author: Daniels, J".:

text:
    THE PEOPLE OF THE STATE OF NEW YORK ex rel. FRANZ KROHN, Appellant, v. WALTER T. MILLER, as Treasurer of the New York Cotton Exchange, Respondent.
    Mandamus — not allowed when the party lias a remedy at law for damages —bylaws of a corporation regulating the sale of certificates of membership — right to give a lien thereon, in favor of other members.

    The relator applied for a mandamus to compel the treasurer of the New York Cotton Exchange to cancel a certificate of membership standing in the name of one Van Meien, and to issue a new certificate to the relator, as the assignee of Van Meien’s share. At the time of the transfer of the share the relator and Van Meien each held a certificate of membership in the corporation. At the time when, the certificate.was offered to be surrendered to the treasurer it was worth the sum of $3,000.

      Reid, that as the relator was a member of the corporation in good standing, possessing all the immunities pertaining to that relation, and as he had nothing to gain in this proceeding beyond the ability to sell the new certificate as an article of property, his remedy was by action and not by a writ of mandamus.

      The validity and effect of certain of the by-laws of the New York Cotton Exchange regulating the sale and transfer of their certificates by members, and the enforcement of the lien created thereon in favor of other members of the exchange considered by Daniels, J.
    Appeal from a judgment entered at Special Term upon the report of a referee, denying an application for a peremptory writ of mandamus.

      Frank F. Van Derveer, for the appellant.

      Francis M. Scott, for the respondent.
   Daniels, J".:

The writ of mandamus was applied for to require the respondent, as treasurer of the New York Cotton Exchange, to transfer a certificate of membership standing in the name of Constant Yon Meien, and to issue a new certificate to the relator. The New York Cotton Exchange is a corporation formed under chapter 365 of the Laws of 1871, and its organization consists of the officers mentioned in the act, and other persons to whom certificates of membership may be issued. These certificates of membership permit the persons to whom they may bo issued to transact business as members of the exchange; and, by the power given to the corporation by section 3 of its charter, to adjust controversies between its members, to establish just and equitable principles in the trade, and to maintain uniformity in its rules and regulations and usages, the corporation, through its officers, had the power to supervise and regulate the business carried on by its members. It was also empowered by the same section to make all proper and needful by-laws not contrary to the Constitution and laws of the State of New York or the United States, and by section 4 of the act to admit new members and expel any member in such manner as might be provided by its by-laws.

The relator and Yon Meien each held a certificate of membership in the corporation. And the relator purchased, as he was at liberty to do under the by-laws, the certificate held by Yon Meien, and took a power of attorney authorizing its formal transfer. He also executed a written transfer and assignment of the certificate to himself, which was affirmed and ratified in writing by Yon Meien, and upon this instrument and the payment of a fee of twenty-five dollars ($25) required by one of tbe by-laws before a transfer could be made, he applied to the ti’easurer to receive a surrender of the certificate he had purchased, and to issue a new certificate of membership to himself in lieu thereof. This was refused by the treasurer, and it was to enforce compliance with the request that the application was made for a writ of mandamus.

Upon the application, the court ordered an alternative writ to issue, to which a return was made denying the relator’s right to a certificate of membership on the surrender of that purchased by him, and alleging other matters which were relied upon by way of answer to his alleged right to surrender the certificate purchased by him and to receive another in its place. The issues framed by the answer and the alternative writ were by the consent of parties referred to a referee, as that was authorized to be done by section 2083 of the Code of Civil Procedure. The order which the parties entered directed l< that this proceeding be, and the same hereby is, referred to Benjamin H. Bristow, Esq., counselor-at-law of this court, as referee to hear and determine all the issues in this proceeding; ” and acting under this order the referee heard and determined the entire controversy between these parties. It has been objected in support of the appeal that he was not authorized to dispose of the rights of the parties in the proceeding; but that view cannot be entertained under the very genei’al language of the order, for the referee was empowered by it to hear and determine all the issues in the proceeding, and that included the right of the relator to a peremptory writ of mandamus. The trial of the issues of necessity included the determination and disposition of the rights controverted by means of them; and the referee was not deprived of that power under this order, hy the provisions of the Code, directing that the writ of mandamus should be issued either by a Special or General Term of the Supreme Court. But if a different view of the power of the referee could be adopted it would not promote the success of the relator, for, as a matter of fact, the case was brought to a hearing upon the referee’s report before the Special Term, and that court denied his application for the writ. This was a final disposition of the case by the court itself, and if the judgment entered upon the decision made by the court is correct upon the facts found by the referee then the appeal cannot be sustained.

The case contains the evidence only as to the value of the share, and the rights of the parties are accordingly to be determined upon the facts which the referee has found to have been proved upon the trial. By his report it is shown that by-laws were adopted by the corporation for the management of its affairs and the enforcement of the obligations of its members to each other arising out of the transaction of their business as members of the exchange. And by section 5 of the by-laws it was provided that a certificate of membership might be transferred to a member or a member elect, but to no other person, by a surrender thereof to the treasurer of the exchange, with a duly executed assignment and the payment of a fee of twenty-five dollars for transferring the certificate, and upon which transter the treasurer, it was directed, should issue a new certificate of membership to the member, or member elect, mentioned in the assignment. But this was restricted by the same section which contained the declaration that no certificate of membership shall be “ so transferred until a notice of the intention to make such transfer, subscribed by the member owning the certificate, shall have been posted upon the bulletin of the exchange for ten days, and until all claims against such member which may be presented within said ten days by other members of the exchange shall be settled, or while any annual dues or assessments levied on such membership shall remain unpaid.” And the treasurer refused to accept the surrender and issue a new certificate, for the reason, as it was considered, that the relator had not complied with what had been required on the part of his assignor in this manner. The authority was given to the relator by his assignee to obtain a transfer of the certificate of membership on the 10th of December, 1883, and a notice in writing subscribed by Yon Meien, of his intention- to make a transfer of the certificate, was posted upon the bulletin of the New York Cotton Exchange at that date, and it remained posted in that manner until the month of November, 1881. But no application for the surrender of the certificate and the issuing of another to the relator was made to the treasurer of the corporation until the 19th of September, 1881. During this interval of time the assignor continued to transact business as a member of the exchange, and in that business became indebted to other members, and failed, as the by-laws require that to be done, to pay or extinguish the indebtedness. By one of the rules in the exchange no member was bound to accept the contract of another while a notice was posted upon the bulletin of his intention to rqake a transfer of his share. But the members were still at liberty to deal with him if they elected so to do, for the rule proceeded no further than to relieve them of the obligation to accept the contracts of the member proposing to sell his share. They were still at liberty, notwithstanding this rule, to accept his contracts and deal with him as long as he continued to be a member of tlie exchange. The members still dealt with the assignor, and in that manner this indebtedness on his part to them was created. By other sections of the by-laws, where a member in the course of.his dealings became indebted to another, and the debt was not settled or liquidated at maturity, the creditor was empowered to record the fact of the failure of the. debtor to meet his liabilities in a booh kept by the superintendent of the exchange, entitled “Record of Failures.” The by-laws then provided for further proceedings, on complying with which the share of the delinquent member might be sold and its proceeds applied so far as that should be necessary to the payment of his indebtedness to other members of the exchange.

For the satisfaction of the debts incurred by Yon Meien to other members of the corporation previous to the 19th of September, 1884-, the steps required by the by-laws were taken in favor of the creditor members, and a resolution was finally adopted directing the sale of this share to the highest bidder, with the object of satisfying these demands out of its proceeds. The right of the corporation to proceed in this manner was denied on behalf of the relator,««.for the reason that a notice of the intention to transfer this share had been posted upon the bulletin of- the exchange for more than ten days prior to the contraction of either of these debts. But a doubt arises as to the sufficiency of the notice itself to produce this effect, for the by-law has in effect directed that the notice to be posted shall be of the intention to make a transfer of the certificate by the action and under the authority of the treasurer of the exchange, while it does not appear, as the fact has been found in the case, that such a notice was posted upon the bulletin. What the referee has found as to this fact is that Yon Meien on the 10th of December, 1883, caused to be posted upon the bulletin “ a notice in -writing, subscribed by bimself, of his intention to make a transfer of said certificate,” which fell short of the statement to be made in the notice prescribed by the by-law, for that was required to express the intention to make the transfer by a surrender of the certificate held at the time to the treasurer, and to receive a new certificate of membership in its place from him. The notice which was posted, as the referee has described it, would be entirely satisfied with a transfer made from Yon Meien to the relator, which would be insufficient to produce a termination of the membership of his assignor. Then the by-law provided that the notice should be one of ten days, and the notice it designated was that the surrender and transfer of the certificate permitted by ;the preceding portion of the section should be made by the action ■of the treasurer of the exchange. While the by-law has not in language so expressed, it is not an unreasonable inference from it that the notice was intended to indicate when the surrender would ■be made and the new certificate applied for. It did not, certainly, •by its language authorize an indefinite notice to be given that might extend through a period of years as well as months. But the notice was restricted to the period of ten days, and if at its (expiration no surrender of the certificate should be offered, and no (application for a new certificate made, it would not be an unreasonable construction of the by-law to hold that the proceeding had ■been for the time abandoned. To allow the notice to remain indefinitely effectual, would operate unjustly upon the other members of the exchange. For while it would permit the person manned in the certificate proposed to be sold to continue to act as a member, and to induce other members to accept his contracts, it ■would empower him to defeat the remedy provided for by the by-laws for the collection and payment of their obligations.

The other sections of the by-laws contained in the report of the .referee are not consistent with this freedom from liability asserted <on behalf of the certificate in controversy. For they have provided generally for the enforcement of the payment of the indebtedness of one member to another out of the proceeds resulting from the sale of the delinquent member’s certificate. And until the certificate itself may be surrendered, and a new certificate cf membership issued upon its surrender, both the corporation and its members would seem to have the right to regard the person proposing to sell or transfer his certificate, as still a member, until the transfer should be made complete by the issuing of a new certificate. As between the parties themselves to the transfer the title to the certificate would pass without complying with the by-law providing for its surrender and the issuing of another certificate in its place. But as to the corporation and the other members of the exchange the rule should be difierent, as it clearly is so far as by-laws apply to shares of stock owned in a private corporation. There a transfer between the parties themselves will convey the title, but where no notice of it may be given to the corporation and no transfer of the shares shall be made upon its books, it can only consider as the owner the person appearing to’ be such upon its own records. (McNeil v. Tenth Nat. Bank, 46 N. Y., 325, 332; Cushman v. Thayer, etc, Co., 76 id., 365; Brisbane v. Delaware, etc., Co., 94 id., 205.) And that rule, from the reason upon which it is founded, seems to be equally as applicable to this case. It might very well be assumed, even if the notice which was posted complied in its form with the by-laws, that the intention to transfer the certificate was abandoned if that was not done at the expiration of the ten days mentioned in the notice, and upon that presumption the person giving the notice would still be entitled to conduct himself in his dealings as a member of the exchange. If it had not been the purpose that the transfer should follow the expiration of the ten days, then no object existed for prescribing that period of time at all. If an indefinite notice, not less than ten days, was what was intended to be permitted, it is only reasonable to presume that the by law would have so declared. And that it did not do so, but provided for the posting of a notice for ten days and no more and no less than that, it may be inferred that it was intended that a definite notice as to the time should be given by the person proposing to transfer the certificate. The propriety of this construction is disclosed by the careful provisions contained in the succeeding by-law, providing for the enforcement between themselves of the obligations of the members of the exchange. And as to the corporation these persons continued to be members who appeared by its certificates to be such, and that was the relation which Yon Meien maintained to the exchange until the application for the surrender of the certificate was first made on the 19th of September, 1884.

It has been urged that the power did not exist to enforce the payment of debts against this certificate created after the expiration of ten days from the time when the notice was posted. The by-law does designate preceding debts as the only claims which the member must pay before he can be permitted to transfer his certificate. But this objection also fails entirely of its effect if the notice itself is to be held to expire with the ten days; and if it does not, then a member of the exchange not indebted could post his notice upon the bulletin of his intention to transfer his certificate, and omit to do it at the expiration of the ten days, and then continue to act upon it for years afterwards and deprive the other members of the exchange, having demands against him arising out of their dealings, from all right of satisfaction by the appropriation and sale of his certificate. That could not have heen the intention of the by-law, and it is not necessary so to construe it. It should not be applied in such a manner as to permit this misconduct as well as injustice, if that can be, as it may under the by-laws be, avoided.

But without disposing of the case upon these considerations a’ further legal difficulty stands in the way of the success of the proceeding. The relator has, at all times referred to in this controversy, been the owner in his own right of another certificate of membership in the exchange. Under that all the rights and privileges pertaining to membership are possessed and enjoyed by him. An additional certificate would not increase these privileges, heyond the unimportant circumstances that he might post a notice of his intention to transfer the one he now has, and still insist upon the obligation of the members o-f the exchange to accept his contracts. But as no intention has been asserted in his behalf at any time to transfer the certificate he now has, a mere possibility, or contingency of this description, can legally have no direct influence in the disposition of this controversy. As the case upon the facts has been presented he is a member in good standing, possessing all the immunities pertaining to that relation, with the other members as well as the corporation itself. What he has to gain in this proceeding, and all that he has is another certificate, in no manner increasing his rights beyond the ability to sell it as an article of property. And even though he may be unlawfully deprived of that right, his remedy for its correction is not by way of the writ of mandamus. Upon this subject it has been stated as the law that “the existence of another adequate remedy by an ordinary action at law is a sufficient bar to the exercise of the jurisdiction by mandamus over corporate associations or organized bodies as well as in all other cases, it being a fundamental principle lying at the very foundation of the law of mandamus that the writ is never granted where the law supplies another adequate and specific remedy.” (High on Extraordinary Remedies, etc., § 283.) And the same legal principle has been stated in nearly the same language in section 710 of Angelí & Ames on Corporations.

It was also considered and so defined in Matter of Shipley (10 Johns., 484). The certificate according to the evidence was of the value of three thousand ($3,000) dollars at the time when it was offered to be surrendered to the treasurer and he was requested to issue another in its place. A recovery of that amount would fully indemnify the relator for whatever loss he may have sustained, if he was entitled to the new certificate. And that value could legally be recovered by him if he is right in the position that the certificate which he applied for should have been issued to him. (Sargent v. Franklin Ins. Co., 8 Pick., 90; Gray v. Portland Bank, 3 Mass., 364; Bond v. Mt. Hope Iron Co., 99 id., 505; Murray v. Stevens 110 id., 95; German Union Building, etc., Association v. Sendmeyer, 50 Penn., 67; Bank v. Lanier, 11 Wall., 369; Bank of Attica v. Manufacturers, etc., Bank, 20 N. Y., 501; Commercial Bank v. Kortright, 22 Wend., 348.)

In cases against public officers and in certain cases against corporations, the writ of mandamus has not been refused where an action for damages might also be maintained. (McCullough v. Mayor, etc., 23 Wend., 458; Buck v. City of Lockport, 6 Lans., 251.) But no such departure from the general rule has been made or sanctioned, where the writ of mandamus has been applied for to obtain a mere article of property of a fixed and definite value, the recovery of which would afford full justice to the applicant. That is this case, and both the referee and the Special Term adopted that view of it in the decision and judgment which have been made and rendered. On this ground, therefore, even if that previously considered should not be beld to be controlling, the relator was not entitled to this writ and the judgment should be affirmed, with costs.

Davis, P. J., and Brady, J., concurred,

Judgment affirmed, with costs.


source: Caselaw Access Project

author: Brady, J.: Daniels, J.: Davis, P. J.:

license: Public Domain

text:
    HENRY O’NEILL, Respondent, v. BONNIE B. GRAY, Appellant, Impleaded with Others, and five other cases.

      Mortgage — when so construed as to give the mortgagee the rights of a mortgagee in possession — in an action of foreclosure, although difficult and extraordinary, the additional allowance is limited to two and one-half per cent — Oode of Oivil Procedure, sec. 3253.
    The plaintiff sold certain lots to one Yost and received from him bonds and mortgages thereon to secure a temporary loan. Subsequently it was agreed between the plaintiff and Yost that to enable Yost to procure a permanent loan from a trust company the plaintiff would discharge the mortgages held by him, would advance a further sum of money and receive from Yost five bonds and mortgages subsequent in lien to a mortgage to be given to the trust company; to foreclose which five bonds and mortgages these actions'were brought; it was further agreed that the plaintiff should have the right to collect the rent of the premises described in the mortgages and apply the same on account of the sums . due under the mortgages.
    The plaintiff in accordance with this agreement discharged the mortgages he then had, advanced .the money, received the five bonds and mortgages and collected the rents, applying the same upon the debt due, as provided in the agreement. Each of the mortgages referred to the agreement, provided for the payment of the sums intended to be secured thereby, and for a foreclosure in case of a breach of any of the conditions or agreements.
    In an action to foreclose these mortgages it was claimed by the defendants that when construed in connection with the agreement, the mortgages were in the nature of a Welsh mortgage, which did not admit of foreclosure.

      Held, that the claim was untenable; that the plaintiff was a mortgagee in possession and entitled as such to foreclose the mortgages.
    Section 3253 of the Oode of Civil Proceedure, limiting the additional allowance which may be awarded in actions to foreclose mortgages to a sum not exceeding two and one-half per cent upon the amount due, and to not more than $200, makes no distinction between actions which are difficult and extraordinary and those which are not. (Brady, J., dissenting.)

      Rosa v Jenkins (31 Ilun, 384) followed.

      Five appeals from five judgments of foreclosure of mortgages on five separate lots on Lexington avenue, near One Hundred and Eighteenth street, in the city of New York. These mortgages were subsequent in lieu to a mortgage given to the United States Trust Company referred to in the opinion.

      O. Bainbridge ¡Smith,- for the appellant.

      George M. Baker, for the respondent.
   Brady, J.:

The facts which seem to be established beyond peradventure in this case are, that the plaintiff sold certain lots and made a temporary loan to one Yost, receiving as security bonds and mortgages. Subsequently Yost applied to the United States Trust Company for a permanent loan, and they agreed to loan $38,000, a sum which was not sufficient, however, to pay the amount due to the plaintiff, without reference to other liens which had actually existed upon the property. Yost then applied to the plaintiff for assistance, and an agreement was made, dated October 6,1882, by which he agreed to advance the money necessary to enable the Trust Company to make this loan, and Yost agreed to give him the five bonds and mortgages in controversy, payable on or before the expiration of a year, and also agreed that the plaintiff should have the right to collect the rents of the premises described in the mortgages, and apply the same on account of the sums due under the mortgages.

The plaintiff, in accordance with this understanding, discharged the mortgage whieh he held, and advanced the necessary money to enable the Trust Company to make the loan, whereupon Yost executed and delivered the bonds and mortgages. The plaintiff appears to have collected the rents, and so far as appears upon the record, to have faithfully and properly applied them to the diminution of the debt due.

Each one of the mortgages given to the plaintiff refers to the agreement already mentioned, containing the statement, as it does, that the mortgage is to be considered in connection with a certain agreement made between the same parties, bearing the same date and intended to be recorded at the same time. The mortgages, however, provided for the payment of the sums intended to be secured by them, and the agreement itself provided for the foreclosure of the mortgages to which it related; for by the seventh clause it is covenanted that in the event of a breach in any of the conditions or agreements by the parties of the second part, or either of them, it was expressly understood that the party of the first part should have the right to foreclose any or all said mortgages immediately and without further notice to said parties of the second part. Indeed, the whole transaction was very properly described by the learned justice in the court below in disposing of the contention on the part of the defendant, by saying that the instruments in question were ordinary mortgages payable within one year, with the additional security of the rents and profits. It is simply the case of a mortgagee in possession, who was required by his agreement to give due credit for the rents collected.

The' contention was that the agreement to which reference has been made, made the mortgage a vivum vadium, as it was formerly called, or one in.the nature of a Welsh mortgage. That was a species of security by which the borrower of a sum of money made over his estate to the lender until he had received that sum out of the issues and profits of his land. And it was so called because neither the money nor the land was lost and were not left in dead pledge. There was a living pledge, for the profits earned were constantly paying off the debt. (Bouvier’s Law Dict.; Coote Law of Mortgages, 5; 4 Kent’s Comm., 137.) But the distinguishing characteristics of such an instrument were that there was no proviso that the conveyance was to be void on payment of the debt, and there was no covenant express or implied for such payment. There was no right to sue for it, and the mortgagee had no remedy whatever therefor, because it admitted of no foreclosure. (Snell’s Equity Principles, 281; Coote on Mortgages, 5; Jones on Mortgages, § 3; 1 Fisher on Mortgages, § 11; Herman on Mortgages, § 7, pp. 8 and 9.)

In the mortgages in controversy, there was an express covenant' for the payment at a specified time, and a right to sue for it; there was a bond, and in the agreement itself provision was made for the foreclosures of the mortgages in case any default was made in any of the covenants on the part of the persons executing them. The learned justice in the court below in disposing of the case very properly said, therefore, that the instruments in question had none of the characteristics of a vivum vadium, and that the relations between the parties were simply those of a mortgagee in possession, required by his agreement to give due credit for the rents collected, which was the clear intention of the parties, and that it was nothing more than the assertion in the agreement of a principle of disposition which equity would enforce even if the contract, had been silent wit! i regard to it. We entertain no doubt whatever of the correctness of the judgment thus pronounced.

The only other question which we are called upon to examine on this appeal, according to the developments of the record, is the propriety of making an allowance of five per cent upon the amount of the mortgages.

Section 3253 of the Code provides that in an action to foreclose a mortgage upon real property or for its partition, or in a difficult and extraordinary case where a defense has been interposed in any action, the court may, in its discretion, award to any party a further sum as follows: In an action to foreclose a mortgage a sum not exceeding two and a-half per cent upon the sum due .or claimed to be due upon the mortgage, nor the aggregate sum of $200. In any other case specified in this section, a sum not exceeding five per cent upon the sum recovered or claimed or the value of the subject-matter.

It is said by Throop, in his Annotated Code under this section, This and the next section contain the substance of the last three sentences.” (Code of Pro., § 309, as amended by the Laws of 1876, chap. 431.) In Bockes v. Hathorn (17 Hun, 87) it was held that under section 309, as amended by chapter 431 of the Laws of 1876, an allowance of five per cent could be made in an action upon a bond, and to foreclose a mortgage where the case was difficult or extraordinary or a defense had been interposed.

In reasoning out the proposition the court said that if an action were brought upon the bond, and it was a difficult and extraordinary case, and a trial was had, the court could allow five per cent upon the recovery, and it then asks the pregnant question : “ Could the legislature have intended that if the bond were secured by a mortgage, and the ease were equally difficult and extraordinary and a trial had been had, the same rate of allowance could not be granted % ”

Tiie court, in the course of the opinion, refers to the case of Hunt v. Chapman (62 N. Y, 333), but said as the amendment of 1876 has taken place since that decision was rendered it is supposed not to be controlling. Section 3253, as we have seen, is supposed to embrace the features of section 309 of the old Code; but that section has been so construed as to limit the amount of the allowance in mortgage foreclosure cases, it would seem, to two and one-half per cent. (See Rosa v. Jenkins, 31 Hun, 384.) In the course of the opinion the court in that case said: “ The language of the section differed from the language of section 309, as amended by chapter 431 of the Laws of 1876,” and refers to the case of Bockes v. Hathorn (supra). The court then proceeded to say : “¥e think the language cf section 3253 restricts the allowance in mortgage foreclosure cases to two and one-half per cent, and that the effect of the language of section 3253 is to lay down substantially the rule adopted by the Court of Appeals in Hunt v. Chapman (supra),and declared that the exception to the finding of law allowing five per cent was well taken.

Section 3253 seems to provide for an allowance of five per cent in any action which is difficult and extraordinary, and in which a defense has been interposed ; andan action to foreclose a mortgage, where a defense was interposed and the case became a difficult and extraordinary one, would seem to be embraced within the provision just mentioned. The section seems to contemplate an allowance in two cases: one where the action is to foreclose a mortgage and no defense is interposed, when a sum not exceeding two-and one-half per cent upon the sum claimed may be allowed, and the other where a defense has been interposed and the case is a difficult and extraordinary one, when five per cent may be granted.

In the case of Conaughty v. The Saratoga County Bank (92 N. Y., 401) the court said that extra allowances to the successful party in a litigation were regulated by statute and must be governed strictly by the law authorizing them, and that the language of the statute was plain and unambiguous and could not be strained by construction to cover cases not within its terms.

Of course the question presented now is, whether an allowance of five per cent, in a case where a defense has been interposed and the controversy made difficult and extraordinary, can be made. We think that the litigation herein is embraced within the second class named and also within the terms difficult and extraordinary, and that an allowance of five per cent could be made therefore, and was properly granted, and that the objection taken in this regard should be overruled.

For these reasons a judgment should be affirmed, with costs.

Daniels, J.:

The allowance is limited by section 3253 in an action to foreclose a mortgage to a sum not exceeding two and one-half per cent, and then not more than $200. The provision is general making no distinction in that class of actions. A reason for so applying this section when in an action on the bond alone it would not be so restricted, is found in the fact that in foreclosure actions a percentage by way of another allowance is always recovered as a matter of course. (Code, § 3252.) And the allowance has been so limited and this section construed by the case of Rosa v. Jenkins (31 Hun, 384). While, therefore, the judgment for the foreclosure and sale should be so far affirmed, it should be modified, without costs of the appeals by reducing the allowances to two and one-half per cent.

Davis, P. J.:

I concur in the modification reducing the allowance to two and one-half per cent.

Judgment modified as directed in opinion of Daniels, J., and affirmed as modified, without costs.


author: Brady, J.: Daniels, J.

text:
    HARRIET S. FERDON and WILLIAM FERDON, as Executors, etc., of JOHN W. FERDON, Deceased, Respondents, v. HENRY Y. CANFIELD, Appellant.

      Policy of insurance — assignability of one which is made payable to the children of fhe insured.

    On November 17,1873, one Samuel W. Canfield assigned to the plaintiffs’ testator, to procure a loan of $3,000, a policy of insurance on tlie tontine savings fund plan, issued to him on October 17,1873, by which the insurance company agreed to pay $35,000 to the children of Canfield, who were named in it, share and share alike, and also agreed upon the completion of the tontine period, provided the policy should not have previously terminated by lapse or death, to give to the legal holder of the policy certain options.
    Subsequently, and in the year 1877, before the expiration of the tontine period, the policy was assigned by the children named in it, and by the insured to the defendant herein, and possession of it was then given to and has since been retained by him, and all premiums since falling due thereunder have been paid by him. The policy'having become due each of the assignees claimed to be entitled to receive the amount to be paid thereunder.

      Meld, that the defendant was entitled to receive it.
    Appeal from a judgment of tbe Special Term, entered upon the trial of this action by the court without a jury.

      Oscar Frisbie, for the appellant.

      A. & A. X. Fallon, for the resjDondents.
   Brady, J.:

The Equitable Assurance Society of the United States issued on the 17th of October, 1873, a policy of insurance on the tontine savings fund plan upon the life of Samuel ~W. Canfield, for the sum of $25,000, by the terms of which the premium of $1,009.25 was to be paid annually during the continuance of the policy; and the society agreed and promised to pay the amount of the assurance to the children of Canfield, who were named in it, share and share alike, upon the proper proofs of death; and further, that upon the completion of the tontine period, provided the policy should not have terminated previously by lapse or death, to give the legal holder of the policy certain options.

On the 17th of November, 1873, Canfield obtained a loan of $3,000 from John W. lerdón, and assigned to him the policy as collateral security for that sum, with interest, and notice of such assignment was given to the insurers. Subsequently, and in the year 1877, before the expiration of the tontine period, the policy was assigned by the children named in it and by the insured to the defendant herein, and possession of it given him. On the 19th of August, 1883, the policy became due according to its terms, and. the first assignee, Eerdon, sought to get the amount from the society, and made a demand for it, but payment was refused, and he thereupon commenced an action in this court to compel payment. The defendant also commenced an action against the society to compel payment to him, and the society thereupon instituted proceedings to relieve themselves by payment of the sum into court, leaving the disputants to settle their controversy between themselves.

The defendant upon the trial testified that he took an assignment of the policy in June, 1877, and paid all the premiums after that date. The insured then testified that when the policy was assigned to the defendant it was delivered to him. And the defendant then stated that he had possession of the policy all the time he was paying the premiums. He had previously said that when the assignment was executed by the insured over $6,000 had been loaned to the assignor by him.

No proof was offered to show that Ferdon, the first assignee, had made or offered to make any payment of any of the nremiums, but the defendant offered to show by one of the children of the insured and assignor that in a conversation she had with him he surrendered to her, for her father, the policy in controversy, stating that it was not of any benefit to him as the premiums were not paid, and would not be if they were not paid. This evidence was objected to because she was one of the assignors, and rejected. Nevertheless it appears, as wo have seen, that the defendant had possession of the policy and paid the premiums for several years and up to its maturity on the tontine plan.

The question to be considered on this appeal, as eliminated by the facts and circumstances detailed, is therefore whether the assignment of the policy to Ferdon by the insured alone accomplished a valid transfer of the policy and the benefits to be derived from it, or to state the question differently, whether the society having promised to pay to the children of the insured, an assignment of the policy by the insured alone would deprive them of the policy and its benefits.

The only cases bearing upon this question which have been found after a somewhat elaborate search are those of Bickerton v. Jaques (decided in this department and reported in 28 Hun, 119); and Ruppert v. Union Mutual Insurance Company (7 Robt., 155).

In the first case it appeared that one Henry R. Jaques procured a policy of insurance upon his life for $2,000, payable upon his death to his' sister Elizabeth. She died during his lifetine. Thereupon he surrendered the policy and took out another for the same amount, payable upon his death to his nephew David. lie retained the policies in his possession, paying the premiums falling due upon' the first one, and allowing the dividends declared upon the second to be applied to the payment of the premiums accruing upon it.

The administrator of Elizabeth Jaques, for whose benefit the first policy was obtained, denied the right of the insured to make the surrender of the first policy, and therefore of David Jaques to the benefit to be derived from the 'second policy. The learned justice, in examining the question presented, said that no decisive authority had been found by him, the cases affecting the right of a person obtaining the policy to surrender it and receive another in a different manner having generally arisen under the statute made for the benefit of the widow and children which were not applicable to the controversy, because the statute was not broad enough to include them. And the learned justice determined that the transaction should be governed by the intention of the person obtaining the insurance, so far as it was capable of being gathered from the attending circumstance, and held that the insured did not intend to place the insurance irrevocably beyond his control, because he paid the premiums upon it and retained possession of the policy himself. The learned justice thought that the primary and substantial purpose of the insured was to secure the means of sustaining his sister after his own decease, and as that purpose was defeated he was at liberty to deal with the insurance as he himself deemed to be proper. And the conclusion arrived at was that the administrator of Elizabeth was not entitled to any portion of the moneys springing out of the policy.

In the second case cited the pleadings and evidence established that Yalentine Ruppert procured an insurance of $2,000 upon his own life for the benefit of his three children, naming them, which sum was to be paid to the insured or his executors,, administrators or assigns; and that Ruppert, by his last will and testament, gave and devised the policy of insurance in question to his executors in trust for certain purposes. The question presented was whether the children named in the policy did or did not take a vested estate or interest in the sum insured, upon and by the delivery of the policy to that amount. It was held that the children, and not the executors, were entitled to the fund in question, and the executors were defeated in their claim therefore.

In this case, as we have seen, the assignment to Ferdon was executed by the insured and by him only. By the terms of the policy nothing was to be paid to the insured, but to the children, and Ferdon took the assignment with notice of the character of the agreement made. In addition to this it is established that the premium was paid by the subsequent assignee, whose assignment was executed not only by the insured but by the children, for whose benefit the policy was secured, the policy being in his possession over the period' during which he made the payments of the premium and, indeed, up to the time of the trial.

The value of the assignment to Ferdon of course, if it had any value; depended upon the payments of the premium by the insured, which, from the time of the assignment to the defendant, were not made by him, and it may be inferred from the facts and circumstances attending the relations between the defendant and him that he had not the means to pay. If the beneficiaries had died, under the authority of Bickerton v. Jaques (supra), the insured would have the right to surrender the policy and change it, and, therefore, that authority established a certain degree of control over the policy. But the control is regulated by the intention, according to the views of the learned justice who delivered the opinion in that case.

The intention of the insured in relation to the policy herein in controversy was that his children named should have the benefit of it, and that intention has not been departed from, so far as the policy itself in its form is concerned, although the attempted assignment of it would indicate an intention that it should be employed in payment of his obligations. The case of Ruppert v. Union Mutual Insurance Company (supra) is accepted as the better solution of the question herein, inasmuch as it determines the right of the assured, i. e., the persons to whom payments under the policy were to be made — to the benefit of the insurance as vested right secured by the policy. This seems to be not only in accord with the intention of the insured, but the necessary result from the form of the policy itself, with regard to the payment of any sum that might become payable under its provisions.

For these reasons it is thought the assignment to Ferdon is, under the circumstances, not available to his representatives; and that the judgment appealed from should be reversed and a new trial granted, with costs to abide the event.

Davis, P. J., concurred.

Daniels, J.

(dissenting):

The policy was issued on the 19th of August, 1873. On the first of November following, Samuel W. Canfield, who took out the policy, assigned it to John W. Ferdon, plaintiffs’ testator, to secure the sum of $3,000. At that time it does not appear to have passed out of his possession or to have been delivered by him to or for either of .the persons named in it as the assured. It is to be presumed that he then retained possession of the policy himself and was entitled to control or dispose of it. And the assignment of it to the testator was an effectual transfer of it to him by way of security. The defendant acquired his assignment of it afterwards, and after it had been delivered to the persons named as the assured, and necessarily subject to the preceding assignment to the testator. The court held the testator’s title superior to that of the defendant. And that under these circumstances seems to have been warranted.

The judgment should be affirmed.

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


author: Daniels, J.:

text:
    RICHARD LATHERS, Respondent, v. CHRISTOPHER B. KEOGH, Appellant.

      Conveyance of real estate— liability of a vendor to pay taxes under his covenant— construction of an agreement — meaning of the chwraater “ &c."

    On August 4,1883, the plaintiff and defendant entered into a contract for the sale f certain real estate to the plaintiff, which provided, among other things, that “the calculations and adjustments of the exact amount to he paid as to rents, interest, etc., shall be made the same as if this contract were actually carried out and performed on September 1, 1883, at twelve M. It is hereby understood and agreed by and between the respective parties hereto that all rents, issues and profits of the respective lands and premises hereby agreed to be conveyed, or of any part or portion thereof, shall be apportioned as of September 1, 1883, so that the seller shall take all such portion of such rents, issues and profits as is for a period prior to, or is earned up to, September 1, 1883, and the remaining portion shall go to the purchaser irrespective of the time when such rents, issues and profits may be due.”
    On August twenty-third a deed of the premises was delivered which contained a covenant that the premises were, at the time of the delivery of said deed, free, clear, discharged and unincumbered of and from all former and other grants, titles, charges, estates, payments, taxes, assessments and incumbrances of what nature or kind soever, except certain mortgages. On the day of the delivery of the deed an adjustment, so far as related to the gas used upon the premises, the rents, issues and profits, and the premiums paid for the insurance up to-September first, was made. Upon the day of the making of the contract an assessment was made upon the property, but the tax was not confirmed until the twenty-ninth of August.
    In an action to recover from the defendant the amount of the tax which the plaintiff had been compelled to pay:

      Held, that as the tax was not a lien upon the property at the time of the delivery of the deed, the defendant was not liable to pay the same by reason of the covenants therein contained.
    That the taxes were not covered by the agreement as to the adjustment of “rents, interest, etc.,” as they were not expressly specified therein and were not included under the character “ &c.,” as that included only things of the same kind as those before set forth.
    . Appeal irom an interlocutory judgment overruling a demurrer interposed to the plaintiffs complaint.

      A. H. Stoiber, for the appellant.

      Rickard O. Gorman, Jr., for the respondent.
   Daniels, J.:

The demand of the plaintiff was for a judgment for the sum of $893.10, with interest thereon, for a tax imposed upon property purchased by him from the defendant. A contract was made for the sale of the property on or about the 4th of August, 1883, and on the twenty-third of the same month the defendant executed and delivered a deed of the land to the plaintiff. This deed contained a covenant that the premises were, at the time of the delivery of said deed, free, clear, discharged and unincumbered of and from all former and other grants, titles, charges, estates, payments, taxes, assessments and incumbrances of what nature or kind soever, except certain mortgages. After this deed had been delivered a tax was extended and confirmed against the property. This was upon an assessment made on the day of the making of the contract, but the tax was not confirmed until the 29th of August, 1883. And as it was not a lien upon the property ,at the time when the deed was executed and delivered, and no .covenant for its payment was inserted in that instrument, the plaintiff cannot now recover it unless the right to do that has been preserved and secured by the contract for the sale of the lot. .(Barlow v. St. Nicholas, etc., Bank, 63 N. Y., 399; Skidmore v. Hart, 13 Hun, 441.)

The agreement which was made contained this clause: The .calculations and adjustments of the exact amounts to be paid as to rents, interest, etc., shall be made the same as if this contract were actually carried out and performed on September 1, 1883, at •twelve m. It is hereby understood and agreed by and between •the respective parties hereto that all rents, issues and profits of the respective lands and premises hereby agreed to be conveyed, or of .any part or portion thereof, shall be apportioned as of September 1, 1883, so that the seller shall take all such portion of such rents, issues and profits as is for a period prior to, or is earned up to, September 1, 1883, and the remaining portion shall go to the purchaser, irrespective of the time when such rents, issues and profits may be due.” A nd it is upon this covenant that the plaintiff depends to maintain ¡this action. But this part of the contract contained no direct .agreement on the part of the defendant to pay this tax. What he did agree to adjust was the rents, interest, .etc., as they should require to be stated on the first day of September. And .on the day of the delivery of the deed that .adjustment was made ,so far as it included the use of gas upon the premises, the rents, .issues and profits and the premium paid for insurance, to the first of September. The taxes now claimed were in no manner brought ■into this adjustment, and the defendant after that refused to allow ¡them. Whether he was legally bound to reimburse the amount paid by the plaintiff to extinguish these taxes, depends wholly .upon the effect to be given to the character made use of in the .contract of “ &c.” It is not clear from the contract or the attendant circumstances precisely what the parties intended should be .included within the significance of this character. But there seems ¡to be no good reason for so far extending its significance as to include the tax now in dispute. For the ordinary signification of the character when used in the connection in which it was in this case, is to render it inclusive only of other and similar items. What was agreed was, that the party should adjust the rents, interest, etc., not that the defendant should pay the taxes after the agreement and after the delivery of the deed imposed upon the property. And they seem to have been actuated in that understanding of its import when they came to make the adjustment which it was agreed should take place; for they did include the rent, the premiums for fire insurance and the charges for gas up to the day mentioned in this part of their agreement, but at that time omitted all reference- to the tax. These were all current items, bearing the same general description and requiring the adjustment mentioned in the agreement. But the tax was a distinct and separate subject, of a different description. It did not relate to what was incidental to the use and enjoyment of the property itself, as the items which were adjusted each of them did, and it accordingly was not within what would be the understanding to be deduced from the use of this character “ &c.” It has received in use the same signification as was accorded the phrase “ et cetera.” That has been considered by lexicographers as its equivalent, and for that reason it has been stated by Worcester that “these words, and also the contraction etc.,' or &c., denote, and others of the like, kind, and the rest, and so forth, and so on.” And the like definition of the phrase has been given by Webster, which would exclude the extended construction of the character required to maintain the plaintiff’s action. The tax was not similar or of a kind with the items mentioned in the agreement and followed by this character, but it was distinct and different, relating to another and independent subject.

That this character was not intended to be so broadly construed is also to be inferred from the fact that the deed itself was made to contain clear and explicit provisions concerning the taxes, as well as the incumbrances, upon the property. And as to them, the defendant covenanted that the premises “ were, at the time of the delivery of said deed, free, clear, discharged and unincumbered of and from all former and other grants, titles, charges, estates, judgments, taxes, assessments and incumbrances of what nature or kind soever,” except certain mortgages mentioned in the agreement. This evinced the design of the parties to be that as to the taxes and assessments upon the property, their rights and obligations should be defined by the deed and not by this portion of their previous contract. It removed the subject of the taxes and assessments from the domain of the agreement itself, and placed them in the deed to be disposed of and controlled in conformity with its covenants. There was no reservation made of any liability of the defendant for taxes which should afterwards be imposed upon the property, but his liability was confined wholly to those which might, at the time when the deed was made, exist against it. And as this tax was afterwards imposed it was not within this covenant. The fact that the parties made taxes a part of the subject of their covenants in the deed, is in conflict with the construction claimed for the contract on which this action has been brought. For if it had been intended that the defendant should hold himself liable for the adjustment of taxes up to the 1st of September, 1883, the time mentioned in the agreement, the deed would not have been made and delivered so as to exclude the tax from that prospective adjustment, or the deed itself would have been made to preserve the continuance of the right. But neither under the contract nor under the deed was the defendant liable for the re-imbursement to the plaintiff of this tax. Pie took the title as it was at the time when the deed was made in this respect. And as it was then free from taxes the effect of their subsequent imposition was a burden to be borne alone by him.

The judgment should be reversed, with costs, and a judgment entered sustaining the defendant’s demurrer to the complaint, with leave to the plaintiff to amend on payment of the costs of the demurrer, and the costs of the appeal within twenty days.

Davis, P. J., and Brady, J., concurred.

Jndgment reversed, judgment entered sustaining demurrer, with leave to amend in twenty days on payment of .costs.


text:
    JOSEPH K. MURRAY, Trustee, etc., Respondent, v. THE GREAT WESTERN INSURANCE COMPANY, Appellant.

      Evidence — when the report of a boa/rd of surrey of a ressel is not admissible against the insurance company — examination of a witness under a deposition — he must state the facts and cannot refer to reports made by him.

    In this action, brought upon a policy of marine insurance to recover for the total loss of a vessel caused by its striking upon a sunken reef, near the harbor of Nassau, it appeared that after the steamer had been injured, three persons were appointed by the United States consul at Nassau, to make a survey of her condition, which they did, and' made a report on October 25, 1878. This was followed by the appointment of another board of surveyors, consisting of the same persons and one other, who made a further report on December 3, 1878. These reports were subscribed but not verified by the persons making them.

      Held, that it was error to receive these reports in evidence against.the defendant’s objection and exception.
    The persons making the reports were examined on commission. The witnesses did not undertake to repeat or recapitulate the facts mentioned by them in their reports, or to give a minute or particular description of the condition in which they found the steamer and machinery, but, declining to answer interrogatories propounded to elicit statements of the particular injuries alleged to have been discovered by them in the machinery and hull of the steamer, referred generally to the reports as containing the information sought for and the facts required.

      Held, that it was error to receive in evidence as against the defendant the reports so referred to in the said interrogatories.
    That the objection was properly taken at the trial at the time of the reading of the interrogatories and of the oiler of the reports, and not by a motion to suppress the depositions.
    Appeal from a judgment recovered on a trial had before the court without a jury at the New York Circuit.

      Joseph E. Choate and Prescott Hall Butler, for the appellant.

      John ¡Sherwood, for the respondent.
   Daniels, J.:

The recovery was on a policy of marine insurance issued by the defendant on the 13th of September, 1878, on the steamer Cleopatra, her tackle, apparel and furniture. She encountered an injury by striking upon a sunken reef on the 23d of October, 1878, while passing through what is called Douglas Channel, at the entrance to Cochran’s anchorage, near the harbor of Nassau. It was alleged on behalf of the plaintiff, to whom the insurance had been transferred by the assured, with the consent of the company, that the steamer and her boilers and machinery were injured by the stranding to such an extent as to justify their abandonment to this and the other companies as a total loss under their policies, and notices of the intention to make such an abandonment were served upon the insurance companies. The right to claim such a loss was denied on behalf of the defendant, which insisted that the injuries sustained were not of so grave a description as to entitle the plaintiff to recover in the action for a total loss. Evidence- was given on behalf of the plaintiff upon the trial to prove that the injuries to the steamer were so extended as to require a larger expenditure to repair them, after deducting one-third new for old, than one-lialf the value of the steamer fixed and agreed upon in the policy. This was encountered on behalf of the defendant by further testimony tending to establish the fact that the expense of repairing the steamer and her machinery would have been much less than this amount. But as the evidence was presented to the court the conclusion was reached that the plaintiff’s claim for a total loss had been sustained and that he was entitled to recover upon that theory in the action.

At the harbor of Nassau the evidence tended to show that the injuries sustained by the steamer and her machinery could not be repaired, and without repairs it would have been hazardous to have attempted to navigate her to another and distant port where necessary repairs could be provided. And this was considered, as it very well might be, as an important circumstance tending to indicate the existence of a total loss. For that was necessarily to be decided according to the condition in which the steamer and her machinery were found to be and the advantages or facilities for repairing her injuries at or near the place where they had been sustained. A.fter the steamer had been in this manner injured three persons were appointed by the United States consul, at Nassau, to make a survey of her condition, which they did and reported on the 25th of October, 1878. This was followed by the appointment of another board of surveyors consisting of the same persons, and another, who made a further report on the 3d of December, 1878. These reports were subscribed but not verified by the persons making the surveys, and they agreed in the statements contained in , them as to the condition and situation of the steamer and her machinery. And during the trial these reports were received as evidence and seem to have been so acted upon by the court in the disposition of the action. In and of themselves they were not entitled to be received or acted upon as testimony. They were simply ex parte statements and representations of the condition in which the persons making them considered the steamer and her machinery to be. The defendant was in no manner a party to the examination or proceeding. (Griswold v. Nat. Ins. Co., 3 Cow., 96, 117.) Neither were they required to be made by the policy itself, as surveys for other purposes have been provided for and their effect declared. But they were made under the general custom or practice existing in cases of marine insurance. But that eastom or usage has not been so far accepted by courts of justice-as to hold in actions of this description that the reports of the surveyors may be received or acted upon as evidence. The rule, so far as it is settled by authority, is adverse to this use being made of the report of surveyors appointed and acting in the manner in-which the surveyors acted, whose reports were used upon, the trial.. (Abbott v. Sebor, 3 Johns. Cases, 39, 46; Saltus v. Com. Ins. Co., 10 Johns., 487; Hall v. Franklin Ins. Co., 9 Pick., 466, 477; Rankin v. Am. Ins. Co., 1 Hall, 619, 633.)

The authorities relied upon in behalf of the plaintiff do- not confiiet with this legal principle, for both Butler v. Murray (30 N. Y., 101) and Gordon v. Massachusetts Insurance Company (2 Pick., 249, 264) were decided and disposed of upon the- propriety of the master of the ship acting upon a survey in determining whether or not a sale of the vessel should be made. For that purpose the master has been required to act in good faith according to the-exigencies of the circumstances by which he may be surrounded,, and under which he is obliged to act. And where he may have-secured the aid and assistance of competent surveyors the report made by them to him is a material circumstance to be considered by him, as to the course which he ought to adopt in the exercise of his authority as master for the sale of the ship. And the same-view was taken of his duty in Prince v. Ocean Insurance Company (40 Maine, 481) and Orrok v. Commonwealth Insurance Company (21 Pick., 456). But there is a wide difference between the evidence the master himself may be required to act upon in the case of a pressing emergency, and that which is received in courts of justice to determine legal controversies. In the latter cases the statements of persons who ar.e competent witnesses, made to or under the authority of one of the parties, have not been allowed to be received as evidence against the objection of the other party. This principle is very general and it has led to the exclusion of reports and documents of this description; and it was evidently at first so considered and regarded at the trial of the action. But the plaintiff endeavored to avoid its effect and secure the introduction of the reports in evidence by the testimony of the surveyors taken on commission. I.n their evidence these witnesses did not undertake to repeat or recapitulate the facts mentioned by them in their reports, or to give anything like a minute or particular description of the condition in which they found the steamer and machinery, but they referred generally to the reports which had been made, and declined to answer interrogatories propounded to elicit statements of the particular injuries alleged to have been discovered by them in the machinery and hull of the steamer. The first of the surveyors, James H. Gamblin, in his answers to the direct interrogatories, stated: “ I found her in the condition and having sustained the injuries stated in our letter to Messrs. Darling & Co. of October twenty-fifth, hereto annexed. Said letter is in my handwriting. It was a preliminary examination only.” In his answer to the next interrogatory his statement was “ that information is contained in our report and I can add nothing to it.” This interrogatory asked the witness to “ state in what position you found said steamship, and what, if any, injuries, damages or displacements, you then discovered to the hull, tackle, apparel, boilers, engines or machinery.” The most that the witness was willing to answer in his responses to the direct interrogatories was that the description of the vessel and her machinery had been correctly set forth in the reports and he (Could do no better than to refer to them. Upon his cross-examination he did give something of a description of the condition in which he stated he found the steamer and her machinery, but finally .made a summary of his evidence by stating that he referred “ to our reports of surveys wherein our reasons were stated explicitly and which are a sufficient answer to all these inquiries. I do not desire to repeat them.”. The answers of the other surveyors, Thomas W. Einlayson, Charles Smith and Henry O. Lightbourn, were, in their substance and effect, the same. They declined, and failed in their evidence to particularly state the condition in which they found the steamer and her machinery, but referred to the reports, the final one made on the 3d of December, 1878, by all of these witnesses, as the document from which the information sought by the questions could be obtained.

It is probably needless to say that this was an improper course for the witnesses to take in giving their evidence. What they should have done, and what the interrogatories required them to do, was to state the facts they had observed, and which had come to their knowledge, exhibiting the condition of the steamer and her machinery. They could not omit to do that merely for the reason that these two surveys had been made containing statements in detail of the injuries deemed to have been received by the vessel. What the parties were entitled to and the defendant had the right to insist upon was that the witnesses, under the oaths administered to them previous to their answering the interrogatories, should state and repeat all the knowledge they had concerning the state and condition of the steamer and her machinery. And, for their failure to do so, objections were taken upon the trial to the reading of this testimony. The objections were first presented to the depositions as entireties, and then to the answers the witnesses had made in this manner to particular interrogatories. Each of the objections were overruled, and the defendant excepted to the decisions made in that manner. These answers appear to have been regarded, as they very well might be, as including the 'two reports made of the surveys of the steamer. When they were first received by the court it was not as evidence of their contents, but after that, and when the answers to the interrogatories were read, the reports seem to have been received as evidence in the case. To their use as evidence the objection was taken that they were unverified, incompetent and hearsay. This was overruled, and the defendant excepted. The further and same objections were taken to the survey referred to in the answer to the twenty-first interrogatory.”, The same disposition was made of these objections, and the defendant excepted. This interrogatory inquired of the witness “ what, if any, were the damages, injuries, losses or displacements to the hull, boilers, engines, tackle, apparel and furniture of the said steamship discovered upon the said examination or survey.” And the answer of the first witness was, They were such as were set forth in my reports and in the copies annexed, and I can do no better than to refer to them; ” and it was to these reports that these particular objections seem to have been directed. They were overruled, as already stated, and the defendant excepted. The same objections and rulings were taken to the evidence given by Finlayson and the other surveyors. And upon their evidence these surveys were brought into the case and used in its disposition. The case is somewhat obscure, it is true, as to this fact, but the reports of the surveys were included in it as a part of the plaintiff’s evidence, and seem to have been so considered as the result of the disposition of these objections. And that they were received and acted upon as evidence is conceded, as a matter of fact, in the points and argument presented by the learned counsel for the plaintiff. These reports not being evidence of themselves could not be made so by the general answers and references given by the witnesses who made them.

They were still incompetent as proof in the case and did not dispense with the legal necessity of these persons repeating, when they were examined as witnesses, wliat they found the injuries to the steamer and her machinery to have been. They could very well refer to their reports to revive or refresh their recollection, but after having done so the law required that they should state in their evidence what the facts were which they discovered in the course of their examinations, and the effect that was deemed attributable to them in the value of the vessel and her machinery.

It has been suggested that the remedy of the defendant was not by objecting to these answers and documents as evidence upon the trial, but by a motion to suppress the depositions themselves, under section 910 of the Code of Civil Procedure. Put such a motion appears to have been made and denied. And it may very well have been so disposed' of, for neither of the causes for which that section has provided that a deposition may be suppressed, seems to have been presented in support of the motion. The next section of the Code has declared that the depositions when produced upon the trial, have “ the same effect, and no other, as the oral testimony of the witness would have, and an objection to the competency or credibility of the witness, or to the relevancy or substantial competency of a question put to him, or of an answer given by him, may be made as if the witness was then personally examined, and without being noted upon the deposition.” The objections which were taken by the defendant' to these portions of the evidence were within this section, for the answers given by the witnesses were not competent as proof of the condition in wdiich this steamer and her machinery were found. They could not make evidence of that fact by referring to reports they had made at the time when they were called upon to examine the steamer. And beyond the objections taken to the competency of these answers, the reports themselves were further objectionable as hearsay and incompetent evidence. And the objections taken to their admission as evidence should have been sustained instead of being overruled as they were uponrthe trial. The practice which was followed in making the objections conformed to the rule indicated in Commercial Bank, etc., v. Union Bank (1 Ker., 203), as well as being sustained by this section of the Code. These reports, it can be very well seen from the case, must have exercised an important bearing upon its final determination, and the error in receiving them can be no otherwise corrected than by another trial of the action. The question should also have been allowed to be answered which was put to one of the defendant’s witnesses, whether there was anything in his examination of the vessel that enabled him to state whether the extent to which she wás out of line was recent or old. So should the further question have been answered whether he was able to form a judgment as to the age of the hogging alleged to have been caused by the stranding or of the steamer being out of line. For if the witness by his experience and observation had been able to answer these questions in the affirmative, then further proof might have been elicited from him having a pertinent bearing upon the condition of the steamer succeeding the time when she stranded. But it is not necessary to consider these or any other exceptions in detail in the case, or the general effect of the evidence as long as the exceptions taken to the answers which have been considered, and the admission of the surveys as evidence cannot be satisfactorily answered or avoided. They require another trial of the action, in which the witnesses shall be afforded an opportunity of stating the facts themselves, under the solemnity of the oaths administered to them, without referring for their detail or description to the reports made as the result of the surveys.

The judgment should be reversed and a new trial ordered, with costs to abide the event.

Davis, P. J., and Biíadt, J., concurred.

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


text:
    LELAND FAIRBANKS, Jr., Appellant, v. WINTHROP SARGENT, as Executor of HENRY W. SARGENT, Deceased, Respondent.

      A greemeni to receive a proportionate pari of the recovery, in consideration of services to be rendered, in collecting the amount — when it gives a, lien on the recovery — the release of a debt and, collateral security is a valuable consideration — when coupon bonds issued by a primate person are to be treated as negotiable instruments.

    The plaintiff and one Underwood entered into an agreement whereby it was provided that for services to be rendered by the plaintiff in endeavoring to collect certain claims against one Zabriskie, he should have one-sixth of whatever amount of money, securities or property should be received on account of such claims as should be settled without suit, and one-third of whatever amount of money, securities or property should be collected or in any way realized or received, on account of such claims as should be put in suit in this State or any other State or country.
    In pursuance of a settlement made in an action brought in the State of New Jersey against Zabriskie, certain bonds were received under the direction of Underwood by the defendant’s testator.

      Held, that under the agreement the plaintiff had a lien upon the bonds so received, unless the testator was protected as a bona fide purchaser thereof in good faith.

      Williams v. Ingersoll (89 N. Y,, 508) distinguished.
    The bonds were sealed instruments, executed by one Sarah R. Haight, as executrix, payable to one Gray or bearer, having interest warrants attached to them for the payment of semi-annual instalments of interest, payment thereof being secured by a deed of trust or mortgage of certain leasehold property in tlie city of New York. The testator upon receiving the bonds, and in consideration thereof, executed and delivered to Underwood, who was then indebted to him in an amount exceeding the value of the bonds, a release under seal for all claims, debts, dues and demands he had against him, and also discharged another claim which had been assigned to him by way of security. At the time he received the bonds the testator was not chargeable with notice of the plaintiffs interest in the bonds.

      Held, that the testator was entitled to the protection afforded to bona fide purchasers in good faith of negotiable instruments.
    That the fact that the bonds were issued by a private person under seal did not deprive them of their negotiable attributes.
    The rule has now become settled that bonds of this description and issued in this manner, intended to pass from hand to hand, and containing appropriate words for the expression of that intention, are to be regarded as commercial paper.
    Appeal from a judgment of the Special Term dismissing the plaintiff’s complaint, with costs.
    The action was commenced and partly tried in the lifetime of defendant’s testator, and was brought to recover one-third of forty coupon bonds under seal, for $500 each, executed by one Sarah R. Ilaight, sole acting executrix of the last will and testament of Richard IL Haight, deceased, to John A. C. Gray, or bearer, secured by a deed of trust or mortgage of certain leasehold property in the city of New York, together with one-third of any interest theretofore collected by defendant’s testator; or, in case he had disposed of said bonds so as not to be able to transfer and deliver one-third of them, then to recover the value thereof and of the coupons, being $6,666.66, with interest thereon from June 15, 1872.

      A. G. Brown, for the appellant.

      John Clinton Gray, for the respondent.
   Daniels, J.:

The claim to enforce which the action was brought and prosecuted was for one-tliird of the value or amount of forty bonds of $500 each, delivered to the testator under the authority of Henry A. Underwood. The plaintiff had been employed to perform legal services for Underwood and the firm of which he had been a member ; and an agreement was made between himself and the plaintiff on the 1st of July, 1869, by which it was agreed that for his services in endeavoring to collect certain claims, including one against John I. Zabriskie, he should have one-sixth of whatever amount or money, securities or property should be received on account of such claims as should be settled without suit, and one-third of whatever amount of money, securities or property should be collected or in any way realized or received on account of such claims as should be put in suit, either in this State or any other State or country. The claim against Zabriskie was put in suit in the State of New Jersey. That was done by the employment of a legal firm there, "through the agency of the plaintiff. While that action was pending which was for a large amount, a settlement of it was made by which the bonds which have been mentioned, were by the direction of Underwood delivered by Zabriskie to the testator, and the action was brought under' the agreement to enforce the plaintiff’s right to one-third of these bonds. It was held at the trial that the plaintiff had no lien upon the bonds themselves under the agreement which had been made by him with Underwood. But in this agreement it was agreed that the plaintiff should have for his services “one-sixth of whatever amount of money, securities or property shall be collected or in any way be realized or received, whether on settlement or without settlement on account of such claims as shall be put in suit.” This language created more than an agreement by Underwood to pay or deliver the one-third to the plaintiff, and it excludes the case from that of Williams v. Ingersoll (89 N. Y., 508, 518). . For the obligation upon which that action rested was no more than a promise to pay out of the money which should be recovered in any of the actions or proceedings. And that was held not to be an equitable assignment of any part of the demands in suit or of their proceeds. In Wylie v. Coxe (15 How. [U. S.], 415), the agreement was that the complainant should receive a contingent fee of five per centum out of the fund awarded, whether money or scrip. And it was said in the opinion by which the case was decided, that “ this being the contract it constituted a lien upon the fund, whether it should be money or scrip. The fund was looked to and not the personal responsibility of the owner of the claim.” (Id., 420.) And this rule was followed in Trist v. Child (21 Wall., 441, 447), where it was held that to constitute a lien or transfer of an interest in the fund, all that could be required was that “ there must be appropriation of tbe fund pro tanto either by giving an order, or by transferring it otherwise in such a manner that the holder is authorized to pay the amount directly to the creditor without the further intervention of the debtor.” And this was likewise approved in Stanton v. Embrey (93 U. S., 548).

The agreement with the plaintiff was brought by its language within this rule, for it was not an agreement merely to pay, but it was an agreement that the plaintiff should have the stipulated' onetliird of the amount of money, securities or property collected realized or received. This language entitled him to this proportion of the identical proceeds of the litigation. Not by way of payment from Underwood, but by receiving to that extent the money, securities or property. And he was not deprived of this right by the further agreement between the parties that Underwood should determine who should be the attorney to bring the suit where an action might be brought, and had the right also to decide upon the terms and mode of settlement of each of the claims either before or after suit should be brought. For these additional stipulations in no way reduced the force of the preceding part of the agreement by which the plaintiff was entitled to one-third of the proceeds of the settlement for the services performed by him.

But a more serious difficulty arises out of the fact that the testator seems to be entitled to protection as a bona fide purchaser of the bonds in controversy. The settlement was brought about through the assistance of John A. O. Gray, whom the evidence showed and the court held was acting for Zabriskie, and not for the testator. Evidence was given to prove that Gray was informed before the settlement was completed that the plaintiff was entitled to share in the proceeds of the litigation. But that notice or information was without effect in the way of depriving the testator of protection, for the reason that Gray was neither employed by him nor acting under his authority. The testator had a large demand against Underwood, and as Zabriskie was desirous of settling the litigation, and Underwood by means of its proceeds could settle and extinguish the claim the testator had against him, the settlement was brought about to accomplish these objects.

In the negotiations which were carried on the testator was represented by ex-Judge Monell. He had a conversation with the plaintiff concerning the claim against Zabriskie while it was in suit. But in that conversation the plaintiff failed to inform him that he was entitled to or claimed any part of the proceeds of the demand in suit against Zabriskie. He was informed by Monell that the latter ivas interested in knowing the condition and state of the Zabriskie claim. The plaintiff communicated that information, and by way of explanation in reply it was stated to him by Monell that a client of his had a claim against Underwood, and he wished to know the probability of getting the money out of the claims then in suit. An opportunity was afforded to the plaintiff in this interview to state the fact of his own interest in the proceeds of the litigation, but he failed to do that, and by reason of this failure as Monell was the only person who was acting for the testator, he omitted to affect the title to the bonds in the hands of the latter by notice, provided they are to be held to have been negotiable and the testator received them for a valuable consideration. That he did so receive them results'from the fact that he had a larger demand against Underwood and a claim which had been assigned to him by way of security, in addition to this claim against Zabriskie; and inconsideration of the bonds he executed and delivered to Underwood a release, under seal, for all claims, debts, dues and demands he had against him.

This was a complete surrender of the indebtedness by which Underwood was discharged from every vestige of liability. And it also discharged the demands or contract held by the testator as security. This demand may not have supplied him with a valuable security, and still it may very well have been of benefit and advantage to him if he continued to hold it. And the release of this collateral contract and of the whole indebtedness held by the testator against Underwood was, in contemplation of law, the surrender of value on the faith of the bonds, and entitled him to protection as a Iona fide holder if they are to be held to have been negotiable securities. (Brown v. Leavitt, 31 N. Y., 113; Pratt v. Coman, 37 id., 440.)

These bonds were payable to bearer, having interest wai’rants attached to them for the payment of semi-annual installments of interest. And bonds in this form issued by corporations have been held to be negotiable securities, passing as bills and notes in like manner to the purchaser by delivery for a valuable consideration. (Brainerd v. N. Y. and H. R. R. Co., 25 N.Y., 496:) The reason on which this principle was placed was not the fact that the bonds were issued by a corporation, but it was that “ when such obligations are issued to secure the payment of money upon time, and contain on their face an expression showing that they are expected to pass from one person to another, and thus to perform the office of bills and notes, or of money, as the words bearer ” or “ assigns/ or “ the holder” or the like, the courts in this country with a single exception, and those of this State without an exception, have concurred in attaching to them the attributes of commercial paper.” (Id., 500.) And the same view was approved and acted upon by the court in Murray v. Lardner (2 Wall., 110).

In support of this appeal the counsel for the plaintiff has endeavored to avoid the effect of these authorities by a reference to others, in which it has been held that attaching a seal to a bill or note deprives it of its negotiable attributes under the law merchant. But since bonds in this form have entered so largely into the financial and business transactions of the country a more enlarged rule than that supposed previously to be applicable has been adopted for their disposition, and the protection of persons receiving them in good faith and for value. It is not necessary therefore, in disposing of this case, to examine those authorities in detail, for the rule has now become settled that bonds of this description and issued in this manner, intended to pass from hand to hand, containing appropriate words for the expression of that intention, are to be regarded as commercial paper. And as the testator received the bonds now in controversy in good faith, and for what the law regards as a valuable consideration and without notice of the plaintiff’s rights, the plaintiff has mo legal power to follow them either into his hands or in the hands of his executor.

On this ground the court was right in directing the dismissal of the complaint and the judgment should be affirmed.

Davis, P. J., and Brady, J., concurred.

Judgment affirmed.


text:
    In the Matter of the Petition of LEONARD G. BLISS, for a Writ of Habeas Corpus.

      Referee — Tie is disqualified hy reason of his having already in an action for divorce found one of the parties guilty of adultery

    Upon the .application of the relator for a writ of habeas corpus to obtain the custody of his son, an infant under the age of fourteen years, who had ■been committed to the custody of the mother, under articles of separation, •entered into hy his parents, the proceedings were sent to a referee, who had already, in an action for divorce, brought by the husband, the relator, against his wife, made a report finding the wife guilty of adultery upon a number of occasions.

      Held, that it was error to deny a motion made by the wife to change the referee.
    Appeal by Hattie W. Bliss from an order denying a motion to •change the referee named in the order of reference in this proceeding.

      Everett P. Wheeler, for the appellant Hattie W. Bliss.

      John II. Bergan and James Dunne, for the respondent George N. Bliss.
   Daniels, J.:

The habeas corjpus was issued by the relator George N. Bliss who was the husband of the respondent in the proceeding to obtain the •custody of Leonard G. Bliss, an infant under the age of fourteen years. He is one of the children of the marriage of the parties, ■and by an agreement made for their separation his custody was •committed to the wife who is the present appellant. Before the proceedings were taken an action was brought against her by her husband in the Court of Common Pleas for the city and county of New York, for a divorce because of her alleged adultery. The ¡issue in this action was referred to the referee whom the appellant •desires to have changed. After the hearing of the issue before him he made a report in favor of the plaintiff in the action, finding her from the evidence to have been guilty of adultery upon a number ■of different occasions mentioned in the report. Her alleged guilt, :it is expected, will form a material part of the controversy to be •determined by the referee under the order made in these proceedings, •and as he has already, in the action between the husband and wife, made a decision upon that fact, it is apprehended that he will be biased against her to that extent if the inference now ordered shall proceed before Him. How far this subject will be open for reconsideration before the referee in the habeas corpus proceeding it is not necessary now to decide, but it must be evident from the decision which has been made in the action in the Court of Common Pleas, that her conduct has already been made the subject of-adverse decision by the referee. Probably he would be able to divest himself of all the influence of that decision over his mind, in the hearing and disposition of the present reference, but it is not certain by any means that he could do so. That he would endeavor so (o do as a high-minded reputable member of the legal profession, is without doubt, but still, with all his exertions to accomplish that end, the present.decision made by him may yet have an. important influence over his mind in determining the effect of the evidence which will be submitted under the order in this proceeding. And to that risk the wife claiming the custody of the infant should not be subjected. She should, for the hearing and dis position of the proceeding, have it presented to a person whose mind is entirely free and unaffected by any preceding hearing, bringing in question the effect of the evidence which may again be taken in the course of the present reference. Every party in a court of justice is entitled to have his or her controversy presented to an unbiased, impartial tribunal, for the natural effect of the proof cannot be secured to it in any other manner, and there is certainly danger that such would not be the case if the hearing concerning the custody of this child should still be ordered to proceed before this referee. It is true that the counsel for the wife consented to the reference which has been ordered, understanding that the issue in the action was already before the referee. But that circumstance should not be allowed to have so much effect upon the disposition of the motion as to deprive her of her right to a tribunal in which she will have confidence, and which will not be liable to be biased against her evidence by means of a previous determination. The administration of justice should be entirely fair and thoroughly impártial. That is the great end and object intended to be secured by the laws of the State to every party appearing before a' court of justice in the course of legal proceedings. It is not intended to be intimated that it would be defeated by this reference proceeding before tbe referee already selected All that is designed to be said is that it may be defeated, and that this party is entitled as a matter of right to a tribunal for the hearing and consideration of the evidence before which she will not be subjected to this risk.

The order from which the appeal has been taken should be ■reversed, writh costs and disbursements to abide tbe event of the proceeding, and an order should be entered appointing another person as referee in these proceedings, either to be selected and agreed upon by tlie parties or, in default of such selection, by the court.

Davis, P. J., and Brady, J., concurred.

Order reversed, with ten dollars costs and disbursements to abide event, and order entered as directed in opinion.