text:
    BENJAMIN GOULD, Appellant, v. THE CAYUGA COUNTY NATIONAL BANK OF AUBURN, and NELSON BEARDSLEY, Respondents.

      One seeking to rescind a contract, for fraud, must restore what he received under it.

    This action was brought by the plaintiff to recover damages for an alleged breach by the defendants of an agreement to replace certain United States bonds loaned by him to them in 1805. The defense was that the plaintiff had for a valuable consideration released the defendants from all liability for his claim. Upon the trial it appeared that in March, 1873, the plaintiff had a claim against the defendant bank, for forty-four United States bonds, of $1,000 each, loaned to it, and a claim against- its cashier, one Starin, for eleven similar bonds belonging to him, which had been converted by Starin to his own use, and also for certain other matters, amounting in all, including the forty-four bonds loaned to the bank, to $93,502.43. The bank had furnished its cashier, Starin, with funds wherewith to replace the bonds borrowed from the plaintiff, which funds he had converted to his own use. The bank denied its liability to the plaintiff for the bonds borrowed by it, as well as for those taken by Starin. On March 1, 1873, the plaintiff’s claims were finally adjusted and settled by Starin’s paying to him $30,000 in cash, and giving to him his check for $116.08, and his note for $63,000, dated on that, day and payable on demand. Starin also deposited with one Woodruff, to secure the payment of the said note, certain securities and property of the nominal value of $77,975, being substantially all his property. Of the $30,000 paid to the plaintiff in cash, $25,000 was furnished by the bank to Starin, upon the discount of -notes for him, which notes were understood to be, and were in fact worthless; it was also agreed as part of the settlement, that Starin should remain in the . bank as cashier until the following July, and that no bankruptcy proceedings should be instituted against Starin which the bank or the defendant Beardsley could prevent. At the time of the settlement Starin owed the bank over $20,000. The plaintiff thereupon executed an instrument releasing the defendants from all liability arising from the borrowing of*the said bonds. The agreement made by the bank was -fulfilled by it, and from the securities deposited to secure.the payment of the said note some $680 had been realized and paid to the plaintiff.
    Upon the trial the plaintiff sought to avoid the effect of the settlement by showing that he had been induced to enter into it by certain false and fraudulent representations made to him by the defendants.

      field, that as he had not restored or offered, to restore what he had received as the consideration of the settlement, he could not rescind the same, and that the action could not be maintained.
    That ho could not retain the moneys received by him from the bank, as the consideration of the settlement and release, and treat them as payments made on account of the debt due from it to him.
    Appeal from a judgment dismissing tlie complaint, entered upon the decision of the court, on a trial of this action at the Cayuga Circuit, without a jury.

      G. F. Comstock, for the appellant.

      F. W. Cogswell, for the respondents.
   Smith, J.:

The action was brought to recover damages for the alleged breach of an agreement made by the defendants to replace certain United States bonds, loaned by the plaintiff to the defendant, the bank, in June, 1865. The answer of the defendants interposed several defenses, one of which was that after the alleged breach of the agreement, and in the winter of 1872-3, the plaintiff settled and released his claim, for a valuable consideration received in part from the bank, and partly from J. N. Starin, its cashier, who was charged with having appropriated the larger part of the bonds to his individual use. The statute of limitations was also pleaded. At the trial, the plaintiff sought to show that he was induced to enter into the settlement, by certain false and fraudulent representations made by the defendants, and the trial judge so found upon conflicting testimony. But he found also, that the plaintiff had not restored, or offered to restore, what he had received as the consideration of the settlement, .and his decision, that the complaint should be dismissed rested mainly upon the ground that the compromise had not been rescinded. He also held that the action was barred by the Statute of Limitations, as against Beardsley. The principal question in the case relates to the correctness of the conclusion that the settlement is a defense. In considering the question, we assume, contrary to the contention of the respondent's counsel, that the finding of fraud is warranted by the proof. This assumption, however, is merely for the purpose of discussing the question above stated, and is not to be regarded as a decision of tbe point upon a review of tbe evidence.

It will be useful to state, with particularity, the history of the transaction and the facts relating to the compromise and its rescission. As found by the judge, they are as follows: In 1863 and for ■many years preceding, the defendant Beardsley was president, and the said Starin was cashier, of the Cayuga County Bank at Auburn. In April of that year, the plaintiff had on deposit in the' vault of the bank, for safe keeping, a package containing fifty-five United States 5-20 bonds of $1,000 each. In June, 1865, the bank resolved to convert itself into a national bank by the name of the “ Cayuga County National Bank,” and at the same time authorized its cashier to borrow for the bank such bonds as might be needed to deposit with the comptroller of the currency, for that purpose, to be repaid in the same kind within six months. On the next day, Beardsley wrote to the plaintiff a letter, in which, after stating the said purpose of the bank, he asked the plaintiff to lend the bank so much of his U. S. 5-20s as might be • needed for the purpose, promising that the bank would “ replace the securities soon, and before any interest would become due thereon,” and pledging his personal responsibility for performance on the part of the bank. The plaintiff consented to the request, and on the following day, Beardsley and Starin took forty-four $1,000 bonds from the plaintiff’s package, and they were used by the bank for the purpose above stated. The remaining $11,000 of the plaintiff’s bonds were placed by Starin in a private box of his own in the vault of the bank, and were not returned to the plaintiff’s package. The bank also borrowed $21,000 of bonds of other parties. In August, 1865, the bank put in Starin’s hands funds to the amount of $65,000 for the purpose of purchasing bonds to replace those thus borrowed, and a special account of that fund was opened with the bank as “J. N. Starin, special account.” That fund Starin expended in the purchase of U. S. bonds, and the persons lending the $21,000 of bonds were repaid their bonds. Starin for a long time had been, and then was, carrying on business, with the knowledge of the bank, as a broker, making purchases of stocks and securities for different parties, and at different times had in his private box in the vault of the bank, more than $65,000 of U. S. 5-20 bonds, and at one time he tied $35,000 of said bonds together, intending them for the plaintiff, but nothing further was done with them towards replacing the bonds borrowed of the plaintiff. Starin appropriated to his own use all of the bonds above mentioned, except the $44,000, and $21,000, of bonds, and except also $3,000 of bonds which he returned to the plaintiff June 5, 1871. In May or June, 1866, in SejDtember, 1867, in December, 1868, and in March, 1871, plaintiff inquired at the bank, of Starin about his bonds, and was at each time told that the bank was using them. Whenever the interest coupons became due on all said bonds, Starin, as cashier of the bank, reported to plaintiff a sale of such coupons with others, and gave plaintiff his (Starin’s) check for the amount thereof, and the checks were deposited with the bank to the plaintiff’s credit, down to and including the coupons which became due November 1, 1872. In January, 1871, Beardsley was informed by Starin that the latter had used about $30,000 of the plaintiff’s bonds' for his (Starin’s) individual purposes, and Beardsley advised him to return them sj>eedily, which Starin promised to do; and- Starin informed Beardsley that he had not returned the bonds used by the bank. Beardsley did not communicate this information to any one till' December 9, 1872, when he told E. D. Woodruff, a son-in-law of plaintiff, that Starin had stolen plaintiff’s bonds, and on the next day, Beardsley made the same statement to plaintiff. No receipt or voucher was given by the bank for the plaintiff’s bonds used by it, nor does it appear that the plaintiff had any knowledge, down to December 9, 1872, as to the number of his bonds actually taken by the bank.

Thereupon a controversy arose between the plaintiff and the bank, as to the liability of the bank for the plaintiff’s bonds, the plaintiff claiming that the bank was liable therefor, and the bank denying such liability, it being assumed and admitted by the plaintiff, the bank and Starin, that Starin was liable for said bonds in any event. About Mai’ch 1, 1873, Starin made out and delivered to plaintiff a statement of his (Starin’s) indebtedness to plaintiff,, amounting to $93,502.43, which amount included the bonds in controversy, and other liabilities of Starin to plaintiff. After considenable negotiation, subsequent to December 10, 1872, an adjustment and settlement of all said matters in controversy between plaintiff and tlie bank, and of tbe indebtedness of Starin to tbe plaintiff, was finally effected by tbe payment to plaintiff of $30,000 in cash, tbe giving of Starin’s note to plaintiff for $63,000, dated March 1, 1873, payable on demand, and. a check for $116.08. As collateral security for the payment of the said note, Starin delivered to Harmon Woodruff, as trustee for the-plaintiff, certain securities and property of the nominal amount of $77,97&ijt being substantially all of Starin’s property; and the said tn®Sse agreed that he would, from time to time, indorse upon the said note all sums which should be received by him upon such securities and other property. It was also agreed, as part of the said settlement, that Starin should remain in the said bank as cashier until the July after the settlement, and that no bankruptcy proceedings should be. instituted against Starin which the bank or Beardsley could prevent; and Starin was so retained as cashier, and no bankruptcy proceedings were commenced against him. As part of the said settlement, the bank furnished $25,000 of the $30,000'paid to .the plaintiff, and the plaintiff executed and delivered to the bank an instrument in writing, of which the following is a copy:

“ Whereas, a controversy has existed, and does now exist, between Benjamin Gould and the Cayuga County National Bank, in relation to the liability of said bank to said Gould, by reason of certain transactions in regard to certain United.States securities, which controversy has been amicably settled between the parties by the payment by said bank to said Gould of the sum of $25,000; now, in consideration of the receipt of said sum from said bank, I do hereby release and discharge said bank from all liability and. claim, by reason of any matter or thing growing out of the matters above referred to.

“Auburn, March 12, 1873.

“(Signed,) ' BENJAMIN GOULD.”

Such settlement was made with the assent and co-operation of Beardsley. At the time of the settlement, Starin was indebted to the bank, in upward of $20,000. Starin gave to tbe bank notes for the $25,000 paid by the bank, which were made and indorsed by irresponsible parties, and were so understood to be at the time, and the bank has since charged the matter over to profit and loss as worthless. About $2,000 in money has been realized by the ti’ustee from said trust securities and property, and a portion pf the trust property remains in his hands. Of said $2,000, the sum of $680 has been paid by the trustee' to the plaintiff. The court found (and this .constituted the alleged fraud), that during the negotiations for tup*’settlement, the bank and Beardsley represented to plaintiff that the bonds loaned by the bank of the plaintiff had been restored by the bank, whereas the said bonds had not, nor had any. of them been so restored, and Beardsley and the bank, knew they had not been restored ; that the plaintiff relied upon such representations, and that they materially influenced him to make the said settlement, and to execute the said release. The court also found that upon the trial the plaintiff deposited in court .the sum of $25,000, and the interest thereon from March 12, 1873, upon the following conditions ; that said deposit shall remain in the custody of the court, and not be paid to either party until final judgment shall be rendered in the action; the court, by rendering such judgment, or by its action under the judgment, shall restore such deposit to the plaintiff' unless it shall be determined in and by such final judgment that the defendant, the Cayuga County National Bank, ought to recover back the said sum of $25,000, so paid to the plaintiff, in which case the sum of money herein mentioned shall be awarded to the defendant, the bank.

The court held, as conclusions of law, that the defendants became liable to restore the said $55,000 of bonds, and that they have not been restored. He also held, that the plaintiff has not rescinded the agreement, under and as a part of which he executed the release, and that such release is a good defense, as to each defendant.

In regard to the statute of limitations, the court found as facts, that the interest which became due on the said bonds, next after they were borrowed by the bank from the plaintiff, fell due November 1, 1865, and that the plaintiff’s right of action accrued on that day ; that tbis action was commenced January 20, 18J6, and tbat it was not commenced as to either defendant within six years after the cause of action accrued. He also held, as matter of law, that the action is barred, as against Beardsley, by the statute, but .that it is not barred, as against the bank, by reason of the facts found in regard to the payment of the interest on the bonds.

It appears, from the foregoing statement, that the consideration for the settlement and release, moving from the bank, was its agreement (1) to pay to the plaintiff; $25,000, in hand; (2) to forego its right to institute proceedings in bankruptcy against Starin, by reason of the preferential assignment in trust, executed by him for the plaintiff’s benefit; and (3) to retain Starin in its employment as cashier, for a specified time. The agreement of the bank was fully executed. In addition, Starin paid to the plaintiff $5,000 in cash, and gave his check for $116.08, and his note for $63,000, the latter secured by a transfer of all his property in trust, portions of which have been sold by the trustee, and converted into money, $680 of which has been paid to the plaintiff. All that the plaintiff thus received he retained when he commenced this action.

The general rule is that before a party can rescind a contract, he must restore the other party to the condition in which he stood before the contract was made, and this involves a restoration of everything received by him under the contract, whether money, goods or securities. (1 Story on Cont. [5 ed.], § 623; Thayer v. Turner, 8 Metc., 550 ; Masson v. Bovet, 1 Den., 69.) This general rale is not questioned by the learned counsel for the appellant, but he contends that it has no application to the present ease, for the reason that as to the moneys received by the plaintiff, in consideration of the settlement and release, they were but part of a debt now ascertained to have been then due to him from the bank, as well as from Starin, and which he, therefore, has the right to retain; and as to the agreements by the bank in aid of the trust created by Starin for the plaintiff’s benefit, the bank cannot complain of the preference which the plaintiff thus obtained, as it was a performance in respect to the same debt for which the bank was liable, and the bank, on paying the debt, will be entitled, equitably, to be subrogated to the plaintiff’s lights in respect to the trust property. Tbe argument is plausible, but we think it is not sound. However meritorious the claim of the plaintiff against the bank, it was a mere claim or chose in action, until the settlement transmuted it into money in possession, and as long as the plaintiff retains the money, the parties are not restored to their original condition. The settlement is not rescinded, so long as it is made to perform the office of compelling the bank to pay a debt which it refused to pay, and which it would not have paid except as a condition of the settlement. The retention of the money, is an affirmance of the settlement. Suppose the bank, instead .of paying the $25,000 in money, had paid it. in bonds. Could the plaintiff have treated the settlement as rescinded, without restoring the bonds? The reason of the rule above stated is that the party rescinding shall put the other party in statu quo, by restoring and re-vesting his former property in him, without putting him to an action to recover it. (Per PaesoNS, Ch. J., in Kimball v. Cunningham, 4 Mass., 502.) If a money consideration may be held on to by the party rescinding, to be satisfied by an abatement of the damages recovered, why not, also, goods or securities to be deducted from the recovery, at their money value ? The question is not affected by the circumstance that the present action is on contract. If the plaintiff’s bonds had remained in the possession of the bank, he could have maintained trover or replevin for them. "Whether the present action is in tort for a conversion of the bonds, or on contract for a breach of the agreement to return the bonds (and the facts stated in the complaint are sufficient to maintain the action in either aspect), the point under consideration must be determined upon the same principles as if the proceeding was •m reno to recover the bonds themselves. (Matteawan Co. v. Bentley, 13 Barb., 641, per BrowN, J., delivering the opinion of the court, p. 646.)

Is not the plaintiff’s reasoning fallacious in treating that as a partial payment, which was intended by both parties as a payment and settlement of the entire claim ? Upon the assumption that it was a partial payment, he insists that the rule is satisfied by his abating the sum he has received, from the amount of his damages, and taking judgment for the remainder.

The only adjudged case that we are aware of, in which that course was permitted in an action at law, is Ladd v. Moore (3 Sandf., 589). That case had some peculiar circumstances, not existing here, which evidently influenced the decision. It was referred to, manifestly with some distrust of its soundness, in Wheaton v. Baker (14 Barb,, 594), and it was repudiated in Stevens v. Hyde (32 Barb., 171), where Justice E. D. Smith said of it that “it did equity between the parties, but it rests upon no principle,” (p. 182.) The case last cited is an instructive one. The plaintiff sold goods to one Joslin, partly for cash and partly for his notes on timé. Joslin sold part of the goods, and soon after failed, and assigned all his property, including the remainder of the goods in question, to the defendants, in trust for the benefit of his creditors. Subsequently, the plaintiffs tendered to Hyde, one of the defendants, the money and a part of the notes, and demanded the goods. At the trial, the plaintiffs brought into court a part of the notes to be given up (some of the notes having been collected by them after the tender), but they declined to bring in any of the money; and the defendants offered to accept the notes and money tendered to Hyde, and to relinquish all claim to the goods, which the plaintiffs refused. The action was for delivery • of personal property, on the ground of fraud in the purchase. The plaintiffs were nonsuited. The general term denied a new trial, on the ground that the plaintiffs should have kept their tender good. The plaintiffs claimed the right to hold on to the money received by them, to indemnify them for a portion of the goods which Joslin had sold. On that point, the court said, “ In these cases of the rescission of contracts by the acts of the parties, the party seeking to rescind, acts upon his strict legal rights, and there is, as we have seen, no rule which allows him to keep back any part of the consideration received. It may be that Joslin, in this case, had sold more of these goods in value than the amount of the money received by the plaintiffs, but on the rescission -of the contract the title of the goods unsold became and was re-invested in the plaintiff and the title to the money in the defendants or Joslin ; and I know of no way of adjusting the equities between the parties on the trial of an action at law, or of making equitable terms at the circuit, on the trial of an action of replevin for the goods. If the action had been one in equity, the plaintiff seeking a rescission through the action of the court, and offering to do equity, the court would be called upon to take into consideration the situation of the property, the amount thereof sold by Joslin, and the amount of consideration received by the plaintiff, and could have done complete justice to the parties upon the whole case and in view of all the circumstances.”

Now, in that case, it was practicable to abate the money received from the value of the goods, and to let the plaintiffs have judgment for the difference in value, or for a return of the goods unsold; but, to have done so would have permitted the plaintiffs to rescind in part and affirm in part, and for that reason it was denied, although, for aught that appears, it would have worked equity.

So, in Wheaton v. Baker (supra), where one hundred and sixty-six stoves were sold, and part of the price paid in the notes of third persons. The vendee sold sixty-six of the stoves before the vendor elected to rescind, when he did not tender the notes received, nor produce them on the trial, but claimed the right to retain them to indemnify himself for the stoves sold. The court held that this was inadmissible, and that the contract was not rescinded.

So, also, in Matteawan Co. v. Bentley (supra), machinery was sold for $1,283.37, part of the price paid, and the vendor claimed to rescind and recover the balance without offering to return the money received. This, it was held, could not be done.

The views expressed by the learned judge in Stevens v. Hyde, as to the peculiar capacity of a court of equity to deal with a question of this nature, are illustrated by the case of Allerton v. Allerton (50 N. Y., 670), cited by the appellant’s counsel. That was an action in equity, in’which the plaintiffs alleged that the defendant had fraudulently induced them to sell to him their interest in a certain firm, in which the several parties were partners, for a price paid, which was afterwards discovered to be much less than its value. The relief demanded was that the sale be declared void; that the defendant account for all moneys received by him, and that the plaintiffs have judgment for their portion of the profits under the agreement, less the amount they had received. It was held by the Court of Appeals that no tender of the amount received was necessary before suit, as the judgment sought for, and given, allowed it to defendant, and tbis was, in fact, an actual return of the consideration paid. The case, we conceive, has no application to the one before us, except as it illustrates the distinction between an action in which the equitable powers of the court are invoked, and one which seeks relief according to the strict principles of law. Here, no judgment is asked for, allowing to the defendants the money received; no reference is made in the complaint to the settlement or its rescission; and no equitable relief is demanded. If an answer had not been interposed, the plaintiff would have been entitled to judgment for the whole value of the bonds, while retaining tlie money paid on the settlement.

As to the consideration moving from the bank, other than the money paid, it is manifestly impossible to restore the bank to its former situation. Its right to impeach the preferential assignment made by Starin is gone, and its agreement to retain him in its employ is fully executed. It is no answer to say that, on paying the plaintiffs claim, the bank will be subrogated to the rights of the }3laintiff in respect to the trust property. The right which it surrendered in consideration of the settlement attached as an incident to the debt which it then held against Starin. To compel it to increase that debt by satisfying the claim which the plaintiff also holds against Starin, in order to protect itself, is not restoring it to its former position.. It is through no fault of the defendants that restoration is impossible. That feature of the case results from the nature of the terms of the settlement.. As it is not possible to restore the bank to its former condition, the right of rescission does not exist. The plaintiff mistook his remedy. Assuming that he was defrauded, his remedy was to sue for the damages which he suffered by the fraud. The following cases, in addition to those ■already cited, sustain wholly or in part the views above expressed. (Curtiss v. Howell, 39 N. Y., 211, per Groveb, J., 215 ; Cobb v. Hatfield, 46 Id., 533; Pullman v. Alley, 53 id., 637; McMichael v. Kilmer, 76 Id., 36; Sinclair v. Neill, 3 Supra. Ct. [T. & C.], 74; Lester v. Union Manufacturing Co., 1 Hun, 288; Bedell v. Bedell, 3 Hun, 580.)

The tender, at the trial, of the money paid by the bank was of no avail. It was a tender of but a part of the consideration moving from the bank, and it was not unconditional. And the better rule seems to be that in the case of an action at law in disaffirmance of a contract, the tender should be made before suit. This seems to result as a corollary from the doctrine, that if a party defrauded would disaffirm the contract, he must do so at the earliest practicable moment, and before he takes any step in affirmance of it. The rule does not apply, of course, where the thing received is of no value whatever to either party, or where the consideration consists of the promissory note of the defendant, which, being a mere promise, is annulled by the rescission, and it is enough if it be returned, or offered to be returned, at the trial.

Without discussing the defense of the statute of limitations, it results from the foregoing conclusions that the judgment should be affirmed.

Talcott, P. J., concurred ; HaudiN, <T., concurred in result.

Judgment affirmed.


source: Caselaw Access Project

author: SMITH, J..:

license: Public Domain

text:
    SYRACUSE SAVINGS BANK, Respondent, v. THE TOWN OF SENEGA FALLS, Appellant.

      Town bonding — effect of chapter 935 of 1871, on chapter 907 of 1869 — power of the commissioners to prescribe the time when the bonds shall become due.

    On July 1, 1871, bonds of the town of Seneca Falls, to aid in the construction of a railroad, were issued by commissioners appointed by a judgment entered on August 36, 1870, in ¡proceedings instituted tinder chapter 907 of 1869.

      Held, that the passage, on May 13, 1871, of chapter 935 of 1871, amending the act of 1869, did not nullify or avoid the judgment previously entered, nor take away from the commissioners appointed thereby, the power to subscribe for stock or issue the bonds of the town.
    So much of section 4 of chapter 907 of 1869, as provided that the bonds issued thereunder should become due and payable at the expiration of thirty years from their date, was not repealed by implication, by the additional clause added thereto by chapter 935 of 1871, and under the amended section the commissioners may make the bonds to be issued by them payable thirty years from their date, or at any time less than thirty years, but in the former case all the bonds must be made payable at one time, and in the latter, the times for their payment must be so distributed over the said space of thirty years, as that .not more than ten per cent, of the entire principal will become due in any one year.
    Appeal from an order of tbe Onondaga Special Term, and the judgment entered thereon, sustaining a demurrer to the answer to the complaint herein.

      Oomstoole (& Bermett, for the appellant.

      Hiseoch, Gifford <& Doheny, for the respondent.
   SMITH, J..:

The action was brought to recover the amount due on certain interest coupons of certain bonds issued by the Town of Seneca Falls in aid of the construction of the Pennsylvania and Sodus Bay Railroad. The 'proceedings to issue the bonds were duly commenced under the bonding íict of 1869 (ch. 907)) and judgment was entered therein on August 26, 1870, and on that day commissioners to issue the bonds were duly appointed. The -bonds were issued J uly 1, 1871, and they bear date of that day. They are of $1,000 each; they amount to $200,000; and they are all made payable at one timé', to wit, thirty years from their date. The act of 1871, amending the bonding act of 1869, was passed on May 12, 1871, and took effect on that day (Laws of 1871, ch. 925), prior to the issuing of the bonds in question.

There are only two questions in the case, and they arise upon the construction of the act of 1871. It is argued by the appellant’s counsel that the act of 1871 repealed so much of the act of 1869, as that it destroyed the force and effect of the judgment of the county judge, and took away the power of the commissioners thereby appointed, to subscribe for stock or to issue bonds in pursuance of the act of 1869, and that it did not confer any authority upon the commissioners to do either of those things in pursuance of its own provisions. Without adverting particularly to the changes wrought by the amendment referred to, so far as they bear upon the point above stated, it is enough to say that this identical question was recently decided by us adversely to the views of the appellant in the case of Angel v. Town of Hume. (17 Hun, 374.) We regard that case as decisive of the point.

Tlie other question relates to the power of the commissioners as to the time when they may mate the bonds payable. Section é of the act of 1869 provided on that subject that “such bonds shall become due and payable at the expiration of thirty years from their date.” The same section, as amended in 1871, retained those words, and contained a separate clause at the end of the section, in tlie following words: “ The said commissioners may issue the said bonds, payable at any time they may elect, less than thirty years, any law heretofore passed to the contrary, but they shall not so issue said bonds that more than ten per cent, of the principal of the whole amount of bonds issued shall become due or payable in any one year.” This provision, the appellant insists, is a repeal of the former. We think not. Tlie two may well stand together, and that being the case, au intention to repeal i%jiot to be implied. Read together, they empowered the commissioners to make the bonds payable thirty years from date, or at any time less than thirty years, as they should elect; but in the former case, the bonds were all to be made payable at one time, and in the latter casé, they were to be distributed in point of the time of maturing so that not more than ten per cent, of the entire principal would become due in any one year. In issuing the bonds in question the commissioners pm-sued the former alternative.

The order and judgment should be affirmed.

Talcott, P. J., and Hardin, J., concurred.

Judgment and order affirmed.


author: Smith, J.:

text:
    JOHN PAINE, Appellant, v. JAMES H. UPTON and other, Respondents.

      Sale of real estate, under a mutual mistake as to Us quantity — when the purchaser may recover the amount paid by mistake after accepting a deed.

    Where an agreement for the purchase and sale of a farm has been entered into, under an honest and mutual mistake of the parties, as to the quantity of land it contains, the fact that such agreement has been consummated and carried into effect by the execution and delivery of a deed, does not prevent the purchaser from recovering back, in a court of equity, so much of the price as was paid by mistake, where the mistake is not discovered until after he has accepted the deed and entered into possession of the* farm.
    Appeal from a judgment dismissing tlie complaint, entered upon the decisión of the court on a trial of the action at the Monroe Special Term.
    Upon the trial the judge found among other things that some few weeks prior to March 4,1872, certain of the defendants, having offered the Homestead Farm of James Upton, deceased, for sale, the plaintiff and the said defendants entered into negotiations for the purchase thereof by the plaintiff; the plaintiff went upon and examined the farm, and the external boundaries thereof were correctly pointed out to him. At the outset of such negotiations the plaintiff asked the said defendants how much land there was in the said farm, and at what price they would sell it. The said defendants thereupon informed the plaintiff that the said farm contained two hundred and twenty acres or upward, and exhibited to him certain printed descriptions thereof, and told him they had asked for the farm $150 per acre, but would sell it for $33,0u0. The plaintiff refused this offer, and made a counter-offer of $30,000 for the farm; whereupon, and on February 28, 1872, the said negotiations were concluded by an agreement that the plaintiff should buy the said farm at a priee which was fixed at $31,687; and on the day last aforesaid Alexander Pomeroy, Elijah C. Upton, and "Willard Upton, acting on behalf of themselves and the other owners of said farm, of the one part, and the plaintiff, of the.other part, executed under their respective hands and seals a contract for the sale of said farm, in which it was described as follows: “all that tract or parcel of land situate in the town of Greece, in the county of Monroe, N. Y., known as the Homestead Farm of the late James Upton, deceased, and being parts of lots 131 and 132 in Township No. 1, Short Range, Phelps and Gorham’s purchase west of the Genesee river. Also a part of lot 140, in the above township and range; also an acre lying north of the last piece of land, altogether containing about two hundred and twenty-two acres of land, be the same móre or less, for the sum of $31,687.” On or about April 1, 1872, in pursuance of said agreement, a deed of conveyance of said farm was executed and delivered, in which the various Jots referred to in the agreement were described by metes and bounds, and courses and distances, the number of acres contained in eacli being stated, such statement being followed, in each case, by the words “ be the same more or less.”
    The full consideration expressed in said deed was paid or to be paid by the plaintiff, who thereupon went into possession of the said farm, and has ever since continued to own and occupy it-
    All the parties to this action believed, during all negotiations, and at the times of executing the said contract and deed, and at all times until about nine months after the making of the said deed, that the said farm did in fact contain two hundred and twenty acres of land or upward; and such negotiations and agreement were had and executed on both sides upon the basis of such common belief and understanding.
    In fact, the said farm contained but two hundred and six and fifteen one-hnndredtlis acres of land ; all the parties were mutually mistaken in the belief that it contained two hundred and twenty acres or upwards, and the said agreement and deed were founded upon such mutual mistake.
    About nine months after going the plaintiff’s suspicions were for the first time aroused that the said farm contained less than lie had understood, and thereupon he discovered the said mistake.
    The mistake arose as follows: For many years prior to 1865, the said James Upton owned and occupied as part of his Homestead Farm the parcel first described in the deed, together with a parcel adjoining it, of about twenty acres, and making up a total of one hundred and ninety-one and fifty-five one-hundredths acres as there stated. In 1865 he conveyed the said ad joining parcel to a stranger, by reason whereof the parcel first described in the said deed to the plaintiff contained in fact only about one hundred and seventy acres. After his death, his widow, heirs, devisees and executors, being the defendants herein, obtained a loan and executed a mortgage upon the said parcel, with other property, describing it otherwise correctly, but calling it still erroneously one hundred and ninety-one and fifty-five one-hundredths acres; and the same error was thereafter perpetuated in all the descriptions of the said farm put forth by the defendants or any of them.
    The plaintiff, before commencing this action, applied to the defendants to make an allowance" to him upon his bond and mortgage given to secxme part of the purchase-money, on account of the said deficiency, but they refused to do so.
    The extent of the mutual mistake aforesaid was the difference between the actual and the supposed number of acres in the said farm, to wit, thirteen and eighty-five one-hundredths acres, the value of which, at the average price per acre paid for the farm upon the assumption that it contained two hundred and twenty acres, was $1,951.93.
    This action was brought to recover the portion of the purchase-money so paid by mistake.

      II. R. Selden and Theodore Baeon, for the appellant.
    If no deed had been given, and the equities of the parties had'depended upon the contract, the right of the plaintiff to have the mistake corrected would not have admitted of any question. (Andrews v. Gillespie, 47 N. Y., 490; GiUespie v. Moon, 2 Johns. Ch., 585, 596-7; Simpson v. Vauglm, 1 Atk., 33, and note; 1 Sugden on V. & P., c. 7, % 3, pi. 2 and 3, p. 369 ; T Am. from 11 London Edition; 26 Wend., 186.) The acceptance of the deed constitutes no bar to the equitable right of the plaintiff to have the mistake corrected. (Quesnel v. WoodUef ’ 2 Hen. & Munf., 173, note; S. G., 6 Call, 218; Blessing’s Adm’s. v. Beatty, 1 Hobinson, 287; Whaley v. Eliot, 1 A. K. Marsh., 343; Gilmore v. Morgan, 2 J. J. Marsh., 65; Wiley v. Fitzpat/rick, 3 Id., 582; Oreme v. Pratler, 4 Id., 75, 77; Triplett v. Allen, 26 Gratt., 721; Jenks v. Fritz, 7 W. & S., 201; Bcvrtle v. Vosbury, 3 Grant, 277; Tarbell v. Bomna/n, 103 Mass., 341; Read’s Adm’s. v. Gramer, 1 Green Ch., 277; Glute v. Jones, 28 N. Y., 280; Witbeck v. Waine, 16 ‘ N. Y., 532; Grmes v. Brvnkerhoff, 6 T. & C., 630; Da/niel v. Mitchell, 1 Story, 172; Doggett v, Emerson, 3 Story, 700.)

      E. Harris, for the respondents, Eli M., Charles S. and John Upton.
    The court has not found that the supposed quantity of land formed an essential inducement to the plaintiff to purchase, or that quantity constituted the condition of purchase; and the contract having been fully executed, the complaint was properly dismissed. (Marvin v. Bennett, 8 Paige, 312; S. O., 26 Wend., 169 ; Bellcncrp v. Sealey, 11 N. Y., 113 ; Dambmarm v. Schulting, decided in Court of Appeals, November 12, 1878, reported in 7 N. Y. Weekly Digest, 570.)

      JD. O. Hyde, for the other respondents.
    Such a sale in bulk and for a gross sum will not be disturbed by a court of equity, except in cases of extraordinary hardship. (1 Story Eq.. Juris., 1 Ed. Pa., 166; Taylor v. Fleet, 1 Barb., 96 ; Marvin v. Bennett, and Bennett v. Marvin, 8 Paige, 312.) If a quantity of not less than two hundred and twenty acres was a condition to the contract in the mind of the plaintiff, he was grossly negligent, and equity will not relieve him. (Long v. Warren, 68 N. Y., 126; Beasley v. Beasley, 38 L. T., [English] Pep. [N. S.], 811, fully reported in Alb. L. Journal of September 21, 1878, pp. 231-5.)
   Smith, J.:

The fact of a mutual mistake as to the quantity of the land sold was found by the trial court upon proof establishing it beyond question. The land was believed by all parties to contain two hundred and twenty acres and upward, but in fact it contained only two hundred and six acres and a fraction. The court also found that such belief was the basis of the negotiations and agreement of the parties. The case, therefore, is not one of a sale in gross, so that the contract is satisfied by a conveyance of the land within the boundaries stated, whether it contains more or less than the specified number of acres. And it is apparent, from the course of the negotiations between the parties, and the efforts of each to make the price a few hundred dollars more favorable to himself, that if the vendee had been aware of the actual number of acres he would not have made the purchase at the price agreed on. The case is, therefore, one for granting relief, unless, as is contended by the respondent’s counsel, the appellant is concluded by the fact that the agreement has been consummated by a conveyance.

The mistake was not discovered until several months after the deed was delivered and the purchaser had gone into possession, and consequently, the mistake entered into and affected the deed as well as the executory contract. We are not aware of an authority in this State, holding, that in such a case, a court of equity will not give relief. • The cases relied upon by the respondents’ counsel, and cited by the learned judge at Special Term, at the most, contain mere dicta to that effect, they are not adjudications in point. They. are Veeder v. Fonda (3 Paige, 94); Marvin v. Bennett (26 Wend., 169); and Belknap v. Sealey (14 N. Y., 144). The comments of Judge Comstock in the case last cited upon the first two cases named, show wherein they differ materially from the present case. In Belknap v. Sealey, the court rescinded an ex-ecutory contract for the purchase of land, on the application of the vendee, on the ground of mistake in the quantity. The fact that a deed had not been executed was adverted to, but there is no intimation in the case that if there had been a deed, the relief would have been denied. Considering the question as an open one, what sound reason can be given for holding that the vendee is foreclosed by the acceptance of a deed from obtaining the relief sought in this action ? He does not ask that the contract be rescinded, but he seeks to recover back so much of the price per acre as was computed and paid by mistake. The reason suggested by Chancellor Walworth in Veeder v. Fonda, to wit, the necessity of quieting litigation, would apply as well to the case of a-mistake in a deed in any other-material respect, as to a mistake in respect to quantity. In view of the rule that the alleged mistake must be established by clear and irrefragible proof, the necessity of such a holding is not apparent. If, intermediate the contract and the deed, circumstances had occurred calculated to put the vendee on his guard; or if, as in Marwin v. Bennett, the vendor had distinctly refused to insert the quantity in the deed after negotiation on that subject; or if it had been understood that the risk as to the quantity of- land constituted an element of the conveyance, the reason for holding the vendee concluded by the deed would be obvious and controlling. But where the deed and the agreement are executed under the same mutual mistake, it is not easy to understand how the deed stands in the way of correcting the mistake. The case of Wilson v. Randall (7 Hun, 15; affirmed, 67 N. Y., 338), seems to be an authority for holding that a court of equity will correct a mistake in a deed as to quantity. See also Graves v. Brinkerhoff (6 T. & C., 630).

The circumstance that the land is described by metes and bounds and the terms “ more or less ” are added after a statement of the quantity, does not affect the right to relief, if the plaintiff is otherwise entitled to it. (Belknap v. Sealey, sup.) In Belknap v. Sealey, stress was laid upon the fact that the mistake on the part of the purchaser was caused by the misrepresentation of the vendor, although not fraudulently made. The same fact exists here, the court having found that at the outset of the negotiations the defendants stated, in reply to the plaintiff’s inquiry, that the farm contained two hundred and twenty acres or upward. The statement was made in the belief that it was true, but it was a misrepresentation.

The judgment should be reversed and a new trial ordered, costs to abide event.

Talcott, P. J., and Hardin, J., concurred.

So ordered.


author: Smiti-i, <J.:

text:
    HECTOR McLEAN, as Assignee, etc., Appellant, v. JOSEPH A. EASTMAN and others, Executors of JOSEPH FIELD, Respondents.

      When the assignee in bankruptcy of an insolvent bank cannot recover from a stockholder a dividend paid to him when it was insolvent — the lien of a creditor upon the assets of an insolvent corporation is only enforceable in equity.

    This action was brought by the plaintiff, as the assignee in bankruptcy of an insolvent banking association, organized under the general act of 1838 (cli. 260), to recover the sum of $400, paid to the defendant’s testator, a stockholder of the bank, as a dividend upon his stock, on the ground that at the time it was paid the bank was insolvent. It was conceded that, at the time the dividend was paid, neither the testator nor the officers of the bank knew that it was insolvent, unless they were chargeable in law with such knowledge by reason of their respective positions as a stockholder therein and as officers thereof.

      Held, that the action could not be maintained.
    The lien of the creditors of an insolvent corporation upon its assets in the hands of its stockholders, or of.other persons, is a purely equitable one, and can only be enforced in an equitable proceeding.
    The provisions of the Revised Statutes relating to moneyed corporations do not apply to banking associations organized under the general act of 1838.
    Appear from a judgment of the Monroe County Court, entered upon an order dismissing the complaint.
    This action was commenced in the Monroe County Court against Joseph Field, in his lifetime, to recover $400 and interest thereon, as an illegal dividend paid to him by the'Farmers’ & Mechanics’ Bank. Pending the action Field died, and the suit was revived and continued against his executors.

      J. Van Voorhis and J. O. Goohrane, for the appellant.
    It is immaterial whether Field got this money in good faith or not. The assets of a corporation are a trust fund for the payment of its debts, and its creditors have a lien thereon, and the right to priority of payment over its stockholders. .{Bartlett v. Drew, 57 N. Y., 587; Osgood y. Laytin, 3 Keyes, 531; Van Oott v. Van Bnmt, 2 Abb. N. C., 283 ; Orate v. Reed, 4 B. Mon., 178; Gxirran v. State of Ark., 15 How., 304; Sawyer v. Hoag, 17 Wafl., 610; Green’s Brice’s Ultra Vires, 139; Wiekham v. Frazer, 13 Hun, 431; Wood v. Dummer, 3 Mason, 308; Vose v. Grant, 15 Mass., 517-522; Spea/r v. Grant, 16 Mass., 15 ; Owrran v. Arkansas, 15 How. H. S., 304; Read v. Eatonton Go., 40 Ga., 98-104; Bcmk of St. Mary's y. St. John's, 25 Ala., 566; Upton Gases, 6 Otto, 45-56, 64, 65'; Same Gases, 13 B. R., 49-174-226.) Field, being a stockholder, is a privy of the corporation, and chargeable with knowledge of its condition and affairs. (Thompson’s Liability of Stockholders, §§ 329, n., 18, 19; Merrill v. Suffolk Bcmk, JA Me., 57 ; Game v. Brigham, 39 Me._, 35 ; Milliken v. Whitehouse, 49 Me., 525 ; Slee v. Bloom, 20 Johns., 669; Moss v. Oakley, 2 Hill, 265; Belmont v. Goleman, 1 Bosw., 188; Donworth v. Goolbaugh, 5 Iowa, 300; Wilson v. Plattsbiorgh Coal Go., 43 Pa. St., 434; Grand v. Tucker, 5 Kans., 70; Lawrence v. Nelson, 21 N. Y., 158; Sawyer v. Hoag, 17 Wall., 623.) The statute prohibits any dividend by a moneyed corporation, except out of “ surplus profits ” arising from its business. (1 Edm. B. S., 547; Casserly v. Mimners, 9 Hun, 695.) This statute expressly applies to banks. (1 Edm. B. S., 555, § 51.) Such dividend is also prohibited' by another statute. (1 Edm. E. S., 558, § 2.)

      Theodore Bacon, for the respondents.
   Smiti-i, <J.:

This is an action by the assignee in bankruptcy of the Farmer’s and Mechanics’ Bank of Bochester, an insolvent banking association organized under the general banking act of this State, passed in 1838, to recover the sum of $400, which was paid by said bank to Joseph Field, the defendant’s testator, a stockholder of such assoeiaHtiow, as a dividend upon his stock. The facts upon which the plaintiff puts his right to recover are, that at the time when the dividend was made, the bank had earned no profits out of which a ^ dividend could be made, and was, in fact, insolvent. These facts were conceded at the trial, by a stipulation between'the parties, and it was also conceded that such condition of the bank was unknown to the testator, Field, (unless he is chargeable in law with such knowledge by reason of his position as stockholder), and that he received his dividend in good faith, supposing it had been earned. Also, that the officers of the bank were not then aware of its insolvent condition, unless chargeable in law with such knowledge by reason of their position as officers of the bank. The plaintiff was nonsuited in the court below.

The appellant contends that he has the right to reach the money in the hands of the defendants as a part of the assets of the bank applicable to the payment of its debts, upon the principle that the assets of a corporation are a trust fund for the payment of its debts, and its creditors have a lien thereon, and the right to priority of payment over its stockholders. But the lien of creditors of an insolvent corporation upon its assets in the hands of others (independently 'of rights given by statute), is a purely equitable lien, and can only be enforced in , an equitable proceeding. The cases of Bartlett v. Drew (57 N. Y., 587), Osgood v. Laytin, (3 Keyes, 521), and Van Cott v. Van Brunt (2 Abb. N. C., 288), cited by the appellant, were actions in equity. In the case of Bartlett, the action was in the nature of a creditor’s bill, brought by a single judgment creditor, after the return of- an execution unsatisfied, to reach a sum received by a stockholder of a corporation, on a division of its assets before all its debts were paid. The action could not have been maintained if there had been an adequate remedy at law. The present action is what would have been termed an action for money had and received, under the system of pleading which was superseded by the Oodfe of Procedure. The only relief sought is the recovery of the specific sum of money which was paid by the bank to the defendant’s testator. The difficulty in the way of recovering it in a strictly legal action is that, as between the bank and the stockholder, the payment was made in good faith, according to the conceded facts, and the stockholder acquired a valid title to the money, as against the bank. A'court of law cannot go beyond the parties to the transaction, and treat the payee as the recipient of moneys in trust for the benefit of the creditors of the bank. It is not alleged in the complaint, nor does .the scope of the action permit an inquiry, as to whether the firedi-tors represented by the assignee were creditors at the time of the transaction ; and if not, they have no interest in the money sought to be recovered. The inadequacy of a court of law to give relief in such a case was. forcibly commented on in Vose v. Grant (15 Mass., 505), and Spear v. Grant (16 Id., 9). See the opinion of Reynolds, C., in Bartlett v. Drew, supra, 590.

We axe not aware of any statute upon which the present action can be maintained. It was held by the Court of Appeals in Leavitt v Blatchford (17 N. Y., 521), that the provisions of the Revised Statutes relating to moneyed corporations do not apply to banking associations organized under the general banking law of 1838 (Op. of Harris, J., p. 535). The several statutes cited by the appellant’s counsel are within that category, and do not apply to the case. They are 1 R. S., 589, § 1; Id., 598, § 51; Id., 601, § 2. The case of Casserly v. Manners (9 Hun, 695), cited by the appellant’s counsel, was that of a fire insurance company, organized under the general act for the incorporation of insurance companies (Laws of 1849, ch. 308), the seventeenth section of which provides that all companies formed under the act shall be deemed bodies corporate, and shall be subject to all the provisions of the Revised Statutes m relation to corporations, so far as they are applicable.

On the whole, we are of the opinion that the case was properly disposed of in the Oounty Court, and that the judgment should be affirmed.

Talcott, P. J., and Hardin, J., concurred.

Judgment affirmed.


text:
    DAVID GIRVIN, Respondent, v. WILLIAM HICKMAN and WILLIAM PERRITT, as Executors, etc, of JOHN BLISS, Deceased, Appellants.

      When an accounting by the guardian is not a prerequisite to an action against his sureties — when no demand is necessary before bringing an action.

    An accounting by a guardian is not a prerequisite to an action against the sureties upon his bond, in those cases in which the extent of his liability has been otherwise as definitely determined as it could be by an accounting. Where a guardian wrongfully converts tire money of the ward to his own use, no demand is necessary before bringing an action against the sureties upon his bond.
    Appeal from an interlocutory judgment entered upon a decision of the Monroe Special Term, upon a demurrer to the answer and a demurrer to the reply.
    The plaintiff was the sole residuary legatee under the will of Sarah A. Girvin, deceased, and as such was entitled to a legacy of $450 or over. At .the time of the death of the testatrix he was a minor, about eight years old. The. surrogate appointed George Linfoot his general guardian, and the latter gave the usual guardian’s bond. In order to obtain the legacy belonging to his ward, he also inserted in the bond the condition required by 2 R. S., 91, section 47, and the legacy was paid to him by direction of the surrogate. The bond was executed by Liufoot and two sureties, one of whom was the defendant’s testator. This action was brought upon the bond by the plaintiff after he became of age.

      C. R. Gorham, for the appellants; J. W. Stebbms, of counsel.

      R, B. Beach, for the respondent.
   Smith, J.:

The defendants, availing themselves of the rule that, on demurrer, judgment will be given against the party committing the first fault in pleading, allege that the complaint is defective in not averring that there has been an accounting with the guardian, and they contend that such accounting is a prerequisite to an action on the bond against the surety. The question raised by this objection to the complaint is somewhat doubtful, under the decisions in this State.

In Stilwell v. Mills (19 Johns., 304), which was an action on a bond given by a general guardian appdinted by a surrogate, it was said, in a per curiam opinion, that a guardian must be first called to account in Chancery, where the jurisdiction as to such a trust exclusively belongs, before the surety is liable. The only authority cited for the position is Wiser v. Blachly (1 Johns. Ch., 607). The question was not in that case; the real question was whether a surety was holden where the bond was given in the name of the people, instead of the infant (the plaintiff), and it was held that the bond might be amended in that respect. The report of the case does not show whether the plaintiff had attained her majority before the suit was commenced. Salisbury v. Van Hoesen (3 Hill, 77), was an action on a guardian’s bond given under the act of 1815 for the sale of infants’ real estate (1 R. L., 454, § 30; Laws of 1815, p. 103, §§ 2, 4), in pursuance of the provisions of which act, a condition was inserted in the bond, that the bond, “ if forfeited, may be prosecuted in any court having cognizance of the same, by the direction of the chancellor.” The court held that the bond could not be prosecuted until proceedings for an account had been had against the guardian,, in Chancery. Cuddeback v. Kent (5 Paige, 92), was also an action on a bond given under the act of 1815. The chancellor held that the act did not confine the remedy of the infant to a common law action on the bond, against the guardian or his sureties, for a breach of the trust; that the sureties may be joined with the guardian as defendants in a bill in Chancery for an accounting, etc., and that it is not necessary that a decree should have been first obtained against the guardian al;n \ before proceeding against him and his sureties jointly.

Several of these cases were referred to by Gray, C., in Brown v. Snell (57 N. Y., 286, 297). That was an action upon the bond of a special guardian appointed to sell an infant’s real estate. The action w>-as against the guardian and his sureties. The guardian had accounted, before a county judge, on a day not in a stated term, and had stipulated that the judge might enter a decree for the amount appearing due by his account. A decree was entered thereon, purporting on its face to have been made at a' “ County Court.” The accounting was had after the infant had become of age. The defendants contended that the accounting having been made before the judge out of court, the decree was void, and the action could not be maintained against the sureties until the guardian had accounted before a court having jurisdiction. It was held that the decree was valid. It was also held that, conceding the decree void, the accounting was, in effect, a settlement between the parties thereto, which was equivalent to, and rendered unnecessary a formal accounting by order of the court, and that an action upon the bond could be sustained thereon. Gray, C., speaking of- the special provision in the bond in the case of Stilwell v. Mills (supra), said, “ The provision could not have been intended to restrain a party of full age from exercising his discretion as to the prosecution of his defaulting trustee, merely because the trust had arisen out of their prior relation of guardian and ward.”

It is obvious from the cases that an accounting by the guardian is not always a prerequisite to an action against the sureties upon the bond, and there are many special circumstances in which it may be dispensed with. An accounting by the guardian serves to show the extent of his liability, but it is not conclusive on the sureties. If there is anything wrong about it, they may show it in their own defense. But, if tbe case is sucli that tbe extent of tbe guardian’s liability appears without an accounting, why should an accounting be required, before suit against the sureties ? The condition of the bond in suit required the guardian, among other things, to “ render a just and true account of all%noney and property received by him, and of the application thereof,” etc. And again, “ to faithfully apply said legacy . . and account for the same when thereunto required,” etc. Ordinarily, an accounting would be necessary to show how much of the money or property of his ward received by him remained in his hands, over and above what he had faithfully applied.” But the complaint herein alleges (and upon demurrer, the defendants must be held to concede its truth), that the guardian did not faithfully apply the said legacy, but has wrongfully converted the whole of it (except the sum of $17) to his own use. That fact being conceded, the extent of 'the guardian’s liability is fixed, as definitely as it could be by an accounting.

If the guardian, instead of applying the money to the purposes of the trust, converted it to his own use, he was guilty of a wrong, and no demand was necessary before bringing suit. The demurrer to the eleventh count in the answer is, therefore, well taken. That count avers, in substance, that no demand was made.

The twelfth count in the answer alleges that no notice was given to -the sureties of the guardian’s default. None was required by the terms of the bond, or otherwise.

The sixth count of the answer alleges that Linfoot, the guardian, for years fed, clothed, maintained and educated the plaintiff. The second count of the reply, which is demurred to, alleges that during the same period the plaintiff worked for Linfoot, lent him money and sold him goods, in ignorance that he had been appointed the plaintiff’s guardian. The demurrer to this count in the reply was properly overruled.

It is unnecessary to consider the ground on which the judge at Special Term mainly relied, as stated in Iris opinion, for the reason that the mews above expressed lead to an affirmance of the judgment.

The judgment shorrld be affirmed, with costs of the appeal to the respondent, to be paid by the appellants personally in case the' allegations in the complaint, in respect to the refusal of the defendants to refer the claim, shall be established on the trial of the issues of fact herein; otherwise, to be paid by the defendants out of the estate of their testator in their hands.

Talcott, P. J., and Hardin, J., concurred.

So ordered.


text:
    ALICE DOUGLASS, Appellant, v. JOSEPH L. HABERSTRO, as Sheriff, etc., Respondent.

      Sheriff — becomes liable as bail, upon the neglect of the sureties to justify — may be allowed to surrender the principal, after answer — what must be shown to authorize the court to grant him permission to do so.

    When the sheriff has become liable as bail, by reason of the failure of the original sureties to justify, he may exonerate himself by surrendering the principal to the jail before the expiration of the time to answer, or within such time thereafter as the court may deem just to-prescribe.
    But to entitle the sheriff to an order, allowing him to surrender the principal, after the time to answer has expired, he must show a substantial and sufficient excuse for permitting the defendant in the execution to be at large.
    Appeal from an order of the Erie Special Term, exonerating the defendant as bail in an action brought by the plaintiff herein against one "William T. Warren, and discontinuing the present action.
    The action against Warren was for the conversion of moneys, collected by him in a fiduciary capacity. The plaintiff caused him to be arrested by the sheriff, who took from him bail, who were excepted to and failed to justify. The plaintiff recovered a judgment against Warren, and issued an execution against his property, which being returned unsatisfied, she issued a body execution, which the sheriff, the defendant Haberstro, returned, “not found.” That return was made on April 3, 18Y9. The present action was commenced against Haberstro, on April 10. On April 15, Haberstro again took Warren into custody, and held him until April 23, when he released him, upon his giving an undertaking conditioned that he would at all times render himself amenable to the process of the court during the pendency of the action against him, and to such as might be issued to enforce the judgment therein. On April 28, Haberstro, and the bail who had failed to justify, seized Warren and turned him over to the custody of one of the coroners of Erie county, and thereupon obtained an order, made by the Special Term of this court, exonerating thém as bail, which order was reversed by the General Term in October, 1879 (19 Hun, 1). On being surrendered to the coroner, Warren gave him an undertaking, and was permitted to go at large. On October 27, Haberstro not having answered, plaintiff entered judgment against him by default. On November 15, Haberstro obtained a Special Term order giving him leave to answer, upon an affidavit, in which he swore to merits, and excused his default in not answering. He noticed the cause for trial at the February Circuit, 1880 ; it went upon the day calendar, and was placed there as a preferred cause; while it was in that position, he again arrested Warren, and, on February 25, moved for and obtained the order from which this appeal is taken.

      John Campbell Hubbell, for appellant.

      Osgoodby, Titxos and Moot, for respondent.
   Smith, J.:

By the failure of the original sureties to justify, the defendant became liable as bail, and as such had the right to be exonerated on surrendering Warren to the jail, before the expiration of the time to answer in the action against himself. And the Special Term had power to grant him such further time, after answer, as it deemed just, to make such surrender. (Code of Civil Proc., § 601.) But to entitle the sheriff to such relief, after the time for answering had expired, it was incumbent on him to show a substantial and sufficient excuse for permitting the defendant in the execution to be at large. That, we think, he failed to do The time to answer expired April 30, 1879, and the application to be exonerated on surrendering the defendant, was not made until nearly ten months thereafter. If it be assumed that the order of the Special Term, exonerating him, was a sufficient excuse so long as it was in force, it avails him nothing after it was reversed. From the last of October to the latter part of February, he was without any excuse whatever, so far as the papers show. True, he alleged, in vague and general terms, that he was unable to find Warren, after diligent inquiry, but be did not state specific facts. He did not disclose tbe nature of bis inquiries, of whom made, or what information he received in reply to them. On the other hand, the opposing affidavits state positively that with the exception of four weeks, Warren was openly in the city of Buffalo from October to February, and that during that period he saw and conversed with the sheriff, his deputy or attorneys, on several occasions. The course of practice pursued by tbe defendant in tbe action against him indicates very clearly tbat be bad no intention of re-arresting Warren until tbe suit against tbe sheriff was about to be forced to trial.

Although tbe question involved in tbe defendant’s motion is one of discretion, to a great extent, yet it is our duty to review tbe evidence. We have done so, and are satisfied tbat the defendant is without excuse.

Tbe order should be reversed, with $10 costs and disbursements.

Talcott, P. J., and Haüdin, J., concurred.

So ordered.


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    MARGARET C. REMINGTON, Appellant, v. JAMES W. WALKER and MALCOLM McPHERSON, Respondents, Impleaded, etc.

      Pendency of another action — how it must he pleaded — the rendering and the settlement of an executor’s account are separate proceedings.

    The defense of the pendency of another action must be taken by answer or demurrer ; if not so taken it will be deemed to have been waived.
    Where the answer sets up as a defense a final settlement and adjustment of the plaintiffs claims in a proceeding had in another court, proof of a proceeding then pending in that court is inadmissible.
    The rendering of an account to a surrogate by an executor or administrator and the settlement of the account, after it has been rendered, are separate and distinct proceedings.
    Appeal from a judgment entered on tbe report of a referee, dismissing tbe complaint on tbe ground tbat tbe pendency of certain proceedings before tbe surrogate of tbe county of Genesee, compelled an abatement of tbe action.

      J. M. Dwming, -for tljg appellant.

      J. H. Mcurtindale, for the respondent Walker.

      H. Balla/rd, for the respondent McPherson.
   Smith, J.:

The plaintiff is a legatee under the will of Daniel J. McPherson who died in Le Roy, Genesee county, in the year 1857. At that time the plaintiff was about two years of age. The bequest to her was of the sum of $2,500 to be invested by the executors, and such portion of the income as they should deem proper, to be expended by them, in her maintenance and education, and on her becoming twenty-one years of age, the principal and the accumulated interest unexpended for the uses aforesaid, to be paid to her. The executors wer§ Peter J. McPherson and the defendants Walker and Malcolm McPherson. Peter J. McPherson died in November, 1873, leaving a will, and his executors are made defendants in this action. The complaint alleges that Daniel J. McPherson left an estate sufficient to pay all the specific legacies created by his will, and to pay the residuary legatees several thousand dollars: that nothing was paid upon the plaintiff’s legacy until the year 1861, and only about $1,000 down to the year 1876. It further alleges that the executors failed to perform the said trust, and did not set apart the sum bequeathed to 'the plaintiff and invest the same, but mingled it with the funds of the estate and with their own, and did not collect the annual interest from the amount of her legacy, or account for the same; that they had at all times sufficient assets to pay the plaintiff’s legacy in full, after paying debts, expenses of administration and all other legacies given.by the said will, and that they could have invested the said legacy as directed by the will advantageously, and in such a way that it would have yielded an annual income equal to the legal interest thereon. The complaint prayed for an account and final settlement, and the payment of the plaintiff’s legacy, with compound interest, and for general relief. The residuary legatee, Elizabeth Campbell, is made a defendant. The defendants, Walker and Malcolm McPherson, answered separately.

It appeared at the trial that, among the. assets of the testator, was a bond made by the defendant Malcolm McPherson in 1857, for $2,500, accompanied by his mortgage on real estate of sufficient value to secure the payment of the bond, and that after the death of the testator the said bond and mortgage were in the manual custody and possession of Walker as executor. On August 29, 1876, Walker, as executor, assigned the said bond and mortgage to the plaintiff, with a proviso that any sum realized thereon above the sum of $6,913.14, with interest from the date of the assignment, should be paid to the residuary legatee. The sum of $6,913.14 is the amount of the principal of the said mortgage then unpaid, with compound interest. The plaintiff foreclosed the said mortgage by action, claiming as due thereon a sum which included compound interest, but the judgment limited her to the principal and simple interest only. The decision upon which the said judgment was entered wa§ rendered before the commencement of this action. After this suit was begun, and on January 21, 1859, the plaintiff received the amount of the judgment in the foreclosure suit, with interest to that date, being the sum of $5,440.85, besides costs.

The material facts relating to the proceedings before the surrogate are briefly these. The plaintiff became of age in March, 1876. In April of that year Walker presented to the surrogate his account as executor, and his petition stating that Peter McPherson was dead; that Malcolm McPherson neglected to join in the accounting, and that the account was presented for final settlement and allowance, and praying, among other things, for a citation to Malcolm McPherson to attend the final settlement of the said account. It does not appear that a citation was issued upon the said petition. On July 5, 1876, a petition signed and verified by the plaintiff was presented to the surrogate, which averred, among other things, the death of Peter McPherson ; that Walker had made an account of his acts and doings as executor, and was ready and desirous of having a final settlement of the said account; that Malcolm McPherson, though requested so to do, neglected to make and file his account for a Anal or other settlement, and neglected to pay the petitioner the money due her under the will, although there was property in his hands so to do; and praying for a citation directed to the said Malcolm McPherson, “and if necessary to the said James W. Walker,” ordering the executor or executors to make and render their account as such executors as aforesaid, and pay over the money due from them to the petitioner.

On July 10, 1876, the surrogate issued a citation, directed to McPherson and Walker, as executors, requiring them to appear before the surrogate on August 22, 1876, and render an account of their proceedings as executors, or show cause, etc. The citation appears to have been served on Malcolm McPherson only, and the service on him was made by Walker, as appears by an affidavit made by the latter before the Surrogate, on August 29, 1876. The next step in the proceedings appears to be a writing, signed by the plaintiff and Elizabeth Campbell, the residuary legatee, dated August 22, 1876, waiving the issue and service of a citation to appear before the. surrogate to attend the final settlement of the accounts of the executors, and consenting that such settlement “ may be had upon such day as the surrogate may fix for that purpose.” The surrogate testified, and the referee found that, on August 22, McPherson verified the account that had been previously presented by Walker, as above stated, but I have not been able to find that the case shows how or in what form the verification was made. These are all the papers by which the proceedings were instituted. The surrogate testified that Walker, Malcolm McPherson, the plaintiff, and, some part of the time, the executor of Peter J. McPherson, the deceased executor, appeared before him, but he did not state, nor is it shown, at what time the said parties so appeared together, or that the surrogate fixed a day for the settlement, or that the residuary legatee was notified of a day fixed, or that she attended before the surrogate. There is no proof that the surrogate ever entered or directed any order in the matter, other than the issuing of the citation above stated. lie advised the assignment of the Malcolm McPherson bond and mortgage after McPherson refused to pay compound interest, in order that the plaintiff might collect what she could out of it, and, to that extent, relieve Walker. And Walker paid to the surrogate $1,269 in money, a balance appearing in bis bands, according to bis account, and of that sum tlie plaintiff subsequently received $500. Nothing further appears to have been done before the surrogate. This suit was commenced in September, 1878.

We are of the opinion that the referee erred in holding that the pendency of the proceeding before the surrogate was a ground for dismissing the complaint.

1. Another proceeding pendvng was not pleaded as a defense. The executors of Peter J. McPherson did not answer the complaint. Malcolm McPherson answered, but did not set up the proceeding before the surrogate as a bar or otherwise. Walker pleaded it, not as a pending proceeding, but as a settlement and adjustment of the plaintiff’s claim — a very different thing — which it certainly was not, and has not been found to be, by the referee. The rule of pleading, so far as relates to the defense of another action pending, is regulated by statute. If the objection appears on the face of the complaint, it is ground of demurrer. (Code of Civ. Proc., § 495, subd. 3.) If it does not so appear, it may be taken by answer. (Id., § 498.) If not taken by demurrer or answer, the defendant is deemed to have waived it. (Id., § 499.) Under the present form of the answers, the objection to the proof of a pending proceeding in the Surrogate’s Court was well taken.

2. In the proceeding before the surrogate, that officer had not jurisdiction to grant the relief which the plaintiff seeks in this action. Here, she charges all the executors with breach of duty, and asks for an accounting and final settlement, and the payment of her legacy. Not so, in the proceeding before the surrogate. The citation issued by the surrogate to the executors Walker and Malcolm McPherson, merely required them to render an account. The rendering of an account to the surrogate by an executor or administrator, and the settlement of that account, after it has been rendered, are separate and distinct proceedings. (Westervelt v. Gregg, 1 Barb. Ch., 469.) When the account was rendered, the proceeding commenced by the citation was terminated. (Id.) It was competent for the executors, on being required to render an accormt, if they desired to have the sain©- finally settled, to apply for a citation requiring tlie creditors, next of kin and legatees to appeal- before tlie surrogate to attend tlie settlement of tlie account. But that they did not do. McPherson never made such application. The only application to that effect ivas made by Walker, by his petition, presented several months before tlie plaintiff petitioned, and, upon Walker’s petition, no citation was ever issued. Besides, tlie petition of Walker did not ask for a citation to be directed to legatees, but only to liis co-executor, McPherson, and the next of kin. So that the only proceeding initiated before the surrogate was the rendering of an account. True, the petition of the plaintiff prayed that the executors be required to pay her legacy, as well as to render an account, but, in framing the citation, that portion of the prayer was not granted.

3. Thus far, the case has been considered as if the plaintiff’s claim was against the sxirviving- executors alone. But it is against the executors of tlie deceased executor as well. The complaint charges that the three executors neglected their duty, so long as Peter J. McPherson lived. And his executors are made parties to the action. The citation issued by the surrogate was not directed to them, and they were not parties to the proceeding. There is proof that one of them was present before the surrogate }Dart of the time, but there is no evidence that he participated in the accounting or even knew what was going on. And, if the surrogate had not jurisdiction to cite the personal representatives of the deceased executor to account before him as the representatives of the first testator, for the reason that none of tlie effects of such testator came to their hands in that character (Dakin v. Demming, 6 Paige, 95), that circumstance strengthens the appellant’s position.

i. The written waiver and consent of the plaintiff and residuary legatee, did not transform the proceeding into one for a settlement of the accounts. That, as lias been seen, could only be done on the application of the executors on being required to account. Besides, the consent was that the settlement should be had upon a day fixed by the surrogate, and until a day was fixed and notice thereof given to tlie consenting parties, the waiver and consent were inoperative.

5. The question is not affected by the circumstance that the plaintiff has received the avails of the foreclosure, and a part of the money paid by Walker to tbe surrogate. Those .moneys are applicable to the reduction of tbe claim made by ber in this action, and if an amendment of tbe answer is necessary to that end, an application to amend, or to put in a further answer, can be made at a Special Term before the cause comes on for trial. It is apparent from all the evidence that the assignment and payment were not intended as a final settlement of tbe claim, and the receipt of them by tlie plaintiff does not stand in tbe way of her present action.

The judgment should be reversed and a new trial ordered before another referee, costs of tbe appeal to abide event.

Talcott, P. J., and Hardin, J., concurred.

Ordered accordingly.


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    ANDREW W. PONTIUS, Plaintiff in error, v. THE PEOPLE OF THE STATE OF NEW YORK, Defendants in error.

      Evidence to prove the intent is admissible, though it show the accused to have been guilty of another offense — comparison of handwritings, when admissible— what evidence admissible, to discredit the testimony of the accused.

    Upon the trial of the plaintiff in error for an assault alleged to have been committed upon one John G-. Hoster, with a deadly weapon, with an intent to MU him, the prosecution was allowed, against the objection and exception of the plaintiff in error, to show that he had, shortly before the alleged assault, forged the name of the said Hoster to two promissory notes, which notes he had in his possession up to the time of committing the assault.

      Held, that the evidence was properly received.
    That it tended to establish a motive for the commission of the offense, and was not rendered inadmissible by the fact that it also tended to show the commission of a distinct offense other than that charged m the indictment.
    The prosecution put in evidence, without objection, a promissory note, bearing the genuine indorsement of the said Hoster. and also an account book, kept by the plaintiff m error, in which he had written the said Hosier’s name. Subsequently witnesses called by the prosecution were allowed to compare the signatures alleged to have been forged with the genuine signature and the one written in the accouut book.

      Held, no error.
    The plaintiff m error claimed that the notes were given to him by Hoster in consideration of an indebtedness due to him for borrowed money, exceeding in amount that of the two notes.

      Held, that evidence tending to show that tbe defendant was at that time embarrassed in lus pecuniary circumstances, and pressed by numerous creditors whom he was unable to pay, was admissible, as tending to show that he then had no money to lend.
    Certiorari to the Court of Sessions of the county of Seneca, to review the conviction óf the plaintiff in error, in that court, of the crime of assault and battery'upon John Gr. Hoster, with a deadly weapon, with intent to kill.

      John, B. Murray, for the plaintiff in error; Bwrton d? Herron, of counsel.'

      Patrióle J. Rogers (district attorney), for the defendant in error; P. H. Van Ahken, of counsel.
   Smith, J.:

By way of showing a motive for the alleged offense, the prosecuting attorney offered evidence tending to show that the defendant had forged the name, of Hoster to two promissory notes for $1,000, and $2,500, respectively, shortly before the alleged attempt to kill, which notes he had in his possession at the time when the offense was committed. The reception of this evidence is now urged as error, on the ground that it tended to prove an offense other than that charged in the indictment. That the desire to conceal the crime of forgery, if the defendant had perpetrated it, and to render the forged paper available, may have constituted a motive for attempting to put out of the way the man whose name was forged, is so probable, that the evidence cannot be said to be foreign to the issue; and it is well settled, that upon a trial for a felony, evidence tending to prove a motive for its commission is not inadmissible because it may incidentally show the accused to have been guilty of another offense. (People v. Wood, 3 Park. Or., 681; Stout v. People, 4 Id., 71; Pierson v. People, 18 Hun, 239, affi’d in Ct. of App., January 13, 1880 ; Colemam v. People, 58 N. Y., 555.) Tlie objection that the evidence tended to show a distinct offense other than that charged, was properly overruled For the like reason the defendant’s motion to strike out the evidence referred to was properly denied. The defendant’s offer, with which he accompanied the motion, to admit that in case the jury should find that he committed the assault and battery on Iioster, lie intended to kill him, did not alter the case. The public prosecutor was under no obligation to accept the proffered admission and.waive the proof.

The district attorney put in evidence a promissory note on which was the genuine indorsement of the complainant. lie also produced and proved an account-book of the defendant, in which the latter had written, among other things, the complainant’s name, and the items of an account between the complainant and himself. The note and book were received without objection. Subsequently, witnesses called for the prosecution were allowed to compare the genuine indorsement of Iioster on the note with the two signatures alleged to have been forged, and to give an opinion, based on such comparison, as to the genuineness of the latter signature. This was not error. (Miles v. Loomis, 10 Hun, 372; S. C., affi’d., 75 N. Y., 288.) Nor was it error to pen nit a comparison of the same signatures with the handwriting of the defendant in the account-book, and in the body of the $1,000 note, which he testified was written by him. It was within the discretion of the court to allow particular marks of resemblance or dissimilarity, as the case might be, between the several pieces of handwriting, to be pointed out to the jury, and to allow the jury to take into their hands the writings proved in the case, and examine and compare them.

Much evidence was given by the prosecution tending to show that the defendant was embarrassed in his pecuniary circumstances, being pressed by numerous debts, which he was unable to pay, with a view of showing that he had' not money to lend. This testimony is now claimed by the prosecution to be pertinent, by reason of the testimony of the defendant,-that Iioster was indebted to him for borrowed money to more than the amount of the alleged forged notes, at the time they bore date, and that the notes were given in consideration of such, indebtedness. We are inclined to think that testimony tending to show the inability of the defendant to lend money was competent upon the question whether the notes for $1,000 and $2,500 were genuine or forged. It has been held that the presumption of payment, arising from the lapse of time, may be resisted by showing the obligor’s inability to pay; as his poverty, his insolvency, or a state approaching it. (1 Phil. Ev., 4 Am. ed., with C. & H. Notes, p. 677, note, and cases there cited; and see Nicholls v. Van Valkenburgh, 15 Hun, 230, and the cases there cited by Taícoit, P. J., and his comments on the case of Nicholson v. Waful, 70 N. Y., 604.). Our conclusion on this point is not formed without some hesitation, but, on the whole, we think that, in view of the conflict of testimony between the defendant and the complainant, as to the genuineness of the notes, and of the version of the defendant as to the consideration of the notes, and the circumstances under which they were executed, testimony as to the pecuniary condition of the defendant was not irrelevant. Several items of this class of testimony were objected to, on other and special grounds, in addition to that of irrelevancy, but, on examining them, we And no merit in them, and they do not call for further comment.

The testimony of the witness Strong, as to the remark made by the defendant respecting the signature of Hosier on the note given to him by the witness, was competent. It occurred on the Saturday night preceding the Monday on which the alleged assault took place, and as a circumstance tending to show that the defendant was particularly attentive to the characteristics of IToster’s signature it was competent evidence.

It is claimed by the defendant’s counsel that the prosecuting attorney was permitted, against the prisoner’s objection and exception, to cross-examine the defendant as to irrelevant matters, and then to contradict his answers, thus elicited, by other witnesses. This claim has reference particularly to the testimony of Jacob Bachman in respect to the Deshler note, and the chattel mortgage purporting to have been given to the witness by the defendant. But neither Bachman nor the defendant professed to have any positive recollection as to the matter referred to, and there was really no substantial contradiction between them.

The complainant was permitted to testify, against objection, that lie owned four hundred and fifty acres of land in Iowa. For aught that appears, the testimony was wholly irrelevant and was improperly received, but it is difficult to see how the admission of it harmed the defendant, and we think it does not furnish a ground for setting aside the conviction.

The testimony of the witness Green, in respect to the axe, tending to show that the defendant carried it in his sleigh for several days before the assault, and from which the jury might have inferred that he supposed he had it in his sleigh, and attempted to get hold of it, shortly before the assault was made, was competent upon the question of intent.

Some minor questions were raised by other exceptions, which are unimportant, and need no special remark. ¥e have examined them all attentively and are of the opinion that they involve no error.

The rulings of the court below upon the motion in arrest of judgment and the motion for a now trial are not before us for review. They are not brought up by the certiorari. That brings up only exceptions taken at the trial. (2 R. S., 736, § 21; Willis v. People, 32 N. Y., 722; Gaffney v. People, 50 Id., 425 ; Brotherton v. People, 75 Id., 159.)

The conviction should be affirmed and the proceedings remitted to the Seneca County Sessions, with instructions to proceed to sentence.

Talcott, P. J., and Hardin, J"., concurred.

Ordered accordingly.