author: Barker, J.:

text:
    THE PEOPLE OF THE STATE OF NEW YORK ex rel. EDWIN A. NASH, Surrogate of the County of Livingston, Appellant, v. JAMES FAULKNER and HENRY J. FAULKNER, Survivors of SAMUEL D. FAULKNER, Deceased, Respondents.

      Surrogate’s bond — right of the people to bring an action thereon against the mreties thereto — liability of surrogate to account for moneys received by him — what facts arre required to excuse his failure to pay the same over to the person entitled thereto.

    In 1878 one Finley, a resident of Livingston county, died intestate, and thereafter administrators of his estate were duly appointed hy the surrogate of that county. Subsequently a parcel of real estate situated in that county, and of which he had died seized, was sold upon the foreclosure of a mortgage, and the surplus moneys arising upon the sale were paid first to the county treasurer and thereafter, in pursuance of an order made upon the application of the administrators, to the surrogate. Thereafter, upon an application by the administrators for leave to mortgage, lease or sell another parcel of real estate left by Finley in that county, an order was made hy the surrogate directing it to he sold, and subsequently the proceeds arising upon that sale were paid to the surrogate. Pending proceedings instituted hy the administrator for the purpose of distributing the said moneys among the persons entitled thereto, and before the claims of the various creditors of the estate had been finally determined, the surrogate, on August 9, f 878, died.
    The relator, the present surrogate, having demanded payment of the moneys so deposited with his predecessor from the latter’s administrators, and payment thereof having been refused, brought this action in the name of the people against the sureties on the official bond of the deceased surrogate.
      Held, that the people were entitled to maintain the action under section 449 of the Code of Civil Procedure, as the trustees of an express trust.
    Upon the receipt of the said moneys, the surrogate deposited them with one Cone, a private banker doing business in the village where the office of the surrogate was located, and received a certificate of deposit therefor, payable to his own order as surrogate, with interest at five per cent if the moneys were allowed to remain for a specified time. Cone failed and made a general assignment in November, 1877. Upon the trial of this action the court found that Cone was a banker in good standing and credit, doing a general banking business at Geneseo; that the several deposits of money so made as aforesaid were made in good faith and with the intention of benefiting the creditors of the estate of Finley, and that the surrogate had no knowledge of the insolvency of Cone before his failure and assignment.

      Held, that this finding did not relieve the surrogate or his sureties from the obligation imposed by his bond, to account for and pay over the moneys.
    To constitute a defense it should at least be shown that in the management of the fund the surrogate had acted without fault, and that he had been free from all negligence. (Per Barker, J.)

      It seems, that as the obligation imposed upon the surrogate and his sureties by his bond is assumed in compliance with a legal requirement exacted by the State from a public officer, nothing will excuse its performance but a loss or destruction of the money which may have come to his hands by the act of God or the public enemy. (Per Barker, J.)
    Appeal from a judgment, entered upon a decision at Special Term, dismissing the plaintiff’s complaint.
    Samuel D. Faulkner was surrogate of Livingston county during all the time mentioned in the proceedings had in the surrogate’s ■court for that county which, are involved in this action. He died in office on the 9th day of August, 1878. Samuel Finley, a resident of that county, died in 1876, seized and possessed of two parcels of real estate situated in that county, and administrators on his estate were duly appointed and entered' upon the discharge of their duties. At the time of the death of Finley there was a mortgage upon one of the said parcels of his real estate, and thereafter such mortgage was foreclosed by action in this court, and the surplus moneys, amounting to $1,657.16, were paid to the treasurer of Livingston county. Afterwards, and on the 22d day of June, 1876, on the application of the administrators, an order was made directing the treasurer to pay the same to the surrogate, and on the same day they were paid over to the surrogate, who deposited $1,212.90 of such , moneys with James J. Cone, a private banker, doing business in tbe village of G-eneseo, where the office, of the surrogate is located, and received a certificate of deposit therefor, payable to his own order as surrogate on demand, with interest at five per cent if the funds remained on deposit until the first day of December following. On the 24th of July, 1876, the administrators of Finley instituted proceedings by petition before the surrogate praying for authority to mortgage, loan or sell the other parcel of real estate for the payment of the debts owing by the estate. Such proceedings were had in the matter that, prior to the 9th day of April, 1877, such real estate was sold, the .sum realized therefrom being $1,591.50, which was also on that day deposited with the same-private banker to the credit of the surrogate, with five-per cent interest if the moneys remained on deposit for three months. On the sixteenth day of April following, on the application of the administrators, further' proceedings were had before the surrogate for the purpose of distributing the moneys derived from the real estate among the persons entitled thereto, and in June following various claims of creditors of the estate of Samuel Finley were established in said proceedings before the surrogate, and such proceedings were then and thereafter from time to time adjourned, upon the application. of various creditors of said estate, to enable them to prove their claims, and such proceedings were pending and undetermined at the death of the late surrogate, and since his death no other action has been had therein in said surrogate's court. That on or about November 1, 1877, the said James J. Cone, who, up to that time, had remained a banker in good standing and credit, made an assignment of all his property for the benefit of his creditors, and his estate was then discovered to be, and was, largely insolvent. On the 1st day of November, 1877, Faulkner died intestate, and letters of administration on his estate were issued to Henry J. Faulkner and James D. Faulkner, these defendants, who were also sureties on his official bond. The relator, Edwin A. Nast, is the incumbent in the office of surrogate, and as such demanded of the administrators of his predecessor payment to him of the funds mentioned. This being refused, this action was commenced against the defendants as sureties on the official bond of the deceased.
    The plaintiff’s complaint was dismissed, with costs, and from the judgment the plaintiff-appeals.

      James Wood, for the appellant.

      Faulkner dc Bissell, for the respondent.
   Barker, J.:

At the time of the death of the late surrogate, as well as at the time of the commencement of this action, the only persons having any legal or equitable title to the funds derived from the sale of the real estate sold in pursuance of the order of the surrogate, were the creditors and heirs-at-law of Samuel Finley. The same persons have a like interest in the surplus moneys, subject, however, to such liens thereon as may exist in favor of any incumbrances subsequent in point of time to the mortgage which was foreclosed. The legal custodian of such funds is the present surrogate, the representatives of the late surrogate having neglected to pay over the same to the incumbent. This action is brought against the defendants, the sui’eties on his official bond, to recover the funds thus withheld. The trial court held that the action cannot be maintained in the name of the people as plaintiff, and upon this sole ground dismissed the complaint.

The proceedings to sell the real estate of the deceased were initiated under the provisions of the Revised Statutes prior to September 1, 1880, and are, therefore, excepted from the operation of the provisions of the Code of Civil Procedure relating to the sale of real estate of deceased persons for the payment of their debts. (Sec. 3347, subd. 11.)

The proceedings were in all respects regularly conducted up to and including the payment over of the money derived from the sale by the administrators to the then surrogate. Thereafter further proceedings were had in the matter, with a view of distributing the same among .the creditors of the deceased and his heirs-at-law, and before any final order was made passing upon the claims of creditors, the late surrogate died, and since then no other steps have been taken in the matter.

Until the claims of creditors are finally passed upon and a record made of the same, and the amounts due each creditor ascertained, there can be no order or decree of distribution made as required by the statute. On perusing the statute it will be observed that where a sale of the premises has been ordered, and has actually taken place, the administrators are required' to bring the avails derived from the sale into the office of the surrogate for the purpose of distribution, and to be retained by him for that purpose. (2 It. S., 106, § 35.) The surrogate is not authorized to make a distribution of the moneys arising from the sale, to and among the credi tors whose claims were passed upon and adjudged valid on the hearing had in the earlier part of the proceedings, with a view of determining whether it was necessary to lease, mortgage or sell the real estate of the deceased to pay his debts, as provided by section 13. (Id., p. 102.) If a sale is not ordered,but the premises aré required to be mortgaged or leased to secure the necessary sum to pay the debts, then the money realized by such mortgage or lease is not brought into the Surrogate’s Court at any time, but the same is to be paid over by the administrators to and among the creditors whose debts were passed upon and established on granting the order for making the lease or mortgage. (Secs. 21, 22, 35, Id., pp. 103,104, 106.) In cases of sale of the premises then it becomes necessary that further steps be taken to ascertain who are the creditors having claims on the estate of the deceased, and the list of creditors made and recorded by the surrogate on the prior hearing is to be regarded as correct and cannot again be controverted, unless upon newly discovered evidence. (Secs. 38, 39,40,41, 42, Id., pp. 106,107.) After the surrogate has paid all the charges and expenses incident to the sale, and has satisfied the widow’s right of dower, if one exists, the balance of the fund is to be divided to and among the creditors and the heirs-at-law of the deceased according to their respective rights and interests. (Secs. 36, 42.)

This reference to the statute has been made with so much particularity with a view of having it appear in this connection, that neither the creditors nor heirs-at-law have a legal title to any fixed or definite portion of the fund derived from the sale, so that either of them could maintain a suit at law in his own name, on the official bond of the surrogate, and recover damages for an ascertained sum. The claimant must establish his debt in the Surrogate’s Court in the mode and manner and within the time fixed by the statute, befoi'e he can maintain an action in another tribunal and recover a share of the fund.

As to the surplus moneys realized on the mortgage sale, they on being paid into the Surrogate’s Court, were subject to like distribution to and among the parties entitled thereto, in the same manner as the moneys derived from the sale of the real estate.. (Chap. 170, Laws of 1870.)

As both funds were in .the hands of the late surrogate at the time of his death, this action was properly brought in the name of •the people as the trustee of an express trust, as permitted by section 449 of the Code of Civil Procedure.

Before a surrogate enters upon the discharge of his official duties he is required to give a bond, with two sureties, running to the people, “ conditioned for the faithful performance of his duty and for the application and payment of all monies and effects that may come into the hands of such surrogate in the execution of his office.” (2 R. S., 382, § 87, m. p.) The purpose of exacting from the surrogate a bond of this nature is to indemnify all persons against loss, which otherwise might happen by the official misconduct of the surrogate. Individuals having a pecuniary interest in the honest and faithful performance of the official duties of a surrogate have no right to demand security for their protection. All moneys collected on the official bond, in an action in the name of the people, is for the benefit of the persons entitled to indemnity, and is, as a matter of course, when collected, ordered by the court to be paid over to such persons, when their interests are ascertained, or to the incumbent of the office for his official administration. The form and condition of the undertaking, as well as the object and purpose of the same, brings the case within the letter of the statute, which is worded, viz.: “A person with whom or in whose name a contract is made for the benefit of another is a trustee of an express trust, within the meaning of this section.”

The creditors and heirs-at-law are entitled to all the moneys which came to the hands of the late surrogate belonging to the estate of Finley. They are the eestuis que trust, for whose benefit the people hold the bond given for the faithful discharge of his duties. This provision of the Code, concerning parties to actions, should receive a broad and liberal construction in all instances where the action is founded on an official bond to recover money for the benefit of those who are entitled thereto.

The coven ants contained in the bond are to and with the people. A recovery in this action of a sum equal to the amount of the sum belonging to the estate of Finley, which the late surrogate received and which has not been accounted for, would be in strict conformity with the letter of the undertaking. It has been frequently adjudicated that bonds running to the people, executed by the obligors for the benefit of others, may be prosecuted in the name of the people as the trustee of an express trust, without joining the person for whose benefit the action is prosecuted.

In the case of The People v. Norton (5 Seld., 176), a bond was given by a trustee in the matter of a private trust, running to the people, and in an action against the sureties on such bond to recover moneys misappropriated, by the trustee, it was held that the action was properly brought in the name of the people and was authorized by section 113 of the old Code, the provisions of which are exactly the same as those of section 449 of the present Code.

In People v. Townsend (37 Barb., 520), the action was against the sureties, on an administrator’s bond, and the sum recovered was the sum which had been previously decreed by the surrogate to be paid by the administrator on his final accounting, and it was held that the action was properly brought in the name of the people.

The statutes require an administrator’s bond to be “ conditioned that such administrator shall faithfully execute the trust reposed in him as such, and also that he shall obey all orders of the surrogate touching the administration of the estate submitted to him.”

In the case last cited by the final decree the balance found for distribution was a very large amount, aud the same was directed to be paid to and among several persons entitled thereto, and the particular sum given to each was fixed and determined by the decree, and the whole sum was ordered to "be distributed., These cases have never been overruled so far as I can discover, but have been frequently referred to with approval. (See Cridler v. Curry, 66 Barb., 336; Dayton v. Johnson, 69 N. Y., 428; People ex rel. Becar v. Struller, 16 Hun, 234; People v. Groat, 22 id., 166.)

In the case before us the present surrogate is the proper custodian of the fund, the corpus of which cannot be immediately paid over to any of the claimants. It must be kept and cared for until some future time, when in the course of due procedure it should be distributed among the real owners. A recovery in this action will result in restoring the fund to the proper custodian, for the benefit of the beneficiaries, and will bar any action which may be brought by them, or either of them, on the official bond of the late surrogate, founded upon the breach of duty set forth in the complaint in this action.

It was held by the learned judge at Special Term, that the right of action under the provisions of the present Code (§ 1886) was limited to the person injured by the default or misconduct of the surrogate in office. This provision is not new in any sense, and is but a re-enactment of certain provisions of the Revised Statutes on the same subject found in sections 19 and 20, 2 Revised Statutes, marginal page 479.

The phrase in the Revised Statutes, “ the party aggrieved thereby may apply to the Court of Chancery for leave to prosecute the official bond,” and the one “ the person injured thereby may apply for leave to prosecute the delinquent’s official bond,” have the same meaning and is a change of verbiage only and not of substance.

There is no provision of law prohibiting actions being prosecuted in the name of the people on official bonds or limiting the right of recovery thereon, to parties injured by a breach thereof. If funds in the custody of a surrogate are lost or misapplied by his negligence or malfeasance, the remedy upon his official bond should not be suspended to await the determination of other proceedings, pending or to be instituted with a view of determining the rights of claimants to the fund ; but there should be a prompt and vigilant pursuit of the defaulting officer and his sureties for the benefit of those having an interest in the same. Cases may arise where claimants to the funds are unknown, and it would be a reproach to the laws if' dishonest and corrupt-officials could not be prosecuted and compelled to account for misapplied moneys, until such parties appear and establish their title.

As we hold that this action is properly brought in the name of the people, the defense interposed as a bar to a recovery must be examined, although the trial court dismissed the complaint, upon the sole ground, that the plaintiff had failed to establish a cause of action.

The appeal book does not contain any of the evidence ; the case states that proofs were given, tending to establish all the facts set forth in the decision of the court. In disposing of this question we shall confine our examination to the subject of the surplus moneys arising on the sale in the foreclosure suit. The money realized on the sale of the lands ordered by the Surrogate’s Court was, in the first instance, paid over to the then acting surrogate, the district attorney for Livingston county, and the certificate of deposit which is mentioned in the statement of facts was issued to him, and made payable to his order as acting surrogate, and by him indorsed and delivered to the surrogate on his assuming the duties of his office. The findings of fact on this subject by the trial court are so stinted, and as the legal questions involved do not appear to have been specifically passed upon, the question of the surrogate’s liability for the loss of these moneys can with propriety, be deferred for consideration on the trial to be ordered.

The defendants’ claim that upon the facts as found and set forth in the decision, a perfect and legal defense was made out and their principal was exonerated from all liability on account of the loss of the funds. It is argued in support of this proposition, that the .liability of the surrogate for the loss of the money in his custody is to be measured by the rules of law applicable to a case of loss of property by a trustee or bailee, and that he is only chargeable for his own negligent and careless acts or malfeasance in office. This in substance is the rule of the common law in determining the liabilities of public officers for breach of official duty.

In United States v. Thomas (15 Wall., 337), the learned judge who prepared the opinion of the court states the rule as follows, viz : “ The general rule of official obligation, as imposed by law, is that the officer shall perform the duties of his office honestly, faithfully and to the best of his ability. This is the substance of all official oaths. In ordinary cases to expect more than this would deter upright and responsible men from taking office. This is substantially the rule by which the common law measures the responsibility of those whose official duties require them to have custody of property, public or private. If in any case a more stringent obligation is desirable, it must be prescribed by statute or exacted by express stipulation.” (Story on Bailments, 620.)

If this rule be accepted as the measure of the obligations of the late surrogate concerning the loss of funds, then on the facts as found no defense is established. The finding on the subject is this' and no more, that Cone was a banker in good standing and credit, doing a general banking business at G-eneseo; that the .several deposits of money so made as aforesaid, were made in good faith and with the intention of benefiting the creditors of the estate of Finley, and that the surrogate had no knowledge of the insolvency of Cone before his failure or assignment.

The default of the surrogate having been fully established, the burden of proof was cast on the defendants, to establish that the loss of the funds occurred under such circumstances as to exempt their principal from liability; that he had acted in the management of the fund without fault and was free from all negligence. No such fact is found, nor any which in legal effect is the equivalent of such a finding.

Persons in a private or official capacity may act in entire good faith and with a purpose of benefiting those to be affected by their acts, and yet be guilty of negligence and carelessness in the performance of the act in question. Where the interests of parties depend upon the intelligent, cautious and vigilant action of another, who holds towards him the relation of trustee or bailee, the latter, in case of loss or destruction of property while in his custody, cannot escape liability to the injured party by the plea that he acted in good faith.

The defendants’ liability is not, however, limited by. the rule of the common law, but is fixed and measured by the condition of their bond, which is, “ that their principal will faithfully perform the duties of his office and make application and payment of all moneys and effects that may come to his hands in the execution of his office.” This is a positive and unequivocal promise made by the defendants as obligors, mentioned in a bond, that the surrogate shall pay over all moneys -which may come into his custody in his official capacity. This obligation was assumed in compliance with a legal requirement exacted by the State from a public officer, and nothing will excuse its performance but a loss or destruction of the money which may have come to the hands of the surrogate by the act of God or of the public enemy. (U. S. v. Prescott, 3 How. [U. S.], 578; U. S. v. Morgan, 11 id., 154; U. S. v. Dashiel, 4 Wall., 182; U. S. v. Thomas, 15 Wall., 337; State v. Harper, 6 Ohio St., 607; Muzzy v. Shattuck, 1 Denio, 233; Inhabitants of Hancock v. Hazzard, 12 Cush., 112.)

New trial granted, with costs to abide the event.

Smith, P. J., and Hardin, J., concurred in the result.

Judgment reversed and new trial ordered, costs to abide event.


source: Caselaw Access Project

license: Public Domain

text:
    MERCY T. ROSS LEWIN, Respondent, v. WILLIAM W. WRIGHT, Appellant.

      Amendments — a new pa/rty may he made a defendant after a demurrer alleging a defect of parties defendant has been interposed — Code of Oiml Procedure, sec. 728.
    In this action brought against the defendant Wright upon an undertaking upon whch he was liable, jointly with one Doyle, the objection that Doyle was not made a party was raised by a demurrer. Thereupon the plaintiff moved for and obtained an order allowing him to amend the summons and complaint by making Doyle a party to the action.

      Held, that the order was properly granted.
    That the fact thatlthe action was brought and the order made in a CountyiCourt, and that it did not appear from the papers that Doyle was a resident of that county, did not render it improper for the court to grant the order.
    Appeal from an order of tlie Onondaga County Court granting permission to the plaintiff to amend the summons and complaint by adding the name of another person as defendant.

      Hancock da Munro, for the appellant.
    Hunt, Leavenworth da Stern, for the respondent.
   Barker, J.:

The action is founded upon the joint undertaking of the present defendant William W. Wright, and of Edward B. Doyle, who by the order is made the additional defendant. The instrument is set out in full in the body of the complaint. ■

The defendant interposed a demurrer, upon the ground that there was a defect of parties defendant, and that Edward B. Doyle should have been made a party. Thereupon the plaintiff made a motion for leave to make Doyle a party defendant, and that the summons and complaint be amended accordingly. The relief asked for was granted on payment of ten dollars costs of motion. The cause of action set forth in the complaint existed against Doyle as well as against the defendant Wright, and without the consent of the latter, there could be no recovery against him as sol e defendant. The motion was founded upon section 7i¡3 of the Code of Civil Procedure, which provides, viz.: The court may, upon the trial, or at any other stage of the action,- before or after judgment, in furtherance of justice, and on such terms as it deems just, amend any process, pleading or other proceeding by adding or striking out the name of a person as a party, or by correcting a mistake in the name of a party.” The power to allow the amendment is complete, and in this stage of the proceeding it was manifestly in furtherance of justice. Without bringing in Doyle as a party defendant, the plaintiff must have been defeated in the action, and why should he be when, by a rigid rule of law, he cannot recover in an action founded upon the contract, unless both of the joint promisors are made parties. When a motion is made to the court, the only restraint upon the power of the court to allow an amendment of this nature is, that sound-discretion be used in view of the facts and circumstances of the particular case. I am unable to find any reported case holding that the court is without authority, in a case like this, to bring in a new party.

In New York State Milk Pan Association v. Remington Agricultural Works (89 N. Y., 22), the Court of Appeals say: Full authority is conferred (on the court, under section 723) for adding or striking out the name of a person or a party, or correcting a mistake in such name.” We are cited to Newman v. Marvin (12 Hun, 236) as an authority that the court, under the provisions of the old Code, was without power to authorize an amendment of the summons by adding the name of a new party. A careful reading of that case will indicate that the precise question now before us was not then under consideration. Some suggestions were made, in the opinion of the court, that where a party could not recover in an action without bringing in new parties, it would be equivalent to the commencement of a new action; but the court reserved a decision on the question and made the suggestion that cases might arise where the court, in its discretion, would allow an additional defendant to be brought in on such terms as might be just. The doubts of the court, as expressed in that case, are removed by the more explicit terms of the present Code and the decision of the court in 89 N. Y. {supra).

The appellant also makes the point that as it does not appear in any of the papers used on the motion that Doyle, the new party, resided in the county of Onondaga, the court could not acquire jurisdiction over Ms person, and for that reason the motion should have been denied.

The question of jurisdiction thus presented is personal to Doyle himself, and if he is not a resident of that county he may elect not to raise the question, if the plaintiff , succeeds in procuring a service of the summons. If that question can at any time or in any form be made by the defendant Wright, he is not deprived of the privilege so to do at any time hereafter. The order should be affirmed. As the County Court was very liberaljtoward the plaintiff as to the terms upon which the amendment might be allowed, and we have the power to modify the order in that respect, instead of doing so and increasing the costs to be paid as a condition of the amendment, we shall not allow the respondent costs on affirmance of the order.

Smith, P. J., and Hardin, J., concurred.

Order affirmed, without costs.


text:
    CHARLES F. KINGSLEY, as Receiver of the URBANA COMPANY, Appellant, v. THE FIRST NATIONAL BANK OF BATH and Others, Respondents.

      Insolvent manufacturing corporation— an offer by the company to allow a judgment to be taken against it, is an unlawful transfer of its property under Revised Statutes, part 1, chap. 18, tit. 4, sec. 4 — when a stockholder and director cannot entera judgment against it— a corporation may enforce a claim due to it although some of its officers could not enforce claims due to them individually from the same debtor.

    Prior to November, 1880, tbe Urbana Wine Company, a corporation formed under tlie general act cf 1848, was insolvent, and it continued so to be until January 25, 1881, when the plaintiff was appointed receiver thereof. November 22, 1880, a national bank commenced an action against the company by the service of a summons and verified complaint, and thereafter and on January 12, 1881, a judgment by default was entered against it, upon which an execution was on that day issued and a levy was made upon certain personal property belonging to the company. December seventeenth another action was commenced against the company by one Higgs, who was a stockholder in and director of the company, and thereafter and on January twelfth a judgment was entered therein by default and a levy made upon personal property of the company under an execution issued on that day upon the judgment. On December 80, 1880, one creditor, and on January 12, 1881, two other creditors, commenced actions against the company, in each of which actions a judgment was entered on January 12, 1881, under an offer duly made, in pursuance of a resolution adopted by the executive committee of the company, by an attorney who had appeared for it. Executions were issued on each of the said judgments on the day it was entered, and levies were made upon the company’s personal property thereunder. The claims for which the said judgments were recovered were all bona fide ones*and justly duo, and the company had no defense to interpose thereto and no means of delaying the entry of the judgments after the time for it to answer had expired.
    This action was brought by the receiver to have all the said judgments and the liens acquired by the executions issued thereon vacated and set aside as to him, and the property levied upon distributed pro rata among the company’s creditors.

      Held,, that the judgment iecovered in the action commenced by the national bank in November, and the lien acquired by the execution issued thereon, were valid 'as against the company and the receiver, as the company in no way aided or assisted in its recovery and could not have postponed or prevented its entry. •
    That the company by offering to allow judgments to be taken against it in the other actions, before its time to answer therein had expired, in effect transferred and assigned its property, in contemplation of insolvency, in violation of section 4 of title 4 of chapter 18 of part 1 of the Revised Statutes, and that the judgments entered upon such consent were thereby avoided and rendered of no effect.
    That as Riggs was a stockholder in and a director of the company it was his duty to do all in his power to carry out the object and purpose of the law and secure equality of payment among the • creditors of the company; that the entry of the judgment by him in his own favor against the company and the levy made under the execution issued thereon was a violation of such duty and that the judgment should be vacated and annuled.
    That as the debt upon which the bank brought the first action was due to it in its corporate capacity, the judgment was not invalidated by the fact that Cook, who was its president, was also an officer and stockholder of the defendant, the wine company.
    Appeal from a judgment dismissing the complaint, entered upon the report of a referee.
    The plaintiff was appointed receiver of the Urbana Wine Company, an insolvent corporation, on the 25th day of January, 1881. On the 22d day of November, 1880, the defendant, the First National Bank of Bath, commenced an action against the Urbana Wine Company by the service of a summons and verified complaint on the general superintendent of the company. No defense was interposed to the action, and judgment by default was entered on the 12th day of January, 1881, at twenty minutes past eleven in the-forenoon of that day, for the sum of $25,317.17, and an execution was issued thereon and delivered to the sheriff of the county of Steuben at one o’clock in the afternoon of the same day.
    On the 17th day of December, 1880, Elisha Riggs commenced an action in this court against the said Urbana Wine Company, by service of a summons and verified complaint on its president. .No-defense was interposed, and judgment therein was duly rendered by default on the 12th day of January, 1881, at one o’clock in the-afternoon of that day, for the sum of $5,052 ; and at two o’clock in the afternoon of the same day an execution in due form of law was-issued on said judgment and delivered to the.sheriff of the county of Steuben to be executed. At this time said Elisha Riggswas one of the stockholders and directors of the wine company.
    On the 30th day of December, 1880, the defendant, William W. Allen, commenced an action against the said company by the service of a summons and verified complaint on the general superintendent of the company, and the 12th day of January, 1881, the company, by its attorney, made an offer of judgment in said action which was accepted, and on the same day, at five o’clock in. the afternoon, judgment was entered in such action for the sum of $5,019.59 damages, and an execution was duly issued thereon at seven o’clock in the afternoon of the same day and delivered to the sheriff of Steuben county to be executed.
    On the 12th day of January, 1881, the Eirst National Rank of Bath, commenced another action against the Urbana Wine Company, and the summons therein, together with the verified complaint, was served on the president, and on the same day the defendant, by its duly authorized attorney, made an offer in writing that the plaintiff take judgment therein for the sum of $3,858.59, and thereupon and on the same day the same was accepted by the plaintiff and judgment was entered in the action thirty-five minutes past four o’clock for that amount, and on the same day at seven o’clock and twenty minutes in the afternoon an execution was duly issued on said judgment and delivered to the sheriff of the county of Steuben to be executed.
    On the 12th day of January, 1881, the defendant, the Chemung Canal Bank, commenced an action in the Supreme Court against the said Urbana "Wine Company, and the summons and the verified complaint was served on the president that day; and on the same day the attorney for the defendant served an offer of judgment for the sum of $2,772.14, which offer was duly accepted by the attorneys for the plaintiffs therein; and on the same day judgment was entered for $2,790.31 damages and costs ; and at seven o’clock and twenty minutes in the afternoon of the same day, an execution was issued on said judgment and delivered to the sheriff of the county of Steuben to be executed.
    On the 13th day of January,-1881, the sheriff levied upon and took into his possession the personal property of the said Urbana Wine Company, none of which had been sold by the sheriff at the time of the appointment of the receiver in this action.
    After this action was commenced an order was made directing the sheriff to deliver the property to the receiver, and the latter to sell and convert the same into money and to bring the proceeds into court to abide the final judgment in this action.
    The receiver prosecuted this action for the purpose of having each of said judgments declared void as against the creditors of the company, and to secure an equal distribution of the avails of the property levied upon among all the creditors of such company.
    The action was tried before a referee who decided that each and all of said judgments were rendered upon a good consideration ; upheld the levies made by the sheriff by virtue of the several executions, and directed that the several judgments be paid out of the funds in the receiver’s hands, derived from the property seized by the sheriff by virtue of such executions.
    The plaintiff appeals from such judgment.

      J. F. Parhhurst, for the appellant.

      Reynolds <& Collins, for the Chemung Canal Bank, respondent.

      Miller <& Nichols, for the First National Bank, of Bath, W. W. Allen and the executors of Elisha Biggs, deceased, respondents.
   Barker, J.:

The Urbana Wine Company was a business and trading corporation, organized under the general law of 1848, and as such was empowered to hold real and personal property ; to contract debts and pay tlie same by an application of any of its assets in the usual and ordinary course of business. This company became insolvent prior to the commencement of any of the actions in which the several judgments set forth in the complaint, were recovered. It is admitted that the company was justly indebted to the several creditors in whose favor judgments were entered, and that there was no defense or offset thereto. The receiver, representing all the creditors of the company, insists that he is entitled to the avails of the property levied upon by the sheriff, that the same may be distributed to and among them as directed by the statute, for the reasons that the judgments and executions are void and a fraud upon the statute, the provisions of which are intended to secure equality among the creditors of insolvent corporations created by and under the laws of this State. The Revised Statutes provide, that it shall not be lawful for any incorporated company to make any transfer or assignment of its property or dioses in action, in contemplation of the insolvency of such corporation, to any person or persons whatever, and declares that every such transfer or assignment shall be utterly void. This restraint upon the action of insolvent corporations is a part of chapter 18, part 1, of the Revised Statutes, entitled, “ Of incorporations.” The fourth title of this chapter relates to and regulates the power and conduct of the directors, officers and agents selected to direct and manage the corporate business, and contains a code of laws for their government which cannot be disregarded with impunity, to the injury of those who are interested in their observance. The provisions of section four are intended to secure equality among creditors, and forbids all transfers that are intended to give preference, or which have that effect in reality. (Brouwer v. Harbeck, 9 N. Y., 589.)

"When a corporation becomes insolvent, dissolution generally follows, and the only means which creditors have to receive portions of their debts, is the right secured to them by the statute; to share in a prorata distribution of the assets of the company. The statute is exceedingly direct and plain on this subject, and does not tolerate any attempt to evade its provisions. The language is : “It shall not be lawful to make any transfer or assignment in contemplation of the insolvency of such company, to any person or per■sons whatever; and every such transfer and assignment to such •officer, stockholder or other person, o'r in trust for them or for their benefit, shall be utterly void.”

These proyisions are intended as a restraint qn the action of the directors and officers of the company and of them only. It is not the meaning and purpose of the statute to control or direct the action of creditors, who may seek to collect or secure payment of their debts against corporations. The steps which creditors may •or may not take, in an effort to secure payment of' their debts, is regulated by other laws and rules of procedure.

The executive committee, acting for and in the place of the board of directors, were instrumental in securing to the plaintiffs in such of the judgments as were perfected on consents, a preference over the other creditors of the company. It was not within their power as a board of managers to do a more effective act, with a view of securing priority of payment to this class of creditors. At that time, the company was without cash assets; its insolvency was fully established. The personal property owned by the company could not be readily converted into money. The only thing which the company could do to secure these particular creditors was to give them a lien in some way 01 form on its assets. If the company had attempted by a pledge or mortgage to secure a lien on the same, such transaction would have been in legal effect a transfer of the property and utterly void. The judgments confessed by the company are now sought to be used as the means of transferring the property levied upon for the benefit of the plaintiffs therein. There is no real distinction between a conveyance or transfer, directly from the corporation to its creditor, and one from the •sheriff by means of legal proceedings against its property. The sheriff. realizes the money by a sale of the property and hands the same •over to the creditor, with the consent of the debtor. In the eyes •of the law it is a sale, with the consent of the latter, for the purpose of paying his debt. A perfect levy upon property by execution, issued on a valid judgment, followed by a sale, is in every sense of the term a transfer of the property to pay the judgment.

In acquiring the lien now set up by the defendants, they had the •consent and active co-operation of the board of directors. Without •such friendly action these creditors would not have acquired the preference which they now claim, and which will be secured to them over the other creditors of the company if the judgments and the levies are upheld. The evidence is full to the point, that both debtor and creditor sought to secure the same end by the commencement of the actions and the offer of judgment. The purpose of all the parties participating in this transaction cannot be disguised. The concert of action between them is visible in every act which transpired, from the service of the summons and complaint, until the delivery of execution into the hands of the sheriff. At the time the resolution was passed by the executive committee, to make offers of judgments in the several suits, the large judgments in favor of the bank had been perfected, and an execution issued thereon, and placed in the hands of the sheriff. Each member of the committee knew these facts before they assembled to pass the resolution which secured to the plaintiffs in those actions the judgments which they respectively.sought to obtain. As soon as this action was taken by the committee, they, in a body, together with their attorney, convened in the law office of the plaintiff’s attorney, and there prepared the offers of judgment and received the acceptance of such offers. They must have been conscious that the judgments which they consented might be entered, would result in levies on the personal property of the company and be the means of a partial transfer of the same for the benefit of those particular creditors. It was the avowed object of the plaintiffs in the several judgments, and it is so averred in their respective answers in this action, that the purpose of commencing the actions was to enforce the collection of their demands out of the property of the company. It would be against the force of the evidence and all the probabilities of the case, not to believe that the officers of the company who consented -to the entry of these judgments were not aware of that fact. It is a case where the debtor has sought the creditor and volunteered assistance and taken active steps to secure payment of his debt in preference to other creditors.

The statute declares the assignment or. transfer void, in case the same is made in contemplation of insolvency. The question to be determined is not one of fraud, or of an intent on the part of the creditor to obtain a preference in the payment.of his debt; but the simple inquiry is, was there actual or contemplative insolvency and a transfer of property for the benefit of creditors. If both -these facts are established, then the transaction is void. (Brouwer v. Harbeck, supra; Harris v. Thompson, 15 Barb., 62; cited and approved in 33 N. Y., 96; Robinson as Receiver v. The Bank of Attica, 21 id., 406; Dutcher v. Importers and Traders' Bank, 59 id., 5 ; Bump on Fraudulent Conveyances, 256 ; In the Matter of Hurst, an insolvent debtor, 7 Wend., 239.)

The case of Duncombe v. N. Y., H. and N. R. R. Co. (88 N. Y., 1) cited by the defendants’ counsel in support of stheir views, is not in point, as it was there held that the corporation making the transfer was not at the time insolvent.

Neither is the case of Dutcher v. The Importers and Traders' Bank (59 N. Y., 5) an authority in support of th >, argument presented by the learned counsel for the respondent, as the cour there held that the payment made by the bank, although at the time insolvent,. was a transaction in the usual and ordinary course of business and before it had closed its doors or refused payment to any of its debtors. I am therefore of the opinion that the three judgments entered upon the offers of the company, together with the executions and levies thereunder, are absolutely void as against the claims made by the receiver to the funds in behalf of the other creditors of the company.

The judgment in fa-vor of Biggs is sought to be enforced by collecting the same out of the personal property owned by the company on the day the judgment was entered. As Biggs was a director and stockholder at the time the action was commenced and the levy made, his action in seeking to secure payment of his own debt in preference to other creditors is in violation of the provisions of the statute restraining transfers of property for the benefit of officers or stockholders. The provisions of the statute are: “ Whenever any incorporated company shall have refused the payment of any of its notes, or other evidences of debt,’in specie, or lawful money of the United States, it'shall not be lawful for such company or any of its officers to assign or transfer any of the property or choses in action of such company, to any officer or stockholder of such company, directly or indirectly, for the payment-of any debt, * * * and if such assignment or transfer be made, it shall be utterly void.” At the time of the commencement of the action the company had long refused and neglected to pay its debts, and was in fact insolvent. The debt held by Riggs himself, was past due, and because the company neglected to pay it, he had a right of action. The law presumes that he, as an officer of the company, knew that it was insolvent.

He, as a trustee having in charge the affairs of the company, was- in duty bound to do all in his power to carry out the object and purpose of the law, and secure equality of payment among the creditors of the company. To uphold the levy in his favor, and permit a sale of the property, with a view of realizing money to pay his debt, is indirectly a transfer of the property of the company for his own benefit, and is construed as illegal by the letter as well as the spirit of the statute. The statute does not prohibit the commencement of an action by a stockholder or officer of an insolvent company, for that may be necessary to secure an adjustment and liquidation of a disputed demand. It is an assignment or transfer of property, either directly or indirectly, in payment of a debt due a stockholder or officer, that the statute intended to prohibit. The statute is intended to' be a restraint upon the action of each individual officer, as well as upon the joint action of the several officers, acting collectively as a board of managers. The levy under the execution in this judgment should be held void, as a fraud upon the statute.

The judgment in favor of the First National Bank of Bath was for a just debt past due, and recovered in an action prosecuted in due form of law and by a regular course of procedure, and I am unable to discover any illegality in the steps taken to enforce its payment, and the lien created on the personal property by the levy under the execution should be upheld. Thei’e was no defense which the officers could properly and justly interpose to delay the entry of judgment. It is quite apparent that the executive officers of the company were willing that the bank should secure a lien upon the property, and by that means secure preference in payment over other creditors. If the officers of the company could have prevented the entry of a judgment, or the levy under, the execution issued thereon, by any action on their part, and omitted to do so, and thus by their passive assistance aided the bank in securing a lien and a preference, then a very serious question would have been presented as to the validity of the lien as against the rights of the other creditors. They could not have made a valid general assignment of the property and assets of the company, with a view of securing equality of payment to its creditors. Such action would have been void, as all transfers of insolvent corporations are prohibited. (Harris v. Thompson, 15 Barb., 62; cited, 33 N. Y., 96.)

The directors could have instituted proceedings under the statute concerning the voluntary dissolution of corporations, but before a receiver could have been appointed by due course of procedure, the bank would have been entitled to judgment and execution thereon and thus secured the same priority and preference. (In the Matter of Waterbury, 8 Paige, 380; In the Matter of the French Mining Co., 12 Hun, 488; Sands v. Hill, 55 N. Y., 18.)

When proceedings are instituted on the petition of the officers of a corporation for its dissolution, there is no power in the court restraining creditors from prosecuting demands against the company to judgment. That power is limited to cases where the action is prosecuted in the name of the people by the attorney general or by a judgment creditor. (Code Civil Pro., § 1806.)

As this company was not a moneyed corporation, section 9, article 1, chapter 18, part 1, of the Revised Statutes, relating to the insolvency of moneyed corporations and to secure the rights of their creditors and stockholders, is not applicable. This was so held in the case of Robinson v. The Bank of Attica (21 N. Y., 406).

The debt embraced in the judgment recovered by the bank was due it in its corporate capacity, and the circumstance that Cook, who was president of the bank, was also an officer and stockholder in the wine company, does not render the execution issued thereon illegal and void, as being an indirect transfer of the property of the company for the benefit of its officers and stockholders. The money which may be collected upon the judgment may never come to the hands of the stockholders of the bank, as it may be required to pay its own obligations.

The judgment should be so modified as to comply with these views, and as modified affirmed, with costs of this appeal to the receiver and the First National Bank of Bath, to be paid out of the funds in the hands of the receiver.

Smith, P. J., and Hardin, J., concurred.

Judgment modified as stated in the opinion, and as modified affirmed, with costs to the First National Bank of Bath and to the plaintiff to be paid out of the fund. In case the parties differ in regard to the form of the judgment, the same to be settled by Mr. Justice Barker on four days’ notice.


text:
    GEORGE CHAMBERLIN, Appellant, v. THE BUFFALO, NEW YORK AND PHILADELPHIA RAILROAD COMPANY, Respondent.

      Temporary injunction — application to dissolve it, on giving an undertaking — Oode of Givil Procedure, sea. 629, as amended by chap. 404 of 1883 — the undertaking must comply with it strictly.

    Upon tlie defendant’s motion the court vacated a temporary injunction, granted in this action, which restrained the defendant from constructing its road over a portion of a street in a village, the fee of which was vested in the plaintiff, who was the owner of the adjoining house and lot. The defendant did not deny the wrongfulness of its act, hut tendered an undertaking “conditioned to pay to the plaintiff all damages that he may sustain hy reason of the construction and operation of the defendant's road upon the premises described in the complaint.”

      Held, that as the defendant did not attempt to justify its acts it could only procure a dissolution of the injunction by a strict compliance with the provisions of section 629 of the Code of Civil Procedure, as amended by chapter 404 of 1883.
    That the undertaking furnished did not comply with that section which required the undertaking to he “ conditioned to indemnify the plaintiff against any loss sustained by reason of vacating such injunction order.”
    That the court erred in dissolving the temporary injunction.
    Appeal from an order of the Erie County Special Term, dissolving an injunction.
    The line of the defendant’s railroad is along and through Wayne street, in the village, of Olean. The plaintiff is the owner of a house and lot on .the south side of Wayne street, ninety feet front, and bounded on the north by the center of said street. The defendant procured from the village of Olean permission to lay down its tracks through Wayne street, with the center line twenty feet north of the south line of said street, the same to be constructed on the grade of said street, with no material excavations or embankments. On the 8th day of June, 1883, the defendant, by its agents and servants, without the consent of the plaintiff, and against his protest, commenced preparing the street in front of the plaintiff’s property for the tracks, by plowing, excavating and removing the bed of the street. Thereupon the plaintiff commenced this action, and procured a preliminary injunction restraining the operations of the defendant, and caused the same with the summons and complaint to be served.
    In the complaint, the plaintiff sets up his title and alleges that it' extends to the center of Wayne street, and that the defendant is doing the acts and things mentioned, and then avers that, unless the defendant is restrained from committing such wrongful and unlawful acts so thi’eatened, the plaintiff will suffer great and irreparable loss and injury, and the said premises will be rendered almost wholly worthless. The complaint is verified by the plaintiff, and is accompanied by his affidavit, stating that he had never given his consent to the defendant that it ’might construct its road through the street, and that he had requested the agents of the defendant in charge of the work, not to proceed with the same, and that the foreman of the work informed him that they were going to make the cut or excavation in front of his lot two and one-half feet deep, and that the foreman in charge of the work also informed him that he was directed by the company to continue his work until the tracks were laid and the road completed.
    Upon affidavits, the defendant moved to dissolve the injunction; at the time of the hearing of this motion no answer had been served. One of the moving affidavits was made by the defendant’s chief engineer, in which he states that the plaintiff admitted to him that, in his judgment, the premises would be quite as valuable after the construction of the road as before; that the injunction served operates to the serious injury of the rights of the defendant-, inasmuch as it prevents its working on said premises and prevents the laying of a continuous track, so that it can haul material along the line of its road ; and that defendant is ready and willing to give any security or undertaking, as the court may require, conditioned to indemnify the plaintiff against any loss sustained by reason of vacating the injunction.

      F. W. Kruse, for the appellant.

      Bowen, Rogers & Locke, for the respondent.
   Barker, J.:

The defendant has not attempted to meet the plaintiff’s case upon the merits. Its acts in excavating and removing ’the soil in that part of the street, in front of the plaintiff’s property, is an unjustifiable intrusion upon the‘plaintiff’s possession, and is confessedly a trespass. Upon the undisputed facts, as they now appear, the plaintiff is entitled to the relief demanded in his complaint; that is, for a permanent injunction restraining the defendant from continuing its trespasses upon the plaintiff’s lands. Heretofore it has been the practice of the court, in a guarded manner, in cases of this character, to grant a preliminary injunction, to be operative during the pendency of the suit. The plaintiff, in his moving papers, established an unquestioned right to the injunction order within the well-established rules of law applicable in such cases.

It is obvious that the defendant moved to dissolve the injunction with a view of having the same vacated, on giving the security as provided in section 629 of the Code, as amended by chapter 404, Laws of 1883. As amended, the provision of the section is : upon such hearing “ the court or judge must, where the alleged wrong or injury is not irreparable and is capable of being adequately com pensated for in money, vacate the injunction order upon the defendant’s executing an undertaking in such form and amount and with such sureties as the court or judge shall direct, conditioned to indemnify the plaintiff agavnst any loss sustained by reason of vacating such injunction order''

The order appealed from was granted upon the defendant’s executing and delivering an undertaking in the penalty of one thousand dollars, with two good and sufficient sureties, “ conditioned to pay to the plaintiff all damages that he may sustain by reason of the construction and operation of the defendant's road upon the premises described in the complaint in this action.”

Such an undertaking would not be in compliance witb tbe statute, in letter or in spirit. As tbe defendant bas utterly failed to meet the case upon tbe merits, be is not entitled to a dissolution of tbe injunction, except upon strict compliance witb tbe statute as to the form and conditions of tbe undertaking. Unless tbe plaintiff succeeds in tbe action, and a permanent in junction is awarded in tbe final judgment, be can never have any right of action upon tbe undertaking. If be does succeed in securing tbe relief demanded, then tbe defendant cannot construct and operate its road upon any part of tbe plaintiff’s premises without first compensating tbe plaintiff for the damages he may sustain. By an undertaking con ditioned as required by statute the plaintiff would be entitled to indemnity for all the loss sustained by him by reason of vacating tbe injunction order, which would embrace damages for excavating and removing earth from tbe street, and cutting down trees in that part of the highway in front of his premises.

After final judgment in the plaintiff’s favor, in an action upon a bond such as the defendant is required to give by the order, he could only recover sucb damages as be may sustain by reason of constructing and operating the road over his premises.

In this class of cases, where there is no attempt to meet tbe plaintiff’s case upon its merits, and tbe defendant seeks to remove the injunction by giving an undertaking, as now provided by tbe statute, tbe plaintiff has a right to exact an undertaking from the defendant in. full and strict compliance witb,tbe statute.

For this reason the-order vacating the ( in junction should be reversed, witb ten dollars costs and disbursements on this appeal, and ten dollars costs for opposing the motion at Special Term.

Smith; P. J., and Hardin, J., concurred.

Order reversed with ten dollars costs and .disbursements, and ten dollars costs for opposing motion at Special Term.


text:
    LEDETT A. BOSTWICK, Respondent, v. EMILY P. BEACH, Executrix, etc., of NELSON J. BEACH, Deceased, Appellant, Impleaded with others.

      Power of sale — right of executors to exercise it — -they can only sell the testator’s interest— covenants to pay off incumbrances bind them personally, but do not bind, the estate.

    The defendants’ testator, by his will, gave the residue of his property, remaining after the payment of certain bequests, to his wife and children. The will did not deprive the widow of her right to dower in his estate. He appointed his wife executrix, and three other persons executors, and authorized them “ to rent, sell or convey my real estate or personal property in accordance with the above provisions: ” -

      Held, that although the executors might enter into an executory contract for the sale of such interest in the real estate, as the testator had at the’time of his death, they could not agree to buy off the widow’s dower right, or pay off incumbrances existing upon the estate at the time of the testator’s death which he was not personally liable to pay.
    Covenants or agreements so to do, introduced into the contract of sale, would bind the executors personally, but not the estate, nor would they authorize the court, in an action for specific performance, to direct that the value of the widow’s dower right, and the amount due upon an incumbrance should be deducted from the purchase-price.
    Appeal from a judgment,- entered upon the trial of this action at a Special Term held in Lewis county.
    Nelson J. Beach, the testetor, died in February, 1876, the owner of both real and personal property.' The defendants, Emily P. Beach, Alonzo H. Green and Horace L. Green, were appointed executrix and executors of his last will and testament, and the same was duly admitted to probate. The will after making bequests to his wife and some of his children, provided for a division of his estate to and among his children. The paragraph giving the executrix and executors power of sale of the real estate is as follows, viz.: “ I hereby appoint my wife Emily P. Beach, executrix, and Alonzo H. Green and Horace L. Green, my sons-in-law, and Leonard 0. Davenport, of Lowville, my executors for the settlement of my estate, hereby authorizing them to rent, sell or convey my real estate or personal property in accordance with the abpve provisions.” Davenport did not qualify.

      In December, 1881, the executors entered into an executory agreement with tbe plaintiff, in writing not under seal, to sell tbe homestead farm, of which the following is a copy:
    “Received, Watson, N. Y., December 27,1881, from L. A. Bostwick, five hundred dollars to apply on the purchase of the property known as the Nelson J. Beach farm, situated at Beaches’ Brook in said town, this day bargained to be sold to said Bostwick, for eleven thousand dollars, and we'hereby agree to execute a deed of said property to said Bostwick on the 1st of March, 1882, on the payment of tne balance, ten thousand five hundred dollars. It is understood that the five hundred dollars this day received is to be deemed a forfeiture in case of non-compliance, and the undersigned agree to forfeit an equal amount in case of non-compliance on their part. Said farm is supposed to contain two hundred and seventy-five acres. It being a condition of the sale that Mrs. Emily P. Beach and daughter shall have a good and sufficient room in the residence on the farm for their use until May 1, >1882, if desired.
    “ ALONZO LI. GREEN, .
    “ HORACE L. GREEN,
    “ EMILY P. BEACH.
    “' ExecutorsP

    At the time of such sale there was an incumbrance on the farm by mortgage for about $900, and Mrs. Beach resided on the premises, occupying a part of the house, and having an unassigned dower right in all the premises. The $500 mentioned in the contract was actually paid. The executors declared to the plaintiff a willingness on their part to execute and deliver a deed in pursuance of the terms of the contract, deducting from the purchase-price the amount of the incumbrance, or to use the purchase-money in extinguishment of the lien, and if the widow declined to join in the deed releasing her right of dower, that a just sum might also be abated from the purchase-money. Mrs. Beach, the executrix, declined to carry out the agreement in any form; thereupon the plaintiff demanded a deed from the vendors, and, as the court found, deposited the balance of the purchase-money in the First National Bank of Lowville, as a special deposit, subject to the order of the defendants, to be delivered to them on the execution and delivery of the deed, and that such sum remained on deposit at the time of the trial. It does not appear from the case that the testator was under any personal liability to pay the debt secured by the mortgage.
    The court found as questions of law, that the executory agreement was good and sufficient to bind the defendants, and under it it was their duty, on the payment or tender of payment by the plaintiff of the balance of the purchase-money, to execute and deliver to him the deed mentioned in the contract; that the plaintiff was entitled to a deed of the premises free from incumbrance, and it was the duty of the defendants for that purpose to have paid and procured to be satisfied the mortgage and to procure a release from the defendant, Emily P. Beach, of her right of dower. That the plaintiff was entitled to the judgment of the court decreeing the specific performance of said agreement by the defendants, and awarding him the damages sustained by reason of the delay and refusal of the defendants to perform the same, and. directed a judgment that the defendants execute a deed conveying to the plaintiff a good and unincumbered title to the premises, and in case the mortgage was not paid that there be deducted from the unpaid purchase-money the amount of the same, and if the widow did not release her right of dower, then that the value thereof be computed in the manner provided by the rules and practice of the court, and that such amount be also deducted from the unpaid balance of the purchase-money, and that the plaintiff recover $500 against the defendants as executrix and executors, as damages for the non-performance of the agreement.
    The plaintiff was not charged with interest upon the unpaid purchase-money, nor does it appear that the deposit with the bank was on interest.
    The executrix alone appeals from this judgment.

      G. D. Adams, for the appellant.

      A. H. Sawyer, for the respondent.
   Barker, J.:

By the pleadings and on the tidal, all the parties admitted that' the defendant, Mrs. Beach, had a right of dower in the premises, which she did not by the contract of sale release or agree to convey. This concession was recognized by the trial court and the judgment is based upon the facts thus admitted.

On this appeal we are confined to this" view of the case. The contract sought to be enforced was executed by the executrix and executor in their representative capacity and not personally. This is manifest on the face of the contract, and if there is room for doubt as to the capacity in which they acted, it was cleared away and made certain by the parol evidence bearing on the point. (Chouteau v. Suydam, 21 N. Y., 179; Briggs v. Partridge, 64 N. Y., 357.)

It is unnecessary to give this proposition more attention as it is the position contended for by the respondent and adopted by the trial court. It is important to observe that the contract does not speak as to the terms or form of the conveyance to be executed by the vendors, and it is also silent as to the nature and extent of the estate in the property intended to be sold and conveyed by them. Neither is there any clause exempting the executors from personal liability to the vendee, in case of a non-performance on their part of any of the express or implied terms of the agreement. The agreement entitled the vendee to a perfect and unincumbered title. In executory contracts like this,-there is an implied warranty on the part of the vendors that they have and will convey a good title, free and clear of all incumbrances. (Burwell v. Jackson, 5 Seld., 535; Rawle on Covenants of Title, 430; Sugden on Yendors, vol. 1, chap. 7, § 1.)

The decree is based upon the correctness of this proposition. The value of the widow’s right of dower and the amount of the incumbrance by mortgage are directed to be abated from the unpaid portion of the purchase-money, as the means of indemnifying the vendee for the non-performance of the implied terms of the contract, to convey a good and unincumbered title.

It is claimed by the appellant that the executors, as donees of the power to sell, were without authority to make an executory contract of sale containing covenants to pay off the incumbrances, and to convey a perfect title to the vendee and make the same binding on the estate which they represent. Such is my opinion. They were authorized to sell and convey such estate as the testator had in the premises 'at his death and nothing more. The widow’s dower right they could not sell, nor were they authorized by the terms of their appointment to use any of the funds coming to their hands, in their representative capacity, to extinguish that estate or to pay off the incumbrances on the premises. Their power was limited to .sell and convey the testator’s interest in the lands. They promised and agreed to do more; and such promise being in excess of the authority vested in them, it is void so far as the estate which they represent is concerned. As between themselves and the vendee, they were personally bound by the terms of the agreement to the extent they are in excess of their authority..

By the terms of the decree, the agreement and all of the implied covenants were held to be.good as against the estate, and damages have been awarded accordingly. A trustee may bind a trust estate by an executory agreement so long as he keeps within the limits of his power, but the moment he steps outside of the same his promises are void and cannot be enforced against the estate. If this were not so it would be futile to attempt to set bounds to his power, and his own discretion would become the measure of his authority.

In New v. Nicoll (73 N. Y., 127) it is held that, as a general, rule, a trustee cannot charge the trust estate by his executory contract, unless authorized to do so by the terms of the instrument creating the trust; that upon such contracts the remedy is against the trastee personally, and they cannot be enforced against the trust estate. In that case Nicoll, the trustee, was empowered to receive the rents, issues and profits of certain real estate, and, after paying taxes, to pay over the same to the use of another during life. The trustee, as such, employed the plaintiff to make certain repairs on the premises; and in an action for such,work and labor a recovery was had against the defendant as trustee, with directions to pay the judgment out of the rents and profits. The judgment was reversed in the Supreme Court, and such reversal was sustained in the Court of Appeals.

The same principle has been frequently applied to executors and administrators, and is now deemed res adyudicata. (Austin v. Munro, 47 N. Y., 360, Ferrin v. Myrick, 41 id., 315; Stanton v. King, 8 Hun, 4.)

As a general rule, the purchaser may maintain an action against the vendor where he is incapable of making a complete title to all the property sold, and compel a performance pro tanto, and have an abatement made out of the purchase-money, or compensation awarded for any deficiency in title as to quantity or quality of the property sold. (1 Story’s Equity, § Y89; 1 Sugden on Yendors, m. p. 491; People v. Stephens, 71 N. Y., 555; Woodbury v. Luddy, 14 Allen, 1; Davis v. Parker, Id., 94.) In whatever form compensation for defect of title may be made or secured to the' purchaser, the same is in the nature of damages for a breach of some one of the terms, either express or implied, of the contract of sale. In the case now here the vendee has been awarded compensation for a defect in the title. In a legal sense the sum so allowed is no less damages for a breach of a term of the contract, because it is to be abated from the unpaid balance of the purchase-money. If the vendee had in fact paid over all the purchase-money before the action was commenced, he would, nevertheless, by the rule of law adopted by the trial court, have been entitled to damages to be paid by the vendors. It may be that the executors will realize as much for the benefit of the estate by completing the sale on the terms and in the manner provided by the decree, as they would have if the premises had been sold subject to the widow’s dower, but that does not cure the error of the trial court in holding that the contract was binding on the estate.

There are instances where lands are so situated, and the character and value of the same are such, that more can be realized on a sale of the same subject to a dower right than by a sale of the same free therefrom and deducting the value thereof from the purchase money, and the same may be said in regard of incumbrances by way of mortgage, if they have a long time to run at a satisfactory rate of interest.

Judgment reversed, new trial ordered, with costs to abide the event.

Smith, P. J., concurred; Hardin not voting.

Judgment and order reversed, and new trial ordered, costs to abide event.


text:
    JULIA A. CARPENTER, Respondent, v. ELDRED LOTT, Sheriff, etc., Appellant.

      Action to foreclose a lien on a chattel — Code of Civil Procedure, seas. 1781, 1741 — a warrant to the sheriff to seize and •hold the chattel does not protect him in taking it from the possession of one who is not a party to the action, and claims to he the owner thereof.

    In an action brought to foreclose a lien upon a chattel a warrant was issued, as prescribed in section 1738 of the Code of Civil' Procedure, to a sheriff commanding him to seize the chattel and safely keep it to abide the final judgment in the action. The sheriff, pursuant to the warrant, which was regular on its face, took the chattel from the actual possession of a person not a party to the action who claimed to be, and was in fact, the owner thereof.

      Held, that such person could, after a demand for the chattel and a refusal of the sheriff to restore it, maintain an action against him to recover the chattel so taken.
    Appeal from a judgment, entered on a verdict in an action originally commenced in the Chautauqua County Court.
    The action was brought to recover from the defendant certain articles of personal property of which the plaintiff claimed to be the owner. The defendant, as sheriff, seized the property, of which the plaintiff had actual possession at the time, under and by virtue of a warrant issued in an action to foreclose a lien, in pursuance of the provisions of sections 1737,1738 of the Code of Civil Procedure.
    The plaintiff was not a party to the action in which the warrant was issued. On the trial the plaintiff’s evidence tended to prove that she was the owner of the property, and that the lien set up by the plaintiff in the foreclosure suit was subsequent and inferior to that of her own.
    The only question of importance involved in this action is whether the plaintiff as owner of the property, involved in the litigation, can maintain this action as against the sheriff who stands upon the warrant as his justification.

      Abner Hazeltine and Marvin Smith, for the appellant.

      William M. Newton, for the respondent.
   Barker, J.:

At the time the sheriff seized the property, the plaintiff was in actual possession of the same. The jury by their verdict have found that she was the owner. The defendant justifies his action in seizing the property upon the sole ground that the warrant under which he acted commanded him to take and hold the property, and as the same is valid on its face he is fully protected.

In the foreclosure suit the plaintiff therein claimed to have a valid lien on the chattels mentioned, placed thereon by the defendant in such action. As the chattels were not in the possession of ■the plaintiff,-she procured from the county judge a warrant for the seizure of the articles, as provided by section 1738 of the Code of Civil Procedure, and'delivered the same to the defendant herein to •be executed by him, as sheriff, according to its commands.

Such warrant is in all respects in due form of law, and concluded as follows: “You are hereby commanded to seize the said chattels and safely keep them to abide the final judgment in this action.”

At common law, a public officer is not liable in an action of tort for an act done in the strict discharge of his duty, performed in exact compliance with the requirements of the law. As the writ in the hands o.f the sheriff, and under which he acted, commanded him to seize particular chattels, without any regard as to where the •same might be found, or in whose possession the same might be, the rule of the common law, as • stated, would afford him complete protection, and he is not liable in an action of this nature, unless the rule is changed in some respect by statutory regulations. After the sheriff seized the property, the plaintiff herein made a demand of the goods from him, based upon her title, and he neglected to return the goods as requested.

We are of the opinion that the demand and refusal to deliver the goods, secured to the plaintiff the right to prosecute, and as it has been determined that she was the owner of the property, the warrant was no justification for the refusal to comply with the demand. In making the seizure he acted rightfully; in detaining the property after a demand, he acted wrongfully.

Allowing a warrant to issue to seize chattels, in an action to foreclose a lien thereon, prior to final decree, is novel, and is permitted by section 1738 of the Code of Civil Procedure. It is also in the same section provided, that the provisions of • the Code concerning the attachment of property shall apply to such a warrant and to the proceedings to procure it, and, after it has issued, as if it was a warrant of attachment, except as otherwise provided in the section of the Code relating to the foreclosure of a lien upon chattels.

A claimant to property seized by a warrant of attachment, who is not a party to the action, may maintain an action of replevin against an officer with a view of establishing his title to the property. The form of the warrant of attachment is prescribed by the statute, and is a command to seize the property of the defendant, and if he takes the property of a third person, he does so at his peril, for he. has failed to follow the terms of the precept in his hands.

There is a provision that if the goods attached by the' officer as the property of the defendant, are claimed by another person as his property, the sheriff may, in his discretion, impannel a jury to try the validity of the claim, and if the jury find the title of the property to be in the claimant at the time of the levy, the sheriff must forthwith deliver to him or his agent the goods and effects which he has seized, unless the plaintiff gives him an undertaking with sufficient sureties, to indemnify the officer for the detention thereof.- If the undertaking is given, then the sheriff must detain the goods and effects as the property of the defendant. (Code of Civil Pro., §§ 657, 658.)

If the sheriff had summoned a jury, and they had found the title of the property in the claimant, then it would have been the sheriff’s duty to deliver to her the property, unless he had been indemnified by the plaintiff in the foreclosure suit, as required by the statute. Such indemnity would have afforded him a complete protection as against the results of this action. By refusing to impannel a jury, the defendant cannot thwart the purpose of the statute and defeat the right of the claimant to maintain an action, based upon her claim of title. (Manning v. Keenan, 73 N. Y., 45.)

It was the intention of the legislature, in adopting the provisions which have been mentioned, to secure to a successful claimant the property in controversy or a right to prosecute the officer for the alleged wrongful detention. We are unable to discover any intention on the part of the legislature in regulating the proceedings to foreclose a lien on chattels to authorize a seizure of the same by warrant at the instance of the plaintiff in such action, and deprive third parties of all right to set up a claim thereto pending the foreclosure proceedings. It was stipulated on the trial, as a fact, that the sheriff did seize and.take into his custody the chattels mentioned. The affidavit prepared by the plaintiff and served upon the defendant before the commencement of this action, states that she is the owner, and as the property was taken from her actual possession, it may be regarded as a demand made upon the sheriff to return the property to her, no point being made upon the trial that the same was defective.

Judgment affirmed, new trial denied, with costs.

Smith, P. J., and Hardin, J., concurred.

Judgment of County Court affirmed, with costs.


text:
    JOHN ATKIN, Appellant, v. ALPHONZO PITCHER and JOSHUA R. PETTIT, Respondents.

      Costs on appeal from a justice’s court— when governed by the old Code.

    After September 1, 1880, the defendant appealed to a county court from a judgment recovered against him, before that date in a justice’s court. The plaintiff having recovered a judgment for six cents damages in the county court:

      Held, that the rights of the parties to costs were to be determined by section 371 of the old Code and not by section 3070 of the Code of Civil Procedure.

      Matter of Estate of Weston (91 N. Y., 501, affirming S. 0., 27 Hun, 461), followed; Carling v. Ladd (27 Hun, 112) overruled.
    Appeal from an order of the Cattaraugus County Court, made in an action originally commenced in a Justice’s Court.

      E. D. Norihrujp, for the appellant.

      William G. Laidlaw, for the respondents.
   Barker, J.:

The plaintiff recovered a judgment in a Justice’s Court for the sum of $200, prior to the 1st day of September, 1880. After that day, and within the time required by law, the defendant appealed to the County Court, and in his notice of appeal he stated, as one of the grounds of his appeal, that upon all the facts proved before said justice the plaintiff was not entitled to recover a judgment. _ In the County Court a new trial was had before a jury and the plaintiff recovered six cents damages. Thereupon the plaintiff taxed his costs at $101, and the same were inserted in the judgment-roll and made a part of the recovery against the defendant. The defendants then moved the County Court that the plaintiff’s, costs be stricken from the judgment-roll, and that they be allowed costs as against the plaintiff. This motion was granted by the County Court, and the order entered thereon is the one appealed from.

This action originated in a Justice’s Court and was pending at the time the Code of Civil Procedure went into effect, as the appeal to the County Court is in no sense the commencement of an action, but is a proceeding in a pending action to reform the judgment entered thereon. (Kincaid v. Richardson, 25 Hun, 237.) It is claimed by the plaintiff that section 371 of the old Code is in force so far as this action is concerned; and if this position is correct, then he is entitled to costs as the defendant admits. (Beard v. Cridler, MS. opinion of Macomber, J., Fourth Dept., October, 1882; Jones v. Cook, 11 Hun, 230; Wadley v. Davis, 43 How., 82.)

If this section was repealed and was not then in force and applicable to actions then pending, then by the provisions of section 3070 the defendant is entitled to costs, and this the plaintiff concedes. We are of the opinion that section 371 of tire old Code remains in effect and is applicable to this action ; and such has been the ruling of the Court of Appeals in a case presenting a similar question. By subdivision 11, section 3347, so much of chapters 18 and 19 as regulates the proceedings to be taken in an action or special proceedings, and the effect thereof applies only to an action or special proceedings commenced on or after the 1st day of September, 1880, excepting in some particulars which it is not important to mention. As this action was pending at the time the repealing act was adopted, and the appeal was a proceeding in that action, and section 3070 is found in chapter 19, by the very terms of the act the new provision is not applicable to the pending case.

In the Matter of the Estate of Weston (27 Hun, 461) proceedings were instituted in the Surrogate’s Court in the county of New York, in July, 1877, for the final accounting of an executor, and the decree was entered thereon in October, 1880. A question was presented whether the costs in the Surrogate’s Court should be taxed in pursuance of the provisions of the Code of Civil Procedure or of' the old Code, and it was held that chapter 18 is made applicable only to an action or special proceedings commenced on or after September 1, 1880. On appeal to the Court of Appeals (91 N. Y., 502) the same construction was given to the repealing statute. "We regard these decisions as giving a construction to the section involving the question before us and they should be followed. The General Term case of Garling v. Ladd (27 Hun, 112) is a ruling directly the other way, but must be regarded as overruled by the decision of the Court of Appeals.

The order of the County Court striking out the plaintiff’s costs and directing that costs be allowed the defendants is reversed, with ten dollars costs and disbursements.

Present — Smith, P. J.; Hardin and Barker, JJ.

Order reversed, with ten dollars costs and disbursements.


text:
    GEORGE HYLAND and JOHN HYLAND, as Administrators, etc., of GEORGE HYLAND, Deceased, Appellants, v. BRIDGET BAXTER and Others, Respondents.

      Administrator — right of, to advance money for the support of infant children having no general guardian — what must he shown to enable the court to credit him with past advances.

    Although a-court of equity may possess the power to make an allowance for the support and maintenance of ipfant children having no general guardian, to the extent that the same may be necessary to meet their absolute wants, and although if such support and maintenance have been supplied by an administrator out of funds held by him for distribution to such infants, it may, in an appropriate case, direct a credit in his favor on an accounting concerning the funds so held by him, yet to justify it in so doing it must be affirmatively shown that he acted in entire good faith, and the amounts of the various advancements, and the times at which, and the purposes for which they were respectively made must be established by satisfactory evidence.
    Appeal from a judgment, entered upon tbe report of a referee dismissing the plaintiff’s complaint.

      Bernard Baxter died intestate on the 27th day of May, 1862, leaving him surviving his widow, the defendant Bridget Baxter, and his three children, Mary Ann Baxter, then aged eight years, Bernard Baxter, aged two years, and Ella Baxter, seven months old, all of whom are defendants in this action. George Hyland and Bridget Baxter, the widow, were duly appointed administrator and administratrix by the surrogate of Livingston county. The personal estate of the deceased amounted to the sum of about $1,200, which' was mostly converted into money by the administrator, George Hyland. Mrs. Baxter continued to keep house, after the death of her husband, all her children living and residing with her. Hyland was a merchant, living in the same village. Immediately after letters of administration were issued, Mrs. Baxter commenced receiving money from the hands of her co-administrator, and goods from his store, the greater part of which was applied by Mrs. Baxter in the support and maintenance of her infant children. During the time the money and property were being used for the purposes mentioned, the chlidren were without any general guardian.
    There is no proof in the case that any of the money or merchandise received by Mrs. Baxter from the hands of Hyland, the administrator, was specifically appropriated for the use of either of the infant children. The support and maintenance which they did receive, was in the care and nursing bestowed upon them by their mother, and in being provided for and maintained at her table.
    Neither the administrator nor the administratrix kept any account with either of the children, as to the part and portion of the personal estate which had been received for them or used in their support and maintenance.
    In 1872, Wendell Zimmer, as the general guardian for the children, instituted, proceedings before the surrogate to compel the administratrix and administrator to settle their accounts. In these proceedings a final decree was made on the 23d of December, 1876, which found the sum of $738.85 to be in their hands undistributed as belonging to the children, after deducting the widows share,with interest thereon from September, 1867, amounting in all to the sum of $ 1,207.98. This sum the court directed to be equally divided among the children, and the administratrix, Bridget Baxter, was adjudged personally to pay to her administrator, George Hyland, so much of the said sum ordered to be distributed as he should pay into court in pursuance of the decree. From such decree Hyland took an appeal to the court, which at the time of the trial of this action was pending and undetermined. In June, 1877, Hyland, the administrator, commenced this action, naming Bridget Baxter, his co-administrator, as one of the defendants for the purpose of securing an allowance for the past support and maintenance of the minor children, and that the same with interest be applied and allowed upon the final decree as entered in the Surrogate’s Court. Since the trial of this action the plaintiff died, and the present plaintiffs, his personal representatives, have been substituted.

      Oscar Craig, for the appellants.

      Charles S. Bissell, as guardian for the infants respondents.

      D. W. Noyes, for the respondent Bridget Baxter.
   Barker, J.:

In this case, for'the purpose of disposing of the appeal we shall hold that, as a general proposition, a court of equity possesses the power to make an allowance for the past support and maintenance of infant children, having no general guardian, to the extent that the same was necessary to meet their absolute wants, and if such support and maintenance were supplied by an administrator out of funds in his hands held by him for distribution to such infants, the court may, in an appropriate case, direct a credit in his favor, on an accounting concerning the funds held by him in his representative capacity. The plaintiff’s case is founded on the truth of this proposition.

As we have reached the conclusion that the judgment in this case should be affirmed upon other grounds, we do not need to state the limits and qualifications of the proposition with particularity. All the cases bearing on this subject hold that the advancement must be made in entire good faith, and at such times and in such sums as the court would authorize a general guardian to do if one had been appointed and he had applied for and received permission before such disbursements were made; otherwise the act would not be ratified.

The referee has found that the sum of $1,207.98, so adjudged to be in the hands of George Hyland as such administrator, was paid by him in merchandise or money into the hands of the defendant Bridget Baxter, in her right as administratrix; that the larger portion of the money and property, so received by the said Bridget Baxter from the said George Hyland, was applied by the said Bridget Baxter towards the support.and maintenance of said Mary Ann Baxter, Bernard Baxter and Ella Baxter, the said infants, but in what amount and proportion to each cannot be ascertained, and that all such expenditures were made by the said Bridget Baxtér for and on account of said minors prior to June, 1869.

On reading the evidence upon which such findings are based, we find no room to doubt the correctness of the conclusions reached by the learned referee. The data is not given in the proofs from which any tribunal can say the particular sums which should be charged up against each infant. As this uncertainty and confusion comes from an unauthorized use of trust funds, the administrator and administratrix must be the sufferers if any one is harmed. (Hannahs v. Hannahs, 68 N. Y., 610.)

"We have viewed the case as if the deceased administrator was entitled to every allowance which could have been made to the mother if she had applied in her own behalf, for the relief now sought by the appellants. Ve have not permitted their case to be prejudiced or weakened in our minds by the defendants’ present attitude of hostility to the relief sought by the plaintiffs. It must be apparent to every experienced mind, that nothing like accuracy can be reached in any attempt to state an account between the infants and the administrators, concerning their past support'and maintenance.

The judgment is affirmed, with one bill costs in favor of the respondents.

Present — Smith, P. J., Hardin and Barker, JJ

Judgment affirmed, with costs.