author: O’Brien, J.

text:
    Matilda Teschemacher, Resp’t, v. August Lenz, App’lt.

      (Supreme Court, General Term, First Department,

      Filed December 14, 1894.)

    1. Trial—Findings.
    Where, in total disregard of the practice relating to a reference under an interlocutory judgment, or the questions which alone are for the referee to-pass upon, counsel masses a great number of requests in such a way that the referee cannot be expected to entertain, much less pass upon them, he is not obliged to do so.
    2. Partnership—Accounting.
    The complaint, in an action for an accounting, need not specify the particulars as to which an inquiry will be made.
    3. Evidence—Parol.
    Parol evidence is admissible to show that real estate, bought with firm money for the use of the firm, is firm property, though the title is taken in the name of an individual member.
    Appeal from an interlocutory and final judgment in favor of plaintiff.

      John Fennel, for app’lt; Henry W. Smith, for resp’t.
   O’Brien, J.

The plaintiff, claiming to have been the partner of the defendant from December, 1885, until the fall of 1890, brought this action for a dissolution of the firm and an accounting. The partnership was denied, but upon the trial at special term the learned judge found in favor of the plaintiff’s contention that there was a copartnership, which commenced in December, 1885, and terminated on the 26th of September, 1890, and referred the matter of the accounting to a referee. No exceptions were taken to the admission or rejection of evidence on the trial, nor were there any requests to make findings of fact or conclusions of law presented to the judge on behalf of the defendant, and no exceptions were filed to the findings of fact and conclusions of law made by the judge. When the plaintiff rested, defendant moved to dismiss the complaint on the ground of the insufficiency of the proof in regard to the copartnership, which motion was subsequently renewed at the close of defendant’s case. Both motions were denied, and exceptions taken, which were the only exceptions presented in respect to the proceedings at the trial. Thus the only question as to the interlocutory judgment presented for review is whether the judgment produced upon the trial was sufficient to sustain the judgment. In addition to the plaintiff, five other witnesses were examined, all of whom gave evidence more or less weighty tending to support her testimony as to a copartnership between the parties; and it was not error, therefore, for the judge to deny the motion to dismiss the complaint. The evidence adduced by the defendant denying such copartnership presented á question of fact upon conflicting evidence, and upon a review thereof we do not think it can be justly claimed that the weight of such evidence was so clearly in favor of the defendant that we should interfere with the conclusion reached by the learned trial judge upon this disputed question of fact.

The more serious questions are those which were presented upon the accounting before the referee and upon exceptions filed to his report. The principal exceptions are those relating to the referee’s findings of fact and conclusions of law, upon the ground that such are contrary to the evidence and the law. The appellant insists in addition that the referee made erroneous rulings upon the admission and rejection of evidence, but an examination shows that no substantial error in any way affecting the result was made, and these must be regarded, therefore, as untenable.

The defendant presented to the referee forty requests, which he no doubt wished to have found as findings of fact, and twenty-seven conclusions of law, which the referee refused—very properly, as we think—to pass upon. There had been a trial upon the issue as to whether or not a copartnership did or did not exist, and that was settled by the interlocutory judgment But, entirely disregarding such judgment, the counsel for the defendant upon the reference called out on cross-examination of plaintiff’s witnesses all the facts that he could elicit on this point, and many of his exceptions to the admission and rejection of evidence, and most of his requests to the referee, were to obtain from him a decision reversing the interlocutory judgment upon this question, and requiring a finding upon practically every separate piece of evidence that appeared in the record. Very few of these requests were pertinent, or put in any such shape that the referee could pass upon them conveniently; and where, as here, in total disregard of the practice relating to a reference under an interlocutory judgment, or the questions which alone were for the referee to pass upon, counsel masses a great number of requests in such a way that the referee could not be expected to entertain, much less pass upon, them, he is not obliged to do so. Davis v. Leopold, 87 N. Y. 620; Sniffen v. Koechling, 45 N. Y. Supr. Ct. 61. Nor does the omission to pass upon the few requests that were pertinent affect the validity of the decision or report. Code Civ. Proc. § 1023. The defendant was in no way injured by such refusal or failure, because the referee in his report found upon every question submitted to him, and those findings, with his conclusions to which exceptions were filed, present all the questions' that the defendant could have raised by exceptions to the refusal of the referee to find such of his requests as were pertinent.

From the testimony and the report it appears that the parties engaged in the business of sausage making, at first in a small way, and'that they kept no books of account of the firm’s transactions; that the money taken in during the week was laid in the safe in the store, the expenses being paid-from this money as they accrued, and that on Sunday or Monday of each week the week’s accumulations were counted up, the outstanding bills paid, and the remainder or net profits of the business were laid in a separate compartment of the safe. The referee found that at the commencement of the business the defendant contributed $700 and the plaintiff $200, and to this finding the defendant excepts, upon the ground that it is conceded that the $200 was never so contributed by the plaintiff. As a matter of strict accuracy, the appellant is right, the testimony showing that the plaintiff had $200 for contribution, but that it was never actually contributed, because, according to hez1 statement, the defendant requested her to hold it until it should be needed. No injury has been done the defendant, however, with respect to this $200, because, although the referee finds that it was contributed, it is deducted from the amount coming to" her, so that, she being both credited and debited with it, the one offsets the other, the referee expressly holding that she was not entitled to be allowed that amount on the division of the proceeds of the copartnership. There is some evidence showing what moneys had been accumulated as profits of the business, and what division thereof between the parties had been made down to April, 1888, and that from this latter period to October 1st in the same year no profits were made. From October 1, 1888, to May 1, 1890, a period of eighty-three weeks, the referee finds that the average weekly net profits were $154.28, and to this finding the appellant most strenuously objects, upozi the ground that it is entirely unsupported. In this sweeping statement we think the appellant is in erroz-. It is trzie that the testimony upon this point is very unsatisfactory, and somewhat problematical; but the plaintiff and one other witness gave testimony as to the variations in the profits during a period of seven weeks, and the referee’s conclusion was reached by taking all of such amounts, and dividing the total by seven, thus obtaining the average weekly profits. This was the best testimony that it was in the power of the plaintiff to furnish. No books, as stated, having been kept of the firm’s transactions, and the defendant having taken and appropriated all the money, she was not in a position to give any more definite or satisfactory evidence; and, in the absence of any different statement or account by the defendant, she should not be deprived of- what, upon even slight evidence, the referee was justified in finding had been earned in the business. It having been found that the defendant was a partner, if the testimony of the plaintiff is to relied upon at all, the conduct of the defendant was most reprehensible, he having put the business from the vei’y outset in his own name: and, though the plaintiff was engaged with him in securing profits out of the business, these, when accumulated, were taken and appropriated by the defendant, and, except in two' instances prior to Octobez’, 1888, without rendering any account or giving any satisfaction to the plaintiff for her share or portion thereof. It is also found that in 1888, with the funds of the partnership, in addition to $2,000 contributed by the plaintiff, real estate was purchased, the title to which was taken in the name of the defendant, for which the appellant insists he should not be held accountable, and in which he claims the plaintiff should have no interest. There are certain facts which militate against plaintiff’s statement that this was purchased out of the partnership funds under an agreement that it was to be partnership property, notably the fact that for the $2,000 which she advanced on property taken by the defendant she received from the latter a mortgage, upon which, from time to time, she was |¡aid the interest, and subsequently the principal. This she exp.ains, however, by her testimony that the defendant induced her to permit the property to be taken in his name, and that until surtí time as it could be arranged to be taken in their joint names the Mortgage was given her as security for the moneys that she advanced. We see no reason to differ with the conclusion reached by the referee upon the facts here appearing as to.the manner in which the property was bought, the uses to which it was put, and the -occupancy of a portion of it for the conduct of the business and as a home for the parties, it being entirely within his province, upon the conflict presented on the question as to whether this real estate was or was not partnership property, to conclude in favor of the plaintiff. The rents of this property, though sometimes collected by the plaintiff and sometimes by the defendant, were all retained by the defendant, and though it was found that the partnership terminhted on the 26th of September, 1890, the referee, upon the accounting, allowed the plaintiff her proportion of the rents down to the date when the property was sold, and also credited her with her proportion of the profit realized upon the sale of the house. This the- appellant also claims to have been an error, upon the ground that the accounting should not be extended beyond the termination of the copartnership, in September, 1890, as found by the interlocutory judgment. There is no force, however, in his argument, because it is perfectly clear that, while there could be no accounting between the parties in regard to the profits of the business subsequent to the date named, this is an entirely different question from permitting a recovery of what was realized from the use or sale of partnership property acquired prior to the date of dissolution. If instead of real estate there had been horses and wagons, or money in bank, at the date of dissolution, it could hardly be claimed that the defendant could take possession of these, and by renting out the former, or obtaining interest upon the money, retain all these upon the ground that he was not obliged to account therefor, or for anything subsequent to the date of dissolution. In addition the appellant claims that an inquiry into or accounting for the real estate was improper upon the reference, upon the grounds: First, that the particular transaction was not set out in the complaint; and, second, that all transactions relating to real property must be in writing. As to the first, it was no more éssential to set it out in the complaint than it would have been to have claimed that the partnership had purchased a horse, or any other property, it being pertinent on the accounting to determine just what property the partnership had acquired; and that this claim as to the real estate was not an afterthought is shown by the inquiry entered into in reference thereto upon the trial at special term. As to the second, it has been held repeatedly that real estate bought with firm money for the use of the firm is firm property, though the title be taken in the name of an individual member, Baxter v. Bell, 86 N. Y. 195; Collumb v. Read, 24 N. Y. 505, and this fact may be proved by paroi evidence; the statute does not apply. Fairchild v. Fairchild, 64 N. Y. 471. The sole question thus presented is whether the evidence produced sustains the findings of the referee, and whether those findings sustain those conclusions of law, and upon this we find no reason to disturb the decision of the referee.

Another finding of the referee, excepted to, is that in the month of October, 1888, plaintiff sold to the copartnership merchandise, for which the firm agreed to pay her $300, and upon account of which she was paid the sum of $60. The value of. such property upon the reference was positively testified to by the plaintiff to have been worth the sum found by the referee, and, though it was found that upon the trial a lower value was placed upon it, it was competent on the reference, there being no testimony to the contrary, for the referee to accept the plaintiff’s version. In saying that the referee was at fault in finding that $60 was paid upon the goods so sold the appellant is strictly accurate, the testimony being that the defendant did not pay her any money, but instead thereof did discharge a debt which she had incurred in Brooklyn, and which she stated amounted to $50. The difference'between the amounts is small, and is in defendants favor, and therefore he has no right to complain of a view taken by the referee most favorable to him upon the question of the payment and its amount. The most unsatisfactory item of credit allowed the plaintiff is in regard to the $3,000 for the good will of the business. The plaintiff testified that such, in her opinion, was the value of the good will, and this was supported by another witness, who, however, was in no way shown to be competent, and whose testimony upon this question is of very little value. In addition, however, the referee has found that the average weekly profits amounted to $154 a week, and this, together with such testimony as was presented, was some evidence, however meager, upon which to base the finding as to the value of such good will. Upon this question we can but repeat what we have already said. If the best testimony that the plaintiff could give was furnished, as is here shown, and if, as here appears, the defendant failed to meet the case presented against him, abandoning the controversy, and leaving ins counsel to wage a contest practically alone with the plaintiff and her wit nesses, presenting no denial or account, he has no cause to complain if, from such evidence as was furnished, with a view to giving the plaintiff her full rights in the property acquired by their joint energy and" labor, the referee has not exceeded his power in reaching conclusions based upon reasonable inferences. The plaintiffs testimony on all the items included upon the accounting was as clear as the nature of the transactions and the manner in which the firms dealings were conducted rendered possible, and in most of her claims she is supported by other witnesses; while on the other hand, the defendant does not himself appear for examination, and presents but a single witness, who knew nothing of the firm’s business; and such testimony, with the production of the bank books showing the deposits made by the plaintiff, together with the fact that she received a mortgage in her own name upon the real estate, is the only evidence presented to destroy the force of plaintiff’s case. We do not think that she should be punished for the defendant’s wrongful acts in appropriating without accounting to her all the moneys and assets of the firm, including the good will, and then, when in that position, refusing to be examined, or present any account, or make any showing as to the amount or disposition which he had made of the copartnership property, relying seemingly upon the plaintiff’s inability, in the position in which she was placed, ever to present a satisfactory statement upon which she might base her right to recover her just proportion of what resulted from the joint enterprise. In the view of such an attitude assumed by the defendant, he is not in a position to invoke the court’s aid in preventing the plaintiff from •getting what justly belongs to her. Upon the whole case, therefore, we do not think that we should seize upon technical or captious objections to disturb a judgment which seems to be right and just. Judgment affirmed accordingly, with costs.

Van Brunt, P. J., dissents. Follett, J., concurs.


source: Caselaw Access Project

license: Public Domain

text:
    Robert J. Dean et al., Resp’ts, v. Marshall S. Driggs, Def’t. Edward S. Hatch, App’lt.

      (Supreme Court, General Term, First Department,

      Filed December 14, 1894.)

    Appeal—Finding.
    The decision of a referee, upon a reference to take evidence and report to the court, where it appears fair and just, will not be disturbed.
    Appeal from so much of an order as disallows a certain sum for legal services, and from so much of the order as disallows a certain amount for professional services rendered in other proceedings.

      Thomas P. Wickes, for app’lt; L. E. Warren, for resp’t.
   O’Brien, J.

Upon a motion made for the substitution of attorneys, a referee was ordered to determine the amount of the attorney’s lien in several proceedings in which the substitution was desired. The referee found the amount due to be $3,470.16. Upon the motion to confirm the report, the appellant asked the pourt to establish his lien at the sum of $6,470.16, instead of the amount found by the referee, such claim being made up of $500 in addition to the amount found due in the case of Dean v. Driggs, and of $2,500 for services in the the matter of Marques. The court refused to grant such increase and it is on account of such refusal that this appeal is taken.

The first question presented is as to the right to $500 additional to the amount allowed by the referee in the case of Dean v. Driggs. This was an action to recover the sum of $8,500 and interest, and was first tried in 1887, and the complaint was dismissed, but upon appeal to the general term the judgment was reversed and a new trial granted. The second trial took place in June, 1888, when the plaintiff recovered judgment, from which an appeal was taken, which resulted in November, 1889, in the granting of a new trial. Subsequent to the second trial, and prior to the argument of the appeal, and on January 28, 1889, the attorney and client had a settlement involving this' action, among several others, by the terms of which the attorney agreed to accept $1,200 in compensation for services in all matters prior to October, 1888, “exclusive of taxable costs and disbursements,' which, however, are not to be charged except in the event that a-collection is made in any of the matters where costs have been awarded to us, or either of us, and included in the judgment.”1 • After the argument of the second appeal, Dean & Oo. paid the attorneys $250; and these two amounts of $1,200 and $250 the referee has found were in full of services to and including the second appeal, and that they are indebted to the attorney only for services rendered subsequent to the second appeal. The third trial resulted in Dean’s favor, which, upon appeal, was affirmed at the general term, and was pending in the court of appeals when the motion for substitution was made. In his report, the referee thus estimates the services subsequent to the second appeal: “ (24) That E. J. Dean & Company are indebted to said Edward S. Hatch for services rendered in said action subsequent to the second appeal thereof only. (25) That the services rendered in said action after the second appeal up to the time of entry of the order of reference herein are reasonably worth the sum of nine hundred dollars, exclusive of taxable costs. (2.6) That the amount of the taxable costs-in said action are six hundred and twenty-two and 79-100 dollars. (27) That there is due and owing from Eobert J. Dean & Company to Edward S. Hatch said sums of nine hundred dollars and six hundred and twenty-two and 79 JL00 dollars, taxable costs in said action,—in all. the sum of one thousand five hundred and twenty-two and 79-100 dollars.”

It may be assumed, as claimed by the appellant, that the amount.' of costs connected with the suit up to and including the .second appeal was $500, and such costs, by the agreement of the parties, were to go, if collected, to the attorney ; and the contention of the appellant is that the referee,'after deciding that $1,522.79 was a proper compensation for the third trial and the appeal therefrom, erroneously applied the sum of $500, the costs to which the attorney was entitled, as compensation for his prior services. If the premise upon which this argument is based was correct,—that the referee allowed for such services $1,522.79,—-then the conclusion would follow that, in addition thereto, the attorney was entitled to the taxable costs which, by the agreement between the parties, were reserved for the benefit of the attorney. We think, however, that this claim rests upon too slender a foundation. All this discussion would have been avoided if the referee had more clearly expressed himself in his findings; but an examination thereof will show that he had in mind the agreement entered into between the parties by which the costs were to go to the attorney, and that in fixing the value of the services he found that they were reasonably worth the sum of $900, and in addition thereto he found that the attorney was entitled to costs, which made up the amount to $1,522.79. Though not so explicitly stated, there can be no doubt, that this was the intent and meaning of the referee when, in his finding in regard to the value of such services, he says they “ are reasonably worth the sum of $900, exclusive of taxable costs.” Apart, however, from such finding, this being in form a reference-to hear and determine the matters of difference, but in fact one to-take evidence and report to the court, so that it might be enabled, upon the motion for substitution, to fix the amount of the attorney’s lien, we are at liberty, as we have done, to examine the record, as no doubt the court below did, to determine what would be fair and reasonable compensation to the attorney. Having in mind the fact that he had been paid for services up to and including the second appeal, we think that the sum of $900 was full compensafor the third trial of an action involving $3,500, in which, in addition to such amount, the attorney was awarded $622.79, a sum equal to the taxable costs upon the three trials.

The second claim is that appellant is entitled to receive $2,500, in addition to what has been allowed him, for services in various matters classed together as the “Matter of Marques.” It appears that Marques, who had organized a corporation known as the “ American Package Company,” in connection with a man named Gair, owed the attorney for services in relation thereto, and had also become indebted to Mr. Dean in the sum of over $7,000. In 1886, a dispute having arisen between Marques and Gair, the-former desired proceedings taken with a view to realizing on the assets of the American Package Company. Such proceedings the attorney was disinclined to undertake upon the responsibility of Marques alone. At the- same time, Mr. Dean brought to the attorney his claim against Marques for collection, and, as means of accomplishing the latter, an arrangement was made by which Marques assigned his claims against the company to Dean, as security for Dean’s claim against him, and the attorney undertook the proceedings against the company. The question in dispute is whether such proceedings were to be taken upon the retainer of Mr. Marques, or solely upon the retainer of Mr. Dean, and under what arrangement or agreement the attorney proceeded. In support of the view that it was solely upon the responsibility of Dean that the attorney proceeded, a letter written by Dean to Marques, under date of January 27, 1886, was produced, which reads:

“Friend Marques : I have seen Mr. Hatch, and he says he has had a talle with you, and told you he would twist Gair out of his shoes, and help you out, if I would guaranty him, and I have told him that I would. How, I advise, you to give him the matter entirely, for he knows all about the whole affair, and he will make Mr. Glair understand that he cannot do with us as he pleases before we get through with him. How, don't neglect this matter. Do it at once.
“Yours, truly,
R. J. Dean.”

On the next day what purports to be a memorandum of agreement between Dean and Marques was signed by Dean alone, which, after reciting the situation of the parties, purports to assign from Marques to Dean his stock, interest, and claims in and to and connected with the American Package Company, as security for the payment of Dean’s claims, in which instrument we find the following clause:

“(2) That the party of the second part [Dean] will, as far as he considers it to be reasonably safe and practicable for him to do so, without ultimate loss to himself, assist the party of the first part [Marques] in the furtherance of his interest in relation to the American Package Company, and with money necessary therefor, and particularly in securing the services of Edward S. Hatch to and defend said actions and proceedings.”

Ho explanation of why Marques did not sign it is furnished, and whether or not it was a binding contract between the parties is left in doubt. One thing is clear,—that the paper, not being executed by Marques, did not assign the latter’s interest in the Package Company to Dean. However, from this period down to the date of this motion, it is conceded that the attorney performed various services in the matter of Marques, which, by the finding of the referee, was reasonably worth $2,500. Considering that nothing was ever realized by Dean, we may say, in passing, we think this was a liberal allowance; but we agree with the appellant in the view that the question of amount is not involved. Were we to rely solely upon the letter and the agreement from which we have quoted, supplemented as these were by the attorney’s evidence as to the agreement between himself and Dean, there would be much in his contention that he was acting solely upon the retainer of Dean, and that under his agreement he looked to him solely for payment. It will be noticed, however, that the letter was one written to Marques, and that the agreement relied upon was one purporting to be between Dean and Marques but signed by Dean alone; and it is not claimed that there was any written request from Dean to the attorney, reliance being placed chiefly upon the fact that the letter and so-called agreement were both placed in the possession of the attorney. If we take the instrument called the “agreement,” upon which the appellant relies, and regard it as in some way binding on Dean, it will be noticed that it is rather indefinite as to just what responsibility Dean assumed. He states, “as far as he considers it reasonably safe, and practicable for him so to do, without ultimate loss to himself, he will assist Marques with money and in securing the services of the attorney. Just what this meant can behest inferred from the conduct of the parties themselves. Most of the services rendered to Marques were prior to the settlement between Dean and the attorney in January, 1889, and it- is conceded that such settlement included all claims for services of every kind up to October, 1888, with certain exceptions referred to in the settlement, which need not be mentioned, because the Marques matters were not among them. This omission of any claim is significant when considered in connection with other facts appearing. Thus, a few days before the agreement of 1886, the attorney received from Marques a note for $500 as a retainer, upon condition, as he claimed, that Marques could obtain Mr. Dean’s indorsement,—by which he meant, not his indorsement to the note, but “to the engagement that I should go on with Marques matters.” And when for the first time after 1886, the bill for services in these matters as against Dean was presented, in June, 1892, it was in the following words: “To services in Dean v. Marques, and services rendered to Moritz Marques on written request of Mr. Dean and including note of Marques to Hatch in judgment, with other notes in favor of Dean against Marques, $500.” And in the letter explaining this and other charges the attorney writes:

“In Dean against Marques,—this is a particularly hard one, though it is just I should never, probably, have forced myself to a determination unless I was compelled to, as I am under the present circumstances. I would not proceed for Mr. Marques, after he had already run up a bill, which has not been paid, something like a thousand or more dollars, unless he paid me. In lieu of that, he brought your communication that you 'would be responsible for the work. He adjusted it afterwards with me, and I compromised' it, if I remember it correctly, for $500. That note, at your suggestion, when I stated I proposed to bring a suit upon it, was joined with your three notes, and judgment entered in your favor on .that note against Marques. We did a very great amount of work in the matter at different times for you. To the best of my recollection, we have not been actually paid for it, except so far as all claims would be included in the settlement I made with you as of October 1, 1888. I do not think you allowed me anything in that matter, so it seems to me that if I charge you the amount of the note that is in your judgment, and let everything else go, it might be termed just.”

That the claim for services in the Marques matter was in some way compromised or adjusted between the parties, if ever really assumed by Dean, is evident from all the testimony, but just when and how does not so clearly appear. Thus we find that bills were rendered by the attorney to Dean for disbursements, and that Dean paid them, and yet the referee has found (and to such finding we take no exception) that the agreement was not that Dean was simply to pay disbursements. What view the parties took of the so-called agreement, or whether it was compromised or adjusted, may never be ascertained, but the testimony furnished upon the reference clearly shows that neither the attorney nor the client thought there was any real or valid claim existing in 1892: for, in addition to what has already been said, it is shown-that in March, 1889, Mr. Dean wrote the attorney for a bill “for whatever was owing up to February, 1889,” which bill was sent a few days after .and paid. Now, as the principal part of the services rendered for which the claim is now made was prior to the settlement of October 1, 1888, it is remarkable that in none of these settlements between the parties was the claim made by the attorney against Dean; and the attorney admits that in none of the accounts against Dean did he charge up the Marques claim as against him. And in March we find the attorney writing to Dean to know if he had any objection to his accepting a retainer for Marques, which letter would never have been written if he had then thought he was at liberty to-do any work that Marques wanted and charge it to Dean, whom he regarded as a responsible party. Moreover, had the attorney stood upon the claim which he first made in 1892, and which, upon his direct examination upon the reference, he supported, of $500, his position would have been stronger than to attempt to increase this amount by $2,000. By such action the evidence is furnished that his feeling and anxiety to punish his former client were so strong that he was willing to convert what from his letter can be seen was regarded as a doubtful and a hard claim against Dean for $500 into one for $2,500. To summarize, then, upon the reference,, before the client was examined, it appeared-—First, that the attorney claimed for services in these matters $500; second, that the principal part of the services rendered was prior to October 1,1888, ■ the date of the settlement between the paaties; third, that he had never charged such a claim up against Dean in any of his books; fourth, that he had taken Marques’ note for $550, which had been turned over to Dean, and that the amount of such note was the claim that he made against Dean for the services rendered to Marques. Although the attorney had rendered numerous bills for services from 1886 down to 1892—two -of which involved a general statement for all services rendered by the attorney or his firm, excepting certain enumerated claims, in which the Marques matters-were not included—which bills had been paid, yet in none of these had any portion of the claim such as is here made for services ever been made or disclosed or suggested by the attorney to his client. We think, therefore, that, having regard to the relation that existed between the parties, and noticing the particularity, and we might, add, the regularity, with which bills were furnished by the attorney, the facts we have alluded to are most significant, and justified the referee in refusing to allow the attorney any sum for services rendered in the matter of Marques. We regard it as a subject of re-, gret 'that the attorney did not himself adhere to the suggestion which in his letter of June he made to his client, namely, that, instead of entering into harsh words or ill feelings as to their matters of difference, they should be referred with a view of having them adjusted, his closing words being: “ I should be satisfied with whatever the court awards me. I presume you would be, too.” The client having adopted this suggestion, and both having agreed on a referee of their own choosing, who seems to have given a patient hearing and investigation to the questions involved between them, and he having reached a conclusion that the rights of the parties should be adjusted by the payment by the client, in full settlement of all claims, of the sum of $3,470.16, and the client, in addition, being required to pay the expenses of the reference, amounting to $750, which, adopting the advice of his former attorney, he is prepared to do, we think that the attorney should be satisfied with the conclusion reached, which, upon all the testimony, we regard as fair and just, and upon payment of such amounts should be required to give the consents for substitution.

The order appealed from, accordingly, should be affirmed, with $10 costs and disbursements.

All concur.


author: Van Brunt, P.

text:
    Newman Cowen et al., Resp’ts, v. Herman Rinaldo, Impleaded, etc., App’lt.

      (Supreme Court, General Term, First Department

      Filed December 14, 1894.)

    1. Will—Suspension op power op alienation.
    A provision suspending the power of alienation longer than two lives in being, is void.
    2. Same.
    The ulterior trusts or disposition of the will are not valid, where the primary trust has been held to be invalid.
    3. Trusts—Invalid.
    A devise to collect rents and, after paying therefrom legacies, interest, etc., to discharge mortgages on real estate, is not authorized by § 55 of 1 R. S„ 728
    Appeal from a judgment construing a will and holding its provisions valid.

      J. L. Cadwalader, Hamilton Wallis, H. M. Goldfogle, and A. D. Lind, for app'lts; D. G. Rollins, M. R. Blumenthal, B. Tusks, F. E. Minrath, A. Lyon, and Meyer S. Isaacs, for respt’s.
   Van Brunt, P.

This action was brought to procure the judicial construction of the will of Mr. Marks Rinaldo, who died Hovember 26, 1892. The will was admitted to probation the 21st of April, 1893. The testator died seised of a considerable amount of personal and real estate, the real estate being mortgaged. By said will, the testator, after having directed the payment of certain legacies and annuities which he charged upon his real and personal estate, by the eighteenth and nineteenth clauses thereof provided as follows:

“Eighteenth. I give, devise, and bequeath to my executors hereinafter named, and such of them as shall qualify, and the survivors or survivor of them, and such successors as they shall appoint, as hereinafter provided, all my real and personal estate until my son Harry shall become twenty-one years of age, or die, whichever event shall first happen ; and, if he should die before my daughter Amelia should become twenty-one years of age, then until she should become twenty-one years of age, or die before such period—in trust, nevertheless, to collect the rent, income, and profits of said , real estate and the whole of said personal estate and, after paying therefrom the legacies hereinbefore given, the interest on mortgages, taxes, assessments, fire insurance, and repairs on said real estate, to apply the remainder of said rents of my real estate, together with the income and principal of. my personal estate, to the paying off and discharging of the principal of the mortgages on my real estate.”

“nineteenth. Upon my son Harry becoming twenty-one years of age, or upon his death, and if he should die before my daughter Amelia should become twenty-one years of age, or death before such period, I order my executors, or such of them as may qualify, and the survivors or survivor of them, and the successors of them (as hereinafter provided), to sell all my real estate atpublic sale, and execute proper deeds therefor, and out of the moneys so realized to pay : (a) To my son David (now residing at Jersey City) the sum of fifteen thousand dollars, (b) To my grandson Lawrence (son of said son David) the sum of five thousand dollars, (c) To my son Samuel the sum of fifteen thousand dollars, if at that time his present wife shall have died ; and, if she should still be alive at that time, to invest said sum of fifteen thousand dollars in first mortgages upon improved property in the city of Hew York, and pay the interest realized therefrom half yearly to my said son Samuel, as long as his present wife shall live, and upon her death to pay over to him (said Samuel) said principal sum of fifteen thousand dollars. Should he, however, die before her, then upon his death said sum of fifteen thousand dollars shall be divided in equal shares between my sons David, Joel, Edward, and Harry, and my daughters Hannah and Amelia, share and share alike, (d) To my daughter Hannah, wife of Henry Black, the Sum often thousand dollars, and, in addition thereto, to invest the sum of twenty-five thousand dollars in first mortgages upon improved real estate in the city of Hew York, and pay the interest realized therefrom half yearly to my said daughter Hannah, and upon her death to pay over saidprincipalsumof twenty-five thousand dollars to her children in equal shares. Should she, however, die without leaving any children, then said sum of twenty-five thousand dolíais shall be divided between my sons Samuel, David, Joel, Edward, and Harry, and my daughter Amelia, in equal shares, (e) To my son Joel the sum of fifteen thousand dollars, (f) To my son Edward the sum of fifteen thousand dollars, (g) To my daughter Amelia the sum of ten thousand dollars, and, in addition thereto, to invest the sum of forty thousand dollars in first mortgages upon improved real estate in the city of Hew York, and pay the interest realized therefrom half yearly to my said daughter Amelia, and upon her death to pay over said principal sum of forty thousand dollars to her children in equal shares. Should she, however, die without leaving any children, then said sum of forty thousand dollars shall be divided between my sons Samuel, David, Joel, Edward, and Harry, and my daughter Hannah in equal shares, (h) To my son Harry the sum of fifteen thousand dollars, (i) To my son 'Isaac the sum of ten thousand dollars, if at that time his present wife shall have died, or he shall have been divorced from her by an absolute divorce, and shall have married a decent Jewish woman, (k) To invest the sum of fifteen thousand dollars in first mortgages upon improved real estate in the city of Hew York, and pay the interest realized therefrom half yearly to my beloved wife, as long as she may live, and upon her death to divide the principal sum between my sons David, Joel, Edward, and Harry, and my daughters Hannah and Amelia, in equal shares. (1) Should there be any balance left of my real and personal estate, I order my executors to pay (1) to the Hebrew Benevolent and Orphan Asylum Society of the City of Hew York the sum of one thousand dollars; (2) to the Mount Sinai Hospital of the city of Hew York the sum of one thousand dollars; (3) to the Montefiore Home for Chronic Invalids the sum of five hundred dollars; (4) to the Hebrew Eree-School Association of the city of Hew York the sum. of five hundred dollars, (m) Should there be any further balance left of my estate (real or personal), I order my executors to divide said balance in equal shares between my sons Samuel, David, Joel, Edward, Harry, and my daughters Hannah and Amelia, share and share alike.”

The clauses of the will above stated are attacked upon the ground that by them are attempted to be established trusts which are contrary to the provisions of law, as to some of them because of the illegal suspension of the power of alienation ; as to the rest because of the illegal direction in respect to the accumulation and disposition of the rents, income, and profits arising from the estate.

There is no doubt but that, in respect to some, portion of the estate, the testator has designated a legal and valid period for the suspension of the power of alienation of the absolute ownership thereof ; and that, in respect to other portions, he has attempted to suspend the power of alienation during three lives instead of two. Thus, by the eighteenth clause of his will he suspends the power of alienation during the lives of his children Harry and Amelia, limited upon their arrival at 21 years of age, and then by the nineteenth clause he directs that his real estate be sold, and that certain of the proceeds be paid to certain legatees absolutely, and that certain other portions be held during additional lives, or upon additional contingencies. It is clear that the right to suspend the absolute vesting of ownership in any part of this estate could only be limited upon the lives of Harry and Amelia, they being two persons in being, and within the provisions of the statute. The attempt to ingraft upon this suspension additional limitations of ownership was not within the statute, and such limitations must necessarily be void. If it were possible to separate the limitations which are void from the bequests which are valid, it is the duty of the court so to do; and if this were the only question involved in the construction of this will perhaps this might be done. But there is another objection made to a provision of this will which underlies the whole of these provisions ; and that is that the testator has attempted to create a trust for purposes not permitted by the statute. This objection, if well taken, affects the whole scheme of the will, and it is impossible to segregate it from subsequent provisions, because they are all dependent upon this one scheme. It is to be observed that the estate, both real and personal, is devised and bequeathed to the executors in trust for a certain period to collect the rent, income, and profits of said real estate, and the whole of said personal estate, and, after paying therefrom thelegacies hereinbefore given, tbe interest on mortgages, taxes, assessments, fire insurance, and repairs on said real estate, to apply the remainder of said rents of his real estate, together with the income and principal of his personal estate, to the paying off and discharging of the principal of the mortgages on his real estate.

1 Rev. St. p. 728, § 55, provides that express trusts may be created for any or either of the following purposes:

“(1) To sell land for the benefit of creditors. (2) To sell, mortgage or lease lands for the benefit of legatees, or for the purpose of satisfying any charge thereon. (3) To receive the rents and profits of lands and apply them to the use of any person during the life of such person, or for any shorter term, subject to the rules prescribed in the first article of this title. (4) To receive the rents and profits of lands, and accumulate the same for the purposes and within the limits prescribed in the first article of this title.”

It is urged upon the part of the appellants that the trust attempted to be created by the will of the testator does not come within the provisions of the statute. In answer to this contention it is claimed upon the part of the respondent that the power given to the executors to collect rents and manage generally the real estate carries with it by implication the power to lease, and that this brings the trust within the express terms of the statute. That such is not a correct interpretation of the statute was announced in the case of Hawley, v. James, 16 Wend. 62, and does not seem to have been departed from up to the present time. It was there held that the trust provided for by the subdivision of the statute authorizing the creation of the trust to sell, mortgage, or lease lands for the benefit of legatees, or for the purpose of satisfying any charge thereon,' is a provision for alienation, and not for the suspension of the power of alienation; that such a trust is a trust to sell land, or some interest in it; and that the land descends subject to the execution of the trust, subject to the power of sale, subject to the power to mortgage, subject to the power to lease,—but there is no power reserved in the trust to collect rents. The provisions authorizing the collection and receipt of rents and profits of land are separate and distinct. The evident intention of the statute was the creation of a trust to sell land and receive the proceeds thereof for the benefit of creditors, or for the benefit of legatees, or for the purpose of satisfying any charge thereon; to mortgage land and receive the proceeds thereof for the benefit of legatees, or for the purpose of satisfying any charge thereon; and to lease lands for a given sum, which the trustee is to receive for the benefit of legatees, or for the purpose of satisfying any charge on said land, the fee of the land descending. The cases of Savage v. Burnham, 17 N. Y. 561; Garvey v. McDevitt, 72 N. Y. 556; Van Schuyver v. Mulford, 59 N. Y. 426; Harrison v. Harrison, 36 N. Y. 543; Adams v. Perry, 43 N. Y. 487; and Henderson v. Henderson, 113 N. Y. 1; 21 St. Rep. 800, which are cited by the respondents, in no way attempt to question this construction of the statute. Applying such construction to the language of the will under consideration, and having in view the fact that the interpretation of each will is to be according to the intention of the testator, and that intestacy shall be avoided wherever possible, in seems to us that it is impossible to come to any other conclusion than that there was an attempt upon the part of the testator to direct his executors to hold his estate during the lives of his children Harry and Amelia, limited by their arriving at 21 years of age, for the purpose of collecting the rents, issues, and profits, and applying the same to a purpose not permitted by the statute. This, therefore, renders void, under the statute, the whole eighteenth clause, and all dispositions dependent thereon.

It is urged, however, that certain dispositions may be held valid although others may come within the restrictions of the statute. And our attention is called to the cases of Schettler v. Smith, 41 N. Y. 328; Cross v. U. S Trust Co., 131 id. 330; 43 St. Rep. 254, and Tiers v. Tiers, 98 N. Y. 568, as upholding this contention. But in all these cases it was the alternative trust which was found to be void, and not the principal trust; and the courts have held that the principal trust might stand, and the alternative trust fall. Thus in Tiers v. Tiers it was held that the ulterior contingent limitation was quite separable from the primary trust, and merely incidental, its only purpose being to provide for a contingency which might never arise, and the failure of that provision would not affect the general scheme of the will. And it was held that in such cases the rule is well settled that an ulterior limitation, though invalid, will not be allowed to invalidate the primary dispositions of the will, but will be cut off in the case of a trust which is not ah entirety. But we have failed co find any case in which the primary trust has been held to be invalid, and the ulterior trusts or disposition of the will have been held to be good. The will hangs upon the intention of a testator, as'it may be interpreted by the language therein, viewed 'in the light of his situation. You may lop off some of the provisions of the will without interfering with the primary objects of the will. The primary objects may still remain, and those that follow may be cut off. But if you cut off the primary object, upon what do the ulterior provisions depend ? -What support have they ? How can they be maintained ? They must necessarily fall.

This brings us to the next proposition, which is probably embraced in what has been already stated, but to which it is necessary to call special attention; and that is to the provisions for the charitable associations. The testator provided that, should there be any balance left of his real and personal estate (that is, after paying the legacies directed to be paid out of the proceeds of the sale of his estate), he ordered his executors to pay, etc. It seems to be evident from the language of this clause in the will that it is dependent upon that which precedes it, which we have attempted to show is invalid. It is, “ Should any balance be left after doing these things.” It is not a general gift to these charitable institutions, but a gift out of a fund which, if our construction of the will is correct, the executors have no power to create and therefore there is nothing from which it can'be paid. The clause which is called the “ residuary clause ” is subject to the sapie construction. It is, “ Should there be any further balance left of my estate (real and personal), I order my executors to divide said balance in equal shares between my sons Samuel, David, Joel, Edward, Harry, and my daughters Hannah and Amelia, share and share alike.” It was not, as in the case of Lamb v. Lamb, 131 N. Y. 227; 43 St. Rep. 112, a disposition of surplus undisposed of, but it was a disposition of the balance of a fund attempted to be created, as has already been observed, by an illegal provision in the will. While it may have been the intention of the testator to have disposed of all his property, and his will is to be construed, if possible, to carry out that intention, yet, where he has attempted so to do by illegal means, the court cannot put an interpretation upon the language contained in the will which is certainly not in harmony with the manifest intention of the testator. The clause under consideration is not a general residuary clause,, but is a disposition of a general fund, to be created in a certain way. We think, therefore, that the residuary clause became in-inoperative, with the other clauses considered.

The judgment should be reversed, and a decree entered construing the will in harmony with the views expressed in this opinion, with costs to all parties appearing, to be paid out of the estate.

All concur.


text:
    David M. Blaustein, as Administrator, etc., Resp’t, v. Eugene W. Guindon et al., App’lts.

      (Supreme Court, General Term, First Department,

      Filed December 14, 1894.)
    1. Negligence—Unloading from truck.
    A party, though he has the right to unload a hogshead from a truck to the sidewalk, is bound to exercise reasonable care and prudence in so doing, so as not to injure persons lawfully passing along the sidewalk.
    2. Same—Question of fact.
    ■ Whether he is negligent in so doing, without using danger signals or stationing any one to give notice or warning to pedestrians, is a question for the jury.
    Appeal from a judgment, entered on a verdict in favor of plaintiff, and from an order denying a motion for a new trial on. the minutes.

      Allen W.Iloddart, for app’lt; G. Washburne Smith, for resp’t
   O’Brien, J.

This action was brought to recover damages for the death of Jennie Blaustein, the plaintiff’s intestate, caused by the alleged negligence of a servant of the defendants. On or about the 2d day of September, 1892, certain casks of sal soda were being unloaded from a wagon or truck belonging to defendants, at a soap factory on Munroe street, between Rutgers and Pike streets, in the city of New York. The driver had backed up the truck in front of the open doorway of the factory through which the hogsheads were to be rolled. The rear wheels stood two feet in on the sidewalk, which was fifteen feet wide. The driver had attached to the end of the truck a pair of skids, which were about six feet long, the lower end of which rested upon the sidewalk, leaving a space of three or four feet between the ends of the skids and the front edge of the building. There were four or five of these large hogsheads lying down on the truck. Beford the accident, one hogshead had been let down, and it was the second hogshead that rolled from the truck that killed the child. Plaintiff’s intestate was a li ttle girl, of the age of 12 years and 10 months, and at the time of the accident was walking in an easterly direction on the sidewalk of Munroe street, when, in passing between the ends of the skids and the factory, she was struck by a hogshead of sal soda, weighing 1,300 pounds, which rolled from the truck and over her, causing death. At the time of the accident the driver was standing upon the fcruck, with his back towards Pike street, and was stooping over, with his face downwards, just at the time the little girl was passing between the ends of the skids and the building; and at that instance the driver took the chock from under the hogshead, so that, in the language of the driver, it “ rolled down the skids as quick as lightning.” It is not claimed that any ropes or chains were used to let the hogshead down, nor were any danger signals used, nor anyone stationed to give notice or warning ; and instead of permitting the hogsheads to slide down endwise, which, it was testified, had been the custom of the driver on other occasions, on this, as it would appear, in order to save labor, he let the hogshead roll down as fast as it would go, so that it would roll a long way inside the factory. At the close of plaintiff’s case a motion to dismiss the complaint was made, upon the ground that there was no evidence of defendant’s negligence or freedom from contributory negligence on plaintiff’s part. The motion was denied, and at the end of the entire case was renewed and again denied, to which denials proper exceptions were taken, and it is upon these exceptions that the substantial questions presented by this appeal rest.

We think it was clearly a question for the jury as to whether the acts of the defendants’ driver in unloading the truck were or were not negligent Although 'the defendants had the right to unload the hogshead from the truck, they were bound to exercise reasonable care and prudence in so doing, so as not to injure persons lawfully passing along the sidewalk. And this could have been done either by letting it down-with ropes, or by having men enough to ease it down, or, if it was intended to roll it from the truck into the factory, by having some one stationed to warn pedestrians of the danger. After neglecting to adopt any such means of safety, then to argue that, upon such evidence, no question as to defendant’s negligence was presented, is to fail to recognize the force of facts and the obligations imposed upon those using the public streets, in respect to pedestrians. The little girl had an undoubted right to pass over the sidewalk; and while so passing, without notice or warning, she was struck by this heavy hogshead, which was rolled from the truck in a manner to preclude the possibility of her escape, even if she had seen it after it had started,—the testimony showing that the rapidity with which it left the truck gave to the hogshead a momentum sufficient, if unimpeded, to carry it inside the factory. Such conduct is as wanting in care as that of one who, without warning or signal of any kind, and without regard to the presence of pedestrians on the sidewalk, would hurl a barrel or brick, or any bulky or dangerous missile, from the windows of a building, upon the sidewalk. So with respect to the question of freedom from negligence of plaintiff’s intestate. She had the right to pass over the sidewalk, and was right in assuming that she would not be subjected, without warning or signal, to the danger of having thrown against her a hogehead from a truck, any more than that she would be subjected to danger from some heavy or dangerous missile thrown from a window into the street. She had no reason to anticipate that just as she was passing by the driver would let the hogshead roll down upon her; and, though she had knowledge of the presence of the truck, it was for the jury to determine whether her passing between the ends of the skids and the building was an act of negligence, which in any way contributed to her death.

In addition to these exceptions, which we do not regard as well founded, another one is presented, based upon the alleged error of the court in admitting, over defendants’ objection and exception, certain testimony. The driver has been' examined in chief by the defendants, and upon cross-examination he was asked the following question: “Q. So if a person was, say, one or two feet away from your skid at the instant you pull the chock out from under it, he could not get by it before he was struck, could he ?” . This was objected to as calling for a conclusion. The objection was overruled, and the defendants took an exception, and the witnessed answered, “Yes; it went down fast.’’ We do not think that in this any serious error was committed, for the reason that it was the cross-examination of the defendants’ witness, and the answer given was not responsive; but, -such as it was, it was permitted to stay, no motion having been made, upon this ground, to strike it out. The question thus asked, however, was immediately afterwards answered; and, when repeated, no objection was made to it, and the answer was elicited without objection.

Another ground .urged is that the damages were excessive. This, upon all the evidence and the rulings of the court, was a question of fact for the jury, which we are not in a position upon this record to review, because -the record has no statement that the case upon appeal contains all the evidence, and it has been many times held that in the absence of such a statement this court is precluded from reviewing any question of fact. Randall v. N. Y. El. Railroad Co., 76 Hun, 427; 59 St. Rep. 352 ; Koehler v. Hughes, 73 Hun, 167; 57 St. Rep. 131 ; Aldridge v. Aldridge, 120 N. Y. 616 ; 31 St. Rep. 948. We think that the judgment is right, and that it should be affirmed, with costs. All concur.


author: Barrett, J.

text:
    Louise M. Galligan, Pl’ff, v. Richard Kelly et al., Def'ts.

      (Supreme Court, New York Special Term,

      Filed November 21, 1894.)

    1. Ldbel.—Privileged.
    The act of the trustees of a school in collecting and sending to the hoard of education evidence in respect to the conduct of the principal, is privileged.
    2. Same.—Publication.
    The sending of a copy of such evidence to the principal, in order to enable her to answer the charges against her, is not a publication.
    Action for libel.

      Edwin J. Galligan and Louise M. Galligan, for pl’ff; William N. Cohen, William C. Beecher, and Henry L. Scheuerman, for def’ts.
   Barrett, J.

The action proceeds upon an entire misapprehension of the duties of the defendants. The defendants were public officers,—trustees of the particular school in question. While they had no jurisdiction, under the statute, to remove a principal, it was their duty to, see that a principal conducted herself properly; and if she did not, it was their further duty to gather the evidence of derelictions, and present it to the forum or tribunal which had authority to discipline such principal. This action has been tried, seemingly, upon the theory that we are here to redress the wrong which the plaintiff claims resulted from her dismissal. If she was wronged thereby, the remedy is by certiorari to review the action of the board of education. She certainly cannot redress any such wrong by treating the evidence which was gathered for presentation to the board of education as libelous statements made by the defendants. The idea that the plaintiff was libelled because of the presentation of such evidence to the appropriate forum is, to say the least, farfetched. The defendants clearly did not libel the plaintiff, even if the witnesses who testified before them and the board of education did. If the defendants had reason to believe that the plaintiff had conducted herself in such a manner as to justify her removal, they were perfectly right in procuring the evidence of such misconduct. The question here is not whether she was guilty. The question has been determined by the appropriate forum, namely, the board of education, after a due hearing, according to law. Every step that the defendants took in bringing the matter before the board of education was plainly in the line of their public duty, and was consequently privileged. If they had submitted their charges to the board of education without any evidence to support them, it might, indeed, be said that they acted wantonly. In that case the board of education might properly and naturally have criticized them. The board might well have said, “Why do you make these charges, unless jrou yourselves have investigated them sufficiently to see that they call for a further investigation by us?” Had that been the case, the wrong would have been in submitting the charges without the very evidence which is here misstyled a “ libel.” In saying “ misstyled,” I mean as against these defendants, whatever it may be styled as against the persons who gave

testimony. Nor was the presentation of that evidence libelous merely because it was originally ex parte. The defendants were not bound to refuse to listen to statements made by apparently credible witnesses merely because the plaintiff was not present at the moment. The proper course was to reduce such statements to writing, and, instead of sending them directly to the board of education, to furnish a copy" thereof to the plaintiff, and to give her an opportunity of answering them. And this was precisely what they did, and in doing so they acted discreetly. Thus the plaintiff had a full opportunity of explanation before the defendants decided that the charges and evidence should be sent to the board of education for the only real and substantial trial which there could be in the matter. Let us see just what has been shown on that head. The plaintiff was notified to appear before the trustees. She did appear before them. A portion of the testimony was read to her, and the rest of it was furnished to her the same day. A week later she had an opportunity of presenting her side of the case. Mow, surely, though the defendants had not jurisdiction to remove her, they acted with propriety and discretion in giving her an opportunity of presenting such matters in mitigation as might induce them not to send the charges forward. If, as the plaintiff seems to claim, they exceeded their jurisdiction even in giving her a hearing, she cannot well complain, for their action was in her interest and for her benefit. So much for the question of privilege. What the defendants did was strictly in the line of their official duty, and was therefore privileged.

As to the second question, there is not the slightest evidence of publication by the defendants. I regret that the plaintiff suffered so much time "to be taken up in her cross-examination with regard to the simple though crucial fact repecting the delivery to her of the testimony. It took an unnecessarily long time to extract from her the few simple and salient facts on that head. In the end, however, the facts were quite clear. And what were they ? Plainly, that when she left the defendants at 5 o’clock on the afternoon of the 1st of April, she was told that the testimony would be furnished to her, in order that she might come later and explain it. She did not take it away herself, but had hardly reached home before the janitor of the school building, under the direction of the defendants, brought it to her house, left it there with her sister (really, however, with herself), and took her own receipt for it. And yet there was all this fencing as to whether it was in her individual possession. I regret that there was not greater frankness on that head. Mow, the testimony was not thus sent to the plaintiff for publication. It was sent for her own perusal and use—not for her sister, or for any one else. It was sent to her for a specific purpose, and that purpose was a good and proper one, namely, to enable her to read at her leisure, and to come later before the defendants, prepared to say what there was to say against it. If she chose to call a town meeting to hear it read, it was not the defendant’s fault. The defendants did not send it to her for the perusal of her friends or relatives, nor for the inspec-

tian of the general public. If she chose to sit up all night with her friends, or allow them to read it, that was her own affair. The defendants had not sent it to be published in that manner, and they cannot be charged with the plaintiff’s acts of publication. In fine, they were privileged to take the testimony to ascertain whether there ought to be a trial by the board of education, and that board has sustained them by a vote overwhelmingly preponderating against the plaintiff. It would be monstrous to hold that the testimony thus taken, and thus furnished to the board of ■education, was a mere libellous statement made by the defendants maliciously to punish the plaintiff. Such a doctrine would be most disastrous in its effect upon the proper administration of our public school system. If, under such circumstances, these trustees could be treated as libelers, and punished in damages, for doing what they did, it would simply prevent all such officers from fearlessly guarding the sacred interests intrusted to them by the law. These officers are responsible for the due administration of the school system, and they should be upheld in all proper efforts to maintain discipline, and to compel obedience to the rules and by-laws laid down by the board of education. It would be strange indeed if they were to be held to a stricter rule of law than is held against .a person who charges another with a crime in the ordinary criminal courts of the country. In that class of cases the person making the charge cannot be held for damages for malicious prosecution, even if the defendant is acquitted, unless the charge was made wantonly, maliciously, and without reasonable or probable cause to believe it to be true. Here the charges were certainly made with probable cause to believe them to be true, because they were made upon formal testimony, and because the plaintiff was actually removed by the appropriate tribunal. If such an action as this •could be maintained upon such facts, it would be impossible to induce any prudent citizen to accept such aposition as that of school trustee. He would either be held responsible by the people for failure to do his plain duty, or he would be held responsible by the courts for doing his plain duty. Fortunately for the good •government of the schools, the trustee is not between these alternatives. In my judgment, this action was ill-advised, and should never have been brought. It certainly cannot be sustained upon any principle or precedent appertaining to the law of libel.

The complaint must accordingly be dismissed.


author: Parker, J.

text:
    Samuel W. Milbank, as Receiver, etc., App’lt, v. Helene De Riesthal et al., Impleaded, etc., Resp’ts.

      (Supreme Court, General Term, First Department,

      Filed December 14, 1894.)

    1. Corporations—Insolvent—Preference.
    An intention to prefer creditors is not established by the mere fact that the corporation allowed a judgment by default for a valid debt to be recovered against it.

      2. Same.

    Such intention may be shown by the actions and utterances of its officers.

      8. Same—Uotes—Execution.
    A note signed by the officers who are accustomed to sign corporate notes, is valid, where the proceeds were used for its benefit, though not signed. by one of the officers specified in the by-laws.
    Appeal from a judgment dismissing the complaint.

      George Putnam Smith, for app’lt; Chauncey S. Traux and Herbert G. Hull, for resp’ts.
   Parker, J.

The object of this suit - was to obtain a judgment, declaring void certain judgments obtained- by the defendants. Helene De Eiesthal and William 0. Bowers against a corporation known as the A. De Eiesthal Company, of which the plaintiff,, Milbank, is now the receiver. .The ground upon which the complaint predicated the plaintiff’s demand for relief was. that such judgments 'were invalid because in contravention of section 48 of chapter 688 of the Laws of 1892, known as the “ Stock Corporation Law.” June 1, 1893, the defendant Bowers loaned the A.. De Eiesthal Company $3,000, receiving therefor a promissory note, payable on demand. Subsequently, paj'ment was demanded and refused, and immediately thereafter an action was commenced to recover on the note, to which defendant did not interpose an answer; and in due course, and on September 1, 1893, judgment wras entered in favor of the plaintiff for the amount due, with costs. Oh the same day the defendant Helene De-Eiesthal entered judgment against the corporation in an action, brought on two promissory notes, the principal sum of which aggregated $8,000. That she had advanced such sum to the corporation, and taken its demand notes therefor, is not disputed. As in Bowers’ case, the j udgment thus entered was in an actipn commenced by the service of a summons of which the corporation took no notice. So far as the record discloses, the officers of the-corporation were passive. The trial court found as a fact “that-neither said defendant corporation, the A. De Eiesthal Company, nor any of its -officers or directors, did or performed any act or thing to aid or assist the said defendants Helene De Eiesthal and William C. Bowers in obtaining their respective judgments against, the corporation.”

The first question is whether these judgments are condemned by section 48 of the stock corporation law. That portion of it which is pertinent to the present inquiry reads:

“No conveyance, assignment, or transfer of any property of any such corporation by it or by any officer, director or stockholder thereof, nor any payment made, judgment suffered, lien created or security given by it or by any officer, director or stockholder when the corporation is insolvent or its insolvency is imminent, with the intent of giving a preference to any particular creditor over other creditors of the corporation, shall be valid.”

Our attention has not been called to any case arising since the passage of the act in which this question has been brought to the attention of the court. The first part of section 48 absolutely prohibits the transfer of any property to an officer, director, or stockholder of a corporation, which shall have refused to pay any of its obligations when due, upon any other consideration than the full value of the property paid in cash. But that portion of the section which we have quoted has for its object the prevention of preferences to a particular creditor or creditors over other creditors of a corporation which is either insolvent or its insolvency is imminent. It does not declare invalid all transfers of property or payments made to creditors of an insolvent corporation, but only such as are made with the intent of giving a preference to the creditor over other creditors. While the statute seeks to accomplish the end aimed at by restraint upon the action of the corporation, its officers, directors, and stockholders, nevertheless the consequence of action on their part in contravention of the statue is visited upon the creditor whose preference is attempted by them. But it does not attempt to restrain creditors from pursuing the remedies which the law affords to procure satisfaction of their claims. The vigilant creditor is not threatened by it with the certain loss of the expense of legal proceedings if, at the time of the entry of judgment, the debtor corporation should be insolvent or its insolvency imminent. He is not required to determine at his peril the question of the insolvency or threatened insolvency of the debtor corporation before commencing legal proceedings, or entering the judgment in which they shall result. And while the restraint of the statute is put upon the corporation, its officers and stockholders, allowance is made for the fact that corporations apparently insolvent are occasionally saved by care and prudence in the management of their affairs, and that frequently insolvency is not expected by its officers, but is suddenly brought about by some unexpected loss; hence the further condition that the acts described in the section must have been done with the intent to' prefer the creditor affected in order to render them void. This corporation was insolvent on the 1st day of September, 1893. when the judgments of these defendants against it were entered. If, at about that time, the corporation had transferred to such creditors certain of its property in payment of their claims, the general legal proposition that when a positive act is done, the consequences of which are known beforehand, the party will be held, to have intended those consequences would undoubtedly support the inference that the transfer was for the purpose of giving the creditor a preference over other creditors. But where the corporation sued has no defense, affords its creditor no assistance, and interposes no hindrance, taking no action whatever in the premises, can it be held that the entry of the judgment permits the interference that the “judgment suffered” was with the intent of giving a preference to such judgment creditor ? We think not, and this position is supported by a carefully considered opinion delivered by Mr. Justice Miller in Wilson v. Bank, 17 Wall. 273. From this opinion we quote:

“The creditor sued them, and recovered judgment, and levied execution on their property. They afforded him no facilities to do this, and they interposed no hindrance. * * * There is nothing morally wrong in their course in this matter. They were sued for a just debt. They had no defense to it, and-they made none. To have made an effort by dilatory or false pleas to delay a judgment in the state court would have been a moral wrong and a fraud upon the due administration of the law. There was no obligation on them to do this, either in law or in ethics. *
* * It is also argued that, inasmuch as to lay [lie] by and
permit one creditor-to obtain judgment and levy on property necessarily gives that creditor a preference, the debtor must be supposed to intend that which he knows will follow. The general legal proposition is true that where a person does a positive act, the consequences of whic.h he knows beforehand, he must be held to intend those consequences. But it cannot be inferred that a man intends, in the sense of desiring, promoting, or procuring it, a. result of other persons’ acts when he contributes nothing to their success or completion, and is under no legal or moral obligation to hinder or prevent them.”'

In Bank v. Warren, 96 U. S. 539-541, the court said:

“ This action goes upon the theory that the mere nonresistance ■of a debtor to the judicial proceedings against him when the debt is due, and there is no valid defense to it, is the suffering and' giving a preference under the bankrupt' act. This theory is expressly repudiated in the case of Wilson v. Bank, 17 Wall. 473."

Other evidence was necessary to require of the trial court the inference essential to support a judgment in favor of the plaintiff. No evidence was received by the court tending to show the existence of a desire to prefer the defendant creditors, aside from the fact that the officers of the corporation remained entirely passive touching .the efforts of Bowers and Helene De Riesthal to obtain judgments for the several amounts due them, unless the plaintiff’s position be well taken that the corporation had a legal defense to the notes held by them. The appellant insists that"the corporation could have successfully defended the actions, on the ground that the notes which were given at the time the loans were made were not signed by the secretary as required by the by-laws of the corporation. The by-laws do seem to provide that the secretary shall sign all notes and other obligations of the company. It is quite evident, however, that this was a mistake of the scrivener who-■copied the by-laws into the minute book. Article 3 of the bylaws relates to the duties of the'officers of the corporation ; section 1, to those of the presidentsection 2, to those of the vice-president; section 3, to those of the treasurer; and section 4, to those of the secretary. In section 3, relating to the duties of the treasurer, may be found the following:

“The treasurer shall present his financial statement at each annual meeting, and also whenever directed by the president or by the board of directors. The secretary shall also sign all certificates of stock and all notes and other obligations of the company.”

It would seem that the word “ secretary ” must have been inadvertently used, instead of the word “ treasurer,” to the duties of whom that section relates. But, assuming that the by-laws make it the duty of the secretary to sign all notes and obligations of the corporation, we are, nevertheless, of the opinion that the corporation had no defense. The notes were executed by the officers of the corporation who had been accustomed to sign its notes, to wit, the president and treasurer. The money was borrowed for the corporation by its president. It went into its treasury, and was used for its benefit. Under these circumstances the notes were valid and enforceable. Kraft v. F. P. & P.Association, 87 N. Y. 628; Smith v. Martin A. F. C. Ileater Co., 47 St. Rep. 26; Bank of Attica v. Poitier & S. Manuf'g Co., 17 id. 327; Second Nat. Bank v. Pottier & S. Manuf'g Co., 18 id. 954; Chem. Nat. Bank v. Colwell, 29 id. 726.

Row, while the evidence justifies the decision of the trial court, we still think the judgment must be reversed, because of the refusal of the court to admit testimony offered for the purpose of showing the existence of a desire ón the part of certain officers of of the corporation to prefer these defendants. We find from the record that in a number of instances the plaintiff attempted to introduce testimony tending in that direction. This testimony consisted in part of conversations had between the witness and the president and vice-president of the corporation after the summons in each of the actions had been served, but before the entry of the judgments. At these interviews the fact that the summons had been served was discussed, and the plaintiff offered to show that at one of them the president of the corporation, .and the husband of one of the judgment creditors, in the presence of his counsel, .and witness and his counsel, produced a paper writing which the witness was requested to sign, which purported to secure a preference for Mrs. De Riesthal. That the paper related to the settlement of the . business of ¿the A. De Riesthal Company, and contained a condition that Mrs. De Riesthal should be preferred for $6,000. As the president then had in his possession a summons, which had been served upon the proper officer of the corporation, in an action to recover $8,000 brought by Mrs. De Riesthal, the fact, if fact it was, that the president of the corporation was attempting to secure a settlement of the business affairs of the corporation with the creditors, on a basis which should secure to her a preference of $6,000, would seem to furnish some evidence, at least, that certain of the officers of the corporation desired to prefer Mrs. De Riesthal. Objection was made to the admission of this testimony, on the ground that the defendants Bowers and Mrs. De Riesthal were not present at such interviews. On this ground the evidence was excluded. Evidence of a like character, and tending in the same direction, was frequently brought to the attention of the court, but it was excluded on the same ground. We need not refer to it, as that to which we have already alluded is sufficient to present the question. If it were necessary, in order to support a judgment invalidating a judgment suffered by an insolvent corporation, that a conspiracy should be proved to have existed between the creditors,and the officers of the corporation, there would be force in the objection made by counsel for the defendants on the trial ; but, as we read the statute, it is sufficient to invalidate the judgment if the corporation suffered it to betaken with the intent of giving preference to such creditor. That the mere fact that the officers of the corporation do not oppose the creditor in his effort to get the judgment, but remain passive, is not alone sufficient to require the inference that the judgment was suffered with the intent of giving such creditor preference. But the inference may be supported on additional evidence of an affirmative character, tending to-show the existence of such a desire on the part of the officers of the corporation having knowledge of the situation. Evidence tending to prove such a desire on the part of the officers may consist of acts done or words spoken under such circumstances as manifest a wish or plan to effectuate a preference in behalf of the prosecuting creditor. Of such a character was the evidence rejected by the court, and the exception taken to its exclusion calls for a reversal of the judgment.

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

All concur.


author: Parker,

text:
    James J. Ward, App’lt, v. Metropolitan Elevated Railway Company et al., Resp’ts.

      (Supreme Court, General Term, First Department,

      Filed December 14, 1894.)

    1. Release—Basements—Record.
    A release, by an abutting owner, of an elevated railway company from all causes of action for the construction and operation of its road, need not be recorded as against a subsequent grantee of the lot.
    2. Same—Notice.
    The operation of the road in the street puts a purchaser on inquiry as to-the right to such easements.
    3. Same—Possession.
    Possession by a third person is notice to the grantee of any claim which the former may have, though his possession originated in a trespass.
    Appeal from a judgment dismissing the complaint upon the merits.

      Eugene D. Hawkins, for app’lt; Julien T. Davies, for resp’ts.
   Parker,

August, 1889, nearly eleven years after defendants’ elevated railroad was open for traffic, Johanna Leipziger, who was then the owner of the premises in question, together with her husband, executed and delivered to the defendants, for a consideration of $3,300, an instrument in writing under seal, conveying and releasing to defendants the easements or property rights appurtenant to said premises taken by the maintenance and operation of said railroad, releasing defendants from all causes of action,, past and future, for such maintenance and operation, and- consenting to the perpetual maintenance and operation of said railroad in front of said premises. This instrument has never be recorded. In January following, Johanna Leipziger, by full covenant warranty deed, conveyed said premises to the plaintiff without reservation or reference to the previous release given to the defendants. This deed was duly recorded. Plaintiff contended upon the trial that within the provisions of the recording Á •deed from Leipziger was entitled to priority over defenc previous unrecorded release from the same source of title. trial court held, under the authority of While v. Man. Ry. 139 N. Y. 19; 54 St. Rep. 409, that by the release these defendants acquired title to the easements which were, prior to that time, vested in the owner of the premises, and that thereafter said easements were no longer an appurtenance to the premises owned by Leipziger. We think the decision in White’s Case fully supports the conclusion of the trial court. But, if the instrument from Leipziger to defendants be regarded as a grant of real estate, plaintiff is not helped by the statute which he invokes. It reads : “ Every conveyance of real estate within this state hereafter made shall be recorded in the office of the clerk of the county where such real estate shall be situated ; and every such conveyance not so recorded shall be void as against any subsequent purchaser in good faith and for a valuable consideration of the same real estate, or any portion thereof, whose conveyance shall be first duly recorded."

How, the difficulty with plaintiff’s position is that he saw the defendants in the open and visible possession of the easements at the time of his purchase, without taking any steps, so far as the record discloses, for the purpose of ascertaining by what title they held possession, and therefore he was not “ a purchaser in good faith,” within the meaning of the recording act. Under that act, registry and possession each constitutes constructive notice which puts a party upon inquiry, and charges him with notice of every fact to which inquiry would reasonably have led. Hence, where one is in actual possession under an unrecorded deed, he is protected against a subsequent purchaser who records his deed, because it was the duty of the purchaser to inquire as to the rights of the person in possession. Tuttle v. Jackson, 6 Wend. 226. In Phelan v. Brady, 119 N. Y. 587 ; 30 St. Rep. 256, which was an action brought to foreclose a mortgage upon certain premises given by M., who held an apparently perfect title, it appeared that before the execution of the mortgage M. had conveyed the premises to the defendant, who was in possession, and with her husband occupied two rooms in the premises, which consisted of a tenement building or block containing forty-three rooms or apartments, then occupied by twenty different occupants or families, as tenants from month to month. In affirming the judgment which dismissed the complaint the court said:. “ It may be true, as argued by plaintiff’s counsel, that when a party takes a conveyance of property situated as this was, occupied by numerous tenants, it would be inconvenient and difficult for him to ascertain the rights or interests that are claimed by all or any of them. But this circumstance cannot change the rule. Actual possession of real estate is sufficient notice to a person proposing to take a mortgage on the property, and to all the world, of the existence of any right which the person in possession is able to establish.”

The necessary inference from the language which we have quoted is that the duty of inquiry put upon an intending pur-

chaser will not be fully satisfied by anything less than an inquiry of the occupant himself touching his title and interest. Easements capable of' physical examination are embraced within the recording act, and necessarily subject to-the same law of notice as conveyances of a fee. Snell y. Levitt, 39 Hun, 228. In several decisions affecting easements occupied by the elevated railroad, it has been asserted that the law of notice is applicable. Mitchell v. Met. El. Railway Co., 56 Hun, 543 ; 31 St. Rep. 625, and Id., 134 N.Y. 11; 45 St. Rep. 318. In Mitchell's Case the general term said:

“The plaintiff in this case took no means whatever of ascertaining upon what claim the" elevated railway company based its right of possession, and, unless such means were used, they could not possibly be considered as not haying notice of whatever claim the defendants might be able to assert.”

In the court of appeals it was said :

“ The defendants’ possession of the easements gave notice to all the world of a claim of right in respect thereto, so as to put all persons on inquiry.”

The appellant contends that the possession openly and visibly maintained by the defendants for six years was that of trespassers, and as thereafter their possessions continued, apparently, openly, and visibly in the same way, plaintiff had the right to assume that the possession of the defendants at the time plaintiff took his deed was of the same character as that maintained by them at the beginning, and therefore he was excused from inquiry. It might be said that the record contains no evidence that the plaintiff indulged in any assumptions whatever with reference to the character of defendants’ possession when he purchased the property. It does not appear that he personally knew that the possession of the defendants was ever wrongful. But assuming that he did know it, and that he indulged in the assumption that defendants’ possession continued to be wrongful, the question would be whether he could safely so assume. We think not. An intending purchaser may know that the occupant of the premises entered into possession under a lease ; but it will not avail him to assume that he continued to occupy as a tenant if, in the meantime, the character of his occupancy underwent a change, and he became the owner of the fee. There does not seem to be any better reason for assuming that the possession of a trespasser will not be changed in character in the course of time. The courts do not presume that a party who is once a trespasser is always a trespasser. In Uline Railroad Co., 101 N. Y. 126. Judge Earl, speaking for the court, says:

“ I think it quite absurd and illegal to assume that a wrong of any kind will forever be continued, and that the wrongdoer will not discontinue or remedy it.”

In Pappenheim’s Case, 128 N. Y. 436, 40 St. Rep. 445, the court, through Peckham, J., says:

“ The law says their [the defendant railroad companies’] action cannot be regarded as a permanent trespass, for the very reason that it is unlawful, and the law will not presume that an unlawful act is to be continued forever.”

And in Galway v. Met. El. Railway Co., 128 N. Y. 132, 40 St. Rep. 145, Buger, C. J., says:

“ The plaintiff had reason to suppose the defendants would discontinue their trespasses, or, if they were continued, they would resort to legal means to justify them. They had no reason to believe that the defendants deliberately intended to proscute their enterprise altogether regardless of the legal rights of others.”

If the law will not presume that the wrongful possession continues, there is no basis whatever for the distinction for which the appellant contends; and, while the appellant may regard the failure of his speculation as unfortunate, it is not unfortunate in that broader sense which the law has in view in establishing legal rules by the application of principles which shall result to the general public good rather than that of the individual, for if it were to be held that possession of the easements by the elevated railroads constitutes an exception to the general rule that possession puts a would-be purchaser on inquiry as to the title and right of the occupant, confusion and uncertainty would result—the very thing which the law abhors. In some cases subsequent purchasers with prior titles would recover ; in others, like White's Case, supraT fail. Because of the rule established in the White Case, if there were no other reason, the courts would hesitate before reaching the conclusion that the exception to the general rule for which appellant contends should be created.

The judgment should be affirmed, with costs. All concur.