text:
    Louis Ettlinger, App’lt, v. The Persian Rug & Carpet Company et al., Resp’ts.

      (Supreme Court, General Term, First Department,

      Filed November 18, 1892.)

    1. Corporations — Mortgage—When mat be foreclosed bt bondholder.
    Where a trustee for the holders of the bonds of a corporation, which were secured by a mortgage, is incurably insane; the corporation insolvent, and the assets such as to make an immediate foreclosure necessary to protect the bondholders’ interests, a bondholder may, upon showing these facts in his complaint, sue in his own name to foreclose the mortgage, without a demand on the trustee.
    2. Same—Receiver.
    In such case, upon notice to the attorney general and the corporation, the court has jurisdiction to appoint a receiver, where it appears that the landlord has obtained a judgment against the corporation for rent, and levied execution on its property.
    3. Same.
    In such case it is not necessary to serve a notice of the appointment of a receiver on the insane defendant trustee.
    4. Same.
    After the receiver has sold the assets of the corporation to third parties, the court having found the suit collusive on the part of the plaintiff, should not dismiss the complaint, but should direct an interlocutory reference and decree, and thus protect the rights of the other bondholders, third parties, and the fund in the hands of the receiver.

      Appeal from a judgment dismissing the complaint, and order denying motion to introduce further testimony.

      Thomas W. Peyton, (Thomas P. Wickes, of counsel), for app’lt; Francis B. Chedsey, for resp’ts.
   O’Brien, J.

This action was brought by the plaintiff to foreclose a chattel mortgage executed by the Persian Eug & Carpet Company, a domestic corporation, to defendant Krause, as trustee for the holders of a series of 25 $1,000 bonds, of which there were issued 21, 14 of which were held by the plaintiff, and 7 by the defendant Schumacher. There is no dispute but that at the time of the commencement of the action the interest upon the bonds was due and unpaid, and a cause of action for the foreclosure of the mortgage existed. The questions most seriously litigated upon the trial and determined by the judgment appealed from were that the plaintiff had no status to maintain the action; that the court was without jurisdiction to appoint a receiver, or direct the sale of the property; that the sale under the order was improper, as being one step in a collusive action to obtain by plaintiff possession of the corporate property. If the view taken by the learned trial judge, that the court was without jurisdiction to entertain the action by reason of the plaintiff not having a legal status to bring such suit, be correct, then we agree with him that the orders made upon the assumption of such jurisdiction would be void. It must be conceded that the complaint alleges every allegation essential to a complete cause of action to foreclose a mortgage, and the legal status of the plaintiff to maintain the action is alone involved in determining the question of the court’s jurisdiction. The complaint, in addition to a cause of action in favor of some one, alleges the insolvency of the defendant company, the necessity for immediate proceedings to foreclose, by reason of the character of the assets, consisting principally of heavy machinery, which could not be removed without great expense, and the imminent danger of its being removed from the premises by summary proceedings because of inability to pay rent, and the damage and injury that would result to the bondholders if the machinery and other property were removed from the premises before a sale thereof could be had. The complaint also alleges that the trustee, Krause, did, while in Germany, become violently and incurably insane, and -that he is now confined in a lunatic asylum at Frankfort, in the empire of Germany, and cannot act under said mortgage as trustee to preserve and sell said property for the benefit of said bondholders.

The question thus presented at the outset is as to whether the court had j urisdiction to entertain this action; and in thus considering it we are to take, not the proof given upon the trial (upon which it was proper, according to the weight given thereto, to either grant or refuse the relief), but the complaint itself. In other words, we think that this question should be disposed of as a question of law, just as though it was raised upon a demurrer to the complaint. We recognize the well-settled doctrine that a trus-

tee for .bondholders, holding the legal title for the benefit of all concerned, should sue; and in cases where it is made to appear that he is competent and willing to institute an action, this right cannot be assumed by a cestui que trust or beneficiary or other person ; and it is only where it is made to appear that the trustee is unwilling or, by reason of his relations to the grievance of cestui que trust or beneficiary, he should not be permitted to maintain the action, that it can be maintained by such cestui que trust or beneficiary. It will not be seriously disputed that upon a proper case, showing unwillingness on the part of a trustee to bring a proper action, such may be maintained by a beneficiary or cestui que trust. Most of the cases to which we have been referred by the respondents wherein a bill or complaint by a beneficiary has been dismissed will show that it is because of failure to prove a proper case, and not by reason of lack of jurisdiction, that the bill or complaint has been dismissed; that whether the beneficiary asserts his right in his own name or through the trustee is more a matter of form than of substantial right; and that the beneficiary will be allowed to sue whenever the wrongs complained of must otherwise go without redress. The position of a trustee under a mortgage given to secure bondholders is similar in principle to that of a corporation with respect to rights inuring to stockholders, and for the redress of which an action would lie in favor of the corporation. With regard to these cases, we have the rule clearly laid down, that, although an action to recover such losses should, in general, be brought in the name of the corporation, where it refuses, or where the wrongs complained of would otherwise go without redress, the stockholders, who are the real parties in interest, will be permitted to sue in their own names, making the corporation a defendant. Brinckerhoff v. Bostwick, 88 N. Y., 52; Hawes v. Oakland, 104 U. S., 450. We think that here the facts alleged in the complaint show that it would have been futile, if not physically impossible, to have made a demand upon the trustee in time to prevent what was feared, namely, injury to the property of the corporation by its removal; that such allegations supplied a reason for the failure of the trustee to begin the suit, and satisfied the requirement that, before the fight of the trustee to maintain the action in the first instance is taken away, some statement must be furnished upon which the court can see that the injury sought tó be remedied, or the complaint made, would otherwise go unredressed. In this action we do not think that any distinction can be made between an unwilling and an incompetent trustee, because, as illusstrated in this very case, while it is true that the trustee’s misfortune, and not his misconduct, is the reason why he could not respond to bring the action, this would not alter the fact that, by reason of his not doing so, plaintiff’s substantial rights were in jeopardy; añd it might well be that delay might result in a given case in a substantial denial of justice to all persons interested in the fund.

It will not do in considering this question to take account here that upon the proof the learned trial judge reached the conclusion that the action itself was collusive. "We must take the complaint as it stood at the commencement of the action, and its allegations, for the purpose of determining whether a cause of action in favor of a beneficiary was stated which, in the absence of a demand on the trustee, the failure of which was explained, could be maintained. The court could not assume on the complaint, nor could it see, that the action was collusive. And if we indulge in an opposite assumption to that found by proof upon the trial, viz.: that the suit itself was in good faith intended to protect the interests of the plaintiff and the defendant and all other persons interested in the company, we can better reach a conclusion as to whether the court was wanting in jurisdiction to entertain the action or not. Many cases could be referred to wherein, either by the refusal of the trustee to begin the action, or for reasons stated showing the impropriety of his bringing the action, it has been maintained in the name of a beneficiary or cestui que trust; and we have been referred to no case which goes to the length of holding that, where proper reasons are assigned, showing that, in consequence of removal from the jurisdiction, or incompetency through mental trouble, of the trustee, the beneficiary or ■cestui que trust could not maintain the action, where such action was necessary to protect the rights of the cestui que trust and others interested in the trust property. The conclusion we have reached •on this point leads us to the view that the court had jurisdiction of the action, and upon a proper showing could have granted the relief prayed for at the suit of the plaintiff.

We think, also, in an action wherein the court has jurisdiction, that, upon notice to the corporation and attorney-general, under ■circumstances here appearing, the court was not without jurisdiction to appoint a receiver. Upon such application it was shown that the corporation was insolvent, and unable to pay its current expenses; that the landlord had recovered a judgment against it for rent due August 1st, and levied execution upon the property •of the company; and that the company was unable to pay the rent which would fall due on the 1st of the month following, and •anticipated being evicted from the premises in which it was carrying on business. This situation of affairs would certainly justify 'the appointment of a receiver, in a proper action; and the objection that notice thereof was not served upon the defendant trustee, where the difficulty or impossibility of giving such notice was fully shown, cannot affect the validity of the order appointing the receiver. It is insisted that the authority of the court to appoint a receiver without giving such notice is limited by § 714 of the Code, which, in effect, ‘provides that a temporary receiver shall ■only be appointed without notice in a case where an order of publication for the purpose of acquiring jurisdiction over the defendant has been published.

We think, however, that this section has no application to this case, for the reason that the court, by virtue of service upon and appearance by the corporation through its attorneys, acquired jurisdiction over the defendant corporation, and, upon a proper showing, in appointing a receiver, it but exercised the power which has -been regarded as inherent in the supreme court. Though not entirely in point, the case of Attorney General v. Guardian Mutual Life Ins. Co., 77 N. Y, 272, is instructive as to the power of the court in respect to the appointment of receivers. There the order to show cause why a receiver should not be appointed was served neither on the president nor other officer of the company, but on the return the company appeared by attorneys, who admitted seivice of the order to show cause. The learned judge writing the opinion, says: The supreme court acquired jurisdiction of the proceeding for the appointment of á receiver of the Guardian Life Insurance Company by the presentation of the petition of the attorney general, setting forth that the superintendent of the insurance department had communicated to him that he had made an examination of the affairs of the company, and that it appeared to the superintendent from such examination that the assets of the company were insufficient to reinsure its outstanding risks. The court, having acquired jurisdiction of the subject matter by the presentation of the petition, acquired jurisdiction of the corporation by its voluntary appearance by its attorneys on the return of the order to show cause, service of which had previously been admitted by them. This service, followed by the appearance of the attorneys on the return of the order to show cause bound the corporation, and dispensed with the necessity of the actual service of the order on the president or other officers of the company. There is no proof that the appearance by the attorneys was unauthorized, and the presumption is that they appeared by authority of the corporation. A corporation, like a natural person, may appear voluntarily by attorney, and such appearance gives jurisdiction to the same extent as if there was actual service of process.

“ The court, therefore, had jurisdiction to make the decree dissolving the corporation, and appointing a receiver. If the decree was improvidently granted, or if for any reason it should be set aside or modified, relief can be had upon application, by any party interested, to the court by -which it -was made; but the regularity of the appointment of the receiver cannot be questioned by any other tribunal.” The receiver here, upon his appointment, showed in his application to the court, thereafter immediately made, for leave to sell the property, that the situation described in the motion paper's leading up to his appointment was correct, and that there was reason to believe that it would be for the best interests of all parties that the property should be sold. With regard to the power of the court to appoint a receiver and direct a sale of the property by the receiver pendente lite, the recent cases in this court and in the court of appeals growing out of the failure of Levy Bros, so fully discuss these questions that a reference thereto alone is sufficient; and, among the others, see National Park Bank v. Goddard. 41 St. Rep., 439. The receiver, under the order to sell, disposed of the property, some to third parties, and the bulk thereof to the plaintiff; and, the parties who purchased on such sale having taken possession of the property so purchased by them, which has been removed, and some of which may no longer be in existence, it would be impossible to have it restored to the corporation in its original condition. This order of sale was subsequently modified, upon the application of one John Morgan, a judgment creditor, who had obtained a judgment and made a levy, by directing that the property should be sold “subject to any lien upon the proceeds of such sale that may be established by the said Morgan.” As the result of such sale, a fund has been obtained by the receiver, of which, in view of the judgment appealed from, it is difficult to see what disposition is to be made.

We have thus at some length referred to the situation, for the reason that, while we are not disposed to interfere with the conclusion reached by the learned trial judge in refusing relief to the plaintiff, we think that the court, having the power to determine the rights of the parties, should have proceeded in such a way as to do complete justice. While, therefore, our opinion is in this case that the court, had jurisdiction of the action, we think the learned trial judge was right in refusing to give any relief to the plaintiff, upon his conclusion that “ the suit was, upon all the facts adduced at the trial, in a legal sense, collusive, and * * * subversive, as conducted, of Mr. Schumacher’s rights; ” and “that the plaintiff and all concerned should be required to relinquish what they have obtained through these proceedings, and in some form to restore the status quo.”

To accomplish this, however, we think the complaint should not have been dismissed, but that, to protect the rights of all parties, namely, the rights of persons who, other than the plaintiff, purchased upon the sale, and the judgment creditor Morgan, who released his levy upon the property on condition that he should be allowed to have his lien attach to the proceeds of the sale, andr above all, to give to the defendant Schumacher relief, to which, in view of the conclusions reached by the learned trial judge, we think he was entitled, it would have been the proper course to have directed an interlocutory reference, to the end, first, that an account might be taken of the value of the property which the plaintiff had thus succeeded in getting into his possession, and,, that ascertained, that the property be placed in the receiver’s-hands for the purpose of securing a fund equal to the value of the assets thus appropriated by the plaintiff, for distribution among-those entitled thereto. Unless some such interlocutory reference be had in the action, we fail to see how the court is to restore the status quo, or to protect its own receiver, whose appointment was not a void one, and against whose disinterestedness and good faith throughout no suggestion is made. As the case now stands, he has a fund in his hands resulting from a sale of the property, which has not been, nor do we see, with the judgment standing in its present form, how it can be, distributed and disposed of. We think that the result of the interlocutory judgment ordering a reference such as suggested will be to have the questions as to the value of the property determined, and that, upon the coming in of such referee’s report, the question of the amount which should be paid by the plaintiff to the receiver can be ascertained, and thus the rights of all the parties can be fixed and determinied in this action. Should the judgment stand, the questions which could "be thus settled will be the unquestioned source of numerous suits and motions, which by following the suggestion indicated can be settled and adjusted in this one action. We are of opinion, therefore, that the judgment should be modified in the manner pointed ■out, by an interlocutory "judgment directing a reference for the disposition of the questions indicated, with costs to abide the event.

In regard to the appeal taken from the order of the learned trial judge, refusing to reopen the case for further testimony, but little need be said. The granting or refusing of such a motion was one resting in the discretion of the court, and we do not find that there was an unjustifiable refusal to exercise it in plaintiff’s favor. The order appealed from should, therefore, be affirmed, with costs .and disbursements.

Van Brunt, P. J., and Lawrence, J., concur.


source: Caselaw Access Project

author: O’Brien, J.

license: Public Domain

text:
    Alvy W. Momeyer, Resp’t, v. The New Jersey Sheep & Wool Company, App’lt.

      (Supreme Court, General Term, First Department,

      Filed November 18, 1892.)

    1. Evidence—Secondary.
    Where notice to produce a proposition in writing, delivered to, and left with a defendant, has been served, a failure to produce such original paper entitles the plaintiff to introduce an alleged copy of the proposition, and to show by paroi that it is like the original.

      ■%. Same.
    When such copy was first admitted improperly before a proper foundation was laid, and stricken out, and not finally admitted until the evidence entitling it to be referred to as secondary evidence was presented, the error is harmless.
    Appeal from a judgment entered upon the verdict of a jury in .■an action to recover the contract price for boring a well.
    . William F. Handel, for app’lt; P. Q. Fclcerson, for resp’t.
   O’Brien, J.

The action was to recover $743.75, the amount ■of the contract price for boring a well 175 feet deep, and furnishing materials in connection therewith. On the part of plaintiff ■evidence was given tending to show that the work was done and material furnished in accordance with the contract alleged in the ■complaint; and the question at issue, as presented by testimony offered by defendant, was whether or not, as part of the agreement, the contractors were to put down a well that would furnish 75 gallons of water a minute. Some evidence was also given by the defendant tending to show that the well was to be completed within 30 days; but any variance in respect to time of completion is not material to be considered, as no defense was placed upon this, nor was any point made of it on the trial. The court, in a ■charge to which no exception was taken, fairly presented for the jury’s determination the question as to what was the contract between the parties, which, upon conflicting testimony, was resolved in favor of the version contended for by plaintiff. Upon this appeal, the defendant insists that its motion to dismiss the complaint at the conclusion of plaintiff’s case should have been granted, for the reason that the burden placed upon the plaintiff, of establishing the specific contract set forth in the complaint, had not been sustained. It was also urged that the verdict of the jury was contrary to the evidence in the case. In addition to these two questions, which relate to the merits of the controversy, two other reasons are assigned for a reversal of the judgment, growing out of exceptions taken to the admission in evidence of two exhibits offered by the plaintiff. One, (plaintiff’s Exhibit A,) when first offered, was improperly admitted, because no sufficient foundation had been laid for its introduction.

Thereafter, however, the court struck it out, and it was finally admitted when, in the opinion of the court, a proper foundation had been made. The most serious question in the case turns upon the point as to whether it was error to admit finally this exhibit, "which, it was claimed by the plaintiff, was a copy of the original proposition accepted by the defendant, and which constituted the agreement upon which the right of action depends. The contractor’s testimony was to the effect that, prior to June 2d, the original, of which this Exhibit A was substantially a copy, was delivered to and left with the defendant. The bookkeeper of the plaintiff stated that he went with one of the contractors to the place of business of the defendant in Jersey City, upon which occasion the contractor introduced the subject of receiving the acceptance of his proposition, which Mr. Pidcock, one of the officers of the defendant, stated had been mislaid; that it was then suggested that a new one be written up, which was then and there done; and Mr. Pidcock stated that it was satisfactory, and that he would keep it, and have his “ typewriter write it off on the machine, and mail it to Mr. Conlaii, the contractor, at Newark.” When asked if he could remember the contents of that paper written at the defendant’s place of business, he stated that he had a fair recollection of it; and, when asked if the plaintiff’s Exhibit A corresponded with the paper left with defendant, he answered that it corresponded in. price, and in depth limit, and in the material; and he further stated that, to the best of his recollection, it was a copy of it. It further appears that the defendant was requested to produce the original, and resort to this secondary evidence contained in Exhibit A was only due to their refusal to produce the original.

We take it that the law is well settled that where, as here, a proposition in writing is delivered to and left with a defendant, upon whom notice to produce is served, a failure to produce such original paper entitles the plaintiff to resort to secondary evidence ; and, therefore, if no more certain or definite proof was-available, resort might be had to paroi evidence for this purpose. Here, however, was a paper which, according to the testimony of these two witnesses, was stated by one to be substantially a copy of the original proposition, and by the other to be substantially a copy of the second proposition, also left with the defendant: and the link showing the similarity between the first and second. propositions in writing left with the defendant is supplied by the testimony of the contractor, who says they were made on the same form, and were, with the exception, perhaps, of some words, exact and substantial fac similes.

While, therefore, the admission of this exhibit originally may have been eiror, it was harmless, because it was stricken out, and not finally admitted until the evidence entitling it to be referred to as secondary evidence was presented. The second exhibit (B.) called in question was a telegram, dated June 2, 1890, as follows:

“ Have concluded to accept your offer. Commence at once.

“Hew Jersey Sheep & Wool Company.”

Though no objection was made when the telegram was offered and admitted in evidence, defendant’s counsel subsequently moved to strike it out on the ground “ that it was offered in evidence as an acceptance of the proposition which show on their [sze] face the falsity of it.” This motion is not only grammatically and formally bad, but it is scarcely intelligible. We may assume, however, that the difference in date between the proposition, which was dated June 25th, and this telegraphic acceptance, which was dated June 2d, is the point the appellant desired to make. This discrepancy in dates was explained by one of the contractors, who testified that the first proposition submitted to the defendant was prior to June 2d, and that, upon the defendant’s officer, Pidcock, informing him that it had been mislaid, the second one was made out on or about the 25th of June, upon which day it was dated, and left with the defendant. This tallies with the testimony of the bookkeeper, who, in his testimony already referred to, explains the reason for the giving of this second proposition. If, therefore, we have apprehended the point presented by appellant in regard to this telegram, we think we have furnished the answer.

This leaves the two questions most strongly urged upon this appeal, namely, the denial of the motion to dismiss the complaint for insufficient evidence, and the denial of defendant’s motion, after the verdict in plaintiff’s favor, to set the same aside because contrary to the weight of evidence. The case contains no statement that all the evidence given upon the-trial is contained within it. The facts are not, therefore, before the general term for review. The only questions are those of law. Aldridge v. Aldridge, 120 N. Y, 614; 31 St. Rep., 948; Cheney v. N. Y. C. & H. R. R. R. Co., 16 Hun, 415; Claflin v. Flack, 36 St. Rep., 728. It is to be further noticed that,' although a motion for a new trial was made, no order denying the same was ever entered, and no appeal from such an order is before us, the appeal being only from the judgment. A denial of a motion for a new trial is not the subject of an exception, and such an exception presents no question of fact for review upon appeal from the judgment. To bring up the case for review upon the facts, there must be an appeal from the order denying the motion for a new trial. The only mode in which the facts can be brought before the general term for review is by appeal from order of special term or circuit granting or refusing a new trial. Matthews v. Meyberg, 63 N. Y., 656; Boos v. World Mut. Life Ins. Co., 64 N. Y., 236; Dillingham v. Flach, 43 St. Rep., 810.

The procedure necessary to present questions for review upon appeal has been so frequently formulated as to now make it appear a needless repetition. But, for the reason that upon so many appeals it is lost sight of, it would seem necessary from time to time to repeat it, with a view, if possible, of saving appellants from falling into the same errors as the appellant here, of urging questions that cannot be considered because not presented upon a proper record. The exception taken by the defendant to the denial of its motion to dismiss the complaint presents a question of law as to whether there were sufficient facts tending to prove a cause of action which requires that they should be examined in order to make a disposition thereof. For this purpose it is unnecessary that a statement should be made in the record that it contains all the evidence, because the question thus presented could as well be determined upon a bill of exceptions as upon a record of the entire case. Were the question to be presented by a bill of exceptions, it would then be the duty of the plaintiff to see that all the testimony which he regarded as essential to establish a prima facie case was inserted therein. So where a case and exceptions on appeal are presented, as here, and an exception is taken to the denial of a motion to dismiss the complaint on the ground that the cause of action alleged in the complaint has not been proven, we are to assume that all the testimony relevant and necessary to show that the denial of such motion was correctly made is before us. This requires that we should examine the testimony offered by the plaintiff, for the purpose of determining whether the motion to dismiss the complaint was properly denied. This we have done, and taking the defendant’s version of what the contract was between the parties, and of the manner in which the same was fulfilled, we fail to find any fatal variance between the allegations of the complaint and the proof offered in support thereof, or any such insufficiency in making out a prima facie case as would have justified the trial judge in granting the motion for a dismissal. We are of opinion, therefore, that the judgment appealed from should be affirmed, with costs.

Van Brunt, P. J., and Patterson, J., concur.


author: Van Brunt, P. J.

text:
    Sarah Gunning, Resp’t, v. Catherine Gunning et al., Impl’d, App’lts.

      (Supreme Court, General Term, First Department,

      Filed November 18, 1892.)

    Banks—Deposits—Evidence.
    In an action to recover a deposit from a savings bank, the complaint alleged that it was made with plaintiff’s money by and in the name of a man with whom she lived as his wife, and since deceased, and also that the deceased assigned to her his title and interest in the money; she testified that she had always had the bank book in her possession, although she had testified that the deceased had drawn out a large part of the original deposit, and the entries appeared in the book. She gave no explanation as to where she got the money. Held, that there was no legal evidence which justified a submission of the case to the jury, the only material evidence being plaintiffs and most of it incompetent, because relating to transactions between herself and deceased, and entitled to little credit, in view of her swearing to two absolutely inconsistent causes of action, and her conflicting statements.
    Appeal from judgment in favor of plaintiff, and from an order denying motion for new trial.

      Denis Quinn (J. W. Shepard, of counsel), for app’lts; Henri Pressprich, for resp’t.
   Van Brunt, P. J.

This action was brought against the North River Savings Bank to recover the amount of a fund on deposit with it to the credit of one Martin Gunning. The complaint alleged that on or about the 10th of August, 1889, the plaintiff, in the name of Martin Gunning, deposited with the defendant $10,459.75 in money ; that the defendant promised to repay the plaintiff, through Martin Gunning aforesaid, on demand; that the defendant has repaid the plaintiff, through Martin Gunning, on account of the aforesaid sum, the sum of $8,100, leaving the sum of $2,359.75 still due to the plaintiff; and that the plaintiff has demanded of the defendant the last mentioned sum, which the defendant has neglected and refused to pay. The North River Bank thereupon made a motion, upon papers showing that Martin Gunning had died, and letters of administration had been issued upon his estate to the defendants James and Catherine Gunning, for a substitution of such representatives of Martin Gunning in its place and stead, and for leave to pay the money into court. An order was thereupon entered, making the personal representatives of Martin Gunning, deceased, parties defendant, and providing for the service of' pleadings upon them. The plaintiff thereupon served a-n amended complaint, alleging, among an almost innumerable number of irrelevant allegations, that in March, 1875, the plaintiff, relying upon the allegation of Martin Gunning that he was a single man, and had no wife or children, agreed with said Martin Gunning that they should become man and wife, and live together as such during the term of their natural lives ; and they did so live together until April, 1891, when Martin Gunning died. That by plaintiff’s industry, labor and economy she had saved and accumulated out of the proceeds of her business $10,459.75, which amount of profits were deposited to the credit of said Martin Gunning, in the name of the said Martin Gunning, with the defendant, the North River Bank, which deposit was made to the credit of said Martin Gunning without the knowledge and consent of the plaintiff. That after said deposit Martin Gunning delivered to the plaintiff the bank book, and fbat since said delivery the plaintiff has remained in full possession and control thereof; and that, being ignorant, illiterate, and unable to read or write, she was unable to discover the fact that the deposit was made in Gunning’s name. And for a separate cause of action the plaintiff alleged that on or about the 10th of August, 1889, or thereabouts, Martin Gunning deposited with said bank the sum of $10,475, and that prior to his death the said Gunning, for value received, assigned, transferred and set over to the plaintiff the aforesaid balance, and all his right, title, and interest thereto, and claimed a recovery upon that ground. This complaint was sworn to by the plaintiff, and the answer was substantially a general denial. Upon the trial the jury found a verdict in favor of the plaintiff, and. from the judgment thereupon entered, and from an order denying a motion ior new trial, this appeal is taken.

It seems to us, in view of the oath of the plaintiff in respect to this transaction, as to two causes of action, which are absolutely inconsistent with each other, that her testimony was entitled to very little credit. It would appear that she was willing to swear to anything for the purpose of getting possession of this money. In the first place, she swears that the money is hers, and that the same was deposited by Gunning in his own name without her knowledge and consent; and, in the second place, she alleges that, for value received, Martin Gunning assigned, transferred, and set over to the plaintiff all his right, title and interest in this money. These claims are so inconsistent that it was impossible for both to be true, and yet the plaintiff swears to the accuracy of each. The only evidence which tends in the slightest degree to support the claim of the plaintiff is her own, which is to the effect that she was keeping lodging-houses and soup-houses in various parts of the city, and that the money she earned was put in the New York County Bank in Fourteenth street; that she did not draw it out, for there was an injunction put on it; that there was then $2,300 and some small amounts besides; that she did not know exactly the year it was put in, about ten or twelve years ago. Then she states that she had over $10,000 when she went to Ireland; that she went down to Mr. Walsh’s in Wall street, got a draft for it; that she carried the money in her bosom; that the draft was sent to the Provincial Bank of Ireland in the name of her mother, Fitzsimmons, Martin Gunning being with her at this' time; that they went together to Ireland," stayed there two or three years, and came back, the money being remitted to the North American Bank, 52 Wall street; that she went there with Gunning, got the money and the check, and went up to the North River Bank and deposited it, and subsequently she drew $7,500, which was drawn out for buying a house in St. Mark’s place.

Upon cross-examination it appeared that the title to this house was taken in the name of Martin Gunning, and that she never saw the check which was given by the North American Bank, and which she states went up to the North River Bank, her answer being: “I don’t see the check; but Gunning and I went up there.” No draft of the kind mentioned was produced or shown ever to have existed. The plaintiff, upon the trial, produced the bank book, claiming to have had possession of it since the time of the deposit, which is about as correct as most of the other testimony upon the part of the plaintiff, because it appears from her own testimony that Gunning drew money subsequently from the bank, amounting to $7,000 or $8,000, which drafts are entered upon the book, and Gunning must have had the book then. There was some other testimony as to declarations upon the part of Gunning that he had no money, and also the examination of Gunning in proceedings in respect to alimony in a suit brought against him by his wife for divorce. Upon the part of the defendants, testimony was offered going to show that at the time Gunning went away he was a man of considerable means, and had considerable monejr. The court submitted the case to the jury, and they found a verdict in favor of the plaintiff, which submission was duly excepted to upon the part of the defendants. We think, upon an examination of the whole case, that there was no legal evidence which justified the submission of any question to the jury. Most of the evidence upon the part of the plaintiff was clearly incompetent, being evidence of transactions between the deceased, Gunning, and herself. In fact, all of the evidence, if it may be so called, pertinent to the question as to the ownership of the money, fell within this rule. Gunning being dead, it was impossible for him to answer, and the plaintiff could tell what story she pleased in regard to the ownership of this fund. She gave no explanation at all where she got this money from. She says she had it in the County Bank, but does not produce any evidence of the fact; and, as we read the evidence, that only applies to a small portion of the amount. And the significant fact is developed by the evidence that, when $7,000 or $8,000 of this money claimed to belong to the plaintiff is drawn for the purpose of buying a house, the title is taken in Gunning’s name, without dissent on her part, so far as this case discloses. The possession of the bank book under the circumstances means nothing. Gunning had died in her house, where they were living together as man and wife, and there -was no difficulty about her obtaining possession of the book after his death ; and" the circumstances of her inconsistency in the manner in which she stated her cause of action must necessarily, as already stated, weaken any statement that she might make. If the property of dead people is to be transferred upon such loose evidence as this, there is but little security for the personal representatives of such deceased. We think the judgment should be reversed, and a new trial ordered, with costs to appellants to abide the event.

O’Brien and Lawrence, JJ., concur.


author:
      O’Brien, J.
      Van Brunt, P. J.

text:
    Ann Sharp, Adm’rx, Resp’t, v. George L. Rose, App’lt.

      (Supreme Court, General Term., First Department,

      Filed November 18, 1892.)

    Money had and received—Proceeds of policy of insurance assigned as collateral.
    When a policy of life insurance is assigned as collateral security for a debt, and the amount of the policy is paid by the insurance company to the creditor, the surplus over the debt may be recovered in an action for money had and received.
    Appeal from judgment in favor of plaintiff, entered upon verdict directed by the court.

      Gruber & Landon (Abraham Gruber and Alfred R. Page, of counsel), for app’lt; Rothschild & Roff, for resp’t.
   O’Brien, J.

The complaint alleges the death of James Sharp, the granting of letters of administration to the plaintiff, and “ that on or about May 8, 1891, the defendant above named received and collected, to and for the use and benefit of said plaintiff, from the Mutual Life Insurance Company, the sum of $1,400, which said sum the defendant retains, and, though demanded, refuses to pay.” Upon the trial evidence was given by plaintiff tending to support the view that a policy of insurance taken out upon the life of James Sharp had, through certain mesne assignments, been assigned to the defendant as collateral security for money loaned, and that the sum demanded in the complaint was received by the defendant from the insurance company over and above what was required to fully pay and satisfy his debt and interest thereon. The defendant introduced no evidence, and to defeat a recovery relied upon two grounds: (1) That the plaintiff seeks to recover on an entirely different cause of action than that stated in the complaint, and inconsistent with it; and (2) that the testimony failed to prove any contract between the defendant and the decedent that the policy was assigned as collateral security, it tending merely to prove that the defendant had received a certain amount of money from the insurance company to his own use, and not to the use and benefit of the plaintiff. The form of action adopted in framing the complaint is the old common law form for money had and received; and it is insisted by the appellant that, as the cause of action sought to be proven required equitable relief in two particulars, namely, (a) to have an absolute assignment declared to be a pledge for collateral security, and (b) for an accounting, the debt being unliquidated, and the defendant having made advances, therefore there was an inconsistency between the pleadings and the proof. This objection cannot now be regarded as a novel one, in view of the decisions of Everiit v. Conklin, 90 N. Y., 645; King v. Van Vleck, 109 N. Y., 363; 15 St. Rep., 521; Roberts v. Ely, 113 N. Y, 128; 22 St. Rep., 185; Place v. Hayward, 117 N. Y., 487 ; 27 St. Rep., 710, and Chapman v. Forbes, 123 N. Y., 532; 34 St. Rep., 351. The case of King v. Van Vleck, supra, is a direct authority holding that where a policy of life insurance is assigned as collateral security for a debtj and the claim of the creditor is satisfied by the receipt of the amount due from the insurance company, the surplus may be recovered in an action for money had and received." This also disposes of the claim that the title of the mortgagee or pledgee, though in a technical sense it became absolutely vested in him, was not subject to the right of redemption until some proceeding adequate in law for that purpose was taken by the mortgagor to cut off such right. As said in that case: “ The mortgage must be deemed to have been paid by the money received hy the defendant upon the policy, and he held the balance for the plaintiff, and became indebted to her therefor. To hold that a technical action to redeem was necessary in such a case would be to sacrifice substance to form, under a system of pleadings where mere forms count for but little. The facts set forth in the complaint show that the plaintiff was entitled to the relief she claimed. The action is substantially for money had and received, and it is impossible to perceive why that was not a proper action. The precise relief to which the plaintiff was entitled was the balance of money due her, and she was entitled to no other relief, and needed no other. That balance was easily ascertainable, and the peculiar machinery of an equity court was not needed to ascertain it.” It is true that in most, if not all, the cases above referred to, the facts were very fully set forth. But neither at common law nor under our code system of pleading is it absolutely essential that such facts should be fully set forth. The Code requires (§ 481) “ a plain and concise statement of the facts constituting each cause of action."

The complaint here concisely stated that the plaintiff had received moneys from the insurance company which belonged to her. If there was any uncertainty or indefiniteness, though we fail to see how there could be, the defendant had his remedy. The complaint stated a good cause of action, and under such a form of action it has always been competent to prove that “ a person has money in his hands which belongs to another, no matter how he came into possession of it, and upon which he has no legal or equitable claim as against the true owner, and which he has no right to hold as against the true owner.” 4 Wait Act. & Def., 508, § 30. The whole subject is very fully and ably discussed in Roberts v. Ely, supra, wherein it is said, page 131, 113 N. Y; 22 St. Rep., 187: “ The action for money had and received to the use of another is the form in which courts of common law enforce the equitable obligation. The scope of this remedy has been gradually extended to embrace many cases which were originally cognizable only in courts of equity.” We are of opinion, therefore, that there was no variance or inconsistency between the cause of action alleged in the complaint and that sought to be established by the evidence.

The other question, however, still remains, as to whether the evidence sufficiently established a cause of action. This is presented upon defendant’s motion to dismiss the complaint, which was denied, and to which denial the defendant excepted. It is unnecessary for us to detail the facts proven, it being sufficient to say that the inferences to be drawn therefrom were clearly susceptible of, and only consistent with, the view adopted by the learned trial judge in directing a verdict, namely, that the defendant had obtained an absolute assignment of the policy of insurance, which he held as security for money loaned, which, when returned to him out of the payment made by the insurance company upon the policy, still left a balance which in equity and justice should have been returned to the plaintiff, and for which a verdict was directed. Some slight testimony which was objectionable crept into the case, over the defendant’s exception, but upon an examination it can be seen that it in no way prejudiced the defendant, the case not having been submitted to the jury, and the facts remaining being sufficient to sustain the direction made by the court. We are of opinion, therefore, that the judgment should be affirmed, with costs and disbursements.

Van Brunt, P. J.

I concur. The defendant did not raise at the trial the question as to the previous assignments, and it is too late now to avail himself of that objection to plaintiff's right of recovery. _


author: Per Curiam.

text:
    William Gillespie et al., Resp’ts, v. The Davidge Fertilizer Company, App’lt.

      (Supreme Court, General Term, First Department,

      Filed November 18, 1892.)

    1. Pleading—Answer.
    In an action for an accounting for goods delivered, as plaintiff alleged, under certain agreements, whereby defendant was to hold the goods in trust, with liberty to sell the same, and to hand the avails therefrom to the plaintiffs, the answer denied these allegations, but admitted that defendant received certain goods similar to those mentioned in the complaint, and had disposed of a part thereof, and received the proceeds. Held, that the answer did not admit the allegations of the complaint, and was not frivolous.
    2. Same.
    In such case the allegation in the answer that the defendant’s agent, who made the contracts, had not authority so to do, was a sufficient defense.
    Appeal from order overruling answer as frivolous.
    Action for an accounting for goods sold. The complaint was as follows:
    (1) That the plaintiffs are copartners in business as commission merchants in the city of New York, under the firm name and style of Gillespie Bros. & Co. (2) That the defendant is a manufacturing corporation created by and under the laws of the state of New York. (3) That heretofore, to wit, on or about the 28th day of February, 1889, an agreement was entered into between plaintiffs and defendant, a copy of which is set forth in Exhibit A, hereto attached, and .that thereafter, to wit, on or about the 2d day of March, 1889, a further and separate agreement was entered into between plaintiffs and defendant, a copy of which is set forth in Exhibit B, hereunto attached, and that thereafter, to wit, on or about the 3d day of April, 1889, a further and separate agreement was entered into between plaintiffs and defendant, a copy of which is set forth in Exhibit C, hereunto attached. (4) That, pursuant to the terms of said agreements, the defendant received all and singular the goods specified in Exhibits A, B and C, hereto attached, and thereafter disposed of the same, or some part thereof, and has received the avails of same, or a portion thereof, but has wholly failed, refused and neglected to account or pay over to these plaintiffs the proceeds thereof, except the sum of $2,303 15-100, although requested so to do by the plaintiffs in this action. (5) That by reason of said failure, refusal and neglect on the part of said defendant, and for other good and sufficient reasons, the plaintiffs have, by due and proper notice to defendant, terminated said agency, and have demanded all the goods not heretofore disposed of, and all of the moneys, property and accounts in its possession, or received by it, the defendant, relating to the sale of the goods heretofore furnished to the said defendant, under and in pursuance of the terms of the said agreements; that the said defendant refused to turn over to plaintiffs any moneys in its hands, or any of the property so consigned to it, or to render any just account thereof, and the said defendant also refused to allow these plaintiffs, or their agent, to examine the books of said defendant containing the entries relating to said property, and refused and still refuse to give these plaintiffs proper facilities of ascertaining • the facts in relation tnereto. (6) The plaintiffs verily believe that the defendant has in its possession, or under its control, money, accounts, notes, and merchandise belonging to these plaintiffs, and also a portion of the goods so consigned, but the amount thereof these plaintiffs were unable to -determine; but the plaintiffs believe that the same amounted, at the time of the commencement of this action, to at least six thousand dollars. Wherefore plaintiffs demand an accounting between plaintiffs and defendant, and a judgment for the amount found to be due under said accounting, by the defendant to these plaintiffs, and for such other and further relief as to the court may seem just and proper.
    [Exhibit A.]
    New York, Feb. 28, 1889.
    The Davidge Fertilizer Co., 121 Front Street, New York,
    Received of Gillespie Brothers & Co. delivery order for the following merchandise:
    Mark 1 500 bags No. 1 fertilizer, 200 lbs. each.
    500 bags No. 2 fertilizer, 200 lbs. each.
    134 bags No. 3 fertilizer, 168 lbs. each.
    And in consideration thereof we hereby agree to hold the said goods in trust, with liberty to, sell the said goods, and, in case of sale of all or any part thereof, to hand the avails, as soon as received, to Gillespie Bros. & Co., and we hereby agree to keep the said property fully insured against fire.
    Davidge Fertilizer Co.
    R. C. Davidge, Pres.

    Exhibits B and C are substantially the same as Exhibit A.
    The answer alleged:

      First. For a first defense : (1) It has no knowledge or information sufficient to form a belief as to the allegations contained in the first subdivision of said complaint. (2) It admits that it is a manufacturing corporation, but alleges that it is organized for the sole purpose of manufacturing fertilizers and selling the same. (3) On information and belief it denies each and every allegation contained in subdivisions third, fourth, fifth and sixth of said complaint, except that it received certain goods similar to those mentioned in Exhibits A, B and C, and has disposed of a part thereof, and has received the avails of a portion thereof. Second. For a second defense: The defendant, further answering, says, on information and belief, that the said R. 0. Davidge mentioned in Exhibits A, B and C, annexed to said complaint, had no authority to sign the same or to enter into such a contract in the name of the defendant, and that the alleged obligations mentioned and set forth in said Exhibits A, B and 0 were foreign to the objects for which the defendant was organized, beyond its powers, and as to the defendant were unauthorized and void. Wherefore the defendant demands that said complaint be dismissed, with costs.

      George Wilcox, for appl’t; Kneeland, Stewart & Epstein (Ira B. Stewart, of counsel), for resp’ts.
   Per Curiam.

The answer interposed by the defendant was not frivolous? It distinctly puts in issue the 3d, 4th, 5th and 6th subdivisions of the complaint. These subdivisions constitute the entire cause of action, and the answer thus amounts to a general denial. These denials are not affected by the admission of the defendant that it received certain goods similar to those mentioned in the plaintiffs’ complaint, and that it has disposed of a part thereof, and has received the avails of a portion thereof. The denial of the receipt of the goods specified in the complaint still stands, and there is no admission, direct or indirect, of the agreements referred to in the complaint upon which the goods are said to have been delivered; nor is there any admission, direct or indirect, that the defendant received the goods specified in the complaint, or disposed of such goods pursuant to any such agreements. The decision evidently proceeded upon the theory that the affirmative defense set up in the answer, denying the authority of Mr. Davidge to enter into the contracts, raised no issue of fact or law, and that, consequently, such defect vitiated the entire an-, swer. We think, however, that the defense thus affirmatively pleaded was sufficient. But, even if it had been insufficient, it did not disturb the preceding denials. The order should therefore be reversed, with $10 costs and the disbursements of the appeal, and the motion for judgment should be denied, with costs.

O’Brien and Barrett, JJ., concur.


text:
    In the Matter of the Estate of John Callahan, Deceased.

      (Supreme Court, General Term, First Department,

      Filed November 18, 1892.)

    Executobs and administbatobs—Accounting.
    The petition of a creditor that an executrix be required to account was opposed by the latter in an affidavit which alleged that she was the residuary legatee of the estate; that she was able and willing to pay all just claims due; that she had in fact paid all claims except the petitioner’s, which was in dispute. Held, that the affidavit did not show cause sufficient to require a denial of an application for an accounting.
    Appeal from an order of the surrogate of the city and county of JSTew York, directing the appellant to account, and directing its filing on or before May 31, 1892.

      Thomas J. McKee, for ex’rx, app’lt; Niles & Johnson (W. W. Niles, Jr., of counsel), for resp’t.
   O’Brien, J.

In this proceeding a petition was presented to the surrogate, showing that the executrix of the deceased had not filed any account, though more than eighteen months had elapsed since her appointment, and asking that a citation issue requiring the executrix to appear and show cause why she should not render and settle her accounts as such executrix. A citation having been issued, the executrix on the return thereof submitted an affidavit in which she asserted that the petitioner had no valid claim against the estate, and, in support of this allegation, reviewed certain steps taken by the petitioner to establish the validity of the claim. The first of these was an action brought by the petitioner against the deceased in his lifetime which, upon his death, resulted in the substitution of the executrix as defendant in his place and stead, who thereupon interposed her answer denying the petitioner’s right to recover in the action. This action, after issue joined, was, upon the application of the petitioner, discontinued, upon the condition that the petitioner pay the costs.

The executrix further shows that afterwards an action was brought against the auctioneers who sold the property out of which this claim is alleged to have arisen, and that this action after issue joined came on for trial, and a judgment upon the merits was rendered in favor of the auctioneers and against the petitioner. The executrix also' swears that under the will she was made the residuary legatee, and as such took and holds possession of all the property of the estate, and avers her readiness to pay any and all just claims due, and assigns as a reason for not filing an account that all debts due by the deceased have been fully liquidated. She also states that after the disposition of the actions above referred to a claim was presented by the petitioner, which claim was rejected, and that six months have elapsed since such rejection. The answering affidavits dispute the statement made by the executrix with respect to the rejection of the claim; and while the presentation of the claim is conceded, a question upon the conflicting statements was presented as to whether or not it was ever rejected by the executrix. Upon the proceedings thus had, the surrogate made the order directing the executrix to file an account of her proceedings; and from this order the first appeal is taken. Thereafter, upon failure to comply with the terms of this order, an application was made for an order to show cause why a -warrant of attachment should not issue against the executrix, which was granted. In answer to such order to show cause, many of the facts averred in her former affidavit were presented as reasons why an account should not be filed, and the special point was' made that the order of the surrogate requiring her to account had not been served. Upon this motion the surrogate made his decision as follows: “Upon examination, I find the statute does not require service of the order. See § 2727. The account must be filed on or before May 31, 1892, or a warrant of attachment will issue.” No order was entered upon this decision of the surrogate. The appellant, however, assuming that this decision was an order, has appealed therefrom. This last appeal, purporting to be from an order of the surrogate, when no such order, so far as appears, is in existence, must be dismissed, as we are aware of no practice which will permit an appeal from an opinion rendered by a surrogate or judge, in the absence of an order, decree, or judgment made thereon, and properly entered. Were the question presented upon this appeal, however, before us, it would be without merit, for the reason that, if the original order directing the executrix to account was proper, the surrogate, upon her failing to comply with the directions contained in the order, would be justified in granting a warrant of attachment. The point relied upon of non-service of the order was correctly disposed of by the surrogate, as will be found by a reading of the section referred to by him, § 2727 Code Civ. Pro., which states: “The executor or administrator is bound by such an order without service thereof.”

This brings us to the main question presented upon this appeal, as to the validity of the order of the surrogate directing the executrix to file an account. As shown by the case of Thomson v. Thomson, 1 Bradf., 26, the Eevised Statutes authorized the surrogate, of his own motion, to enforce the return of an inventory after three months from the date of letters. 2 E. S. (3d Ed.), 149, § 18. Whether this power still exists in the surrogate it is unnecessary for us to determine, it appearing here that the order was made upon the petition of a creditor, and the authority of the surrogate, under such circumstances, to make the order is expressly conferred by the Code of Civil Procedure, §§ 2724, 2726, 2727. By the latter section, upon a petition being presented by a creditor, the surrogate must make an order directing an account, unless good cause to the contrary is shown. The appellant insists, however, that good cause is shown by reason of the circumstances set forth in the answering affidavit, to the effect that all other claims against the estate have been liquidated, and that she has sufficient moneys in her hands, and stands ready and willing to pay all just debts due; and that the further fact that the petitioner’s claim is disputed is a good reason why she should not be compelled to file an account. Notwithstanding the proceedings resorted to by the petitioner to enforce payment of a claim, which, it would appear, were ineffectual, it is conceded that subsequent thereto the petitioner filed the claim with the executrix; and whether the same was rejected or not, we think, upon the affidavits presented, was undoubtedly and properly resolved by the learned surrogate in the petitioner’s favor. If, however, we were to assume that the claim of the petitioner was in dispute, this would be no reason for denying the application. This question has been directly passed upon by the surrogate’s court in Re Cowdrey, 5 Dem., 453, wherein it was held that, eighteen months having elapsed since the executrix had obtained letters testamentary, she must be directed to account; and further held that the fact that the petitioner’s claim is in dispute was no ground for denying her application for an accounting. While this decision is in no way controlling upon us, an examination of the reasons for the conclusions reached by the surrogate in that case, and of the authorities relied upon by him, will show that it is well supported.

Upon examining this record, we find no reason to interfere with the disposition made by the learned surrogate, and the order appealed from should be affirmed, with costs and disbursements.

Barrett, J., concurs.


author: O’Brien, J. Van Brunt, P. J. Lawrence, J.

text:
    The People ex rel. The Equitable Gaslight Company of New York, App’lt, v. Edward P. Barker et al., Commissioners of Taxes, Respts.

      (Supreme Court, General Term, First Department,

      Filed November 18, 1892.)

      1. Taxes—Corporations—Petition por certiorari.
    A petition by a corporation for a certiorari to review an assessment against it for taxation, which states that the commissioners have illegally and erroneously included in their valuation of the personal property of said corporation the market value of its capital stock, to wit, 112 per cent, upon the whole of said capital stock, is sufficient under § 4 of chapter 269, Laws 1880.
    2. Same.
    In such case an assessment will not be reduced, where it does not appear that the corporation was aggrieved, although the assessors adopted an erroneous method in determining the value of its capital stock.
    Appeal from order confirming assessment of capital stock as reduced.

      Coudert Bros., for app’lt; William H. Clark (George S. Coleman, of counsel), for resp’ts.
   O’Brien, J.

The relator, upon petition, obtained a writ of certiorari to obtain a reduction and cancellation of the assessment' placed by the tax commissioners in taxing the capital stock of the relator. The petition states that the commissioners “have illegally and erroneously included in their valuation of the personal property of the said corporation on said roll for taxation the following: The then market value of the capital stock of said corporation, to wit, 112 per cent, upon the whole of said capital stock.” The law provides, chapter 269, Laws 1880) that this writ is allowable when the petition shall set forth that the assessment is illegal, specifying the grounds of the alleged illegality, or is erroneous by reason of overvaluation,” etc.; and “ if it shall appear * * * that the assessment complained of is illegal, erroneous, or unequal, for any of the reasons alleged in the petition, the court shall have power to order correction of the assessment, in accordance with law.”

It is insisted by the respondents that the ground of illegality specified in the petition was an overvaluation of the capital stock to the extent of twelve per cent. This, however, would be rather a limited and confined view to take of the relator’s objection. We think it was intended to, and did, fairly apprise the respondents of the objection urged below, and urged here, that the method or principle upon which the assessment was placed was illegal and erroneous, and resulted in an injustice to the relator. Upon an examination of the record, we think it is placed beyond doubt that the method or principle adopted by the commissioners was erroneous and illegal, under the decision of People v. Coleman, 126 N. Y., 433 ; 38 St. Rep., 237. It was therein held: “ First, the subject value or valuation and assessment is never the share stock, but always the company’s capital and surplus; second, such capital and surplus must be assessed at its own value, and, when that is correctly known and ascertained, no other value can be substituted for it.” And it appearing in that case from the statement of assets and liabilities of the company that there was nothing subject to taxation, it was held error for the assessors, for the purpose of determining the value of the capital of the corporation, to take as such the value of the shares in such corporation; and for these reasons the assessment was vacated and canceled.

Here we think the relator is sustained in the contention that in determining the value of its capital the assessors were guided principally, if not wholly, by a consideration of the market value of the shares of the corporation, which, as we have shown, was an erroneous method or principle to apply. We do not agree, however, with the argument addressed to us by the appellant, that such facts show that the assessment has been levied upon the property of others, not upon the property of the corporation, and that, therefore, there was a total absence of jurisdiction; because, while this is specious, it is not sound, for the reason that what the commissioners did, having jurisdiction over the property of the corporation, was to adopt an erroneous method in fixing the value of the capital of such corporation, which did not take away their jurisdiction or power to act with respect to taxing such capital.

Assuming, therefore, that the commissioners, having jurisdiction, did adopt a wrong method or principle, the question presented is. whether this would render the assessment void. This would leave the action of the commissioners subject perhaps to t^ie criticism that they have never acted and fixed the value of the capital, and that, therefore, the assessment laid is illegal and void. We have not, however, been referred to any authority which goes to the extent of holding that the adoption of an erroneous principle by commissioners in fixing the amount of a tax made the tax itself void, in the absence of evidence showing that the party was thereby aggrieved; and, conceding the erroneous method adopted, we think that the test to be applied as to whether it should be further reduced or canceled is to be determined by the answer to the question whether or not the relator has been aggrieved. For this purpose we will assume that every item presented in relator’s statement upon which a claim for reduction could be based, if considered by the commissioners, would have been allowed. In other words, we will assume that, in respect to the actual value of the real estate, as distinguished from its assessed value, it correctly appears in relator’s statement; and we will further assume that the indebtedness claimed to exist did exist and was a proper subject for consideration by the commissioners in determining the value of the capital of the corporation; and with these assumptions in relator’s favor, if it could be shown that it was aggrieved, then we should favor the reduction, if not the annulment and cancellation, of the assessment.

For the purposes, therefore, of our examination, let us take the statement furnished to the department of taxes and assessments by the relator, and which is contained in the record, as follows:

“ Statement made and delivered to the commissioners of taxes and assessments of the city and county of New York, for and in behalf of the Equitable Gaslight Company of New York, showing its condition for the purpose of assessment on the second Monday of January, 1891:

Total gross assets............................ $6,740,666 52

Capital stock actually paid in, or secured to be

j paid in................................... 4,000,000 00

Amount of surplus earnings................... 161,421 87

Rate of dividend for last year, or last annual dividend .................................... 320,000 06

“ Is the company assessed by the state under chapter 361, Laws 1881, and the amendatory acts? Yes.

“ Liabilities in detail, as follows:

Capital stock............................... $4,000,000 00

Certificates of indebtedness................... 933,000 00

Bonds........ 1,000,000 00

Bills payable............................... 150,000 00-

Purchase-money mortgages................... 400,000 00

Accrued interest on bonds, etc................ 33,006 66

Deposits from consumers..................... 18,959 00

For supplies, etc............................ 44,278 99

“ Costs of 125 4102-5280 mains (including $18,000 paid for new pipes not laid), $1,291,427.78.

“Assessed value of real estate (1891), describing particularly by ward numbers:

Assessed value of mains......................

19th Ward, 1st ave., E. 40thstreet; E. 41st street;

Nos. 1 to 20 ; 31 to 50.....................

19th Ward, 1st ave., E. 41st street; E. 42d street;

Nos. 1 to 20; 31 to 50.....................

21st Ward, 1st ave., E. 39th street; E. 40th street;

Nos. 4,956 to 4,981........................

22d Ward, S. E. cor. 11th ave. and 59th street;") Nos. 61 to 64,

22d Ward, between 10th and 11th aves., 58th j to 59th streets; Nos. 5 to 20; 45 to 60. J

“Amounts invested in the stocks of other corporations which are taxed upon their capital.......

“Amount invested in United States securities----

$429,000 00

300.000 06

350.000 06

200.000 06

205,000 06

$1,484,000 06

0 06 0 00

“ (If the stock of the company is worth less than par, state the actual value, and give the facts under oath which will justify

such estimate of its value).

(The market value of stock, 1890................. $125 00

The market value of stock, 1891.................. 115 00)

The commissioners started with a valuation of $4,000,000, or the par capital of the relator, to which was originally added the twelve per cent, which, however, we need not consider, because it has since been stricken out; and therefore we have, as á starting point in determining the question now presented to us, $4,000,000, an amount equal to the par value of the capital of the relator. As shown above, the total gross assets were $6,740,666.52, from which, if we deduct the indebtedness as claimed by the relator, which aggregated $2,579,244, there still remains an amount in excess of $4,000,000, with which the commissioners had a right to start, and from which they were to deduct the amounts exempted by the statute. This they did by deducting the assessed value of the real estate.

But it is insisted, and this is the ground of the grievance claimed, that, instead of the assessed value of the real estate, the actual value thereof should have been deducted; or, in other words, that if for the purpose of fixing the value of the capital stock we have regard to the total gross assets of the corporation, here stated to have been six millions and over, an examination by the commissioners would have disclosed the facts which are now presented to the court, namely, that five millions and over of these gross assets represented money invested in real estate, land, buildings, mains, etc., separately taxed.

We think that the error into which the learned counsel for the relator has fallen is in assuming that, for the purpose of determining the value of the capital, only personal property is to be considered. As said in People v. Asten, 100 N. Y., 597 : “ It is not a controlling fact in .the assessment of the capital stock of a corporation that the whole capital was originally invested in real estate. It is the duty of the assessors to ascertain the present value of the stock, and from this to deduct the assessed value of the real estate and such other items as are specified.” This case and that of Peoples. Commissioners of Taxes, 95 N. Y., 554, we think, are .authority for the view that for the purpose of ascertaining the value of the capital of a corporation it is competent for the commissioners to take the quantity or actual value of the real estate, together with the other property of the corporation; and, after the value thereof is found, they are not required to deduct therefrom the actual value of the real estate which has been included in estimating the value of the capital, the exemption of the real estate being only to the extent that it has been assessed. Therefore, if we assume here that all the property of the relator was real estate—that its gross assets consisted entirely of real estate— it would make the valuation of the capital stock, after deducting the indebtedness, exceed the par value thereof, namely, $4,000,-000. And if the commissioners, under these circumstances, were to be obliged to deduct the actual value of the real estate, and not its assessed valuation, we concede that there would be nothing upon which an assessment could be laid or predicated. But as the commissioners were directed, not to deduct the actual value of the real estate, but only the assessed value thereof, as exempted, it would be their duty to make only that deduction which the statute allowed.

We think the relator, upon the figures submitted, shows that the capital stock was unimpaired; that there remained a surplus of $161,421.87 after deducting an 8 per cent dividend on the par capital for the preceding year; and that the commissioners were bound to adopt at least a par value of the capital as the actual ^valuation of the capital stock for the purposes of assessment; and upon examination, if the indebtedness as claimed and the assessed valuation are deducted before determining what amount is taxable, it will be found that the amount as fixed by the commissioners was not excessive. For the reason, therefore, that we do not see that the relator was aggrieved or could be aggrieved by the method pursued, and the amount, after the deduction made by the learned judge at the special term, having been fair and just to the relator, we are of opinion that the disposition made by the special term was proper, and should be affirmed, without costs.

Van Brunt, P. J.

I concur in the result of the foregoing opinion, except as to costs. I see no reason why an affirmance should be had without costs. I think we should affirm, with costs.

Lawrence, J.

I think that the affirmance should be with costs.

Order affirmed, with costs.


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    The Hanover National Bank, App’lt, v. Sarah F. Blake, Resp’t.

      (Supreme Court, General Term, First Department,

      Filed November 18, 1892.)

    Composition—Fraud.
    B. & Co. made a general assignment for the benefit of their creditors, who thereafter signed a composition agreement to take forty per cent, of their respective claims, to be paid by four notes made by the members of the firm, two of which were to be endorsed by defendant. Plaintiff desiring to have the security of defendant on all four notes, obtained her endorsement thereon, without the knowledge of the other creditors. Reid, that such secret endorsement of all plaintiff’s notes rendered the entire transaction void, and plaintiff could not recover on any of the notes.
    Appeal from judgment in favor of defendant, entered upon verdict directed by the court, and from order denying motion for a new trial.

      Moore & Wallace (Thomas S. Moore, of counsel), for app’lt; C Bainbridge Smith, for resp’t.
   O’Brien, J.

There is presented on this appeal a sole question of law, upon the following admitted facts, from which it appears that in the spring of 1888 Frederick D. Blake and Charles Waterman were partners, engaged in the dry goods business under the firm name of F. D. Blake & Oo. They were deeply indebted to various creditors, including the plaintiff, and, becoming insolvent, executed a general assignment of all their property to James EL Tliovp on the 24th of April, 1888. On the 4th of June, 1888, the creditors of F. D. Blake & Co. signed a composition agreement, by which they agreed to take forty per cent, of the respective claims, to be paid by four notes made by the members of the firm, each for ten per cent, of the claim, two payable in six and twelve months, and two in eighteen and twenty-four months, the latter two indorsed by Sarah F. Blake. The Hanover Bank, desiring to have the security of Mrs. Blake upon all the notes, asked that she indorse the first two as well as the last two, which she did. This was not known to the other creditors, and was a security additional to that provided by the terms of the composition agreement. The note in suit is the third of the series, payable in eighteen months, and properly indorsed by Mrs. Blake in accordance with the composition agreement. Upon these undisputed facts, both counsel at the trial moved for judgment, which the court directed for the defendant, to which exceptions were duly taken, thereby raising the question of law presented on this appeal, which is: Did the secret agreement by which Mrs. Blake indorsed the first two notes invalidate the whole composition agreement, so that notes given in pursuance of its terms are not enforceable by plaintiff? We regard the law as well settled that, with respect to Mrs. Blake’s indorsement upon the first two notes, it was void and inoperative. But it will be noticed that the note now in suit, the third note, is one which, under the terms of the composition, was to bear her indorsement. Upon this question, whether the secret and fraudulent agreement under which the additional security was obtained upon the former notes extends to and invalidates the note in suit, it is impossible to reconcile either the authorities or dicta of judges writing opinions in analogous cases. Thus White v. Kuntz, 107 N. Y., 518; 12 St. Rep., 297 ; Breck v. Cole, 4 Sandf., 79, and in England the case of Feize v. Randall, 1 Esp., 224; 6 Term R. 146, are relied upon by the plaintiff to support the view stated in the opinion in Brech v. Cole, supra, that, “ whenever a composition is made with creditors, every agreement or arrangement by which an advantage is secured to any one or more of the creditors which is denied to others is a fraud upon the creditors from whom it is concealed, although it neither has nor can have the effect of depriving them of any portion of the amount which they had agreed to receive.” On the other hand, the cases of Howden v. Haigh, 11 Adol. & E., 1033; 39 E. C. L. 315; Pendlebury v. Walker, 4 Younge & C., 424; Higgins v. Pitt, 4 Exch., 312 ; Mallalieu v. Hodgson, 16 Adol. & E., N. S. 690; 71 E. C. L., 589; Doughty v. Savage, 28 Conn., 146; Frost v. Gage, 3 Allen, 560, are referred to as authority for the rule laid down by Chitty on Contracts, (9th Amer. Ed. by Perkins), 694, as follows : “ WTere a debtor in embarrassed circumstances enters into an arrangement * * * with his creditors to pay them a composition upon their claims, * * * any private agreement between such debtor and one of the creditors, who professes to join in the general arrangement, that the former, or a third party for him, shall pay a further sum of money, or give a better or further security than such as is provided for the other creditors, is void as & fraud on them. * * * Accordingly, if one creditor do make such a stipulation in fraud of the other creditors, the effect thereof will be to destroy any security which may have been given to him, even for the legal amount of the composition, and it makes no difference that the stipulation in question did not originate with the creditor, but in the voluntary offer of the debtor himself, ■or of a third person on his behalf, or that the creditor has realized nothing under the agreement, for it is the mere fact of such an agreement having been made which constitutes a fraud.” See, also Leicester v. Rose, 4 East, 372 ; Ex parte Sadler, 15 Ves., 52 ; Knight v. Hunt, 5 Bing., 433. With the exception of the case in -Connecticut and that in Massachusetts, above referred to, all the cases expressing a view similar to that formulated by Chitty are English decisions; and, so far as the decisions in the courts of this state are concerned, we can find no direct controlling authority upon the question presented by this appeal. As against the dicta in White v. Kuntz, supra, upon which plaintiff seemingly places great reliance from certain, expressions of the learned judge in writing the opinion, are counter expressions, which, we think, are of equal weight, to be found in the opinion of the same court in Solinger v. Earle, 82 N. Y., 397.

In the absence, therefore, of authority, it remains for this court to determine which of these two contrary views finds most support in principle and reason. This note in suit was received as part of an agreement which was unquestionably fraudulent, and it is only upon a theory that the agreement is divisible that the note in suit could be unaffected by the taint of fraud imbuing the transaction. The giving of the four notes, however, was unquestionably the result of a single fraudulent agreement; and, as fraud vitiated the agreement itself, it is difficult for us to determine upon what principle it could be applied to the first two notes, which were concededly incapable of enforcement, and stop at this, the third, note, because the amount herein provided, and the security attached thereto, were precisely what was intended by the composition agreement. Where fraud enters into an agreement like this, which is single, and, as we think, indivisible, it must permeate the entire agreement, and one who is a party to such fraud cannot, after he has retained the fruits and results of his fraud, ■sustain a recovery for some portion of it which may have connected with it an element of a good and valid consideration. We are inclined, therefore, to adopt the view taken by the learned trial judge, among others, for the reason urged by the respondent, that, if the rule that an additional security given to a creditor, in violation of the terms of the composition, rendered the whole transaction with that creditor fraudulent and void, did not obtain, it would create one of the most alluring inducements to an unscrupulous creditor to commit a fraud, not only upon the unfortunate debtor, but upon his other creditors, who signed the composition upon the faith that all were to share alike; for in taking such security the only risk he would run would be to lose the additional security, while he would be assured of enjoying with the other creditors the amount secured under the composition. Such a doctrine is repugnant to common honesty, and, instead of making the cunning contriver the victim of his clandestine agreement, as was said by Judge Story in his work on Equity Jurisprudence, vol. 1, par. 379, it would place him in a position where he would have everything to gain by his fraud, and nothing to lose. „ The same principle was involved in Baldwin v. Short, 125 N. Y., 553; 36 St. Rep., 138, and the observations of Finch, J., in delivering the opinion of the court, are apt and appropriate to the case at bar. He said: “The contention that the conveyance to Mrs. Short may be sustained to the extent of the adequate and honest part of the consideration is fully answered by the authorities, which hold that, where the deed is fraudulent against creditors, it is wholly void, and cannot stand to any extent as security or indemnity,” citing several authorities. “A different rule would put a premium upon fraud. Almost invariably some-honest consideration is made the agency for floating a scheme of fraud against creditors, and, if that may always be saved, nothing is lost by the effort, and the temptation to venture is increased.” We are of opinion, therefore, that the judgment should be affirmed, with costs and disbursements.

Van Brunt, P. J., and Lawrence, J., concur.


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    Minna Winterfield, App’lt, v. The Second Avenue Railroad Company, Resp’t.

      (Supreme Court, General Term, First Department,

      Filed November 18, 1892.)

    HEai/ISENCB—Faii/ore of proof.
    When, in an action for injuries sustained by being run over by a street car, the plaintiff presents no evidence tending to prove that the injuries resulted solely from the negligence of the defendant, or where it affirmatively appears that, though the defendant may have been guilty of negligence, still the p'aiutiff’s negligence contributed to the injuries, it then becomes proper for the court to dismiss the complaint, because of failure of proof sufficient to justify a recovery.
    Appeal from judgment dismissing the complaint.

      Benno Loewy, forapp’lt; Merrill & Rogers, (Payson Merrill, of counsel), for resp’t.
   O’Brien, J.

It is elementary law that, to entitle plaintiff to recover for injuries alleged to be due to the negligence of defendant, it must be affirmatively proved by the evidence of the plaintiff that such injuries resulted solely from the negligence of the defendant. This places upon the plaintiff the burden of showing, not only that the defendant was negligent, but that the plaintiff was free from contributory negligence. Where, therefore, the plaintiff presents no evidence tending to prove that the injuries resulted solely from the negligence of the defendant, or where it affirmatively appears that, though the defendant may have been guilty of negligence, still the plaintiff’s negligence contributed to the injuries, it then becomes proper for the court to dismiss the complaint because of failure of proof sufficient to justify a re■covery. Here the court dismissed the complaint upon the grounds that, in one view of the testimony given by the plaintiff, her hoy was guilty of contributory negligence, and that in another view, based upon the testimony of another witness, “ the driver made -every effort that a man could make to stop the car,” atid hence there was no negligence on the part of the defendant. In determining whether this ruling was correct, we will take the appellant’s summary of the facts as proved. It was conceded “ that the boy was run over by one wheel of one of the cars of the defendant, and that he thereby received injuries which necessitated the amputation of a leg, which followed.” The plaintiff brought this action to recover for loss of services, and for expenses resulting from such injuries. From her testimony it appeared that she personally had no knowledge of how the accident occurred to her boy, who at that time was an infant, ten years of age. Three witnesses were produced by plaintiff: One, the boy, who testified that just before the accident he was in the butcher shop on Second avenue, one door above 106th street, which was on the first floor of the house in which he lived. That a boy threw some dirt at him, and he ran across the street, and as he was running he slipped and fell. That before he fell he saw the light of the car, and that the car was then at the upper corner of 106th street. When he started to run, the car was somewhere below the corner. The car was coming fast It was a little before seven o’clock in the evening; not quite dark. It was then clear, although it had been raining previously. He was running across the street from the west to the east side when he fell down. That he looked down the street when he started to run, and saw the car a little above the corner. That the horses were trotting. That he ran diagonally and across the street. That when he was hurt he was near the third elevated railroad post from the corner, the one in the middle of the block, •on the east side. That he was six or seven feet from the post when he fell; just below it. That he fell on the track on the east side, on the east rail. Both he and his mother testified that they had tried to find the two boys with whom he was then playing, but that they had moved away, and they were unable to find where they were. Herman Keppler testified that on the evening of this accident he was walking on the east side of Second avenue, and, seeing some friends on the other side, he started to cross the ■street. As he was crossing the street, when he got as far as the east track, he saw this boy fall. He fell right alongside of him. That he noticed at the time the boy fell that the Second avenue oar was on the corner of 106th street. He did not stop to pick the boy up, but when he got as far as the other side of the avenue he heard a scream, and, rushing back, he got bold of the boy from under the car, and dragged him out, with the assistance of some friends. That they took the boy to a drug store. That they were obliged to shove the car back from the boy. That he did not see the driver. That when the boy fell he was in the middle of the block, and the car was at the upper corner of 106th street. That the horses were trotting.

Elizabeth Christman testified that she lives on Second avenue, near 107th street. That on that evening she was in the butcher shop. When she got to the butcher’s she saw some boys playing tag from one side of the street to the other, four or five boys, and one of the boys ran right into her, and she gave him a shove. She then saw the car coming up, and she saw the little boy, August, right above the elevated post, playing tag with another boy, and that he ran right into the horses. She testified that she is a married woman, and that her husband is a tinsmith, and works for the Second Avenue Eailroad Company now. On cross-examination she testified that she saw the driver, and that he had one hand on the brake and the other on the lines ; and that she saw the driver, when the boy ran against the horses, put on the brakes “ as fast as he could.” That the driver “ tried awful hard, but he could not stop after the boy fell.” That when the boy fell she was on the opposite side of the street, on the sidewalk; and that the reason she is so positive that the driver tried “ awful hard to stop ” was “ that there was so many boys running after the boy who ran into her. That she looked right across the street, and saw it.” This was all the testimony on the part of the plaintiff, and the court, on motion of the defendant’s counsel, dismissed the complaint, on the ground that the evidence showed that the plaintiff was guilty of contributory negligence, and the plaintiff duly excepted.

Analyzing this testimony with respect to the management of the car or the actions of the driver, no testimony whatever is given, apart from that of the boy, who says the car was coming fast; and of Keppler, that the horses were trotting; and of Elizabeth Christman, who alone testified to having seen the driver, with one hand on the brake and the other on the lines, who, “ when the boy ran against the horses, put on the brakes as fast as he could.” We are not, however, left entirely to speculation as to the rate at which the car was going. Keppler testified that when the boy fell he was beside him, so that he could touch him, and that thereafter he had plenty of time to, and did, cross over the track. From his evidence one of two inferences can be drawn: either that the boy that he saw fall was not the boy that was subsequently run over and injured by the car, or we must assume that the boy, in falling, became unconscious from the effects of the fall; which, however, there is no evidence in the case to prove; and then remained on the track while the car was coming the distance from the corner to the middle of the block between the streets. As to whether the boy whom the witness Keppler saw fall was the boy Winterfeld is rendered still more uncertain when we come to consider the testimony of Elizabeth Christman, who, examined on behalf of the plaintiff, testified, as has been shown, that she saw the driver with one hand on the brake and the other on the lines, who, when the boy ran against the horses, put on the brakes as fast as he could. It will thus be seen that the inferences to be drawn tend to support the view that the plaintiff was guilty of contributory negligence,' and there is no evidence in the case tending to support the theory that the injuries resulted solely from the negligent acts of the defendant. Of course, had there been evidence tending to show that when the boy fell he was rendered unconscious, and that the car was sufficiently far away to have enabled the.driver to have seen and guarded against , the accident, then a case would have been presented entitling the plaintiff to go to the jury, within the rule stated by Shear. & E. Neg. § 36, which was referred to with approval in Mallard v. Rinth Ave. Railroad Go., 27 St. Eep. 801, that “ the plaintiff may ' recover, nothwithstanding his own negligence exposed him to the risk of the injury, if the defendant, after becoming aware of the plaintiff's danger, failed to use ordinary care to avoid injuring him.” Assuming, in the absence of evidence to the contrary, that the fall did not render the boy unconscious, and that the boy run over was the same one seen by the witness Keppler to fall, then no explanation is given for his not having got out of the way of the car; the evidence of this witness showing clearly that there-was ample time between the fall and the passage of the car from the corner to where the boy fell within which he could have got upon his feet, a,nd out of the reach of the car.

In the case, of Block v. H. B., M. & F. R. Co., 28 St. Rep. 495, relied upon by the appellant, it was said, (page 497): “ It may be further observed that this case, in its essential elements, is kindred to the case of Fenton v. Second Ave. R. R. Co., decided herewith : the boy in that case being injured in consequence of falling in an attempt to cross the track under circumstances similar to those in this case.” This case of Fenton was taken upon appeal from this court to the court of appeals, and the opinion of this court affirming a judgment in favor of a recovery against the company was reversed. 36 St. Eep. 385. This necessarily affected the case of Block v. H. B., M. & F. R. Co., which the learned judge writing the opinion, as we have seen, stated to be in all essential elements kindred to the Fenton case. It may be said, with respect to this case, that in all its essential elements it also is kindred to the case of Fenton v. Second Ave. R. R. Co., which is a controlling authority upon this court. It was therein held “ that the cars of street railways have a preference in the streets, and, while they must be managed with care, so as not to negligently injure persons in the streets, pedestrians must use reasonable caution to keep out of their way.” In some respects the facts in that case were stronger in favor of sustaining a recovery than those presented here. It was proven in that case by a witness that he saw the boy look up and down the avenue, and start on a ran to cross the tracks; that he saw him-stumble and fall at the west rail of the track; that he attempted to get up, and before he could do so was struck by the horses, which were about 20 feet away from him when he fell; that he heard the hallooing of another witness to the driver, and that the brake was not applied until the horses struck the boy. Notwithstanding this evidence, which to some extent was offset by the defendant’s witnesses, the judgment on the verdict of the jury was" reversed, and a new trial granted, the opinion of the court concluding by stating that “ the unfortunate death of this boy was due to his own carelessness, or it was a pure accident; and, in either event,

the defendant cannot be held responsible for it.” If the judgment in the Fenton case could not be upheld, we fail to see how, in this case, where there is absence of any proof either of defendant’s negligence or freedom from contributory negligence on the part of the plaintiff, a submission of the facts to the jury would be justified. We are of opinion, therefore, that the court was correct in its ruling dismissing the complaint, and that the judgment should be ■ affirmed, with costs.

Van Brunt, P. J., concurs in result.