author: Van Brunt, P. J. O'Brien", J. Follett, J.

text:
    The People, Resp’t, v. Erastus Wiman, App’lt.

      (Supreme Court, General Term, First Department,

      Filed March 15, 1895.)

      1. Forgery—What is not.
    If a person, not a member of a firm, is authorized to draw the firm checks, an abuse of that authority will not constitute forgery.

      2. Same.
    The withdrawal of funds by a member from the" assets of the firm for, his own purposes, does not constitute a criminal offense.
    3. Same.
    Where the alleged forgery is committed, not for the purpose of defrauding by means thereof, but for the mere purpose of concealing the misappropriation of money, it does not constitute the crime. .
    4. Appeal—Charge.
    Where the instructions to the jury entirely eliminates the question of criminal intent, upon the trial of an indictment for forgery, the refusal of a request to charge such intent is error.
    5. Evidence—Intent.
    Where, upon the trial of an indictment for forgery, the prosecution has proved the indebtedness of the defendant on the question of his intent, he has the right to prove the means which he had to meet such indebtedness, in order to rebut any inference which might be drawn from such indebtedness.
    Appeal from a judgment of conviction for forgery in the second degree.

      B. F. Tracy, for app’lt; John D. Lindsay, for the People.
   Van Brunt, P. J.

In the disposition of this appeal it does not seem necessary to discuss all the interesting questions which have been presented by the counsel in their arguments. There is substantially no conflict of evidence; and the questions which arise thereon relate to the inferences which necessarily must be or which may be drawn therefrom. It appears that for some time prior to the 1st of January, 1889, one Robert Gf. Dun, the defendant and others had been engaged in the business of carrying on a mercantile agency, the principal place of business being the city of New York. On said last-mentioned day the said Dun, the defendant, and one Arthur J. King and Robert D. Douglass entered into an agreement whereby they agreed to associate themselves in the Business of carrying on a mercantile agency for the period of five years then next ensuing. Such agreement recited that the said Dun was the proprietor and sole owner of the business known as the “ Mercantile Agency,” which had been for many years and still was conducted under the name of R Gk Dun & Oo. and Dun, Wiman & Oo. in various cities in the United States and elsewhere, and of all the chattels, plant, fixtures, records, and other property used in said business, as well as the good will thereof, and of said firm names. This agreement providee: That Dun should contribute to the business the property above mentioned and described, but that said property should remain his sole and undivided property, and neither the association nor any other member of it had, nor by said agreement should acquire, any right, title, or interest therein. That Wiman, King, and Douglass should devote their whole time and attention and labor to the work of promoting, enlarging, and carrying on, and making profitable the said business. That for their services Dun should pay to them and to each of them as follows: To Wiman, a sum equal to seventeen per cent, of the net profits of the business; to' King, a sum equal to six per cent, of said net profits; and to Douglass, a sum equal to five per cent, of the net profits—Dun agreeing that the sums to be paid for such services in any one year should not be less than $10,000 to Wiman, $5,000 to King, and $5,000 to Douglass. The agreement further recited that the association was formed for the purpose of encouraging and stimulating in the said Wiman, King, and Douglass a jealous pride and ambition in the character and repute of the said business, as well as to induce their extraordinary exertions in building up and extending the business and increasing its profits; and that to that end the articles provided that their compensation should be to some extent contingent upon the profits of the business, but that as to them the amount of the profits only afforded the basis of determining the amount of their salaries, and that neither of them had any right, title, or interest in or to the said profits, as such. Then followed provisions as to how the term" “net profits” should be construed, and how they were to be ascertained; also, a provision for the termination of the association at the will of any party thereto by his giving oral or written notice to any other party thereto of his election to terminate; and that the association should be terminated by the death of Wiman, King, or Douglass. The agreement further provided that upon the termination of the association Dun should have the sole and exclusive right to the possession and control of all the property of said agency, and of the records and books of account thereof, and to the liquidation, adjustment and settlement of the affairs thereof. Then followed provisions relating to the event of the death of Dun pending the term of the association, and that the" business during the term of the association should be carried on under the name or style of R. G. Dun & Co.

By the seventeenth article of said agreement it was further provided:

“That no party to this agreement shall at any time use or employ the said name of R. Gr. Dun & Go., or any name under which said business shall be carried on, for any purpose except the regular and proper business of the said Mercantile Agency, and that neither the said Wiman, King, nór Douglass shall use the said name in making, signing, drawing, or indorsing auy note, bill of exchange, draft or other obligation or evidence of debt, excepting only indorsements of such papers for the purpose of depositing the same to the credit of the said association or of collecting the same for the account of the association.”

By the eighteenth clause it was provided:

“That neither the said Wiman, King, nor Douglass shall in his own name sign or indorse any note, negotiable instrument, obligation, undertaking, or evidence of debt, as security, either in form or in fact, without the written consent of said Robert Gr. Dun."

By the twenty-second article of the agreement, Wiman was permitted to draw each month $3,000, King $1,000, and Douglass $1,000 from the cashier of the agency.

From the time of the entering into this agreement, in January, 1889, as had been done for many years previous, business as a commercial agency, in the name of R Gr. Dun & Co. in the United States, and Dun, Wiman & Go. in Canada, was carried on. The general affairs and business of the concern were under the defendant’s charge and control, subject to Dun’s directions, except the department relating to New York City, which was in charge of King, and the other agencies in the state, which were in charge of Douglass. In the conduct of the financial affairs of the association more than three-quarters of all the checks issued by the concern in the course of its business were signed by the defendant in the firm name of R. G. Dun & Co., the others being signed principally by Douglass, one of the other members of the association ; Dun taking but little apparent interest in the business, and being absent more than half of the time. It seems to be admitted by the learned counsel for the defendant that under the prohibition contained i.n the seventeenth article of the agreement neither of the associates other than Dun would have had the right to sign any checks. But an examination of this clause seems to us to lead to a different conclusion, and that it was never intended to deprive the members of the association of the right to sign the checks of the concern; and that, when bills of exchange, drafts, or other obligations or evidences of debt were referred to, it was not thereby, intended to include the checks which were necessary to be signed and issued in the ordinary transaction of the business, but had referencé to the other classes of mercantile paper which would come under the definition of “bills of exchange, drafts, or other obligations or evidences of debt.” In fact, the practice under the agreement showed that it was not so construed by any of the parties thereto, inasmuch as checks were uniformly and almost exclusively signed by others than Dun. Therefore, in the consideration of the relation of these parties to each other, we must assume that there was no intention to restrict the rights of those associates in respect to the drawing of checks in the ordinary course of the business of the agency. It seems to have been assumed .that, by reason of the association of these parties together, they would have the right to use the firm name in respect to the business of the association generally; and, in order to restrict this right, it was considered necessary to insert the prohibition contained in the articles of the association. The management of this business, as has already been stated, except in respect to the city of New York and the agencies in the state of New York, was in the hands of Wiman; and Wiman, Douglass, and King substantially managed the whole business of the association, with little interference upon the part of Dun. For several years prior to the 6th of February, 1893, the defendant had been largely overdrawn in his accounts with the association, to the knowledge of Dun. Upon that day, the defendant, desiring an additional sum of $5,000 for his -own purposes, directed the cashier of the concern to draw a check for $5,000 to the order of one E. W. Bullinger, to whom the concern was then indebted in a sum of at least $15,000 telling the cashier at the time that Bullinger wished a check on account. The cashier filled up the check according to the defendant’s directionand delivered it to him unsign. Upon receiving the check, the defendant signed it “ B. Gr. Dun & Co.” as he had the right to do, and then indorsed thereon the name of Bullinger, and, indorsing it in his own name deposited the check to his own credit in the Central National Bank, and used the money for his own purposes. Bullinger had made no demand on B. Gr. Dun & Co. or the defendant for $5,000 on the 6th of February, and he never saw the check until the 17th or 18th of February, 1893, and never authorized the defendant to sign his name on the back of that or any other check, or in any way upon a piece of commercial paper. The defendant was subsequently indicted for forging the name of Bullinger upon the back of this check with intent to defraud, and also for uttering the same with like intent. Upon the trial the defendant was convicted of forgery in the second degree, and from the judgment thereupon entered this appeal is taken.

Various questions are presented for our consideration, among which is the question as to the relation which Dun, Wiman, Douglass, and King bore to each other in respect to this business. It was held upon the trial that the associates were not partners, but that Wiman, Douglass, and King were substantially employes upon a salary. As between the parties, the question as to what relationship has been created by association depends largely upon intent. We think it would not be disputed fora moment but that the parties to this agreement became partners as to third persons. But it is contended upon the part of the prosecution that no such relation existed as between themselves. As already suggested, the solution of this question depends largely upon the intent of the parties entering into this agreement and association; and, while it may not be possible-to dispose of this question in the affirmative as a matter of law, yet there seems to have been amply sufficient to go to the jury thereon. These parties were associated together in a common enterprise. The written agreement seems to have been intended to prevent Wiman, King, and Douglass from having any interest in the plant of the business, which belonged to Dun ; and the business generally was to be subject to the control of Dun in so far as he desired to act contrary to the wishes of his associates. But in all other respects the associates of Dun were to have the right to conduct the business, and they did conduct it, with but little interference or supervision upon the part of Dun. For the protection of his .capital, Dun placed certain restrictions upon the rights of his associates which he conceived that they undoubtedly would have had in the absence of such restrictions ; hence the-article in regard to commercial paper, etc. But it was nowhere believed necessary to confer by this instrument any authority upon Dun’s associates to do anything in connection with the business. The scope of the agreement is almost entirely prohibitory, and does not attempt to confer any authority or rights, except in so far as it may define the extent of the interest which the associates were to have in the association. It was assumed by all these associates that as a result of the association, as matter of law, Wiman, Douglass, and King, as well as Dun, could sign the firm name, except where prohibited by the articles of agreement. If they were not copartners,—if it was not the intention that they should be copartners,—where did the associates of Dun get this authority ? It cannot be found in the agreement; and yet it was taken as a matter of course. It is further to be observed that the association might be terminated at any instant, at the will of any party thereto, by his giving oral or written notice to any other party thereto of his election to terminate it. Hence, if Wiman, King, and Douglass were mere employes of Dun, one employe by giving notice to another employe had the power to terminate the employment of all; a fact inconsistent with the idea of mere employment.

It seems to us upon a consideration of these facts that at least the jury would have been justified in finding that it was the intention of these associates that they should be partners in this adventure, and have all the rights of partners, except in so far as they were restricted by the terms of their agreement of association. If the jury so found, then Wiman, Douglass, and King .were equally with Dun liable for the expenses of the business, which amounted to $2,500,000 per year. They were entitled to havethereceipts of the business applied to the payment of these obligations, and it was error, therefore, to rule, as the court did, that it was clear that Dun was the owner of the receipts of the business, and thus deny all rights of his associates in such receipts.

The court was requested to charge as follows :

“ That, in determining the power and authority of Wiman in respect to the business of the firm, the jury is not bound to consider the written articles of copartnership alone, but may also consider the manner in which the parties actually conducted the business of the firm; and, where the letter of the articles was knowingly and intentionally departed from by the parties, the practice- and custom of the parties, rather than the letter of the articles, shall control.”

In answer the court said:

“ Subject to what I stated to you, gentlemen, I so charge—subject to my general charge.”

The general charge of the court had been that under the contract and the letter, hereinafter referred to, -received by the defendant, he had no right to take from the assets of the firm to his own use more than $3,000 a month. The court also stated to the jury that the question for them to decide was:

“ Did he write the name of Bullinger on the back of that check with intent to get this money from the firm, that he had no right to take, and apply it to his own purposes? In other words, did he write the name of Bullinger upon the back of that check with the intent to defraud Mr. Dun or his partners ?”

The evidence in this case showed that, to the knowledge of Dun, Wiman had been in the habit of overdrawing his account for several years. Dun would protest, Wiman would repent, and to Dun’s knowledge, repeat the offense immediately thereafter. On the 12th of January, 1893, Dun wrote to Wiman protesting against his overdrafts. Wiman replied, admitting the charge, explaining the reasons why it had occurred and promising not to increase the amount; and shortly thereafter he drew the check and made the indorsement in question, in accordance with his usual habit. It would seemF under these circumstances, that it was a question for the jury to determine as to whether the prohibitions of the articles of association had not been so far departed from and so habitually transgressed,, to the knowledge of the party now claiming to have been defrauded, that upon the act of the defendant in drawing the check in question, for the purpose of transferring a portion of the funds; of the firm to his own private account, a criminal intentto defraud could not be predicated.

The further question presented is as to whether an intent upon the part of the defendant to defraud his copartners would be sufficient to justify a conviction of forgery under this indictment. By the charge of the court, all questions as to whether the indorsement was made with intent to defraud Bullinger or to defraud the bank in which Wiman deposited the checks were excluded from the consideration of the jury. The only fraud which it was claimed the defendant had attempted to perpetrate was upon the firm of R. G. Dun & Co. Unless, therefore, the unauthorized indorsement of the check was made with the intent and for the purpose of defrauding the firm, the defendant was entitled to an acquittal. If Wiman was a member of this firm, the withdrawal of these funds from the assets of the firm for his own purposes would not constitute a criminal offense. Even if he was not a member of the firm, he was authorized to draw the firm checks; “ and abuse of that authority, even though otherwise criminal, would not constitute forgery. It might be, under such circumstances, a fraud upon the firm, but such fraud would not of itself constitute the crime of forgery.” If Wiman was a member of the firm the misappropriation of the funds of the firm to his own use would not subject him to criminal process; and, even if not a member of the firm, he having authority to draw the check in question, — the crime alleged relating solely to the indorsement, — the criminal intent must apply, not only to the drawing of the check, but to the unauthorized indorsement. The evidence in this case shows that the intent to defraud, if any existed, related entirely to the drawing of the check, and that the unauthorized indorsement was resorted to for the purpose of concealing the overdraft. It is conceded that theré was no intention upon the defendant’s part to defraud Bullinger, nor is it claimed that he believed that Bullinger could incur any liability because of such indorsement, as the defendant well knew, andas the court charged the jury, he believing that the check would be paid on presentation at the bank upon which it was drawn, the firm having ample funds to meet the same. It would seem that the intent to defraud which is spoken of by the statute must have some relation to the act which is claimed to constitute the forgery; and where the alleged forgery is committed, not for the purpose of defrauding by means thereof, but for the mere purpose of concealing the misappropriation of money, it does not constitute the crime. This principle is recognized by Wharton (section 1444), where he says that in forgery it is not necessary to have in mind an intent to defraud a particular person, if the consequences of the act would necessarily or might possibly be to defraud any person. But there must, at all events, be a possibility of some person being defrauded by the forgery. There was no possibility of Dun & Co. being defrauded by the alleged forgery in this case.

That it was necessary that this intent to defraud in reference to the matter of indorsement should be present seems to have been recognized by the court when it instructed the jury, at the end of its charge, that if they found that Wiman believed that under the rules of law applicable to commercial paper he had legal authority to use the name of a person as payee to whom it was not intended that the check should be paid, and to indorse such name on the back of the check, such indorsement is not forgery. The court, however, during the progress of the summing up'of the counsel for the defendant, declined to permit him to discuss the facts and circumstances upon which this proposition is predicated. The court interrupted the counsel for the defendant in his summing up, and the counsel stated that his summing up related to this proposition, which he would request the court to charge as follows: “I shall ask your honor to charge the jury that, if the defendant believed that under the rules of commercial law he had legal authority to make this check and indorse it as he did, the crime is not forgery.” The court answered: “That I shall refuse.” The counsel for the defendant excepted, and then proceeded with his summing up, abandoning his argument upon that point. As has been seen, the court at the close of the charge presented the proposition to the jury, and no opportunity was offered for the counsel to address the jury in respect to the point in the discussion of which he was interrupted. Nor was there any retraction by the judge of what he had said during the summing up. There were thus two inconsistent propositions before the jury, and it is impossible to determine by what rule they were guided in the consideration of the case.

The court also seems to have entirely taken from the jury the question of criminal intent. The defendant requested the court to charge as follows:

“Unless the jury find that the acts charged were committed with criminal intent, the. defendant is entitled to an acquittal.”

In answer to this the court said to the jury:

“I charge you unless the act was committed with intent to defraud, as I explained it to you, the defendant is entitled to an acquittal. I refuse to charge as requested.”

During the charge the court charged the jury in respect to the meaning of the word “defraud” as follows:

“ ‘Defraud’ has been defined of follows: ‘To deprive of right, either by obtaining something by deception or artifice, or by taking something wrongfully without the knowledge or consent of the owner.’ And I think that this is as good a definition of ‘defraud’ as I know of.”

It will be at once seen that this definition is fatally defective, so far as relates to criminal proceedings, as the last branch of the proposition takes no cognizance whatever of the question of intent. The jury were by this definition, in effect, charged that if Wiman wrongfully took, without-the knowledge or consent of Dun, the money in question, although he may have believed that he had the right to take the money, he was guilty of the intent to defraud required by the statute; thus, as has already been intimated, eliminating the one element which it has been repeatedly held must be present, namely, the criminal intent. It is .undoubtedly true that, in order to constitute a crime, the doing of the act prohibited, with the intent to do the act, is sufficient, although the party may not be aware of the fact that he is transgressing the law. But there is no possibility of an act of fraud being committed without a fraudulent intent. The word “fraud” imports guilty knowledge. A man supposing that he has a right to property, and taking it without the knowledge or consent of the owner, would under this definition be held to be defrauding the owner if it should subsequently turn out that his supposed right was without foundation. In order that there should be no mistake upon this point, the court, subsequent to the giving of this definition, expressly charged the jury that the question for them to determine was : Did he write the name of Bullinger on the back of that check with the intent to get this money from the firm that he had no right to take, and apply it to his own purposes ?” Ho question of criminal intent was submitted, the only question of intent submitted being an intent to do an act which was not, by any means, of necessity criminal. Even if Wiman believed he had the right to take this money because of the course of previous dealings, the jury were instructed that, if he took it intending to take it, he was guilty of an intent to defraud. An intent to defraud would seem to involve some moral turpitude; but under this instruction a mistake as to property rights is of itself sufficient to justify a finding of fraud. This is carrying the definition of “fraud” much further than has yet been done. We think that in thus instructing the jury the question of criminal intent was entirely eliminated, and under these circumstances the refusal of the request to charge was error.

There would seem also to have been error either in the admission or the exclusion o£ testimony. The prosecution were permitted to prove the overdrafts of Wiman, and his want of funds in the bank to meet the same, upon the theory that this evidence was-competent upon the question of the intent to defraud Dun and his-associates by the drawing of the check in question. But when the defendant attempted to establish his pecuniary condition by ¡-bowing the value of the property which he owned, that evidence was excluded. And it seems to us, certainly, that, if it was competent upon the part of the prosecution to prove the indebtedness of Wiman on the question of his intent, he had the right to prove the means which he had to meet such indebtedness, in order that he might rebut any inference which might be drawn from such indebtedness. It is not intended to countenance for a moment by this suggestion the theory that, if Wiman was guilty of a forgery in the obtaining of this money, the fact that he intended or hoped or expected to return it in any way qualified the nature of his act. It would certainly be an anomaly in the law that an intent to make reparation, and the ability to do so, would make acts innocent which otherwise would be criminal. The taking of the money of another knowingly wrongfully is to defraud; and the act is not. qualified by the intent to return. The thief cannot be heard to-say: “It is true I stole the money to-day, but I intended to return it to-morrow, and therefore I am innocent." Nevertheless, as already stated, if it was competent for the prosecution, for the purpose of showing intent, to prove partiálly the financial condition of Wiman, he had a right to prove the balance. The judgment should be reversed, and a new trial ordered.

O'Brien", J.

(concurring.)—It is conceded that the defendant had the right to sign checks in the name of R. G. Dun & Co. Whether such right was conferred upon him by express or implied authority, or by virtue of his status as a partner in the firm, seems-to me immaterial, so far as it aEects the crime with which the defendant stands charged. He was not called upon to answer for-having made the check, but for having, with intent to defraud, indorsed the name of Bullinger upon the back thereof. If, therefore, he had made the check to Ballinger's order, having originally intended to deliver it to him, and subsequently, having changed his mind, he indorsed the check with intent to defraud, he would be as-guilty of the crime of forgery as though he liad made the check with the original intention of having it payable to the order of Bullinger, without intending to deliver it to him, but to indorse the latter’s name thereon, and thus fraudulently obtain the money represented by the check. In other words, by the act of indorsing the name of Bullinger with criminal intent, he would be guilty of forgery, whether he had or had not been guilty of any independent or separate fraud in signing the check. The evidence shows beyond dispute that without authority he indorsed the name of Bullinger thereon ; and whether he was guilty or not of an independent fraud in signing the check could not lessen his guilt, if established, of having, with intent to defraud, forged the name of Bullinger. The intent with which the act was done was an essential ingredient of the crime, and, being a question of fact, and not o£ law, it was necessary that, under proper instructions, it should be submitted to the jury, to whom the solution of the question of fact belonged. It was importad* to the rights of the defendant that this question should be clearly presented to the jury, and where, as in the case at bar, this was not done, it cannot be regarded as a harmless error. I concur, therefore, in the result reached by the presiding justice, that the judgment of conviction should be reversed, and the defendant have a new trial.

Follett, J.

(dissenting.)—February 21, 1894, the defendant was charged by an indictment with having committed, February 6, 1893, the crime of forgery in the second degree,—by the first count with having feloniously forged, with intent' to defraud, the signature of the payee; and by the second count with having feloniously uttered, with intent to defraud, the forged signature of the payee of the check of which the following is a copy:

No. 57,783.
“The Mercantile Agency, E. G. Dun & Co.
“ New York, Feb. 6th, 1893.
“ Chemical National Bank: Pay to the order of E. W. Bullinger, five thousand dollars.
" $5,000.00.
E. G. Dun & Co.’?

In J une, 1894, a trial was had, which resulted in a verdict of guilty, and June 20, 1894, the defendant was sentenced'to imprisonment in a state prison for five years and six months. The following are the provisions of the Penal Code under which it is urged that the defendant’s act was a crime :

“ Sec. 511. A person is guilty of forgery in the second degree who, with intent to defraud; * * * (2) Forges * * * an instrument or writing, being or purporting to be the act of another, by which a pecuniary demand or obligation is or purports to be or to have been created, increased, discharged, or diminished or in any manner affected, or by which any rights or property whatever are or purport to be or to have been created, transferred, conveyed, discharged, increased, or diminished, or in any manner affected, the punishment for forging, altering, or counterfeiting which is not hereinbefore prescribed, by which false making, forging, altering, or counterfeiting, any person may be bound, affected, or in any way injured in his person or property.”

“ Sec. 521. A person, who, knowing the same to be forged or altered, and with intent to defraud, utters, offers, disposes of or puts off as true, or has in his possession, with intent so to utter, offer, dispose of, or put off, either " * (3) a forged will, deed, certificate, endorsement, record, instrument or writing, or other thing, the false making, forging, or offering of which is punishable as forgery, is guilty of forgery in the same degree as if he had forged the same.”

It was proved by undisputed evidence that the check was filled out by the direction of the defendant; that he signed it on the day of its date, and on the same day indorsed thereon, without authority, the name of the payee, and deposited the check so indorsed with the Central National Bank, which February 6, 1893, gave him credit therefor; and that February 7, 1893, the check was paid to said bank by the drawee, and charged to the account of R. G. Dun & Co. The defendant was sworn on the trial, and he testified that Edward W. Bullinger, the payee, gave him no permission to indorse his name on that or any other check, and that he did not notify Mr. Bullinger that he had made the indorsement. He further testified that Mr. Bullinger was a creditor of the firm of R. G. Dun & Co. for more than $15,000, and that he drew and indorsed the check in that form to transfer the funds of R. G. Dun & Co. to his own account and conceal the transaction. On Friday, February 17, 1893, the existence of the check was discovered by Robert D. Douglass, one of the members of R G. Dun & Go. and on the next day the fact that the discovery had been made became known to the defendant, who on Monday, Fébrdary 20th, wrote and mailed this letter, which was received by Robert G. Dun, to whom it was addressed •

“ 314 Broadway, New York, February 20, 1893.
“ My Dear Mr. Dun: I have had occasion to write you more than once in terms of great humiliation, but never before under such circumstances as now, in which I have a confession to make to you. It is that improperly and fraudulently I have signed the name of Mr. E. W. Bullinger on the back of two checks of your firm made to his order. I will not urge that this was done without any evil intent, or that he would not have signed them himself had I asked him, or that I had any intention of defrauding you or him. Simply and frankly, I must say that I committed this act without authority and most imprudently, and can ask no excuse nor palliation of the offense, except such as in your abundant charity and goodness of heart you may in mercy extend to me. For the sake of my dear wife and children, and for the sake of the long service rendered to you, I pray God your heart may still be softened towards me, and that I may not be made to suffer the penalty of my offense.
“ Respectfully, Erastus Wiman.”

January 7, 1893, the defendant had drawn a check to the order of E. W. Bullinger for $5,000 on the Chemical Bank, and signed it “ R. G. Dun & Go.,” and had indorsed thereon the name of E. W. Bullinger, and applied the avails to his own use. The foregoing letter refers to this check, and to the one set out in the indictment.

Before discussing the particular questions raised on this appeal, it will be well to state the rules of law relating to the crime of which the defendant was convicted. By the common law, forgery was classed with offenses known as “cheats,” and if an instrument or document was falsely made, altered, or uttered, with intent to defraud, though no one was actually cheated or defrauded, the crime of forgery was committed. 1 Bish. Cr. Law (8th Ed.) section 572 ; 2 Bish Cr. Law (8th Ed.) §§ 521, 597; 2 East, P. C. 854; Steph. Dig. Cr. Law, arts. 355, 356; 3 Co. Inst. 168. The ingredients of the offense are the same under the Penal Code of this state:

“ Sec. 509. A person is guilty of forgery in the first degree who, with intent to defraud, forges" certain specific documents.

“ Sec. 511. A person is guilty of forgery in the second degree who, with intent to defraud, forges” certain specific instruments.

The ingredients of the offense are (1) counterfeiting certain specified instruments (2) with intent to defraud. That the defendant drew the check, and, without the authority of Bullinger, indorsed his name thereon, is confessed. This was counterfeiting. The only other ingredient necessary to be established to prove the commission of the crime of forgery was to show that the signature was made with intent to defraud. The statute does not 'require that the counterfeiting be done with intent to defraud a particular person, but if it was done with the intent to defraud any one it is sufficient. Neither the common law nor the statute requires that the counterfeiting be done with intent to perpetuate a criminal fraud, for the commission of which the perpetrator would be indicted; but if the fraud intended be a commercial one, by which another is defrauded or intended to be defrauded, by imposing an apparent liability, or by depriving him of some right or property, it is sufficient. An intent to commit an independent fraud is not in all cases a necessary ingredient of the crime of forgery. In case A. has a credit with a solvent bank for $1,000, and draws his check thereon, for $100, to the order of B., indorses his name thereon, knowing that he has no authority, and negotiates the check at another bank, he is guilty of forgery. It is a fraud on B. to assume to impose a possible liability on him, and it is also a fraud on the bank taking the check. In such a case it is not necessary to show that A. intended to defraud B., the bank taking the check, or any subsequent holder of the amount of the check, and it would be no defense to show that A. believed the check would be paid, or to show that it was paid. The drawer and drawee might both fail, and B. be put to his defense. The act supposed is a fraud in and óf itself. But if A., instead of negotiating the check, had personally presented it to the bank on which it was drawn, and received the money thereon, it would be necessary to show that he intended to commit some independent ulterior fraud. If it could be shown that he made, indorsed, and procured the check to be paid to himself, on which B. ’s signature was counterfeited, with intent to use it as evidence of the payment of his debt of $100 toB., the act would be forgery within section 521 of the Penal Code. The question whether the defendant made, indorsed, and negotiated this check with intent to defraud E. W. Bullinger or the Central National Bank was not submitted to the jury, but was expressly withdrawn by the learned trial judge—we think erroneously—from their consideration. The case was submitted to the jury on the theory that it was necessary to show that the defendant made the check and counterfeited the indorsement of E. W. Bullinger with intent to defraud R. G. Dun & Co., on which theory this judgment must stand or fall. This brings us to the question whether any substantial error was committed in submitting this issue, or in the reception or rejection of evidence bearing on it.

It was urged on the trial, and it is urged in this court, that the defendant was a partner of R. G. Dun & Co., and, being such, that his secret withdrawal of the partnership funds for his individual use was neither a fraud nor a crime. We think the issues whether, under the contract, the defendant was a partner, or whether he believed himself to be one, were not material. Partners occupy fiduciary relations towards each other, and if one partner misappropriates the funds or property of the firm he commits a fraud on his copartners. In case one member of a firm secretly withdraws the firm assets and converts them to his own use, without the assent of his partners, he commits a commercial fraud. It certainly will not be contended that it is impossible for one partner to defraud his copartners or the firm of which he is a member. The evidence given by the defendant conclusively shows that he had no right to use the partnership funds for his own purposes, and that he knew it. It was not shown that the other members of R. Gr. Dun & Co. had assented to such use, but, on the contrary, frequent and sharp letters of reproval were written the defendant criticising him for having so used funds, and forbidding such use’thereafter, and the defendant frequently promised in writing that he never would so offend again. That the defendant did apply the $5,000 received by means of this check to his individual use, and attempted to conceal the fact, is not denied. To do this was a fraud, and, if accomplished by means of forgery, it was a crime. It is no defense for the defendant to prove that it was within his power to have accomplished the same end by means which were not criminal. The answer is that he-chose, not lawful, but unlawful, means to accomplish his purpose, and such as are condemned as a crime. By indorsing the name of E. W. Bullinger upon this check, and depositing it to his credit in the Central Rational Bank,—not the bank upon which it was drawn —he assumed to create a liability by counterfeiting his signature, which was a crime. As before stated, it was a crime in and of itself, and it was also a crime within the issue submitted to the jury, that issue being found in favor of the people.

The question whether the defendant drew this check and counterfeited the signature of E. W. Bullinger with intent to defraud R. G. Dun & Co. was submitted to the jury, and found against the defendant, upon evidence which we think entirely sufficient to sustain the verdict. The defendant’s letter of February 20, 1893, was sufficient, in connection with the undisputed facts and circumstances, to sustain the verdict that the act was done with intent to defraud the firm. Ro error was committed by the refusal of the court to advise, pursuant to section 410, Code Cr. Proc., the jury to acquit the defendant. In this connection the court was asked to charge :

“ (3) Unless the jury find that the acts charged were committed with criminal intent, the defendant is entitled to an acquittal.”

The court refused to charge in the language of the request, and repeated:

“ I charge you, unless the act was committed with intent to defraud, as I explained it to you, the defendant is entitled to an acquittal. I refuse to charge as requested.”

To this the defendant’s counsel excepted. The court in its charge had previously defined the word “defraud” as follows :

“ ‘Defraud’ ” has been defined as follows: ‘ To deprive of right, either by obtaining something by deception or artifice, or by taking something wrongfully without the knowledge or consent of the owner.’ And I think that is as good a definition of ‘defraud’ as I know of. The intent must be to deprive a person of a right, either by obtaining something by deception or artifice, or by taking something wrongfully without the knowledge or consent of the owner."

This definition was not excepted to, and is sufficiently full and accurate for the purposes of the issue submitted to the jury.

Under the sections of the Code before quoted, if the act was committed by the defendant with intent to defraud, it follows that it was done with a criminal intent, for the statute declares it to be a criminal forgery. The terms “ with intent to defraud ” and “ with a criminal intent" are, under this statute, synonymous. It has been several times said by the court of appeals that an act, in order to constitute a- crime, must be done with a criminal intent. But it has never been held, in case the court correctly instructed the jury as to the ingredients making up a particular crime, and that they must find that all of them existed before the defendant could be -convicted, that in addition the court must charge that the act was committed with a criminal intent. The term is used for brevity. If, on the trial of an indictment for murder in the first degree, the court should charge that before the defendant could be convicted the jury must find that he killed the decedent from a deliberate and premeditated design to effect his death, it would not be error to refuse a request, preferred after the charge had been delivered, that the jury must find that the act was committed with a criminal intent. When, as in the case at bar, the jury is fully and correctly instructed as to all of the ingredients of the crime 'under consideration, and are charged that before they can convict they must find that all of the ingredients of the crime existed, it is quite sufficient. Persons violating the criminal law of the state with the unlawful intent prescribed by the statute are guilty of a crime, even though they are ignorant that the act is criminal.

No error was committed in refusing to charge the twenty-sixth request:

“If the jury believe that, at the time Wiman wrote Bullinger’s name on the back of the check in question, he intended to use his name mere osa fictitious payee, such writing of the-name of the •payee on the back of the check is not forgery."

E. W. Bullinger was not a fictitious payee, but a real person, and a creditor of R Gr. Dun & Co., and the defendant directed the cashier to draw this check, stating that Bullinger' wished a check -on account, and the check was charged to him. This was testified to by the cashier, and not denied by the defendant. There was no evidence that the defendant intended to use the name of Bullinger as a fictitious payee, but the uncontradicted evidence was that he drew it to his order, so as to cause it to be believed that it was applied as a payment to him. The issue was sought to be raised, notwithstanding the defendant’s letters, that he believed he was authorized by law, not only to draw the check for the purpose of appropriating the funds of R. G. Dun & Co. to his own use, but was also authorized to indorse the name of E. W. Bullinger on the check. The letters written by the defendant conclusively show that he did not believe that he had the right by means of checks to divert the funds of R. G. Dun & Co. to his individual use. The defendant testified that he was sixty years of age, and since his youth had been constantly engaged in various large business transactions, was familiar with commercial matters and the use of checks. The issue was not tendered that the defendant .was insane, nor that he acted under an insane delusion in making and indorsing the check set out in the indictment. The testimony of a defendant that he believed that he had the right to do an act which is a crime is entitled to no weight unless, from the nature of the act and the circumstances surrounding it, a sane person might have so believed. The act of the defendant was a single transaction, begun by directing the check to be drawn, and terminated by dispositing it in the Central National Bank. It is true that the transaction was made up of several distinct steps. So is every crime; but in the case at bar the steps were so connected that they constituted but a single act or transaction. It will not do to separate the several acts by which a crime is committed, and hold that every one must of itself, disconnected from the others, have been unlawful. It is true that if the defendant had drawn this check to bearer, and so fraudulently acquired $5,000, he would not have been guilty of the crime of forgery. This he did not do, but instead made the check payable to the order of E. W. Bullinger, and without authority indorsed his name thereon, with intent to defraud, and so brought himself within the terms of the statute.

Upon the request of the learned counsel for the defendant, the court charged:

“(SI) If the jury shall find that Wiman believed that under the rules of law applicable to commercial paper he had legal authority to use the name of a person as payee to whom it was not intended that the check should be paid, and to indorse such name on the back of the check, such indorsement is not forgery.”

During the summing up of counsel for the defendant, he attempted to discuss the testimony which he asserted bore upon this proposition, but was interrupted by the court. Thereupon the counsel said:

“ T shall ask your honor to charge the jury that, if the defendant believed that under the rules of commercial law he -had legal authority to make this check and indorse it as he did, the crime is not forgery.’ The court: ‘That I shall refuse.’ Mr. Tracey: ‘And your honor will give me an exception now ? ’ The court: ‘Certainly. I will give it to you now.’ ”

It is now insisted that the ruling made during the summing up and the one. made by the thirty-first request were inconsistent, and that, if an error was committed in the first ruling, the defendant was presumably harmed by the court’s refusal to permit his counsel to discuss the question of fact bearing upon the proposition.. Courts do not sit for the purpose of trying or reviewing abstract questions of law, and if they assume to determine such questions, however much they may err, it is not a reason for reversing their judgments. We think that the evidence did not present this proposition. The defendant testified that he was sixty years of age, and since his youth had been continually engaged in various and large business transactions, involving the use of bank accounts and of checks. There was no testimony in the case that would have warranted the jury in finding that he believed that, for the purpose of concealing his overdraft from R. G. Dun & Co., he had legal authority to counterfeit the name of E. W. Bullinger. As before stated, it was not alleged that the defendant was insane, or acted under an insane delusion; and, in the absence of such an issue, the jury had no right to find and that the defendant believed what a, sane man would not have believed.

It is also urged that the court erred in excluding evidence as to the value of the property possessed by Wiman in February, 1893. He was permitted to describe as minutely as his counsel wished the property possessed by him, and to give his own estimate of its value. The people did not controvert the testimony of Wiman as to the quantity or value of his property. Subsequently, a witness was called by the defendant by whom it was sought to prove the value of certain property owned by the defendant. The court, ruled that this evidence was entirely immaterial, and an exception was taken. Ho issue was raised upon this question. The defendant’s evidence stood entirely uncontradicted, nor was there any subsequent effort made to contradict it by the people.

For the purpose of showing that the cheek of February 6,1893, was signed, indorsed, and uttered with intent, to defraud R Gr. Dun & Co., it was competent to show that the defendant had signed, indorsed, and uttered other checks of R. G. Dun & Co., all forming a part of a system designed to effect the same end,— appropriating the funds of R Gr. Dun & Co, for the benefit of the defendant. Such evidence is quite different from that condemned in People v. Corbin, 56 N. Y. 363. In that case the defendant was tried for forging the indorsement of Yan Amburgh on a promissory note, and the defense was (1) authority to write the name, and (2) a belief that defendant had such authority. The people were permitted to show that defendant confessed that he forged the name of Granoung on other promissory notes, which was held to be error. Evidence of other and disconnected forgeries was not relevant to the issue whether defendant was expressly authorized to indorse the name of Yan Atnburgh, or to the issue whether he believed that he was so authorized.

The judgment should be affirmed.


source: Caselaw Access Project

author: Parker, J.

license: Public Domain

text:
    Michael Elias, Resp’t, v. Manhattan Railway Company et al., App’lts.

      (Supreme Court, General Term, First Department,

      Filed March 15, 1895.)

    Damages—Elevated railway.
    In an action against an elevated railway, a finding of rental damage to abutting property cannot be sustained, in the absence of evidence showing the amount for which the property rented before the building of the road, the complaints by tenants of the road, or the owner’s inability to rent stores of apartments, or the decline of rents in any of them.
    Appeal from a judgment in favor of plaintiff.

      Alfred A. Wheat, for app’lts; Edwin M. Felt, for resp’t.
   Parker, J.

Defendants’ motion to dismiss the complaint, made after the plaintiff had rested his case, should have been granted. There was no evidence upon which an award for either rental or fee damages could be based. The case seems to have been tried upon the theory that about all the plaintiff had to do was to show the presence of the elevated railroad, and ask the court to guess the amount of damage. Upon the question of rental damages the plaintiff testified that he bought the property in 1886,—six years after the railroad went into operation,—for about $75,000, and paid out about $6,000 in putting it in repair. It then rented for about $7,910 annually, and there has been no •substantial change since. He did not show what the property had rented for before the building of the railroad, the course of ■of rents of other property in that immediate vicinity, but not along the line of the railroad ; offered no proof of complaint of the railroad by tenants, or of inability to rent stores or apartments, or decline of rents in any of them. Some of these facts may have existed, but not one of them was proved by plaintiff, nor any other fact upon which the court could predicate a finding of rental damage. As to question of fee damage, he did produce a witness who testified that certain lots off the line of the elevated railroad, and in the immediate vicinity of plaintiff’s property, had increased in value more proportionately since 1880 than the lots on Second avenue. But this, standing alone, was not sufficient. Said the court in the Becker Case, 131 N. Y. 510; 47 St. Rep. 726:

“"We then said in Bohm's Case, 42 St. Rep. 247, there was no other evidence to sustain a finding of damage than the fact that property on the side street had increased in value to a greater proportional extent than land on the avenue in question, and we .said that fact was not sufficient upon which to base such finding.”

Plaintiff’s case was barren of other testimony tending in that direction. It did not even contain an expression of opinion that 4he elevated railroad had in any way harmed plaintiff’s property. Nor was plaintiff’s situation improved by the testimony offered on the part of defendants. It is true that Meagher testified that he purchased the property after the buildings had been built op one story, subsequently completed them, and he estimated the total cost of the property to him at $12,000 a lot. There was no evidence as to its market value when completed, and the evidence is that its present market value is about the same. Meagher also testified that he rented the property, after it was completed, for $6,636 a 3rear, while according to the plaintiff’s testimony its present rental value is about $7,938 a year. The judgment should be reversed, and a new trial granted, with costs to the appellant to abide the event.


author: Herrick, J.

text:
    Henry F. Gillig, Pl’ff, v. George C. Treadwell Company, Def’t.

      (Supreme Court, Albany Special Term,

      Filed February, 1895.)

    Attachment—Levy—Priority.
    Where part of debtor’s property is seized under attachment, and after-wards the balance of his property is seized under other attachments, the subsequent attachments are liens on the property seized under them prior to the lien of first attachment and to an execution issued on the judgment recovered in the first attachment action.
    Motion to compel the sheriff to apply the proceeds of the property, taken by him under an attachment in favor of other creditors, to the payment of an execution issued on an attachment judgment obtained by plaintiff.

      Robert G. Scherer and Taylor & Thompson, for pl’ff; P. G. Reed and Bowers & Sands, for attaching creditors; Zeb A. Dyer, for sheriff.
   Herrick, J.

On the 8th day of January 1894, an attachment was issued in the above-entitled action in favor of the plaintiff and against the defendant, and under it certain personal' property was levied upon and taken into the actual custody of the sheriff of Albany county. Thereafter another attachment was issued in an action wherein the Spraker Bank of Canajoharie was the plaintiff, and the defendant herein was the defendant, and certain other personal property was levied upon and taken into actual custody by the sheriff under such attachment. A third attachment was subsequently issued against the same defendant in an action in which Hugh J. Grant, as receiver, was the plaintiff, and another portion of the defendant’s property was levied upon and taken into actual custody by the sheriff by virtue of said attachment. The plaintiff herein obtained judgment in the action on or about the 1st day of December 1894, and thereafter the sheriff sold the property in his hands held by him under said several attachments, and applied the proceeds of that portion thereof levied upon under the plaintiff’s attachment to the satisfaction of plaintiff’s execution. It was insufficient to wholly satisfy such execution, and the plaintiff now makes this motion to the court to compel the sheriff to apply the proceeds of the sale to defendant’s property levied upon by him under the two other attachments in satisfaction of the plaintiff’s execution. Under an attachment the property of the person proceeded against is seized and held in the custody of the law to satisfy any judgment that may be obtained by the plaintiff in such proceeding against the defendant therein. When property is so attached, no other lien, by execution, attachment, or otherwise, 'can be obtained upon such property, except in subordination and. secondary to the claim of the party procuring the attachment. The lien of such attachment does not obtain unless the property is taken “into the sheriff’s actual custody,” Code Civ. Proc. § 649; Anthony v. Wood, 96 N. Y. 180, 187, and no more property is to be seized by virtue of such attachment than so much as may be necessary to satisfy the plaintiff’s demand, with costs and disbursements (Code Civ. Pro. § 641). In these respects it differs from an execution, which becomes a lieu upon all the defendant’s personal property in the county to which such execution is issued as soon as it is placed in the sheriff’s hands for execution. Now, whether it is held that the lien of an execution, issued in an action wherein an attachment has previously been issued, attaches at the time the execution is issued, or dates back to the levy of the attachment, is of no consequence. If it attaches at the time of its issuance, it can only attach to the property subject to any lien obtained prior thereto. If we hold, that it relates back to the time of the levy under the attachment, then it must as of that time-become a lien only upon the property attached. In this case the property actually taken into custody of the sheriff by virtue of the plaintiff's attachment has been applied to the satisfaction of bis execution, and the lien of the other attachments was obtained . prior to the issuing of the execution, and was upon separate and distinct property from that levied upon under plaintiff’s attachment, and it must be held to satisfy the claims of the plaintiffs in _ those actions. The lien of the plaintiff's execution in this action upon property not taken into actual custody by the sheriff under his attachment is subordinate to the claims of the attaching creditors in the other actions referred to, and for that reason the motion of the plaintiff at this time must be denied, with" $10 costs, without prejudice, however, to the right of the plaintiff to renew said motion, if in the future the lien of the other attachments should be removed, or the claims of the plaintiffs thereon be satisfied, leaving a surplus.

Motion denied, with $10 costs.


text:
    Thomas W. Reilly et al., Resp’ts, v. John R. Lee, App’lt.

      (Supreme Court, General Term, First Department,

      Filed March 15, 1895.)

    1. Pleading—Counterclaim.
    A counterclaim, in an action on contract, must be a complete cause of action at the time of the commencement of the action.
    2. Same.
    Where a defendant, in order to prevent any recovery on a contract, interposes the plaintiff’s breach thereof and obtains a decision in his favor, he deprives himself of the right to recover in that action damages against the plaintiff because of such breach.

      Appeal from a judgment in favor of plaintiffs, dismissing defendant’s counterclaim.

      Artemas B. Smith, for app’lt; L. Laflin Kellogg, for resp’ts.
   Parker, J.

The complaint alleged two separate causes of action, growing out of two different contracts. As to one there is no dispute, and for convenience we shall treat the matters in controversy as if but one cause of action was pleaded in the complaint. In brief, it was for a balance claimed to be due under a written contract entered into between the parties to this action in June, 1889, by which the plaintiffs agreed to build, construct and finish “ in the most substantial and workmanlike manner, and to the satisfaction and acceptance of the engineer or engineers in charge of thePennsylvania, Poughkeepsie and Boston Railroad Company, all the masonry work required to be done by the first party (this defendant) for the bridge to be constructed by it across the Lehigh river at or near Slatington, Pennsylvania.” And the defendant •engaged that whenever, in the opinion of the said engineer or engineers in charge, the said work should be completely finished in every respect, and performed agreeably to the various stipulations and specifications in the said agreement contained, and the said engineer or engineers in charge should have furnished to the defendant a certificate to that effect, together with an estimate of the quantity of work done by the plaintiffs, he would, within twenty days thereafter, pay the plaintiffs the amount found to be due. Performance by the-plaintiffs, and the making and delivery of the required certificate and estimate by the engineer in charge, under which they claimed to be due $1,671.95, were also alleged. The answer put in issue the allegations of performance and the making of the certificate and estimate by the engineer, and by way of counterclaim asserted that the plaintiffs failed to construct the masonry in a substantial and workmanlike manner, as re-„ quired by said agreement; and that a portion of the work was so defectively done that it was rebuilt at defendant’s expense, and the sum expended therefor defendant claimed the right to recover against the plaintiffs under the fifth provision of the contract, which is as follows:

“ Fifth. It is mutually agreed between the parties hereto that, if the second party shall execute any part of such work defectively, then such defective work shall be rebuilt at the expense of the party of the second part, upon receiving the order from the engineer or engineers in charge to that effect.”

The referee found that the engineer in charge did not furnish to ' the defendant a certificate that the work had been performed in a substantial and workmanlike manner, nor make and deliver to the plaintiffs an estimate of the quantity of work done by the plaintiffs, all of which was, by the terms of the contract, a condition precedent to a right of recovery by the plaintiffs; and he further found that there was no proof of a waiver of such certificate by defendant. In accordance therewith he held that the plaintiffs were not entitled to recover any sum whatever, and directed judgment accordingly. His report also directed that judgment should be entered dismissing the counterclaim set forth in the answer, but not upon the merits. With the reasons for the decision respecting the counterclaim as stated in the referee’s opinion, the appellant is dissatisfied. We shall refrain from a discussion of them, however, on this review, because we think the decision must be upheld upon other grounds, and it matters not whether proper reasons are given for rendering a correct judgment.

Assuming the defendant’s contention to be correct, that under the fifth provision of the contract, which we have quoted, he was entitled to recover of plaintiffs the expense of rebuilding the pier, which it is proved was done by the railroad company with whom the defendant had contracted to do the work, which he subsequently subcontracted to these plaintiffs, and which was done at a cost exceeding $3,000, he certainly could not recover until after performance; and performance could not be undertaken until after the order from the engineer or engineers in charge to that effect had been received. They might have provided otherwise, but they chose this method of guarding against defective work, and, in effect, provided that the remedy for unskillful performance on the part of the plaintiffs should be'the rebuilding of such work as should be done defectively. Even that was not left to the discretion of the defendant, for it was further conditioned that the rebuilding should only be done upon an order of the engineer in charge. There was controversy on the trial whether the order was properly made by the engineer and received by the party to be affected ; and whether the rebuilding was done at the expense of the party of the second part. But that is of no moment in the present discussion, for, conceding the defendant’s contention in such respects to be correct, nevertheless a cause of action in his favor could not arise therefrom until performance had been completed ; and it was not completed until after the commencement of •this action. At that time defendant could not have commenced an action against the plaintiffs to recover for the expense incurred in rebuilding the pier, for the rebuilding had not been finished, and his cause of action was not, therefore, complete. And it was none the less necessary that he should have a complete cause of action in order to set it up by way of counterclaim against these plaintiffs. Patterson v. Patterson, 59 N. Y. 574; Taylor v. Mayor, etc., of New York, 82 N. Y. 10. While the counterclaim was dismissed, the dismissal was not upon the merits, so the defendant is not thereby deprived of his right to enforce his cause of action if it, has in the meantime become or shall become complete. The decision of the referee in dismissing the counterclaim is also-justified by the decision in Walker v. Millard, 29 N. Y. 375. In that case the plaintiff sought to recover a balance claimed to be due under a building contract. The defendant answered that plaintiff could not recover, because of his failure to fully perform the contract, and by way of counterclaim demanded damages for defective performance. It was held that the plaintiff had committed a breach of his contract, and could not recover, and also that defendant could not recover on his counterclaim. The reason assigned is briefly stated in the opinion of Johnson, J., as follows:

“He alleges that the plaintiff has broken the contract, or failed to perform it, and cannot, therefore, compel him to pay, and yet insists that he can compel the plaintiff to pay for defects in the work, for which the latter gets no compensation. This, I apprehend, he can scarcely be allowed to do. He cannot both repudiate the contract, and enforce it, in the same action. Had the defendant brought his action to recover damages for the nonperformance of the contract on the part of the plaintiff, it would have been necessary for him to allege performance or an offer to perform, on his part, or he would not have stated a cause of action. Certainly he is in no better situation in regard to his own counterclaim, as defendant. Having interposed the plaintiff's breach, in avoidance of his own obligation to pay, and procured a ruling to that effect in his favor, he is in no situation to enforce the contract against the other party, in any particular, especially in the same action.”

This case was cited and followed in Woodward v. Fuller, 80 N. Y. 812. The same question came before the court in Lennon v. Smith, 124 N. Y. 578 ; 36 St. Rep 880. In that ease the plaintiff contracted to build a cellar within a certain time, and it was agreed that a penalty of $20 a d"ay should be enforced for each day the work should remain unfinished beyond the term. In an action brought to recover the contract price the referee decided that there was a substantial breach of contract upon the part of plaintiff available to defeat recovery by him; and, having decided that the defendant was entitled to be relieved from the obligations of the contract by reason of the breach by plaintiff, he proceeded to award damages in favor of defendant and against the plaintiff in the sum of $540 for nonperformance of the contract. In reviewing the judgment the court said :

“ She could not repudiate the contract for the purpose of barring the plaintiff’s claim for his work, and at the same time make it effectual for the recovery of damages against him for its breach, although she might, if the facts permitted, recover damages, if any there were, in excess of the price or value of the plaintiff’s work. And the reason is that, in such case, the contract is permitted to remain operative for the purpose of the remedy and relief of both parties to it, and it is no less essential to support the defendant’s claim for damages than it is to sustain that of the plaintiff founded upon it for his work. It is apparent that a rule having the effect to give one of the parties to a contract the benefit of it to the exclusion of the other in the same action would or might work very unjustly to the latter, and quite unreasonably to the profit of the former.”

If it should be assumed in this case that the cause of action which defendant set up by way of counterclaim was a completed cause of action, nevertheless he was not entitled to recover on it, because he interposed the plaintiffs’ breach of the contract to prevent any recovery by them, and obtained a decision in his favor, whereupon he deprived himself of the right to recover in that actian damages against the plaintiffs because of such breach. Had he permitted a recovery by the plaintiffs for the amount due them under the contract, he would have been entitled, under the authority of Lennon v. Smith, and upon principle, to counterclaim his damages against them, although they might have largely exceeded the amount due to the plaintiffs under the contract; and for such excess he would have been entitled to an affirmative judgment against them.

If the views expressed are correct, it is unnecessary to consider the exceptions taken to the admission of evidence, and to the refusals of the referee to find certain facts which were requested by the defendant, for, if the rulings had been otherwise, the result could not have been affected. Presumptively both parties were entitled to costs, under section 3234 of the Code of Civil Procedure, but it does not appear that the defendant presented a bill of costs for taxation, or asked to have his costs inserted in the judgment. The defendant’s remedy was to have presented his bill of costs to the clerk, and had them taxed, and, if he had refused to enter them in a judgment, to have made a motion that they be so entered. The judgment should be affirmed, with costs, but without prejudice to the right of the defendant to move for a correction - of the judgment below in respect to costs.


text:
    Joseph C. Hand, Resp’t, v. Ferral C. Dinniny, Jr., App’lt.

      (Supreme Court, General Term, First Department,

      Filed March 15, 1895.)

    1. Bills and notes—Bona fide holder.
    The surrender to a party of his own promissory note, if valid and enforceable, and the taking in lieu thereof a negotiable note made by a third part, before its maturity, constitute the holder one in good faith and for value.
    3. Same.
    The existence of the surrendered note constitutes prima facie evidence of its validity, and its consideration in an-.action, on the transferred note, may be inquired into on the cross-examination of the plaintiff.
    Appeal from a judgment entered on a verdict directed by the court in favor of the plaintiff, and from an order denying a motion for a new trial.

      John J. Adams, for app’lt; Jesse Stearns, for resp’t
   Parker, J.

The plaintiff alleged the making of a promissory note for $5,346.25, payable to the order of D. A. Loring, who indorsed it without recourse, and delivered it so indorsed to the plaintiff, who became and still is the holder and owner thereof for value. The answer admitted the making and delivery of the note, denied that the plaintiff was the owner and holder thereof for value, and alleged that it was given to the payee, together with the' sum of $7,000 in cash, under a written agreement that the payee would deliver to the defendant, in consideration therefor,, the yacht Aztec, in perfect order and ready for use, on or before the 10th day of May, 1894; that Loring, the payee, failed to perform his contract in part, in that he did not deliver the yacht at the time agreed upon, nor in a condition provided for by the terms of the contract, so that defendant was compelled to, and did, lay out, for the purpose of putting the yacht in the condition defendant agreed she should be when delivered, the sum of $723.47, which sum, together with items aggregating $610 in addition, the defendant set up by way of counterclaim. When the plaintiff rested, the trial court was of the opinion, rightly, we think, that the evidence established, prima facie at least, that the plaintiff was the owner and holder of the note for value; and for the purpose of shortening the trial the court inquired of defendant’s counsel whether he intended to show that the plaintiff had notice of the special facts relied upon by him in support of the counterclaim alleged in the answer. The reply of counsel was such as to justify the court in ruling that it would decline to receive defendant’s proofs relating to the counterclaim. But we think there was error in refusing to allow the defendant to cross-examine the plaintiff with reference to the consideration of the note surrendered by the plaintiff when he received defendant’s note from Loring.

We have said that when plaintiff rested he had established prima facie that he had paid full value for the note in question, and this assertion is based upon the testimony of the plaintiff that at the time of the transfer of the note to him he held a note for $5,000, made by D. A. Loring, which became due in July, 1892, and that he surrendered this note to Loring, and paid him seventy-eight dollars in cash, for defendant’s note, which sum, together with the interest due on the note, equaled the face value of the note in controversy. The surrender to a party of his own promissory note, if valid and enforceable, and the taking in lieu thereof a negotiable note made by a third party, before its maturity, constitute the party a bona fide holder for value. Brown v. Leavitt, 31 N. Y. 113; Pratt v. Coman, 37 Id. 440. But the note surrendered must be a valid obligation in order to constitute the party a bona fide holder for value. Its existence constitutes prima facie evidence of the fact, but it m&y be overborne by proof that it was void for want of consideration. After the plaintiff had testified to the existence of the note, and his surrender of it to Loring, defendant’s counsel undertook to cross-examine him in relation to the consideration of the note surrendered.

We quote from the record:

‘‘Q. What was the consideration for the former note of $5,000 ? A. What was it for ? Q. Yes. (Objected to). The Court: Ido not see that that is of any consequence. Defendant’s counsel: Supposed there was no consideration for it ? The Court: I will not go into that. (Defendant excepts).”

Clearly it was a mistake to hold, as the court did in effect, that an entire absence of consideration for th,e Loring note would necessarily not affect the question whether plaintiff was a purchaser for value of this note. It may well be that the testimony of the witness would have shown that there was ample consideration, but we cannot so assume, as the evidence was excluded on plaintiff’s objection. The judgment should be reversed, and a new trial granted, with costs, to the appellant to abide the event.

All concur.


author: Van Brunt, P. J.

text:
    Franz G. Matthiessen, Resp’t, v. G. N. Bartlett, Impleaded, etc., App’lt.

      (Supreme Court, General Term, First Department,

      Filed March 15, 1895.)

    Parties—Necessary.
    Where plaintiff is induced to guarantee the payment of a loan, to secure which the borrowers had deposited certain railroad bonds with the lender, by the written agreement of the defendants that, in case he paid the loan, the defendants would be severally liable to him to the extent of the amounts-set opposite their names and would pay the same on presentation of a proportionate amount of the collateral bonds, and that each defendant cootracted for himself, and not for any other, and only for the amount set opposite his name, all the parties to the agreement are properly made parties defendant to an action on such agreement, after payment of the loan by the plaintiff.
    Appeal from an interlocutory judgment, overruling a demurrer to the complaint.

      J. G. Deane, for app’lt; M. W. Devine, for resp’t.
   Van Brunt, P. J.

The complaint in this action alleged that on the 22d of March, 1894, the defendants Goodwin and Swift procured a loan from the Western National Bank of the city of New York of $44,000, and as security for the payment thereof deposited forty-four first mortgage bonds of the Colonial City Electric Railway Company, of Kingston, N. Y., each for the sum of $1,000.; that the plaintiff guarantied the payment to said bank of said loan .at maturity; that, in order to induce the plaintiff to guaranty said loan, the defendants Bartlett, Swift, Orne, Abbott, Robinson, and Smith duly executed to the plaintiff their agreement in writing, wherein and whereby they agreed with the plaintiff, in amounts and proportion set opposite their .respective names, to severally guaranty the payment of said loan to the extent of said amounts,, respectively, in case the plaintiff, was required to pay said loan, and further agreed to pay to plaintiff the amounts so set opposite their respective nameso n demand and presentation of the proportionate amount of said collateral bonds; that the agreement further provided that each of said guarantors contracted for himself, and not for any other, and only for the amount set opposite his name; that opposite the name of the defendant Bartlett was the amount of $5,000, and various other sums opposite the name of the other-guarantors; and that, the loan of $44,000 to Goodwin and Swift-becoming due, the plaintiff paid the same to the said Western National Bank, and received the collateral security. The complaint further alleges that the plaintiff tendered to the defendant Bartlett bonds aggregation $5,000, the proportionate amount required to be tendered to him, and demanded from him the payment of said sum of $5,000, which was refused. The same allegation is made in regard to the other persons executing the contract of guaranty. Judgment was thereupon demanded that the plaintiff be subrogated to all the rights and liens of said Western National Bank in and to said bonds, and that it be adjudged that there is due from the defendant Bartlett to the plaintiff on account of his guaranty the sum of $5,000, with interest, and a similar demand is made as against the other defendants, and that the collateral security be sold at public auction, and the proceeds of five of said mortgage bonds be applied to the payment of said sum of $5,000, and that the plaintiff have judgment against said defendant Bartlett for any deficiency; and similar allegations are made as against the other defendants. The defendant Bartlett demurred upon the ground that causes of action are improperly united, and that the complaint did not state facts sufficient to constitute a cause of action. The first ground only is urged upon this appeal.

There would seem to be no doubt that the demurrer would have been well taken if there were any means of segregating the particular bonds in which the defendant Bartlett had an interest. But it appears that the bonds were treated as a body, and it cannot be said that the defendant Bartlett or the other defendants were entitled to receive any particular ones of these bonds; and, as a consequence, although the contract of guaranty may be a separate contract, yet the collateral security which followed that guaranty formed one security, in which these parties have an interest, in proportion to the amounts for which they were bound under their guaranty, in the sale of the bonds for the purpose of paying this loan. How would it be possible, if these various bonds brought different prices, to adjust the equities of the parties in this collateral security without the presence of all? It cannot be said that Bartlett is entitled to have the proceeds of the bonds first sold or of those last sold applied to the payment of his indebtedness, and the same is true as to the other defendants. Consequently it is necessary that there should be a marshaling of the proceeds of these bonds, and that they should be proportionately divided among these various guarantors.. There seems, therefore, to be no possible method in which the plaintiff could proceed, except by bringing in all the parties who are interested in these securities, selling the same for and on their account, and have the court marshal the proceeds, determine the equities between the parties, and the amount with which they are to be credited, and give judgment for a deficiency, if the plaintiff should be so entitled, as to each separately. llnder these circumstances we think the court below was right in overruling the demurrer, and the judgment should be affirmed, with costs, with leave, however, for the defendant to answer upon payment of the costs in the court below and of this All concur.


text:
    John C. Wilmerding et al., Resp’ts, v. Sender Jarmulowsky, Impleaded, etc., App’lt.

      (Supreme Court, General Term, First Department,

      Filed March 15, 1895.)

    Fraudulent conveyance—Consideration.
    In order to set aside, as in fraud of creditors, a conveyance, for which tile grantee paid a valuable consideration, a creditor must show that such grantee had actual notice of the fraudulent intent of his grantor.

      Appeal from a judgment in favor of plaintiffs.

      David McClure, for app’lt; Emmanuel Blumenstiel, for resp’ts.
   Parker, J.

In so far as this judgment affects the title to the real estate conveyed by Philip Bernstein and wife to Sender Jarmulowsky, it must be reversed. There is ample evidence to sustain the finding of fraud against Bernstein, and if the conveyance of the property in question had been to his assignee, or to this defendant Jarmulowsky, without a valuable consideration, the proof would have been sufficient to have supported the judgment- rendered. But Jarmulowsky paid a valuable consideration, and he followed it up by not only taking possession of the property, but erecting on one of the lots a building costing upwards of $14,000 Where a valuable consideration is paid, a still further step has to be taken by the party attacking the conveyance in order to affect the purchaser. And a valuable consideration does not necessarily mean an adequate consideration. If valuable and substantial, although inadequate as to amount, it will be sufficient to sustain the grantee’s title, unless chargeable with notice of the fraudulent intent of his grantor. Truesdell v. Sarles, 104 N. Y. 164; 5 St. Rep. 565. The severest rule which is ever invoked against a purchaser paying a valuable consideration arises in cases where there is an outstanding title, lien, or equitable interest affected by the conveyance, which, of course, does not include a case like this, where only general creditors are affected. In such a case the pur- • chaser’s title cannot be affected unless it be proved that prior to the consummation of the sale he had knowledge of facts sufficient to put him on inquiry as to the existence of a right, title, lien, or equitable interest in conflict with that which he was about to purchase. If that be established, then the law is, in a case where a reasonable investigation would have disclosed the. real situation, that the grantee is presumed either to have made the inquiry and ascertained the extent of such prior right, or to have been guilty of a degree of negligence equally fatal to his claim to be considered a bona fide purchaser. Williamson v. Brown, 15 N. Y. 354; Baker v. Bliss, 39 N. Y. 70 ; Acer v. Westcott, 46 N. Y. 384; Reed v. Gannon, 50 N. Y. 345; Bennett v. Buchan, 76 N. Y. 386; Kirsch v. Tozier, 143 N. Y. 390; 62 St. Rep. 439. Even .under this rule the plaintiffs failed to establish a case. What facts have they proved this grantee had knowledge of, prior to the conveyance, tending in that direction Nothing . of moment, except inadequacy of. consideration, towards which their evidence strongly points,—so strongly that it is perfectly safe to say that the purchase price of the property was considerably less than its real value. -The payment of full value by a purchaser is evidence bearing upon the question of bona fides, because an ordinarily prudent man will not pay full- value under circumstances that may provoke a lawsuit, and possibly a loss of the amount invested. But it is not conclusive upon that question. It constitutes merely one circumstance to be weighed in connection with such others as may be proved. So, inadequacy of consideration is a circumstance to be weighed in connection with others, but it is not conclusive. Mor is it sufficient standing alone, for it is the general rule that dealers in real estate, and other property as well, are constantly on the lookout- for what they term “ bargains.” They buy only because they are con vinced that they can sell again for a better price. And the purchaser, waiting for an opportunity to buy real estate from which he can secure an advance, will not be deprived of his purchase solely because it appears that he believed he was getting the property for less than he could sell it for. There must be other circumstances having a tendency to make a would-be buyer suspect that the offer to sell at a low price is induced, not by the pressing necessities of the grantor, but because of a desire to defraud others. Jarmulowsky, prior to the conveyance, had loaned Bernstein $3,000, and- taken as security a mortgage upon the property, which was already incumbered by mortgages aggregating $31,750. A few months after the making of the loan, Bernstein applied to him for a further loan upon the property, which Jarmulowsky refused to grant. He was a large owner of real estate in that section of the city, having at that time title to property aggregating‘in value about $350,000, and he said to Bernstein he would buy the property, if he wished to sell it, upon a basis to be fixed by an appraiser whom he should select to value the property. Subsequently he sent an appraiser, who reported that $36,000 would be a fair valuation, and, on Bernstein’s coming again, he informed him that he would pay that amount for it. Bernstein asked $38,000, but Jarmulowsky refused to pay any more, and a written agreement was entered into between them, on June 16th, for a sale of the property to him for $36,000. About ten days later the deed was executed and delivered, and Jarmulowsky, after deducting from the consideration agreed upon the amount of the mortgage and interest due thereon, paid to him the balance by check, amounting to $916.19. Two or three days later Bernstein made a general assignment for the benefit of his creditors; but there is no evidence whatever that Jarmulowsky knew of his intention in that respect, or that any facts or circumstances came to his attention which should have prompted an ordinarily prudent man to inquire whether the grantor had in his mind a scheme to cheat and defraud his creditors. And Jarmulowsky’s conduct in erecting a building on one of the lots and paying for the same with his own money tends, in some measure at least, to support the bona Jides of the transaction so far as his part in it is concerned.

So far we have considered this matter as if it were governed by the rule established in Williamson v. Brown, and other cases cited supra, and have reached the conclusion that even under that rule a case was not made out which would support a judgment so far as it affects the conveyance to Jarmulowsky. But a different and less stringent rule seems to have been adopted in Stearns v. Gage, 79 N. Y. 102, as to a purchaser of land, who pays a valuable consideration, in a case where the conveyance is sought to be .set aside on the ground that it was made with intent' to defraud creditors at large having no special lien or equity. This distinction seems to have been made because of the language of the statute relating to fraudulent conveyances. But, however that may'be, the fact remains that the court asserted in that action, which was one to se.t aside a deed on the ground that it was fraudulent and void as against creditors, after quoting the statute, that “ this plainly means that actual .notice shall be given of the fraudulent intent, or knowledge of circumstances which are equivalent to such notice. Circumstances to put the purchaser on inquiry where full value has been paid are not sufficient.” The effect of this decision was to create an exception to the general rule asserted by Williamson v. Brown. As this case is of the same character as Stearns v. Gage, it of course comes within that decision, and calls for other and different proof of notice than that required by Williamson v. Brown, the requirements of which were not even met by the plaintiffs, as we have already observed. The judgment should be reversed as to the defendant Jarmulowsky, and a new trial granted, with costs to the appellant to abide the event.

All concur.


text:
    John L. McCullough, Resp’t, v. Harvey L. Pence, App’lt.

      (Supreme Court, General Term, First Department,

      Filed March 15, 1895.)

    Judgment—Demurrer.
    A decision overruling a demurrer to the complaint with leave to answer is not res adjudícala, where the defendant pleads over, but he may raise any objections to the maintenance of the action which he does not waive by answering.
    2. Accounting—What necessary.
    In order to justify a resort to a court of equity or a decree for an accounting, there must be some trust or fiduciary relation between the parties ; the existence of a bare agency is not sufficient.
    Appeal from an interlocutory judgment, ordering dn accounting, and from a filial judgment on the referee’s report.

      John H. Parsons, for app’lt; William C. Reddy, for resp’t.
   Van Brunt, P. J.

The complaint in this action alleged that the plaintiff was the owner of a one-sixth interest or share in certain letters patent, and that defendant had the right of sale under said letters patent upon payment of certain royalties, one sixth of which belonged to plaintiff, and that defendant had made large -sales of patented articles, and had made a payment to plaintiff on account of his interest; that the amount of sales was unknown to plaintiff, but that the plaintiff has-been informed and believed that they have been very extensive; that an account had been requested, but the defendant had refused to so account, and had not made any account since a date in said complaint mentioned. Judgment is prayed for an accounting and for judgment for amount found due. The defendant demurred to this complaint upon the ground of defect of parties, improper union of causes of action, and that the complaint did not state facts sufficient to constitute a cause of action. That demurrer was overruled, and defendant given leave to answer. The defendant availed himself of leave to answer, and answered, • denying knowledge of assignment, apd averring willingness to pay $10, which amount the royalties did not exceed. The issues thus raised came up for trial at a special term. The defendant claimed trial by jury, which being denied, the defendant moved to dismiss complaint upon the ground that it did not state any cause of action of equitable cognizance, which motion was renewed at the close of the case. These motions being denied, and exceptions duly taken, the trial proceeded, and resulted in an interlocutory judgment referring it to a referee to take and state account. The referee reported $7.23 due at the time of the commencement of the action, and $16.29 due at the time of trial. Judgment was entered upon the referee’s report for said ■sum of $16.29 and $140.30 costs. From this judgment and the interlocutory judgment this appeal is taken.

It is urged by the appellant that the motion to dismiss com plaint should have been granted, because the facts proved did not constitute a cause of action in equity for an accounting. In reply, the respondent claims that the plaintiff's right to bring this action for an accounting was determined and became res adjudicóla on the decision of the demurrer. Several cases are cited to support this proposition, but an examination seems to show that the contrary is the rule. By answering, the defendant has withdrawn his demurrer, and it no longer properly forms any part of the record. This was distinctly held in the case of Brown v. Railroad Co., 18 N. Y. 495. The defendant, therefore, could raise any objections to the maintenance of the action which he did not waive by answering, the general ground against maintaining action being one. It is not of every action in which it is necessary to take an account that equity has jurisdiction. There must be something more than the mere right to an account. It would seem that there must be some trust or fidicuary relation between the parties in order to justify a resort to a court of equity or a decree from an accounting. Even the existence of a bare agency is not sufficient. Marvin v. Brooks, 94 N. Y. 71. In the case at bar there was not the semblance of any trust. The action is brought to enforce a mere contract obligation to pay royalties, and the only final j udgment would be a money judgment. The defendant in an action at law could have a reference to take the accounts if necessary, and, if a discovery was needed, an examination before trial was open. We think that the judgment should be reversed, and new trial ordered, with costs to appellant to abide the event.

All concur.