author: INGRAHAM, J. O’BRIEN, J.

text:
    People v. American Loan and Trust Company. Lorenzo Burrows, as Receiver, etc., Resp’t, v. J. Edward Simmons, as Receiver, etc., App’lt.

      (Supreme Court, Appellate Division, First Department,

      Filed March 6, 1896.)
    Trust fund—Pledge.
    Where the receiver of decedent’s'eslate sued a trust company to recover certain certificates of stock which he alleged had been wrongfully pledged by the executor, and judgment went against him. and, pending appeal, it was stipulated, under the sanction of the court, that cash should be substituted for the stock and held by the company subject to the same lien, if any, which it had on the stock, and that, in the event of plaintiff’s ultimate success in the suit, the company should return the cash on demand without interest, and after the money had been paid and the stock withdrawn, the trust company became insolvent and a receiver was appointed, and final judgment was entered declaring that the company never had any lien on the stock and that the receiver of the decedent’s estate was entitled to the same or to the money deposited in lieu thereof, it was held that the delivery of the money to the trust company gave the company no greater title to the money than it had to the stock, and that it had no right to apply such sum of money to the general use of the company, and that neither the trust company nor its receiver, has acquired any interest in or right to the money, and that, as between the receiver of decedent’s estate and the trust company or its creditors, either general or preferred, such receiver is entitled to the money.
    Appeal from an order, granting an application by the receiver of an estate for an order directing the receiver of the American Loan and Trust Company to pay a sum of money deposited with the said company.
    The following statement is by O’BRIEN, J.:
    In 1884, Charles H. Moore was the receiver of the estate of Roswell S. Burrows, deceased. He has since died, and the petitioner here succeeded . him as such receiver. In that year Mr. Moore commenced an action against the American Loan & Trust Company to recover certificates of the capital stock of the Niagara Falls International Bridge Company, then held by said American ■ Loan & Trust Company in pledge. The latter defended the action, and thus an issue arose between the receiver and the trust company as to who was legally entitled to the possession of the certificates. Judgment was rendered in that suit in favor of the trust company. Pending appeal to court of appeals, Moore, the receiver, thereafter obtained an order of court allowing him to enter into a stipulation which was made between the parties on October 21, 1887, as follows: “ The said receiver shall exchange with said trust company cash to the amount of said claim of said defendant as established by the judgment herein, with interest and all the costs awarded at special or general term for certificates of bridge stock and the power of sale and transfer accompanying the same, now held by said trust company. Said cash" to be held by the said trust company subject to the same lien, if any, that it may be ultimately decided in this suit that the" trust company has on the said stock, and, in case- judgment herein is affirmed by the court of appeals, the said trust company may apply such money to the payment of its said claim and costs to the discharge of said loan. And if the plaintiff shall succeed in this suit, and obtain the judgment of this court, determining that he is entitled to said stock, then the said trust company, upon the entry of such judgment, and upon demand, will return said cash without interest to the receiver, and at the same time, and under the same circumstances, shall deliver to the receiver the note and other papers relating to the loan for which the said defendant now holds said stock as collateral.” On the same day the trust company delivered to Moore the certificates of stock, and the latter deposited the money in question with the trust company, and took a receipt therefor. Thereafter the trust company became insolvent, and Simmons was appointed its receiver, and on or about the 21st of July, 1892, Moore served upon Simmons a note of the deposit of this money, and of bis claim that it was held as a pledge, and that neither the trust company nor its receiver had any “ right to mingle the said money so deposited in pledge with the general assets of the company.” Subsequently Moore died, and Lorenzo Burrows was appointed receiver in his stead. Afterwards a judgment was recovered in the action of Burrows as receiver against the American Loan & Trust Company, wherein it was adjudged “that the plaintiff, as the receiver of the estate of Roswell S. Burrows, deceased, was entitled to the certificates of stock, and to the said sum deposited in lieu thereof.”
    The trust company was incorporated by special act of the legislature of this state, and section 3 of said act provides: “In case of the dissolution of said company * * * the debts due of the company as trustee and guardian, receiver or depository of moneys in court and savings bank funds shall have a preference.” Laws 1884, p. 326. The trust company carried on a general banking business from October, 1887, when said deposit was made, until Mr. Simmons was appointed as receiver on March 7, 1891. When the deposit in question was made, the money was not kept separate, but was mingled with the funds of the company generally. At the time when Mr. Simmons, as receiver, took possession of the assets of the company, there was on hand the sum of $31,-793.89 in cash. There was then no special sum of monej'- set apart to meet the claims asserted in the action of said Moore. The amount of the indebtedness of the company to which by the terms of the charter preference was expressly given was $704,-840.10. In addition, there are claims to the amount of $400,000. The principal of the preferred claims has been paid in full, but the receiver has not now in his hands a sufficient amount of money to pay the interest, and nothing whatever has been paid upon the unpreferred claims. The receiver of the estate of Burrows petitioned this court for an order that his claim be “paid in full in preference to the claims of any general creditor upon the funds or assets in the hands of said Simmons as receiver aforesaid.” The receiver of the trust company opposed this motion upon the ground that the petitioner was not entitled to such preference, either by reason of the character of the transaction out of which the claim arose or of the provision of the character of the trust company. An order was, however, made directing such payment absolutely, and from that order Mr. Simmons, as receiver, has appealed to this court
    David Wilcox, for app’lt; John Cunneen, for resp’t Burrows.
   INGRAHAM, J.

The American Loan & Trust Company was a trust company incorporated under an act of the legislature of this state passed June 1, 1872, and known as “Chapter 868 of the Laws of 1872 ” [amended by Laws 1882, c. 391], doing business in the city of New York. On the 15th day of March, 1884, it anade a loan of $25,000 to one Mary Burrows Smith, and said Mary Burrows Smith delivered to the said trust company a certain promissory note, wherein it was stated that for value received the said Mary Burrows Smith and one Albert S. Warner, as executor of Boswell S. Burrows, jointly and severally promised to pay to the American Loan & Trust Company $25,000, with interest; and to secure the payment of the said note’the said Warner delivered to the trust company certificates of 300 shares of the stock of the Niagara Falls International Bridge Company, the property of the said estate, held by him in trust as such executor: and at the time the said trust company received the said stock.it was well known to said trust company that the said certificátes of stock were the property of the estate of the said Burrows, deceased, and were held by said Warner in trust,-as executor of said estate,- and as part of the assets of said estate. Subsequently there was repaid of the said loan certain sums of money, reducing the principal of the said.loan to $17,067.64, and upon such payment there was returned to said Warner by said trust company certificates for 100 shares of the capital stock of the bridge company; and on October 21, 1887, the said trust company held 200 shares of the capital stock of the bridge company, and there was due upon said loan the said sum of $17,067.62. Warner was removed as executor, and one Moore was appointed receiver of the property, who, on the 4th day of September, 1884, filed his bond, and entered upon the discharge of his duties as such receiver. Moore subsequently died, aud the respondent was app inted in his place as receiver, and qualified on the 9th of January, 1894. Subsequent to the appointment of Moore as receiver he demanded of the trust company the return of the certificates of stock held by it as security for the said loan as the property of the estate, and, the trust company,having refused to return such stock, an action was commenced in the supreme court by Moore, as receiver, against the trust company, to recover the possession of the said stock as the property of the estate, it being claimed by said Moore that the said certificates of stock had been illegally pledged by Warner to secure the payment of the debt of the said Mary Burrows Smith. It seems that while such action was pending, and before it was finally determined, and on or about the 21st of October, 1887, an order was entered in the action in which said Moore was appointed receiver, whereby he was authorized and directed to enter into a stipulation with.such of the persons or corporations who held the bridge stock “to exchange cash to the amount of their respective claims against the estate for the bridge stock held by them as pledgees to secure payment of the same, such cash to be held by them subject to the same lien, if any, that it may be ultimately decided in the suit now pending between such pledgee and the receiver that the pledgee has on the stock, and, in case such is established, that the pledgee may apply such money in discharge of the lien, but otherwise to return the same to the receiver, such exchange to be without prejudice to and in no wise to affect such suit, but that the same may be conducted to final judgment, and on appeal, if an appeal be taken by either party, with the same force and effect and in the same manner in all respects as if such exchange was not made.” And in pursuance of such order the said Moore and the said trust company entered into a stipulation entitled in the action wherein Moore was plaintiff and the trust company defendant, by which it was agreed that the said Moore, as receiver, “shall exchange with said trust company cash to the amount of the claim of said defendant as established by the judgment herein, with interest and all the costs awarded at a special or general term, for the certificates of bridge stock, and the power of sale and transfer accompanying the same, now held by the said trust company; said cash to be held by the said trust company subject to thersame lien, if any, that it may be ultimately decided in this suit that the trust company has on the said stotk; and that, in case judgment herein is affirmed by the court of appeals, that the said trust company may apply such money to the payment of its said claim and costs to the discharge of the said loan; and that, if the plaintiff shall succeed in this suit, and obtain the judgment of this court, determining that he is entitled to such stock, then that the said trust company, upon the entry of such judgment, and upon demand, will return said cash, without interest, to the receiver.” - And in pursuance of such stipulation the said Moore, as receiver, paid to the trust company Ifche sums of $17,067.64 and $185.44, and took from the said trust company a receipt of follows:

“Charles H. Moore, as Receiver of the Estate of R. S. Burrows vs. The American Loan and Trust Company. Received, New York, October 21, 1887, from the plaintiff in the above-entitled action, $17,067,64, deposited in lieu of two hundred shares (200) of the stock of the Niagara Falls International Bridge Company, and $185.44 costs, pursuant to the stipulation bearing date this day, made, signed, and delivered in this action.

“American Loan & Trust Company,

“By W. D. Snow, Secretary.”

It appears that subsequent to the death of Moore and the appointment of the respondent as receiver, the said respondent was substituted as plaintiff in the action between Moore and the trust company, and that final judgments was entered in that action, whereby it was adjudged that the delivery of the certificates of stock of the bridge company by said Warner to the trust company as a pledge tb secure the payment by said Mary Burrows Smith to the said trust company of the moneys that it loaned and advanced to her was a violation of his duty as executor; that the said trust company, by receiving from the said Warner, as executor, the said stock of the bridge company, assets of his testator, knowing that he was depositing the same in pledge for the payment of the debt of a third party, and in violation of his duty, is to be adjudged as conniving with the said executor, and that the said trust company acquired no title to or lien upon the said certificates,* and that the plaintiff was entitled to judgment directing that the defendant Simmons, as receiver of the trust company, deliver to the said plaintiff, as receiver of the estate of Burrows, the said certificates for 200 shares of the capital stock of the bridge company. And it was thereby adjduged that the Amcri•can Loan & Trust Company acquired no title to nor lien upon the said certificates, and that the plaintiff, as receiver of Burrows, was entitled to the said certificates, and to the said sum of money deposited in lieu thereof, and that plaintiff recover of the defendant Simmons, as receiver, his costs. This latter judgment was entered after the appointment of Simmons as receiver of the trust company, and he seems to have been substituted before the entry of judgment as the defendant in the action in place of the trust company that had been dissolved.

It having thus been adjudged, in an action in which the appellant, as receiver of the trust company, was a party, that the trust company never acquired any title to or lien upon the said bridge stock, it would seem to be clear that if the bridge stock had remained in the possession of the trust company, and had been received by Simmons upon his appointment as receiver of that company, the respondent would have been entitled to an order directing Simmons to deliver that stock to him as receiver. From this judgment it conclusively appears that the trust company never was the owner of the stock, and never had acquired a lien thereupon, or right to the possession thereof; that it at all times remained the property of the estate of which the respondent is receiver, and that such estate at all times was the owner and entitled to the exclusive possession thereof; that the possession of the trust company was wrongful, and without right; that the estate of Burrows at all times was its owner, and entitled to its possession. The fact that a judgment had been entered by which it was held that the trust company had such an interest in the stock that it was entitled to retain possession thereof, which judgment was subsequently reversed, gave the trust company no title to the stock while such judgment remained in force, so that during that time the trust company could lawfully dispose of the stock; for the final judgment that was entered adjudged that no such title or right to possession had ever vested in the trust company. Such erroneous judgment was absolutely without force, and, as no proceedings took place under it, it was ineffectual for any purpose to affect the rights of the parties. The trust company thus being in possession of the stock, the property of the estate of which the respondent was receiver, and of which such estate was entitled to the possession, the representative of the estate and the trust company entered into the stipulation before mentioned, by which a sum of money was exchanged with said trust company for the certificates of the bridge stock, and said sum of money was held by the said trust company subject to the same lien, if any, that it might be ultimately decided the trust company had on the stock, with the further agreement that, in case the judgment of the court .should ultimately decide that the trust company had no lien or right of possession to said stock, that the said trust company would “return said cash, without interest, to the receiver.” Tins delivery of money to the trust company gave to the company no greater title to that money than it had to the stock, It had no right to apply such sum of money to the general uses of the company. On the contrary, it was clearly bound to hold it as a trust fund, and subject to the determination by the final judgment in • the action between the estate of Burrows and the trust company as to the right of possession of the stock. Such money no more became the property of the trust company than did the stock that it held, the title to which was in dispute. Nor is there any evidence to show that the trust company violated this covenant, and actually used this money; for at the time the receiver took possession a sum of money in cash largely in excess of that deposited and substituted for the stock came into the possession of the receiver, and it does not appear that at any time prior to the appointment of a receiver the trust company did not have in its actual possession this sum of money. The mere- fact that it was deposited in the trust company’s general account, and was not kept separate, is unimportant. It was bound to keep this specific sum of money' to await the determination of the final judgment in the action between the receiver of the estate and the trust company, and that sum of money was on hand and in its possession when the appellant was appointed receiver. The relation of debtor and creditor never existed as between the respondent as receiver and the trust company. The trust company was never a debtor to the respondent for this sum of money, but the trust company had held this bridge stock, claiming a lien upon it, and subsequently held this sum of money that had been exchanged for the bridge stock, claiming a lien upon it; and the fact that the trust company was not to pay interest upon this sum of money if it should be'ultimately determined that-it had no lien upon the bridge stock or its substitute (this sum of money) shows clearly that it was never the intention of the parties that the money was to be used by the trust company, but rather that it was to be held by it as a specific pledge to be returned in case the estate should ultimately succeed. It seems entirely clear, therefore, that neither the trust company nor the appellant, as receiver, has acquired any interest in or right to this sum of money, and that, as between the respondent, as receiver, and the trust company or its creditors, either general or preferred, the respondent was entitled to the money.

We think, therefore, that the order was clearly right, and that it should be affirmed, with $10 costs and disbursements.

VAN BRUNT, P. J., and BARRETT and RUMSEY, JJ., concur.

O’BRIEN, J.

(dissenting).—The certificates of stock for which the money was substituted were not deposited with the trust company by Burrows or bv his receiver, Moore, but were held by that company as security for a debt. Moore, claiming the stock as the property of the estate of Burrows, brought his action for the purpose of procuring a determination to that effect, but judgment went against him, and he appealed. If at that time the trust company, as it then had the legal right to do, had sold the certificates of stock, and applied the proceeds to the payment of its debt, using the meuey realized in its business, would the receiver of Burrows’ estate, upon subsequently obtaining a .reversal, and a judgment in his favor, have been entitled, as against the re ceiver of the trust company, to a preference over all other creditors? Such a judgment would eventually entitle the receiver of Burrows to a return of the stock, or, in case it was sold, to- its value. In such a transaction it could not be held that there was any trust relation, or that the trust company acted as bailee for Burrows, but, as we have seen, it was claiming in hostility with respect to securities which it held in pledge for a debt due it; and the judgment, when rendered, and before it was reversed, decreed that it was entitled to sell the stock, and apply the proceeds to the payment of its debt. I think that in such a transaction, the certificates having been sold, and the money applied in discharge of the debt due the trust company, and the money realized mixed with its general funds, and used in its ordinary business, where, as shown, there was no .fiduciary relation, and • no relation, -as between the Burrows estate and the trust company, of bailor and bailee, the remedy of Burrows’ receiver upon obtaining the judgment in his favor would be a right to have a return of the stock, or its value if sold. And the claim thus arising would place the receiver of Burrows in the category of a general creditor, and would not create any such fiduciary relation as would entitle him to a preference over all other general creditors. If this view of the original -relation between the parties is. right, I do not see how it is in any way changed by the stipulation which merely substituted the money for the stock. The stipulation provides that the cash shall be held by the trust company subject to the same lien, if any, that it may be ultimately decided in the suit that the trust company has in the stock; and that, if the plaintiff shall obtain a judgment determining that he is entitled to the stock, then the trust company shall return the cash. There is no agreement that the money shall be retained in specie, but simply that, after recovery of a judgment by plaintiff,'1 the money shall be returned upon demand. No force can bg attached to the provision that the money shall subject to the same lien as the stock, because this provision was in the interest of the trust company, and was inserted, not for the protection of the receiver of Burrows, but as recognizing the lien which the trust company claimed; and it was proper that it should provide that the money deposited in lieu of the stock should be subject to the same rights as the trust company had to the stock. I fail to see how a deposit thus made is any stronger than that of the ordinary depositor in a trust company, because in the latter case the trust company agrees to pay back the money on demand without any preliminary process of litigation, whereas, under the stipulation, the money deposited by Moore was to be repaid only if he could succeed in establishing his right thereto by litigation. But, even if we should regard the stipulation as constituting the petitioner a trust creditor this would not entitle him to a preference. As said in Calvin v. Gleason, 105 N. Y. 262; 7 St. Rep. 13:

“Upon an accounting in bankruptcy or insolvency a trust creditor is not entitled to a preference over general creditors'of the insolvent, merely on the ground of the nature of his claim; that is, that he is a trust creditor, as distinguished from a general creditor. * *. * The equitable doctrine that, as between the creditors, equality is equity, admits, so far as we know, of no exception founded on the greater supposed sacredness of one debt, or that it arose out of a violation of duty, or that 'its loss involves greater apparent hardship in one case than another, unless it appears in addition that there is some speefic recognized equity founded on some agreement, or the relation of the debt to the assigned property, which entitles the claimant according to equitable principles to preferential payment. If it appears that the trust property specificially belonging to the trust is included in the assets, the: court, doubtless, may order it to be restored in trust.”

In that case also we find an answer to the suggestion made that this amount should he preferred before other claims because the funds and assets which came to the’ possession of Simmons were increased by the amount of the moneys in controversy, and that by reason of them he received, that amount more than he otherwise would. As therein said: “In a very general sense, all creditors of .fin insolvent may be supposed to have contributed to the assets which constitute the residuum of his estate.” I think the principle of that case sustains the appellant’s view, that upon whatever terms the stock or the money might have been received, even if it were the fact that the trust company had wholly converted or misapplied the same, still that alone would not give the debt so arising a preference over other indebtedness of the trust company. In order to secure a preference, it would be necessary to show in addition that some part of the proceeds arising from such action was in the hands of the trust company when Mr. Simmons was appointed receiver, and then the preference would not extend beyond the amount of such proceeds actually coming into the receiver’s possession.

I do not think that the petitioner’s right to relief can be predicated upon the second ground, namely, the terms of the charter of the trust company, that “debts due from the company as trustee and guardian, receiver, or depositary of moneys in court * * * shall have a preference.” Regarding the manner in which the deposit was made, we do not think it constituted the company “a depositary of moneys in court.” That provision covers eases in which the company is intrusted as an officer of the court, acting in a fiduciary capacity, with the property of others, and can have no reference to a case where acting in its own behalf, it accepts security for a "debt which it claims to" be due to it.

I am of opinion, therefore, that the order directing a preference was erroneous, and should be reversed, with $10 costs and dis* ■ bursements, and the motion denied, with $10 costs. ~ ~


source: Caselaw Access Project

author: INGRAHAM, J.

license: Public Domain

text:
    Erwin Davis, Resp’t, v. Ellen S. Cornue et al., App’lts.

      (Supreme Court, Appellate Division, First Department,

      Filed March 6, 1896.)

    Injunction—Decree—Distributees.
    The distributees of au estate under the decree of a foreign court will not he enjoined from receiving their interests thereunder, until the alleged interest of one in such state, shall he determined, on the ground that such "decree was procured through a corrupt conspiracy on the part of those-benefited thereby, in fraud of his rights.
    Action by Erwin Davis against Ellen S. Cornue and Joshua Gr, Cornue, her husband, and others, to restrain and enjoin the defendants above named and certain other defendants from distributing the estate of Andrew J.Davis, deceased, or participating in such distribution thereof, or receiving in any manner any portion thereof until the rights of plaintiff and of certain of the defendants in and to said estate should be determined, and their portions thereof received by them. From an interlocutory judgment overruing a demurrer by defendants Ellen S. Cornue and Joshua Gr. Cornue to-the amended complaint, said defendants appeal.
    It is alleged in the amended complaint that Andrew J. Davis died in the state of Montana, where he resided, March 11,1890, leaving a large estate in that and other states, and' having never married, leaving as his heirs at law and next of kin, plaintiff, who is a brother, and two other brothers, four sisters, and seven nephews and nieces, all of whom are defendants in-this action; that in May, 1890, plaintiff and his two brothers and three of his sisters entered into a written agreement whereby plaintiff agreed to institute and prosecute to final judgment, at his own expense, all actions and other proceedings necessary to establish the rights and claims of himself and the other parties to said agreement in and to said estate, against any person claiming the same * as a child of a decedent, and to defend in like manner any actions or other proceedings-that should be brought by any such person in the assertion of such claim, plaintiff to receive in consideration therefor one-half of the share in said estate of each of the other parties to said agreement, of which agreement all the other heirs at law of decedent had notice; that thereafter John A. Davis, one of the parties to said agreement, propounded for probate, in the proper-court in the state of Montana, a paper purporting to he the will of decedent, by the terms of which, after provision for the maintenance for life of certain persons therein named, all the residue of the property of decedent was devised and bequeathed absolutely to said John A. Davis; that thereafter said John A. Davis, by another agreement in writing, authorized plaintiff, at his own expense, to do whatever might be necessary for the enforcement, of his (said John A. Davis') rights under said will, for their mutual benefit, on the same terms expressed in the former agreement, of which agreement also the other heirs at law of decedent had notice ; that plaintiff fully performed both of said agreements on his part; that said John A. Davis died intestate, January 24, 1893, leaving a widow and six sons, one of whom, as administrator of his father’s estate, was substituted as proponent of said will of Andrew J. Davis, deceased, in the place of said John A. Davis, deceased; that the probate of the will aforesaid was contested by four of the defendants in this action; that, whether said will should be admitted to probate or not, plaintiff and the other surviving parties to the above-mentioned agreements are entitled thereunder to definite shares and interest in and to the estate of Andrew J. Davis, deceased; that thereafter defendant Ellen S. Cornue and her husband- and certain others of the defendants in this action, including the contestants of the will of s Andrew J. Davis, deceased, and including the widow and heirs of-John A. Davis, deceased, corruptly and fraudulently conspired and agreed to and with each other that said contest should be discontinued, said will admitted to probate, and the estate divided among themselves in certain proportions, and to defraud plaintiff and the other surviving parties to the two agreements first above mentioned and their shares and interests in said estate, which corrupt and fraudulent agreement was carried into effect, and resulted in a decree admitting said will to probate, and ordering the distribution of said estate in accordance therewith; that neither plaintiff nor any of the other surviving parties to the agreements first above mentioned were parties to the proceeding aforesaid, or had knowledge thereof until said decree was formally entered and made public; that defendant Ellen S. Cornue and her husband, and the other defendants colluding with them, threaten and intend to cause said estate to be distributed among themselves, and to disregard the rights and interests of plaintiff and the other surviving parties to the first-mentioned agreements in and to said estate; that defendants are not financially responsible; and that, if said estate was divided among them, the interests and shares therein of plaintiff and those interested with him would be dissipated and lost. Ellen S. Cornue and her husband demurred to the amended complaint, for want of jurisdiction, aud for want of facts sufficient to constitute a cause of action; and, their demurrer having been overruled, they appeal.
    Charles E. Eushmore, for app’lts ; Robert M. Morse and Walter S. Logan, for resp’t.
   INGRAHAM, J.

This appears to be a rather novel action, by which plaintiff seeks to reverse the judgment of a court of the state of Montana, which admitted a will of a deceased resident of that state to probate, and a decree of that court directing a distribution of the assets of the estate of the deceased (the court plainly having jurisdiction), on the ground that he had made an agreement with certain of the heirs at law of the deceased, and also a legatee and devisee under the will of the deceased, by which he was to obtain a portion of the estate of the deceased, but which is demurred to by these defendants, who were not parties to that agreement, and the agreement did not assume to affect these defendants’ share of the estate. The complaint alleges a wicked and corrupt conspiracy, by which these defendants, who had filed objections to the probate of the will, withdrew the objections, and consented to the probate of the will, upon being allowed a certain portion of the estate. But it is a little difficult to see upon what principle these defendants were prohibited from withdrawing such objections to the admission of the will to probate, or why this.court should prevent the decree of a court of competent jurisdiction, in fact having exclusive jurisdiction of the subject-matter of the proceeding, from1 being carried out. This court has no jurisdiction to administer upon the estate of the deceased, has no power to determine whether or not the will of the deceased was properly admitted to probate in the state of Montana, or to distribute the assets of the decedent, who was a resident of the state of Montana. We could not determine here whether the plaintiff would have got under his agreement more than the decree of the court of Montana has awarded to him, or to those whom he represented, if the defendants’ objections to the probate of the will had not been withdrawn ; and the question as to whether or not the will should be probated had been contested. And, if this court should grant the injunction which the plaintiffs asks, the defendant Ellen S. Cornue would simply be restrained from receiving a portion of the estate which a judgment of a competent court has decreed she was entitled to, without providing any method by which it could be determined what she was entitled to, or what her rights were. Here, so far as appears, the only remedy asked for is that the defendants be restrained from accepting any portion of said estate under a decree of a court of competent jurisdiction, which decrees that the said defendant is entitled to a portion of it. No judgment is asked determining how much this defendant is entitled to receive, and it is clear that this court could not in this action determine that question. Upon the granting of this relief, the condition of the parties would be that a large amount of property exists which a court of competent jurisdiction has determined should be divided among the parties to the action, but which this court adjudged should not be divided until they had bought the plaintiff off. We are not asked to determine the rights of the plaintiff in and to any of the property of the deceased, and, as. before stated, we would have no power to determine that question.

The learned judge at special term, in deciding this motion, expressly disclaimed any power or authority to interfere with the decree of the foreign court, but held that it was competent for this court to act upon the persons of the defendants, and restrain them from taking the benefit of certain provisions of that decree, when it was clearly shown that they were inserted by fraud and collusion, without notice to the plaintiff, and for the evident purpose of despoiling him of th^t share of the estate to which he was entitled. But we ‘think it quite clear that where this court neither has power to determine to whom the estate should go, nor power to set aside the decree on the ground of collusion or fraud, or for any other reason, it would be manifestly improper to grant an injunction restraining the parties from receiving the share under the decree, thus leaving the decree in force, but restraining any of the parties from executing it, and thus preventing the property of the decedent’s estate from being distributed according to law. It is hardly the province of a court of equity to compel the persons interested in an estate to buy off one who claims an interest in the estate by an injunction which could be of no use to the plaintiff except so far as it would compel others to buy him off. The plaintiff has a complete remedy by an application to the proper court in Montana which has jurisdiction of the subject-matter of the action, which can summon all the parties interested before it, and give to the plaintiff such relief as he is entitled to. We think, therefore, that this complaint alleges no cause of action against these demurring defendants, who were not parties to or bound in any way by the agreement set up in the complaint.

The judgment must be reversed, and the demurrer sustained, with leave to the plaintiff to amend the complaint within twenty days, upon payment of costs in the-court below and in this court,

All concur.

The opinion of Mr. justice PATTERSON, at special term, is as follows:

The amended complaint sets forth a cause of action enforceable against the demurring defendants in the courts of this state. The gist of the matter is that the defendants referred to are, with others, and in fraud of the plaintiff’s rights, about to distribute, under a decree of a probate court of another state, entered in a proceeding without notice to the plaintiff, a certain estate in which, by specific agreement, of which the defendants referred to had full knowledge, the plaintiff has a share; and this will be done in violation of the plaintiff’s rights, and, unless the defendants are enjoined from further proceedings under the decree, the plaintiff will be remediless. , It is not contemplated in any way to interfere with the action of the foreign court to act by any exercise of jurisdiction here to affect the decree admitting the will of Mr. Davis to probate. All that cannot be attacked here. But it is competent for this court to act upon the persons of the defendants, and restrain them from taking the benefit of certain provisions of that decree, when it is clearly shown that they were inserted by fraud and collusion, without notice to the plaintiff, and fof the evident purpose of despoiling him of that share of the estate to which he was entitled, not under the will, but by agreement with the parties who do take under the will. This does not impugn the judgment of a court of a state, but merely acts upon the persons who seek to profit by the alleged fraud. The subject-matter of the action is one of which our courts have cognizance ; and the defendants have submitted personally to the jurisdiction, as they have done by demurring, the court has power to render final judgment suitable to the facts, which, as they are stated in the amended complaint, would entitle the plaintiff to some, if not all, of the relief asked for.

Demurrer overruled, with costs, and with liberty to the defendants, to withdraw the demurrer, and answer the complaint within twenty days on payment of costs.


author: WILLIAMS, J.

text:
    Charles G. Keller, as Administrator, etc., Resp’t, v. Henry Haaker, App’lt.

      (Supreme Court, Appellate Division, First Department,

      Filed March 6, 1896.

    1. Negligence—Question fob jury.
    Where, at the time of the accident, the street was so obstructed as to leave only enough space to permit a single team to pass by at one time and ¡there were many children in the street and the obstruction interfered with > the view thereof, it is fairly a question for the jury whether the rate of ■ speed at which, and the manner in which, the team was being driven at the time of the accident, were negligent.
    3. Same—Contributory.
    In such case, it is the duty of the driver, under the circumstances, to drive the team carefully and to he vigilant and careful to see whether children were in'the street and avoid injuring them.
    8. Same.
    The plaintiff has the burden of proof and must establish the absence of contributory negligence.
    4. Same.
    It is enough if, from all the evidence given in the case on both sides, the inference can be fairly drawn by the jury that there was absence of contributory negligence.
    6. Same.
    And where the injured party is a boy-of tender years, his age should be considered, and the care to be exercised by hitn is such care as an ordi-
    narily careful and prudent person of his age would have- used.
    Appeal from a judgment in favor of plaintiff, and from an order denying a motion for a new trial. .
    This action was brought to recover damages for the death of plaintiff’s intestate, alleged to have been caused by the negligence of the defendant. The deceased was a boy eight years of age, and was killed by one of defendant’s teams attached to a heavy, but empty, coal wagon, which was being driven along West Fif-' tieth street, in the city of New York. The defendant, at the close. of plaintiff’s evidence, and again at the close of all the evidence,' moved to dismiss the complaint, on the ground that there was no proof of defendant’s negligence, and no proof .of want of contributory negligence on the part of deceased. These motions were denied, and defendant excepted. The case was submitted to the jury, and a verdict rendered for plaintiff for $500. A motion for a new trial was made and denied; a judgment was entered ; and this appeal was taken.
    Robert Thorne, for app'It; Edwin G-. Davis, for resp’t.
   WILLIAMS, J.

We entertain no doubt but that there was sufficient evidence to sustain the verdict of the jury as to the negligence of the defendant or its driver. Considering the location of the street, its condition at the time of the accident, being so obstructed as to leave only enough space to permit a .single team to pass by at one time, the large number of children in the street at the time, and the obstruction interfering with a view of the street, it was fairly a question for the jury whether the rate of speed at-which the team was being "driven at the time •of the accident, as the jury were justified in finding it and the manner in which the team was being driven, were negligent. The jury were justified in finding thatit was the duty of the driver, under the circumstances, to drive the team carefully, and to be vigilant and ■careful to see whether children were in the street, and av oid inj uri ng them. Birkett v. Knickerbocker Ice Co., 110 N. Y. 504; 18 St. Kep. 130.

It seems to us there was also sufficient evidence to sustain the "finding by the jury that the deceased was free from contributory negligence. Mo general rule of law can be laid down as to. what in all cases constitutes contributory negligence. The plaintiff has the burden of proof, and must establish the absence of contributory negligence. But no particular kind or species of evidence is essential to be given. It is enough if, from all the evidence given in the case on both sides, the inference can be fairly drawn by the jury that there was absence of contributory negligence. The highest degree of care on the part of the injured party is not required in order to establish freedom from contributory negligence, but only such care as an ordinarily careful and prudent person, under all the surrounding circumstances, would have used; and where, as here, the injured party is a boy of tender years, his age should be considered, and the care to be exercised by him is such •care as an ordinarily careful and prudent person of his age would liave used. We are not to judge of the accident, and the circumstances surrounding the deceased at the time, from the evidence given by the defendant, that most unfavorable to the plaintiff. On the contrary, in support of the verdict, we should consider the evidence most favorable to the plaintiff, and should assume that the jury, as it had a right to do, credited such evidence, rather than that most favorable to the defendant. These principles are now ^ell settled, and no citation of authority is necessary in support of them. From the evidence, therefore, the jury were justified in finding that the street on its north side was so obstructed with building materials, brick, sand, iron girders, etc., as to leave a space wide enough for but one team to pass at a time. The pile of brick was three feet high, and there was a sand .pile not so high beside it. The boy had been at school, and was on his way home, having his schoolbook with him. He, with other children, had stoppéd at the sand pile. There were a large number of children in the street. The team was being driven rapidly through the street, and through the narrow passage by-the obstruction in the street. As the team approached this narrow •passage, deceased was at the sand pile, and the brick pile was between him and the team, and obstructed the view of the team to some extent Just at this point of time, another child snatched' deceased’s book from him, and threw it across the street, to- a point in the gutter in the extreme south part of the narrow passage. The deceased, seeing this done, and eager to recover his-book, ran across the narrow passage, and stooped down to pick up the book; and, while in that position, the team came upon him, and he was knocked down, and trampled upon by the horses’ feet, and his death resulted. If the team had been traveling at a proper rate of speed, the horses might have been stopped in time to avoid the accident. Some of the witnesses do say that deceased ran under the horses’ feet, but these the jury evidently did not credit, and they were not bound to believe them. Under these-circumstances, and considering the tender years of the deceased,, we are of opinion that the jury were justified in inferring the absence of contributory negligence. The case was very carefully submitted to the jury by the trial judge. Every right of the defendant was fully protected. The verdict was not large. The-jury evidently acted without passion or prejudice, and we think its determination as to the facts should not be disturbed.

The judgment should be affirmed, with costs.

O’BRIEN and INGRAHAM, JJ., concur.

YAN BRUNT, P. j., and PATTERSON, J.—We dissent,, upon the ground that there was conclusive evidence of contribu- . tory negligence. ,


author: PATTERSON, J.

text:
    Theodore Haebler et al., Resp’ts, v. Maximilian O. Luttgen, App’lt.

      (Supreme Court, Appellate Division, First Department,

      Filed March 6, 1896.)

    1. Appeal—Case—Certificate.
    Where there is no certificate or statement in the case that it contains all the evidence presented on the trial, the appellate court is permitted to consider such questions only as arise on appeal from the judgment.
    2. Principal and agent—Fiduciary relation.
    Where, under a contract, whereby one undertakes to act as agent for the sale of cement delivered to him f. o. b. in New York, and agrees to remit to his principal, within a fixed period after each sale, a net price for each barrel, and he is to receive for his labor all that he obtains above such net price, he is acting in a fiduciary capacity, and must account for all goods sold within the period fixed by the contract.
    8. Same—Demand.
    Where there is an unconditional promise by an agent to turn over all remittances as soon as received, a demand of performance is not a prerequifc ite to an action.
    4. Same—Construction.
    Under the contract above specified, the agent must pay all expenses arut freight charges on goods consigned to him, and remit the agreed net pric© for each barrel sold by him.

      5. Same.
    A person who contracts to sell goods and remit proceeds thereof within a certain time, is chargeable with the proceeds as cash, though he may have received them in another form.
    6. Appeal—Harmless error.
    Error in the submission of a contract to the jury is ■ cured by the jury finding its proper construction.
    Appeal from a judgment in favor of plaintiffs, and from an. "order denying a motion for a new trial.
    L. Laflin Kellogg, for app’lt; R. B. Honeyman, for resp’ta,
   PATTERSON, J.

This is an appeal from a judgment rendered upon a verdict of a jury in favor of the plaintiffs in an action tried in the court of common pleas, and from an order denying defendant’s motion for a new trial. We are not at' liberty to consider the appeal from the order. There is no certifiate or statement in-the case that it contains all the evidence presented on the trial., and in consequence of the defective condition of the record we-are remitted to the consideration of such questions only as arise on the appeal from the judgment. It appears that the plaintiffs, merchants in New York, on the 4th day of June, 1891, entered into a written contract with the defendant, who resided and carried on business at Minneapolis, Minn., by the terms of which the-defendant was constituted a selling agent for the plaintiffs of certain German cement of which the plaintiffs were the importers; and he undertook to sell,’ on conditions to be mentioned, 4,000 barrels during the season, presumably of that year, as a minimum quantity. The price for this cement during the season was to be $2.35 a barrel free on board at New York for cement to be used in a curbing contract referred to,—this price being fixed on the basis of sixty days from the date of delivery in Minneapolis,— or $2.37 a barrel free on board at New York for all other business on a bases of three months from the date of shipment. The merchandise was to be billed by the plaintiffs to the defendant, and-he assumed the distinct obligation of selling the cement as the plaintiff’s agent, and making out his bills to his customers for such cement as such agent; and he also agreed to turn over to the plaintiffs, “as whose agent he sells, bills, and delivers the same,”' all remittances he received for the cement as soon as he obtained the same. His compensation was to consist of all he received over and above the fixed prices. It also appears that the plaintiff's shipped to the "defendant something over 4,000 barrels of cement, and they claim that in November and April, 1892, the defendant sold and received payment for 400 barrels, and has not paid the value thereof, at the price fixed by the contract, but has retained and misappropriated the amount received, in violation of his agreement and. in fraud of the plaintiffs. And they further claim that the defendant sold and received payment for an additional hundred barrels in June, 1882. The answer admits the making o£ the contract substantially in the terms ' set forth in the complaint, but avers that it was • modified and changed by the consent of the plaintiffs so that the goods were to be sold at a price named by the plaintiffs, and that it was agreed the defendant should receive the usual commission for the sale of cements, and all expense and outlays to be paid by the plaintiffs. It further avers by way of a counterclaim—presumably arising out of the alleged contract—that the defendant, at the express request of the plaintiffs, paid, laid out, and expended a sum-of meney in connection with the merchandise, exceeding the amount received for the 500 barrels; and also sets up a counterclaim for commissions on the sale of the cement, and judgment is ■demanded therefor.

It becomes important in the first instance, to examine the record to ascertain precisely what is the state of the proof respecting the contract between the parties, and such examination fails to disclose that there was any modification of the character set up in the answer made of the contract of June, 1891, and that the allegations of the answer in that respect are without support. All that was ■done was that the plaintiffs authorized the defendant, if it became necessary to sell at $2:20 or $2.30 net to them; and nothing was said about commissions, or who should pay charges. The relations between the parties stand upon the written contract, and the liability of the defendant must be determined by the construction to be .given to that contract. The first point made by the appellant is that the action cannot be maintained in the. form in which it was brought, because there is nothing to establish that the defendant acted in a fiduciary capacity-or otherwise than as a factor or commission merchant entitled to the possession of the goods, and to dispose of them, and to retain from the proceeds his commissions and advances. But such is not the. nature of this contract. Its terms specifically constitute a different relationship, and make the defendant a mere selling agent, with strictly limited power respecting the merchandise and its proceeds; and so careful were the plaintiffs to guard themselves that the nature of this agency is referred to in no less than three times in the contract. The proper construction of the agreement is that this merchandise was to be shipped to the defendant free on board at New York at' .a fixed price to be returned to the plaintiffs by the defendant at $2.35 or $2.37 for each and every barrel of cement sold by the defendant, he to receive for his labor and attention all that he obtained above the before-mentioned prices. This would seem to contemplate the payment by the defendant of all the charges of transportation and storage upon merchandise -forwarded to him,because he stipulated that on the conditions of the contract he would sell a minimum quantity of 4,000 barrels, which confessedly he has not done. In view of the terms of the contract and the obligation.assumed by the defendant of remitting advances upon receipt of the proceeds of sale to the plaintiffs, it .is difficult to perceive how any contention can be made that the defendant was not acting in a fiduciary capacity; and therefore the claim of the defendant that he did not receive the proceeds of the sales in that relation cannot be upheld.

It is further claimed on the part of the appellant that, assuming the moneys were received in a fiduciary capacity, and the action being in form for damages for fraud, a nonsuit should "have been granted because of the failure to allege and prove a demand for the payment of moneys. The plaintiffs do not allege a demand* If this was an action for conversion, the beginning of the suit would not be a sufficient demand, and there would be force in this objection. But there is in this case an unconditional promise of an agent to turn over all remittances as soon as received; an obligation, therefore, to return fixed amounts at fixed periods; and a ■demand of performance is not a prerequisite to a suit. As was said in the important case of Brown v. Arrott, 6 Waits & S. 418:

“Where the owner of the goods or the principal is advised from time to time by his agent of the sales as they are made, and again of the receipt of the moneys as .they are paid thereon, and according to the understanding that exists between them, arising either from a special agreement, or a previous course of dealing between them, or the establised usage or custom, if there be any, regulating the same, the principal or late owner of the goods is to call on his agent or factor, and receive his money, or to draw upon him for it, the latter may retain it until it is demanded; but where the factor or agent is bound, either by the agreement or previous course of dealing between them, or the usage of trade in regard thereto, to forward the money to his principal or employer, it is clearly his duty to do so as he shall receive it, though it may be only a part of what he expects, by the earliest opportunity;-and no practice to the contrary will either justify or excuse his retaining it beyond such-time, unless the sum shall be so small as not to justify the expense of forwarding.it,”

It is further claimed on the part of the appellant that the defendant was entitled to retain out of the proceeds of the sale of the cement the advances he made for freight, insurance, and storage, and that, it having been shown that the advances exceeded the amount of proceeds of the cement sold, the verdict should have been for the defendant; or, in other words, he should have recovered on the counterclaim. This contention proceeds upon a wrong construction of the contract. As said before, the written instrument of June 4, 1891, is the only contract between the parties, and by the terms of that contract the plaintiffs were scrupulously careful to protect their right to an immediate return to them of the proceeds of sale of all the merchandise at the rates specified in the contract. There is no question at all involved in that contract of deductions for anything, and no proof of a request that the defendant pay any charges on the shipments. When the cement was sold, it was the duty of the defendant at once to remit §2.35 or $2.37, as the case might be. Those figures were not to be diminished by any charges or costs of any kind on any of the 4,000 barrels, but were a net price; and it is not shown that there was any sale of the particular quantities mentioned in the complaint in this action at any other price. There was nothing ambiguous in the terms of the contract, nor does the correspondence between the parties show any construction put upon th'.t contract, concerning the liability of the defendant, other than is,contained in the contract itself. What the defendant states he may have done is not shown to have been acquiesced in, and the defendant’s contention in this respect has no real foundation. The defendant took the risk of selling 4,000 barrels. He sold only 500. He was to pay all charges and return certain prices. Ho claim is made that the plaintiffs prevented his selling all he contracted to sell. He did not perform what he undertook to do, and his outlays arc his own loss. The title to the goods was always in the plaintiffs, although the defendant was entitled to the possession of the same during the season for the purposes of sale. When the season passed, and no sale had been effected, the defendant’s right to sell had ceased, and the plaintiffs had the right to resume possession of the property, and were not bound to reimburse the defendant for expenses incurred in fruitless efforts to sell.

It is also claimed that there was error in allowing a recovery on the 100 barrels of cement disposed of in June, 1892, because the plaintiffs failed to show that the proceeds were actually received. It does appear that the defendant received notes of the purchaser for the 100 barrels referred to. It may be presumed that those notes were paid at their maturity, nothing to the contrary being set forth or proven ; but, at all -events, the plaintiffs were entitled to a remittance of the fixed amounts withinin sixty or ninety days, no matter in what form the defendant received the proceeds of sale.

Many exceptions were taken at the trial, npne of which we find to be of sufficient importance to require special reference to them. If there was error in the admission of testimony of the payment of freight and storage by the plaintiffs upon 3,400 barrels, it was an error which in no way militated against the defendant’s rights, because his counterclaim did not repose upon any basis of proven fact; and as to the court leaving to the jury the construction of the contract as to the defendant being liable for freight or storage,, while, of course, it was for the court to construe that contract, and not the jury, whether its terms were contained in the instrument of June 4, 1891, or were to be spelled out from correspondence, still the jury having found the proper construction, there was no occasion for interference with the verdict on that score.

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


text:
    Aimee Saunders, Resp’t, v. Agricultural Insurance Company of Watertown, App’lt.

      (Supreme Court, Appellate Division, First Department,

      Filed March 6, 1896.)

    Insurance—Policy—Construction.
    Where the owner of a two story house, with a one story addition, in which the owner lived, situated on one side of a highway, and of a ham and a wagon house, situated on the other side of the highway, applied for insurance on all the buildings, and a policy was issued insuring $500 on barn No. 1, occupied by a tenant, $650 on hay and grain in barn No. 1, $200 on wagon house, and $450 on wagons, carriages and horses in the barn, hut containing no insurance on the dwelling, part of which was used for storing grain, the policy was held not to cover the dwelling house, but only the barn and wagon house on the other side of the highway.
    Appeal from a judgment in favor«of plaintiff, entered on a verdict,
    A. H. Sawyer, for app’lt; Geo. Richards, for resp’fe
   INGRAHAM, J.

At the end of the case the defendant asked the court to direct a verdict, upon the whole evidence, in favor of the defendant, upon the ground that it clearly appeared from the testimony that the building which was destroyed by fire was not the building that was insured by the defendant. This motion the court denied, and the défendant excepted. The only question, as conceded by the parties, was whether or not the building destroyed was the building insured by the defendant. We think that this motion should have been granted,'and that there was no evidence to justify a finding of the jury that the building that was destroyed by fire was the building insured. The evidence in the case is substantially uncontradicted as to the situation of the premises at the time the policy of insurance was issued. Upon one side of the road was a building that the witness described as “a story and a half or two-story house, with these additions,—one story additions.” “The main part of the house was a story and a half, or two stories.” It was in this building, thus described as a house, that the insured and her family lived, and the only building upon the place that could be called a residence. Upon the opposite side of the highway from this building designated as a dwelling house were two buildings,—one called by the witness “Barn No. 1,” and the other a wagon house. They were separated from each other. The barn was composed of three connected buildings; the wagon house, one building, standing by itself. A diagram was admitted in evidence, which showed the location of these buildings with the highway, and which was testified to as correct by the person who made it. With this situation of the property, there was one building on which the owner resided, another building which was used for barn purposes, and another that was used as a wagon house. The insured applied to the defendant for insurance upon all the buildings, and in consequence of that. application the policy in question was issued. That policy insured $500 on bam No. 1, occupied by a tenant, $650 on hay and grain in barn No. 1, 200 on wagon house, and $450 on wagons, carriages, and horses in the barn, but contained no insurance upon the ■dwelling. The building that was destroyed by fire was the building standing by itself, which was the only building on the premises used as a dweling. Bearing in mind this situation of the premises, and the absence of any evidence showing a contrary intention, we think it is clear that the building insured was not the building occupied by the owner as a residence, but was the building that was designated on, the plan as “Barn No. 1.” The policy expressly insured wagons and sleighs, carriages and harness,, in-the barn. • The horses and cattle were kept in this building designated as “Barn No. 1” upon the diagram. None of these things: was kept in the building known as the “dwelling house.” There was also insured the grain kept in the barn No. 1, and the evidence is that there was no grain kept in that barn, but that the grain was kept in a part of the building designated as a “dwelling house.” While the description used in the policy is to some extent ambiguous, at the same time the distinction is drawn in tha form of the policy itself between a dwelling house, a barn, and a. wagon house. In it the dwelling was not insured, yet, strictly speaking, the building that was burned was a dwelling house; for in it the owner dwelt, and there was no other place upon the premises that could come within that description, On the other hand, the building known as “Barn No. 1” was a barn used for the purpose of keeping cattle, and in it/ was kept straw, although no grain was kept there. Considering this condition of the premises in question, no one reading this policy could understand, where a dwelling house was not insured, and a barn was, but that? the policy applied to the building that was not destroyed, and'1 not to the building that was.

We think, therefore, that the court erred in refusing to direct a verdict for the defendant upon the whole evidence, and that the judgment must be reversed, and a new trial ordered, with costs-to appellant to abide the event.

All concur.


text:
    Paul Williams, Resp’t, v. William Hays, App’lt.

      (Supreme Court, Appellate Division, First Department,

      Filed March 6, 1896.)

    1. Megt.tgenoe—Insanity.
    Where a joint owner is to have the absolute control and management of' a vessel and becomes her owner pro hac vice, he is responsible to his co-owners for any want of care or skill in the management of his vessel which causes the loss of the vessel.
    3. Same.
    And it is entirely immaterial, so far as the joint owner’s liability is concerned, whether the duty was that imposed upon him by law or arose from, the contractual relation that existed between him and his co-owners.
    3. Same—Liauility.
    Where one of two innocent parties must suffer, the loss must fall on the one whose acts caused the injury, regardless of his intention or ability to perform his obligation in consequence of disease, and the cause of such, disease or insanity becomes entirely immaterial, provided that is not caused by his voluntary act.
    4. Evidence—Secondary.
    Where the only testimony as to the existence of any writing is that off the party objecting, who fails tó produce the same, though within his. power, or to show that it contains all the terms of the agreement, parol, evidence thereof will not be excluded on the ground that it is not the best evidence.

      Appeal form a judgment in favor of plaintiff, entered on a ver diet under direction of the court.
    William W. Goodrich, for app’lt; George A. Black, for resp’t,
   INGRAHAM, J.

— This case presents questions about which there has been quite a conflict of judicial opinion. The main question, however, has been settled by the court of appeals on a former appeal to that court. See 143 N. Y. 442; 62 St. Rep. 45L The evidence appears to have been substantially the same upon the last trial as it was when the case was before the court of appeals, and by'the judgment there but one question-was left open, and that was whether or not the defendant would be liable if. he had become insane solely in consequence of his efforts to save the vessel during the voyage; the court saying:

“We would have a different case to deal with. He was not responsible for the storm; and while it was raging his efforts to save the vessel were tireless and unceasing, and if, he thus became mentally and physically incompetent to give the vessel any further care, it might be claimed that his want of care ought not to be attributed to him as a fault.”

Upon this question we agree with the judge below, — that it could make no possible difference as affecting the liability of the-defendant, applying the principles stated by the court of appeals, how he became insane, or what caused the disease or mental condition that prevented him from exercising the care or skill that he was bound to exercise. The court of appeals held that upon the evidence the defendant was to have the absolute control and management of the vessel, and became her owner pro hac vice; and this relation existing, the defendant was responsible to his- co-owners for any want of care or skill in the management of his vessel which caused the loss of the vessel.

On this trial the plaintiff, under a stipulation which allowed either party to read any of the testimony taken upon the former trial of the action, but against objection and exception of the defendant, read the testimony of the defendant given upon the former trial, in which he testified as to the contract under which he-managed the vessel, and upon which evidence the court of appeals based its judgment. That evidence was objected to on the ground that the complaint alleged the relations that existed between the defendant and his co-owners, the allegations of which were admitted by the answer. It is quite true that the complaint alleges that the defendant was part owner and master of the brig Sheldon, that at the time of the loss and stranding of the brig the vessel was under the command of the defendant as master, and that such loss ánd stranding were caused wholly by the negligence, carelessness, misconduct, and improper navigation of the defendant as master; and the answer admits that the defendant was part owner and master of the brig, admits that the brig became a total loss,, but denies that the said wreck or loss was occasioned by his negli-’ gence as master. We do not feel justified, however, in reversing this j udgment because of the admission of that testimony, as the pleadings were before the court on the former appeal, and notwithstanding these allegations and admissions, the court held that the defendant was not master, but stood in the relation of charterer. It must therefore have determined that it was incompetent for the court to take evidence as to the relation that did actually exist between the defendant and his co-owners, and hold him to the responsibility that such relation created, irrespective of the allegations in the pleadings. The court then, after determining the relation that existed between the defendant and his co-owners, discussed the question as to the defendant’s liability to them, and what effect his sudden insanity would have upon his liability for a neglect to perform the duty that he owed to his co-owners, and ■expressly determined that his insanity would be no answer to an action against him based upon his'neglect to perform such duty. After an examination of the authorities, the court states the result as follows:

“This vessel was intrusted to the defendant, not as agent, but as the other owners, as charterer, lessee, or bailee; and if he ■caused her destruction by what insane persons would be called willful or negligent conduct, the law holds him responsible. The misfortune must fall upon him, and not upon the other owners of the vessel.”

At the conclusion of the opinion the learned judge says:

“To uphold this judgment, we must ingraft upon the general rule the exception or qualification that he is not liable for his negligent tort. If the defendant had taken a torch, and fired the vessel, he would have been liable for her destruction, although his act was unconscious, and accompanied by no free will. But if he had negligently fired the vessel, and thus destroyed her, being incapable from his mental infimity from exercising any care, the claim must be that he would not be liable. Such a distinction is not hinted at in any authority, has no foundation! whatever in principle or reason, and cannot stand with authorities I have before cited.”

The principle upon which the defendant’s liability was placed as expressly stated by the court, is that, where one of two innocent parties suffer, the loss must fall on the one whose acts cause the injury, rather than upon the one who had no hand in it. And this principle is here applied to a case where a person was injured not by the direct acts of another, but by that other’s failing to exercise the care and skill which he was bound to exercise in consequence of a contract or duty that he had assumed to perform. As was illustrated by the learned trial judge in his opinion:

“In the defendant had taken a torch, and fired the vessel, he would have been liable for her destruction, although his act was unconscious, and accompanied by no free will. But if -he had negligently fired the vessel, and thus destroyed her, being incapable, ‘from his mental infirmity, from exercising any care, the claim mtist be that he would not be liable.”

And to extend the analogy somewhat further, if he, being in charge of the vessel, being bound to exercise due care and skill to protect her, had known that she was on fire, but had not extinguished it, he would still be liable" for a failure to extinguish it, although prevented by insanity or any other disease from either appreciating the danger or moving so as to be able to extinguish it. That is substantially the position here. This vessel was near the shore, unmanageable in consequence of an accident to her rudder, and she drifted ashore, and was lost, and' the defendant is held responsible because he did not take measures to prevent that accident, which it is apparent that any person in the possession of his faculties would have taken. The court expressly held that it was entirely immaterial, so far as this defendant’s liability was concerned, whether the duty was that imposed upon him by law or arose from the contractual relation that existed between the defendant and his co-owners, the court saying that, if the obligation of the defendant to take good care of the vessel while she was in his possession under his contract was an obligation springing out of his contract, and thus a contract obligation, “ such a view of the case would not aid him. He was sane when he entered into the contract, and his subsequent insanity would furnish no defense in an action for the breach of the contract,” .

It has thus been authoritatively determined that the defendant was liable to his co-owners for his neglect or want of skill in allowing this vessel to be lost, and whether or not the insanity under which he claims to have been suffering was occasioned by his efforts to save the vessel during the storm which immediately preceded its loss would make no difference as to his liability. It seems to us clear that if an insane captain is bound to use the same care and skill in the management of his ship that a sane captain is bound to use, and is liable if he fails to exercise such care and skill, upon the principle that where one of two innocent parties must suffer the loss. must fall on the one whose acts caused the injury, regardless to his intention or ability to perform his obligation in consequence of disease, the cause of such " disease or insanity becomes entirely immaterial, provided that it is not caused by his voluntary act. Upon what principle can an unfortunate individual, suddenly afflicted with a disease, either mental or physical, which prevented him from exercising any of his faculties, be said to be at fault ? The liability is expressly placed upon the ground that he is not at fault, but is one of two innocent parties upon whom the loss must fall. If this principle applies at all to such a case as this, it must apply, we think, 'to throw the responsibility upon the one whose failure to act has caused the injury, irrespective of the condition that caused failure to act It is true that in determining what duty a person assumes when placed in a position like that of the defendant it has been usually assumed that the parties contracted in relation to the limitations under which all human beings exist. All are liable to sudden attacks of disease which for a longer or shorter time incapacitate a person from doing any labor or performing any duty. -And if a person thus rendered, by what has been called “ an act of God,” incapable of work, his failure to work is not actionable. But it is hpre held that such a condition does not excuse a person from liability for an injury which was caused by his neglect when suffering from insanity which prevented him from performing the duties and obligations which he assumed, and upon the ground that the injury having to fall upon either the captain or his co-owners, and it having resulted from the captain’s failure to do his duty, he, rather than the co-owners, must suffer. The rule applying, it can be no defense to him to say that the incapacity was caused by a disease brought on by his former efforts to navigate the vessel, or to perform the duties that he assumed when he took command of the vessel. He was bound to exercise care and skill in the navigation of the vessel, and whether the disease that caused the insanity was brought on by an attack of malaria, together with the remedies that he took for it, or was brought -on by the exposure in navigating the vessel, together with the remedies that he took for the condition caused by such exposure, is clearly immaterial. . In one case, as in the other, it was his neglecting to do what he was bound to do that caused the loss, and he, rather than his co-owners, who neglected no duty, the court of appeals has held must be responsible. We think, therefore, that the judge below was right in holding that, applying the judgment of the court of appeals in this case, the defendant was liable, irrespective of what it was that caused his condition which prevented him from exercis- , ing care and skill in the' navigation of this vessel when such negligence caused her loss.

We do not think that it was error for the court to refuse to strike out the evidence of the captain as to his relation to his co-owners, on the ground that the contract between the defendant and such co-owners was in writing, and that the writing was the best evidence. . The only evidence of the existence of the writing was that of the captain when he said that a letter had been written after an interview with the agent of the other owners, but it did not appear that such letter contained the contract between the parties, or that all of the terms of the agreement under which the defendant navigated the vessel were contained in it. It was within the defendant’s power to produce the letter, and, if he had wished to exclude the parol evidence of the arrangement under which he sold the vessel, it was his duty to show clearly that the whole contract between the parties was in writing.

Upon the whole case, we think the trial judge correctly applied the judgment of the court of appeals,-and that no error was committed that would justify us in reversing the judgment. The judgment is therefore affirmed, with costs.

All concur.


author: RUMSEY, J.

text:
    New York Board of Fire Underwriters, Resp’t, v. Whipple & Company, App’lt.

      (Supreme Court, Appellate Division, First Department,

      Filed March 6, 1896.)

    1. Constitutional law—Title op act.
    _ Chapter 846 of 1867 is constitutional.

      2. Same.
    Where the title of a local or private act expresses a general purpose or object, all matters fairly and reasonably connected with it, and all measures which will or may facilitate its accomplishment are proper to be incorporated in the act, anrl are germane to its title.
    8. Same—Police power.
    If a business in which a citizen engages is one cf a public nature, or in which the public have an interest, he must submit, for the public purposes, to the regulation of his business by the authority of the state.
    4. Same.
    Any business is said to be effected with the publicinterest, where cither the following of it is not as of right, but is permitted by the state as a privilege or franchise, or where exclusive privileges are granted in consideration of some special return to be made to the public.
    5. Same.
    People, who exercise the business of insurance in this state, are clearly within the control of the police power, for the reason that they have a virtual monopoly of the business by the grant of the state.
    0. Same.
    It is within the power of the legislature to impose upon persons authorized to issue insurance in the city-of New York the duty of taking steps to preserve life and property at fires.
    ?. Same.
    Chapter 846 of 1867 is constitutional, as a proper exercise of the police power.
    Appeal from an order overruling a demurrer to the complaint.
    The following is a copy of the demurrer filed:
    • The above-named defendant, appearing by John T. Fenlon, its attorney, demurs to the complaint herein on the ground that it appears on the face of the complaint—First, that the complaint does not state facts sufficient to constitute a cause of action ; second, that there is a defect of parties defendant, for the reason that the names of Joseph L. Parraga and David F. Casey, composing the firm of Whipple & Co., have been omitted; third, that there is a defect of parties defendant, for the reason that the names of the seven or more members mentioned in the complaint as forming the alleged association are omitted as parties defendant. Wherefore defendant demands judgment that the complaint be dismissed, with costs.
    John T. Fenlon, for app’lts; John Berrv, for resp’t.
   RUMSEY, J.

The action is brought, pursuant to chapter 846 of the Laws of 1867, to recover a certain assessment levied upon the premiums received by the defendants for insurance issued in the city of New York. The defendants demur to the complaint upon three grounds : First, that it does not state facts sufficient to constitute a cause of action, and that there is a defect of parties defendant, for two reasons more particularly stated in the dernerrer. As to the second and third grounds of demurrer, neither of them is well taken, for it does not appear upon the face of the complaint that the objection therein urged exists.

As to the first ground of demurrer, the questions raised upon it, with one exception, have been disposed of by the case of this plaintiff against the Metropolitan Lloyds of New York City, reported in 11 Misc. 646; 66 St. Rep. 872. This decision was affirmed by the general term without opinion. 87 Hun, 619; 67 St. Rep. 291. That case differs from this in only one respect, which is entirely unimportant. In the complaint in that case the statute under which the plaintiff was organized, and by which the liability sued upon was created, was not pleaded.' Here it is pleaded. But the distinction is of no importance for the purposes of this demurrer. So far as the questions presented were passed upon by the 'court in that case, it is authoritative, and must be held to sustain the complaint here. In that case, however, at the special term, the court declined, for reasons which were sufficient, to pass upon the constitutionality of the statute under which the plaintiff was created, and by which the liabilities sought to be enforced in that action, as in this, were brought into existence. The general term," in the exercise of a wise discretion, thoüght it was advisable to affirm the judgment without passing upon that ' question. But in view of the fact that numerous actions have been commenced since that time to enforce the same liability, three of which have been presented to us at this time, it has been thought best to examine the question of constitutionality, and to decide it.

The act in question is chapter 846 of the Laws of 1867, entitled “ An act to incorporate the Mew York Board of Fire Underwriters.” By the first section a large number of officers of different fire insurance companies and associations, “and all other persons, presidents or other officers for the time being of any incorporated company or association, and any agent doing the business of fire insurance in the city of Mew'York, who may become associated with them,are hereby created a body corporate by the name of ‘The Mew York Board of Fire Underwriters.’ ’’ The remaining sections prescribe the purposes for which the corporation is; organized; specify its officers, and, generally, the manner of performance of its business, and- the powers which it shall have. The seventh, eighth, ninth, and tenth sections give power to the corporation to create a “fire patrol,” as it is called, and regulate the powers to be given to that patrol, and prescribe the manner in which the money to pay the expenses of that patrol shall be rasied and collected. These sections will be more fully referred to later.

The first objection to the constitutionality of the act is that, being a private and local act, it contains more than one subject, and the subject is not sufficiently expressed in the title. That this act is a private and local act must be conceded. People v. Supervisors of Chautauqua Co., 43 N. Y. 10. The fact that certain provisions of the act may be public in their nature does not make the whole act public, so ¿that it ceases to be within the article of the constitution mentioned above. The title of the act has been quoted above. It. is certainly germane, so far as it goes, to the object for which the act was passed; and we think, within rules which are now well settled, it complies with the requirements of the constitution. The rule now, as settled, is that, where the title of a local or private act expresses a general purpose or object, all matters fairly and reasonably connected with it, and all measures which will or may facilitate its accomplishment are proper to be incorporated in the act, and are germane to its title. People v. Briggs, 50 N. Y. 553; In re Knaust, 101 N. Y. 189; Sweet v. City of Syracuse, 129 N. Y. 316, 330; 38 St. Rep. 933. The objection referred to, we think, is clearly not well taken.

But a further objection is suggested which requires more examination. It is claimed that the provisions of this act are such as, in effect, to authorize the corporation created' by it to levy a tax upon the premiums received by persons engaged in the business of insurance in the city of New York, whether they are members of the corporation or not, and that this is substantially taking private property without due process of law, and that the power to do it neither exists in the legislature, nor can be delegated by it. Undoubtedly, if the conclusion drawn from the provisions of this act is correct, the act violates the constitution and is invalid; but we do not think that it is susceptible of such construction. The right to levy this assessment for the purposes provided for in this act is not the levying of a tax, but it is to be sustained as an exercise by the legislature of its police power in the regulation of business. In examining the question of the constitutionality of an act of the legislature of the state, it must be borne in mind that all the legislative power is vested in the legislature. Unless the constitution forbids the act, it is within the power of the legislature, if it is legislative in its nature, and in every case the presumption is that the act is valid. People ex rel. Carter v. Rice, 135 N. Y. 473; 47 St. Rep. 702. The presumption in this case is strengthened because of the fact that this act having been upon the statute book for nearly thirty years,—business having been done under it and assessments levied pursuant to it during all that time without objection, so far as appears,—it is not lightly to be overthrown, and certainly ought not to be overthrown in any doubtful case. The existence of what is'known as the “police power” in the legislature, by which it is authorized to exercise a regulating and controlling power over the internal affairs of the state is well settled. It is equally well settled that such a power is far-reaching. Cooley, Const. Lim. 713 et seq. In the nature of things, of course, it is difficult to. define it; and it is almost impracticable, in general words, to set any limit to its exercise, or to lay down any general rules within which it must be brought before the exercise of it can be sustained. It has been said—and such appears to be the current of authority—-that it authorizes the government of the state to regulate the conduct of it's citizens towards each other, and, when necessary for the public good, the manner in which each shall use his own property, Munn v. Illinois, 94 U. S. 113. The rule laid down in that case, although meeting with strong dissent from a portion of the court when the case was decided, have been, we think, now fully adopted by many of the courts of the United States asan accurate statement of the extent to w hich the,courts may go in regulating and controlling the use of property under the police power. The rule, assettled by that case and by other cases, may be said to be that, when the owner of property devotes it to a use in which the public has an interest, he, in effect., grants to the public an interest in that use, and must, to the extent of that interest, submit to be controlled by the public, for the common good, so long as he maintains the use. Within the same principle, if a business in which the citizens engages is one of a public nature, or'in which the public have an interest, he must submit, for the public purposes, to the regulation of his business by the authority of the state. This, we think, cannot be denied. The question, then, is presented, what constitutes a public interest in any business, which will authorize the state to make regulations concerning it? The question was considered at large in the case of Munn v. Illinois, cited above. The chief justice, in delivering the opinion of the court in that case, says:

“Under the police power the government regulates the conduct ' of its citizens, one towards another, and the manner in which each shall use his own property, when such regulation becomes necessary for the public good.’’

And he says that under that power it has been customary, from time immemorial, in England and in this country, to regulate ferries, common carriers, haclcmen, bakers, millers, innkeepers, and people exercising business of thus nature. It is said that property becomes clothed with a public interest when used in a manner to make' it of public consequence, and affect the community at large. Many cases and instances are cited in the prevailing opinion in that case in which the legislatures, in various states have regulated thé conduct of business of different kinds, all of which have been sustained upon the ground that the business was one which affected public interest, and therefore vías amenable to control by the public authorities. The question of the power of the state to regulate business has been presented in many cases in this state, and the case of Munn v. Illinois, supra, has been followed as laying down the true rule under which the exercise of police power could be sustained. People v. Budd, 117 N. Y. 1; 26 St. Rep. 533, and cases cited; People v. King, 110 N. Y. 415; 18 St. Rep. 353. The question of the'extent of the police power is considered fully by Judge Cooley in his learned work on Constitutional Limitations, and he comes to the conclusion that any property or bus-, iness which is effected with the public interest is amenable to the police power of the state, and that any business is said to be effected with the public interest where either the following of it was not as of right, but was permitted by the state as a privilege or franchise, or where exclusive privileges are granted in consideration of some spedial return to be made to the public. Cooley, Const. Lim. § 746. It is not necessary to pursue the examination of this branch of the subject further, because we are satisfied that the conclusions of Judge Cooley are fully sustained by principle and authority. Although at one time the business of insurance in this state was one which might be followed by anybody, and with regard to which no restrictions were imposed, yet that for many years has ceased to be the case. Not only is that business now regulated by many laws, but the pursuing of it is forbidden, except by certain persons, who are licensed and authorized for that purpose, and who thereby receive from the state a privilege0 to pursue it apart from other persons. Insurance Law, §§ 9, 34, 54. It has been the policy of the state, for many years, to regulate and control this business, in view of its great extent, the great interests involved in it, and the serious damage to the great body of citizens which might result if the business was entirely without control. The right to thus control it can hardly be questioned at this day. For that reason people exercising the business of insurance in this state are clearly within the control of the police power, because, as is said in the cases above cited, they have a virtual monopoly of the business, by the grant of the state. The act in question authorizes this corporation to establish a fire patrol, having for its object to preserve life and property at and after a fire; and, to enable-the patrol so organized to act with promptness and efficiency, certain powers, almost public in.their nature, are given to them. It will be seen at once that this patrol may render great service to persons authorized to pursue the business of insurance within this city, where the powers of the patrol are to be exercised. It is a valuable adjunct to this business, and one which might well be created by the state as a means of benefit, not only to citizens, but to those persons who have contracted to furnish indemnity to citizens in case of the destruction of their property by five. The act requires all persons who are engaged in the business of insurance in the city of New York to render to the corporation organized by it a return of the amount of premiums received by them during certain months of the year, and authorizes the corporation to charge upon all persons engaged in that business such sum as maj' be necessary to pay the expenses of the fire patrol, not exceeding two per cent, of the amount of the premiums received by them. It affixes a penalty for a refusal to make the returns, and makes the sum assessed collectible by action. Within the principles laid down above, we think the power of the legislature to impose upon persons authorized to issue insurance in the city the duty of taking this step to preserve life and property at fires cannot be questioned. These persons have the exclusive privilege of entering into such contracts. The nature of the contract is one which renders it peculiarly proper that they should not only have the privilege, but be charged with the duty, of protecting property, and life, also, when in danger from conflagrations. We think there can be no doubt that this duty may properly be imposed upon them, and that they may be required to pay the expenses of it. For these reasons the act, in our judgment, is constitutional, and, as it is so, it creates a good cause of action; and a complaint brought under it, if otherwise setting upon the proper facts, does state facts sufficient to constitute a cause of action, and is not demurrable. For the reasons above given, we think this complaint is good, and the judgment overruling the demurrer should be affirmed, with costs.

Judgment affirmed, with costs, with, leave to the appellants to withdraw the demurrer in twenty days, and answer, on payment of the costs in this court and of the costs in the court below.

All concur.


author: PER CURIAM.

text:
    New York Board of Fire Underwriters, Resp’t, v. Whipple & Company, App’lt.

      (Supreme Court, Appellate Division, First Department,

      Filed March 6, 1896.)

    Appeal from an order overruling a demurrer to the complaint.
    John T. Fenlon, for app’lts; John Berry, for resp’t.
   PER CURIAM.

For the reasons above stated in the opinion of Mr. Justice EUMSEY in the case of Board v. Whipple (decided herewith) — St. Rep.--, the judgment should be affirmed, with costs, with leave to the appellants to withdraw the demurrer in twenty days, and answer, on payment of the costs in this c.ourt and of the costs in the court below.


author: BARRETT, J.

text:
    The People ex rel. Lawrence Connor, Resp’t, v. William Brookfield, as Commissioner, etc., App’lt.

      (Supreme Court, Appellate Division, First Department,

      Filed March 6, 1896.)

    Office and officer—Discharge.
    Chapter 716 of 1894, making veteran appointees irremovable from office • except for incompetency, leaves it to the removing power to determine' Whether the facts exist which authorize a removal.
    Appeal from an order, directing the issuance of a peremptory writ of mandamus to reinstate the relator in the position in the department of public works from which he was discharged on November 2, 1895.
    William L. Turner, for app’lt; William M. K. Olcott, for resp’t.
   BARRETT, J.

This case cannot be distinguished from People v. Morton, 148 N. Y. 156. It was there held that chapter 716 of the Laws of 1894, making veteran appointees irremovable from office except for incompetency, left it to the removing power to determine whether the facts exist which authorize a removal. It is claimed that the notice of removal in that case specified the ground, while here it does not. There is nothing In the opinion which justifies the distinction claimed. The court said that “it • appeared from the return to his [Fonda’s] application that he was discharged for cause, or, as was stated therein, for incompetency and conduct inconsistent with said position.” This also appears in the present return. The court also said that the removal there was made for the cause specified in the statute. That conclusion, however, was arrived at from the return; not, apparently, from the language of the notice of removal. It would undoubtedly have been better had the formal notice in the present case specified the ground of removal. But the material fact is that the removal was actually for the cause specified in the statute. That is stated distinctly in the return, and cannot be questioned in an application of this character. It is impossible to grant a mandamus restoring the relator, when the commissioner of public works states under oath that he was discharged solely for negligence, incompetency, and conduct not consistent with the position held by him.” It is the fact, and not the form of expressing the fact, which must govern upon an application for a peremptory mandamus to reinstate the removed appointee.

The order appealed from should be reverse^, with costs, and the application denied, with costs.

All concur.