author:
O’Brien, J. Parker, J.
      Yak Brunt, P. J.

text:
    The People, Resp’t, v. American Steam-Boiler Insurance Company of New York City, Def’t. Henry S. Ward, Receiver, etc., App’lt.

      {Supreme Court, General Term, First Department,

      Filed November 16, 1894.)

    1. Insurance—Casualty—Dissolution—Transfer of deposit.
    Chap. 285 of 1884 does not apply to casualty insurance companies.
    2. Same—Income of deposit.
    The courts may require the superintendent of insurance to pay to the receiver of such company the income of securities deposited by the company.
    Appeal from an order denying a motion to compel the superintendent of insurance to pay interest.

      John C. O' Connor, for app’lt; G. W. Francis, for the People.
   O’Brien, J.

On November 5, 1883, the American Steam-Boiler Insurance Company deposited, pursuant to section 6, c. 463, of the Laws of 1853, $100,000 in bonds with the superintendent of insurance. The company subsequently having ceased to do business, an action was commenced by the people for the purpose of dissolving the corporation for nonuser, winding it up, and distributing its assets. In such proceeding the receiver was appointed, and duly qualified. The interest on the bonds so deposited became due on the 1st of May, 1894,'. and was collected by the superintendent of insurance ; and to obtain such interest the receiver applied to this court for an order directing the superintendent to pay it over to him, which motion was denied upon the ground that there was no power in the court to grant the application.

Although it was stated upon the argument that there was no question as to the company’s solvency, the fact being that it was not only able to pay all its debts, but would, in addition, pay a large dividend to the stockholders, this does not appear in the petition, and cannot, therefore, be considered. As the law stood prior to 1892, there was no authority in this court to interfere with a fund such as this, deposited under chapter 463 of the Laws of 1853 as amended ; it having been directly held in the case of Ruggles v. Chapman, 59 N. Y. 163, that the courts have no power to compel the superintendent to transfer the trust imposed upon him by said act. The judge writing the opinion in that case, in speaking of the difficulties in the way of harmonizing the two independent schemes of dealing with an insolvent insurance company, with part of its assets in the hands of the superintendent of insurance and part in the hands of the receiver, says: “We venture to add that it is better that the legislative power should be invoked to resolve the difficulty, and to provide for the protection of the rights of the parties interested in such cases by general laws, than that the courts should attempt to build a system out of the discordant and scanty material of positive enactments now to be found in the statutes.”

To justify a transfer of the principal or interest in the hands of the superintendent of insurance, express legislative authority must be shown. In the opinion of the court below, reference was made to the act of 1884, c. 285, which provides that the court, upon the application of the attorney general, should direct a transfer to the receiver of such corporation of the securities or fund deposited with the insurance department; and for the reason that the application was not so made, but was opposed by the attorney general, and as none of the provisions of that act was applicable to sustain the motion made, he therefore denied it. We do not think that the law of 1884 has any bearing upon the question here. As shown-by its title, the act itself is one to provide for the transfer of securities and property by bankrupt corporations to their receivers, and for the transfer by the superintendent of insurance to receivers of insolvent life insurance and annuity companies the funds and securities deposited with such superintendent by such companies for the security of policy holders. By its first section it makes provision for all cases where receivers are appointed for any corporation, excepting only an insurance company; and by the second section it confines itself to the receivers of insolvent life insurance and annuity companies. The defendant here is an insurance company; but it is neither a life nor an annuity company, and, being a casualty insurance company, the laws of 1884 are inapplicable. Impelled, no doubt, by the force of the suggestions contained in the opinion from which we have quoted (Ruggles v. Chapman, 59 N. Y. 165), and the sentiment existing in favor of having the laws relating to these different companies consolidated and harmonized, the legislature, in 1892, recognizing the various forms of insurance, classified them, making special provisions for each class, and repealing laws—-among others, that of 1858— inconsistent with the new provisions. In addition to general regulations applicable to all insurance companies, the provisions for the different kinds relating to “life, health, and casualty insurance corporations/’ within which category this defendant would come, are embraced between §§ 70 and 92, inclusive, of the act. Chapter 690, Laws 1892. Among the general provisions we find that § 14 provides that, “ so long as the corporation depositing -the securities shall continue solvent and comply with the laws of the state, it shall be permitted by the superintendent to collect the interest or dividends on such deposit; ” and by § 76, which has special application to a corporation such as the defendant company, it is provided that when such a corporation is deemed insolvent, and a receiver thereof appointed, the latter, upon giving his bond, “ shall take possession of all (such) assets and credits, including the securities deposited in the insurance department." It will thus be seen that in either contingency (of the solvency or insolvency of the company) the interest should go to the receiver—in the case of solvency, by the express language of § 14, and, in the case of insolvency, by the fair construction to be given to § 76, which requires that the shares deposited in the insurance department could be taken possession of by the receiver. It does not weaken the receiver’s position that he did not ask for the bonds themselves. If there is express authority for his right to the securities, this confers power upon the court, in a proper case, to direct the payment of the interest realized upon bonds to the receiver. , In other words, the greater power that is given to the court, of directing the transmission of the securities themselves, necessarily includes the lesser, or ordering the transfer of interest realized from such securities. The superintendent was not required by any statute to collect the interest, because this would place in his hands an amount in excess' of the deposit required by law; and, having this money, no reason was suggested why he should not pay it over to the receiver. We think, therefore, that the court has the power, in a proper case, to grant the application. The learned judge below, upon the ground that the court had no power, refused to and did not pass upon the merits of the application. The petition here is rather meager, in failing to state the exact financial condition of the company, and to the end that this may be remedied, and all the facts bearing upon the question presented, a new application should be made, and an opportunity afforded the attorney general to furnish reasons, if any, why the application should not be granted. The order accordingly should be reversed, with leave to renew, without costs to either party.

Parker, J.

(concurring).—I think Mr. Justice O’Brien’s position is in accord with a reasonable construction of §§ 14 and 76 to 92 of the insurance law of 1892. It is not pretended that any possible public service can, be subserved by a denial of the application. If the present statute is not broad enough, then further legislation must be had in the premises; otherwise, this large deposit will be unjustly diverted from one of the uses for which it was intended. This fact should not, of course, prompt a strained construction, and a reference to it is only made that the probable reason for the carefully chosen language of § 14 may be properly appreciated. It reads: “ So long as the corporation depositing the securities shall continue solvent and comply with the laws of the state, it shall be permitted by the superintendent to collect the interest or the dividends on such deposits.”

By § 76 of the same act it is provided what shall be done with the securities in the event of insolvency. It is conceded that' the defendant is solvent, but urged that § 14 requires something more in order to entitle it to collect the dividends and interest upon its securities, to wit, that it shall continue in the conduct of the business which prompted the incorporation. A sufficient answer would seem to be that the section says nothing of the kind. No reference is made to the business of the corporation or its conduct in the clauses concerning the collection of dividends and interest. Broader language is employed: “So long as it shall continue solvent and comply with the laws of the state, it shall be permitted” to collect dividends. The defendant is solvent, and complying with the laws of the state. It has concluded to pay its obligations and go out of business, as the statute provides that it may, and to that end it is strictly employing the methods and procedure provided by the law of the state. It would seem to follow that it is entitled to the dividends and interest.

Yak Brunt, P. J.

(dissenting).—I cannot concur in the conclu.-. sion of Mr. Justice O’Brien, that this motion should have been granted. Although the superintendent is not required by any statute to collect the interest upon- the securities deposited with, him, it is only so long as the corporation depositing the securities continues solvent, and complies with the laws of the state, that it is permitted by the superintendent to collect the interest .or dividends on such deposit. It is manifest that it was the intention of the legislature to allow the corporation, so long as it was. continuing its business, to collect the interest upon its securities, because there is no provision for any one collecting this interest except in the contingency which has happened in the case at bar. In order to entitle the corporation to collect the interest, it must continue solvent, and comply with the laws of the state. This cannot have been intended to apply to a corporation which is in the hands of a receiver, because, although it may be solvent, it is not continuing its business, and does not come within the language which is claimed as an authority for the granting of the motion in question. It is undoubtedly -true that the receiver is the successor of the corporation. But, where a statute confers upon a corporation the power to do a thing, it certainly is not intended that the receiver shall have the same power which the statute confers upon the corporation itself. Therefore, when the statute speaks of a corporation being entitled to collect this interest, it means an acting corporation, and not a corporation which has ceased to do business, and is in the hands of a receiver. I think the order appealed from should be affirmed, with costs.


source: Caselaw Access Project

author: Parker, J.

license: Public Domain

text:
    Rutgers Female College of New York, App’lt, v. Cornelius H. Tallman, Resp’t.

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

      Filed, November 16, 1894.)

    Vendor and purchaser—Notice.
    When a situation is presented which the law declares should put a person of ordinary prudence on inquiry, he is chargeable with constructive notice of everything to which that inquiry would have reasonably led, but nothing more.
    Appeal from a judgment in favor of defendant.

      Albert Sticlcney and Wm. L. Snyder, for app’lt; James M. Smith, for resp’t.
   Parker, J.

For a little over two years prior to June 1, 1872, 'James P. Pierce, of the state of California, had the record title to certain premises known as Nos. 487, 489 and 491 Fifth avenue,-—premises for which a number of years had been occupied by this plaintiff for college purposes. On that date Pierce conveyed the property to this defendant, for a consideration of $120,000. At the time of the conveyance, defendant was a trustee of the plaintiff, to which position he was elected June 20, 1871. Immediately after the defendant had acquired title to the premises, he leased them to the plaintiff from year to year until 1879, when plaintiff was. dispossessed; but by verbal agreement, subsequently entered into, plaintiff occupied the premises as defendant’s tenant until some time in April, 1882. The last meeting of the board of trustees was held at said premises on the 18th of April, 1882. About, two months prior to the last-mentioned date,- defendant conveyed the property to August Pottier for the sum of $180,000, and in'July following, the plaintiff, at the request of Pottier’s attorneys, and for a nominal consideration, also executed and delivered to said Pottier a quitclaim deed of the premises. Hot until 1890—nearly eight years after the conveyance of the property to Pottier—was any claim presented to or demand made of the defendant, in respect to such property, or the proceeds of it, when this.suit was commenced, in which the plaintiff prayed that defendant account to it for all the moneys received by him from Pottier, after deducting any money that may have been advanced to him for the benefit of the plaintiff. The trial at special term resulted in a judgment for defendant, and on this appeal plaintiff contends that the trial court misapprehended the nature of its contention, arid treated the case as an ordinary action of fraud brought against a party standing in an ordinary position, thus ignoring what plaintiff characterizes as the fraudulent feature of the entire case, to-wit, that the plaintiff was a trustee.

As we understand plaintiff’s position, it is that, prior to the conveyance from Pierce to the defendant, tiré plaintiff was entitled in equity to redeem the property on paying to Pierce the amount actually due to him, and that Tallrnan, having been elected a trustee prior to his taking the deed from Pierce, is chargeable with knowledge of all the facts which by reasonable diligence he could have acquired from an investigation and examination of the college records, and, further, that such facts were actually brought to his attention as should have put him on inquiry. For many years prior to May 31, 1870, the title to the property was in the plaintiff. It was incumbered by four mortgages, upon which the principal sums due amounted to $53,000 on June 29, 1868,: at which time the plaintiff executed and delivered to James P. Pierce another bond and mortgage for the sum- of $52,000, payable, with interest, on the 1st of July, 1871. This latter mortgage the plaintiff contends was without consideration, and that the-execution of it was procured by Henry M. Pierce, the then president of the college, and a brother of James P. Pierce, the mortgagee, in pursuance of a fraudulent scheme having for its purpose the acquisition qf the title to the property for very much less than its actual value. The court refused to find as a fact that the mortgage was without consideration, or as a conclusion of law, that the mortgage was, as between Pierce and the plaintiff, fraudulent and voidable. If these findings were well founded, it necessarily follows that the judgment of the special term was right. But if it be assumed, for the purposes of further discussion, that; as between plaintiff and Pierce, the mortgagee, the mortgage was avoidable, we are unable to discover a basis upon which a recovery in favor of the plaintiff could have been predicted. The court refused to find, as requested by the plaintiff, that the “defendant was expressly notified that there was an irregularity or illegality in the execution and delivery of said mortgage of $52,000.” Its refusal is justified by the record.

The question of actual notice is therefore out of the case, and whether defendant had constructive notice remains only for consideration. Defendant was elected a trustee June 20, 1871, and thereafter was informed that Homer Morgan & Co., real estate brokers, were offering the property for sale in behalf of Pierce. Ascertaining the price at which the property could be purchased, he caused his attorney to search the title. We have not the result of that search before "us, but the fact is that the records contained nothing indicating that the $52,000 mortgage was voidable, or that the plaintiff had any equity whatever in the property. They disclosed that on the 23d day of October, 1869, a judgment of foreclosure and sale of the fourth mortgage was regularly entered at a special term of the supreme court. Thereafter a sale was duly had thereunder, resulting in the purchase of the property by James P. Pierce for the sum of $117,000. Out of the purchase money the referee paid the amounts due for principal and interest on the four mortgages which were prior to the $52,000 mortgage, and deposited the sum remaining in his hands, viz., $57,270.48, with the chamberlain of the city of Flew York, as by the decree he was directed. In surplus proceedings subsequently had, and in which plaintiff appeared by attorney, an order was made that said surplus moneys be paid to James P. Pierce, in satisfaction of the principal and interest due on said $52,000 mortgage. FTo appeal was taken from that order, and payment was subsequently made by the chamberlain in pursuance of it As the plaintff was a party to the suit, and appeared in the surplus proceedings, there was certainly nothing in the record* to suggest that the plaintiff had any equity in the property. It is urged that the fact that plaintiff was in possession of the property was sufficient to put defendant on inquiry touching plaintiff’s rights therein. Seymour v. McKinstry, 106 N. Y. 230; 8 St. Rep. 580, and 11 id. 760. True, but when a situation is presented which the law declares should put a person of ordinary prudence on inquiry he is chargeable with constructive notice of every thing to which that inquiry would reasonably have led, but nothing more. Hanover Nat. Bank v. American Dock & Trust Co., 75 Hun, 55; 56 St. Rep. 862. Such inquiry would have disclosed that, at the time when he was elected a trustee, plaintiff’s possession was that of a tenant of James P. Pierce. A little later, and on July 14, 1871, at a meeting of the board of trustees of the plaintiff, it was recommended that plaintiff secure the college premises owned by Pierce for another year; and subsequently the premises were rented by plaintiff from Pierce from August 1, 1871, to June 1, 1872, at a rental of $800 per month. These facts appeared upon the minute book of the plaintiff, and were sufficient to satisfy the inquiry which the law put upon him by reason of plaintiff’s possession. Defendant’s position is quite different than it would have been had the suit to foreclose the mortgage been commenced, and the subsequent proceedings had, while he was a member of the board of trustees. . He did not become a member until after the title to the property, through judicial proceedings, had become vested in one who was a stranger to him, and who had never been officially connected with the plaintiff,—one whose title the plaintiff recognized by renting the property from him at a stipulated rent; the lease being in pursuance of resolutions passed by the board of trustees. In the presence of such facts, and in the absence of other information tending to arouse suspicion, he was not bound to investigate in relation to the consideration of the several mortgages, which-were the subject either of foreclosure or of disposition in the surplus proceedings.

Judgment should be affirmed, with costs.

All concur.


author: Martin, J.

text:
    George C. Glassford, Resp’t, v. Alfred C. Lewis et al., App’lts.

      {Supreme Oourt, General Term, Fourth Depa/rtment,

      Filed December 7, 1894.)

    1. New trial—Discretion.
    Motions for new trials are addressed to the discretion of the court, whether based upon the weight of evidence, surprise, or newly discovered evidence, or the fact that the party has been deprived of his evidence by accident or other like grounds.
    2. Same—Newly discovered evidence.
    Where the new evidence was discovered since the trial, could not have been obtained on the former trial by reasonable diligence, is material, not merely cumulative, and of a character that would probably change the result, it is sufficient to authorize the court, in its discretion, to grant an order for a new trial.
    Appeal from an order granting a new trial.

      W. II. Johnson, for app’lts; B. M. Townsend and Carver, Deyo & Jenkins, for resp’t.
   Martin, J.

The motion for a new trial, which resulted in the order appealed from, was made upon the ground of newly discovered evidence, and because the verdict was contrary to the evidence. A careful reading of the testimony contained in the appeal book discloses that the special term may well have granted the plaintiff’s motion upon the ground that the verdict was against the weight of evidence. It was said by Allen, J., in Barrett v. Third Av. R. R. Co., 45 N. Y. 632: “Motions to set aside verdicts as contrary to evidence, as well as motions for a new trial upon the ground of newly discovered evidence, are not governed by any well defined rules, but depend, in a great degree, upon the , peculiar circumstances of each case. They are addressed to the sound discretion of the court; and whether they should be granted or refused involves the inquiry whether substantial justice has been done, the court having in view solely the attainment of that end.”

The same doctrine is held in McKeever v. Weyer, 11 Wkly. Dig. 258; Oberlie v. Bushwick Ave. R. R. Co., 6 St. Rep. 771; Bannon v. McGrane, 45 N. Y. Supr. Ct. 517; Macy v. Wheeler, 30 N. Y. 231, and Standard Oil Co. v. Amazon, 79 id. 506. In the Bannon Case it was said: “ It is at all times a grave question for an appellate court to reverse, on the ground of error, an order made by the trial judge setting aside the verdict as against the weight of evidence.”

In Young v. Stone, 77 Hun, 395; 60 St. Rep. 419, after reviewing these cases, this court said: “ We think a trial judge is invested with power to set aside a verdict and grant a new trial on the ground that the verdict is against the weight of evidence, or because the damages are excessive or insufficient, or when, for any other reason, substantial justice would be promoted thereby. This power we think an important one, and one that ought, perhaps, to be more often exercised by trial courts for the proper protection of the rights and interests of litigants.”

Applying these rules, and considering the proceedings and evidence had and taken before the trial court, we are led to the conclusion that the order appealed from should not be reversed, as the court was justified in granting a new trial on the ground that the verdict was against the weight of evidence.

We are also of the opinion that the court was justified in granting the order upon the ground of newly discovered evidence. The defendants’ claim that the motion should have been denied because of the' plaintiff’s loches in making it should not, we think, be sustained. An examination of the affidavits read upon the hearing of this motion renders it apparent that the special term may have found that the loches of which the defendants complain was occasioned as much or more by their delay than by that of the plaintiff. Moreover, the court may also have found upon the papers before it that the defendants expressly waived the question of loches in consideration of the plaintiff’s consent to a postponement of the motion. If the affidavit of the plaintiff’s attorney was relied upon, the court, as well as the counsel for the defendants, may have thought that he was not “in a position to raise the question of loches.” This leaves for consideration the question whether the papers upon which the motion was granted were sufficient to authorize the court to grant"a new trial upon the ground of newly-discovered evidence. The general rules applicable to such a motion are well settled. It must appear that the-evidence has been discovered since the trial; that it could not have been obtained upon the former trial by the exercise of reasonable diligence; that it is material to.the issue, and goes to the merits of the case; that it is not merely cumulative, and that its character is such that it would probably have changed the result. When these facts appear, and the court is satisfied that the ends of justice will be promoted by allowing the moving party an opportunity to present the newly-discovered evidence, the motion will be granted. Grah. & W. New Trials, 642, 1085, 1086; Powell v. Jones, 42 Barb. 24, 29; Bonynge v. Waterbury, 12 Hun, 534; Sistare v. Olcott, 22 St. Rep. 564; 5 N. Y. Supp. 114; Darbee v. Elwood, 2 Hun, 599. Motions for new trials are addressed to the discretion of the court, whether based upon the weight of evidence, surprise or newly-discovered evidence, or the fact that the party has been deprived of his evidence by accident, or other like grounds; and in modern practice they are liberally granted in the furtherance of justice. Platt v. Munroe, 34 Barb. 291; Tyler v. Hoornbeck, 48 id. 197. We think the motion papers sufficiently show that the new evidence was discovered since the trial, could not have been obtained on the former trial by reasonable diligence, that it is material, not merely cumulative, of a character that would probably change the result, and sufficient to authorize the court, in its discretion, to grant an order for a new trial on that ground. The facts in this case are much stronger than in Holmes v. Roper, 32 St. Rep. 470; 10 N. Y. Supp. 284, where an order denying such a motion was reversed, and a new trial granted upon that ground.

Order affirmed, with costs.

All concur.


author: Merwin, J.

text:
    J. Milford Andrews et al., Resp’ts, v. Belle N. Whitney et al., App’lts.

      {Supreme Court, General Term, Fourth Department,

      Filed December 7, 1894.)

    1. Divorce—Alimony—Liability eor debts.
    Alimony cannot be subjected to payment of debts contracted before the decree for divorce was made.

      2. Same.
    In case the provisions of the Revised Statutes as to uses and trusts are applicable, the surplus, which can be reached by creditors, is that only which is beyond what is necessary for the suitable support of the wife and those dependent upon her, in the manner in which they have been accustomed to live.
    Appeal from a judgment in favor of plaintiffs.

      Wm. 0. Tracy, for app’lts; Kennedy & Ross, for resp’ts.
   Merwin, J.

This action is in the nature of a creditor’s bill, and is based on a judgment recovered by the plaintiffs against the defendant Belle N". Whitney on the 5th day of June, 1893, for $341.33 damages, besides costs. The recovery was on a note which was given for a balance of an account for groceries furnished by plaintiffs to the defendant. The account commenced in September, 1891, and ended in November, 1892. The total of the purchases was $674.84, and payments from time to time were made to the amount of $347.15. Prior to May 13, 1889, the defendant Belle N". Whitney was married to the defendant James W. Whitney, and resided with him in the city of Rochester. The defendant Belle Augusta Whitney lived with them. She was the daughter of Mrs. Whitney by a prior marriage, and was in May, 1889, about fifteen years old. Shortly prior to May 13, 1889, Mr. and Mrs. Whitney separated, and at that date an agreement of separation was made, the defendant Ashley being the party of the third part, or trustee. By the second clause of this agreement Mr. Whitney agreed to pay to Mrs. Whitney, for her support and maintenance, during the time she should remain his wife or widow, or during her life, if she should not marry until after his death, the annual sum of $3,000 in equal monthly pay.. ments in advance. He also agreed to place it in the hands of the trustee the sum of $8,000, to be used by him in the purchase of a dwelling for the occupancy of Mrs. Whitney, the title to be in the trustee as such, and he to allow Mrs. Whitney to occupy it as long as she should live. If, however, she should prefer to rent a dwelling, or if, after a dwelling was procured, she gave up its use, it was then the duty of the trustee to invest the said $8,000, or the proceeds of any dwelling that had been purchased, and pay over to Mrs. Whitney, during her life, the income derived from the fund. Upon her death the fund should be transferred by the trustee to the daughter, Belle Augusta, for her own use and benefit. By the fifth clause of the agreement security for the payment of the annuity was provided for by mortgage to the trustee on certain real estate, and the trustee covenanted to indemnify Mr. Whitney against his common-law liability for the support of Mrs. Whitney. By the eighth clause Mrs. Whitney agreed that she would at any time upon request release her inchoate right of dower in any of the property of Mr. Whitney by joining with him in any conveyance or mortgage thereof, or in such other manner as would effectually release the same, and such release was declared a condition precedent to the payment of any installment of the annuity falling due after any refusal to execute such release ; and it was agreed between all the parties that the provision for Mrs. Whitney was ample and sufficient, and was accepted by her as sufficient for her maintenance and support, and in lieu of all dower or right of dower or share in the property or estate of Mr. Whitney, and that she should not have or claim any dower in his estate. By the ninth clause certain policies of insurance on the life of Mr. Whitney were assigned to the trustee, Mr. Whitney agreeing to keep up the premiums, and, when the policies became payable, the trustee to collect the moneys due, and hold the same for the benefit of Belle Augusta Whitney. Since this agreement the parties have lived separate. Mr. Whitney made the annuity payments up to February 1, 1893. He furnished the $8,000 fund, but no dwelling house was purchased, Mrs. Whitney preferred to have the income of the fund. The fund was invested by the trustee, and the income was paid to Mrs. Whitney prior to April 1, 1893. On January 1, 1893, Mrs. Whitney commenced in the supreme court an action against her husband for an absolute divorce for principal cause. Ho defense was made, but prior to the decree there were negotiations on the subject of alimony, and the provisions in the decree were agreed upon by the parties. The usual judgment for divorce was entered on 21st February, 1893. Upon the subject of alimony it provided that the defendant therein pay to the plaintiff therein the sum of $3,000 a year from March 1, 1893, during her life, as a suitable allowance to her for her maintenance and support, and that this be paid in monthly payments by the defendant therein to William J. Ashley, as trustee for the plaintiff therein, and then be paid by the trustee to the plaintiff. Ashley was in the decree appointed trustee of Mrs. Whitney for the purposes of the decree, and the defendant therein was required to give to the trustee, as security for the annuity, his bond, and a mortgage on certain real estate therein specified. It was also adjudged that, except as therein specifically provided, the decree should in no wise affect the agreement of May 13, 1889, “ which said-agreement shall remain unimpaired and in full force, except the provir sion in the second subdivision thereof for an allowance of $3,000 annually to the plaintiff in this action, and also excepting the fifth subdivision thereof, ail of which subdivision is hereby abrogated and annulled; ” and it was provided that “ the said plaintiff and her said' trustee surrender and pay over to the defendant all the money and securities held by said trustee under said agreement except the sum of $8,000, provided for by clause four of said agreement, and the life insurance and policies therefor, mentioned in the ninth clause thereof; and that the defendant release to said trustee and to Belle Augusta Whitney, daugther of said plaintiff,, all his interest in or control over said sum of $8,000.” • On the-same day that the decree was entered, an indenture of release between Mrs. Whitney as party of the first part and Mr. Whitney as party of the second part was executed and acknowledged, in and by which, after a reference to the judgment of divorce that day entered, and a recital that the party of the first part had agreed, for the consideration therein stated, to make the release pursuant to chapter 616 of the Laws of 1892, the party of the first part, in consideration, as therein stated, of the sum of $4,500, to her paid, the receipt whereof was thereby acknowledged, released to the party of the second part all her inchoate right of dower in any real estate of which he was seized at the time of the granting of the judgment of divorce, or had since acquired, and also all the interest and estate which she had or could' have in his estate, real or personal, as his former wife, or which should in any event come to her as his wife or widow if the judgment of divorce had not been granted. It was stated that the agreement of May 13, 1889, should not in any manner be affected, except so far as it was modified by the divorce judgment. The party of the second part, in the release, “in consideration of the execution hereof by the party of the first part,” released and assigned “to the party of the first part, and to William J. Ashley as her trustee, and to Belle Augusta Whitney, daughter of the party of the first part, all his interest in or control over the sum of eight thousand dollars, now in the hands-of said. William J. Ashley, trustee, mentioned and referred to in said judgment.” Prior to the granting of the decree of divorce, Mrs. Whitney had become indebted to divers persons in about the-sum of $10,000, and she was insolvent. The $4,500 referred to in the release was paid by Mr. Whitney to the attorneys of Mrs. Whitney, and it was used by them in paying their charges against. Mrs. Whitney, and in paying or compromising some of her debts. On or about. April 1, 1893, Mrs. Whitney transferred to Belle Augusta Whitney all her interest in the $8,000 trust fund. This transfer was made in connection with an application by or on behalf of Belle Augusta Whitney to the supreme court for an authority and direction to the trustee to pay over to her from the principal of that fund the sum of $700 for the purpose of paying bills incurred by her or on her behalf to that amount for clothing and. other necessaries, and also such further sum, from time to time, as might be necsssary for her support and maintenance. Notice was given to the trustee, and the court made an order on April 1, 1893, authorizing the trustee to pay to said Belle Augusta Whit.ney from the principal of the fund the sum of $700 to defray the bills referred to. On the 6th May, 1893, on similar application, an order was made directing the trustee to pay over the income of the fund to Belle Augusta, andón the 20th May, 1893, another order for the trustee to pay ovgr to her $125 of the principal for the payment of past bills, and thereafter pay to her $100 a month for her education and support, until the further order of the court. So that at the time of the commencement of this action, on 30th June, 1893, the principal of the $8,000 trust fund was reduced to about the sum of $6,700. The referee found that the transfer from Mrs. Whitney to her daughter of her interest in the $8,000 trust fund was made with intent to hinder, delay and defraud .creditors, and, therefore, void as to plaintiffs; that “ the sum of $200 a month is a proper and sufficient sum for the support and maintenance of the defendant Belle N. Whitney, and those dependent upon her for their support; ” that the plaintiffs “ are entitled to recover and have and receive the interest and income on said sum of $8,000, or what remains thereof, and the sum of fifty dollars per month from the alimony allowed to said Belle N. Whitney, until the plaintiffs’ claim, with the cost and interest, are fully paid.” Upon this basis the judgment appealed from was entered.

The first question to be considered is "whether the judgment can be sustained so far as it appropriates to the use of the plaintiffs a portion of the alimony allowed by the decree of divorce. There are, as it seems to me, two effectual reasons against it:

1. The principle of the case of Romaine v. Chauncey, 129 N. Y. 566; 42 St. Rep. 267, is against it. In that case it was held that a creditor, whose debt was contracted and in existence before the date of the decree, could not reach alimony awarded to the wife by the decree. It is, however, claimed that the alimony provided for by the decree is but a continuation of the provisions in the agreement of separation; that the plaintiffs’ debt was incurred after that agreement, and in reliance on its provisions, and .that, therefore, the rule in the Romaine Case should not apply. By the decree the provision of the agreement as to the $3,000 a year was abrogated. The security was on other property. The scope of the allowance was different. In the agreement it was conditional upon Mrs. Whitney not marrying again during the life of Mr. Whitney. In the decree it was absolute. In the agreement the trustee agreed to indemnify the husband against certain liabilities. That was done away with by the decree. In the agreement the allowance was in part in consideration of her releasing upon request her inchoate right of dower, and was to be accepted in lieu of dower or share in the property or estate of her husband. There is no such condition in the decree. The release of right of dower was provided for by another instrument, and for a consideration entirely outside of the decree. The sum of $4,500 was paid by Mr. Whitney to assist Mrs. Whitney or her attorneys in arranging her debts. This is stated in the release to be its consideration. The referee finds that only a portion of the sum of $4,500 was for such release, and the remainder was for other considerations. So that we must assume that the annual allowance in the decree was alimony pure and simple. It is clear that it was so intended. It came from the husband, and was intended only for future debts. Mr. Whitney was not liable for the plaintiff’s debt. He made all the payments the agreement called for. I think that the rule of the Romaine Case applies.

2. In appropriating a portion of the alimony to the use of the plaintiffs, the theory of the court below evidently was that the alimony and the income of the balance of the $8,000 trust fund should all be taken as the income of a trust fund, and that' the surplus of such income beyond the sum that may be necessary for the support and maintenance of Mrs. Whitney and those dependent upon her for their support can be reached under the provisions of the Revised Statutes as to uses and trusts. 4 Rev. St. (8th Ed.) 2438, § 57. The case of Williams v. Thorn, 70 N. Y. 270, is referred to on the general proposition, though not a case like the present. Assuming that the statute may be applicable to this case, the question, then, is whether the proper rule has been applied in order to ascertain the surplus. In the Williams Case it is said by Judge Rapallo, with the apparent approval of the •entire court, that the surplus which can be reached by creditors is that which is “ beyond what is necessary for the suitable support of the debtor and those dependent upon him, in the manner in which they have been accustomed to live.’’ This rule was applied,in the subsequent conduct of that case. The counsel for plaintiffs, on this subject, refers to Tolles v. Wood, where it is said by Chief Judge Ruger that “ neither the manner in which the party has been accustomed to live nor the style in which his associates and acquaintances expect him to live furnishes a just criterion for determining the amount necessary to provide a suitable support for the 'cestui que trust." These views do not seem to have been adopted by a majority of the court. See 99 N. Y. 616. Besides, that case was materially different from the present. In a divorce' case the amount of alimony is fixed having special reference to the manner in which the wife has been accustomed to live. A sum is fixed suitable for the support of the wife, having regard to the circumstances of the respective parties. Code Civ. Pro. § 1759. If in a creditor’s suit this question can be reconsidered, it would certainly be appropriate to have in special view the manner in which the wife had been accustomed to live. That was not done in this case. The evidence offered by the plaintiffs on that subject is not on that basis, nor does the finding of the referee purport to be on that basis. Nor can we properly infer a finding that on this basis will sustain the judgment.

The evidence, so far as it goes, as to the amount necessary for her suitable support according to the rule laid down by Judge Rapallo, would indicate that the sum fixed by the referee as a proper and sufficient sum was too small.

The further question is whether the judgment can be sustained as to the income of the $8,000 trust fund. The right of Mrs. Whitney to that income is founded on the agreement of separation. If, as the plaintiffs claim, the transfer of this income was invalid, and the income inalienable (Tolles v. Wood, 99 N. Y. 617), and the surplus reachable under the statute above referred to, then the same trouble arises as to the method in which the sum suitable for Mrs. Whitney’s support was arrived at. If the amount of the alimony can be taken into account in determining whether the income of the $8,000 trust fund is necessary for the suitable support of Mrs. Whitney and those dependent upon her, then the element of the manner in which she has been accustomed to live should be considered.

The considerations lead to a reversal. There are some other questions in the case, but they need not now be considered, as upon a new trial they may appear in a different light, or not at all. If the transfer by Mrs. Whitney was fraudulent, and there is a surplus, within the rule laid down in the Williams Case, having in view the entire income of Mrs. Whitney, both under the decre and the prior agreement as modified by the decree, I see no good reason why the plaintiffs, under the circumstances of this case, so far as they now appear, should not have some relief as to the income of the balance of the $8,000 fund. If Mrs. Whitney takes the position that she still has the right to require the purchase of a dwelling, then the question may arise whether she has not abandoned that right. If she has not, still the question would arise whether the plaintiffs cannot reach the income until that right is asserted. These questions need not be determined here.

All concur.

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


text:
    Nathaniel Simpkins, Resp’t, v. William Taylor et al., App’lts.

      (Supreme Court, General Term, First Department,

      Filed November 16, 1894.)

    1. Reformation—Fraud and mistake.
    To justify the reformation of a written instrument, the plaintiff must establish the mutual agreement of the parties to the precise contract alleged to have been in fact the original agreement, and that the written instrument fails to express the common agreement because of accident or of mutual mistake of all the parties, or by mistake on one side induced by the fraud of the other, and must do so by proof so clear and convincing as to satisfy thoroughly the mind of the court.
    2. Same—Laches.
    The purchaser was held, in this case, not to be estopped by loches from having the gu iranty reformed.
    Appeal from a judgment in favor of plaintiff.

      Thomas G. Shearman, for app’lt; George H. Pettit, for resp’t.
   Parker, J.

To justify the reformation of a written instrument it is well settled that the plaintiff is bound to establish (1) the mutual agreement of all parties to the instrument to the precise1 contract alleged, to have been in fact the original agreement; (2} that the written instrument fails to express the common agreement because of accident or of mutual mistake of all the parties, or by mistake one side, induced by the fraud of the other; and the burden rests upon the plaintiff to establish both of these propositions, not simply by a preponderance of evidence, but by proof so clear1 and convincing as to thoroughly satisfy the mind of the court. Southard v. Curley, 134 N.Y. 148; 45 St. Rep. 778, and cases cited. The judgment under review decrees that an instrument in writing, .which on its face is a guaranty of collection of a certain bond and mortgage should be so reformed as to guaranty its payment. That, such an instrument may be reformed by a court of equity, as well as deeds, mortgages, and contracts generally, which have been repeatedly the subject of reformation, is supported by Pryor v. Williams, 3 Abb. Dec. 624. The question, then, is whether, applying the principles which should govern courts in decreeing that a contract be reformed to the evidence adduced on the trial, the findings of the court at special term should be sustained. The direct testimony upon the question in issue was given by three witnesses,, and how much their bearing while on the witness stand may have-contributed towards satisfying the conscience of the court that the-guaranty was not such as was agreed to, and that the change in the agreement was brought about through mutual mistake, or the mistake of one party and the fraud of the other, we cannot know. Our examination must be confined to the record. The first inquiry should be, what was the agreement! For it is not enough to prove that the plaintiff so understood the contract, and that the defendant knew he so understood. It must further appear that the defendant so agreed. The plaintiff and the defendant Taylor had been personal friends for years prior to this transaction. Some measure of plaintiff’s confidence in Taylor can be taken from the fact that after plaintiff had agreed to take the bond and mortgage and defendant’s guaranty, and pay $10,000 therefor, the plaintiff gave him the amount in advance of the papers being ready for delivery. Indeed, they were not prepared and sent to him for nearly three months thereafter. The plaintiff’s testimony as to the agreement was as follows: “ Mr. Taylor came to me, and wanted me to invest in this Peyton Montgomery mortgage, which was $10,000, and bearing seven per cent, interest, and I told him it was too large a risk for me to take ; I did not care to invest so much money in one thing. He said it was perfectly good, and he considered it as good as a government bond, in his judgment. I said, if that was so, if he would guaranty the payment of it, I would give him one per cent., and I said I would be satisfied with six, and he said he would. He promised to do so.”

John Simpkins, a brother of the plaintiff, testified that he had a conversation with Taylor after his brother had agreed to take the loan. They were playing billiards at the club, when Taylor —“Told me that my brother had agreed to take $10,000 loan with a guaranty of the firm, and he stated that the firm had to charge the one per cent, as a guaranty as a’matter of business ; that they could not make a guaranty, or it.would not be business for them to make a guaranty, of any loan payment of it, without taking one per cent, for so doing. I replied to his statement that I thought my brother had been very foolish to have made a loan of $10,000 unless the payment of the principal and interest was guaranteed, because, having a family, I did not think he could afford to take the risk.”

The other witness on this point was the defendant Taylor. He said : “ I said nothing to Mr. Simpkins, at the conversation which took place in May, 1886, or about that time, in regard to guarantying the payment of this bond arid mortgage. I said that I would sell him the loan with a guaranty, and that, upon my return to Kansas, I would have the form of guaranty made up and sent on to him.”

' He does not say that he proposed to Simpkins that he would sell him the loan with only a guaranty of collection. According to his own version of it, there was no such limitation suggested. Nor does he say it was his intention to so restrict the guaranty. He contents himself with a denial that at the time there was anything said in regard to guarantying the payment of the bond and mortgage. Now, the court before whom the witnesses appeared finds the fact to be that he did so agree, and, in view of the testimony to which we have referred, this court should sustain the finding.

Immediately after the making of the agreement, the plaintiff gave Taylor the $10,000, who, nearly three months later, sent to him the bond and mortgage, and with it a guaranty of collection signed by the defendants. It was received by plaintiff’s agent, and retained by him with other papers of the plaintiff. The agent had authority to open plaintiff’s letters, and did so in this instance, simply reporting the fact of their receipt by him to the plaintiff. Thus it happened that plaintiff’s attention was not called to the form of the guaranty. Certainly discussion is not needful to make it appear that, so far as he was concerned, the fact that the written agreement was different from the real agreement of the parties was due to mistake. That the execution of a different contract of guaranty than that agreed upon was due to fraud on Taylor’s part seems equally apparent." He agreed to give a guaranty of payment if Simpkins would loan the money. He did not do it An opportunity to perpetrate the fraud was presented, and he took advantage of it. He had Simpkins’ money, who also had confidence in him, and was at the time of its execution and delivery at a seaside resort. So he prepared a guaranty, but one quite different from that which he had agreed to have executed by the firm and delivered. He must be presumed to have intended the necessary consequences of his act which was to perpetrate a fraud on the plaintiff.

We do not concur in the view expressed by the appellant’s counsel that by reason of the long delay the plaintiff should be held to have acquiesced in the guaranty delivered. The paper came into the hands of his agent, who did not call his attention to the peculiar form of the guaranty. And the circumstances were such that he never read the paper until he regarded it necessary to call in the loan. With reasonable promptitude thereafter he commenced this suit. Albany City Savings Inst. v. Burdick, 87 N. Y. 40-46, justifies the refusal of the trial court to dismiss the plaintiff’s complaint on that ground. An examination of the authorities cited by the appellant on this question will disclose that there were present in each case facts entirely different from the controlling facts in this one as to justify the assertion that they are not in point. Calhoun v. Millard, 121 N. Y. 69; 30 St. Rep. 759, was a suit in equity to compel the surrender and cancellation of certain town bonds. For many years, without protest or objection, taxes had been levied upon the property of the town to pay the interest annually accruing on the bonds, and it was applied to that purpose. The court held the party guilty of unreasonable loches. Avery v. Equitable Life As. Society, 117 N. Y. 451; 27 St. Rep. 699, was a suit to reform a policy of life insurance,' after the tontine period of 15 years had expired, and the beneficiary had been tendered tlie cash value of the policy. The complaint offered no excuse whatever for the delay, and judgment was rendered on a demurrer to the complaint. Syms v. Mayor, 105 N. Y. 153; 6 St. Rep. 830, had for its purpose the reformation of two leases, one executed in 1840 and the other in 1861. The court disposed of the case in this sentence: “But there was no proof of any mistake or fraud in their execution, or in the terms inserted in them, and, therefore, even if the statute of limitations is not a bar to the action to reform the leases, there was no basis or ground for their reformation.”

The law of the case was not further discussed. The judgment should be affirmed, with costs.

Follett, J., concurs.

Van Brunt, P. J.—I cannot concur in the conclusion arrived at by Mr. Justice Parker in this case. I do not think that the proof offered in this case was of so clear and convincing a character as to justify the reformation of the instrument in question. It is attempted to establish the mutual mistake of the parties by the testimony of the plaintiff, and his brother, the plaintiff testifying to the arrangement, and his brother to an admission alleged to have been made subsequent to the date of the transaction in question. The defendant contradicts the testimony of the plaintiff pointedly, and refers to certain circumstances which tend to impair the credit to be given to that testimony. He shows that the guaranty was sent to the plaintiff, and he testifies without contradiction that he asked the plaintiff some time thereafter whether he had received the papers, and the plaintiff answered, “Yes.” The defendant then asked him, “Is the guaranty—is that form of guaranty—all satisfactory?” and the plaintiff said, “Yes.” The plaintiff’s brother testifies to a conversation had between himself and the defendant some time after the transaction in question, while they were playing billiards at the Union League Hotel, in which he says that the defendant told him—what he already knew to be the fact—that his brother had agreed to take a $10,000 loan with a guaranty of the firm, and he stated that the firm had to charge the 1 per cent, as a matter of business; that they could not make a guaranty, or it would not be business for them to make a guaranty, of any loan—payment of it—without taking 1 per cent, for so doing. It appears certain from the evidence in this case that the words “ payment of it ” were an interpolation by the witness in the conversation, and were not words used "by the defendant. They do not fit anywhere into the conversation. The conversation was complete without them. But the witness had in mind the necessity, in order for his brother’s success, that the words “ payment of it ” should be injected, and he was equal to the occasion. He says that the language used was that they would not make a guaranty, that it would not be business for them to make a guaranty of any loan—and then he injects the words “payment of it”—without taking 1 per cent, for so doing. The very method in which the witness testified to this conversation shows that these words were not used, certainly that the defendant did not use them on any such occasion. This view is confirmed by the answer of the witness to the next question. He says:

“ I replied to his statement that I thought my brother had been very foolish to have made a loan of $10,000 unless the payment of the principal and interest was guaranteed, because, having a family, I thought he could not afford to take the risk.”

The language of the witness here seems to imply that he understood that his brother had made the loan without the guaranty of payment, because he speaks of his brother as having been very foolish in acting in the way in which he did, whereas, if he had acted in the way the witness says he did, he would not have been at all foolish in making the loan. It seems to me that under these circumstances the plaintiff, having these papers under his control for a long period of time—it is true, there is no evidence that he had looked at them—having acknowledged the correctness of the guaranty, his attention being called to it by correspondence, there is no such clear and distinct evidence of mutual mistake, or of mistake on one side and fraud on the other as would justify the reformation of this contract. The judgment should be reversed, and a new trial had, with costs to the appellant to abide the event.


author: Merwist, J.

text:
    Isaac J. Squire, App’lt, v. Otis H. Prestos et al., as President and Trustees, etc., Resp'ts.

      {Supreme Oourt, General Term, Fourth Department,

      Filed December 7, 1894.)

    1. Municipal corporations—Villages—Tax.
    Fees of counsel, employed in good faith by village trustees to defend an action against them to enjoin the collection of a tax, may be included in a tax levy.
    2. Same—Unauthorized contract—Ratification.
    An attempted ratification, by the electors, of an unauthorized contract, under § 5, chap. 737 of 1873, as amended by chap. 422 of 1885, does not validate it as of the time when it was made.

      3. Same.
    Chap. 604 of 1887 does not modify chap. 737 of 1873, as amended bv chap. 423 of 1885.
    Appeal from a judgment dismissing the complaint.

      C. L. Andrus, for app’lt; Edwin D. Wagner, for resp’ts.
   Merwist, J.

case presents another phase of a litigation that was before this court in Squire v. Cartwright, 67 Hun, 218; 51 St. Rep. 356. That was an action to restrain the collection of a special tax levied in October, 1890, which, among other things, contained 'an item for rent of water hydrants under a contract made by the president and trustees of the village with the water company on August 15, 1890. It was decided by the trial court in that case that the contract of August 15, 1890, was inoperative and void, and judgment was given restraining the collecting of the tax, and restraining the defendants and their successors in office from applying any of the moneys collected under the warrant to the payment, among other'items, of the water rent referred to. On the appeal the judgment was modified so as to be without prejudice to any proceeding, taken as authorized by law, to enforce the contract of Augugt 15, 1890, based on its adoption at a village meeting on the 14th September, 1891, and as modified the judgment was affirmed. In the judgment entered on the decision on the appeal a clause is inserted as follows: “ It being hereby adjudged that the said contract is a valid and legal contract from and after the adoption thereof by said village meeting.” The present action was commenced on May 18, 1891, to restrain the collection of the annual tax levy, which was levied on May 2, 1891, and which contained, among other items, water rent accruing prior to September 14, 1891, on the contract of August 15, 1890, and an item of $150 for counsel fees incurred by the president and trustees in the prior action. The proceedings of the meeting of September 14, 1891, wer epleaded and proved as they were in the former action. Upon the trial it was- held that the contract of August 15, 1890, was valid under the provisions of chapter 504 of the Laws of 1887, and was also made valid as of its date by the proceedings of ratification or adoption by the meeting of September 14, 1891; that the item for counsel fees was a proper charge against the village, was reasonable in amount, and properly included in the tax levy; that the plaintiff had an adequate remedy at law, and the annual tax levy should not be interfered with.

This action is' brought by the plaintiff, a taxpayer, under the provisions of chapter 531 of the Laws of 1881, as amended by chapter 673 of the Laws of 1887. Code Oiv. Proc. § 1925. There seems to be no doubt about his having a standing in court. See Ayres v. Lawrence, 59 N. Y. 192; Osterhoudt v. Rigney, 98 id. 231; Warrin v. Baldwin, 105 id. 534; 8 St. Rep. 22. And if the plaintiff did not make a case for setting aside the tax warrant, and still showed that the officers of the village were threatening to pay illegal claims from the funds that they were raising, or from funds of the village, the plaintiff would be entitled to some relief. The complaint and the statute are broad enough to reach that phase of the case. So that, if either of the items which the plaintiff attacks is not a valid claim against the village, the complaint was improperly dismissed. The former action was against the president and trustees officially, and if, in its defense, they acted in good faith, they should be protected for their reasonable counsel fees. Under the general act, power is given, “ to employ an attorney or attorneys for the transaction of any matter requiring legal skill.” Laws of 1870, chap. 291, tit. 8, § 3, subd. 5. It is not found or shown that they acted in bad faith. The trial court did not, I think, err as to this item.

The validity of the other item objected to depends on whether the contract of August 15, 1890, was operative prior to September 14, 1891. By the judgment on the appeal in the former case it is adjudged that it was operative from September 14,1891, and inferentially it was decided that it was not operative before. The statute under which the board of trustees derived their power to make any contract on the subject was chapter 737 of the Laws of 1873, entitled, “ An act in relation to the creation and formation of waterworks companies in towns and villages of the state of New York.” By section 5 of this act the board of trustees of any incorporated village were given power to make a contract with a corporation organized under the water act for the delivery by said company of water, through hydrants or otherwise, for public purposes, provided, however, “ that no such contract shall be made for a longer period than three years, nor for a sum exceeding in the aggregate two and one-half mills for every dollar of the taxable property of said village per annum, unless the proposition for the same be submitted to a vote of the electors of such village * * * and approved by a majority of the voters entitled to vote, and voting on such question at any annual election, or at a special election duly called; and any board of trustees, when so authorized, may contract for a term not exceeding thirty years, the amount of such contract to be paid in semi-annual installments.” The trustees on May 13, 1890, made a contract on the subject which practically exhausted their power to act without a vote of the electors. The validity of that contract is not disputed. Then, in reality, in continuation of the same subject, they made the contract in question after a submission of the proposition to a vote of the electors, and its rejection by them. Afterwards, and after both actions had been commenced, the meeting or election of September 14, 1891, occurred, the effect of the action of which is now under consideration. Under the act of 1873, a favorable voté of the electors was a condition precedent. The proposition, not the contract, was to be submitted, and, if approved, then the trustees could make a contract. It was not a question of ratification or waiver that was to be submitted, nor was any general power given to the electors on the subject. It was simply a question whether they would say “Yes” or “No ” to a proposition for a future contract. It seems to me very clear that the vote of the electors under the statute of September 14, 1891, did not relate back to and validate the contract as of the time when it was originally made, but that the most that the defendants can legally claim is that it became operative from and after the favorable vote of September 14, 1891.

The other theory upon which it is claimed to be valid is that it is within the authority conferred by chapter 504 of the Laws of 1887, entitled, “An act conferring additional powers upon villages.” By section 1 of that act it was provided that whenever it shall be desired by any village, whether incorporated under a special act or organized under the general act for the incorporation of villages, “ to raise moneys additional to the amount,permitted to be raised by its charter or by the general law aforesaid, for the purpose of building a bridge, constructing a sewer or carrying out some other proper village object,” the trustees might submit the question of “ raising such moneys ” to the “ taxpaying electors ” at a special election, and, if there was a majority vote in favor “ of raising such moneys,” then the trustees may raise the same in the same manner as other village taxes are raised and collected; and in the meantime, in anticipation of such tax, the money may be temporarily borrowed on the credit of the village and used for the purpose desired. If the amount desired to be raised for any of the purposes stated shall not exceed in the aggregate the sum of $500, the trustees may by a unanimous vote, and without submitting the question to the said electors, proceed to raise it in the same manner as other taxes, and in meantime borrow in anticipation, and use for the purposes intended. By § 2 of the act it was provided that “ the powers conferred by this act are in addition and supplementary to and independent of all other powers possessed by villages, either under any special act or under the general act for the incorporation of villages.” It is very apparent that this act was designed to meet emergencies not otherwise provided for, when for some public purpose there was a necessity for the immediate use of moneys. The moneys to be raised were “additional to the amount permitted to be raised by its charter or by the general law aforesaid,” and naturally would have reference to the subjects that by the charter or the general act the village had control over. The object was “to raise moneys,” and the provisions of the act are to be construed in view of that object. The submission was to be to “the tax-paying electors," not “to the electors,” as in the water act. Aside from borrowing the money in anticipation of the tax, no power was given to make contracts to bind the village. It is difficult to see how there was any design to modify the provisions of the water act, or how it can fairly be construed to refer at all or apply to the subject of that act. That was a particular and specific subject, with special provisions, and the general provisions of the act of 1887 should not be deemed to change them unless an intent to do so was clearly manifest. In re Commissioners of Central Park, 50 N. Y. 493; In re Evergreens, 47 N. Y. 220. The intention of the legislature is the test, and I fail to see how an intent can be inferred in the act of 1887 to modify the conditions of the act of 1873. It may he observed that the provisions of the act of 1873 are in substance re-enacted in the revision of 1890, c. 566, § 81. These considerations lead to the conclusion that the defendants are not helped by the act of 1887, and that the contract of August 15, 1890, cannot be deemed to be operative prior to September 14, 1891. It follows that upon the case as made the plaintiff was entitled to some relief, and that therefore the complaint should not have deen dismissed.

All concur.

Judgment reversed on the exceptions, and new trial ordered, costs to abide the event.


text:
    In the Matter of the Application by Susan Brizzee for Probate of the Will of John W. Flansburgh, Deceased.

      (Supreme Court, General Term, Fourth Department,

      Filed December 7, 1894.)

    1. Wills—Capacity.
    A testator is competent to make a valid will, if his mental powers enable him to understand and appreciate the amount and condition of his property. and to comprehend the nature and consequences of his act in executing the will, if the disposition is his own free act.
    2. Same.
    The general term were unable to concur in the conclusion of the surrogate as to the incompetency of the testator to make the will in question.
    Appeal from a decree refusing to admit the will to probate.

      Carver, Deyo & Jenkins, for app’lt; A. D. Wales, for resp’t.
   Martin, J.

It was expressly found by the surrogate’s court that the execution of the will in question was not procured by undue influence. This finding was, we think, fully justified by the evidence. The only ground upon which probate of the testator’s will was denied was that he was not of sound and disposing mind and memory, and not competent to make a valid will. Hence, the only question to be determined upon this appeal is whether the evidence was sufficient to fairly justify that conclusion. If the testator’s mental powers enable him to understand and appreciate the amount and condition of his property, and to comprehend the nature and consequences of his act in executing the will in question, he was at liberty to dispose of his property as to him seemed best, so long as the disposition was his own free act. In re Snelling, 136 N. Y. 515, 517; 49 St. Rep. 695. Although the legal presumption is that every man is compos mentis, and the burden of proof that he is not rests upon the party alleging it, still it devolved upon the proponents to prove, not only the execution and publication of this will, but also the mental capacity of the testator; and if, upon consideration of the evidence on both sides, the court properly was not satisfied that the testator was of sound and disposing mind and memory, the probate should have been denied. Delafield v. Parish, 25 N. Y. 9. While the evidence offered by the contestant tended to show that the testator was more irritable and excitable in the latter years of his life than formerly; that he was for several years before and until about the time of the execution of his will subject to epileptic fits; that he was not always cleanly in the use of tobacco, or as particular as formerly in the exposure of his person when attending to the calls of nature; that he sometimes got lost; that he was partially blind (which may explain some of these acts); that in a spirit of fun he sometimes performed acts of a childish nature; that he became distrustful of his daughter and her husband when they had quarreled, as Dr. Dibble predicted they would, because the daughter and father were so nearly alike; and that he sometimes shed tears, presumably when meditating upon the troubles which encompassed him,—yet, after a careful study of all the evidence contained in the appeal book, we are unable to concur in the conclusion of the learned surrogate as to the incompetency of the testator to make the will in question. We are therefore of the opinion that the decree of the surrogate’s court should be reversed, and the issues tried before a jury. Decree of .the surrogate’s court of Broome county reversed, and a new trial of the issues of fact directed before a jury of the circuit court of Broome county, the order to be settled before Martin, J. The costs of this appeal are to abide the final direction of the surrogate’s court.

All concur.


author: Per Curiam.

text:
    Clifford A. Spencer, App’lt, v. Peter J. McManus, Resp’t.

      (Supreme Court, General Term, Third Department,

      Filed December 4, 1894.)

    1. Negligence—Leakage of water.
    Where, in an action for alleged negligence in allowing water to leak through the floor of premises occupied by the defendant from an open faucet in a toilet room, it appears that the defendant and another party were in the occupation of such toilet room, the plaintiff is not entitled to a judgment without showing that the faucet was left open by defendant or his servants.
    3. Same.
    That such other party was not a legal tenant of such toilet room, is immaterial.
    Appeal from a judgment of the county court, reversing," without opinion, a judgment of the city court of Albany.
    Montignani, Mallory ■& Elemendorf (George H. Mallory, of counsel), for app’lt; Reilly & Hamilton (J. Murray Downs, of counsel), for resp’t.
   Per Curiam.

The dictum in Moore v. Goedel, 34 N. Y. 547, that, if the defendant had been in the exclusive possession of the place from which the overflow came, “it would probably have been sufficient prima facie to have proved the injury and where the overflow occurred,” was doubted in Harris v. Perry, 89 N. Y. 308-314, the court saying, in reference to the above-quoted sentence: “That remark goes far enough, for it may at least be doubted whether the mere fact that an injury occurs on premises under the control and in the possession of a party raises any presumption of wrong against him.” Assuming, however, that the plaintiff "made out a prima facie case of negligence against the defendant by showing that he was damaged in consequence of water escaping from, a faucet left running in a toilet room rented to and occupied by defendant, we think the testimony produced by the latter on the trial fully met this prima facie case, and showed the absence of negligence on the part of defendant. The faucet was left running between Sunday and Monday mornings, defendant’s store being closed the Saturday evening before, and not opened until after the accident, and only one of defendant’s employes being there in the interval. He testified that at nine o’clock, Sunday morning, he locked up the toilet room in question, the faucet being then turned off, and found the door locked Monday morning, and the faucet turned on. The defendant fairly proved that the faucet was not left open by himself or servants. The door was kept locked.. It is not claimed that the faucet was not in good order. Although it might have been sufficient, in the first instance, for plaintiff to show the overflow and injury, after above evidence was in we are unable to see how the trial court could find that plaintiff had made out a case of negligence against defendant. The act of turning on the water was that of some wrongdoer, and the presumption that such wrongdoer might have been defendant or his servants was negatived by the testimony given on the trial.

It appeared that the Empire band had a key of the toilet room, and used it. As far as the evidence shows, they did so without any license or right. It does not appear that the servant of defendant who assumed to license them had any authority to do so, or that defendant had any knowledge of the matter. In fact, the defendant and another party were in occupation of the toilet room, and plaintiff was not entitled to judgment without showing that the faucet was left open by defendant or his servants. Moore v. Goedel, supra. It makes no difference in this case that the Empire band was not a legal tenant of the toilet room. They were there as they would have been if a tenant, and hence the presumption that might exist, if defendant had been the sole occupant of the room, that his negligence caused the injury, could not be entertained. The negligent act of leaving open the faucet might have been that of the Empire band. If defendant gave a license to the Empire band to use the toilet room, we are unable to see that that fact created any liability against him; nor was he liable for the negligent act of the band or its members. Stevens v. Armstrong, 6 N. Y. 435.

The judgment should be affirmed, with costs.


text:
    John Weston, as Surviving Partner, etc., Resp’t, v. City of Syracuse, App’lt.

      (Supreme Court, General Term, Fourth Department,

      Filed December 7, 1894.)

    1. Municipal corporations—Common council—Powers.
    The common council has power to bind the city by the modification of a contract between the city and another party.
    2. Same—Right op action.
    An action lies against the city on a contract providing that no payment shall be made thereon until an assessment has been levied and collected, where the city fails to make such assessment.

      3. Contract—Fraud.
    Evidence that such contract was induced by fraud is properly excluded, where the city, after it had knowledge of such fraud, extended the time for the completion of the contract.
    Appeal from a judgment entered on a verdict in favor of plaintiff, and from an order denying a motion for a new trial.

      Charles E. Ide, for app’lt; George H. Sears, for resp’t
   Martin, J.

This action was brought to recover an amount claimed to be due upon a contract between the plaintiff and his deceased partner, on the one part, and the defendant, on the other, for furnishing the materials and performing the labor required for the construction and completion of a 48-inch brick sewer in Oak-wood avenue, from Oakwood Cemetery to Kennedy street; in Kennedy street, from Oakwood avenue to Cortland avenue; in Cortland avenue, from Kennedy street to South avenue; and in South avenue, from Cortland avenue to the Onondaga creek. The contract between the parties was in writing. • The plaintiff alleged that it had been fully and completely performed according to its terms, except where changes were made by the defendant’s engineer and surveyor under the powers conferred upon him by such contract. After the plaintiff’s firm had commenced and constructed a portion of the sewer described, an investigation was had by the officers of the defendant, whereby it was discovered that some portions of the work were not in strict compliance with the provisions of the contract; but it also appeared that, where there were, changes or deviations, they were made by the direction and under the immediate supervision of the engineer and inspector of the defendant. After such investigation the defendant’s common council duly passed a resolution, which was approved and signed by the mayor, requiring the contractors to complete the portion already built in accordance with the terms of the contract, except, however, .that they were not required to change the grade of the work as it then existed; the invert portion was to rdbiain as then laid. The contract was thereby declared to be amended and modified to that extent, and the remaining portion of the sewer was to be constructed in accordance with the terms of such contract, without modification. The contractors thereupon resumed the work, which had been suspended during the investigation, completed the remainder in substantial accordance with the terms and provisions of the contract, and also performed some extra work for the defendant. On July 25, 1892, and after the final completion of such sewer, the defendant’s commissioner of public works made the plaintiff’s final estimate or account, by which it appeared that there was $7,933.41 due upon such contract, and for extra work done by the contractors, and attached thereto the following certificate : “ I hereby certify that for a distance of 1,453 feet from Onondaga creek the work was done in accordance with a resolution adopted by the common council 29th July, 1890. The next 1.000 feet was done in accordance with the contract and specifications, except in the matter of grade. At the beginning of the 1.000 feet the sewer is about- two feet above the grade established by the original map, and at the end of the 1,000 feet it is at said grade. The remaining portion of the sewer was completed in accordance with the contract and specifications.”

The proof disclosed that the 1,000 feet mentioned in the foregoing certificate was constructed under and by the direction of the defendant’s city engineer and inspector. It also appeared that the grade of the 1,000 feet, so far as it was not made to conform to the original contract, necessarily had to be changed, or there could be no. connection with or outlet through the portion already constructed, and adopted by the resolution of the common council. The evidence of the plaintiff wms'to the effect that the contract between the partiés, as modified by the resolution of the common council passed July 29, 1890, was substantially complied with, whilethatof thedefendant tendedtoshowthatthereweresomeother defects in the construction of the portion of the sewer as to which the investigation was had, aside from those mentioned in the resolution modifying such contract. Upon that question there was a conflict in the evidence. The jury found for the plaintiff, and there was, we think, sufficient evidence to sustain its verdict. Without incumbering this opinion with any further history of the details of the proceedings had, or course of action pursued by the parties to this contract, it may be observed that, under the evidence and findings of the jury, it is quite obvious that the contractors endeavored to honestly comply with the terms of the original contract, the instructions of the city officers or employes having the work in charge, the usages that had been established in the performance of such work, and with the contract as modified. Therefore, if there were any defects in the work, they arose from the fault of the city, its officers or employes; and, consequently the equities seem to be clearly with the plaintiff, and the judgment should not be disturbed unless some error was committed upon the trial requiring its reversal. This leads to an examination of the questions presented by the appellant as grounds upon which the judgment should be reversed.

The appellant contends that the common council had no authority to modify the contract between the parties, and that, therefore, the court erred in not granting its motion for a nonsuit. We think this contention cannot be sustained. Meech v. City of Buffalo, 29 N. Y. 198; Moore v. City of Albany, 98 N. Y. 396; Mulholland v. Mayor, etc., of New York, 113 N. Y. 631; 22 St. Rep. 347; Brady v. City of New York, 132 N. Y. 415; 44 St. Rep. 613; Voght v. City of Buffalo, 133 N. Y. 463; 45 St. Rep. 739. Nor do we think the case of Bonesteel v. Mayor, etc., of New York, 22 N. Y. 162, aids the defendant. That case is clearly distinguishable from the case at bar, as is pointed out in Moore v. Mayor, 73 N. Y. 248. In the latter case it was, in substance, held that although a municipal corporation may set up, as a defense to an action upon a contract alleged to have been made by it, its own want of power to'Contraet, yet, as against those innocently dealing with it, and in good faith parting with property and expending money for its benefit, it may be estopped from availing itself of irregularities in the exercise of power conferred. Smith v. City of Utica, 25 St. Rep. 287; 6 N. Y. Supp. 792. Thus we are led to the conclusion that the court committed no error in refusing to nonsuit the plaintiff upon the ground already considered, and that it properly submitted to the j nry the question whether the common council, with a full knowledge of all the facts in relation to the condition of the portion of the sewer complained of, had modified the contract between the parties, and waived any objections that existed as to the manner of its performance, in so far as it did not conform to the original contract, and whether, except as it had been modified or waived, the provisions of such original contract had been substantially performed by the plaintiff.

The appellant also contends that the action was improperly brought, that by the contract the plaintiff agreed that no payment should be made until the cost was assessed upon and collected from the taxpayers liable to local taxation for the construction of the sewer, and that an action for the contract'price cannot be maintained. In Reilly v. City of Albany, 112 N. Y. 30, 42; 20 St. Rep. 560, where a similar question arose, Ruger, O. J., in delivering the opinion of the court, said : “ When the contractor had performed his work according to his contract, he had no duty remaining to discharge, and then had a right to rely upon the implied obligation of the city to use with due diligence its own agencies in procuring the means to satisfy his claims. It could not have been supposed that he was not only to earn his compensation, but also to set in motion and keep in operation the several agencies of the city government, over whom he had no control, to place in the hands of the city the funds necessary to enable it to pay its obligations. That was a power lodged in the hands of the city, and the clear intent of the contract was that it should exercise it-diligently for the purpose of raising the funds necessary to pay for the improvement. For an omission to do so, it would become liable to pay such damages as the contractor might suffer by reason of his neglect of duty.” Cumming v. Mayor, etc., of Brooklyn,, 11 Paige, 596; Sage v. City of Brooklyn, 89 N. Y. 189; McCormack v. City of Brooklyn, 108 id. 49; 12 St. Rep. 817; Donnelly v. City of Brooklyn, 121 N. Y. 9; 30 St. Rep. 501.

We think the doctrine of these cases justified the trial court in holding that this action could be maintained.

Again, it is contended that the court erred in declining to-charge : “If the jury find that the completion of the contract, as originally made, has not been certified by the city engineer or commissioner of public works, the plaintiff cannot recover.”

It will be perceived that this request related to the original contract, and did not include the contract as modified by the common council. We think the court was justified in refusing to charge as requested.

The only remaining question raised by the appellant relates to the rejection of evidence. On the cross-examination of the plaintiff the defendant offered to show that he procured the vote of one member of the common council for the resolution modifying the contract by corrupt means. To evidence which, it was claimed, would tend to show that fact, the plaintiff objected on the ground that it was incompetent, immaterial and irrelevant, and that the resolution was duly adopted and approved by the mayor in accordance with the law. This objection was sustained, and the defendant excepted. It may be observed, in passing, that this offer was made, and proposed evidence excluded, during the cross-examination of the plaintiff, who was a witness in his own behalf. The court might well have excluded the evidence upon the ground that the defense of fraud should be proved, if at all, after the plaintiff rested. Moreover, it was conceded upon the trial that an investigation as to the question of bribery or fraud was had in December, 1890, so that if there was any fraud on the part of the plaintiff in obtaining a modification of this contract, it then became known to the defendant. Notwithstanding such knowledge upon the part of the defendant, yet long after its discovery of such fraud the time for the completion of the work was extended by it until December 25,1891, the defendant thereby recognizing the modified contract as being in full force and effect. It is well-established principle of law that, in order to rescind a contract on the ground of fraud, there must not only be a disaffirmance of it at the earliest practical moment after discovery, but a return of all that has been received under it. The receiving of any benefit under a contract after knowledge of the fraud, or changing of the condition of property which is the subject-matter of the contract,, is a ratification of it. Cobb v. Hatfield, 46 N. Y. 533; Gould v. Cayuga Co. Nat. Bank, 86 id. 75; Baird v. Mayor, etc., of New York, 96 id. 576. In Devlin v. City of New York, 4 Misc. Rep. 106; 53 St. Rep. 455, where a similar question arose, it was held that, assuming the contractor to have secured the contract by inducing the officials concerned in its award to act corruptly, it was, notwithstanding that fact, operative as against him, unless the defendant saw fit to disaffirm it; that it was not necessary that it should ratify the contract, and, having entered upon its performance, it could not escape liability for the work done or the breach subsequently committed, in the absence of proof that the contract was disaffirmed by it upon the discovery of the alleged fraud. We think the principle of these authorities is sufficient to uphold the rulings of the trial judge upon this question. Having thus considered all the questions raised by the learned counsel for the appellant in his brief, and having found no errors therein sufficient to. justify us in disturbing the judgment, it follows that it should be affirmed.

Judgment and order affirmed, with costs.

All concur.


author: Herrick, J.

text:
    Hiram B. Cady, as Administrator, etc., Resp’t, v. Fanny Brennan et al., as Executors, etc., App’lts.

      (Supreme Oonrt, General Term, Third Department,

      Filed December 4, 1894.)

    Witness—§ 829.
    An executor, in an action against him, may testify in his own behalf as to a personal communication with his testator.

      Appeal from a judgment in favor of plaintiff.

      J. W. Houghton, for app’lts; Jesse Stiles (J. S. L'Amoreaux and L. Varney, of counsel), for resp’t.
   Herrick, J.

This is an action by the plaintiff against the defendants, as executors of the estate of George B. Bixby, deceased, for the board, care and attendance by the plaintiff of a sister of George B. Bixby, for which the plaintiff alleges the defendants’ testator, George B. Bixby, agreed to pay. The case was tried before a referee, who rendered judgment in favor of the plaintiff, and against the defendants, from which judgment the defendants appeal to this court.

Upon the trial it appeared that the sister of said Bixby, named Electa, for whose care and attendance this action was brought, had lived for a number of years with her brother, until about April, 1882, .when, being upward of 80 years of age, sick and infirm, she left or was taken from the house of the said George B. Bixby to that of the plaintiff, and was there maintained and cared for, as plaintiff claims, under an agreement on the part of said Bixby to pay the plaintiff therefor. This agreement was sought to be established by alleged admissions made by Bixby, and by the direct testimony of at least one witness. The defendant Fanny Brennan was placed upon the stand as a witness in behalf of the defendants, to testify as to a conversation that took place between one Benjamin Cady, a witness sworn upon the trial in behalf of the plaintiff, and George B. Bixby, at the time when it was proposed to take Bixby’s sister to the house of the plaintiff. The testimony proposed to be given by such witness was objected to, on the ground that the witness was not competent to give evidence in this action under § 829 of the Code, as she is the executrix of and also a residuary legatee under the will of the said George B. Bixby, which will was introduced in evidence upon the trial, and that the evidence proposed to be given was improper, immaterial, and irrelevant. This exclusion of the testimony of the witness Fanny Brennan, although she was an executrix of and a legatee under the will of the said George B. Bixby, upon the ground that she was not a competent witness, was error. She was not a witness against, but in favor of, the executors, and as such was competent. McLaughlin v. Webster, 141 N. Y. 76; 56 St. Rep. 541. The testimony offered to be given by the witness Fanny Brennan, I think, was material. The witness Benjamin Cady, sworn for the plaintiff, had testified that he had visited the house of the testator Bixby, had spoken to his sister in reference to going with Mrs. -Klock, the plaintiff, and then asked the testator “ if he had any objection to her going, and he said he had not.” He subsequently testified that Bixby called that evening to'see his sister, and that he heard him say to the plaintiff, “ Take good care of Electa, and you shall have your pay for it; ” that he saw Bixby the next day, and Bixby told him to tell the plaintiff “ to take good care of Electa, and that she would be well paid for it.” Upon the cross-examination, after again repeating that Bixby said that he had no objection to his sister going with the plaintiff, he was asked the following questions: “ Q. Did not lie say to you then that there were enough people in the house to take care of, and, if not, he would get more ? A. Not to my recollection; not to my knowledge; he did not make that remark. Q. Did not he say, further, that, if you or Mrs. Klock took her away, never to expect anything more from him ? A. No, sir; I will swear positively I did not understand him to say that. He did not say so, not thát I heard.”

After proving that the witness Fanny Brennan was present at the interview between the witness Benjamin Cady and the testator, Bixby, the witness was asked what was said by Benjamin Cady a:id the testator, Bixby, at such interview ; and it was offered to show by her that at such interview Bixby said to Cady: “ That his sister Electa could stay at his house if she wanted to; that it had always been her home; that he did not want her to go away; that if there was not help enough about the house, he would get more; that, if she wanted a doctor, he would send for one, but that, if she went away, he washed his hands of the whole transaction; they need never look to him for anything for her support or care; that they must never run any bills against him; that he was willing to take care of his sister, but that, if she left, he would do nothing for her, and pay no bills in her behalf.”

The witness being competent, as we have seen, and the plaintiff having by the witness Cady given in evidence part of the conversation, the defendants had a right to give in evidence any other or further part of the conversation which would in any way explain or qualify that portion introduced by the plaintiff. Rouse v. Whited, 25 N. Y. 170; Platner v. Platner, 78 N. Y. 90; People v. Beach, 87 N. Y. 508-512; Grattan v. Met. Life Ins. Co., 92 N. Y. 275-284.

. Again, it was competent and material for the purpose of contradicting the witness Cady, not only as a direct contradiction, but also as showing the improbability of the story he told. According to his testimony, Bixby, upon the occasion of his sister being taken away, expressed his willingness that she should go, and on the evening of the same day made an express promise to pay for her care and maintenance. The testimony offered upon the part of the defendants of the conversation had in reference to her leaving Bixby’s house not only contradicted that given by the witness Cady, but, if believed, might well be taken into consideration by the jury in determining whether, after making such strong expressions of his willingness to care for his sister at his own house, and refusing to pay for her care elsewhere, it was probable that, on' the evening of the same day, he should so utterly and entirely change his mind as to make an express promise to pay for her care and maintenance at the plaintiff’s. The views herein expressed as to the compentency of the witness Fanny Brennan, and the materiality of the evidence offered through her, applies as well to the witnesses James Brennan and Elisa Streetér, sworn upon the part of the defendants, and whose testimony in relation to the conversation hereinbefore referred to, between the witness Benjamin Cady and the testator, Bixby, was excluded by the referee, because of the supposed incompetency of the witnesses, under § 829 of the Code. For these errors the judgment should be reversed, and a new trial ordered, costs to abide the event.

Mayham, P. J., concurs in result; Putnam, J., not acting.