author: O’Brien, J.

text:
    In the Matter of the Application of the Board of Street Opening and Improvement, etc., Relative to Acquiring Title to Forest Avenue.

      (Supreme Court, General Term, First Department,

      Filed December 15, 1893.)

    1. Assessments—Street opening.
    In proceedings for opening streets in the annexed district of the city of New York, the commissioners of estimate and assessment are not restricted to property lying within half a block of the street proposed to be opened.
    2. Sam:e.
    Sections 677 and 958 of the consolidation act are not repealed by the general provisions of the act.
    'Appeal from order confirming report of commissioners of estimate and assessment, and denying motion to vacate and set .aside all the proceedings.

      Hrnest Hall and Thomas S. Bassford, for app’lt; Maiiheiu P. Myan, for resp’t.
   O’Brien, J.

This proceeding was instituted to acquire title to Forest avenue, in the Twenty-third ward, from Home street to East One Hundred and Sixty-eighth street, a distance of one block. After viewing the premises, depositing an abstract of their estimate and assessment, together with their damage and benefit maps, and after hearing all the objectors, the commissioners completed their final report, and, upon notice to all parties, the same was presented at special term and confirmed. From the order of confirmation an appeal was taken, and the order reversed upon the ground as shown in the former opinion. Matter of Board of Street Opening, 64 Hun, 59; 45 St. Rep., 828: “The method in-which this assessment was levied was so manifestly unjust and out of harmony with the system upon which assessments of this kind should be levied, that the report of the commissioners should not have been confirmed upon that ground.”

Upon such appeal it appeared then, as it does now, that, in addition to land, a building was taken, and it was assumed that § 970 of the Consolidation act was applicable. That section provides, among other things, that in case of “ the opening of any street or avenue, or portions of any street or avenue, in said city, when the street or avenue, or portions thereof, sought to be opened shall have been laid down and shown upon any general map or plan made and filed in pursuance with any law of the state of New York relative to the mapping or planning of avenues in said city, when no buildings for which compensation can lawfully be made shall be taken, the assessment district shall not extend beyond the centre line of the blocks adjacent thereto, nor beyond the ends of the street or avenue, or portions thereof, sought to be opened.”

The construction given to this section was, that while it allowed the commissioners to extend the assessment district “ beyond the center line of the blocks,” and “ beyond the ends of the street or avenue, or portions thereof, sought to be opened,” upon the area thus extended no more than a ratable proportion of the cost of the building taken ought to be imposed. In other words, that the assessment for the land taken for the street should not extend beyond the center line of the blocks, nor beyond the ends of the street or avenue, or portions thereof, sought to be opened ; while the value of the building taken ought to be ratably apportioned upon the property embraced in such extended area. Under this construction, the value of the land taken would be assessed upon the area as above defined, and only the cost of the building would be imposed upon the extended area.

Subsequent to this decision a motion for reargument was made, upon the ground that the court’s attention had not been drawn to §§ 677 and 958 of the consolidation act.

These sections, 677 and 958, make applicable to street proceedings in the twenty-third and twenty-fourth wards all the laws then in force in reference to street proceedings in the city of New York (title and particularly § 990) just the same as if these streets had been laid out by the commissioners appointed under the act of 1807, “ except that the said commissioners of estimate and assessment who may be appointed as herein provided may assess for such opening all such parties and persons, lands and tenements as they may deem to be benefited by such improvement, to the extent which said commissioners of estimate and assessment deem such parties, persons, lands and tenements benefited thereby, provided that as to streets which shall be in the opinion of said commissioners of estimate and assessment, or a majority of them, more than one mile in length, not more than one-half of the amount awarded for damages and of the expenses attending such opening shall be so assessed ; the amount of such damages and expenses not so assessed being hereby made a charge upon the city of New York to be paid as hereafter provided.”

The motion for a reargument was denied, upon the ground, as .stated in the memorandum, that “ independent of the construetion to be placed upon the statute, we do not think a reargument should be ordered as the decision was correct because the commissioners had adopted an erroneous principle in the levying of the assessment.”

Notwithstanding this intimation that the question of whether § 970 or §§ 677 and 958 applied, was an open one and subject to reconsideration when again presented, the commissioners, assuming that the court had held that § 970 applied, state, in their final report presented upon this appeal, as follows : “ The commissioners refer to the previous report as made by this commission, as to their prior action in this matter, and they now, in deference to, and in accordance with, the decision of the general term in the same matter, make their final report in accordance with that decision by reducing the assessment upon the property beyond the centre line of the block to the limit prescribed by the opinion of the general term.”

In other words, the commissioners assumed that they were instructed by the general term to place the assessment for the land taken upon the area defined by § 970, and to impose upon the extended area of assessment only the value of the building. In this the commissioners fell into the error of assuming that this court had placed its decision upon the ground that § 970 controlled, whereas the court had left that question open, as shown by its memorandum upon the application for reargument, when its attention was called to the special provisions relating to the twenty-third and twenty-fourth wards. Whether it will adhere to the expression contained in the opinion as to what portion of the assessment can be placed upon the extended area, will be passed upon when that question is presented. At present it is only necessary to say that upon consideration we have reached the conclusion that § 970 is not applicable, for the reason that this proceeding affects property in the twenty-third ward, and is, therefore, governed and controlled by §§ 677 and 958 of the consolidation act, which are made specially applicable thereto..

Section 970 contains the general provision in reference to the assessment district in street opening proceedings, and, as will be seen by a reading of the consolidation act, §§ 677 and 958, except the twenty-third and twenty-fourth wards from the general provision of § 970. Between these sections there is no conflict, and under well settled rules of construction relating to statutes all can stand. Such rules require that (a special statute providing for a particular case, or applicable to a particular locality, is not repealed by a statute general in its terms and application, unless the intention of the legislature to repeal or alter the special law is manifest McKenna v. Edmundstone, 91 N. Y., 231; Matter of Railroad Avenue, East; 47 Hun, 305; 13 St. Rep., 581. Moreover, that “ it was not the intention of the legislature to supersede the special provisions of chapter 604 of the Laws of 1874, is apparent from its re-enactment in the consolidation act, as well as from the saving clause of § 1008 of the consolidation act, which provides that 1 nothing contained in this title (street openings) shall be construed as affecting any provision of special acts relating to particular districts or portions of the city, so far as such provisions are inconsistent with the provisions of this title.’ ”

And the existence of these sections, 677 and 958, has been recognized and the sections applied in many proceedings since the enactment of the Consolidation act. Thus, since the former appeal was decided, the attention of this court was called to § 958 in the Matter of Opening Wendover Avenue, 20 N. Y., Suppl., 568 ; 48 St. Rep., 868. As said in that case: “ By § 958 of the Consolidation act it is provided that the commissioners may assess for street openings persons, land and tenements as they may deem to be benefited by such improvement to the extent which said commissioners of estimate and assessment deem such persons, lands and tenements -so benefited thereby.”

The commissioners in their report further say: “That certain pieces or parcels of land lying beyond the centre line of the block adjacent to the avenue so opened by us and beyond the ends or portions so opened are benefited more than the amounts assessed against such parcels by reason of the reductions made as aforesaid, in accordance with the of the term.”

Since the commissioners in this proceeding, as shown by their report, did not assess property which they considered benefited by the improvement to the extent of the benefit for the reasons already given, and as they proceeded under § 970, instead of §§ 677 and 958, of the Consolidation act, it follows that the order confirming the report must be set aside.

Under the §§ 677 and 958 applicable to this preceding, therefore, the commissioners, when buildings are taken, may assess for such opening such property as they may deem benefited by the improvement.

This conclusion renders it unnecessary to point out what are claimed to be the inequalities in the assessments levied upon particular parcels, because it would appear that the commissioners, deeming themselves controlled by the former expression of opinion of this court, and proceeding by an erroneous method, felt compelled to crowd into a narrower area than the law permitted the assessment necessary to cover the cost of the improvement.

So much of the order as denies' the motion to vacate and set aside all the proceedings should, therefore, be affirmed, and so much of it as confirms the report of the commissioners should be reversed, and the proceedings sent back to the commissioners for revisal and correction.

Ordered accordingly.

Follett and Parker, JJ., concur.


source: Caselaw Access Project

author: Follett, J.

license: Public Domain

text:
    The Equitable Life Assurance Society of the United States, Resp’t, v. Thomas Brennan, App’lt.

      (Supreme Court, General Term, First Department,

      Filed December 15, 1893.)

    1. Deeds—Covenants.
    When a parcel of land is conveyed by its owner to several grantees by independent conveyances containing similar restrictive covenants,an equitable negative easement is created in favor of each lot, as against all the others, which the owners may enforce in equity.
    3. Same.
    Where all of the deeds are recorded, a subsequent grantee is chargeable with constructive notice of the restrictions as to the use of the land.
    3. Same—Basement.
    A release from a devisee of the original grantor does extinguish such easement.
    Appeal from a judgment restraining the defendant from erecting stables on his lands, unless within sixty days after the entry of the judgment, he pays to the plaintiff $10,000 with interest from the date of the entry of the judgment.
    Prior to April 15, 1881, the trustees of St. Patrick’s Cathedral and J. Augustus Page entered into a contract, by which the former agreed to sell and convey, and the latter to purchase, a block of land bounded on the north by Fifty-first street, on the east by Fourth avenue, on the south by Fiftieth street, and on the west by Madison avenue. Previous to this date the land had been divided into lots as shown by the map attached to the deed, executed April 15, 1881, by said trustees to said Page, which conveyed lots Nos. 10 to 31 inclusive, pursuant to said contract. This deed was duly recorded April 16, 1881.
    Attached to said deed, and forming a part thereof, was a map, of which the following is a copy :
    (Map omitted.)
    On the same date, April 15,1881, said trustees, by the direction and appointment of Page, conveyed to Henry Yillard lots numbers 1 to 9 inclusive, and number 32, as described on said map, which deed was duly recorded April 16, 1881. The deeds contained the following covenant, which relates to the half of the block west of lots Nos. 13 and 28, or west of the line A. B: “And the said party of the second part for himself, his heirs, executors, administrators and assigns, doth hereby covenant, promise and agree, to and with the said parties of the first, their successors and assigns, that neither he,, nor any of his heirs or assigns, shall at any future time or times, erect or build, or permit or cause to be erected or built, any stable, factory, machine shop, brewery, distillery, slaughterhouse, carpenter or smith’s shop, or structure or erection for the purpose of any kind of manufacturing or for any trade, business or employment which shall be dangerous or noxious or constitute a nuisance upon either ten, eleven, twelve, twenty-nine, thirty, or thirty-one above described, or any part thereof. And the said party of the second part, for himself, his heirs, executors, administrators and assigns, doth hereby further covenant, promise and agree to and with the said parties of the first part, their successors and assigns, that no building or buildings, other than first-class stone or brick front dwelling-houses or French apartment house shall be erected upon either of the lots last above mentioned. It being understood and agreed that the foregoing covenants on the part of the party of the second part shall run with the land and bind all successive owners and their heirs and assigns.” The covenant in Villard's deed relates to lots Eos. 1 to 9, inclusive, and thirty-two, otherwise it is a copy of the above covenant.
    January 10th, 1882, Page conveyed, by a warranty deed, to Robert and Ogden Groelet, lots Eos. 13 and 14, which deed was duly recorded January 10th, 1882. January 10th, 1883, Page conveyed, by a warranty deed, to Rosanna Spaulding lots Eos. 27 and 28, which deed was duly recorded January 10th, 1883. March 1st, 1883, Page conveyed, by a warranty deed, to Abraham Benson lots Eos. 15 to 26 inclusive, which deed was duly recorded March 3d, 1883. By the last three deeds Page conveyed the east half of the block and all east of the line A. B. Each of these three deeds contained the following covenant: “ And the said parties of the second part for themselves, their heirs, executors, administrators and assigns, do -hereby covenant, promise and agree to and with the parties of the first part, their heirs and assigns, that neither they nor any of their heirs or assigns shall at any future time or times erect- or build or permit or cause to be erected or built, any stable, machine shop, brewery, distillery, slaughterhouse or smith shop upon said premises, it being understood and agreed that the foregoing covenants on the part of the parties of the second part shall run with the land and bind all successive owners thereof, and their heirs and assigns.”
    May 31, 1886, Rosanna Spaulding conveyed, by a warranty deed, to James J. Spaulding, lots Eos.. 27 and 28, which deed was duly recorded June 7th, 1886. June 1st, 1888, Spaulding conveyed three lots, by a warranty deed, to William S. Haddock, which deed was duly recorded June 12th, 1888. William S. Haddock, December 20th, 1888, conveyed, by a warranty deed, these lots to Eugene T. Lynch, which deed was duly recorded December 24th, 1888. Eone of these three deeds contained or referred to a restrictive clause. February 21st, 1890, Lynch conveyed, by a warranty deed (duly recorded February 28, 1890, these lots to William H. Sturtevant. This conveyance was subject to the restrictive clause contained in the deed from J. Augustus Page to Rosanna Spaulding. February 21st, 1890, William II. Sturtevant gave a mortgage (duly recorded February 28th, 1890) to Eugene T. Lynch, upon these two lots to secure the payment of $90,000, which mortgage was subject to the restrictions com tained in the aforesaid deed from J. Augustus Page to Rosanna Spaulding. This mortgage was subsequently assigned to the plaintiff, was afterwards foreclosed, and August 3, 1891, the two lots were conveyed by the referee' in the foreclosure action, to the plaintiff. This deed was duly recorded August 3d, 1891. The conveyance to the plaintiff was subject to the restrictions contained in the deed from J. Augustus Page to Rosanna Spaulding. February 21st, 1884, Abraham Benson conveyed, by a warranty deed, to Robert C. Hine, lots Eos. 15 to 26 inclusive. This deed did not contain or refer to any restrictive covenant, and was duly recorded February 23d, 1884. September 20th, 1883, J. Augustus Page died, leaving a last will and testament, by which he devised and bequeathed all his estate to Mary E. Page, his widow, who, March 10th, 1884, executed a release of the lots so conveyed to said Hine from the covenant contained in the deed from J. Augustus Page to Abraham Benson. March 1st, 1892, the defendant, Thomas Brennan, acquired, through mesne conveyances (all duly and timely recorded), title to the land bounded on the east by Fourth avenue, on the south by Fiftieth street, on the west by a line drawn parallel with Fourth avenue and seventy-five feet therefrom, and on the north by Fifty-first street None of the mesne conveyances contained or referred to a restrictive clause or covenant
    ■ An apartment house stands on the plaintiff’s' lots which was erected when the premises were owned by Rosanna Spaulding. In May, 1892, the defendant began to erect six private stables on his land, three of them fronting on Fiftieth street, and three of them on Fifty-first street. July 9th, 1892, this action was begun to restrain perpetually the defendant from erecting or maintaining the stables on his land.

      Guggenheimer & 'üntefmyer (Samuel Untermyer and Moses Weinman, of counsel), for app’lt; Lord, Day & Lord (Lucius Li. Beers, of counsel), for resp’t.
   Follett, J.

In determining the rights of these litigants it is unnecessary to consider the deeds conveying the lots in the west half of the block, except in so far as they may throw light on what the grantors and grantees intended to effect by the conveyances relating to the east half of the block.

January 10th, 1882, J. Augustus Page was the owner in fee of the east half of the block bounded on the north by Fifty-first street, east by Fourth avenue, south by Fiftieth street, and west by a line parallel with and a hundred feet west of Fourth avenue, and designated by the letters A. B. on the map. This lot had been divided into sixteen lots, designated by Nos. 13 to 28 .inclusive, and described on the map which was recorded in the register’s office April 16th, 1881. This tract was then free from restrictions.

On the 10th of January, 1882, Page conveyed lots Nos. 13 and 14 to R and 0. Groelet, and January 10, 1883, he conveyed lots Nos. 27 and 28 to Rosanna Spaulding, plaintiff’s' predecessor in title, and March 1, 1883, he conveyed the remainder of the tract, Nos. 15 to 26 inclusive, to Abraham Benson, defendant’s predecessor in title. Every one of these three deeds contained the same restrictive clause (the second in the statement of facts), and from them and the purposes for which the neighboring real estate was at that date of the conveyances then adapted and used, the learned referee found:

Twelfth. Said Page adopted and acted upon a uniform plan of restriction in making conveyances of said easterly half of said block, but this finding is not based upon any oral statements alleged to have been made by Mr. Page to Mr. John Bindley.”

This is the only finding of fact challenged by the appellant on this appeal, but it seems to the court that it is sustained by the weight of the documentary evidence and "by the testimony descriptive of the uses of the adjacent property at the time the deeds containing the restrictive clauses were executed. The uses which could be made of the west half of the block were limited by the deed from the trustees of the cathedral to Page and Millard, and the uses which could be made of the east half of the block were limited by the deeds from Page to Groelet, Spaulding and Benson. These restrictive covenants did not arise by chance, but out of the agreement between the grantor and his grantees, and were created for a purpose. It is apparent that the design of the parties to these covenants was not to reserve a purely personal right to the grantor, solely enforceable by him, but to restrict the uses of the land for the benefit of the grantees and their successors in interest. This purpose is apparent from an inspection of the covenant.

■Three questions are involved in this appeal:

I. Did the covenants contained in the deeds from Page to Groelet, Spaulding and Benson, which conveyed the east half of the block, create an equitable easement in favor of every one of those grantees, and enforceable by either against any one of them who should violate his covenant? 2. If these conveyances created such an easement, had the defendant notice of its existence ? 8. Did the release of Mary E. Page, of March 10, 1884, to Hine discharge the lands held by him and subsequently acquired by the defendant from the burden imposed or benefit created by the restrictive covenant?

The first question should be considered quite apart from the one of notice. The leading and best considered case in this country which has come to our knowledge bearing upon the first proposition is Parker v. Nightingale, 6 Allen, 88 Mass., 341, which arose out of the following facts : Tenants in common of a tract of land in the city of Boston laid it out into a street, with lots of suitable size for residences, which abutted on the street and were distinguished by numbers. It was orally agreed among the co-tenants that in conveying the lots the grantees should be laid under an express obligation, by way of condition or limitation, “ that no other building shall be erected or built on the lot except one of brick or stone, not less than three stories in height, and for a dwelling house only.” These lots were conveyed to different purchasers, all upon this condition. Forty years afterwards, a subsequent grantee of one of the lots converted the building thereon into a restaurant, and thereupon several owners of the other lots filed a bill to restrain this use of the defendant’s lot, and it was held that this condition was for the benefit of the owners of all the lots held under a like condition, and that they could maintain an action to restrain the defendant from using his lot for the purpose of a restaurant. The decision was not placed upon the oral agreement entered into between the cotenants, but it was held that aa equitable negative easement arose out of the deeds in favor of the several lots. The deeds in this case did not contain a covenant on the part of the grantees, but the conveyances were on condition. Nevertheless, the condition was held to create an easement in favor of the owners of the other lots held under a common source of title on like conditions. The case was carefully considered, and the reasons for the conclusion reached are clearly stated by the learned chief judge, and the only purpose that would be served by quoting or restating the argument would be to increase the volume of our overgrown and, in great part, useless reports of cases which neither involve a new principle nor apply a well recognized principle to new or unusual facts. This-case was followed in Sanborn v. Rice, 129 Mass., 387, and in Tobey v. Moore, 130 id., 448, in which cases it was again held that restrictions imposed upon a number of parcels of land included in one tract, in pursuance of a general scheme of improvement,, may be enforced by a grantee of one parcel against the grantee of another.

In this state it has been several times held that when a parcel of land is conveyed by its owner to several grantees by independent conveyances containing similar restrictive covenants an equitable negative easement is created in favor of each lot against all the others which the owners may enforce in equity. In Barrow v. Richard, 8 Paige, 351, the owner of a tract of land divided it into lots, which he conveyed from time to time to purchasers. In the deed of the first five lots conveyed a condition was inserted “ that the conveyance should be void if there should at any time be erected, made, carried on, permitted or suffered, upon any part of the premises so conveyed, any livery stable, slaughter-house, tallow chandlery, smith’s forge, furnace, brass or other foundry, nail or other iron factory, or any manufactory for the making of glue, varnish, vitriol, ink or turpentine, or for dressing or keeping skins or hides, or any distillery or brewery, or any other manufactory, trade or business whatsoever which should or might be in anywise offensive to the neighboring inhabitants.”

In the first five conveyances this provision was inserted as a condition, but in the subsequent deeds it took the form of a mutual covenant between the grantor and the grantees that the lots should not be used for the purposes specified. The owner of one of these lots established on it a coal yard, and an action was brought by the owner of another lot to restrain such use. Three questions arose in the case: 1. Whether an easement in favor of each lot as against the others was created by these grants? 2. Whether establishing a coal yard, which was not one of the prohibited businesses, was a violation of the covenant ? 3. Whether the owner of one of the lots could restrain the owner of another from using it for a prohibited business? All three propositions were determined in favor of the complainant; the second on the ground that a coal yard conducted as described in the bill was prohibited by the clause “ trade or business whatsoever which should or might be in anywise offensive to the neighboring inhabitants.”

In Brouwer v. Jones, 23 Barb., 153, the owner of a tract of land divided it into lots, and conveyed them to various purchasers, inserting in the conveyances a covenant that the property should not be used for certain purposes. The concluding clause of the covenant read as follows: “Or any manufactory, trade, business or calling whatever which may be in anywise dangerous or noxious or offensive to the neighboring inhabitants.” The defendant, a subsequent grantee, - established a planing mill on one of the lots, and in an action brought to restrain this use of the premises the same questions arose as in Barrow v. Richard, supra, and were decided in favor of the complainant. The planing mill was not mentioned in the restrictive covenant, but it was held to be covered by the sentence last quoted. It was not held in either of the foregoing cases that the ambiguous term “ neighboring inhabitants ” was descriptive of the class of persons in favor of whose property the easement was created. This term embraces the owners and occupiers of the restricted lots, and none other, and its effect in the connection in which it was used was held to enlarge the scope of the covenant so as to include business other than those specially mentioned, and it may be that this term was effectual as a notice that persons other than the one to whom the covenant in terms ran were interested in it

In Raynor v. Lyon, 46 Hun, 227; 11 St. Rep., 500, it was held that when a person who is a common source of title of several lots imposes restrictions on their use by the deeds by which they were conveyed, that each of the grantees and their successors in interest have an easement in the other lots conveyed with the restrictive clause. This rule was recognized in Amerman v. Deane, 132 N. Y., 355 ; 44 St. Rep., 567, and is laid down as an established rule of equity by various text writers. Wash. Eas., 2 ed.. 90, 94; 2 Dart. V. & P., 6 Eng. ed., 864 et seq; Pom. Eq. Juris., 2 ed., p. 1994.

By the three deeds from Page to Gfoelet, Spaulding and Benson there was created an equitable negative easement in favor of every lot against all the other lots conveyed by these deeds.

Had the' defendant notice of the existence of the easement ? The referee did not find whether the defendant had or had not knowledge of the existence of the easement, though the defendant testified that he had no knowledge of it until after he purchased. But he had constructive notice of all of the limitations and restrictions contained in the recorded conveyances forming his chain of title, and so in law he is deemed to have had knowledge of the existence of the restrictive covenant contained in the deed from Page to Benson. He had knowledge of the situation of the surrounding property, and the purposes for which it was used, which, together with his knowledge that an easement existed in favor of some property in his land, he was put on inquiry as to the property to which this easement was attached.

He was bound to search the records for conveyances by the former owners of his lot impairing or encumbering the land which he proposed to purchase. Had he done this, he would have discovered the existence of the easement in favor of the plaintiff’s lot.

The easement having attached to the plaintiff’s lot by virtue of the conveyances, it is plain that the subsequent release by the devisee of Page did not destroy it. Hills v. Miller 3 Paige, 254.

The defendant has no legal nor equitable ground for complaint because the judgment is in the alternative, permitting him to pay $10,000, instead of being perpetually enjoined from using the premises as proposed. This question has been many times detenhined in the elevated railroad cases.

The judgment should be affirmed, with costs.

Van Brunt, P. J., and Parker, J., concur.


author: Parker, J.

text:
    The People, Resp’t, v. Thomas A. Welch, App’lt.

      (Supreme Court, General Term, First Department,

      Filed December 15, 1893.)

    Criminal law—Jurisdiction.
    Where the act, which constitutes an offense against the laws of the United States, is also an offense against the laws of a state, the state court is not thereby deprived of the right to try the offender for his violation of the state law.
    Appeal from a judgment of conviction rendered against the appellant by the court of general sessions of the peace, in and for the city and county of New York, on the 28th day of October, 1891, adjudging him guilty of manslaughter in the second degree.

      Lorenzo Semple, for app’lt; Delaneey Nicoll and Henry B. B. Stapler, for resp’ts.
   Parker, J.

The defendant, was convicted of manslaughter in the second degree, under an indictment charging him with willfully and feloniously propelling and running a tug boat into a yacht, and “ did thereby willfully and feloniously cast the said Jenkins from the said yacht into the- river * * * and by the means aforesaid, willfully and feloniously did kill and slay the said Jenkins.” The form in which the offense was charged by the indictment would constitute manslaughter in the second degree, under either the second or third subdivisions of § 193 of the Penal Code.

The section reads as follows:

“ Such homicide is manslaughter in the second degree when committed without a design to effect death.
“ (1.) By a person committing or attempting to commit a trespass or other invasion of a private right, either of the person killed or of another, not amounting to a crime, or,
“ (2.) In the heat of passion, but not by a dangerous weapon or by the use of means, either cruel or unusual, or,
“ (3.) By an act, procurement or culpable negligence of any person, which, according to the provisions of this chapter, does not constitute the'crime of murder in the first or second degree, nor manslaughter in the first degree.”

The place where the crime was committed was within the territory described in § 1442 of the consolidation act, which provides that: “ The whole of the Hudson river southward of the northern boundary of the city of New York, and the whole of the bay between Staten Island and Long Island, shall be so far be deemed within the jurisdiction of the city and county of Hew York, that all offenses shall be cognizable in the courts of criminal jurisdiction held in and for the said city and county.”

Section 1 of the same act also provides that the boundaries of the said city and county include all of the Hudson river ” within the boundaries of the State. By § 51 of the Penal Code, it is provided that “ the court of general sessions of the city and county of Hew York, and the court of sessions of the county of Kings, have jurisdiction to try, determine, and punish, all crimes cognizable within their respective counties, including crimes punishable with death and imprisonment in the state prison for life.” And as the court named in the section last quoted was one in which the defendant was tried and convicted, it follows that the defendant was convicted by a court having jurisdiction of all crimes cognizable by the courts of this state within the territory in which the offense charged was committed, which offense is declared by the statute of the state to be manslaughter in the second degree.

But the appellant, not denying the general jurisdiction of the court to punish offenders for crimes committed on the Hudson river within the boundaries of the city and county of Hew York, contends that defendant’s act furnishes an exception to the rule, because it constitutes an offense against the laws of the United States, and, therefore, jurisdiction to punish for it belongs to the courts of the United States. That while, prior to the recent revision of the statutes of the United States, the offense might have been punishable by the courts of the state, because congress had not at that time reserved to the United States courts exclusive jurisdiction of all offenses which could be tried and determined under the authority of the United States, such authority was taken away from the state courts by § 711 incorporated at the time of such revision, by which exclusive jurisdiction was vested in the courts of the United States of all crimes cognizable under the authority of the United States.

The facts relied upon by the appellant to present this question were established upon the trial, and appear in the record as follows-:

“That the defendant, Thomas A. Welch, was duly licensed to act as a second-class pilot on steam vessels by the United States Local Board of Inspectors of Steam Vessels for the District of Hew York; that while said license was in full force and effect, anti while said defendant was engaged in the actual performance of his duties as a pilot under said license, a collision oceured June 15, 1891, on the Hudson river, between the steam towboat ' F. W. Devoe,’ upon which the defendant was employed, ana which was at the time under the defendant’s control and management as pilot, and the sloop yacht ‘ Amelia,’ which collision was caused by the willful misconduct, negligence and inattention to his duties on said ‘ F. W. Devoe’of the said defendant, Pilot Thomas A. Welch. The said collision, caused by the willful misconduct, negligence and inattention of the said Thomas A. Welch, resulted in the sinking of the yacht ‘ Amelia ’ and in the destruction of the life of Francis Jenkins, who was at the time on board of the yacht ‘ Amelia ’ by drowning.”

Witnesses called on behalf of the People, and “ of the other defendant for other purposes, were permitted to testify, without objection or exception, as to the rules of navigation adopted by the United States Local Board of Inspectors of Steam Vessels.”

These facts, it is readily apparent, constitute the crime of man-, slaughter, under § 5344 of . the Revised Statutes of the United States, which reads as follows:

“ Every captain, engineer, pilot or other person employed on any steamboat or vessel, by whose misconduct, negligence or inattention to his duties on such vessel the life of any person is destroyed, * * * shall be deemed guilty of manslaughter, and, upon conviction thereof, before any circuit court of the United States, shall be sentenced to confinement at hard labor for a period of not more than ten years.”

And it is not questioned but the facts proved establish the crime charged in the indictment. As the indictment charges an offense against the statutes of the state, it follows that the act of the defendant violated both the laws of the United States and of the state of New York. ( But appellant insists that, as the act constituted a crime against the laws of the United - States, the courts of the state of New York have been ousted of jurisdiction to try offender, notwithstanding the same act constitutes, and for forty-six years before the insertion of § 711 in the United States Revised Statutes constituted, an offense against the statutes of the state of New York, and prior to that time was recognized as a criminal offense under the common law, constituting the crime of manslaughter.

Section 5344, above quoted, is found in title 70 of the Revised States, entitled “ Crimes," and among the introductory and general provisions of that title may be found § 5328, which reads as follows: “ Nothing in this title shall be held to take away or impair the jurisdiction of the courts of the several states under the law thereof."

In the same title, then, in which the act of defendant is declared to be a crime against the laws of the United States, it is provided that nothing in the act shall have the effect to impair or take away the jurisdiction of state courts under the laws of the state. How is this provision to be given any effect, unless it be construed to mean that where an act, which is declared to be an offense against the laws of the United States by any of the provisions of that title, also constitutes an offense against the laws of the state within the territorial jurisdiction of which the act was committed, the jurisdiction of the state courts to try the offender for the violation of its "Jaw shall not in anywise be impaired or held to be taken away ? „

Prior to such enactment, the general rule on the subject of concurrent jurisdiction in cases where the act constituted an offense against both the laws of the United States and the laws of the state where the act was committed, was as stated in Holt on Con•current Jurisdiction, p. 26: “ In such cases the offender may be punished either in' the United States court or in the state court having jurisdiction ; but the proceeding in either tribunal must be based exclusively on the law of the sovereignty under which the tribunal sits; that is, the proceeding in the Federal court must be based on the Federal law and those in the state court on the state law.”

Following that rule, the several sections under consideration are capable of harmonious construction. Section 111 operates to give to the Federal courts exclusive jurisdiction to try offenders •charged with violations of the federal law, thereby necessarily depriving the state courts from taking jurisdiction thereunder, while § 5328 was intended to assure the state courts that congress had no intention to interfere with their right to try the same offender, providing the act charged against him constituted a violation of the statutes of the state. We have asserted that the rules as quoted from “Holton Concurrent Jurisdiction” is well established, and some reference to the authorities upon which that assertion is based will now be made. In Fox v. State of Ohio. 5 How. U. S., 432, it was held that a state may punish the offense of uttering or passing false coin, and in the case of the United States v. Marigold, 9 How. U. S., 560, that the federal court, in the proper exercise •of its authority, may punish the same act as an offense against the United States. In the latter case the court said: “With the view of avoiding conflict between the state and federal jurisdictions, this court, in the case of Fox v. The State of Ohio, have taken care to point out that the same act might, as to its character and tendencies, and the consequences involved, constitute an offense against both the state and federal governments, and might draw to its commission the penalties denounced by either, as appropriate to its character in reference to each. We think this distinction sound, as we hold to be the entire, doctrines laid down in the case above mentioned, and regard them as being in no wise in conflict with the conclusions adopted in the present case.”

Subsequently, in Moore v. Illinois, 14 How., 13, the court had under consideration the validity of a statute of the state of Illinois, in pursuance of the provisions of which the plaintiff in error had been indicted and convicted of harboring and secreting a negro slave. It was contended that the statute was in conflict with an act of congress on the same subject. Mr. Justice Grier, in delivering the opinion of the court, said: “ But, admitting that the plaintiff in error may be liable to an action, under the act of congress, for the same acts of harboring and preventing the owner from retaking his slave, it does not follow that he would be twice punished for the same offense. An offense, in its legal signification, means the transgression of a law. A man maybe compelled to make reparation in damages to the injured party, and be liable also to punishment for a breach of the public peace, in consequence of the same act; and may be said, in common parlance, to be twice punished for the same offense. Every citizen •of the United States is also a citizen of a state or territory. He may be said to owe allegiance to two sovereigns, and may be liable to punishment for an infraction of the laws of either. The same act may be an offense or transgression of the laws of both. Thus, an assault upon the marshal of the United States, and hindering him in the execution of legal process, is a high offense against the United States, for which the perpetrator is liable to punishment; and the same act may be also a gross breach of the peace of the state, a riot, assault, or a murder, and subject the same person to a punishment, under the state laws, for a misdemeanor or felony. That either or both may (if they see fit) punish such an offender, cannot be doubted. Yet it cannot be truly averred that the offender has been twice punished for the same offense ; but only that by one act he has committed two offenses, for each of which he is justly punishable. He could not plead the punishment by one in bar to a conviction by the other.”

Chief Justice Taney, in the case of United States v. Almy, reported in the Quarterly Law- Journal for July, 1859, at page 163, and referred to in Jetts case, 18 Grattan, 945, concludes his opinion as follows: “In maintaining the power of the United States to pass this law, it is, however, proper to say that, as these letters with the money in them were stolen in Virginia, the party might undoubted have been punished in the state tribunals, according to the laws of the state, without any reference to the post office or the act of congress, because, from the nature of the government, the same act may be an offense against the laws of the United States and also of a state, and be punishable in both. This was considered and decided in the case of Fox v. State of Ohio, 5 How. U. S. Rep., 410, and in the case of United States v. Peter Marigold, 9 How. U. S. R., 560, and his punishment in one sovereignty is no bar to his punishment in the other.”

In Ex parte Siebold, 100 U. S., 371-390, the petitioners were judges of election at different voting precincts in the city of Baltimore, at an election held in that city at which representatives in congress were voted for, and which positions they held in pursuance of the statute of the State of Maryland. They were after-wards convicted in a circuit court of the United States for the district of Maryland, for offenses alleged to have been committed by them, respectively whilst acting as judges at such election. The petition was denied, the court, at page 389, saying: “Another objection made is that, if congress can impose penalties for violation of state laws, the officer will be made liable to double punishment for delinquency at the suit of the state and at the suit of the United States. But the answer to this is that each government punishes for violation of duty to itself only. Where a person owes a duty to two sovereigns, he is amenable to both for its performance. and either may call him to account. Whether punishment inflicted by one can be pleaded in bar to a charge by the other for the same identical act need not now be decided, although considerable discussion bearing upon the subject has taken place in this court, tending to the conclusion that such a plea cannot be sustained.”

This was followed by a brief consideration of the cases to which we have referred, and their approval.

In Cross v. North Carolina, 132 U. S., 131, the plaintiffs in error were convicted, under § 1029 of the Code of North Carolina, of the forging of a promissory note, made payable to a national bank. A writ of error was sued out, upon the ground that the offense of which they were convicted was cognizable only in the courts of the United States. It is true that the court held that the crime charged in the indictment was not included in § 5418 of the U. S. Revised Statutes, but the court, speaking through Mr. Justice Harlan, said: “ The argument in behalf of the plaintiffs in error fails to give effect to the established doctrine that the same act or series of acts may constitute an offense equally against the United States and the state, subjecting the guilty party to punishment under the laws -of each government. This doctrine is illustrated in United States v. Marigold, 9 How. U. S., 560, 569; Fox v. Ohio, 5 id., 410, 433; Moore v. Illinois, 14 id., 13.

The cases cited, it will be observed, not only assert concurrent jurisdiction in certain cases, but answer the contention that the application of the rule would be a violation of the constitutional provision: “ Ho person shall be subject for the same offense to be twice put in jeopardy of life or limb.”

The cases cited by the appellant are not in conflict with the position taken in those we have referred to. They hold that it is within the constitutional power of congress to confine to the courts of the United States jurisdiction of crimes arising under the laws of the United States. Claflin v. Houseman, 93 U. S., 130; The Moses Taylor, 4 Wall, 411. And that § 711 of the Revised Statutes of the United States vested exclusive jurisdiction in the courts of the United States to try all offenders against the laws of the United States. People v. Fonda, 62 Michigan, 401; Commonwealth v. Fenton, 101 Mass., 204; Ex parte Dock Bridges, 2 Woods, U. S., 423.

But they do not decide that, if the act which constitutes an offense against the laws of the United States be also an offense against the laws of a state, that the state court is thereby deprived of the right to try the offender for his violation of the state law.

Indeed, it could not be so decided with reference to such acts as are declared to be crimes by title 70 of the Revised Statutes of the United States, and at the same time give any effect whatever to section 5328 of that title.

In Dashing v. State, 78 Ind., 357, the court had under consideration the sections now before us, and it held that section 711, construed with section 5328, does not operate to divest the states of the right and jurisdiction to enact and enforce their own criminal laws, though the acts made criminal thereby might also be made criminal by the laws of the United States.

The judgment of conviction should be affirmed.

Van Brunt, P. J., and Follett, J., concur.


text:
    Edward M. Knox, Resp’t, v. Eden Musee American Company, Limited, App’lt.

      (Supreme Court, General Term, First Department,

      Filed December 15, 1893.)

    1. Corporations—Purchaser op stock.
    One who, in good faith and for value, purchases certificates of stock of a corporation, valid on their face and regularly indorsed in blank, may maintain an action against the corporation for damages, where the certificates prior to their purchase had been surrendered for cancellation, and new certificates signed in their place, but the old certificates had been negligently allowed to remain in the possession of the company’s clerk, uncanceled.
    ■2. Same.
    The failure of the officers to perform the duty, imposed by the by-laws, is negligence for which the company is liable.
    '3. Same—Notice.
    The doctrine of constructive notice does not apply to such a transaction.
    4. Same—Inquiry.
    In such case, the rule that one deals with an officer of a corporation in a matter, in which the officer has a personal interest distinct from that of the company, is put upon inquiry as to the authority of the officer, does not apply.
    Action against the defendant corporation to recover damages for the defendant’s refusal to transfer to the plaintiff fifteen shares ■of its capital stock. In May, 1891, one Reynolds, an employe of the defendant, applied to the plaintiff for a loan of $2,500 upon the discount of his note, indorsed by one Jurgens. Jurgens was also an employe of the defendant, the general superintendent of its business. The plaintiff knew that Reynolds and Jurgens were in the employ of the defendant, and supposed that Jurgens was its managing director. He refused to lend the money without security, and Reynolds told him that they (meaning himself and Jurgens) owned twenty shares of the capital stock of the defendant, and he agreed to lend the money on that as collateral. Subsequently, Reynolds brought to the plaintiff four certificates of five shares each—one issued to Mrs. Eva M. Chase, one to Seligsberg & Co., and two to Mrs. Hattie Z. Blish. They were in all respects regular in form and genuine certificates; they were all indorsed in blank by the persons in whose favor they were issued, except that in the case of the certificate issued to Mrs. Eva M. Chase, the name of Seligsberg & Go. was inserted as the attorney to make transfer on the books. The plaintiff examined the certificates and the indorsements, but did not observe that in the certificate issued to Mrs. Chase the blank was filled as to the attorney to transfer. He made the loan on the note of Reynolds, indorsed by Jurgens, and the four certificates as collateral. After-wards, the loan was paid in part, and renewed, and there remains still due to the plaintiff $1,800, with interest from March 2, 1892, on $800, and on $1,000 from January, 1892. The renewed notes being dishonored, the plaintiff applied to the defendant for a transfer of fifteen shares represented by the certificates other that that to Mrs. Chase, on which he makes no claim. The defendant refused to make the transfer, and thereupon this action was brought
    The facts relating to the certificates are as follows: The twenty shares had been purchased by the firm of Seligsberg & Co., of which Mr. Hollman, the president of the defendant corporation, was a member. In April, 1891, Jurgens informed Mr. Hollman that one Siebrecht wished to buy twenty shares, at §114 per share, and Mr. Heilman agreed to sell him these twenty shares. He took the certificates to the defendant’s place of business, which was under the immediate charge of ■Jurgens, subject'to Mr. Heilman’s general supervision, and finding that Siebrecht was not ready to complete the purchase, left the certificates in the company’s safe in the office, ■giving instructions to Jurgens that when Siebrecht paid the money the transfer should be made. About three weeks later, Jurgens sent to Mr. Heilman, at his office in Hew York ■city, a new certificate for twenty shares, made out to Siebrecht, complete, except as to the signature of Hollman as president. This certificate was signed by Heilman, returned to Jurgens and delivered to Siebrecht, who paid the price of the shares, which was received by Mr. Heilman. The old certificates were not, in fact, canceled, but in the month of May, 1891, were used by Reynolds and Jurgens as collateral security for the loan made ■on Reynolds’ note by the plaintiff, as above related. In December ■or January following, it was discovered that Jurgens was a defaulter, and soon after he disappeared. It does not appear that Reynolds knew of the fraudulent withdrawal of the certificates ■or knowingly participated in the fraud of Jurgens.
    .The defendant corporation was formed under the Business ■Corporation act, Laws 1875, chap. 611. It had adopted a by-law that “ all certificates exchanged or returned to the company shall be canceled by the secretary, and such canceled certificates pasted in their original place in the certificate book, and no new certificate shall be issued until the old certificate has been thus canceled and returned to its original place in said books.” By the by-laws, the certificates were to be signed by the president or vice-president and the treasurer. Mr. Heilman had been president from the formation of the company, and had always signed the certificates, except when he was for a short period out of the country. The certificate and transfer books were kept at the company’s office, in the safe, of which Jurgens alone had. the combination. He had, in effect, had sole charge of these books, receiving old certificates and preparing new ones, obtaining the signatures of the treasurer and presenting them to the president for his signature. In every other instance in which Mr. Heilman, as president, had signed a new certificate, he had had presented to him the old certificate and saw that it was canceled, in fact, before the new.one was issued.
    In this particular case Jurgens did not send with the new certificate the old ones, canceled, as was usual. The secretary had .never attended to the canceling of the old certificates, and neither he, nor the president, nor, so far as appears, any officer had ever been in the habit of examining the stock transfer or certificate books or the returned certificates at the company’s office. Their duties in this respect seems to have been wholly devolved upon Jurgens, the general superintendent and manager of the. business. The business was the carrying on of a show in West Twenty-third street, in a building occupied by the company for that purpose. Its capital stock was $400,000, of which $330,000 was actually issued. The receipts at the door were deposited in bank by Eeynolds. Jurgens did not handle the money, but he had been trusted with large amounts of jewelry and other valuables, and nothing had excited the suspicions of the officers of the company as to his honesty.
    From the time the certificates in question were last seen by Mr. Heilman, in the company’s safe, till Eeynolds produced them to-the plaintiff as collateral to his and Jurgens’ note, there is no evidence as to where they were. • This was on -the 8th day of May, 1891.

      Gharles Steele, for app’lt; Henry D. Hotchkiss, for resp’fc
   Parker, J.

The certificates of stock which lie at the foundation of this controversy are regularly, signed by the president and treasurer of the corporation; bear the corporate seal of the company, and were regularly issued to the individuals named in the several certificates, who indorsed in blank an assignment with a power of attorney to execute a transfer upon the stock books, which indorsement was witnessed.

That the stock was properly issued and the transfer indorsed thereon duly signed in blank by the shareholder is unquestioned, and thus, according to the established usage in the commercial world, they were acceptable to lenders or purchasers without inquiry or other formality than that of delivery, because of the recognized assurance that the stock which the certificates' represented could not be transferred except upon the delivery and cancellation of the certificate.

It is true that the president of the company, who had become the holder and owner of the shares, surrendered them to the company, in order that new shares might be issued in their place te one who had purchased the stock of him, and of right the stock should have been canceled. But it was not; and later, for value, it passed into the possession of one whom, for the purpose of the present inquiry, we shall speak of as a bona fide holder. While they had been delivered to the officers of the corporation for cancellation, nothing had been written or stamped upon the certificates which evinced that fact, and they came first to the attention, and next to the possession, of the plaintiff, without anything upon them which in the least tended to disclose that other certificates had been issued in their place.

It is difficult to see an y reason why the purchaser of a certificate of stock, under such circumstances, should not be held to be in the same legal position as if he were the purchaser of a promissory note, payable to bearer before maturity. Both are transferable by delivery, and the certificate bears upon its face the promise of the corporation that a new issue of stock in its stead would not thereafter be permitted without a surrender of the certificate. The object of the assurance was to induce the public to purchase them the more readily because of their easy convertibility. And when we consider the volume of daily transactions in stocks, and have in mind that stocks of railroad corporations in this country alone aggregate a little over four thousand and six hundred millions, with shares in banking, business and other corporations almost without number, it would seem to be of the highest importance that the public should be reliably assured that certificates of stock purchased by them in good faith, with a transfer indorsed in blank, entitles them to protection, not only against a claim by a prior owner that he has not parted with it, McNeil v. Tenth National Bank, 46 N. Y., 325, but also from a claim by a corporation that the stock is invalid because surrendered up for cancellation and new stock issued in its place. There seems to be no good reason why, to such an extent at least, such certificates should not be deemed to have so much of the attributes of negotiable securities as to make them unassailable in the hands of purchasers in good faith and for value.

It must be admitted that the weight of authority, numerically considered at least, has pronounced against the applicability of the word negotiable, as describing the quality of stock certificates. Beach on Private Corporations, § 677; Cook on Stock and Stockholders, § 412. Mr. Beach, in his work on Private Corporations, as well as some other text writers, have manifested a disposition to regard the expression quasi negotiable, as more aptly descriptive of the character of the instrument, which carries with it to its purchaser in good faith assurance of protection grounded on the doctrine of estoppel, the foundation upon which the estoppel is rested being that the title of an innocent purchaser necessarily comes through the acts of the real owner, which make it possible for any one to purchase the certificates, in the belief that his vendor is vested with title and authority to make a valid and effective sale, and do not depend upon the rights of the apparent owner in any degree. “ This doctrine has been so extended that a Iona fide purchaser of stock for value is protected by estoppel in almost pvery case in which he would be as the holder of a negotiable instrument.”

If this be a correct statement of the rule, the necessities of the commercial world in dealing in stocks are as fully recognized, in so far as the protection of the good faith purchaser is concerned, as if certificates of stock were treated as or termed negotiable. Protection of the good faith purchaser is the matter of moment ; what it may be termed is of least account.

Morawetz, in his work on Private Corporations, 2d ed„, § 185, bases the statement following on the decisions mainly of New York courts: “By general mercantile usage, shares in a corporation are assignable by indorsement and delivery of the certificate issued to the owner as evidence of his rights. It is well settled that, after a certificate for shares has been indorsed by the .holder, with an assignment and power of attorney to execute a transfer upon the stock books, the name of the transferee and attorney being left blank, the certificate thus indorsed may be passed from hand to hand, and the last holder will be entitled to fill up the assignment and power of attorney and complete the transfer by entry upon the books of the company.1’

Among the early cases in this state where a stock certificate, after an indorsement in blank upon the back of it by the holder, for the purpose of having it used as collateral security for a loan, was pledged by the party to whom it was delivered to obtain a loan in his own behalf, was Kortright v. Buffalo Commercial Bank, 20 Wendell, 91. The certificate was for 100 shares of bank stock, and the bank refused to transfer the certificate on its books when requested to do so, nothwithstanding the assignment and power of attorney over the signature of the original owner of the stock had been duly filled out. The court said that the assignment and power of attorney was in “ strict conformity with the universal usage of dealers in the negotiable.and transfer of stocks according to the proof in the case. Even without the aid of this usage there could be no great difficulty in upholding the assignment. The execution in blank must have been for the express purpose of enabling the holder, whoever he might be, to fill it up. * * * The filling up is but the execution of an authority clearly conveyed to the holder, is lawful in itself, and convenient to all parties, as it avoids the necessity of needlessly' multiplying transfers upon the books.”

N. Y. & N. H. R. R. Co. v. Schuyler, 34 N. Y., 30, was a suit in equity to have certain alleged false and fraudulent certificates and pretended stock of the corporation adjudged void and to compel the certificates to be brought into the court and cancelled. The court, in discussing the character of stock certificates, said at page 32; “ Now, while the corporation could not give to a certificate of this kind negotiability in its legal commercial sense, it could and did approximate to that characteristic as nearly as legally possible, for the purpose of making its stock more value-able, by the ease with which its certificates could pass from hand to hand by simple delivery. * * * But it was essential to make those certificates in a form to secure public confidence, and this could only be done by making them solemn assurances of rights. Hence, by its by-laws, the corporation declared that the stock represented by them should never be transferred, except Upon the delivery and cancellation of the certificate; and this provision, in effect, is embodied in the certificate itself. To the purchaser of the stock from its stockholders it assured safety in purchasing 'the certificates, by declaring that the stocks should only be transferred upon its surrender and cancellation.

In McNeil v. The Tenth Nat'l Bank, 46 N. Y., 325, the plaintiff delivered to his brokers a certificate of certain shares of stock to secure any balance of account, having previously indorsed thereon the form of an assignment, and a power of attorney to make all necessary transfers. The name of the transferee and attorney and the date were left blank. Subsequently, the brokers, without authority and without plaintiff’s knowledge, pledged the scrip to secure a loan to themselves. Defendant paid the loan and received the securities. It was held that it was estopped from asserting its title as against the plaintiff. Judge Bapallo, speaking for the court, said: “The holder of such a certificate and power possesses all the external indicia of title to the stock, and an apparently unlimited power of disposition over it. He does not appear to have, as is said in some of the authorities cited, concerning the assignee of a chose in action, a mere equitable interest, which is said to be notice to all persons dealing with him that they take subject to all equities, latent or otherwise, of third parties ; but, apparently, the legal title and the means of transferring such title in the most effectual manner.”

Judge Bapallo thus makes the distinction which obtains between what is assignable, as are choses in action generally, and instruments which contain certain elements of negotiability. The one passes by assignment, and is taken subject to equities, while that which is negotiable is taken free from all equities, and secures to the bona fide purchaser the entire legal and equitable right. This element of negotiability was presented in another form in Leitch v. Wells, 48 N. Y., 585.

The doctrine of constructive notice of lis pendens, filed in a pending action, was sought to be made applicable to a subsequent purchaser of a certain stock. Plaintiff's contention was not upheld, the court saying at page 613 : “ Stocks are articles of commerce, and the dealings in them every business day of the year far surpass in value the dealings in any other species of personal property. They pass from hand to hand in commercial transactions, like negotiable notes or bills of exchange. They are sold and pledged, and in many ways form the basis of credit. Since the decision in the case of McNeil v. Tenth National Bank, above cited, certificates of stock, with blank assignments and powers of attorney attached, must be nearly as negotiable as commercial paper. The doctrine of constructive notice by Us pendens has never been applied to such property.”

In the case of the Fifth Avenue Bank v. R. R. Company, 137 N. Y., 231; 50 St. Rep., 712, the court recently said: “ While certificates of stock in railroad and other business corporations do not possess the qualities of commercial paper in the full sense of the term, yet, as evidence of title, when the transfer indorsed thereon is signed in blank by the shareholder, they become, in effect, so far as the public is concerned, as if they had been issued to bearer. They are then readily transferable by delivery and have an element of negotiability which renders them an important factor in the financial and commercial transactions of the country. * * * The plaintiff must, therefore, be accorded whatever advantage belongs to a holder in good faith of a chose in action of this character."

While protection to the bona fide purchaser of stock, indorsed in blank, has been worked out by means of the doctrine of estoppel, it seems to have at last reached a point in the process of development which justifies the statement following, which we take from Cook on Stock and Stockholders: “ The law of estoppel protects the purchaser against not only the rights of previous holders, but against the claims of the corporation itself. Indeed, to such an extent has the law of estoppel been applied to protect Iona fide purchaser of stock, that he is protected now in almost every instance where he would be protected if he were purchasing a promissory note or other negotiable instrument.”

The holder of a certificate of stock who indorses it in blank, which is subsequently wrongfully converted to the use of another, is estopped from asserting his title as against a Iona fide purchaser. For the same reason this defendant would seem to be estopped from challenging the validity of this certificate. Under the seal of the corporation, supported by the genuine signatures of two of its officers, the present holder was informed, by statements appearing upon the face of the certificate, that the shareholder named therein was entitled to a certain number of shares of stock, which could be transferred upon the books of the corporation in person, or by attorney, whenever the certificates should be surrendered, but not otherwise. In the language of Davis, J., in Bank v. Lanier, 11 Wall., 378: “ This is a notification to all persons interested to know that whoever in good faith buys the stock and produces to the corporation the certificates regularly assigned, with power to transfer, is entitled to have the stock transferred to him, and the notification goes further, for it assures the holder that the corporation will not transfer the stock to any one not in possession of the certificates.”

It is difficult to see how it is possible for the corporation to make a statement calculated to more thoroughly persuade a purchaser that the stock was still outstanding and valid. And the plaintiff having acted upon the faith of such assurance, the corporation cannot be permitted to say that it was not true.

If the position thus taken be correct, there remains for consideration the question whether plaintiff is a bona fi$,e holder. The learned referee, however, predicated defendant’s liability upon the ground of negligence, which is a well recognized foundation upon which to rest an estoppel in cases arising out of wrongful transfer of stock.

His finding of negligence on the part of the officers, of the corporation, if it had support in the evidence, commands the conclusion reached by him that the defendant is estopped from challenging the validity of the certificates in controversy. That the finding is justified by the evidence adduced is readily apparent. It has for a long time been the rule with corporations to provide that, where certificates of stock were exchanged or returned to the corporation, such certificates should first be canceled and returned to their original place in the certificate books before a new certificate should be issued in its place. This experience had taught to be necessary:

First. In order to protect the corporation against the returned certificates being wrongfully put into circulation again by officers, employees or others, who might in some way obtain access to them.

Second. As the public are invited to purchase' securities, it is the policy of corporations to have them regarded equally as safe to deal in as negotiable securities. The protection of the corporation was attempted to be secured by a by-law, requiring surrender and cancellation before the issue of a new certificate. But to assure the public against any possible apprehension of difficulty lest a new certificate should have been issued in the place of the one offered for sale, the certificates on their face declare that a new certificate should only issue after the surrender, cancellation and return to its place in the certificate book of the old one. Now this corporation had a similar by-law, and made a like representation on the face of the certificates issued by it.

The occasion for it was well understood. It constituted a part of the business learning of the time. The necessity of carrying out the by-law and the promise of the certificate was as apparent as that the occasion required, both the by-law and the promise. Neglect of the officers to follow the by-law under such circumstances could not be otherwise than wrongful as against one who, were it not so held, would suffer from the neglect. The situation is not one where the officers of a corporation can say, it never happened us before, and therefore we had no reason to apprehend it, for it was the experience of other corporations, which they knew •so well, that they attempted to guard against misadventure in the manner described. But while the by-law was duly made it was not enforced.

And in failing to comply with this rule of well recognized necessity, which it pledged itself to comply with on the face of its certificates, it neglected to perform a duty which it owed to this plaintiff as one of the public. That neglect having resulted in injury to this plaintiff by reason of it, there is secured to him the right to be indemnified by the defendant

This brings us to the question, whether the plaintiff was a bona, fide holder ?

It was so fully discussed by the referee as to require but little more than a statement that his conclusion is indorsed. The plaintiff was applied to by Reynolds for a loan upon the notes of Jurgens and himself. He refused to make the loan without security. Thereupon the certificates in question were offered and accepted as such. He had no actual notice of any want of title on the part of Jurgens and Reynolds.

But, it is urged, that as Jurgens was the general superintendent of the defendant, and Reynolds an employe, of which fact plaintiff had knowledge, that he was put on inquiry touching the validity of the certificates. In other words, that if an intending purchaser of stock knows that the would-be seller is an officer or employe of the corporation which issued the stock, he is put on inquiry, and thus becomes chargeable with constructive notice of everything to which that inquiry would reasonably have led.

In Wilson v. B. E. R. Co,, 130 N. Y., 675; 30 St. Rep., 240, the party discounting the notes of the corporation had knowledge that the proceeds were being applied to the personal use of the-president of the corporation. And it was held that prima facie the act was unlawful, and, unless actually authorized, the purchaser would be deemed to have taken them with notice of the rights of the corporation. A rule whieh accords with a sound public policy, for corporations have no authority to loan, their notes or securities to their officers for use in their own personal transactions. So, when a person is invited to buy or loan money upon the faith of securities to an officer of a corporation, and such securities or obligations appear to belong to the corporation,, he is charged with the duty of inquiry, because agents do some: times exceed their authority, and when the situation presented is such as to lead an ordinarily prudent man to question the right of the agent to do a certain act, he who deals with him does scat his peril. Public policy requires such a rule. ' If it were otherwise, so'that it would be sufficient to shut the eyes and say, “ I did not see,” dishonest, although trusted agents, would have no difficulty in finding ready capital to aid them in enterprises undertaken on the strength of the assets of corporations.

A type of the cases which call for the application of the rule, is furnished by Bank of New York National Banking Association v. The American Dock & Trust Co., 53 St. Rep., 905. But, as the rule is well grounded in reason, it has never been so far extended as to embrace such a case as this.

These.certificates do not purport to belong to the corporation. On the contrary, they appear to have been, as was the fact, issued to the shareholder named in each of them, and by her indorsed in blank so as to be readily transferred by delivery from person to person, until some holder should desire a new certificate.

They contain nothing which would induce the suspicion that new certificates had been issued in their place; on the contrary, they severally have the assurance of the president and treasurer that this could not be done until the certificate should he canceled.

As neither Reynolds nor Jurgens occupied the position of either president or treasurer, it was evident that they were without the opportunity to issue new stock. But further discussion of this question need not be indulged in. It is apparent that the possession-of a certificate of stock of a corporation regularly issued to a shareholder named therein, and by him indorsed.in blank, by an officer of the corporation other than one having, a part to perform in the execution of the certificate, is not of itself sufficient to charge a buyer with the duty of inquiry.

There was a fourth certificate, not in controversy here, which which was not indorsed in blank, but regularly filled out, and it is said that plaintiff was thus put in possession of a fact which should have led him to doubt the ownership of the certificate by Jurgens and Reynolds. In the first place, the evidence1 which the referee fully credits, is to the effect that the plaintiff'did not observe that it had been filled out. That being so, the situation presented is that of a party attempting to assert, as against the corporation issued them, the validity in his hands of these certificates of stock, under circumstances which command his success,, unless his failure to observe an endorsement upon the back of a certificate not in suit, but delivered at the same time, operates to prevent it. It is difficult to see any basis upon which to charge his carelessness with such consequences.

The appellant contends that he cannot recover because of his contributory negligence. Here were four certificates presented to him. He found some of them, and he supposed all of them, indorsed in blank. In that he was mistaken. His examination was not sufficiently careful. By reason of it he took one certificate which he cannot enforce against the corporation; but does that deprive him of the right to enforce his cause of action upon each of the other certificates ? There was no negligence as to them, or either of them. They proved to be indorsed, as he had supposed.

The situation does not admit of the application of the doctrine of constructive notice. The appellant suggests otherwise, but does not support the suggestion with decisions.

The judgment should be affirmed with costs.

Van Brunt, P. J., and Follett, J., concur.


text:
    The Electric Power Company, Resp’t, v. The Metropolitan Telephone & Telegraph Company, App’lt.

      (Supreme Court, General Term, First Department,

      Filed January, 1894.)

    1. Trespass—Telephone company.
    Where a telephone company is in possession of the fixtures of a tel-graph company with its wires, conducting a business from which it derived a revenue, the fact that this is done without authority affords no excuse for the destruction of its property by the latter company.
    3. Same.
    Though the telegraph company has the right to remove the wires from, its fixtures, it makes itself liable if it thereafter carries the wires away.
    3. Same—Defense.
    Where the recovery is limited to such damages as result from the appropriation of the property, the direction of the board of electrical control to remove the wires from its fixtures is not available ás a defense.
    4. Same—Damages.
    The evidence as to the amqunt of wire converted and its value was held to be sufficiently definite to support the verdict.
    5. Same—Servants.
    The acts of defendant’s servants in converting plaintiff’s property was held to be so intimately connected with their employment that defendant was properly held liable for their tort.
    Appeal from judgment in favor of plaintiff entered on verdict at circuit, and from an order denying motion for a new trial.

      Burton N. Harrison, for app’lt; Roger Foster, for resp’t
   O’Brien, J.

In his charge to the jury the learned trial judge clearly stated the facts and defined the issues. As therein said:

“ On or before April, 1891, it appears from the proofs that the plaintiff corporation was engaged in the maintenance of lines of electric wires, over which it furnished power to customers for the movement of machinery, for which the plaintiff charged and received certain rentals or'compensation. The corporation was organized under a general act of the legislature of the state of New York. * * * That, being in the enjoyment of this business, some time in March and the first part of April, 1891, the defendant corporation, whose business is indicated, perhaps by its title, the Metropolitan Telegraph and Telephone Company, by its agents and servants, committed what, in legal parlance, may be called a trespass upon the property of the plaintiff, in that, by its agents and servants, during the last part of the month of March and the first part of the month of April, the defendant cut and carried away certain wires of the plaintiff, thereby appropriating its property in the wires and causing it damage, for the recovery of which this action was brought."

It was alleged m the complaint, and made to appear on the trial, that the plaintiff had wires attached to fixtures belonging to itself, and also upon fixtures belonging to the defendant. With respect to the latter there was a dispute whether permission had ever been granted to plaintiff to so attach its wires. The plaintiff, however, insisting that it had a lease, or at least a license, sought to make the defendant responsible for the damage which it claimed was done to its business, in addition to compelling it to pay for the injury resulting from the cutting of the wires "and the carrying away and converting of the same by defendant.

As the damages which it was held the plaintiff could.recover were limited solely to such as it could show resulted from the conversion of the wire belonging to it, we may eliminate the other questions from our consideration; leaving it to be determined whether the judgment in this case is right which awarded to the plaintiff damages for the taking of such wire cut and removed from house-tops, some from fixtures owned by defendant, and some from plaintiff’s own,fixtures. .

Apart from the questions of their having cut and removed the wire, and the damages resulting therefrom, the defendant claims that there were certain insurmountable obstacles in the way of any recovery in this case, growing out of ‘the want of authority in the plaintiff to conduct the business which it was carrying on in this city, and for other reasons which will be noticed. It is insisted that, as the defendant had lawful authority to carry on its business, and as the plaintiff had no authority to carry on the business shown to have been done by it with the electrical conductors here in question, therefore, the defendant was justified in cutting and removing such wires, without being liable to plaintiff in damages.

To this we think there are two answers.'

The plaintiff was in possession of the fixtures, with its wires, conducting a business from which it received a revenue; and though this were done without authority it would afford no excuse for the destruction of its property by the defendant. And. second, conceding that the defendant had the right to remove plaintiff’s wires from the fixtures, by thereafter carrying those wires away it made itself liable.

We think that similar reasons apply to the argument based upon the failure of the board of electrical control to give permission to do the business in the way in which it was being conducted by plaintiff. And while it may be true that defendant would not be responsible for any injuries resulting to plaintiff from the former’s attempt to comply with the requirements of the notice of the board of electrical control, directing the removal of plaintiff’s wires from defendant’s fixtures, this would not entitle the defendant, upon re • moving such wires, to carry away and convert the same. These considerations might be pertinent if damages had been allowed for the fact of the cutting, or for the injury resulting therefrom to plaintiff’s business. But where, as here,' the recovery is limited to such damages as were shown to have resulted from the appropriation of plaintiff’s property, we fail to see how these can be made available as a defense.

Other suggestions, which we regard as equally irrelevant, are made for the purpose of shielding the defendant from liability; but these we do not deem it necessary to discuss, feeling that the validity of this judgment must be determined by a consideration of the merits of the controversy as finally submitted to the jury.

There was proof tending to show that all the wire which the defendant cut and took away was of the value of $2,296. Of this amount $900 was claimed to have been wire cut from plaintiff’s own fixtures, and to replace which required the expenditure of $100 to linemen and workmen. If we add to this the interest upon the value of the property taken between the date of conversion and the trial, it will be found that these aggregate amounts exceed the sum awarded by the jury, and, therefore, there can be no claim of excessive damages. The real questions, however, are those which were clearly presented to the jury by the trial judge, as to whether any wire belonging to plaintiff was appropriated and carried away by the servants of the defendant corporation; and, if so, how much, and what was its value ? In addition, we have the more serious question, whether the defendant is liable for the acts of the persons who, after the cutting, removed the wire.

Upon all these questions, except as to the defendant’s responsibility for the acts of those who carried away the wire, the proof as presented furnished the answer. Though from our examination, we think it is reasonably free from doubt that the same persons who cut the wire were engaged in removing and did remove most if not all of it, there is not the same certainty with respect to the amount of wire so removed, nor entirely satisfactory evidence as to the value thereof. From the very nature of the acts charged, however, it was difficult, after the wire-was removed, to describe its condition and determine with accuracy the exact amount taken, or, in view of the extent of its use, its true value when cut and removed. But we do not think, if it can be found that the defendant is responsible, that it is necessary for the court to refuse to accept the only evidence offered, or that could be offered, though unsatisfactory, and to accord it no weight, simply because, by reason of the illegal acts of third persons, more satisfactory proof is impossible.

Upon the question of damages, or in regard to the evidence offered in support thereof, we see no valid reason for disturbing the verdict of the jury, to whom all the circumstances connected with the cutting and removal were presented, and who had all the light that could be furnished them in determining the amount.

The one question, however, which we do not regard as entirely clear is as to the liability of the defendant for the acts of its employes in removing the defendant’s wire after it had been cut As stated, we think the jury were justified in concluding that it was removed by the same persons who cut it, and also that such persons were the employes of the defendant Assuming, therefore, that the defendant had the right, either, under the directions of the board of electrical control, or independently thereof, to remove the wires from its fixtures, for the reason that they were upon such fixtures without its authority and contrary to law, and were both a public nuisance and a special nuisance to defendant, is the defendant liable for the further acts of its servants in converting the plaintiff’s property ?

It is insisted that such torts were not within the scope of their employment by defendant, and that defendant cannot be held liable for them. Undoubtedly, authorities can be found, both in England and in this country, to uphold this contention, but it is-not our purpose to examine them at length, thinking, as we do,, that there has been upon this branch of the law a gradual tendency to increase the liability of the master for the acts of the-employe, and of a principal for acts of an agent, done, not only within the scope of his employment, but also within the scope of the business with which it is entrusted. And this is well summarized in a note in Mallach v. Ridley, 24 Abb. N. C., 83, wherein it is said:

“A few years ago it was almost universally held in this country that an act of the employe, the motive of which appeared to be his own malice, did not render the employer liable, even though done within the scope of the employment; but all the authorities which sanction that rule are now deemed, in so far, overruled, and, in respect to the question of the right of action, the motive of the servant is now immaterial, and even the fact that the employer gave proper instructions, and that the act was in direct violation of those instructions, does not shelter the employer. The only question is where the line is to be drawn between acts so related to the employment that it is just to hold the employer liable, and acts so disconnected from it that the employe alone should be liable.”

And upon the question of principal and agent, the extent to which the courts will go in protecting third persons from such agent’s acts is stated in the case of Fifth Avenue Bank v. Forty-second St. & Grand St. Ferry R. R. Co., 137 N. Y., 231; 50 St. Rep., 712.

We think, therefore, that where it has been shown that, by the directions of the defendant, the wire belonging to the plaintiff was cut from fixtures on the house-tops and removed therefrom, without notice to plaintiff and without affording it a reasonable opportunity of collecting together and reclaiming the property, and where, in addition, it was shown that such wire was removed by the employes and servants of the defendant, it was an act so closely and intimately connected with and related to their employment that it is but just that .the employer in this instance should be held liable.

We have examined the exceptions to rulings upon the evidence, and upon the requests to charge, but do not think that these require any special mention.

Upon the entire case, we think the judgment is just and right, and that it should be affirmed, with costs and disbursements.

Van Brunt, P. J., and Follett, J., concur.


author: Bookstaver, P. J

text:
    William Francis Clemmons, Resp’t, v. John J. Gorman, as Sheriff, etc., Resp’t. Callman Rouse et al., App’lts.

      (New York Common Pleas, General Term,

      Filed February 5, 1894.)

    1. Appeal—Default.
    An order of the city court, opening a default, is not appealable to the court of common pleas.
    A Sheriff—Ikdemhitors.
    Section 1421 of the Code allows the indemnitors tio greater right than substitution as defendants in an action.
    8. Same.
    After the judgment against the sheriff is paid and satisfied, without fraud or collusion, application by the indemnitors for substitution comes too late.
    4. Same.
    In such case, if they have any grievance against the sheriff, they can obtain adequate relief when he seeks to enforce against their indemnity bond.
    Appeal from an order of the general term of the city court affirming an order made at special term denying a motion made by Uallman Rouse and Samuel Barnett as sureties on an indemnity bond given to the defendant as sheriff of the city and county of New York.

      Goldsmith & Doherty, for Rouse and Barnett, app’lts ; Abraham Gruber, for pl’ff and resp’t; W. E. Stillings, for def’t and resp’t.
   Bookstaver, P. J

This action in replevin was brought in the city court of New York to recover certain chattels which were in possession of the defendant as sheriff under and by virtue of certain executions issued to him against the property of one Copple Levy. A writ of replevin was issued by the plaintiff to the coroners of the city and county of New York, who took certain chattels thereunder. Thereafter and before the chattels replevied "on said writ were delivered to the plaintiff, Oallman Rouse and Samuel Barnett, the appellants herein, executed an undertaking which was given to the plaintiff by defendant to reclaim the chattels so taken; the undertaking was approved, and the coroners thereupon redelivered the property to the defendant, who thereafter sold it under and by virtue of the executions issued' to him. The action was regularly placed on the calendar of the' city court, and thereafter a judgment by default was entered in the office of the cleric of the. city court for the sum of $804.21, a transcript whereof was duly filed in the office of the clerk of the city and county of New York on the same day, and the day following an execution upon that judgment was issued against the property of the defendant to the coroners of the city and county of New York; seventy-two days after this execution was issued, the sheriff paid the amount of the judgment. The appellants contend<that they never had any notice of the entry of that judgment. The next day after the execution was paid, the appellants procured and served an order to show cause why they should not be substituted as defendants in the place and stead of the defendant, and why the default before mentioned should not be opened and the judgment vacated and set aside and the in.demnitors or sureties allowed to come in and defend this action. This motion was duly heard at a special term of the city court and was denied. An appeal was taken from the special to the general term of that court, which affirmed the order, and from the order entered on that affirmance, this appeal was taken.-

It may be, as appellants contend, that the motion to be substituted as defendants in the place of the sheriff was a matter of strict right, Code Civ. Pro., § 1421; Hayes v. Davidson, 98 N. Y., 19 ; but they could not be so substituted until the default had been opened. Now, the opening of the default was a matter of discretion in the court below which the general term of that court might review if improperly exercised, but this court cannot. Walsh v. Schultz, 67 How., 186; 12 Daly, 103, 109; Stringfield v. Fields, 13 Daly, 171; Robinson v. Cornish, 36 St. Rep., 39; Keller v. Feldmann, 49 id., 718; Lawrence v. Farley, 73 N. Y., 187. It is quite true that in Jakobi v. Gorman, 21 N. Y. Supp., 762; 50 St. Rep., 202, we affirmed an order of the city court opening the default and substituting the indemnitors. But in that case we pointed out that an order of the city court opening a default was not appealable to us as it rested in that discretion. Besides, in that case there was a judgment remaining of record unnaid and unsatisfied. In this case it appears without contradiction that the judgment was paid and satisfied before any steps were taken by the sureties to be substituted. 0 The payment of the judgment extinguishes the action, Am. & Eng. Ency. of Law, 12, p. 150a; and if the judgment is extinguished, it follows that the action which terminates in the judgment is also extinguished. No greater right is allowed to indemnitors by § 1421 of the Code than to be substituted as defendants, in an action. They made no attempt to be substituted until the real defendant ~ had paid the judgment, and by such payment extinguished the action and wiped out of existence any right which the indemnitors might before have had. Especially as there is no evidence whatever of any fraud or collusion upon the part of the defendant in making the payment.

A similar conclusion was reached on like facts in Cohen v. Gorman, 25 N. Y. Supp., 460; 55 St. Rep., 217. If the indemnitors have any grievance against the sheriff, they will be afforded adequate relief when he seeks to enforce against them the bond of indemnity given by them, if he acted negligently or fraudulently in the matter, and if he allowed the case to go by default without notice to the indemnitors, provided they had stipulated for such notice in their bond. Surely the plaintiffs should not be required to redeliver the money paid to them under the execution in order to relieve the indemnitors for any neglect either on their part or that of the sheriff-defendant.

The order appealed from should, therefore, be affirmed, with costs.