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    New York Security and Trust Company, Resp’t, v. Saratoga Gas and Electric Light Company et al., App’lts. (Three cases). William V. Reynolds, as Receiver, etc., App’lt, v. New York Security and Trust Company et al., Resp’ts. (Two cases).

      (Supreme Court, General Term, Third Department,

      Filed July 6, 1895.)

    1. Trustee—Appointment.
    The supreme court has power to appoint a trustee in the place of the trustee under a mortgage who has become insolvent.
    3. Same—"Removal.
    Such trustee will not, at the instance of one representing neither the mortgagor, morlgagee, nor any of the bondholders, be removed because of irregularity in the appointment where it has been recognized and acquiesced in by the mortgagor and a majority of the bondholders.
    3. Same—Mortgage—Intention.
    The commencement of an action in the name of the trustee, by authority of its officers, to foreclose the trust mortgage, is a sufficient declaration of an intention by the trustees to exercise the option to declare the principal due for the default in the interest.
    4. Same—Corporation—Ratification of secretary’s act.
    A resolution of the board of directors of a corporation, ratifying and approving the act of its secretary iu giving notice that the corporation, as trustee in the trust mortgage, exercises its option to declare the debt due, is a sufficient confirmation of the secretary’s act, though the resolution was not adopted till after the commencement of the action to foreclose the mortgage.
    6. Same—Gas company—Mortgage—Filing.
    A mortgage execut'd by a gas and electric light company, covering both realty and nersonalty, where it has been recorded as a realty, need not be filed as a chattel mortgage.

      6. Same—After-acquired property—Burden.
    Where a mortgage by its terms includes all the property then owned and to be acquired by the mortgagor, a person who, in an action to foreclose such mortgage, claims a judgment lien, superior to the mortgage, on property of the morlgagor on the ground that it was after-acquired personalty has the burden of proving that it was after-acquired. The mere allegation of such claim in his answer does not cast the burden upon the mortgagee of establishing that all the property was in the possession of the mortgagor when the mortgage was executed.
    7. Same—Fixtures.
    Dynamos and exciters set up by an electric light company in a mortgaged building as part of the electric plant, with the intention that they should remain there until worn out or superseded by more suitable machinery, become part of the realty and subject to the mortgage as against judgment creditors of the mortgagor, though they may be removed without impairing the construction of the building.
    8. Same—Fraudulent conveyance.
    The rule that, where mortgaged property is permitted by the mortgagee to be used or appropriated by the mortgagor it shall, as against other creditors of the mortgagor, be credited upon the mortgage, does not apply to corporate mortgages, where such appropriations and use of property and expenditure of money are made in the course of the corporate business: the articles used up or worn out, replaced by others; the moneys expended' necessarily expended in keeping the business alive, and to produce a revenue and without which use of property and expenditure of money, the corporate business would cease, and no revenue could be derived with which to pay the interest upon the mortgage or other debts of the corporation.
    9. Equity—Cross-action.
    Under the Code, a cross-action with the forms and procedure relating "thereto in chancery does not exist.
    10. Judgment—Actions tried together.
    Where two actions, though tried together, are separate and distinct, and the relief in one cannot be asserted as a defense in the other, and the parties to the record are not the same in each, a single decision and order for judgment in both cases, may be rendered, but, on such decision and order separate judgments should be entered, in order that the record in each case may be complete in itself.
    Appeals from certain orders and judgments.

      Edward Winslow Paige, for app’lt, William V. Reynolds; Edgar T. Brackett, for app’lt, First Nat. Bank of Saratoga Springs ; John H Benedict, for app’lt, Edward F. Andrews; Hornblower, Byrne & Taylor ( William B. Hornblower and Howard A. Taylor, of counsel), for resp’ts, New York Security and Trust Co. and Walter Stanton.
   Herrick, J.

The above entitled appeals all arise out of an action commenced by the New York Security and Trust Company, to foreclose a mortgage executed by the Saratoga Gas & Electric Light Company. Appeals 1 and 2 are appeals from judgments, and numbers 8, 4, and 5. are appeals from orders made in the course of such proceedings. The facts in each appeal shed some light upon the others, and to save unnecessary repetition, it it seems to me best to consider all the appeals in a single discussion. On the 1st day of February, 1887, the defendant the Sara-toga Gas & Electric Light Company, a corporation organized un,der the laws of the state of New York, and doing business at Saratoga Springs, for the purpose of securing an issue of bonds made or to be made by it, to the amount of $300,000, each of said bonds to be in the sum of $1,000, executed a mortgage to the American Loan & Trust Company, of New York, a corporation doing business as a trust company under the laws of the state of New York, as trustee. Such mortgage purports to convey:—

“ All the corporate property, real, personal and mixed, including all lands, easements, rights of way, buildings, fixtures, materials, supplies, machinery, and plant, franchises, contracts, and choses in action, whether now owned or hereafter acquired or constructed by said gas company, together with the appurtenances thereto, and all the rents, tolls, issues, income, and profits of said gas company present and future.” .

It was provided that said property was to be held by said trust company, its successors and assigns, in trust for the equal benefit and security of all the holders of said bonds, and it contains the usual covenants and conditions of mortgages executed for such purposes. It is provided that—

“ Any vacancy ip the trusteeship, from whatever cause, may be filled by a written appointment executed by said gas company, and the holder or holders of a majority of the bonds hereby secured; or if in thirty days such appointment be not made, then by the supreme court of the the state of New York for the Fourth judicial district, upon application of any party in interest, on such notice as the court may prescribe.”

Such mortgage also provided that—

“If any default shall be made and shall continue for sixty days, as above specified, then the principal of all said bonds, although not then due by their terms, shall at the trustee’s option, become immediately due and payable, anything in said bonds or herein contained to the contrary notwithstanding. Such option shall be exercised or not exercised, and such principal declared due or such declaration annuled and withdrawn by the trustee, according to the written request of the holder or holders of a majority of said bonds.”

In March, 1891, an action was brought in behalf of the people of the state of New York against the American Loan & Trust Company, for a dissolution of that corporation for alleged insolvency ; and thereafter, in the month of May, 1891, a judgment was rendered in said action dissolving such corporation, and appointing J. Edward Simmons as permanent receiver thereof. Thereafter, and in the month of May, 1892, one Walter Stanton presented to the supreme court a petition wherein he stated that he represented a majority of the bonds issued by the Saratoga Gras & Electric Light Company, 'and was the owner, or in the possession, and had control, of the majority of said bonds at that time, and representing that the American Loan & Trust Company had become insolvent and that J. Edward Simmons had been appointed as receiver thereof, and that no proceedings had been taken for the appointment of a successor trustee to said company, and that the interest-upon said bonds which had matured May/l, 1892, was in default, and coupons therefor had been presented, but were unpaid; and asked that a successor trustee to the American Loan & Trust Company be at once appointed. On the same day, the president of the Saratoga Gas & Electric Light Company executed and acknowledged an instrument whereby he consented to the appointment of the New York Security & Trust Company as successor trustee to the American Loan & Trust Company, and requested that such company be appointed as such successor trustee under the deed of trust or mortgage executed by the Saratoga Gas & Electric Light Company February 1, 1887. Thereupon, on the 23d day of May, 1892, notice having been given to the attorney general of the state and to the receiver of the American Loan & Trust Company, an order was made at a special term of this court held in the city of New York, entitled in the same proceedings, wherein and whereby the American Loan & Trust Company was dissolved, appointing and designating the plaintiff herein, the New York Security & Trust Company as successor trustee “for the said Saratoga Gas & Electric Light Company, under the mortgage and deed of trust of said company to the American Loan & Trust Conn pony dated the 1st day of February, 1887.” Thereafter, and on the 3d day of June, 1892, at a meeting of the trustees of the Sara-toga Gas & Electric Light Company, the following was adopted: “On motion, resolved that the New York Security & Trust Company be appointed trustee for the bondholders of the Saratoga Gas & Electric Light Co.” On the 10th day of June, 1892, an agreement in writing was entered into purporting to be between the Saratoga Gas & Electric Light Company, as party of the first part, and the New York Security & Trust Company, as party of the second part, which agreement recites the execution of the mortgage, hereinbefore referred to, the American Loan & Trust Company, as trustee ; the fact that such American Loan & Trust Company had been declared insolvent; and also reciting that an order of the court made May 23,1892, appointed the American Security & Trust Company as successor trustee to the American Loan & Trust Company; and then follows a conveyance by the gas company to the trust company of all the property described in the mortgage theretofore executed to the American Loan & Trust Company, subject to the terms and conditions of said mortgage ; and the New York Security' & Trust Company in such instrument accepts the same, pursuant to and under the terms and conditions of the mortgage executed to the American Loan & Trust Company. This agreement was signed in behalf of the Saratoga Gas & Electric Light Company by the president and treasurer of said company, and properly acknowledged and verified by them as having been executed and signed by them by order of the board of directors. The treasurer so signing said instrument is the same person as William Y. Reynolds, one of the appellants herein.

The appellants claim that there was no authority given to execute said instrument, and none was proved upon the trial, and the book of minutes of said company does not show that any resolution was ever adopted authorizing the execution of such instrument. On the 1st day of December, 1893, an agreement was entered into between certain holders of such bonds, and such others as might thereafter deposit their bonds in pursuance of such agreement, and a committee of five named in the agreement, whereby such committee was authorized to procure the sale of all the property of the said Saratoga Gas & Electric Light Company as an entirety, and to declare the principal of said mortgage debt due, or if the same had already been declared due, to confirm the same, and to purchase the property of said company, in the event of its foreclosure sale, and to recognize said company, in the event of its being bid in by them, in the interests of the bondholders; and the plaintiff trust company was designated as the depositor and trustee under such agreement; and in pursuance to such agreement the majority of the bonds of said gas company are held by the plaintiff trust company. After the order of May 23, 1892, appointing it as successor trustee to the American Loan & Trust Company, the New York Security & Trust Company assumed to actas trustee under such mortgage, receiving money from the Sara-toga Gas & Electric Light Company to pay the interest upon the bonds as they became due, and paying the coupons as they were presented to it, down to August, 1893. On the 3d day of October, 1893, upon the petition of one Pruyn, who claimed to be the owner of $15,000 of said bonds, and upon the statement of the insolvency of the American Loan & Trust Company, and upon his statement also that he believed that no trustee had been appointed as successor of said American Loan & Trust Company, at a special term of the supreme court, held in Saratoga county, Messrs. Scott & Hamilton were appointed as trustees under said mortgage, to succeed the American Loan & Trust' Company. Thereafter, at a special term in the county of Clinton, October 13,1893,-an order was made vacating and setting aside the order appointing Messrs. Scott and Hamilton as such trustees, upon the ground that such order had been made inadvertently and in ignorance of the order appointing the plaintiff as such trustee. At the same time and place a motion was made to vacate and set aside the order made in the first judicial district, dated May 23, 1892, appointing the plaintiff as such trustee, which motion was denied. The order setting aside the appointment of Scott & Hamilton, and the order denying the motion to vacate the appointment of plaintiff as trustee, were both appealed from to the general term, and both orders were affirmed. 76 Hun, 610. After the commencement of the action to foreclose said mortgage, as hereinafter set forth, William Y. Reynolds, by a petition verified December 27, 1893, and entitled in the action in which the American Loan & Trust Company was dissolved, and in which he stated that he had been appointed receiver of the Saratoga Gas & Electric Light Company, “ by a judgment of this court in a sequestration action against the Saratoga Gas & Electric Light Company,” asked the court to vacate the appointment of the trust company as trustee, upon the ground that such appointment was irregular and void as being in contravention of the terms of the mortgage, which provided the manner in which the successor trustee should be appointed The motion upon such petition was heard at a special term held by the same justice who had theretofore made the order appointing the trust company as such successor trustee. Upon such hearing the affidavits of all the members of the committee of bondholders, hereinbefore referred to, who were to take charge of the interests of the bondholders and to purchase the property and reorganize said gas -company for the benefit of the bondholders, were read, in which they asked that such motion be denied, and that the trust company be continued as such successor trustee. The motion of Reynolds to vacate the order appointing this plaintiff as trustee in place of the American Loan & Trust Company, was denied, and it does not appear that the same has ever been appealed from. Default was made in the payment of interest upon said bonds, August 1, 1893. November 10 and 11, 1893, the holders of a majority of said bonds signed written requests, directed to the plaintiff herein, wherein it was requested to exercise the option to declare the principal of all the bonds immediately due and payable; reciting the fact that default had been made in the payment of the interest due August 1, 1893, and that such default had continued for a period of sixty days: and also requesting the plaintiff to proceed to foreclose the mortgage. On the 11th day of November the secretary of the plaintiff notified the Sara-toga Gas and Electric Light Company, in writing, that the plaintiff exercised its option to declare the principle of all the bonds immediately due and payable, because default had been made in the payment of interest, and that such default had continued for a period of sixty days ; and on the same day the action first entitled, for a foreclosure of said mortgage, was commenced. On the 16th day of November, 1893, La Fayette' B. Gleason was appointed receiver of the Saratoga Gas & Electric Light Company, for the benefit of the plaintiff in said foreclosure action. An amended complaint and notice of pendency of action, bringing in other defendants, was filed in the clerk’s office December 23, 1893.

The defendant the First National Bank, of Saratoga Springs, in answer to the plaintiff’s complaint, alleged that before the commencement of the foreclosure action, and on or about the 27th day of September, 1893, it recovered judgments in the supreme court against the Saratoga Gas & Electric Light Company, to the amount of over $7,900 ; that executions had been issued thereon, and personal property belonging to the said gas company had been levied upon and sold, and bid in by the said bank, upon which sale the amount realized, over and above the fees and expenses of the sheriff, was the sum of $1,296.06, which had been credited upon the amount of said judgment, and that the balance of said judgment remained due and unpaid ; that thereafter, and on the lltn day of November, 1893, other executions upon said judgments were issued to the sheriff of Saratoga county; and the said bank claims .that such executions are liens “ upon any property acquired by said gas company after the execution and delivery of the mortgage set out in the complaint, prior and superior to the lien of said mortgage. ” The bank also asserts in its answer that the mortgage sought to be foreclosed was, as against such defendant, “ so far as the same was and assumed to be a mortgage upon the personal-property of said gas company, fraudulent and void;” alleging that after the execution of such mortgage the mortgagee continued to use up, dispose of, and sell, property covered by the said mortgage, and instead of applying said proceeds in payment of said mortgage debt, used the same in the purchase of other property, which, under the terms of the said mortgage, became subject to the lien of said mortgage, and which in turn was itself sold, and the proceeds again used as before,— which process continued until the commencement of this action and the appointment of the receiver therein; that such use and disposition of the property was by and with the consent and concurrence of said mortgagee, and of the holders of said bonds, secured by such mortgage, and such use and disposal was contemplated and agreed to when such mortgage was given. The bank further alleges that the plaintiff was not entitled to begin or maintain the action, because it was illegally and improperly appointed successor trustee to the American Loan & Trust (dompany, and in contravention of the terms of the mortgage, wherein the manner of appointing a successor trustee was provided for; and asked judgment that the judgments and executions issued thereon in favor of such bank be declared a lien upon the property, real and personal, to the amount remaining unpaid on such judgment, and that the property bid in by such bank at the sales under such execution be declared to belong to it, not subject to the lien of the mortgage set out in the complaint, and that the value of the property used by the gas company since the execution and delivery of said mortgage be declared, as against said bank, to be a payment upon the mortgage set out in the complaint, and the amount thereof deducted from the amount due upon the bonds and mortgages; that such mortgage be deemed fraudulent and void as against the defendant, and that it be declared that the plaintiff is not the trustee under such mortgage, and is not entitled to maintain the action.

The appellant Andrews, in his answer to the complaint, set forth the obtaining of a judgment against the gas company, the return of an execution unsatisfied, the commencement thereon of sequestration proceedings against the gas company, and the appointment of William Y. Reynolds as receiver thereof. He also put in issue the legality of the appointment of the trust company as successor trustee, and also raised the same question as to the use of the mortgaged property by the mortgagor as is raised in the answer of the Saratoga Rational Bank, and asked that his judgment be declared a lien upon all the property of the gas company, and in all other repeets asked the same relief as is asked by the bank in its answer. The appellant William Y. Reynolds, in his answer to the complaint, set forth his appointment as receiver on the 16th day of December, 1893, and put in issue the legality of the appointment of the trust company as successor trustee, and also put in issue the exercise of the option, by the trust company, to declare the whole amount of the principal of the bonds to be due, and asked that the order appointing the trust company as successor trustee be vacated and set aside, and that it be adjudged that the said trust company is not the trustee under the said mortgage.

On the 28th day of April, 1894, William Y. Reynolds, as receiver, commenced an action against the New York Security & Trust Company and others, as defendants, alleging in his complaint the commencement of the action first entitled, for the foreclosure of the mortgage, the dissolution of the American Loan & Trust Company, and the appointment of the New York Security <& Trust Company as successor trustee to the American Loan & Trust Company, and alleging that no notice of any application for the appointment of the New York Security & Trust Company was given to anyone, except to the attorney general, and to the attorneys for the receiver of the American Loan & Trust Company ; and alleging, upon information and belief, that Walter Stanton, upon whose petition such appointment was made, was not at that time the owner of any bonds issued by the Saratoga Gras and Electric Light Company, and did not have any in his possession nor under his control, and that the receiver of the American Loan & Trust Company, Simmons, did not, nor did the people of the state of New York, own any such bonds; and asked that the order appointing the New York Security & Trust Gompany as successor trustee “ be reviewed, vacated, set aside, and held for nothing; ” and also asked that the complaint in the foreclosure action commenced by the New York Security & Trust Company be dismissed.

Both actions, the one to foreclose the mortgage and the action of Reynolds as receiver to review the order appointing the trust company as successor trustee, were bv agreement tried at the same time, and resulted in a judgment dismissing the complaint in the action brought by Reynolds as plaintiff, and in a judgment and decree of foreclosure and sale in the action brought by the trust company to foreclose the mortgage. Separate decisions and separate judgments were rendered and entered in each. Final judgment in the action wherein Reynolds was plaintiff, and an interlocutory judgment in the foreclosure action, were entered September 19, 1894, and final judgment of foreclosure and sale was entered in the foreclosure action November 19, 1894. From each of these judgments appeals have been taken—from the judgment of foreclosure and sale, by the Saratoga National Bank, by Andrews, and by Reynolds, as receiver; and from the judgment dismissing the complaint in the action brought by Reynolds, an appeal has been taken by Rejmolds—which appeals constitute the first and second entitled appeals. The appellant Reynolds made a motion to set the decision in each case aside, and after judgment was entered upon such decisions, moved to set such judgment aside and to have one judgment entered, upon the ground, that the foreclosure action and the action by Reynolds to review the order appointing the trust company as trustee constituted but onei cause, and should end in but one judgment, disposing of all the issues in both actions. Both these motions were denied, and from the orders denying the same Reynolds appeals to this court, which appeals constitute the third and fourth above entitled appeals. Thereafter, and on the 27th day of April, 1895, the said Reynolds made a motion, at a special term of the supreme court, for an order directing Gleason, as receiver, to pay the coupons due February 1, 1895, and that upon the payment by him, said Reynolds, of the coupons due August 1, 1894, and February 1, 1895, the said Gleason, as receiver, deliver the possession of the mortgaged property to said Reynolds—which motion was denied, and from the order denying the same, Reynolds appeals to this court, which constitutes the fifth above entitled appeal.

The history of the entire proceedings having been thus given, so that the situation of all the parties, as to each appeal, may be fully understood, we will now consider such appeals in then-order. First, the appeal of Reynolds from the judgment in the foreclosure action, and from the judgment in the action seeking to review the order by which the trust company was appointed the successor trustee.

No question was raised upon the trial but what default had been made in the. payment of interest upon the bonds, and that such default had continued for a period of over sixty days before the commencement of this action. No question is raised but. that the trust company represents in fact a large majority of the-bondholders, and it appears that upon the hearing before the referee appointed under the interlocutory judgment the plaintiff trust company produced before such referee, and had in its custody 271 of the 300 mortgage bonds. The only questions raised upon the trial, and argued upon this appeal, by the appellant Reynolds, were as to the legality of the appointment of the trust company as successor trustee, which question is common to both actions, and which is the only question presented in the-action wherein Reynolds, as receiver, is plaintiff; and as to-whether the trust company did in fact legally exercise its option to declare the whole principal amount of the bonds immediately due and payable, pursuant to the terms of the mortgage, after the expiration of sixty days from the default upon the payment of interest—which last question only enters into the action for foreclosure.

The plaintiff is properly acting as trustee of the gas company. The court of chancery has jurisdiction of trusts and trustsees, and had power, independent of any statute, to remove a trustee, on good cause shown, and to appoint another in his place. The-supreme court has succeeded to the jurisdiction and power of the court of chancery and it seems to me unnecessary to cite-authorities to prove its jurisdiction and power to appoint one trustee in the place and stead of another. The original trustee under the mortgage becoming insolvent, the supreme court had jurisdiction to appoint a successor trustee. Its order making such appointment was therefore not a void order, but may have been, under the circumstances, irregular.

Without discussing the question as to the power and authority of the court, in a proceeding pending before it for the dissolution of a corporation which is acting as a trustee, to appoint a successor trustee as a part of the proceeding pending before it, I will assume that the original appointment of the Mew York Security & Trust Company as successor trustee to the American Loan & Trust Company was irregular. The orderly and ordinary course of proceeding to dispose of such an order is to appeal from it, or, if facts upon which it was obtained were falsely stated to the court, to move for a rehearing. As we have heretofore seen, a motion to vacate the order appointing the trust company as successor trustee was made in another district from that in which such order was granted, and was denied, which denial was affirmed upon appeal to this court. That was the only proceeding taken by any bondholder to vacate or set aside the appointment of the trust company as successor trustee. From that time forward no bondholder has appeared in these proceedings to contest the appointment oE the trust company or to contest the foreclosure proceedings.

After the commencement of the foreclosure action a motion was made at a special term, before the same justice who had appointed the trust company as successor trustee, to vacate such appointment, which motion was denied, and no appeal was taken therefrom. This ordinarily would conclude the matter. But assuming the right in a proper case to have reviewed by action a judgment, decree, or order obtained by fraud, in what position does the appellant then stand ? He alleges as his cause of action that the person upon whose petition such appointment was made falsely represented himself as the owner, or in possession of, or having under his control, bonds of the gas company, and claims that at that time such petitioner neither owned, possessed, nor controlled any such bonds. In my view of this case, as it now stands, it is a matter of absolutely no importance whether such petitioner owned, possessed, or controlled at that time any. bonds or not. This action is one in equity. To sustain it the plaintiff must show some equity existing in his favor. The only persons interested in the question of who shall be trustee under the mortgage are the bondholders and the gas company, all of whom have recognized, acquiesced in, and requested such appointment: The gas company, first, by its officers, the president and treasurer, executing to the trust company the so called supplemental mortgage ; secondly, by its board of trustees, adopting the resolution, heretofore set forth, designating the trust company as the successor trustee; and thirdly, by paying over to it, from time to time, money to pay the interest upon its bonds. The bondholders, by requesting the trust company to exercise its option and declare the whole principal sum due, and commence foreclosure proceedings upon the mortgage ; again, in the agreement of bondholders, constituting a committee to act for them, heretofore referred to, wherein the trust company wop designated as their trustee, and, in pursuance thereof, depositing a large majority of the bonds with it ; and still again, upon the motion made at special term to vacate and set aside the order appointing the trust company as successor trustee, when the entire committee of bondholders by separate affidavits requested the special term to deny such motion, and to continue the trust company as successor trustee. Upon the tria!, as we have seen, the trust company produced before the court 271 of the 300 bonds issued under the mortgage ; and under such circumstances, where it is so evident that the plaintiff is acting for and on behalf of a vast majority of the bondholders, I do not think that a court of equity will, at the" instance of one who represents neither the mortgagor- nor the mortgagee, nor any of the bondholders under the mortgage, interfere because of any alleged irregularity in its appointment of a trustee which is acting at the request and by the consent of all the parties interested. A stranger, not interested, cannot raise any question as to the want of jurisdiction of the court appointing a trustee, or as to the regularity of the proceeding. People v. Norton, 9 N. Y. 176; In re Livingston, 34 N. Y. 555-570.

As to the exercise of the option to declare the principal sum due, the majority of the bondholders requested the trust company to exercise such option. The contention is made that the trust company did not legally comply with that request; that the notice ■sent by the secretary of the company to the gas company was not sufficient, it not appearing that he was authorized so to do by a resolution of the board of directors of such company. I am inclined to think that no such resolution was necessary ; that it was a matter that called for no deliberation or action upon the part of the directors, but that it was a mere executive duty, which the executive officers of the trust company could perform in its ordinary discharge of their duty. By the terms of the mortgage, the request of the bondholders was conclusive and mandatory; but, be that as it may, the bringing of the suit itself was a sufficient declaration of its intention to exercise such option. Northampton Nat. Bank v. Kidder, 116 N. Y. 221; 8 St. Rep. 621. And no question is raised here but what the action was commenced in the name of the trust company by proper authority.

But, in addition to that, there was produced and given in evidence upon the trial a resolution of the board of directors of the trust company ratifying and approving the action of the secretary in giving notice that the trust company exercised the option in question. It is true that this resolution was passed after the commencement of the action, and during the trial thereof, but nevertheless I think it was a sufficient confirmation of the action of the secretary to sustain and make good the position of the trust company, if any such resolution was at any time necessary to authorize the secretary to act. What should " have been done only by their authority, having been done without such authority, they, may at any time ratify.

The contention of the appellants the bank and Andrews that the liens of their judgments, execution, and sale be declared liens prior to the lien of the mortgage, I do not think should be sustained. The gas company was organized under chapter 40 of the Laws of 1848, entitled “ An act to authorize the formation of corporations for manufacturing, mining, mechanical or chemical purposes,” passed February 17th. By chapter 163 of the Laws of 1878 all corporations organized under chapter 40 of the Laws of 1848, and the acts amendatory thereto, were authorized to mortgage “ all or any part of the goods and chattels of such corporation, and also the franchises, privileges, rights and liberties thereof.” By chapter 517 of the Laws of 1864 companies organized under such acts aforesaid were authorized to mortgage all or any part of the real or personal property of such corporation. Under these statutes, the gas company had power to execute the mortgage in question. Chapter 171 of the Laws of 1891 provides that: “It shall not be necessary to file as a chattel mortgage any mortgage which has been or shall hereafter be executed by any telegraph, electric light, or telephone company upon real or personal property, and which has been or shall be recorded as a mortgage,” etc. This statute, I think, includes the gas company. Being a gas and electric light company, it properly comes under the words “ any * * * electric light * * # company."

The mortgage being recorded in the proper county, it was notice to all persons as to the personal property as well as to the real estate. I am not prepared at this time to assent to the doctrine that mortgages of the kind in question here do not extend to after-acquired personal property. It seems to me that the principle established in Rochester Distilling Co. v. Rasey, 142 N. Y. 570; 60 St. Rep. 284, in not applicable to mortgages of the kind here under consideration. Enterprises like that of the gas company commonly require too much capital to be carried on by single individuals. A partnership is not adapted to conduct such undertakings. It requires an aggregation of capital, and a method of business, which is best secured by a corporation. The accepted manner of raising the greater part of the needed capital is by an issue of bonds, secured by a mortgage upon the franchise, real estate, and business plant and property of the corporation. These bonds and mortgages are ordinarily, and almost necessarily, long-term bonds and mortgages. Those in question here are payable twenty years from the date of their execution. Frequently the most valuable portion of their property does not consist in the land owned by them; and the buildings erected thereon, but in the implements and machinery necessarily used in carrying on the business. In the natural course of business, during the long term of the bonds and mortgage much of such machinery, implements and tools becomes worn out, and must be replaced. Then, too, there is a constant improvement in machinery. Better and cheaper methods are devised, but which demand new and different machinery. • The machinery that is from time to time put in, in place of that which is worn out,— the new machinery which supersedes the old, in order to adapt the plant to modern processes and methods,—becomes an essential part of the plant; and such renewals and additions I think may fairly be said to be contemplated when any large enterprise of the kind I have been discussing is inaugurated: and may be said to be of the when investors are aslced to advance their money in aid of such undertakings. Otherwise, the longer the business continues, the more enterprise that is exhibited in adopting new methods and devices, the less, the security of the investors becomes; unless, every time a tool, implement, or piece of machinery becomes worn out, and a new one is put in its place, or where a piece of improved machinery is. put in place of an old one which it supei'sedes, new bonds and a new mortgage are given to the bondholders. That is obviously impracticable. In the interest, as it is said, of trade and commerce, a liberal rule in favor of the tenant has been adopted, as between landlord and tenant, in the question of what additions to leased property made by the tenant become fixtures. So, in the-interest of commerce and manufactures, a liberal rule as to bondholders and and mortgagees should be adopted as to after-acquired personalty that becomes a necessary or' proper part of the mortgaged plant. It has been held that after-acquired real estate can be mortgaged. Carpenter v. Mining Co., 65 N. Y. 43; Seymour v. Railroad Co., 25 Barb. 284; Stevens v. Watson, 4 Abb. Dec. 302.

When the real estate is conveyed to the mortgagee, the lien of the mortgage, which before that time remains but an equitable claim upon the property to be acquired, becomes a vested legal right to such subsequently acquired realty. Fisk v. Potter, 2 Abb. Dec. 138-144. In the case of Seymour v. Railroad Co., supra, where, the question was whether real estate acquired by a railroad corporation, after the execution of a "mortgage, was within, the lien of such mortgage, the court said that it was entirely “ immaterial whether the right of way was all acquired, or not, at the time the mortgage was recorded ; or whether the road had, or had not, been at that time entirely located, or the location thereof, if previously made, was afterwards changed.” That case was approved in the case of Carpenter v. Mining Co., supra. The mortgagor in that case was organized under the same act that the gas company in this case is, and the court said of the mortgage given by it that: “It is not in conflict with the statute because it mortgaged the future as well as the present real estate of the company. There is nothing in the statute which limits the effect of the mortgage to the present real estate of the company, and nothing in the nature of a mortgage security which can thus limit its-effect.” 65 N. Y. 51. I can see no difference in principle between mortgages of this nature upon the realty from those given upon chattels. The power to mortgage the personal property is under the same statute that authorizes the mortgaging of realty. Creditors and persons dealing with the company have the same notice of the mortgage of the personalty that they have of the-mortgage upon the realty. Chapter 171, Laws 1891, above quoted, renders the recording of a mortgage of the kind in question, including both real estate and personal property, equivalent, so far as the personal property is concerned, to the filing of a chattel mortgage upon the same property. It seems to me, therefore, that unless some third person has acquired a lien upon such property prior to its acquisition by the gas company, as soon as the gas company became possessed of it, it became subject to the lien of the mortgage.

If I am mistaken, however, as to that aspect of the case, there is another which I think must dispose of the appeal of the bank and Andrews. Their contention, it will be borne in mind, is that their judgments and executions should be declared liens, prior to the mortgage, upon all after-acquired property. The mortgage by its terms covered all the property of the gas company, and all property to be thereafter acquired. As to after-acquired property, I take it that there is no occasion to cite authorities to show that, as between mortgagor and mortgagee, at least, it was valid. Upon the face of the mortgage, then, the trust company was entitled to foreclose upon all the property in the possession of the gas company at the time of the foreclosure. The appellants the bank and Andrews by their answer claim a lien prior and superior to that of the mortgage. They allege that they have such a lien because the property levied upon by them was purchased after the execution of the mortgage. It was incumbent upon them to prove that allegation; and if the fact that any part of it was after-acquired property was an essential element to establish the priority of the lien claimed by them. It was incumbent upon them to establish that fact. Their mere assertion of their claim in their answers was not sufficient to place the burden of proof upon the trust company to show that all the property in the possession of the gas company was in its possession at the time of the execution of the mortgage. There is no evidence that any of the property upon which the bank and Andrews claim that their judgments or executions and sale should be declared liens prior to that of the mortgage was purchased after the execution of the mortgage, except the dynamos and exciters. Dynamos and exciters are essential in the manufacture of electricity. They were placed in the building used by the gas company for the manufacture of electricity as a part of the electric plant. It appears that the dynamos weighed about two tons each; that they rested upon special foundations, upon which were sliding grooves in such form that a dynamo could be slipped out and another of the same size slipped in. They were fastened to the floor by screws. Each dynamo was joined by a leather strap to the shafting. The floor of the building could be removed without disturbing the dynamos. The exciters weighed about 500 pounds each, and were fastened in the same way that the dynamos were, except that there was no special foundation built for them. It was the intention, in placing these dynamos and exciters in the building, to keep them there until they were worn out, or superseded by others. The fact that a piece of machinery can be taken out of a building without impairing the construction of the building does not determine the question as to whether it has become a part of the real estate. The question is, was it the intent to place it there as a permanent improvement, an addition to the freehold, to be applied to the property and to the use of the business there carried on ? Potter v. Cromwell, 40 N. Y. 287; Voorhis v. McGinnis, 48 id. 278; McRea v. Bank, 66 id. 489. The case of Potter v. Cromwell, supra, was one where a portable gristmill was placed in a building theretofore used as a tannery. It could be removed without impairing the structure of the building. It was no more firmly or permanently attached to the realty than the dynamos and exciters in this case. It could be removed without impairing the structure of the building. It was placed in the building for the purpose of being used as a permanent structure for a custom gristmill for the neighborhood. It was held to have become a part of the' realty. In Davidson v. Gaslight Co., 99 N. Y. 558, it was held that so much of the tools, implements and machinery in question as were attached to and had become essential to the use of the building and machinery erected upon the mortgaged property, for the purpose of manufacturing illuminating gas had become thereby a part of the realty, subject upon annexation to the lien of the mortgage. In the case before us we have a corporation whose franchise is to enable it to manufacture and dispose of gas and electricity, with land upon which are buildings used for the purpose of manufacturing gas and electricity and distributing it. In these buildings have been placed pieces of machinery of the kind that are essential in the production of electricity, placed there with the intention of their remaining there until worn out, or, in the expression used, “ superseded,” by which I take it was meant until, in the progress of invention, better and more suitable machines should be produced. ■ They thereby became part of the permanent plant of the company, proper and necessary for it to have in order to carry on its corporate business. Itseems to me, therefore, that within the principles of the cases above cited these machines became a part of the realty mortgaged.

The property of the gas company that has been used, disposed of, and sold by the gas company since the execution of the mortgage, as set forrh in the answer of the bank and of Andrews, the value of which they allege should, as against them, be credited upon the amount of such mortgage, appears to have consisted of coal oil, lime, and articles of that character, which were used in manufacturing gas and electricity, and renewed from time to time in carrying on the business of the corporation. The moneys expended appear to have been expended for the purchase of supplies, repairs to the building and plant, and the general expenses of conducting the business. It is hardly worth while spending time upon the contention that is made that such use and sales of property, and expenditures of moneys thould be credited upon the mortgage, as made in fraud of creditors.

As was stated in the court below, the question “ whether a mortgage is fraudulent as against creditors is a question of fact;” and again: “Every case must stand upon its own facts, and the test of fraud in such cases is whether the mortgaged property is really devoted to the creditor’s security.” It is not pretended here that this was any scheme by which the gas company, under the shield of a mortgage, was to be permitted to dispose of its property for its own profit in fraud of its creditors. No question is raised but that the mortgage was actuallj' given for the security of the bondholders. Such being the case, the rule that is in-valved, that where mortgaged property is permitted by the mortgagee to be used or appropriated by the mortgagor it shall, as against other creditors of the mortgagor, be credited upon the mortgage, for the reason that then the security of the bondholders is lessened, and ultimately leaving less for other creditors, I do not think can be applied to corporate mortgages like the one in question, where such appropriation and use of property and expenditure of money is made in the course of the corporate business ; the articles used up or worn out, replaced by others; the moneys expended, necessarily expended, in keeping the business alive, and to produce a revenue,—and without which use of property and expenditure of money the corporate business would cease, and no revenue could be derived with which to pay the interest upon the mortgage, or other debts of the corporation, and but for which it would cease to have any active existence. By such use of the corporate property and expenditure of money the value of the corporate property is enhanced, or at least kept good, which is for the benefit of all creditors of the company, whether mortgage creditors or others. To hold to the contrary would greatly impair the value of long term bonds secured by mortgage upon real and personal corporate property, as authorized by statute, and would not,. upon the whole, be for the benefit of other creditors of such corporation.

The appeals from the orders denying the motions to vacate the judgments entered as above stated, and direct the entry of a single judgment, embracing both actions, are next to be considered. These motions were founded upon the assumption that a cross-action as known- to the old chancery practice still exists. The argument to that effect was predicated upon section 217 of the Code of Civil Procedure, which states that the general jurisdiction formerly possessed and exercised by the supreme court of the colony of New York, at any time, and by the court of chancery of England, on the 4th day of July, 1776, is now vested in the supreme court, with such exceptions, additions and limitations as have been created and imposed by the constitution and laws of the state; “ and that subject to those exceptions, additions and limitations, the supreme court of the state has all the power and authority of each of those courts, and exercises the same in like manner.” By the words “ exercises the same in like manner,” I do not think it can be held that a cross-action, with the forms and procedure relative thereto, has been preserved ; because by the old Code of Procedure all forms of action, both legal and equitable, theretofore existing, were abolished, and by section 518 of the present Code of Civil Procedure, it is provided that the chapter of which that section forms a part prescribes the forms of pleadings in all actions, and the rules by which the sufficiency thereof is determined, except where special provision is otherwise made by law. Section 3839 provides that there shall be but one form of action, abolishes the distinction between actions at law and suits in equity, and abolishes all forms of'action at law and suits in equity. While the jurisdiction of the old supreme court and of the court of chancery has been vested in the present supreme court, and while all remedies, both in law and equity, have been undoubtedly preserved, the method of procedure by which that jurisdiction shall be exercised, and the remedies pursued, have been entirely changed, and are now to be found in the Code of Civil Procedure or in the rules of court. Decisions as to the former rules of practice and procedure, while they may be valuable as shedding light upon similar procedure provided for in the present Code or in the rules of practice, or as guides where such Codes and rules have failed to definitely prescribe in some particular the practice to be followed, and are no longer precedents in questions of practice, except to the extent I have stated. The case of Simpson v. McKay, and McKay v. Simpson, 3 Thomp. & C. 65, relied upon to sustain the motion to vacate and consolidate, I do not think sustains the contention of the appellants. As I understand it, a cross suit is not maintainable where the relief sought can be obtained in the first action. It is more than doubtful as to whether the case of McKay v. Simpson was properly a cross-action, or could have been sustained as such if challenged. The parties to both actions were identically the same, and the remedy sought in the second action was one that could apparently have been obtained in the first. The court said : “ The defendants, Alexander and Robert McKay, brought the cross-action, claiming to be allowed payments and set-offs omitted in their answer in the former suit. Why this end was not sought to be obtained by an amended or supplemental answer rather than by cross-action is not obvious.” And further on in the opinion the court said “The tidal embraced the subject-matter of both actions. The matter of the cross-suit was but a defense to the original action, and, therefore, the original cause and the cross-suit constituted but one action.” Where the cross-suit is really nothing but an answer or defense which could have been asserted by answer in the first action, and where both, as was said in the McKay v. Simpson Case, “constituted but one action," and where the parties are the same, as in that case, a single judgment may be .proper ; but that is not this case. Here the cause of action set forth in the so-called pross-suit did not constitute a defense to the original action, and was confessedly brought because it was not a defense to the cause of action set out in the first action. Neither are the parties to both actions the same. Again, in that case the original action was commenced in the court of chancery in 1843,—some years, it will be observed, before the merger of the court of chancery in the present supreme court, and before the distinction between actions at law and suits in equity was abolished, and before the abolition of the old form of procedure. These differences, without adverting to others, between the case of Simpson v. McKay and the one at bar, seem to me sufficient to destroy it as a controlling authority in this case. The actions now being considered are separate and distinct. The relief sought in one cannot be asserted as a defense in the other. The parties to the record are not the same in each. Ordinarily, where separate actions are brought,, each - proceeds to áh appropriate judgment upon the record. There may be cases where an action is brought to restrain the prosecution of .another then pending, and where the relief prayed for is granted, that a single judgment, to wit, a judgment restraining the further prosecution of the first action, is proper. There the relief that has been granted is of such a nature as to render the prosecution of the first action to judgment impossible in law, the second action in such a case having, by the affirmative relief that has been granted, swallowed up, or superseded the first. But no such result will follow in the event of such second action being unsuccessful. Then it seems to me there would be an obvious propriety in entering up a judgment dismissing the complaint in the second action, and permitting the first action, the prosecution of which it had been sought to restrain, to proceed, in the regular and usual method of procedure, to final judgment. It may be that such an order would have been proper here had the plaintiff Reynolds succeeded in his cross-suit, although I do not feel clear in that regard. But, having failed in securing the affirmance relief sought by him, I can see no reason why each action should not proceed to judgment the same as other actions. As a matter of convenience, it may be proper, where cases are practically tried together, as these were, the evidence in one being taken as evidence in the other, that a single decision and order for judgment in both cases should be rendered ; but on such decision and order separate judgments should be entered, in. order that the record in each case may be complete in itself.

As to the appeal of Reynolds from the order denying the motion to direct the receiver Gleason to pay certain coupons, and, upon the payment by said Reynolds of the remaining coupons, to turn over all the property of the gas company in his possession to said Reynolds, it seems to me that such motion was properly denied. No question was raised upon this appeal but that the appointment of a receiver in the foreclosure proceeding to preserve the property and receive the profits for the bondholders was within the power and discretion of the court. The order appointing Gleason receiver seems to have never been questioned or appealed from. The motion to discharge him, and to turn over the property in his possession to a receiver appointed in a sequestration proceeding, was one largely in the discretion of the court at special term to grant or refuse. Each of these receivers is an officer of the court, acting for it and in its place and stead. Each is simply the instrument of the court, to guard, protect, and manage for it the property and interests which are in its custody and control. The discretion of the court as to which receiver should have the future control of the property was exercised after a review, probably, of all the proceedings in this matter, as they have been herein set forth, the motion having been heard by the same justice before whom the actions were tried. The motion was made after the final judgment and decree of foreclosure and sale in the foreclosure action, and after the receiver Reynolds had been beaten in his efforts to defeat such actiom; and there is nothing before the court to show that any person interested would be benefited by granting such order, except the receiver Reynolds, who would thus have placed in his possession a large amount o£ property upon which he might he entitled to receive a percentage. Mo abuse or mismanagement is shown on the part of Gleason, and in fact I can see nothing in the record that in any way shows that the court below did not properly exercise its discretion when it refused to grant the motion which would practically remove Gleason from the receivership and place the property in the control of one who, from the record before us, seems to have vexatiously delayed the bondholders in securing their rights under the mortgage given to protect them, and who has unnecessarily increased the expenses of the proceedings they were compelled to take to enforce and protect such rights.

The number of questions to be considered in these appeals, and the length to which their consideration would necessarily extend, have precluded me from entering upon any discussion of many of the authorities cited in the learned and ingenious briefs of counsel, and I have therefore largely confined myself to an expression of the conclusions at which 1 have arrived after considering the authorities referred to.

The views herein expressed lead to an affirmance of the judgments and orders appealed from, with costs of the appeals wherein Reynolds, as receiver, is appellant, against said Reynolds personally.

Mayham, P. J., concurs ; Putnam, J., not acting.


source: Caselaw Access Project

author: Herrick, J.

license: Public Domain

text:
    Edward Palmer, Resp’t, v. New York and Lake Champlain Transportation Company, App’lt, et al., Def't.

      (Supreme Court, General Term, Third Department,

      Filed July 6, 1895.)

    Negligence—Pjroof.
    The injury to a person on a boat in tow by coming in contact with the hawser of another tug and tow in the farmer’s attempt to pass the latter at a place where it ;was dangerous to make the attempt, was held to have ref suited from the negligence of the overtaking tug, and not, therefore, to render the owner of the other tug liable for damages to the party injured.
    Appeal from a judgment in favor of plaintiff.

      Potter & Lillie, {J. Sintfo d Potter, of counsel), for app’lts; Shedden & Booth {L. L. Shedden, of counsel), for resp’t.
   Herrick, J.

This is an appeal' by the defendant the Mew York and Lake Champlain Transportation Company from a judgment and order denying a motion for a new trial. At about noon on the 9th day of May, 1891, the tugboat Robert H. Cook, owned and operated by the appellant, left Whitehall, N. Y., with seventeen canal boats, going north through Lake Champlain. About fifteen minutes thereafter, the tugboat E. C. Baker, owned and operated by the defendant the Lake Champlain Transportation Company, left Whitehall, M. Y., with fourteen canal boats in tow, bound northward to the same port as the first-mentioned tugboat. The canal boat of the plaintiff was in the second mentioned tow. About seven miles from Whitehall, there is a sharp turn in the lake known as “ Maple Bend.” At that point the channel is about 150 feet wide. It turns to the east; then again to the west. Before reaching Maple Bend, there is a stretch of the lake about one and one-half miles of straight water, known as “ Long Beach.” The Baker overtook the tow in charge of the Cook at the head of Long Beach, and then gave two blasts with her whistle, that being the signal that she desired to go to the lefthand side of the Cook. The Cook answered by a similar signal, which signified an answer to the request of the Baker. The Cook thereupon moved over to the right hand, and as near as possible to the shore, continuing at the same rate or speed as before. The Baker gradually passed the Cook, and when Maple Bend was reached was about 500 feet ahead of the Cook. The hawser of the Baker was from 150 feet to 175 feet long. A canal boat is about ninety-eight feet in lenght. The plaintiff’s boat as in the third tier of boats in the Baker tow, and on the right-hand, or Vermont, side of said tow. Thus, while the Baker itself, at the time of turning Maple Bend, was some 500 feet ahead of the Cook, a portion^ of the boats it was towing were opposite the Cook and a portion of the boats in its tow. The evidence shows that the passage of two tows of boats at the same time, around the sharp turn of Maple Bend, is dangerous. In turning Maple Bend, the hawser of the Cook was drawn with great force against the plaintiff’s boat, and then slipped and flew over the bow, striking the plaintiff, and causing the injury for which this action is brought. The evidence shows that the Cook had gone as far to the east shore as it possibly could without running aground, and indicates, also, that the Baker, in endeavoring to pass the Cook and its tow of boats, in the sharp turn at Maple Bend, drew the boat of the plaintiff against the hawser connecting the Cook with its tow of boats.

The rules of the United States for steam vessels navigating waters of the United States were, introduced in evidence, three of them being as follows:

Buie 22 : “ Every vessel overtaking another vessel shall keep out of the way of the last-named vessel.”

Buie 23 : “ Where, by rule 22, one of two vessels shall keep out of the way, the other shall keep her course subject to the qualifications of rule 24.”

Buie 24: “ In construing and obeying these rules, due regard must be had to all dangers of navigation, and to any special circumstances which may exist in any particular case rendering departure from them necessary in order to avoid immediate danger.”

This case has been once before tried, when a verdict was rendered against both defendants. The present appellant then appealed to this court. The Champlain Transportation Company did not appeal.

Upon the former appeal the court said :

“ Were it not for the testimony which was allowed to be introduced by the court in regard to the local custom on Lake Champlain, that, when one boat passes another, the latter slackens its and allows the former to the evidence does not establish a very clear case of negligence against the appellant.” 76 Hun, 181, 182; 57 St. Rep. 307.

And it was then held that evidence of this local custom was improperly admitted upon the trial, and the judgment was reversed, and a new trial granted, which resulted in the judgment now here for review.

Upon careful examination of the evidence in this case, I fail to find sufficient evidence of negligence on the part of the appellant to sustain the judgment. It seems to me that the accident in question resulted from the effort of the Baker to pass the Cook and its tow in a place where it is dangerous to make any such attempt. The navigation rules offered in evidence provide that every vessel overtaking another vessel shall keep out of the way of the last-named vessel, and that the last-named vessel shall keep her course subject to the qualifications of 'rule 24. The qualifications of rule 24 are that, in construing and obeying the previous rules, due regard must be had to the dangers of navigation, and to any special circumstances which may exist in any particular case, rendering departure from them necessary in order to avoid immediate danger. The only special circumstance in this case was that the water was somewhat narrow, and the tugboat Cook, instead of keeping her course, as provided for by rule 23, departed therefrom to the right or east side of the lake; thereby giving the Baker more room to pass upon the left, as she desired to do. The Cook went as far as possible to the east. She could go no further without running aground. There is no evidence that she was going at an undue rate of speed. There is nothing in the law requiring her to stop in order to let the Baker pass; neither was there any 'obligation resting upon her to do so. If, when Maple Bend was reached, she had then stopped, the testimony shows that such stoppage would have resulted in a collision. She did not run into the plaintiff’s boat. The plaintiff’s vessel was run into her hawser by the Baker. The Cook could not avoid it, except by running or endangering her own line of boats. It was not bound to do either. Upon the whole case, I fail to find any evidence of negligence upon the part of the appellant.

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

All concur.


text:
    Bridget Moran, Resp’t, v. Harris Friedman, App’lt.

      (Supreme Court, General Term, Third Department,

      Filed July 6, 1895.)

    New trial—Newly discovered evidence—Diligence.
    Where the alleged newly-discovered evidence consists of the testimony of persons who are not eye witnesses, but only had conversation with the adverse party concerning the transactions, the moving party is not chargeable with lack of diligence in not obtaining such evidence before the trial, and the motion for a new trial will not be denied for that reason.
    Appeal from a judgment in favor of plaintiff, and from an order denying a motion for a new trial on the ground of newly-discovered evidence.

      F. B. Taylor (Isaiah Fellows, Jr., of counsel), for app’lt; John Scanlon (James B. Stevens, of counsel), for resp’t.
   Herrick, J.

One of the appeals above entitled is from a judgment entered in favor of the plaintiff, and against the defendant; and the other is from an order denying a motion made for a new-trial, upon the ground of newly-discovered evidence., Both appeals were argued together. Ordinarily, motions for new trial upon the ground of newly-discovered evidence will not be granted where such evidence is cumulative, or is merely to impeach the veracity of witnesses sworn upon the trial; neither will it be granted unless it can be seen that the newly-discovered evidence is of such importance as to admit the supposition that the result will be different from that of the trial previously had. Brady v. Industrial Ben. Association, 79 Hun, 156 ; 61 St. Rep. 360. In this case the evidence was of such a character that a verdict by a jury for either the plaintiff or the defendant would not have been set aside as against the weight of evidence. There were only four witnesses to the transaction in question,—the plaintiff, the defendant, the plaintiff’s mother, and the man who accompanied the defendant to plaintiff’s house ; two witnesses on- each side, including the parties to the action, and their stories as to what took place were in direct conflict. Such being the state of the testimony upon the trial, it seems to me that there can be but little doubt that the newly-discovered evidence “ may produce a result different from that of the trial previously had.”

The new evidence is not simply to impeach the veracity of a witness. It goes further than that. It not only, if true, impeaches the veracity of the plaintiff, but impeaches the good faith with which the action is brought, to the extent of indicating that the charge made by her against the defendant is a trumped-up one. It has also been held that where the alleged new evidence is evidence that could, by the exercise of reasonable diligence, have been discovered and presented at the trial, the motion will be denied. Smith v. Rentz, 73 Hun, 195 ; 56 St. Rep. 128. I do not see in this case that there has been any lack of diligence upon the part of the defendant. The newly-discovered evidence is not that of witnesses to the transaction in question, whose presence, and what they saw or heard, could have been ascertained by diligent investigation, but is that of persons who have had conversations with the plaintiff; and it is hardly to be expected that the defendant should make inquiries as to who among plaintiff’s neighbors had had conversations with her in reference to the transaction in question, and, except by such an investigation there was no method for the defendant to discover the evidence in question, except by some accident, such as happened in this case. It seems to me, therefore, that the defendant’s motion should not be denied upon the ground of a lack of diligence in not heretofore discovering the existence of the testimony he now desires to present. The ■order denying the motion for a new trial should therefore be reversed, and the motion granted.

The motion for a new trial being granted there is no occasion to investigate the appeal from the judgment. Upon the plaintiff’s stipulating thereto, the appeal from the judgment may be withdrawn, without costs of the appeal to either party. If the plaintiff refuses to make such stipulation, the defendant may enter a judgment of reversal, and for a new trial, with costs and disbursements of the appeal.

Order denying motion for a new trial reversed, and motion granted, with $10 costs and printing disbursements of this appeal.


author: Mayham, P. J.

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

      (Supreme Court, General Term, Third Department,

      Filed July 6, 1895.)

    Masteb and sebvant—Rules.
    A railroad company is not liable for the death of an employe, caused by a collision, where the rules adopted by the company were sufficient, if observed, to prevent such accident, but, through whose non-observance by the engineer of the colliding train, the accident was occasioned.
    Appeal from a judgment entered on a nonsuit.

      L. F. Griffith (T. F. Hamilton, of counsel), for appl’t; R. A. Parmenter, lor resp’t.
   Mayham, P. J.

This action was prosecuted by the plaintiff, as administratrix of John Smith, deceased, an employe on a passenger train of the defendant’s railroad, who was killedj by a collision between the train on which he was employed and another train on the defendant’s road. The plaintiff’s intestate was a fireman on a locomotive engine of the defendant, attached to a passenger train required by the defendant’s time schedule to^run from Dutchess Junction to Fishkill, two stations on the defendant’s railroad, at about the rate of 103 miles an hour. This time schedule was in the possession both of the engineer and fireman on that locomotive, who were co-employes of the defendant. The defendant had established and promulgated rules for the government of its train hands, which were known to these employes and to all persons in the management of its trains, which, if observed by those employed in running the trains, would have rendered the accident improbable, if not impossible. The accident occurred by reason of the accidental stopping of a train in advance of the one on which intestate was employed, and going in the same direction. The rules of the defendant, among other things, provided that when any train was stopped on the road, or impeded, or is-only able to proceed at a slow rate, the rear brakeman or trainman must go back instantly with a red signal, at least half a mile. Had this rule been observed, sufficient warning would have been given to have stopped the train on which intestate was employed, and thus averted the injury. To this rule there is an- exception—that when the train is guarded by a distance signal, or flagman displaying a red or danger signal at a sufficient distance to protect from injury, which the trainman must see and know, he may, instead of going back half a mile, rely upon such signal. The case shows that a Semaphore, displaying a danger signal, was set; and that the signal man, on seeing .that, took up his torpedoes, and returned; and that the intestate’s train passed the semaphore without heeding its warning and thus collided' with the engine engaged in helping the disabled train. The rules also require that all trains approaching a station, junction, or point where a signal is located must do so expecting to find them at danger, and must be prepared to stop. Had this rule been observed by the engineer and intestate, the collision could not have occurred, and the serious consequences to intestate would not have followed.

It is urged by the appellant that the proof shows that other railroads have different rules from those adopted by the defendant, and that from that proof the jury might have found that the rules of the defendant were defective to such an extent that the jury might have found it guilty of negligence; but we find no proof that the rules of the defendant were so defective that, if strictly followed by the employes, they would not have afforded ample protection to all employes under them. We think the learned judge was fight in holding that there was entire failure of proof to establish any negligence of the defendant, and, if the accident was caused by negligence, it was the negligence of the intestate’s co-employes, which was a risk he took when he engaged in the service of the defendant, and for which his personal representative cannot recover in this action. We find no error in the rulings or decision of the learned trial judge for which this judgment can be reversed.

Judgment affirmed, with costs.

All concur.


text:
    Isabella Merritt, Resp’t, v. Derrick W. Sparling, as Receiver, etc., App’lt.

      (Supreme Court, General Term, Third Department,

      Filed July 7, 1895.)

    Receiver— Contempt.
    A receiver cannot be punished for contempt for disobedience to an order directing him to pay a judgment recovered against him, where such order was not made in the action in which he was appointed.
    Appeal from an order, directing the receiver to pay plaintiff a certain sum of money, with interest and costs, within a specified time, or be held in contempt of court.

      J. K & J. G. Van Mten (J. JE. Van TStten, of counsel), for app’lt; William Lounsbery, for resp’t.
   Mayham, P. J.

The case discloses that the defendant Sparling was, on the 20th of June, 1890, appointed receiver of the crops and fruits growing on a farm, for the recovery of possession of which John B. Van Btten was at that time prosecuting an action of ejectment against this plaintiff, which farm he held under a contract of purchase; and that such action was subsequently prosecuted to judgment against this plaintiff in favor of Van Btten, and in such judgment it was, among other things, adjudged that the plaintiff in such action recover the crops and fruits upon the premises, gathered and put in by the receiver, which were therein adjudged to be the property of the plaintiff in that action. After the plaintiff herein was ejected and dispossessed in that action, she commenced and prosecuted this action against the defendant, as receiver, to recover on an alleged assigned account for services rendered for the receiver in gathering crops on the farm, and in boarding hands while engaged in harvesting thereon. On the trial of this action, the judge directed the jury to find a verdict for the plaintiff, against the defendant, for $125, subject to the opinion of the court. On that verdict the plaintiff entered judgment for the sum of $236.99, recovery and costs. The defendant having failed or neglected to pay this judgment, the special term, on the 17th day of November, 1894, made the following order r

“ Ordered and adjudged that the defendant, Derrick W. Sparling, as receiver, pay or cause to be paid to the plaintiff the jndgment recovered by her on the 29th of May, 1893, for $236.99, with interest thereon from the last-mentioned date, with $10 costs of this motion, within twenty days from the entry of this order and notice thereof; and that, in default thereof, the sáid defendant be held as in contempt of this court."

By the recital in this order, the judge found that:

“ There was received into the hands of the receiver of the produce of the farm, of which he was appointed by the court receiver, sufficient money out of which to pay and discharge the plaintiff’s said judgment.” '

The defendant, in his affidavit in opposition to this motion, positively denies that he took possession of any crops, employed any hands to gather the same, or promised or agreed to pay the plaintiff for boarding hands engaged in harvesting or gathering the same. From the order above recited the defendant appeals. The appellant insists that the application to compel him, as receiver, to pay this judgment, was not made in the proper action; that, as he was appointed receiver in the action wherein John Van Btten was plaintiff and Isabella Merritt and Jacob De Witt were defendants, the application to compel him to pay any moneys in his hands as receiver could only be made in that action.

There is great force in this contention, both in principle and upon authorty. While we must assume that this action, which was prosecuted with the leave of the court, was properly brought; and, for the purposes of this motion, that the judgment therein is valid as against the receiver, as such, and correctly fixed his liability to the plaintiff; and that execution thereon, while it could not be levied on property in the hands of the receiver, as the same was constructively in the possession of the court, through its receiver—the court could, in that action, in which he was receiver, make an order which would properly reach any trust estateQin his hands as receiver. Walling v. Miller, 108 N. Y. 177; 13 St. Rep. 93. But as he was not receiver in this action, it is difficult to see upon what principle he can be punished as for contempt, and subjected to fine and imprisonment for the failure to pay a judgment, in an action in which he is not a receiver, and for the payment of which he has no trust funds. Doubtless, as an officer of the court, he would be amendable to the order of the court for the performance of the duty imposed upon him in the action in which he was appointed; but to hold him guilty of a contempt of court for failure to pay any and all judgments recovered against him as receiver would be imposing upon him liabilities which he could not foresee when he accepted the trust, and which do not arise out of the trust itself. But this question seems settled upon authority of many well-considered cases. In Walling v. Miller, 108 N. Y. 177; 13 St. Rep. 93, the rights of a party having a lien by judgment and execution on property in the hands of a receiver were clearly pointed out, where «the lien of the execution had attached before the appointment of the receiver, and the court says:

" The lien of the execution was not destroyed by the appointment of the receiver, but the right and interest of all parties to the property were thereafter to be adjusted by the court which appointed the receiver, and the property could not be taken out of the possession of the receiver, and sold upon the execution, without leave of the court. The execution creditor could bring his lien to the attention of the court in the action in which the receiver was appointed, and ask to have the execution satisfied out of the proceeds of the property.”

Such a course would be manifestly just to all parties claiming an interest in the property, as, in that action, Van Etten, who, by the judgment in ejectment, was adjudged entitled to the property; the defendant in that action, who is now claiming the proceeds of the property of the receiver; and the receiver, who, as-the officer of the court, stood indifferently between the claimants, liable to hand the proceeds of the property to the one entitled to the same —would all be before the court, to do and receive what might be adjudged for or against them, respectively. In no -other way could the rights of Van Etten, Bennett, and the receiver be fully adjusted as to all the parties. Clearly, if, by the judgment in the ejectment case, and property in the constructive or actual possession of the receiver was adjudged to belong to the plaintiff in that action, the receiver should not in this action be compelled to pay it over to the defendant, or to account and pay over to her the proceeds or value of the same; and all the parties to that action, as well as the receiver, should be before the court in a motion for a complete determination of the rights of all the parties. In Rinn v. Insurance Co., 59 N. Y. 148, the plaintiff brought an action against the defendant on a policy of the defendant, and, pending this action, the defendant became insolvent, and, in an action in equity by another party, a receiver was appointed. Subsequent to the appointment, the plaintiff recovered a judgment against the defendant, and thereafter moved in his action to compel the receiver who had been appointed in the equity action to pay the judgment. Andrews, J., in delivering the opinion of the court of appeals reversing the decision of the general term granting such motion, uses this language:

“ Without considering or passing upon the question whether the plaintiff has a remedy, or was or is entitled to a distributive share of the farm which came to the hands of the receiver, we reverse the order of the general term, on the ground that her remedy, if it exist, must be sought by application to the court in the district in which the receiver was appointed, and in the action in which the appointment was made.”

In Re Mallory, 2 St. Rep. 499, Dwight, J., says:

“The rule seems to be well established that, for the purpose of reaching funds in his hands, the application must be made in the action in which the receiver was appointed.”

We have been referred to the adjudication which breaks the force of the decisions above referred to, and are of opinion that in principle they are analogous to the case at bar.

It is urged by the learned counsel for the respondent that the defendant, as receiver and an attorney, is an officer of the court, and must obey its orders; but the answer to that seems to be that, as receiver, he is not an officer of the court in this action, and as. an attorney of the court he sustains no fiduciary relations to this plaintiff, and as such holds no trust funds belonging to her. Without considering the other questions raised by the appellant, we think the order of the special term, for" the reasons above suggested, was erroneous, and should be reversed.

Order reversed, with $10 costs and disbursements.

All concur.


text:
    Lemon Thomson et al., App’lts, v. Hiram Harris, Resp’t.

      (Supreme Court, General Term, Third Department,

      Filed July 6, 1895.)

    1. School—Taxes—Assessment list.
    The provision of section 65, tit. 7, chap. 555 of 1864, requires a heading, showing for what purpose the different items of the tax is levied, to "be prefixed to the tax list, whether the tax is voted by the district or whether it is such a tax as the trustee is by law authorized to levy without any vote of the district.
    2. Same—Statement.
    Such provision is directory only, and a failure to prefix such heading does not vitiate the assessment.
    Appeal from a judgment of the county court, affirming a judgment of the justice in favor of defendant.

      Ostrander & Salisbury {William S. Ostrander,-of' counsel), for app’lts; Joseph D. Buucus, for resp’t.
   Mayham, P. J.

This appeal was tried in the county court as a new trial. On the trial before the justice, from which the appeal is taken, the parties stipulated the facts, and the justice rendered judgment in favor of the defendant, dismissing plaintiffs’ complaint. On the trial in the county court, the parties stipulated upon the same facts submitted to the justice, and passed upon by him, and the county judge made a decision in favor of the defendant, dismissing plaintiffs’ complaint, with costs. From a judgment entered upon that decision, this appeal is taken.

The action was brought by the plaintiff to recover damages against the defendant for wrongfully entering upon plaintiffs’ premises, and taking, selling, and disposing of a quantity of shingles. The answer was: First, a general denial; second, a justification as a school district collector, acting under a warrant issued by the trustees of a school district, and delivered to the defendant, as collector, under which he seized and sold the shingles in question, to satisfy a tax levied and assessed by the trustee of the school district against the plaintiffs, who were residents of the district. The warrant and tax list upon which the defendant sought to justify was put in evidence, from which it appears that a warrant, regular and proper in form, and duly signed by the trustee, was placed in the hands of the defendant, as collector, and that, attached thereto, was the assessment and tax levy of the various inhabitants of the district, among which was the assessment and tax levied and assessed against the plaintiffs. There was not prefixed to the tax list a heading showing for what purpose different items of the tax was levied ; and the only ground upon which the plaintiffs sought to recover, and upon which this appeal is prosecuted, is that the warrant under which the shingfes were sold was void, because of the omission from the tax list of the statement of the purpose for which the tax was levied. This contention is based upon section 65 of title 7 of the general school act of 1864 (chap. 555). That section reads as follows :

“Within thirty days after the tax shall have been voted by the district meeting, the trustees shall assess it and make out a tax list therefor, and annex thereto their warrant for its collection. But they may at the same time assess two or more taxes so voted, and any tax or taxes they are authorized to raise without such vote, and make out one tax list and one warrant for the collection of the whole. They shall also prefix to their tax list a heading showing for what.purpose the different items of the tax. is levied.”

The tax levy upon which this warrant is issued does not appear to have been made out for the collection of a tax voted by the district, but was for the collectin of such tax as by law the trustee was authorized to levy without any vote“ of the district. It is urged by the learned counsel for the respondent that the provisions of section 65, above quoted, do not require- the trasteé to prefix to a tax list for the collection of a tax not voted by the district any statement showing for what purpose the tax is levied. And this contention is based upon the fact that the law fixes the tax which may be levied by the trustee without a vote, and that there is no reason for prefixing to such a tax a statement of the items for which it is levied. There is some force in this argument; but we do not think the section quoted justifies such a construction, as the provisions seem to be general, and to relate to any tax list levied by the trustee and annexed to the warrant. It is quite clear, as is contended by the learned counsel for the appellants, that in any proceeding, either by the government or an individual, under any statute in derogation of the common law, whereby the property of citizen is taken against his will, the statutory cedure should be strictly pursued. This proposition is so thoroughly established by authority that it seems unnecessary to cite cases.

But it is insisted by the counsel for the respondent that the provision of the statute relating to the list of purposes for which the tax is levied, and which was omitted from this warrant, is directory only, and not mandatory; and that the validity of tire-warrant for the collection of this tax in no way depended on the prefixing of such list. If this contention be sound, then the warrant, which was the authority under which the defendant acted, was not void upon its face, and would furnish adequate protection to the officer who executed it. If, on the contrary, this provision of section 65 was mandatory, and constituted a condition upon which only a valid warrant could be issued, then such warrant, without the list, would be defective upon its face, and void, and the officer executing it would be without protection. It will be observed that there are no negative words in this last clause, showing that the warrant would be irregular or defective if the provisions of such clause were not complied with. The general rule is that:

“ Statutory prescriptions in regard to time, form, and mode of proceeding of public functionaries are generally directory, as they are not of the essence of the thing to be done, but are given simply with a view to secure system, uniformity, and dispatch in the conduct of public business.” 23 Am. & Eng. Enc. Law, p. 458.

And one of the tests for the purpose of determining whether a provision of the statute is in reference to the performance by an officer of a public duty, is whether the statute contains negative words which render his acts illegal or improper if the provision is not complied with. In the case at bar, the object to be attained was the collection of the tax for school purposes. The method of attaining that object was by the levying of a tax on the taxable inhabitants of the district in proportion to their respective valuation, and the method by which that was to be enforced was through the warraht issued by the trustee to the collector. All these objects were attainable without the prefixing of the purpose of the tax to the tax list, and there is nothing in the statute in terms which renders the levy, assessment, and warrant void if a statement of the object for which the tax is levied is not prefixed to the assessment. If this view is correct, the provision of the section which requires the prefixing of a statement of the object of the tax to the tax list was not mandatory, but directory only, and the warrant and tax list therefore not defective upon their face, so as to render them void in the hands of the collector. We are therefore inclined to hold, not without some hesitation, that the warrant and tax list were fair upon their face, and that they furnished protection to the officer who executed them. Whether they would be a protection to the officer who issued them we are not called upon to determine.

The judgment of the county court should, therefore, be affirmed, with costs. Judgment affirmed, with costs. All concur.