author: Bradley, J.

text:
    George W. White, App’lt, v. Mary Reed, Exr’x, et al., Resp’ts.

      (Court of Appeals, Second Division,

      Filed March 17, 1891.)

    Partnership—Accounting—Sale of partner’s interest obtained by fraud.
    Where a sale by one member of a firm to his partners is set aside for fraud or other cause, and the other members cpntinue the business, or enter upon new enterprises with the firm property, they may be required to account to the outgoing partner or his representative for the resulting profits. But the right of the outgoing partner to recover rests upon the fact that when he retired from the firm he had some remaining interest in the capital appropriated and used in the continuance of business by the other partners.

      Appeal from judgment entered on decision of general term of the superior court of the city of New York, affirming a judgment entered upon report of a referee, and from an order of the general term reversing a judgment previously entered upon a report of another referee.

      George H. Adams, for app’lt; Albert Stiekney, for resp’ts.
   Bradley, J.

The plaintiff, Horatio Reed and Charles White were equal partners in business from 1862 to August 4, 1876, when the plaintiff sold out his interest to his partner. The plaintiff in 1881 brought this action against Reed and White to •set aside the sale on the ground of alleged fraud, and for an accounting, with a view to the recovery of an additional sum by way of capital and profits. The court determined that the allegation of fraud was sustained; and by interlocutory decree set aside the sale and directed an accounting, which was had before a referee, upon whose report judgment was entered in favor of the plaintiff for upwards of $100,000. The judgment was reversed by the general term, and a new accounting directed before another referee. 23 J. & S., 417; 13 N. Y.St.Rep.,738. It was had andresulted in a report and judgment against the plaintiff for upwards of $8,000. The latter judgment was affirmed. This appeal is from that affirmance and from the order reversing, the judgment entered upon the first report The interlocutory judgment, and the facts' and conclusions of law found by the court directing it, remain undisturbed and effectual as the determination of the rights and liabilities of the parties, so far as they are dependent upon such decree: The business of the firm was large and consisted of buying live hogs in Chicago and shipping them to the city of New York, where they were slaughtered and the product disposed of. The plaintiff resided in Chicago, and had charge of buying and shipping the hogs to New York, where they were received by Reed and White, who had entire charge of the business there, and kept the books representing the accounts of the firm. In fact New York was its place of business.

In June, 1872, Reed entered into a secret arrangement with one Bate to sell and deliver to the latter from day to day, in the name of the firm, a large quantity of slaughtered hogs, to be disposed of by Bate for the joint profit of him and Reed to the exclusion of the firm. To accomplish this a formal agreement was made between them on the one part, and certain persons on the other part, whereby the latter agreed to make advances and take dressed hogs on terms particularly mentioned ; and the firm of Charles White & Co. made sales and deliveries to Bate up to February 8th following of over three million pounds of dressed hogs amounting to $186,761.58. In June, when such arrangement was made, Bate was indebted to the firm $24,722.71 and was then insolvent, of- which Reed was advised when he entered into the agreement with him; and when the business with Bate was closed in February, 1873, his indebtedness to the firm had increased to $44,735.74. In August, 1876, the plaintiff expressed to Reed and White dissatisfaction with the conduct of the business in New York and especially with the loss occasioned by the indebtedness of Bate, and he proposed to sell his interest in the firm for a sum certain. After some negotiation he sold out to Reed and White and agreed to take in cash and notes about $27,000 and one-third interest in certain real estate at a valuation of about $30,000, making together $57,000 for his interest. At that time a balance sheet was taken from the books which showed his credit balanc'e to be $70,818.40, and to induce him to make the sale for an amount less than such balance the defendants represented to the plaintiff that the Bate account was of no value and ought not to be taken into account. The court found that the representations in that respect were false to the knowledge of Reed, and were made with fraudulent intent on his part to induce the plaintiff to sell his interest for less than its value, and with the fraudulent intent of concealing from him the true state of the affairs of the firm to his disadvantage. The value of the indebtedness of Bate was in the liability of Reed to account to the firm founded upon his secret arrangement before mentioned with Bate; and in that view the interlocutory decree directed that in the accounting Reed be charged with the value of the merchandise delivered to Bate by the firm after June 15, 1872, and credited with payments made by him to the firm.

The further direction for the accounting given by the interlocutory decree was, that the defendants account for the disposition by them of the partnership assets which were in their possession on August 4, 1876; and that an accounting be had between the par-ties in respect to their several interests in the assets or their proceeds, or in the amounts for which the defendants might be chargeable in their disposition of them; that an account be taken of the assets and liabilities of the firm existing on that day; that the defendants file an account and the referee make an inventory of such assets and liabilities; and that he ascertain and determine what were the obligations of the defendants to the plaintiff in disposing -of the partnership assets or any of them after the sale by him, and the amounts with which the defendants were chargeable by reason of such disposition ; and that on such accounting the plaintiff be charged with all sums of money withdrawn by him or paid to him by the firm in August, 1876, also the value of all property withdrawn by or transferred to him by the firm or by the defendants at that time. The referee determined that the plaintiff received ' something more than he was entitled to at the time of the sale to Reed and White. This was based upon the finding made by him of the value of the firm assets at that time, and the determination that the plaintiff then received $57,000 for his interest. Both of those propositions of fact are contested by the plaintiff, who insists that he did not receive and should’ not account for or be charged with that amount. The one-third interest in the real estate before mentioned was not conveyed to him, but an agreement was made by White, who held the legal title for the firm, to sell it to him and to make conveyance when requested to do so. In December, 1880, the plaintiff released White from the agreement to convey, in consideration whereof Reed and White paid the-plaintiff §19,000. The plaintiff claims that he should not be charged with the $30,000, but only with the $19,000, as of the-time he received the latter sum. And this is urged on the ground that when the sale by him to his partners Reed arid White was set. aside the agreement to sell and convey such interest in the real estate referred to fell with it, and he was chargeable in that respect with only what he received upon the release of it by him and as-of the time he received the consideration of his release.

That view does not seem tenable, as the fraud charged had no-relation to the nature of the consideration which he received in payment for the transfer of his interest in the partnership property. Before the commencement of this action he had released his claim under the agreement to sell him the land for a specific-consideration paid to him. And on this subject.the interlocutory decree directed that in the accounting the plaintiff should be charged with all sums of money withdrawn by him from the firm in August, 1876, “also with the value of all property withdrawn by or transferred to him by said firm or by the defendants at that time.” The estimated value then made seems to have been the amount for which the third interest in the land was taken by the plaintiff, and there is no other evidence and no finding or request-to find upon the subject of its value at that time. And upon this review this court cannot say that it was worth then any less-than the price allowed by the plaintiff for it.

The question whether his interest in the firm assets was entirely covered by the $57,000 was one of more difficulty. All the partners had credit balances on the books, and the custom was to-make annual rests and to add interest from year to year on such balances. They, as represented by the balance sheet of 1st of July, 1876, were Charles White, $124,657.41; Reed, $84,096.99; plaintiff, $70,818.40. The plaintiff’s interest as thus represented (a sum equal to which he at first proposed to sell for) was reduced little less than one-third the amount of the Bate indebtedness in-the arrangement pursuant to which he made the sale. These-credit balances on the accounting were changed by adding some-assets not on the books or in the ledger account at the time of the sale, also by charging Reed with the amount of the Bate indebtedness which accrued after June 15, 1872, and adding one-third that amount to the balance of each of the other partners, thus; producing actual credit balances as of August 4, 1876, as follows: Plaintiff, $78,909.18; Charles White, $132,748.19; Reed, $68,515.43, making an aggregate $278,163.60. But the value of the-interests of the partners so represented was dependent upon the actual value of the assets of the firm. And while they had the nominal value of upwards of $290,000, the referee found that at. that time the actual value-was only $201,181.77 ; and after charging one-third of the losses and depreciation and the small amount of liabilities to each of the parties, the result as found by the referee was that the $57,000 was in excess of the plaintiff’s interest in the partnership assets. While the evidence is not such as to necessarily require the finding that the value of the property of the firm on August 4, 1876, was no more than the amount so found to be its value, there was evidence which permitted the conclusion that if the partnership had then been closed up, the amount of the assets would have produced no more than that sum. The question upon the evidence was one of fact, and it cannot upon this review be held that the finding was without some evidence for its support. Assuming then that the plaintiff, pursuant to his agreement to sell, received the value of his interest in the assets at that time, the question arises whether he was entitled to an accounting which would give him a right to participate in the profits of the business thereafter continued by Charles White and Eeed. They carried on the same business at the same place until in June, 1884, and realized large profits ; and the accounting was ■had after that time. Their deaths did not occur until in 1888. It is a general rule that when a partnership is dissolved by death •of a member or otherwise, and the other members continue the business, or enter upon new enterprises with the firm property, they may be required to account to the out-going partner or his representative for the resulting profits. And in some cases it may be optional on his part whether they be required to allow to him a due share of the profits or interest upon his share of the capital. Crawshay v. Collins, 15 Vesey, 218; 1 Jac. & Walk., 267; 2 Russell, 325; Featherstonhaugh v. Fenwick, 17 Vesey, 298; Wedderburn v. Wedderburn, 2 Keen, 722; 4 Myl. & Craig, 41. And the same rule is applicable where a sale by one member of a firm to his partners is set aside for fraud or other cause. Cook v. Collingridge, Jac., 607; King v. Leighton, 100 N. Y., 386.

It is, however, contended on the part of the plaintiff that the practical effect of setting aside the sale was the restoration of the plaintiff’s relation of partner and its continuance without interruption by the sale; and that at least he had a ■ credit balance of upwards of $21,000 remaining, and was entitled to share in the profits of the business until its termination in June, 1884. This would have been so if he had continued a partner and drawn out $57,000. That sum would, in that case, have been charged to him on the books and he would have been entitled to credit for ■one-third of the profits. He was not, in fact, a partner from the time of his sale. The firm befóte then existing was dissolved. And the setting aside the sale did not have the effect to restore the previously existing partnership; but in view of the purpose of this action, the effect of the interlocutory decree was to charge ■the other partners (who had continued the business) as trustees, with liability to account to the plaintiff and allow him what he was equitably entitled to of the profits of the business so continued and to render to him his share remaining in the capital of the firm. This was a subject of inquiry on the accounting, and whether he had any interest in the capital was dependent upon its amount compared with that received by him on the sale. If the amount so received equaled one-third the amount of all the assets of the firm at that time, he had no interest remaining in the capital and he derived no right to any by setting aside the sale. Mor for that purpose was there a restoration of the excess of the plaintiff’s credit balance. The interlocutory decree, as understood, does not, go so far as that. It directs the referee to take and state an account of the assets and liabilities of the firm on August 4, 1876. And while it also directed a further accounting by the defendants, it was left for the court, on the coming in of the referee’s report, and on motion for judgment upon it, to determine the rights of the parties upon the accounting had. If, as found by the referee, whose report was confirmed by the court, the amount paid to the plaintiff on the sale exceeded the amount of his interest in the capital or assets of the firm, he had nothing in the property appropriated to or used in the business continued by Reed and White after the plaintiff’s sale to them; and in that view it is difficult to see any principle upon which his claim for profits resulting from their business, conducted with their-own property only, can be supported. While the fraud which induced the sale by the plaintiff gave him the opportunity to seek and obtain full indemnity for the loss he had suffered by it, with the right to treat the defendants as trustees, and require them to account and render to him the share of the profits of the subsequently conducted business in the event, they used in it the joint property of the firm, the fact that he had no remaining interest in it denied to him the right to such relief. Taylor v. Hutchison, 25 Grattan, 536; 18 Am., 699; Vyse v. Foster, L. R., 8 Ch. App., 309; 4 Moak, 904; L. R., 7 H. L., 318; 11 Moak, 1; Simpson v. Chapman, 4 DeG., M. & G, 154; 2 Bates on Part., § 797.

There is no want of harmony in this view with King v. Leigh-ton. In that case there were unfinished contracts, which were the property of the firm at the time of the release of his interest in the partnership joint assets, which release the plaintiff was induced by the fraudulent representations of the defendant to give to the latter, who was held liable, upon the principle before mentioned, to account for the firm property and the profits realized from it in the subsequent conduct of the business by him, of which profits the plaintiff was held entitled to his share. And in the use by the defendant of such profits as capital, it is very likely he may have been required to, also, account therefor, and to allow to him a suitable measure of resulting profits. The-granting relief of that character does not proceed on the ground that the party seeking it is a member of a continued partnership, but rests upon the fact that when he retired from the firm he had some remaining interest in the capital appropriated and used in the continuance of business by the other partners. And when they seek such an advantage by fraud they will not be permitted to profit by it to the prejudice of the outgoing partner. It may be that upon the evidence the plaintiff has reason to think that the value of the assets was greater than that found by the referee, but upon that question this court is concluded by the finding and its confirmation by the court below. It is true that his knowledge of the fact, concealed from him at the time of the sale, of the liability of Reed to make good a portion of the indebtedness of Bate, would have increased the value as he then understood it of the firm assets $20,000 and his credit balance upwards of $6,-000; but inasmuch, as the ultimate purpose of this action was an accounting rather than to recover damages for the fraud, the right of the plaintiff to relief was dependent upon his having an interest in the assets as of and subsequent to the time of the sale. The entries in the books in that respect or the credit balances were only presumptive evidence of the value of the capital or assets of the firm. Jones v. Butler, 87 N. Y., 613, 617.

The good will of the partnership business of the parties seems to have had no consideration on the trial or accounting. 'The subject of it or its value was not specifically mentioned in the interlocutory decree. Hor was it one of the considerations upon which the sale by and purchase from the plaintiff was founded. It quite clearly appears that the negotiations which resulted in the sale were had solely in reference to the credit balance of the plaintiff and its comparison in amount with the then value of the assets. The matter of the good will or its value is not the subject for consideration. Steuart v. Gladstone, L. R., 10 Ch. Div., 626; 27 Moak, 161.

In accordance with the views already expressed, the vital fact was, whether the value of the assets at the time of the sale exceeded the amount which the plaintiff then received as its cftnsideration. And as it was found that it did not, the plaintiff was not entitled to recover upon the accounting. In determining whether or not the judgment is supported by the findings of the referee, as confirmed by the court, reference can be had only to the report upon which the judgment was entered. When the prior judgment was reversed the report of the referee on the first accounting became ineffectual.

But the only theory upon which the affirmative judgment in favor of the defendants can be supported is, that the parties were in fact partners, and this action brought by the plaintiff as such, for a dissolution and accounting. In that view the plaintiff’s action would have a phase which, if given to it, might lead to a different result In such case, as suggested by the defendants’ counsel, all parties are actors and judgment will be awarded for and against any of them as their rights may appear. Here the partnership existing on August 4, 1876, was then dissolved, and did not in fact thereafter exist The plaintiff’s action was for relief founded on fraud; and after the obstacle produced by his contract of sale and release was removed, his ultimate remedy required an accounting to ascertain whether he was entitled to any and what amount, treating the original defendants, as he was permitted by the interlocutory judgment, as trustees of the capital in which he had an interest, and to charge them with the amount to which he was entitled of the profits of the business in which it had been employed by such defendants. He was the actor in the action. The defendants, so far as appears, had no cause against him upon which to found a counterclaim, and none was alleged.

The defendants were, therefore, not entitled to recover the affirmative judgment rendered in their favor.

The judgment, so far as by it the defendants recovered against the plaintiff $8,325.78 and interest, should be reversed, and in other respects affirmed, and be modified accordingly, without costs in this court to either party.

All concur.


source: Caselaw Access Project

author: Parker, J. Brown, J. (dissenting.)

license: Public Domain

text:
    In the Matter of Proving the Last Will and Testament of James Conway, deceased.

      (Court of Appeals, Second Division,

      Filed March 17, 1891.)

    Will—Execution—Subscription.
    A will drawn upon a printed form or blank, with part of the devises . written in the proper space, and then in parenthesis above the attestation clause the words, “carried to back of will,” and the whole of the back filled with writing, with the word, “ continued ” at the top, and at the bottom the words “signature on face of the will,” and the testator’s name signed at the foot of the first page, is not executed by a subscription “ at the end of the will,” as required by the statute.
    (Brown, Bradley and Haight, JJ., dissent.)
    Appeal from a judgment of the general term of the fifth judicial department, entered upon an order' made October 23, 1890, affirming a decree of the surrogate of Wyoming county, admitting to probate the will of James Conway, deceased.
    The will was written upon a printed form, consisting of a half sheet‘about the size of a half sheet of legal cap. The form from the beginning of the will to the end of the attestation clause was wholly upon one side of the half sheet. On the back of the sheet was an endorsement, “ Will,” with a blank between ruled lines for the name of the testator, so placed that when the paper was folded as an ordinary legal paper the endorsement would appear on the outside. The usual direction for the payment of debts was printed, and then followed the printed words, “ I give, devise and bequeath my property as follow’s.” Following these words was a blank space five inches long. Then a printed provision appointing an executor, with a blank for the name. Then the testimonium clause, a blank space for the name of the testator and the seal; then the attestation clause and a blank space for the names of the witnesses. In drawing the will the blank space of five inches in the body of the instrument was entirely filled up with devises of three separate pieces of real estate to the testator’s three sons. At the end of the third devise, in parentheses and underlined, were the words, “ carried to back of will.” Upon the back of the will, just below the space left for the endorsement, in parentheses and underlined, was the word, “ continued.” Then followed bequests of personal property to the testator’s sons and daughters, which filled up the whole of the back of the instrument from the space for endorsement to within one inch of the bottom, and below it all appeared the words, “ signature on face of the will.”

      E. M. Bartlett, for app’lt; George W. Bottsford, Jr., for resp’t

       Reversing 33 N. Y. State Rep., 365.

   Parker, J.

We think the probate of the instrument should have been denied on the ground that there was not such a subscription and signing by the testator and witnesses at the “ end of the will” as is required by our statute. 2 E. S., 63, § 40. The aim of the statute is to prevent fraud. To surround testamentary dispositions with such safeguards as will protect them from alteration. The provision “ is a wholesome one and was adopted to remedy real or threatened evils. It should not be frittered away by exceptions. While its provisions should not be carried beyond the policy of the framers of it, that policy should not be defeated by judicial construction.” Sisters of Charity v. Kelly, 67 N. Y., 409. If we were without authority to guide our action could there be room to doubt that the subscription on this instrument is in contravention of the letter and spirit of the statute ? The instrument commences as follows: “ The Last Will and Testament of James Conway,” and on the same page towards the bottom it concludes, “ In Witness whereof I have hereunto subscribed my name * * *,” and immediately following is the subscription “James Conway.” If between such beginning and end all of the provisions of the will were written there would be a full compliance with the statute. But such is ■not the case. On the other side of the sheet and occupying nearly the entire page are what purport to be important testamentary provisions. Now, can it be said that this will is subscribed at the end ? That somewhere between the beginning and the signature of James Conway the matter written on the second page appears ? These questions are emphatically answered in the negative by the decisions of this court in Matter of O’Neil’s Will, 91 N. Y., 516. In that case as in this the will was written on a printed form or blank. The written part was divided into thirteen paragraphs. The thirteenth being as follows: “ And I authorize and empower my executors hereinafter named, to sell, convey, assign and transfer my real property for the payment of the bequests hereinafter named and mentioned either at private ” (here the writer came to the testimonium clause at the end of the blank space and thereupon turned over the sheet and completed the sentence on the top of the next page, as follows:) at public sale and in the manner that they will deem the most profitable and advantageous to my said estate, but in no case shall my said executors by process, by law or otherwise, sell and convey and dispose of my said real property before the lapse of five years after my death, unless my said executors shall see fit and proper to sell and dispose of the same by virtue of the authority hereinbefore given them as aforesaid.”

It was read to the testator in the presence of witnesses, the portion written on the top of the fourth page being read as if it had all been written in the blank space immediately after the word “ private.” He then signed the will just after the testimonium clause, declared it to be his last will and testament, and the witnesses at his request and in his presence subscribed their names as witnesses immediately underneath the attestation clause. This court, in a carefully considered opinion delivered by Chief Judge Huger, reached the conclusion that the testator and witnesses did not sign “ at the end of the will ” as commanded by statute, and therefore the instrument was invalid and not entitled to probate. That decision, both in its letter and spirit, seems to be decisive of the question before us, but as it is insisted otherwise, reference will be made to the features wherein it is suggested that they are so far distinguishable as to permit a different result.

In this will the third written paragraph and the last on the first page ended about the middle of the last line before the testimonium clause; then, enclosed in brackets, was written the following : “ Carried to back of will” On top of the second page and about half an inch above the commencement of the fourth sub-division enclosed in a bracket and underscored is the word “ continued,” and below the writing and néar the bottom of the page are the words “signature on face of the will.” While in OTTeil’s will there are no such words, but the concluding paragraph is written on one side so far as the blank space would permit and then concluded on the other. In each case it is conceded that it was the intent of the testator that the provisions appearing on the page following his signature should form a part of his will, and to each case is the remark of Chief Judge Euger equally applicable, that “ while the primary rule governing the interpretation of wills, when admitted to probate, recognizes and endeavors to carry out the intention of the testator, that rule cannot be invoked in the construction of the statute regulating their execution. In the latter case courts do not consider the intention of the testator, but that of the legislature.” Matter of O'Neil, supra.

It is likewise true that in this will, as well as O’Heil’s, the actual physical termination of the will is not at the place where the testator subscribed his name, and there seems to be no reason in the direction of giving support to the integrity of the statute as interpreted in Matter of O'Neil, supra; Matter of Hewitt, 91 N. Y., 261; and Sisters of Charity v. Kelly, 67 id., 409, that will permit the court to make such use of the words “carried to back of will,” “continued” and “ signature on face of will,” as will permit a holding that the signing was “ at the end of the will.” There is no less opportunity for fraud in cases like this than in the O'Neil case. For how can a case be conceived of where alteration can be more easily accomplished ?. A paragraph is ended and a portion of a line left; there then need but be written therein “ carried to back of will,” and then any number of disposing paragraphs may be written thereon. The words of themselves do not prove that they were written before the signing of the testator. Certainly th ev furnish no more satisfactory evidence of having been written before the happening of such event than where the entire space before the testimonium clause is occupied by a subdivision of the will which is simply completed on the next page, as in the O'Neil case. And when, as frequently happens, one or both of the witnesses die before a will is probated, a contrary construction would seem to open a door for fraud which it was the aim of the legislature to close.

Again, if the rule of construction laid down in the O'Neil case be departed from to this extent, where can the line be drawn ? If, by preceding the testimonium clause with the words “ carried to back of will,” all that is written thereon may be made a part of the will what is to prevent making another sheet a part of it also, by writing on the bottom of that page, continued on sheet one, and so on until any number of sheets, of paper with testamentary provisions thereon bte made a part of the instrument which is signed on the first page ?

We have thus given some of the reasons which have led us to the conclusions:

First. That the O'Neil case requires this court to hold that this will was not signed at the end.

Second. That the attempted distinction may not be iustified on the ground that it cannot be made to so operate as to permit frauds which it was the design of the legislature to prevent.

There now remains for consideration the basis upon which it is sought to found the distinction.

Reference is made to the rule stated in Williams on Executors, at page 97, “if a testator in a will or codicil or other testamentary paper, duly executed refers to an existing unattested will or other paper the instrument so referred to becomes a part of the will,” and other authorities tending to the same direction being cited, it is asserted that within the principle thus established a testator may write substantial portions of his will upon the margin of the document, or upon the back of the paper, or upon the paper annexed to the will, if such provisions are referred to in the body of the instrument and connected therewith by means of asterisks, words or symbols indicating their relation to the provisions on the face of the paper.”

A brief reference to the state of the law relating to the execution of wills in England will make it apparent that neither the decisions of its courts nor the rules deduced therefrom by English text writers can be made applicable to cases arising under our • statute.

Prior to January 1, 1838, no solemnities were necessary for the making of a will of personal estate. Wills were admitted to probate which did not contain either the signature or seal of the testator and were in the handwriting of some other person, while the statute of frauds provided the formalities of signature and attestation necessary for a devise of lands. By statute, 1 Viet., chap. 26, § 9, it was provided “ that no will shall be valid unless it shall be in writing and executed in manner hereinafter mentioned; that is to say, it shall be signed at the foot or end thereof by the testator or by some other person in his presence and by his direction, and such signature shall be made or acknowledged by the testator in the presence of two or more witnesses present at the same time, and such witnesses shall attest and shall subscribe the will in the presence of the testator, but no form of attestation shall be necessary.” This act took effect January 1, 1838. . A new ground of contest in the courts was now presented as to what should be considered a signing of the will at the end or foot thereof. Mr. Williams, in his work on Executors, page 78, says the tendency was at first in the direction of a liberal construction of this part of the statute, but afterwards it was deemed necessary to take a more rigid view of the enactment on the ground that it was intended to prevent any addition being made to the will after the deceased had executed it. Accordingly, probate was refused in a great number of cases.

This result, not at all surprising, in view of the fact that prior to 1838 testamentary dispositions of personalty were frequently given effect where the testator had not even signed or authorized the signing of the writing, led to the passage of the statute, 15 Viet., chap. 24, entitled “An act for the amendment of the laws with respect to wills,” passed June 17, 1852. Section 1 provides as follows : “ Where by an act passed in the first year of the reign of Her Majesty Queen Victoria, entitled ‘ An act for the amendment of the laws with respect to wills,’ it is enacted that no will shall be valid unless it shall be signed at the foot or end thereof by the testator or by some other person in his presence and by his direction; Every will shall, so far only as regards the position of the signature.of the testator or of the person-signing for him as aforesaid, be deemed to be valid within the said enactment, as explained by this act, if the signature shall be so placed at or after, or following, or under, or beside, or opposite to the end of the will that it shall be apparent on the face of the will that the testator intended to give effect by such his signature to the writing signed as his will, and that no such will shall be affected by the circumstance that the signature shall not follow or be immediately after the foot or end of the will, or by the circumstance that a blank space shall intervene between the concluding word of the will and the signature, or by the circumstance that the signature placed among the words of the testimonium clause or clause of attestation shall follow, or be after, or under the clause of attestation, either with or without the blank space intervening, or shall follow, or be after, or under, or beside the names, or one of the names of the subscribing witnesses, or by the circumstance that the signature shall be on a side or page or other portion of the paper, or papers, containing the will, whereon no clause or paragraph or disposing part of the will shall be written above the signature, or by the circumstance that there shall appear to be sufficient space on or at the bottom of the preceding side or page or other portion of the same paper on which the will is written to contain the signature; and the enumeration of the above circumstances shall not restrict the generality of the above enactment, but no signature under the said act or this act shall be operative to give effect to any disposition or direction which is underneath or which follows it, nor shall it give effect to any disposition or direction inserted after the signature shall be made.”

Clearly it needs no other argument than is furnished by a statement of the practice in England respecting the probate of wills prior to 1838 and a reading of the amendment of 1852 to demon-state the inapplicability of English decisions to a question like that before us. By statute the English courts are commanded to consider the intent of the testator in determining whether there was a due execution. With us it is the intention of the legislature and not that of the testator which controls such a question. Matter of O'Neil.

Williams on Executors, Jarman on Wills and "the English decisions cited need not, therefore, receive other consideration.

Van Cortlandt v. Kip, 1 Hill, 590, decides simply that a codicil duly executed will-amount to a republication of the will causing it to speak as of the date of the codicil, and that when such is the case both should be read and construed together as one instrument. That proposition does not admit of controversy. Caulfield v. Sullivan, 85 N. Y., 153-160. But it is difficult to see how it can be made available in the disposition of the question now presented.

In Brown v. Clark, 77 N. Y., 369, a woman executed her will, subsequently married, and then in due form executed a codicil which after describing the will executed before marriage continued as follows: “ I do hereby republish, reaffirm and adopt the aforesaid instrument as my present will in like manner as if so executed by me, but modified pursuant to this codicil, which in connection with, and amendment of my said will I now publish and declare together as constituting my last will and testament” And at the execution thereof the testatrix declared the instrument to be “ a codicil to her last will and testament, and a reaffirmation of the latter.” As her marriage operated to revoke the will, 2 R. S., 64, § 44, the question presented was whether the execution of the codicil was a republication of the will. And such was held to be its legal effect. Mo other question was involved or decided, although reference was made to certain English decisions, which are not deemed in point for reasons already given.

Matter of Commissioners of Washington Park, Albany, 52 N. Y., 131, was a proceeding instituted to acquire title to lands under a statute requiring that in the petition the real estate sought to be taken must be fully described, and the names and places of residence of the parties owning or claiming an interest in the real estate stated. In the body of the petition the real estate was referred to as “hereinafter fully described and set forth,” and the petition further declared that “ hereafter is stated the names and places of residence of the parties * * * Annexed to the petition were schedules containing the recitals called for by the statute. It was held that the schedules formed part of the petition, and that there was a sufficient compliance with the statute. That case does not seem to be applicable here. The statute is not the same, nor the object sought to be accomplished. It did not require that the paper should be subscribed at the end. And the reasons which induced the legislature to require that in case of wills the provisions thereof should all be written before the signature did not exist.

Tonnele v. Hall, 4 N. Y., 140, was considered by this court in the O'Neil case, and need not be again referred to. The reference thus made to the authorities cited in support of the proposition enunciated in Williams on Executors may well be concluded by a quotation from the opinion in the O'Neil case. “ It is not believed that any paper or document containing testamentary provisions not authenticated according to the provisions of our statute of wills has yet been held to be a part of a valid testamentary disposition of property, simply because it was referred to in the body of the will.”

It is sought to further distinguish this case from O'Neil's on the authority of certain cases in which the effect of an interlineation or erasure are considered. Crossman v. Crossman, 95 N. Y., 145, is the only case cited in which the question arose under our statute. In that case a will was executed in duplicate; in one there was an interlineation of the name of one of the executors, and it was noted at the-bottom of the will before the attestation clause. The interlineation was necessary to make the two wills precisely alike. And Judge Earl, in delivering the opinion of the court, said: “ Where an interlineation fair upon the face of an instrument is entirely unexplained, we do not understand that there is any presumption that it was fraudulently made after the execution of the instrument. But here the interlineation was noted at the bottom of the instrument before the attestation clause, and so, too, the interlineation was necessary to make it a duplicate. * * * Taking all these circumstances there was sufficient to cast the burden upon the contestants to show that the interlineation was fraudulent and unauthorized.”

Now can it be said that the provisions on the back of this instrument constitute an interlineation? They do not appear on its face; and do not have any necessary connection with that which precedes or follows them. Clearly such a determination is not supported by the Crossman case. And that decision should not be carried beyond its terms in order to obtain a basis for distinguishing this case from that of O’Neil’s.

The judgment should be reversed and petition for probate dismissed, with costs.

Brown, J. (dissenting.)

Theappellant claims that the judgment should be reversed upon the authority of Hewitt’s case, 91 N. Y., 261, and O’Neil's case, id., 516.

In Hewitt's case the witnesses signed in the middle of the will and the facts have no similarity to the present case.

In O'Neills case the will was written on a printed form consisting of one sheet of four pages. The blank left for the insertion of special and substantial parts of the will was nearly three pages, and the formal termination and attestation clause was at the end of the third page. This was all filled up and being of insufficient size to contain all the provisions the testator desired to make, the remaining portion was carried to the fourth page.

The names of the testator and witnesses appeared at the foot of the third page. These facts are similar to those in the case before us, but in one very essential particular the cases differ.

In .O'Neil's case there was no reference in the body of the will to the writing on the fourth page and that part of the will was in no way authenticated, and this circumstance was referred to by Judge Euger in his opinion.

In this case there is a clear and distinct reference in the body of the will to the provision on the back of the paper and they are connected by means of the words in parenthesis and their relation to each other indicated.

It is well settled that an interlineation or erasure on the face •of a will does not necessarily destroy it, and there is no presumption where it is fair upon its face that it was made after execution. Crossman v. Crossman, 95 N. Y., 145; Speake v. United States, 9 Crunch, 37; Bailey v. Taylor, 11 Conn., 531; Jarman on Wills, vol. 1, p. 144.

So it is also established by numerous authorities that any written testamentary document in existence at the execution of a will may by reference be incorporated into and become a part of a "will, provided the reference in the will is distinct and clearly identifies or renders capable of identification by the aid'of extrinsic proof the document of which reference is made. Van Cortlandt v. Kip, 1 Hill, 590; Brown v. Clark, 77 N. Y., 369; Matter of Comm'rs of Washington Park, 52 id., 131-134; Tonnele v. Hall, 4 Comst., 145; Burton v. Newbery, L. R., 1 Ch. Div., 239; Williams on Executors, 97; 1 Jarman on Wills, 78.

I think this will may be sustained within the principle of the authorities cited.

It would be quite too narrow a construction of the statute to hold that in no case is a will valid when a substantial provision was written below the signature when such provision is connected with the body of the instrument by a clear and distinct reference made to them.

By such reference it is incorporated into and becomes a part of the will, and no distinction is- apparent between such a case and one where the testator writes upon the margin of the instrument or between the lines, and connects such writing with the body of "the paper by an asterisk or hyphen.

In this case there are no suspicious circumstances appearing on "the face of the will. It is all in one handwriting, and it is proved beyond question that the will was read to the testator and was executed in the condition it now appears, and the testator understood perfectly that part of the will was on the back of the paper. The words •“ carried to back of will ” on the face of the paper and the word “ continued ” on the back connect the two parts and indicate their relation to each other, and, in determining where the ■end of the will is, the writing on the back is to be read as if written on the face of the will.

Ho one could read this will in the ordinary way and reach the ■ end without reading that part on the back of the paper. When the words “carried to back of will” are reached/one naturally turns to the back of the paper and the word “ continued ” connects the parts. When that part on the back is read, the reader returns to the face of the paper and resumes the reading at the beginning of the clause appointing the executor.

The case would be the same if, instead of adopting the course pursued, the draftsman had written on the margin of the face of the paper what appears upon the back and connected it with the body of the instrument with an asterisk.

The case does not fall within the mischief that the statute was designed to guard against, and there is no authority holding such-a will as this invalid.

In Sisters of Charity v. Kelly, 67 N. Y., 409, the signature of the testator appeared in the middle of the clause appointing the executors. In that case Judge Folger said: “The instrument is-to be scanned to learn where is the end of it as a completed whole, and at the end there found must the name of the testator appear.”

Scanning this will to ascertain where the end is, we cannot ignore the words and symbols which connect the body of the instrument with the writing on the back, and reading it in the light and meaning of those words and symbols, the signature appears^ at the end.

The judgment should be affirmed.

Judgment reversed and petition for-probate dismissed, with, costs.

All concur, except Bradley, Haight and Brown, JJ., dissenting; Brown, J., reading dissenting opinion.


author: Brown, J.

text:
    Emily Ford, Adm’rx, Resp’t, v. The Lake Shore & Michigan Southern R. Co., App’lt.

      (Court of Appeals, Second Division,

      Filed March 17, 1891.)

    1. Master and servant—Negligence—Employer must furnish rules' FOR METHOD OF WORK.
    A corporation is bound to carry on its business under a proper system and under reasonable rules and regulations, and if, through a failure to establish such, a servant is injured, the corporation is liable.
    2. Same.
    Defendant furnished ‘ ‘gondola” cars, with boxes generally used for carrying coal, with stakes, but without brackets to receive them, for the purpose of being loaded with heavy timbers, which were to be drawn about a mile-through the city. Plaintiff, who was a switchman in defendant’s employ, was injured by timbers which fell from a passing car. Defendant’s only rule as to the loading of lumber required its employes “to attend to the-loading of all freight, whether loaded by station men or by shippers, to see-that it is safely stored, and so that it cannot fall off the cars.” Held, that defendant was liable, as it did not provide, make and promulgate a proper and sufficient rule with respect to the loading of the cars with lumber, which, if faithfully observed, would have given reasonable protection to-its employes.
    3. Same.
    As to such acts the agent occupies the master’s place and the latter is deemed present and liable for the manner in which they are performed.
    (Follett, Oh. J., dissents.)
    Appeal from a judgment of the general term of the superior court of Buffalo, entered upon an order dated December 31,1890, affirming a judgment directed to be entered upon special findings-of fact, and also affirming an order denying a motion for a new trial.
    This action was to recover damages for negligently causing the death of the plaintiff’s husband, a switchman in the employ of the defendant.
    On the night of May 29,1887, while at his post of duty, he was. struck by heavy timbers which fell from a passing car, and received injuries from which he soon after died.
    The case has been once before in this court, 117 E. Y., 638; 27 E. Y. State Rep., 246, and the material facts are very fully stated in the opinion of Judge Earl there delivered. Other facts are stated in the opinion.

      James F, Gluck, for app’lt; Tracy 0. Becker, for resp’t
   Brown, J.

Upon the first appeal of this case the judgment which the plaintiff had recovered was reversed by this court on the ground that the cause of accident was attributable solely to the negligence of the fellow servants of the deceased in improperly loading the lumber upon the cars.

There was then no question whether the defendant was guilty •of negligence in failing to establish a proper rule or method for the loading of lumber.

The court on the first trial charged the jury that there was no evidence that the defendant was called upon to establish any system of rules which should provide for any different or safer method in the loading of the lumber than that described by the witnesses, and as the plaintiff had a verdict, no question was or could be raised on appeal as to' the correctness of that charge.

Upon the last trial it appeared that the only written rule that the defendant had established, which it was claimed had reference to the loading of lumber, was one known as Eo. 82, and which required its employes “ to attend to the loading of all freight, whether loaded by station men or by shippers, to see that it is safely stored, and so that it cannot fall off the cars.”

It appeared that the defendant had also furnished to its employes stakes to be used in making secure freight placed upon flat or gondola cars and the witnesses for the defendant who had loaded or inspected the cars in question testified that they knew that stakes were' necessary in making the lumber secure, and that when there were no brackets on the side of the cars, as in this ■case, the stakes could be placed inside the box between the side ■of the car and the lumber and fastened by being nailed or spiked to the side. But that course was not pursued in this case for the reason that on account of the short distance the lumber was to be ■carried it was not deemed necessary.

The plaintiff also gave proof tending to show that on other roads a verbal rule existed that in loading lumber it should be .secured by stakes on the sides and stays across the top of the load whenever it was loaded above the side of a car, and that the rule applied in all cases no matter what the distance was over which the lumber was to be carried. That no verbal rule of this •character prevailed on defendant’s road and no instruction to that effect was ever given to its employees. This testimony was not given upon the first trial.

At the close of the evidence the trial court submitted eight special questions to the jury, stating that upon the answers to those ■questions it would determine which party would be entitled to judgment. Upon the special findings thus made judgment was directed for the plaintiff.

This mode of submitting the case to the jury was acquiesced in by both parties, but the defendant claimed and now claims that there was not evidence sufficient to justify a verdict for the plaintiff and that the complaint should have been dismissed, and by appropriate exceptions the question is presented here whether the. findings of the jury have support in the evidence.

That the car in question was improperly loaded and that such was the cause of the intestate’s death and that he was free from any negligence contributing to the injury, are facts found by the answers, to the first three questions and are not disputed on this appeal.

The seventh and eighth findings related 'to the question of plaintiff’s damages and the amount. The fifth question was as follows : Did the defendant provide, make and promulgate a proper and sufficient rule with respect to the loading of the cars-with lumber, including the car from which the lumber fell, which if faithfully observed would have given reasonable protection to its employes.” Which question the jury answered in the negative.

We are of the opinion that the answer to this question supports, the judgment rendered.

The intestate upon entering the defendant’s employ assumed and assented to the ordinary risks incident to the service. But. employers cannot avail themselves of this assent unless they take reasonable precautions to insure the servant’s safety while in the performance of his duties, and there can be no exemption from liability for injuries sustained by a servant when such injuries, are traced to the employer’s failure to take such precautions.

Within the operation of this principle a corporation is bound to carry on its business under a proper system and under reasonable rules and regulations, and if through a failure to establish such a servant is injured the corporation is liable.

The master is responsible for his own negligence and want of care and this may appear from his failure to furnish proper machinery and materials for the work, or from the employment of incompetent and unfit servants and agents, or from a failure to make proper rules or establish a proper method for the conduct of his business.

These are the master’s duties, and responsibility cannot be-evaded by their delegation to agents. As to such acts the agent occupies the master’s place, and the latter is deemed present and liable for the manner in which they are performed. Flike v. B. & A. R. R. Co., 53 N. Y., 549; Fuller v. Jewett, 80 id., 46.

In the case before us it was clearly the duty of the defendant to adopt some system for the loading of lumber upon open cars that would have regard for the safety not only of its servants and those traveling over its road, but to the safety of all persons who should be in the vicinity of its cars. The importance and extent of the business, and the manifest danger from the falling of heavy sticks of timber from the cars required this.

But there was no rule on the subject. The only rule shown to. exist had no particular reference to lumber more than other freight, and it expressed nothing more than the obligation which the law put upon the corporation, viz.: to take due care that freight was safely loaded and should not fall from the car.

But method or system as to loading lumber there was none. Having furnished a good car and stakes that might be used, the manner of loading lumber was left to the judgment and discretion of its agents and servants.

It was not sufficient for the defendant to show that its employes knew that the rule I have quoted applied to lumber, and also knew that the general usage required it to be staked and that stakes were furnished and available to the men in the particular case before us. All this may be assumed to be true, and yet the fact exists that the use of the stakes was not enjoined upon the servants by any rule of the defendant or by any instruction ever given them. Having furnished the car and the stakes, it was left to the judgment and discretion of the foreman whether to use the stakes or not, and in this particular instance they were not used, for the reason that they supposed the lumber would stay on the car over the short distance it was to be carried. And it is because of the failure of the defendant to require the use of the stakes in all cases that the neglect of its servants in this case is imputed to it. There was no rule, and the only method or system was such as the foreman in each particular case should deem the safe and proper one to pursue.

Under such a state of facts the employer must be deemed constructively present during the loading of the cars, and the acts of his agents are in law deemed to be his acts.

The improper and negligent loading of the cars is thus traced directly to the defendant and its negligence established.

Thus far I have treated the construction of rule 82 as a question of law, but in the question submitted to the jury there was opportunity for a finding of fact that the making of that rule was a sufficient performance on the part of defendant of its duties, towards its servants, and it is unnecessary to say more upon the exception of the defendant to the submission of that question as one of fact to the jury than that it was a ruling as favorable towards it as the facts of the case warranted.

The view of the case herein expressed renders unnecessary any reference to the other findings of the jury which the respondent claims establish the negligence of the defendant.

We find no error in the record and the judgment must be affirmed.

All concur, except Rollett, Ch. J., dissenting.


author: Potter, J.

text:
    Carl R. C. Heyne, Resp’t, v. John Doerfler, Ex’r, App’lt.

      (Court of Appeals, Second Division,

      Filed March 20, 1891.)

    Executors and administrators—Evidence of claim against estate— > Code Civ. Pro., § 829.
    Plaintiff presented a claim against the estate for services as nurse and for board of decedent’s nephew and niece, and was allowed to testify before the referee, under objection, that he had a conversation with deceased about the nephew and niece coming to his house, and also to state that “ aunt cried and said I should take her (the niece) and I should receive $200.” Held, error; as the evidence was improper under § 829, Code Civ. Pro.
    Appeal from a judgment of the general term of the supreme court, second department, affirming a judgment upon the report of a referee, appointed under the statute to hear and determine a claim against the estate of Maria F. Arlt, deceased.
    The amount of the claim as presented by the plaintiff amounted to $611, and is made up of two charges. One of them is for the board of Anna John ana Emil John ; the other is for professional services rendered as nurse by plaintiff for the deceased for various periods of time between June 2, 1887, to March 18, 1888.
    The referee reported in favor of the plaintiff to the amount of $350 of the claim, allowing the whole of the $200 and a portion only of the claim for services as nurse. The appeal to this court was allowed by the court below.

      Jos. A. Burr, for resp’t; H. D. Birdsall, for app’lt.
   Potter, J.

The plaintiff sought to recover for his services and attendance, upon proof that he had rendered services for and attended upon the deceased at her house during her sickness, and at her request and upon her promise to pay for the same at the rate he would have earned if he had worked at his business of making cigars. He also sought to recover the sum of $200 upon proof that the deceased had promised to pay him that sum if he would take and keep Anna and Emil John, relatives of the deceased, who had recently arrived at the house of the deceased from Germany, till they should get employment. The evidence introduced upon plaintiff’s part to support these claims, including that given by the plaintiff himself, was weak and quite unsatisfactory, but under the rule that prevails in this court in respect to reviewing evidence, we do not feel warranted in reversing the judgment upon that ground. But we think the learned referee fell into errors in receiving some of the evidence given by the plaintiff himself in reference to personal transactions and communications between the plaintiff and the deceased bearing upon plaintiff’s employment and a promise of payment by the deceased.

. To support the claim of $200 it was necessary that plaintiff should prove a contract between himself and the deceased to the effect that plaintiff had agreed to keep at his house Anna and Emil John and the deceased had promised to pay him $200 for so doing. There is no pretence that such contract, if made at all, was not wholly made by parol The plaintiff was allowed to answer, under objection and exception that such evidence by the plaintiff was not competent under § 829, Code of Civil Procedure, this question: “Before Emil and Anna came to your house, did you have a conversation with Mrs. Arlt in reference to (their) coming.” Answer, “Yes, sir.” This was one step towards proving the alleged contract between plaintiff and the deceased in relation to their going to plaintiff’s house. Again, the plaintiff was asked and allowed to answer, “What did Mrs. Arlt say when. Anna John was present ? ” Answer: “Aunt cried and said I should take her and I should receive $200." This answer was received and duly excepted to. Again, the plaintiff was allowed to put in evidence memoranda showing the days and periods of time he had been at the house of the deceased.

Some, if not all of the evidence above specified was in contravention of § 829, Code of Civil Procedure.

The object and purpose of this statute is so obvious as not to require or justify any explanation. or consideration beyond that which it has repeatedly received from this court. It was said in the opinion of the court of appeals in Holcomb v. Holcomb, 95 H Y., p. 325, in relation to § 829, that, “ The words of exclusion are as comprehensive as language can express. Transactions and communications embrace every variety of affairs which can form the subject of negotiation, interviews, or actions between two persons, and include every method by which one person can derive impressions or information from the conduct, condition, or language of another. The statute is a beneficial one and ought not be limited or narrowed by construction. Although it must appear that the interview or transaction sought to be excluded was a personal one, it need not have been private or confined to the witness and deceased. If they participated it does not change its character because others were present A contrary rule would defeat the reasonable intent of the statute that a surviving party should be excluded as one interested from maintaining by his testimony an issue which in any degree involved a communication or transaction between himself and a deceased person."

It was incumbent upon the plaintiff in order to maintain the claims in this case to prove that the deceased engaged the plaintiff to keep and board Anna and Emil John and to serve and nurse the deceased, and her promise to pay him therefor. For that purpose, the plaintiff was allowed to prove that he conversed with the deceased in reference to their coming to plaintiff’s house and that he should receive from the deceased $200 therefor and that he was at the house of the deceased in Brooklyn many times and for several periods of consecutive days, leaving his own house and business in New York for that purpose, and when there, generally, no person other than the physician of the deceased in making professional visits was present.

The plaintiff’s attendance at the house of the deceased under the circumstances proved in this'case was a personal transaction between the plaintiff and the deceased and was of the utmost significance.

The testimony of the plaintiff as to the communications and transactions between himself and the deceased was pertinent to the issue upon the trial in this case and could have had no relevancy to any other aspect of it. Indeed, I am inclined to the opinion that it exceeded in weight and cogency upon the issues all the other evidence in the case, and hence it cannot be successfully maintained that the objectionable evidence did no harm or that there was sufficient evidence without it to justify an affirmance of the judgment. In re Eysaman, 113 N. Y., 62; 22 N. Y. State Rep., 136.

As these views require a reversal of the judgment, there is no occasion to consider the objections to the introduction of the memoranda of plaintiff’s attendance at the house of the deceased made, but not remembered or verified, by himself or the introduction of the will of the deceased as evidence in the case.

The judgment should be reversed, and a new trial granted.

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

All concur.

       Reversing 32 N. Y. State Rep., 960.


author: Earl, J.

text:
    Frank Rudd, Receiver, Resp’t, v. George H. Robinson, App’lt.

      (Court of Appeals,

      Filed March 20, 1891.)

    1. Manufacturing companies—Fiduciary relation of trustee.
    There is no rule of law which charges a director or stockholder of a corporation with actual knowledge of its business transactions merely because he is such director or stockholder.
    2. Same—Evidence—Books of corporation.
    The books of account of a corporation are not competent evidence of themselves to establish an account or claim against a trustee or stockolder in an action brought in behalf of the corporation
    This is an appeal from an order of the general term of the supreme court, first department, denying a motion for a new trial made upon a case ana exceptions under § 1001 of the Code of Civil Procedure. The facts appear sufficiently in the opinion.

      Thos. Darlington, for app’lt; Benj. F. Blair, for resp’t

       Reversing 27 N. T. State Rep., 98.

   Earl, J.

The plaintiff is receiver of the Goodwillie-Wyman Company, an insolvent manufacturing corporation organized under the laws of this state. The action was brought in equity to charge the defendant as a trustee of the corporation for the unlawful receipt and appropriation of the money and property of the corporation. An interlocutory judgment was rendered against him charging him with a large amount of money thus improperly received and appropriated.

The liability of the defendant for this money was, in the main, established by the account books of the corporation, and the principal contention on his behalf upon this appeal is that those books were improperly received as evidence against him.

The capital of the corporation was $50,000, of which Robinson, Briggs and. Innet, three of the directors, owned $1,000 each, and the balance of the stock was owned by Fisk and Groodwillie, the two other directors. Goodwillie was president, Fisk treasurer, and Briggs vice-president and secretary of the corporation.

There was no proof that the defendant had actual knowledge of the entries contained in the books which were used as evidence against Mm, or that he authorized such entries or caused them to be made. There was no proof from which the law would raise a legal presumption that he had knowledge of the entries, unless he is chargeable with such knowledge from the mere fact that he was a stockholder and trustee of the corporation.

There is no rule of law which charges a director or stockholder of a corporation with actual knowledge of its business transactions merely because he is such director or stockholder. In this case the broad claim is made that in an action by a corporation against one of its members to enforce a personal liability of the member to the corporation, its books are competent evidence against him to show the condition of the accounts between him and it, and to establish the extent of his liability to it upon their simple production and proof that they are the books of the corporation kept as such by its officers and agents. The proposition is thus announced in the points of the learned counsel for the plaintiff: “ Between a corporation and its members all its books regularly kept by its officers and agents for the purpose of recording its transactions and properly conducting its business are per se evidence.”

The cases reported in this country and England bearing upon this question are very numerous, and the general expressions of judges contained in their opinions are not entirely harmonious. The conflict, however, is mainly in the dicta of judges, and not in decisions actually made.

The books of corporations for many purposes are evidence, not only as between the corporation and its members, and between members, but also as between the corporation and its members and strangers. They are received in evidence generally to prove corporate acts of a corporation, such as its incorporation, its list of stockholders, its by-laws, the formal proceedings of its board of directors and its ' financial condition when its solvency comes in question. But we have not been able, after a careful examination of the authorities cited by the counsel for the plaintiff, and many others, to find any case in which it has been decided that the books of account of a corporation are competent evidence, of themselves, to establish an account or claim against a trustee or stockholder in an action brought in behalf of the corporation; and it has been repeatedly said by judges and text-writers that they are not competent for that purpose.

In Wharton on Evidence, 3d ed., § 662, it is said that even in suits by a corporation against its members its books cannot be used as “ proving in behalf of the corporation self-serving entries.” In Angell & Ames on Corporations, 11th ed., § 679, it is said: Entries in the books of a corporation of private pecuniary transactions with a stockholder are not admissible against him, -especially when it does not appear by whom the entries were made.” See, also, 2 Waterman on Corporations, 646. In Hager v. Cleveland, 36 Md., 476, in an action by a creditor of a manufacturing corporation against a stockholder to enforce his individual liability for a debt contracted by the company, it was held that the books of the corporation relating to its private transactions were not admissible in evidence. In Hill v. Manchester, etc., Water Works Co., 5 B. & Adol., 866, by a clause in the charter of the defendant, it was enacted that its clerks should, in a book provided by the company, keep an account of all acts, proceedings and transactions of the company, and that every proprietor should have liberty to-inspect the same and take copies of the entries; and it was held that entries of the proceedings in the books thus kept by the clerk were not admissible in evidence on behalf of the company against one of their own members suing them. Denman, Ch. J., writing the opinion and speaking of certain facts to be proved, said: These points of fact, however, could only be established by the books kept by the clerk of .the company, and the question now to be decided is whether they are evidence against the plaintiff. It is argued that they were because he was a proprietor, and the books of a partnership are evidence against any one of the partners ; and more particularly as the act requires such books of the proceedings to be kept, and that all the proprietors shall have free access to them at all reasonable times. We are, however, of opinion that the principle on which partnership books are evidence against the partners is that they are the acts and declarations of such partners, being kept by themselves, or by their authority by their servants and under their direction and superintendence. But the clerk of the company, once appointed, is subject to the control of no individual member; and the free access provided for is only for the purpose of inspection. A proprietor entering into a contract with the company must be deemed a stranger, and can be affected by no entry made undér orders from the entire body.”

In Haynes v. Brown, 36 N. H., 545, the action was by a creditor of a corporation to recover against a stockholder; and it was held that the books of the corporation were not admissible against a member of the company as evidence of his private transactions or dealings with the company, and that in respect to them he was to be regarded as a stranger. That case has been frequently cited by text writers and judges, and its authority for the rule thus announced has never-been questioned, so far as we can discover. In Chenango Bridge Co. v. Lewis, 63 Barb., 111, it was held that the books of a bridge company, proved by its treasurer to have been received by him as the company books upon his accession to the office, containing an account of the tolls received for the bridge for several years previous to that time, were not admissible as against the defendant, a stockholder of the company, to prove the amount of the tolls received during that period, without the necessary and preliminary proof as to such tolls ; hut that such books proved by its treasurer to have been kept by him, and to contain correct entries of tolls, as given to him by the toll gatherer, coupled with the proof by the toll gatherer that he had made correct returns of the tolls received by him, were admissible, because proved by the treasurer who kept them. See, also, Olney v. Chadsey, 7 R. I., 224; Wheeler v. Walker, 45 N. H., 355. In Pearsall v. Western Union Telegraph Co., 35 N. Y. State Rep., 307, decided in the second division of this court on the 22d day of last January, the plaintiff was a stockholder of the defendant, and brought the action to recover damages against the defendant for not properly transmitting a message; and it was offered to be proved in defense of the action that the board of directors had adopted a resolution that it would not be liable for mistakes or delays in the transmission or delivery of unrepeated messages, and would not be liable for damages arising from delays in the transmission or delivery of a repeated message beyónd an amount specified; and it was insisted that a shareholder was chargeable with notice of this resolution.

The resolution was excluded and the defendant excepted; and it was held that in this there was no error ; that a shareholder in a corporation is not chargeable with constructive notice of resolutions adopted by the board of directors, or by provisions in the by-laws regulating the mode in which its business shall be transacted with its customers, and that the plaintiff’s rights arising out of defendant’s contract to transmit the message were in no wise limited by its regulations or by-laws not brought to his knowledge. That case is ample authority to show that the defendant in this case was not chargeable with knowledge of the entries made in the books of this company; and that such books were not competent evidence against him of such entries. The principle at the foundation of chat decision is that the business transactions of a corporation with its members are .on the same footing as its transactions with strangers, and that the business entries in the books of a corporation are no more evidence against the members than they are against strangers.

After a careful consideration of all the cases which have come to our attention we can perceive no principle upon which the account books of a corporation can be evidence against a member of the corporation of the accounts and entries therein made in a suit brought by the corporation, or its representatives, against him to enforce his liability upon such- account. The officers and book-keepers of a corporation are in no sense his agents. Individually he has no control over their acts, and has no responsibility therefor; and in making the entries they do not, in any legal sense, represent or bind him. As to the competency of such books, directors and stockholders of a corporation stand upon the same footing. It is quite true that a director stands in a more favorable position, to know what is going on within the corporation and to be more familiar with its books in some cases than a stockholder. He has the right to inspect the books of the corporation, and so has a stockholder. A stockholder having the ability is just as able to become familiar with the contents of the books of a corporation to which he belongs as a director ; and there is no principle of law by which a director can be charged with knowledge of the entries in the books of a corporation which is not- equally applicable to its stockholders.

It is frequently easier to charge a director with knowledge of the books than it is to charge a stockholder, because he usually has an active part in the management of the corporation; but, as a general rule, many directors in corporations are just as ignorant, and necessarily so, of the particular accounts contained in its books as the stockholders are. It would be quite a dangerous, and we think startling, proposition to hold that a clerk or other officer in a business corporation could enter charges in its books of account against a director or stockholder which could be proved in favor of the corporation by the mere production of the books, thus throwing upon him, or his personal representatives after his death, the burden of explaining the entries or showing them to be untrue; and we believe the doctrine has no support in principle or authority. A corporation seeking to enforce a claim against one of its directors or stockholders, must establish it by the application of the same rules of evidence which are applied in an action brought by an individual to enforce a claim against any defendant

It was admitted on the argument of this case that thfe evidence furnished by the account books was vital to the plaintiff’s case, and we, therefore, do not deem it important to examine the other points zealously and ably argued before us.

For the error pointed out the judgment should be reversed and a new trial granted, costs to abide event.

All concur.


author: Andrews, J.

text:
    Patrick Williams, Ex’r, Resp’t, v. The Brooklyn Elevated Railroad Co., App’lt.

      (Court of Appeals,

      Filed March 20, 1891.)

    1. Railroads—Elevated—Damages.
    It cannot be left for the jury to say whether an elevated railroad in a public street is, or is not, one which the legislature or the municipality may authorize as against an abutting owner, upon the theory that it is a question of fact and not of law, depending upon the extent of the interference in a particular case with the public right of passage or with the enjoyment by the abutting owners of their premises.
    2. Same.
    The jury may award damages for loss sustained through the inability of adjoining owners to rent houses, from time to time, while the preparatory construction was going on and after the completion of the road, where such loss could be traced to the operations of the defendants.
    3. Same—Trial—Summing up.
    The reading by counsel in summing up to the jury of a newspaper article, wholly irrelevant to the case, and read for the purpos.e of influencing the jury against corporations, and to lead them under the influence of a just anger, excited by the incident narrated, to give liberal damages, is unjustifiable, and the refusal of the court to interfere under the circumstances is legal error.
    Appeal from judgment of the supreme court, general term, second department, affirming judgment for plaintiff entered oh verdict.

      William K Cohen, for app’lt; A. B. Boardman, for resp’t

       Reversing 32 N. Y. State Rep., 702.

   Andrews, J.

The Story case, and those which have followed it, have settled the doctrine that the placing of an railroad structure in a city street is inconsistent with its character as an open public street, and, in the absence of the consent of the abutting owners to the erection, violates their lights as such, notwithstanding the title to the soil of the way is in the municipality, and although the railroad company in erecting the structure acted under both legislative and municipal authority. In view of these decisions, the contention of the counsel for the defendant that he was entitled to go to the jury upon the fact whether the structure of the defendant was an interference 'with the right of the plaintiff as an abutting owner, depending upon the question whether it did or did not obstruct the street, cannot be sustained. There may be little and possibly no damage occasioned by the erection, or the existence of the road maybe a positive advantage to his property, depending on the particular circumstances.

Where the property owner sues for damages, the jury is to ascertain and award them, and they are to be governed by the evidence in determining the amount and whether substantial or nominal damages only shall be awarded. But it cannot be left for the jury to say whether the structure is or is not one which the legislature or the municipality may authorize as against an abutting owner, upozz the theory that it is a question of fact and not of law, depending upon the extent of the interference in a particular case with the public right of passage or with the enjoy - ment by the abutting owners of their premises. This disposes of one class of exceptions taken on the trial.

The oz’iginal charter of the defendant was granted in 1874, but the work of constructing the road was not commenced until 1879, and was not completed until 1885, and an exception was taken to the refusal of the court to charge that no damages weze recoverable for any depreciation of rental value of the plaintiff’s houses, resulting fz’om the contemplated building, or rumors of the contemplated building, of the defendant’s road.

There was no claim to recover for any damages except for the six years pz-ior to the commencement of the action, viz.: from November 20, 1880, to November 25,1886. The jury were expressly limited by the court to this time, and under this ruling it was ■quite immaterial whether the rumors that the road was to be built, existing prior to the actual commencement of the construction, did or did not affect the rental value of the houses completed before 1879, between the time of their completion and the time when the construction was commenced, and tlie court was justified in declining to charge upon this abstract question. The foundations for the columns of the road were laid in front of plaintiff’s premises in 1879,.and the court properly submitted it to the jury to find whether the obstruction of the street during the progress of the work, by the piers and the deposit of material used in the construction, diminished the rental value of the houses of the plaintiff during the period of construction, proof having been given which tended to support the plaintiff’s contention upon this point. There was no error in permitting the jury to award damages for loss sustained through the inability of the plaintiff to rent the houses fi’om time to time, while the work was going on and ■after the completion of the road, where such loss could be traced to the operations of the defendant.

The proof to sustain this claim was not and from the nature of the case could not be very definite or satisfactory, but there was evidence on the subject and the matter could not be taken from the jury.

Tlie exceptions taken by the defendant on the trial were very numerous. There were forty requests to charge made in its behalf. The charge covered the material questions in the case and furnished no ground for any valid exception. The requests to charge were mainly denied. They either related to matters upon which the court had already charged, or embodied abstract or immaterial propositions, or related to questions of evidence and the credibility of witnesses, the denial of which was not legal error.

We perceive no valid ground for reversing the judgment on the merits, and we should affirm it except for the ruling of the court made during the summing up to the jury.

The counsel for the plaintiff in his address to the jury, after referring to “ the utter disregard of the rights of the private citizen by corporations,” proceeded to read from a newspaper, “ The New York Tribune,” an article headed “ Only a Boy Peddler,” purporting to be an account of the death of a boy, “ a little fellow fifteen years old, a Roumanian,' a stranger in this great city (New York) selling collar buttons and pocket combs from a modest tray, to help support his mother and eight brothers and sisters,” caused by his touching an electric wire which, the article stated, had been left swinging for months from a pole near which the boy bad taken his stand. This was made by the writer the text for comment on the neglect of the city officials in failing to take effective measures to have electric wires placed under ground, and the article concluded with the statement: “It is shameful that where such perils are in question there should be procrastination, shiftlessness and incompetency which would not be tolerated in a private business.” When the counsel for the plaintiff commenced reading the article, the defendant’s counsel interposed and objected to the reading and asked the court to prevent it. The court overruled the objection and the defendant’s counsel excepted. The plaintiff’s counsel then resumed the reading and was reminded by the court that the reading was under exception, but the counsel proceeded and read the remainder of the article.

It is the privilege of counsel in addressing a jury to comment upon every pertinent matter of fact bearing upon the questions which the jury have to decide. This privilege it is most important to preserve and it ought not to be narrowed by any close construction, but should be interpreted in the largest sense. The right of counsel to address the jury upon the facts is of public as well as private consequence, for its exercise has always proved one of the most effective agencies in the ascertainment of truth by juries in courts of justice, and this concerns the very highest interest of the state. The jury system would fail much more frequently than it now does, if freedom of advocacy should be unduly hampered and counsel should be prevented from exercising, within the four corners of the evidence, the widest latitude by way of comment, denunciation, or appeal in advocating his cause. This privilege is not beyond regulation by the court. It is subject to be controlled by the trial judge in the exercise of a sound discretion, to prevent undue prolixity, waste of time, or unseemly criticism. The privilege of counsel, however, does not justify the introduction into his summing up of matters wholly immaterial and irrelevant to the matter to be decided, and which the jury have no right to consider in arriving at their verdict.

The jury are sworn to render their verdict upon the evidence. The law sedulously guards against the introduction of irrelevant or incompetent evidence, by which the rights of a party m,ay be prejudiced. The purpose of these salutary rules might be defeated if jurors were allowed to consider facts not in evidence, and the privilege of counsel can never operate as a license to state to a jury facts not in evidence, or to weigh considerations which have no legitimate bearing upon the case and which the jury would have no right to consider. Where counsel in summing up proceeds to dilate upon facts not in evidence or to press upon the jury considerations which the jury would have no right to regard, it is, we conceive, the plain duty of the court, upon objection made, to interpose, and a refusal of the court to interpose, where otherwise the right of the party would be prejudiced, would be legal error. There are many cases sustaining this conclusion. Among them are Mitchum v. State of Georgia, 11 Geo., 616; Tucker v. Henniker, 41 N. H., 317; Rolfe v. Rumford, 66 Me., 564.

The reading by counsel in summing up to the jury of the newspaper article “ Only a Boy Peddler,” was wholly irrelevant to the case. It could have been read for no purpose except to inflame the jury against corporations and to lead them, under the influence of a just anger excited by the incident narrated, to give liberal damages to the plaintiff in the case on trial. The refusal of the court to interfere under the circumstances of this case was legal error.

The privilege of counsel and the largest liberality in construing it did not authorize such a totally irrelevant and prejudicial proceeding. The counsel also during the summing up read a passage from the opinion of this court in the Lahr case, 104 N. Y., 291; 4 N. Y. State Rep., 340, after objection taken by the defendant’s counsel had been overruled by the court. It is not important to consider the exception to this ruling, as the appellant is entitled to a reversal for the reason already stated. It may be observed, liowever, that it is the function of the judge to instruct the jury upon the law, and where counsel undertake to read the law to the jury the judge may properly interpose to prevent it. But if the judge sees fit to permit this to be done and the law is correctly laid down in the decision or book used by counsel, it would not, we think, constitute legal error or be ground of exception by the other party, although such a practice is not to be encouraged. If, however, the reading from a decision was to bring before the jury the facts of the case decided, or the amount of the verdict, or the comments of the judge on the facts, to influence the jury in deciding upon the facts in the case on trial, or in fixing the amount of damages, then clearly the reading ought not to be permitted.

We think the judgment in this case should be reversed, upon the exception taken to the reading of the newspaper article.

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

Ail concur.