text:
    DANIEL McPARLAND, Appellant, v. DUDLEY W. BAIN, HENRY W. MILLER and SAMUEL F. PRENTISS, as Receiver, etc., Respondents.

      Becovery of a judgment by a creditor against his debtor — if fraudulently recovered, it does not bind the oihm'W'editors of such debtor — Bvidence — when it may be shown that a defense pleaded, was not in fact passed upon in another action.

    One Bain recovered a judgment against a corporation, upon an offer made by its attorney, as provided for in the Code, and thereafter assigned the same to the defendant Miller, who thereafter brought an action thereon against the corporation and procured a judgment therein, sequestrating its property and appointing a receiver. Some two years after Bain recovered his judgment a motion, made in behalf of the corporation to set aside the judgment as fraudulent and collusive, was denied, and in the action brought by Miller, the same fraud and collusion were set up as a defense in the answer served by the corporation.
    This action was brought by the plaintiff, who had recovered a judgment against the corporation, upon which an execution had been issued and returned unsatisfied, to set aside the judgments so recovered by Bain and Miller, on the ground that they were obtained by fraud and collusion, and that nothing was due from the corporation to Bain, and that Miller took his judgment as a collateral security to an existing claim that he had against Bain, knowing it had I been fraudulently obtained.

      Held, that the recovery of the former judgments and the denial of the motion to vacate the first one, did not estop the plaintiffs from proving that they were obtained by fraud and collusion.

      Held, further, that the plaintiffs should have been allowed to prove that the question of fraud and collusion, though set up in the answer, was not in fact litigated or passed upon in the action brought by Miller upon the Bain judgment.
    Appeal from a judgment in favor of the defendants, entered upon a trial had at a Special Term, and from an order granting an additional allowance.

      W. B. T. MilliJcen, for the appellant.

      JE. Sprout, for the respondents.
   Davis, P. J.:

This action was brought by the appellant, Daniel McParland, a judgment creditor of a corporation known as the Illuminated Tile Company one of the defendants in the actibn, to set aside as fraudulent a judgment recovered against the said corporation by the respondent Dudley ~W. Bain, and by him assigned to the respondent Henry Miller; and also to set aside a judgment recovered in an action brought by said Miller against the said corporation, based upon the judgment so assigned to him, which sequestrated the property of- the said corporation, and appointed the respondent, Samuel F. Prentiss, a receiver of the said corporation. The appellant’s judgment was recovered in an action in the Marine Court. It was duly docketed, and an execution issued thereon had been returned wholly unsatisfied. The judgment in favor of Bain was recovered in this court by confession, an officer of the corporation having directed an attorney to appear and offer judgment under the provisions of the Code, which offer was accepted and judgment entered thereon.

The appellant alleges in his complaint that Bain, for, the purpose of defrauding the plaintiff and other creditors of said corporation, and preventing him and them from collecting his and their claims and demands against said company, by wrongful and fraudulent collusion with some of the officers thereof, or by deception practiced upon them, and for the purpose of fraudulently acquiring the control of the assets and property of said company, fraudulently obtained his said judgment, and that at the time of the recovery of said judgment by the defendant Bain, there was, and still is, nothing whatever due to him from said company.”

He also alleges that Bain assigned his judgment to Miller as security for the sum of about $500, and upon no other consideration, and that Miller received the assignment with knowledge that the judgment was fraudulently obtained, and he alleges also that the property of the corporation was insufficient to pay its debts and liabilities in full, and that if the judgment recovered by Bain is enforced against the same, that the other creditors of the corporation will not receive more than ten per cent of their claims. These allegations were put in issue by the answers, and it was alleged also as a bar to the action of the appellant, that subsequently to the recovery of the judgment by Bain, and upwards'of two years afterwards, a motion was made in the Supreme Court by the corporation, or on its behalf, to set aside the judgment recovered by Bain and assigned to Miller, on the ground that it was recovered by fraudulent collusion and deception, and that such motion was contested and finally denied by the court. It was alleged also in bar to the action that in the suit brought by Miller to enforce the judgment and to sequestrate for that purpose the effects of the corporation, the alleged fraud and deception in obtaining the same was set up by the corporation in its answer as a defense, and that upon the trial of the action judgment was rendered by the court granting the relief prayed for by Miller.

“When this case came down to trial, upon the opening of the case by plaintiff’s counsel, the defendant’s counsel moved that the complaint be dismissed on the ground that the facts therein stated did not constitute a cause of action against either of the said defendants. The plaintiff’s counsel then moved for judgment against all the defendants on the ground that the facts stated in their answer did not constitute a defense, which latter, motion was denied by the court and an exception duly taken. Thereupon the court directed “ that the issue raised as to the matter in bar set up by the answer be first tried, it being assumed and conceded for the purpose of such ruling that all the facts and allegations set forth in the complaint which are denied by the answers are, and are to be taken herein as true.” The proceedings on the motion of the corporation to set aside the judgment and the decision of the court thereon denying the motion, and the subsequent proceedings on the appeal from such order of denial to the General Term affirming the order, were then put in evidence. The judgment roll in the action brought by Miller, as assignee of the judgment recovered by Bain, containing the complaint and the answer of the corporation which set up the fraudulent recovery of the judgment and the findings of the court (which did not however pass upon the question of fraud in the recovery of the judgment), and the judgment of the court sequestrating the property of the corporation and appointing the defendant Prentiss as receiver of its property, were also put in evidence. The appellant then offered to prove that on the trial of the issue in this action all evidence in regard to the fraud alleged in the answer was ruled out by the court. This offer was excluded and an exception was duly taken. The appellant was not a party to either the motion or the action, and had no notice of either. Upon this evidence the court below found the existence of the corporation as alleged in the complaint; the recovery of the judgment and the docketing of the same; the issuing of execution and return thereof; the recovery of the judgment by Bain against the corporation for the sum of $12,931.53; the docketing thereof; the issuing of execution and its return; the assignment of the judgment by Bain to Miller; the bringing of the action against the corporation in this court in the county of Kings; the recovery of the judgment and the appointment of Prentiss as receiver, and that he qualified and entered upon his duties; that the corporation set up in that action in their answer substantially the fraud alleged in the com-, plaint in this action; that the plaintiff in this action was not a party to that action, and that there is no proof that he had notice thereof; that a motion was made in this court by the Illuminating Tile Company and one William J. Nichols to set aside the judgment obtained by Bain, which motion was denied and on appeal to the general term the order denying the motion was affhmed; that the plaintiff in this action was not a party to the said motion or appeal, and that there was no evidence that he had any knowledge thereof; and, lastly, that for the purposes of the trial of this action it is assumed and conceded that the plaintiff can prove all the allegations in his complaint denied by the defendants in their answer; whereupon the court found and decided as matters of law that the complaint should be dismissed, with costs.

The case was disposed of altogether upon a question of estoppel. It was held in effect by the Special Term that the judgment recovered by Bain against the corporation was conclusive evidence against the appellant, of the relation of debtor and creditor between Bain and the corporation, and that the question whether such recovery was collusive and fraudulent or not, was conclusively disposed of against the appellant, by the judgment recovered by Miller, the assignee, in which the receiver was appointed, whether the issue of fraud then set up in its answer by the corporation was in fact tried or not. This was in substance holding that the appellant in this action was representatively a party to these proceedings, although not in fact so, and although he was not shown to have any notice of their pendency.

We are of opinion that the learned judge carried the doctrine of estoppel beyond its legitimate bounds. In Candee v. Lord (2 N. Y., 269) tbe Court of Appeals held that a judgment obtained without fraud or collusion is conclusive evidence in suits between creditors in relation to the property of the debtor, the indebtedness of the latter and the amount of such indebtedness. And Gardiner, J., in delivering the opinion of the court, laid down the following rules, in which it appears the concurrence of the court was unanimous : A debtor may be said to sustain two distinct relations to his property; that of owner and quasi trustee for his creditors. As owner he may contract debts to be satisfied out of his property, confess judgments, create liens upon it, sell or give it to others at pleasure; and so far as he is personally concerned will be bound by his own acts. But the law lays upon him an obligation to pay his debts, and holds him in behalf of his creditors to the exercise of good faith in all transactions relating to the fund upon which they must depend for payment. He can, therefore, neither create a debt, or do any of the things above mentioned, mala fide to their prejudice. The common law, of which the English statute and our own is but the exposition, declares that every such debt, judgment or assurance, contracted or given with the intent to hinder, delay or defraud his creditors, as against them, to be void. And equity in many cases holds the debtor and his confederates in the fraud as trustees for the parties aggrieved. The rights of creditors to the property of the debtor are to be worked out through the different relations to which 1 have alluded.”

“ In creating debts or establishing the relation of debtor and creditor, the debtor is accountable to no one, unless he acts mala fide. A judgment, therefore, obtained against the latter without collusion,, is conclusive evidence of the relation of debtor and creditor against others, first, because it is conclusive between the parties to the record, who, in the given case, have the exclusive right to establish it; and second, because the claims of other creditors upon the debt- or’s property are through him, and subject to all previous liens, preferences or conveyances made by him in good faith. Any deed, judgment or assurance of the debtor, so far at least as they conclude him, must estop his creditors and all others. Consequently, neither a creditor nor stranger can interfere in the bona fide litigation of the debtor, or retry his cause for him, or question the effect of the judgment as a legal claim upon his estate. A creditor’s right, in a word, to impeach the act of his debtor, does not arise until the latter has violated the tacit condition annexed to the debt, that he has done and will do nothing to defraud his creditors.”

Where, however, fraud is established, the creditor does not claim through, the debtor, but adversely to him, and by a title paramount, which overreaches and annuls the fraudulent conveyance or judgment by which the latter himself would be estopped.”

These rules distinctly recognize in its full vigor the exception to the general doctrine of estoppel upon which the plaintiff in this case seeks to stand, and they only establish that a judgment obtained without fraud or collusion, and which concludes the debtor, whether rendered upon default, confession or after contestation, is, upon all questions affecting the title to his property, conclusive evidence against his creditors to establish, first, the relation of creditor and debtor between the parties to the record; and second, the amount of the indebtedness.” (Per Gardiner, J.) And the learned judge in another part of his opinion proceeds to say: If, however, as the bill alleges, their judgment was fraudulent, the complainant, as a creditor, can repudiate it and claim the property as that of his debtor, his acts to the contrary notwithstanding, and hold his' confederates in the fraud accountable as trustees for his benefit.”

Applying these rules to the case in hand, there would seem to be no difficulty in holding that the appellant could attack for fraud the judgment recovered by Bain, whether held in his own hands or by his assignee. For the purpose of determining the question in this case, it stands conceded that the judgment was obtained by collusion between Bain and the officers of the company, and that in fact there was no indebtedness of the corporation to Bain at the time of its recovery. Upon these facts, if there had been no subsequent proceedings, it would seem very clear that the appellant could maintain this action. Have those proceedings affected or impaired that right ? The appellant was not a party to them, nor did he have any notice of their pendency. He is not, therefore, estopped upon their face as matter of record. (Frost v. Koon, 30 N. Y., 428 ; Demarest v. Darg, 32 id., 281.) And the question presented is, whether the result of the subsequent efforts of the corporation or Nichols to assert the fraud as a ground for setting aside the judgment, are conclusive upon the appellant as a creditor of the corporation.

If any such effect would follow from the judgment in the action, he certainly ought to have been at liberty to show that the question of fraud was in fact not contested. It was pleaded, but his offer was to show that when the evidence of fraud was sought to be produced, the court, by its rulings, excluded it as no defense in that action. Since he was not a party to that suit and had no right by appeal to review the ruling of the court, there seems to us to be no sound reason why he should not have been permitted to prove that in point of fact there was no trial and determination of the question of fraud then set up in the answer.

In Lawrence v. Hunt (10 Wend., 81) it was held that if it does not. appear from the record that the verdict and judgment in the former suit were directly upon the point or matters which are attempted to be again litigated in the second action, the fact may be shown aliunde, provided the pleadings in the first suit were such as to justify the evidence of those matters, and that it also appeared that when proved the verdict or judgment must necessarily involve their consideration and determination by the jury.

If the fact that the litigation did embrace the question may be proved aliunde, there is certainly no good reason why it may not be shown aliunde that in truth the question was not at all litigated, when under the pleadings it might have been.

This is not, however, a controlling question in the case, because we are of opinion that the adjudications upon the motion and in the action did not operate to preclude the appellant from asserting the fraud in the judgment recovered by Bain. A subsequent litigation to enforce that judgment by Bain or his assignee Miller, whether the corporation sought to resist it or not, cannot, under the principle announced by the Court of Appeals in the case of Candee v. Lord (supra), establish the validity of a judgment, which, as against the creditors of the corporation was fraudulent and void. Such a rule would only require the parties to a fraud to take another step between themselves, to shut out all inquiry in respect to the fraud they had committed. The receiver stands in respect to this question in no better condition than the parties who seek to enforce the judgment. He probably could not contest the validity of the judgment under which he was appointed, but there is nothing in the nature of his office, nor in his relations to the judgment or to the property of the corporation, that prevents his being treated as a trustee solely for bona fide creditors.

Therefore, when it is shown, as was attempted in this action, that a claim, asserted as an indebtedness owing by the corporation is in fact fraudulent and void as against its bona fide creditors, his duty is to administer the assets in such manner that the fraudulent indebtedness will have no share in their distribution, for he is trustee for bona fide creditors only.

The question whether he was properly a party to the action, for want of proof of leave to prosecute him having been obtained, is not material upon this appeal. That question was not raised below; and if it had been might have been easily met by producing an order of leave already given, or by one granted nunc pro tune, if necessary or the court could have properly held, at that stage of the case, that his appearance and admission by answering, without making the objection to the regularity of the suit, was a waiver, so far as he was concerned, of the usual rule in such cases. The rule requiring leave to sue a receiver is not statutory, and is in no sense elementary to-the action itself. To sue without leave is a contempt of court, but the court will not dismiss a complaint in such a case as a matter of course.

We are of opinion that the judgment was erroneous and must be-reversed and a new trial granted, with costs to the appellant to abide the event.

This result disposes of the appeal from the order granting the allowance, and we need make no further disposition of that appeal.

Brady and Daniels, JJ., concurred.

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


source: Caselaw Access Project

author: Davis, P. J.:

license: Public Domain

text:
    In the Matter of the Application of the Executors of PETER DOLAN, Deceased, for Authority to Sell so much of his Real Estate as shall be Necessary to Pay his Debts.

      Sale of real estate to pay the debts of the decedent — legatees whose legacies are changed upon it, a/i'e entitled to notice of the proceeding.

    When legacies are charged upon real estate, the legatees are entitled to notice of an application to the surrogate for an order directing the real estate to he sold to pay the debts of the testator; and no valid order therefor can be .made unless such notice has been given.
    Separate appeals of Eelix Donnelly, Frederic Moeller and William Nelson, Jr., from orders of the surrogate of New York, denying their several petitions to be released from their respective purchases of real estate ordered to be sold to pay the debts of Peter Dolan, deceased.

      Geo. G. Blanlce, for the appellant Donnelly.

      F. Be P. Forster, for the appellant Moeller.

      Samuel Bilcer, for the appellant Nelson.

      Jno. McKeon and J. Vincent, for the executors, heirs and devisees of Dolan, respondents.
   Davis, P. J.:

A number of interesting and embarrassing questions are presented on these appeals by the several appellants. But we do not deem it important to consider them all, inasmuch as a single one, applicable alike to each of the appeals, appears to us to be fatal to the order of the surrogate.

By his will the testator gave three legacies, to wit: the sum of $5,000 to his brother, Edward Dolan; the sum of $3,000 to the Rev. David A. Merrick, pastor of the Roman Catholic Church of St. Francis Xavier, in the city of New York, and the sum of $1,000 to the Society of St. Yincent De Paul; and after directing that those legacies shall be paid by his executors out of the rents, issues and profits of his real and leasehold estate, at such time and in such manner as they shall deem for the best interests of his ■estate, he proceeded to charge his estate, real and leasehold, with the payment of said legacies.

In Jordan v. Poillon (77 N. Y., 518) it was held that legatees whose legacies are charged upon real estate are entitled to notice of any proceeding which affects the land; and when no notice is given cannot be precluded from asserting their claims afterwards.

That was the case of a judicial sale of lands in partition, and the purchaser refused to complete his purchase on the ground, among others, that legatees whose legacies had been made a charge on the real estate of the testator were not parties to the action. It was said by the court in the course of the opinion: “A purchaser on a partition or foreclosure sale has a right to expect that he will acquire a good title, and the law presumes that he bids with that object in view. He should not be left, upon receiving a deed, to the uncertainty of a doubtful title or the hazard of a contest with other parties which may seriously affect the value of the property if he desires to sell the same.’’

And it was also said: In order to bind the legatees to any proceeding which affects their rights they should have an opportunity ■ to be heard; and when no notice is given they cannot be precluded from asserting their claim afterwards.”

In this case notice of the proceeding was given to but one of the legatees, Edward Dolan. The other two, so far as anything in the proceedings show, had no notice of their pendency, and did not in any manner appear therein. "When this fact was discovered by the purchasers, who now appeal, each of them objected to complete his purchase on the ground, amongst other things, that such notice had not been given to such legatees.

The only answer made to the objection by the surrogate in his opinion is, that the objection seems to be untenable for the reason that the legacies, though so charged, are by law subject to the payment of decedent’s debts. But this answer is not sufficient, for the legatees having had no notice or opportunity to be heard in the proceedings before the surrogate are not affected thereby, and the decree of the surrogate could not be pleaded in bar of any claim which they might set up hereafter to enforce their legacies against the lands bid off by the appellants. While it is true that their legacies were subject to the payment of the debts, they were nevertheless entitled to a hearing before the surrogate upon the questions of, to what debts and to what amount of indebtedness their legacies were subject; and unless that hearing was accorded to them the decree of the surrogate could not prevent their asserting at any future time, as an embarrassing lien, the charge upon the lands under the will. As was held in Jordan v. Poillon a purchaser is not bound to take the risk of such a question which might embarrass any future sale which he might desire to make, and would be a complete answer to any attempt to enforce the contract of such sale by an action for specific performance. Whether or not this difficulty might have been cleared out of the way is not for us to determine. It was, in our opinion, a fatal one, and sufficiently so to relieve us from the consideration of the other objections urged.

The order of the surrogate in respect to each of the appellants must be reversed, and the several petitions granted by orders giving relief in the usual form in such cases, with ten dollars costs and disbursements to each of the appellants.

Brady and Daniels, JJ., concurred.

Orders reversed and petition granted, with ten dollars costs and disbursements to each of the appellants.


text:
    THE VICTORY WEBB PRINTING AND FOLDING MACHINE MANUFACTURING COMPANY, Respondent, v. HENRY WARD BEECHER and Others, Appellants.

      Manufacturing corporation — liability of its trustees for a failure to file a repoi't— Chapter 510 of 1875 — effect of, upon liabilities incurred before its passage — meaning of the word ‘ ‘ debts ” as used in chapter 40 of 1848.
    The trustees oí a manufacturing corporation, whose certificate of incorporation was filed October 6, 1874, failed to file the report-required by section 12 of chapter 40 of 1848, in January, 1875. On June 7, 1875, chapter 510 of the laws of that year took effect, whereby the said twelfth section was so amended as to require that every such company should make a report, “ within twenty days from the first day of January, if a year from the time of the filing of the certificate of incorporation shall then have expired, and if so long a time shall not have expired, then within twenty days from the first day of January in each year after the expiration of a year from the time of filing such certificate.”

      Held, that the act of 1875 repealed the former statute and relieved the trustees from the liability for the debts of the company, imposed upon them by the former act because of their failure to file the report.

      Semble, that the “ debts” for which the trustees are made liable by the act do not ’ include unliquidated claims for breaches of contracts and causes of action incidentally arising or, resulting therefrom, which the company might meet and defeat by some sufficient defense.
    Appeal from an order overruling a demurrer interposed to the complaint, and from an interlocutory judgment in favor of the plaintiff entered thereon.
    The defendants, claiming that seven distinct causes of action were set forth in the complaint, demurred to each of them separately, on the ground that it did not state facts sufficient to constitute a cause. of action.

      Shearman dk Sterling, Lewis dk Beecher and Thorndike Saunders, for the appellants.

      Lord, Dang dk Lord, for the respondent.
   Davis, P. J.:

The complaint sets forth several distinct causes of action, some., of which are alleged to have arisen upon a contract for the manufacture of certain machinery; others upon the manufacture of additions to the machinery not called for by the original contract; others for claims growing out of the unlawful neglect and refusal of, the contracting corporation to accept such machinery by reason of which divers expenses were incurred for storage, insurance, etc., of the same. The original contract was alleged to have been made with a corporation organized by the name of “ The Christian Union Company,” which corporation expired by the limitation of its charter before any cause of action arose on the contract, and it is alleged that a new corporation was thereafter organized having the same corporate name, which assumed the obligations of the contract and took the place of the former corporation in respect thereto.. The action is brought against the appellants as trustees of the latter corporation to recover against them jointly and severally under the provisions of section 12 of the manufacturing act of 1848.

It is necessary, therefore, to import an averment on that subject which follows the seventh count or cause of action of the complaint, into each of the several preceding causes of action, to make them respectively causes of action against the defendants as such trustees.

It seems impossible to treat the complaint as containing a single cause of action. By its express allegations it contains several; and if it be true that the separation of them was not in all cases necessary, yet, as to some portions it certainly was, and the plaintiff ought not to be heard now to urge his own inaccuracy in making the separations as a ground for defeating a demurrer which adopts and follows his own division and classifications. This suggestion is only made to meet the point now urged, that the demurrer is bad, because not taken to the complaint as a whole instead of to the several alleged distinct and separate causes of action. A demurrer to the whole complaint as a single cause of action would have been bad if either of the plaintiff’s alleged grounds of action presented a separate cause.

There are but two questions which need to be considered in disposing of the demurrer, although a large number are presented by the points of the appellants. The first is whether the complaint shows a liability under the statute against the defendants as trustees of the corporation. The organization of the second Christian Union Publishing Company is alleged to have been perfected by filing the certificate of incorporation on the 6th day of October, 1874. As the twelfth section of the act of 1848 then provided, the company was required annually, within twenty days from the first day of January, to make and publish a report in the form and manner prescribed by the section, and in default of so doing all the trustees were made jointly and severally, personally liable for “ all the debts of the company then existing and for all contracted before the report shall be made.”

Afterwards, and before this suit was brought, the legislature amended the section so as to read as follows: “ Every such company shall, within twenty days from the first day of January, if a year from the time of the filing of the certificate of incorporation shall then have expired, and if so long a time shall not have expired, then within twenty days from the first day of January in each year after the expiration of a year from the time of filing such certificate, make a report, which shall be published,” etc. And the amended section imposes the same liability on the trustees when the company fails to file such report as the former section required. (Chap. 510, Laws of 1875; see Statute Law of New York [Diossy’s ed.], vol. 2, p. 306.)

The certificate in this case was filed October 6,1874. Under the section as it stood then, the certificate should have been filed within twenty days after the 1st day of January, 1875. The default in doing so is the ground of the liability of the trustees averred by the complaint. But a short time afterwards the legislature amended the act in such a manner that the certificate was not required to be filed till within twenty days after the 1st day of January, 1876. No default in so filing it is averred. The action was commenced in 1878 for causes of action alleged to' have accrued against the company in 1875. The amending act of 1S75 contained no saving clause, except of actions. pending at the time of its taking effect, which was June 7, 1875. The plaintiffs’ causes of action had not then wholly accrued, and no action therefor was pending. The question is, can the plaintiffs maintain this action under the provisions of the original law ?

The effect of the amendment, as to cases not saved by the act, was to abrogate the existing provision by substituting another. The legislative action was equivalent to a repeal .of the former section and the enactment of another section with new provisions. Doubtless, it was intended to relieve trustees whose corporations had failed to make and publish the report, which was designed to be an annual one and to give information of the condition of the company at or near the close of each year, saving such liability only in cases where suits were then pending. (Moore v. Mausert, 49 N. Y., 332.)

Every statute is by implication a repeal of all prior statutes, so far as it is repugnant and contrary thereto, and that without any repealing clause.” (Sedgwick Statutory Law, 104; U. S. v. Tynen, 11 Wall., 88; Dexter and L. Plank Road Co. v. Allen, 16 Barb., 15; Bartlet v. King, 12 Mass., 537; Potter’s Dwarris, 155.)

It is settled in this State that the recovery allowed by statutes against trustees and stockholders for the failure of a corporation or its officers, to make a report, is a penalty. (Merchants’ Bank v. Bliss, 35 N. Y., 412; Garrison v. Howe, 17 id., 458; Adams v. Mills, 60 id., 536, 553; Mc.Harg v. Eastman, 35 How. P. R., 205; S. C., 7 Robt., 137; and several cases lately decided by this court.)

The general rule is that a penalty given by statute cannot be recovered after its repeal although incurred before, unless the repealing act reserves the right of action. (Butler v. Palmer, 1 Hill, 324; Smith v. Banker, 3 How., 142.) The plaintiff in such an action must be able to show the court a statute in force at the time of the trial giving the penalty. This he does if his right is reserved by a repealing act; but this he cannot do if the statute be repealed by express enactment or necessary implication without any saving clause on which he can stand. It follows, therefore, that when the plaintiff began the action there was no existing penalty to be recovered and the demurrers were well taken.

The other question under the statute is, whether the allegations of the complaint show “ debts ” existing against the corporation, within the meaning of the twelfth section. They show, undoubtedly, causes of action for breaches of contract and causes incidentally arising or resulting from such breaches, which would entitle them to recover damages against the company unless met and defeated by some sufficient- defense. But it is very doubtful whether such causes of action are “ debts,” within the meaning of the act. If they are “ debts,” would not the company be bound to include them in the annual report of “ existing debts ” to be made under section 12? The statute says the report must state the amount of its “ existing debts.” Is it the intention that the report shall state as existing debts the amount of disputed and contested claims? If that be so then the statute would operate in many cases as a confession of indebtedness destructive of good defenses. The words “ existing debts ” must have been used in some more restricted sense, or else the statute might operate to subject the trustees to liabilities, which may not be capable of recovery against the corporation itself, for if they are to be regarded as existing debts, then their omission would be fatal to the validity of the report., But the statute liability is expressly confined to existing debts.” If the statute is to be strictly construed (Garrison v. Howe, 17 N. Y., 458), then the courts are bound to observe the distinction in law between debts and demands or claims for damages. The courts have held that certain kinds of liability, which must ultimately ripen into “debts,” are not “debts” within the meaning of the act of 1848, and similar acts. (Oviatt v. Hughes, 41 Barb., 541; Whitney Arms Co. v. Barlow, 68 N. Y., 34.) And this court has lately had under advisement and determined the same 'question. On both of these grounds we think the plaintiffs fail to show a right to enforce the statutory penalties demanded by the ■ complaint. The judgment and order appealed from must be reversed, with costs of the appeal, and judgment given for defendants on the demurrer, with costs, with leave to plaintiff to amend on the usual terms.

Beady and Daniels, JJ., concurred.

• Judgment reversed and judgment entered for the defendants on the demurrer, with costs and with leave to plaintiff to amend on the usual terms.


text:
    MARK L. McDONALD, Appellant, v. ERWIN DAVIS, Respondent.

      Bankruptcy proceedings— order allowing a plaintiff to continue an action against the bankrupt — effect cf. a subsequent discharge of the bankrupt, upon the order.

    On September 15, 1869, tbe defendant was adjudged a bankrupt by tbe United States District Court for California, upon bis voluntary petition, filed on tbe eleventh of that month, and an order was then made restraining tbe plaintiff from prosecuting an action commenced by bim against tbe defendant in one of the district courts of that State. On February 25, 1873, tbe plaintiff moved in tbe bankruptcy court for and procured an order reciting that no assets bad come into tbe bands of tbe assignee; that the defendant bad been guilty of laches in prosecuting bis proceeding, no steps having been taken by bim to procure bis discharge, and directing that tbe plaintiff be at liberty to proceed with bis action in 'the same manner as be might have done if no restraining order bad been made, and that if be should obtain judgment therein, be should be at liberty to sue out execution and take any other proceedings thereunder that tbe law and practice of the State court permitted.
    Tbe plaintiff, having recovered a judgment in 1873, thereafter, in 1876, brought an action in this court upon it, in which tbe defendant appeared and answered. Thereafter, and in March, 1877, tbe defendant procured a discharge in bankruptcy and pleaded tbe same in bis answer to an amended complaint served by tbe plaintiff.

      Held, that the discharge was to be construed in connection with the order, which still remained in force ; that when so construed there was no inconsistency between them, and that the effect of the order was to except the indebtedness for which this action was brought from the operation of the subsequent discharge.
    Appeal from a judgment in favor of the defendant, entered upon an order dismissing the complaint made at the New York Circuit.

      J. K. Herbert and Charles James, for the appellant.

      Henry A. Hoot, for the respondent.
   Davis, P. J.:

The appellant commenced a suit against the respondent in the Twelfth District Court of the State of California on the 6th day of September, 1869. On the eleventh day of the same month the respondent filed his voluntary petition in bankruptcy in the District Court of the United States for California. On the fifteenth day of the same month he was adjudicated a bankrupt, and a restraining order was issued by the court in bankruptcy which stayed the prosecution of the appellant’s action in the State court. The appellant’s cause of action which' was on contract, was proved in bankruptcy. No assets came to the assignee in bankruptcy. No further steps were taken by the bankrupt in his proceedings in the bankruptcy court, and no attempt was made to obtain his discharge till the time hereinafter mentioned. The bankruptcy proceedings remaining in that condition, on the 25th day of February, 1873, the appellant made a motion in the bankruptcy court, on the ground of the laches of the respondent in prosecuting his proceeding, to vacate the restraining order, and for leave to prosecute his suit in the State court to judgment and execution. The motion was granted, and it was ordered that the appellant be at liberty to proceed with said action in the same manner as he might have done if no restraining order had been issued, and that if he should obtain judgment therein he should be at liberty to sue out execution and to take any other proceedings thereunder that the law and practice of the State court permitted. Thereupon the plaintiff proceeded in the action and recovered judgment in February, 1873, against the defendant in the sum of $7,423 in gold and $38.25 costs. In July, 1876, an action was commenced in this court by personal service in this city, on the judgment so recovered. The respondent appeared and answered. Afterwards, and in or about the month of March, 1877, the respondent obtained from the said United States District Court in Bankruptcy a discharge in his bankruptcy proceedings, which discharge he pleaded in answer to the complaint in this .action when subsequently amended by plaintiff. This court upon motion had previously refused to give him leave to plead the same on the ground assigned in the opinion of Mr. Justice Daniels. (McDonald v. Davis, 19 Hun, 95.)

At the trial, after proof of the judgment of the State court of California and of the appellant’s ownership thereof, the respondent produced and put in evidence his discharge in bankruptcy. The appellant then proved and put in evidence the order of the Court of Bankruptcy, above mentioned, which vacated the stay and authorized the prosecution of the suit to judgment and execution, and such other proceedings as the law and practice of the State court permitted. The court thereupon dismissed the complaint and gave judgment for the respondent with costs.

The question presented is as to the effect of the order of the Court of Bankruptcy of the 25th of February, 1873. In considering the effect of that order it is important to recall, with precision, the several dates of the proceedings in bankruptcy, the character of the proceedings and the condition of the bankrupt law at that time. The proceeding of the respondent in bankruptcy was a voluntary one. It was commenced on the 11th of September, 1869 ; he was adjudged a bankrupt on the fifteenth of that month. No assets came to the hands-of the assignee.

The right of the bankrupt to a discharge was then controlled by section 29 of the bankruptcy laws (14 U. S. Stat. at Large, p. 531 [chap. 176 of 1879], § 29), which declares that if no assets have come to the hands of the assignee, the bankrupt may apply to the court for a discharge from his debts, at any time after the expiration of sixty days and within one year from the adjudication in bankruptcy.

It has been held that this provision as to time is not a direction but a requirement, and that where he may apply after sixty days he . must..apply within one year. This is put on the ground that the .- act grants a conditional privilege, which can- only be claimed .or enjoyed on compliance with the condition.. (Bump-on Bank., 240, and.cases there cited.)

■The respondent made no application for the discharge within one year, after he was adjudicated a bankrupt, nor indeed within more than seven years. After more than three and a-half years had elapsed, the appellant took steps to relieve himself from the restraining order, which had- been granted on the application of the bankrupt.' Under the- provisions of the twenty-first section of the act (Rev. Stat. [U. S.], § 5106), the court undoubtedly had power to relieve him. It might have done so by dismissing the petition in : toto, which would have operated for the benefit of all creditors, or the plaintiff might obtain an order which should, in effect, dismiss it wholly as to himself, and thus make the laches of the bankrupt operate to prevent any discharge that could affect the enforcement of his debt against future assets of. the bankrupt. He took the latter course.

The recitals of the order of the bankruptcy court show that it proceeded upon a state of facts under which the right to the dis- . charge, under the section of the act first above cited, was deemed to be lost by neglect as against the appellant. The recital is as follows:

“And it further appearing that they duly proved their claim against the estate of the said bankrupt, and that no part of the same has been paid, and that no assets have come into the possession of the assignee of the estate of said bankrupt out of which said claim or any part thereof has been or can be paid; and it further appearing that said bankrupt has not been, or made any application to be, discharged from his debts under the bankruptcy act, it is ordered,” etc.

Clearly, the court intended to give the fullest relief to appellant in its power under this state of facts; and so it proceeded to order that the action in the State court might proceed; and that if the plaintiffs therein obtained judgment they should be at liberty to • sue out execution, and to take any other proceedings thereunder that the law and practice of that court permits to enforce the judgment. This means nothing, or it is equivalent to adjudging that the suit and the judgment and execution thereon shall not be affected by a discharge in bankruptcy of the respondent, if any were subsequently obtained.

The court could not have intended, and did not intend, to grant an idle and useless privilege which'could- at any time be made unavailing by an ex parte discharge in bankruptcy to be granted to the respondent. It meant, on. the other hand, to adjudicate that, as against the appellant, the respondent had lost his right or privilege to have any such discharge under the law. The order should be ’construed as adjudicating that precise thing; and while it stands in force, it must be held to except the indebtedness for which the action was brought, and upon which the judgment was recovered, out of the operation of the subsequent discharge. It was, in other words, equivalent to a dismissal of the. proceedings in bankruptcy, jpro tanto, and, in so far as they affected the appellant’s demand, ■proved in bankruptcy, and which might- be recovered in the pending suit. The respondent- could not be discharged as to such indebtedness without first obtaining an order vacating or modifying the order of 25th of February, 1873.' This he has not done; and that order, while it stands in force as a part of the proceedings in bankruptcy, shows upon its face-that,-by reason of the bankrupt’s gross laches, he is entitled to no discharge as against the appellant’s' claim' and the judgment recovered thereon. There is • no ■inconsistency between it and the order of discharge afterwards obtained, because the record in bankruptcy is to be read as a whole '; and when so read, it discloses the fact that the formal discharge is not applicable to appellant’s judgment, and the reasons why it is not.

' In our opinion the appellant was entitled to recover upon the judgment on which this action was brought, and it was error to dismiss his complaint.

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

■ Brady and Daniels, JJ., concurred.

Judgment reversed; new trial granted; costs to appellant, to abide event.


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

text:
    THE PEOPLE OF THE STATE OF NEW YORK, ex rel. JOSEPH LAUGHLIN, Appellant, v. JAMES FINN, Warden of the City Prison in the City of New York, Respondent.

      Petit larceny — is a misdemeanor within section 64 of chapter 2, title 6, of the Code of Criminal Procedure.

    Petit larceny is a misdemeanor within the meaning of that word as used in section 64 of chapter 2 of title 6 of the Code of Criminal Procedure, conferring upon the Court of Special Sessions of the city and county of New York “jurisdiction to try and determine, according to law, all complaints for misdemeanors. ”
    Appeal from an order dismissing a writ of habeas corpus, and denying a motion to discharge the appellant.

      W. F. Kintzing and G. L Simonson, for the appellant.

      JD. G. Rollins, for the respondent.
   Davis, P. J.:

The return in this case shows that on the 21st of September, ■ 1881, the appellant was tried and convicted by the Court of Special Sessions of the city and county of New York of the crime of petit larceny, he having been arraigned and charged with such offense, and having answered the same, and elected to be tried by that court. Upon his conviction, it appearing that he was under the age of sixteen years, it was adj’udged that he be sent to the House of Refuge, to be dealt with according to ■ law. The;--appellant traversed the return by alleging that the Court of Special Sessions in and for the city and county of New York, had no jurisdiction to try the alleged offense, on the ground that petit -larceny is a felony.

The sole question presented is, whether that court had jurisdiction, at this time of the trial and conviction, of the. offense of petit larceny. The jurisdiction of that court is regulated and determined by the provisions of the Code of Criminal Procedure. Section 64 of chapter 2 of-title ,6 of that code provides as follows: “ The Court of Special Sessions of the city and county of New York has jurisdiction. To try and determine according to law all complaints for misdemeanors, unless the defendant elects to be tried by the Court of General Sessions, or the Court of Special Sessions send the case to the Court of General Sessions for trial.”

It is insisted by the appellant that the words all complaints for misdemeanors,” as used in this section, do not include petit larceny, because that crime is a felony at common law, and has never been declared by any statute to be a misdemeanor.

It is true that petit larceny is a felony at common law. ( Ward v. People, 3 Hill, 396; Carpenter v. Nixon, 5 id., 260; People v. Adler, 3 Park., 249; Colby on Criminal Law, 82.)

It is also true that no statute has heretofore in express terms declared petit larceny to be a misdemeanor. But the Penal Code, by section 535, does so- declare. That code -was enacted, by the same legislature which enacted the Code of Criminal Procedure. But it was provided that the Penal Code shall take effect on the 1st day of May, 1882. (P. C., § 727.) It is probable that when the codifiers framed the provision giving to the Court of Special Sessions jurisdiction to try and determine according to law all complaints for misdemeanors, it was supposed that both codes would go into operation at. the same time, and that fact, had it so happened, would have left no doubt that the word misdemeanor,” as used in the Code of Criminal Procedure, does include all petit larcenies. Such will be the effect on and after the first of May next, when the Penal Code takes effect, and thereafter there will be no question but that the Court of Special Sessions will have jurisdiction to try and determine petit larcenies, because they will then have been expressly declared by statute to be misdemeanors.

It is very difficult to answer satisfactorily the argument presented • by the learned counsel for the appellant to sustain their position that such jurisdiction does not now exist. But the statute which declares the punishment of petit larceny has for all practical purposes reduced that crime to the grade of misdemeanors, and the Court of Appeals, in the late case of The People ex rel. Comaford v. Dutcher (83 N. Y., 240), sustain the exclusive jurisdiction of the Court of Special Sessions to try the offense of petit larceny on the distinct ground that it belongs among offenses of the grade of misdemeanors within the meaning of the provision of the Constitution,, which declares that “ Courts of Special Sessions shall have such juris■diction of offenses of tlie grade of misdemeanors as may be prescribed bylaw.” This decision, together with that of The People ex rel. Murray v. Special Sessions (74 N. Y., 406), tend so strongly to establish that, for the purpose of trial and punishment in the ■ Court of Special Sessions, petit larceny is to be regarded as a misdemeanor, that we feel ourselves constrained to accept them as having virtually settled the question adversely to the appellant, leaving it for that tribunal, if the question shall be again presented to it, to remove whatever doubts may remain upon the subject.

The question is one of serious importance to this city and county, because a contrary ruling would throw upon the Court of General . Sessions, now overwhelmed with business, a mass of petty offenses, which can well be, and ought to be, disposed of by. the Special Sessions.

The order appealed from is therefore affirmed.

Beady, J.:

It is true that no statute prior to the passage of the Penal Code declared petit larceny to be a misdemeanor. • But the Revised Statutes declared the word felony, when used in the act or in any other statute, should be construed to mean an offense for • which the offender, on conviction, should be liable by law to be punished by death or by imprisonment in the State prison. (2 R. S., 702, § 30.) And by the same chapter it was declared that every person who should be convicted of stealing, taking and carrying aw'ay personal property, of another of the value, of twenty-five dollars.or under, should be adjudged guilty of petit larceny, and should be punished by imprisonment in the county jail not exceeding. Six months, or by a fine not exceeding $100, or by both such fine and imprisonment.

It is true that these enactments do not, in express terms, declare petit larceny to be a misdemeanor, but the result is that petit larceny is not a felony, because the punishment is not by death or by imprisonment in a State prison.

Expressio unius est exclusio alteri/as. A misdemeanor is any crime less than a felony, and the terms felony and misdemeanor are generally used in contradistinction' to each other. (Barbour’s Criminal Treatise and Citations.)

The provisions of the Revised Statutes, of offenses punishable by imprisonment in a county jail and by fines,” are printed under • the heads of misdemeanors, and in popular acceptation therefore, and among the members of the profession a misdemeanor was understood to be a crime not punishable by death or confinement in the State prison.

When the Criminal Code was passed therefore, and the jurisdiction of Courts of Special Sessions declared, the word misdemeanors had a well known signification and included petit larceny within the class of offenses which it embraced. It was at the time of the passage of the Code mentioned, settled by statute as well, that an offense not punishable by death or imprisonment in the State prison was not a felony, and not being a felony, was included in the term misdemeanor.

Petit larceny was therefore understood to be, and was in fact, a misdemeanor, and when it was so declared by the Penal Code, the ■ declaration was but a legislative recognition of the fact.

Brady and Daniels, J J\, concurred in the result.

Order affirmed.


author: Brady, J.:

text:
    GEORGE H. WOOSTER, Respondent, v. DAVID KISCH and LOUIS M. SIMSON, Appellants.

      Liquidated damages— when a sum named in a contract is to he treated as liquidated damages, and not as a penalty.

    The plaintiff licensed the defendants to use a patented article, known as a “ folding guide,” to be employed in connection with sewing machines, upon the payment of fifty dollars for each guide so used. The guide is about three inches long and easily secreted. The contract provided that the party of the first part thereto, the plaintiff, or his assigns or agents, should have the right and privilege, and be permitted “ at' any reasonable time or hour to visit and inspect the establishment of the parties of the second part (the defendants), where said folding guides are, and inspect and count the same under penalty of one thousand dollars, which said sum is hereby fixed and stated as liquidated damages to be recovered against the said parties of the second part in case of refusal to permit such visits and inspections as aforesaid.”

      Held, that the sum named was to be treated as liquidated damages and not as a penalty.

      Appeal from a judgment in favor of the plaintiff, entered upon a verdict rendered at circuit, and also from an order denying a motion for a new trial, made upon the minutes of the justice before whom the action was tried.

      Edmnmd Wetmore, for the appellants.

      Thos. B. Browning, for the respondent.
   Brady, J.:

This action was brought to recover the sum of $1,000, alleged to have been forfeited as liquidated damages for a breach of contract entered into between the parties. The plaintiff, by the agreement, licensed the defendants to use a patented article, known as a ■“folding guide,” to be employed in connection with sewing machines and similar mechanism. The “ guide ” is about three or four inches long and is easily secreted. The defendants, among •other things, agreed to permit the plaintiff at any reasonable time ■or hour to visit and inspect their establishment, and to inspect and count the folding guides,” and in case of their refusal to do so, ■covenanted to pay the plaintiff the sum of $1,000 as liquidated damages.

The contract on that subject provided as follows : “ The said parties of the second part further covenant and agree that the said party of the first part, or his assigns, or his or their duly constituted agents, shall have the right and privilege, and shall be permitted, at any reasonable time or hour, to visit and inspect the establishment •of the parties of the second part, where said folding guides are, and inspect and count the same, under penalty of one thousand dollars, which said sum is hereby fixed and stated as liquidated damages to be recovered against the said parties of the second part in case of refusal to permit such visits and inspections as aforesaid.”

On the 17th of May, 1879, the plaintiff applied to the defendants, during business hours, to be allowed to visit and inspect their ■establishment, in accordance with the terms of the contract, but permission to enter the establishment was presently refused.

Upon the trial there was an issue with regard to the refusal of the defendants to allow the inspection, which was disposed of upon ■conflicting evidence. The judge charged that if the plaintiff, at a reasonable time and in a reasonable manner, and for the purpose named in the agreement, made a demand, and satisfactorily proved that he did, and that the defendants refused, he was entitled to a verdict. There was no exception taken upon this branch of the case to the judge’s charge, and the verdict of the jury was in favor ■of the plaintiff, thus establishing the fact that the plaintiff, at a reasonable time and in a reasonable manner, and for the purposes named in the agreement, asked permission to visit the defendants’ ■establishment and to count their “folding guides,” which was refused him. The judge also held that the license provided for the payment of $1,000 as liquidated damages, and not as penalty; and to this ruling there was an exception. ,

There was a request, also, on behalf of the defendants, to charge that the clause in controversy, namely, that which referred to the payment of liquidated damages, construed with reference to the rest of the contract and with the intent of the parties, as derived from the language of the instrument and the circumstances, provided a penalty, and that the plaintiff could only recover nominal damages in case of a breach. This request was refused and an ■exception was duly noted.

The question presented upon this appeal is whether, under the agreement, the sum named is to be regarded as liquidated damages or as a penalty, and in the determination of that problem as one of intention, it may be said that perhaps there is not much growing ■out of the facts and circumstances developed to guide us in arriving at a satisfactory conclusion, but yet enough. The question is not free from difficulty, owing to the variety of decisions relating to the subject, and which are well summed up in the remarks of Earl, J., in the case of Kemp et al. v. The Knickerbocker Ice Company, to be found at pages 57 and 58 of the 69th New York ^Reports, and which are as follows:

“ The question whether a sum named in a contract to be paid for a failure to perform shall be regarded as stipulated damages or a penalty, has been frequently before the courts, and has given them much trouble. The cases cannot all be harmonized, and they furnish conspicuous examples of judicial efforts to make for parties wiser and more prudent contracts than they had made for themselves. Courts of law have, in some cases, assumed the functions of courts of equity, and .have relieved .parties, by forced and-unnatural constructions, from stipulations highly penal. Where an amount stipulated as liquidated damages would be grossly in excess ' of the actual damages, they have leaned to hold it a penalty. Where' the actual damages were uncertain and difficult of ascertainment, they have leaned to hold the stipulated amount to have been intended as liquidated damages. No form of words has been regarded as controlling, but the fundamental rule as thus announced is, that the: construction of these stipulations depends - in each case upon the intent of the parties, as evinced by the entire agreement construed ■ in the light of the circumstances under which it was made.” Earl, J., then groups a number of cases as illustrative of the views thus expressed.

In this case the circumstances are that the plaintiff was the owner of a patent “ folding guide,” which would seem to be very useful. It is small in size, as already stated, being not more than three or four inches long, and might therefore be secretly used. The compensation for a license to use one of these guides is fifty dollars; the cost of the use of twenty of them, therefore, would amount to $1,000. The apprehended secret employment of the “guides” no doubt led to the determination on the part of the plaintiff to secure by contract indemnity for any abuse of his rights as a patentee, and to secure it in such a way that there could be no doubt about the form and effect of the security, and hence provided for the right to inspect the defendants’ premises, as one of his licensees, and the “guides*” employed by him. The plaintiff, denied the right of inspection and examination, would have no means of immediately ascertaining whether there was a violation of the agreement and of his rights or not. If he proceeded against the defendants at all it would or might necessarily be upon' belief only, his action not resting upon any information with regard to the subject. The defendants might, as they did in this instance, unreasonably, and therefore unjustly, decline to allow an inspection of their premises, and of the “guide” or “guides” employed, and thus not only prevent the plaintiff from obtaining in that way the necessary and reliable information to enable him to assert his rights and to punish the defendants for a violation of their contract and of his privileges, but subject him to the loss occasioned by the unwarranted use of guides not paid for.

These results must be supposed to have been within the comprehension of the defendants themselves at the time that the contract was made, and they must have fully understood, therefore, the importance of an absolute provision for the protection of the plaintiff’s rights, which, as we have already seen, could be easily invaded in consequence of the character of the article patented. The refusal of the defendant Kirch to allow the inspection demanded by the plaintiff, and asking that it be deferred for a quarter or half an hour, would seem to indicate that something injurious to the plaintiff’s rights was in progress, and that the time mentioned was desired for the purpose of removing the evidence thereof. It is certainly a very suspicious circumstance, in view of the finding of the jury that the request was not at once granted. This circumstance is referred to as corroborative of the ease with which a licensee might violate his contract, and upon short notice of a contemplated inspection which would disclose the violation, hastily suppress all evidence of it, and' hence the necessity not only for the enforcement of a rigorous observance of the contract but of the provision of liquidated damages for its violation. It may be said, also, that damages in such a case must be regarded as uncertain and of a character not to be estimated except by conjecture, because of the inability of the plaintiff to obtain by actual observation and examination the necessary information to enable him to show what the damages were.

This case bears analogy to that of Bagley v. Peddie (reported in 16 N. Y., 169). That action was to recover $3,000 as liquidated damages. It appeared that none of the covenants were for the payment of money or for the doing or committing of any act. The damages resulting from it could not be computed by the data furnished by the instrument itself, but the damages from any breach were uncertain and required evidence aliunde the instrument to establish their amount. One of the covenants was not to reveal the secrets of the business in which the principal obligor was to be employed, or any invention or improvement that might be made by .his employer, the obligee, and it was held that a breach of this covenant involved' damages so uncertain and difficult to be ascertained that the sum named in the bond would be deemed not a penalty but liquidated damages, although the damages resulting from the actual breach might be readily determined by a jury.

The case in hand presents the same elements as the one thus cited, and it seems should be governed by the principles enunciated in that case, which is one of those referred to by Justice Earl.

In the light of all the facts and circumstances, the character of the article licensed, the necessity for protection to the plaintiff and the ease with which his rights might be invaded and violated, lead to the conclusion that it was the intention of the parties that the sum named should be regarded as liquidated damages, and not as a penalty.

There is no reason why this view should not be entertained.

The doctrines which the courts have promulgated to control actions of this character have resulted, as suggested by Judge Earl, from a disposition to save people from seemingly improvident contracts, and although doubtless, in many cases, they have exercised a benign influence, are nevertheless extremely questionable in their general application.

It would probably be shown, if the matter could be properly investigated, on proof as to intention, that the parties intended in all cases that the sum named should be paid for a violation of the agreement. Contracting parties are not educated to an understanding of the rules prevailing in regard to the construction of an agreement, such as made by the parties hereto, which these doctrines have established; but when advised of them, as they may be, will doubtless, in many instances, take the chances of a violation of the agreement which otherwise would be strictly performed.

Eor the reasons assigned the judgment should be affirmed, with costs.

Davis, P. J., and Daniels, J., concurred.

Judgment affirmed, with costs.


author: Brady, J.: Daniels, J.: Davis, P. J.:

text:
    GEORGE WALKER, Plaintiff in Error, v. THE PEOPLE OF THE STATE OF NEW YORK, Defendants in Error.

      Insanity — what must be shown to render a person irresponsible for his criminal acts — upon whom the burden of proving the sanity or insanity of the accused rests.

    Upon the trial of the plaintiff in error for the crime of abduction, the defense being insanity, his counsel requested the court to charge that the true test of criminal responsibility, where the defense of insanity is interposed to an indictment, is whether or not the accused had sufficient reason to know right from wrong, and whether or not he had sufficient power of control to govern his actions. The court charged the first part of the request, but declined to charge the latter portion thereof.

      Held, no eror; that if the accused had sufficient reason and intelligence to know right from wrong, it was a matter of no moment whatever whether or not he had sufficient power to control or govern his actions.
    The judge charged the jury that to establish a defense on the ground of insanity, it must be dearly proven that at the time of committing the act, which was the subject of indictment, the accused was laboring under such a defect of reason from disease of the mind as not to know the nature and quality of the act he was doing; or if he did know it, that he did not know that he was doing wrong; that if the testimony satisfied them beyond a reasonable doubt of his guilt, and that he was not insane, it would be their duty to convict; and further, that if there was any reasonable doubt arising upon the evidence in the case, and upon nothing else, it would be their duty to give him the benefit of that doubt and acquit him.
    The prisoner’s counsel requested him to charge that the defendant in a criminal case was not required to prove his insanity in order to avail himself of that defense, but merely to create a reasonable doubt upon this point, and that thereupon the burden of proving the sanity falls upon the people. This the judge declined to charge.

      Held, that in view of the charge already given the judge committed no error in refusing to charge as requested.
    Writ of Error to the Court of General Sessions for the city and county of New York, to review the trial and conviction of the plaintiff,(in error of the crime of abduction.

      William F. Kintzing, for the plaintiff in error.

      Daniel G. Hollins, for the defendants in error.
   Brady, J.:

The plaintiff in error was indicted and tried for the crime of abduction, and was convicted and sentenced to the State prison for term of ten years. The response made to the charge was insanity. Upon the trial the counsel for the plaintiff in error requested the court to charge, first, that the true test of criminal responsibility, where the defense of insanity is interposed to an indictment, is whether the accused had sufficient reason to know right from wrong, and whether or not he had sufficient power of control to govern his actions. The learned recorder, in answer to this request, said : I will charge the first part of that proposition, namely, the true test of criminal responsibility, where the defense of insanity is interposed to an indictment, is whether the accused had sufficient reason to know right from wrong.” But he further said: I decline to charge the latter part, namely, and whether or not he had sufficient power to govern and control his actions.” The prisoner, by his counsel, excepted to the refusal to charge as requested.

The counsel for the prisoner also requested the recorder to charge that the defendant, in a criminal case, was not requested to prove his insanity in order to avail himself of that defense, but merely to create a reasonable doubt upon this point, whereupon the burden of proving the insanity falls upon the people.” The learned recorder declined to charge as requested and the counsel for the plaintiff in error duly excepted. The recorder in his charge to the jury said, that to establish a defense on the ground of insanity it must be clearly proven that, at the time of committing the act which is the subject of the indictment, the party accused ■ was laboring under such a defect of reason, from a disease of the mind, as not tc know the nature and quality of the act he was doing; and if he'did know it, that he did not know that he was doing wrong. Counsel for the plaintiff in error excepted to the words clearly proven,” as used in this extract from the charge, and the exception was duly noted.

It will be perceived, in reference to the first request, that in addition to the proposition as to the capacity of the plaintiff in error to know right from wrong, it was designed by his counsel to create another test or condition, namely, as to whether the plaintiff in error had sufficient power to govern and control his actions, which is to say, in' effect, that if he had sufficient reason to know right from wrong, and knowing .it had not sufficient power to control and govern his actions, and did the act charged with a knowledge therefore that it was wrong, the act was to be regarded as that of an insane person and one irresponsible for his deed.

It is enough to say that there is no precedent for such a combination of elements as is presented in this request. The true test upon the authorities is that announced by the learned recorder, namely, whether the accused had sufficient reason to know right from wrong; and if he had sufficient intelligence to know it, whether he had sufficient power to control or govern his actions was a matter of no moment- whatever. Assuming that he had reason enough to know that he was doing wrong when he committed the act of which he stood accused, it was his duty’ to control himself, a duty that he owed to God and man, and one for the omission of which under the law of the land he was to be punished. The courts have gone quite far enough in declaring that if the accused is laboring under such a defect of reason from disease of the mind as not to know the nature and quality of the act he is doing, and if he did know it that he did not know that he was doing wrong, he should be regarded as irresponsible for the act charged against him.

There are some obiter clicta which would seem to evidence an intention to shroud this doctrine in doubt, or to hamper it with conditions subversive of its clearness and efficacy, but they have not been adopted in any adjudicated case as expressive of the law of this State. If when a person is put upon trial it is urged on his behalf that he was insane at the time of the commission of the crime of wjiich he is accused, he is (not entitled to the benefit of the rule governing that averment to any greater extent than that expressed by the recorder in this case, and it is to be given to the jury as a rule without conditions and without qualifications. If the testimony submitted for the consideration of the jury established such mental infirmity as the rule itself suggests, then the prisoner is entitled to his discharge upon the ground of his irresponsibility. But if the testimony does not fully respond to these requirements, then he must suffer as a person presumed to' be sane, and on whose behalf sufficient evidence has not been given to overcome this presumption. (Freeman v. People, 4 Denio, 9; Willis v. The Peeple, 32 N. Y., 717; Flanagan v. The People, 52 id., 167.) This is all that it is deemed necessary to say with, regard to the first request.

• The second request herein stated is-subtle in its character; it is that the defendant in a criminal case is not required to prove his insanity in order to avail himself of that defense, but merely to create a reasonable doubt upon this point, whereupon the burden of proving sanity falls upon the people. It would be sufficient, in answer to the exception which was taken to the refusal of the recorder to charge this request, that the burden of proving sanity does not fall upon the people in any case. The prisoner is arraigned and the jury are impanneled with two legal presumptions existing, one that he is innocent and the other that he is sane. If the prisoner is to be relieved from the consequences of his offense by reason of a mental infirmity existing at the time of his transgression amounting to insanity, it becomes his duty, or the duty of some person on his behalf, to overcome the presumption of sanity by satisfactory evidence, and the people may rest upon the presumption of sanity without resorting to any proof. This point has been expressly decided in Walter v. The People (reported in 32 N. Y., 117), which was a case of homicide. The court was requested to charge, as a proposition of law, that in a case where the defense consists of the insanity of the prisoner it becomes incumbent upon the prosecution to prove him sane. The court said, that as an abstract proposition the request was manifestly unsound, that sanity was presumed to be the normal state of the human mind, and that it was never incumbent upon the prosecution to give affirmative evidence that such a state exists in a particular case. And this doctrine was reaffirmed in the case of Ferris v. The People (reported in 35 N. Y., 125), and again reasserted in the case of Brotherton v. The People (75 N. Y., 162), in which Judge Church delivering the opinion of the court said: Sanity being the normal and usual condition of mankind the law presumes that every individual is in that state, hence a prosecutor may rest upon that presumption without other proof. The fact is deemed to be proved prima facie.” In as much as the request contained more therefore than the prisoner was entitled to, the recorder was not obliged to charge it under well settled rules. In addition, however, to this response, it must be further said that the request, aside frqm the objectionable portion which has been referred to, from its phraseology called upon him to declare that the defendant in a criminal case was not required to prove his insanity in order to avail himself of that defense, but merely to create a reasonable doubt upon this point, namely, upon the point of insanity. The learned counsel for the plaintiff in error no doubt designed to state that it was sufficient for his client to create a reasonable doubt upon his sanity; but the request does not contain that proposition. If there were nothing else to be said upon this particular element of the case, the view might be regarded as hypercritical; but the learned recorder substantially charged upon the rule which the prisoner’s counsel doubtless intended to invoke by the request itself, for he said, after referring to the evidence of insanity:

“ It is for you tó determine upon all this evidence, whether or not on the 15th of June, 1881, when it is alleged that this man perpetrated the offense of abducting this child, he was sane or insane; in other words, whether his mind was in such a condition that he was perfectly able to comprehend and understand the difference between right and wrong, and that he did know that he was doing a wrong act, if he had sufficient mind to form that intent, which the law requires must be proved to exist, and it is for you to determine those questions; they are purely questions of fact. If you come to the conclusion that the prisoner was insane at the time it is charged that he perpetrated this crime, you will find him not guilty on the ground of insanity. If you come to the conclusion, beyond all reasonable doubt, that he committed the crime of abduction, as I have defined it, if the testimony'satisfies you beyond a reasonable doubt of his guilt and that he was not insane, it will be your duty to convict; and further, if there is any reasonable doubt arising upon the evidence in the case, and upon nothing else, it will be your duty to give the prisoner the benefit of that doubt and acquit him.”

It must be further said in regard to this request, that in the case of Brotherton v. The People (supra), it appeared that the judge, in charging the jury, used this expression :

This allegation of insanity is an affirmative issue, which the defendant is bound to prove, and you must be satisfied, from the testimony introduced by him, that he was insane; ” and he further charged that if there was a well founded doubt whether the man was insane at the time he fired the pistol the jury were to acquit him. It was held that in these two paragraphs of the charge taken together, there was no error, and the court in reviewing the trial said that the prisoner was bound to prove that he was not sane, and whether insanity was called an affirmative issue, or it is stated that the burden of proof of insanity is upon the prisoner in order to overcome the presumption of sanity, is not very material if the jury are told as they were that a reasonable doubt upon that question entitled the prisoner to an acquittal.

The jury in this case were told that if they came to the-conclusion that the prisoner was insane at the time it was charged he perpetrated the crime, they were to find him not guilty on the ground of insanity; and further, that if they came to the conclusion, beyond all reasonable doubt, that he committed the crime, and that he was not insane, it was their duty to convict him; and further, that if there was any reasonable doubt arising from the evidence in the case, he was entitled to the benefit of that doubt, and it was their duty to acquit him. They. were substantially charged, therefore, that if there was • a doubt about the guilt of the plaintiff in error, arising either from his innocence of the crime itself, or from a doubt as to his sanity, that he was entitled to a verdict of acquittal.

It will have been perceived that in the case of Brotherton, to which reference has been made, the charge was directly to the effect that the insanity urged on behalf of the prisoner was an affirmative issue which he Avas bound to prove, and that the jury must be satisfied, on the testimony introduced by him, that he was insane, which was not done in this case. The learned -recorder charged that to establish the defense of insanity it must be clearly proven that at the time of committing the act which was the subject of the indictment, the party accused was under a defect of reason from a disease of the mind; so that the case of Brotherton and this one are, in the respects in which they have been compared, in harmony.

From what has been said the view entertained of the exception to the charge in which the learned recorder used the words clearly proven,” may be foreshadowed. The exception in this respect is regarded as valueless. As already suggested, taken in connection with, another paragraph, to which reference has been made herein, it is no broader than the charge sustained in the case of Brotherton v. The People (supra). In that case it was charged that the prisoner’s insanity was an affirmative issue which he was bound to prove, and in this case it was declared to be a defense which must - be clearly proven. The cases are analogous and parallel.

The precise question presented by the exception, although it has not been definitely decided in this State, and although it may seem to be in doubt (see People v. McCann, 16 N. Y., 58; Flanagan v. The People, 52 id., 467), appears to have been answered in the case of M'Naghten (10 Clark & Fin., 210), in which Lord Chief Justice Tindale said that the jury should be told that “ to establish a defense on the ground of insanity, it must be clearly proved that at the time of the committing the act the party accuséd was laboring under such a defect of reason, from a disease of the mind, as-not to know the nature and quality of the act he was doing, or if he did know it, that he did not know he was doing what was wrong.” This case is regarded, therefore, as an express authority for the proposition that the defense of insanity must be clearly proven in order to overcome the presumption of sanity which the prisoner encounters at the commencement of his trial. The question of insanity in its legal phases may be a very interesting subject to discuss. It certainly presents a very broad field when contemplated with the numerous adjudications, both in this country and in England, affecting it, and the number of elementary writers who have considered it; but it is not necessarily the duty of an appellate court to write a review of these cases, it is enough to express the conclusion arrived at in regard to it when presented for examination, upon consideration of the controlling decisions in this State bearing upon it. This has been done in this opinion, and it follows that the judgment must be affirmed.

Daniels, J.:

The law of this case seems to have been carefully observed at the trial. Upon both the important points presented, the instructions given to the jury were in strict accord with the authorities which have long been regarded as correct expositions of the law. In M’Nagliten’s case the proper course to be followed in the disposition'of the defense of insanity was considered and determined by the House of Lords, the highest English judicial authority. And it was then held that “.every man is to be presumed to be sane and to possess a sufficient degree of reason to be responsible for his crimes until the contrary be proved.” And to establish a defense on the ground of insanity it must be clearly proved that at the time of the committing of the act, the party accused was laboring under such a defect of reason, from disease of the mind, as not to know the nature and quality of the act he was doing, or if he did know it, that he did not know he was doing what was wrong.” “ If the accused was conscious that the act was one which he ought not to do, and if that was, at the same time, contrary to the law of the land, he is punishable.” (10 Clark & Fin., 200, 210.) The same subject received the consideration of the Court of Appeals in Flanagan v. People (52 N. Y., 467). And the same criterion was sanctioned for the disposition of the defense of insanity, as that which was adopted by the preceding case in England. And in the latter case it was further held that the accused was not entitled to an acquittal simply because the criminal act might have been committed in subordination to some irresistible impulse or inclination. This point was urged in behalf of the prisoner in that case by the same learned counsel now representing the present plaintiff in error, and it was answered by the court in very plain language, as follows: “ Indulgence in evil passions weakens the restraining pow'er of the will and conscience, and the rule suggested would be the cover for the commission of crime and its justification. The doctrine that a criminal act may be excused upon the notion of an irresistible impulse to commit it, where the offender has the ability to discover his legal and moral duty in respect to it,' has no place in the law.” And the remark of an able English justice that every crime was committed under an influence of such a description, and the object of the law was to compel people to control these influences,” was repeated with approval. (Id., 470.) In Reg. v. Haynes (1 Foster & Fin, 666), this subject was further considered, and it was there observed that if an influence be so powerful as to be termed irresistible, so much the more reason is there why we should not withdraw any of the safeguards tending to counteract it. There are three powerful restraints existing, all tending to the assistance of the person who is suffering under such an influence, the restraint of religion, the restraint of conscience and the restraint of the law. But if the influence itself be held to be a legal excuse, rendering the crime dis-punishable, you at once withdraw a most powerful restraint, that forbidding and punishing its perpetration. We must therefore return to the simple question, ‘ Did the prisoner know the nature of the act hq was doing, and did he know' he was doing what was wrong?’” (Id., 667.) These principles present the gist and substance of the law upon these subjects. They have been discussed in very many other instances and .concurring in the same conclusions. For that reason, particular references to them is at the present time not necessary. To a great extent they are considered in the opinion of Mr. Justice Brady, to which concurrence and approval may very properly be given. For the reasons assigned by him, and those suggested by Presiding Justice Davis, and maintained in such plain language as to preclude the possibility of misapprehension on the occasions- just referred to, this conviction should be affirmed.

Davis, P. J.:

On the question what constitutes the insanity which in law exonerates from the punishment of crime on the ground of irresponsibility, I Concur fully in the views and conclusions of my brother Brady. On the question of the burthen of proof after evidence has been given by the accused tending to show insanity, the learned recorder had given to the jury in his charge the true rule applicable to a case of the kind when it comes upon all the evidence to be submitted to the jury; and having done this, it was no error to refuse to submit upon the part of the prisoner a proposition which, if correct in itself, was only calculated to confuse the jury by distracting their attention from the real question, which upon the whole evidence had already been correctly submitted to them. The recorder committed no legal error in refusing to charge as requested in the form presented by the counsel for the prisoner. I concur, therefore, in the affirmance.

Judgment affirmed.