author: Follett, J.

text:
    Thomas F. Mason, as Receiver, etc., Resp’t, v. Lydia Delphine Henry et al., as Executors, etc., App’lts.

      (Supreme Court, General Term, First Department,

      Filed January 18, 1895.)

    Limitation—Receiver.
    An action by the receiver of an insolvent corporation "against the trustees to recover assets alleged to have been wasted by them falls within the six-years statute, and is barred at the end of such time unless saved by some special statute.
    Appeal from a judgment in favor of plaintiff.
    This action was begun in April, 1879, against John F. Henry and others, trustees of the Widows’ & Orphans’ Benefit Life Insurance Company, to recover the value of assets belonging to the corporation, and alleged to have been wasted by the trustees. This company was incorporated in 1864, and the Mutual Protection Assurance Society was incorporated in 1868, both pursuant to chapter 463, Laws 1853, an act entitled “An act to provide for the incorporation of life and health insurance companies, and in relation to agencies of such companies.” The first-mentioned corporation had a capital of $200,000, divided into shares of $100 each, and the last-mentioned corporation had a capital of $100,000, divided into shares of $25 each. October 19, 1871, defendants’ intestate became a trustee of the Widows’ & Orphans’ Benefit Life Insurance Company, being at that time one of the trustees of the Mutual Protection Assurance Society. November 10, 1871, the last-mentioned corporation was insolvent, and between that date and June 18, 1872, pursuant to a plan of the trustees of the two corporations, the assets of the Widows’ & Orphans’ Benefit Life Insurance Company, of the value of $1,487,714, were transferred do the Mutual Protection Assurance Society. February 13, 1872, the name of the Mutual Protection Life Assurance Society was changed, by chapter 36 of the Laws of that year, to the “ Reserve Mutual Life Insurance Company.” On the 18th of Jurfe, 1872, the Widows’ & Orphans’ Benefit Life Insurance Company ceased to do business. March 8, 1877, the Widows' & Orphans’ Benefit Life Insurance Company, having become insolvent, Henry R Pierson was duly appointed its receiver; and he having died. January 1, 1890, Thomas P. Mason was, February 28, 1890, duly appointed receiver of said corporation, and also of the Reserve Mutual Life Insurance Company, which was also insolvent. May 25, 1893, John F. Henry died, leaving a last will and testament, which was probated, and letters testamentary were issued thereon to the defendants. July 6, 1893, an order was entered permitting the plaintiff to sever the action, and to revive and continue it against the executors of John F. Henry, after which a supplemental summons and pleadings were served. Upon the trial, the sum of $189,123.04, with interest from March 8, 1877, was found to be due to the policy holders and creditors of the Widows’ & Orphans’ Benefit Life Insurance Company. The court also made the following findings: “Thirty-second. Subsequent to October 19, 1871, the said defendants’ intestate and his associates, being and acting as trustees of the Widows’ & Ophans’ Benefit Life Insurance Company, wasted, diverted, and misapplied, and suffered to be wasted, diverted, and misapplied, the moneys, assets, property, and effects of said Widows’ & Orphans’ Benefit Life Insurance Company, to the damage and injury of the policy holders and creditors of that company, in the sum of upward of $275,000.” “Thirty-sixth. The misappropriation of funds and the acts which constitute the cause of action herein occurred in ¡November, 1871. Thirty-seventh. This action was instituted in April, 1879.” “Thirty-ninth. The cause of action herein existed to same extent that it existed at beginning of this action against said Henry, in 1878, and at all ¡times previous thereto and after 1873.” Á judgment was ordered for the amount due the policy holders and creditors of the Widows’ and Orphans’ Benefit Life Insurance Company, with interest from March 8, 1877. From this judgment the defendants .appeal.

      Thorndike Saunders, for app’lts; Raphael J. Moses, for respt.
   Follett, J.

The defendants insist that the plaintiff had concurrent remedies at law and in equity, the legal remedy being as effectual as the one in equity, and therefore the cause of action was barred six years after it accrued. If the premise of this proposition is sound, the conclusion follows, Butler v. Johnson, 111 N. Y. 204; 19 St. Rep. 85, unless the case is within some statutory exception. This action was begun in April, 1879, the precise date not appearing. The court found that the assets were misappropriated and the acts constituting the cause of action performed, in ¡November, 1871. Chapter 4 of the Code of Civil Procedure,, entitled “ Limitation of the Time of Enforcing a Civil Remedy,” did not take effect until September 1, 1877 (Code Civ. Proc. § 3356); and by subdivision 3 of section 414 of that Code the statute of limitations therein prescribed is not applicable to causes, of action existing September 1, 1877, upon which suits were begun before September 1, 1879. As before stated, this cause of action accrued before September 1,1877, and this action was begun before September 1, 1879, and so the limitations prescribed by the old Code are applicable to this action. Viets v. National Union Bank, 101 N. Y. 563; Clark v. Lake Shore & Michigan Southern Railway Co., 94 N. Y. 217; Goillotel v. Mayor, etc., of New York, 87 N. Y. 441. Sections 91 and 97 of the old Code provided :

“ Sec. 91. Within six years : (1) An action upon a contract, obligation, or liability, express or implied, excepting those mentioned in section 90. * * * (6) An action for relief on the

ground of fraud in cases which heretofore were solely cognizable by the court of chancery, the cause of action in such case not to be deemed to have accrued until the discovery of the aggrieved party of the facts constituting the fraud.”

“ Sec. 97. An action for relief, not hereinbefore provided for, must be commenced within ten years after the cause of action shall have accrued.”

By the fifth subdivision of section 382 of the Code of Civil Procedure the provisions of subdivision 6 o,f section 91 of the old Code are changed. Under the present Code the judgment sought, must be “other than for a sum of money,” which provision was not in the old Code.

It must be borne in mind that this is not an action by a shareholder, or by a creditor of the insolvent corporation, but is an action brought by its receiver.

Hun v. Cary, 59 How. 426, affirmed 82 N. Y. 65, was an action at law, brought by a receiver of an insolvent savings bank against its trustees, to recover damages for wasting its assets, in which it was distinctly held by the court of appeals that an action at law could be maintained by a receiver, or, in other words, that he had. a legal remedy.

O'Brien v. Fitzgerald, 61 St. Rep. 472, reversed 143 N. Y. 377; 62 St. Rep. 371, was an action at law, brought by a receiver of an insolvent state bank against its directors, to recover damages for wasting its assets, and it was again held that an action at law could be maintained. In discussing the question it was said:

“ In support of that idea the case of Brinckerhoff v. Bostwick, 105 N. Y. 567, is pressed upon our attention as indicating that the present action must be regarded as of an equitable character. But there is a wide and vital difference between the two cases. In this the action is by a corporation against its delinquent directors; in the other it was by a stockholder who could not sue at law, but was compelled to go into equity to obtain his relief, and whose right of action was wholly and purely of an equitable character. It may be, nevertheless, that a corporation may sue its directors in equity to recover losses sustained, for there seem to besóme cases in which the remedy has been allowed. Granting that, and granting also, what I am not now ready to admit as the law of this state, that the facts pleaded in the present case are_■sufficient to support the action as an equitable one, we are left by the pleader in a doubt which can only be solved by recurring to the demand for relief.”

This is the last expression of the court of appeals on this question, •and it holds that a receiver may maintain a legal action against the directors or trustees of an insolvent corporation for wasting its assets. The case at bar was decided at special term -upon the ■supposed authority of Brinckerhoff v. Bostwick, 88 N. Y. 52; Id., 99 N. Y. 185 ; Id., 105 N. Y. 567; 8 St. Rep. 196. That was an action in equity, brought by a shareholder of an insolvent national bank (which was in the hands of a receiver appointed by the comptroller of the currency), in behalf of himself and the other shareholders, against the directors to compel them to account for dam-' ■ages sustained by the bank because of their misconduct. The receiver and the corporation were joined with the directors as defendants. On the three occasions when this case was before the ■court of appeals it was held that a- shareholder could maintain an ■•action in equity. On the second review of this case by the court of appeals it was said :

“ What limitation of time, then, was applicable to this action ? We think the limitation is regulated by § 4 of the Code of Civil Procedure. Section 414 provides that the provisions of that chapter shall apply and constitute the only rule of limitation applicable to a civil action or special proceeding, except as mentioned in that section, and this action does not come within any of the exceptions. It does not come within subdivision 3 of that section, because, it was not commenced within two years after the Code took effect. We think the limitation applicable to this action is ten years,—that which is prescribed by § 388 of the Code. This is unquestionably an equitable action, and the plaintiffs stand in the place of the receiver; and, if he had prosecuted the action, he would have stood in the place of the bank, and had the same rights which it would have had if plaintiff. So this action, for the purpose of determining the limitation of time applicable to it, must be governed by the same law which would have been applicable if the action had been brought by the bank". The action is against the directors, as trustees, to call them to account for the manner ■in which they discharged their trust, and is one of which courts ■of equity always have jurisdiction.' Ang. & A. Corp. §§ 312, 314; Robinson v. Smith, 3 Paige, 222 ; Heath v. Railroad Co., 8 Blatchf. 347, Fed. Cas. No. 6,306; Brinckerhoff v. Bostwick, 88 N. Y. 52. In the latter case, Rapallo, J., said: ‘ The liability of the directors of corporations for violations of their duty or breaches of the trust committed to them, and the jurisdiction of courts of equity to afford redress to the corporation, and in proper cases to its shareholders, for such wrongs, exist independently of any statute.’ There is no doubt, therefore, that, as to the original plaintiff in this action, the proof of violations of duty and breaches of trust by the defendants could range through ten years prior to the ■commencement of the action.”

This, in effect, seems to hold that a shareholder has not concurrent remedies at law and in equity against the directors of a corporation for mismanaging their trust, but that his remedy must be sought in a court of equity. The holding that the 10-years statute of limitations was appliable was, in effect, a holding that there is no legal remedy. Butler v. Johnson, supra.

In O'Brien v. Fitzgerald, supra, Brinckerhoff v. Bostwick is discussed, and it is there said that a shareholder cannot sue at law, but must seek his remedy in equity.

In Brinckerhoff v. Bostwick, 99 N. Y. 185, the judgment reported- in 34 Hun, 352, was reversed, and a new trial granted. Afterwards' the case was noticed by the defendant for trial at a circuit, and placed on the calendar, whereupon the plaintiff moved, at special term, that it be stricken from the calendar, and tried as a suit in equity, which motion was granted. On an appeal from this order, it was reversed at general term, 43 Hun, 458 ; but on an appeal to the court of appeals, the order of the general term was reversed, the court reiterating its former decisions that the action was an equitable one. 105 N. Y. 567; 8 St. Rep. 196. This case is not in point, and does not sustain the judgment of the special term.

It is not alleged in the complaint that it is necessary to set aside conveyances for the purpose of reaching assets, and, indeed, the action is not for the purpose of reaching specific assets wrongfully ■disposed of by the defendants, but for the recovery of damages; nor is it found by the court that the defendants’ misconduct was not discovered until within six years before the commencement of the action. We see no reason why the plaintiff’s legal remedy was not as effectual as the one in equity, and so, whether the case be regarded as a suit in equity or as an action at law, it falls within the six-years statute, and is barred unless saved by some statute. Pierson v. Morgan, 20 Abb. N. C. 428, and Pierson v. Cronk, 13 N. Y. Supp. 845, are overruled.

It is insisted that this action is excepted from the statute of limitations by § 2, tit. 4, c. 18, pt. 1, Rev. St., which provides:

“ And no statute of limitations shall be a bar to any suit at law or in equity, against such directors for any sums for which they are made liable by this section.”

Assuming that chapter 18 is applicable to these insurance corporations, this action was not brought to recover sums for which directors are made liable by § 2. The cause of the action is set out in the complaint as follows:

“(16) The plaintiff further shows that, subsequent to said election of said 19th of October, 1871, the said Henry and his associates suffered and permitted the assets, property, aud effects of e the said widows and orphans to be wasted and misapplied, and the policy holders to be plundered, cheated, and defrauded ; that the said assets were so wasted, and the said policy holders were so plundered, and that the sum of $63,000 and upward was paid to the said Sanford, Morgan, Freeman, and others out of said assets, for their services in wrecking and ruining said widows and orphans; that since the 10th day of November, 1871, a large number of the policies of said widows and orphans have been canceled, lapsed, and surrendered, and twisted, upon which large profits were realized, and which profits the said Henry' and his associates have suffered and permitted to be diverted from the said-widows and orphans, and applied to the benefit of the policy holders, stockholders, and trustees, and officers of said Mutual Protection and others.”

The judgment must be reversed, and a new trial granted, with costs to the appellants to abide the event..

All concur.


source: Caselaw Access Project

author:
Parker, J.
     O’Brien, J.

license: Public Domain

text:
    Louise Meise, Resp’t, v. John H. Doscher et al., App’lts.

      (Supreme Court, General Term, First Department,

      Filed January 18, 1895.)

    Bills and notes—Filling-blank. .
    The indorsement and delivery of a blank note for the accommodation of the maker do not authorize him to add the word, “with interest.”
    Appeal from a judgment entered on a verdict in favor of the plaintiff, directed by the court.

      Joseph C. Rosenbaum, for app’lts; J. George Flammer, for resp’t.
   Parker, J.

McGrath v. Clark, 56 N. Y. 34, and Farmers' Nat. Bank v. Thomas, 79 Hun, 595 ; 61 St. Rep. 518, are not distinguishable from the case presented by this record, and require that the judgment shall be reversed as to the defendant Newman. About January 30, 1891, the defendant Henry Newman, at the request of John H. Doscher, who was engaged in business under the name of Doscher & Co., indorsed a note in blank, and delivered it to Doscher. The printed matter upon the face of it was like that in general use, and its delivery to Doscher had the legal effect of an authorization to him to fill up the blanks. But, in addition to filling up the blank spaces, there was also inserted the words, “with, interest at the rate of five per cent, per annum, payable semiannually.” All the writing upon the face of the note, with the exception of the signature of “Doscher & Co.,” was placed thereon by the plaintiff's attorney in her and Dusclicr’s presence. Unless, then, there was other authority, in respect to the form of the note, conferred upon Doscher by Newman than is evidenced by the delivery of the blank indorsed by him, the insertion of the provision relating to interest operated to invalidate the note as between the plaintiff and Newman. The evidence does not suggest that, at the time of this indorsement in blank, Doscher and Newman discussed the matter at all. Indeed, the only evidence, tending in that direction even, consists of the fact that the three notes surrendered by the plaintiff at the time the note in suit was given also drew interest at the rate of 5 per cent, per annum. Newman testified that he had indorsed other notes in blank for Doscher, and whether the notes then held by plaintiff were so indorsed, or whether Newman was to take them up, and, if so, whether Newman was aware of the addition of the words relating to interest, the record is silent. Indeed, there is no evidence that Newman knew that this note was given to the plaintiff as'a renewal of other notes, or that he had any information of the particular use which was to be made of it by Doscher. Under this evidence, therefore, it is at least doubtful whether there was sufficient evidence to go to the jury upon the question whether authority was given Doscher to fill in the words relating to interest; but we need not consider that question, as, perhaps, a different state of facts may be shown on the retrial.

As between the plaintiff and the defendant Doscher, 'the question of payment should have been submitted to the jury. The defendant testified that he gave a check for $1,562.50 personally into the hands of the plaintiff, and the cashier of the bank, upon which it was alleged to have been drawn, testified that at about that time the bank paid for the defendant and charged to his account a check in that amount. The defendant said he was unable to produce the check, because it had been burned up. Plaintiff denied having received the check, or that the defendant, at that or any other time, gave her a check in such an amount. There was other evidence bearing upon the question, but we have referred to enough of it to make it clear that it was for the jury to say whether defendent Doscher paid to the plaintiff the sum testified to by him, by means of a check. The exception taken by the defendant to the refusal of the court to submit that question to the jury was well taken. The judgment should be reversed, and a new trial granted, with costs to the appellants to abide the event.

Van Brunt, P. J., concurs.

O’Brien, J.

I dissent from the views of the majority of the court in this case. The plaintiff, in 1889, claimed an indebtedness against the defendant Doscher of $4,500, for which she held three promissory notes for $1,500 each, made b}*- him and indorsed by the defendant Uewman, which notes contained a statement, “with interest at five per cent, per annum.” In adjustment of such indebtedness, the defendant Doscher, in addition to cash, gave two notes of $1,500 each, one of which is the note in suit, and thereupon surrendered the notes that he then held. It is conceded that the two notes for $1,500, which included the one in suit, were 'indorsed by the defendant Newman in blank at a time when there was nothing written on the face of the notes, and that at the time of the settlement between the plaintiff and the defendant Doscher the blanks in the notes were filled up. It is insisted, therefore, that as there was nothing on the face of the notes but the printed matter at the time of the indorsement, the adding of the words, “with interest at five per cent, per annum, payable semiannually,” subsequent to the indorsement, was a material, alteration of the instrument, which relieved the indorser from liability. Upon this contention Mr. Justice Parker says: "McGrath v. Clark, 56 N. Y. 34, and Farmers' Nat. Bank v. Thomas, 79 Hun, 595; 61 St. Rep. 518, are not distinguishable from the case presented by the record, and require that the judgment should be reversed as to the defendant Newman." I think that this case is to be distinguished from both. In McGrath v. Clark the defendant indorsed a promissory note, with the time and place of payrnent in blank, and delivered the same to the maker, who filled the blanks, and added the words “with interest.” It was held that, while the delivery of the note to the maker gave him authority to fill the blanks by inserting any time and place of payment he chose, it did not authorize the addition ■of the words, “with interest,” and that this was a material alteration which invalidated the note as against the defendant, in the absence of proof of some authority therefor aside from the delivery. The distinction between that and the case at bar seems to me marked. There the only thing remaining to make a complete note was the filling up of the blanks for the time and place of payment; and the inserting of the words “with interest” necessarily increased the obligation by adding the amount of interest, and this without any evidence of authority, either express or to be implied from the nature of the blanks that were to be filled up. ' In the case at bar all blanks were to be filled up, and the note was given for the purpose of taking up another note of similar'tenor, which, in addition to the amount, included interest ; and it seems, to me that there was just as much authority, upon these facts, to add the words in relation to interest as there was to insert the principal obligation represented by the notes that were retired. Bank v. Thomas, is equally distinguishable. In that case it appeared that, many times prior to indorsing the blanks upon which the notes in suit were written, one Seward had indorsed blank notes for the defendant Sanford as the notes in suit were indorsed. All of these notes had been made payable at specified times after date, usually about three months, and without interest; and it was. therefore very properly held that by a delivery of a note in blank, indorsed by the person delivering the same, no implied authority is given to the person to whom the same was delivered to fill in in such note the words “with interest,” when there was no blank left therefor, or to write in the blank, preceding the words “after date,” the words “on demand.” As therein said :

“The form of the blank notes indorsed clearly admits that they were intended to be filled out and used as blank notes ; that the holder was authorized to insert therein a specified time after, for their payment; that they were to be used by being discounted at the bank; and that they were not to be so drawn as to become a-continuing security for the debt of the maker, with interest. This not only appears from the form of the note, in which there was no blank for the words ‘with interest,’ and in which the blank preceding the words ‘after date’ plainly indicated that a specified time was to be inserted, but it also appears from the course of dealing between the parties which had existed for several years before the notes were given. When changed to a note payable on demand, with interest, it became a continuing security for the amount of the note and interest. On such a note the indorser’s liability can be measured neither by any definite time nor definite amount. The man remained liable until an actual demand was made. If kept alive as to the maker, it might remain unpaid, and the indorser’s liability continue until the interest equalled, or even exceeded, the principal debt, and the statute of limitations would be no bar to an action thereon.”

Here the note in suit, although it contains the words, “with interest at the rate of five per cent, per annum, payable semi-annually,” is a renewal, and was intended by all parties interested to take the ¡fiace of other notes similarly drawn, and likewise bearing interest at the same rate. Apart, however, from this, I do not think there was any proper plea of unauthorized alteration of the note, nor do I think the evidence offered sufficient to sustain any such defense, and, upon the record as it stood on this question, I think the court was right in directing a verdict.

Upon the question of payment, no evidence was presented tending to show that any payment was made upon the two notes of which this in suit is one; the answer alleging that when the settlement was made, and the two notes given, the plaintiff falsely and fraudulently stated that Doscher was indebted to her in the sum of $4,922.86 as a balance owing in certain transactions between them, and that, believing such statements to be true and relying thereupon, he was induced to pay the plaintiff $1,922.86 in cash, and deliver to her the note in suit. As said, Doscher admitted that no claim had ever been made by him that payment had been made on account of the note in suit since its delivery to the plaintiff; but he attempted to show that at the time the settlement between him and the plaintiff was entered into he was not indebted in the amount of $4,922.86, because he bad made prior to that time other payments for which he had not received credit. This would have been entirely competent and proper, and would have presented a question for the consideration of the jury, if the other portion of the defense had been in any way sustained, that at the time of the settlement any false or fraudulent representations had been made by the plaintiff. It clearly appears, however, that at the time of the settlement the plaintiff made no representations, false or otherwise, but, upon a claim that an amount represented in notes was due her, an adjustment was had between the parties, and the note in suit, with the other note and cash, given in settlement. In this state of the record I do not see that there was anything else for the court to do but to direct a verdict, because there was no evidence of any payment upon the note in suit, and that portion of the answer alleging that the plaintiff falsely and fraudulently represented an indebtedness which was not due utterly failed. I think, therefore, that the judgment was right, and should be affirmed, with costs.


author: Titus, C. J. White, J.

text:
    Louis W. Gay, Resp’t, v. Earl D. Haskins, App’lt.

      (Buffalo Superior Court, General Term,

      Filed January 10, 1895.)

    Evidence—Guaranty.
    Evidence of a breach of a guaranty in a contract for erecting a heating apparatus that it will heat the rooms to a certain temperature in the coldest weather, is admissible in an action for the contract price, though the vendor has procured the final certificate of the architect.
    Appeal from a judgment in favor of plaintiff.

      Platt & Sanger, for app’lt; George Sawyer, for resp’t.
   Titus, C. J.

This action was brought to foreclose a mechanic’s lien filed by the plaintiff on the 22d day of July, 1892. The plaintiff and defendant entered into a contract by which the plaintiff was to furnish and set up complete a furnace of sufficient heating capacity.to heat defendant’s house, and complete same in a good and workmanlike manner. The contract provided that the sum of $1,045 should be paid to the contractor (plaintiff) in installments, as follows: $470 when the rough piping was in; $470. when the entire apparatus was set up and completed; and the balance ($105) 30 days from the last payment, and within 30 days after the contract was completely finished,—providing that in each of said cases the architect should certify in writing that all the work had been done to his satisfaction. It is further provided by the contract that no certificate given or payment made under this contract, except the final certificate and final payment, shall be conclusive evidence of the performance of this contract, either wholly or in part, against any claim of the owner. On November 21,' 1892, the architect gave a certificate in the following language: “ November 20, 1892. E. D. Haskins: Louis W. Gay, contractor for heating, is entitled to the second payment of $470, as per contract. Amount previously paid, $470. Amount of contract, $1,045.00. John S. Rowe.” This sum was paid, and receipted for by the plaintiff, on the 22d day of November, leaving the final installment of $105 unpaid. No other or further certificate was given, and no final certificate, as required by the contract, was given, unless this one can be so considered. This becomes important when we consider that the plaintiff in the specifications guarantied that the apparatus would warm the rooms to which radiation is conducted to 70° Fahrenheit in the coldest winter weather. The work was to be done according to the drawings and specifications, and they became a part of the contract, and must be resorted to to determine whether the certificate given November 21st was the final certificate contemplated by the contract. The provision deferring the final payment of $105 for 30 days was probably intended for the purpose of affording the owner and architect time and opportunity to determine whether the work was completed according to the terms of the contract, before he could truthfully certify that the -work was done to his satisfaction. This is especially the case when the sufficiency of the heating must be determined within the 30 days limited by the contract. Hence the contract provides, as I understand it, that before the final payment of $105 becomes absolutely payable the architect must certify in writing that all the work upon the performance of which the payment became due has been done to his satisfaction. The certificate of the architect given to secure the second payment of $470, while not in the language of the contract, is probably a sufficient compliance with its terms, under the authorities. Wyckoff v. Meyers, 44 N. Y. 145; Snaith v. Smith, 57 St. Rep. 86. And a certificate was required, by the terms of the contract, before the last installment became payable, before the defendant would be absolutely concluded from setting up the defense that the work was not in accordance with the terms of the contract. If the architect had given the final certificate,—the third one required by the contract,—that the work.was done to his satisfaction, it would have been conclusive upon that question, in the absence of fraud or mistake. Wyckoff v. Meyers, supra. But the giving of such a certificate by the architect is a condition precedent to the absolute right of enforcing payment of the final installment. Wangler v. Swift, 90 N. Y. 38. It seems to me, therefore, that the court erred in ruling that the defendant’s evidence tended to show that the work was not completed in accordance with the terms of the contract, and that he had sustained damage by reason thereof. The court below seems to have taken the view that the plaintiff was entitled to his pay as long as the work of the contractor was done, and that no final certificate was required. It -does not seem to me, from a reading of the contract, that this position can be maintained. The plaintiff, before he can recover, must produce the architect’s final certificate, as required by the ■contract, that the work has been done to his satisfaction. Another reason why we think the judgment should be reversed is that the guaranty contained in the specifications is an independent undertaking, and has nothing to do with the performance of the work; .and, at all events, whether the plaintiff had procured the final certificate of the architect or not, it was competent for the defendant to allege and prove that the furnace did notsupply the heat which it was agreed it should do by the contractor, and that it would warm the rooms to which radiation is conducted to 70° Fahrenheit in the coldest winter weather. We think the court erred in •excluding the testimony which the defendant offered, tending to show that the furnace did not perform the work which the plaintiff agreed by his contract that it should do. The judgment appealed from should therefore be set aside, and a new trial ordered, with costs to abide the event of the action.

White, J.

(concurring).—By the contract between the parties the heating apparatus was to be completed as soon as it reasonably could be, and was in fact completed prior to December 22, 1892. All the work and material used was satisfactory to the defendant, and the whole price of the apparatus became due and payable on January 22, 1893. The contract for the work guaranties that the apparatus will warm all rooms to which radiation is set to 70 degrees Fahrenheit, in the coldest winter weather. The defendant pleaded, and on the trial offered to prove, a breach of this guaranty. The evidence was excluded, on the ground that the work and material used in constructing the heating apparatus -complied in all respects with the contract, and that, therefore, the plaintiff had performed this guaranty. To be more literally exact, the trial court held that the parties by the contract made the architect an arbiter of the question as to whether the warranty had been fulfilled by the plaintiff, and tho^ the certificate of the architect that all the work had been completed to his satisfaction/and in accordance with the contract, conclusively establishes the fact of such fulfillment. I am of. the opinion that there is no connection between the certificate of the architect and the guaranty by the plaintiff. The two things are independent ’of each other. There is nothing in the contract by which the architect is called upon to judge or pass upon the heating capacity of the apparatus. His province is solely that of judge and arbiter between the parties as to the correspondence of the apparatus in material, workmanship, and structure with the contract. The guaranty in question by the plaintiff has no relation to any of those things, but solely to the heating capacity of the apparatus. Assuming, then, that a breach of this guaranty is sufficiently pleaded,—and that does not appear to be disputed,-—it follows that the exclusion of evidence on the part of the defendant in support of his claim for a breach of this guaranty by the plaintiff was error. That the work and material used in and that the apparatus corresponded physically in- all particulars with the contract is not open to dispute ; but whether the apparatus, when completed, failed to fulfill the guaranty, is; and, if it fail in that regard, a cause of action for its breach immediately accrues in favor of the defendant. As; the case does not contain all the evidence, the findings of fact by the trial court are conclusive; but the exclusion of defendant’s evidence in support of his counterclaim for breach of warranty is a question of law, and subject to review here. The judgment appealed from should be reversed, and a new trial ordered, with costs to abide the event. -


author: White, J.

text:
    The American Preservers Company, Resp’t, v. The Columbia Investment Company, App’lt.

      (Buffalo Superior Court, General Term,

      Filed January 10, 1895.)

    Principal and agent—Conversión.
    Where an. agent uses his principal’s check to make an individual purchase of stock from defendant, immediately pledges such stock for a discount of his individual note and deposits the proceeds to his principal's credit, with the intent to make good the account for the check which he had given to defendant, the principal is entitled to recover from defendant only the difference between the amount of the deposit and the amount of the check.
    Appeal from a judgment entered on a verdict directed by the court in favor of plaintiff, and from an order denying a motion for a new trial.

      N. W. Norton, for app’lt; Simon Fleischmann, for resp’t.
   White, J.

The plaintiff is a foreign corporation engaged in the business of manufacturing and selling fruit preserves and jellies in different states. Its business in this state was conducted by Charles F. Tomes, who had his office in this city. Tomes was a general agent of the plaintiff in conducting its business. The plaintiff kept an account with the Manufacturers’& Traders’ Bank, and Tomes was authorized to draw checks in plaintiff’s name for use in its business only. On Hovember 7, 1892, Tomes was indebted to the plaintiff in the sum of $2,800 on account of moneys belonging to the plaintiff, theretofore embezzled by him. On that day Tomes purchased from the defendant, in his own name, as an individual, and not as the agent of the plaintiff, $1,000 of its capital stock, and paid that amount for the stock, with the plaintiff’s check. On the same day, but before paying for or receiving the stock, Tomes had arranged with the bank for the discount by it of his note for $1,000, and to accept the stock as security for the note; and this arrangement was carried out between Tomes and the bank immediately upon the receipt of the stock by him, on November 7, 1892. Tomes’ note was discounted by the bank on the faith of the stock pledged to it by him as security for his note. The discount on the note was $18.10. For the proceeds of the discount, the bank gave to Tomes, as an individual, and not as agent, its teller’s check for $981.90, which he deposited to the plaintiff’s credit for the purpose and with the intention on his part of making the account good for the check which he had given to-the defendant. On the 9th day of November, 1892, in due course of business, the check which Tomes had given to the defendant Was presented at the bank and paid. The defendant knew nothing of the transaction between Tomes and the bank, nor did the plaintiff know until several months thereafter that Tomes was indebted to it, or that he had misappropriated any of its property. The plaintiff now seeks to recover from the defendant the $1,000 which it drew from the plaintiff’s bank account in payment for the stock which it sold and delivered to Tomes.

It clearly appears that, when he purchased the stock, Tomes intended to pledge it as collateral security for his note, which the bank had agreed to discount for him before he made the purchase, and to use the proceeds of the discount to pay for the stock. It is equally clear that, by depositing the proceeds of the discount to the credit of the plaintiff, he did not intend that such proceeds should become the property of the plaintiff, but that, on the' contrary, he did intend to apply those proceeds in payment of his stock, by having them paid to the defendant His plan for the accomplishment of his purpose was executed, and the defendant received its pay for the stock, to the extent of $981.90, from those proceeds. In form, those proceeds became the property of the plaintiff instantly upon their deposit to its credit by Tomes, but the right to those proceeds, as between the plaintiff and defendant, is to be determined upon equitable principles ; and if, in equity and good conscience, the defendant should be allowed to retain the $981.90 of the money it received, then, to that extent, the plaintiff must fail. No question is made but that, to the extent of $18.10, it should succeed. The check was taken by the defendant in payment for the stock. It was payable forthwith, on presentation. Possibly Tomes could have used the proceeds of his note discounted by the bank in payment of his indebtedness to the plaintiff, or for any other purpose, and thereby have defrauded the defendant out of the price of the stock. The fact is, however, he did not do nor attempt to do any fraudulent act in connection with this "transaction, but honestly carried out the plan adopted by him for purchasing and paying for the stock; and, as it seems to me, it would be a great injustice for the courts to undo what Tomes did honestly, and in the best of faith. In view of the fact that the $981.90 was advanced by the bank on the faith of the stock, equity and good conscience would seem to require payment for the stock by the plaintiff before it could appropriate the money to itself. All his acts in purchasing and paying for this stock should be treated as one single transaction, and the act of depositing the $981.90 to the plaintiff’s credit should not be singled out and separated from the others, as a basis for an equitable claim in favor of the plaintiff against the- defendant, after the moneys raised on the faith of the property it sold have been actually paid to it.

The facts in the case at bar differ materially from those in Gerard v. McCormick, 27 St. Rep. 709. Conceding the fact to be that in the Gerard Case the court, in denying the defendant’s motion for a new trial, assumed that Boswell, the agent, had deposited his own funds to the credit of his agency account, from which he paid his individual debt, the defendant, McCormick, had not parted with any property, upon the faith of which Boswell had raised the money which he deposited to his agency account. In the case at bar the money .which Tomes deposited to the plaintiff’s ■credit was raised upon the faith of the stock parted with by the ■defendant. ¡Nor does it appear in that case that the moneys raised, by Boswell upon his individual property, and deposited to his agency account, was so raised or deposited for the sole purpose of paying his individual debt. . Bor aught that appears in the report ■of the case, the object of Boswell, in raising and depositing the money as he did, was to pay and make good, pro tanto, his shortage in his agency account. I am of the opinion that if, instead of depositing the money raised on the stock and his note in the bank, Tomes had placed it in the hands of the plaintiff, with a full statement of all the facts, including the fact of his embezzlement •and indebtedness to the plaintiff, with instructions to the plaintiff to pay the same to the defendant, thereupon the equitable title to the money would have vested in the defendant, and that its right to the money would, even in such a case, be superior to that of the plaintiff. Much more is the right of the defendant superior as the case stands, because, as a matter of fact, until the payment was made to the defendant, Tomes retained actual physical dominion and control over those moneys, or the credit obtained on their deposit. There can be no doubt that if Tomes had intended the $981.90 as a payment, pro tanto, of his indebtedness to the plaintiff, it would have been impressed with a trust in its favor instantly upon the deposit being made or, in the absence of any intent or purpose on the part of Tomes when he made the deposit, the same result would have followed; but what is here said is based upon the assumption that Tomes’ intent and purpose were to use the- money in paying for the stock, and that such is the fact seems beyond question, upon the evidence. Tomes had an absolute right to apply or have the $981.90 applied in payment for the stock, and the manner or mode of exercising that right should not be permitted to destroy it, as to the defendant, whose prop•erty was the effectual means of raising the money which it received. The defendant, in accepting the plaintiff’s check for the stock, took only the risk of the funds drawn upon it being in fact the property of the plaintiff. In fact, those funds were raised for the benefit of the defendant, upon the faith of property sold by it, and paid for with a check against those funds, and upon which they were drawn. The intent and purpose of Tomes in the transaction determine its effect. That purpose and intent, as we have seen, were to purchase and pay for the stock with money raised by him individually on the faith of the stock itself, and he accomplished his purpose. In the absence of the special facts, and the purpose and intent of Tomes, to which attention has been called, the law would determine the effect of his acts, and impute to him an intent to pay his indebtedness to the plaintiff, pro tanto; but, in equity and good conscience, he was not at liberty so to use or dispose of the stock purchased from the defendant, or defraud it of the purchase price. On the contrary, fair dealing demanded that the stock be so used and disposed of as to insure the payment for it to the defendant. That has been done, and should not be undone. .The judgment and order appealed from should be reversed, and a new trial ordered, with costs to abide the event.


author: Dwight, P. J.

text:
    Patrick V. Byrnes, Resp’t, v. Henry N. Lewis, Impleaded, etc., App’lt.

      (Supreme Court, General Term, Fifth Department,

      Filed December 27, 1894.)

    1. Bill of particulars—When not granted.
    A bill of particulars will not be ordered as to non-issuable, immaterial or collateral facts, which are averred argumentatively, or by way of evidence, in support of the preceding denial of particular allegations of the complaint.
    2. Same.
    Where an averment of the answer, though not constituting a counterclaim, constitutes a complete defense, the defendant should give the items which he intends to prove as constituting such defense.
    Appeal from an order requiring a bill of particulars.

      Church & Church, for app’lt; A. L. Purdy, for resp’t.
   Dwight, P. J.

The action was in the nature of a creditors’ bill brought to set aside a general assignment made by the defendant Henry N. Lewis August 15,1893, and other various transfers, conveyances, and gifts of property made by him before the assignment, all of which arc alleged to be in fraud of creditors. The plaintiff is a judgment creditor in the amount of $94.29 on a judgment recovered October 16, 1893, on which execution has been returned unsatisfied. The pleadings in the action are extremely voluminous, and very brief abstracts of portions of each must serve to illustrate the questions presented by this appeal. Thus the complaint alleges that the defendant Henry IST. Lewis was, before January 1, 1883, engaged in the banking business at Wellsville in company with one Hoyt, receiving deposits to a large amount, and using the money last deposited to pay former deposits; that the firm of Hoyt & Lewis was dissolved January 1, 1888, the defendant Lewis assuming all its obligations, and taking all the moneys on hand which had been deposited by its customers ; that at that time, in connection with others, he organized the First National Bank of Wellsville, of which he became a stockholder, director, and president, and so continued until January, 1886, and to which he became largely indebted “in the name of Hoyt & Lewis, aforesaid, and individually, being a continuation of the said indebtedness of Hoyt & Lewis, bankers, so assumed by said defendant Lewisthat in April, 1886, he opened a private bank at the same place, receiving deposits and doing a general banking business, and that from the deposits so received he paid the debts of Hoyt & Lewis and his own debt to the national bank,, and paid his earlier depositors from later deposits, and continued the business until the 15th day of August, 1893, when he made: the general assignment complained of. The' indebtedness to the plaintiff which was the basis of his judgment of $94.29 was for deposits with the defendant in his business as. a private banker, last described. To these allegations the defendant, ant, answering, admits his partnership with Hoyt in the banking business, the dissolution of that copartnership, the assumption of its liabilities by himself, and that, "after settling with Hoyt, he: took the remaining assets of the firm. He admits, the - organization of the First National Bank, and his connection with it, and that he became indebted to it, but denies that such indebtedness-was a continuation of that of Hoyt & Lewis. He admits that he-went into the private banking business in April, 1886, but denies that from the deposits received by him in that businesss he paid the debts of Hoyt & Lewis and his debts to the First National Bank, created in continuing the indebtedness of Hoyt & Lewis, as alleged. And in this behalf the defendant avers that, at the time of the dissolution of the firm of Hoyt & Lewis, his assets, including those coming to him from the firm, exceeded his liabilities by many thousands of dollars; that he paid the liabilities of the firm from the sums realized from the assets; and that, when those liabilities were fully paid, there remained to the defendant a surplus of several thousands of dollars, derived, therefrom. These averments of the answer are- made the subject of one of the provisions of the order appealed from, which requires the defendant to furnish a bill of particulars of the assets and liabilities of the firm of Hoyt & Lewis at the time of its dissolution, containing “the amount and value of the assets, and of what and in what they consisted, and the amount and character of the liabilities, together with the names of the person or persons to whom the defendant was indebted at the time of the dissolution of the firm of Hoyt & Lewis, and the amount of the liabilities of said firm which were assumed by said defendant,, specifically showing the items thereof, and the names of the persons in whose favor said indebtedness existed.” We are clearly of the opinion that this provision of the order exceeded the discretion of the court, and was not within the most liberal construction of the rule for bills of particulars. The facts averred by that portion of the answer referred to in this provision constituted no defense to any portion of the plaintiff’s cause of action. They were no issuable facts, nor, in themselves, material to. any issue tendered by the complaint. They were collateral facts merely, and were averred argumentatively, or by way of evidence, in support of the preceding denial of particular allegations of the complaint. The particulars called for by this provision of the order are such as the defendant would not be permitted ta prove in his own behalf, and concerning which he would be required to testify only on his cross-examination, in the ■discretion of the court. The case of Dwight v. Insurance Co., 84 N. Y. 493, which is much relied upon by the plaintiff, and in which the rule for bills of particulars is stated as broadly as in any of the cases cited, differs radically from the present. There the general statements of the answer of which particulars were required to be given constituted a substantive defense to the action, viz. that of a breach of the warranty contained in an application for life insurance; and most of the other cases cited are similarly distinguished. The first provision of the order appealed from cannot be sustained.

The second provision of the order has relation to an alleged indebtedness of the defendant Henry IST. Lewis to the defendant Juliet A. Lewis, his wife. The allegations of the complaint in this regard are to the effect that, although on the books of the bank the account of the defendant Juliet was overdrawn to the amount of more than $600, yet that an indebtedness of more than $3,500 is stated in the schedule of liabilities attached to the assignment of the defendant Henry 1ST. as due from him to the defendant Juliet, and that such indebtedness is fictitious, and intended to defraud his just creditors. To this allegation the defendant Henry N. answers that, notwithstanding the apparent overdraft of his wife’s account, he was still justly indebted to her in the sum of $3,816.93, which appears in his schedule of liabilities." The second provision of the order requires that the bill of particulars shall state the items of this indebtedness. We have no doubt of the propriety of this provision. The averment of the answer in this respect, though not constituting a counterclaim, constitutes a complete defense to the charge of falsifying the schedule of indebtedness which, of itself, would be fatal to the assignment. It is proper that the defendant should give the items which he intends to prove as constituting the alleged indebtedness.

The third provision of the order refers to the same alleged fictitious indebtedness of the defendant Henry 1ST. to his wife, and its requirements will be satisfied when the second provision is fully complied with.

The defendant named in the complaint next after the wife of the assignor is his daughter, M. Fannie Lewis, concerning whom it is alleged that her father, with intent to defraud his creditors, permitted her to draw in his name from his said bank, at different times, divers sums of money, amounting, in the aggregate, as the plaintiff is informed and believes, to many thousands of dollars, thus withdrawing the same from the reach of his creditors, etc.; also that during a period of about 18 months before the date of the assignment the same daughter, M. Fannie, drew money from the bank, on her own cheeks, against an account made up of credits of $50 each month allowed her by her father without consideration, and with the like fraudulent intent. Answering these allegations, the defendant Henry N. admits that his daughter Fannie was permitted to and did draw from the bank certain sums of money in his name, but denies that they amounted to a large sum, and denies the fraudulent intent; and in that regard he avers that the sums so drawn were intended to be and were used in the purchase of supplies for his family, and aggregate but a small sum. He also admits the credit to the same daughter of $50 a month during the time mentioned in the complaint, and that the same, except a small balance, was drawn out during the same time by his said daughter on her own checks, and he denies the fraudulent intent charged in respect to this transaction. And he further avers that the allowance of $50 a month was upon her undertaking to take upon herself the care of the household, purchasing all supplies for the table out of the allowance mentioned : and that, if she should be able to make any saving out of said monthly allowance, it should be hers as compensation for her services as housekeeper, etc., and that the moneys so drawn by his said daughter were actually used for the purposes mentioned. The fourth and fifth provisions of the order appealed from require that the bill of particulars shall show specifically the items, amounts, and dates of the moneys drawn by the daughter in the name of her father, and the items, amounts, and dates of the sums used by her in paying for purchases for the use and support of his family ; also showing the amounts and dates of moneys drawn by the daughter against her allowance of $50 per month, and the dates, items, and amounts of moneys paid out by her for the table and living expenses of the family during the 18 months above mentioned. In respect to those provisions of the order it is sufficient to say: First. That the charge that moneys to a large amount were:- fraudulently drawn, and permitted to be drawn, by the daughter in her father’s name, is an allegation of the plaintiff which it is for him to prove; and that the mere averment of the defendant that moneys were so drawn, to a small amount, for a legitimate purpose, cannot have the effect to shift the burden of proof either as to the amount or the purpose of such drafts. Since, then, the defendant cannot be called upon to prove either the amount or the use of the moneys so drawn, still less can he be required to furnish his proofs on that subject to the plaintiff in advance of the trial of the action, Second. The answer admits all the particulars alleged concerning the drafts by the daughter’s own checks against her allowance of $50 a month, except the allegation of their fraudulent purpose and intent. There remains, therefore, nothing to be proved by the defendant in that connection, and, of course, nothing can be required by way of specification of what he expects to prove on that subject.

There is a fourth defendant, of the name and family of the alleged fraudulent assignor, viz., a second daughter, Miss Nellie Lewis. It is alleged concerning her that under date of the 20th of July, 1893, the defendant, her father, issued in her name two fictitious and fraudulent certificates of deposit of the amounts, respectively, of $3,000 and $50, and executed what purported to -be an assignment and transfer to her of 30 shares of the stock of a certain railroad company, to secure the payment of such certificates; that neither the certificates nor the assignment of stock were ever delivered to her, but were retained by the father, and that the whole was a scheme to create a fictitious indebtedness in favor of his daughter, and to withdraw the railroad shares from his assets. By his answer the defendant admits the issuance of the two certificates of deposit and the execution of the transfer or assignment of the shares of stock, but denies all fraudulent intent in relation thereto, and affirmatively avers that the certificates represent in amount moneys actually in his hands as agent of his daughter, which had been before invested by him for her, and had been paid in and received by him as such agent for reinvestment; that, finding no desirable investment at the time, he issued the certificates running to her, and made the assignment of stock as security for their payment, and informed her by letter —she living in the state of Connecticut—what he had done with her funds, and that she answered by letter ratifying the transaction and accepting the transfer and assignment. In respect to these averments of the answer the sixth provision of the order requires the defendant Henry N. to show by his bill of particulars the dates and amounts of moneys of the defendant Nellie received from her by him as her agent for investment, the securities in which the same had been invested, and the amounts paid to and collected by him from such investments from time to time. We think this requirement was manifestly proper on the same principle and for the same reason that the requirement of the second provision of the order was upheld. The allegation of the complaint is a distinct charge of a fictitious indebtedness, fraudulently devised, and included in the schedule of liabilities filed with the assignment. The affirmative averments of the answer in that regard constitute an affirmative defense to that charge, and the plaintiff is entitled to specifications of the averments so made.

The seventh and eighth provisions of the order relate to averments of the answer which embrace no issuable facts, but such as are merely collateral, and which are not properly the subject of an order of this character.

The result of this examination is to sustain the order only as to its second and sixth provisions, and to reverse it as to all its other provisions.. The order should be modified accordingly, and, as so modified, affirmed, without costs of this appeal to either party.

All concur. So ordered.


author: Lewis, J.

text:
    Mary Lortz, as Administratrix, etc., Resp’t, v. The New York Central and Hudson River Railroad Company, App’lt.

      (Supreme Court, General Term, Fifth Department,

      Filed December 27, 1894.)

    Negligence—Crossing.
    Where the view is obstructed by smoke from a locomotive which has just passed, it is the duty of a person to await the disappearance of the smoke before attempting to cross the tracks.

      Appeal from a judgment entered on a verdict in favor of plaintiff, and from an order denying a motion for a new trial, made on the minutes of the court.

      Albert H. Harris, for app’lt; William, C. Watson, for resp’t.
   Lewis, J.

This action was brought by the plaintiff, as administratrix, to recover damages sustained by the next of kin by the death of her husband, Frederick Lortz. Lortz was killed while attempting to cross the defendant’s track, in the village of Batavia, by coming in collision with one of the defendant’s locomotives. We assume, in disposing of this appeal, that the jury was justified in finding that the defendant’s negligence caused the death of the deceased. Whether the deceased was shown to be free from negligence contributing to his death is the serious question in the case. The defendant’s road runs in an easterly and westerly direction through the village of Batavia. It crosses Cedar street at grade. Cedar street forms the easterly boundary of the village. The defendant’s tracks cross it at right angles. There are five tracks at the crossing,—four main tracks, and a branch, which is the northerly track. The tracks are numbered from the south, 1, 2, 3, and 4. No. 1 is for the east-bound passenger trains; No. 2 for the west-bound passenger- trains; No. 3 and 4 are for freight trains. The tracks for a quarter of a mile east and for more than 100 rods west of this crossing are straight, and there is nothing to obstruct or interfere with the view of a foot traveler approaching the crossing from the south after he reaches a point 10 feet from the south track, for the distances mentioned in either direction. The decedent’s residence was upon Cedar street, a few rods north of the defendant’s road, and his place of business was upon the same street south of the tracks. He was on his way home from his place of business, at about 6.30 o’clock in the evening of April 16, 1889. When he reached a point about nine or ten feet from track No. 1, a passenger train ran across Cedar street to the west on track No. 2. The deceased stopped some eight or ten feet south of track No. 1, until this west-bound train had crossed the street; and there was evidence tending to show that he then turned his head to the east and to the west, as if to see if there was anything approaching the crossing, and he then started northerly, and, just as he stepped upon track No. 1, he was struck by a locomotive going easterly on said track at a speed of about 40 miles an hour. The locomotive was drawing a train of cars, and its head-light was burning. The deceased was instantly killed. It was a damp, cloudy night. Witnesses describe the clouds as being black. The west-bound locomotive mentioned, as it crossed Cedar street, threw out a dense volume of smoke, which settled down upon the railroad tracks just west of Cedar street. The smoke came close to the ground, and was about as high as a man’s head. There was nothing in the evidence tending to show that there was anything but the smoke that prevented the deceased from seeing the train coming from the west from the point where he was standing. He was very familiar with the crossing and the surroundings, as he had lived just north of the crossing for many years, and was accustomed daily to pass over the defendant’s tracks upon Cedar street. Whether he in fact did look to the east or west before attempting to cross the tracks was a controverted question upon the trial. The defendant’s daughter, who was standing, at the time of the accident, in Cedar street, north of the railroad tracks, some 10 or 15 rods from her father, testified that she saw him, standing just south of the track after the west-bound train had passed, and that he turned his head in both directions before he stepped upon the track Several witnesses called by the defendant testified that they observed him, and that he did not look either east or west before attempting to cross the track. There was some evidence which it is claimed by the plaintiff tended to show that the deceased’s eyesight was somewhat defective. This evidence was given by the plaintiff. She testified that her husband’s eyesight was defective; that he could not see anybody very far off; that he could not see very good far off. When asked to give her reason for the opinion that he could not see at a distance, she replied that he told her he could not. When asked to state any circumstance which led her to think that he could not see at a distance, she replied that they were once standing in the street, and that she pointed out to him some houses that she could see, and that he could not see as far or as plainly as she could; and she testified that that was the only circumstance that she could remember' from which she inferred that he could not see as far as she could. She testified that he caught cold in his eyes, and that water ran out of them. When asked to state how far distant the houses were that the deceased attempted to see, she replied that she did not know. She testified that the deceased was obliged to use eyeglasses to read. He was 62 years old at the time of his death. Whether his eyesight was proven to be more defective than is usual with persons of that age is doubtful. It is a matter of common knowledge that there is a difference in the ability of persons to see at a distance. It cannot be fairly claimed from the evidence that there was such a defect in the deceased’s eyesight as prevented him from seeing the smoke which was upon the track. There is nothing in the evidence which would justify the inference that the defect in the deceased’s eyesight had anything to do with the accident. If there was a cloud of smoke upon the track, as described by the plaintiff’s witnesses,—and we assume there was,—the deceased was able to see it had he looked in that direction. The train was some 10 to 15 minutes late.

We think that no other conclusion is deducible from the evidence than that the deceased was standing, as described, near the south track, and waited for the west-bound train to pass Cedar street, and then either attempted to cross the track without looking in either direction, or, if he looked to the west, he saw the smoke upon the track, and, without waiting for it to pass away, attempted to cross, without being able to see, because of the smoke, whether the train was approaching. We do not think the jury was justified, under the evidence, in coming to any other conclusion, and such being the case under the well-settled law of our state, he must be held to have been guilty of such contributory negligence as to prevent the plaintiff from recovering.

The facts in Heaney v. Long Island Railroad Co., 112 N. Y. 125; 20 St. Rep. 296, are very similar to the facts of this case. The deceased in that case attempted to cross the defendant’s railroad tracks in the city of Brooklyn about 6 o’clock in the morning. The weather was cloudy and drizzly. The train had just passed on the track nearest to the deceased as he attempted to-cross, and the smoke from the engine settled down upon the road sufficient to temporarily obscure objects in the line of his vision. He was about 66 years of age, and his hearing was somewhat impaired. He was killed by a passing train, the approach of which was obscured by smoke upon the track. It was held that it was-the unquestioned duty of the deceased to await the disappearance-of the smoke before he attempted to cross the track, and that his-neglect to do so was negligence, which prevented a recovery. It is stated in the opinion :

“If it was a body [referring to the smoke] perceivable, as contrasted with other objects, it was to a greater or lesser extent an obstruction or embarrassment to the vision; and to say that the deceased may not have known that the smoke was an obstruction involves the proposition that he may not have been conscious of the condition of the atmosphere distinguishable from its other or usual conditions, which is so unreasonable that habit disables us from understanding it.’’

The doctrine of this case we do not understand to have been at all disturbed by the later cases of McNamara v. N. Y. C. & H. R. Railroad Co., 46 St. Rep. 439, and Shiels v. Wortmann, 126 N. Y. 650; 37 St. Rep. 134. The decision in the latter case was placed upon the ground that the jury may have found from the evidence that it was a curve in the line of the road that prevented the deceased from seeing the approaching locomotive, and not the-presence of smoke. The accident to Lortz occurred from 15 to-30 minutes before sunset. If the smoke upon the track was as dense as the plaintiff’s evidence tended to show it to have been, it. is very improbable that the deceased would have failed to see it had he looked in that direction. The plaintiff failed to show that, the deceased was free from negligence contributing to his death, and hence failed to make a case entitling her to recover. The judgment and order appealed from should be reversed, and a new trial granted, with costs to abide the event. All concur.


text:
    Frank C. Chesley, App’lt, v. William B. Hughes, as Sheriff, etc., Resp’t.

      (Supreme Court, General Term, Fifth Department,

      Filed December 27, 1894.)

    Appeal—Discretion.
    An order denying a new trial on the ground that the verdict is contrary to the evidence will not he reversed, unless there has been an abuse of discretion.
    Appeal from an order setting aside a verdict in favor of plaintiff, and granting a new trial on the minutes of the court.

      James H. Waring, for app’lt; Charles S. Cary, for resp’t
   Lewis, J.

This action was brought to recover the value of a. stock of furniture alleged to have been converted by the defendant as sheriff of Cattaraugus county. The firm of George E. Howland & Co. composed of George E. Howland and Daniel W. Pierce, in the latter part of December, 1891, purchased a stock of furniture of different dealers, amounting in value to about the sum of $4,-000. They opened a store in Olean the 1st of January, 1892, and continued in busines until the forepart of March of that year, and then transferred their entire stock to the plaintiff for a consideration of $2,400. Twelve hundred dollars of the purchase price was applied upon an alleged "indebtedness of the firm to the plaintiff for money which it was claimed the'plaintiff had loaned them from time to time, and for goods sold to them after they opened their store, and and before the transfer, amounting in all to the sum of $1,200, and for the balance of the purchase price of the stock the plaintiff gave his two promissory notes, for $600 each, one coming due 18 months from its date and the other 2 years. The creditors of the firm caused attachments to be issued and delivered to the sheriff, and he, by virtue thereof, took possession of the stock of goods. The plaintiff recovered a verdict against the sheriff for the sum of $2,200, which was set aside by the court, upon the ground that the verdict was against the weight of evidence. The evidence tended to show that neither Howland nor Pierce had any means with which to engage in business; neither had they any credit, except that that was manufactured by the statements of the plaintiff to the salemen of the various dealers who sold them goods. The evidence tended very strongly to show that the members of the firm and the plaintiff entered into a fraudulent scheme to obtain possession of the stock of goods with the intention of disposing of them, and defrauding the firm's creditors. There was evidence tending to show that the salesmen of the creditors were induced to sell goods to the firm upon the representation of the plaintiff that they were responsible, and that it would be sáfe to sell them goods. The evidence tended to show that the plaintiff was aware that Mr. Howland, who was his father-in-law, was, at the time representations were made, entirely irresponsible pecuniarily. The plaintiff testified that, when Howland informed him that he was going into the furniture business at Olean he laughed at him, and said, “How is that ? How are you going into business?” and that Howland replied, “I have got that all fixed; that Mr. Pierce's people were to furnish means to put into the business.’’ ■ The plaintiff testified that he had no knowledge as to the responsibility of Mr. Pierce, and yet he represented the- firm to be responsible and worthy of credit, and thereby induced the dealers to sell the firm goods to the value of $4,000, which they about three months thereafter transferred to him at the price of $2,400. Without rehearsing all of the evidence, we are satisfied, from an examination of it, that the trial court was justified in granting the order appealed from. While such an order is. appealable, under Code Civ. Proc. § 1342, an appellate court would Tnot be justified in reversing the action of the trial court unless it was made to appear that the discretion vested in the Court had been abused. McKeever v. Weyer, 11 Wkly. Dig. 258; Young v. Stone, 60 St. Rep. 419.

The granting of motions to set aside verdicts as contrary to evidence, as well as motions for new trials upon the ground of newly-discovered evidence, are, as a rule, addressed to the discretion of ■the court, and depend in a great degree upon the peculiar circumstances of the case. The justice presiding at the trial has advantages and opportunities to judge of the propriety of the verdict not possessed by the appellate court. He is permitted to listen to the witnesses while giving their evidence, and observe their manner and conduct upon thé trial; and when he exercises a discretion in a case the appellate court will not reverse, unless it pretty clearly appears that he has abused his discretion. Barrett v. Third Ave. Railway Co., 45 N. Y. 628, 632. An examination of this case has satisfied us that it was a very proper case for granting the order. The order appealed from should be affirmed, with $10 costs and disbursements, to abide the event of the action.

All concur.


text:
    Brackett H. Clark, Resp’t, v. Veronica Lynch, App’lt.

      (Supreme Court, General Term, Fifth Department,

      Filed December 27, 1894.)

    Insurance—Benefit—Exemption,
    The fund, received by the widow of a deceased" member of a beneficiary society is exempted from debts contracted after, as well as those contracted before, the fund is received.
    Appeal from an order in supplementary proceedings.

      George H. Thomas, for app’lt; Myron' T. Bly, for resp’t.
   Lewis, J.

The defendant’s husband was a member of the Ancient Order of United Workmen,—a fraternal society organized by chapter 74 of the Laws of 1877. Her husband’s life was insured by said society for the sum of $2,000. ■ The defendant was named in the policy as sole beneficiary. Her husband died,- and she received the fund in April, 1892. Thereafter the defendant contracted a debt to the plaintiff for the rent of a dwelling house, and he recovered a judgment therefor against defendant. On the return of an execution unsatisfied, proceedings supplemental to execution were instituted upon the judgment, and upon examination of the defendant it was disclosed that she then had in her possession a part of the fund she received from the society; and the county judge of Monroe county ordered her to pay the judgment and costs of the proceedings out of said money, and from said order this appeal was taken.

It is the contention of the appellant that the money was by law exempt from execution. The act by which said societjr was incorporated provided that the beneficiary fund should be exempt from execution, and should not be liable to be seized, taken, or appropriated, by any legal or equitable process, to pay any debt of the deceased member. It was held by this court in the case of Bolt v. Keyhole, 30 Hun, 619, that money received from this same society by a widow of dne of its members, who was named as beneficiary, was not exempt from the claims of her creditors. The decision was made in October, 1883, and the following winter chapter 116 of the Laws of 1884 was passed, which extended the exemption to the beneficiary fund paid the widow, as to her debts. A general act providing for the organization of fraternal beneficiary societies was passed in 1889. Laws 1889, c. 520. It contained a provision permitting any such society theretofore incorporated to reincorporate under said act. It contained a like provision as to exemption as the act of 1884. The United Workmen’s Order never reincorporated under the act of 1889. Article 7 of the general insurance law of 1892 (chapter 690) also provided for the incorporation of such societies, and for the reincorporation of societies theretofore incorporated. Section 292 provided that the provisions of the act, so far as they were substantially the same as those of the laws existing on September 30, 1892 (the day before the act of 1892 took effect), should be construed as a continuation of such laws, modified or amended according to the language of the act of 1892, and not as new enactments, and should be applicable to all corporations formed under laws repealed by said act The acts of 1884 and 1889, above referred to, were repealed by the act of 1892, but,, as we have seen, the provisions of said acts, as to exemption, were retained in force. The 1892 act contained a like exemption as the former acts referred to. The defendant coming into possession of the fund when the acts of 1884 and 1889 were in force, she was entitled to the benefit of their provisions, which, as we have seen, exempted the fund from the claims of her creditors, as well as those of her deceased husband. The exemption provided for was general in its terms. It exempted the fund from execution for the debts of the widow, no matter when or how contracted.

It is suggested that, if it is exempt as to the debts contracted prior to the time the fund is received, the exemption should not be extended to debts thereafter contracted. If such a distinction is to be made, the reason for it is not found in the language of the statute. Its language is clear and explicit,—“any debt or liability.” The purpose of the statute was to afford protection to the widow and children of the member at a time when they were likely to especially need assistance. It-being a beneficiary statute, it should be liberally construed to effectuate the intention of the legislature.

It is suggested that such a construction will be likely to work injustice to creditors, who may extend credit relying upon the fact that the widow has the fund. Hot so. If the fund is exempt, the creditor would not be likely to be deceived, and give credit upon the strength of it, knowing that he is helpless to reach it.

Our attention has not been called to any case where this precise question has been adjudicated. Analogous eases have arisen under the law exempting pension moneys (§ 1393 of the Code of Civil Procedure). The following cases sustain our conclusions : Youmans v. Boomhower, 3 Thomp, & C. 21; Holmes v. Tallada, 125 Pa. St. 133; Stockwell v. National Bank, 36 Hun, 583; People v. Williams, 6 Misc. Rep. 185; 56 St. Rep. 897 People ex rel. Breed v. Wells, 10 Misc. Rep. 195; 63 St. Rep. 758.

We are of opinion that the fund was exempt, and this leads to a reversal of the order. The order appealed from should be reversed, and the motion denied, with $10 costs and disbursements.

All concur.


author: Van Brunt, P. J.

text:
    Adolph Friedman, Resp’t, v. Jacob Rose et al., App’lts.

      (Supreme Court, General Term, First Department,

      Filed January 18, 1895.)

    1. Fraudulent conveyance—Bill op sale.
    A chattel mortgage is not rendered void by the fact that a bill of sale, given as additional security to such mortgage, is void because of non-filing, and no change of possession.
    2, Appeal—Flrst instance.
    The objection that a chattel mortgage is void because it covers the stock in trade in actual use in a store, from which the mortgagor is allowed to sell and put the money in his pocket, cannot be raised for the first time on appeal.
    Appeal from a judgment in favor of plaintiff.

      John Fennel, for app’lts; D. P. Hays, for resp’t.
   Van Brunt, P. J.

This action was brought to recover certain chattels specified in the complaint, by the plaintiff, as owner thereof, against the sheriff of New York ; and the present defendants, the sheriff’s indemnitors, were, by an order of the court, substituted as defendants in the place of the sheriff. The answer denied all the allegations of the complaint, and set up, as an affirmative defense, that the property was attached by the sheriff under a warrant of attachment against the property of one John Haut, who was the owner thereof, or had an interest therein liable to attachment, and that the title of the plaintiff was fraudulent, and the transfer to him made for the purpose of cheating and defrauding the creditors of John Haut. Upon the trial it appeared that the plaintiff was an auctioneer, and the cousin of said John Haut, who was engaged in the cigar business in this city up to and after April 16, 1891, and that on the 16th of April, 1891, and for some time prior thereto, Haut was indebted to Jacob Rose in the sum of $439.18 for merchandise s.old. On the 22d of April, 1891, Rose brought suit against Haut to recover that sum, and procured a warrant of attachment against the latter’s property, which was levied on April 23d. Judment was subsequently entered in the attachment suit by default. On the 6th of June, 1891, an execution thereon was issued to the sheriff, who returned it wholly unsatisfied, and the creditor’s claim now remains unpaid. On the 16th of April, 1891, Haut, being indebted to the plaintiff, gave a chattel mortgage upon all his stock, fixtures, and other goods and chattels then in the store where 'he had been conducting business, to secure the payment of said indebtedness on demand. Upon the same day he.gave to the plaintiff a bill of sale, absolute in its terms, covering the stock and fixtures in said cigar store,—both instruments covering the same property. The chattel mortgage was filed in the register’s office on the day it was given, but the biTl of sale was not filed. ¡

It is claimed on the part of the defendants that the bill of sale was made to cheat Haul’s creditors, and that the same was confessed by the plaintiff. This claim is based upon the evidence of the plaintiff that he took the bill of sale for further security, so that, if a creditor or somebody should attack the chattel mortgage, -he would have the bill of sale to show that he was the owner of the goods. And the plaintiff’s attorney, who drew the paper, also testified that he thought it would obviate any question if he (the plaintiff) got a bill of sale of all the stock there was in the place, and, further, that he supposed the idea was that, if there was any question about the stock being covered, he wanted to be sure of the stock, because he considered the stock had value, and he wanted to make sure he would get the stock. On the 23d of April the mortgage was foreclosed, the marshal assuming to act only under the chattel mortgage. There was no evidence tending "to showthat there was any change of possession after the making ■of the bill of sale and chattel mortgage. It is now claimed that the bill of sale was void because there was no immediate change of possession, and that the chattel mortgage was also void, inasmuch as it covered the stock in trade in actual use in the store. If, as is claimed upon the part of the defendants, the bill of sale was tainted with actual fraud, then, the bill of sale and mortgage having been executed together, both must fall. But the evidence in the case does not necessarily support the claim that this bill of sale was fraudulent in its nature. This question was submitted to the jury, and they have found against the defendants upon this issue, and we see no reason to disturb the conclusion of the jury in that regard. It is undoubtedly true that the bill of sale was absolutely void, as against the creditors, because there was no -change of possession, and it was taken as additional security to the chattel mortgage, and it was not filed. But being void under the statute does not make it fraudulent, so as to taint other acts ■done in connection therewith. Moncompliance with a statute may make an act void, but does not make it fraudulent. Therefore, when the jury found that these papers were taken in good faith, "the plaintiff had a right to rely upon the title which he had acquired by means of the mortgage, which, it is conceded, was filed and complied with the law.

This, however, does not dispose of the objection which is now urged upon us,—that the chattel mortgage was void because it -covered the stock in trade in actual use in the store, from which the mortgagor was allowed to sell, and put the money in his pocket. If any such question had been raised upon the trial, it probably would have been an exceedingly serious one. But we have examined this record in vain for any such point raised below. The defendants moved to dismiss the complaint upon the ground that the giving of the bill of sale and the chattel mortgage were part and parcel of the same transaction, and that the bill of sale, absolute on its face, was not an absolute sale, but a mere further security, and there fraudulent and void in law, as to creditors then existing (which was not a good proposition of law), and that, if the transaction was fraudulent as to the bill of sale, the entire transaction was fraudulent, and no part of it can stand. We have already seen that this point was not well taken.

The defendants moved to dismiss upon the further ground that the bill of sale and mortgage were/void because the plaintiff did not take possession of the property, and that there was no continuous change of possession, such as the statute required.” But no suggestion whatever was made that the mortgage covered stock in trade which was in actual use, and was therefore void. It fs too late to raise this point upon appeal. We see no reason, therefore for interfering with the judgment, and such judgment, and the order appealed from, should be affirmed, with costs.

All concur.


author: Per Curiam.

text:
    Catharine Comyns et al., as Executors, etc., Resp’ts, v. William B. Riker, Impleaded, etc., App’lt.

      (Supreme Court, General Term, First Department,

      Filed January 18, 1895.)
    Fraudulent conveyance—Grantee.
    Upon setting aside a conveyance as fraudulent, the judgment should provide that, on satisfying the claim of the complaining creditor, the property be returned to the grantee.
    Appeal from a judgment in favor of plaintiffs.

      Dennis McMahon, for app’lt; John J. Adams, for resp’ts.
   Per Curiam.

This action was begnn June 30, 1892, by a judgment creditor of William H. Riker, to set aside a transfer of personal property by him to William B. Riker as fraudulent and void as against creditors. By the twelfth finding of fact it is found that the appellant, the transferee, was not the creditor of William B. Riker, his son, the transferer, in an amount equal to the value of the property transferred; and by the thirteenth finding the court found that the transfer was made by William H. Riker to said William B. Riker “ with the intent on the part of said William H. Riker to hinder, delay, and defraud the creditors of said William H. Riker, including the said William Comyns, and said transfer was accepted by said William B. Riker with notice of said fraudulent intent, and said William B. Riker was a party to said fraudulent act.” Upon an examination of the record, we are of the opinion that the findings are sustained by the evidence.

' The claim of the plaintiffs amounts to $5,095.92, with interest from April 7, 1892, besides the costs recovered by the judgment,—$534.25. By the judgment the transfer of personalty valued at more than $90,000 was set aside as fraudulent as against creditors, and a receiver was appointed, who was directed to convert the property into money. The following is the sixth conclusion of law:

“ (6) That the receiver be directed to take said moneys, notes, and accounts, and out of the proceeds thereof to pay the plaintiffs1, judgments, with costs of this suit, and hold the balance subject to the further order of the court.”

As between the transferer and transferee, the transfer was valid, and the court should not have set it aside, except in so far as it was necessary to pay the amount due the plaintiffs, as fixed by the judgment and the expenses of executing it.

The judgment should be modified by providing that the transfer be set aside as against the plaintiffs, and that, upon the satisfaction of the judgment and the payment of the expenses of enforcing it, the property be returned to the appellant In case other creditors have acquired liens on the property, it will remain subject to such liens. On the settlement of the judgment, the appellant sought to have this provision incorporated in it, but was unsuccessful, and an appeal became necessary to. remedy this error. The appellant is entitled to recover the costs of this appeal, to be deducted from the amount of the plaintiffs’ recovery. As modified, the judgment is affirmed.


text:
    In the Matter of Oscar H. Goodman, Resp’t, v. Henry W. Bainton, App’lt.

      (Supreme Court, General Term, First Department,

      Filed January 18, 1895.)

    Election—Voters—Residence.
    A student at a seminary of learning cannot gain a residence for the purpose of voting, though he has no other domicile.
    Appeal from an order granting an application to strike name from the list or register of voters.

      Thomas F. Wentworth, for app’lt; Charles H. Knox and Louis H. Hahlo, for resp’t.
   Per Curiam.

Henry W. Bainton registered from No. 41 East Sixty-Ninth street, a seminary of learning, known as the Union Theological Seminary.” He had occupied the same apartment for more than one year, and had no other domicile. He was born in the city of New York, but in another assembly district than that in which the seminary was situated. His father died in 1890, since which time the building in which his father lived has been demolished. The motion to strike his name from the registry was made on the ground that the constitution forbids the acquisition by a student of a residence, for the purpose of voting, at a seminary of learning. It reads as follows :

“ For the purpose of voting, no person shall be deemed to have gained or lost a residence by reason of his presence or absence while employed in the service of the United States; nor while engaged in the navigation of the waters of this state, or of the United States, or of the high seas; nor while a student of any seminary of learning; nor while kept at any almshouse, or other asylum at public expense; nor while confined in any public prison.” Const, art. 2, § 3.

The learned judge reached the conclusion that Bainton did not gain a residence while a student at the Union Theological Seminary. That his decision was right seems to be so clearly written in the constitution as not to warrant any discussion of the subject. However, it should be said that the assurance which to some can only come from final judicial decision is afforded by Silvey v. Lindsay, 107 N. Y. 53; 11 St. Rep. 187. The order should be affirmed.

All concur.


author: Parker, J.

text:
    Warren F. Goddard et al., Resp’ts, v. Harris Cassell et al., App’lts.

      (Supreme Court, General Term, First Department,

      Filed Janury 18, 1895.)

    Pleading—Amendment.
    The special term has power to direct an amendment of the complaint, though it changes the cause of action from replevin to conversion.
    Appeal from an order amending the complaint by changing the cause of action from replevin to trover.

      A. Blumenstiel, for app’lts ; Abraham Gruber, for resp’ts.
   Parker, J.

It was not held in Freeman v. Grant, 132 N. Y. 22; 43 St. Rep. 396, that the court at special term is without authority to permit an amendment to a complaint, which shall entirely change the cause of action. The decision made was that such an amendment- may not ordinarily be granted on the trial against the objection to the other party. Upon the question of •power there has been some conflict of authority, but this controversy was recently put at an end by the court of appeals in Deyo v. Morss, 144 N. Y. 216; 63 St. Rep. 80. The court held that, under § 723 of the Code of Civil Procedure, authority is conferred upon the special term to direct an amendment of the complaint, although it changes the cause of action, and substitutes another belonging to a different class. The special term was informed, by the pleadings and affidavits before it, that A. & J. Levy fraudulently, and without intent to pay therefor, obtained from the plaintiffs certain personal property, which these defendants thereafter directed the sheriff of the city and county of New York to take possession of, and sell, under certain writs of execution issued to him against the property of the firm of A. & J. Levy; that the sheriff, in accordance with such direction, sold the prop? ■erty, and paid over the proceeds realized upon the sale to the creditors in whose favor the executions were issued. Before the sale the plaintiffs demanded of the sheriff that he deliver to them such property, and, he having refused, an action to recover their possession was instituted. Thereafter these defendants, at their request, were substituted as defendants in such action, in the place .and stead of the sheriff. Before the action came on for trial, it was decided in Wise v. Grant, 140 N. Y. 593 ; 56 St. Rep. 496, that, where a sale and delivery of goods is procured by fraudulent representations on the part of a purchaser, the title and possession passes to him, notwithstanding the fraud, subject to the right of the vendor to rescind the contract of sale; that, if such goods be levied upon prior to any act on the part of the vendor showing an intention to rescind the contract of sale, an action of replevin to recover the goods will not lie, the remedy of the vendor being in an action for conversion against the sheriff after demand made upon him for a delivery of the goods and his refusal. This decision •coming to the knowledge of the plaintiff’s attorney, he promptly made a motion for leave to so amend his complaint as to make the •cause of action one for conversion, instead of one for the recovery of the possession of the property. The special term, in the exercise of its discretion, granted the motion, upon payment of taxable costs and disbursements, and we see no reason for questioning the decision made.

The order should be affirmed, with $10 costs and printing disbursements.

All concur.