author: Beckham, J.

text:
    Sarah V. Denise, Resp’t, v. Albert L. Swett, App’lt.

      (Court of Appeals,

      Filed June 5, 1894 )

    Jurisdiction—State courts—Patents.
    Unless there is an agreement to pay royalties for the manufacture and sale of the patented article, no action is maintainable in the state courts therefor.
    Appeal from judgment of the general term of the supreme court in the fifth judicial department, entered upon an order made March 28, 1893, which affirmed a judgment in favor of plaintiff entered upon fhe report of a referee. The nature of the action and the facts, so far as material, are stated in the opinion.

      Edmund L. Pilis, for app’lt; Quincey Van Voorkis, for resp’t.

       Reversing 52 St. Rep. 114.

   Beckham, J.

This is an action brought to recover certain royalties alleged to be due plaintiff by virtue of an agreement between plaintiff’s assignor and the predecessors of the defendant, under which it is alleged the defendant and his predecessors (whose liabilities in that regard the defendant assumed) manufactured and sold a certain patented article designated in the agreement as “ an improved screw barrel press.”

The case was tried before a referee who reported in favor of the plaintiff, and the judgment entered upon such report has been affirmed by the general term.

The liability of the defendant depends upon the question whether, subsequent to June-30, 1886, the agreement to pay royalties was in force. The plaintiff affirms and the defendant denies the proposition. Unless there were an agreement to pay royalties for the manufacture, it is plain that the state courts would have no jurisdiction, for they cannot entertain an action to recover damages for an infringement of a patent. The Continental Store Service Co. v. Clark, 100 N. Y. 365, and cases cited.

Upon the question of the existence of the alleged agreement the ■evidence is without contradiction and may be thus stated: In 1882 one Henry H. Brown was the proprietor of the invention above designated, and defendant and one Samson were partners in business as manufacturers in Orleans county, in this state. They entered into an agreement with Brown in July of above year under which Brown licensed the partners to manufacture and sell the patented article for one year from July 1, 1882, upon payment of certain named sums for royalties upon each and every dozen presses manufactured and sold by them. The agreement contained the further provision that the partners might obtain an extension of the agreement for any length of time within the life of the1 patent or which might be desired by them upon their giving notice in writing of their desire to renew the contract at least sixty days before its expiration. This agreement was in fact extended under the above provision from year to year until May 1, 1886, and it is conceded that the renewal made in the spring of 1885 was for a term which would end in May, 1886.

Prior to May, 1886, there had been some disagreements between the parties in regard to the conduct of the business, and it was undecided whether the agreement would be continued or not. By a provision which was put in the agreement when it was renewed in 1885, the further extension from May, 1886, depended upon the mutual agreement of the parties. On the 4th° of May, 1886, the partners wrote a letter asking that the contract be renewed. Correspondence and interviews succeeded, but the agreement was not renewed, and on June 14 and 17 respectively the partners reiterated their request to Brown for its renewal. On the 19th of June Brown wrote to the partners stating that as the terms of his letter of the 17th were not accepted he thereby revoked the same and he offered to take the stock off their hands and entered into some further details now immaterial.

The letter of Brown dated the 17th of June and referred to in his letter of the 19th, is not in the record, but the evidence leads to the inference that it contained an offer to renew the contract upon terms therein stated. There is no proof that the terms were accepted, and, on the contrary, Brown, in his letter of the 19th of June, says they were not. In the meantime and pending these negotiations the partners had continued’the manufacture of the article. As to the practical effect of the correspondence and of the letter of the 19th of June written by Brown to the partners, there is no divergence of evidence. Both Brown and Swett, the defendant, were sworn on the trial and they both agree that they regarded the agreement as terminated from that time, June 19. The partners finished or continued to make the presses up to June 30th after the receipt of the letter, and they furnished returns up to that time and accounted for and paid the royalties due up to that date, but from that time they never made another report and did not consider themselves thereafter as manufacturing under any agreement. Up to that time they had made quarterly reports as to royalties.

The testimony further shows that after June 30th they not only did not manufacture under the agreement, but the defendant maintained that the machine which was manufactured after that date was not identical with the one described in the agreement. The evidence is undisputed that in truth they did not after June 30th manufacture an article which was absolutely and in detail identical with the article mentioned in the agreement, although the referee finds that the two articles are in substance alike. Both parties testified in so many words to the termination of the agreement before July 1, 1886. The defendant was called by the plaintiff as a witness bn the trial, and he said on examination by his own counsel, that the letter of June 19th ended any attempt on their part to renew the contract; that ended if; there was no correspondence or conversation after that and no attempt made to renew or extend it, and it was not renewed; they sent back to Brown certain articles which were useless to them after the agreement expired and which they could only use under the agreement; they did this by letter June 29th, 1886; on the 4th of July following the partners wrote a letter to Brown giving him abatement of presses made up to June 30th preceding, and notifying him that they had placed amount of royalties on them to Brown’s credit; the letter was the final settlement of sales up to that date and no dealings after that were had with Brown, and he never thereafter called upon the partners to make any payment by reason of the agreement or to make any report in regard to it, except that Brown says that possibly he may have asked for a report in the fall of 1886. In June, 1891, it appears from Brown’s own evidence that he had a conversation with the defendant upon the subject of the article the defendant had been manufacturing since the termination uf the agreement, and in that conversation Brown said that the article which defendant had been thus manufacturing was an infringement on his rights, and defendant had replied to him that if he were of that opinion he had better contest it. The defendant during the time of his manufacturing, after the termination of the agreement, maintained his right (outside of the old agreement and assuming its termination) to manufacture the article in the way he was doing, and claimed that it was not the same article mentioned in the agreement and that it was not any infringement on the rights of Brown. This is incompatible with a manufacture under the agreement. Whether the article manufactured were or were not substantially identical with that described in the agreement, the evidence is clear and uncontradicted that defendant maintained it was not, and that he had the right to manufacture it without regard to any agreement and assuming its termination. Upon this question the evidence is also clear that defendant was willing to try conclusions with Brown by means of a lawsuit. It is proved and not disputed that tlie defendant had, subsequent to June 30th, 1886, consulted with counsel relative to the article he was making or proposed to make, and stated or showed the difference between its manufacture ana the article as described in the agreement, and that such ' counsel had advised him that the article he proposed to manufacture or was then manufacturing, was not an infringement on Brown’s rights.

On the subject of the termination of the agreement, Brown was called and testified that the agreement was terminated in 1886 and that it was never renewed, and that the letter of June 19th which he wrote was a notice to the partners of the termination of the contract The witness also said that all matters were settled up between them up to that time and under the agreement as he believed, and that after that he made no new agreement with the partners, and he did not extend the old contract at all; he made no claim for anything in this action prior to June 30th, 1886; at that time he and the partners had not been able to agree about renewing the contract, so it had never been renewed

Brown further said that the partners never made any quarterly reports subsequent- to the one sent him the last of June or forepart of July; he thought he called on them for a report in the 'fall of 1886, but that so far as be knew, all matters up to the termination of the contract had been settled either by notes or payments in cash. From the fall of 1886 he had never made a demand for a report or for any payment or royalties under the agreement, and none had been made until just before the commencement of this action-This in substance is the uncontradicted evidence of the parties to the agreement. It is seen they both unite in stating it was terminated in June, 1886, and that it never was renewed.

A motion for a non-suit was made upon the ground that plaintiff had shown no liability to pay royalties for the time mentioned in the complaint, which was subsequent to June, 1886. This was denied, and requests to find were made and exceptions to their refusal and to the findings as made were duly taken, so that the question is fairly presented whether on this evidence the defendant was bound to pay royalties according to the provisions of an agreement during a time subsequent to the period when the agreement itself, according to the evidence of both parties to it, had terminated.

I think the plaintiff failed to make out a case and that the judgment ought, therefore, to be reversed.

First, it is to be noted that by the terms of the agreement of 1885, it was to expire in May, 1886, and that its renewal depended upon the mutual agreement of the parties and not as theretofore upon the election of the partners to renew it upon giving notice of the time for which they desired such renewal sixty days before its expiration.

There was to be a meeting and agreement of minds before the renewal was to be effected. The evidence shows conclusively and without the least contradiction that no such agreement for a renewal in terms took place, and that no renewal was thus effected. It is true that during the negotiations in May and early June, 1886, the partners manufactured, but the whole thing was regarded by both sides as dead and completely gone after the letter of June 19th was written, and for the articles manufactured or in process of manufacture at that time and up to June 30th settlement was made between the parties, and after that time both parties swear that they regarded the agreement as at an end. As a further evidence of such fact the partners proposed to and did manufacture the same kind of an article but differing slightly in its make up, and they consulted counsel whether it would be an infringement on the Brown patent, and they received a negative answer and so continued to manufacture it with that difference, and never since June, 1886, did the defendant, as he swears, manufacture a single machine covered by the Brown patent. The referee finds that in truth the article manufactured by defendant since that date was substantially like the one mentioned in the agreement. Whether 'it was or not is not important, because by the uncontradicted evidence it is shown that the defendant was not assuming or claiming to manufacture under the agreement, but, on the contrary, was openly and persistently manufacturing an article which he claimed a right to manufacture, not arising out of any contract and not depending upon any agreement. And when Brown afterwards tells defendant that his manufacture is an infringement of his, Brown’s rights, defendant answers him in substance that if he think so he had better commence an action to prevent such infringement and thus contest the point at cnee. This evidence of Brown itself as to a conversation between defendant and Brown, which occurred five years subsequent to the termination of the agreement, is uncontradicted and shows clearly the entire absence of any pretense by either party at that time as to the continued existence of that agreement or that the manufacture by defendant had been continued under or by virtue of such agreement. Brown’s own evidence shows that upon this occasion he made no claim that defendant was liable under the agreement for royalties, but only that he was guilty of an infringement upon his patent by reason of manufacturing in the way he had been doing. This would have been impossible if the agreement had been in existence and defendant had continued manufacturing under it. Evidently there was then no thought on either side that the agreement had been in force during this period. Both parties then knew and recognized the fact that they had failed to extend or renew it, and that they had both treated it since June, 1886, as at an end, and in addition to this evidence they both so swore on the trial.

The ground of the liability is, however, stated to rest in the fact that the parties by their action did tacitly agree to renew the contract; that notwithstanding the failure to renew the agreement in terms, it was in reality substantially renewed by the failure of Brown to do anything after the writing of the letter and by the actual manufacture of substantially the same article by the defendant, who thus used the right given him by the agreement which was acquiesced in by Brown, because he did nothing to prevent it, and he thus waived the effect of the notice he had once given. By these various acts and omissions it is said the parties tacitly but effectually renewed the agreement, although for how long a time the evidence wholly fails to show. This failure^of Brown to take further action subsequent to his letter of June 19, is made to operate as a waiver of his notice contained in such letter, and this.waiver by Brown, together with a manufacture of the article on the other side, bring about a renewal which neither party then anticipated. We find a difficulty in implying it renewal which is opposed to the words and acts of the parties. It is plain that a waiver of the notice could not effect the renewal of the agreement. That required the affirmative consent or act of both parties, and without it the old agreement remained use: less and non-existent. Neither could the manufacture by the defendant under the conceded facts be regarded as an implied recognition of the binding force of the agreement or as an implied renewal thereof. The act of manufacturing is explained fully by defendant and that explanation is uncontradicted. It was not in any degree a recognition of the existence of the agreement, nor could such recognition or renewal be thereby implied, but, on the contrary, the evidence shows without dispute that the manufacture was under a claim of right not resting on contract and outside of the agreement, atid without reference to it. It seems to us that to imply a renewal of the agreement on this evidence results in a decision which is so at war with the acts and words of the parties and with the undisputed facts in the case as to rest practically upon no evidence.

Brown, after the giving of the notice and the acquiescence of all parties in the fact that the agreement was not renewed, was not bound to do anything further, nor could the fact of his mere silence while the parties manufactured an article be regarded as a, consent to the renewal of the agreement. The important and material fact still remains that it was not the giving of the notice in the letter of June 19th which terminated an otherwise existing agreement. The agreement had terminated already by its own specific terms, and it required the mutual consent and agreement of both parties to renew it. Their acts already alluded to cannot in reason or justice as we think be held to renew an agreement of this nature.

The learned referee was controlled, as it would seem from his opinion, in the disposition of the case by what he regarded as the binding authority of the case of Union Manufacturing Co. v. Lounsbury, 41 N. Y. 363, but with unfeigned respect we think he carries the doctrine too far.

After an examination of it, we think that case differs from this in one or two important particulars. The defendants in the case cited were manufacturers under license from the jjlaintiff and upon conditions stated in the agreement, a violation of which was to forfeit their right to manufacture. The defendants during its existence violated one of its conditions by making a kind of cloth which they had agreed not to mannfacture. The plaintiff then notified defendants that on that account they were forbidden from using or exercising the right to manufacture for any purpose whatever. The plaintiff took no other step towards rescinding the agreement, and the defendants continued to manufacture the cloth which the agreement permitted them to manufacture and made no claim so far as the case shows of any right to manufacture the cloth outside of the agreement, but they subsequently refused to pay the price agreed upon, which accrued after the day of notification. Plaintiff, in an action brought upon the agreement, -was permitted to recover. It will be noticed that the agreement was in force at the time the plaintiff served the notice. The notice was nothing more than a statement by the plaintiff that he meant to avail himself of and to enforce the forfeiture provided by the agreement. The choice rested with him alone, and when he stated an intention to exercise the right, he was not thereby compelled to do so or to follow it up by resorting to legal measures if the defendants continued- to 1 mannfacture, notwithstanding his notice. Obviously, they had no right to manufacture and claimed none outside of the agreement. If they did thus continue to manufacture, there is no reason why the plaintiff might not waive his right of forfeiture or rescission and sue for the price coming to him under the agreement The fact that he does sue shows that he does waive the right existing in him alone to terminate the contract on account of the violation of one of its conditions by the defendants. If he waive the right to terminate the contract, surely the defendants could not be heard to say that nevertheless they elected to terminate it or to hold him to its termination on account of his written notice, although that notice was based on their own violation of one of the provisions of such contract. Here is a totally different case. This agreement terminated by its own language in May, 1886. The manufacture of the article by defendant pending negotiations and up to June 30, was settled for and ended. To renew the agreement some mutual and binding agreement to renew must be shown or an implied renewal must be based upon the words or conduct of the parties. The parties have shown no written renewal and their words and acts we have already seen are wholly opposed to an implied renewal.

The plaintiff has, therefore, failed to show an agreement, and without an agreement to pay royalties this judgment cannot be sustained, and it must, therefore, be reversed and a new trial granted, with costs to abide the event.

All concur.

Judgment reversed.


source: Caselaw Access Project

author: O’Brien, J.

license: Public Domain

text:
    William H. Miller et al., Resp’ts, v. Edward Benjamin et al., App’lts.

      (Court of Appeals,

      Filed June 5, 1894.)

    1. Contract — Enforcement.
    The right of a vendor to enforce a contract will not be forfeited or lost by reason of technical, inadvertent or unimportant omissions or defects.
    2. Same.
    But there must be no willful or intentional departure, and the defects in performance must not pervade the whole, or be so essential as substantially to defeat the object which the parties had in view in making the contract.
    8. Same — Question of fact.
    Whether in any case such defects or omissions are substantial or merely unimportant mistakes that have been or may be corrected, is generally a question of fact.
    Appeal from judgment of the general term of the supreme court in the second judicial department, entered upon an order made April 16, 1892, which affirmed a judgment in favor of plaintiffs entered upon a verdict, and also affirmed an order denying a motion for a new trial.
    This was an action upon a contract by which plaintiffs agreed to sell and defendants to purchase a certain quantity of slit steel.
    The complaint claimed damages for a failure by defendants to accept and pay for a portion of the steel, and also asked to recover for the balance remaining unpaid upon that portion of the steel which had been delivered.
    The facts, so far as material, are stated in the opinion.

      Albridge C. Smith, for app’lts; R. B. Owillim, for resp’ts.
   O’Brien, J.

The plaintiffs have recovered upon an executory contract made by them with the defendants on the 15th of March, 1889, whereby the defendants agreed to purchase and the plaintiffs to sell to them one hundred thousand pounds of slit steel of a certain grade and quality to be delivered thereafter at the rate of about twelve thousand five hundred pounds per month from May 1, 1889, to January 1, 1890, specifications for each month’s deliveries to be given by the defendants to the plaintiffs in each case during the first week of the month preceding. The defendants were to use the steel in the manufacture of dress extenders worn by ladies and which were in fashion when the contract was made, but, as the proof tended to show, went out of fashion that summer. The plaintiffs in order to be prepared to fill the contract contracted for the steel abroad to be delivered to them from time to time as the contract required, but as is claimed, by reason of the defendants’ refusal to accept delivery, it accumulated on their hands and they were obliged to carry it. About twenty-seven thousand pounds of the steel were delivered. About three months after -the execution of the contract complaint was made by the plaintiffs that the defendants failed to send the specifications to enable them to deliver,, and in the latter part of August, 1889, the defendants wrote to the plaintiffs to cancel the order or contract, giving as a reason for this action on their part that the plaintiffs persisted in sending them heavier steel than specified in the contract. It seems that the steel had to be prepared and slit in special sizes in order to meet the defendants’ wants, and the grade or quality required was designated in the order as Nos. 27 and 29. The judgment was recovered as damages for the nonpei-formance of this contract on the part of the defendants and for a small balance claimed to be due to the plaintiffs and unpaid on account of the steel delivered. There was some dispute with respect to this balance which became a question of fact at the trial. The proof tended to show that the defendants failed to furnish the specifications for the monthly delivery of steel as required by the contract and the order requesting the contract or orders to be canceled amounted to a refusal on their part to further perform. The only question of law in the case is raised by the defendants’ contention that they were excused from further performance by reason of omissions or mistakes on the part of the plaintiffs in sending heavier steel than was called for by the specifications. The numbers specified in the contract were intended to designate the weight or thickness of the slit steel according to the usuages of the trade. The proof tended to show that it was a fact well known and understood in the trade that it is very difficult if not impossible to get cold steel rolled accurately so as to have a perfectly even thickness and uniform weight. A slight variation in weight and thickness is expected on account of this difficulty, and so long as this variation does not exceed one gauge or number it could not be regarded as a departure from the contract. Thus, a contract for this kind of steel, specifying 27 or 29 gauge, may be filled by 28 or 30. The proof tended to show that in June and July following the execution of the contract the plaintiffs sent on at least two occasions some of the 27 gauge instead of 29 gauge which had been specified. The defendants returned two barrels in June and two more in Julyj and the plaintiffs promptly replaced these shipments with goods of the proper grade. These slight variations were evidently mistakes in filling the specifications and were so understood by both parties. They were promptly corrected by the action of the plaintiffs in replacing the rejected gdods at their own expense by a like quantity which conformed to the specification. It does not appear that the mistake caused any material damage or loss to the defendants. The deviation from the contract occurred in such a way and was of such a character that it did not, as matter of law, amount to a breach on the part of the plaintiffs. The right of a party to enforce a ■ contract will not be forfeited or lost by reason of technical, inadvertent or unimportant omissions or defects. A substantial performance must be established in order to entitle the party claiming the benefit of the contract to recover, but this, does not mean a literal compliance as to details that are unimportant. There must be no willful or intentional departure, and the defects of performance must not pervade the whole, or be so essential as substantially to defeat the object which the parties intended to accomplish. Whether in any case such defects or omissions are substantial or merely unimportant mistakes that have been or may be corrected is generally a question of fact. Glacius v. Black, 50 N. Y. 145; Phillip v. Gallant, 62 id. 264 ; Woodward v. Fuller, 80 id. 315 ; Heckman v. Pinkney, 81 id. 211; Dauchy v. Drake, 85 id. 411; Van Clief v. Van Vechten, 130 id. 579 ; 42 St. Rep. 736; Crouch v. Gutmann, 134 N. Y. 51; 45 St. Rep. 470. In so far as that question was involved in this case, the learned trial judge properly submitted it to the jury to determine whether there was such a failure on the part of the plaintiffs to furnish and deliver the steel of such particular sizes and weight called for by the contract and specifications as justified the defendants in terminating the contract. The instructions on this point were full and in accordance with the rules of law referred to, and the verdict was in favor of the plaintiffs. Some collateral questions arose upon the trial which have been examined and some exceptions appear in the record, but they involve no error of law which can be said to have prejudiced the defendants. The submission of the whole case to the jury disposed of it in a manner sufficiently favorable to the defendants. The judgment must, therefore, be affirmed.

All concur. Judgment affirmed.


author: Earl, J.

text:
    James McCaldin, Resp’t, v. William A. Parke et al., App’lts.

      (Court of Appeals,

      Filed June 5, 1894.)

    1. Whaefing-bp.s—Duty of.
    Wharfingers do not guarantee the safety of vessels coming to their wharf. They are bound only to use ordinary care to make the place in front of their wharf reasonably safe for vessels to approach and lie there.
    2. Same—Negligence.
    They are liable only for negligence, though they make a representation as to the depth of the water, if it is made in good faith and does not constitute a contract in that respect.

      Appeal from judgment of the general term of the supreme court in the second judicial department, entered upon an order made May 8, 1893, which affirmed a judgment in favor of plaintiff entered upon a verdict, and also affirmed <an order denying a motion for a new trial.
    This action was brought to recover damages for injuries to a steamship owned by plaintiff, sustained in a collision with a rock under water while approaching defendants’ wharf.
    The facts, so far as material, are stated in the opinion.

      Edward M. Shepard, for app’its; William, W. Goodrich, for resp’t.

      Reversing, 52 St. Rep. 745.

   Earl, J.

The defendants owned a wharf at Hunter’s Point in the.East river, near New York, in April, 1887, and the plaintiff’s vessel struck a rock in the bottom of the river, about seventy feet from the wharf, while approaching the wharf with a cargo of lumber consigned to the defendants, and she sustained damage for which this action was brought. Upon the. first trial of the action there was judgment of non-suit, which upon appeal was reversed. 66 Hun, 323; 50 St. Rep. 262. Upon the secqnd trial the plaintiff recovered judgment, which has been affirmed, and which is now brought under review.

The defendants chartered the plaintiff’s vessel in November, 1886, to carry lumber from Charleston to their wharf. The vessel was to be under the control and management of the plaintiff’s captain and crew, and his compensation was to be the price named for every thousand feet of lumber transported.

The plaintiff claimed to recover both on the ground that the defendants were negligent in allowing the rock to be in the approach to their wharf, and also that they had contracted to give him for the approach of his vessel to their wharf sixteen feet of water at all times of the tide ; and the trial judge submitted the ease to the jury upon both grounds, charging them that if they found either in favor of the plaintiff he was entitled to recover. Hence, unless the evidence was sufficient to sustain a recovery upon both grounds, the judgment must be reversed, as we cannot say upon which ground the verdict was based.

1. We do not think there was sufficient evidence to show that there was a contract on the part of the defendant to furnish the sixteen feet of water as claimed by the plaintiff. He is a witpess for himself, testified: “When we were negotiating the charter, Parke asked me what the length of the vessel was, what she drew loaded. I told him that the vessel was 190 feet, and that she would draw between fifteen and sixteen feet. He said he wanted to know because he was about to make arrangements to have his dock dredged out. He said he would give me sixteen feet' to go to the dock at all times of the tide.” He admitted that he did not testify to this upon the first trial. Holmes, the broker who negotiated the charter party, testified that “ they said we were going to have sixteen feet of water. The vessel could come in at any time and all stages of water. That was said by the firm in general conversation; 1 could not say what individual; it was principally Mr. Parke, part of the negotiations being with him and part with Mr. McOIave.” This evidence of the plaintiff and Holmes was contradicted by Parke and McOIave. We think this evidence utterly fails to show a contract as to the depth of water. The contract which the parties were then negotiating was embraced in the charter party, and nothing is there found about the depth of water in front of the wharf. All the language used and the circumstances of the case forbid the inference that the defendants meant to bind themselves and guarantee that there should be sixteen feet of water at all stages of the tide. They were not asked by the plaintiff to give such a guaranty, and what they said were mere statements and representations, plainly not understood to constitute an agreement outside of the charter party. The parties were not engaged in making two contracts, but one which was contained in the charter party. The statements had reference to the dredging which the defendants expected to make. In Vroman v. Rogers, 132 N. Y. 67 ; 43 St. Rep. 564, the action was to recover damages for alleged injury to the plaintiff’s barge and its cargo while at the wharf of the defendant in the city of New York, and it was founded on the charge that the plaintiff leased wharfage there of the defendant upon the representation of the latter that the place so let was safe and that it had six feet of water at low tide. There was some evidence tending to^show that substantially such representations were made, and there, as here, it was claimed that the language used constituted a contract. The learned judge writing the opinion in this court said: “There was in terms no undertaking to indemnify or protect the plaintiff against loss by reason of any condition at the .wharf or in the bed beneath the water there. The defendant was not asked to do that. What was said by him on the subject was in its nature a representation, and if made in good faith, he could be charged with liability as for negligence only.” The language used there by the wharfinger was just as significant of a contract obligation as that we have here. The plaintiff could rely upon the statements testified to by him to exonerate himself from the charges of negligence, but not to impose a contract obligation upon the defendants. But, if we assume that the alleged statements contained a contract, what was the contract? The defendants’ wharf was three hundred feet long, and it was possible to approach it in front from all directions. Is it a fair construction of the language used, assuming that it made a contract, that the plaintiff should have sixteen feet of water for any approach he might make to the wharf? There were plenty of safe approaches to the wharf. In fact all the approaches were safe but the one over the rock, and hundreds of vessels had gone to the wharf in all stages of the tide during several years in safety. Indeed, the plaintiff cannot have the benefit of the statement as a contract unless we hold that he was entitled for his vessel to sixteen feet of water in all directions in front of the wharf out into the river so far as any jury might find that the approaches to the wharf extended, and we cannot so hold.

2. But whatever may be said of the contract ground of liability, we are very sure that the defendants cannot, upon the evidence contained in this record, be held liable upon the ground of negligence. As wharfingers they did not guarantee the safety of vessels coming to their wharf. They were bound only to use ordinary care to make the place in front of their wharf reasonably safe for vessels to approach and lie there. Vroman v. Rogers, supra; Smith v. Havemeyer, 36 Fed. Rep. 927; Carleton v. Franconia I. & S. Co., 99 Mass. 217; Docks v. Gibbs, 11 H. L. Cases, 512; The Moorcock, 14 Prob. Div. Law Rep. 64; The Calliope, Id. 138; S. C., House of Lords, App. Cases, L. R., vol. 1, 1891, p. 11.

A surveyor called as a witness by the plaintiff, who had examined and located the rock upon which the vessel struck, testified as follows: “The rocks which I have mentioned here are not I should judge part of the bottom of the East river; I should judge not from feeling of them; I should judge that they were something that fell in there; they don't seem very large; they were rather loose. When I speak of stone and also of rocks I do not mean the same thing; I indicate that some are smaller and some larger; the rocks are large. That is all I mean by that. I could not say how they came there. I could not tell you the size of them. They seemed to be a surface of three feet or more. I could measure over them and feel it go down; they do not move. I did not feel them tilt or move under the weight of my rod.” From this description there is no certainty that the rocks had been thei'e for any considerable length of time. They may have come there so recently that the defendants could not have discovered them by any degree of diligence. They covered but a very small space under a large expanse of water. Previous to the collision of the plaintiff’s vessel with them they had never been heard of. They were, as we must assume, upon none of the charts of the river. The defendants had owned and used their wharf for twelve years, and during all that time neither they nor the men in their employ had heard of them. During those years from five hundred to one thousand vessels, many of them as large as plaintiff’s vessel, and some larger, had gone in safety to that wharf, as we must assume, in all kinds of weather and at all stages of the tide. And the plaintiff’s vessel had gone to the wharf twice before. The defendants had had the place in front of their wharf dredged out immediately after their contract with the plaintiff.. Under such circumstances what reason had they to suppose that the approaches to their wharf were not safe? What greater assurance of their safety could they have than that they had always been found adequate for all the vessels that came there during a series of years? They had employed a dredging company to dredge out the basin in front of their wharf. What more should they have done having no notice whatever of the presence of the rocks there? The case of the Calliope is quite in point, and so are the following authorities: Hubbell v. City of Yonkers, 104 N. Y. 434 ; 5 St. Rep. 730; Lafflin v. Buffalo & W. S. R. R. Co., 106 N. Y. 136; 8 St. Rep. 596.

There is a singular lack of proof that these rocks were in the approach to defendants’ wharf. They were not in any channel which had to be used to approach the wharf. They were in the Fast river, and for aught that appears may have been in that part ■of the river used for general navigation. It does not clearly appear that the defendants had any control of the place where they were, or that they had any right to remove them. If they were in the pathway of general navigation, and not in a place necessary for approach to the defendants’ wharf, then the plaintiff took the risk of navigation there as other vessel owners did, and for that, too, the case of the Calliope is an authority.

Our conclusion is that the judgment should be reversed and a new trial granted, costs to abide the event.

All concur, except Bartlett, J., dissenting.

Judgment reversed.


text:
    John D. Ferguson, Resp’t, v. Thomas C. Arnow et al., App’lts.

      (Court of Appeals,

      Filed June 5, 1894.)

      %. Malicious prosecution—Proof required.
    A recovery in an action for malicious prosecution against an unsuccessful plaintiff in a civil action should not be permitted without very clear and satisfactory proof of all the fundamental facts constituting the case. The costs awarded to 'the successful defendant are the indemnity for a groundless prosecution.
    S. Same—Probable cause.
    The fact that an order of arrest in the former action was obtained against the present plaintiff has no bearing upon the question of probable cause. If want of probable cause has been established, it would bear upon the question of malice.
    Appeal from judgment of the general term of the supreme nourt in the second judicial department, entered upon an order made the second Monday of December, 1892, which affirmed a judgment in favor oj: plaintiff entered upon a verdict, and also affirmed an order denying a motion for a new trial.
    This was an action* for malicious prosecution brought by plaintiff, who had been one of several defendants in an action for trespass, in which the defendants herein were plaintiff and in which they were defeated.
    The facts, so far as material, are stated in the opinion.

      J. W. Bariram, for app’lts; William C. Reddy, for resp’t.

       Reversing, 50 St. Rep. 852.

   Earl, J.

A party who brings an action for malicious prosecution against a plaintiff who has been unsuccessful in a civil action should not be permitted to recover without very clear and satisfactory proof of all the fundamental facts constituting his case. Such actions should not be encouraged.

The costs awarded to a successful defendant in a civil action are the indemnity which the law gives him for a groundless prosecution. Public policy requires that parties may freely enter the courts to settle their grievances, and that they may do this without imminent exposure to a suit for damages in case of an adverse decision by judge or jury.

Among other things the plaintiff was bound to show in this action a want of probable cause for the action the defendants brought against him, and in this we think he utterly failed, and the trial judge upon the undisputed evidence should have nonsuited him.

There was a highway in front of the defendants’ land which had existed from some time prior to 1804. In 1888 and 1889 it was about four rods wide. The highway commissioner of the town claimed that as originally laid out it was five rods wide, and that it had been encroached upon by the. veranda of the defendants’ house and by their fences, and he gave them notice of the encroachments requiring their removal. This they refused and then he caused them to be removed, the plaintiff being one of the principal actors engaged under the commissioner in the removal. The defendants then commenced an.action of trespass against the plaintiff and others to recover damages for.the removal of the veranda and fences, and in that action they obtained an order for the arrest of the defendants therein, and they were arrested and released upon giving the proper undertaking. The action was put at issue by the answer of the defendants, and it was subsequently brought to trial at a circuit court. There evidence w'as given upon both sides, and the case was submitted to a jury who rendered a verdict for the defendants. Thereafter this "plaintiff commenced this action for malicious prosecution of that action, and he recovered a judgment which is brought under review by this appeal.

The three defendants other than Thomas C. Arnow are women, and do not appear to have had anything to do personally with the prosecution of the action against the plaintiff. The defendants had inherited the land from their father, with the veranda and fences there, and they had all known the highway for many years, and had not themselves encroached thereon and did not know of any encroachment thereon by others. The Veranda and most if not all of the fences had stood where they were when removed by the plaintiff for at least forty years. The defendants had never heard of any complaint of any encroachment until about 1888. The highway as fenced out was of the usual width, and the claimed width was very unusual. There was no record of the laying out of the highway and no recorded survey thereof. There was a record of the alteration thereof,' made in 1804, which simply recited that the highway was five rods wide. But the defendants had never even seen that. They undoubtedly believed that their piazza and fences did not encroach upon the highway, and seemed to have abundant reason for so believing. Under all these circumstances, and others not here alluded to, the defendants commenced the action of trespass, acting under the advice of their counsel. If upon such evidence as we have here an action for malicious prosecution could be maintained, then, such an action could be maintained for the unsuccessful prosecution of many of the actions which come upon appeal to this court, and a large proportion of unsuccessful actions could be followed by such an action, and litigation be thus interminably prolonged.

The fact that an order of arrest in the trespass action was obtained against the plaintiff has no bearing upon the question of probable cause. If the want of probable cause had been established that fact would have bearing upon the question of malice. For the arrest the plaintiff had his indemnity in the undertaking given upon the granting of the order of arrest.

We' regard this as a plain case, and, without a further reference to the law or the facts, our conclusion ife that the judgment should be reversed and a new trial granted, costs to abide event.

All concur.

Judgment reversed.


author: Finch, J.

text:
    Newton E. Whiteside et al., App’lts, v. Noyac Cottage Association, Resp’t.

      (Court of Appeals,

      Filed June 5, 1894.)

    1. Association—Assessment—Equitable action.
    Where the illegality of an assessment,imposed by an association, appears upon the face ot' the papers, and the facts which the association will be compelled to prove, to enforce at law the assessment or forfeiture, will themselves show the invalidity, an equitable cause of action to remove a cloud on title is not established.
    2. Same—Valid.
    The by-laws of the association and the deed to plaintiff, when read together and properly construed, were held, in this case, to leave no reasonable doubt of the validity of the assessment.
    Appeal from judgment of the general term of the supreme court in the first judicial department, entered upon an order made the first Monday of May, J893, which affirmed a judgment in favor of defendant entered upon an order dismissing the complaint on trial at special term. ,0
    This Action was brought by plaintiffs, who were the owners of . certain lots by purchasing from defendant, a club of which they had become members, to remove a cloud from their title caused by the lien of an assessment levied under the by-laws of defendant, apd to restrain defendant from forfeiting their rights as members by reason of non-payment of said assessment. The facts, so far as material, are stated in the opinion.

      Eugene D. Hawkins, for app’lts; William G. Reddy, for resp’t.

       Affirming 52 St. Rep. 773.

   Finch, J.

The plaintiff and others situated like him joined a club incorporated under the Laws of 1875, (Chap. 267), and the amendments thereof. It had become the owner of about forty acres of land for its corporate purposes, and had sold and conveyed to the plaintiff a single lot or parcel for the purpose of the erection by him of a dwelling house thereon. By the purchase he became a member of the club, and subject to its rules and regulations, and this liability appeared upon the face of his deed and limited and modified the title transferred. The lot could only be used for the construction and occupation of a dwelling house, and was inalienable except to the club or those accepted as its members; and the grantee covenanted by his deed to hold the land subject to assessments by the managers of the association to meet any deficiencies arising from the maintenance of its public grounds, club house and other property, and to submit to a forfeiture of his estate if Ire should fail to pay as prescribed. The by-laws of the association contained all these provisions, and dictated in detail the mode of procedure. An assessment was made in accordance with their terms, and the plaintiff, neglecting and refusing to pay, was served with a formal notice that his title and membership would be forfeited unless, at a specified date, he appeared before the board of managers and showed cause to the contrary. Instead of so appearing he brought suit in equity, asking as relief that the action of the board be rescinded, .and it be enjoined fróm forfeiting the plaintiff’s title and membership. The complaint was dismissed and the judgment affirmed by the general term.

That affirmance went upon the ground that no equitable cause of action was established. There was no cloud upon the title if the plaintiff’s view of the by-laws was correct. His theory was and is that, by their terms, no assessment could be made for permanent improvements, but only for current expenses. The assessment showed on its face that it was made in part at least for permanent improvements, and so was unauthorized by the bylaws if plaintiff’s construction is the true one. The case is not one of an assessment by a public authority, which is presumably valid, but of a claimed contract right, which has no force except under the contract, and which, if invalid at all, was so upon the very face of the claim. The facts which the association would be compelled to prove, in order to enforce at law the assessment or forfeiture, would themselves show the invalidity of their claim if the plaintiff’s construction of the by-laws be correct.

But that construction is not correct. It is apparent from the by-laws, the circular • disclosing the aims and objects of the association, and the very terms of plaintiff’s deed, that the expenditures of which complaint is made were fairly within the scope of those current expenses and that maintenance to which the by-laws and the deed referred. By his deed the plaintiff became a member of the association and as such gained the right to “the use of the club house, public grounds, water front, beaches, yachts, fishing privileges, etc.” He knew, therefore, that they did exist or were to exist, and were to be paid for out of the revenues of the association, any deficiency in which was to be met by an assessment within certain fixed limits. The appellants’ construction is purely and severely technical, and disregards utterly the manifest purport and meaning of the contract. By chapter fifth of the by-laws, two funds were constituted: one the land and improvement fund to be “applied exclusively to the purchase, improvement and maintenance of the grounds and other property of the association and the other, into which all membership fees, annual dues and assessments were to be paid, called the current expense fund. This was to be appropriated “in the first instance,” that is, primarily, to such current expenses, in-eluding taxes, but any surplus at the end of a year might be “turned into the land and improvement fund,” so that assessments creating a surplus beyond current expenses could, at the option of the managers, go to permanent improvements and the purchase of needed “property.” By § 2 of chapter six, provision was made for assessments to pay taxes; and then follows a broad general provision that “the board of managers may also, from time to time, make assessments for other purposes * * as they shall deem necessary.” There is here no limitation of the power within the scope of the corporate purposes, except as to amount, and they may be carried to permanent improvements when not needed for current expenses. The by-laws and the deed-read together, and properly construed leave no reasonable doubt of the validity of the assessment

It may be added that we approve also of the ground taken by the general term founded upon Thomas v. M. M. P. Union, 121 N. Y. 50; 80 St. Rep. 563, and beyond their argument in that ■direction no further discussion is necessary.

The judgment should be affirmed, with costs.

All concur.

Judgment affirmed.


author: GIbay, J.

text:
    The Elmira Savings Bank, Resp’t, v. Charles Davis, as Receiver, etc., App’lt.

      (Court of Appeals,

      Filed June 5, 1894.)

    1. National banks — State legislation.
    State legislation, in regulation of the general conduct of the business of a national bank with its depositors, is not an interference with any exercise of the governmental power.
    S. Same—Voluntary act.
    It is the voluntary act of the national bank, in contemplation of its insolvency and with view of then preventing the ratable application, of its property, which is avoided by the national law.
    .8. Same—Weat not prohibited.
    Liens, equities or rights arising by express agreement, or implied from the nature of the dealings between the parties, or by operation of law, prior to the insolvency and not in contemplation thereof, are not invalidated.
    Appeal from judgment of the general term of the supreme court, in the fourth judicial department, entered upon an order made December 27, 1893, which directed judgment in favor of plaintiff upon a case submitted under the Code of Civil Procedure, § 1279.
    Plaintiff, a savings bank incorporated under the laws of this state, had, on May 24, 1893, a deposit account with the Elmira ¡National Bank. On that day said bank having become insolvent, defendant was appointed its receiver by the comptroller of the enrrency. Plaintiff claimed that the amount of its deposit should be paid as a preferred claim under the State Banking Law. (Laws of 1892, chap. 689, § 130.)

      The provisions of the statutes and further facts, so far as material, are stated in the opinion.

      Charles H. Pede and Edward Winslow Paige, for app’lt; Edward G. Herendeen, for resp’t.

      Affirming, 55 St. Rep. 912.

   GIbay, J.

The defendant is the receiver of an insolvent National bank and the plaintiff, a savings bank created under the laws of this state, claims, with respect to its deposits theretofore made with the former, to be entitled to be preferred in payment, under § 130 of the Banking Law of this state. Laws of 1892, chap. 689. The circulating notes have been provided for and all other conditions of the Banking Law. have been complied with, so as to entitle the claim to be allowed, if not in conflict with the provisions of the National Banking Law. The State Banking Law permits the trustees of savings banks to keep an "available fund * * *, on hand or deposit in any bank in this state, organized under any law in the stifle or of the United States,” etc., etc. § 118. Section 130 provides as follows: -

“ All the property of any bank or trust company which shall become insolvent shall, after providingdor the payment of its circulating notes, if it has any, bé applied by the trustees, assignees or receiver thereof in the first place to the payment in full of any sum or sums of money deposited therewith by anjr savings bank, but not to an amount exceeding that authorized to be so deposited by the provisions of this chapter, and subject to any other preference provided for in the charter of any such trust company.” •

The sole contention is whether this provision can be given effect in the distribution of the property of insolvent National banks. The appellant insists that it conflicts with certain provisions of the National Banking Law; which were framed to prohibit preferences, and relies upon the following sections of the Revised Statutes of the United States.

*‘§ 5236. From time to time, after full provision has been made for refunding to the United States any deficiency in redeeming the notes of such association, the comptroller shall make a ratable dividend of the money so paid over to him bjr such receiver on all such claims as may have been proved to his satisfaction or adjudicated in a court of competent jurisdiction, and, as the. proceeds of the assets of such association are paid over to him, shall make further dividends on all claims previously proved or adjudicated; and the remainder of the proceeds, if any, shall be paid over to the shareholders of such association, or their legal representatives in proportion to the stock by them respectively held.”

“ § 5242. All transfers of the notes, bonds, bills of exchange, or other evidences of debt owing to any National banking association, or of deposits to its credit; all assignments of mortgages, sureties on real estate, or of judgments or decrees in its favor; all deposits of money, bullion, or other valuable thing for its use, or for the use of any of its shareholders or creditors; and all payments of money to either, made after the commission of an act of insolvency, or in contemplation thereof, made with a view to prevent the application-of its assets in the manner prescribed by this chapter, or with a view to the preference of one creditor to-' another, except in payment of its circulating notes, shall be utterly null and void, and no attachment, injunction or execution shall be issued against such association or its property before final judgment in any suit, action or proceeding, in any state, county, or municipal court.”

The provisions of the Federal law as to National banks constitute a complete system for their establishment, government and winding up. Cook Co Nat. Bank v. United States, 107 U. S. 445. As agencies of the government, in .the administration of a branch of the public service, the states are without authority to exercise any control over them, or to affect their operation (except so far as Congress may permit),; where the legislation will conflict with the National law, or will tend to impair or destroy their utility and efficiency in performing the functions, by which they are designed to serve the government. National Bank v. Commonwealth, 9 Wall. 353 ; Farmers' National Bank v. Dearing, 91 U. S. 83; Waite v. Dowley, 94 id. 527; Western Union Tel Co. v. Mass., 125 id. at p. 551. If the State Banking Law, in these provisions which we are considering, comes into conflict with the operation of the Federal Law, the former must be held ineffectual to impede the due execution of the latter, in all respects therein intended and provided for. Is that the case here? We are not now concerned with questions of the propriety or justice of the state law, in directing the claims of savings "banks to be preferred in payment over those of other depositors. That is the law of the state, enacted by its legislature in furtherance of the protection and security designed to be afforded to the savings of the people and if the inhibition of § 5242 of the U. S. Revised Statutes does not extend so far as to prevent its operation in such a case, it must be given its full effect. That effect would be to preserve and enforce a right or preference, which had accrued to the savings bank in making deposits, of its funds witli the National bank, and which will be deemed to have been in the contemplation of the parties and assented to. Their contractual relations were necessarily influenced and shaped by the provisions of this public law; which gave to that class of depositors a superior claim or lien to that of other depositors or creditors upon the property of the bank. Are these provisions for security against a possible loss of the -deposits of savings banks inconsistent with that equal distribution among creditors, which was intended by the National law to be effectuated, when the moment of insolvency arrived ? The language of § 5242 does not seem to convey that idea, in providing that “ all payments of money to either,” (¿ e. shareholders or creditors) “ made after the commission of an act of insolvency, or in contemplation thereof, made with a view to prevent the application of assets in the manner-prescribed by this chapter, or with a view to the preference of one creditor to another, expept in payment of its circulating notes, shall be utterly null and void.” In Corn Exchange Bank v. Blye, 101 N. Y., 303, it was said by this court of this section that “ it specifically prohibits all transfers of the corporate property made -with a'view to preferences and so protects the creditors from any voluntary act of the bank, which selects out favored individuals for payment.” It is a transfer of property, or a payment of moneys, in contemplation of insolvency, in order to give a preference to the creditor, which the law condemns. Its policy is to secure equality of distribution of the assets among creditors; but it was' not intended that, in the distribution, rights lawfully acquired and superior equities should be disregarded and annulled. - _

But we have upon this question a very recent and emphatic declaration by the United States supreme court, in the case of Scott v. Armstrong, 146 U. S., 499. In that case, the question related to the right of one who was debtorto a^National bank to an equitable offset, as against its receiver; appointed by the comptroller of the currency to close up its affairs for insolvency. Sections 5236 and 5242 were relied upon as forbidding it; because of their requirements that there should be a ratable disposition among the hreditors and that there should be no preference given or suffered, in contemplation of, or after committing the act of insolvency. Chief Justice Fuller, delivering the opinion of the court, said: “ We do not regard this position as tenable. Undoubtedly any disposition by a National bank, being insolvent or in .contemplation of insolvency, of its choses in action, securities or other assets, made to prevent their application to the payment of its circulating notes, or to prefer one creditor to another, is forbidden; but liens, equities or rights arising by express agreement, or implied from the nature of the dealings between the parties, or by operation of law, prior to insolvency and not in contemplation thereof, are not invalidated. The provisions of the - act are not directed against all liens, securities, pledges' or equities, whereby one creditor may obtain a greater' payment than another, but against those given or arising after or in contemplation of insolvency.^ Where a set-off is otherwise valid, it is not perceived how its allowance can be considered a preference, and it is clear that it is only the balance, if any, after the set-off is deducted which can justly be held to form part of the assets of the insolvent. The requirement as to ratable dividends, is to make them from what belongs to the bank, and that, which at the time of the insolvency belongs of right to the debtor, does not belong to the bank."

This is very explicit language and must be regarded as controlling upon us, as a construction placed by the highest federal court upon these provisions of the national banking law. In that case anu in those of Waite v. Dowley and National Bank v. Commonwealth we have authoritative expressions of opinion from which to imply the doctrine, that state legislation in regulation of the general conduct of the National bank with its depositors is not an interference’ with any exercise of the govermental power. If in the course of its business, through force of state laws, lights are accorded to, or liens are acquired by, depositors or creditors, they are not within the purview of §§ 5236 or 5242. The distinction between what is legislation by the state which conflicts with the national banking law and what is a constitutional exercise of state legislative power in relation to national banks is found by considering whether it assails or affects the independence of the national bank, in the performance of its functions as an agency of the general government. With respect to its contracts, its rights and remedies, they may, in general, be subject to, or based upon, state legislation, without impairing their efficiency as national institutions. Western Union Co. v. Massachusetts, supra. It is the voluntary act of the national bank, in contemplation of its insolvency and with the view of then preventing the ratable application of its property, which is avoided by the national law. In the present case, wliile a going concern, it entered into an engagement with the savings bank, which the state law required and regulated ; which vested in the latter superior rights or equities, and which, in the possible event of future insolvency, would give to it a prior claim to payment from the assets. When that event happened and the receiver was appointed, he took over the property of the insolvent concern, as trustee for its creditors and shareholders, under the same conditions as the bank held it and subject to the right of this plaintiff to be first paid in full, before other creditors were paid.

I think the judgment of the general term below was right and that it should be affirmed; with costs. ,

Judgment affirmed.

All concur, except Earl and Peckham, JJ., not voting.


author: Gray, J.

text:
    Stella Stafford, Resp’t, v. The Morning Journal Association, App’lt.

      (Court of Appeals,

      Filed June 5, 1894.)

    1. Evidence—Good character.
    Though it is unnecessary lor the plaintiff, in an action for libel, to make an averment as to her good character and repute, yet, if she does so and the averment is put in issue by the answer, it opens the door to the admission of evidence of good reputation.

      2. Same.
    In the absence of a disclaimer on the part of the defendant of any intention of questioning plaintiff’s reputation, when making an objection to such evidence, the reception of the testimony is not error.
    Appeal from judgment of the general term of the supreme court in the first judicial department, entered upon an order made April 14, 1893, which affirmed a judgment in favor of. plaintiff entered upon a verdict, and also affirmed an order denying a motion for a new trial.
    The action was brought to recover damages for the publication in the Morning Journal of an article complained of as libelous and which reads as follovvs:
    “ Le Huray Sisters, Blanche, Stella and Allien, just from Paris; massage, French style; love secrets; how to get a husband; inclose stamp; valuable iúíomiation for ladies by aid of cards. Le Huray Sisters, 444 Second Ave., Mount Vernon, N. Y.”
    The complaint alleged that plaintiff’s maiden name was'" Le Huray, and had two sisters named Blanche and Allien, respectively, who, with herself, resides at the place named. That the article was published in a column in defendants’ paper, headed “Astrology,” and-defendant thereby falsely represented that plaintiff had authorized the publication of the article, and held her out to the public as a person of loose morals, etc.
    Further material facts are stated in the opinion.

      B. F. Einstein, for app’lt; Roger M. Sherman, for resp’t.

       Affirming, 52 St. Rep. 595.

   Gray, J.

We are quite satisfied with the disposition made by the general term of the questions presented by the appellant’s exceptions at the trial and the only one to which we shall refer is that arising upon exceptions to the admission of evidence as to ■ the general reputation of the plaintiff for chastity and virtue.

The complaint alleged that plaintiff was of “good character and repute and enjoyed the respect of her friends and acquaintances and of the community.”

The answer stated that the defendant' had “no knowledge or information sufficient to form a belief as to the allegations contained in that paragraph of the complaint.”

At the commencement of her case the plaintiff called witnesses to prove her allegations and the defendant objected, upon the grounds of immateriality and of incompetency and, also, that “it is not one of the issues under the pleadings.”

The general rule as to the impropriety of permitting a party to give evidence of his good reputation, in actions for the recovery of damages for libel or slander, has reference to cases where reputation is not a material issue, or where it has not béen attacked. The reason for it is in the absence of any usefulness in proving that which the law already assumes and because the character of the complaint does-not form the basis for the recovery of general damages.- But this case differs from those relied upon by the appellant in certain aspects. In the first place, the plaintiff’s allegation was put in issue by the answer. It is true that it ¡was unnecessary for the plaintiff to allege as she did, with respect to her reputation; but having done so, the defendant, in choosing to make an issue upon the answer, opened the door for the offer of evidence. In the next place, when the question of materiality was raised, it was then open to defendant to disclaim any purpose of questioning the plaintiff’s reputation. But it did not do so.. The objection that “it was not one of the issues under the pleadings,” of course, was not true; while, if the proof was immaterial, then no harm can be said to result from giving it and in establishing that which the law presumed. The very effect before the jury of failing to disclaim any purpose of questioning the plaintiff’s character, when the question was raised upon the issue and when endeavoring to prevent any proof as to what it was, must have been bad and, as I think, warranted the trial judge, under the circumstances, in permittingevidence to be given. I do not think the plaintiff was absolutely bound, in the face of an issue tendered by the defendant as to her reputation for chastity and virtue, to sit quiet and .to rest upon the legal presumption. The evidence bore upon an issue in the case, which the defendant could have avoided, and the plaintiff, in anticipating any possible attack and in insisting upon the admission of the evidence in question, in the absence of any disclaimer on the part of the defendant, should not be made to suffer from the ruling in question. She very properly offered it as a part of hey case, Young v. Johnson, 123 N. Y. 226; 33 St. Rep. 436, and the trial judge committed no error in permitting proof of what the law assumed.

The cases in this court referred to by the appellant are not in conflict with these views. Houghtaling v. Elderhouse, 1 N. Y. 530 ; aff’g, 2 Barb. 149, was an action for slander; for charging the plaintiff with poisoning defendant’s horses, and defendant pleaded not guilty. In reply to defendant’s testimony, tending to prove the truth of the charge, the plaintiff offered to prove that his general character was good and the evidence was excluded. It is obvious that such evidence could not constitute any rebuttal of plaintiff’s guilt, if shown by the circumstances disclosed by defendant’s evidence.

Pratt v. Andrews, 4 N. Y. 493, was an action for crim. con. with plaintiff’s wife. Defendant gave evidence tending to prove plaintiff’s knowledge and connivance, in support of a defense to that effect; but did not assail the general character of plaintiff’s wife. Evidence was offered by plaintiff, in rebuttal, that the reputation of his wife was good before the defendant attended- her as physician and it was excluded. The evidence had no bearing upon any issue in the case.

In Young v. Johnson, 123 N. Y. 226; 33 St. Rep. 486, the plaintiff, in an action to recover damages for rape and after defendant had given his proof, offered evidence to prove her general reputation and good moral character in the community. The exclusion of the evidence was upheld- here, upon the ground that the plaintiff’s reputation had not been attacked and that the defendant had expressly disclaimed any such purpose. In that case it was significantly remarked that if the testimony was admissible, as bearing upon the general issues ,in the case, it could have been given before plaintiff rested her case.

I think the judgment below was right and that it should be affirmed, with costs.

All concur. Judgment affirmed.


text:
    William T. Long, App’lt, v. William Long, Resp’t.

      (Court of Appeals,

      Filed, June 5, 1894.)

    1. Infant’s real estate — Sale—Payment of debts.
    Aside from the statute providing for the sale of the decedent’s real estate for the payment of his debts, the court has no general power to direct the proceeds of the sale of an infant’s interest therein, in the hands of the special guardian, to be applied to such payment.

      2. Same..
    Creditors of a deceased person must pursue strictly the statutory proceedings whenever resort must be had to the real estate for the payment of debts.
    3. Same — Bond of special guabdian— Subeties.
    The sureties on a bond of a special guardian for the sale of an infant’s real estate are not usually liable until the remedies against the principal have been exhausted and the extent of the liability ascertained by an accounting in the proper court.
    4. Same.
    But when it can be seen that an accounting cannot possibly change tbe . facts upon which the liability of the sureties depend, the infant will, not" be compelled to resort to such accounting.
    5. Same — Accounting.
    In case of an accounting, the special guardian should be required to account before the court from which he derived his appointment.
    6. Ratification — Infants.
    The ratification of an unauthorized act must be by some competent person, with knowledge of all the facts and of their legal bearing upon his-rights.
    7. Same.
    The indorsement of the account of his general guardian, by a ward after coming of age, does not ratify the acts of a special guardian, to-which such account contains no reference.
    8. Appeal — Reveesal upon the facts.
    Where it does not appear that the reversal of the judgment, entered upon the report of a referee, was upon the facts, the court of appeals will assume that the decision was upon the law, applied to the facts settled by the report of the referee.
    App'eal from judgment of the general term of the supreme court in the fifth judicial department, entered upon an order made January 18, 1893, which reversed a judgment in favor of plaintiff entered upon the report of a referee and granted a new trial.
    This action was brought upon a bond given by Duncan MacIntyre, as special guardian for the plaintiff, then an infant, in proceedings instituted in the supreme court for the sale of plaintiff’s real estate, such bond being e'xecuted by MacIntyre as principal, and William Long, defendant, and George W. Root as sureties..
    The facts, so far as material, are stated in the opinion.

      J. B. Adams, for app’lt yJohn B. Abbott, for resp’t.

      Reversing, 50 St. Rep. 546.

   O’Brien, J.

J.— The general term has reversed the judgment entered upon the report of the referee in favor of the plaintiff in this-case. It does not appear that the reversal was upon the facts, and we must, therefore, assume that the decision was upon the law, applied to the facts settled by the report of the referee. The judgment was based upon facts as to which there was really no-controversy. In December, 1866, Holloway Long, the plaintiff’s-grandfather, died, leaving a will which was duly admitted to probate. He devised to the plaintiff and .his -sister, children of his deceased son, as tenants in common, the undivided one-half part of a farm contatning 328 ,acres, of which he died seized. In the month of February, 1868, the plaintiff and his sister, being infants, by their general guardian, presented a petition to* the supreme court. for authority to sell this real estate. An order was entered in the proceeding appointing the general guardian special guardian for the purpose of selling the land, and their interest in it, upon his executing a bond to each of the infants in the penalty of $5,000, conditioned for the faithful performance by the special guardian of his trust, and for compliance with the orders of the court in respect to the proceeds of the sale. On the 22d of February, 1868, the special guardian with the defendant and another person, now deceased, executed the bond in the form and manner prescribed by the order and the rules of the court. It was approved by the county judge and filed, and thereupon the guardian entered upon the performance of his duties as such. Subsequently the guardian, by the direction of the court, conveyed the infants’ interest in the land to a purchaser. The following are the words of the condition in the bond: “ The condition of this obligation is such, that if the above-bounden Duncan MacIntyre shall faithfully perform the trust reposed in him as the guardian of the above-named infant for the purpose of selling and disposing of certain real estate belonging to said infant, and shall pay over, invest and account for all moneys, and securities received by him as such guardian as aforesaid, according to the order of any court having authority to give directions in the premises, and shall observe and obey all orders and directions of any such court in relation to the said trust, then this obligation to be void, otherwise to remain in full force and virtue.”

The purchaser paid to the special guardian as the consideration for the conveyance to him of the interest of both children in the real estate the sum of $9,150, The interest of the infants was subject to a legacy of $4,000 bequeathed by the testator to his widow. The guardian paid this from the proceeds of the sale, and no question is made as to the validity or propriety of this payment. The defendant was a son of the testator, and was named in the will as the sole executor, but he renounced the office and subsequently administrators with the will annexed were appointed. He then filed with them, as such, a claim against his father’s estate, which was disputed and referred as -a disputed claim under the statute. The referee reported in favor of the claim and judgment was entered upon the report in favor of the claimant for $10,245 on the 14th of December, 1867. There is some dispute as to the regularity of this judgment, it being claimed on the part of the plaintiff that it was entered without confirmation of the report by the court or any other direction save the report of the referee appointed by the surrogate. We will assume, however, that the judgment was not void and that the defects or irregularities in the record, if any, are not now material. The special guardian paid the balance of the purchase money received by him for the interest of the infants in the real estate devised to them by the will to the defendant upon this judgment, without any order or direction of the court, and this was found by the learned referee to be a misappropriation by the guardian of the funds, for which his sureties are responsible. The guardian never rendered any account to the court of his proceedings, and was never regularly discharged from the obligations of his trust. He died intestate in 1871 and his estate was administered and distributed in the year 1875. The other surety died in the year 1881, intestate, and his estate has also been administered and distributed. Prior to the commencement of this action the court, upon the plaintiff's petition, directed that the bond be prosecuted. The referee directed a judgment for the plaintiff'for the amount of the penalty specified in the bond. The opinion of the learned general term indicates that the reversal proceeded upon the theory, that though the payment of the fund to the defendant was irregular and in violation of the rules of the court, yet the infants had the benefit of the payment, since it went to extinguish a claim or lien against their property, and hence the plaintiff was not equitably entitle to recover. It is plain from the discussion that it was assumed the court could have ordered the guardian to pay the money in his hands upon the judgment and that such an order would have been made had he applied for it, and that as there was nothing wanting to complete the authority to dispose of the fund in that way except such an order, equity would now regard as done that which would have been done had an application for that purpose been made. The conclusion of the learned court below depends upon two propositions in neither of which can we concur: (1) That the court would or could have authorized the guardian to pay the money on the judgment. (2) That the infants received the benefit of such payment. The court had no power to direct the fund in the guardian’s hands to be applied to a purpose for which it could not direct the land to be sold in the first instance. The judgment was not a lien upon the land. It was not a judgment against the testator in his lifetime nor against his devisees, but against the administrators of his estate. It could have been enforced only in the regular course of administration. The personal property was the primary fund for its payment, and the real estate of which the testator died seized, in the hands of his heirs or devisees, was not liable to be sold for the payment of the debt until the personal estate had been exhausted, and not then without complying with the statutory proceedings for that purpose in the surrogate’s court. Aside from the statute there was no general power in the court to direct the lands of which the testator died seized, or the proceeds in the hands of the guardian, to be applied to the payment of debts. Hogan v. Kavanaugh, 138 N. Y. 417; 52 St. Rep. 884; O'Flynn v. Powers, 136 N. Y. 412 ; 49 St. Rep. 814; Kingsland v. Murray, 133 N. Y. 170 ; 44 St. Rep. 515. The judgment, whether valid or not, added nothing to the force of the claim as a charge upon lands. The most that could be claimed for it is that it was prima facie evidence of a debt. When real estate devised or descended is sought to be charged with the debts of the déceased, the-validity and existence of the debts are open to contest by the heirs or devisees in the proceeding, and the decree of the surrogate on1 the accounting does not conclude them, and except in the case of a judgment on the merits, is not even prima facie evidence of the existence of the debt. O’ Flynn v. Powers, supra. The personal estate must first be accounted for and applied ; the other lands devised are also equally chargeable; the Statute of Limitations or any other legal defence to the claims is available to the heirs or devisees and the land cannot be sold or its proceeds applied until a valid debt is established in the proceeding. These familiar rules made it impossible to say with any degree of certainty that the judgment or claim upon which the fund in question was applied, or any specific part of it, could ever have been charged upon the land in such a way as to authorize a sale. The residuary real estate, which seems to have been large, was devised to the defendant. That was chargeable with the debts of the deceased after the personal estate had been exhausted and in the regular course of administration. The liability of the interest of the infants in the land devised to them to be sold for the satisfaction of the debts of the deceased, was subject to so many conditions and depended upon so many contingencies that, when invoked as a justification for the disposition made of the fund arising from the sale it seems to me to be entirely unsafe and unreliable. In the absence of proof or finding showing beyond all question that some definite sum of money necessary for the payment of the debts of the testator, must necessarily become in the end a charge upon the lands devised to the plaintiff and his sister there was no equitable basis for disturbing the conclusion of the learned referee. I am unable to see how much proof was possible in this case or how it can be be made in any case resting upon similar facts, and hence the necessity of the rule which requires the creditors of a deceased person to pursue strictly the statutory proceedings whenever resort must be had to the real estate for the payment of debts. The general rule is that the sureties upon official bonds of this character are not liable until the remedies against the principal have been exhausted and the extent of the liability ascertained by an accounting in the proper court. The provisions of § 2606 of the Code do not seem to apply to a special guardian for the sale of the real estate of infants. The surrogate’s court has no jurisdiction of such a proceeding, and the guardian should, be required to account before the court from which he derived his appointment. In this case the guardian could have been required to account to the supreme court. Whenever a statute requires an accounting by the principal, or his personal representatives, as a preliminary condition to the maintenance of an action upon the official bond, it must, of course, be complied with. But no statute is cited which in terms applies to this case. The application is by way of analogy. In an action upon the bond of a special guardian for the sale of real estate, special circumstances may appear which would render sucli an accounting wholly unnecessary, and then it may be dispensed with. When it can be seen that an accounting cannot possibly change the facts upon which the liability of the sureties depend, the infant should not be compelled to resort to a proceeding which is practically useless. In this case no accounting could make a single material fact any clearer than it now is. The guardian received the money and paid it over to the'defendant. He died intestate more than twenty years before the commencement of this action. His estate derived no benefit from the misappropriation. It was administered and distributed more than fifteen years before. If the guardian and the other surety were still'alive, in an action’upon the bond, the whole liability in equity would, as-between themselves, fall upon the defendant, for the reason that lie received the money, and the misconduct of the guardian was for his benefit. In view of these special circumstances, I think the learned referee was right in holding that an accounting in the court having jurisdiction of the guardianship was not necessary, since the extent of the liability of the sureties upon the bond had been otherwise as definitely determined as it could be by an accounting. Girvin v. Hickman, 21 Hun, 316; Brown v. Snell, 57 N. Y. 286. It appears that after -the infants became of age they made an indorsement upon the account rendered to the surrogate by their mother, as their general guardian, in which they expressed themselves satisfied with the account. It is urged that such action on their part ratified what had been-done with the fund arising from the sale of the real estate. There is no ground for this" contention. The account of the general guardian contained -no reference to the fund in question. Ho part of it ever came to her hands, and of course her accounts could not embrace it, and the surrogate had no jurisdiction over it. The-infants, before coming of age, were represented, by special guardian in proceedings before the surrogate for the settlement of the accounts of the administrators of Holloway Long, and in like-proceedings for the settlement of the accounts of the administrators of the special guardian for the sale of the real estate. Their presence upon the record as parties to these proceedings could not ratify the misappropriation. Aside from the fact that they were then incapable of ratifying, it does not'appear that these accounts could or did inform them of the disposition made of the money from the land. The ratification of an unauthorized act must be by some competent person, with knowledge of all the facts and of their legal bearing upon his rights.

The-judgment of the general term should be reversed and that entered upon the report' of the referee affirmed, with costs.

All concur. Judgment accordingly.