text:
    Solomon Reiss et al., Resp’ts, v. The New York Steam Co., App’lt.

      (New York Superior Court. General Term,

      Filed January 5, 1891.)

    1. Negligence—Damages—Interest.
    In an action for injuries to personal property the plaintiff is not entitled absolutely and as matter of law to recover interest upon the amount of the damage immediately caused by the negligence, but the jury in assessing the damages should add interest if, in their judgment, that be necessary to give full compensation.
    2. Same—Charge.
    In such an action the judge charged that if “plaintiffs were entitled to recover anything, they were entitled to recover interest on the amount of damages allowed. Held, error.
    Appeal by defendants from judgment against them entered on the verdict of a jury and from order denying their motion for a new trial made upon the minutes of the judge.

      James W. Hawes, for app’lt; Stern & Myers (Mr. Kingbury, of counsel), for resp’ts.
   Per Curiam.

An examination of the case shows that there was no error on the trial, unless in one respect that will be considered.

The action was for damages for injuries to the personal property of plaintiff caused by the negligence of defendants. The learned judge charged the jury that if the plaintiffs were entitled to recover anything, they were entitled to recover interest on the amount of damages that the jury allowed.

In actions of this kind for the recovery of damages for injuries to personal property, the plaintiff is not entitled absolutely and as matter of law to recover interest upon the amount of the damage immediately caused by the negligence, but the jury in assessing the damages should add interest, if in their judgment that be necessary to give full compensation. Mairs v. Manhattan R. E. Ass'n, 89 N. Y., 507, and cases there cited.

The charge as made was not excepted to, but the defendant’s counsel at the end of the charge said that he excepted to that part of the charge which instructs the jury that if the plaintiffs recover they may be entitled to recover interest on the damages. If such had been the charge, it would have been correct, for it is true there may be a recovery for interest, if that be necessary to indemnity or compensation and the form of the exception diverted the attention of the judge from the doubtful and incorrect part of the charge. Therefore the exception would not require the reversal of the judgment.

Revertheless, it cannot be affirmed that interest was given as compensation not as matter of law, and lest injustice may have been done, the judgment should not be upheld, so far as the interest

The judgment should therefore be reversed, with costs to abide the event, and a new trial ordered unless the plaintiff stipulate, De Carricarti v. Blanco, 121 N. Y., 238; 30 N. Y. State Rep., 926, that the verdict be reduced by deducting from its amount such part of it as represents interest from January 1,1888, and the judgment correspondingly modified, and in that case the judgment as modified is affirmed, without costs of appeal.

Sedgwick, Ch. J., and Freedman, J., concur.


source: Caselaw Access Project

author: Ingraham, J.

license: Public Domain

text:
    Edwin W. A. Hunter, Resp’t, v. George H. Stuge et al., App’lts.

      (New York Superior Court, General Term,

      Filed January 5, 1891.)

    1. Sale—Warranty.
    On a sale of eggs to defendants, plaintiff's agent did not expressly warrant them, hut stated that they were a nice lot of eggs, and that defendant would lose hardly anything out of a case of eggs. Defendants’ representative examined them himself. Held, that there being no express warranty, the rule caveat emptor applied, and no warranty would he implied.
    2. Verdict—Directed by court.
    Where it is the duty of the court to direct a verdict for plaintiff, the fact that the jury would not have rendered such a verdict without such direction is no reason to disturb such verdict when rendered.
    Appeal from judgment entered on verdict of a jury.

      Adolph L. Sanger, for app’lts; .Hamilton H. Squire, for resp’t.
   Ingraham, J.

The complaint alleged a sale of goods to the defendant The answer failed to deny any allegation of the complaint, and set up as a special defense a breach of warranty, and asked to deduct the damages sustained by reason of such breach from the amount due to plaintiff.

On the trial the defendant assumed the affirmative. The point was not made on the trial, nor was it taken on this appeal, that the affirmative defense was a counterclaim and admitted because of the failure of the plaintiff to reply.

The plaintiff was, therefore, entitled to a direction of a verdict in his favor unless the defendants proved their affirmative defense set up in the answer, and at the close of the,, evidence offered by the defendants plaintiff asked that a verdict be directed for the amount claimed.

This motion, we think, should have been granted.

There was no evidence to sustain the defense. The person who represented the plaintiff at the sale did not warrant the eggs as good or of any particular quality. He expressed his opinion as to the -quality of the eggs, but it was nothing more than an opinion. What he said was, “ that they were a nice lot of eggs,” and “you will lose hardly anything out of a case of eggs.”

The defendant’s representative examined the eggs himself and purchased them upon such examination, and there being no express warranty, the rule caveat emptor applied.

As it was the duty of the court to direct a verdict in favor of the plaintiff, the fact that the jury would not have rendered such a verdict without such a direction, is no reason to disturb such a verdict when rendered, and the incident that happened at the end of the trial was immaterial.

The judgment and order appealed from should be affirmed, with costs.

Sedgwick, Ch. J., and Freedman, J., concur.


text:
    The Beethoven Piano Organ Co., Resp’t., v. The C. C. McEwen Co., Impl’d., App’lt.

      (New York Superior Court, General Term,

      Filed January 5, 1891.)

    Creditor’s action—Fraud.
    The complaint in a creditor’s action alleged that the defendant, C. C. McEwen, a minor, condudted a business for his father’s benefit with means furnished by the father through his wife; that goods were purchased of plaintiff on credit; that said defendant confessed judgment to his mother, on which an execution was issued and the property sold thereunder to her; that subsequently the said parties organized the defendant corporation and became the officers thereof, and said property was transferred to it and the capital stockissued therefor.. Held, sufficient to warrant an inference of fraud, and that the property could be followed into the hands of the corporation.
    Appeal from interlocutory judgment entered on an order overruling a demurrer to the complaint.

      M. L. Townsend, for app’lt; Henry C. Andrews, for resp’t.
   Ingraham, J.

The complaint alleges that the defendant Clarence 0. McEwen, a minor, commenced business in his own name about the 1st of October, 1886, for the benefit of his father, Edson H. McEwen, and the said business was conducted with money supplied by said Edson ¡H. McEwen through his wife, the defendant, Grace E. McEwen, and otherwise. That said Clarence C. McEwen obtained from plaintiff merchandise on credit and gave promissory notes therefor, endorsed by said Edson H. McEwen. That said Clarence C. McEwen, being a minor, confessed judgment to the defendant Grace E. McEwen, which judgment was void, and that upon such judgment an execution was issued and the property held in the name of said Clarence C. McEwen was levied on and sold by the sheriff of the city and county of Hew York under said execution®and bought in by said Grace E. McEwen.

It is clear that upon these allegations plaintiff, as a judgment creditor of Edson H. McEwen who had exhausted his remedy at law, could maintain an action to have the property of the judgment debtor so transferred by this fraudulent device applied to the payment of his judgment.

The complaint then alleges that the parties to the fraud organized the defendant corporation; that the defendant Clarence C. McEwen was the president and Grace E. McEwen was treasurer, and that the property so purchased by said Grace E. McEwen was turned over to said corporation and the capital stock issued therefor. I can see no reason why under such circumstances the property which 'was lawfully applicable to the payment of the plaintiff’s judgment cannot be followed in the hands of the corporation. The officers of the corporation had knowledge of the fraud, and assuming these allegations are true, it is clear that the organization of the corporation was part of the device by which the property of the judgment debtor was to be divested so that it could not be reached and applied to the payment of his debts. The corporation cannot be said to be a bona fide purchaser of the property for value. Its officers had knowledge of the fraud, in fact were instrumental in perpetrating the fraud, and the organization of the corporation was evidently for the purpose of carrying out the fraudulent scheme. The mere forms adopted for the perpetration of fraud are of little importance. Schemes of fraud may be so cunningly devised as to blind the eye of justice, but they must not escape condemnation and reparation when discovered. Rice v. Manley, 66 N. Y., 87.

And it is the duty of a court of equity to look beneath the surface and when the fraud appears, no matter what forms have been adopted to cover it up, to redress the wrong done.

The rule is now settled, “ that a pleading on demurrer is deemed to allege what can be implied from the allegations therein by reasonable and fair intendment, and facts impliedly averred are traversable in the same manner as though directly averred. It is sufficient that the requisite allegation can be fairly gathered from all the averments of the complaint, though the statement of them may be argumentative and the complaint be deficient in technical language.” Marie v. Garrison, 83 N. Y., 23.

And applying the rule, I think the complaint alleges facts from which the inference of fraud is plainly implied.

It does not appear that there are any innocent parties who have rights that will be injuriously affected by granting the relief asked for. If it appears that such parties exist the court has ample power by final judgment to protect them.

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

Sedgwick, Ch. J., and Freedman, J., concur.


author: Per Curiam.

text:
    Moritz Roth, App'lt, v. The Hamburgh American Packet Co., Resp’t.

      (New York Superior Court, General Term,

      Filed January 5, 1891.)

    1. Carriers—Negligence—Liability for breakage.
    In the absence of proof of the manner in which the casks in question were made or the strength of their material, there is no presumption from the mere fact of breakage that ordinary care was not used by the carrier.
    :2. Same.
    The casks when received by defendant were enveloped in linen covers, and the bill of lading stated they were received in “ apparent good order and condition.” Feld, that this referred only to the linen cover, and that there could be no presumption as to the strength of any particular cask.

      Appeal by plaintiff from judgment dismissing complaint entered upon an order made at trial term, and from order denying plaintiff’s motion for a new trial, made upon the judge’s minutes.

      John Fennel, for app’lt; James C. Colgate, for resp’t.
   Per Curiam.

The action was for the value of two casks of wine that had been shipped upon a steamer of the defendants to-be carried to this port. The plaintiff was owner and consignee. On the arrival of the steamer the plaintiff demanded the casks. They were then in a broken condition, some of the staves having been broken. The whole of the contents had leaked out.

The plaintiff had received a bill of lading, which provided that the defendants should not be liable for breakage or leakage, but on the trial it was claimed that the shipment had been made under a verbal contract which would make the defendants liable as common carriers at common law. The evidence, however, shows that the shipment was made subject to the terms of the printed bill of lading, afterwards delivered to the agent of plaintiff and sent by him to plaintiff.

The plaintiff claimed, under the bill of lading, that assuming the defendants were not liable for breakage and leakage, unless caused by their negligence, yet that the facts of the breakage and leakage created a- presumption of negligence in the treatment of the casks, or, at least, it was for the jury to say whether the condition of the casks did not show negligence.

_ Let it be assumed for the purpose of this decision that the law is that when casks or things of that nature are generally carried in ships without breakage if ordinary care is used, the fact of breakage will lead to a presumption that ordinary care was not used. Yet such a presumption can be made only of casks that are made of the material and in manner that suffice to give them strength to resist the ordinary operation upon the ship. If nothing be known or presumed as to the strength of the cask, no experience would exist upon which it might appear probable that it would bear ordinary usage.

In the present case, at the time of shipment the casks were en-' veloped in linen covers. The manner in which the casks were made or the strength' of material were not shown, although proof on the subject could have been had. The admission in the bill of lading referred only to the “ apparent good order and condition ” of the casks, and this referred in fact to the linen covers. There can- be no presumption as to the degree of strength of any particular cask.

If these views are right the plaintiff did not show facts which made á presumption of negligence on defendant’s part or any question for the jury on that point.

The rulings as to evidence were correct.

Judgment and order appealed from affirmed, with costs.

Sedgwick, Ch. J., Freedman and Ingraham, JJ., concur.


author:
Freedman, J.
      Ingraham, J.

text:
    James Clinton Bolton et al., Pl’ffs, v. William Schriever et al., Def’ts.

      (New York Superior Court, General Term,

      Filed January 5, 1891.)

    Bes adjudicata—Decision of subrogate as to inhabitancy cannot be ASSAILED COLLATERALLY.
    The judicial determination of a surrogate, in proceedings for probate, as to the inhabitancy of the testator cannot be assailed colla erally.
    Exceptions ordered to be heard in the first instance at general term.

      Edward C. Perkins and James Clinton Bolton, for pl’ffs; Johnston & Johnston, for def’ts.
   Freedman, J.

At the trial a verdict was directed in favor of the plaintiffs, and the trial judge directed that the exceptions taken by the defendants be heard at general term in the first instance, and that the entry of judgment be suspended in the meantime.

The action is in ejectment, to recover possession of a lot of land known as No. 398 Tenth avenue, between Thirty-second and Thirty-third streets, in the city of New York.

On January 17, 1841, Theodore B. Tallmadge died seized of the premises in question, leaving him surviving two daughters, his only heirs-at-law, one of whom is the plaintiff, Angelina T. Arthue, and the other of whom, Laura E. Bolton, was the wife of the plaintiff, James Clinton Bolton. Laura E. Bolton afterwards died, leaving a will devising all her real estate to the plaintiff, James Clinton Bolton.

The common source of title of both the plaintiffs and the defendants is the said Theodore B. Tallmadge, the plaintiffs claiming by descent, and the defendants adversely under his will and' subsequent conveyances, beginning with a deed from Philip Burrows, executor of Theodore B. Tallmadge, deceased. Probate of the said will was made apparently in due form of law in the surrogate’s office, in the county of New York, in 1841, and if the said probate cannot be assailed in this action, the defendants showed a sufficient title.

The plaintiffs contend that the said probate can be assailed in this action and that it is invalid by reason of the fact, which may be assumed to have been proven at the trial, that Tallmadge, at the time of his death, was an inhabitant of the state of New York, but not an inhabitant of the county of New York, and their contention rests upon the doctrine and decision of Bolton v. Jacks, 6 B.obt., 166.

The general doctrine of the case cited, namely, that want of jurisdiction renders void the judgment of any court, 'whether of superior or inferior, general or'limited, or local jurisdiction; that "the recital of jurisdictional facts in the record of such judgment is not conclusive (unless made so by statute), but only prima facie evidence of the existence or occurrence of such facts; and that the party against whom the record of such judgment is offered in evidence is not estopped by such recitals from showing affirmatively by proof de hors the record that they are untrue, and from thus avoiding the judgment, has stood the test of criticism and is now undoubted good law in this state. It was expressly approved by the court of appeals in Ferguson v. Crawford, 70 N. Y., 253, 267.

The decision of the case has not been so fortunate, and in respect to certain judicial determinations made by surrogates! courts it has been in part overruled and in part disapproved by the court of appeals.

In Roderigas v. Fast River Savings Institution, 63 N. Y, 469, it was held that the surrogate, in granting letters upon the estate of the plaintiff, who was not then dead, acted judicially; that, under the statutes of this state, he had jurisdiction to issue the letters upon a judicial inquiry and determination by him that death had occurred; and hence that the letters so granted protected the defendant as an innocent third party as to the amount paid to the administratrix on the faith of the letters, though they were in fact granted on false evidence. This determination was made upon the construction of the statutes of this state regulating the jurisdiction and proceedings of surrogates’ courts, and it was held that the said statutes furnish a complete system; that, in enacting the same, the legislature intends to confer upon surrogates’ courts sole and exclusive jurisdiction over the subject of granting letters of administration, and as part of that jurisdiction to determine, upon sufficient evidence, the; facts upon which their action must rest; that, if the ease be a proper one, the surrogate must act and issue letters ; and that thereupon the letters so issued are conclusive evidence of the authority of the administrator until reversed on appeal or revoked.

The decision of the court of appeals in the case last referred to related to a judicial determination made by a surrogate upon the question of death. But as to a like determination of the question of inhabitancy, equally strong views were expressed, and the decision of Bolton v. Jacks in that respect was expressly disapproved by Earl, J. (p. 469), and questioned by Miller, J. (p. 475), by a reference to two other reported cases which are in conflict with Bolton v. Jacks. t

In deference to the views expressed by these learned judges on that occasion, I feel constrained to hold that the decision of Bolton v. Jacks is to be followed no longer, and that, if there is a dis-. tinction to be made between a judicial determination upon the question of death and a judicial determination upon the question of inhabitancy, it is one which the plaintiffs should be left to urge upon the court of appeals. And inasmuch as letters testamentary stand upon precisely the same legal footing as letters of administration, and it not having been shown in this case, as was shown upon a re-trial of the Roderigas case, that the surrogate did not act judicially, the conclusion to be reached is that it was error to direct a verdict for the plaintiffs. Under the circumstances it is unnecessary to consider the other questions presented by the exceptions.

The exceptions of the defendants should be sustained, the verdict set aside, and a new trial ordered, with costs to the defendants. to abide the event.

Ingraham, J.

I concur with Judge Freedman in his opinion. Upon the death of a resident of this state, jurisdiction to administer upon the estate of the deceased vests in the surrogate courts established in the several counties of the state, and this duty devolves upon the surrogate of the county in which the deceased resided at the time of his death.

The question of the inhabitancy of the deceased becomes a question that must be determined by the surrogate to whom an application is made for administration, and I think it is clear that the determination of that question is conclusive, except in a proceeding to review such determination, and cannot be attacked collaterally. This principle is recognized by the court of appeals on the second appeal in Roderigas v. East River Savings Institution, 76 N. Y., 321, where Church, Ch. J., delivering the opinion of the court, says:

“ But if a person be actually dead, then the surrogate is vested with power over the general subject-matter. In the latter case he has the right to act, and although he acts erroneously his action cannot be impeached collaterally. He may commit an error as to inhabitancy which would be sufficient to reverse his decision, but not sufficient to render it void from the beginning, for the reason that he has power to act upon the subject.”

This was the position of the surrogate when the application was made to admit the will of Tallmadge to probate and grant letters testamentary to his executors. He had jurisdiction of the subject-matter because Tallmadge was dead. Whether the surrogate of New York county, or the surrogate of Columbia county, should admit the will to probate depended upon the question of the residence of Tallmadge at the time of his death, and that question-the surrogate of New York was required to determine. The petition for the probate of the will alleged that Tallmadge resided in the city of New York, and he determined that he did so reside by the decree admitting the will to probate.

The authority of the surrogate to grant letters testamentary depended upon the probate of the will. It was the appointment of the executors by the will that gave the surrogate jurisdiction to grant the letters, and if the surrogate had no jurisdiction to probate the will, he had no jurisdiction to grant the letters. Yet I hardly think it would bé claimed that the letters issued were void, so that a payment of a debt owing to the deceased to such executors would not have discharged the debt

I think, therefore, that the plaintiffs had no title to the property, and that the complaint should have been dismissed.


author: Per Curiam

text:
    Jacob Wolkoff, App’lt, v. William E. Tefft et al., Resp’ts.

      (New York Superior Court, General Term,

      Filed January 5, 1891.)

    Witness—Impeachment—Evidence.
    Where the plaintiff, as a witness, on cross-examination, has admitted that he was arrested and convicted of a crime, he has a right on redirect to show his innocence of such crime.

      Appeal from judgment for defendant, dismissing the complaint, and from order denying plaintiff’s motion for a new trial made upon the judge’s minutes.

      Henry Morrison, for app’lt; Palmer & Boothby, for resp’ts.
   Per Curiam

The plaintiff was a witness in his own behalf as to important matters. On his cross-examination he testified that he had been arrested about some coats, that a party he was with stole the coats, and that he, the plaintiff, was arrested and ■convicted and served his term in the House of Eefuge. On redirect examination he was asked: Were you guilty or innocept

of that transaction ? The counsel for defendant did not object to the form of the question, and objected to it as immaterial and irrelevant. The witness had a right to show his innocence, and if possible to relieve himself from the unfavorable inference that might be drawn from the fact of his conviction. No record of that had been produced, but if it had been it would not have been conclusive of plaintiff’s guilt. Sims v. Sims, 75 N. Y., 467.

Judgment and order reversed and new trial granted, with costs to abide the event.

Sedgwick, Ch. J., Freedman and Ingraham, JJ., concur.


author: Bradley, J. Parker, J. (dissenting.)

text:
    Daniel J. Noyes, App’lt, v. Theresa A. Anderson, Imp’ld, etc., Resp’t.

      (Court of Appeals, Second Division,

      Filed January 14, 1891.)

    1. Mortgage—Foreclosure — Payment op assessments — Relief from DEFAULT IN PERFORMANCE OF CONDITION SUBSEQUENT.
    Plaintiff, for good consideration, agreed with defendant that during the natural life of the latter, and for one year after her death, he would not foreclose a certain mortgage so long as certain prior mortgages were unforeclosed and no interest left unpaid, “ and so long as no taxes or assessments on the said premises remain unpaid and in arrears for more than thirty days.” Plaintiff commenced this action of foreclosure on the ground that the premises were encumbered by an assessment for twenty-three dollars, confirmed March, 1886. Defendant alleged that she had no knowledge of it until April 28, 1887, when she promptly caused it to be paid. It appeared upon the trial that the non-payment of the assessment was due solely to the negligence of her son and agent, and that it was promptly paid by her the day previous to the service of the summons upon her. Held, that the case was one in which defendant was entitled to relief from the consequences of her default.

      % Same.
    The stipulation essentially differed in its nature and object from a provision in the mortgage to the effect that the principal sum shall become due on a specified default in the payment of interest as provided by it. In such a case the court, as a rule, will not grant relief to the mortgagor from the effect of his default, when nothing is done on the part of the to render it unconscionable for him to avail himself of it.
    (Follett, Oh. J., and Parker, J., dissent.)
    Appeal from order of the general term of the court of common pleas of the city of New York, reversing judgment entered on the decision of the court at special term, and granting a new trial.
    The action was brought in 1887 to foreclose a mortgage of date January 1, 1884, made by the defendant, Anderson, and her husband, John J. Anderson, upon certain premises in the city of New York, to secure the payment of $12,500 and interest to the plaintiff on the 1st day of January, 1885, according to the condition of a bond of the mortgagors. The husband died in January, 1885. The defendant Anderson by her answer set up an agreement, made and delivered by the plaintiff to her, October 2,1885, which, after recital referring to such bond and mortgage, stated that in consideration of certain agreements made by said Theresa A. Anderson in and about the settlement and adjustment of the action then pending in the court of common pleas, wherein Noyes, as executor, etc., was plaintiff, and she was defendant, and of one dollar to him in hand paid, “ I, Daniel J.Noyes, do hereby covenant and agree with the said Theresa A. Anderson that during the natural life of Theresa A. Anderson, and for one year after her decease, I will not institute or permit to be instituted any proceedings at law or otherwise to enforce the aforesaid bond and mortgage held by me, so long within said period as the prior mortgages remain unforeclosed and no interest on said prior mortgages or either of them remains unpaid for more than thirty days after the interest shall have accrued and be payable by the terms thereof, and so long as no taxes or assessments on the said premises remain unpaid and in arrears for more than thirty days.” It having been stated by the plaintiff in the complaint that the premises were encumbered by an assessment amounting to $23.08 for sewer improvement made and confirmed in March, 1886, which remained unpaid, the defendant by her answer alleged that she had no knowledge. of such assessment until about April 28, 1887, when she promptly caused it to be paid. And she asked for the judgment of the court that she be relieved from the consequences of her omission to pay such assessment.
    The summons and complaint were filed with the clerk and served upon defendant Corwin, who had an apparent lien by judgment, on April 27, 1887, and lis pendens was filed on that day, and pursuant to an order of publication made April 29 the summons and complaint were personally served upon the defendant Anderson at Chicago, in the state of Illinois, on May 5, 1887. The trial court directed judgment for the plaintiff.

      Thomas Allison, for app’lt; Charles Donohue, for resp’t

       Affirming 16 N. Y. State Rep., 603.

   Bradley, J.

The agreement of October 2, 1885, by which the plaintiff agreed that no proceedings should, upon certain conditions, be taken to enforce the bond and mortgage during the life of Mrs. Anderson, and for one year thereafter, was founded upon a good consideration; and inasmuch as she had been in default in payment of the sewer assessment more than thirty days at the time of the commencement of this action, the main question is, whether she was, under the circumstances, entitled to relief against the consequences of. such default. At the time the agreement was made, the principal sum secured by the bond and mortgage had become due and payable. The prior mortgages, amounting to $20,000, with that held by the plaintiff, amounted to a sum exceeding the value of the premises, so that the only value of the equity of redemption to the defendant was in the observance of the plaintiff’s agreement to postpone the foreclosure of the mortgage. In view of those circumstances and of the fact that the defendant was known to be insolvent, it is evident that the purpose of the agreement was to protect her equity of redemption. This was her estate in the premises, and the right to her enjoyment of it was wholly dependent upon the forbearance of the foreclosure of the plaintiff’s mortgage, provided no action should be taken on the prior mortgages. And the arrangement resulting in the agreement was made to enable her, so far as the observance of its provisions permitted, to have the benefit of such estate during her life. The right, therefore, to maintain this action to foreclose the mortgage was dependent upon the failure of the defendant to perform some condition in the agreement, and a forfeiture of her right to the further protection under it of her equity of redemption.

The power of a court of equity in cases properly requiring it will be exercised to relieve a party against forfeitures and from penalties. And this is upon the principle of equity jurisprudence that a party having a legal right shall not be permitted to avail himself of it for the purposes of injustice or oppression. The doctrine was applied to relieve a mortgagor from the forfeiture to which he was subjected and an obligor from the penalty with which he was chargeable by the common law on default. It is also not only available to cases of leases where forfeiture of the term and entry are provided for as the consequences of non-payment of rent on the day it becomes due, but is extended to other cases, and more especially to those (although noé necessarily confined to them) where the default resulting in forfeiture is in the payment of money, as in such case adequate compensation can be made. Pomeroy Eq. Jur., §§ 450, 451, 433: This relief will not be afforded in cases where the default and forfeiture have been occasioned by the wilful neglect of the party seeking it. Nor will it ordinarily be given where the breach is of a condition precedent, although that rule may not be without exception. In the present case the default was in the performance of a condition subsequent, because the right of the plaintiff under the contract vested on its delivery subject to the provision that it should be avoided or rendered insufficient by a subsequent breach of the conditions, or any of them, upon the observance of which the defendant’s right given by the contract depended. And the defeat of such right by her default, which the plaintiff by this action seeks to make available for the foreclosure of the mortgage, would result in a forfeiture from which, or the consequences of it, the court upon the principle before mentioned may have relieved the defendant, if in other respects she was entitled to the interposition of its equitable powers for that purpose. The stipulation of the plaintiff’s agreement essentially differs in its nature and object from a provision in a mortgage to the effect that the principal sum shall become due on a specified default in the payment of interest as provided by it.

In the latter case provision is made for the time when the principal sum may become due, and that time is regulated by an event which may or may not occur so far as it is dependent upon the default of the mortgagor. The consequence so produced is not deemed a forfeiture. The result is maturity of the principal debt at the time, not definitely fixed when the mortgage is made, but specifically stipulated for in that instrument. And in such case the court, as a rule, will not grant relief to the mortgagor from the effect of his default, when nothing is done on the part of the mortgagee to render it unconscionable for him to avail himself of it. Noyes v. Clark, 7 Paige, 179; Malcolm v. Allen, 49 N. Y., 448; Bennett v. Stevenson, 53 id., 508.

But the case at bar must be considered and determined in the light of the undisputed facts and circumstances under which the agreement was made and in reference to the purpose represented by it. The money secured by the mortgage was due at that time. The parties made no stipulation modifying the terms of the bond and mortgage, nor in terms extending the term of payment, although the. right to pay it would exist while, foreclosure was suspended. Payment evidently was not contemplated. Nor was the mere extension of the time of payment of the mortgage debt the object or purpose of the agreement. And the conditions which the defendant was required to perform were independent of such debt and did not embrace the payment of any part' of it' The purpose was to obtain and give protection to the defendant’s estate, consisting of her equity of redemption, that she might have the beneficial enjoyment of it during her life, subject only to certain conditions to be by her performed. The primary purpose of the arrangement represented by the agreement was to secure to Mrs. Anderson for such time, so far as it would have that effect, the estate she then had in the premises, which could not be retained by her without the suspension of the foreclosure of the mortgage. The effect, therefore, given to her default by foreclosure of the mortgage would be the forfeiture of her estate in the premises, and no less so under the circumstances than would be that of a tenant of his term by entry of his landlord for nonpayment of rent pursuant to a provision in the lease.

In Giles v. Austin, 62 N. Y., 486, which was a case of that character, Judge Rapallo in delivering the opinion of the court said: “ The cases in which relief has been denied are either where the lessee has wilfully committed some affirmative act in violation of his covenant, or been guilty of some default, the precise damages for which cannot be ascertained by any rule. But where the covenant is simply for the payment of money, the forfeiture is regarded as security merely for such payment, and equity will not allow it to be enforced after the party has obtained all that it was intended to secure to him.” So in the present case the purpose of the condition, subject to which the right of the defendant was taken and to be held under the agreement, was not to permit the increase of the amount of the prior mortgages by the accumulation of interest upon them, or to allow charges for taxes or assessments to remain on the premises. This was the' extent of the requirement, and it may necessarily be supposed that the consequences which the contract permitted to result toiler from default were intended to secure the accomplishment of such purpose. The case, so far as relates to the nature of the agreement and its object, comes within those to which the equitable doctrine before mentioned may properly be applicable. DeForest v. Bates, 1 Edw. Ch., 394; Atkins v. Chilson, 11 Met., 112; Hagar v. Buck, 44 Vt., 285; 8 Am. Dec., 368.

The sewer assessment of $23.08 had been standing upwards of a year when this action was commenced, and when the defendant’s attention was called to it the assessment was promptly paid the day previous to the service on her at Chicago of the summons and complaint. The trial court found that the previous non-payment of it was owing solely to the negligence of the defendant’s son and agent, Henry S. Anderson. The facts bearing upon that subject are undisputed. There is nothing in the evidence to permit the inference that the defendant did not intend to promptly pay all taxes and assessments on the property. She left that matter in charge of her son, who resided in the city, and she was away from there.

He paid the taxes in 1886, and had in his hands the defendant’s money with which to pay such charges, and sufficient to pay the assessment during the time it remained unpaid, and the only reason of his failure to pay it was that he did not know that it was made or existed. It appears that he might have ascertained about it at the office of the clérk of arrears. But when he paid the tax of 1886 at the tax office in the city the son was, upon his inquiry, informed by some one in the office that there was no sum due or in arrears against the property. It is clear that the purpose of the defendant’s son was to pay the taxes and assessments, and that his failure to make an earlier payment in this instance was not wilful neglect on his part, nor was the plaintiff prejudiced by it.

The plaintiff is entitled to all the inferences properly deducible from the evidence, as well as the benefit of the facts found upon it, in support of the judgment of the special term, as it must be assumed that it was reversed by the general term on questions of law only, since nothing in the decision appears to the contrary. But we think, upon undisputed evidence,.ana in view of the facts as found by the court, the case was one in which the defendant Anderson was entitled to equitable relief, and that the absolute denial of it to her was error. The defendant may properly have been chargeable with some costs. And in view of the situation neither party should have costs of the special term.

The order should be affirmed and judgment absolute directed for the defendant, to the effect that she be relieved from the consequences of her default in the payment of such assessment, with costs of the appeal to the general term and in this court.

Parker, J. (dissenting.)

A stipulation that a debt, the payment of which is secured by a mortgage on estate, come due and the security foreclosable upon the failure of the mortgagor to pay interest as it falls due, or the taxes assessed on the mortgaged premises, is neither a penalty nor a forfeiture, and a court, in the absence of fraud on the part of the mortgagee, cannot relieve the mortgagor from the consequences of his neglect to pay according to the terms of his contract. Jones on Mortgages, §§ 77, 1180, 1181,1182; Wiltsie on Mort. For., §§ 43, 44, 45, 46, 47; Thomas on Mortgages, § 228; and the cases cited in the sections of the text books referred to. The stipulation gave an extension of credit, its continuance until one year after defendant’s death being made dependent on the non-foreclosure of prior mortgages, the payment of interest within thirty days after maturity, and taxes and assessments within thirty days after the same shall be in arrears. From the failure to pay taxes or assessments the court can no more relieve a party than from the failure to pay interest, which it cannot do in the abensce of default on the part of the mortgagee. Hale v. Gouverneur, 4 Edw. Ch., 207; Spring v. Fish, 21 N. J. Eq., 175-8; Ferris v. Ferris, 28 Barb., 29; Bennett v. Stevenson, 53 N. Y., 508.

It is not asserted that the mortgagee here was in fault. The defendant merely attempts to excuse her neglect A similar attempt was made in Ferris v. Ferris, supra, but without avail. ■

Order affirmed and judgment absolute directed in favor of defendant to the effect that she be relieved from the consequences of her default in the payment of the assessment, with costs of the appeal to the general term and in this court.

All concur, except Follett, Ch. J., and Parker, J., dissenting, and Haight, J., not sitting.


author: Haight, J.

text:
    David Stewart, App’lt, v. Collis P. Huntington, Resp’t.

      (Court of Appeals, Second Division,

      Filed January 14, 1891.)

    1. Election or causes op action—Stock.
    Plaintiff alleged in his complaint that it was agreed between him and defendants, in order to induce him to sell certain stock to them, that in case any person or party other than the plaintiff should be paid by the defendants any higher pr'ce per share for the stock than that paid to him, then they would pay him such additional sum. He also alleged that defendants agreed that if, after a contemplated visit of one Aspinwall to California, plaintiff should become dissatisfied with such sale, they would return the stock to him, which they afterwards refused to do. Held, that as one cause of action was for the value of the stock based upon a rescission of the contract, and the other for balance of the purchase price based on affirmance of the contract, the two causes were inconsistent, and plaintiff must make his election, and could not go to the jury upon both.
    3. Same.
    The court could not have restricted the plaintiff to his claim for damages by reason of the refusal of defendant to return the stock. The right to elect rests with the party, and cannot be taken from him.
    3. Same.
    The contract in relation to the selling of stock at higher prices contemplated the voluntary purchase of stock by the defendant, and not amounts paid in the compromise of actions brought claiming wrongful appropriations of money, part of which amounts were made up of transfers of stock at stipulated prices. (Vann, J., dissents.)

      Appeal from a judgment of the general term of the supreme court, first department, affirming a judgment entered upon a verdict for the defendant directed by the court at circuit.

      Joseph H. Choate, for app’lt; James C Carter, for resp’t.

       Affirming 16 N. Y. State Rep., 113.

   Haight, J.

This action was brought against Collis P. Huntington, Leland Stanford and Charles Crocker, as survivors of Mark Hopkins, deceased. Mone of the defendants except Huntington were served with summons or complaint, and none of the other defendants have appeared in the action. The case has been three times tried. The first resulted in a disagreement of the jury-the second in a verdict for the plaintiff for $102,923.82, on which a judgment was entered which was reversed by the general term, and the third in a direction of a verdict for the defendant by the court, wdiich is the one now under review.

This action was brought upon an alleged breach of contract on the sale of stock, and for balance of the purchase price claimed to be due and unpaid. On or about the 21st day of April, 1870, the plaintiff was the owner and holder of two hundred shares of the capital stock of the Central Pacific Eailroad Company. On or about that day he entered into a contract with the defendants for the sale to them of the stock, the terms of which, as alleged in the complaint, are as follows, that is to say: “that upon the delivery of such shares of stock to the defendants, or to such persons or parties as the said defendants through the said Collis P. Huntington, should direct, said defendants would pay to the plaintiff a sum equal to $100, with interest thereon, at seven per cent, per annum, from the 1st day of September, 1864, upon each share so delivered; that in case any person or party other than the plaintiff had been or should be paid by or for account of the defendants, or either or any of them, or said Central Pacific Eailroad Company, any higher price per share, for any share or shares of stock of said railroad company, than the price per share so to be paid to the plaintiff on the delivery of his stock, then, and in that case, the defendants would pay to the plaintiff on demand, in addition to the amount so to be paid to him on the delivery of such shares of stock, the difference between the amount so paid to him on the delivery thereof and the value of such 200 shares of stock at the highest price per share paid by, or for account of the defendants, or either or any of them, or said railroad company, to any person or party other than the plaintiff for any share, or shares, of stock of said railroad company; and that in case during or after the then contemplated visit to California of William H. Aspinwall, who had also sold certain shares of stock of said railway company to the defendants upon the like terms, the plaintiff should become or be dissatisfied with such sale of his said stock to the defendants, the defendants would, upon demand, return to the plaintiff the shares of stock so sold and delivered by him as aforesaid, and would consent to the cancellation and rescission of the said sale.”

The complaint further alleges, in substance, that, under and in pursuance of the contract, the plaintiff was directed by the defendant Huntington to deliver the stock to the firm of Fisk & Hatch, who were doing business in the city of New York; that he did, pursuant to such directions, deliver the stock to that firm, who accepted the same, and paid the plaintiff therefor $100 per share, with interest thereon from the 1st day of September, 1864, as per the agreement; that afterwards, and during the visit of William H. Aspinwall to California, the plaintiff became and was dissatisfied with such sale of his stock to the defendants, and duly notified the defendants thereof, and demanded the return to him of the stock so sold and delivered to the defendants, and the cancellation and rescission of the said sale, and offered to pay to the defendants the amount so paid to him on the delivery of the stock, with lawful interest thereon, but the defendants wholly neglected and refused to return such stock, or any part thereof, or to consent to the cancellation and rescission of the sale.

It also alleges that there were paid by or for account of the defendants to other persons higher prices per share for stock of the said railroad company than the price paid, to the plaintiff by the defendants; that they purchased stock of one Charles A. Lombard, to whom they paid at the rate of $400 per share, or thereabouts.

The testimony given on behalf of the plaintiff in substance supports the allegations of the complaint The plaintiff, in speaking in reference to the contemplated visit of Mr. Aspinwall to California, asked the defendant to leave the matter open until Mr. Aspinwall had been there and could look the matter over and decide whether they had better sell or not; that Mr. Huntington replied to the effect that he could not leave the option open, but stated that “ if Mr. Aspinwall is not satisfied with the sale when he gets out there, I will return you your stock, and you can pay back the money that you get.” The plaintiff further testified that he then asked him: “ ‘ Will you agree that we shall receive as much for our stock as you pay to anybody else?’ he said, ‘Yes, I will agree to that.’ Then Mr. Aspinwall or myself said to him, ‘We will agree, then, to your proposition, that you buy our stock and pay us par and interest from 1864.’ ” He further testified to the effect that Huntington made some representations to the effect that there was trouble in the company in California over the issue of stock; that he had it in his power to get his friends out, and that he wanted the plaintiff to sell his stock to -him so that he could save him from being annoyed with the troubles of the company, etc.

But the action is not based upon a fraud, and could hardly be sustained if it had been, for under the liberal provisions of the contract alleged the plaintiff was given ample time in which to investigate the facts in relation to the condition of the company and the value of the stock, and then, if dissatisfied, to rescind and annul the sale. Much discussion has taken place upon the argument of this case in the courts below, in reference to the election of the plaintiff to rescind the contract of sale. Under the agreement the plaintiff was given the right to rescind and have the contract cancelled “ during or after the then contemplated visit to California of William H. Aspinwall.” The preelse time in which this election was to be made is not stated, but the reference to the time of his visit to California as a time in which the election could be made, would seem to indicate that it was the contemplation of the parties that it should be speedily made after he had had an opportunity to investigate the affairs of the company and determine as to the value of its stock, and it was doubtless his duty to exercise his option within a reasonable time thereafter.

This action was not brought until nearly six years thereafter, and consequently the election to rescind, if made, must have been made long before the commencement of this action, in order to be within the reasonable time allowed. We are, however, not left in doubt as to the facts bearing upon this question, or even as to whether there was an election by the plaintiff to rescind. That he did so rescind is alleged in the complaint, and is testified to by him, and it is not controverted by the defendant. The plaintiff says he received a telegram from Aspin-wall while he was still in California, in which it was stated that they had made a mistake in selling the stock, and that thereupon he immediately went to Huntington, offered to pay back the money received, and demanded the return of the stock. The defendant neglected and refused to return it, and by so doing committed a breach of the agreement. Whilst the election of the plaintiff was complete and made within the time allowed, it is claimed that he is not bound thereby for the reason that the defendant refused to surrender the stock, and thereby violated his agreement, and that he cannot be permitted to avail himself of his own misconduct in order to hold the plaintiff to bis election. We shall assume this to be so, for the purposes of this case, without stopping to consider or decide the question, for under the view entertained by us, it is not'essential in the determination of the case.

Upon the trial the case proceeded upon both claims, and evi- • dence was taken upon each cause of action alleged until the plaintiff rested, at Which time the defendant called upon him to elect as to which cause of action he would rely upon. This the plaintiff objected to doing, and thereupon the court ruled and required him to make such election, whereupon, after first taking an exception to such ruling, he elected to rely upon his claim for the higher price alleged to have been paid to others by the defendant for stock of the company. Of this ruling complaint is now made, and in order for us to determine whether' or not the plaintiff has suffered in consequence thereof; it becomes important for us to first ascertain the precise nature of the causes of action alleged in the complaint.

As we have seen, it is first alleged that it was agreed between the parties that in case any person or party other than the plaintiff had been or should be paid by or for account of the defendants, or either or any of them, any higher price per share for any shares of the stock than the price paid to the plaintiff, then, and in that case, the defendants would pay to the plaintiff such additional sum. This allegation, in effect, makes the additional sum so agreed to be paid, if paid to others, a part of the purchase price, and the action, therefore, would be upon the contract of sale for the balance of the purchase money due and unpaid. It would be an action in affirmance of the contract.

The other allegation is to the effect that if, during or after the contemplated visit to Oalifornia of Aspinwall, the plaintiff should become dissatisfied with such sale, the defendants would, upon demand, return to him the stock so sold, and would consent to the cancellation and rescission of the sale. That he did become dissatisfied during the visit of Aspinwall to Oalifornia and did demand of the defendants a return of the stock, and that the sale be rescinded, etc., and the defendants refused to return to him the stock or consent that the sale be cancelled or rescinded.

The action under this clause of the complaint would have to proceed upon the theory that the contract had been rescinded and annulled, and the recovery would have to be for the value of the stock. It is said that the action would be upon a breach of the contract by the defendant. Very true, but what was the breach? It was a refusal to return the stock to the plaintiff when he exercised the option given him by the contract to rescind.

The appellant says, however, that he makes no claim upon the ground of conversion ; that his claim is founded upon a breach of the contract in not returning the stock when demanded, and that because of that breach he is entitled to recover the fullest damages which by the proofs he could establish. That if the price paid to other parties exceeded the value of the stock, he would be entitled to recover that amount.

We cannot recognize or approve of such a claim. If the plaintiff is entitled to recover on account of a higher price paid to others, it is because there is such a provision in the contract, and the action is maintained thereon to recover the balance due as a part of the purchase price, and not because of a breach of the contract in refusing to return the stock. " If he is entitled to recover because of such breach, it must be for the value of the stock as established by the evidence.

It has also been said that the agreement was in effect that the plaintiff should have the right to buy back or re-purchase the stock, instead of rescinding and annulling the sale. But we find no such allegation in the complaint or any support thereof in the evidence. It consequently appears to us that one cause of action is for the value of the stock based upon a rescission of the contract, whilst the other is for a balance of the purchase price based upon an affirmance of the contract. H this is so, the two causes are inconsistent, and he could not be permitted to go to the jury upon both.

The appellant concedes that the contract contains two separate, distinct provisions of such a nature that the performance of either would discharge and satisfy the whole contract, and yet he asks to go to the jury upon both. In case half of the jurors should be of the opinion that he was entitled to recover the value of the stock by reason of the rescission of the contract, and the other half should be of the opinion that he was entitled to recover for balance of purchase price because of paying a higher price to others, there would still be a verdict in his favor. A bare statement of the facts demonstrates the wisdom of the rule that prohibits a party from going to the jury upon inconsistent claims.

One of the judges below, in his opinion, says that that court on a former review of the case in the general term said that it was then held that the plaintiff’s action was limited to the right to recover damages for the refusal to return the stock, and that there was consequently no reason for the trial court in this case to require an election as to the cause upon which the plaintiff would place his right to recover, after he had been so restricted by the decision of the general term. We do not,, however, understand that any such restriction was made by the general term on that review. Ho evidence thereof appears in the case, other than is disclosed from the opinions of the judges written upon that review.

In the chief opinion written in the cáse, the position was taken that the plaintiff had elected to rescind the sale, that he was hound by it, and consequently could not maintain, an action upon the contract for the higher price paid to others. This view, however, was not concurred in, another judge favoring a reversal upon the ground that the evidence upon which the plaintiff had recovered damages failed to support the verdict. The other member of the court concurred in the result, specifying no ground, so that we do not understand that it was then determined that the election of the plaintiff was final and binding upon him, and that the defendant could avail himself thereof. The one question upon which the judges writing in that case did agree was thatthe evidence was insufficient to sustain the verdict, which was based upon the contract for the higher price paid to others. But the agreeing upon this point did not authorize that court in granting a new trial to limit or restrict the plaintiff to his other cause of action. He had the right to bring other witnesses to produce evidence which would sustain a verdict by showing other sales at a higher price to other parties.

It is said that the court should have restricted the plaintiff to his claim for damages by reason of the refusal of the defendant to return the stock. In other words, that the trial court should have elected for the plaintiff as to what cause of action he should proceed upon,. We do not understand, however, that such a duty devolves upon the court, or could properly be exercised by it. The right to elect rests with the party, and cannot be taken from him.

' That the causes of action are inconsistent, and that an election should be made, has been held upon each trial of the action,-and, we think, the same has been properly approved of by the general term.

It remains to be seen whether there is any evidence that the defendant had paid others a higher price for the stock than that paid to the plaintiff. The evidence relied upon to sustain this branch of the case pertains to the transactions of the Contract & Finance Company, of which the defendants were the principal stockholders, which company had been incorporated under the laws of California, for the construction of the Central Pacific Railroad. It appears that one Lombard, who was the owner and had control of a block of the stock, commenced or was about to commence an action against the Contract '& Finance Company, the defendants individually and others; that one John B. Felton was his attorney; that he had prepared the complaint in the action and showed it to the president of the corporation, in which complaint he had alleged numerous appropriations of money belonging to the Central Pacific Railroad Company by the officers of the Contract & Finance Company, amounting to upwards of fifty millions of dollars. The relief prayed for in part was, that a receiver be appointed of the Central Pacific Railroad Company and of the branches thereof, that the defendants be restrained and enjoined from acting as members of the board of directors of that company, or from voting at any meeting of stockholders upon any of its stock, and that they also be restrained and enjoined from selling, transferring, pledging or otherwise disposing of any of the stock of the said company, etc.; that an accounting be had of the actual cost of the building and equipment of the Central Pacific Railroad and of the telegraph line, and of the receipts and income thereof from the time the same commenced running to the time of the appointment of the receiver; that an account also be taken of the disposition of all of the stock and bonds of the company, of the bonds issued by the United States in aid of such company, of bonds issued by the city and county of San Francisco and other municipalities, of moneys received from the state of California, from private subscription, from the sale of lands and all other sources; and that they be adjudged to surrender to the Central Pacific Railroad Company all the bonds of the United States and of the said Central Pacific Company, and all of the stock of the said company held by them or either of them; that they be adjudged to pay into the treasury of the company the sum of fifty millions of dollars; and for such other and further relief as shall be equitable.

It also appears that at this time the defendants were endeavoring to reorganize the railroad company and to negotiate the sale of a large amount of the stock; that they feared that the bringing of the suit would impair the credit of the company and interfere with their contemplated reorganization; that thereupon negotiations were had for a settlement, which finally resulted in the Contract & Finance Company paying to Felton, the attorney, the sum of $90,000, and to Lombard the sum of $190,000, Lombard transferring his stock to the Contract & Finance Company and Felton agreeing that he would not bring any other like action against the defendants. It also appears that about a month thereafter another action of the same character, with similar allegations, was brought by one Brannan, who was the owner of 200 shares of the stock of the Central Pacific Company, and that this action was also finally settled by the Contract & Finance Company by its taking a transfer of the stock and paying the sum of $85,000. In the settlements made there does not appear to have been anything said in reference to the amount that should be allowed or paid for the stock; in each case a gross sum was agreed upon to be paid in ,settlement of the action, which embraced a transfer of the stock to the Contract & Finance Company. Stamford, the president of the company, in his testimony, states that he regarded the suits as an attempt to blackmail; that he believed the parties were aware that they were negotiating for a large amount of money, and that they thought, under the circumstances, that they could interfere with the negotiations. But whether the actions were for blackmail or not does not change the facts in reference to the settlements, and it is quite evident, from the undisputed evidence upon the subject, that the defendants, through the Contract & Finance Company, were induced to pay a large sum in settlement of these cases, in order to prevent the publicity and consequent effects which would of necessity follow upon a contest over the allegations contained in the complaint and of the relief demanded thereon.

The contract, as we have seen, was, that if the defendants should pay any other person a higher price for the stock than was paid the plaintiff, that then they should pay the plaintiff the difference between the amount which he had already received and the higher amount so paid to other persons. This contract contemplated the voluntary purchase of stock by the defendants and not the amounts paid in the compromise of actions of the character described ; and, consequently, the evidence in reference to such settlements furnishes no basis upon which a verdict for the plaintiff could have been rendered.

The witness Aspinwall gave evidence to the effect that the defendant Huntington had stated to him that they had paid $400 a share for the stock, but it also sufficiently appears that at the time this statement was made Huntington was speaking of the compromise of the action to which we have already referred, and it consequently can have no other effect than that given to the settlement of those cases.

These views render it unnecessary to consider the other questions involved in the case.

Judgment should be affirmed, with costs.

All concur, except Vann, J., dissenting.


author: Potter, J.

text:
    Edward S. Jaffray et al., Resp’ts, v. Siegfried Davis et al., App’lts.

      (Court of Appeals, Second Division,

      Filed January 14, 1891.)

    1. Accord and satisfaction—Payment of lesser sum in satisfaction OF LARGER.
    A creditor cannot bind himself by a simple agreement to accept a smaller sum in lieu of an ascertained debt of larger amount, such an agreement being nudum pactum. But if there be any benefit, or even any legal possibility of benefit, to the,creditor thrown in, that additional weight will turn the scale and render the consideration sufficient to support the agreement.
    8. Same.
    Defendants gave promissory notes, on time, for one-half the debt they owed plaintiffs, and gave a chattel mortgage on their stock, fixtures and other personal property, under an agreement with plaintiff to accept the same in full satisfaction and discharge of the indebtedness. Meld, that this new agreement was supported by a sufficient consideration to make it a valid one, and the new agreement was by the parties substituted in place of the former.
    This is an appeal from a judgment of the general term, first department, affirming a judgment rendered for the plaintiff upon a trial before a judge at a circuit without a jury.

      Isaac L. Miller, for resp’ts; John W. Little, with O. F. Wisner, of Michigan, for app’lts.

       Reversing 16 N. Y. State Rep., 32.

   Potter, J.

The facts found by the trial court in this case were agreed upon. They are simple, and present a familiar question of law. The facts are that defendants were owing plaintiffs on the 8th day of December, 1886, for goods sold between that date and the May previous, at an agreed price, the sum of £7,714.37, and that on the 27th of the same December the defendants delivered to the plaintiffs their three promissory notes amounting in the aggregate to $3,462.24, secured by a chattel mortgage on the stock, fixtures and other property of defendants, located in East Saginaw, Michigan, which said notes and chattel mortgage were received by plaintiffs under an agreement to accept same in full satisfaction and discharge of said indebtedness. “ That said notes have all been paid, and said mortgage discharged of record.”

The question of law arising from these facts and presented to this court for its determination is whether such agreement, with full performance, constitutes a bar to this action, which was brought after such performance to recover the balance of such indebtedness over the sum so secured and paid.

One of the elements embraced in the question presented upon this appeal is, viz.: whether the payment of a sum less than the amount of a liquidated debt under an agreement to accept the same in satisfaction of such debt forms a bar to the recovery of the balance of the debt. This single question was presented to the English court in 1602, when it was resolved, if not decided, in Pinnel's case, 5 Co. R., 117, “ that payment of a lesser sum on the day in satisfaction of a greater, cannot be any satisfaction for the whole,” and that this is so, although it was agreed that such payment should satisfy the whole. This simple question has since arisen in the English courts and in the courts of this country in almost numberless instances and has received the-same solution notwithstanding the courts, while so ruling, have rarely failed upon any recurrence of the question to criticise and condemn its reasonableness, justice, fairness or honesty. No respectable authority that I have been able to find has, after such unanimous disapproval by all the courts, held otherwise than was held in Pinnel's case, supra, and Cumber v. Wane, 1 Str., 426 ; Foakes v. Beer, House of Lords, 9 App. Cases, 605 (36 English Reports, 194); Goddard v. O'Brien, Queen’s Bench Div. (vol. 30 Am. Law Beg., 637, and notes).

The steadfast adhesion to this doctrine by the courts in spite of the current of condemnation by the individual judges of the court and in the face of the demands and conveniences of a much greater business and more extensive mercantile dealings and operations, demonstrate the force of the doctrine of stare deems. But the doctrine of stare decisis is further illustrated by the course of j udicial decisions upon this subject; for while the courts still hold to the doctrine of the Pinnel and Clumber v. Wane cases, supra, they have seemed to seize with avidity upon any consideration to support the agreement to accept the lesser sum in satisfaction of the larger,or in other words to extract if possible from the circumstances of each case a consideration for the new agreement, and to substitute the new agreement in place of old and thus to form a defense to the action brought upon the old agreement. It will serve tho purpose of illustrating the adhesion of the court to settled law, and at the same time enable us perhaps more satisfactorily to decide whether there was a good consideration .to support the agreement in this case, to refer to (the consideration in) a few of the numerous cases which the courts have held to 'be sufficient to support the new agreement.

Lord Blackburn said in his opinion in Foalces v. Beer, supra, and while maintaining the doctrine “ that a lesser sum cannot be a satisfaction of a greater sum,” “but the gift of a horse, hawk or robe, etc., in satisfaction is good,” quite regardless of- the amount of the debt; and it was further said by him in the same opinion “ that payment and acceptance of a parcel before the day of payment of a larger sum would be a good satisfaction in regard to the circumstance of time;” “and so if I am bound in twenty pounds to pay you ten pounds at Westminster, and you request me to pay you five pounds at the day at York, and you will accept it in full satisfaction for the whole ten pounds, it is a good satisfaction.” It was held in Goddard v. O'Brien, 9 Q. B. Div., 37; 30 Am. L. Reg., N. S., 637, “A. being indebted to B. in 125 pounds, 7s. and 9d. for goods sold and delivered, gave B. a check (negotiable, I suppose,) for 100 pounds, payable on demand, which B. accepted in satisfaction, was a good satisfaction.” Huddleston, B., in Goddard v. O'Brien, supra, approved the language of the opinion in Sibree v. Tripp, 15 M. & W., 26, “that a negotiable security may operate, if so given and taken, in satisfaction of a debt of a greater amount; the circumstance of negotiability making it, in fact, a different thing and more advantageous than the original debt which was not negotiable.”

It was held in Bull v. Bull, 43 Conn., 455, “ and although the claim is a money demand liquidated and not doubtful, and it cannot be satisfied with a smaller sum of money, yet if any other personal property is received in satisfaction it will be good, no matter what the value. And it was held in Clumber v. Wane, supra, that a creditor can never bind himself by simple agreement-to accept a smaller sum in lieu of an ascertained debt of a larger amount, such agreement being nudum pactum, but if there be any benefit or even any legal possibility of benefit to the creditor thrown in, that additional' weight will turn the scale and render the consideration sufficient to support the agreement.

It was held in LePage v. McCrea, 1 Wend., 164, and in Boyd v. Hitchcock, 20 Johns., 76, that “ giving further security for part of ■a debt or other security, though for a less sum than the debt, and acceptance of it in full of all demands make a valid accord and •satisfaction.” That “if a debtor gives his creditor a note endorsed by a third party for a less sum than the debt (no matter bow much less) but in full satisfaction of the debt, and it is received as such, the transaction constitutes a good accord and satisfaction.” Varney v. Commey, 3 East, 25. And so it has been held “ where by mode or time of part payment, different than that provided for in the contract, a new benefit is or may be conferred or a burden imposed, a new consideration arises out of the transaction and gives validity to the agreement of the creditor.” Rose v. Hall, 26 Conn., 392. And so if “ payment of less than the whole debt, if made before it is due or at a different place from that stipulated, if received in full, is a good satisfaction.” Jones v. Bullitt, 2 Litt., 49; Ricketts v. Hall, 2 Bush, 249; Smith v. Brown, 3 Hawk., N. C., 580; Jones v. Perkins, 29 Miss., 139; Schweider v. Lang, 29 Minn., 254; 43 Am., 202.

In Watson v. Elliott, 57 N. H., 511-513, it was held, “it is enough that something substantial which one party is not bound by law to do is done by him or something which he has a right to do he abstains from doing at the request of the other party,” is held a good satisfaction.

It has been held in a number of cases that if a note be surrendered (by the payee to the maker) the whole claim is discharged and no action can afterwards be maintained on such instrument for the unpaid balance. Ellsworth v. Fogg, 35 Vt., 355; Kent v. Reynolds, 8 Hun, 559.

It has been held that a partial payment made to another, though at the creditor’s instance and request," is a good discharge of the whole debt. Harper v. Graham, 20 Ohio, 106. “ The reason of ■the rule is, that the debtor in such case has done something more than he was originally bound to do, or at least something different. It may be more or it may be less as a matter of fact.”

It was held by the supreme court of Pennsylvania, in Mechanics' Bank v. Huston, February 13, 1882, 11 W. Notes Cases, 389, “The decided advantage which a creditor acquires by the receipt of a negotiable note for a part of his debt as by the increased facilities of recovering upon it, the presumption of a consideration for it, the ease of disposing of it in market, etc., was held to furnish ample reason why it should be a valid discharge of a larger ■account or open claim unnegotiable.

- “ It has been held that a payment in advance of the time if agreed to, is a full satisfaction for a larger claim not yet due. Brooks v. White, 2 Met.. 283; Bowker v. Childs, 3 Allen, 434.

“ In some states, notably Maine and Georgia, the legislature, in order to avoid the harshness of the rule under consideration, have, by statute, changed the law upon that subject by providing “no action can be maintained upon a demand which has been can-celled by the receipt of any sum of money less than the amount ■legally due thereon or for any good and valuable consideration however small,” citing Weymouth v. Babcock, 42 Maine, 42.

And so in Gray v. Barton, 55 N. Y., 68, where a debt of $820' upon book account was satisfied by the payment of one dollar by calling the balance a gift, though the balance was not delivered except by fiction, and the receipt was in the usual form and was silent upon the subject of a gift, and this case was followed and referred to in Ferry v. Stephens, 66 N. Y., 321.

So it was held in Mitchell v. Wheaton, 46 Conn., 315; 33 Am., 24, that the debtor’s agreement to pay and the payment of $150, with the costs of the suit, upon a liquidated debt of $299, satisfied the principal debt.

These cases show in a striking manner the extreme ingenuity and assiduity which the courts have exercised to avoid the operation of the “ rigid and rather unreasonable rule of the old law,” as it is characterized in Johnston v. Brannan, 5 Johns., 268-272, or as it is called in Kellogg v. Richards, 14 Wend., 116, “technical and not very well supported by reason,” or as may be more practically stated, a rule that “ a bar of gold worth $100 will discharge a debt of $500, while 400 gold dollars in current coin will not.” See note to Goddard v. O'Brien, supra, in Am. Law Register, New Series, vol. 30, pp. 640,, 641. "

The state of- the law upon this subject, under the modification of later decisions, both in England and in this country, would seem to be as expressed in Goddard v. O'Brien, Queen’s Bench Div., supra: “ The doctrine in Cumber v. Wane is no doubt very much qualified by Sibree y. Tripp, and I cannot find it better stated than in 1 Smith’s Leading Cases, 7th Ed., 595.” The general doctrine in dumber v. Wane, and the reason of all the exceptions and distinctions which have been engrafted on it, may, perhaps, be summed up as follows, viz.: “ That a creditor cannot hind himself by a simple agreement to accept a smaller sum in lieu of an ascertained debt of larger amount, such an agreement being nudum pactum. But if there be any benefit or even any legal possibility of benefit, to the creditor thrown in, that additional weight will turn the scale and render the consideration sufficient to support the agreement” Bull v. Bull, 43 Conn., 455; Fisher v. May, 2 Bibb, 449; Reed v. Bartlett, 19 Pick., 273; Union Bank v. Geary, 5 Peters, 99-114; Le Page v. MacCrea, 1 Wend., 164; Boyd v. Hitchcock, 20 Johns., 76; Brooks v. White, 2 Metc., 283; Jones v. Perkins, 29 Miss., 139-141; Hall v. Smith, 15 Iowa, 584; Babcock v. Hawkins, 23 Vt., 561.

In the case at bar the defendants gave their promissory notes: upon time for one-half the debt they owed plaintiff, and also gave plaintiff a chattel mortgage on the stock, fixtures and other personal property of the defendants under an agreement, with plaintiff to accept the same in full satisfaction and discharge of said indebtedness. Defendants paid the notes as they became due and plaintiff then discharged the mortgage. Dnder the cases above cited and upon principle, this new agreement was supported by a sufficient consideration to make it a valid agreement, and this agreement was by the parties substituted in place of the former. The consideration of the new agreement was that the plaintiff, in place of an open book account for goods sold, got the defendants’ promissory notes, probably negotiable in form, signed by defendants, thus saving the plaintiffs, perhaps, trouble or expense of proving their account and got security upon all the defendants’ personal property for the payment of the sum .specified in the,notes, where before they had no security.

It was some trouble at least and perhaps some expense to the ■defendants to execute and deliver the security and they deprived themselves of the legal ownership or of any exemptions or the power of disposing of this property, and gave the plaintiffs such ownership as against the defendants and the claims thereto of defendants’ creditors if there were any.

It seems to me upon principle and the decisions of this state '(save, perhaps Keeler v. Salisbury, 33 N. Y., 653, and Platts v. Walrath, Lalor’s Supp., 59, which I will notice further on), and of quite all of the other states, the transactions between the plaintiffs and the defendants constitute a bar to this action. All that is necessary to produce satisfaction of the former agreement is a .sufficient consideration to support the substituted agreement The doctrine is fully sustained in the opinion of Judge Andrews in Allison v. Abendroth, 108 N. Y., 470, 13 N. Y. State Rep., 831, from which I quote : “But it is held that where there is an independent consideration, or the creditor receives any benefit or is •put in a better position, or one from which there may be legal possibility of benefit to which he was not entitled except for the agreement, then the agreement is not nudum pactum and the doctrine of the common law to which we have adverted has no application.” Upon this distinction the cases rest which hold that the ■acceptance by the creditor in discharge of the debt of a different thing from that contracted to be paid, although of much less pecuniary value or amount, is a good satisfaction, as for example a negotiable instrument binding the debtor and a third person for a smaller sum. Curlewis v. Clark, 3 Exch., 375.

Following the same principle it is held that when the debtor -enters into a new contract with the creditor to do something which he was not bound to do by the original contract, the new contract is a good accord and satisfaction if so agreed. The case of accepting the sole liability of one of two joint debtors or co-partners in satisfaction of the joint or co-partnership debt is an illustration. This is held to be a good satisfaction, because the sole liability of one of two debtors “ may be more beneficial than the joint liability of both, either in respect of the solvency of the parties or the convenience of the remedy.” Thompson v. Percival, 5 B. & Adol., 925. In perfect accord with this principle is the recent case in this court of Luddington v. Bell, 77 N. Y., 138, in which it was held that the acceptance by a creditor of the individual note of one of the members of a co-partnership after dissolution, for a portion of the co-partnership debt, was a good consideration for the creditor’s agreement to discharge the maker from further liability. Pardee v. Wood, 8 Hun, 584; Douglass v. White, 3 Barb. Ch., 621-624.

notwithstanding these later and decisive authorities the plaintiff -contends that the giving of the defendants’ notes with the chattel mortgage security and the payment, such consideration was insufficient to support the new or substituted agreement, and cites; as authority for such contention the cases of Platts v. Walrath, Lalor’s Supp., 59, and Keeler v. Salisbury, 33 N. Y., 648.

Platts v. Walrath arose in justice court, and the debt in controversy was put forth as a set-off. The remarks of the judge in the former case were quite obiter, for there were various subjects in dispute upon the trial and from which the justice might have reached the conclusion that he did. The judge, in the opinion relied upon, says: Looking at the loose and secondary character of the evidence as stated in the return, it was, perhaps, a question of fact whether any mortgage at all was given; or at least whether if given; it was not in terms a mere collateral security for the large note.” “Even the mortgage was left to parol proof. Did it. refer to and profess to be a security for the note of $1,500 or that sum less the fifty dollars agreed to be thrown off, etc., etc.”

There is so much confusion and uncertainty in the case, that it was not thought advisable to publish the case in the regular series of reports. The case of Keeler v. Salisbury, supra, is not to be regarded as an authority upon this question or as approving the case of Platts v. Walrath, supra. In the case of Keeler v. Salisbury, the debtor’s wife had joined in the mortgage given by her husband, the debtor, to effect the compromise, thus releasing her inchoate right of dower. The court held that fact constituted a sufficient consideration to support the new agreement, though the court in the course of the opinion remarked that it had been held that the debtor’s mortgage would not be sufficient, and referring to Platts v. Walrath. But the court did not otherwise indicate any approval of that case and there was no occasion to do so, for, as before stated, the court put its decision upon the fact that the wife had joined in the mortgage.

In view of the peculiar facts in these two cases and the numerous decisions of this and other courts hereinbefore referred to, I do not regard them as authorities against the defendants' contention, that the plaintiff’s action for the balance of the original debt is barred by reason of the accord and satisfaction, and that the judgment must be reversed, with costs.

All concur.


author: Parker, J.

text:
    George Schaper, Resp’t, v. The Brooklyn & L. I. Cable R. Co., App’lt.

      (Court of Appeals, Second Division,

      Filed January 14, 1891.)

    Railroads—Cable—Construction of in streets of cities not authorized BY GENERAL RAILROAD ACT.
    The general railroad act of 1850 and its amendatory and supplementary-acts do not confer upon a company incorporated under it the right to build a cable road in the streets of a city.

      {In re Peoples Bapid Transit Co. v. Bowie Dash, 34 IT. Y. State Bep..„ 595, followed.)

      Appeal from a judgment of the general term of the supreme court, in the second judicial department, affirming a judgment rendered at special term.

      William C. Dewitt, for app’lt; George W. Wingate, for resp’t.

       Affirming 4 N. Y State Rep., 860.

   Parker, J.

The decision of this court In re The Peoples Rapid Transit Co. v. Bowie Dash, 125 N. Y., 1; 34 N. Y. State Rep., 595, requires an affirmance of the judgment. The defendant intending to construct an elevated railroad along and over certain streets in the city of Brooklyn, commenced the erection of it in part on Boerum Place and in front of property owned by the plaintiff. The plaintiff, insisting that such action was without legal right, brought this suit to restrain the defendant from entering upon and proceeding in the further construction of the railroad in front of his premises.

Section 23, title 19, chapter 863, Laws of' 1873 (the charter of the city of Brooklyn)■ provides that “it shall not. be lawful hereafter to lay, construct or operate any railroad in, upon or along any or either of the streets or avenues of the city of Brooklyn, wherever such railroad may commence or end, unless a majority of the owners of property upon the streets or avenues in or along which such railroad is to be constructed shall first petition the common council of said city therefor, nor unless the said common council shall authorize the construction of such railroad and the grant therefor shall have been awarded and given to the person who will agree with adequate security to cany passengers on such railroad at the lowest rate of fare.” This section, continuing, excepts from its operation various existing and specially named railroad companies, and also “ such other companies as are or may be authorized by law.”

No steps were taken by the defendant or the common council of the city in compliance with such provisions ; a majority of the owners of property upon- the streets or avenues along which it was contemplated to build this road did not petition the common council therefor, and that body did not award a grant of the right to construct'to a person agreeing to carry passengers on such road at the lowest rate of fare. But the defendant insisted that because it was organized under the general railroad act of 1850, and the acts amendatory thereof and supplementary thereto, the provisions of the charter quoted were not applicable to it; that it was only required to obtain the consent of the common council in the manner provided by that act, which it did. The reasons assigned in support of that position need not be stated or discussed. Since they were presented to us by counsel, the decision cited, supra, has been made. It requires the determination that the general railroad act of 1850, and its amendatory and supplementary acts did not confer upon a company incorporated under it the right to build within the limits of a city a structure of the character of that contemplated and undertaken by the defendant. The question discussed by the general term need not, therefore, be considered.

The judgment should be affirmed.

All concur.