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

text:
    THE PEOPLE OF THE STATE OF NEW YORK ex rel. CHARLES R. PURDY, Executor, and CAROLINE S. SHANNON, Executrix, etc., of ANN LOHMAN, Deceased, Respondents, v. WILLIAM P. ESTERBROOK, Inspector of Buildings, and CORNELIUS VAN COTT and Others, Fire Commissioners of the City of New York, Appellants.

      Building act of New Tork city —1874, chap. 547, sec. 8 — refusal of the department of buildings to grant an application made under it — its action cannot be reversed by the board of examiners.

    Where, upon an application made for leave to alter and enlarge a building in the city of New York, the department of buildings has refused to grant it and to exercise the power conferred upon it by section 8 of chapter 547 of 1874;, authorizing it to modify or vary the provisions of the building acts to meet the requirements of a particular case, the applicant has no right under the said section to compel the question thus passed upon to be presented to the board of examiners, provided for in the act, for its consideration, and, if that board decides in his favor, to compel the department of buildings to make the necessary modification of or variation from the provisions of the building acts. (Brady, ,1., dissenting.)
    The assent of the board of examiners is made necessary before the department. of buildings can modify in a particular case the provisions of the building acts, but where the department refuses to make such modification, the board of examiners has no power to review its action.
    Appeal from an order of a Special Term beld at chambers, granting tbe application of tbe respondents for a writ of mcmdcwrws requiring tbe inspector of buildings in New York city to submit the application of tbe relators to tbe board of examiners, and if approved by such board, to issue a certificate of approval of said application to tbe relators.

      W. L. Findley, for tbe appellants.

      B. II. Shannon, for tbe respondents.
   Davis, P. J.:

Tbe motion made to dismiss tbe appeal in this case, on tbe ground of acquiescence in tbe order on tbe part of the appellants, is not well founded. It appears that a stay of proceedings, with a view to

51 an appeal, was denied by tbe learned judge wlio granted the order, with leave to renew the application for such stay after the board of examiners should have acted. The respondents were therefore compelled by the writ of mandmius to present the application to that board, and the affidavits show that they did so under protest, insisting, as they now do, that the case was not a proper one for the consideration of that board. Immediately after the action of the board of examiners the application for a stay pending the appeal was renewed and then granted by the learned judge, who, upon granting the same, pronounced an opinion giving his reasons for making the original order, substantially to the effect that ho acted altogether iipon the decision of a previous Special Term which he regarded as binding upon him, and showing that he regarded the question as a doubtful one, proper to be reviewed upon appeal. There is nothing in the proceeding to justify the idea that the appellants have in any manner waived their right to appeal. The motion to dismiss the appeal should therefore be denied.

The questions presented by the appeal arise under section 8 of chapter 547 of the Laws of 1874, and'involve merely the construction of that section. The respondents, as owners of a building on the corner of Fifty-second street and Fifth avenue, in the city of New York, presented their application and filed their plans and specifications in the bureau of insj)ection of buildings in the fire department, for leave to make certain proposed alterations in said building, consisting in part of the erection of two additional stories thereon and raising the building from a four story to a six story one, and the walls from sixty-three feet to eighty-nine feet in height above the curb. The appellants disapproved of so much of the application as related to the raising of the height of said building from four stories to six, and the height of the walls as above stated, on the ground, as is alleged in their answer, that the detailed statement of the plans for the same was not in accordance with the provisions of the laws relating to buildings in the city of New York, and that the granting of the same would conflict with public safety and the public good, and would not be in furtherance of justice.

It seems not to be in dispute that to authorize the erection of the desired additions to the height of the building, would demand a deviation in some respects from the requirements of the statutes regulating tbe construction, alteration and repair of buildings in the city. By section 8 of chapter 547 of the Laws of 1874, the department of buildings is clothed with power, under certain limitations, to make such deviations from, and to modify or vary any of the provisions of the act, to meet the requirements of special cases where the same do not conflict with the public safety and the public good, so that substantial justice may be done.” The portions of that section material to the question before us, are in the following words: '

The department of buildings named under this act shall have full power in passing upon any question relative to the mode, manner of construction, or materials to be used in the erection, alteration or repair of any building in the city of New York, where the same is not specially provided for herein, to make the same conform-to the true intent, meaning and spirit of the several provisions hereof, and shall also have discretionary power, upon application therefor, to modify or vary any of the several provisions of this act to meet the requirements of special cases where the same do not conflict with the public safety and the public good, so that substantial justice may be done ; but no such deviation shall be permitted except a record of the same shall be kept by said department, and a certificate be first issued to the party applying for the same; such certificate shall be issued only upon an application setting forth the facts sworn to by the applicant, and after such application shall have been passed, upon favorably by a board of examiners, consisting of the superintendent of buildings, a member of the examining committee of the New York Chapter of the American Institute of Architects, one of the ex-presidents of the New York Board of Underwriters, and two members of the Mechanics and Traders’ Exchange of said city, one of the latter of whom shall be a master carpenter, and one a master mason, all of whom, except the said superintendent, shall be selected by their respective organizations, and so certified by the proper officers to the said superintendent; no application shall be considered as passed by said board, unless the same receive three affirmative votes.”

The important question presented in the case is whether where the department of buildings on such an application has refused to modify or vary the provisions of the act to meet the requirements of a special case, on the ground that to do so would conflict with public safety and the public good, and substantial justice would not be done, the applicant has a right under this section to compel the question thus passed upon by the department to be presented to the hoard of examiners for its consideration, and if that board pass favorably to him, then to compel the department of buildings to make the necessary modification of or variation from the provisions of the act. We think it very clear that no such system of appeal from the decision of the department of buildings was intended to be created.

The section clothes the department with the very extraordinary but doubtless necessary power to meet the exigencies likely to arise in the city in cases where strict compliance with the provisions of the act can be dispensed with without conflicting “with public safety and the public good.” But it imposed upon the exercise of that power certain restrictions, intended tp prevent its abuse. Those restrictions are made by the section conditions precedent to the exercise of the power, so that the department should have power to make the deviations only in cases where those conditions precedent have been first complied with. After conferring the discretionary power upon the department to modify or vary the provisions of the act, the section proceeds as follows :

“ But no such deviation shall be permitted except a record of the same shall be kept by said department, and a certificate be first issued to the party applying for the same. Such certificate shall be issued only on an application setting forth the facts sworn to by the applicant, and after said application shall have been passed upon favorably by a board of examiners.”

This language does not create an appellate tribunal, with power to review and overrule the determination of the department of buildings in refusing to exercise its discretionary power to deviate from the requirements of the statute, on the ground that such deviation would conflict with public safety and the public good; nor does it authorize the board of examiners to interfere to any extent with the decision of the department when ad/oerse to such am application. On the contrary, it requires that the favorable action of the board of examiners shall precede the decision of the department to deviate from the law. The sole pui’pose of these provisions is to place upon the power given to the department of buildings to modify, vary and deviate from the requirements contained in the several provisions of the act, even where the department is of opinion that such deviations do not conflict with public safety and the public good and are necessary to substantial justice, the necessity of having the assent to such action, before any step is taken upon it, of the board of examiners created by the section, indicated by at least three affirmative votes, which is a majority of all the members of that board. Bnt there is no provision requiring the assent of the board of examiners, or any action on its part to a refusal of the department of buildings to make such deviation ; nor is there any right of appeal to the board of examiners given from such refusal. In short, the assent of the board of examiners is made necessary to the act of setting aside or varying from the statute, but not to any refusal to do so. ■

The decision of the court below gave an altogether erroneous construction to the section. It appears by the opinion of Mr. Justice Cullen on granting the stay, that the application for the writ was not argued at Special Term, but was granted upon what was supposed to have been a previous decision of that court which he considered as conclusive upon him, though, as he says in his opinion, adverse to his views of the statute. Our construction of the statute agrees with that indicated in the opinion of the learned justice as the true one, and it follows that the order must be reversed and the writ denied, with ten dollars costs of the appeal besides disbursements.

Daniels, J.:

From the return made it is evident that the board, having power to modify or vary the provisions of the act from which the relators desired to be relieved, declined to provide for that relief for the reason that to do so would .conflict with the public safety and the public good, and that substantial justice would not be done thei-eby; and the inspector óf buildings also agreed to this conclusion. Whether this should or should not be done was a subject committed to the sound discretion of these officers. They could not favorably exercise that discretion without the preceding action of the board of examiners recommending that course. But as full discretion' was vested in them over this subject, even such action would not require them so to exercise it as to make a favorable disposition of the application. They could still determine against it after the board of examiners should recommend its allowance. There is nothing in the act preventing them from denying the application without the action of rhe board of examiners. On the contrary, the power to make such a denial is clearly to be implied from its terms. They cannot modify or vary the act without the favorable action of the board of examiners, and that is the utmost of the restraint placed upon them. Accordingly, if they deem the case an improper one for the exercise of the discretion vested in them, they have the power so to decide at once, as they appear to have done in this case. (Laws 1874, p. 737, § 8.1 After such a decision there can be nothing to be submitted to the board of examiners. Their action can amount to nothing if it should be taken, and a writ of mandamus would be of no possible service to the applicants under the circumstances. The decision made by the respondents was within the range of the discretion given to them. They refused to vary or modify the act, and that refusal must be considered as final. Concurrence is, therefore, given to the opinion of the presiding justice.

Brady, J.,

dissenting:

The plaintiffs, who were the owners of a building on the corner of Fifty-second sti’eet and Fifth avenue in this city, filed their plans and specifications in the bureau of inspection of buildings in the fire department for proposed alterations to be made to the buildings named, and among otlierthingstoputtwo additional stories thereon, raising it from a four-story to a six-story building, and the walls from sixty-three feet to eighty-nine feet in height above the curb, and the application was presented to the appellant Esterbrook, who was the inspector of buildings appointed under chapter 521 of the Laws of 1880, for the proper certificate for allowing such alterations to be made; and subsequently an application was made to the board of fire commissioners, asking that it act upon the application, based, it would seem, upon the refusal of the inspector to grant the required certificate and upon the asserted right, under the laws relating to the subject, to have the action of the inspector reviewed by the board named.

The act of 1830 mentioned {supra), is an amendment of an act to reorganize the local government of the city of New York, passed in 1873, and provides, by the seventy-sixth section, as amended, that the fire department shall have for its head a board to consist of three persons to be known as the fire commissioners of the city of New York. And further, that there should be in the department four bureaux, one of which should be known as the bureau for the inspection of buildings; and it is declared that all acts relating to buildings in the city of New York, and all acts and parts of acts relating to the department of buildings in said city, or prescribing, limiting or defining the powers or duties of said department or any officer thereof, then in force not inconsistent with this act, were continued in full force and effect and the powers and duties transferred to the fire department of the city of New York and devolved upon the officers thereof. It also declares that the bureau of inspection of buildings shall, under and subject to such rules and regulations and orders as may be established by the board of fire commissioners, have charge of all matters relating to buildings and structures in thé city of New York then by law devolved upon or required to be performed by the department of buildings. And further, that the bureau should be under the management of a person who should be known as inspector of buildings, who might be authorized by the board of fire commissioners to perform any duty 02' exercise any power or authority then confe2'red upon the superintendent of buildings.

The question presented by this appeal is whether the inspector of buildings has the power to refuse to give such a certificate as applied for, absolutely in the exercise of his discretion. It does not appear in this case whether any rales, regulations and orders have been established by the board of fire commissione2's governing the bureau of inspection of buildings, or what duties, power or authority conferred by law upon the superintendent of buildings the inspector has been authorized by the board of fire comipissioners to perform or exercise. These two elements are embraced in the act of 1880, to which reference has been made as we have seen, and it would seem, therefore, that some action of the board of fire commissioners, defining the authority of the inspector of buildings, was necessary in order to enable him to act with full authority in inference to the affairs of the bureau. As no point in regard to this subject has been made, it must be assumed, for the purposes of this appeal, that the board of fire commissioners has conferred upon the inspector of buildings all the authority which was possessed by the superintendent under existing law.

Under the act of 1862 (chap. 356), which was designed to provide for the regulation and inspection of buildings and the more effectual prevention of fires and the better preservation of life and property in the city of New York, a department was created for the survey and inspection of buildings in the city of New York which, by section 49, declared, it to be the duty of the deputy superintendent of buildings to examine all buildings * * * under an application to raise, enlarge, alter or build upon them, and to report to the superintendent the condition of the same, with his opinion relative thereto, declaring that in the absence of the superintendent he should be empowered to act with all the powers enjoyed and possessed by the latter. This provision contemplated the action of two persons upon an application to alter, build uj>on, raise or enlarge a building, namely, the opinion of the deputy superintendent, whose duty it was to make the necessary examination and report the same with his opinion to the superintendent, and that of the superintendent himself. The act of 1866 (chap. 873), and which was an act to amend and reduce to one act the several acts relating to buildings and the keeping and storage of combustible materials in the city of New York, also provided by section 45 that it should be the duty of the deputy superintendent of buildings to make the same examination as that prescribed by the act of 1862, and to report the result with his opinion, to the superintendent; and provided as well, that in the absence of the latter, he should be empowered tt> act with all the powers enjoyed and possessed by the superintendent. Section 36 of the act of 1862 also gave to the department created by it, full power in passing upon any question relative to the mode or manner of construction, or materials to be used, in the erection, alteration or repair of any building in the city of New York, where the same was not specially provided for therein, and also gave the department discretionary power, upon application, to modify or vary any of th^several provisions of the act to meet the requirements of special cases, where the same did not conflict with the public safety and good, so that substantial justice might be done; but further provided that no such deviation should be permitted except upon a record.of the same to be kept by the department and a certificate to be first issued to the party applying for the same, such certificate to be issued only upon, an order first being obtained therefor, upon a sworn petition setting forth the facts upon such an application, to a Special Term of the Supreme Court. The act of 1866 (av/pra) contains substantially the same provision, as does also the act of 1871 (chap. 625).

By section 8 of the Laws of 1874 the provision just considered was re-enacted but a change was made to this effect, namely, that the certificate allowing the alteration should be issued only upon an application setting forth the facts sworn to by the applicant; and after the application should have been passed upon favorably by a board of examiners, consisting of the superintendent of buildings, a member of the executive committee of the New York Chapter of the American Institute of Architects, one of the ex-presidents of the New York Board of Underwriters and two members of the Mechanics and Traders’ Exchange of this city, one of the latter of whom should be a master carpenter and one a master mason, and all of whom except the superintendent should be selected by the respective organizations and so certified by the proper officers to the superintendent; and, further, that no application should be considered as passed by said board unless the same should receive three affirmative votes, and each member of the board being prohibited from passing upon any question in which he was pecuniarily interested. The change made was by taking away from this court the power to approve of the certificate and conferring it upon the persons named.

It will be perceived, as to these provisions embracing substantially all that has .been enacted on the subject, that no express right was given to appeal from the decision of the superintendent'of buildings or inspector of buildings, upon whom was conferred all the power given to the superintendent of buildings; and that unless the right to review his act arises inferentially the refusal to give the certificate is absolute. It will also have been perceived that when the certificate is given by the inspector of buildings, in the exercise of his discretion, it is not sufficient to authorize the alteration to be made because it must be approved by the persons designated by the act of 1880, and it follows that in reference to the alterations the certificate by the inspector of buildings is not absolute but necessarily subject to ratification. It will likewise have been perceived that under the original statutes the examination to be made of the building, predicated of an application to alter, raise or enlarge it, must have been made by the deputy superintendent, who was required to make a report of his proceedings and their results with-his opinion thereon. And this was to be done whether the certificate was given or not, or whether the application was to be gi’anted or not, the statute being silent as to the result of such examination by the deputy superintendent.

The question involved in this appeal, as already suggested, namely, whether the inspector of buildings has the right to refuse absolutely, as a matter of discretion, to grant am application to enlarge, raise or alter a building depends entirely upon the interpretation to be given to these various acts and the object intended to be secured by them. If the application be granted in the first instance it is, as we have seen, subject to revision; and although the inspector of buildings may think that the alteration, or enlargement, or repairs should be allowed, nevertheless the persons designated have the power to control it, and there does not seem to be any good reason why the refusal to grant the application, in the exercise of the discretion, should not be subject to a similar revision. It is impossible to conceive that the legislature intended to confer upon one person, being the head of a bureau, the absolute power of determining whether an alteration or an enlargement of a building should be made. It is the fire department which has control of the subject, according ■to the language of the law, and the inspector is the mere agent employed as a part of the machinery by which the necessary information shall be obtained and communicated to the board.

Section 31, as amended by the act of 1874 (supra), declares that the department of buildings named under the act shall have full power in passing upon any question relative to the mode or manner of construction, or materials used in the erection; alteration or repair of any building in the city of New York, where .the same was not specially provided for therein. The result of tire refusal to give the certificate is not provided for. The power over the subjeet resided with the department of buildings prior to the act of 1880, which transferred it to the fire department, as we have already-seen. Inasmuch as there might be an abitrary refusal to grant the certificate in a proper ease, and in order to provide against such a contingency, it would seem to be a very just interpretation of the statutes that such a refusal should be subject to the review of the fire department, and thus secure the co-operation of the department, of which the bureau of inspection of buildings is only a subordinate branch. The fire department, acting as a body, would have the power then to protect the citizen from an unjust refusal to grant the certificate in a proper case, and could direct the certificate to be furnished, and vice versa. Then the certificate, if given, would be subject to approval by the board of examiners created under the act of 1880, to which reference has been made. If this construction of the statutes be not favored, an application such as made by7 the respondent herein, even though it were unjustly refused in the exercise of a discretion erroneously employed, could not be overcome by any remedy.

' For these reasons, we think the order appealed from should be affirmed.

Order reversed and writ denied, with ten dollars costs and disbursements.


source: Caselaw Access Project

author: Brady, J.:

license: Public Domain

text:
    JOHN L. SUTHERLAND, Executor, and FRANCES SUTHERLAND CLARK, Executrix, etc., of LOT C. CLARK, Deceased, Respondents, v. LAUREN C. WOODRUFF, Appellant.

      Guaranty — construction of it — when parol evidence is admissible to show that the claim sued upon is not included 'within it — when an action lies upon it — Usury.
    This action was brought upon an alleged guaranty by the defendant of the payment of certain bonds and coupons purchased by the plaintiffs testator. The-guaranty was as follows: " Whereas, I have this day agreed with Lot 0. Clark (the plaintiffs’ testator) to purchase upon the most favorable terms for our joint account, fifty thousand dollars of the bonds of * * *. Now, for and in consideration of one dollar to me in hand paid, I do' hereby guaranty the collection and punctual payment of the said bonds and the coupons thereon, and do further agree to hold said Clark harmless against all loss arising from the same. ”■

      Held, that the court erred in refusing to allow the defendant to testify that neither the bonds in suit nor any others had ever been purchased by him upon the joint account of the testator and himself.
    That it was not usury per se to buy obligations at a discount upon a guaranty for their payment in full.
    A guaranty recited the transfer of certain bonds to the purchaser and provided that the party executing it thereby guaranteed “ the payment of the principal and interest of the same as they mature.”

      Held,, that the guaranty was of the payment of the bonds and coupons as each matured, and that the plaintiff was not required to wait until the bonds matured before bringing an action to recover the amount of the unpaid coupons.
    Appeal from a judgment in favor of the plaintiff, entered upon a verdict directed by the court upon the trial of this action at the circuit.

      F. J. Fithicm and A. J. Yanderpoel, for the appellant.

      S. P. Nash, for the respondents.
   Brady, J.:

This action was brought to recover the coupons upon $46,500 of the bonds of the Erie and Genesee Yalley Railroad Company, which had been transferred, it was alleged, by the defendant to Lot C. Clark, the plaintiff’s testator.

A recovery was allowed on the coupons of $45,000 only of the bonds.

There were two instruments of guaranty. The first was dated July 22, 1871, and is as follows :

“ Whereas, I have this day agreed with Lot C. Clark to purchase upon the most favorable terms, for our joint account, fifty thousand dollars of the bonds of the Erie and Genesee Yalley Railroad, which said bonds bear gold interest at the rate of seven per cent per annum, payable semi-annually, and the principal payable in gold.

“Now, for and in consideration of one dollar to mein hand paid, I do hereby guaranty the collection and punctual - payment of the said bonds and the coupons thereon, and do further agree to hold said Clark harmless against all loss arising from the same.,

“ Dated New York, Jul/y 22, 1871.

j3oenc«n?ci«íMnpí (Signed) “L. C. WOODRUFF.”

The second was for $20,000 of similar bonds, and is as follows :

“ For value received I have this day transferred to Lot C. Clark twenty thousand dollars of the bonds of the Erie and Genesee Valley Railroad, Nos. 21, 22, 19, 20, 18, 17, 16, 15, 14,18, 12, 11, 10, 9, 8, 7, of $1,000 each, and 105, 100, $500 each; Nos. 4, 5, 6, of $1,000 each. Now I do hereby guaranty the payment of the principal and interest of the same as they mature.

“ Buffalo, July 24, 1873.

(Signed) “L. C. WOODRUFF.”

Mr. Clark died on the 11th of February, 1880, and after his death the plaintiff, as his executor, called upon the defendant to pay the coupons which had matured. This was not done, and in consequence this action was brought to recover the amounts alleged to be due, under the circumstances disclosed.

Upon the trial, when the plaintiff rested, the counsel for the defendant moved that the complaint be dismissed as to the first cause of action, namely, that which related to the purchase of $50,000 of the bonds on joint account, upon the ground that the plaintiff had given no evidence to show that the bonds had ever been purchased by the defendant, or received or held by the plaintiff’s testator, in pursuance of or in accordance with the terms and conditions specified in the guaranty set forth in that cause of action, but, on the contrary, that the evidence showed that the guaranty did not extend to or include the bonds or interest of the coupons described in the first cause of action, because they were not purchased or held on joint account but purchased and held ag the sole and individual property of the plaintiff’s testator and were not within the terms of the guaranty. This motion was denied and the defendants duly excepted.

. During the progress of the defense the defendant was called as a witness and was asked in reference to the first guaranty this question : That guaranty recites that you guaranteed certain bonds to be purchased by you on joint account for Mr. Lot C. Clark; did you ever purchase any bonds on joint account for Mr. Lot C. Clark ? This question was objected to, not on the ground that it related to a transaction with a deceased person but upon the ground that the obligations of the parties were to be determined by the papers. He was then asked the following question: Did you purchase these bonds on joint account, or any of the bonds mentioned in this suit on joint account, between you and Mr. Lot C. Clark? The same objection was made to this question, and it was distinguished by the same ruling and exception.

It will have been perceived that the guaranty was in connection with the recital of an agreement, executory in its character, and in which the defendant declared that he had that day agreed with Mr. Clark to purchase upon the most favorable terms for joint account $50,000 of the bonds of the railroad mentioned, and in consideration of one dollar in hand paid had agreed to guaranty the collection and punctual payment of the said bonds and the coupons thereon; that'is to say, the bonds and coupons to be purchased under the .agreement to which the guaranty related.

It is a well settled rule that guaranties are to be construed strictly. A multitude of cases can be arrayed in illustration of this rule, and the defendant had a right, therefore, if he could do so, to show that the purchase, to which the guaranty related, and in contemplation of which it was made, never occurred; in other words, that his undertaking to piirchase $50,000 worth of bonds referred to in the contract of guaranty was never consummated; .and if it were not, then prima facie the guaranty had no application. It is a familiar rule that sureties can only be charged when the case is brought within the very terms of the contract (Birckhead v. George, 5 Hill, 635), and that the obligation of sureties is not to be extended, by construction, to embrace purposes and ■objects not contemplated by the parties. (McCluskey v. Cromwell, 11 N. Y., 598, per Church, Ch. J.; People v. Chalmers, 60 id., 158.) So it is equally well settled that where any agreement or guaranty of suretyship is accompanied by a recital containing words of limitation or description as to time, the words of limitation in the recital are to control, any general or unlimited language in the obligation •or condition of the writing to the contrary notwithstanding. (Brant on Suretyship, § 138, and authorities cited; Ward v. Stahl, 81 N. Y., 406.) It may be, and doubtless the jury would have so said if the issue had gone to them for determination, that there was evidence sufficient to justify the conclusion that bonds were in fact delivered in performance of the contract of purchase, and it may be that there is evidence enough to warrant this court in declaring such a result. But the defendant had a right to present that phase of his case, because it was material upon the question of whether the guaranty itself was applicable to any of the bonds. If the defendant failed to carry out the agreement'to purchase the bonds which he agreed to make, and damages had resulted to the plaintiff's testator from a failure to perform his obligations in that respect, and the agreement was founded upon a sufficient consideration, he had a legal remedy which he might have pursued. But we are now dealing with the responsibility arising upon a contract of guaranty in reference to the first cause of action, and which may be considered and disposed of by the rules of law applicable .to such instruments.

The exclusion of the questions detailed was, under the circumstances, therefore an error, requiring a reversal of the judgment so far as any recovery was had upon the first cause of action.

There seems to be no doubt as to the right of the plaintiff to recover upon the guaranty which forms the subject of the second cause of action. The defendant’s proposition is, that no action can be maintained upon it until the maturity of the bonds specified, which would not be until 1886. This may be an ingenious, but it is an unsuccessful construction of the contract. The guaranty is of the principal and interest of the same, as they mature; that is, the payment of the principal and interest as either and both mature. The interest is guaranteed when it becomes due, and the principal wdien it becomes due. It does not seem to be capable of any other interpretation.

The proposition that the payment of the interest was not guaranteed until the principal matured would be at variance with all rules of construction, and with the clear intention of the contracting parties.

There is no evidence in this case, from which a conclusion can be fairly drawn, that in the transactions which resulted in the guaranties, there was a loan contemplated, and that the contracts relied upon were resorted to for the purpose of covering a usurious transaction nor is there any evidence of any intention to evade the statute in reference to usury.

There is nothing, in other words, to justify the conclusions that the investments were mere covers for a loan. It is not usury per ae to buy obligations at a discount upon a guaranty for tlieir payment in full. (Rapelye v. Anderson, 4 Hill, 472.) Although the recovery, upon the authority of that case, must be limited to the amount actually expended.

The result of the consideration of the appeal in this case is, therefore, that there must be a new trial, unless the plaintiffs waive the recovery under the first cause of action, in which case it may be affirmed as to the balance. If the waiver be not made then the judgment is reversed and a new trial ordered.

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

Judgment reversed and new trial ordered,' unless plaintiff shall waive the recovery under the first cause of action, in which case judgment affirmed for the balance.


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

text:
    JESSE HOYT and Others, Respondents, v. THE HARTFORD FIRE INSURANCE COMPANY, Appellant.

      Wa/rehouse receipt — when it transfers the title of the property receipted for — policy of insurance •— assignment of— right of the assignee to recover thereon.

    September 5, 1877, the defendant issued to dne Heuberer, a policy of insurance for $5,000, upon 10,000 bushels of corn, owned by him and contained in his mill in the city of Brooklyn. The policy covered property owned by him, or held in trust or on commission, or sold but not delivered, and provided that ■ in case of actual sale of the property or transfer of the title thereto, upon leave being previously had, the policy might be assigned. May 16, 1878, the plaintiffs having agreed to loan Heuberer $5,000 upon the corn, received from him a warehouse receipt stating that he had received on storage for their account 10,000 bushels of corn, to be made into corn meal, deliverable to their order on payment of the charges, the words “not negotiable” being written across its face. The corn was then worth $4,700. On the same day the policy was assigned to the plaintiffs, with the consent of the company thereto indorsed thereon. In September, 1878, the policy was renewed, the premium being paid by Heuberer. In December of that year the mill and its contents were destroyed by fire.

      Held, that as between the plaintiffs and Heuberer the receipt operated to transfer the title of the corn to the plaintiffs, and that they, as the owners thereof were entitled to recover from the defendant the amount due upon the policy. (Brady, J., dissenting.)
    An indorsement upon the policy provided that it was not assignable for purposes of collateral security, but that in all such cases it was to be made payable in case of loss to the party to be secured, by an indorsement to that effect upon its face.

      Held, that this did not apply to a transfer of the property insured, but only to cases in which the policy alone was to be used as a security.
    Appeal from a judgment in favor of the plaintiffs, entered upon a verdict directed by the court, and from an order denying a motion for a new trial made upon the minutes of the justice before whom the trial was had.

      Ghaties W. Bangs and Francis Lynde Stetson, for the appellant.

      Stephen A. Walker, for the respondents. '
   Daniels, J. :

The recovery in this action was upon a policy of insurance issued by the defendant to Charles E. Heuberer in the sum of $5,000 upon 10,000 bushels of corn contained in his mill situated in the city of Brooklyn. The policy was dated the 5th of September, 1877, and was by its terms to continue in force for the period of one year from the ninth day of the same month. At the expiration of that time it was renewed by a certificate issued for that purpose for a further period of one year, and before the expiration of that time the mill together with the corn which was made the subject of the insurance was destroyed by fire. After the policy was issued, and on or about the 16th ’ of May, 1878, Heuberer applied to the plaintiffs for a loan of $5,000 upon the corn, which they consented to make. And for the purpose of carrying the agreement into effect, Heuberer executed and delivered to them a warehouse receipt stating that he had “received on storage for account of Messrs. Jesse Hoyt & Co., ten thousand bushel? of corn, to be made into corn meal, deliverable to their order on payment of the charges accrued thereon, and in accordance with the marginal note hereto.” This receipt was signed by Heuberer, and the note on the margin contained the statement “ ten thousand bushels corn to be made into corn meal.” Under the receipt was a printed statement relating to its negotiability, which, it is not important to notice for the disposition of the ease. The receipt itself was marked “not negotiable.” It was not issued upon a transaction included within the terms of chapter 326 of the. Laws of 1858, and for that reason it will not be necessary to consider the provisions of that act. '

The receipt was not invalid because it was not issued upon a transaction within the terms of the act, for it was still a lawful contract between the parties to it under the general principles of the common law, in no way restricted by anything contained in the statute. And as the corn was actually in store at the time when the receipt was issued, and the evidence showed that it so continued down to the time of the loss by fire, it took effect as a valid transfer of the property to. the plaintiffs, although it was not in fact separated from other property of the same description either then in the mill or afterwards received there and disposed of by Heuberer. (Kimberly v. Patchin, 19 N.Y., 330; Parshall v. Eggert, 54 id., 19.) Under these authorities Heuberer, by force of the receipt, became the bailee of the corn for the use and benefit of the plaintiffs, and their rights to it were in no manner diminished by the circumstance that the receipt entitled them to have the corn ground into corn meal. That was a privilege reserved to them which they could avail themselves of or not as they afterwards might elect. They made no such election, and consequently the instrument issued to them retained simply its character of a receipt by which the party subscribing it was obligated to hold the corn for their benefit. The corn itself aj>peared to be worth the sum of $4,700, and as the plaintiffs advanced the sum of $5,000 upon it, this left no interest whatever in the person issuing the receipt.

The nature of such an instrument was considered in Yenni v. McNamee (45 N. Y., 614), where it was held to be inoperative as to a creditor afterwards levying upon the property, but it was at the same time conceded to be valid between the parties to it substantially according to its terms. (Id., 620, 621.)

An instrument of the same nature was also considered by the court in Gibson v. Stevens (8 How. [U. S.], 384.) The plaintiff there simply advanced money upon the receipt to the parties to whom it had been issued, and the point presented was the extent of the interest acquired in that manner by him. The opinion of the court was delivered by the chief justice who stated that an indorsement and delivery of the warehouse document in consideration of the advance of the money made by the plaintiff, transferred “ to him the legal title and constructive possession of the property, and the warehousemen from the time of this transfer became his bailees and held the pork and flour for him.” (Id., 399.)

“ To the extent of his advances he is a purchaser, and the legal ■ title was conveyed to him to protect his advances * * *. The legal title, the right of property, passed to him and McGueen and McKay retained nothing but an equitable interest in the surplus, if any remained after satisfying the claims of Gibson.” (Id., 400.)

Even if this transaction should be considered a mortgage, as it affected personal property, the right of the plaintiff to it would be substantially the same. For a mortgage of such property is a transfer of the title to it as a security for the debt. (Conard v. Atlantic Ins. Co., 1 Pet., 386; Bank of Rochester v. Jones, 4 Comst., 497.)

The transaction presented by the last case was similar in substance to the one now before the court. For the bank advanced Its money upon a draft for the security of which the receipt issued was transferred to it, and it was there held by the court that “ in a mortgage of chattels the general property passes to the mortgagee.” “And the delivery of the carrier’s receipt or bill of lading to the bank for a valuable consideration passed to the bank the legal title of the same.” (Id., 507.)

It is clear, therefore, that the effect of this transaction must have been to vest the title to the corn in question in the plaintiffs. They became its owners inasmuch as the advances upon it by them exceeded its value. No right or interest whatever was léft in Heuberer, beyond a mere formal privilege to redeem it by the payment of the money. And as the value of the corn was less than the money advanced upon it, that was simply a naked and technical right of no value whatsoever.

Under the same date as that of the receipt the policy in controversy was assigned by Heuberer to the plaintiffs, and their right to recover for the loss of the corn under it was resisted practically because they were not its owners, and also that Heuberer had no such title as rendered the policy at any time obligatory in its nature. It was by its own terms issued to him upon property owned by him, or held in trust, or on commission, or sold, but not delivered. At that time he was the owner of the corn, and the policy therefore became a valid insurance to him. He was then the sole, absolute and unconditional owner of the pi-operty insured, and that portion of the policy which rendered it conditionally dependent upon this circumstance was satisfied by the fact. And if the policy had continued to bo held by him it would have remained an equally valid instrument under the clause by which it was expressly made to include property sold and not delivered. <

By the delivery of the receipt under the arrangement made between the parties, a change did take place in the title. But that was consented to by the agents of the defendant, and that consequently did not invalidate the policy. It was provided by an indorsement upon it that the policy was not assignable for purposes of collateral security. But in all such cases it was to be made payable in case of loss to the party, to be secured by an indorsement upon its face.

This restraint, however, did not include the transaction between these parties. For it was so made as to relate simply to the class of cases in which the policy itself was alone to be used for the mere purpose of a security. This was not a transaction of that nature, lmt it was, as has already been shown, a sale and transfer of the title to the property itself, by which the plaintiff became its owner, subject only do a mere naked right of redemption. And that brought it within the other clause indorsed upon the policy, declaring that in case of actual sale or transfer of title, leave being previously obtained, the form subjoined may be used, which must be executed at the time of said transfer.”

This, it will be observed, is not limited to a case in which an absolute or indefeasible title to the property may be transferred, but it includes every sale or transfer of the title to the property insured. And that which was made by ITeuberer to the plaintiffs was clearly within these terms, for it operated as a transfer of the title to the corn to the plaintiffs, and that authorized them to receive a transfer of the policy and to continue it as an insurance in their favor. In order to render it an insurance to them as such owners of the corn, the following consent was given ir_ writing, subscribed by the persons authorized to represent the company as its agents: The property hereby insured having been purchased by Jesse Hoyt & Oo., the Hartford Fire Insurance Company consent that the interest of Charles E. Heuberer in the within policy may be assigned to said purchaser, subject, nevertheless, to all the conditions therein mentioned and .referred to.” This was dated on the 15th of May, 1878, the day before the date of the receipt. And it was followed by an assignment dated on tlie same day as the receipt, by which Heuberer transferred, assigned and set over unto Jesse Hoyt & Co., and their assigns, all his right, title and interest in the policy, and all benefits and advantage to be derived therefrom. The transaction upon which this consent was given to the assignment so made ivas within the terms of the indorsement already mentioned made upon the • policy. For the property insured had been purchased by Hoyt & Co., and the title to it had. been transferred to them. The policy, therefore, from that time was a valid insurance in their hands upon this interest, and the certificate afterwards issued by the company continued it in force down to and including the time of the fire.

The proofs of loss which were served in compliance with what the policy required upon this subject were made out by Hoyt & Co., and were received in that form by the company. This was in strict compliance with the terms of the policy which allowed the assignee owning the property to make such proof, for it was only’when the assignor of the policy continued to own the property that the proofs were required to be made by him.

Evidence of commercial usage relating to transactions of this nature was received at the trial against the objection and exception of the defendant. But, as the other facts established in the case entitled the plaintiff to a recovery under the terms of the policy, this evidence requires no particular consideration. Whether it was admissible or not, it was of no consequence whatever in determining the rights of these parties. They were settled and controlled by the other facts concerning which there was no substantial dispute. And even if this evidence should be held to have been improperly received, it produced no possible harm. As the case was established by the evidence given at the trial, the plaintiffs were entitled to recover for the amount of the loss sustained by them through the destruc ■ tion of the corn, and as there was no question of fact, and the case was so treated at the trial by the counsel for both parties, the court was justified in directing a verdict in favor of the plaintiffs, and the judgment entered upon it, as well as the order denying the motion for a new trial, should be affirmed, with costs.

Davis, P. J.:

I concur in the views and conclusions of my brother Daniels.

Brady, J.

(dissenting):

In September, 1877, Charles E. Heuberer was, and continues to be a grain warehouseman and miller, conducting his business at the Pacific Mills, so called, in the city of Brooklyn. He was not strictly a warehouseman, but had on storage at his mills, either received from others or owned by himself, a large quantity of corn, oats and other cereals. On the 5th of September, 1877, the defendant issued to him a policy of insurance, which is the subject of this action. It was for the sum of $5,000, and for “ merchandise, hazardous and extra hazardous, his own or held by him in trust or on commission, or sold but not delivered, contained in the brick building known as the Pacific stores,” etc. The conditions of the policy in the printed part seem to be the usual ones. The chief of them having any bearing upon the question considered in this case provides that if any change takes place in the title or possession of the property, whether by sale, transfer or conveyance, legal process or judicial decree, or if the assured is not the sole, absolute and unconditional owner of the property insured, then in such case the policy shall be void.

On the 16th of May, 1878, Heuberer applied to the plaintiffs for a loan of $5,000 on 10,000 bushels of grain in his mill in Brooklyn and the loan was made. He gave to them a paper of which the following is a copy :

“ No. 117. Charles E. Heuberer,

“Steam Elevator and Grain "Warehouse,

Pacific Stores, 30 to 38 Columbia Street,

Brooklyn, May 16th, 1878.

“ Bush, gross, bush, screenings, bush. nett.

“ Received on storage from.................. in Pacific stores, for account Messrs. Hoyt & Go., ten thousand bushels corn, to be made into corn meal, deliverable to their order, on payment of the charges accrued thereon, and in accordance with the marginal note hereto.

“CHAS. E. HEUBERER.”

“ Ten thousand, bushels corn, to be made into corn meal.”

(Written across the face in red inlc) “ Not negotiable.”

“ The annexed receipt may be transferred by indorsement (unless the words not negotiable ’ be written or stamped on the face thereof), and any person to whom the same may be so transferred will be deemed and taken to be the owner of the property herein specified, and no property can be delivered except on the surrender and cancellation thereof. Vide sections 6 and 8 of the act to prevent the issue of false receipts, and to punish fraudulent transfers of property.”

“Entered folio____”

The transaction was made upon the exchange and no time was fixed for the repayment of the money, and no agreement of any sort witli reference to this subject was made between the parties.

Heuberer, upon the same day, assigned and delivered to the plaintiffs the policy of insurance in suit, which was presented to the company’s agent and the consent signed, as follows : “ This property having been purchased by Jesse Hoyt & Co., the Hartford Eire Insurance Company consent that the interest of Charles E. Heuberer in the within policy may be assigned to said.purchaser, subject, nevertheless, to all the terms and conditions therein referred to.”

Upon the 11th of September, 1878, the policy was continued for one year, to September 9, 1879, the renewal premium being paid by Heuberer. Upon the 4th of December, 1878, a fire occurred which entirely consumed the mill, and much more than 10,000 bushels of corn. The plaintiffs gave notice of the fire and loss, and upon the 24th of December, made formal proofs under oath.

In the proofs thus furnished the plaintiffs alleged that the property insured consisted of 10,000 bushels of corn, No. 2, which belonged to them solely, and had so belonged since the 16th of Mgy, 1878, besides whom no other person had any interest whatever in the property, or in any part of it. The defendant having declined to pay, the plaintiffs brought this action, alleging that Iieuberer, the assured, sold, assigned and transferred to them the merchandise insured, as already stated.

Upon the conclusion of the plaintiffs’ case, the salient features of which have been stated, the complaint was dismissed upon the following grounds:

First. That it appeared by the proof that the plaintiff's had at the time of the ffre no insurable interest in any of the property which was injured by the fire.

Second. That the policy, according to its terms, did not attach to any property in which the plaintiffs, under their arrangement with Mr. Iieuberer, had an interest.

Third. That such an interest as the plaintiffs may have had in the property which was injured by the fire was not insured or covered by the terms of the policy.

Fourth. That the facts proved or given in evidence did not constitute, in their most favorable light for the plaintiffs, a cause of action in their favor.

The defendant, in confirmation of the views expressed in the grounds upon which the motion was made to dismiss the complaint, insists that the receipt was insufficient to vest an absolute title to the corn in the plaintiffs, and, not being absolute owners of the property burned, they were not entitled, under the pleadings, under proof of loss or under the policy, to the recovery of the amount claimed.

We do not deem it necessary to follow the discussion presented upon the briefs as to the character of the paper called a receipt, in connection with the statute of 1858 in reference to warehouse receipts, nor do we deem it necessary to consider, in that connection, the proof of custom given upon the trial relating to such an instrument, for the reason that the evidence distinctly establishes, as a legal result, that it was given, not as an absolute transfer of the property mentioned in it, but as collateral security for the payment of an advance or loan, and that the plaintiffs’ title to the corn was a defeasible one, which, they not having parted from, it might be destroyed at any time by the payment of the advance. Assuming that the delivery of such a paper, under the custom determining its effect, would be an absolute transfer of the merchandise described in the absence of any fact limiting its effect, as soon as the evidence established that it was in fact, notwithstanding the custom, delivered as security for the payment of an advance, the signer still retaining an interest in the property; therefore the custom itself was overcome by the intention of the parties, which was that the custom itself should not prevail.

A bill of sale absolute on its face, that is, transferring property to be held as -security for the payment of a debt, is in character and effect a mortgage, and is to be so regarded. In such a case the mortgagee acquires only a lien upon the assign’s property. (Smith v. Beattie, 31 N. Y., 542; Leitch v. Hollister, 4 id., 211.) The interest of a mortgagee is not that of an owner. (Savage v. Ins. Co., 52 N. Y., 507; Perry v. Ins. Co., 61 id., 214. See also on this subject, and particularly applicable to the facts affecting the character of the transaction, Yenni v. McNamee, 45 N. Y., 614.)

This case substantially decides that such a transaction as that detailed herein, notwithstanding it is accompanied by the receipt mentioned, does not confer the absolute ownership of the property upon the person to whom it is given, and this result, namely, that the plaintiffs were not the absolute and unconditional owners of the property insured, rendered it impossible for them to recover, unless the i-iglit springs out of some other phase of the case. (Savage v. Ins. Co.; Perry v. Ins. Co., supra.)

The claim of the plaintiffs was based upon the proposition that they were the absolute owners of the property, because they so asserted in their proofs of loss and reiterated that allegation in their complaint. We do not discover in examining the case any answer to the result stated. The facts and circumstances and the authorities bearing upon the question seem to lead to no other conclusion than that the plaintiffs were not absolute owners within the terms of the policy, and which therefore as to them, in that aspect, was void.

The learned counsel for the respondent lays great stress upon the custom which was established in reference to the delivery of receipts such as were given to the plaintiffs in this case, but, as already suggested, the receipt fails m accomplishing the purpose which he insists was its design, in consequence of the proof to which reference has been made; that in fact it was delivered as collateral security. He thinks also, if the court is persuaded that the plaintiffs were not absolute owners, that nevertheless the defendant will

54 not be permitted, to escape from tbe obligations of tbe policy and npon the proposition that’ the clause in it, namely, held by him in trust, or on commission, or sold bur not delivered, would be sufficient to enable the plaintiffs to recover.

There would be great force in this suggestion were it not for the clause indorsed on the policy that it is not assignable for the purpose of collateral security, but in all such cases should be made payable, etc., by indorsements on its face. And this clause is in entire harmony with the general condition of the policy already considered, requiring that the assured should be the sole, absolute and unconditional owner of the property insured. The effect of this clause is such as to render it unnecessary to consider what relations other than debtor and creditor were created by the contract between Heuberer and the plaintiffs, as they cannot prevail against the rights of the defendant secured by the terms of the policy.

The learned counsel for the respondent also presents for consideration the proposition that Heuberer had an insurable interest of which the plaintiffs can avail themselves in this action; but the difficulty in sustaining it which at once*presents itself is, that nothing of that kind was assignable by the terms of the policy. It contemplates an actual and absolute change of ownership, and such an effect was supposed to have been accomplished by the receipt which was given to the plaintiffs by Heuberer. As already suggested, such was regarded as the legal result of the delivery of that receipt by the plaintiffs, who in their proofs of loss and in their complaint, asserted an absolute and unconditional title to the property covered by the policy.

The right of the plaintiffs to recover has been successfully assailed and the judgment must be reversed and new trial ordered, with costs to abide event.

Judgment and order affirmed, with costs.


author: "Daniels, J.:

text:
    In the Matter of CHARLES E. APPLEBY to Vacate an Assessment.

      Assessment — what is a material error — the cost of paving a portion of a street required to be paved by a raihroad company must be deducted.

    The failure of the city authorities to compel a railroad company to pave that portion of a street occupied by its tracks, -which it was required to pave and keep in repair by the ordinance granting to it the right to lay its tracks therein, is a material error, and entitles a property’owner whose assessment for paving has been increased, by the addition of the cost of paving that portion of the street so required to be paved by the company, to have such amount deducted from his assessment.
    Appeal by the petitioner from an order, made at a Special Term-denying an application to vacate an assessment.

      Cecil Campbell Higgins, for the appellant.

      J. A. Beall, for the mayor, etc., of New York.
   "Daniels, J.:

This case has already received the consideration of this court -when it was held that the application of the petitioner had been rightly denied because of his failure to prove that the Hudson River Railroad Company had laid its tracks in this portion of Eleventh avenue, under the liberty for that purpose given to it by an ordinance of the common council of the city. Under the order, as it was finally made, the petitioner was allowed to give further proof by supplying this omitted evidence, and on the hearing, which resulted in the order from which the appeal has been taken, this proof was supplied. It now appears in the case that in 1848 or 1849 the railroad company did lay a track of rails in Eleventh avenue, between Fifty-second and Fifty-ninth streets, which included that part on which the pavement was laid, for the expenses of which the petitioner’s property was assessed.

The ordinance under which the railroad acquired the right to lay its tracks in the avenue contained the provision that it should “ grade, regulate, pave and keep in repair a space twenty-five feet in width in and about the tracks in all the avenues and streets through which said track or tracks shall be laid, whenever the common council shall deem the interest of the public to require such pavement to be done.” It was subject to this obligation that the railroad company accepted the privilege created, and the duty to perform it assumed the nature of a contract upon its part. (Mayor, etc., v. Troy, etc., R. R. Co., 49 N. Y., 657.) By availing itself of the privilege the company at the same time subjected itself to the performance of the obligation, forming in part the consideration upon which the privilege was granted. This ordinance does not appear to have been in any man ner afterwards changed, or to have been superseded by means of any legislative or other authority. The presumption therefore is that it was in full force at the time when this pavement was placed upon the avenue, and the obligation of the railroad company to comply with this provision when this work was done was clear and explicit. In providing for the pavement unmistakable evidence was given by that act that the common council deemed it for the interest of the public that the pavement should be laid, and the railroad company, under the express terms of the ordinance, was then bound to pave .a space of twenty-five feet in width in and about its track. The public authorities could not by neglecting to enforce the obligation relieve the company from its observance, and charge the increased expenditure caused thereby upon the property of persons liable to contribute to the payment of the expense of the improvement. They had no choice or right of election upon this subject. For the ■obligation was absolute in its nature, and it was their duty to •enforce it, so far as it extended, for the relief of the persons owning the jiroperty liable to contribute to the cost of the enterprise, for these persons were legally obligated only to pay the expenses incurred in paving the residue of the avenue outside of this space ■of twenty-five feet. That was the full measure and extent of their legal obligation, for the rest of the expense had been in unmistakable terms imposed upon and assumed by the railroad company; and the property owners were entitled to the same benefits they would have secured if this obligation had literally been enforced. It was not claimed that the company was unable to perform the obligation •so imposed upon it, or to respond for the consequences of its neglect in doing so. And no reason has, therefore, been presented for depriving the property owners of the advantage intended to be secured to them by this provision of the ordinance. The omission to enforce it and to secure so much of the pavement under it as the-railroad company was obliged to lay, was a material error and defect in the proceedings themselves, of which the applicant as the owner of the property fronting- upon the avenue has a legal right to complain. (Matter of Casey, 5 Hun, 463; Matter of N. Y. Prot.,. etc., School, 15 N. Y., 324.) No part of the cost of this twenty-five feet of pavement was legally chargeable to him, but under the terms of the ordinance it is clear that it should have been imposed upon the railroad company. A portion of it was included in -the assessment required to be paid by him, and to that extent he has been made the subject of injustice. The order, therefore, should be reversed and a further hearing directed, upon which the assessment against the petitioner should be so far reduced as to relieve him from the cost of -so much of the pavement as the railroad company should have been required to lay in front of his property to comply with the terms of this ordinance; and as so reduced, the assessment should be affirmed, without costs.

Ha vis, P. J., and Brady, J.., concurred.

/forder reversed and a rehearing directed, without costs.


author: Davis, P. J.;

text:
    CHARLES H. KATT and Others, Appellants, v. THE GERMANIA FIRE INSURANCE COMPANY, Respondent.

      Referee — The failure of a referee to be sworn wiU not authorize the setting aside of' the judgment— Code of Uiml Procedure, sec. 731.
    The failure of a referee to be sworn will not authorize the court to set aside the-judgment entered upon his report.
    Appeals from orders made at Special Term, setting aside a judgment entered upon the report of a referee and setting aside: the report.

      A. Blmnenstiel, for the appellants.

      John Chetwood, for the respondent.
   Davis, P. J.;

The first appeal is from an order of Special Term setting aside the judgment, entered upon the report of a referee. The seconu is from the order of another Special Term setting aside the report of the referee.

Both of these orders were based upon the fact that the oath of the referee was taken before one of the attorneys for the plaintiff in the action. If the taking of an oath before the attorney is void, the worst effect that could follow is that no oath was taken by the referee.

Section 121 of the Code of Civil Procedure declares that where a verdict, report or decision has been rendered, judgment shall not be stayed, nor shall any judgment of a court of record be impaired or affected by reason of either of the following imperfections, omissions, defects, matters or things in the process, pleadings or other proceedings * * *. “Por an omission on the part of a referee to be sworn.”

This section we think clearly disposes of both motions contrary to the decision of the court below. \

The judgment, ought not to be disturbed, but having been set aside for an alleged defect, the order to set aside the report ^as regarded by the learned judge holding the subsequent Special Terffi as a necessary consequence of the first order. He was correctN under the assumption that the order setting aside the judgment was regular ; but its palpable irregularity compels us to reverse it, and it follows, as a matter of course, that the second order must be reversed.

Both of these order's must be reversed, with the costs in one • appeal and the disbursements in both.

Present — Davis, P. J., Beady and Daniels, J.J.

Orders reversed, with ten dollars costs in one appeal and disbursements in both.


text:
    In the Matter of JOHN PAINE to Vacate an Assessment, etc.

      Assessment — void if one item, of work he withdrawn from, competition, though such item amount to less than $1,000.
    When, in the proposals for bids for constructing a. sewer, a price is fixed for the foundation planks, and no estimate is given of the quantity to he used, an assessment, based upon the contract, is void if the total expenditure exceeded $1,000, even though the total cost of ihe foundation plank was less than that sum.
    Appeal from an order of the Special Term reducing an assessment.

      J. A. Beall, for the mayor, etc., of New York, appellant.

      J. O. Shaw, for the petitioner, respondent.
   Brady, J.:

This is an application to reduce an assessment for a sewer. In the contract for the work a fixed price was inserted for the expense of foundation planks and no estimate was made of the quantity to be used. This item was not submitted to competitive bidding. In conformity with the decisions upon that subject, namely the omission to submit the item to competitive bidding, and the decision in the Matter of Merriam (84 N. Y., 596), the assessment was declared to be illegal and reduced by deducting from it the work done at fixed prices and for which no competition was invited.

The Matter of Mahan (20 Hun, 301, affirmed in the Court of Appeals, 81 N. Y., 621); Manhattan Savings Bank (82 N. Y., 142), and the Matter of the Gas-Light Company (not yet reported), all sustain the proposition that the item objected to was improperly ; inserted, and render the assessment subject to reduction.

It is contended on the part of the corporation, however, that as the item is less than $1,000 under the provisions of the charter, it can be sustained. The provisions of the charter are, where the separate items of work and materials shall together amount to an expenditure of more than $1,000 the same shall be let by contract, and the contract shall be entered into by the appropriate heads of departments, and shall be founded on sealed bids, etc. (See charters of 1857 [chap. 446], 1870 [chap. 137] and 1873 [chap. 335].)

It seems to- be indisputable that this view cannot be sustained for the reason that the contract related to the improvement-, the accomplishment of which rendered it essential that all the items embraced within it and set forth should be provided for, and they amounted, united, to several thousand dollars. If the expenses of the improvement could be divided up into fragmentary parts, as seems to be involved in the proposition of the counsel for the appellant, then the object of the provision in the charter referred to would be overcome. Its design was to prevent the splitting up of expenditures into sums of less than $1,000 by separate contracts, and therefore to prevent exactly what it is urged upon us here to sustain. The contract for the improvement involved an expenditure, all its elements being considered, of more than $1,000, and when we have ascertained that fact the answer to the proposition submitted by the counsel for the appellant is complete. The statute requires that every part of the work contemplated shall be admitted to public competition, and prohibits the corporation from fixing in advance the price for an unknown quantity of an unknoivn article, as is properly suggested by the respondent’s counsel. (See cases, swprci/ chap. 335 of the Laws of 1873.) If the difficulty of determining precisely the amount of labor necessary for the accomplishment of the designed improvement bad been insurmountable, as said Barrett, J., in the Merriam case, the commissioner should, at least, as was suggested in Brady v. The Mayor (20 N. Y., 312), have left the item to be paid for by day’s work, or what it was worth.

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

Davis, P. J., and Brady, J., concurred.

Order affirmed, with ten dollars costs and disbursements.


text:
    CHARLES F. REICHMANN, Appellant, v. THE MANHATTAN COMPANY, Respondent.

      Svidence — examination of a party before trial — the officer's and directors but not the tenants or agents of a corporation can be examined — Code of Oivil Procedure, tec. 872, as amended by chap. 536 of 1880.
    Section 872 of tiie Code of Civil Procedure, as amended by chapter 536 of 3880, providing for the examination of the parties to an action before trial, authorizes the examination of the officers and directors of a corporation, when their testimony is1 necessary and material, but does not authorize the examination of its servants, agents or employes.
    Appeal from an order entered in this action on the 23d of November, 1881, vacating an order for the examination, ,as a party-before trial, of one Stephenson, a station inspector in the employment of the defendant, on behalf of the plaintiff.
    The action was brought to recover damages for an assault and a false imprisonment.

      Simon Sultan, for the appellant.

      Charles Steele, for the respondent.
   Brady, J.:

The examination contemplated in this case was sought under section 872 of the Code, as amended by chapter 536 of the Laws of 1880 (see vol. 1, p. 755), and by which the seventh subdivision of the section named was amended so as to read as follows:

- “Any other fact necessary to show that the case comes within one-of the last two sections, and if the party sought to be examined is a corporation, the affidavit shall state the name of the officers or directors thereof, or any of them whose testimony is necessary and materia], or the books and papers, as to the contents of which an examination or inspection is desired, and the order to be made in respect thereto shall direct the examination of such persons and the production of such books and papers.”.

Prior to this amendment it was determined that the provisions of the Code authorizing the examination of a party to an action did not include, and therefore could not be extended to, the officers, servants, agents or employes of a party, although such a party was a corporation, and it was accordingly held that the directors of a corporation could not be compelled to submit to an examination before trial. (The People v. The Mutual Gas-Light Co., 74 N. Y., 434; Boorman v. The Atlantic and Pacific R. R. Co., 78 id., 599.)

It will be perceived that the amendment includes officers and directors whose testimony is necessary and material, and names no other class of individuals connected with the corporation. It does not extend to servants, agents or employes, therefore, eo nomine, it is confined to officers and directors of the corporation. The officers of a corporation are elected, if the power is not expressly lodged in other hands, as for instance in a body of directors, by the company at large (Angel and Ames on Corp., 115), and .the servants, employees and agents are selected by the officers unless some other mode of appointing them is provided by the corporation itself.

In the case of the People v. The Mutual Gas-Light Co., the Court said: “ The word party, as used in this and previous similar statutes, has an unmistakable meaning; it means a plaintiff or defendant, and cannot be extended to the officers, servants, agents and employees of the parties, whether such parties be corporations or natural persons,” and the legislature, by the amendment of 1880, enlarged the signification of the word party, so as to embrace officers or directors, and no others, as already suggested. The particular designation of the persons thus made cannot well be understood otherwise than as declarative of the intention of the legislature not to include any other persons. The officers and directors are included, because they embrace the superior class of persons connected with the corporation, who are invested with authority by it to manage its affairs, and, therefore, to conduct its business, including the power to give instructions and directions to subordinates, whether they be agents, servants or employes. It would be impossible, by any stretch of the imagination at all consistent with the words officers and directors, to embrace a station inspector, whose duties, according to his designation, are clearly subordinate and would seem to be restricted to the stations and are the incidents connected with them. The plaintiff is not remediless, because if he desires to show the particular instructions given to a subordinate which, are essential to his case, he may seek the examination of the ' officers or directors under the statute, from whom he can obtain the necessary information or evidence, according to the fact.

The result of this review is that the order appealed from must be affirmed, with costs and disbursements.

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

Order affirmed, with ten dollars costs and disbursements.


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    TOBY W. JOHNSTON, Appellant, v. JOHN STIMMEL and Others, Respondents.

      Interpleader — when an order requiring the United States to interplead is proper.

    In this action, brought by the assignee of a mortgage to foreclose the same, it appeared 'that before the mortgage was assigned the United States had commenced an action in the United States Court against the mortgagee (the assignor), and that after the making and recording of- the assignment an attachment had been issued therein, under which the mortgage debt had been levied upon as the property of the assignor, on the ground that the assignment was fraudulent and void. After the commencement of this action the United States Court, upon the application of the defendants, the owners of the property covered by the mortgage, directed that the levy he discharged, unless the United States consented to appear and yield to the jurisdiction of the State court and allowed its right to hold its -lien to be there determined on the merits, if the State court should direct the United States to be interpleaded or substituted as a defendant in this action.
    Thereafter, upon a motion duly made, this court directed that the amount . of the claim, with interest and costs, be deposited with the clerk, and that the United States be interpleaded or brought in as a defendant, upon condition that the United States district attorney should appear for the United States and stipulate that it would submit itself to the jurisdiction of this court and consent that its title to the mortgage debt be determined herein upon its merits, and that it would abide by the judgment.

      Reid, that the order was properly made and should be affirmed.
    Appeal from an order of interpleader made at Special Term.
    On January 23, J8J5, the defendant Conrades made and delivered to Harrison Johnston his bond, by which he agreed to pay to said Harrison Johnston the sum of $5,000 and interest. Oonrades being the owner of certain leasehold estate on the west side of Third avenue, between Sixty-fourth and Sixty-fifth streets in the city of New York, on the same date executed and delivered to said Harrison Johnston a mortgage upon said premises to secure the payment of said bond. The plaintiff claimed that on October 29, 1879, said bond and mortgage were assigned to him by his father, Harrison Johnston, by an assignment of that date, recorded November 5,1879. Conrados conveyed the premises to the defendant Warnsdorfer, January 1, 1875, subject to said mortgage, the payment of which was assumed by Warnsdorfer.
    On April 30, 1879, about six months prior to the date of the assignment to the plaintiff, the United States of America commenced an action against said Harrison Johnston in the United States Circuit Court for the Southern District of New York, to recover the sum of $1,967,987.96. On March 5, 1880, after the recording of said assignment, an attachment in said action was issued to the marshal of the southern district of New York, who attached in due form of law said mortgage, and notice thereof was duly given to said Warnsdorfer and Harrison Johnston. The assignment of said mortgage from Harrison Johnston to his son, Toby W. Johnston, the plaintiff, was claimed by the United States to be fraudulent and void, and that the mortgage debt was the property ^of said Harrison Johnston, and therefore liable to be attached as his property. Both Harrison and Toby W. Johnston are non-residents of this State.
    A motion on behalf of Harrison Johnston, or, some one in privity with him, was made in said Circuit Court to discharge said attachment, but the same was denied.
    On April 29,1880, and after service of the attachment on him, Warnsdorfer conveyed the property to the defendant Stimmel, who was not willing to assume the payment of the mortgage debt, and desired that it be discharged, but, by reason of the levy under the attachment, the same could not be paid off, and on that day the amount of said mortgage debt was deposited in the United States Trust Company to the joint credit of Warnsdorfer and Stimmel, to be drawn therefrom only upon their joint order, and for the purpose of paying off said mortgage; and the money continued in said Trust company until it was paid to the clerk of this court by virtue of the order appealed from November 3, 1881.
    In July, 1881, this action was commenced to foreclose said mortgage and for a sale of the property.
    In September, 1881, a motion was made on behalf of "Warnsdorfer, in the action of the- United States of America v. Harrison Johnston, to discharge the attachment and levy as to said mortgage debt, and for permission to pay the same to the said Toby 'W. Johnston, the plaintiff in this action. Upon said motion the United States was heard, and Judge Brown made an order directing the discharge of said levy, etc., unless the United States of America consented to appear and yield to the jurisdiction of this court, and allow the questions as to the right of the United States of America to hold its lien, to be determined on the merits, if, on a motion to be made by the defendants in this action, this court should direct the United States of America to be interpleaded or to be substituted as a defendant in this action.
    The plaintiff in this action had due notice of that motion in the United States Court, but did not appear thereon.
    Thereafter, and before answering, a motion on affidavits showing these facts was made on behalf of the defendants Stimmel and Warnsdorfer, for leave to pay the amount of said mortgage and the money claimed by the plaintiff into the court, and that the United States of America be substituted as the defendant therein, or that it be brought in as a defendant.
    The motion came on before Judge Barrett, who, after hearing the counsel for the plaintiff and defendants,' and the United States district attorney, on behalf of the United States, directed ■ that the amount of the claim, with interest and costs, be deposited with the clerk, and that the United States of America be interpleaded or brought in as a defendant, from which order the plaintiff appeals.

      Hamilton WalMs, for the appellant.

      Armour G. Anderson and Joseph jBellesheim, for the respondent Stimmel.

      He Witt G. Brown, for the other respondents.
   Brady, J.:

Tlie application which resulted in the order appealed from, was made in pursuance of the order directed by Judge Brown, on the motion to discharge the attachment issued on behalf of the United States, and that order was a conditional one predicated of the voluntary appearance of the United States in this action and submission to the jurisdiction of this court if this proceeding were instituted. The order of Justice Barrett provided for'such voluntary appearance and submission to the jurisdiction of this court in the premises within ten days; and further, that in default of such submission that the plaintiff upon judgment obtained, should be paid the money deposited under the terms of the order.

The learned justice in his opinion said on that subject: “The only remaining difficulty is as to bringing in the United States. That seems, however, to have been settled by the order of the District Court, and the willingness expressed by the United States district attorney to submit to the jurisdiction. The motion should, therefore, be granted upon the money being brought into court and upon the United States district attorney appearing for the United States herein, and stipulating that the United States submits to the jurisdiction and consents that the title to the mortgage debt may be determined herein upon the merits, and that it will abide by the judgment.”

The order was conditional, therefore, and by its terms obviated the objection that this court has no power to implead the United States. The theory upon which both Judges Brown and Barrett acted was that sovereignty would voluntarily appear. If it does not, then the order fails, and the plaintiff is not prejudiced; if it does, then the jurisdiction of this court is established and the proper remedy can be invoked. As matter of justice, the order was decidedly proper. There are two claimants to the fund in court and the debtor should not be obliged to participate in the controversy between them. It is true that the United States is an attachment creditor only, and, it may be, is not in a position to attack the assignment to the plaintiff of the bond and mortgage. Whether a mere attaching creditor can so proceed is a question marked in this State by conflicting opinions and adjudications in the Court and Commission of Appeals (see Thurber v. Blanck, 50 N. Y., 80; Mechanics and T. Bank of Jersey City v. Dakin, 51 id., 519), and the United States Circuit Court, if tbe controversy were therein continued, might sustain the right of the United States to the fund, provided the assignment were shown, as alleged, to have been fraudulently executed. It is idle to say that there tvas nothing shown on the motion made in this court to authorize the order appealed from. The United States had obtained an attachment and had taken the necessary steps through the proper officer to secure whatever lien upon the fund the attachment could create, and the extent of that lien must depend upon the effect of the: attachment and the rights secured by it. If the issuance of that process established a right to hold the fund, subject to the determination of the question of fraud presented, then there could be no doubt whatever of the character of the claim urged by the United States, or ¿hat the respective claims asserted by it and the plaintiff are such as to warrant the interposition of this court by way of interpleader. The proceeding is within the provisions of section 820 of the Code, which, while they do not introduce any new cause of interpleader, perfect a simple remedy which may be resorted to where previously the only remedy was by action. (1 Yol. Wait’s P., 166, and casefe cited; Townsend’s Code [1870], 122, and cases cited.)

A demand is made against the debtor for the same debt or prop, erty and without collusion. The money which is provided to pay the mortgage debt is claimed by two persons, the plaintiff and the United States, and it is proper that these claimants should conduct any litigation that may be necessary to determine their respective rights. The debtor by providing the fund has done all that he should be called upon to perform. If the United States does not come in and submit its claim to the jurisdiction of this court, as provided by the order appealed from, the interpleader fails and the plaintiff can proceed. For these reasons the order appealed from should be affirmed, with ten dollars costs and disbursements.

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

Order affirmed, with ten dollars costs and disbursements.


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    FRANCIS CRAWFORD, Respondent, v. ROSA KASTNER, Administratrix, etc., of ADOLPH F. KASTNER, Appellant.

      Summary proceedings — the justice has no jurisdiction over equitable defenses, in them— when an action will lie to restain their continuance.

    The plaintiff and the defendant’s intestate entered into an agreement, dated March 18, 1876, whereby the latter leased to the former certain premises for the term of four years, “with the privilege of six years more at the same rent.” In March, 1880, the plaintiff notified the defendant, the administratrix of the lessor, that he elected to exercise the privilege of renewing the lease, and requested her to execute a lease prepared by him to carry the agreement '' into effect. The defendant refused to carry the agreement into effect and on May 20, 1880, instituted summary proceedings before a justice of a district court to remove the plaintiff from the premises. The plaintiff brought this action to restrain the continuance of such proceedings and to secure the extension of the lease.

      Held, that as the justice had not jurisdiction to pass upon the question of the plaintiff’s right to an extension of the lease, this action was properly brought and could be maintained.
    Appeal from a judgment in favor of the plaintiff, entered upon an order overruling a demurrer to the complaint.

      AsJibel P. Fitch, for the appellant.

      Joseph Fettretch, for the respondent.
   Brady, J.:

This action was commenced to compel a specific performance of a covenant in the lease executed between the plaintiff and the intestate, Adolph F. Kastner. The agreement is dated the 18th of March, 1876, and the premises named in it rented for the term of four years, with the privilege of six years more at the same rent.”

It appears that on the 31st of March, 1880, the defendant was appointed the administratrix of the goods, chattels and credits of the intestate, and that she duly qualified; that the plaintiff elected to exercise the privilege contained in the lease, and caused to be prepared an agreement, or lease, in accordance with the privilege mentioned. He executed the lease and tendered it to the defendant, and demanded that she should execute it, and thus carry into effect the intention of the parties. The defendant refused to execute it, or any paper whatever, to carry into effect the agreement mentioned.

It also appears that on the twentieth of May she instituted a summary proceeding, before a justice of a district court in this city, co remove the plaintiff from the premises; whereupon the plaintiff commenced this action for the purpose of restraining the continuance of such proceedings and securing the extension of the lease, to which he was entitled under the original agreement. There can be no doubt that the words “ with the privilege of six years more at the same rent” were equivalent to a covenant of renewal, and it is equally free from doubt that the plaintiff was therefore entitled to a specific performance of the covenant. (Chretien v. Doney, 1 Comstock, 422; Tracy v. Albany Exchange Co., 7 N. Y., 472; Kelso v. Kelly, 1 Daly, 420; Reed v. St. John, 2 id., 213.)

■ The objection to the maintenance of this action depends chiefly upon the proposition that the plaintiff’s remedy is complete by law, and that in any proceeding to remove him the original lease would be a perfect protection, if the proceedings were predicated of an allegation that the term had expired.

District courts are courts of limited jurisdiction. When a justice presides in a summary proceeding provided by statute, his powers are limited and restricted; equitable defenses are not available. The justice is not vested with any power in equity and can only investigate defenses of a purely legal character. Whether the plaintiff was entitled to the renewal which was contemplated by the original agreement depends entirely upon circumstances — the faithful discharge of the duties imposed by the original lease, the right to exercise the privilege, the exercise of the privilege in a proper way and the performance of such acts in reference to it as were necessary to secure the right to demand the extension of the lease in accordance with it.

These facts and circumstances, necessarily required the adjudication, if disputed, of a court of competent jurisdiction, and whether the plaintiff, under all the circumstances disclosed, was entitled to a renewal of the lease or the extension of the term was an issue of law which the justice was not competent to determine for want 6f jurisdiction.

The rule is well settled that where the defense is an equitable one in a summary proceeding, application may be made to, and the powers of a court of equity invoked to restrain the proceeding and to transfer the contention to its jurisdiction. (See Graham v. James, 7 Robt., 473.) For these reasons the proposition suggested by the defendant cannot be maintained.

The. agreement set forth in the complaint, which was tendered to the defendant for execution, seems to be in harmony with the privilege to which it related; but the allegation is broader than the mere presentation of that paper, because it is alleged that the defendant refused to execute any paper whatever to carry into effect the agreement between the plaintiff and her deceased husband, and this allegation was admitted by the demurrer. But it appears also in this connection from an averment in the complaint, and affirmatory of the intention of the defendant not to recognize the continuance of the term or the legal force of the privilege, that summary proceedings were instituted to remove the tenant.

For these reasons no doubt is entertained that the judgment appealed from was properly rendered, and it should accordingly be affirmed.

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

Judgment affirmed.