author: O’Brien, J.

text:
    John Hope, by Guardian, App’lt, v. William A. Brewer, Jr., et al., Resp’ts.

      (Court of Appeals,

      Filed November 29, 1892.)

    Will—Trusts.
    Testator, by his will, gave „ the residue of his estate to his executors in trust to found an infirmary in Scotland. By a codicil he revoked this power and directed them to realize the residue as soon as they conveniently could do so, and pay the proceeds to certain persons in Scotland, in trust, to found and maintain a hospital there, the benefits thereof to be bestowed •upon such “ sick, infirm or aged persons in reduced circumstances in the town of L.” as the trustees should judge proper objects of the bounty. Held, that even if it be assumed that the bequest of the residuary estate to the Scotch trustees in trust for the purpose of founding and maintaining the hospital should be held void under our law for the reason that the absolute ownership of personal property is unlawfully suspended, or that the beneficiaries of the trust are not sufficiently specified or defined, still that does not render the disposition invalid, as these objections do not apply to a gift in trust to be administered in Scotland and perfectly valid there.
    Appeal from judgment of the supreme court, general term, first department, affirming judgment at special term sustaining the validity of the trust of the residuary estate created by the last will and testament of Thomas Hope, deceased.

      Delos McCurdy, for app’lt; James Thomson and Robert Hunter McGrath, Jr., for resp’ts.

       Affirming 46 St. Rep., 803.

   O’Brien, J.

The general question presented by this appeal is the validity of the 26th or residuary clause of the will of Thomas Hope, who died on March 3, 1890, without issue. The will contains numerous bequests to collateral relatives and to institutions .and corporations for charitable purposes. By the residuary -clause all the rest, residue and remainder of the testator’s estate was devised and bequeathed to his executors and their survivors, in trust, for the purpose of founding and endowing an infirmary lor the care and relief of sick and infirm persons to be established .at the testator’s native place of Langholm, in Dumfrieshire, Scotland. The testator directed his executors, as trustees, to promptly take all necessary and proper steps for procuring the incorporation and organization of this infirmary. He further directed that if within three years from his decease, and during the lives óf the two executors and trustees named, or within the three years and' during the life of either of them, such infirmary was incorporated and organized, so as to be able to take the bequest, and should, in respect to its organization, purposes and plan of management, be accepted as satisfactory by the trustees, or the survivor of them, then the trustees, or the survivor of them, should forthwith, or as soon as practicable, sell and convert into money all of the said property remaining unsold, and pay over the whole of said trust fund, or estate, to such infirmary; to have and to hol.d forever for its uses and purposes. But if an infirmary, in accordance with these provisions, should not be incorporated and organized and be accepted as satisfactory by the trustees, within three years ,:,after the testator’s death, and during the life of the trustees, then the trustees, or the survivor, and his or their successor or successors, were directed to divide the whole of the said trust fund and estate among, and pay it over to such charitable institutions, then established and existing at Langholm, and competent to take the same, as the trustees should decide, and in such proportions as they or the survivor of them might think proper. The testator left both real and personal estate, and in a subsequent clause .of 'the will the executors were directed to sell the real estate and convert the same into money, as soon after the testator’s death as convenient The will bears, date June 12, 1886, but the residuary clause was materially changed and modified by subsequent codicils. The first codicil, bearing date November 24,1886, directed that in case the trustees should meet with any difficulties or cause of delay in incorporating and organizing the infirmary, provided for in the will, they were authorized and directed, if lawful so to do, to realize the whole of the residuary estate and pay the same over to three trustees in Scotland, named in the codicil, for the purpose of establishing and maintaining such infirmary, and the testator gives directions for the government of the institution and the investment of the fund. It is not necessary to make further reference to this codicil, as it was substantially abrogated by another, bearing date October 24, 1888,' and ■ which furnishes the principal ground for this controversy.

The 26th" or residuary clause of the will, as well as the first codicil, in so far as they relate to the founding and endowment of the infirmary in Scotland, were also changed arid modified by this second codicil by substituting the following provision : “Instead of said .institution being founded and endowed by said trustees in the manner therein mentioned, I direct them, as. soon after my decease as they can conveniently do so, to realize all the rest, residue and remainder of my said property and estate so bequeathed to them, and to pay, assign and make over the whole proceeds thereof,'when and as- realized, to and in favor of William) Elphinstone Malcolm, * * * George Maxwell * * * and Bobert Smellie, residing in ‘Langholm aforesaid, * * ' * as-trustees and fn trust, to the end that they may apply the same in-founding, endowing and maintaining? an institution Jor the care or relief of sick or infirm persons to be established and located at Langholm, my native place, * * * and to be called “ The-Thomas Hope Hospital.” These Scotch trustees, and their successors, are made perpetual governors of the hospital, and are directed and empowered to apply the funds to be received by them from the executors to the erection, completion and organization of the hospital, and provision is made in great detail with respect to the' investment of the fund. and the application of the income. Power is also expressly conferred upon the governors of the institution to enact’statutes and by-laws for its government, and to change or modify them, at their pleasure, whenever in their judgment the object of the charity would be promoted thereby. The particular beneficiaries of the trust, or the persons to be received and cared for in the hospital, are described by the testator in the codicil in the following language: ' .

“And I recommend and appoint the preferences of admission to the said hospital to be as follows, viz.:" (first) sick or infirm persons natives of, and resident in, the said town of Langholm, or the parish of Langholm, or such other parishes in the county of Dumfries as the said governors and trustees in Scotland may from time to timé select and determine ; (second) sick or infirm persons natives of, or resident in, said town or parishes, as aforesaid. And I declare that the said governors aiid trustees in Scotland shall be the sole judges as to the eligibility of the persons to be admitted to the said hospital and benefits thereof, or to participate in this ■endowment, and shall likewise be the sole judges when any such ;sick or infirm person shall cease to be an inmate of said hospital ■or be recipient of the funds of the endowment. And I empower the" said governors and trustees in Scotland at their discretion and if the funds will admit thereof, to give and afford out of said revenues such assistance as they may tliink suitable to such sick, infirm or aged persons in reduced circumstances, natives of or resident in the said town of Langholm or parishes as aforesaid, as they may judge to be proper objects of this endowment without the necessity of their being admitted to the said hospital.

The scheme of the original will contemplated the foundation, endowment and management of the hospital by the executors as trustees. The codicil required the executors to convert the residuary estate into money and pay the same over to the Scotch trustees, who were empowered to" establish the institution and administer the charity. It has been found as a fact by the trial court, and is not now disputed, that this disposition of the residuary estate contained in the residuary clause of the will and in the -second codicil is perfectly valid under the laws of Scotland. The foreign trustees are competent to take the.fund and to administer the trust under Scotch law. The power and duty of the executors to convert the estate .into money is thus expressed 'by the testator immediately following the residuary clause: “ It is my will that my executors hereinafter named, as soon as may be conveniently done after my death, shall sell and convert into money all the real estate, of every name or nature and „ wheresoever situated, of which I shall die seized, possessed or entitled unto, and I hereby authorize and empower my said executors, and the survivor of them, to sell and dispose of said real estate at public or private sale at such time or times, and in such parcels, and upon such terms, and irf such manner as to them shall seem meet” ' .• .

This provision of the will operates to convert the real estate of which Thomas Hope died seized into personalty and subjects it to the operation of the rules of law governing the devolution of personal property. Moncrief v. Ross, 50 N. Y., 431; Power v. Cassidy, 79 id., 602 ; Vincent v. Newhouse, 83 id., 505; Asche v. Asche, 113 id., 232; 22 St. Rep., 799; Fraser v. Trustees of the P. C., 124 N. Y., 479; 36 St. Rep. 471; Underwood v. Curtis, 127 N. Y., 523; 40 St. Rep., 255 ; Lent v. Howard, 89 N. Y., 169; Bisphams’ Principles of Equity, §§ 311, 312.

The plaintiff is the nephew of the testator, and one of the legatees under the will, and he brings this.action to set aside as void disposition of „the residuary estate contained in the 26th clause and the codicils, on the ground that the several provisions for the establishment of the infirmary or hospital are too' indefinite and uncertain in their subjects and objects, and unlawfully suspend the power of alienation of real estate and the absolute ownership personal property. The courts below have, in all respects, sustained the validity of the will and codicils, and the plaintiff alone ■appeals from the judgment. Although it appears that when the testator made the final provision contained in ■ the second codicil the establishment of a charity in his native place, he was temporarily residing at that place in" Scotland, yet it is found that at the time that the will and .codicils were . executed he was domiciled in this state, and -the will has been • proved and established here. , .The scheme of the testator, as -outlined in the residuary clause 'of the will, contemplated the creation of a corporation to hold the property and administer the charity, but in the second - codicil the execution of “the. trust through a corporation to be created in the future seems to have been abandoned. The testator there finally provided that the Scotch trustees named should take and hold the fund, and apply it, as trustees, to the erection of proper buildings, upon land already purchased by the testator, and conveyed to them as trustees, and to the furnishing of the same in a manner suitable for the purposes of the institution, and the income of the balance to be applied to the maintenance of the -.same. The three trustees, and their successors in perpetuity, were to be the governors-and managers, and as such they were to hold and own the property, for the purposes of the trust. The functions of the two°executors with respect to the fund weré administrative merely. They were to pay the .debts and legacies, and pay the. residuary fund, over to the Scotch trustees, and then their powers and duties terminated. . Henceforth, both the title and management of the fund was conferred by the will and codicil upon the foreign trustees. I am unable to see how the vesting of the estate was postponed, or the absolute ownership suspended, in consequence of any power, or duty conferred upon the executors for .any period of time whatever.

The payment of the bequest of the residuary estate to the trustees in Scotland was • to be made by the executors as soon and when the same was converted into money. The fact that such ■conversion might require a period of time not 'measured by lives does not: create an unlawful perpetuity. It was said in Robert v. Corning, 89 N. Y., 228, that such result is accomplished only when there are no persons in being by whom an absolute fee in possession can be conveyed' and that' a- discretionary power conferred upon executors with respect to the time of sale did not susnend the power of sale or the absolute ownership. It was within the legal power of the executors to convert the whole estate into money the day after their appointment and qualification and to pay over the residuary fund to the foreign trustees, and this fact would seem to constitute a sufficient answer to the contention that the absolute ownership was suspended by reason of any power or duty conferred upon the executors. Reference has already been made to the language of the will and codicil wherein the testator undertook to specify and define the persons who were to be the recipients of his charity, or the beneficiaries of the trust. There is no defined beneficiary either named or capable of being ascertained within the rules of law applicable to such cases in order to constitute a valid testamentary, trust under the law of this state. The words “ sick, infirm or aged persons in reduced circumstances,” within a certain town or parish or within such other towns and parishes in a certain county as the governors of the institution might from time to, time select and determine, are entirely too vague and indefinite to satisfy the rule, with respect to the beneficiaries of a trust, which prevails in this state. Fosdick et al. v. Town of Hempstead, 125 N. Y., 581; 35 St. Rep., 863 ; Holland v. Alcock, 108 N. Y., 312; 14 St. Rep., 761. The principle upon which this rule is founded, or at least one of the reasons 'for the rule, is that such a trust is incapable of enforcement and in some of the cases there was no trustee competent to take. Here, however, the trustees are competent to take and hold the fund and the execution of the trust does not depend upon the will of the trustees, but upon the law of the country where the testator directed the fund to be used and the power of its courts over the trustees in the application and management of the property. The fund can lawfully be held and the will of the donor fully carried out at the place where he intended to found the charity and in the manner prescribed by him.

This brings us to the important question in this case; whether the courts of this state are required in- such a case to interpose our own laws with respect to the requisites of a valid testamentary trust in order to defeat the disposition which the testator has made of his property and which is perfectly valid where he intended the gift to take effect.

In the great variety of cases bearing upon the validity of trusts of this character and in the manifold aspects in which questions growing out of such dispositions of property have arisen and been presented to the courts, it is not, perhaps, surprising that in some of. the opinions of the courts dicta, expressed in general language, may be found giving support to the plaintiff’s contention. But I have not been able to find any well considered case, in which the question was directly involved, where a gift to a foreign charity in trust, contained in-a valid testamentary instrument, has been-held void, where there was a trustee competent to take and hold, and the trust was capable of being executed and enforced according to the law of the place to which the property was to be transmitted under the will of the donor. The law of this state inhibiting the creation of trusts not expressly authorized by statute, and the suspension of the power of alienation of real estate and the absolute ownership of personal property, is founded upon a' pub-lie policy of our own. It was said of the English statute of mortmain that its object was political and intended to .have but a local operation. o

It was enacted.to prevent what was deemed a public mischief and not to regulate, as between ancestor and heir, the power of disposing . by will, or to prescribe, as between grantor and grantee, the forms of alienation. It„i§ an incident only, and with reference to a particular object, that the “exercise of the •owner’s dominion over the property is abridged. The restraints which the statutes imposed upon owners of property had reference to a mischief existing in England only. Atty. Gen. v. Stewart, 2 Mer., 143. Statutes of a 0 kindred nature enacted in this state and in the various states of the Union, whatever their form, were intended to operate within and promote the welfare of the people of each particular state, and it was not contemplated that they should have any extra-territorial effect. It is not a matter of any public concern whatever to this state whether the personal property of a person domiciled here shall pass to his heirs or next of kin in a foreign country, or to trustees -in trust' for charity residing there, or even to a foreign corporation for purposes of charity. Vansant v. Roberts, 3 Md., 119.

_ Our law with respect to' the creation of trusts, the suspension of tthe power of alienation of real estate and the absolute ownership .of personal, was designed only to regulate the holding of property under our laws and in our state, and a trust intended to take ■effect in another state, or in a foreign country, would not seem to be within either its letter or spirit. When a citizen of this state, or a person domiciled here, makes a gift of personal estate to foreign trustees for the purpose of a foreign charity, our courts will mot interpose our local laws with respect to trusts and accumulations to arrest the disposition made by the owner of his property, but will inquire as to two things: First, whether all the forms and requisites necessary to constitute a valid testamentary instrument, under our law have been complied with, and, Second, whether the foreign trustees are competent to take the gift for the purposes expressed, and to administer the trust under the law of the country where the gift was to take effect, or, as Judge Rapallp stated the rule with respect to gifts to charity generally, the inquiry is, “ Whether the grantor or devisor of a fund- designed for charity is competent to give, and whether the organized body is endowed by law with capacity to receive and to hold and administer the gift ” Holland v. Alcock, supra, 337.

In this case the testator was unquestionably competent to give, and did make the gift under all the forms and requisites necessary to constitute a valid testamentary disposition. So were the trustees to whom the gift was made competent to take and administer it under Scotch law, and the only question is whether we must defeat, the gift and frustrate the intentions of the testator because he neglected to observe, in all respects, the rules of our local law with regard to the creation of trusts and perpetuities.

Unless we are concluded upon this question by established principles of law, there is no reason growing out of the facts surrounding the case,, or founded upon public policy, for diverting the property into channels not contemplated by the testator.,-, It is no doubt true that the validity of a disposition of personal property at the domicil of the owner is generally the test of its validity in other jurisdictions. But,, this rule, I apprehend, only requires compliance with forms and with principles of law generally or universally recognized as essential to the transfer or transmission of property. If personal property is disposed of will, and in trust for charity, to take effect in another country, no-good reason is apparent for insisting that a full compliance with the local law of the domicil, with respect-to the form or duration of the trust, or the definition of the beneficiaries, is necessary to-the validity of the disposition. Such laws are not generally regarded as limitations upon the power, of the owner to transfer or transmit the property, but regulations applicable to the holding of property in the particular community, founded upon political or social considerations. In Cross v. United States Trust Co., 131 N. Y., 330; 43 St. Rep., 254, we held that a disposition of personal property by will and in the form of a trust, to be executed in this state, made by a person domiciled in another state, valid at the place of the domicil, was valid here, though the absolute ownership of the property was suspended for a period longer than is permitted by our statute. The principal ground of that decision was that our courts were required, under the doctrine of comity, to recognize a disposition of personal property made in another state as valid, if valid there, and hot in its nature unlawful or against public policy. In the creation of the trust our statute in regard to perpetuities was disregarded, but we held that it did not apply to a will made by a person who was domiciled in another state. In order to sustain this will we must go,, a step farther and hold another, jbut a kindred proposition, namely, that a disposition of personal property made in this state by a competent testator in a valid testamentary instrument to trustees in a foreign country, for the purposes of a charity to be established in that country, is -valid, although not in compliance with our statute or the rules of law in force herein regard to trusts and perpetuities, providing it is'valid by the law of the place where the gift is to take effect and which governs the trustees and the property when transmitted there.

If our statute, as I have attempted to show, does not apply to such a case, then there is nothing in the way of the validity of such a disposition of property. The question has been often referred to in this court, and though the precise question was not. involved the expressions of opinion are in favor of sustaining this-will. In the leading case of Chamberlain v. Chamberlain, 43 N. Y., 424, Allen, J., discussing the question, said: The courts of' this state will not administer a foreign charity, but' they will direct money devoted to it to be paid over to-the proper parties, leaving it to-the courts of the state within which the charity is-to be established to provide for its due administration and fdr the= proper application of the legacy. Hill on Trustees, 468 ; 2 Story on Equity Jurisprudence, § 430 ; Prevost of Edinburgh v. Aubery, Ambler, 236; Burbank v. Whitney, 24 Pick., 154; Atty. Gen. v. Lepine, 2 Swanst., 182. * * A gift by will of a citizen of this state to a charity or upon a trust to be administered in a sister state which would be lawful in this state, the domicil of the donor, would not be sustained, if it -was not in accordance with the laws of the state in which the fund was to be administered. Bequests in aid of foreign charities, valid and legal in the place of their existence, will be supported by the courts of the state in which the bequests are made. Hill on Trustees, 457. If the legatee, whether a natural or an artificial person, and whether he takes in his own right or in trust, is capable, by the law of his domicil, to take the legacy ifl the capacity and for the purposes for which it is given, and the bequest is in other respects valid, it will be sustained irrespective of the law of the testator’s domicil. • * * * It is no part of the policy of the state of New York to interdict perpetuities or gifts in mortmain in Pennsylvania or California. Each state determines these matters according to its own views of policy or .right, and no other state has any interest in the question, and there is no reason why the courts of this state should follow the funds bequeathed to the Centenary Fund Society to Pennsylvania to see whether they will be there administered in all respects in strict harmony with our policy and our laws.

“ The question was before the court in Fordyce v. Bridges, 2 Phillips, 497, upon the bequest of a fund in England to be invested in a Scotch entail. Lord Cottenham says: ‘An objection was made that the bequest of a fund, to be invested in a regular Scotch entail, was void as a • perpetuity. The rules acted upon by the bourts of this country with respect to testamentary dispositions tending to perpetuities, relátelo this country only. What the law of Scotland may be upon such a subject the courts of this country have no judicial knowledge nor ’will they, I apprehend, inquire. The fund being to be administered in a foreign country is payable here, though the purpose to which it is to be applied would have been illegal, if the administration of the fund had been to take place in this country. This is exemplified by the well established rule in chses of bequests within the statute of mortmain. A charity legacy, void in this country under the statute of mortmain, is good and payable here if for a charity in Scotland.’ To the same effect is Vansant v. Roberts, 3 Md., 119.”

In the case of Manice v. Manice, 43 N. Y., 303, Judge Rapallo discussing the validity of a bequest by a person domiciled in this state to Yale College, said: “ The direction to pay to the treasurer is a good gift to the college, the college having been -shown to be capable of taking. Emery v. Hitt, 1 Russ., 112; De Witt v. Chandler, 11 Abb. Pr., 459; Hornbeck v. Am. Bible Society, 2 Sandf. Ch., 133. The college is a foreign corporation, it being authorized by the laws of its own state to take.” After discussing the question whether .the words of the will were sufficient to create a trust the learned judge continued: “These are questions, however, which must necessarily be determined by the courts of the state in which the corporation legatee is situated. The fund is to go there, and be there administered. The will of the testator, so far as the courts of this state can act upon it, is-fully executed when the money is paid to the proper, officer of the foreign corporation, and there is no law "of this state prohibiting gifts to such foreign corporation.

“ Though the laws of the state of that corporation may permit it to hold and administer property in perpetuity, or to' accumulate it, the local policy of this state upon that subject is not interfered with, by allowing property of our citizens to pass to such foreign, •corporation, and be administered by it in such foreign state according to'its own laws. Fordyce v. Bridges, 10 Beavan, 105; S. C., 2 Phillips, 497 ; Vansant v. Roberts, 3 Maryl., 119 ; Chamberlain v. Chamberlain, supra, 424.”

The same doctrine was approved in the subsequent case of Despar d v. Churchill, 53 N. Y., 192, and property in this state of at testator in California was remitted to that state to be administered under the will notwithstanding it was devoted =to the purposes of a trust which would have been unlawful in this state,., thqugh valid there. We have recently held that a bequest of the residuary estate of a testator domiciled here to a municipality in. the German Empire was valid, it appearing that the municipality had capacity by the law of the place to take and hold the gift. Matter of Huss, 126 N. Y., 537 ; 37 St. Rep., 789. See also, Kerr v. Dougherty, 79 N. Y., 327 ; Hollis v. The Drew Theological Seminary, 95 id., 166.

We have examined the cases'cited by the learned counsel for the plaintiff in support of his contention.. They contain general expressions of the rule that a testamentary disposition of property invalid at the domicil of the owner is invalid everywhere, and indeed this rule is stated in some of the cases to which. I have referred and, as a general principle, cannot 'be questioned. But, when it is said that such a disposition is invalid everywhere if invalid at the domicil, the rule refers to some defect in the execution of the instrument, the capacity of the testator, the legal construction of the instrument, the form or object of the disposition; and not to the non-compliance, in framing the terms of the trust,, with a local statute or rule of law regulating 'the .holding of prop-, erty by the citizens of the state or country where the will was' made, and which had no extra-territorial force. Perhaps the strongest case in support of the plaintiff’s view is that of Bascom v. Albertson, 34 N. Y., 587. In that case there was a bequest- of the residuary estate by a testator in this state to five unnamed persons as trustees, tti be appointed by the supreme court of the state of Vermont, to found and establish an institution in that, state for the education of females. This bequest was held to be void., The discussion in this court proceeded almost entirely upon the question whether it could be sustained under the English doctrine of charitable uses sanctioned by a majority of the court in Williams v. Williams, 8 N. Y., 525, and it was held that it could not The case differs from the one at bar in at least one important particular. The testator failed to appoint trustees competent to take and it did not appear that those appointed by the action of the judges of the supreme court of Vermont could take or hold, or that the trust could be administered under the laws of that state. Besides, the views expressed in the prevailing opinion, in so far as they are in conflict with the judgment now under review, must be deemed to be modified by the subsequent cases of Chamberlain v. Chamberlain, Manice v. Manice and Despard v. Churchill, supra.

Our conclusion is that, even if it be assumed that the bequest of the residuary estate to the Scotch trustees in trust for the purpose of founding and maintaining the hospital should be held void under our law for the reason thát the absolute ownership of personal property is unlawfully suspended, or that .the' beneficiaries of the trust are not' sufficiently specified or defined, still that does not render the disposition invalid, as these objections do not- apply to a gift in trust to be administered in'Scotland and perfectly valid there. This result, I think, is in harmony with the genéral tendency of courts to sustain testamentary dispositions of property when it fairly can be done under the rules of law, and in accordance with principles of enlightened justice.

' The judgment should, therefore, be affirmed,' with costs to'the executors, the foreign trustees and the plaintiff payable out. of the estate.

All concur.


source: Caselaw Access Project

author: Andrews, J.

license: Public Domain

text:
    Nellie Potter, Adm’rx, Resp’t, v. The New York Central & Hudson River Railroad Co., App’lt.

      (Court of Appeals,

      Filed November 29, 1892.)

    Master and servant—Negligence oe co-servant—Evidence.
    Plaintiff’s intestate was killed while discharging the duty of inspector for defendant, through two cars having been shunted down upon the same track and colliding with the cars between which he stood. Held, that the burden of "showing an omission of duty upon the part of the defendant in not having a brakeman upon the cars was upon the plaintiff, and in the absence of any evidence to the contrary, the presumption is that competent and sufficient servants were employed and proper regulations established^ and that the failure of the brakeman to be at his post was the negligence of a co-servant of intestate, for which defendant was not responsible.
    Appeal from judgment of the New York superior court, general term, affirming judgment in favor of plaintiff entered on a verdict.

      Hamilton Harris, for app’lt; Abram Kling, for resp’t.

       Reversing 46 St. Rep., 895.

   Andrews, J.

The plaintiff’s intestate was, at the time of the accident which caused his death, engaged in his duty of inspecting cars upon a track of the defendant in the city of NewYork, used in part for the storing of cars awaiting inspection. While he was engaged in this business othqr ^ employees of the defendant, under the direction of a yard master, were engaged in drawing out cars from another track, two or three at a time, and shunting them on to the track on which the cars stood which were being inspected by the intestate. ■

The inspection was made ■ by two inspectors, one passing on each side of the cars and making the necessary observations.

The intestate and'his co-employee discovered that one of the bumpers between the first, and second cars from the end of the line in the direction from which the shunted cars came was out of order, and the intestate passed between the two cars and stood between t'he bumpers with a memorandum book in his lland. At that moment two cars were shunted upon the track and collided with the cars which were being inspected by the intestate, and he-was crushed between the bumpers and soon afterwards died.

The complaint charges that-it was the duty of the'.defendant. “ to have flagmen upon the freight cars attached to the engine-when in motion, to signal to the operator of the engine of any obstruction,” and the failure to perform this duty is made by the complaint the'gravamen of the action.

The proof took a somewhat wide scope, and it was claimed on the trial that proper and reasonable care-required that there should have been a brakeman on the shunted cars to control their motion when detached from the.engine, in an emergency.

Upon the issue whether there was a brakeman on the two-shunted cars the" only evidence oh the point, on the part of the plaintiff, was given by the co-employee of the intestate, .who testified that he was thrown down by the collision and that as soon as he got up he looked to see if any brakeman was on the top of the cars which collided with the stationary cars, and that “ there-was no brakeman there.” On the part of the .defendant three-witnesses, • two of them employees of the defendant and one a stranger,, testified that there was a brakeman On the two running-cars at the time of the collision.

When the plaintiff rested the defendant moved for a nonsuituonthe ground that no cause of action had been proven against the defendant, and that the negligence, if any, was that of the intestate. or of a co-servant," and the motion was denied. It was repeated at the conclusion of the whole evidence, and the motion was again denied, and to the denial of each motion exception was-duly taken by the defendant. The jury found a verdict for the plaintiff for $5,000.

We think the motion made on the whole case should have been granted, for the reason that the evidence did not disclose any omission of duty by the defendant, which, under the law of master and servant, made it responsible for the negligence which caused the death of the intestate. That the shunting of the two cars upon the track on which the intestate was engaged in discharging the duty of inspector, and permitting them to come in contact with the stationary cars, was gross negligence, seems to-admit of no doubt. It is assumed that if there had been a brakeman upon the moving cars/and he had discharged his duty, the-collision might have been prevented. While the preponderance-of evidence supports the claim of the defendant that there was a. brakeman on the cars, there was probably sufficient in the evidence given in behalf of the plaintiff to require the submission of the question to the'jury, and it was found by the jury in favor of the contention of the plaintiff. Assuming, therefore, that 0tbere was no brakeman on the shunted cars, the question arises whether this negligence was that of the master or of a co-servant of the intestate. If solely the negligence of a co-servant, the master is not responsible, unless it was- the master’s duty hot only to provide competent and sufficient servants to perform the work of shunting the cars, and to establish proper regulations for the conduct of the business, but also to „ see to it that the servants employed as brakemen or otherwise shouldr be at their posts. It is not claimed that the défendant had failed to employ sufficient and competent servants, including brakemen, to do their work of shifting the cars, or that they were not present in the yard and engaged about the business at and prior to the time of the accident. Nor it is claimed that proper regulations had not been established, defining the duties of employees, and for the management of the-business of the yard. The burden of showing an omission of duty in these respects, if any existed, was upon the plaintiff, and In the absence of any evidence to the contrary, the presumption is that competent and sufficient servants were employed and proper regulations for the management of the business had been established. Rose v. R. R. Co., 58 N. Y., 217.

We think the master’s duty was fully discharged in this case-when these things had been done, and that the failure of the brakeman to be at his post was the negligence of a co-servant of the intestate, for which the master is not responsible.

In the Flike case, 53 N. Y., 549, it was held that it was the duty of a railroad company to man its trains with a sufficient number of brakemen, and that sending out a train with an insufficient number was a violation of the master’s duty, and that it was -no excuse for a failure to have a sufficient number on the train,' that the company employed a sufficient number and that one of the brakemen so employed had overslept himself and for that reason did not áppear.

In this case the casualty resulted from the negligent omission of the brakeman to take his proper position on the top of the moving cars. If in the Flike case the accident had been occasioned by the brakeman’s negligence in not keeping a proper lookout, or by his going inside the car when he should have been on the outside, a different question would have been presented.

In the case óf Rose v. R. R. supra, the negligent act of a train dispatcher in starting trains too near each other, by reason of which the plaintiff’s intestate, a brakeman, was killed, was held not to be the negligence of the master, in the absence of proof that the company had omitted to make suitable regulations for the dispatching of trains. It is quite obvious that the work of shifting cars in a railroad yard must be left in a great measure to the judgment and discretion of the servants of the railroad who are entrusted with the management of the yard. The details must be left to them, and all that the company can do for the protection of its employees is to provide competent co-servants and pre■scribe such regulations as experience shows may be best calculated to secure their safety. The case of Besel v. R. R, 70 N. Y., 171, strongly supports the conclusion we have reached in this case, that the negligence which occasioned the death of the plaintiff’s intestate is not imputable to the defendant.

If the case of Murphy v. R. R., 118 N. Y., 527; .29 St. Rep., 941, can be construed as holding an -adverse view, we think it is opposed to the principle of former decisions. The claim that the defendant’s counsel on the trial assented that the liability of the defendant should depend on the determination by the jury of the fact whether a brakeman was on the moving cars, is, we think, unfounded. The absence of the brakeman was the sole ground ■of liability alleged in the complaint. The defendant’s requests were intended to draw the attention of the court in the first place ■to this situation, and having confined the case of the plaintiff to this issue, he subsequently asked the court to instruct the jury that although there was no brakeman on the cars, yet the plaintiff ■could not recover. In this there was no inconsistency.

We think the judgment should be reversed and a new trial granted.

Judgment reversed and new trial granted, costs to abide event.

All concur.


author: Per Curiam.

text:
    The People, App’lts, v. William J. H. Ballard et al., Resp’ts.

      (Court of Appeals,

      Filed November 29, 1892.)

    Appeal—Motion por reargtoment.
    This case was decided by the court of appeals, second division, which ordered a new trial. Upon this motion for reargument, the defendants contend that the court overlooked the point that there is a plain distinction between the case of a business corporation which has the means or the ability to carry on its business at a profit, and that of such a corporation having no public duties or functions to perform, which finds itself unable, from no fault on the part of its managers, to conduct its business without loss. Reid, that while this court is not prepared to say that such distinction does not exist, yet as a new trial has been ordered, the question can be raised in the court below and brought up if desirable on the pcw appeal, and therefore a reargument should not be had.
    Motion for reargument.

      Treadwell Cleveland, for motion; J. Langdon Ward, opposed.

       48 St. Rep., 166.

   Per Curiam.

Upon the first argument on this appeal, one member of the court was disqualified from sitting; and the remaining judges were equally divided upon the question whether an action of this character can be maintained by the attorney general in the name of the people. The case was thereupon transferred to the second" division, where it was again argued and a decision handed down on October 1, 1892, contemporaneously with the dissolution of that branch of the court. It was there held by a divided court, that the action in its present form was maintainable, and the judgment of the general term, affirming the judgment of the special term, which dismissed the plaintiffs’ complaint, was reversed and a new trial ordered upon the ground that the trustees of a mining company, incorporated under the act of 1848, cannot, even with the consent of a majority of its stockholders, transfer all of its property and assets to another corporation, avowedly incorporated for the purpose of acquiring the same and carrying on its business, and receive in payment therefor the stock of the latter corporation.

It appears that the purchasing company is a foreign corporation, but we do not understand that it is claimed the case would be different if it were a domestic one. Upon the transfer the purchasing corporation assumed all the debts of the defendant corporation, and. it is conceded that the defendant corporation has virtually abdicated its franchises and placed itself in a position where it is and will be unable to carry on the business for which it was incorporated.

The defendants now move for a reargument, and their counsel,, with commendable candor, concede that under the rules which prevail in this court, and which control the determination of such motions, all discussion is foreclosed of the question of the maintainability of this action by the People, and also of the question that the directors' of a domestic corporation, which is engaged in a profitable business, cannot, without the assent of all the stockholders, close out its business; transfer its entire property to another corporation; pay its debts; distribute its remaining assets among its stockholders, and surrender its franchise to the state. But it is contended that the rule is otherwise with respect to a. non-paying corporation, and that the trustees of such a company, when they find the business to be unprofitable, and it is shown that it cannot be run except at a loss, have the right and that it. is perhaps their duty to suspend the business of the corporation, dispose of its property and wind up its affairs, if the majority of the "stockholders consent thereto,, and that an action will not lie-against them under §§ 178 L-2 of the Code for mismanagement, or an abuse of trust, or for an unlawful application of the corporate funds, if they in good faith adopt such a course. -In support of this position," the defendant’s counsel cite the decision of the-second division in the case of Skinner, as Trustee s. Smith et al., handed down at the same time with the decision in the present case, in which the learned chief judge of that division, in concluding his opinion, says: “ The right of a manufacturing company to discontinue its operations when they have become unprofitable for the purpose of protecting shareholders from further loss, does-not admit, we think, of doubt;.” and several cases are cited, but none in the courts of this state, and we find no other expression on the subject, except a dictum of the present chief judge of this court, in Denike v. N. Y. & R. Lime & Cement Co., 80 N.Y., 606, where he says: “ All the stockholders uniting might undoubtedly surrender the franchises of. a corporation and work its dissolution.” The query, however, is added “ But can a portion of them do this in the absence of. statutory authority? ”

It is insisted that there is a plain distinction in this respect betweeen the case of a business corporation which has the means or the ability to carry on its business at a profit, and. the case of such s, corporation having no public duties or functions to perform, which finds itself unable, from no fault on the part of its managers to conduct its business without loss, and that the court in disposing of this appeal overlooked this distinction, and.hence the propriety of this motion for a reargument.

Where such a motion is addressed to a court, differently constituted from the one which decided the appeal, but possessed of ■co-ordinate authority, as it is in the present case, it must be, obvious that there are difficulties and embarrassments in the way of its disposition which would not exist if ,, a rehearing was sought in the same tribunal where the decision complained of was made. We are not prepared to say that the distinction which the defendants rely upon does not exist, and it may be that if the attention ■of the court which decided this appeal could he specially called to the point, if it was not in fact done upon the argument, the distinction would be recognized, and the appropriate relief granted. But we deem it unnecéssary for the proper preservation of. the defendants’ rights to express or intimate any opinion on the subject. A new trial has been ordered. The question can now be distinctly and specifically raised in the court below, and if the decision there is adverse to the defendants a new appeal will bring it here in such a form that it can be heard and disposed of by this court as if it were res nova, provided it turns out, as the defendants contend, that it was not considered and distinctly decided upon the present appeal.

The motion for a reargument is, therefore, denied, but without costs.

All concur.


text:
    The Apollinaris Co., Limited, App’lt, v. George W. Venable et al., Resp’ts.

      (Court of Appeals,

      Filed November 29, 1892.)

    Injunction—Undertaking—Liability of sureties.
    In an action to restrain defendants from infringement of a trade mark, after a temporary injunction had been granted, the plaintiff addressed a protest to the American consul at Cologne, against his acting as a commissioner under a commission addressed to him, and on defendants’ application, an order was made, punishing plaintiff for contempt, by directing a dismissal of the complaint, and a dissolution of the temporary injunction. Held, that this did not, under the circumstances stated, either in fact or in law, constitute an adjudication that plaintiff was not entitled to the preliminary injunction, nor a breach of the undertaking of the sureties given upon the issuance thereof.
    Appeal from judgment of the supreme court, general term, first department, affirming order appointing a i;eferee to ascertain and assess the damages sustained by respondent, by reason of the preliminary injunction issued therein. '

      Henry Melville, for app’lt; J. Albert Englehart, for resp’ts.

       Reversing 44 St. Rep., 838.

   Andrews, J.

The sole question on this appeal is whether an order made on the application of the defendants after the commencemeut of the action, to punish the plaintiff for contempt, for interfering to prevent the execution of a commission to take testimony, issued upon the application of the defendants, by which order plaintiff was adjudged guilty of the contempt charged, and which directed as a punishment that the plaintiff’s complaint should be dismissed, and the temporary injunction granted at the commencement of the action should be dissolved, followed by an actual dismissal of the complaint and a dissolution of the injunction in pursuance of the order, constituted a breach of the undertaking of the. sureties given on the issuing of the preliminary injunction to pay the defendants in the action such damages, not exceeding the sum mentioned in the undertaking, “as they may sustain by reason of the injunction, if the court finally decides that the plaintiff was not entitled thereto.”

The object of the action was to procure a judgment restraining the defendants from the infringement of a trade-mark. The right to a temporary injunction depended upon the same facts as did the final relief sought in the action. The interference of the plaintiff, which constituted the contempt, was a protest made on its behalf addressed to the American consul at Cologne against his acting as commissioner under the commission issued to him, •on the ground that by the regulations of the German government a commission to take testimony in that jurisdiction, issued from our courts, could not be legally executed by a foreign consul, and that the oath taken by witnesses and the evidence given under the commission to such consul would be extra judicial.

The law seems to be as claimed by the plaintiff, but the court properly held that this did not justify the plaintiff in interfering to prevent the execution of the commission. In settling the order in the contempt proceedings, the judge who settled the order was asked by the defendants’ counsel to insert in the reference to the injunction a statement “ that it is finally decided that the plaintiff is not entitled thereto.” The judge declined to do so, saying: “ No decision had been, or could be, made on the merits.”

We are of the opinion that the dismissal of the complaint and the dissolution of the injunction, under the circumstances stated, did not, either in fact or in law, constitute an adjudication that the plaintiff was not entitled to the preliminary injunction in the action. That question was not before the court, and was not and could not have been decided in the contempt proceedings. The undertaking related to the right of the plaintiff to a temporary injunction at the commencement of the action, and the obligation assumed by the sureties was to pay damages in case the court “ finally decides that the plaintiff was not entitled thereto.”

The sureties upon such an undertaking may be held in some cases although there has been no formal adjudication against the right to the temporary injunction. Where the plaintiff ex parte and without the consent of the defendants enters an order vacating the injunction and discontinuing the action, this is equivalent to the adjudication that the plaintiff was not entitled to the injunction when granted. The purpose of requiring an undertaking would be thwarted if in such a case the sureties were not held. Pacific Mail Steamship Co. v. Toel, 85 N. Y., 646. It would seem upon the same principle that if the case was dismissed upon the application of the defendants for want of prosecution, the inference should be indulged that no right to an injunction existed when it was issued, and the dismissal should be treated as an adjudication against the right.

But where, as in the present case, the defendants secure a dismissal of the action and a dissolution of the injunction upon, some matter arising subsequent to the commencement of the action and having no relation to the merits either directly or by inference, it would, we think, be contrary to the natural or reasonable interpretation .of the transaction to hold that the dismissal was a determination by the court that the plaintiff at the time the-temporary injunction was issued “was not entitled thereto," and especially would it be contrary to principle to so adjudge against the sureties in the undertaking. Palmer v. Foley, 71 N. Y., 106; Johnson v. Elwood, 82 id., 363.

We think the order of the special and general terms should be; reversed and the motion denied.

All concur, except Earl, Ch. J., not voting.


text:
    Jasper W. Gilbert, Resp’t, v. The Board of Supervisors of the County of Kings, App’lt.

      (Court of Appeals,

      Filed November 29, 1892.)

    Justice of supreme court—Abridgement of term—Compensation.
    The term “ compensation,” as used in article 6, § 18, of the constitution does not include the allowance made by the supervisors of Kings county to justices of the supreme court residing in that county, under chapter 831, Laws 1866, for assisting the commissioners of jurors, and a justice residing in such county whose term has been abridged by reason of age is not entitled to such allowance for the remainder of the term to which he was-elected.
    Appeal from judgment of the supreme court, general term, second department, affirming judgment for plaintiff.

      John B. Meyenborg, for app’lt; Calvin Frost, for resp’t.

       Reversing 46 St. Rep., 143.

   O’Brien, J.

By an amendment of § 13, art. 6, of the state constitution, which went into effect on the 1st of January, 1881, the following words were ¿dded to the section : “ The compensation, of every judge of the court of appeals, and every justice of the supreme court, whose term of office shall be abridged pursuant to-this provision, and who shall have served as such judge or justice ten years or more, shall be continued during the remainder of the term for which he was elected.” The plaintiff was elected a justice of the supreme court in the county of Kings for a term of fourteen years, commencing January 1, 1874, and ending December 31, 1887. But this term was abridged five years, on and after December 31, 1882, by reason of the fact that during the year-last mentioned he became seventy years of age. During the whole period of the term for which plaintiff was-elected he has-been paid the salary of a justice of the supreme court, $6,000 annually, besides $1,200 per year, being the allowance given in lieu of all personal expenses by chapter 541 of Laws of 1872. These payments were properly made, as is admitted under the decisions of this court. The People ex rel. Bockes v. Wemple, 115 N. Y., 302 ; 26 St. Rep., 330 ; The People ex rel. Gilbert v. Wemple, 125 N. Y., 485; 36 St. Rep., 20. At the time that the plaintiff was retired from office by reason of his advanced age, under the provisions of the constitution, he was in receipt of another sum of money, namely, the sum of $6,000 per annum, under a resolution of the board of supervisors of the county of Kings, adopted March 8, 1871, under the authority of § 9, chapter 821, of the Laws of 1866, which amended chapter 322 of the Laws of 1858, entitled “An act in relation to jurors, and to the appointment and the duties of a commissioner of jurors, in the county of Kings.” These statutes require the justices of the supreme court, or any two of them, with the other officers named in the act, to attend at the office of the commissioner of jurors to witness and assist in the drawing of juries to serve in the various courts of record to be held in the county. The ninth section of the amendatory act of 1866. under which the supervisors fixed the compensation, is as follows: “ The board of supervisors of the county of Kings ■shall allow to the justices, judges and officers of the several courts for the services required of them under this act, and the act hereby amended, such compensation for their services as the said board shall deem reasonable and proper.”

The plaintiff has recovered for the five years after he retired from office, and thus it has been held by the courts below that the provision of the constitution providing that the compensation for judges whose terms are abridged by reason of age shall continue daring the term for which they were elected, not only embraces the annual salary and allowance for expenses, but also carries along with it any sum of money payable by a locality for special and local services performed by the incumbent of the office for the time being, as a member of a local board administrative or ministerial in its character. The question is, wliat did the framers of the amendment to the constitution mean when they enacted that the compensation of the retiring judge should be continued although he became disqualified to serve after reaching the age of seventy. The word compensation is used in both §§ 13 and 14 of the article. In the latter section it is provided that The judges and justices hereinbefore mentioned shall receive for their services a compensation to be established by law, which shall not be diminished during their official terms.” The compensation which was to be continued is obviously the same compensation mentioned in the next section and which is to be established by law, and not diminished during the official term of the incumbent. The constitution in using the words “ compensation to be established by law ” did not contemplate a resolution of a municipal body fixing the compensation of a judge for local services as member of a board which could as well be performed by any other officer. When the amendment of 1880 was adopted the word compensation had been in the judiciary article for ten years, and was understood to mean the salary of the judge as such and the allowance for expenses, and it is quite unreasonable to suppose that either the framers of the amendment or the people in adopting it had in mind the allowance which a municipality or board might, in its discretion, award to a judge for focal services as member of a board for drawing jurors. Neither the language nor the purpose of the amendment would justify the conclusion that the retiring judge was secured the payment of such a sum of money for years after he became disqualified to perform the duties by reason of the vacation of his office.

■ It would seem to be a fair test of the question whether the sum of money mentioned in the resolution of the board of supervisors was compensation, within the meaning of the constitution, to inquire whether the sum fixed for attending at the drawing of jurors could have been diminished during the plaintiff’s term of office. If it could have been reduced or abolished altogether, then it is not that compensation which is continued by the constitution during the term for which the plaintiff was elected, for, as-we have seen, that refers to the compensation to be established by law for judicial services and which cannot be diminished during the official term. The statute conferred power upon the board of supervisors to “ allow to the justices, judges and. officers of the-several courts for the services required of them * * * such compensation for their services as the board shall deem reasonable- and proper.” The whole matter of compensation was left to the discretion of the board, and when it passed the resolution awarding the plaintiff six thousand dollars per year, this did not bind any future board and was not permanent. The next board could have reduced it to a nominal sum, and during the last year of the plaintiff’s actual service the board might have abolished the compensation entirely as to him, as he was no longer, within the terms of the statute, qualified to perform the duties for which the compensation was to be paid. The constitution in providing that the compensation of a judge, whose term was abridged by reason of age, should be continued, referred to the sum of money that the retiring judge was in receipt of, when he ^became disqualified, as. his regular stated salary as one of the justices of the supreme court. It did not refer to or include what might be termed extra compensation, which a particular judge was in receipt of, when he became seventy years of age, from a county, for special services to be performed in and for such county and not elsewhere. It cannot be supposed that the people, when the amendment of 1880 was before them for adoption, intended that it should be so construed as to give one judge the statutory salary and allowance for expenses only, and to another judge nearly twice that amount. It was never intended that the amendment providing for the continuation of the compensation of a retiring judge should carry with it compensation by a locality for local services which he could not perform after his retirement and which were not neces.sarily judicial in their nature and character. We think that the sum mentioned in the resolution of the board of supervisors for attending at the drawing of jurors in Kings county was not the-compensation of a justice of the supreme court established by law,- and which could not have been diminished during plaintiff’s official term, but, on the contrary, it was special compensation by a locality for special services and which was subject to change by the body that established it and to be wholly abolished at the end of plaintiff’s actual term of service. The amendatory provision, of the constitution which secured to the plaintiff after his retirement his compensation as a justice of the supreme court, cannot be held to include the sum for which the judgment in this case was rendered.

The judgment should, therefore, be reversed and a new trial granted, costs to abide the event.

All concur.


author: Earl, Ch. J.

text:
    Clark R. Griggs, Resp’t, v. Melville C. Day et al., Surviving Executors, App’lts.

      (Court of Appeals,

      Filed November 29, 1892.)

    1. Accounting—Collateral.
    Plaintiff, in 1879, contracted with the W. & L. E. R. R. Co. for the construction of its line in Ohio. The railroad was to furnish him available subscriptions to ■ the amount of $4,000 per mile, and to pay him for his services in bonds and stock of [the company. Defendant’s testator G. advanced plaintiff large sums of money, and as collateral security therefor plaintiff assigned and delivered to G. his construction contract and: bonds and stock of the company. In 1882, plaintiff received from the-company for extra work and for its failure to furnish the subscriptions, its notes for about two million dollars, and these being turned over to G., he held them until 1883, when there was due him for moneys advanced to plaintiff nearly $2,500,009. G. then received from the company 2,280 second mortgage bonds of $1,000 each at 75 cents on the dollar, amounting to $1,736,600, and surrendered the notes, and they were cancelled. G. then entered in his journal “ This amount of notes and interest $2,062,643 taken from contractor at 75 per cent $1,546,982.” He then charged the-company with the whole amount of the notes and interest and gave it credit for $1,736,600, the price at which he took the bonds, and credited plaintiff with $1,546,982. The referee in this action for an accounting by G. found that the legal effect of the surrender by G. of the notes and of the charge made by him was to relieve plaintiff from any liability to him for the amount, and in the accounting he charged G. with the full amount of the notes with interest. Held, error.
    2. Same—Measure of damages.
    The company being insolvent, the notes and second mortgage bonds surrendered were worthless, but the referee held these facts to be immaterial, and that under the circumstances G. had made himself chargeable with the full amount of the notes without reference to their value. Held, error; that as^ to the balance of the notes which were surrendered to the company without any consideration, there was simply a wrongful conversion of them by G., and rendered him liable to plaintiff for the value of the notes converted.
    Appeal from judgment of the New York superior court, affirming judgment in favor of plaintiff.

      Melville C. Day and Esek Cowen, for app’lts; John H. Post, for resp’t.

       Reversing 46 St. Rep., 967.

   Earl, Ch. J.

This action was brought against Cornelius ¡EL Garrison, since deceased, for an accounting. It was referred to a referee, and he ordered judgment in favor of the plaintiff for upwards of $188,000? The record is very voluminous, and in the briefs submitted and the arguments of counsel many questions of law and fact were presented for our consideration. A careful study of the record has satisfied me that the judgment appealed from is both illegal and unjust.

In September, 1879, the .plaintiff entered into a contract with the Wheeling & Lake Erie Railroad Company, an Ohio corporation, for the construction and equipment of its line of railroad in that state according to the specifications and upon the terms and, conditions mentioned in the contract. By one of the provisions*' of the contract the railroad company was “ to furnish the contractor available subscriptions or proceeds thereof, and aid to the amount of $4,000 per mile of main track, branches and sidings, or so much as may be necessary to furnish right of way, grade, bridge and tie said rail between Huesons and Martins ¡Ferry," a distance of 143 miles, and “ to use its best endeavors to secure for the contractor available subscriptions and aid to the extent of $4,000 per mile, or so much as may be necessary ” for a similar purpose as to the balance of the road, a distance of fifty-eight miles. For the performance of this contract, besides the aid to be furnished as above stated, the plaintiff was to receive bonds and stock of the company. He was without financial ability, and he applied to Garrison for financial aid to enable him to perform his contract; and upon his application Garrison from time to time advanced him large sums of money, amounting in all, besides interest, to nearly $4,500,000. For the money so advanced the plaintiff assigned and delivered to Garrison as collateral security his’ construction contract and bonds and stock of the company ; and some of it was repaid by the sales to him of bonds and stock.

In 1882 the plaintiff received from the company for extra work claimed to have been done by him, and on account of its failure to perform the portions of the contract above quoted, its promissory notes amounting to $1,949,710.72 and they were delivered by him to Garrison for moneys advanced and to be advanced by him for the construction of the road. Garrison held these notes until May, 1883, when there was due to him for moneys advanced to the plaintiff for the construction of the road nearly $2,500,000. He then received from the company 2,280 of its second mortgage bonds of the denomination of $1,000 each, at seventy-five cents on the dollar, amounting with some interest to $1,736,600 to apply upon his claims, and he then surrendered to it all of the above mentioned promissory notes and they were cancelled. On the same day he caused an original entry to be made in his journal, one of his account books, as follows : “ This amount of notes and interest $2,062,643.13 taken from contractor at seventy-five percent, $1,546,982.35.” He then charged the company in his books of account with the whole amount of the notes and ■ interest and gave it credit for $1,736,600, the price, including interest, at which he took the second mortgage bonds; and he credited, the plaintiff with the sum of $1,546,982.35. The difference between the total amount due upon the notes and the amount allowed by him for the second mortgage bonds, was $326,043.13, and thus he had in his hands, not used for the payment of the bonds, the notes to that amount which he then surrendered to the-company without any consideration whatever; and, as the referee-found, he elected to look to the company as his debtor on open, account for that amount. The referee also found that by reason. of the surrender of the notes in consideration of .the purchase o£ the bonds, and by reason of the surrender of the balance of the notes, and by reason of the election before mentioned, Garrison discharged the indebtedness of the plaintiff to him to the amount of the face value of the notes at the time of the surrender. He also found that the plaintiff’s rights as pledgor in the construction contract and in the bonds, stock and other property transferred to Garrison as collateral security, were never cut off by foreclosure of his rights or in any other way.

These facts having been found by the referee, he found among other conclusions of law that the legal effect of the surrender by Garrison to the railroad company of the promissory notes held by him as collateral security for moneys advanced to the plaintiff, and. of the charge by him against the railroad company of the full amount of the notes and interest was to relieve the plaintiff from, any liability to him for the amount thereof, and in the accounting he charged Garrison with the full amount of the notes with interest. The only question which I deem it important now to-consider is whether the learned referee was right in making that, charge.

The further fact must be taken into consideration that the notes, surrendered were of no value as against the company. It was utterly insolvent, with property no more than sufficient to pay its first mortgage bonds. The second mortgage bonds were absolutely of no intrinsic value. The referee held these "facts to be-immaterial and that under the circumstances Garrison had made himself chargeable with the full amount of the notes without reference to their value. Such a conclusion is somewhat startling, and should not be sanctioned unless it has support in well recognized principles of law or authorities which we feel constrained to follow.

The entries in Garrison’s books of account in reference to these notes have very little bearing upon the controversy between these parties. They were private entries made by Garrison, undisclosed to the plaintiff and without his authority. They were important simply as evidence and are entitled to no more weight than would have been the oral declarations or admissions of Garrison made to any third party. They show what use he made of the notes, and about that there is no dispute.

They did not bind the plaintiff and he has never, so far as appears, assented to them. They show that Garrison intended to take the notes at seventy-five cents on the dollar, and that he was willing to allow the plaintiff that sum for them. But there was no actual purchase of them.

If that entry had come to the knowledge of the plaintiff and he had adopted it, and so notified Garrison, he could probably have held him to a purchase of the notes for that sum. But he repudiates that entry and refuses to let Garrison have the notes for that sum. He cannot use that entry to fasten upon him a purchase of the notes at their face value. The minds of the parties never met upon such a contract. Garrison either purchased the notes used in exchange for the bonds at seventy-five per cent of their face value, or he did not purchase them at all. Therefore, as the plaintiff repudiates the purchase at the price named, there, was no contract of purchase, and as to these notes, pledged collateral security, Garrison must be held to have wrongfully converted them to his own use. It would make no difference whether we consider these notes as having been exchanged for the bonds, or as having been used in payment for the bonds. In either view Garrison was at most guilty of a conversion of them.

As to the balance of the notes which were surrendered to the company without any consideration, there was simply a wrongful conversion of them They had no value as obligations against the company, and it is preposterous to suppose that Garrison intended by the surrender to charge himself for their full face value against an indebtedness of the plaintiff to him for money actually loaned. By the surrender he did not intend to release the company from its indebtedness evidenced by the notes. But he intended and elected still to hold the indebtedness evidenced by his charge in open account upon his books. The obligation of the company was not impaired or lessened by the transaction, and it owed just as much after it as before. Even if he made the notes his own by surrendering them, there was simply a conversion of them. It is true that he elected to hold the company as his debtor upon open account, just as it was his debtor before for the same amount evidenced by the notes. He did not take a new debtor, but he retained and intended to retain the same debtor. Here there was no novation and nothing resembling it. It usually, if not always, takes three parties to make a novation", and they must all concur upon sufficient consideration in making a new contract to take the place of another contract, and in substituting a new debtor in the place of another debtor. Novation is thus briefly defined: A transaction whereby a debtor is discharged from his liability to his original creditor by contracting a new obligation in favor of a new creditor by the order of the original creditor. 1 Parsons on Contracts, 217. Here there was no element answering to this definition. There was no intention to make a novation, no consideration for a new contract, no concurrence of the three or even of the two parties.

So we reach the conclusion as to all the notes that Garrison by their surrender made himself liable for a wrongful conversion of them to his own use, and thus became responsible to the plaintiff for the damages caused by the wrong; and the question is, what were such damages ? The answer must be, the value of the- notes converted. There can be no other measure, as that measures the entire damage of the plaintiff absolutely.

As to the notes surrendered for the bonds, the plaintiff could have elected to take the bonds or their value, but this he refuses to do, as the bonds have no value, and thus he is confined absolutely to the value of the notes.

Now, how does the case stand upon authority ? In Garlick v. James, 12 Johns., 146, the plaintiff deposited with the defendant a promissory note of a third person as collateral security for a debt, and the defendant, without the knowledge or consent of the plaintiff, compromised with the maker of the note, and surrendered the note to him upon payment of one-half of the face thereof. It was found that the maker was at the time of the compromise abundantly able to pay the full amount of the note; and under such circumstances it was properly held that the pledgee was liable for the balance unpaid upon the note. In Hawks v. Hinchcliff, 17 Barb., 492, the plaintiff sued the defendant upon an account for merchandise delivered, and the defendant showed that the plaintiff took two notes for the amount of the account as collateral security for the payment thereof; that he transferred one of the notes to a person who recovered judgment thereon against the makers, and afterward assigned the judgment to one Prindle; that he recovered judgment upon the other note, and assigned that to Prindle; and it appeared that the defendants in those judgments had never paid the notes or the judgments.

It was held that the plaintiff, the pledgee, could not recover upon his account. It was not shown upon what consideration the notes and the judgments were transferred by the pledgee, or that at the time of the transfer the makers of the notes were not perfectly solvent. The plaintiff there relied upon the simple fact that the notes and judgments were not paid. Upon this state of the facts the court held that the presumption, nothing appearing to the contrary, was that the note and judgment were transferred by the plaintiff for the full amount appearing to be due upon them, and hence he was charged with the full amount. There are some broad expressions contained in the opinion which when isolated from the facts of the case tend to give some countenance to the plaintiff’s contention here. In Vose v. The Florida Railroad Co., 50 N. Y., 369, it was held that a wrongful sale by a creditor of collateral securities placed in his hands by the principal debtor does not, per se, discharge even a surety for the debt (much less the principal debtor) in loto, but that by such sale the creditor makes the securities his own to the extent of discharging the surety only to an amount equal to their actual value. In Potter v. Merchant's Bank, 28 N. Y., 641; Booth v. Powers, 56 id., 22, and Thayer v. Manley, 73 id., 305, it was held that in an action to recover damages for the conversion of a promissory note, the amount appearing to be unpaid thereon at the time of the conversion, with interest, is prima facie the measure of damages, but that the defendant has the right to show in reduction of damages the insolvency or inability of the maker, or any other fact impugning the value of the note; In the Exeter Bank v. Gordon, 8 N. H., 66, where the bank had received a note as collateral security and had subsequently without the consent of the pledgor compromised it by receiving the one-half thereof from the maker, it was held that the bank was bound to credit the pledgor with only the amount received upon compromise upon proof that the compromise was advantageous and that the maker was insolvent and unable to pay the balance, and the general rule was laid down which was announced in the cases last above cited.

If the pledgee of the note of an insolvent maker may surrender it upon a compromise for one dollar without being made liable" for more than he receives, upon what conceivable principle can a pledgee be held for the face value of a worthless note by surrendering it without any consideration whatever? " If one entrusted with a note as agent, or holding it as pledgee, loses it by his carelessness, or even wilfully destroys it, he can in an action against him by the principal or pledgor be held liable only for the value of the note. If Garrison had broken into the plaintiff’s safe, and taken these notes without any right whatever, in an action for their conversion the plaintiff could have recovered against him as damages only the actual, not the face value of the notes.

I need go no further. Other illustrations are not needed. Our attention has been called to no case in law or equity which upholds the plaintiff’s contention as to these notes. I should be greatly surprised to find any, and do not believe there are any.

I have assumed without a careful examination of the defendant’s objections to the notes that they were valid and properly issued by the company for their full amount. I have also assumed, without examining the matter, thát upon this record we must hold against the contention of the defendants, that the second mortgage bonds took the place of the notes given for them, and were held in their stead as collateral security.

Statements made upon the argument by the counsel. for the appellants render it unnecessary for us to consider any other objections to the judgment, and for the reasons stated the judgment should be reversed, and new trial granted, costs to abide the event.

All concur ; Gray, J., in result.


author: O'Brien, J.

text:
    Ernest J. Lecocq, Resp’t, v. Auguste Pottier, Ex’r, App’lt.

      (Supreme Court, General Term, First Department,

      Filed October 20, 1892.)

    Reference—Refusal of befebee to pboceed.
    As a claim against a decedent’s estate can only be referred by consent, on a refusal by the referee to proceed the parties are relegated to their original status, and have the right to consent to a new referee or be beard by a jury. In such a case, on motion to dismiss for want- of prosecution, the court has no power, against the wish of some of the parties, to vacate the former order of reference, appoint a new referee and direct that on the hearing the .proofs and testimony taken before the former referee shall be received and considered as if taken before the referee so appointed.
    Appeal from order denying motion to dismiss the proceedings for want of prosecution, and appointing Wm, P. Prentice as referee in the place of John M. Bowers, the former referee, who had declined to act further in the matter.

      B. T. Kissam, for app’lt; Brownell & Lathrop, for intervening legatees, app’lts; E. Huerstd, for resp’t.
   O'Brien, J.

This proceeding arises out of a claim made against an estate, which was referred to a referee. Upon failure to proceed with the reference a motion was made to dismiss, which was granted. Subsequently the claimant moved to open the default, which was allowed upon terms. . Upon the ground of the claimant’s failure to proceed with the reference as required by the order opening the default, a second motion was made to dismiss the proceedings, and upon such motion an order was made “denying said motion, and referring this proceeding to William P. Prentice, as referee, in place and stead of John M. Bowers, who has declined further to act; the referee, Prentice, to proceed to the hearing and determination -of this proceeding with all convenient speed, and that the proofs and testimony heretofore taken before the said John M. Bowers shall be considered and received on the hearing and trial before said referee,Prentice, with the same force, virtue and effect as if they had originally been taken before him herein, and that all evidence heretofore taken in this matter stand and be received by the said referee, Prentice, in the trial to be had on this proceeding before him.” This appeal is taken from the foregoing order.

The excuse offered for failure to proceed was that the referee declined to act; and it was, no doubt, as the result of this statement, contained in the opposing affidavits, that the judge proceeded to appoint another referee, and gave the further directions contained in the order appealed from. We think, however, that in this the learned judge exceeded his power. The motion before him was one to dismiss the proceeding for failure to prosecute, and this, we think, should either have been granted or denied. This would have left the parties in such position that if, as a matter of fact, the referee declined to proceed, either party could have moved to discharge the referee, and for the substitution of another in his place.

It must be remembered that in cases of this kind a referee can only be appointed by "consent of parties; and the case of Emmet v. Bowers, 23 How., 300, supports the view that where a referee so appointed refuses to proceed, the parties are relegated to their original status, and have the right to consent to a new referee or be heard by a jury. The case of Masten v. Budington, 18 Hun, 105, holds that where, upon appeal to the general term from a judgment entered upon the report of a referee appointed to determine the validity of a claim against the estate of a deceased person, the judgment is set aside and the order of reference vacated, the court at special term has power to refer the case to a new^ referee to hear and determine. In this proceeding, however, no motion was regularly made to vacate, nor was the order of reference vacated; but upon a motion to dismiss for want of prosecution, upon an intimation that the referee appointed by consent of the parties had declined to act, the court, of its own motion, vacated the order of reference, and appointed a new referee, not only without the consent, but in direct opposition to the wishes of certain of the parties to the proceeding. This, as we have said, we do not think the court had power to do; nor can we find any sanction for the direction in the order “ that the proofs and testimony heretofore taken ” before the referee “ shall be considered and received on the hearing ” before the new referee. In Maicas v. Leony, 113 N. Y., 621; 22 St. Rep., 149, the court, in commenting upon a similar direction in an order, says: “ The provision in the order that the evidence already taken may, by consent of both parties, be read before the new referee, does not give the defendant all he is entitled to and secure all his substantial rights. The plaintiff may withhold his consent, and then his evidence cannot be read, and the new referee will not have the benefit of seeing and hearing the witnesses.” The direction in this order is more objectionable than the one commented upon in the case above referred to, for the reason that it was inserted, not only against the consent, but in opposition to the defendants’ wishes. We think, therefore, that the order appealed from should be modified by striking all provisions therefrom except that which denied the motion to dismiss, and, as so modified, the order should be affirmed, without costs.

Vak Brunt, P. J., concurs.


author: Vak Brunt, P. J.

text:
    William Comyns App’lt, v. William H. Riker et al., Resp’ts.

      (Supreme Court, General Term, First Department,

      Filed October 20, 1892.)

    Injunction—Pendente lite.
    In ah action to compel the application to plaintiff’s judgment of certain notes received by the judgment debtor on a sale of property and which it is claimed that he has fraudulently transferred, an injunction to restrain the negotiation and disposal of the notes pending the action should not he granted where the facts presented do not necessarily tend to the conclusion of the- fraudulent intent of the debtor and his transferee and there is no proof that the transferee is insolvent.
    Appeal from an order denying a motion for an injunction restraining the defendants from negotiating or in any way disposing of certain promissory notes which the plaintiff, a judgment creditor of defendant William H. Riker, seeks to have applied towards the payment of his judgment.
    It is alleged that William H. Riker, the judgment debtor, sold . his stock of goods to a firm of which his father was a member, taking notes therefor, which notes he afterwards transferred to his father without consideration. It appeared that some years prior thereto his father had transferred his business to him.

      J. J. Adams, for app’lt; Thomas J. Farrell (D. McMahon, of counsel), for resp’ts.
   Vak Brunt, P. J.

This action was brought to restrain the defendants, William H. Riker and William B. Riker, from nego- . tiating, transferring and disposing of certain promissory notes, and for other relief. A motion for an injunction pendente lile having been denied, this appeal is taken from the order thereupon entered. It is impossible to enter into a detailed discussion of the facts claimed to be established by the plaintiff, upon which he founds his right to an injunction, without expressing our opinion as to the weight of certain evidence, which, however, may present a different aspect upon the trial, when the affiants are orally examined before the court. For this reason we do not think such discussion' should be entered into, as it might, to some extent, hamper the court below, upon the trial of the issues, in its consideration of such evidence. For the disposition of this motion it is sufficient to say that, in our opinion, no case was made out which would justify the court in granting the extraordinary relief sought to be obtained. There was no proof or allegation that the defendant William B. Biker, to whom this money would be paid, is insolvent, or in any way unable to respond to any claim which the plaintiff might make against him. And, further, relief of this extraordinary character should not be>granted simply because our suspicions might be excited as to the regularity of any given transaction. The facts presented must necessarily tend to the conclusion of the fraudulent intent of the parties against whom relief is sought. And, in using this language in respect to suspicion, we do not intend to characterize in any way the effect which the proof submitted had upon our minds, or to intimate that the transactions referred to seem to us to be suspicious or otherwise. As already stated, we desire to leave the question of the effect of any evidence which may be offered upon the trial, both upon the part of the plaintiff and the defendants, entirely open for the court below. The order should be affirmed, with ten dollars costs and disbursements.

O’Brien and Lawrence, JJ., concur.


text:
    Mary Ann Robinson, Pl’ff, v. Robert Govers, Individually and as Ex’r, et al., App’lts.

      (Supreme Court, General Term, First Department,

      Filed October 20, 1892.)

    1. Abatement and revivor—Death of party after verdict—Code Civ. Pro., § 763.
    Section 768 of the Code, providing for the entry of judgment where a party dies after verdict, does not apply to a case where the cause of action abates by the death of the plaintiff.
    2. Same—Dower.
    The verdict, report, decision or interlocutory judgment rdferred to in the section has reference to such verdict, etc., as determines the rights of the parties; and such section, therefore, has no application to an action for dower, where the plaintiff died after verdict that she was entitled to dower, but before confirmation of the report of the referee as to the amount thereof.
    Appeal from order granting leave to the plaintiff’s executor to continue the action, and amending and denying defendants’ motion to vacate a prior order in the same matter.

      Gratz Nathan, for app’lts ; J. B. Pine, for resp’t.
   Per Curiam.

The action was brought to recover dower in certain real estate of which Anthony Eobinson, 'the plaintiff's husband, died seized. Shortly after the commencement of the action the plaintiff filed in the county clerk’s office consents to accept sums in gross in satisfaction of her dower. By an answer interposed by one of the defendants, Robert C. Eobinson, an infant, submitting his rights to the protection of the court, all the facts alleged in the complaint were necessarily put in issue; and these, under the Code, had to be determined by the verdict of a jury. Code, § 968i The verdict was “that the plaintiff is entitled to dower in the premises described in the complaint.” Thereupon the plaintiff moved for an interlocutory judgment awarding dower in the property described, and directing a reference as to whether an admeasurement could be had, and, if not, for a sale of the premises. At the same time the defendants moved for an order that, in the event of the plaintiff being entitled to judgment, they should have leave to pay the plaintiff the gross sum to which she might be adjudged to be entitled. Upon the hearing of -this motion the court ordered a reference to ascertain the value of the plaintiff’s right of dower, and to report the respective amounts so ascertained by him.

Upon the report of the referee a motion was subsequently made to confirm the, same, and on the 18th of February, 1892, an order was entered denying defendants’ motion to dismiss the complaint, and confirming the referee’s report with certain modifications, and granting leave to defendants to pay the gross sum which the court found the plaintiff was entitled to receive. On the same day, and prior to the entry of this order, the plaintiff died, and a motion was thereupon made on behalf of the executor of plaintiff to continue the action in his name, and providing that the payments should be made to him-as such executor. The defendants made a motion to vacate the order of February 18, 1892, upon the ground that at the time said order was made the plaintiff had departed this life, and the action abated. The court denied the defendants’ motion to vacate ’the order of February 18th, and granted the plaintiff’s motion for a continuance ; the decision being placed upon the ground that under the provisions of § 763 of the Code the plaintiff’s rights were finally determined by the verdict of a jury; and it is from these orders that the present appeal is taken.

This presents a question as to the construction to be given to this section (763), which reads as follows: “If either party to an action dies after an accepted offer to allow judgment to be taken, or after a verdict, report, or decision, or an .interlocutory judgment, but before final judgment is entered, the court must enter final judgment in the names of the original parties, unless the offer, verdict, report, or decision, or the interlocutory judgment, is set aside.” This section is to bé found under a title relating to“ proceedings upon the death .or disability of a party," and in its first section (755) is a provision that “ an action does not abate by any event if the cause'of action survives or continues.” By-subsequent sections under this title provision is made with respect to what proceedings were to be taken under certain circumstances upon the death of a party, all of which have reference to causes of action which survive after the death of the party. While, therefore, the effect of these sections is to permit the continuance of the action where the cause of action itself is not abated by the death of the party, they have no relation to an action such as this, where the cause of action itself abates by the death of the plaintiff. We are thus brought to the consideration of the true construction to be given to § 763. Having in mind the prior sections and § 764 (which latter has reference to an action for personal injury, and provides that the action does not abate by the death of a party), we are enabled to determine the true intent and meaning of § 763. From such examination we think it reasonably clear that this section will not support the order made continuing the action, and for two reasons: first, it does not apply to a case where the cause of action abates by the death of the plaintiff; and, second, even though it could be held to apply generally to any action, that in one such as this, to admeasure dower, a continuance Would not be authorized upon the death of the plaintiff before the entry of judgment. We think the first reason is supported, as shown, by a consideration of the preceding sections of the Code, and their relation to each other under a single title.

This view is enforced by § 764, which was undoubtedly intended to save from the general rule, by which an action abates if the cause of action abates, the case of an action to recover damages for personal injury. As has been well said by the appellant’s counsel, “ The language here is plain and explicit, and it is quite manifest that, if it had been the intention to make some provision in regard to actions in general, that intention would have been made equally plain and explicit. In fact, if the construction of § 763 contended for by the respondent were the true one, § 764 would have been entirely unnecessary, for the provisions of § 763 would have applied as well to an action to.recover damages for a personal injury as to all other actions.” The second finds support from a consideration of the nature of the action and the verdict rendered in the plaintiff’s favor. Even if § 763 has any application to actions generally, we think that the verdict, report, decision, or interlocutory judgment contemplated is one that determines the whole action, and in which nothing remains to carry the same into effect but the entry of final judgment thereon, and cannot be held to apply to a case like this, which relates to but a single issue involved in the case, and which is but the initiation of proceedings leading to a determination in the action of the rights of the parties. If we keep in mind what is determined by the verdict in an action for the admeasurement of dower and the subsequent proceedings, we think this is reasonably clear. The verdict determines that the plaintiff is entitled to dower, and the interlocutory judgment to be entered thereon can only direct that the plaintiff’s dower be admeasured by a referee or commissioners. Where, however, the plaintiff has filed a consent, and is entitled to an interlocutory judgment, the court, upon the application of either party, may ascertain whether a distinct parcel of the property can be admeasured and laid off to the plaintiff as tenant in dower, and, if such admeasurement cannot be made, a sale must be directed, and it is upon such sale being made and confirmed that the value of the plaintiff’s dower in the net proceeds is calculated and fixed. Practically, therefore, nothing is determined by the verdict except that the plaintiff is entitled to maintaip an action, the form of such verdict being that she is entitled to dower in the premises, which is to be determined and fixed, not only by the interlocutory judgment, but, by reason of the subsequent proceedings, by final judgment. We are of opinion, therefore, that the verdict, report, decision, or interlocutory judgment referred to in § 763 has reference to such verdict, etc., as determines the rights of the parties; and that the section will not apply to a verdict such as the one here, it not having reached a stage which determines .the rights of the parties. For these reasons we are of opinion that the order should be reversed, and that the defendants’ motion to set aside the order of February 18th, should be granted, with costs.

Van Brunt, P. J., and O’Brien, J., concur.