text:
    In the Matter of the Application of Maurice S. Cohen, for a Judicial Settlement of the Accounts of Sewanee M. Stevenson et al., as Executors, etc.

      (Supreme Court, General Term, First Department,

      Filed April 13, 1894.)

      1. Bxectjtoks—Claim against estate—Dismissal op petition.
    Under § 2727 of the Code, the surrogate’s discretion is not exhausted by the issuance of a citation, but he- may thereafter dismiss the proceeding.

      3. Same.
    The petitioner must show that he is a creditor, having an admitted or established claim, before he can, as a matter of right, require a judicial settlement.
    3. Same.
    The state of the record was held, in this case, not to authorize a legal conclusion that the claim had, by the acquiescence of the executors, become a liquidated and undisputed debt against the estate.
    Appeal by a creditor from a denial of an application for a judicial settlement of accounts.

      Rastus S. Ransom, for app’lt; William G. McOrea, for resp’t.
   Follett, J.

The purpose of the appellant was evidently to file a petition which would authorize a decree under §§ 2722 and 2725, or under §§ 2726 and 2727, of the Code of Civil Procedure. It is not necessary now to determine whether the remedies provided by these sections can be united and prosecuted in a single proceeding. Section 2722 provides :

“In either of the following cases a petition maybe presented to the surrogate’s court, praying for a decree directing an executor or administrator to pay the petitioner’s claim, and that he íce cited to show cause why such a decree should not be made: (1) By a creditor, for the payment of a debt, or of its just proportional part, at any time after six months have expired since letters were granted. * * * On the presentation of such petition, the surrogate must issue a citation accordingly; and on the return thereof, he must make such. a decree in the premises as justice requires. But in either of the following cases the decree ftiust dismiss the petitioner without prejudice to an action or an accounting, in behalf of the petitioner: (1) When an executor or administrator files a written answer, duly verified, setting forth facts which show that it is doubtful whether the petitioner’s claim is valid and legal, and denying its validity or legality, absolutely, or on information and belief. * * *”

Section 2725 of the Code of Civil Procedure contains the following, among other provisions:

“ In either of the following cases, the surrogate may, in his discretion, make an order requiring an executor or administrator to render an intermediate account: * * * (3) On the return of a citation issued on the petition of a creditor, * * * praying for a decree directing payment thereof as described in § 2722 of this act. (4) Where eighteen months have elapsed since letters were issued and no special proceeding, on a petition for a judicial settlement of the executor’s or administrator’s account is pending.”

It will be observed that, by this section, it is discretionary with the surrogate’s court whether, on the return of a citation issued on the petition of a creditor, it will make an order requiring a representative to render an intermediate account. The nature of the petitioner’s claim, or how it arose, is not set forth in the petition, but it is stated in the verified claim to be for professional services and disbursements. But the claim is not made a part of the petition. The respondents, by their answer, denied that the services rendered were of the value of $1,523.63, and denied that the ex-exutors ever conceded or admitted the claim, and alleged that, when it was presented, it was duly rejected by them. The appellant states in his affidavit of January 8, 1894, that when he asked for payment of the claim, one of the executors replied that, in his opinion, the bill was too large. This state of the record does not authorize a legal conclusion that the claim had, by the acquiescence of the executors, become a liquidated and undisputed debt against the estate.

It is also urged that the answer is insufficient because it fails to set forth facts which show it to be doubtful whether the claim is valid and legal. The sufficiency of the answer must be determined with reference to the allegations in the petition, which, it will be observed, set forth no facts constituting a cause of action, except that the petitioner’s claim for $1,523.63 had been presented and not rejected, and had become a liquidated debt against the estate, which is explicitly denied in the answer, and it is averred therein that the claim was rejected when presented. This answer is clearly sufficient to put in issue every allegation contained in the petition, and, in so far as it was founded on §§ 2722 and 2725, it was the duty of the surrogate’s court to dismiss it, as, in its discretion. it was authorized to do. § 2725.

Was it error to dismiss the petition, in so far as relief was sought by it under §§ 2726 and 2727 ? which provide:

“Sec. 2726. In either of the following cases, the surrogate’s court may, from time to time, compel a judicial settlement of the account of an executor or administrator. (1) Where one year has expired since letters were issued to him. * * * Sec. 2727. A petition, praying for the judicial settlement of an account, and that the executor or administrator be cited to show cause why he should not render and settle his account, may be presented in a case prescribed in the last section by a creditor. * * * On the presentation of such a petition, a citation must be issued accordingly ; except that in a case specified in subdivision first of the last section, if the petition is presented within eighteen months after letters were issued to the executor or administrator, the surrogate may entertain or decline to entertain it, in his discretion.”

It is urged that, because the surrogate’s court issued a citation on the petition, it had exhausted its discretion, and could not thereafter exercise further discretion, and dismiss the proceeding. This contention is not well founded. Such a limitation of the powers of the surrogate’s court would require it to entertain a petition for a judicial settlement on the mere allegation of the petitioner that he was a creditor, though such allegation was denied in the answer. The discretion vested in the court may be exercised whenever it appears that the validity of the petitioner’s claim has not been conceded or established.

It is also urged that the answer filed by the respondents did not allege that 18 months had not passed since letters testamentary were issued. This fact affirmatively appears by the petition, and it was unnecessary for the respondents to aver it. In case a year has elapsed since letters were issued to a representative, the surrogate’s court has power, on its own motion, with or without a petition, to.' require from the representative a judicial settlement of his account. Code Civ. Proc. § 2626 ; Anon., 14 Civ. Proc. R. 38; 14 St. Rep. 490. And if, ‘in the case at bar, the letters having been issued more than a year, such an order had been granted, the fact that the petitioner was not a creditor having an established claim would not have been a ground for reversal of the order. In re Cowdrey, 5 Dem. Sur. 453; 8 St. Rep. 774, and Re Callahan, 66 Hun, 118; 49 St. Rep. 425, more than 18 months had elapsed since letters i were issued to the representatives, and the surrogate’s court had power, with or without a petition or suggestion from any one, to require a judicial settlement of the accounts of the representatives. The petitioner must show that he is a creditor having an admitted or established claim, before he can, as a matter of right, require a judicial settlement. We think the surrogate’s court acted within the discretionary powers conferred on it by the Code of Civil Procedure, and its decree should be affirmed, with costs.

All concur.


source: Caselaw Access Project

author: Follett, J.

license: Public Domain

text:
    In the Matter of the Appraisement of the Estate of Prank Linsly James, Deceased.

      (Supreme Court, General Term, First Department,

      Filed April 13, 1894.)

    1. Tax—Transfer—Non-resident.
    - A legacy under the will of a non-resident testator, who leaves assets in this state, is not taxable if not paid out of the assets here. !
    3. Same—Stock—Foreign.
    Shares of stock of a foreign corporation owned by a non-resident testator, the certificates of which are in this state, are not taxable.
    Appeal from a decree confirming the appraiser’s report, assessing a tax on certain legacies.

      D. B. Ogden, for app’lt; Edward S. Kaifman, for resp’t.
   Follett, J.

It seems to have been settled that in case a resident citizen of another state or country, and domiciled therein, dies, leaving personalty within this state, it, or the right to succeed to it, is taxable' under chapter 713 of the Laws of 1887, In re Romaine, 127 N. Y. 80; 38 St. Rep. 76, and in case a resident citizen of this state, and domiciled therein, dies, leaving personalty in another state' or country, it, or the right to succeed to it, is taxable under that act. In re Swift, 137 N. Y. 77 ; 50 St. Rep. 81. Under these decisions the property of the testator within this state, passing to foreign legatees, is taxable under the act above mentioned. It is alleged in the petition that the, foreign legatees have been paid out of the property of the testator in England ; but whether this allegation is true or false was not determined by the appraiser nor by the surrogate’s court, nor does it appear whether these legacies were paid before or after the will was established in this state. If the legacies bequeathed to the foreign legatees were paid out of the property in England, those legatees have not succeeded to any property in this state, nor has any property passed, to them by virtue of the laws of this state, aa’d their right of succession is not taxable under this act. This does not affect the amount of revenue derivable from the property within this state, because the residue is increased. It has been held, In re Swift, supra, that the right to succeed to personalty situate in another state, and owned by a resident citizen of this state at the time of his death, is taxable under the act; but, so far as we know, it has never been held that the right to succeed to personalty situate ip. another state, and owned by a decedent who never resided nor had been domiciled in this state, is taxable under the act. It appears from the facts found by the appraiser that a considerable portion (the amount not stated) of the testator’s personalty found to have been within this state at the date of his death consists of shares in corporations incorporated under the laws of other states, the value of-which was included in the total valuation of $2,250,979.64. Under the evidence, presumably, the certificates representing these shares were in this state when the testator died, though it was not so expressly found. These certificates are not shares or property under the laws relating to taxation, nor under the sections of the Code relating to attachments. They are merely evidence of title to the shares. In re Will of Enston, 113 N. Y. 174, 181; 22 St. Rep. 569 ; Plimpton v. Bigelow, 93 N. Y. 592, 600 ; Burr v. Wilcox, 22 N.Y. 551; Van Allen v. Assessors, 3 Wall. 573, 598, 599 ; Winslow v. Fletcher, 53 Conn. 390 ; 4 Atl. 250; Hawley v. Brumagim, 33 Cal. 394, 399 ; Cook, Stockh. & Corp. Law, § 10. The testator not being a citizen of this state, and the property represented by the certificates not being therein at the time of his death, it is not, nor is the right to succeed to such property, taxable under chapter 713 of the Laws of 1887, and the surrogate’s court erred in including it in the amount from which the ratio was found. The decree of the surrogate’s court should be reversed, with costs to the appellant, and a new hearing granted in that court.

All concur.


author: Van Brunt, P. J.

text:
    In the Matter of the Estate of John A. Phipps, Deceased.

      {Supreme Court, General Term, First Department,

      Filed April 13, 1894.)

    Tax—Collateral inheritance.
    The right to a legacy, which has never been reduced to possession, and which is kept within this state without the will of the decedent, is not the subject of taxation under chapter 713 of 1887, as amended by chapter 815 of 1891.
    Appeal from an order fixing the amount of inheritance tax.

      J H. Dougherty, for app’lt; E. J. Levey, for resp’t.
   Van Brunt, P. J.

Elizabeth Fogg, a resident of this state, died on the 3d day of January, 1891, leaving a last will and testament, which was admitted to probate on the 15th of April, 1891. By her will, she gave and devised all her residuary estate,—some of which consisted of real estate, but where situated does not appear,—equally, to Hiram Fogg, of Bangor, Me., and John A. Phipps, of Boston, Mass. In January, 1892, Phipps/lied at.said. Boston, leaving a will, which, on February 1, 1892, was duly admitted to probate in the county of Suffolk, Mass.,—the domicile of the decedent at the time of his death. An exemplified copy of the will was on the 20th October, 1892, filed and recorded in the office of the surrogate of the county of New York, by whom ancillary letters testamentary were duly issued. The executors of Elizabeth Fogg’s will took proceedings under the collateral inheritance acts for a determination of the value of the property, passing by her will, subject to taxation, and the fixing of said tax. The proceedings resulted in an order fixing the amount of her estate subject to tax, including the legacy to Phipps, which was taxed at the rate of 5 per cent. The tax was paid by the executors to the comptroller of the city and county of New York. The legacy to Phipps was never paid to him, nor was it in a condition to be paid, he having died while Mrs. Fogg’s estate was unsettled. By his will he gave his estate to his widow. This proceeding was instituted by the ancillary administrator for the purpose of having it determined what amount of inheritance tax, if any, he was liable to pay upon the legacy bequeathed by Mrs. Fogg to his testator, Phipps. Such proceedings were had that the value of said,legacy was ascertained, and it was determined that it was liable to the inheritance tax. An appeal was taken from the surrogate’s order affirming the appraiser’s report to the surrogate, as prescribed by-statute; and he, singularly enough, affirmed his previous decision, and from this order of affirmance the present appeal is taken.

The question involved upon this appeal depends upon the construction to be giyen to § 1 of chapter 483 of the Laws of 1885, as amended by chapter 713 of the Laws of 1887, as amended by ' chapter 215 of the Laws of 1891; the .last-named statute being the one which was in operation at "the time of the death of the testator, Phipps. The provisions of this act, as far as they are necessary to be considered in the disposition of this appeal, are as follows:

“After the passage of this act all property which shall pass by will or by the intestate laws of this state from any person who may die seized or possessed of the same while a resident of this state; or, if the decedent was not a resident of this state at the time of his death, which property or any part thereof shall be within this state; * * * shall be and is subject to a tax at the rate hereinafter specified.”

The determination of the question as to whether any tax can be imposed, under the facts above stated, therefore, involves the inquiry whether the decedent had any property within this state at the time of his death. If he had, then, under the principle announced in Re Romaine, 127 N. Y. 86; 38 St. Rep. 76, it is liable. If he had not, then, clearly, there is nothing upon which the tax can operate. In the consideration of this question, it will not be necessary to note the difference between the law as it was originally enacted, m 1885, and as it existed at the death of the testator, but simply to determine the question as to whether a right to a legacy given by the will of a resident of this state can be considered property located within this state. It seems to us that the mere statement of the proposition carries its answer with it, when we consider that the residence of a debtor does not fix the situs of the debt, but, rather, the domicle of the creditor. It is a familiar principle that the situs of personal property is, presumptively, the domicile of its owner, and its disposition is controlled by the laws of such-domicile. But for certain purposes of taxation a different rule has obtained, becaus'e of statutes passed to' prevent non-residents having the protection of our laws for their property which is invested and kept within this state without contributing to the expense of such protection, and it is in the .same line of legislation that the statute of 1891 has been passed; and, consequently,>where a resident of another state dies the owner of personal property which he has habitually kept and invested in this state, it is liable to taxation, as has been adjudicated in the Case of Romaine, above cited. But it has not yet been determined that if a resident of another state dies, having debts due him by residents of this state, those debts are the subject of taxation, as being the property of the decedent within this state. That such property is not the subject upon which the act in question was intended to operate seems to have been intimated in the Case of Swift, 137 N. Y. 77; 50 St. Rep. 81, where the property the subject of taxation is likened to realty, being tangible, and located within the limits of the state, as was the fact in reference to the estate of Roihaine. But a mere chose in action—a right to recover a sum of money—has never, as yet, been given the attribute of tangibility; and this seems to be all that Phipps had at the time of his death. He had a right to claim the amount of money which his share of the residuary estate of Mrs. Fogg would result in,—nothing more; no particular piece of property, no particular piece of money, no particular representatives of money or property. And until this residuary estate was ascertained, by an accounting of the executors, the legatee might not be even able to maintain an action for its recovery. It would appear, therefore, that a tax in this proceeding has been levied upon a legacy which not only had never been realized, but the right to the possession of which had never accrued. And if, as intimated in Re Romaine, it was not the intention to attempt to levy a tax upon property,-except suchas the owner, at the time of his death, voluntarily permitted to remain in the state, how can such a tax be levied upon property which the decedent has never had it in his power to remove, if this unrealized legacy can be called property within this state? .In other words, can this act be construed to cover a right at some future time to receive a sum of money, or to recover a debt? We think, clearly, it cannot, and that all that it was intended' to cover was tangible property kept within this state by the decedent, and that property which is transiently here, as upon the person or in the baggage of a man suddenly dying within this state, was never intended to be covered by the provisions of the act.' If the claim advanced in support of the tax in the case" at bar is to. prevail, then in every case such as has been cited must the tax be collected, which never could have been the intention of the legislature. We think, therefore, that the right to this legacy, which had never been reduced to possession, and which was kept within this state without the will of the decedent, is not the subject of taxation under the acts in question; and the order appealed from should be reversed, with costs.

All concur.


text:
    In the Matter of the Application of Henry W. Schmidt et al., for Letters of Testamentary Guardianship, etc.

      (Supreme Court, General Term, First Depm'tment,

      Filed April 13, 1894.)

    1. Guardian—Appointment.
    Under chap. 175 of 1893, a father has no power, while the mother is living, to appoint by will a guardian of his infant children. •
    2. Same.
    Her subsequent assent will not validate such attempted appointment.
    Appeal from an order denying an application for letters of guardianship.

      Moses Weinman, for app’lts.
   Follett, J.

The power to appoint a testamentary guardian is statutory, and was first given by 12 Car. II. c. 24, § 8. In Ex-parte Earl of Ilchester, 7 Ves. 370, Lord Alvanley said:

“It is clear, by the common law, a man could not, by any testamentary disposition affect either his land or the guardianship of his children. The latter appears, never to have been made the subject of testamentary disposition till the statute 12 Car. II.”

7 Pick. St. p. 474; 2 Kent, Comm. 225; 2 Steph. Comm: (8th Ed.) 310; 1 Bl. Comm. 462.

Hence such guardians are called in the books “guardians by statute” or “statutory guardians.” Section 8 of 12 Car. II. c. 24, was enacted in this state March 3, 1787 (Laws 1787, c. 47, § 11; 2 Jones & V. 96; 2 Repub. Laws N. Y. p. 448). This provision was re-enacted February 20, 1801 (1 Rev. Laws 1802, p. 181, § 18), again March 5, 1813 (1 Rex. Laws 1813, p. 368, § 18), and was incorporated in the Revised Statutes (2 Rev. St. 150). From time to time the Revised Statutes relating to this subject have been amended so that before the passage of chapter 175, Laws 1893 (which is an amendment of the Revised Statutes), it was provided that the father, during the lifetime of the mother, might appoint a testamentary guardian of unmarried minors, and that the mother, surviving the father, might also appoint one for her unmarried minor children. 4 Rev. St. (Banks’ 8th Ed.) p. 2612, c. 454, Laws 1888. By the Revised Statutes, as amended in 1893, the father and the mother are declared to be the joint guardians of their minor children. The word “husband” is used in the statute, but it evidently means “father,” as it cannot be presumed that the legislature intended that a husband should become joint guardian with the mother of children by a former marriage. This act repeals the authority conferred by the former statutes upon the father to appoint a testamentary guardian during the lifetime of the mother. Under the Revised Statutes, as amended, only the surviving parent is authorized to appoint such a guardian. People v. Boice, 39 Barb. 307. The father having no power under the statute to make the appointment, his void act in attempting to do so cannot be validated by the subsequent assent of the mother. The testamentary guardianships which the testator attempted to create were limited to the estates of the minors, but we need not now consider whether such a qualified guardianship is authorized by the statute. It is difficult to see any good reason for taking any risks in this case. The persons to whom it is desired to have letters of testamentary guardianship issued can easily be appointed the general guardians of the infants.

The order should be affirmed.

Yah Brunt, P. J., concurs in result; Parker, J., concurs.


author: Parker, J.

text:
    The Mayor, etc., of the City of New York, App’lt, v. John Brady et al., Resp’ts.

      (Supreme Court, General Term, First Department,

      Filed April 13, 1894.)

    'Evidence—Indemnity bond—Personal injuries.
    In an action on the contractor’s indemnity bond, the city may, where it has paid a judgment recovered against it for personal injuries caused by an obstruction in a street where work was being done by the contractor, show that he committed the negligent act on which the recovery was had.
    Appeal from a judgment dismissing the complaint.

      William H„ Clark, for app’lt; James A. Peering, for resp’t.
   Parker, J.

As we adhere fully to the position taken by this court on the former appeal in this action, 70 Hun. 250; 54 St. Rep. 1, further discussion of the questions considered will not be indulged. The record then before the court disclosed that the plaintiff, in order to establish its cause of action, had introduced in evidence the contract, the bond, and the judgment roll, proved the payment of the judgment, the amount expended in contesting the former action, and rested. This court held that the plaintiff had failed to make out a case. It appeared from the judgment roll that the issue whether the city or the contractor was primarily liable, as between themselves, was not presented or tried; therefore it failed to establish that which was essential to a recovery, viz. that the judgment recovered against the city was for damages caused by some negligent act or omission of the contractor, for which, as between him and the city, the contractor was primarily liable. On the last trial, the record of which is now before us, the plaintiff produced the witnesses who were before the court upon the trial of the action between Cruickshank and the plaintiff, and attempted to prove the alleged negligent acts which furnished the basis for the recovery had by Cruickshank; the purpose being to establish, as between this plaintiff and’Nutt & Kearns, the contractors for whom these defendants were sureties, that Mutt & Kearns were primarily liable for the damages sustained. The evidence was excluded, and thus is presented error for which a reversal must be had.

Upon the argument it was asserted that the plaintiff had failed to fairly apprise the court that its purpose was to prove the original negligence, and that Mutt & Kearns were primarily liable to respond for the damages resulting. That such contention was incorrect sufficiently appears from the extracts following, which we take from the record :

“Mr. Blandy : I offer to prove that the judgment against the city procéeded as the result of the negligence of Nutt & Kearns. The court: I have already ruled on that point, and you have taken your exception. Mr. Blandy: You honor does not get the point of the distinction. I told you, when Mr. Cruickshank was on the stand, I did not offer it for the purpose of proving-negligence of Nutt & Kearns, but for the purpose of proving that the judgment proceeded against the city, because of the finding of negligence by the jury in that action. The general term might say to me that it was not competent for me to prove that the judgment proceeded that way, but that I should have gone on and proved the original negligence. The court: I have twice read you the paragraph of the general term’s opinion which is the basis of my action in this trial. You have taken your exception to protect your rights. Mr. Blandy: _ I offered Cruickshank a moment ago, not to prove the original negligence of Nutt & Kearns, but to prove that the judgment proceeded against the city because of the negligence, leaving the judgment record then' to be conclusive. Mow I am in a position to prove the original negligence. I have all the witnesses here that we called on that trial, but I don’t think your honor wants me to call them. I think you mean, under the opinion of the general term, the proof would not be competent in either respect. If you say so, I am entirely satisfied. The court: I cannot say anything more than I have. I have read you again and again this paragraph in which the general term said no shell issue was tried, or could have been tried, upon that trial. Therefore I am obliged to sustain the objection.” Augustus W. Cruickshank, recalled for plaintiff: Q. Will you describe to the jury the position of the pipe in question on the night that you met with your accident? (Objected to—First, upon the ground that the record in the suit of Cruickshank v. The Mayor is conclusive in this action ; second, that sufficient foundation has not been laid for the question of more proof that the land in question was a parcel of land; over which the plaintiff had a right to pass. Objection sustained, for the reasons already stated. Exception.) Q. State the circumstances under which you met with the accident which you have described in the Cruickshank action ? (Same objection, ruling, and exception. Plaintiffs rest.) ”

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


author: Andrews, Oh. J.

text:
    Arthur J. Connelly, Resp’t, v. The Manhattan Railway Company, App’lt.

      {Court of Appeals,

      Filed June 5, 1894.)

    1. Railroads—Elevated—Duty.
    It is the duty of an elevated railway company, under its charter, to operate its trains, if practicable, for the convenience of the public.
    3. Same—Question of fact.
    Upon the evidence in this case it was held that there was no warrant for imputing negligence to the company for not earlier suspending traffic on its road, and a charge which submitted such question to the jury was error.
    Appeal from j udgment of the general term of the supreme court in the first judicial department, entered upon an order made April 14, 1898, which modified and affirmed as modified a judgment in favor of plaintiff entered upon a verdict, and also affirmed an order denying a motion for a new trial. The nature of the action and the facts, so far as material, are stated in the opinion.

      Edward B. Thomas, for app’lt; Jacob Fromme, for resp’t.

      Reversing 52 St. Rep. 462.

   Andrews, Oh. J.

This action was brought to recover for personal injuries sustained by the plaintiff in the city of New York while a passenger on the defendant’s railway, at about 7 o’clock on the morning of March 12th, 1888, the day of the so-called “blizzard.” The plaintiff entered the down-town train at Seventy-sixth street, which was filled with passengers, and finding no vacant seat stood in the passageway. The track was blocked by the trains ahead, which could not get up the grade commencing at Seventy-sixth street on account of the snow which clogged the rails and the spaces on each side. About twenty minutes after the plaintiff entered the car a train in the rear, which had started from Harlem, drawn by two engines and having several cars crowded with passengers, ran into the train in which the plaintiff was, causing the injury of which he complains. It was claimed on the trial that the collision was caused by the negligence of the defendant (1) in not discharging the passengers on the train in which the plaintiff was when it wras found that it could not proceed as required by the rules of the company; (2) in starting the colliding train from the Eighty-fourth street station with directions to “ skip the Seventy-sixth street station,” when it was known to the agents of the company, or ought to have been known to them, that the road was- blocked at Seventy-sixth street; (3) in running the train at a dangerous rate of speed from Eighty-fourth street to the point of collision. The storm known as the “ blizzard ” was unprecedentd in its character and severity. The weather forecasts published the day before gave no indication that such a storm was to be expected. It rained on the 11th, and about midnight the storm changed to snow, accompanied by a very high wind. The snow continued until about 5 o’clock of the morning of the. 12th, when it stopped snowing for some hours. It then commenced to snow again, and continued snow* ing during the rest of that day and until the afternoon of the 13th. The traffic on the street railways was suspended from about 7 o’clock on the morning of the 12th and business in the city was to a great.extent discontinued. The court left the question of negligence to the jury, and we think this was a proper disposition of the question.

But the court, we think, erred in refusing to;charge a proposition requested to be charged by the counsel for the defendant and in the instructions following the request, to which refusal to charge and to the charge as made the defendant’s counsel excepted. The defendant’s counsel requested the court to charge “that the evidence does not justify a finding that the defendant, should not have operated its railway at all at the hour when the accident occurred.” The court said: “I do not express any opinion on the evidence; it is before you. It is for you to say whether the evidence does establish negligence on the part of the defendant to operate at the time and at the hour specified.” By this charge it was left to the jury to determine whether the situation. was such as to require the defendant, in the exercise of due-care, to have wholly suspended its efforts to move its trains at and before the time of the collision. There was, we think, no evidence-to justify the submission of this question to the jury. The storm had apparently abated. The trains of the defendant were crowded with passengers seeking passage to the lower part of the city. It was the duty of the defendant, under its charter, to operate its trains, if practicable, for the convenience of the public. Ho accidents had, so far as appears, occurred on that day prior to the accident in question, and the road had continued its efforts to-move its trains. Up to about the time of the accident the street, surface roads had continued their traffic, and they naturally would be more likely to be impéded by the snow than the elevated roads. The forecasts of the weather were, as has been said, favorable. The jury were permitted to find that the defendant should, in the exercise of due prudence, have wholly suspended its operations before the time the accident happened, although the public were ' clamoring for transportation and crowding its cars for passage. We do not think that upon the evidence there is any warrant for imputing negligence for not earlier suspending traffic on its road. The main charge on this point it is said referred only to the question of negligence in running the colliding train from Eighty-fourth street station, with directions to “skip Seventy-sixth street,” when the road was blocked at that point. But the request to charge and the instructions given thereon indicate that a broader contention was made on the trial, viz., that- the entire operation of the-road should have been suspended, and that negligence could be predicated upon the fact that the company undertook to continue the operation of its road.

For the error in the refusal to charge the proposition referred to, and in the charge made in response thereto, the judgment should be reversed, and a new trial granted.,.

All concur.

Judgment reversed.


author: O’Brien, J.

text:
    John D. Forward, Resp’t, v. The Continental Insurance Company, App’lt.

      (Court of Appeals,

      Filed June 5, 1894.)

    1. Insurance—Fire—Condition.
    A condition against a state of things, known by all the parties to exist, cannot be deemed to be within their intention and purpose upon entering into the contract of insurance.
    8. Same—Agent.
    In such case, where the insurance is taken by an agent, it is not so much a question of power or authority in the agent to waive the condition as of knowledge of the real facts by the company through its agent.
    3. Same—Limitation of authority.
    In case of agencies at a distance from the principal place of business, no limitations of authority, which are not brought to their knowledge, will be binding on parties with whom tile agent deals within the general scope of the business intrusted to his care.
    4. Same.
    The reasons for a condition in a policy declaring it void in case the interest of the insured is other than unconditional absolute ownership do not apply, when the transfer is merely colorable or nominal and not real and effective.
    Appeal from judgment of the general term of the supreme court in the fifth j udicial department, entered upon an order made January 18, 1893, which denied a motion for a new trial, overruled defendant’s exceptions and directed judgment in favor of plaintiff upon a verdict. This action was brought to recover the amount of an adjusted loss under a policy of insurance issued by defendant.
    The facts, so far as material, are stated in the opinion.

      Myron I£ Peck, Jr., for app'lt; Safford K North, for resp’t

       Affirming, 49 St. Rep. 867.

   O’Brien, J.

The judgment in this case was recovered upon a policy of insurance, issued April 23, 1891, at one year upon a store and the goods therein, which were owned by the plaintiff. By the terms of the policy the risk was distributed as follows : Upon the store a sum not exceeding $1,000, the goods a sum not exceeding $1,200, and the furniture and safe a sum not exceeding $100. The entire property was destroyed by fire on the 27th of September, 1891. The complaint alleges and the answer admits that the loss was adjusted and determined between the plaintiff and a general agent of the defendant on the 6th of October following at $1,950, and the recovery was for this sum and interest. The only defense interposed by the answer or urged upon the argument of the appeal in this court was a breach on the part of the plaintiff of one or perhaps two of the conditions contained in the following clause of the policy :

“ This entire policy, unless otherwise provided by agreement indorsed hereon or added hereto, shall be void * * * if the interest of the insured be other than unconditional, sole ownership, * or if the subject of insurance be personal property, and be or become incumbered by a chattel mortgage. * * In any matter relating to this insurance, no person, unless duly authorized in writing, shall be deemed the agent of this company. * * * This policy is made and accepted subject to the foregoing stipulations and conditions, together with such other provisions, agreements or conditions as may be indorsed hereon or added hereto, and no officer, agent or other representative of this company shall have power to waive any provision or condition of this policy, except such as, by the terms of this policy, maybe the subject of agreement, indorsed hereon or added hereto ; and, as to such provisions and conditions, no officer, agent or other representative of this company shall have such power, or be deemed or held to have waived such provisions or conditions, unless such waiver, if any, shall be written upon or attached hereto. Nor shall any privilege or permission affecting the insurance under the policy exist or be claimed by the insured unless so written or attached.”

It was shown at the trial that the plaintiff, .about two months before the policy had been issued to him, had executed and delivered to his brother an instrument in the form of a bill of sale upon the stock of goods, furniture and fixtures in the store, which on March 3, 1891, was filed in the town clerk’s office. This instrument, in consideration of $500, purports to transfer the plaintiff’s interest in the property absolutely to his brother. The proof at the trial tended to show that there was in fact no consideration for the transfer. That it was colorable merely and made between the two brothers with reference to some litigations pending or threatened against the plaintiff. The brother never in fact paid anything as a consideration for the transfer, and no debt was due or owing to him by the plaintiff. He never in fact claimed any title to the property or any right to its possession, which always remained in the plaintiff. There was also proof that the existence of this bill of sale, its true consideration, character and purpose were disclosed to the defendant’s agent before the policy was issued or deli vei’ed. The court submitted two questions to the jury : (1) Whether the defendant, notwithstanding the condition of the policy,had knowledge of all the facts respecting the existence, nature and purpose of the bill of sale, instructing them that the knowledge of the agent was the knowledge of the company, and that if they found that the defendant had knowledge of the facts the policy was not avoided. (2) Whether a statement contained in the proofs of loss to the effect that there was no incumbrance on the property at' the time was willfully false and known to be so by the plaintiff when he made the proofs, and was made for the purpose of defrauding the defendant, instructing them that if it was not then it did not amount to false swearing within' the intent and meaning of a condition in the policy. The verdict was in favor of the plaintiff; and hence all the disputed facts material to the questions of law must be deemed to be established in the plaintiff’s favor. It was said by Judge Andrews in Walsh v. Hartford Fire Insurance Co., 73 N. Y. 11, upon the authority of many cases, that “conditions for the pre-payment,of premium and the like, which enter into the validity of a contract of insurance at its inception, may be waived by agents, and are waived if so intended, although they remain in the policy when delivered, and that a contract for renewal is for the purpose to be treated as the original contract.” It has uniformly been held by this court that a condition of this character in a contract of insurance will not operate to avoid it after aloss providing the company, before delivering the policy, had knowledge of the fact that the insured, notwithstanding the warranty, or the statement and the condition was not the sole owner or that it was incumbered. In such case the company is deemed to have waived the condition or by the delivery of the policy with the condition avoiding it in case the insured is not the sole owner, or that the property is incumbered, and accepting the premium, is held estopped from setting up the condition as a defense. It was never supposed that such a condition was intended to apply to a state of facts in regard to which the company had been fully informed when it accepted the risk The cases on this point are numerous, and it is.impossible to make any distinction in principle between the conditions considered and that involved in the case at bar. Van Schaick v. Niagara Fire Ins. Co., 68 N. Y. 434; Whitehead v. Germania Ins. Co., 76 id. 415; Woodruff v. Imperial Ins. Co., 83 id. 134; Short v. Home Ins. Co., 90 id. 16; McNally v. Phœnix Ins. Co., 137 id. 389; 50 St. Rep. 680 ; Carpenter v. German Am. Ins. Co., 135 N. Y. 298; 47 St. Rep. 862; Gross v. National Fire Ins. Co., 132 N. Y. 133; 43 St. Rep. 482; Berry v. American Ins. Co., 132 N. Y. 49 ; 43 St. Rep. 400.

In these cases it was held, either that the company had waived the condition, or was estopped by the delivery pf the policy and the receipt of the premium, since, under such circumstances, it could not be supposed that it intended to deliver to the insured a policy which it knew to be void. When the underwriter, before the inception of the contract, is informed by the owner that the property is incumbered, but still delivers the policy with the condition embodied in it, then it seems to me, it is not so much a question of waiver or estoppel as a question whether the condition ever attached or operated'upon the facts thus disclosed. It can, of course, operate in the future upon transfers or incumbrances as the facts arise, and then the question is one of waiver. But when the facts are all known before any contract is made, a condition against a state of things known by all the parties to exist cannot be deemed to be within their intention or purpose. This case cannot be taken out of the rule by any possible distinction unless it be the character and powers of the agent of the defendant, to whom, upon the finding of the jury, the facts were communicated. It is urged that the cases cited do not apply for the reason that the waiver there was by a general agent. That may be true with respect to the four cases last cited. But it does not seem to me to be so much a question of power of authority in an agent to waive a condition in the contract as of knowledge by the company through its agent of the real facts. In the Carpenter Case, supra, the information as to the true state of the title was given to a mere cleric of the general agent, and we held that such knowledge was imputable to the company, through the general agent, for whom the clerk acted in soliciting the insurance, and that a condition of this character remaining in the policy did not avoid it. Now, the powers of the agent in this case were certainly much broader than those of the clerk in the case referred to. In this case the person to whom the information "was communicated was certainly an agent appointed by the defendant itself, while in that the person had no authority directly from the company, but was a mere servant or clerk acting for and solely under the authority of the agent. The agent in this case and tne clerk in the other were engaged in precisely the same duty and performing the same service when they acquired the knowledge as to the condition of the property and the state of the title. They were both soliciting insurance and ascertaining the character and condition of the property upon which the risk was about to be taken, and I am unable to suggest any reason for imputing knowledge in the one case and not in the other. Moreover, the record is entirely silent as to any facts tending to show that in this case the agent was acting in pursuance of a special or limited power. On the face of the policy he appears to be the duly authorized agent of the defendant and actually did grant special permits and waive conditions in the policy. He had power to waive conditions, providing it was in the manner stipulated in the policy, that is to say, in writing. He had power to solicit insurance, collect premiums and deliver pblicies. There is no proof in the record that the plaintiff ever made application for this policy, written or otherwise, or that he touched the company at any point or in any form except through this agent. The fair inference from the»proof is, that the defendant furnished the agent with policies' duly executed, which be filled up and delivered at his discretion, reporting the facts to the company. _ There is nothing on the face of the policy and nothing was communicated to the plaintiff to lead him .to believe that the powers of the agent were special or restricted. Insurance companies doing business by agencies at a distance from their principal place of business, are responsible for the acts of the agent,, within the general scope of the business intrusted to his care, and no limitations of his authority will be binding on parties with whom he deals which are not brought to their knowledge. Insurance Co. v. Wilkinson, 13 Wall. 222; Mersereau v. Phœnix Mutual Life Ins. Co., 66 N. Y. 278; Bodine v. Exchange Fire Ins. Co., 51 N. Y. 117; Arff v. Star Fire Ins. Co., 125 N. Y. 57; 34 St. Rep. 366.

It was held in the case of Ellis v. Albany Fire Ins. Co., 50 N. Y. 402, that an agent-with precisely such powers as I have supposed the agent in this case possessed, could bind the company by a parol contract of insurance,- while Un application for a policy was pending, but none delivered till after a loss. I am unable to discover in the record any basis for the contention that the knowledge of the agent as to the existence and purpose of the bill of sale is, not thp knowledge of the defendant. On the contrary, his knowledge of the facts is, I think, imputable to his principal. So ■far as appears, the plaintiff dealt with'him as the representative of the company. If there were in fact any limitations or restrictions of his powers as an ordinary agent it was for the defendant to show it. Bus commission was not put in evidence nor any proof given tending to show that he was not what he was described in the complaint, the defendant’s duly authorized manager or agent at the place where the contract was made. There were no other means of communication between the plaintiff and the defendant employed. So far as appears he made this contract for his principal, and the knowledge that he obtained in the course of the business was the knowledge of the defendant.

There is another view of the question that deserves some notice. Conditions in contracts of insurance against liability when the property is incumbered or where the title is not absolute in the insured are inserted for the purpose of guarding against the moral hazard involved. When the transfer or incumbrance is merely colorable or nominal and not real or effective the reasons that induced the stipulation do not apply. Was there any real sale or transfer of this property within the meaning of the policy ? Nothing was done except to execute and file a paper. There were no intention in fact to transfer,the title or vest any beneficial interest in the nominal vendee. There was no debt to he enforced, no consideration passed, and the use and possession remained unchanged. The filing of the paper added nothing to its validity. It was not a mortgage nor intended as security for any debt. It was a mere paper transfer without consideration and without delivery of possession, and while it had the form it had none of the legal elements necessary, even between the parties, to constitute a valid contract of sale. In legal effect it was, I think, the same as an unexecuted gift. The worst that can be said of it is that it was intended to defraud creditors, but if that he true still the moral hazard which was the basis of the condition of the policy would still be absent, since the plaintiff’s interest in the property at the time of the insurance was in fact the same as before the paper was executed. There is no legal ground upon which this court can properly disturb the verdict, and the judgment should, therefore, be affirmed.

Finch and Peckham, JJ. concur; Andrews, Oh. J„, and Bartlett, J., concur on last ground mentioned in opinion; Earl, X, dissents on first ground and concurs on last ground; Gray, X, dissents.

Judgment affirmed.


author: Andrews, 0. J.

text:
    Jacob Lorillard, Resp’t, v. William P. Clyde et al., App’lts.

      (Court of Appeals,

      Filed June 5, 1894.)

      1. Contbact—Conditional existence.
    Where the performance depends on the continued existence of a given person or thing, and such continued existence is assumed as the basis of the agreement, the death of the person or the destruction of the thing puts an end to the obligation.

      %. Same—Interference of law.
    If, after a contract is made, the law interferes and makes subsequent performance impossible, the party is held to be excused.

      3. Same—Guaranty. ■ '
    In an action to recover dividends guaranteed to be paid by a corporation, there is an implied condition that the existence of the corporation should continue during the period covered by the guaranty, and the obligation of the contract of guaranty terminates prima facie with the dissolution of, the corporation,
    4. -Same—Defense.
    The claim that the dissolution of the corporation was caused by the wrongful acts of the guarantor, will not entitle the guaranteed party to judgment, where the latter himself was the proximate cause thereof.

      James C. Carter (Boardman & Board-man, attorneys), for app’lts; Richard L. Sweezg (Glover, Sweezy & Glover, attorneys), for resp’t.
   Andrews, 0. J.

The validity of the contract upon which the action is brought was adjudicated in the case reported in 86 N. Y. 384. The divisible character of the obligation of the defendants, and the right of the plaintiff to maintain separate actions for successive payments on the guaranty as they fell due has also been settled. 122 N. Y. 41; 33 St. Rep. 303. The plaintiff in the actions heretofore brought has recovered under the contract dividends, or the equivalent of dividends on his stock, at the rate of seven per cent, per annum from July 1, 1874, to July 1, 1879, a period of five years antecedent to the dissolution of the corporation. The present action is to recover such dividents for the two succeeding years, which complete the term of seven years specified, in the guaranty.

The effect of the dissolution of the corporation upon the contract of guaranty as to payments subsequently accruing thereon presents the new question involved in the present litigation. Its. solution rests primarily upon an interpretation of the contract. The object of the contract, as stated therein, was the consolidation of the interests of the respective parties in the business of water transportation between New York and Philadelphia. - They were competitors in the business. The plaintiff owned and ran steamships between these ports by the outside route, and the defendants eonductéd their business between the same ports by means of tugs and barges running upon the canals and inside water routes. The outside business could be carried on during the whole year. The business by the inside routes was of necessity suspended during the time the canals were closed by frost. The plan of combination was to organize a corporation to which each of the interests would contribute an equal amount of capital in the- properties then employed by each in the business of transportation at an agreed valuation, any difference in value to be equalized by payment by the one party to the other. The written contract embodied the scheme. It provided for the organization of a corporation under the law of New York, with a capital of $300,000; designated the vessels to be contributed by each interest and fixed their value; provided for the payment by the Olvdes to the plaintiff of $20,000 for equality of interest. Among other provisions is the following: “William P. Clyde & Co. to have the management of said corporation, and business, and in consideration thereof to guarantee to Jacob Lorillard a dividend of not less than seven per cent, per annum for seven years, and to receive for such management the usual commission of two and one-half per cent, in and five por cent, out at each end of the freights earned.” The corporation was organized ; a board of five directors was designated in the certificate of incorporation, one-half of the stock, being fifteen hundred shares, was issued to the plaintiff, and the other half to W. P. Clyde & Co., except that three shares of the par value of $100 each were, by the direction of the Clydes, taken from their one-half and certificates issued to three clerks, who were named as directors in order to qualify them under the statute. The business of the corporation was carried on under the management of W. P. Clyde & Co. until April, 1879, when a suit was brought in the name of the People by the Attorney General to dissolve the corporation and a temporary receiver appointed. The case was tried and resulted in a judgment dissolving the corporation and the appointment of a permanent receiver. It is unnecessary to enter into greater detail at this time of the facts disclosed by the record. Other facts will be hereafter referred to.

The question whether the obligation of the defendants’ under their guaranty, continued in force as to the part of the seven years, unexpired at the time of the dissolution of the corporation, in the absence of any responsible agency of either party for the causes which led to the dissolution, must be determined by the intention of the parties as ascertained from the language of the contract, and, if ambiguous, from such language and the surrounding circumstances. The contract contains no explicit statement on the subject. It assumed that the corporation would be in existence during the whole period over which the guaranty extended. The guaranty was not for the yearly payment of a sum equal to seven per cent, on the capital of the plaintiff in the corporation, or on the nominal amount of his stock. It was, that the dividends of the corporation should annually for seven years equal that sum. The plaintiff would under the contract and by virtue of his right as a stockholder be entitled to dividends declared by the company, whether they should be more or less than seven per cent, per annum, and if dividends less than that amount should be made, the liability of the defendants on their guaranty would be limited to a sum sufficient to make up the deficit. In case the dividends equaled or exceeded seven per cent, there would he no liability, and in case no dividends were declared then the guaranty would stand in lieu of dividends. The contract provided that “ accounts shall be made up and dividends when earned shall be declared and paid quarterly," and it is also provided that during the seven years neither party should be interested in “any competing steam water line between New York and Philadelphia without the consent of the other party in writing.” The fact that guaranty was of “dividends" which implies the existence of the corporation during the time specified capable of earning and declaring dividends, and the prohibition against either party becoming interested in competing lines during the same period, inserted for the protection of the corporate business, plainly indicate that the parties were dealing upon the assumption o£ corporate existence during the period covered by the guaranty. But this becomes much more plain when the nature of the transaction in which the parties were engaged and the consideration upon which the guaranty rested are considered. The real purpose of the parties was to combine their properties and conduct the transportation business between New York and Philadelphia as a joint business, each contributing the same amount of capital and being equally interested in the vessels. The arrangement was substantially a partnership with a corporate organization. The consolidation would prevent competition and presumably benefit both interests. The management of the business was, by the contract, to be vested inW. P. Clyde & Co., and “ in consideration thereof,” and of their right to receive the usual commissions on inwai’d and outward bound freight which was given them, they agreed to guarantee to the plaintiff dividends at the rate and for tire time specified. -

It is incontrovertible that the right to manage the businesss of the corporation and to earn and to receive the commissions on freight were the considerations upon which the guaranty rested. The plaintiff conceded these rights to the Clydes for this equivalent. The defendants could receive the benefits of the contract only in case the corporation should continue in being during the running of the guaranty. The death of the corporation would terminate their management, prevent their earning commissions; the business would end, and the court, in administering the assets, would return to each party his proportion of the capital remaining for distribution. The death or dissolution of the corporation would withdraw all the capital invested, so far as it remained, and take away for the future the whole consideration upon which the guaranty was based. There would thereafter be no corporation earning or capable of earning dividends, and nothing left upon which the obligation to pay them could lie predicated. The general doctrine that when "a party voluntarily undertakes to do a thing, without qualification, performance is not excused because, by inevitable accident or other contingency not forseen, it becomes impossible for him to do the act or thing which he agreed to do, is well settled. This doctrine protects the integrity óf contracts, and one of the reasons assigned in its support in the early case of Paradine v. Jane, Aleyn Rep. 26, is that as against such contingencies the party could have provided by his contract. See Harmony v. Bingham, 12 N. Y. 99; Ford v. Cotesworth, L. R., 4 Q. B. 134; Jones v. U. S., 96 U. S. 24. But it is now well settled that when performance depends on the continued existence of a given person or thing, and such continued existence was assumed as the basis of the agreement,.the death.of the person or the destruction of the thing puts an end to the obligation. Ex-ecutory contracts for personal services, for the sale of specific chattels, or for the use of a building, are held to fall within this principle. Dexter v. Norton, 47 N. Y. 62; People v. Globe Mutual Ins. Co., 91 id. 174; Taylor v. Cadwell, 113 Eng. C. L., 826. These cases are not exceptions to the rule that contracts'voluntarily made are to be enforced, but the courts, in accordance with the manifest intention, construe the contract as subject to an implied condition that the person or thing shall be in existence when the time of performance arrives. So, if after a contract is made, the law interferes and makes subsequent performance impossible, the party is held to be excused. Jones v. Judd, 4 N. Y. 412.

It must be conceded that it is difficult to draw the line and to determine the exact limitations of the principle. When the ex-ecutory contract relates to specific chattels, and the subject matter is destroyed without fault of the party, the implied condition arises and excuses performance. But where the contract is based on the assumed existence and continuance of a certain condition, or upon the continuance of a subject matter which, however, is not the direct object of the contract, is the principle, in such cases, excluded? The present case illustrates what we have in mind. The contract in question was not with the corporation whose life was extinguished by the judgment of dissolution. But the guaranty assumed that the corporation would continue in existence during the seven years period. The liability which the defendants assumed was in consideration of the benefits which might accrue to them from the management of the transportation business of the corporation during that period. Upon the assumption that the death of the corporation was brought about without their fault, were they thereafter bound ?• Is th,e doctrine of implied condition less applicable than it would be if the contract had been between the defendants and the corporation ? If in one case the contract, so far as it was unexecuted, would be terminated, did not the happening of the same event terminate the engagement of these parties, based on the assumed continuance of the corporation in life ? There is in the present case, we think, an element which strengthens the conclusion we have reached, that the obligations of the contract terminated prima facie with the dissolution of the corporation. There is something more than an implied and wholly unexpressed condition that the corporation should continue in life during the seven years. It is the fair construction of the language of the contract itself. The contract was not unilateral. It contains mutual stipulations. These mutual stipulations, by their terms, look to the continuance of the corporatinn, and the mutual obligations into which the parties entered are qualified by this understanding.

The plaintiff, however, seeks to avoid the force of the proposition that, by the true construction of the contract, the obligation of the guaranty as to future payments did not survive the dissolution of the corporation, by the claim that the causes of the dissolution of the corporation were the wrongful acts of the defendants, and that they cannot interpose the judgment of dissolution brought about by their own misconduct as a defense. We think the answer to this claim is that, as between these parties and in this action, the plaintiff himself must be considered as having procured the dissolution of the corporation. The grounds, upon which the court in the People’s action proceeded in adjudging the dissolution are set forth in the judgment, which is an exhibit in this action. The act of 1852, under which the corporation was organized, is a general law for the incorporation of steam ocean navigation companies. The act offers to any seven or more persons the opportunity to organize a corporation thereunder. It specifies what the certificate to be filed shall contain, and, among other things, that it shall specify “ the ports between which the vessels (of the corporation) are intended to be navigated” (§ 1). The corporators may insert one or many routes at their pleasure. The act also directs that the corporation shall be managed by not less than five nor more than nine directors, who shall be shareholders and citizens (§ 3). The sixth section makes the stockholders severally individually liable for the debts of the corporation to an amount equal to the amount of, the stock held by them respectively “ until the amount of its capital stock shall have been paid in and a certificate thereof shall have been made and recorded.” The seventh section makes it the duty of the president and a majority of the directors,'within thirty days after the payment of the last installment of the capital stock, to make and verify a certificate of that fact, “ and within said thirty days record the same in the office of the clerk of < the county in which is located the principal business office of the corporation.” The grounds of forfeiture upon which the judgment in the People’s action was based, as near as can be gathered from the record were (1) that three of the five directors were disqualified, not being stockholders in the company; (2) that ño certificate of the payment in full of the capital stock of the corporation had been made" and filed as required by the seventh section of the act, although fully paid up in 1874; (3) that annual meetings of the stockholders for the election of directors had not been held; (4) that the corporation had at times diverted some of the seagoing vessels from the route designated in the certificate to other sea routes. ' In support of the first ground of forfeiture it was shown on the trial of the action that the defendants, alter making a transfer on the books of the corporation of one share of stock to each of the three clerks who were named as directors, took back an assignment from each in blank of the share standing in his name and continued to hold the same until the dissolution. As between the plaintiff and defendants this accomplished the purpose which was an essential part of the agreement between them, that each of the parties should hold an equal amount of the stock of the corporation. The fourth ground of forfeiture was based on the fact that ships from time to time belonging to the corporation were employed on other routes than the one mentioned in the certificate of incorporation. The contract between the parties contemplated that during the summer months, when the business could be carried on by the inside route, the outside vessels might be employed on some route other than that specified in the certificate, and the contract ¡Drovided that “ the managers may temporarily divert any of the property of the corporation where it can be more profitably employed.” In pursuance of this authority, the plaintiff, during the first year, ran vessels on behalf of the company on other routes than the one designated. Assuming that the several acts and omissions adjudged in the People’s action were violations of corporate obligation and duty, which under § 430 of the Code of Procedure in force when the proceedings to annul the charter of the corporation were taken, authorized the state to bring and maintain that action, it is difficult to see how any public interest required a resort to this remedy. The irregularities and omissions, so far as appears, would have been corrected on notice to the corporation, but no such notice was given. The section of the Code referred to makes it the duty of the attorney-general, upon leave granted, to bring an action to annul the charter of a corporation for any of the acts or omissions specified in that section, “ in every case of public interest; ” but in other cases, only where 11 satisfactory security shall be given to indemnify the people of this state against the costs and expenses to be incurred thereby.” The section discriminates between violations of corporate duty affecting “ public interests,” or as was said in Thompson v. People, 23 Wend., 583, where a corporation has committed “ some misdemeanor in the trust injurious to the public,” and technical, incidental or immaterial violations, which, although strictly involving liability for forfeiture, might not seem to require this drastic procedure. In the one case the attorney general is bound to act. In the other, only when required to act by the intervention of some other party, and he indemnifies the state and assumes the burden, of the litigation. The plaintiff in this action was the active promotor of the People’s action. The suit was instituted upon his application; he gave the bond required by the attorney-general and. verified the complaint; the suit was carried on and tried by private counsel employed by him. It is safe to say that unless for his active intervention the suit would never have been prosecuted. If you go back of the judgment to inquire for the cause of the dissolution, you come to the plaintiff as the proximate and efficient agency in procuring it. He owed no public duty to the state to bring to the. notice of its officers the technical breaches of corporate duty upon which the judgment proceeded. For some of them he seems to have been as much responsible as the defendants, and that in doing what he did he was not actuated by a regard for the public .interests, or by a sense of public duty, the record contains ample evidence. We think that the finding that the defendants forfeited their management of the corporation by their own wrongful acts is not sustained by the evidence, in the sense that they were wrongful as to the plaintiff, or that as between these parties they were the cause of the dissolution.

The judgment should be reversed and a new trial ordered.

Judgment reversed. All concur.


author: Peckham, J.

text:
    William B. Dayton, Resp’t, v. William A. Parke et al., App’lts.

      (Court of Appeals,

      Filed June 5, 1894.)

    1. Proof—Hearsay evidence.
    Hearsay evidence alone will not be regarded as sufficient proof of a fact in issue concerning which it was given, unless it appears from the course of the trial that it was so received and accepted.
    2. Appeal—Supreme court—Determination.
    The supreme court cannot, on appeal, add to the original judgment a sum which it finds from the evidence to he due plaintiff, when the question as to the amount due is one of fact upon which either party may demand the finding of a jury.
    3. Charter party—Consignee—Demurrage.
    Where the consignee is the owner of the cargo and the vessel is, through his fault, detained an unreasonable length of time at the port of discharge, he is liable for damages in the nature of demurrage.
    4 Same.
    But damages will not be presumed simply from evidence of unlawful detention, and, in case the owner of the vessel fails to prove any damages, lie is not entitled to judgment for even nominal damages.
    Appeal from judgment of the general term of the supreme court in the second judicial department, entered upoji an order made February 25th, 1898, which modified, and affirmed as modified, a judgment in favor of plaintiff entered upon a verdict directed by the court, and also appeal from so much of said order as affirmed an order of special term denying a motion for a new-trial, and an order denying a motion for a re-taxation of costs.
    This action was brought by plaintiff' on behalf of himself and all the owners of the schooner J. H. Parker to recover the freight on a cargo of railroad ties shipped by Mallonee & Co., of Charleston, S. 0., the charterers of the schooner, and consigned to the defendants, and to recover demurrage at the rate stated in the charter party. Said charter party provided “ that the lay days for loading and discharging shall be as follows: Commencing from the time the captain reports his vessel ready to receive or discharge cargo: For loading, cargo to be furnished at the rate of 40 M. ft. per day (Sundays excepted), and for discharging, customary dispatch. And for each and every day’s detention by default of said party of the second part,- or agent, fifty-two dollars shall be paid by-said party of the second part, or agent, to said party of the first part, or agent.”
    The further facts, so far as material, are stated in the opinion.

      Edward 2f. Shepard, for app’lts; Thomas J. Hitch, Jr., for resp’t. ■

      Reversing 51 St. Rep. 542.

   Peckham, J.

Thé trial court directed a verdict for the amount of the plaintiff’s claim for freight, together with six cents damages, for demurrage, and the judgment was thus duly entered, with costs. Both parties appealed, and the general term, upon plaintiff’s appeal, modified the judgment by increasing the amount allowed plaintiff for demurrage from six cents to three hundred spid twelve dollars, and it affirmed the judgment upon defendants’ appeal. The defendants have appealed here from the judgment as so modified, and also from several orders as relating t > costs, and to the amendment of the judgment as to the amount that should be directed upon the plaintiff's claim for freight. Upton the liability of the defendants for freight, we think, as the ease appears here, the plaintiff had proved by uncontradicted evidence enough to warrant the court in directing a verdict.

The defendants, in addition to other evidence on the subject, admitted in so many words that plaintiff's claim against them for freight was correct. This did not preclude them from p-oving that the admission was erroneous, or from giving any other explanation of it that they could, but they did not prove anything of tlie kind, nor was any explanation of the admission attempted. It is, indeed, said that the course of the trial was such as to assume the sufficiency of certain hearsay evidence to prove the alleged fact that the defendants had sold the railroad ties to the Long Island Railroad Company, in behalf of the consignors thereof, lie-fore the vessel in which they were loaded left Charleston, and upon such alleged facts the defendants base their claim that they did not receive the cargo, and were not liable for the freight due the owners of the vessel upon its arrival at the dock of the Long Island Railroad Company. However that may be, we cannot say from a perusal of the record that this hearsay evidence was received or allowed upon the assumption that it proved the fact stated as liearsay. This hearsay evidence first came out in the course of the direct examination of a witness for the plaintiff who was giving material evidence in the case, on the part of the plaintiff, and the mere fact that he stated some further matter as his understanding or as what he supposed to be true, cannot be grasped by the defendants as proof of the fact itself. This is (rue, even though on the cross-examination as to what took place prior to the making of the charter party in question the witness reiterates his understanding that the ties which lie was seeking a charter party to transport from Charleston had already been sold by defendants, as agents of the consignors, to the Long Island Railroad Company. . It would seem from this record that the fact was stated as an understanding on the part of the witness, more for the purpose of identifying the ties than for any purpose -of proving a sale, and the case fails to show that after this evidence had been so given the trial proceeded upon the theory that the fact liad been sufficiently proved. Sometimes it does appear from the record that the trial has proceeded upon a theory that certain facts were properly proved, yet on appeal the case presents no sufficient evidence of them. In sucli case and in furtherance of justice the facts will lie assumed in accordance with the theory. We cannot find enough in this case to warrant us in doing it here.

Witnesses in giving evidence in the course of an oral examination frequently state as facts those tilings which they plainly have no personal knowledge of. It would be too strict practice to say that unless a motion is made and the objectionable evidence is stricken out either party can refer to it as proof of the fact itself. Even where a witness is asked for evidence which is plainly hearsay, and he gives it as such, it ought to appear from the course of the trial that the evidence was received as sufficient proof of the fact concerning which it was given or it will not be so regarded. Receiving a copy of a written document instead of the original, and without objection that the original should be produced, is obviously a very different case.

In such event there is a direct offer to prove the original paper by the production of the copy, and the party against whom it is offered is then put to his objection, and if he fail to object to the admission of the copy he of course ought not thereafter to be per- • mitted so to do.

The learned trial judge refused to regard the fact of sale as proved by this hearsay evidence. It is clear he did not suppose that the trial had proceeded upon any theory that such fact had in any way been sufficiently proved. This should render an ap- ' pellate court still more reluctant to make such an assumption, especially where the record is not at all clear that the theory was assumed by both counsel. That the learned counsel for the appellant assumed it and regarded the fact as sufficiently proved is without doubt true, but confined as we are to the record for proof we are compelled to say that we do not find sufficient evidence that the fact was assumed on the trial to permit us to make the assumption here.

Ignoring the hearsay evidence the case is then bare of proof that would call for the submission of the question to the jury, whether the railroad ties in suit had been sold by defendants to the Long Island Railroad Company before the arrival of the vessel at the port of New York. This was the only question upon which counsel for defendants asked to go to the jury after the denial of his motion for the direction of a verdict in their favor. Upon this branch of the case we cannot see that any error was committed by the trial judge.

Another and a different question is presented with regard to the plaintiff’s claim for demurrage.

The general term has raised the amount recovered against the defendants from six cents to three hundred and twelve dollars. This amount was arrived at by allowing six days for demurrage at the rate of fifty-two dollars per day, as provided in the charter party. The provision in the charter party on the subject of demurrage was .held to be binding upon the defendants, although they wrere strangers to the instrument. I am not aware of any provision of law which in such a case as this would permit the' supreme court on appeal to add to the original judgment a sum which it finds from the evidence to" be due plaintiff for demurrage, when the question as to what amount is due is one of fact upon which either party might demand the verdict of a jury. Aside from that question, however, there is the remaining and important one whether defendants upon this proof are liable in any sum whatever for demurrage. Demurrage, technically so called, is founded upon some contract entered into between the consignor pr freighter and the ship owner, which, under certain oireumstances, is held to be assumed by the consignee. Abbott on Shipping, § 1, page 380, in. p. 303, et seq. A delay beyond the time designated in the contract gives a cause of action in favor of the ship owner. Although it is said to be a claim in the nature of freight, yet it is perfectly distinct and separate therefrom. While a consignee, by accepting the goods consigned to him under a bill of lading by which the person receiving the goods is to pay freight, is held bound by an implied contract to pay the freight, yet, unless the bill of lading, either itself or by reference to another instrument, contain also an express condition providing for the payment of demurrage, the consignee in simply accepting the goods will not be liable for the payment thereof. Jesson v. Solly, 4 Taunt. 52; Brouncker v. Scott, Id. 1; Evans v. Foster, 1 B. & Ad. 118 ; S. C., 20 E. C. L. 520; Van Etten v. Newton, 134 N. Y. 143. 45 St. Rep. 768.

At the same time while not liable strictly for demurrage, yet a consignee of the cargo who is also the owner thereof, may be liable for damages in the nature of demurrage when the vessel is detained, through the fault of the consignee, an unreasonable length of time at the port of discharge. Ford v. Cobsworth, L. R., 4 Q. B., 127; Scholl v. Albany & R. Iron Co., 101 N. Y. 602.

In such case not only must the detention be proved, but the damages and their nature must also be the subject of proof. There is no express contract to refer to for the purpose of computing the amount to be paid as demurrage, and hence in an action to recover damages of that nature, proof must be given of their existence and amount.

The plaintiff claims he has proved the defendants liable for demurrage in its strict technical sense, by reason of the provisions on that subject in the charter party. The argument is that the defendants, as consignees of the cargo, and by receiving the goods under the bill of lading, have made themselves parties to it, and that the bill of lading, by referring to the charter party, has made that instrument part of the bill, and defendants are, therefore, liable to pay whatever the charterers are liable to pay by virtue of that instrument thus made part of the bill of lading. In order to maintain the proposition that the provisions of the charter party upon the subject of demurrage form a part of the bill of lading, the plaintiff must show that the two papers form on this question substantially one instrument, and that the bill of lading by its reference to the charter party upon this very point of demurrage makes the provisions of the charter party upon that subject part of the substance of the bill of lading itself, and thus anyone who becomes bound by the receipt of the goods under the bill of lading, becomes bound to pay demurrage under the charter party as a part of such bill. We do not think this argument can rest upon the facts in this case. The bill of lading is itself silent upon the subject of demurrage, and after acknowledging the receipt of the ties in the port of Charleston, S. 0., the agreement, as stated in the bill, is to deliver the same “unto order or to their assigns, lie or they paying freight for the said ties as per said charter party and its conditions, with primage and average accustomed.” The ■'charter party contained specific provisions for the rate of freight and when it was payable.

It also contained specific and separate provisions as to the lay days for loading and discharging, and the amount (£52) payable for eacli and every day’s detention. This charter party was a contract between the ship owner and Mallonee & Co., the charterers, living at ''Charleston, and represented by an agent in New York, not the defendants, nor any one connected with them. We think the reference in the bill of lading to the^ charter party is plainly confined to the conditions of that instrument as to payment of the freight. The subject mentioned in the bill of lading is the cargo of railroad tics, and the agreement therein stated is to deliver the ties in New York to the consignees, he or they paying freight according to the conditions of the charter party. It would be a wide stretch to hold that by this language of the bill of lading, which plainly referred only to the provisions of the charter party as to the freight money, a consignee would become liable to demurrage if he accepted the cargo under such a bill.

The case of Smith v. Sieveking, 4 E. & B. 945 ; S. C., 82 Eng. C. L. R., had language in the bill of lading much the same as this, and the Court of Queen’s Bench (1855) held the defendants (consignees) not liable for demurrage. The language of the bill of lading was “he or they paying for the said goods as per charter party, with primage and average accustomed. The charter party mentioned the rates of freight, and contained a stipulation that “for the payment of all freight and demurrage the captain shall have an absolute lien and charge on the said cargo. There was demurrage at the outport, and although the charter party provided for a lien on the cargo for all demurrage, yet it was held that obviously by the terms of the contract the consignee was not to pay for such demurrage.

In Wegener v. Smith, 15 Com. Bench; S. C., 80 Eng. C. L. R. 285, it was held that the juiy might imply a contract on the part of the indorsee of a bill of lading to pay demurrage when the cargo was delivered under the bill to order “against payment of the agreed freight and other conditions, as per charter party.” This is different language from that used in the case under consideration. The delivery was not alone upon condition of paying freight, But upon other conditions mentioned in the charter party, among these being a condition to pay demurrage. In the one case the delivery is not confined to the condition of payment of freight, and in the case at bar it is!

The plaintiff also refers as authority for his claim to Moller v. Young, 24 L. J. 217 ; Common Law, 1855. The action was not, properly speaking, to recover demurrage, but was brought for detaining the ship an unreasonable time. The trial court at the Queen’s bench sittings in London directed a verdict for defendants on the admitted facts, with leave to enter verdict for fifty pounds for plaintiff, the court being at liberty to draw all inferences of fact. The damages sustained were in this way admitted to be fifty pounds if plaintiff were entitled to any, or the court could infer it from the facts in the case the same as a jury might. The court,. on appeal, directed a verdict to be entered for the plaintiff. There is nothing to show any intention of overruling the cases above cited, which hold that there must be a specific contract to pay demurrage, and that in the absence of it it will not be implied. And if the bill of lading be silent on the subject of demurrage, and do not make the charter party on that particular subject part of itself, no contract is proved from an acceptance of the cargo under a promise to pay freight as provided by the charter party.

In Porteous v. Watney, 47 L. J. 643, Common Law Court of Appeals, 1878, also cited by the plaintiff, the bill of lading contained the words, “ paying freight and other conditions as per charter party.” The charter party contained stipulations in detail providing for demurrage. The consignee was held liable for the payment of the same. In this case the court recognizes the rule that when the bill of lading only refers to the charter party by way of stating the terms of freight, such reference does not impose an obligation upon the consignee, or assignee, or other holder of the bill of lading to perform any other conditions of the charter generally. The opinions of Thesiger, Cotton and Brett, Lords Justices, are plain upon this point.

I have been able to find no case where language in a bill of lading, such as is contained in this one, has been held to make the provisions of the charter party upon any other subject than the payment of freight part of the bill of lading.

We come then to the question of liability of defendants as consignees and presumed owners of the ties, for the payment of damages in the nature of demurrage for an improper detention of the vessel. On this branch the plaintiff has wholly failed to prove any damage whatever. Because the defendants might have been liable to pay those damages which the plaintiff might have proved if he had sustained them, is no reason for allowing the plaintiff to recover even a nominal sum by way of damages, when no amount of damages whatever has been proved. The plaintiff chose to plant himself upon his alleged right to recover demurrage technically so called, and for that purpose he refers to the bill of lading and charter party as forming a contract on defendants’ part to pay a certain sum daily for each day’s detention proved beyond the number allowed in the charter party. This claim, as we have seen, he cannot make good, and there is no reason why he should be permitted to recover even a small sum unproved, especially when the effect might be to saddle costs of the litigation, otherwise payable by plaintiff, upon the shoulders of the defendants. The plaintiff says he was entitled to a recovery of six cents, if for no other reason than to establish a principle. I see no principle that is established by such a judgment. In an action of trespass upon real estate where title comes in question it is easily understood that a verdict of six cents may be of the greatest value to plaintiff as establishing his title to the land so far at least as the defendant is concerned. No such principle obtains or can obtain in such an action as this. The cause of action of plaintiff in such a case consists of two branches, one to establish an unjust or unreasonable detention by defendants, and the other to show the damages which plaintiff sustains by reason of such detention. A failure to prove either fact, unlawful detention or danage ensuing, is a failure to prove a cause of action, and a plaintiff in failing to prove any damage whatever is not entitled to a judgment for nominal damages. It is not a ease where the law will presume damage. It is a fact to he proved.

We think the best that can be done in this case is to reverse the judgment and grant a new trial, costs to abide the event, unless the plaintiff shall consent to reduce the judgment by striking out any recovery whatever for demurrage. In case such consent shall be given, then judgment shall stand for the reduced amount, subject to any further reduction if any shall be allowed by the decision of the court upon defendant’s application for costs by reason of the offer made by them. No costs on this appeal are allowed to either party in case the judgment is affirmed by consent of plaintiff as reduced, and in that case the order denying motion to modify verdict is affirmed. The order denying defendant’s application for taxation of costs must, in event of affirmance of the judgment by consent, be reversed, with leave to the defendants to renew such motion upon the facts as now existing.

Judgment will accordingly be entered in accordance with this opinion.

All concur.

Judgment accordingly.