risk, and plaintiff was insured until notice to the-. contrary.
    3. Same.
    The officers of a mutual Are insurance company have the same power to-waive defects in or ratify invalid policies as corresponding officers in stock insurance companies.
    4. Same.
    In this state, where insurance is made on different kinds of property, each separately valued, the contract is severable, even if one premium’ is. paid and the amount insured is the sum total of the valuations.
    Appeal from a judgment of the general term of the supreme-court, in the fifth judicial department, entered on an order made-June 22, 1889, denying a motion for a new trial and directing judgment for the defendant upon a verdict rendered in its favor under the direction of the court at circuit
    This was an action upon a policy of fire insurance alleged to-have been issued by the defendant upon certain real and personal property belonging to the plaintiff. The answer denied that the-defendant issued the policy in question and alleged that the same; was issued by the plaintiff, as secretary of the defendant, to himself, without authority, and that it was, therefore, void. It was-further alleged that the real property covered by the policy was. subsequently incumbered by a mortgage given by the plaintiff, in violation of a clause in the contract prohibiting subsequent incumbrances without the consent of the company, and that the-, policy thereupon became void.
    The defendant was organized under chap. 862 of the Laws of" 1880, as amended by chap. 171 of the Laws of 1881. The business of the company, as stated in its by-laws, which are annexed to and made a part of every policy, is the “insurance of city and village dwellings and their accompanying outbuildings and their contents; farm houses and their accompanying outbuildings and their contents, and other property not more hazardous, against, damage by fire or lightning.”
    The powers of the company, as the by-laws further provide, are-vested in a board of twelve directors, who elect from their own number a president, vice-president, secretary and treasurer. In. addition to the usual duties imposed on such officers, it is the duty of the president, or, in his absence, the vice-president, to sign all policies, which are to be written and countersigned by the secretary, who keeps the accounts, books and papers of the company and acts as its general agent during his term of office. These three officers constitute an executive committee, possessing “ all the powers of the board of directors, when they are notin session,” and are required to hold stated meetings on the second Saturday of January, April, July and October, to “ examine and approve all applications on which policies have been written during the quarter next preceding and cancel or modify all policies which they do not approve.” Applications for insurance can be made to any director, but must be approved by one member of the executive committee before a policy can be issued. Any person insured by the company becomes a member thereof, and on sustaining a loss is required to “ notify the secretary without delay and give any information required by the adjusting officers and submit to examination under oath.” The executive committee is authorized to adjust and settle all losses. “All applications for insurance taken by a person duly authorized take effect at noon of the date of the same, provided that the premium is actually paid. The property shall be held insured until the applicant is notified of its modification or rejection by the secretary.” On the first of each month agents and directors are required to report “ to the office ” the business done by them during the preceding month and pay over the amount due to the company, and on the fifteenth of each month the secretary is required to pay over all funds on hand to the treasurer. The premiums charged are expected to pay all ordinary losses and expenses, but in case of an unusual loss an assessment upon members may be made by the directors,, who are to be convened for that purpose.
    The statute requires the president and secretary to make an annual report, under oath, showing the number of policies issued, the amount and kind of insurance and an itemized account of the moneys received by the company during the year. Laws 1881, chap. 171, § 10. A supervisory committee, elected by the members, is required by the by-laws to examine the books and vouchers “ and report their opinion thereon, verify the annual reports of the president and secretary made under the requirement of the statute, and certify to the facts in the case as found by them under their hands and report the same to each annual meeting of the members.” A copy of the annual report is mailed to each member of the company. The by-laws also provide that “ applications for insurance and membership ” must be made on “printed blanks prepared by the executive committee * * * without  blanketing ’ for one member more than another.”

      John J. Ryan, for app’lt; S. E. Filkins, for resp’t

       Reversing 25 St. Rep., 784.

   Vann, J.

Upon the trial of this action there was a sharp conflict of testimony, but at the close of all the evidence the court granted a nonsuit on motion of the defendant and the plaintiff excepted. As was said by the court in Clemence v. The City of Auburn, 66 N. Y., 334, 338, “ the plaintiff did not assent to any proposition of fact assumed either by the counsel for the defendant or the court, and is not concluded by omitting to request that the whole case, or any particular question, should have been submitted to the jury. If in any view of the evidence a verdict might have been rendered for the plaintiff, or if there were questions of fact which might have been determined for the plaintiff, and which, if determined in his favor, would have entitled him to recover, the case should not have been "taken from the jury.” Sheridan v. Brooklyn City, etc., R. R. Co., 36 N. Y., 39; Colt v. Sixth Ave. R. R. Co., 49 id., 671 ; Train v. Holland Purchase Ins. Co., 62 id., 598.

For the purpose of this review, therefore, all questions involving the credibility of witnesses must be resolved in favor of the plaintiff, and such facts deemed established as upon any reasonable view of the evidence the jury could have found in his interest.

The facts, as the jury might have found them had the case been submitted to them for decision, are as follows : On Saturday, July 11, 1885, the plaintiff, who had been' the secretary of the defendant ever since its organization, filled out a blank application for insurance upon his own property, intending to present it to the executive committee, which was required by the by-laws of the company to meet in quarterly session on that day. The application was for insurance to the amount of $500 on a wine house and cellar belonging to the plaintiff, and $1,500 on his personal property kept stored therein, and was in the usual form, except that the custom of the company did not permit personal property to be described by a blanket clause. The application was signed by the plaintiff, who, by the last clause thereof, agreed to pay to the defendant the sum of $11, and bound himself to pay it such further sums as should be necessary to meet all legitimate losses and expenses according to its rules and by-laws. The executive committee, which was at this time composed of Edward E. Russell, George Brown and the plaintiff, by virtue of the offices then held by them, respectively, of president, vice-president and secretary, held no meeting that day, as no one attended except the plaintiff. Within a day or two the plaintiff met Mr. Brown, and handing him the application told him that he wished to apply for insurance on his wine house. Mr. Brown took the application in his hands, opened it, looked it through as if reading it, and then endorsed his approval thereon as a member of the executive committee, by writing his name in the proper blank space, as the plaintiff had done before him. The plaintiff then went to the •office of the company, filléd out a policy to himself according to the application and signed it as secretary, Mr. Brown having already signed it with others, in blank, as vice-president. At the same time the policy was entered on the “ policy register ” by Mr. Pratt, as follows, the heads of the columns and the entries beneath being given as if continuous : “ Number of policy, 747, name of insured, George L. Pratt, post office, Ridgeway, Orleans county, date July 11, 1885, term, three years; amount insured, third class, $2,000 ; amount of premium, $10; total amount insured, $2,000 ; total amount of premium, $10.”

He also charged himself on the ledger with the amount of the premium, ten dollars, and credited himself with one dollar as the commission on the same to which he was entitled according to the by-laws. He filed the application with the papers of the company, took the policy home and put it with his other policies, one, at least, of which was issued by the defendant, but under what circumstances or by whom signed did not appear. The first policy ever issued by the defendant was to the -plaintiff on this same wine house and cellar. It was based on an application approved by the plaintiff, Mr. Brown and one Downey, who was president at the time, - was written and countersigned by the plaintiff, as secretary, and continued in force for three years and until it expired by limitation. The next quarterly meeting of the executive committee, after the application in question had been made, was held October 10, 1885, and all of the members were present. According to the testimony of the plaintiff, eleven applications, including his own, were presented to and approved by the committee at that meeting and were so recorded on the minutes of its proceedings, as kept by him. Some of the applications were approved by the endorsement of names thereon, but none in the bundle containing the- plaintiff's were so endorsed. Mr. Bussell, the president, when requested by the plaintiff to look over those applications, said: “ If they have two names on, I won’t bother with them. I want to make this next train.” The application in question was not otherwise shown to Mr. Bussell at that time and he did not examine it, or any other in the package containing it. " The applications were always thus presented to the committee “in bulk.” In December, 1885, the plaintiff mortgaged the premises insured to one Salisbury and, as secretary of defendant, endorsed its consent thereto both upon the policy and the application. The premium accompanying the application was paid over, with other moneys, to the treasurer of the company and still constitutes a part of its assets. It does not appear that an annual report was made at the close of the yéar 1885, except as it may be presumed that the statute was obeyed, nor whether this policy and premium were included in the statement of the affairs of the company as required by law. Laws 1881, chap. 171, p. 217, § 14. On January 19, 1886, one Chamberlain was elected secretary in the place of the plaintiff, who thereupon delivered all the books and. papers of the company, including the application in question, to that officer.

In December of the same year the plaintiff called on Mr. Chamberlain to renew a policy on his dwelling house then about to expire, and asked him to produce said application on the wine house and another on his tenant house, stating that the policies were with Mr. Salisbury and he wished to see when they expired. The application was thereupon produced by the secretary, having thereon in plain sight the consent to the mortgage and the approval of Brown and Pratt only. The annual report for the year 1886, sworn to by the president and secretary, stated that 194 policies were then in force, one of them being the policy in suit, and that the amount of the outstanding risks was $235,521, which included the risk in question of $2,000. The report also stated the cash on hand, including in the aggregate, but not specifically naming, the premium paid by the plaintiff. The supervisory committee, appointed to examine the books, verify the annual report and certify the facts as found by them, reported that after making a full examination of the books and comparing them with the financial report of the president and secretary, they found that the figures agreed.

On Tuesday, August 2, 1887, more than two years after the date of the policy and eighteen months after the plaintiff had ceased to be secretary, the wine house, cellar and contents were destroyed by a fire, which occurred at midday. The value of the property burned largely exceeded the amount of insurance thereon. That same afternoon the plaintiff asked Mr. Chamberlain, who Was still secretary, to let him see the application, stating that his policy was with Mr. Salisbury and he did not remember the amount of his insurance. Mr. Cnamberlain handed him the application and, after it had been examined, took it back. The next day formal notice of the loss was given to the secretary, and two days later the executive committee met the plaintiff, when the president, Mr. Downey, asked him if he had brought his policy. He answered that he had not, as it was in the control of Mr. Salisbury as collateral security to a mortgage.

The application was produced and the blanket clause criticized. On being asked if he had made out a list of his loss, plaintiff answered no, and latter in the day the president furnished him with blank proofs of loss and requested him to fill them up that evening, which he did and delivered them to the secretary the next day. The same day the committee called on him at his house and asked to see his books, and when they were produced he was informed that they wanted to know what his sales were for the past year and he said that he would figure it up and let them know. Soon after he took his journal to the committee, gave them the amount of his sales for 1884, 1885 and 1886, and on being told that they wanted to go further back, he went for another journal, but could not find it He was asked if he could not get at it in some other way, and thereupon spent about an hour in picking the accounts out of his ledger, and as he read them off the secretary took down the amounts. He was told to continue the work with the secretary the next day, which he did for half an hour, when having found the missing journal, he furnished the rest of the information in five or ten minutes. Soon after he filed with the secretary an additional proof of loss. Each proof of loss comprised many items and both together fill over seven printed pages of the case. During these repeated interviews with the adjusting committee, Mr. Brown, the vice-president, and the director who approved the application, was present and the committee with full knowledge of all the facts did not elect to avoid the policy, but in all that they said and did, prior to the commencement of the action, treated it as a subsisting contract, valid in origin and valid at the time of the fire. Ho offer was ever made to return the premium, although there is no provision for its forfeiture to the company in case the risk never attached or the policy became void.

The main question presented for decision is, assuming that these facts were established, could the jury have found, under proper instructions from the trial court, that there was a valid contract between the parties. The plaintiff could not insure himself in the name of the defendant and if the supposed contract rested on his action alone, there would be no room for serious controversy. Neuendorff v. The World Mutual Life Ins. Co., 69 N. Y., 389. But the acts of others, who represented the defendant only, intervened and it is claimed that through their action the company waived its right to avoid the policy and ratified it as a good and binding contract While the plaintiff had a right to fill out his own application, he had no right to approve it, either as a director or as a member of the executive committee, because it is the policy of the law to prevent an agent, entrusted by his principal with the discharge of duties involving the exercise of judgment and discretion, from making a contract in which he has a personal interest that may conflict with the interest that he is bound to protect as the agent of another. The N. Y. Central Ins. Co. v. The National Protection Ins. Co., 14 N. Y., 85 ; Voltz v. Blackmar, 64 id., 440; May on Ins., 3d ed., § 125. Mr. Brown, however, was under no such disability, but as a director he Was empowered to receive, and as a member of the executive committee to approve the application. His approval and the payment of the premium bound the risk and, by virtue of the by-laws, the plaintiff was thereby insured until notice to him to the contrary, which was never given. The learned trial judge was inclined to this view, but he held that when the policy was issued the application had fulfilled its office, and that the insurance from that time depended on the policy and not on the application. But if the policy was void, or if voidable and it was avoided by the company, how could it affect the valid application, which was not dependent upon it? A,voidable act, when lawfully declared void, is the same as if it had been void ab initia. Can an act, void in inception or by due declaration, have any legal force ? Can a valid contract be merged into a void contract? Can that which does not exist, and is the same as if it never had existed, destroy that which does exist ? Moreover, the statute under which the defendant was incorporated provides that all policies shall be signed by the president and secretary; that the president and secretary shall be directors; that the directors shall be members, and that every person in order to become a member must sign an application for insurance. Does not the statute, therefore, contemplate that the secretary shall sign his own policy ? How otherwise can its commands be obeyed, for the secretary is required to sign all policies and he is also required to take out insurance? But the signing by the secretary would be merely clerical if the terms of the contract had been previously assented to by other officers of the company, and we refer to the statute simply to show that the policy was not void because signed by the secretary.

We think, however, that it was voidable at the election of the company, because its terms had not been previously approved by some officer who represented the company only. Such was the position taken by the defendant when moving for a nonsuit Therefore, when the executive committee met on October 10, 1885, a valid application, effective as an insurance contract, had been made, and a voidable policy issued thereon. The defendant, through Mr. Brown, knew of the former, but is not shown to have known of the latter, except inferentially. If the plaintiff is to be believed, the application was then approved by the executive committee,- and the temporary insurance thereby rendered permanent. Fried v. Royal Ins. Co., 50 N. Y., 243 ; Audubon v. Excelsior Ins. Co., 27 id., 216.

After the new secretary came in, and the application together with the books containing entries relating to the policy and the premium thereon were turned over to him, the company had the means of knowing that a policy had been issued. His attention was called directly to the subject some months later when the plaintiff asked him for this application, and he produced it. The premium paid by the plaintiff passed through the usual channel into the defendant’s treasury, where it still remains. At the close of the year 1886, the officers, of whom plaintiff was not then one, included the policy and its amount in their annual report, not by specific mention, but necessarily counting it to make out the number and amount reported. The supervisory committee after making a full examination of the books certified that the report was correct. The books, with their “perfect record of all the transactions of the company,” were required by law to be “ kept open for the inspection of every member ” every day except Sundays and legal holidays. Laws 1880, chap. 362, p. 541, § 5.

A year and a half after the plaintiff went out of office the fire occurred, and the executive committee, after receiving specific notice that a policy had been issued, and that it was in the hands of the mortgagee, met as an adjusting committee. 'With the open application in their hands, and without a word to indicate that they elected to avoid the policy, they met the plaintiff, asked him to fill out the blank proofs of loss which they gave him, called for his books, required him to furnish information, which they knew involved trouble and loss of time to obtain, and not until the action was commenced, so far as appears, was any step taken to avoid the policy. We think that the evidence permitted the inference that the company with knowledge of the facts ratified the policy, and that the effort to avoid it after suit begun thereon was wholly ineffectual. Titus v. Glens Falls Ins. Co., 81 N. Y., 410; Roby v. American Central Ins. Co., 120 id., 510 ; 31 St. Rep., 560; Hyatt v. Clark, 118 N. Y., 563 ; 29 St. Rep., 851.

A question as to the power of defendant’s officers to waive or ratify is raised by the defendant, and we are asked to decide it. The argument is made that there is a distinction between stock and mutual companies, because the insured has no voice in the former while he is a part of the insurer in the latter; that each officer is his agent to a limited extent, and cannot waive the obligations of one member to the others, as he is their agent also. The act under which the defendant is organized provides that every person insured shall sign an application for insurance and thereby become a member; that the members shall choose directors, who are to elect the officers, and that the business and corporate power of the company shall be transacted and exercised by the board of directors, subject to the 'by-laws; that by-laws may be adopted by the directors, and may provide for an executive committee for such purposes as may be necessary; that the directors may issue policies insuring against damages by fire or lightning. Laws 1880, chap. 362, and Laws 1881, chap. 171. Thus it appears that the defendant is a corporation engaged in the business of fire insurance. Its members have no direct power in the management of its affairs. Their power is confined to the election of directors, to whom the business and corporate powers of the company are exclusively confided by law. The relation of a member to the corporation is somewhat analogous to that of a stockholder in a stock company. "We see no reason for holding, and we have been referred to no case in this state which holds that the officers of such' a corporation have less ¡lower to waive defects or ratify invalid policies than corresponding officers in stock insurance companies.

We have been referred to certain cases in Massachusetts holding that where the members of a mutual insurance company by formal vote prescribed the form in which their policies should be made, and had thus deliberately determined the liability which they were willing to assume, the officers of the company could not waive such stipulations of the policies and by-laws as constituted the substance and essence of the contract, although they could waive service of proofs of loss and the like. Evans v. Trimountain Mut. Fire Ins. Co., 9 Allen, 329; Buffum v. Fayette Mut. Fire Ins. Co., 3 id., 360; Priest v. Citizens' Mut. Fire Ins. Co., id., 602.

These cases are not analogous, because the statute under which the defendant exists confers no power upon its members to make by-laws, determine the form of the contract, or do anything except elect directors, who constitute the governing body and wield 'all the power that the .corporation possesses. We think that defendant’s officers had the same power with reference to the subjects of waiver and ratification that is possessed by the officers of stock companies. 2 Herman on Estoppel, § 1204, and cases cited.

The position of the defendant that the policy of the plaintiff, even if once valid, became void on account of the mortgage to Salisbury, requires little attention, because the nonsuit was not moved for on that ground.

If the existence of the mortgage had been made a basis of the motion, non constat further proof would have been given upon the subject of consent and any difficulty in that regard thus avoided. Isham v. Davidson, 52 N. Y., 237; Adams v. Greenwich Ins. Co., 70 id., 166. Moreover, the condition in regard to incumbrances affected nothing except the real estate, which was but part of the subject of insurance, and a breach thereof did not affect the remainder of the contract, as it related only to the personal property which was not mortgaged.

Whatever the rule may be elsewhere, it is settled in this state that where insurance is made on different kinds of property, each separately valued, the contract is severable, even if but one premium is paid and the amount insured is the sum total of the valuations. Merrill v. The Agricultural Ins. Co., 73 N. Y., 452 ; Schuster v. The Dutchess Co. Ins. Co., 102 id., 260 ; 1 St. Rep., 415; Smith v. Home Ins. Co., 14 St. Rep., 106; Woodward v. Republic Fire Ins. Co., 32 Hun, 365.

The claim of the defendant that the plaintiff procured the approval of Mr. Brown and of the executive committee by concealment and fraud, involves a question of fact. We think that the motion to nonsuit should have been denied and the case submitted to the jury, and the judgment should, therefore, be reversed and a new trial granted, with costs to abide event

All concur.


source: Caselaw Access Project

author: Haight, J.

license: Public Domain

text:
    Spencer D. C. Van Bokkelen, Resp’t, v. Robert H. Berdell, App’lt.

      (Court of Appeals, Second Division,

      Filed December 1, 1891.)

    1. Evidence—Partnership—Accounting-.
    After the dissolution of a partnership, plaintifí brought an action to compel defendant, in whose name certain real estate had been held, to account for rents, etc. The referee refused to allow defendant to testify as to his having made payments for repairs, etc., where any of the items were above §30 in amount, unless he first produced a voucher or other evidence of payment. Held, error.
    2. Same.
    It is error for a referee to allow plaintiff to state what facts were shown upon the trial before a former referee, who had died before the conclusion of such trial.
    3. Same.
    A witness cannot be asked whether he is under indictment for perjury.
    Appeal from a judgment of the general term, second department, affirming a judgment of the special term entered upon the report of a referee to whom the case had been referred to take and' state an account upon an interlocutory judgment.

      Philip L. Wilson, for app’lt; William W. Niles, for resp’t.

       Reversing 31 St. Rep., 429.

   Haight, J.

Under a stipulation of the parties the interlocutory judgment is to stand, and the only questions brought up for review pertain to the accounting thereunder.

It appears that the plaintiff and defendant were co-partners doing business under the firm name of Eobert H. Berdell & Co. ; that they dissolved on the 30th day of September, 1858, each signing the following statement entered in the books of the company : “ The undersigned have this day dissolved partnership by consent; either party will sign in settlement. Store and office furniture and fixtures, books of account, papers, etc.,, to be the property of Eobert H. Berdell. Hew York, September 30,1858.”

It appears that during the continuance of the co-partnership certain real estate had been acquired by the company, the title of which was taken in the name of the defendant, for which in the interlocutory judgment he was ordered to account for the rents, issues and profits, after being credited with all amounts paid in relation thereto.

It further appears that upon the house and lot known as 96 Dean street there was a mortgage for $2,500, and upon the ten lots known as the Perry lots there was a mortgage for $3,300. The defendant testified that both of these mortgages had been paid by him, and he was corroborated in this statement by the testimony of Mr. Middleton, who held the $2,500 mortgage, and by the production of his check book and satisfaction pieces. There is no pretense that the mortgages were paid by the plaintiff or by any person other than the defendant. It is suggested that the defendant has encumbered the premises with another mortgage, but whether the same has been paid or is now a lien upon the premises does not appear. If he has encumbered the premises by another mortgage, the plaintiff may be entitled to relief in reference thereto, but we do not understand that that fact would deprive the defendant of his right to be credited with the amount paid in satisfaction of the previous existing mortgages. The referee, on request, refused to find that either of these mortgages had been paid.

It is suggested that there is no certificate that the case contains all of the evidence. But upon the trial of an issue of fact by a referee or by the court without a jury, a refusal to make any finding whatever upon a question of fact where a request to find thereupon is seasonably made by either party, or a finding without any evidence tending to sustain it, is a ruling upon a question of law. Code Civ. Pro., § 993. And a ruling upon a question of law duly excepted to serves as a notice to the respondent of an intention to raise a question of legal error, and puts upon him the responsibility of adding by amendment any omitted evidence on the question. Halpin v. The Phenix Ins. Co., 118 N. Y., 165; 28 St. Rep., 788.

The appellant, however, has neglected to take an exception to the refusal of the referee to find that these mortgages were paid. The only exception taken is to the finding of the referee that the defendant had paid upon the Dean street house for interest, taxes, premium, insurance, moving factory and repairs the sum of $2,101.70, on the ground “ that said finding does not embrace all the payments made on said property by the defendant to the credit of which he is entitled, and on the ground that said finding is too general, and should specify what payments are embraced therein.” A similar exception was also taken to the finding that was made in reference to the Perry lots. Whether these exceptions are sufficiently specific to raise the question for review in this court we shall not stop to consider, for there are other exceptions upon which we prefer to rest our decision.

The referee appears to have tried the case upon the erroneous theory that the defendant’s testimony was not competent for the purpose of proving items of payments, upwards of twenty dollars in amount, unless he first produced a voucher therefor or other evidence of payment. Upon this theory very much of his evidence was ruled out. As to many of the payments which he claimed to have made upon the premises he was able to produce other evidence, and then his testimony appears to have been admitted, but as to some of the payments claimed by him to have been made he was unable to furnish other testimony, and was . consequently compelled to submit the case without evidence as to such payments.

Schedule D. o£ defendant’s account as rendered was for items of repair upon the premises during the years 1863, 1864, 1865 and 1866. He was asked if he paid the items embraced in this schedule to Mr. Skinner. The plaintiff objected, the objection was sustained, and an exception was taken. It appeared that Skinner was in his employ as agent, and that he paid him for taking care of the premises and making repairs thereon. The defendant subsequently testified to making a number of the payments embraced in this schedule, but that evidence was upon the motion of the plaintiff’s attorney stricken out by the referee. The case had been partially tried before Lawrence, another referee, who had died before the conclusion of the trial. The defendant had testified that he had vouchers for payments made, and that they were left with the former referee; that he had been to his office to get them, and was informed by the person in charge that they had been transmitted to the new referee; that he had not since been able to find them. It appears to us that the evidence was competent and should have been received.

The plaintiff, in giving his testimony, was called upon to state what facts were shown upon the trial before referee Lawrence. This was objected to by the defendant as incompetent, the objection was overruled and an exception was taken. The witness answered that the facts shown were that the defendant made a mortgage on the property in favor of S. C. Parkhurst; that the mortgage was not put on file for a long time after, etc. It appears to us that this evidence was incompetent. The plaintiff was thus permitted to give his conclusions as to what had been shown upon a former trial before another referee. The evidence given was important, for it tended to show that the defendant had encumbered the property with a mortgage other than those existing at the time the property was purchased.

The defendant, upon his cross-examination, was asked if he was under indictment for perjury. This question was objected to, the objection was overruled and an exception taken. He was compelled to answer that he had been told so, but that he had not seen the papers. Whilst a witness may be discredited by showing his conviction for an offense, we do riot understand it to be competent to discredit him by showing that he has been indicted. People v. Crapo, 76 N. Y., 288; Ryan v. People, 79 id., 593; People v. Noelke, 94 id., 137-144; People v. Irving, 95 id., 541-544.

The rules of evidence in civil cases are applicable also in criminal cases, except as otherwise provided by law. Code Crim. Pro., § 392; Kober v. Miller, 38 Hun, 184.

The appellant claims that he should have been allowed for a balance due him upon account, as shown by the books, at the time of the dissolution of the copartnership; that he also should be allowed for water taxes paid; but we have not thought it necessary to consider these or the other questions raised, for upon a new trial further evidence may be given.

The final judgment entered upon the interlocutory judgment should be reversed and a new accounting had, as provided for in the interlocutory judgment, with costs to abide the final award of costs.

All concur.


text:
    The Pocantico Water Works Co., Resp’t, v. Seth Bird et al., App’lts.

      (Court of Appeals, Second Division,

      Filed December 1, 1891.)

    1. Riparian owners—Effect of filing map by water works company.
    Plaintiff had, in 1886, filed a map showing the location of its dam and reservoir and the lands necessary to be taken, had entered into contracts with several villages to supply them with water, and had constructed a dam and reservoir a short distance above premises owned by one H. It had acquired the right to divert the waters of the stream from all the other riparian owners above and below the dam, and was proceeding with due diligence to acquire the rights of H. In 1888 it filed another map, showing the location of a storage reservoir below the main one, but not until defendants, with notice of plaintiff’s intentions, had filed their map locating their waterworks on the lands of H. Held, that as the statute under which plaintiff was incorporated empowered it to acquire such rights before filing its map, the rights acquired by such agreements were not impaired by the filing of defendant’s map, and it could enjoin them from erecting any reservoir above the place where it had located its storage reservoir.
    2. Same—“ Public use.”
    The fact that plaintiff had contracted with several of the riparian owners to supply them, their cattle, etc., with necessary water, did not destroy the public use any more than contracts made with the householders in the villages to be supplied.
    Appeal from a judgment of the general term of the supreme court, second department, affirming a judgment entered upon the decision of the Westchester special term.

      Henry C. Griffin, for app’lts; E. T. Lovatt, for resp’t.

       Modifying 22 St. Rep., 827.

   Haight, J.

This action was brought to restrain the defendants, who. were acting as the board of water commissioners of Tarrytown, from locating and constructing a dam and reservoir upon the premises of one George Hart on the Pocantico river at a point between the plaintiff’s dam and its contemplated storage reservoir.

The plaintiff was organized under chapter 737 of the Laws of 1873, as subsequently amended, and had entered into contracts with the villages of North Tarrytown, Dobbs Ferry and Hastings to supply them with pure and wholesome water. It ha.d located its works upon the Pocantico river, and had constructed a dam and reservoir a short distance above the premises owned by Hart, on which the defendants sought to locate their works. It had acquired by contract, purchase or proceedings to condemn the lands occupied by it, and the right to divert the water of the stream from most of the riparian owners below the dam, and, as the court finds, was proceeding with due diligence and in good faith to acquire the riparian rights of Hart; that the defendants, with actual notice- of all that the plaintiff had done to secure Hart’s rights in the stream, undertook to locate a dam and reservoir on Hart’s land, by which they proposed to take the waters of two of the tributaries of the Pocantico river to supply the village of Tarrytown with water, and on April 21, 1888, filed a map thereof and instituted proceedings to condemn for their use the riparian rights of Hart.

It further appears that on the 29th of May, 1886, the plaintiff caused to be filed in the office of the clerk of the county a map showing the location of the-dam and reservoir which have been constructed, and of the lands necessary to be taken therefor; that on April 9, 1888, at a meeting of the company, it was resolved that the maps prepared by the engineer of the company showing the location of lands required for the high service reservoir with the rights of way thereto, to be erected by the company on the Baylies property and also the storage reservoir located below the present one to be erected on Phelphs and Rice properties be adopted, and the president and secretary directed to sign the same and attach the corporate seal of the company thereto according to law, and cause the same to be filed in the county clerk’s office. The map so adopted and approved was filed in the office of the clerk on the 7th day of May, 1888, but not until after the defendants had filed their map.

It is quite apparent that it was not within the contemplation of the plaintiff at the time of the filing of its original map in 1886 to construct the high service reservoir or the storage reservoir. The dam and reservoir as it now exists with the property necessary to be taken therefor with the necessary pipe lines therefrom is all that was covered by that map. It is true that the lower riparian owners upon the stream were entitled to damages by reason of the diversion of the water of the stream at the plaintiff’s dam and reservoir. It was the duty of the plaintiff to settle with such owners for the damage so occasioned them, but we do not understand that this would deprive the defendant or any other company of the right to locate its works upon the same stream below the plaintiff’s works. The plaintiff by its dam and reservoir only could divert the water of the stream at that place. All of the overflow or surplus together with that which entered from tributaries below the dam would continue on down the natural bed of the stream, and this surplus was available for the use of other companies. But it is claimed on behalf of the plaintiff, that it had found it necessary to also appropriate this surplus as well as that coming to the river from the tributaries below the dam, and that this appropriation was finally determined upon at the meeting of the company on April 9th ; that in order to carry out the enterprise it had acquired the lands necessary for the new storage reservoir with the right to divert the water of the river thereat instead of the dam above, and that all" of the rights of the riparian owners between the company’s dam and its proposed storage reservoir-had'been acquired,-with the exception of that belonging to Hart, and that it was proceeding with due diligence to acquire his interests when the defendants, with full knowledge of the plaintiff’s purposes and plans, filed their map and instituted their proceedings to condemn. It is under these circumstances that the plaintiff seeks to enjoin the defendants.

As to the river below the plaintiff’s dam the defendants succeeded in filing 'its map before the plaintiff, but we do not regard this act as necessarily giving the defendants exclusive right to condemn and acquire the lower riparian rights in the river.

We are aware that in the case of The Rochester, Hornellsville & Lackawanna R. R. Co. v. The N. Y., L. E. & W. R. R. Co., 110 N. Y., 128; 16 St. Rep., 838, it was held that where a railroad corporation has made and filed a map and survey of the line of route it intends to adopt for the construction of its road, and has given the required notice, to all persons affected by such construction, and no change of route is made as the result of any proceeding by any land owner or occupant, it has thereby acquired a right to construct and operate its road upon such line exclusive in that respect as to all other roads or corporations.

But in the case of a railroad, the statute provides for the location of its route through the counties which it has to pass, and such location is made known by the map and survey which it places on fila. The statute, then, within a specified time, gives to-the persons interested the right to institute proceedings to change the location. If this is not done, the road becomes located at the place indicated upon the map filed, and the company is thus given the exclusive right to construct and operate its road upon such line. But no such provision is embraced in the statute giving to water works companies the right to locate their dam. or reservoir.

The provisions of that act as amended by chapter 415 of the Laws of 1876, provides that after the company shall have fully completed its organization and shall have made a contract with any town or village as provided in the act to supply the same with pure and wholesome water, the company and its agents and employes shall be authorized to enter upon any land or water for the purpose of making surveys and to agree with the owner of the property, which may be required for the purposes of the act, as to the amount of compensation to be paid, such owner; but before entering, taking or using any land for such purposes, the company shall cause a survey and map to be made of the lands intended to be taken or entered upon, on which the land of each owner or occupant shall be designated, which map shall be signed, by the president of the company and its secretary, and filed in the office of the county clerk.

It will be observed that under the provisions of this statute the map is to be filed before the company enters upon the land for the purpose of using it But it may enter upon the lands for the purpose of making surveys and acquiring title by agreement with the owner, before such map is filed; and that is what it appears had. been done by the plaintiff in this case.

Phelphs granted unto the plaintiff “the full right and privilege to forever divert the waters of the Pocantico river from my premises situate, lying and being in the town of. Mt. Pleasant, county of Westchester and state of New York, and use the same for all its purposes.”

Beatty granted unto the plaintiff, “its successors or assigns, the full right and privilege to forever divert the waters of the Pocantico river from my premises in said town, county and state, and use the same for all its purposes.”

Harriet Horton granted “ all my riparian rights in and to said Pocantico river, and hereby sell and assign the same riparian rights to said Pocantico Water Works Company, for myself, heirs, executors, administrators and assigns.”

Carle granted to the plaintiff, “its successors or assigns,.the full right and privilege to forever divert the waters of Pocantico river from my premises situate, lying and being in the town of Mt. Pleasant, county of Westchester and state of New York, and use the same for all its purposes.”

Rockefeller granted unto the plaintiff “ all my right, title and interest and claim of, in and to the" water of the Pocantico river and release all damages for the diversion thereof on or along my premises by said company for the purposes for which it was chartered.”

Rice conveyed lands to the plaintiff which embraced the bed of the stream and carried with it the riparian rights of the grantor.

Other lands were acquired by purchase and proceedings to condemn which we do not deem it necessary to mention in detail.

We have called attention to the lands lying between the company’s dam and its proposed storage reservoir, all of which had been acquired by the plaintiff,, with the exception of Hart’s, prior to the time that the defendants filed their map, and in each grant the right was given to the plaintiff to divert the water running in the stream at the premises. This would include all of the overflow from the company’s dam, as well as all of the water which should enter the stream from the tributaries below the dam and above thp premises so acquired.

Hart's property is located upon the river above the premises mentioned as having been acquired by the plaintiff. If the defendants are permitted to locate their dam and reservoir upon the Hart property it will cut off the water which otherwise would naturally flow through the river. They would consequently have to acquire from the plaintiff its rights to the water flowing through the premises mentioned. This they claim the right to do by proceedings to condemn and for that purpose their map was filed.

In view of the fact that the statute gave to the plaintiff the right to acquire land and water rights by agreement with the owners before filing its map, we do not think that its rights acquired by such agreements were impaired by reason of the filing of defendants’ map.

It is claimed, however, that these rights acquired by the plaintiff, were not for the public use, had not been so devoted, and that they were not necessary for the purposes of its incorporation.

The term “ public use ” as used in connection with the right of eminent domain is not so easily defined. The legislature has no power to take the property of one individual and- pass it over to another, unless the use to which it is to be applied is for the public benefit. The question of public use is a judicial one and must be determined by the courts. It is not affected by the agency employed, for it may be vested in private persons who may be actuated solely by motives of private gain, if the rise to be made, thereof is for the benefit of the public. It has consequently been held that railroads, canals, turnpikes, ferries, sewers, gas and water companies are for a public use, and the legislature may give them the right to take the real estate necessary for their use under the right of eminent domain. It is doubtless true that in order to make the use public a duty must devolve upon the persons or corporation holding the property to furnish the public with the use intended. The term implies “ the use of many ” or “by the public,” but it may be limited to the inhabitants of a small or restricted locality, but the use must be in common and not for a particular individual. Lewis on Eminent Domain, chap. 7; Olmsted v. The Proprietors of the Morris Aqueduct, 46 N. J. Law., 495; Inhabitants of Wayland v. The County Commissioners of Middlesex, 4 Gray, 500; St. Helena Water Company v. Forbes, 62 California, 182; In the Matter of the Application of the New Rochelle Water Company, 46 Hun, 525; 12 St. Rep., 646; The Stamford Water Company v. Stanley, 39 Hun, 424.

The statute under which the plaintiff was incorporated gives the right of eminent domain after the completion of the organization of the company and its contract with the town or village to supply the inhabitants thereof with pure and wholesome water. The contract does not of itself make the use public, but it does impose upon the ¡jlaintiff a duty to supply the villages- with whom the contract was made with water. It being with villages in which the inhabitants thereof have the right to its common use, it becomes public within the rule uniformly recognized by the courts.

But it is said that the plaintiff has entered into contracts with Rockefeller, Horton, Legate and others, persons of whom the plaintiff has secured its water rights, to supply them, their cattle, etc., with necessary water. Very true. It also may engage with every householder in the village of North Tarrytown to supply them with water. This would not destroy the public use. It would rather tend to show use by many, and thus establish that the use was for the public benefit. With the persons named there are special contracts, but those contracts were made for the purpose of securing their riparian rights.

It is true that the rights of the plaintiff acquired below its dam have not as yet been devoted to a public use, but at the time this action was commenced it had not had time to complete the structures necessary therefor; that it was proceeding in good faith and .with due diligence was a fact found by the trial court.

The property mus't be necessary for the purposes of the incorporation. This fact has also been found by the trial court, and when we take into consideration that the inhabitants of three villages are dependent upon the supply which the plaintiff is able to furnish, our changeable seasons and the liability to long droughts, we are not disposed to interfere with such finding, but rather to adopt the language in the case of Olmsted v. The Proprietors of the Morris Aqueduct, 47 N. J. Law, 311; “It is impossible to estimate with precision the quantity of water that will be needed to supply the wants of a population of * * * Nor can it be computed with accuracy what the supply of water will be from the district hitherto relied upon. In a matter of such extreme necessity, all contingencies must be provided for, and the supply should be so ample that a lack of water could not be reasonably apprehended. A supply to that extent is necessary to enable the company to perform its duty to its consumers.”

We do not deem discussion necessary as to the other questions raised.

The judgment should be modified so as to only enjoin the defendants from constructing, erecting or maintaining any dam or reservoir upon the Pocantico river above the point where the plaintiff has located its storage reservoir, and as so modified the judgment should be affirmed, with costs.

All concur.


text:
    John J. Pryor, Resp’t, v. Hubbard A. Foster, App’lt.

      (Court of Appeals, Second Division,

      Filed December 1, 1891.)

    1. Fraud—Landlord and tenant.—Waiver.
    Defendant in January, 1887, leased plaintiff a house for fifteen months and five days. The latter paid the rent from month to month during the entire term, and subsequently brought this action to recover damages for false representations by defendant to the effect that the furnace would heat the house with ten tons of coal per year. During the term they had a number of conversations, in which plaintiff told defendant that the furnace did not heat the house, and that he would hold him liable. Held, that plaintiff did not waive his right to recover damages by paying the rent.
    2. Same—Measure op damages.
    Plaintiff’s damages did not arise solely in consequence of the payments of rent reserved by the lease, for when a party to a contract perpetrates a fraud, he commits a wrong for which he is liable to the defrauded party in at least nominal damages.
    Appeal from a judgment of the superior court of Buffalo, affirming a judgment entered by the municipal court of Buffalo.

      Edmund J. Plumley, for app’lt; Tracy C. Becker, for resp’t.

       Affirming 24 St. Rep., 917.

   Haight, J.

On the 27th day of January, 1887, the defendant leased to the plaintiff a house on the corner of Allen and Wads-, worth streets, in the city of Buffalo, for the term of fifteen months and five days.

This action was brought to recover damages for alleged false ■ representations made by the defendant to the plaintiff to the effect that the furnace in the house was a good one; that it heated the house nicely and comfortably with from eight to ten tons of coal per year; that in a moderate winter it would heat the house thoroughly with eight tons, and in a cold winter with ten tons.

Fraud must be proved, and not presumed. The representations alleged must be made with a knowledge that they are false and untrue, "and for the purpose of deceiving the plaintiff. That these facts must be established to the satisfaction of the jury no one will question.

Upon the- trial evidence was given on behalf of the plaintiff tending to show that the representations were made by the defendant ; that they were false and known by him so to be, and were made with the intent to induce the plaintiff to enter into the lease. Whilst this evidence was controverted, it became a question of fact for the determination of the trial court, and in-, -asmuch as the judgment of that court has been affirmed by the general term of the superior court, that determination must here be considered final and conclusive. There being evidence to .sustain the finding, the defendant cannot here avail himself of his ■exception taken upon the refusal of his motion for a non-suit.

We therefore pass to the consideration of the main question raised for review, and that is whether or not the plaintiff’s right to maintain this action has been waived by his subsequent conduct. z .

The rule is /that where a fraud is perpetrated in procuring the ■execution of a contract the party defrauded has an election of remedies. He may, after knowledge of the fraud, rescind the ■contract and recover back that which he has parted with, or he may continue to perform on his part and maintain an action for such damages as he has sustained by reason of the fraud. Whitney v. Allaire, 1 Hill, 484; S. C., 4 Denio, 554; aff’d, 1 N. Y., 305; Miller v. Barber, 66 N. Y., 558.

If he rescind he must do so immediately upon the discovery of the fraud, and if he continue the use and occupation of the property received under the contract he will be deemed to have elected to affirm it. Strong v. Strong, 102 N. Y., 69 ; Schiffer v. Dietz, 83 id., 300.

The plaintiff in this case did not rescind. He continued in the use and occupation of the premises during the entire term for which they were leased, and jjaid the rent thereon from month to month as it became due and payable.

He may, however, have his action for damages unless he has waived the same.

In Bigelow on Fraud, 184, it is said that If a party, with knowledge that a fraud has been perpetrated upon him in a particular transaction, confirmed the transaction by making new agreements or engagements respecting it, or by retaining and using the subject of it after knowledge, or otherwise recognize it as binding, he thereby waives the right to treat it as invalid and abandons his right to rescind if it be a case of contract, or to redress if it be a tort not attended with a contract with the wrongdoer. If the fraud result in a contract, performance of the same after discovering that it was fraudulently obtained by the opposite party does not preclude a person from suing for damages on account of the fraud. The injured party may retain the benefits of the contract, confirm its validity and still recover damages for the fraud by which he was induced to make it, or he may recoup any damages which he has sustained if the opposite party sue him for money due on the contract, or for other failure to perform it.”' * * * And again, “There must be something equivalent to a ratification of the contract after discovery of the fraud; and this may be either by acts of express recognition of its binding force,, or by allowing the other party to proceed upon it and change his position, or by the intervention of the rights and interests of third, innocent persons. But such facts as these merely preclude the injured party from repudiating the contract. He may still bring 'an action for the damage sustained by being drawn into the contract, even though the contract has passed into judgment.”

In Cooley on Torts, 505, it is said that “ Fraud may be waived by an express affirmance of the contract. Where an affirmance is-relied upon it should appear that the party having a right to complain of the fraud freely and with a full knowledge of his rights in some form clearly manifested his intention to abide by the contract and waive remedy he might have had for the deception.”

An in St. John v. Hendrickson, 81 Ind., 350-352, it is said that “There may be a waiver of a right to recover damages for the loss resulting from false and fraudulent representations by an express affirmance. It is essential to such a waiver that the party should possess full knowledge of the fraud practiced upon him ; that he should intend to confirm the contract and abandon all right to-recover for the loss resulting from the fraud.” * * * And again the court says: “We fully recognize and approve the rule that a party may retain what he received and stand to his bargain and recover for the loss caused him by the fraud. * * * We neither hold, nor mean to hold, that affirmance by retention of the thing bargained for cuts off an action for damages. We do hold that where a party with full knowledge of all the material facts-does an act which indicates his intention to stand to the contract- and waive all right of action for the fraud, he cannot maintain an action for the original wrong practiced upon him. Where theaffirmance of the contract is equivalent to a ratification all right-of action is gone. * It is only equivalent to a ratification when made with full knowledge of the fraud and of all material facts, and with the intention of abiding by the contract and waiving all right to recover for the deception.”

It will thus be seen that the question of waiver is largely one of intent. It appears from the testimony of the plaintiff that he-moved into the house on the 20th of February; that immediately thereafter he discovered that the furnace would not heat the house, and that he had several talks with the defendant in reference thereto; that on one occasion the defendant came to the house and asked the plaintiff if he had turned the stopcocks, and said, “ If you want heat on one side of the house turn this; if the other, turn .this;” that the plaintiff then told him that it was impossible to heat the house; that he had never seen .a day in cold weather when he could sit comfortably in any room unless all. the heat was thrown into that room; that on another occasion he had a conversation with the defendant at the store on or about the 2d day of May; that he then said to the defendant that it was impossible to heat the house with the furnace; that he must fix it or he would hold him responsible. These conversations occurring from time to time shortly after the discovery of the fact that the furnace would not heat the house, accompanied with the plaintiff’s statement that he should hold the defendant responsible, does not indicate an intent on his part to waive his right to recover damages. The question is therefore narrowed to the determination as to whether the payment of rent from month to month raises the presumption of an intent to waive the fraud. It is not apparent that the payment of the rent changed the position of the defendant The lease between the parties had been executed. If the plaintiff had been induced to enter into it through the fraud of the defendant he was entitled to maintain his action for the damages he had sustained immediately upon the discovery of the fraud. The liability of the defendant was neither increased nor diminished by such payment The plaintiff’s measure of damages was the difference in the rental value of the premises as they were and as they would have been had they been as represented. The plaintiff had the Tight to make as good a bargain as he could, and was entitled to the full benefits thereof. He was therefore entitled to full indemnity for the damages that he sustained. Krumm v. Beach, 96 N. Y., 398-407.

His damages did not arise solely in consequence of the payments of rent reserved by the lease, as is contended, for when a party to a contract perpetrates a fraud he commits a wrong for which he is liable to the defrauded party in at least nominal damages, even though no actual damages be shown. Northrop v. Hill, 57 N. Y., 351-354.

In the case of Whitney v. Allaire, supra, the action was for rent under a lease. The defendant sought' to offset the amount which he had been compelled to pay a third party for an adjoining lot which the plaintiff had falsely and fraudulently represented to be his and included in the lease. It was held that the defendant was entitled to a deduction by reason of the fraud of the sum which he had been so compelled to pay.

In the case of Cook v. Soule, 56 N. Y., 420, it was held that in an action to recover rent the lessee had a right to set up as a counterclaim damages arising from the breach of an agreement in the lease on the part of the lessor to keep the premises in repair; that the fact, that the lessee had paid the rent except for the last ■quarter does not deprive him of the right to counterclaim his damages for the entire year, and if in excess of the rent, he is entitled to a verdict for such excess. See, also, Dennison v. Grove, 52 N. J. Law, 144.

Whilst the plaintiff might have offset his damages in an action for rent reserved, we do not think he was bound to refuse payment thereof and then wait for an action to be brought against him therefor. Being a tenant, he might be proceeded against in summary proceedings for the non-payment of rent. In such proceedings iris defense of fraud would not be available. Whether he could interfere through equity and restrain the proceedings, it is not necessary to now consider.

We do not regard the case of The People v. Stephens, 71 N. Y., 527, or that of Barr v. The N. Y., L. E. & W. R. Co., 125 N. Y., 263; 34 St. Rep., 743, to be in conflict with the views, above expressed.

In the former case the action was brought to recover damages alleged to have been sustained in consequence of a fraudulent and unlawful combination and conspiracy between defendants to prevent competition and to deceive the contracting board in letting repair contracts for certain sections oh the state canals at excessive prices. The action was brought by the attorney-general to recover moneys paid by the state under such contracts in excess of the fair value of the work performed and materials furnished. Subsequently an act was passed, Laws of 1870, chap. 55, by which the canal board was authorized, upon the recommendation of the canal commissioners, whenever they should deem it to the interest of the state, to cancel and annul any contract or contracts for the repairs of the canals theretofore made, by a resolution to be entered on the minutes of the board, and that every contractor whose contract should be cancelled and annulled by the board should be entitled to receive the money deposited as security for the performance of his contract, with the accumulated interest thereon, together with the money earned on such contract up to. the time of the annulling thereof and a fair compensation for the tools, materials and implements necessarily procured for the purpose of performing the contract. The canal board did not see fit to cancel the contract of the defendants in that action, but required them to perform it and at the end of each month voluntarily paid the amount earned under the contract.

It was held that this act having been passed with full knowledge on the part of the legislature of the means by which the contract had been obtained, that it must be assumed that the legislature did not deem it in the interest of the state to avail itself of the right to claim damages for the fraud nor to refuse payment for the work already done.

It is true that Allen, J., in delivering the opinion of the court says, that “ The parting with the consideration constitutes the legal damage, and that being done with full knowledge of the cheat, fraud or deception cannot be alleged ” * * * That “ the state agents acting within the scope of their authority with full knowledge of the acts and combinations charged and every fact affecting the validity of the contract, and with full knowledge of the character and value of the services and materials rendered and furnished, required of the deféndants a performance of the contract and at the end of each month paid the-stipulated compensation without protest or objection and without coercion or duress.” He further states: “It follows that having the power and the right to repudiate and refuse to perform the contract after the commencement of performance and without waiving liability for damages if the fraud existed as alleged, a continuance of the contract with knowledge of the fraud, and under circumstances entitling the contractor to the prices stipulated by the contract, and voluntarily paying the stipulated compensation, was a waiver of the fraud,”

But it will be observed that in that case the contract, unlike the one under consideration in this case, was executory and materially different. The action was to recover back money in excess of the true value of the work performed which had been voluntarily paid by the state with full knowledge of the fraudulent conspiracy. Ho question was made but that the contractors had performed their work in accordance with the contract. The only damages therefore which the state could suffer was because of the payment of a greater sum than the work was reasonably or fairly worth. The state, as we have seen, had the right to rescind the contract and had it done so or had it refused to pay for the services performed it would have suffered no damage. It was therefore held that the payments were voluntary and that the plaintiff could not recover.

But in this case a very different question is presented. As we have shown, a different rule prevails as to the measure of damages. The plaintiff leased the premises in mid-winter and moved into the same with his family. He could not then be compelled to rescind the contract or be deemed to have waived it, for as we have shown he had an election of remedies. It might not have been convenient for him at that season of the year to find another house into which he could move. He had the right to continue to occupy the house under his executed contract and demand the damages that he had suffered by reason of the fraud, and it does not appear to us that under the circumstances of this case that his payment of the rent, thereby avoiding the annoyance of summary proceedings, should be construed as a waiver of his right to such damages.

In Barr v. The N. Y., L. E. & W. R. Co., supra, the case appears to have been disposed of upon the ground of ratification, and the question of waiver by reason of rent paid does not appear to have been considered.

We do not deem discussion necessary as to the other points raised.

The j udgment should be affirmed, with costs.

All concur.


author: Vann, J.

text:
    James R. Watts, App’lt, v. Samuel B. Adler, Resp't.

      (Court of Appeals, Second Division,

      Filed December 1, 1891.)

    Pabtnebshif—Accounting—When action fob will lie afteb dissolution.
    The fact that the parties had dissolved partnership voluntarily, and plaintiff had been authorized to liquidate the business of the firm, does not prevent him from maintaining an action for an accounting to compel the other partner to pay over any balance that .might be established against him, unless there has been a settlement between them of all their copartnership transactions.

      Appeal from a judgment of the general term of the supreme court, in the first judicial department, affirming a judgment entered on the decision of the court at special term.
    This was an action for an accounting, between former co-partners, after a voluntary dissolution of the firm.
    The articles of co-partnership provided, among other things, that, “for the purpose of carrying on the business of wholesale coal dealers,” the plaintiff and defendant should be co-partners from January 13, 1885, until January 12, 1888, and that on or before May 1, 1885, each partner should contribute as capital the sum of $10,000. The profits were to be shared, and the losses borne, in the proportion of sixty-three per cent by the plaintiff to thirty-seven per cent by the defendant. Upon the expiration or dissolution of the firm the plaintiff was to “ have the exclusive right to the good will of the business and to liquidate ” its affairs. The plaintiff paid in his share of the capital, but the defendant did not pay in all of his, and both parties drew out freely prior to the 2d of September, 1885, when the firm was dissolved by mutual consent. At this time the defendant was indebted to the firm to quite a large amount for coal purchased by him. There were uncollected accounts, exceeding twenty-five in number, and some unsettled liabilities, but the amount to be collected or paid did not appear. The firm had a lease of the premises it occupied, and the term did not end until May 1, 1888. The rent reserved was at the rate of $1,500 for the first year, and $1,750 for each remaining year, payable quarterly. The plaintiff, “ as liquidator,” took possession of the books and assets of the firm, and paid bills, but did not discharge all of the liabilities. He purchased coal to fill the orders taken before the dissolution, and endeavored to dispose of the lease, as he testified, pursuant to an agreement between himself and the defendant, but was unable to do so because he had not the money required to comply with the terms proposed.
    This action was commenced February 4, 1887.-
    Further facts appear in the opinion.

      Treadwell Cleveland, for app’lt; Jacob F. Miller, for resp’t

       Reversing 27 St. Rep., 183.

   Vann, J.

On the first trial of this action the complaint was dismissed upon the ground that it does not state facts sufficient to constitute a cause of action, in that it failed to show that the plaintiff had any right to equitable relief, but the judgment was reversed by the general term, which held that when a copartnership has been dissolved and the accounts are unsettled, an action in equity for an accounting is proper to settle the rights of the parties. Watts v. Adler, 13 St. Rep., 553. The defendant did not appeal from that decision, but upon the second trial, which is now under review, renewed his motion to dismiss the complaint upon the same ground as before, and now insists that the position thus taken is a complete answer to this appeal. The defendant did not plead a want of equitable jurisdiction in his answer, nor allege that the plaintiff had an adequate remedy at law, and hence was in no situation to insist upon the trial that an action in equity would not lie. Truscott v. King, 6 N. Y., 147, 165; Town of Mentz v. Cook, 108 id., 504, 508; 13 St. Rep., 845; Ostrander v. Weber, 114 N. Y., 95, 102 ; 22 St. Rep., 979 ; Hyatt v. Ingalls, 124 N. Y., 93, 105 ; 35 St. Rep., 114. Moreover, we see nothing in this case to take it out of the general rule that an action in equity for an accounting is the appropriate, if not exclusive, remedy to adjust and settle the affairs of a copartnership. Story Eq. Jur. (13th ed.), §§ 441, 466; 2 Bates on Partnership, § 921; 2 Bindley on Partnership (3d ed.), 1000. As was said by Mr. Justice Daniels in his dissenting opinion below: “ The fact that the parties had largely settled their affairs prior to the commencement of the action formed no objection to their completion and adjustment through its intervention.” Although the plaintiff was authorized to liquidate the business of the firm, still he could maintain an action for an accounting and thereby compel the defendant to pay over any balance that might be established against him. Each partner has a right to an accounting from his copartner as to all dealings and transactions connected with the business of the firm, and, as the result may indicate, either to a ratable distribution of any surplus there may be after payment of the debts, or to a ratable contribution to make up the sum required to discharge the debts. Thus, all the obligations, both express and implied, arising from the copartnership agreement, may be enforced in a convenient and effective manner by a court having power to adapt its action to every variety of circumstances.

Upon the last trial the court found as facts that when the firm was dissolved a balance was struck and a settlement had between the parties of all their copartnership transactions; that pursuant thereto the defendant gave to the plaintiff his two promissory notes for $1,000 each, and “ that the transactions between the parties were then and there stated and settled, and no fraud or mistake appears whereby the settlement thus made is or can be impeached.” This finding is the foundation of the judgment dismissing the complaint, and the exception taken by the plaintiff thereto presents the question whether there was any evidence to support it under the rule of appeal to this court Neither party alleged in his pleading, or claimed on the trial, that any final or general settlement had been made. The position of the plaintiff, as stated in the complaint, with reference to the giving of said notes, was “ that upon said dissolution, the defendant being then indebted to the said firm in the sum of $4,694.58, with interest, for coal theretofore sold by it to him, and in other sums, and he alleging that he was not able to pay such indebtedness in cash, it was agreed between the plaintiff and defendant that an approximate calculation be made of the probable final result of the liquidation of the affairs of said firm, estimating in such calculation that the lease of the said offices could be so disposed of as to relieve the said firm from liability for rent thereunder after the 1st day of May, 1886, and that the assets of said firm were actually worth their full face value; that such calculation and estimate was made, and the sum then determined upon, * * * as the approximate sum that would be due by the defendant to the plaintiff in liquidating the affairs of the said firm on account of the aforesaid indebtedness of the defendant for coal, and upon the basis aforesaid, was the sum of $2,000, for which the said defendant * * * made and delivered to the plaintiff his two' certain promissory notes, each for the sum of $1,000, * * * which, when paid, it was agreed should be applied toward the payment of said indebtedness for coal.”

The defendant, by his answer, admitted the making of said notes, which were due and unpaid, but denied the remainder of said allegations. He specifically denied that said notes were given for any indebtedness of his, or that the proceeds thereof were to be applied on account thereof, and alleged that they “ were made by him and received by the plaintiff to be discounted for defendant’s benefit, and the proceeds were to be paid over to him, defendant, which was not done.” It appeared that before the commencement of this action the defendant had sued the plaintiff for converting said notes, and each party in his pleading in that action made the same allegations, in substantially the same words, as to the origin and object of the notes as he subsequently made in this. There was no other material issue joined therein, and the trial resulted in a judgment on the merits in favor of the defendant in that action and the plaintiff in r.his. Thus it was so determined as to admit of no dispute by either party, that said notes were not given in settlement of all the unadjusted matters between the copartners, but were given by the defendant to be applied, when paid, upon his indebtedness to the firm, mainly on account of the coal that he had purchased of it. Lorillard v. Clyde, 122 N. Y., 41; 33 St. Rep., 303.

Upon the trial of this action the plaintiff testified that after the dissolution a statement was made embracing the amount to the credit of defendant’s capital account, the amount 'to the debit of his coal account and the condition of the profit account. A rough estimate was made of the liability under the lease upon the theory that it could be disposed of by May 1, 1886, and of the clerks’ salaries until the close of the year 1885, and “ it was determined that the amount of his indebtedness would not vary much from $2,000, for which he gave ” said notes. The notes were not paid, and the lease was not disposed of, because the plaintiff bad no money to accept the offer that was made to cancel it for the sum of $750. There was no other testimony as to a settlement. The defendant did not claim there was a settlement, nor furnish any evidence on that subject. The case was apparently tried upon the theory, as indicated by the objections, rulings and the omission to take exceptions, that there would be an accounting as a matter of course.

The main struggle was over the lease, the defendant claiming that the plaintiff could have disposed of it if he had wished to. We do not think that there was any evidence of “a settlement between the parties of all their co-partnership transactions.” The liability under the lease was not. adjusted, and the only point considered was the indebtedness of the defendant to the firm. Considering the adjudication in the prior action between the parties and the pleadings in both actions, in connection with the testimony of the plaintiff, which is all the evidence there is, either direct or indirect, upon the subject of a settlement, we think that it conclusively appeared that there was not such a settlement as would defeat an action for an accounting. The finding of the trial court, being without any evidence tending to sustain it, was a ruling upon a question of law, Code Civ. Pro., § 993, and the exception taken thereto by the plaintiff compels us to reverse the judgment appealed from and order a new trial, with costs to abide the final award of costs.

All concur.


author: Parker, J.

text:
    Mary J. Kennedy, Resp’t, v. The Rochester City & Brighton R. R. Co., App’lt.

      (Court of Appeals, Second Division,

      Filed December 1, 1891.)

    1. Negligence—Evidence—Declarations of party injured.
    In an action for damages sustained through negligence plaintiff cannot support his own testimony by proof of declarations respecting his sufferings made to persons other than a physician who is at the time in attendance professionally, unless such complaints form a part of the res gestos.

    2. Same.
    If such complaints are so far detached from the occurrence as to admit of deliberate design and be the product of a calculating policy on the part of the actors, then they cannot be regarded as part of the res gestm.

    Appeal from a judgment of the general term of the supreme court, fifth department, entered on an order affirming a judgment in favor of the plaintiff at circuit

      Thomas Raines, for app’lt; P. Chamberlain, Jr., for resp’t.

       Reversing 26 St. Rep., 871.

   Parker, J.

The judgment under review awards damages to the plaintiff for injuries sustained as a result of a fall from the platform of one of defendant’s street cars, and occasioned, as she alleges, by the negligent conduct of the person in charge of the car, which eventuated in its starting with a “sudden jerk” as she was getting on.

The appellant assigns for error, among other rulings properly presented by exception, that which permitted a sister of the plaintiff to testify to declarations of the plaintiff respecting her sufferings. The questions complained of and the answers thereto are as follows:

Q. State when she came home did she complain at all? A. Yes, sir.

Q. State what she complained of ? Defendant’s counsel objected as incompetent; received and exception. A. Complained of her side and head; pain in her head and side and didn’t get much sleep all night, and then the next morning when she got up she thought she would be able to go to work.

Again the witness was interrogated with reference to the pláintiff’s appearance during her illness, and after testifying that she was pale around the mouth and eyes, she was asked:

Q. Did you notice those? A. Yes, sir; 1 noticed her eyes; they were dark, and she always complained of a numbness right up her side, and she had kind of a prickling,. sharp pain, and then she suffered considerable pain in her back. Defendant’s counsel moved to strike out the evidence that she said she had numbness and prickling pain in her side, as incompetent.

Q. Did she say that when you observed evidences of distress ; what was her condition when she made that remark; did she appear to be in distress? A. Yes, sir. Motion to strike out denied and objection overruled and exception.

While evidence of the character of that under consideration was admissible prior to the statute allowing witnesses to be parties, it is now definitely settled that a party cannot support his own testimony by proof of declarations to the same effect made to persons other than a physician who is at the time in attendance professionally. Roche v. Brooklyn City & Newtown R. R. Co., 105 N. Y., 294; 7 St. Rep., 361. Evidence of exclamations which are natural concomitants and manifestations of pain and suffering are still admissible because regarded as involuntary and natural expressions which a witness may describe for the samé reason that he may the appearance of the party. Hagenlocher v. C. I. & B. R. R. Co., 99 N. Y., 136. Here as in Roche’s case the witness testified not to involuntary exclamations indicating pain, but to answers given to questions asked. But it is urged that in Roche’s case the objectionable evidence related to conversations occurring several weeks after the injury, while here they occurred within a few hours.

There is no imaginary line somewhere between a few hours and a few days, or a few weeks, on one side of which declarations in favor of-a party are admissible in evidence, while on the other they are inadmissible.

Unless such complaints form a part of the res-gestee they cannot be admitted. And if they are so far detached from the occurrence as to admit of deliberate design and be the product of a calculating policy on the part of the actors, then they cannot be regarded as part of the res gesta.

Now in this case, between the time of the accident and the declarations of pain plaintiff had walked in a direction opposite to her home to the street car barns and listened to the conversation which her sister had with the superintendent; then she walked up State street several blocks along which cars were passing every few minutes to “ the four corners ” where she took a car to Hubbell Park, and then walked two blocks home. Certainly it cannot be asserted that this conversation was an incident of the injury in the sense that it emanated immediately from it, or that it stood in any immediate casual relation to the act of falling and its first effect, or that it was not so far separated from the occurrence as to admit of the formation of a plan to strengthen plaintiff’s case against the defendant.

The contention of the respondent that the evidence could not have harmed the defendant, and therefore a reversal need not be had, in any event cannot be sustained. On the trial the defendant attempted to show by the testimony of physicians that the plaintiff was not injured to the extent, if all, asserted by her. Physicians who had made a personal examination of the' plaintiff testified that they could not discover any other than very slight evidences of injury. One of them, mdeed, characterizing the plaintiff as a malingerer.

With such an issue before them, it certainly cannot be said that the jury in reaching a conclusion favorable to the contention of the plaintiff did not attach some importance to the testimony of the witness who related what plaintiff had declared with reference to her pain and its location prior to the commencement of the action.

The judgment should be reversed.

Judgment reversed and new trial granted, with c5sts to abide event.

All concur.


author: Follett, Ch. J.

text:
    Chauncey Stevens, Resp’t, v. E. H. Ogden and A. P. Bigelow, Impl’d, App’lts.

      (Court of Appeals, Second Division,

      Filed December 1, 1891.)

    Mechanics’ lien—Laws 1885, chap 342.
    There is no provision in the mechanic’s lien law (Laws 1885, chap. 342) forbidding a contractor to pay his creditors out of the money due or to become due him from the owner to the exclusion of laborers ana material men who have not filed liens. And where the contractor gives a creditor an order upon the owner of the building, payable out of the amount due him, which is accepted by such owner, it operates as an assignment pro tanto of that fund, provided no lien has been filed at the time of accepting the order.
    Appeal from a judgment of the general term of the supreme court, in the first judicial department, which modified, and, as modified, affirmed a judgment entered on a decision of the special term.
    Between September 21, 1886, and December 22, 1886, Alexander Anderson furnished building materials and made repairs on No. 115jj- Waverly Place, New York, for which he was entitled to receive, January 26, 1887, $1,545.48, pursuant to a contract with Bridget M. Reynolds, the owner in fee of the property.
    While the work was in progress the plaintiff sold ana delivered to Anderson lumber used in the reparation of the building of the value and at the agreed price of $1,097.93, no part of which having been paid, he on the 15th of February, 1887, duly filed a mechanic’s lien, pursuant to chapter 342 of the Laws of 1885, the general mechanic’s lien law of this state.
    Between October 7 and November 5, 1886, E. H. Ogden & Co. sold and delivered to Anderson lumber of the value and of the agreed price of $909.94, a part of which, of the value of $400, was used in repairing the building. No part of said $909.94 has been paid. On the 15th of November, 1886, Anderson executed and delivered to E. H. Ogden & Oo. an order on Bridget M. Reynolds, of which the following is a copy:
    “Please pay to the order of E. H. Ogden & Co. nine hundred and nine 94-100 dollars and charge to account of my contract with you for the carpenter work at 115£ Waverly Place, it being for lumber materials used in construction of same, the amount to be paid of the last payment of $1,900.” This order was given and accepted as payment for said lumber, and on the day of its date it was duly presented to Mrs. Reynolds, but she did not accept it in writing nor promise to pay the amount represented by it.
    November 24, 1886, Anderson, by a written order, directed Mrs. Reynolds to pay Eben Peek $113.76 out of the sum to become due January 26, 1887, for the work performed, which was presented to her November 27th, and she then agreed to pay the amount represented by it. August 1,1887, this action was begun to foreclose the lien filed by the plaintiff. The special term held that the orders drawn in favor of E. H. Ogden & Co. and Peek were valid assignments of portions of the fund ($1,545,48) due January 26, 1887, and that they were entitled to be first paid out of it, and that the plaintiff was only entitled to the remainder. A judgment was entered in accordance with this decision, and the plaintiff appealed to the general term from that part of the judgment which adjudged the claim of E. H. Ogden & Co. to be prior to his, but did not appeal from the part adjudging the claim of Peek to be prior to his. The general term modified the judgment of the special term by deducting $504.94 from the claim of E. H. Ogden & Co., and adjudged that they were entitled to $400, the value of the lumber sold by them, which was used on the building, with interest thereon from November 15, 1886, and gave the claim of the firm priority over the claim of the plaintiff to that extent, and awarded to him the remainder, without costs to either party. Prom this j udgment E. H. Ogden & Co. appeal to this court.

      Charles H. Machin, for resp’t; Charles A, Decker, for app’lts.

       Reversing 27 St. Rep., 497.

   Follett, Ch. J.

The order drawn by the contractor on the owner in favor of E. H. Ogden & Co. for $909.94 being, by its terms, payable out of a particular fund specified in the order, operated as an assignment pro tanto of that fund. Brill v. Tuttle, 81 N. Y., 454; Conselyea v. Blanchard, 103 id., 222; 2 St. Rep., 738; Lauer v. Dunn, 115 N. Y., 405; 26 St. Rep., 412.

In McCorkle v. Herrman, 22 St. Rep., 519 ; rev’d 117 N. Y., 297; 27 St. Rep., 333, several persons had performed labor and furnished materials for a building erected by a contractor for the owner. After the work had been done and the materials supplied, but before any lien was filed, a judgment creditor of the contractor began supplementary proceedings to collect his judgment, which did not arise out of and had no connection with the building contract, and procured the appointment of a receiver. Subsequently the laborers and material men duly filed their liens, and the question arose whether they or the receiver had the prior right to the sum due from the owner to the contractor.

It was held at the general term that the lienors had the prior right. In discussing this question the court said: The statute gives a creditor a lien against a particular fund upon his doing certain things, and that lien is superior to the claim of any other creditor who has not taken the steps designated by the statutes to secure a liem The plaintiff, by his appointment as receiver, undoubtedly became vested with all the right, title and interest of his judgment debtor in and to this fund as of the time when the preliminary order was served. But he gets no greater right than he would have had if his judgment debtor had assigned the same to him on that day, and he cannot enforce any other or greater rights than his judgment debtor could enforce. His creditors, by the permission of the statute, have been enabled to assert a claim upon this debt due to the judgment debtor, and, by reason of the statute, having taken those steps, they have a superior claim upon this debt due to him, and by the transfer of this debt to another person, whether by operation of law or by a voluntary assignment, the plaintiff’s debtor could not deprive the creditors of the rights which the law conferred upon them.”

The court of appeals reversed the judgment, and in discussing the question, said : “ The real question presented by the demurrer relates to the priority of lien between a judgment-creditor of a contractor who has duly commenced supplementary proceedings on his judgment, terminating in the appointment of a receiver, and laborers and material men who, subsequent to the commence ment of the supplementary proceedings, and within the time allowed by law, filed notices of lien to reach the debt owing the ■contractor, under a contract with the owner of a building for its construction. The section of the lien law, chap. 342 of the Laws •of 1885, which governs the right of the lienors in this case, prescribes that upon ‘ filing the notice of lien ’ a lien shall be acquired, etc. The filing of the notice originates the lien. Anterior to this act the laborer or material man has no preferential right to be paid for his labor or material out of the sum which is due from the owner of the building to the contractor, but stands in the same position as other creditors. He may subject the debt to a lien in his favor on filing the notice and taking the proceeding prescribed by the act. But if before this has been done other ■creditors, pursuing the usual remedies for the collection of debts, have acquired a legal or equitable right to have the debt applied in satisfaction of their claims, the right is not overreached by liens subsequently filed under the act, unless priority is given by the provisions of the act itself.”

“ Which of the claimants have the prior right? We think the plaintiff, as receiver, has the superior claim. He stands as the assignee of the claim of the contractor against the defendant, by a title which ante-dates the filing of the notices of lien. When the liens -were filed there was a debt owing by the defendant. If the proceedings instituted by the creditor, whom the plaintiff represents, had been abandoned, the liens would have had priority. But not having been abandoned, and the equitable lien existing when the liens were filed having been converted into a legal title as of a time anterior to the filing of the liens, the right to the debt, as between the plaintiff and the lienors, vested in the former. The plaintiff, we think, stands' in as good a position at least as if prior to the filing of the liens the contractor had in good faith assigned his claim against the defendant to the creditor in the supplementary proceedings as security for his debt The assignee, under such an assignment, according to the general current of authorities, would take precedence over lienors under liens subsequently filed.”

The case cited, like the one at bar, arose under chap. 342, Laws 1885, and is decisive of the question presented.

There is no provision in the statute forbidding a contractor to-pay his creditors out of the money due or to become due him. from the owner, to the exclusion of laborers and material men who have not filed liens. This may be an omission, but if so, it can only be supplied by the legislature, for the courts cannot extend these purely statutory rights beyond the terms of the statute-by which they are created.

The judgment of the general term should be reversed, and the-judgment entered on the decision of the special term affirmed, with costs.

All concur, except Parker, J., absent.