text:
    Roeber v. New Yorker Staats Zeitung.

      (Supreme Court, Appellate Division, First Department,

      Filed March 6, 1896.)

    1. Pleading—Libel—Justification.
    The ruling that, where the truth of the libel is alleged, it will be treated as a defense by way of justification, though it is not separately stated as a defense in the answer, or not expressly alleged to be a.justification, applies only to an answer that expressly alleges the truth of the libel, and where the defense demurred to allege the truth of the libel, it is not a justification.
    2. Appeal—Court of appeals.
    An appeal from the appellate division of the court of appeals will not be allowed where the question is one of pleading, which does not go to the merits of the action. —;......
    Motion for reargument.
    Franklyn Pierce, for the motion; Joseph C. Levy, opposed.
   PER CURIAM.

The cases cited by the appellant are per-' fectly familiar to the court, and the principle therein established, was not overlooked upon deciding the appeal. A particular clause of the answer was demurred to on the ground that it was not sufficient as a justification. To sustain the demurrer it must appear that the clause in question was pleaded as a justification, and that the allegations contained in the clause were not good as a justification. We agree with the appellant that it was not good as a-justification, but we held that the clause in question was not demurrable on that ground, because it was not pleaded as a justification. And we point out that the appellant had mistaken his remedy, in demurring, instead of applying to compel the defendant to make his answer more-definite and certain by alleging whether or not the clause in question was pleaded as a justification, or in mitigation of damages. By the ninth clause oí the answer the allegations in the eighth clause, which is the one demurred to, are expressly. stated to be alleged in mitigation,of damages, and as thus pleaded, are proper allegations in the answer. We do not overlook the rule, which is well settled, that, where the truth of the libel is alleged, that will be treated as a defense by way of justification, although it is not separately stated as a defense in the answer, or not expressly alleged to be a justification. But that only applies to an answer that expressly alleges the truth of the libel, and, as this clause demurred to failed to allege the truth of the libel, it was not a justification. And as the pleader did not expressly state it to be a justification, but did expressly allege the facts in mitigation of damages, we could not assume that it was a plea of justification, for the purpose of holding it bad as such*a plea.

We do not think we would be justified, in this case, in allowing an appeal to the court of appeals. The crowded condition of the calendar of that court, and the action of the people in adopt-' ing the new constitution, have indicated an intention of restricting the questions that are to be passed upon by the court to orders or iudgments which finally dispose of a litigation. This objection can be taken on the trial, and there is nothing presented in the question here that would justify us in certifying that there is a question of law that should be reviewed by the court of appeals ; the only question being one of pleading, which does not go to the merits of the action.

The motion, therefore, for a reargument, or for leave to go to the court of appeals, should be denied, with $10 costs.

All concur.


source: Caselaw Access Project

author: INGRAHAM, J.

license: Public Domain

text:
    Amelia L. Spies, as Executrix, etc., App’lt, v. Henrich Michelsen, Resp’t.

      (Supreme Court, Appellate Division, First Department,

      Filed March 6, 1896.)

      1. Pleading—Motion to dismiss.
    - Upon a motion to dismiss an action on the ground that the complaint x does not state facts sufficient to constitute a cause of action, the complaint ■will he deemed sufficient whenever the requisite allegations can he fairly-stated from all the averments, although the statement of them may he argumentative, and the pleadings deficient in logical order and in technical language, and will be held to state all facts that can be implied irom the allegations by reasonable and fair intendment, and facts so impliedly averred are traversable in the same manner as though directly stated.
    3. Executor—Personal promise.
    A promise made to an executor to pay a debt due to the decedent can be enforced by the executor either individually or in his representative capacity.
    3. Same.
    Where the complaint alleges that the defendant is indebted to the plaintiff’s testator at the time of his death, in a certain amount, upon an open account, and that, subsequent to the death, on an accounting as between the plaintiff, as executor, and the defendant, the sum named had been found to he due, which the defendant had promised to pay, the plaintiff can maintain the action in her representative capacity.
    4. Same.*
    An allegation in a complaint, filed by the plaintiff as executrix, that, on an accounting between plaintiff and herself as such executrix, defendant was found indebted to her as executrix, states a good cause of action for the recovery of the amount in favor of plaintiff in her representative capacity.
    Appeal from a judgment of dismissal on a trial before a jury.
    James Harold Warner, for app’lt; Hamilton R Squier, for resp’t.
   INGRAHAM, J.

The court dismissed the complaint in this ac tion upon the pleadings, the motion being upon the ground that the complaint does not state facts sufficient to constitute a cause of action. The court seems to have granted the motion upon the proposition that counsel who places a cause upon the short-cause calendar should at least have his complaint explicit, and leave no room for doubt as to its meaning. The only question is as to whether or not the complaint alleges a good cause of action in favor of the plaintiff against the defendant. The question presented is the same as upon a demurrer to the complaint on the ground that the same does not state facts sufficient to constitute a case of action. Upon such a motion, the complaint will be deemed sufficient whenever the requisite allegations can be fairly stated from all the averments, although the statement of them may be argumentative and the pleadings deficient in logical order and technical language. - The pleading will be held to state all the facts that can be implied from the allegations by reasonable and fair intendment, and facts so impliedly averred are traversable in the the same manner as though directly stated. See Sage v. Culver, 147 N. Y. 245; 69 St. Rep. 524.

Assuming that the cause was brought by the plaintiff in a representative capacity, as executrix of the estate of Francis Spies, deceased, we have to determine whether or not any cause of action is alleged in favor of the estate. The action is brought upon the ground stated, between the plaintiff as executrix and the defendant. It seems to be settled that a promise made to an executor to pay a debt due to the decedent can be enforced by the executor either individually or in his representative capacity. The case of Bingham v. Marine Nat. Bank, 41 Hun, 378; 2 St. Rep. 638; affirmed by court of appeals in 112 N.Y. 661; 20 St. Rep. 292, is ample authority for that proposition. That was an action to recover upon a certificate of deposit, payable to the order of the plaintiffs as administrators of the estate of Moulton, and it was held that plaintiffs were at liberty, therefore, either to bring the action in their own names as individuals, or as representatives of the estate. On appeal to the court of appeals the court say:

“If therefore, the plaintiffs are regarded in their different capacities as different persons, no other result could be reached. The certificate of deposit, when produced upon the trial, bore the general and unrestricted indorsement of the payees. It was good, therefore, either as the. property of the plaintiffs as individuals, or as administrators, under the letters issued in New York. However sued, the money recovered would belong to the estate, and whether the description of the' person be rejected as surplusage, or retained, could in no manner be important.

The question is whether the facts stated in this complaint, including those that could-be implied from the allegations by reasonable and fair intendment, allege a cause of action in favor of the estate of which the plaintiff is executrix. The material allegations, after alleging the appointment of plaintiff as executrix, are that the testator, before his death, was a merchant doing business in New York; that he died on the 21st day of June, 1893; that on or about the 1st day of August, 1893, the plaintiff, as’ execu-, trix aforesaid, and the defendant, Heinrich Miehelsen, came to an accounting; that, at such accounting, defendant was found to be indebted to the plaintiff, as executrix, in the sum of $4,334.33, upon an open account for advances, interest, and' merchandise, which amount defendant promised to pay; .and that there is now due and owing to the plaintiff, as executrix of the said last will and testatment, the said sum and interest. It seems to us that this can be fairly said to be an allegation that the open account was one existing between plaintiff’s testator and the defendant at the time of the testator’s death, and that the promise that was made to the plaintiff as executrix was a promise to pay the balance of that account existing in favor of the plaintiff’s testator against the defendant. The accounting was alleged to be between plaintiff as executrix and defendant, that on such accounting the defendant was found to be indebted to the plaintiff as executrix, and° that there is now due and owing to the plaintiff as executrix a sum of money. If the contract had been an individual one between the plaintiff and the defendant, an accounting would have been between the plaintiff individually and defendant, and not between plaintiff as executrix and defendant. The fair intendment of this allegation is, we think, that the account that existed was one that existed between the estate of which plaintiff was the representative and the defendant, and not an accounting in which the defendant was indebted to the plaintiff individually, and that promise having been made upon such accounting, was a promise to pay to the estate which, under the authority above cited, the plaintiff could enforce in her representative capacity as against the defendant.

No question is here presented as to the right of this defendant’ to offset any judgment that he should have, either as against the plaintiff individually, or as against the estate of which plaintiff is the representative. There can be no doubt that, had the complaint alleged that the defendant was indebted to the plaintiff’s testator at the time of his death, to any amount, upon an open account, and that, subsequent to the death, on an accounting as between the plaintiff, as executrix, and the defendant, the sum, named had been found to be due, which the defendant ha<$ promised to pay, the plaintiff could have maintained this action in her representative capacity; and that, we think, can be said to be fairly alleged in the complaint as it stands.

We think, therefore, that the judgment should be reversed, and a new trial ordered, with costs to the appellant to abide the event,

All concur.


author: PER CURIAM.

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

      (Supreme Court, Appellate Division, First Department,

      Filed March 6, 1896.)

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

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


author: BARRETT, J.

text:
    Henry Lawrence et al., as Administrators, etc., Resp’ts, v. Niagara Fire Insurance Company, App’lts.

      (Supreme Court, Appellate Division, First Department,

      Filed March 6, 1896.)

    1. Executors—Insurance—Parties.
    Administrators may sue to recover on a policy of fire insurance issued to their intestate, though the loss is of both real and personal property.
    2. Insurance—Appraisers.
    Where a policy proves that a loss shall not become payable until sixty days after notice and proof of loss, “including an award by apprisers when appraisal has been required,” it does not mean the ascertainment resulting from the award of appraisers where no such appraisal has been required.
    3. Same.
    Where an appraisal has been required and made, the sixty days run from receipt of award by the company in connection with the proofs of loss.
    4. Same.
    But, where an apraisal has not been required, the sixty days run from the receipt of the proofs of loss, together with any ascertainment or estimate which may have been arrived at between the insured and the com- . pany.
    6. Same.
    If no such ascertainment or estimate had been arrived at, and no appraisal has been made, then the sixty days run from the receipt of the proofs of loss.
    B. Insurance—Construction.
    The words in the policy “an appraisal has been required,” means "required by either party.”

      Appeal from a judgment in favor of plaintiff.
    P. 0. J. De Angelis, for app’lt; S. Hanford, for resp’ts. ,
   BARRETT, J.

This action was properly brought by the ad-' ministrator and administratrix of the deceased. They were his “legal representatives,” within the meaning of the law. The defendant claims that they were only his legal representatives as to the personality, and that the heirs are his legal representatives as to the real estate. Upon this it contends that two actions should have been brought, one by the heirs for damage to the real estate, and one by the plaintiffs for damage to the personality. This contention fails to distinguish between the right of action proper and the right to share in the recovery. If the policy had simply named the deceased, and stopped there, the right of action would have passed upon his death to his executor or administrator. The provision of the policy that, wherever the word “insured” occurs therein, “it shall be held to include the legal representatives of the insured,” was nothing but a recognition of the ordinary rule* So far as the contracting parties were concerned, there was no intention to vary the rule in regard to the vesting of the right of action upon the death of the insured. As between them the real estate incident was of no especial importance, and it was quite immaterial whether the loss in case of fire should be paid directly to the heirs, or to the legal representatives (as ordinarily understood) in the right of the heirs.

The contract as to both real estate and personality was with* William H. Lawrence. The plaintiffs are his successors. As such, the defendant’s contract obligation runs to them directly! They can maintain the action because óf this direct contract obligation. They so maintain it in their own right as to the personality, in the right of the heirs as to the real estate. Wyman v. Wyman, 26 N. Y. 256. They may be regarded, as was said in the latter case, as parties to whom, as trustees of an express trust, the right to sue in their own name is preserved under the Code. Thus, the contract right and the insurable interest are interwoven. What equity may require the plaintiffs to do with the recovery is another question. The heirs can take care of themselves. What the defendant must do is to comply with its contract, namely, pay the loss to the persons to whom its legal obligation thereunder runs.

The defendant makes the further point that an appraisal of the damage occasioned by the fire was a condition precedent to the right of the insured to maintain an action to recover for the loss. The policy provided that the loss or damage should be ascertained or estimated according to the actual cash value of the property at the time the loss occurred, and that “said ascertainment or estimate" should be made by the insured and the company, or, if they differed, by appraisers. Provision is subsequently made for tlie selection of appraisers and an umpire. There is also the further provision that the loss shall not become payable until sixty days after the notice, ascertainment, estimate, and satisfactory proof of the loss herein required have been received bv this companv, im eluding an award by appraisers when appraisal has been required.” The ascertainment here first referred to is that previously contemplated, namely, the ascertainment or estimate to be made by the insured and the company. . It does not mean the ascertainment re-' suiting from -an award by appraisers where no such appraisal has been required. Where an appraisal has been required and made, the sixty days run from the receipt of the award by the company in connection with the proofs of loss. But, where an appraisal has not been required, the sixty daj-s run from the receipt of the proof of loss, together with any ascertainment or estimate which may have been arrived at between the insured and the company. If no such ascertainment or estimate has been arrived at, and no appraisal has been made, then the sixty days run from the receipt of the proofs of loss. The construction placed by the defendant upon the words “ when appraisal has been required ” is strained and unnatural. It is contended that it means “ when appraisal has been required by the terms of the policy.” But why say this if appraisal is always required by the terms of the policy ? The true construction is the obvious one, namely, that it means “required by either party.” That is the ordinary sense of the words, and expresses the plain intention of the parties. They clearly so un- , derstood it, for we find the agent threatening that, unless the plaintiffs should accept $2,700 as a compromise, he would exhaust every condition of the policy, and insist upon having an appraisal. It is conceded, however, that this threat was not carried out, and that the defendant never demanded an appraisal. The defendant’s conduct throughout indicated that no appraisal was desired. The proofs of loss were furnished to it on the 13th day of September, 1892, in the form prescribed by its agent. Upon the 26th of the same month, this agent informed the administrator that the proofs of loss were not legally verified. No other objection was then made. Subsequently, in answer to.tne administrator’s request for information as to the real difficulty, the agent replied that the verification had no “venire.” Four weeks later he wrote again, stating his use of the word “ venire” was a curious blunder, and that he meant to use the word “venue.” This trifling proceeded without a word of substantial objection to the proofs of loss or request of an appraisal, until finally, at the end of November, the plaintiffs’ counsel demanded immediate payment, and suggested that, if the defendant desired to contest the claim, it should name attorneys upon whom papers could be served. Even then no objection was made to the plaintiffs’ proceedings or claim, and the general agent replied that the defendant had no desire for any legal contest.

The claim that the action was prematurely brought is without merit, and the judgment should be affirmed, with costs.

All concur.


author: BISCHOFF, J.

text:
    Stephen A. Whisten, as Administrator, etc., App’lt, v. William Brengal, Resp’t.

      (Supreme Court, Appellate Term, First Department,

      Filed Feb’y 26, 1896.)

    1. Negligence—Employe.
    Where money is found by an employe lying in the safe in which his employer ordinarily kept articles of value to his business, and the safe is habitually maintained unlocked at all times by the employer, the employe’s duties call for ordinary care in preserving the fund in question, but such “ ordinary care ” is the degree of caution which a reasonably prudent person would exercise under the existing circumstances, and no more.
    3. Same—Burden of proof.
    The presumption in favor of the performance of duty cast the burden of proof with regard to the employe’s negligence, his omission to exercise ordinary care, upon the employer.
    8. Same.
    Under the circumstances, in this case, there was no negligence upon the employe’s part in that he did not bank the fund, rather than leave it as it was found in a receptacle which had neither an available combination lock nor a key.
    Appeal from a judgment in favor of defendant.
    Wm. North, for app’lt; I. N. Williams, for resp’t. ’
   BISCHOFF, J.

The defendant, an employe of one William Whisten, the plaintiff's intestate, was sued for the loss of $150, which sum came into the defendant’s possession while acting ,as the manager of Whisten’s business, during the latter’s illness, which resulted fatally. The sum in suit was discovered by the defendant lying in the safe in which his employer ordinarily kept articles of value to his business, the safe having been habitually maintained unlocked at all times by the latter, who had asserted that he had11 honest people around here,” alluding" to the premises in which the business was conducted. The defendant notified his employer of this discovery of the money, which he had replaced in "the portion of the safe where it had lain. Some days subsequently it was missing "from the safe, and upon the defendant’s failure to pay the equivalent over to the plaintiff upon a demand máde after Whisten’s death, this action was brought to charge the defendant either upon an admission of liability or for negligence as a bailee.

With regard to the admission of liability there was a direct conflict of evidence, resolved, and not, ás we may say, improperly, in the defendant’s favor, but the plaintiff contends that there was negligence upon the defendant’s part in that he did not bank the fund, rather than leave it as it was found in a receptacle which had neither an available combination lock nor a key. We are quite satisfied,-however, with the manner in which the case was .determined below. The defendant’s duties, of course, called for ordinary care in preserving the fund in question, but'that 11 ordinary care ” was' the degree of caution which a reasonably prudent person would exercise under the existing circumstances; sind no more. The presumption in favor of the performance of duty cast the burden of proof with regard to the defendant’s negligence, his omission to exercise ordinary care, upon the plaintiff (Claflin v. Meyer, 75 N. Y. 260; Bailey, “Onus Probandi,” 31); and the record before us is destitute of all support in that respect. Here the defendant but followed in the footsteps of his employer, whom naturally he would imitate in the temporary conduct of the business devolving upon him. His emyloymeut \$ould not ordinarily call for greater circumspection than the employer applied to the security of bis possessions. We cannot infer from the record that the employer’s sense of security was of a Utopian or eccentric character, because the evidence fails to apprise us that the premises in which the employer’s business was conducted, and the safe contained, were more than ordinarily exposed to the successful efforts of persons affected with marauding proclivity. The deposit of the money in bank was but one of many means of securing the fund against theft, and it does not follow that the defendant was guilty of negligence, because he did not resort to the particular means of security preferred by the plaintiff, but, instead, followed the example of his employer. Without knowing more of the premises where the safe was contained than the plaintiff cared to show upon the trial, we cannot say that the defendant omitted the caution of an ordinarily prudent person, and so that, as matter of law, he was negligent.

Ho exceptions were urged upon this appeal, and upon the evidence, the judgment is affirmed, with costs.


author: BEEKMAN, J.

text:
    Peter B. Olney, as Receiver, etc., Pl’ff, v. Matthew Baird et al., Def’ts.

      (Supreme Court, New York Special Term,

      Filed December, 1895.)

    1. Corporations—Insolvency—Preference.
    Transfers made by a coporation, at the time when it is not only insolvent,, but is known to he so by its officers, are preferential and therefore void.
    3. Same.
    The suffering of a judgment by an insolvent corporation, with the intent of giving a preference, is within the prohibition of the stock corporation law as amended by chapter 688 of 1892.
    8. Same.
    The fact that such judgment was duly recovered in the courts of another state, does not place it beyond the reach, of any attack in this state.
    4. Same. ^
    A party thereto, who has profited by the opportunities of the judgment, if before the court, can be compelled to account for all he has obtained under it.

      Action by a receiver to recover property of the corporation acquired by defendants under a judgment recovered against such corporation.
    Samuel A. Noyes and George C. Comstock, for pi'll; Joseph Fettretch, for def’ts.
   BEEKMAN, J.

The Sargent Granite Company, a business corporation, duly organized and incorporated under the laws of the state of New York, having become insolvent, an action was instituted against it on behalf of certain of its judgment creditors for a sequestration of its property, and in that suit the plaintiff has been appointed receiver. No assets have come into his hands and he now brings this action against the defendants for the purpose of recovering the property of the corporation, of which the defendant Matthew Baird claims ownership under the following state of facts: On or about; April 7, 1890, the Sargent Granite Company was organized as a corporation under the general manufacturing act (Laws 1848) of the state of New York. Its capital was fixód at $20,000, represented by 200 shares, of which all but five were issued for property which was transferred to it. In order to obtain money with which to carry on its operations, the company borrowed from one C. F. Schramme the sum of $10,000 and for the purpose of securing him gave him a bill of sale of all its property, which bill of sale, although absolute in form, was intended by the parties to operate only as a chattel mortgage. Mr. Schramme also held about 100 shares, or one-half, of the capital stock of the company. Being desirous of severing his relations with the company, he entered into negotiations with the defendant Matthew Baird, and it was finally agreed between them that Baird should take a transfer and assignment from Schramme of his stock and the indedtedness of the incorporation to him upon payment of the amount of said indebtedness, which was then' about $9,900. The understanding was that Mr. Baird should, take the position of Mr. Schramme in the company, with all the rights, as against it, which the latter then enjoyed. This transaction was consummated about the 27th day of August, 1890, and.1 the stock.in question was transferred to Baird, and the bill of sale1 was also delivered to him at the same time. No formal assignment of the latter was ever executed, and whatever view may be taken in respect to its validity in law as a chattel mortgage, it was sufficient in the hands of Schramme, and under the arrange- . ment between himself and Mr. Baird, also in the hands of the, latter, 'to constitute at least a preferential equitable charge uponc the assets of corporation in favor of the holder. At that time the, corporation was not insolvent,- nor had it refused to pay its notes, or other obligations when due. The determination of the effect of this bill of sale, however, is not within the issues of this^ action. The transaction was the outcome of an understanding which had been arrived at betwe.en Mr. Baird and Frank T. Sargent, who» was then the president of the corporation. The understanding was that Mr. Baird should acquire Mr. Schramme’s interest, as* above stated; that he would also, from time to time, advance such money as might be needed for the operations of the company; that all of the products of the company should be consigned to him ; that the proceeds of the sale of such products should be collected by him; and that interest on balances should be credited or allowed, as the case might be, at the rate of 6 per cent, per annum. It is claimed by Mr. Baird that, in addition to this, it was also understood and agreed that the company, for the purpose of securing his advances, would from time to time give him bills of sale of everything it had, and assignments of all moneys due it upon contracts. This, however, is denied by Mr. Sargent. I feel constrained to accept his version of the matter; among other reasons, because it seems more in accord with the probabilities of the case, as well as with the subsequent conduct of the parties» Although Mr. Baird, during a period of some 20 months alter he came into the company, had made advances which brought the company into debt to the extent of something over $100,000 no bills of sale were made to him, nor apparently did he request that they should be given; and subsequently, when such transfers were made in some cases under resolutions passed by the trustees reciting the reasons for their action in that, regard, no reference of any kind was made to any previous understanding or agreement such as the defendant Baird claims to have existed. It is not necessary for me, therefore, to consider whether such an agreement, which it is conceded never received any formal sanction by vote of the trustees, would have been valid.

Immediately upon Mr. Baird’s becoming a stochholder of the corporation, he was elected a trustee, and also, treasurer. Ho bank account, however, was opened in the name of the company, but all of its moneys, from whatever source, were received by him, and deposited to his individual account. A ledger account was kept by him with the company, in which he charged it with the moneys which were advanced by him, and which were from time to timé paid out to meet the current expenses of the corporation, and credited it with the moneys collected by him on its account. It may be said in passing that Baird had peculiar facilities for handling the product of the company, in view of the fact that he was a contractor doing a very extensive business in this city with the different departments of the city government, which required the use of granite either for the paving of streets or the construction of piers and bulkheads on the water front. In the month of March or April, 1882, he seems to have become alarmed about the financial condition of the company, and requested Mr. Frank T. Sargent, who was still its president, to execute to him a bill of sale of its property, to be held by him as security for his debt Mr. Sargent testifies that at first he refused to do so, claiming that it would be unfair to the other creditors; but that, upon threat being made by Mr. Baird to wind the company up, he yielded, and the paper was accordingly executed and delivered, and on or about the 9th day of May, 1892, was recorded in the clerk’s office in the city of Belfast. m the state of Maine. Mr. Baird denies that he made any such threats. Some three days prior to the date of this bill of sale a special meeting of the trustees of the company was held, at which the resignation of Mr. Baird as treasurer and trustee was received and accepted, but no other action of any kind was taken, nor was any authority whatsoever given to the president to make the . bill of sale in question. The resignation of Mr. Baird was obviously prompted by prudential motives, in view of the fact that his security under the bill of sale would have been very much impaired, if not entirely destroyed, by the' fact of his being an officer of the company at the time of its execution and delivery. On the 18th day of May following, and for the same reason, he took the further step of divesting himself of all the stock in the company, which he transferred to one George L. Harrington. During all the time that Mr. Baird was connected with the company, either as stockholder or creditor, Mr. Harrington was his superintendent in his personal business; and when the stock was so transferred to him he was told by Baird that he could have whatever there was of it after the indebtedness of the company to him (Baird) had been paid, and at the same time he directed him, out of the shares so transferred, to give nineteen shares to William J. Clark, twenty shares to one William H. Keyes, and ten shares to one Babcock. Clark was Baird’s confidential clerk and bookkeeper, and Keyes was a superintendent in the employ of James Baird, who was a brother of the defendant Matthew Baird. According to Mr. Baird's statement, the understanding between them was that they were to become absolute owners of the stock in question, and were entitled to get out of it whatever might be coming to the stockholder. No consideration of any kind passed upon the transfer, nor is it claimed that it was anything more than an absolute gift of the stock in question to these persons. I shall have occasion hereafter to refer to this transaction as somewhat persuasive evidence of a conviction on the part of Baird that the company was hoplessly embarrassed at the time. On the day following this transfer Mr. Harrington was elected a trustee to fill the vacancy created by Baird’s resignation. At the same meeting a resolution was adopted that all moneys due or to become due the company from Mr. G. H. Mitchell, of Chicago, be assigned to the defendant Matthew Baird, and also that all moneys due or to become due from one Gallagher should also be assigned to him. On the 24th day of June, at a meeting of the trustees, a motion was made by Mr. Harrington, which was unanimously carried, “to transfer the lease of the Mount Haegen granite quarry to Matthew Baird as collateral security for money due him by the Sargent Granite Company, said lease to be transferred back to the company on their paying off said indebtedness.” Again, on the 28th day of July, a further meeting of the trustees of the company was held, at which a motion was made by Mr. Harrington, which was carried, apparently without opposition, “that the president be authorized to give a bill of sale covering all stone, manufactured and unmanufactured, and any personal property not already covered by previous bill of sale, to Matthew Baird, as security for moneys advanced to the company.” No other meeting seems to have been held until the 29th day of August, 1892. In the meantime, and on the 25th day of August, 1892, a meeting of the stockholders of the company was held, at which the following trustees were elected: Francis T. Sargent, W. Otis Sargent, William J. Clark, William H. Keyes, and George L. Harrington, and on the 29th day of August the trustees thus chosen met and elected George L. Harrington president of the company, arid ■ William K. Keyes vice president, and William J. Clark secretary and treasurer. At the same time a resolution was passed, which, after reciting that the Sargent Granite Company was indebted to Matthew Baird in a'sum exceeding $50,000 for monej’s paid by him to the campany, and for his account and benefit, and that the company, for the better securing of such indebtedness, had, through its president and secretary, made and delivered to Baird the bill of sale above referred to, bearing date on the 19th day of April, 1892, ratified and confirmed the action of said officers, and declared that such paper should have the same effect as if said officers had been authorized by the board of trustees to execute and deliver the same. A further resolution was also passed, which, after reciting that since the 19th day of April, 1892, Baird had paid out large sums of money on account of the company, for which the company was still indebted to him, provided that for the better securing of the entire indebtedness the company should make, execute, and deliver to him “full and complete bills of sale of all its personal property, goods, and merchandise, where-ever situated, including that described in the bill of sale aforesaid of April 19, 1892, as well as such as has come into its ownership since that date,” and the president of the company was directed to execute and deliver the same to him. On the 23d day of September, 1892, the trustees again met, and a resolution was passed which recited that the company had entered into a contract with one Patrick Gallagher, and that in the performance of said contract by the company Matthew Baird had advanced and loaned moneys to said company, and also that the company was indebted to Baird in large sums of money; and it was thereupon resolved that all moneys then due or thereafter to become due to the company under said contract should be assigned and transferred to Baird as payment on account of the indebtedness of the company to him, and the president of the company was authorized and directed to execute and deliver such an assignment. At the same meeting another preamble and resolution was also adopted, under which the lease to the company, made on the 6th day of June, 1891, of certain real estate, which will be referred' to hereafter as the “ Mount Haegen Quarry,” was surrendered and canceled. This resolution recites that it was deemed for the best interests of the company that such action should be taken, and the treasurer of the company, Mr. Clark, was authorized and empowered to cause the necessary instrument of cancellation to be made, executed, and delivered to the lessors. A further resolution was also adopted, which recited a contract between the company and one G. H. Mitchell for furnishing him with certain granite; that in the performance of said contract by said company Matthew Baird had advanced and loaned, and was about to advance and loan, moneys to said company ; and it-was thereupon resolved that all moneys due or to become due under said contract should be assigned and transferred to said Baird on account and in part payment of what was then due from said company to him, and the usual direction was given to the officers of the company to carry the resolution into effect. The next and the last meeting of the board of trustees of which any record is found in the minute book was held on the 9th day of November, 1892, and the following business was transacted at that meeting.: The resignation of Francis T. Sargent as trustee was presented and accepted, and one George E. Babcock was elected to fill his place. A resolution was passed under which, after reciting that numerous actions had been brought against the company, both in this state and the state of Maine, it was resolved that Messrs. Harriman and Fessenden be retained to act for and on behalf of the company in all of said actions, with full.power to act in such manner as they might deem best for the interests'of the company. Two other resolutions were passed, one forbidding Francis T. Sargent, and the other forbidding Winthrop 0. Sargent, from interfering or intermeddling with the business or affairs of the company.

All of the transfers seem to have been executed in conformity with these various resolutions, except that, instead of the lease of the Mt. Haegen quarry being assigned as authorized at the meeting of June 24, 1892, it was surrendered under the resolution of September 23, 1892. The motive of the company in surrendering this lease becomes apparent when we consider the action taken by Mr. Baird in the matter. On or about the 27tn day of September, 1892, some four days after the meeting of the trustees at which the resolution was passed canceling the lease, Mr." Baird went to Bangor, and had an interview with Capt. Goodwin, who was one of the lessors.' Frank T. Sargent was present at the time, and at that interview Mr. Baird requested Capt. Goodwin to accept the surrender of 'the lease, and to make out a new lease of the property, upon substantially the same terms, to him individually. There was some "objection made to this on the ground that Mr. Frank T. Sargent held an option for the purchase of the fee of the property, but this difficulty was disposed of by a cancellation of the option, and the surrender of the lease was accepted, and a new/lease made to Baird in conformity" with his request; the latter at -the same time paying to Capt. Goodwin the rent under the old lease, which" was very much in arrears, and also an additional sum representing another indebtedness of the company to him. At the same time, and apparently as an inducement to Mr. Sargent to withdraw his opposition to the transaction, a letter was then and there written to him by Mr. Baird, which he dated September 27, 1892, and which contains the following statement :

“ Being about to take possession of the quarry at Mount Haegen mine, and having expended considerable money for tools, derricks, horses, cattle, machinery, boilers, railroads, etc., I will agree with you, if you want to work with me in the same under my direction from this date to January 1st, 1894, and if the quarry will by that date be able to earn money enough to pay up to me all the moneys with interest and expenses expended by me before this date and up to the date of January 1st, 1894,1 will then agree to ti'ansfer to you one-third interest I have in the above quarry, tools, machinery, etc.”

Mr. Sargent’s explanation of this is that he intended to make this arrangement for the benefit of the stockholders. Whether this explanation be true or not, it is not relevant to the decision of the case. Its value is found chiefly in its bearing upon the intent of the defendant Matthew Baird in securing the lease in question in his own name.

Down to this point it will be apparent from the facts which I have stated that, commencing with the 19th day of April, 1892, and ending with the 27th day of September, 1892, the defendant Matthew Baird had acquired complete control and dominion over every asset belonging to the company ; the only property which had belonged to it being a quarry known as the “ Oak Hill Quarry,”- which, according to Mr. Baird’s statement, proving to be unprofitable, the company had virtually abandoned. During all of this time, then, the situation was .this: Every dollar of money which came in on account of contracts which the company had, or on account of its products, was received by Mr. Baird, who charged himself with it in his account with the company. All products of the company were assigned to him, and were under his complete control; and all other property of the company had been placed under the dominion by the action of the trustees in sanctioning the various papers which had been executed for the purpose of vesting him with the title to the property of the company. There was no farther possibility of free agency on the part of the trustees, and the corporate functions of the company were virtually in a condition of utter paralysis. The majority of the trustees were either in his employment or otherwise under his influence; and the fact that they officially existed simply for recording his will, protecting his interests, and serving his purposes abundantly appears from the fact that no business, with one or two trifling exceptions, was transacted at any of their meetings, except the diligent divesting of the corporation of its property, in order to promote his interests. Although from the 16th day of April he had ceased to be a trustee of the corporation, and from the 18th day of May had also ceased to be a stockholder in the same, he stood for the company in all of the transactions which were had in the line of its business, gave directions in regard to its work, communicated instructions for the reduction of its working force, and in short, managed and controlled its business, financially and otherwise, as if he had been an officer of the corporation vested with plenary powers to do as he pleased in the direction of its affairs. It is not difficult, in view of all this, to come to the conclusion that Mr. Baird, as far back as the month of March or April, 1892, was aware that the company was insolvent, That such insolvency existed at that time anil at all times subsequent thereto is, I think, plainly apparent upon the proofs. The indebtedness of the company to Mr. Baird in April exceeded $100,000 and apparently rapidly increased from that time on until the judgment hereinafter referred to was recovered by him against the company in the supreme judicial court of Maine. Both Frank T. Sargent and Winthrop O. Sargent swear that during this period Mr. Baird stated to them that the company was insolvent. They also stated that bills had been incurred in connection with the equipment and operation of quarries which had not been paid, and which were being demanded by the creditors, and that in some instances suits had been brought for the purpose of enforcing these claims. Some of these charges were ultimately paid by Baird, and no doubt augmented the rapidly increasing indebtedness of the company to him. According to the estimate given by the Sargents, the assets of the company during this period were worth about $55,000 or $60,000, while its indebtedness including Baird’s claim, amounted to between $125,000 and $150,000; and of this sum $10,000 or $12,-000 were represented by the book accounts due by the company and by arrears of rent, under the leases of both quarries, amounting to $5,000 or $6,000.

Without going into details, it is sufficient to say that the proofs taken as a whole, including the correspondence which passed between Mr. Baird and others in reference to the affairs of the corporation, satisfy my mind not only that company was insolvent at the time these various transfers were made, but that the fact was known to the officers of the company as well as to Mr. Baird, and that the transfers in question were made in contemplation of insolvency, and with the intent to give Baird a preference over the other creditors of the corporation. Mot the least significant fact tending to show what was in his mind as early as May, 1892, is the transaction by which he gave away his ninety-nine shars—nearly one-half of the capital stock of the corporation. Mo explanation of this is afforded beyond his desire to divest himself of his relation as stockholder to the company. Mo reason is given'why he should have been so "benevolent to those to whom the stock was tranferred; nor is there any other explanation of his act worthy of acceptance, except that he knew the stock was worthless, owing to the financial condition of the company, and that his surrender of it, for the purpose of relieving his efforts to secure himself from a well-founded ground of attack, involved no sacrifice of anything substantial on his part. In reference to the transaction by which the company surrendered the Mt. Haegen lease, gnd a new lease was taken by Baird in his own name, it is fair to say that on the 8th day of September, 1892, prior to the adoption of the resolution in question by the company and the surrender of the lease pursuant thereto, Mr. Baird wrote a letter to Frank T. Sargent, in which, among other things, he says:

“In making out the lease of Mount Haegen, have Capt. Goodwin make it out to me, and I will settle up his account to date with yon, and will file with the Sargent Granite Company writings. When the debt of the Sargent Granite Company is paid, 1 will transfer the lease over to the company. This, I think, I am, entitled to receive as collateral security, with any other things the company have, to secure me for money advanced by me to said company.”

While this letter shows that the purpose of the transaction was through this means, if possible, to secure the ultimate payment of his debt, and thus in a sense not to misapply or embezzle its property, at the same time it gives emphasis to the complete and exclusive dominion which lie.had assumed over the property of the corporation, of which the quarry and its appurtenances substantially constituted all that was left.

About the 10th day of November, 1892, Mr. Baird determined to take actual possession of the Mt. Haegen property, and to deprive the company of whatever semblance of control over or management of its property had remained to it. He went to the quarry, accompanied by his attorney, who announced to the assembled workmen, in Mr. Baird’s presence, and as his spokesman, that for all practical purposes the Sargent Granite Company had ceased to exist; that Mr. Baird had the lease of the quarry, and that from that day on the men would be in his employ, and that he would be responsible for their wages. From that time forward the business which had formerly been transacted by the Sargent Granite Company or in its name was transacted. by and in the name of Matthew Baird. Shortly after this, actions were commenced against the company by other creditors, attachments were procured in the state of Maine, and the workmen, whose pay had been largely in arrears, commenced lien suits for its recovery, some 120 proceedings having been instituted for this purpose. Doubts having been expressed as to the validity of the various bills of sale and assignments which had been made by the company to him, Mr. Baird was advised for his protection to institute an action against the company to recover the amount of his debt, and this was brought about and accomplished in the following manner: At that time Mr. George F. Harriman, as a member of the firm of Harriman & Fessenden, was the attorney for both the Sargent Granite Company and Mr. Baird. Acting upon his instructions, his brother, Mr. James Harriman, an attorney residing in Belfast, in Maine, commenced an action in that state against the company in the name of Matthew Baird, and caused an attachment to be issued therein and levied upon all of the property in the state which had belonged to the company, and which had been included in the bills of sale which had been given to Mr. Baird. It was a matter of considerable importance to the latter that personal service of process should be made upon an officer of the corporation in time to have the caseheard at the January term of the supreme court of Maine. To that end Clark, the secretary of the company was instructed by Mr. Hcrriman and Mr. Baird to go from the city of New York to Belfast for the purpose of having the summons in the action served upon him as an officer of the company, and Mr. Baird gave him the money for the expenses of the trip. Following the directions which had been so given Mr. Clark went to Belfast, and immediately upon his arrival waited upon Mr. James Harriman, who was the attorney for Baird in the suit, and was informed by him that the sheriff would shortly call and make the service, which was done; and he returned to New York and reported to Mr. George Harriman and to Mr. Baird what had taken place. Before he left Belfast however, he placed the papers which had been served upon him in the hands of an attorney by the name of Thompson, and told him to take charge of them for the company. He had never met Thompson before, but was introduced to him upon that occasion by Mr. James Harriman. Thompson appeared in the action for the company. There was no contest, however, of the claim, and it appears that he was paid for his services by Mr. George Harriman, who, in turn collected the.amount from Mr. Baird. On the opening of the January term there was formal proof made by Baird before an auditor, who reported as due the full amount of the claim, but, upon the intervention of one or more creditors of the company, the court sent the report back to the auditor, who again made a report differing but little, if any, from the first. Whereupon judgment was entered on the 21st day of January, 1893, in favor of Matthew Baird and against the company for the sum of $146,-618.65 and the taxable costs amounting to $745.66. This recovery simply intensifies the conviction that during the year 1892 the company was utterly and hopelessly insolvent. On the 25th day of January, 1893, execution was issued upon" the judgment, and the attached property was sold to the defendant William P. Baird for a sum not exceeding in all about $2,000. It was sold subject to the lien attachments, amounting to about $20,000, which it appears were subsequently paid off by Matthew Baird. It was also sold subject to attachments which were obtained in other suits. The proofs arc silent as to what became of these other attachments. The sheriff testifies that he was indemnified upon the sale, and that he had been advised by competent counsel that the attachments were invalid. At all events, we find as the crowning act of this series of transactions between the company and Baird a sale of all its property for a sum of money which seems absurdly inadequate,which was applied exclusively upon its indebtedness to Baird who was the actual purchaser at the sale, and who now claims absolute title to all the property so sold. William P. Baird is the son of Matthew Baird, and, although title to the property so sold was taken in .his name, it appears, and in fact is admitted by the father, that he is the real owner of the property, and responsible for its appropriation and use. ■

The company having been thus stripped of all its property, and being unable to pay any of its creditors, has passed into the hands of a receiver, and this action has been brought for the purpose of setting aside said transfers so made to Baird, compelling him and William P. Baird to deliver over to the receiver all of the property obtained by him under the execution sale, and to account for such property and the profits arising therefrom. Section 48, c. 564, Laws 1890, known as the “Stock Corporation Law,” provides, among other things, in reference to such a corporation, that “no officer, director, or stockholder thereof shall make any transfer or assignment of its property, or of any stock therein, to any person in contemplation of its insolvency; and every such transfer or assignment to such officer, director or other person, or in trust for them or for their benefit, shall be void,” The courts have construed similar words in another statute to import not only insolvency that was imminent or that was expected to arise at some future period, but also a condition of present insolvency. Robinson v. Bank, 21 N. Y. 406; Paulding v. Steel Co., 94 N. Y. 334. In order that á cause of action may arise under this statute, two things are essential:

“There must be a transfer or assignment of property, and this must be done in contemplation of the insolvency of the corporation. Insolvency has been differently defined in different courts. By some it is said to be a condition in which the value of the assets is less than the amount of liabilies. By others it is said to be a general inability to pay obligations as they become due in the regular course of business. Many a business is at times insolvent, according to the first of these uses of word, although it is prosperous, and no one thinks for a moment that any necessity will arise for applying its property to the payment of its liabilities by pro-process of law. There is no necessity for the law to interpose in behalf of its creditors so long as the corporation is able to meet its obligations promptly. The use of this word, in the statute under consideration, is the latter use. Brouwer v. Harbeck, 9 N. Y. 589; People v. Gaslight Co., 3 How. Prac. (N. S.) 137. The statute is meant to apply when it becomes apparent to those assigning or transferring its property that the corporation is in the condition described in the latter of these definitions, so that the question confronts them: How are the assets of the corporation to be used, not in carrying on its business, but in meeting its obligations?” French v. Andrews, 81 Hun, 272; 62 St. Rep. 759.

I do not think that upon the facts of this case there can be much doubt that the Sargent Granite Company, at the time when these preferential transfers were made, was not only insolvent, but was known to be so by its officers, and that it was in view of that condition, and in contemplation of such insolvency, within the meaning of the statute, that the transfers in question were made. But, had it not been for an amendment of the statute, a very serious question would have arisen whether the judgment recovered in the state of Maine by the defendant Matthew Baird against the corporation could have been successfully attacked. Until the passage of chapter 688 of the Laws of 1892, amending the stock corporation law, the decisions of the c.ourts seemed uniformly to uphold acts on the parts of officers of insolvent corporations which were plainly intended to faciliate the efforts of creditors to secure preferential liens by judgment. Varnum v. Hart, 119 N. Y. 101; 28 St. Rep. 262; French v. Andrews, 145 N. Y. 441; 65 St. Rep. 384. But chapter 688 of the Laws of 1892, which took effect on the 18th day of May, 1892; amended section 48 of the stock corporation law, above referred to, so that the portion germane to the present discussion was then made to read as follows:

“Ho-conveyance, assignment or transfer of any property of any such corporation by it or by any officer, director or stockholder thereof, nor any payment made, judgment suffered, lien created or security given by it or by any officer, director or stockholder when the corporation is insolvent or its insolvency is imminent, with the intent of giving a preference to any particular creditor over other creditors of the corporation, shall be valid. Every person receiving by means of any such prohibited act or deed any property of the corporation shall be bound to account therefor to its creditors or stockholders or other trustees.”

It will thus be seen that the suffering of a judgment by an insolvent corporation, with the intent of giving a preference, is brought within the prohibition of the act, the legislature having been, doubtless, influenced in their action by reason of the decisions to which I have referred. This amendment has undergone judicial construction in the case of Milbank v. De Riesthal, 82 Hun, 537; 64 St. Rep. 199. At page 544, 82 Hun; 64 St. Rep. 199, Mr. Justice Parker, delivering the opinion of the court, says:

“ The mere fact that the officers of the corporation do not oppose the creditor in his effort to get the judgment, but remain passive, is not alone sufficient to require the inference that" the judgment was suffered with the intent of giving such creditor a preference. But the inference may be supported on additional evidence of an affirmative character, tending to show the existence of such a desire on the part of the officers of the corporation having knowledge of the situation. Evidence tending to prove such a desire on the part of the officers may consist of the acts done or words spoken under such circumstances as manifest a wish or plan to effectuate a preference in behalf of the prosecuting creditor.”

There can be no doubt of the fact that there existed the strong-, est kind of a desire and purpose on the part of the officers of this corporation to facilitate the defendant Matthew Baird in prosecuting his action to judgment. On his bidding, and at his expense, the secretary of the company went into the state of Maine, for the purpose of having process served upon the corporation through him. Hot only this, but the secretary placed the papers in the hands of an attorney whom he had never met before, who was introduced to him by the attorney for the plaintiff, and who was ultimately paid by the latter. There could not well be a plainer case of suffering a judgment in order to give a preference than this. It has been argued by the learned counsel for the defendants in this action that, because this judgment has been duly recovered in the courts of the state of Maine, it is beyond the reach of any attack here. Precisely the same question arose in the case of McQueen v. New, 87 Hun, 206; 67 St. Rep. 139, 446, and was decided adversely to this contention. The defendant, who has profited by the opportunities of the judgment, is before the court, and can be compelled to account for all that he has obtained under it. It is not necessary that the judgment should be set aside,( which, as it was recovered in a foreign tribunal, this court would have no power to do; but as the defendant has, through its agency,, acquired a preference forbidden by our statutes, it is to be regarded as a meams employed to accomplish a forbidden end, and the property acquired through the use of such means is, by virtue of our statute, affected with a trust in the hands of the defendant in favor of those from whom it has been unlawfully taken, and this court has abundant power to compel him to account therefor.

It follows, therefore, that there muse be judgment in favor of the plaintiff against the defendants, declaring such transfers and acts, intended to give a preference to the defendant Matthew Baird, to be null and void, and requiring the defendants to account to the plaintiff for all of the property of the Sargent Granite Company acquired by them under any of said transfers, or by virtue of proceedings under the execution sale had under the Maine judgment, with'costs.

Ordered accordingly.


author: MERWIN, J.

text:
    Annie M. Keenan, App’lt, v. Henry Getsinger, Resp’t.

      (Supreme Court, Appellate Division, Third Department,

      Filed Jan’y 27, 1896.)

    1. Evidence—Declarations.
    In an action by a sister of defendant’s deceased wife to recover for services in caring for such wife in sickness, conversations relating to the performance of such service between plaintiff and defendant and his wife are competent.
    2. Same—Expert—Services.
    Where, in such action, it is shown that a physician knew the services rendered, had hired nurses, and was familiar with their duties, his testimony as to the value of the services is admissible.
    . 3. Same—Husband and wipe—Contracts.
    Evidence of arrangements made between plaintiff and defendant’s wife regarding the services before their rendition is admissible.
    Appeal from a judgment dismissing the complaint on the report of a referee. _ ______

    Eugene D. Flannigan, for app’lt; W. K. Clute, for resp’t.
   MERWIN, J.

The plaintiff in this case sought to recover for services performed by her at the house of the defendant, in taking care of the defendant’s wife upon three occasions, at two of which the wife was ill in confinement, and the other occasion was at the last sickness and death of the wife. There was no dispute that plaintiff performed services on thesé occasion, with the knowledge of the defendant, at his house. In his answer he admits that, at the periods of confinement, the plaintiff rendered and performed certain services and attention usual in such cases. The plaintiff was the sister of the wife, and the defendant alleges that whatever the appellant did was gratuitous, and was rendered without any request or promise to pay therefor on the part of defendant or any one acting for or in his behalf. The referee found, among other things, that it was not proved at whose request the services were performed, and that the value of the services were not proved.

It is claimed by the appellant that material errors were made by the referee in rulings upon the admission of evidence. The appellant was upon the stand as a witness in her own behalf, and1 was asked,, with reference to the third illness, the question : “ Can’t you recollect the conversation with defendant and defendant’s wife in regard to you going there ?” The plaintiff answered: “ Yes,” and the defendant then objected'to the conversation, and the referee sustained the objection, and plaintiff excepted. The plaintiff was also asked to state a conversation with defendant’s wife during the wife’s last sickness, when defendant was present, in regard to having another nurse. This was excluded, and exception taken. These conversations were competent, the defendant being present, and it does not appear that they were fully stated at any other stage of the case.

The plaintiff was also asked to state a conversation had with defendant’s wife at a certain time “in regard to coming tocare for her during expected illness in confinement.” This was objected to as irncompeteht, immaterial, no part "of the issue, also hearsay, and that a wife cannot bind a husband only for support, unless she is his authorized agent. The objection was sustained, and exception ■ taken. We think this evidence should have been admitted. See Reeve, Dom. Rel. 79; Benjamin v. Benjamin, 15 Conn. 357.

One of the issues in the case was whether plaintiff went and performed the services in question under such circumstances as .would give her a right to expect compensation therefor. There is some evidence in the case that the plaintiff performed the services at the request of the wife, and upon promise of compensation. The referee, however, declined to so find, and we cannot therefore say that the erroneous rulings above referred to were not injurious.

The physician, who was in attendance upon the wife on one of the occasions referred to, after having testified that he knew the plaintiff, saw her at the defendant’s, house during that illness, saw her' perform the duties of a nurse there during that illness, and that the duties she performed as a nurse were proper, and also that he was familiar with the duties of a nurse, and had hired nurses, was asked the question: 111 Assuming that this plaintiff performed, the duties of a nurse for the defendant’s wife during that period you have stated, in the spring of 1892, and did the services in a proper manner as nurse, what, in your opinion, would be the value of her services ? ” ■ This was objected to by defendant, “ as incompetent, immaterial, and irrelevant, and that the services that the plaintiff swore to were not sworn to in the presence of the witness.” The objection was sustained, and exception taken. This ruling was, we think erroneous, and was material.

Other exceptions were taken, which need not be here considered. We are of the opinion that there should be a new trial

Judgment reversed, and a new trial ordered, costs to abide the event, and referee discharged.

All concur.


author: VAN BRUNT, P. J.

text:
    Mary E. Hindman et al., Resp’ts, v. Ellen F. Haurand, Individually and as Executrix, etc., et al., App’lts.

      (Supreme Court, Appellate Division, First Department,

      Filed, March 6, 1896.)

      t. Wm,—-Construction—Chabse.
    The question as to charging real estate with legacies is one of intent, to be determined upon the language of the will and the circumstances surrounding the testator, aided hy the light which adjudged cases sometimes throw upon such language and circumstances,
    2. Same.
    It is not sufficient that the legacy is directed to be paid, in order to make it a charge, but something more is necessary, viz., a direction that it be first or previously paid, or a residuary devise is after its payment or is to a person with directions to pay, or is of all not herein otherwise disposed of. So held, where the testator, after creating several legacies, provides that, “ after the bequests and provisions above mentioned,” the residue of his estate, real and personal, should go to his wife, and the testator is obliged subsequently, because of sickness, to use and dispose of the personalty which lie had intended should pay the legacies.
    Appeal from a judgment for defendants,
    H, Aaron, for app’lts; A. N. Weller, for resp’ts, ■
   VAN BRUNT, P. J.

It may not be at all necessary to add anything to the opinion which was delivered by the learned justice in the court below upon the trial of this case. We think that be satisfactorily demonstrates that the language of the will in question has never been considered to be of such a character as to justify the charging of the payment of legacies upon real estate. The rule in respect to this question was laid down in the case of Lupton v. Lupton, 2 Johns. Ch. 614, and does not seem to have been departed from, as the. same rule is enunciated in Briggs v. Carroll, 117 N. Y. 288; 27 St. Rep. 468. The authorities cited by the counsel for the appellants in regard to these provisions of a will do not seem to have introduced any new rule of interpretation; it .being held that the whole question is one of intent, to be determined upon the language of the will and the circumstances surrounding the testator, aided by the light which adjudged cases sometimes throw upon such language and circumstances. Wiltsie v. Shaw, 100 N. Y. 191. In the case cited, the testator died, leaving personal property exceeding $50,000 in value over all indebtedness, besides certain real estate. By bis will, after making bequests amounting to $1,100, he gave to his executors $20,000, in trust to invest said sum in the best securities they could obtain, and to use the income for the benefit and maintenance of the testator’s son during his life, and upon his death to pay over the principal. The residue of his estate, real and personal, he gave to another party. It was held that the legacies were not charged upon the real estate of the testator, the court saying:

“It is clearly not sufficient that the legacy is directed to be paid. The cases all involve something more,—a direction that it be first or previously paid, or the residuary devise is after its payment, or is to a person with directions to pay, oris of all not herein otherwise disposed of.”

The language of the will in question does not seem to come within the rule which is above laid down. “After the bequests and provisions above mentioned” does not seem to be any stronger than the words “all the rest, residue, and remainder.” It is to be observed, also, that, shortly after making the will in question, the testator had personal property sufficient to meet all the legacies therein contained, and that in consequence of ill health, which prevented him from continuing his business, and required him to use part of this personal property for living expenses, such personal property was so reduced at the time of-his death as not to be sufficient to meet the legacies. Under these circumstances, the deficiency was not so great and obvious as to preclude any possible inference that the testator did not realize it, or that he might have intended before his death to make up the deficiency. The evidence shows that, shortly after making the will, the deficiency was actually made up; bringing the case clearly within the principle expressed in Briggs v. Carroll, supra.

The judgment should be affirmed, with costs.

All concur.

The following is the opinion of the lower court (INGRAHAM, J-):

The only question in this case is whether certain legacies to the nephews and nieces of the testator are charges upon the testator’s real estate, the personal estate not being sufficient to pay the debts and expenses of administration. The general rule is stated by Chancellor Kent in the case of Lupton v. Lupton, 2 Johns. Ch. 623, as follows: “ The real estate is not as of course, charged with the payment of'legacies. It is never charged unless the testator intended it should be, and that intention must be either expressly declared or fairly and satisfactorily inferred from the language and disposition of the will.” In that case it was held that the clause, “ I give and devise and bequeath all the rest, residue, and remainder of my real and personal estate not hereinbefore already devised or bequeated,” did not furnish evidence of an intention to charge land with pecuniary legacies, the chancellor saying: “If that residuary clause created such a charge, the charge would have existed in almost every case, for it is the usual clause and a kind of formula in wills. It means only when taken distributively reddendo sinpula singulis that the rest of the personal estate, not before bequeathed, is given to the residuary legatees, and that the remainder of the real estate, not before devised, is in like manner disposed of. It means that the testator does not intend to die intestate as to any part of his property, a nd it generally means nothing more.” That case has established the rule in this state, and subsequent cases, so far as I am aware, have simply applied this rule to the peculiar phraseology of each will required to be construed.

The will in this case, after giving the pecuniary legacies that are now sought to be charged npou the real estate, provides as follows. “ (7) After the bequest and provisions above mentioned, I give, devise, and bequeath to my beloved wife, Ellen F. Haurand, all the rest, residue," and remainder of my estate, real and personal, wheresoever the same may be, and of whatsoever character and description the case may be known to my beloved wife, absolutely, and to her heirs and assigns, forever.” I do not think that this clause, standing alone, indicates an intention to charge legacies of money upon the testator’s real estate. It is, in substance, the same as the provision in the will considered in the case of Lupton v. Lupton, and the use of the words “ after the bequest and provisions above mentioned” did not indicate that the testator intended to change the rule of law as to the fund or property from which the pecuniary legacies were to be paid. The only intention that can be drawn from this language is that he intended that all his personal property not necessary to satisfy the bequests and provisions contained in the will should go to his wife, and the fact that he united with that provision a clause giving all his real estate to his wife cannot have the effect of expressing an intention that the real estate should only go to his wife charged with the payment of legacies that were payable only out of personal property. I think it most probable that this contingency was not presented to the testator at all when he made this will, and there is nothing to show that he ■considered the question as to whether or not these legacies were ‘to be paid by the sale of the real estate in case his personal estate •was not sufficient to pay them. But, in order to hold that the legacies were chargeable upon the real estate, it is necessary to find affirmatively that the question did present itself to the testator, and that he intended that they should be so charged. There is nothing in this will that directs the payment of the legacies before the residuary estate shall take effect, as in the' case cited of Lupton v. Lupton, where the legacies are to be paid as a condition upon the vesting of the real estate. That would show an intention that the devise should only take effect when the legacies were paid. But in this.case there is no direction as to payment. In each case cited by the plaintiff there was either express direction to pay the legacies before the devise was to take effect, or the gift over was after deducting the legacy, or there was language importing an intention of the testator to postpone the vesting of the devise over until the specific legacies had been paid. But in this case there is no such provision. It is after the bequest and provisions of the will, “I give, devise, and bequeath,” not after the payment of the legacies.contained in the will; and thus, as stated by Chancellor Kent in Lupton v. Lupton, “it is not sufficient that debts or legacies are directed to be paid; that alone does not create the charge, but they must be directed to be first or previously paid, or the devise declared to be made after they are paid.”

Much of the testimony .of Mrs. Ha a rand as to the statements-made to her by the testator, which was taken before the referee and submitted to me, is incompetent as personal transactions between herself and the testator; but I do not think that anything that appears in her testimony should change the construction that I have given to the words used. At the time the will was made, the testator was in business, with considerable money in the bank; just how much at the date of the making of the will does not appear. Nothing appears, however, to show that he at the time was without any personal property from which these legacies could be paid, and thus create an inference that he must have intended them to be paid from his real estate.

I think, therefore, there should be judgment for the defendants, that thé legacies are not a charge upon the real estate; the costs of the guardian ad litem to be paid out of the estate.


text:
    Henry W. T. Steinway, App’lt, v. William Steinway et al., Resp’ts.

      (Supreme Court, Appellate Division, First Department,

      Filed March 6, 1896.)

    1. Gobpobatioíts—Officers—Trust.
    An officer and director of a corporation sustains a trust relation towards the company, and a trustee is prohibited from dealing individually with) himself in his trust capacity.
    2. Same .
    But, if the contract so entered into is in all respects just as between the-parties, and all the share holders and directors or trustees are competent to assent, and, with full knowledge of the terms of the contract, do as- • sent and direct that it be made, it is binding on the corporation and can- , not be avoided bv the share holders. So held, where the president and director of a manufacturing company, and another party, by agreement with all the stockholders, form a partnership to conduct a like business in? another city, in snch manner as to be substantially a branch house, and the enterprise was a pressing necessity for the benefit of all concerned, including the stockholders, and involved considerable risk.
    3. Same—Estoppel.
    In such case, a stockholder who accepts the increased dividends on stock during such period is estopped from claiming that he did not consent to or ratify the contract- between such firm and the corporation or stockholders.
    á, Same.
    So, a stockholder is estopped by such transfer from claiming that the-contract was not binding on him and the corporation, and from claiming the profits realized by such firm out of the business.
    5. Same.
    Where the proposition, which results in such transfer, provides for the concellation of all claims, of whatever kind and nature, against such firm, the corporation is estopped by the release which accompanies such transfer from claiming that the contract was not binding, and from1 claiming the profits realized by the firm in the business.
    6. Same.
    A court of equity will not listen with much satisfaction to the eom- ■ plaints of a corporation that transactions were illegal which had its ap? proval, were essential to its protection, and the benefits of which it has fully received.

      Appeal from a judgment dismissing the complaint, entered on decision of the court after trial at special term, ,,, ,
    This action is brought by a stockholder of the corporation of Steinway & Sons, in behalf of himself and all other stockholders, to compel the defendant William Stein way, its president and one of its trustees and directors, to account for, and pay over to the corporation, certain profits alleged to have been illegally acquired through individual dealings with it. The corporation is joined as defendant because it refused to bring the action. The following facts are either undisputed, or are established by a decisive preponderance of evidence: In 1880 Steinway & Sons had a branch office in London, which was not profitable. Its nonsuccess was mainly due to the fact that the Hew York factories could not supply it cheaply enough with pianos, and that those manufactured here were not suited to the English climate, neither the wood nor the varnish lasting well in the moister atmosphere. In 1880 matters were brought to a crisis by the rise of Amerian money, which deceased the purchasing power of British currency, and by a serious strike in the Hew York factories, which made it impossible to furnish the London house even so well as before. In this emergency, Theodore Stein way, the defendant William Steinway’s brother, proposed to the stockholders that a copartnership be formed to establish a branch of the business in Hamburg, which could sell to the London house cheaper—and for its purpose, bet- ’ ter—instruments than had theretofore been furnished it, and which could aid and strengthen the Hew York house in time of labor troubles. In addition to these particular reasons, the extension of the business to Hamburg was manifestly desirable and advantageous. The risk, however, was considerable; and Theodore and William agreed to assume it personally, each supplying half of the capital. • When the business became a success, it was to be turned over to the corporation at cost price. This plan met with the unanimous approval of all the stockholders, including the plaintiff. The copartnership thus formed was known as Steinway’s Pianofabrik. From Hovember, 1880, when the Fabrik went into operation, until December, 1889, when it went out of existence, the corporation sold to it, at certain special prices (of which the plaintiff now complains), such materials as it had occasion to get from this side of the water. Of these prices, however, plaintiff had full knowledge during the whole of the period. The Fabrik sold to the London house at from 20 to 45 per cent, cheaper than the prices at which the Hew York house had been able to consign the goods; and the London branch of the business quadrupled, and from being scarcely self-supporting, became very lucrative. In 1889 Theodore died, leaving by his will his interest in the Fabrik, and all patents taken out by him in Europe, to the defendant William Steinway. The latter thereupon fulfilled to the letter his agreement with the corporation, A meeting of the trustees was held on December 29, 1889, at which he submitted an offer to transfer the business to the corporation for the amount of the capital invested therein, as shown by an inventory annexed, the correctness of which was guarantied. In addition to other concessions, not necessary to mention, this defendant agreed to transfer to the corporation all patents, whether taken out in Europe ot America.
    Of these the corporations had been a licensee paying royalties! thereon. This offer was unanimously accepted, all the stock being voted on either personally or by proxy. The plaintiff was present, and made no objection. The minutes state that he participated in the discussion, but expressed no opinion upon the final vote. The arrangement was carried out, and the Hamburg house has ever since been part of the Steinway system. The offer contained the following provision: “(11) All claims that Steinway’s Pianofabrik of Hamburg may have for commissions, spoiled or broken material furnished, or repairing Steinway & Sons’ (of New York), pianos in Germany or Europe, for making good Steinway & Sons’ warranties, if not already booked and allowed by said Steinway & Sons, against Steinway & Sons, New York, and also all claims by Steinway & Sons, of whatever kind and nature, against Steinway’s Pianofabrik, if not already booked and allowed by said Steinway’s Pianofabrik, be forever canceled and quit-claimed to each other on the consummation of Steinway & Sons’ purchase of Steinway’s Pianofabrik under my within offer, by passing the resolution by Steinway & Sons’ board of trustees at its meeting on the 26th day of December, 1889.”
    Edward B. Hill, for app’lt; George W. Cotterill, for resp’ts.
   BARRETT, J.

1. We agree with the plaintiff that an officer and director sustains a trust relation towards the corporation, and that a trustee is prohibited from dealing individually with himself in his trust capacity. Such transactions are undoubtedly voidable, at the option of the interested parties, whether fair or otherwise. Davoue v. Fanning, 2 Johns. Ch. 251; Munson v. Railroad Co., 103 N. Y., 58. But this general and wholesome principle is entirely inapplicable to the facts of the present case. The defendant William Steinway did not here attempt to represent both sides. He not only consulted the stockholders, but he dealt directly with them. They gladly assented to the enterprise, and fully sanctioned all that was contemplated and proposed. The enterprise was in fact a pressing necessity, inaugurated for their benefit, and for the benefit of all concerned. The rule applicable to this state of facts was well stated by Follett, C. J., in Welch v. I. & T. Nat. Bank, 122 N. Y. 177, a page 189; 33 St. Rep. 452, as follows:

“If the contract so entered into is in all respects just, as between the parties, and all of the shareholders and directors or trustees are competent to assent, and with full knowledge of the terms of the contract, do assent, and direct that it be made, it is binding on the corporation, and cannot be avoided by the shareholders.

To the same effect, Hotel Co. v. Wade, 97 U.S. 23, and Barr v. Glass Co., 17 U. S. App. 124; 6 C. C. A. 260. In thus dealing with the stockholders,‘the trustee is dealing with the collection of individuals constituting the corporation; and they may make any bargain they please with him, or permit any act which is not radically ultra vires. Even if the directors misapply the funds of the corporation, their acts in that regard may be cured by the unanimous consent or ratification of the shareholders. Mor. Priv. Corp. § 625, and cases there cited. So a transaction in which the directors have no authority to represent the corporation, because personally interested in obtaining an advantage at the expense of the corporation, may subsequently be ratified, even by the majority, if the transaction was not in fact fraudulent, or detrimental to the corporate rights. Id. § 626, and cases there cited. If the shareholders may thus ratify illegal acts of the trustees-they may agree originally that such acts shall be lawful and proper. And where they have done so the corporation cannot complain. That is precisely this case, and the only question, there, fore, is whether the authorized enterprise was conducted fairly to the corporation. We have scrutinized the evidence on this head with great care, and our conclusion is adverse to the plaintiff’s contention. The more the evidence is scrutinized, the clearer seems the fairness and the correctness of the dealings between the corporation and the fabrik. The plaintiff claims that he did not consent to the system of charges made by the corporation to the fabrik but, this claim is wholly without merit. His conduct is inconsistent, throughout,, with any other theory than that he assented to this system and to these charges. Then, too, he participated in the resultant benefits of the system. During the whole period from 1880 to 1889, he accepted his dividends, which increased steadily from six per cent, to eighteen per cent., — an increase due largely to the success which the fabrik, under this very system, enabled the London house to achieve. His occasional expressions of dissatisfaction cannot weigh against such facts. The only definite and formal claim he made, with the exception of the formal demand which preceded the commencement of the action, was after Theodore Steinway’s death, when he declared that the stockholders were entitled to be paid the amount of the decedent’s profits in the firm. And it is significant -that he dropped his claim on learning that he would receive as legatee under Theodore’s will more than could possibly come to him as a stockholder. What he really wanted was, not to repudiate the whole-affair (it was too advantageous for that), but to get all there was in it legitimately, and then something that was not. He assented to the entire transaction, profited by its.operations, and resolved to retain its resultant benefits. These operations were not only just and fair in themselves, but they were directly and indirectly beneficial to the corporation and all its stockholder's. The plaintiff, therefore, has no just cause of complaint.

2. The plaintiff is also concluded by the transfer of the fabrik and of the other property which accompanied it. This transfer was the consummation by the defendant William Steinway of his original agreement with the corporation. All that the plaintiff now complains of was then, and had long been, known to him and every other stockholder. If any intention existed of assailing the bargain, or of attempting to deprive the defendant Steinway of whatever incidental benefits he had realized under it, this was the last chance of asserting it. A cestui que trust is not, any more than another, exempted from the operation of those salutary rules of law which prohibit one from taking inconsistent positions with-regard to a contract. If he decides to disaffirm an agreement'made: by the trustee, he must restore what he has received under it, Duncomb v. Railroad Co., 84 N. Y. 190; Barr v. N. Y., L. E. & W. Railroad Co., 125 N. Y. 263; 34 St. Rep. 743. If he learns in.- time of what has been done, he must make his election, like= another, as to whether he will abide by the contract, and, if not, he may not receive benefits therefrom. As Judge Finch said in the Duncomb Case of the rule permitting the fiduciary to disaffirm (page 199), “The rule was adopted to secure justice, not to work injustice; to prevent a wrong, not to substitute one wrong for another.” To permit the plaintiff here to benefit from the ownership-by the corporation of the very valuable Hamburg plant, and the many other advantages surrendered by the defendant Steinway, and at the same time allow him tq strip that defendant of every .vestige of profit secured by the risk of capital and the labor of nine years, would be grossly unconscionable. It would, in fact, be a fraud upon the defendant William Steinway.

3. The corporation itself is also concluded by the release which accompanied the transfer. The proposition which resulted in this transfer provided for the cancellation of “ all claims, of whatever kind and nature, against Steinway’s Pianofabrik”; that is, against those Who constituted the fabrik. The context shows, it is true, that what was particularly in the minds of the parties was the bool; accounts. But there was no limitation, except where allowances had already been made upon the books. The words of release, save in this particular respect, are as broad as they well can be; and the intention that all other past liabilities, of whatever nature, should be wiped out, is undeniable. Mo special reference was made to the claim which is asserted in this action, for the obvious reason that the possibilty of its assertion was not contemplated. It would, indeed, have been an affront to the proposer-of such a transfer to suggest that the mutual releases which were to accompany his generous offer should specify a claim which could only be founded upon his lack of integrity. If at that time there was any stockholder of the corporation ungrateful enough to contemplate such a claim, he was sufficiently prudent to keep the thought to himself.

The views expressed render unnecessary a consideration of the plaintiff’s delay in bringing suit, though the judgment might well rest upon the ground of inexcusable laches. Óur decision, however, is based upon the demerits of the plaintiff’s case. He has no independent equity, and that which he puts forward on behalf of the corporation is as weak as his own. As Mr. Justice Field remarked in Gas Co. v. Berry, 113 U. S. 322, at page 327.

“A court of equity does not listen with much satisfaction to the complaints of a corporation that transactions were illegal which had its approval, which were essential to its protection, and the benefits which it has fully received.”

f .None of the exceptions taken to the admission or exclusion of evidence deserve special mention. Upon the whole case, there could have been no'other just result than that which was arrived at by the learned judge at special térm; and the judgment appealed from should therefore be affirmed, with costs. '

All concur,.


text:
    Walsh v. Campbell.

      (Supreme Court, Appellate Division, First Department,

      Filed March 6, 1896.)

    Reargumeni
    James P. Campbell, for motion; John Jeroloman, opposed,
   PER CURIAM.

Some confusion is created in marshaling the different payments by reason of the plaintiff having credited on account of the contract one payment of §300 which should have been credited on account of extra work, because the receipt itself states that it was a payment on account of such extra work. The result, however, is in nowise changed ; for, if we credit it, as it should have been, to extra work, it would make a payment of $300 less on account of the contract, so that the balance due on the contract, instead of being $72.94, should have been 372.94. And although the plaintiff states that but $72.94 was due on the contract, it was entirely proper for the referee, in reaching a- conclusion as to the true state of the accounts between the parties, to adjust them as the figures warranted. If, therefore, we restate the account as it should have been presented by the plaintiff, and give credits to the accounts upon which payments were made, we reach the same ■result, because it is conceded that the contract price was $18,000, and the extra work performed - amounted to $560.99, making a total of $18,560.99. There were, in all, eleven receipts, one of which was for $300 on account of extra work; and of the other ten receipts, one, which stated that it was a payment of $300 on account of contract, was properly held, by the referee, to be for money that had been given to plaintiff to pay taxes, and for which, therefore, the defendant was not entitled to a credit. If, therefore, we deduct the amount of the remaining nine receipts, $17,627.06, paid on account of the contract, from $18,000, the contract price, it leaves a balance of $372.94; and if, then, we deduct the $300 paid on extra work from $560,99, the value of such extra work, 'it leaves a balance due on that account of $260.99, Adding together these two amounts, $372.94 (due on the contract) and $260.99 (balance for extra work), we have $633.93, the amount of plaintiff’s claim allowed by the referee. If we state it in another Sorm, we reach the same result, thus:

The contract price was.................. $18,000 00

There was extra work performed worth.... 560 99

$18,560 99

Plaintiff claimed, and the referee found, that there remained unpaid on contract......' $ 72 94-

And that the full amount was due for extra work.............................. 560 99

$633 93

Defendant produced eleven receipts,—ten on account óf contract, aggregating.......$17,927 06 '

And one (which defendant claims the court overlooked) on account of extra bill rendered .................... 300 00

- 18,227 06

Leaving a balance due plaintiff of.........$ 333 93

The proof showed that one of the ten receipts on account of contract, being the one numbered 9, for $300, was a mistake, 1 the money having been given to plaintiff to pay defendant’s taxes. Deducting this sum from the amount paid, and adding it to the amount due................... 300 00

Makes the total amount owing by plaintiff to defendant........................ $633 98-

If it would serve to clear the matter in the appellant’s mind, we-think that the respondent correctly summarizes it in his argument, by saying it is as broad as it is long, whether the amount of the receipt is deducted from the additional and extra work of $560.99, or from the contract price of $18,000 ; for, 'if deducted from the contract price, it would leave due on the contract $372.94, instead of $72.94. Add to the figures, $372.94, the sum of $260.99 the balance unpaid on the extra and additional work (if the amount-of receipt of March 12, 1886, was deducted from said additional and extra work of $560.99), would still leave the balance due-plaintiff the same, viz. $633.93.

The contract for erecting building on 438 West Thirty-Second street was.............................$18,000 00

The additional and extra work on the said building consisted of two items, viz. :■

-l Fifteen mantels at an additional cost, which is admitted...................................... 90 00

Other additional and extra work................ 470 99

Plaintiff’s total claim

Paid on account, which is admitted by both plaintiff and defendant, and as appears by the receipts offered in evidence by the defendant’s counsel (which will be found at pages 155 to 158), including the receipt of March 12, 1886, which the appellant claims the court overlooked.......................... 17,927 06-

. Balance due plaintiff over all payments made.... $ 633 93-

The motion should therefore be denied, with $10 costs.