author: Per Curiam.

text:
    William S. Keiley, Receiver, Resp’t, v. The Mechanics & Traders’ Bank, App’lt.

      (Supreme Court, General Term, First Department,

      Filed October 13, 1893.)

    Conversion—Damages.
    Defendant took possession of certain property and sold the same under a bill of sale which was afterwards set aside for fraud. Held, that the amount of recovery was rightly fixed at the sum for which the property was sold by defendant, instead of being estimated from the conflicting testimony of experts as to its value.
    Appeal from a judgment entered upon the report of a referee, and from an order overruling the exceptions filed by appellant and confirming the said report in all respects.

      Charles Strauss, for app’lt; Blumenstiel & Hirsch, for resp’t.
   Per Curiam.

The Industrial Manufacturing Company, on the 24th of January, 1888, had certain notes under discount at the Mechanics & Traders’ Bank (this defendant). For the purpose of securing the payment of such obligations at maturity it executed to the defendant a chattel mortgage upon all of its property, consisting largely of machinery then in use by it, and at the same time delivered to the defendant a bill of sale, embracing the same property, under which the defendant at once took possession. Subsequently an action was brought for the dissolution of the corporation, in which plaintiff was duly appointed receiver of its property and effects, and thereafter he commenced this suit, to set aside the mortgage and bill of sale. The trial at special term resulted in an interlocutory judgment declaring the chattel mortgage and bill of sale void, and decreeing that they be "set aside. From that j udginent an appeal was taken to the general term of this court, resulting in its affirmance. 39 St. Rep., 438. By the interlocutory judgment a referee was appointed to take and state the accounts, and report to the court “ what amounts should be paid over to the plaintiff, in accordance with the terms and provisions hereof.” The referee reported that the plaintiff was entitled to have judgment against the defendant for the sum of $3,750, with interest thereon from the date of the conversion of the property, amounting to $958.75. The report being confirmed by an order of the court, a final judgment was thereafter entered. So we may consider on this review only the exceptions taken subsequent to the entry of the interlocutory judgment. The appellant calls our attention to some exceptions taken by him to certain rulings of the referee in the admission and rejection of testimony; but, after an examination of the questions presented by them, the conclusion is reached that they do not call for a reversal of the judgment.

The main-contention of appellant is that the defendant should have been charged with the sum of $2,250, instead of $3,750. The secretary and treasurer of the Industrial Manufacturing Company testified that at the time of the giving of the mortgage and bill of sale the machinery, fixtures and merchandise described in such instruments were worth between $7,000 and $8,000, the original cost being over $12,000. On the part of the defendant ex-” pert witnesses were called, who gave to the property a much lower valuation, their estimates running from $1,531.50 to $1,164. It appears that almost immediately after the defendant took possession of the property two of the officers of the company, separately and each for himself, commenced negotiatio'ns with the officers of the defendant to purchase the machinery and merchandise described in the chattel mortgage and bill of sale. The negotiations resulted in a sale of the property to one of them, and the referee reached the conclusion, not unwisely, that the sum which the defendant realized from the sale of the property, under the circumstances disclosed, furnished better evidence of value than that afforded by the testimony of the experts. The appellant insists, however, that the referee found that the defendant received for the machinery and effects $1,500 more than it did in faqt receive. The mortgage was given originally to secure a note for $2,250, and defendant contends that it was sold for a sum sufficient to pay that note only. There were two other notes not yet matured, which had been discounted by defendant for the benefit of the Industrial Manufacturing Company, on one of which the indorser was entirely responsible, while on the other, which was a note of $3,000, the indorser was in poor credit, and failed some two or three months afterwards. The purchaser of the machinery actually paid $1,500 on account of this note, and, while one of the defendant’s officers insisted that the payment of this sum was not provided for in the agreement which he made with him to sell the property, it is apparent that.the purchaser understood that he was obliged to pay $3,750 in order to secure the property. He was willing to pay it, and did pay it. After an examination of the testimony, which it is unnecessary to discuss here, we are of the opinion that the referee was fully justified in finding that the defendant received $3,750 for the property, and that it cannot complain of a determination fixing the value at a sum which it actually received for it.

The judgment should be affirmed, with costs.

O’Brien, Follett and Parker, JJ., concur.


source: Caselaw Access Project

author: Parker, J.

license: Public Domain

text:
    Anthony Van Bergen et al., Resp’ts, v. Ludwig Lehmaier et al., App’lts.

      (Supreme Court, General Term, First Department,

      Filed October 13, 1893.)

    1. Assignment for creditors—Partnership.
    One partner of a firm, which had made an assignment for the benefit of creditors, will not be deemed to have constructive knowledge of a conveyance by the other partner of his individual property because one of the firm’s clerks took part in the transaction.
    2. Same—Offer of composition.
    The fact that after an assignment for the benefit of creditors made by a ' firm they proposed a composition with creditors at the suggestion of some of their creditors, does not in any degree show that the assignment was merely made to coerce a settlement.
    8. Same—Omission from schedule.
    A finding that an assignor’s schedules were falsely made up to coerce-creditors into a settlement is not justified by the mere fact that an item was omitted from such schedules, when there was positive testimony, corroborated by circumstances, that the omission was a mistake.
    Appeal from a judgment of the special term setting aside a general assignment made March 17. 1891, by the firm of Lehmaier &Co.

      Courtland V. Anable (Nathaniel Myers and Albert Stickney, of counsel), for app’lts; John J. Adams, for resp’ts.
   Parker, J.

The firm of Lehmaier & Co., composed of Ludwig Lehmaier and Sigmund Herzog, on the 17th day of March, 1891, made a general assignment for the benefit of their creditors. As composed at the time of the assignment, the firm had been in existence since January 1, 1890. For two years prior to that time, Adolph Hochstadter had been the junior member of the firm, but was succeeded by Herzog at the date mentioned. Lehmaier & Go. were wholesale dealers and importers of silks and dress goods in the city of New York, doing an annual business of $1,000,000 and upwards. The assigned estate, after deducting over $300,000 of assets pledged as security against loans made on the strength of the pledges, had a cash value of over $170,000. The net cost value of the assets, after deducting unpaid duties and the amount of debts contracted on the pledges of assets, was: Merchandise, $227,-400.05; other assets, $98,137.53; total, $325,537.58. The unsecured liabilities amounted to $375,000, including, however, $24,111.34 of contingent liability. So that, taking the assets at their cost price, there was a disparity between assets and liabilities of about $25,000. But one creditor was preferred in the assignment. He was a brother of the senior member of the firm, and the amount of his preference was about $20,000. He had been for a number of years the commissionaire, in Leipzig, of the firm, purchasing merchandise in his own name from parties in Germany, paying for it himself, shipping it in his own name to the firm, and receiving from the latter the cost price of the goods, plus his disbursements, and a commission of three per centum upon his outlays for his services. It was for moneys thus0expended, and for the commissions by which his services were compensated, and not •otherwise, that he was preferred. The amount of the preferences being for a much smaller proportion of the cash value of the assets than authorized by statute, it is not a subject of legal criticism. The rest of the partnership assets were unreservedly devoted by the assignment to the benefit of all the creditors of the firm. Not •content with receiving a ratable proportion of the assets, after payment to the preferred creditor, the plaintiffs obtained judgment, and thereafter instituted this suit to set aside the assignment, resulting in a judgment in their favor. The trial court found as a fact that the assignment was made “ with the intent to hinder, delay and defraud their creditors, including plaintiffs.”

As evidentiary facts it was found, in substance: (1) That in November, 1887, Lehmaier executed a deed, which in form conveyed to a third party property then valued at a few thousand dollars, situated in the town of Yonkers, who on the same day went through the form of executing a deed of the said real estate to Lehmaier’s wife, but that the deeds were not recorded until the day preceding the making of the assignment; that'the title did not pass until the deed was recorded, and it was then passed for the purpose of defrauding the creditors of Lehmaier and of the firm. (2) That on the 10th day of March, 1891, Lehmaier conveyed through a third person, to his wife, a lot adjoining the premises described in the deed of November, 1887, for which he paid $1,085; that such conveyance was wholly without consideration, and in fraud of the rights of his creditors. (3) That such conveyance was made with the assent and connivance of the defendant assignor Sigmund Herzog, in furtherance of the said scheme to defraud the creditors of the defendant .assignors, including the plaintiffs. (4) That the said assignment was made by the defendant assignors with the intent to coerce their creditors into a settlement, and the schedules were made up and filed by them in pursuance of such scheme. (5) That the said assignment was not intended by the defendant assignors to distribute among their creditors the assigned property, but was solely made and intended by them to transfer their property with intent to hinder, delay and defraud creditors, and to coerce them into a settlement. No other finding of fact touching the alleged misconduct of the assignors, or either of them, was made, and it must be assumed on this review that findings which the trial court deemed of sufficient materiality to make were considered by him in reaching the conclusion that the facts supported a general finding that the assignment was made with intent to defraud the firm’s creditors.

Now, there was evidence tending to show a consideration for the conveyance of March 10, 1891, the contention of the Lebnaaiers, husband and wife, being that subsequent to the deeds of 1887 a loan was obtained on the property therein described of $4,000, a portion of which was used to pay for the indebtedness incurred in the purchase of the lot last conveyed to her, which had no special valu<j, except as connected with the property described in the deeds of 1887. But, assuming that the finding is supported by the weight of evidence, the finding immediately following, which is necessarily connected with and dependent upon it, is wholly without evidence to support it. It is that such conveyance was made with the assent and connivance of the junior member of the firm, and in furtherance of the scheme to defraud their creditors. There is no evidence that Herzog participated in, assented to, or even knew of the conveyance at the time it was made. It is true that the conveyance was made through a clerk of the firm as the conduit. There is no evidence that the clerk had any knowledge or suspicion that a fraud was contemplated, if one was, or that he communicated to any one what had taken place. Certainly, it cannot be said that a member of a firm will be deemed to have constructively guilty knowledge of a business transaction, wholly out.side of the firm business because his partner and a clerk participated in it. The error in the finding was probably brought about because of the fact that Herzog was the third party through whom the conveyance was attempted to be made in 1887; but he was not then a member of the firm, nor did he become such until more than two years afterwards. That the finding thus erroneously made (doubtless because it was mistakenly supposed that Herzog was a party to the last, instead of the first, conveyance) had weight with the court in making the decision seems highly probable, not only because the finding was deemed of sufficient materiality and relevancy to justify the court in making it, but also for the reason that in that way, only, could the assignee and Herzog be affected by the individual act of Lehmaier touching individual property, property wholly unconnected with the partnership, and unaffected directly by the firm assignment.

Another finding which must be deemed to have had weight with the court in making the general finding that the assignment was made with intent to hinder, delay and defraud the creditors of the firm was, in substance, that the assignment was not intended by the assignors to distribute among their creditors the property assigned by it, but to coerce a settlement. It is difficult to find support for that finding in the record. Clearly, the making of a general assignment, in the manner authorized by statute, does not raise a presumpiton that the object in view is to prevent a distribution of the property assigned, and to coerce a settlement with creditors. When that act has been fully performed, and the defendants have parted with dominion over the assigned estate, the creditors are in a position to enforce, through the courts, a due ■ administration thereof. The assignors did not attempt to retain control over the property assigned, and clearly they were powerless, in the absence of wrongdoing on the part of the assignee, to-disturb the assurances which the law gives to creditors, that the assets will be properly marshaled, honestly husbanded and ratably distributed among those entitled thereto. The evidence contains no suggestion of unfaithfulness to his trust on the part of the assignee; no hint of an effort on his part to induce a settlement which should secure to the creditors less than their due proportion of the estate.

On the contrary, it was found as a fact “ that the execution of the said general assignment to said defendant Nathaniel Myers was accompanied by an immediate, and was followed by an actual and continued, change of possession of the property assigned thereby, and that said assignee proceeded to administer upon the property thus assigned to him, and did administer according to law.” If, as the finding declares, the assignee took possession of the property, and proceeded to and did administer the estate assigned according to law, how can it be possible to find that the assignors intended that something else should be done, in the absence of evidence suggesting that they had reason to expect that the assignee would act otherwise than he has ? But for the subsequent effort to bring about a composition with creditors, it would not have been suggested even that the purpose of the assignment was to coerce a settlement with the creditors. Lehmaier says that the idea of a compromise did not originate with him, but with certain large creditors after this suit was begun April 25th; and it appears that all of the creditors, save three, preferred such a disposition of the matter, and agreed upon a basis which, for aught that the record discloses, might have consumed all the assets of the estate. But if the fact was that the suggestion first came from Lehmaier, instead of his falling in with the wishes of creditors, as he contends, there would be nothing wrongful in it, so long as it was a mere proposal to be accepted or rejected as the judgment of the creditors should dictate. His control over the property was gone. It was being administered lawfully, and in the absence of collusion with the assignee, of which there is no hint, the assignors were powerless to affect the rights or remedies of the creditors. In such a situation there was no legal impropriety in advising or requesting a compromise. That fact, standing alone, would not support the conclusion that an assignment was made to coerce a settlement with creditors. A proposition of that kind, made under .the circumstances described, contains no element whatever of coercion. No word or deed has been proven against the assignor or assignee, subsequent to the assignment, which could have had for its purpose the compelling of any creditor to surrender any Of his rights, lest by refusing he should be a greater loser. On the other hand, there is evidence that some of the larger creditors, provoked by the refusal of these plaintiffs and two other creditors to join in the composition, and thus permit an immediate and ratable payment, proposed that judgments be confessed in their favor, to the end that they might first institute suits attacking the assignment, and thus plaintiffs and the two other creditors would be assured that, if the assignment should be set aside, they would not receive anything, because the judgments first obtained would be large enough to absorb the assets. With such a prospect confronting them, it was urged they would be likely to change their position and consent to share with the other creditors. This was regarded by the assignors, and the assignee as well, as coercion, and for that reason they refused to lend their aid to the project. The finding next preceding the one we have been considering asserts that the schedules were made up in pursuance of the scheme to coerce the creditors into a settlement.

There were two omissions from the schedules—the first, a piece of real estate in Florida, owned by Lehmaier individually, for which he paid about $100. He testified that he had not paid any taxes on it since his purchase, and had forgotten that he owned it The firm had no interest in it, and it had no proper place in the firm’s schedule. The second item was a claim against the United States government for $9,000, the value of which was dependent on litigation then pending between the government and certain importers. Had it been inserted, it would necessarily have been appraised at a merely nominal value. The claim was not assigned or transferred to any one, and necessarily passed to the assignee by the assignment. But respondent’s contention is that it was omitted from the schedules in order to persuade creditors that the estate was of less than its real value. The explanation offered by the assignors is that the schedules were not prepared by them personally, but by a Mr. Anabel, who was employed by the assignee, and assisted by the clerks of the late firm, and that they did not examine the schedules item by item, but assumed that the work done had been correctly performed. This explanation seems to have support in other facts. ^The account was not regarded as of any substantial value. It appeared on the books of the firm, then being examined by plaintiff’s experts, who at times had them in their possession, so that the assignors knew that the experts not only had the opportunity to find out, but it was their business to discover and report, any omissions from the schedules. When the attention of the assignee was called to the omission, he at once caused an amended schedule to be filed, in which was set forth the facts in regard to the claim. The amended schedule is, in respect to this claim, not open to criticism. It recites all the facts connected with it, and asserts that while the claim had little, if any, value when the assignment was made, it is now probably worth 50 cents on the dollar, by reason of a favorable decision involving the main point. There is nothing in the evidence to be pitted against the testimony of the witnesses that the claim was mistakenly, and not intentionally','omitted from the schedules, and the corroboration of other facts and circumstances, except the naked fact that the claim does not appear upon the original schedules. We think it ought not to be held, upon such, a state of facts, that the schedules were falsely made with the view of coercing the creditors. As we have reached the conclusion that the findings contain error which call for a reversal of the judgment, we shall refrain from discussing other questions which' the record presents, for it may well be that on a new trial the evidence will be so far changed as to render such a discussion fruitless. The judgment should be reversed, with costs to the appellant to abide the event.

Van Brunt, P. J., and Parker, J., concur.


author: Follett, J.

text:
    Sir Roderick W. Cameron, Pl’ff, v. Charles H. Tompkins, Def't.

      (Supreme Court, General Term, First Department,

      Filed October 13, 1893.)

    1. Statute of frauds.
    Plaintiff wrote defendant requesting him to relieve him of his stock in a certain corporation by paying the price paid for the same; defendant answered by letter that he would do so on a certain day, but the shares were not taken on such date, and thereafter a note for $5,000 was executed by defendant and delivered to plaintiff in consideration of an oral agreement between the parties that on the date the note became due the defendant would purchase plaintiff’s stock. The note was not paid, although the stock was tendered at the time payment was demanded. No mention of the note or amount to be paid was made in the letter. Held, that the oral agreement was void under the statute of frauds and the note was without consideration.
    2. Bills and notes—Evidence.
    In the action on such note it was not competent for plaintiff to show by oral evidence that the note was given for the purchase price of the shares, and though the fact was proved without objection, and also by the defendant, it did not validate the contract; and the defendant having pleaded the statute of frauds was in a position to take advantage of the fact.
    3. Pleading—Reply.
    Where plaintiff, by his reply, had expressly excepted from his denial certain facts, he was not entitled to prove that such facts were not as alleged in the answer.
    Motion for new trial on exceptions ordered beard at general term in the first instance.

      Peter B. Olney, for pl’ff; Burton N. Harrison, for def’t.
   Follett, J.

At the close of the trial the plaintiff asked the court to direct a verdict in his favor, and the defendant moved that a verdict be directed in his favor. The court granted the plaintiff’s motion, and the defendant excepted, and thereupon the defendant’s exceptions were ordered to be heard at the general term in the first instance. This action was brought on a promissory note, of which the following is a copy :

“$5,027.50. New York, 14th March, 1890.
“ Fifteen days (without grace) after date, I promise to pay to the order of Sir Roderick W. Cameron five thousand & twenty-seven 50-100 dollars, at Hanover National Bank, New York. Value received.
“O. H. Tompkins.
“Due March 29, 1890.”

The defendant admitted the making, delivery, and nonpayment of the note, and alleged that it was given in consideration of an oral agreement between the litigants that the defendant would on the 29th of March, 1890 (the date when the note fell due), purchase of the plaintiff certain shares of stock, on delivery of the certificates properly signed, which it is alleged the plaintiff did not do, and that the oral agreement was void under the statute of frauds, and the note was without consideration. This note arises out of the following transaction: The defendant was the owner of shares, or was engaged in procuring subscriptions for unissued shares, of the Idaho Mining & Irrigation Company, a domestic corporation, and on the lSth of November, 1889, the plaintiff acquired from or through the defendant 784 shares of the stock for $5,000, and on the same day a certificate for 484 shares was issued to E W. Cameron & Co., and another certificate for 800 shares to E. McLeod Cameron, the plaintiff’s son. The agreed price of the shares was paid on or about the date of the certificates. In -January, 1890, the defendant orally agreed that he would at some future date take back the shares and repay the purchase price. On the 24tli of January, 1890, the plaintiff wrote the defendant as follows :

“ E. W. Cameron & Co., 23 South William Street.
“ New York, 24 January, 1890.
“ General C. H. Tompkins—Dear General: Agreeably with your considerate promise to relieve me of my subscription to the Idaho Irrigation Co., I ask you to make an entry of it in your journal, and kindly write me a reply, naming a date on which you will repay me the amount. I do not seek any interest on the amount paid, but, if you will include my son’s subscription-also, it would be a favor. Your proposition was 30 days from the 7th instant, but, if you prefer to extend the time, you can make it from this date. I am,
“ Faithfully yours, E. W. Cameron.”

The defendant received the letter, and indorsed thereon, “ Be-plied Jan. 30, ’90, agreeing to take stock by 24th Feby.” The following is a copy of the defendant’s answer:

No. 15 Cortlandt Street, New York, 30th Jany., ’90.
“ Dear Sir Boderick: I beg to acknowledge your favor of 24th inst., and in reply to state that I will undertake to accede to your request to relieve you and your son of your subscriptions to the stock of the Idaho Mining & Irrigation Co. on or before Feby. 24th, 1890.
“ Very truly yours, C. H. Tompkins.
“ Sir Eodericlc Cameron.”

The shares were not taken back on the 24th of February,' 1890, and other conversations were had on the subject between that date and March 14, 1890, when the parties met, and the note in suit was executed and delivered. The certificates for thé shares were not present when the note was executed, and have never been delivered to the defendant, although they were tendered at the Hanover Bank on the date the note fell due and payment was demanded. The principal question presented on this appeal is, was there a sufficient memorandum in writing to save the contract from the condemnation of the third section of the statute of frauds,” which provides:

“ Sec. 3. Every contract for the sale of any goods, chattels or things in action, for the price of fifty dollars or more, shall be void, unless (1) a note or memorandum of such contract be made in writing, and be subscribed by the parties to be charged thereby; or (2) unless the buyer shall accept and receive part of such goods, or the evidence, or some of them, of such things in action; or (3) unless' the buyer shall at the time pay some part of the purchase money.”

A contract to sell shares of stock in a private corporation is within the third section of the statute of frauds of the state of New York. Johnson v. Mulry, 4 Rob., 401; affirmed 51 N. Y., 634; Baltzen v. Nicolay, 53 id., 467, 470 ; Brownson v. Chapman, 63 id., 625 ; Dos Passos Stockbrokers, etc., 765 ; Cook Stock & S., § 339; 1 Reed St. Frauds, § 234. The defendant did net accept the certificates for all or any of the shares : nor were they or any of them assigned to him at the date of the agreement to sell, nor at any time thereafter; nor were they or any of them transferred to him on the books of the corporation, and no part of the purchase money was paid by him. The contract is not valid under the second or third subdivision of the section, and the defendant cannot be held liable to pay for the shares unless there is a sufficient note or memorandum in writing to satisfy the requirements of the first subdivision. The only memoranda relating to the sale which were introduced in evidence are the letters before quoted and the note on which the action was brought. The letters referred to each other, and may be read together, but it will be observed that the price at which the shares were sold is not stated in either letter. The promissory note is not referred to in the letters, and there is nothing in them or in the note showing that the sum for which the note was given represents the price of the shares, or, indeed, that the note arose out of the transaction.

The only way in which we are informed that the note was given for the agreed price of the shares is by the testimony given on the trial. It was not competent for the plaintiff to show by oral evidence that the note was given for the purchase price of the shares, and though that fact was proved without objection, and also by the defendant, it did not validate the contract; and, the defendant having pleaded that the contract out of which the note arose was void by the statute of frauds, he is in a position to take advantage of the fact. In order to satisfy the requirements of the third section of the statute of frauds, all of the material provisions of the contract must be contained in some note or memorandum; and, in case any material provision is omitted from the writing or writings, its terms or the nature of the provision cannot be established by testimony. Wright v. Weeks, 25 N. Y., 159; Stone v. Browning, 68 id., 598; Drake v. Seaman, 97 id., 230; Mentz v. Newwitter, 122 id., 491; 34 St. Rep., 207.

As before stated, the price at which the shares were sold is not disclosed by the memoranda, which is a material provision of a contract for the sale of goods or choses in action. In case goods or choses in action are sold at an agreed price of fifty dollars or more, the memorandum of sale must disclose the price at which sold in order to satisfy the requirements of the third section of the statute of frauds. Stocker v. Partridge, 2 Rob. 193; German v. Machin, 6 Paige, 288-292; Newbery v. Wall, 65 N. Y., 484-488; Stone v. Browning, 68 id., 598-604; Williams v. Morris, 95 U. S., 444-455; Smith v. Arnold, 5 Mason, 414; Johnson v. Buck, 35 N. J. Law, 338-343; Welsh v. Bayaud, 21 N. J. Eq., 186; Carr v. Passaic L. I. & Bldg. Co., 19 N. J. Eq., 424; Elmore v. Kingscote, 5 Barn. & C., 583; 8 Dowl. & R., 343; Acebal v. Levy, 10 Bing., 376; Hoadly v. McLaine, id., 482; Goodman v. Griffiths, 1 Hurl. & N., 574; 1 Benj. Sales (Corbin’s Ed.), §§ 249-251; Blackb. Sales (2d Eng. Ed.), 59; 1 Reed St. Frauds, § 417 ; Browne St. Frauds, § 381 et seq. When a price is not agreed on, the circumstances may be such as to justify the assumption that the goods were to be sold or the work to be done at a reasonable price, but this rule does not apply to a case where the price was agreed on. Argus Go. y. Mayor, etc., 55 N. Y., 495, and the authorities above cited. The contract proved, which was the consideration for the defendant’s promise, was void under the statute of frauds, and the plaintiff, under the evidence contained in this record, was not entitled to recover. The answer contains this allegation:

“ Defendant further alleges that the plaintiff did not on said 29th day of March, 1890, demand of defendant that defendant make such purchase, and that plaintiff did not on said day tender to defendant said shares of stock, or the certificate or certificates, by said corporation theretofore issued for and representing said shares, and then held by plaintiff, and that plaintiff did not on said day offer1 to deliver said certificate or certificates to defendant properly indorsed for transfer.”

This allegation is contained in the defendant’s second defense. The plaintiff served a reply, which contains the following denial: “ The plaintiff denies each and every allegation contained in the defendant’s second and separate defense, the counterclaim herein, except that portion thereof wherein defendant alleges that on the 29th day of March, 1890, plaintiff did not demand ‘ of defendant that defendant make such purchase, and that plaintiff did not on said day tender to defendant said shares of stock, or the certificate or certificates of said corporation theretofore issued for and representing said shares, and then held by plaintiff, and that plaintiff did not on said day offer to deliver said certificate or certificates to defendant, properly indorsed for transfer.’ ” -

On the trial the plaintiff was permitted to prove that he tendered the certificates for the shares at the Hanover National Bank, March 29,1890, when the note fell due and was presented for payment. The defendant objected to this testimony, on the ground that it contradicted the reply, which objection was overruled, and an exception was taken. The plaintiff did not ask to amend his reply, nor that he be relieved from his admission. The defendant had the right to rely on this admission, and he was under no obligation to be prepared with evidence to meet this question. The reception of this testimony was error. The defendant’s exceptions must be sustained, and the verdict set aside, and a new trial granted, with costs to the defendant to abide the event.

Van Brunt, P. J., and Parker, J., concur.


author: O’Brien, J.

text:
    John T. Barnard, Temporary Adm’r, Resp’t, v. John T. Gantz et al., App’lts.

      (Court of Appeals,

      Filed November 28, 1893.)

    1. Trust—Undue influence.
    An old lady, eighty years old, executed a trust deed to her son-in-law,' who was her attorney, and her son, by which the income of her property was to be paid to her for life, and upon her death $13,000 went absolutely to her son-in-law, and the remaining $20,000, after certain life estates to two other sons, was to be divided between the trustees. At the same time she made a will with similar provisions, which she afterwards destroyed. She also executed an instrument revoking said trust deed, and brought this action to reform it by inserting therein a power of revocation. Held, that the burden was upon defendant to show that the transfer was the voluntary, intelligent act of the party who made it and that its nature and effect was fully understood and comprehended by her.
    2. Same—Revocation.
    Where it appears that a power to revoke should have been expressed in the instrument, a court af equity will regard that as done, and adapt the relief to the exigencies of the case.
    3. Same—Ratification.
    In order to effect a ratification of such a deed by an instrument making a change in the trustees, it must appear that the party intended such a result after knowledge of all the facts, and especially the important fact that it did not conform to her intentions.
    4. Same—Seal.
    Where the intention to seal the instrument is manifest upon the paper itself, a court of equity will assume that it is sealed or grant the some relief as though a common law seal was attached.
    5. Same.
    Such an instrument, which transfers personal property alone, may be revoked by any instrument in writing signed by the party authorized to revoke, although not under seal, and delivery is not essential to the validity of the revocation.
    Appeal from j udgment of the supreme court, general term, second department, reversing judgment dismissing the Complaint.
    . L. E. Warren, for app’lts; E. B. Barnum, for resp’t.

      Affirming 50 St. Rep., 674

   O’Brien, J.

In this case the general term has reversed the judgment in favor of the defendants, entered upon the report of a referee dismissing the complaint, upon questions of fact. It is, therefore, one of the cases where this court is authorized and required to review the facts. Code, § 1338. In order to sustain the reversal of the decision of the referee, it must appear that his findings are against the weight of evidence, or that the proofs so clearly preponderate in favor of a contrary result that it can be said with a reasonable degree of certainty that his conclusions were erroneous. Baird v. Mayor, etc., 96 N. Y., 567 ; Aldridge v. Aldridge, 120 id., 614; 31 St. Rep., 948; Devlin v. Green wich Savings Bank, 125 N. Y., 756; 35 St. Rep., 922; Roosa v. Smith, 17 Hun, 138.

There is practically ncf dispute in regard to the main facts upon which the plaintiff demanded relief. On the 24th of August, 1883, Ann E. Crouse, then eighty years of age, and being the owner of certain railroad bonds of the value of $33,000, executed and delivered to one Washington Hall, her son-in-law, who was and for some time had been her trusted and confidential financial adviser and agent, and to her son, the defendant John T. Gantz, an instrument under seal, called a trust deed, by which she transferred to them the bonds mentioned, to have and to hold the same upon the following trust: To receive and collect the income arising therefrom and pay the same over to her during the term of her natural life, and after her death to pay the income of $10,000 of the bonds to her son George H. Gantz during his natural life, and upon his death then to be distributed equally between the trustees to whom the transfer was made, or their legal representatives. To pay the income of $10,000 more of the bonds to her son Joseph W. Gantz during the term of his natural life, and upon his death to divide and distribute them equally to the trustees or their legal representatives. The balance of the bonds, amounting to $13,000, were to be delivered to Hall or his legal representatives.

The deed upon its face reserved no power of revocation in the settlor. On February 8, 1885, Hall died, leaving a will, in which the defendant Susan E. Hall was named as executrix, and on April 2, 1885, Mrs. Crouse, by another instrument under seal and acknowledged, appointed the defendant Starkey trustee in her place. .On the 13th day of July, 1890, she executed an instrument revoking, annulling and declaring void the trust deed and the appointment of Starkey as trustee. She then brought this action to reform the trust deed by inserting therein a power of revocation in order to conform to her intention and that of all the parties when it was executed. Subsequently, and on the 19th of June, 1891, while the action was pending, she died, leaving a will, in which the plaintiff was named as one of the executors. He was subsequently appointed temporary administrator of her estate, and by an order of the court the action was revived and ' continued in his name upon a supplemental complaint which he was permitted to file and serve. The complaint stated all the facts, including the revocation of the deed and the appointment of the new trustee. The relief demanded was that the instrument be reformed as above specified, and that the trustees, Gantz and Starkey, deliver to the plaintiff the bonds, or any property substituted for them, and account and pay over to the plaintiff the income not previously paid to Mrs. Crouse in her lifetime, and for such other relief as might be just and equitable. The order of the court permitted the plaintiff to serve a supplemental summons and complaint “as he may be.advised,” and the allegations to the effect that the trust deed and appointment of Starkey to succeed Hall had been revoked by Mrs. Crouse in her lifetime were new, as no such allegations were inserted in the original pleading. As these allegations did not relate to matters which had transpired subsequent to the commencement of the action, it is doubtless true that they were not properly inserted in a supplemental pleading, but it does not appear that the defendants made any motion to correct it, and it does not appear that upon the trial the plaintiff requested the referee to permit an amendment to the complaint by inserting the same allegations, and the request was granted without any objection or exception.

If this is still to be regarded as an action to reform the instrument so as to permit the power of revocation to be exercised, the death of the party who made the transfer would probably be an answer to it, as that power, if it was within the intention' of the parties, was personal and would not survive. But, as the pleadings now stand upon the record, the action may be regarded as one to make an actual revocation of the two instruments by Mrs. Crouse in her lifetime effective and to recover the property transferred. If it appears that the power to revoke should have been expressed in the instrument, a court of equity will now regard as done whatever the parties really intended, and which in good conscience should have been done, and thus the relief will be adapted to the exigencies of the case. Van Rensselaer v. Van Rensselaer, 113 N. Y., 208, 214; .22 St. Rep., 947; Bell v. Merrifield, 109 N. Y., 202, 207 ; 14 St. Rep., 796 ; Murtha v. Curley, 90 N. Y., 372; Valentine v. Richardt, 126 id., 272 ; 37 St. Rep., 12 ; Code, § 1207.

The most important question, however, arises upon the evidence which was before the referee, and upon which his judgment denying the relief sought was based. It cannot be said that his conclusion is not sustained by any evidence so as to make the question before us one of law. But, we think, the ' evidence was of such a character as to warrant the general term, in the exercise of its undoubted power to review his findings, in arriving at a contrary result. The referee found that Mrs. Crouse did not, at the time of making and delivering the instrument, know that its legal effect was to make the disposition of the bonds irrevocable, and thus place the title beyond her control. This is equivalent to a finding that she did not understand the nature and effect of the instrument to which she attached her signature. The bonds were then and for some time before had been in the possession and custody of Hall, one of the assignees and trustees, who was not only connected with her by marriage, but for many years had been her confidential adviser, and occupied relations of trust and confidence to her, and the other assignee and trustee was her son. The evidence tends to show that at the time she signed the deed she also executed her will, though the bulk of her property was apparently disposed of under the deed. What the contents of the will were does not distinctly appear, as the proof tended to show7 that it had been destroyed, but as she executed one instrument which was clearly revocable and another which apparently was not, it is easy to see how she may have been confused and misled.

Considering her advanced age, the relations of the parties to whom the transfer was made to her, the confidence which she evidently reposed in them and their interest in the transaction, the case comes fairly within the equitable rule which casts upon the parties who were benefited by the transaction the burden of showing that the transfer was the voluntary, intelligent act of the party who made it and that its nature and effect was fully understood. In ord'er to get a clear view of the application and extent of this doctrine, it is only necessary to refer to the expressions of opinion in this court, notably in two cases. In Cowee v. Cornell, 75 N. Y., 99, Judge Hand, for the court, stated the rule in the following language:

“It may be stated as universally true that fraud vitiates all contracts, but as a general thing it is not presumed, but must be proved by the party seeking to relieve himself from an obligation on that ground. Whenever, however, the relations between the contracting parties appear to be of such a character as to render it certain that they do not deal on terms of equality, but that either " on the one side, from superior knowledge of the matter derived from a fiduciary relation, or from overmastering influence, or on the other, from weakness, dependence or trust justifiably reposed, unfair advantage in a transaction is rendered probable, there the burden is shifted, the transaction is presumed void, and it is incumbent upon the stronger party to show affirmatively that no deception was practiced, no undue'influence was used, and that all was fair.”

In a subsequent case Judge Andrews stated the rule in these words, which sufficiently show the wide extent to which the principle has been applied in cases of this character:

“ Undue influence, which is a species of fraud, when relied upon to annul a transaction inter partes, or a testamentary disposition, must be proved, and cannot be presumed. But' the relation in which the parties to a transaction stand to each other is often a material circumstance, and may of itself, in some cases, be sufficient to raise a presumption of its existence. Transactions between guardian and ward, attorney and client, trustee and cestui que trust, or persons one of whom is dependent upon and subject to the control of the other, are illustrations of this doctrine. Dealings between parties thus situated, resulting in a benefit conferred upon, or an advantage gained by the one holding the dominating situation, naturally excite suspicion, and when the situation is shown, then there is cast upon the party claiming the benefit or advantage the burden of relieving himself from the suspicion thus engendered, and of showing, either by direct proof or by circumstances, that the transaction was free from fraud or undue influence, and that the other party acted without restraint and under no coercion, or any pressure, direct or indirect, of the party benefited. This rule does not proceed upon a presumption of the invalidity of the particular transaction, without proof. The proof is made in the first instance when the relation and the personal intervention of the party claiming the benefit is shown. The law is not so impracticable as to refuse to take notice of the influence of greed and selfishness upon human conduct, and. in the case supposed it wisely interposes by adjusting the quality and measure of proof to the circumstances, to protect the weaker party and, as far as may be, to make it certain that trust and confidence have not been perverted or abused." In re Smith, 95 N. Y., 522.

The principle has been applied to a great variety of contracts and dispositions of property between persons standing in the same or similar relations to each other. Nesbit v. Lockman, 34 N. Y., 167; Marx v. McGlynn, 88 id., 357; Green v. Roworth, 113 id., 462; 23 St. Rep., 149.

The learned referee, we think, failed, in disposing of the facts, to give such application to this rule as the testimony and the circumstances of the case required, and, hence, the general term was warranted in reversing the judgment. The burden was cast upon the defendant of showing that the nature of the transaction was fully understood and comprehended by the other party, and the proofs did not warrant that conclusion.

It is said that the deed was ratified by the instrument of April 2, 1885, appointing Starkey as trustee in the place of Hall. It is not shown that Mrs. Crouse had then any knowledge or information that the paper was not in its terms and legal effect what she intended it to be. In order to effect a ratification of such an act it is necessary to show that the party intended such a result after knowledge of all the facts, and. especially the important fact, that it did not conform to her intentions. If there was any ratification whatever, it applied to the instrument as intended and understood, and not to the instrument as it was.

It is urged that the instrument of revocation is inoperative to amend a deed, as it was not under seal and was not delivered, upon the principle that a deed can only be modified or revoked by an instrument of equal solemnity. The signature to the paper is followed by the letters L. S. in brackets. She evidently intended to seal the instrument, and where that intention is manifest upon the paper itself, a court of equity will assume that it is sealed or grant the same relief as though a common-law seal was attached. Town of Solon v.Williamsburgh Savings Bank, 114 N. Y., 134; 23 St. Rep., 138. The instrument, however, which transferred the bonds to the trustees and beneficiaries, though under seal, was a mere assignment of personal property, and would have been precisely as effectual if no seal had been affixed. The seal, therefore, added nothing to the solemnity, force or effect of the instrument, and if a provision for future revocation was intended to be inserted, so as to make it revocable in fact, that result could have been accomplished by any instrument in writing, signed by the party authorized to revoke. Delivery was not • essential to the validity, of the revocation. The instrument was not a contract between parties, but an act manifesting, the intention to exercise a power conferred or reserved. If there was any question here in regard to the validity of the acts of the trustees with respect to the property, or their good faith in acting under the deed, or the rights o[ third persons, then the question of delivery and notice might be important, but the only question is whether enough was done to effect a revocation as between the parties. In the absence of some provision in such an instrument pointing out the way in which it is to be revoked, that result is accomplished by the execution of any instrument intended for that purpose, and which sufficiently expresses the intention of the party executing the same.

The other questions appearing on the record disclose no grounds for disturbing the judgment, and it should be affirmed, with costs, and judgment absolute ordered for the plaintiff.

All concur.


author: Finch, J.

text:
    Franklin D. Locke et al., Ex’rs, Resp’ts, v. The Farmers’ Loan & Trust Co. et al., Trustees, Magdalena Rings et al., App’lts.

      (Court of Appeals,

      Filed November 28, 1893.)

    Trust—Declaration on—Perpetuities.
    Testator, prior to his death, executed a declaration of trust by which he set apart four certificates of railroad stock representing one hundred shares each, the net income and dividends on which were to be apportioned into ten parts, three of which were to be paid to a person named, three to another and two to each of two others, and upon the death of either, or the marriage of one of them, the portion allotted to such person was directed to be paid over to certain corporations. By his will testator directed his executors to carry out the trust, but in case they could not, to make a substituted trust for the same persons and in the same amounts. Held, 1hat the declaration of trust was valid; and upon its execution the settlor held the legal title to the stock in trust for those to whom he had given the income; that there were four separate trusts, each of which terminated on the death of its life beneficiary, when the principal went to the corporation, and hence there was no unlawful suspension of ownership.
    Appeal from judgment of the supreme court, general term, first department, affirming judgment of special term, declaring a trust deed invalid and an attempted trust in a will invalid and ineffectual.

      John G. Milburn, for app’lts; Sherman Evarts, for resp’ts.

      Reversing 50 St. Rep., 287.

   Finch, J.

The testator in his lifetime executed a formal declaration of trust relating to four hundred shares of the capital stock of the New York & Harlem R. R. Company standing in his name on the books of that corporation, and for which he held four certificates. By the terms of the trust the net income and dividends of the stock was to be apportioned into ten equal parts, three of which were to be paid over to the use and benefit of Magdalena Eings, three to the use of Anna Eings, two to the use of Henry Eings for the term of his natural life, and two to Minnie Eings until her decease. The deed further provided that upon the death or marriage of Magdalena, or the decease of Anna, whichever of the three events should first happen, “ the portion allotted ” to such person should be paid over to the use and benefit of the St. John’s Episcopal Church and Society of Salisbury, Connecticut ; and “ the portion allotted ” to the other of the two should, upon the happening of the prescribed event, go to the Buffalo Orphan Asylum. In like manner, at the termination of the life interests of Henry and Minnie, “ the portion allotted ” to the former was to go to the St. Vincent’s Female Asylum of the city of Buffalo, and that allotted to the latter to the Buffalo Hospital of the Sisters of Charity. Practically there were thus created four separate and distinct life interests, each one in a prescribed part or portion of an entire fund, with a remainder over to a new beneficiary forever. The settlor, after executing in triplicate this declaration of trust, which contained also a power of revocation, deposited one original thereof, and also the four certificates of stock, in a sealed envelope in his box in the vaults of the Mercantile Safe Deposit Company in the city of Hew York. The envelope was indorsed, “ Declaration of Trust, Jonathan Scoville to Magdalena Bings and others,” in a handwriting which was not the settlor’s ; but following that there was added by his own hand these words: “ Declaration of trust with certificates of Hew York & Harlem B. B., certificates belonging to trust and being numbered 21815, 21816, 21817, 21818, 100 shares each. Duplicate declaration of trust filed with the beneficiaries and M. A. Whitney, 202 Main street, Buffalo, H. Y.” And then attached thereto was this further memorandum in the testator’s handwriting : “ H. C. Scoville, for and in behalf of the within named beneficiaries. In case of my decease please see that the enclosed trust is 'faithfully carried out. Duplicates filed with beneficiaries and M. A. Whitney, 202 Main street, Buffalo,—J. Scoville; ” and in the margin of such memorandum appeared the words : “ Dated at Buffalo, January 24,1887,—J. Scoville.” The persistent purpose and obvious care of the settlor to make the trust effective and carry its proceeds safely to the appointed destination are further shown by his will, made in December of 1890, after the trust had stood and been fulfilled for almost four years. In article sixth of that will he recites the deposit of the deed of trust, adding as descriptive of it the words: Which affects a portion of my estate, which portion is more particularly described in a paper inclosed with such deed of trust.” He then directs his executors to carry out the provisions of such deed of trust so far as they can, but, in case they cannot, attempts to make a sub stituted trust for the use of the same beneficiaries and in the same proportions as recited in the deed. The testator made Locke and the Farmers’ Loan & Trust Co. executors of and trustees under said will, but by a codicil the present plaintiffs were appointed executors, and Locke and the Trust Co. became trustees under the will, article sixth being specifically included.

On this state of facts the special term held the trust deed invalid as creating a perpetuity, and the attempted trust of article sixth of the will also invalid and ineffectual, and carried the stock over to the residuary disposition, and so to persons other than the named beneficiaries. The general term affirmed this decision, holding that the testator meant by the ultimate legacy to the four corporations respectively to keep in existence a trust to pay over income during the entire corporate life, the result béing that the purpose of the testator is wholly thwarted and defeated.

The respondents’ argument rests upon two propositions; the first, that no trust at all was created by the deed, but that instrument amounted only .to a promise without consideration to pay to the beneficiaries future accruing income from securities never transferred by the settlor, and of which he remained the absolute owner until his death; and the second, that if there was a trust it necessarily suspended the absolute ownership of the fund for more than two lives in being.

The first proposition has little support in the terms of the instrument itself, and none in its surroundings. It is abundantly settled by authority that a trust of personal property may be-effectually framed in which the author of the trust is himself the trustee. Martin v. Funk, 75 N. Y., 137 ; Barry v. Lambert, 98 id., 306.

In the present case there were both words and acts. The settlor first described the property which he severed from his general estate and set apart as the productive source of the income and dividends which he could not hold as trustee before they accrued or existed, except as he so held the certificáteswhich gave the potential right, and then declared himself a trustee of the named beneficiaries, to receive and pay over to them, for their own use- and benefit, all future income and dividends which should accrue. Ho beneficial interest in the property was left in himself, but the whole of that interest was by his own act vested elsewhere. He held the legal title to the stock, but necessarily held it, from the-date of his declaration, as trustee for the beneficiaries. There was no formal transfer on the books of the company from himself as-an individual to himself as trustee, and he remained the nominal owner, holding the naked and barren legal title. In such a case, as between a vendor and vendee of stocks, the vendor holds the-legal title as trustee for the vendee, because the former, having parted with the entire beneficial interest, can hold the legal title in no other way. Johnson v. Underhill, 52 N. Y., 203. In like manner, as between settlor and beneficiary, a transfer to the latter of all income and dividends necessarily transfers the whole beneficial interest and leaves the settlor a holder of the naked legal title on the books of the company as trustee for the beneficial owners. That is the situation in which, by the deed of trust, the settlor put. himself, and intended to put himself, and his concurrent acts clearly demonstrate that intention. He selects out and separates the four certificates from his general estate, places them in a sealed envelope, and indorses on that a memorandum describing the certificates as “belonging to the trust,” and so explicitly declares himself trustee of the stock itself.

It is quite true, as the learned counsel for the respondents contends, that the settlor kept and meant to keep in himself, for the time being, the nominal legal title. The reserved'power of revocation made that a convenient and useful measure, but it is perfectly consistent with an explicit purpose to hold that legal title as trustee for those to whom he had given the whole beneficial interest. Young v. Young, 80 N. Y., 438. His further language, which has been the subject of comment, is easily understood in the light of what he did. The words, “ in whose possession the said several certificates of stock may come without actual transfer,” and “ in trust to myself or to any custodian in whose hands the said certificates of stock may be deposited by me or by my order,” show that he meditated the change of actual possession and the deposit which occurred, and meant that the trust should, nevertheless, follow and envelope the certificates, .although there should be no “ actual transfer ” on the books of the company. I think, therefore, that a good and valid declaration of trust was made, and that upon its execution the settlor held the legal title to the stock in trust for those to whom he had given the income expected to issue from it, which amounted to the entire beneficial interest.

The respondents’ second proposition is more difficult to answer until we see clearly the real point upon which it turns, and which I take to be, whether the words and acts of the settlor will bear the interpretation of four several trusts, each for the life of a beneficiary, with an absolute gift over in each instance; or whether, because that interpretation is impossible and inadmissible, we are driven to the construction that the trust was to continue forever as the instrument of an eternal distribution of income and dividends, an interpretation involving, in greater or less degree, the •destruction of the trust.

There is no difficulty in regarding the four shares as separate and several, although the fund itself was to be held as a whole until the moment for an actual severance should come. Savage v. Burnham, 17 N. Y., 571; Stevenson v. Lesley, 70 id., 512. Why such a severance was not made at the outset is apparent from the facts. The settlor held the stock in four separate blocks of one hundred shares each, represented by four certificates, each block of a hundred shares having its own certificate. If he had desired to give each of the beneficiaries the use and ownership of exactly one-quarter of the whole four hundred shares, he could and very probably would have set apart one certificate for each, and so have made the severance which the form of the certificates would have naturally suggested. But he intended a different division. Magdalena and Anna were each to have three-tenths of the whole net income, or, in effect, the dividends upon one hundred and twenty shares each, while Henry and Minnie were limited to the dividends resulting from eight}*- shares each. It followed that the division of the certificates was not such as the division intended by the settlor, and so he divides the income and dividends into portions consisting of three-tenths each to the first two and two-tenths each to the last two beneficiaries, requiring in one case the income product of more than any one certificate and in the other that of less than any one certificate. Convenience thus dictated the division of the whole fund arithmetically without its actual severance; but the shares of each were described as that person’s allotted portion, and such portion, distinctly and severally and by itself, was identiled in each one of the four instances as the specific share or portion to go in the end to the particular corporation named. Each life tenant took wholly independent of the others, and without the least connection with them, and regardless of what had happened or might happen to them; and each corporation, upon the occurrence of its own prescribed event, took its own several and specific share. No emergency of the trust, beyond the mere convenience of leaving the investment for the time being undisturbed, required it to be kept as a whole and undivided fund. In such a case, where we can see in the words of the instrument creating the trust fair indications of an intent to establish several trusts rather than one only, whether that be always necessary to the result or not; where the settlor or testator takes note of each portion as a several thing to be itself transmitted to a new taker; where the gift is in separate shares; and where no complications intervene to prevent, it is our clear duty to regard the trusts as several when that view will save them from destruction.

I have not failed to reflect upon the adverse view of the majority of the general term. They say that if we hold that there are here several trusts “it will be impossible for the creator of a trust, however much he may desire to do so, to express any intention to have a fund remain -in solido.” No case denies him that right. We here do not deny it. If this settlor had expressly said, in terms admitting of no o'ther construction, that the fund should so remain forever, or made dispositions which required it to so remain, we should say so and let the consequences follow. There are many such cases, generally where there are provisions of survivorship involving contingencies which compel the fund to remain unbroken until it can be known who shall take and in what proportion. Such cases and those like the present were distinguished and separated in Coster v. Lorillard, 5 Paige, 172 ; 14 Wend., 265; and again in Everitt v. Everitt, 29 N. Y., 39, upon the broad distinction between a taking by the beneficiaries as joint tenants and a taking by them as tenants in common, and so distributively, In Matter of Verplanck, 91 N. Y., 443; and none of the latter make it at all difficult for a settlor or testator, by creating a joint tenancy among the beneficiaries, or by direct and explicit provisions for continuing the fund in solido in the hands of the trustees for a specific period, to effect that precise result. Here the settlor has not said that the fund should remain in solido forever in decisive terms, nor is it a necessity flowing from his dispositions. His language is at least equivocal and his intention matter of inference, and we are at liberty to consider and determine what is the true inference, and so to separate the trusts.

We should now ascertain what character and quantity of interest the deed transmitted to the several corporations upon the death of the life beneficiaries. I have already described it as the entire interest and absolute ownership, and it is necessary to justify the description, and the process will bring clearly into view what I suppose to be the decisive inquiry in the case. If the principal is put in a trust extending beyond each life interest and covering the succeeding corporate life, there is a suspension of the absolute ownership which will inevitably destroy the trust. If, on the other hand, by the legal construction of the instrument, each trust terminated at the death of its life beneficiary, then, in the absence of any gift of the principal by express mention directed to its disposition, the gift to the ultimate beneficiaries of the whole income and dividends is a gift of the principal vesting the absolute ownership. In Paterson v. Ellis, 11 Wend., 298, the rule was declared that “a devise of the interest or of the rents and profits is a devise of the thing itself out of which that interest or those rents and profits may issue.” And the court added: “ Where the intention of of the testator to give only the use is clear, manifest and undisputed, the rule must yield to the stronger force of the intention ; but where it is doubtful whether the use only or the absolute ownership was intended to be given the rule has been allowed to have a controlling effect.” In Smith v. Post, 2 Edw. Ch., 526, a gift of the rents and profits of land was held to have vested the title to the land in such devisees, because, while there was mention of the land, there was no disposing mention of it. And in Hatch v. Bassett, 52 N.Y., 362 it was said : “A general gift of the income arising from personal property, making no mention of the principal, is equivalent to a general gift of the property itself.” The comment of the trial judge upon this case shows clearly, I think, where the decisive point of our inquiry is to be found. He deems the authority inapplicable because, as he says, “ there is a mention of the principal, which is given to the trustees named.” But that is one form of the exact question involved. Was it so given ? The trustee always takes the legal title, but only such as is required by the scope and extent of the trust itself; and, where that continues but for a life, only a commensurate legal estate passes, and the fee in the land subject to the trust, and the principal of a fund subject to the life use, remain undisposed of or pass elsewhere. Embury v. Sheldon, 68 N. Y., 234, 235; Stevenson v. Lesley, 70 id., 517.

If tliis trust terminated at the death of the life beneficiary then the principal was never held by the trustee except during the life tenancy, and when freed from that incumbrance remained intact and wholly undisposed of as such. The crucial inquiry, therefore, is how long, by the true construction of the settlement, was the trust to continue, which is the logical equivalent of the other question, whether only the use was intended to be given. An answer to either of these questions substantially answers the other; and so we may study the duration of the trust considered by itself. The settlor did not say how long it should last. He did not explicitly or in terms fix the period at which it should terminate. Nothing in the deed directly answers the question. We can only answer it by ascertaining what is possible under the usual and proper rules of legal construction. One of these rules is that trusts end when their intended purposes are accomplished and when they are no longer necessary to effect the designed results. We are thus led to the inquiry, what in truth were the actual ■ purposes of the trust, what were its objects, and wherein lay the necessities for its existence. Obviously, the trust was needed during each life of each of the primary beneficiaries, in order to collect dividends and pay them over, and to protect and keep the principal intact until the close of each life. Beyond that there is disclosed to us no need, no object, no purpose requiring or even making convenient a prolongation oi the trust. There was nobody for whom the principal was to be preserved as a future remainderman ; the corporate legatee was under no disabilities and in need of no protector or guardian ; and it is only by assuming the theory of a purpose to give the income merely, and to withhold the principal forever, involving a distrust of the corporations nowhere indicated, that a motive for the continuance of the trust can be imagined, and an excuse for its existence framed. But that assumption is itself in dispute and founded upon an ambiguity. The reasoning of the respondents’ counsel appears to be in substance this: the trust was to pay over, for instance, to Magdalena three-tenths of the income and dividends, and on her death or marriage to pay over the portion allotted to her, which was again three-tenths of income and dividends, to St. John’s Church; and so the trust was to continue, in order to make such payment, through the whole corporate life; and thus the continuance of the trust is inferred from the gift of income and dividends to a corporation forever. But that, as we have seen, is, in and of itself, an ambiguous fact, and the inference wholly needless. As was said in one of the cases cited, such a gift may mean -an intention to give merely the use, or it may mean an intention to give the absolute ownership; and it helps not at all to reason in the vicious circle, that the trust continued because the use only was given, and the use only was given because the trust continued. The fact, therefore, that income and dividends forever were given to a corporation does not necessarily involve the presence of a trust, and, instead of settling the duration of that actually created, derives its own scope and meaning from the determination of that duration ; and it becomes obvious that we have full liberty to decide that the trust declared ended in the case of each life beneficiary at his or her death, if the language used will permit.

That language not only permits, but, I think, indicates such construction. The settlor, in the case of Anna, for example, instead of saying that he holds her share in trust to pay her the income and dividends for life, and then to pay them to the asylum during its corporate life, follows the trust to her with the words “ provided, however,” that upon her death her share shall be paid to the asylum. The word “provided” usually indicates a condition, and would seem to show that a trust for Anna’s life was created, with a subsequent condition that on its termination the portion allotted to her should go to the asylum. It is not a sufficient answer to say that the trust is for “ the uses and purposes following;’’ and payment of income to the corporation is a use and purpose “ following,” and contained in the same paragraph with the use for the benefit of Anna. That construction would put under the dpminion of the trusts another condition subsequent, contained in the same paragraph, and introduced again by the word “provided." That condition is that Magdalena and Anna, out of the income apportioned to them, “ shall each bear and pay an equal portion, of the taxes, repairs and insurance of the premises this day leased to the beneficiaries herein named.”

Each was to pay: not the trustee: and pay it out of the income which should come to her from the trust. This proviso was clearly not within the trust or among its uses, although in the same paragraph and following the primary declaration. So that we have a case where the intended duration of the trust is only certain down to the death of the life tenants, and, after that, becomes at least doubtful and uncertain, in view of its natural and reasonable purposes, and the language used by the settlor in creating it. In such a case the trust is not to be prolonged to its own destruction by mere inference or implication, Greene v. Greene, 125 N. Y., 506; 36 St. Rep., 30 ; but must end at the termination of each life estate.

If now we turn to the other form of the same question, which is whether the mere use was intended to be given, or whether we are permitted to say that the gift was absolute and carried the principal itself, we find ourselves bound to choose the latter .alternative, as I have already shown, unless there is disclosed an intention to give the use merely which is clear, manifest and undisputed.” That is not true of this case by any means. The only rational object of giving the use merely would have been to preserve the principal for some other destination. No conscious disposition of that principal was made by the settlor outside of and beyond the corporate legatees. His deed contains no such ultimate disposition. Evidently the settlor contemplated no remainder, for there could be none where the entire beneficial interest was given forever, because given to corporations which do not die. It was for cases of such character that the rule was framed which adds the naked and barren legal title to a gift of the entire beneficial interest, because outside of that such title can go nowhere and represents nothing.

We are thus at liberty to hold that there was no intention to give the mere use ; and at all events it is impossible to say that such an intention, if there are any indications of its existence, is clear, manifest and undisputed. It is very far from that; and so the rule is controlling which regards the gift of the entire income and dividends as a gift of the principal out of which they issue.

No rule of construction is violated by holding that the settlor created four separate and independent trusts instead of one only ; that each of those trusts terminated at the death of its life beneficiary, or in one case on the precedent marriage of that one; that there was no disposing mention of the principal of the fund when freed from the temporary incumbrance of its trust; and that the gift thereupon of the income and dividends to a corporation forever was a gift of the principal out of which they were to issue. Such then is one permissible and possible construction, and being so we are bound to prefer it to the other interpretation suggested, which makes the creator of the trust contemplate its existence and operation forever, and dictate that the principal of the fund should be eternally inalienable, with the inevitable result that his whole disposition must fail and his anxious intention be thwarted in all its parts.

It follows that the judgment of the courts below should be reversed, an® judgment be entered declaring the dispositions of the declaration of trust executed by the testator in his lifetime to be valid; that the plaintiffs, as executors, deliver over to the defendant trustees under the trust the shares of stock therein described, and the dividends thereon if, and so far as, the same have come to their hands, and have no other duty to perform in respect thereof; that the said trustees hold said stock upon the trusts herein described and defined, and that the costs of all parties in all the courts be paid out of the testator’s estate.

All concur.


author: Earl, J.

text:
    In the Matter of the Claim of Mary L. Van Slooten, Resp’t, v. Charles H. Wheeler, Ex’r, App’lt.

      (Court of Appeals,

      Filed November 28, 1893.)

      1. Decedents’ estates—Proof of claim.
    Public policy requires that claims against the estates of dead men should be established by very satisfactory evidence.
    2. Same—Mortgage. ■
    Claimant held a mortgage, payable on demand, against the real estate of the decedent, which he sold. She satisfied the mortgage a short time before the sale, and afterwards was known to have a check for the amount thereof, which she did not produce, but claimed that she gave it to the executor, who denied having received it. No proof was given as to the consideration for the mortgage, and it appeared that while the claimant frequently requested the executor to make advances upon her' legacy under the will, she never requested any payment upon her claim. Held, .that there was no sufficient proof of the claim; that the balance of probabilities was that if the mortgage and check ever had any real foundation as securities for money to be paid, they were discharged in some way in the lifetime of the decedent.
    Appeal from judgment of the supreme court, general term, second department, reversing order denying motion to set aside a referee’s report, and awarding judgment to claimant' for the full amount of her claim.

      George G. Reynolds, for app’lt, Martin J. Keogh, for resp’t.

      Reversing 50 St. Rep., 873.

   Earl, J.

The testator died on the 3d day of June, 1886, leaving one descendant, a son, and leaving a will in which the defendant was appointed executor.

In September, 1889, the plaintiff presented a claim against the estate of the testator for $20,000, which, in her verified statement thereof, was described as follows: “ Said Harry E. Dodge, deceased, in or about the year 1886, was the owner of the premises No. 278 Henry street in the city of Brooklyn, upon which said premises there was a mortgage of $20,000, owned by and belonging to me, and that in or about the month of May, 1886, said Harry E. Dodge, deceased, sold said premises, and at his request I executed a satisfaction piece of the said mortgage with the understanding and agreement that said Dodge would pay me the amount of said mortgage upon receiving the consideration price of said premises from the purchaser thereof, whereupon thereafter he gave me a check for the face of said mortgage, to wit, the sum of $20,000, which said sum has never been paid to me and against which there are no offsets or counterclaims of any name or nature whatsoever.” This claim was disputed by the defendant, and was then by consent referred to Albert E. Lambe to hear and determine the same. The case was brought to trial before the referee, and he made his report, deciding it in favor of the defendant, dismissing the claim. His report was confirmed and judgment was entered thereon in favor of the defendant. From that judgment the plaintiff appealed to the general term, and there the judgment was reversed upon the facts and a new trial was ordered before another referee. Thereafter James McKeen was appointed referee and the case was again brought to trial before him, and upon substantially the same facts as had appeared upon the first trial he made his report dismissing the claim, and his report was confirmed and judgment was entered thereon. From that judgment the plaintiff again appealed to the general term, and it reversed the judgment upon the facts, and holding that the case was a plain one for the plaintiff, and could not be materially changed upon a new trial, it ordered judgment for the plaintiff for the amount of her claim, with interest and costs, amounting in all to upwards of $28,000. From that judgment the defendant has appealed to this court.

We are not able to .take the same view of the evidence in this case as that which found favor with the learned general term. We could rest our decision upon the able opinion of the referee before whom the case was last tried, and find therein ample justi-" fication for the conclusion we have reached. But the amount involved is so large, and the difference between the two referees and the general term is so wide and emphatic that it is most proper that we should give our own reasons for our judgment.

Harry E. Dodge was a widower, and for some years before his death had been a member of the Wall street banking firm of Clark, Dodge & Co. At his death he was apparently worth, over and above all his debts, aside from this claim of the plaintiff, nearly $200,000. He became acquainted with the plaintiff, who was then a widow, at least as early as August, 1877. Her name was then Mrs. Miner, she having since the death of Mr. Dodge been married to Mr. Van Slooten. Soon after their acquaintance, the plaintiff and Dodge commenced to live together in Brooklyn, first at the house of one of the plaintiff’s witnesses, Mrs. Chertizza, then at a house in Livingston street, and then in her house in Sidney place, where he died. On the 11th day of March, 1882, he gave her his bond and a mortgage upon a house in Henry street to secure the payment to her of the sum of $20,000 on demand, with interest from the date thereof. He had a shock of paralysis on the 14th day of April, 1886, another on the 7th day of May and a third on the day of his death. The mortgage remained on the house at Sidney place until April 21r 1886, seven days after the first shock of paralysis, when she sent it to her attorney with the request that it should be recorded, and he caused it to be recorded on that day. There is nothing to show what the consideration for that mortgage was, and it is very doubtful whether it had any consideration. If it had been given for money borrowed or for property purchased, we see no reason to doubt that the fact could have been proved. Why did Mr. Dodge, a rich man, give the mortgage? Why was it made payable “on demand,” witli interest from date? Why was it permitted to slumber four years without record ? Why was it, after slumbering so long, recorded soon after the attack of a disease usually fatal? During these four years it does not appear that any interest was paid upon the mortgage, and the bond and mortgage when delivered to her attorney for record contained no indorsements of the payments of interest. If the interest had been paid, as it probably would have been upon a subsisting, .vital obligation, it is quite probable that some at least of the payments could have been proved. But this is not all.

The very next day after the record of the mortgage she executed a satisfaction piece certifying that the mortgage had been paid, and it was on that day discharged of record. The satisfaction piece was drawn and the acknowdedgment thereof was taken by her attorney, who had the mortgage recorded. Why was the mortgage placed upon record one day to be satisfied and canceled the next? What transpired between the record of the mortgage at three o’clock P. M. of one day and its satisfaction on the next day ? If the mortgage was for any reason to be so soon satisfied, why was it not torn up or simply canceled in some way before its record ? And what possible reason could there be for ‘recording it ? .A not improbable explanatibn is that the mortgage was recorded in violation of some understanding between the parties, and that when Mr. Dodge learned of it he required its cancellation. Mr. Dodge sold and conveyed the Henry street real estate on the 1st day of May for $15,750, and thus we have the fact that the mortgage was for $4,250 more than the value of the property, and this militates somewhat against the theory that the mortgage was a bona fide mortgage to secure a real debt. She alleges in the verified statement of her claim that she satisfied the mortgage upon an agreement with Dodge that he should pay her the amount of the mortgage upon the receipt by him of the purchase price of the property when sold. We must assume that he received the purchase price in cash, because if he did not it was easily susceptible of proof. What did he do with the money ? If he had deposited that amount in the bank of his firm or in any other bank, that could have been proved. She alleges that he was to pay her mortgage with the proceeds of the sale. Did he not do it ? And if he did not, what became of the money? She says he then agreed to pay her, and if the mortgage was a valid, subsisting obligation, why did he not do it? She says he did not pay her, and if he did not, the probability is that the mortgage was given for some undisclosed purpose and was not intended as a subsisting obligation. We are dealing with probabilities. He being dead, and her mouth being closed by the statute, we must ascertain as well as we can where the balance of the probability is. The bond and mortgage have disappeared. She says that she never received them back from her attorney, to whom she had delivered them for record. He testified that he delivered them back to her. What became of them ? Were they not destroyed as useless or as paid obligations? She bases her claim entirely upon the bond and mortgage, and she must show affirmatively that at the time of his death the amount named in them was actually unpaid and due to her.

In the satisfaction piece she acknowledges that it was paid, and that acknowledgment is prima facie evidence that it was paid, and that she received the money, Sheldon v. Sheldon, 133 N. Y., 1; 44 St. Rep., 260, and she was bound to show affirmatively that that acknowledgment was untrue. This she attempts to do by showing that Mr. Dodge, some time in the month of May, gave her a check for $20,000 upon the firm of Clark, Dodge & Co. The referee found that this check was actually given some time in May. Whether it was given before or after the second stroke of paralysis is uncertain. It was given about that time. If it was intended thereby to pay the amount due upon the mortgage, why was it not given at the time the mortgage was discharged of record ? And why, if the mortgage was a real security, did the check not include some interest? If the check was intended for the payment of the mortgage, why did she not demand the money on it before or after the death of Mr. Dodge? She was familiar with business, and with the nature and purpose of checks, and knew how to draw money on them. She never presented it to the drawees for payment, and she was not able to produce it upon the trial of the action. That, like the bond and mortgage, had disappeared. She came before the referee without a particle of written evidence to sustain her large claim. She testified that she had the check at the time of the death of Mr. Dodge, and that a few days thereafter she delivered it to the defendant in a sealed envelope, saying to him that it contained a check of $20,000, given to her by Mr. Dodge for the payment of the mortgage, and that he told her that if she did not “ collect the check ” before he died she should give it to Mr. Wheeler, and let him “collect it ” for her. This is a singular story. Mr. Dodge gave her the check not in the immediate presence of death. If the money was not to be presently paid, why did he not give her his note ? If the check was actually for the payment of money due her, what reason had he to suppose that she would not draw the money in his lifetime? Would a business man speak of “collecting” the money on a check? Why should he direct her to deliver it to his executor for collection when all she had to do was to go to the drawees and get the money ? Why did she, with her knowledge of business, surrender to the defendant the only written evidence of her large claim without taking any voucher for the same ?

The defendant absolutely denied this story; denied that she ever mentioned the check to him; denied that he ever had it in his possession; denied that he ever heard of it until more than two years after the death of Mr. Dodge. Which of these two is to be believed? She is greatly interested. He is absolutely without any interest or temptation to pervert the truth. He appears to be a man of great respectability and high character. There is absolutely no reason for discrediting his evidence. He belongs to a firm of dry goods commission merchants doing business in New York and Boston. He has been named as executor of several estates. He is a director of the Hamilton Loan & Trust Company, and of the National Citizens’ Bank of New York, and of the American District Telegraph Company of Brooklyn, a trustee of the Hnion Dime Savings Institution of New York and a member of the Chamber of Commerce of New York. The testator named him in his will as executor and as trustee for his son,-thus certifying to his integrity and respectability. What possible reason can there be for not believing him in a case where he cannot be mistaken and where he tells the truth or commits perjury?

Prior to December 24th, 1884, Mr. Dodge had made a will, but we do not know what its provisions were. On that day he made another will, the provisions of which were, in all respects, like those in his last will, except that in the former will he gave the plaintiff $15,000, and in the last will he made the defendant sole executor and trustee. The last will was executed on the 15th day of May, eight days after Dodge had had the sec'ond shock of paralysis. In that will he increased the plaintiff’s' legacy to $30,000, and he gave to his executor in trust for his minor son all the residue of his estate, to be held and managed by him until the son reached the age of twenty-five years, when the estate was to be paid over to him; and in case his son died under twenty-five, unmarried, or without lawful issue, then he gave the whole of the estate held by the trustee to his sister and to the plaintiff, to be equally divided between them. There is no reliable evidence that the check was in existence after the date of that will. The increase by that will of her legacy was nearly equal to the whole proceeds of the real estate upon which she held the mortgage. Was not whatever Dodge owed her upon the mortgage or the check adjusted by the provisions of this will? As we must hold, unless we credit the story of the plaintiff that the check disappeared about that time, what more rational inference than that it was upon some consideration, ior for .some purpose, destroyed at that time? If the testator intended that the plaintiff, bound to him by no ties, should have, in addition to the $20,000, a legacy of $30,000, thus depleting his estate to the extent of $50,000, there was an exhibition of generosity quite extraordinary for one who had a son and a sister, the natural objects of his bounty. Besides this, he gave her a contingent interest to the extent of one-half of the large remainder of his estate, so that in the event of the death of his son, she would share in his estate to the extent of more than $100,000.

During the year after the death of the testator, she from time to time asked the defendant for advances upon her legacy—never .a cent, according to his evidence, upon her pretended claim—and, upon her request, large sums were thus advanced to her. Finally, on the 28th day of July, 1887, she and her attorney met the defendant at the office of his attorneys, for the payment of the balance of her legacy, and then the amount of payments which had been made to her was ascertained, and the balance of nearly :$23,000 was paid to her, and it is very certain that no mention whatever was then made of this claim.

[f, therefore, this case ' was to be disposed of upon the undisputed facts to which we have referred, and upon the evidence of the plaintiff and defendant, there is absolutely no reason to doubt that the conclusion of the referee was fully justified.

But it is claimed on behalf of the plaintiff that there was some evidence upon the trial of the case from other witnesses strengthening her case, and to that evidence we will now give some attention.'

Mrs. Chertizza testified that she called upon Mr. Dodge a •couple of months before liis death to borrow some money to pay a mortgage upon her house, which was then in process of foreclosure, and that he said he could not loan her the money because he had to pay the plaintiff’s mortgage. It is not improbable that this was said by him as an excuse for not letting her have the money. But if he said it and meant what he said, did he not pay the plaintiff, as she subsequently certified in the satisfaction piece executed by her that he did ?

Mrs. Halstead testified that a few weeks prior to the death of Mr. Dodge, in the first or second week of May, she saw a check lying on a bureau in the plaintiff’s house ; that she read it; that it was for $20,000, drawn on Clark, Dodge & Co., and payable to her, and that it was signed with his genuine signature. This •evidence simply shows what the referee found, that there was such a check in existence about that time.

Mr. Abaurer, a barber, testified that he had a talk with Mr. Dodge six months before his death, about the sale of his Henry street house, and that he told him that there was a mortgage on it for $20,000 to the plaintiff; that after the sale of the house he had another conversation with him, in which he said he had canceled the mortgage and given the plaintiff the check. The evidence of this witness was somewhat confused, and his statement about the check was’ drawn out by plaintiff’s counsel only after the form of his questions had drawn his mind to what he wanted. He had previously stated twice that Mr. Dodge’s language in that conversation was that he had “gone to work and had given Mrs. Miner the $20,000 mortgage,” and then the testimony about the check came out in this way: “I ask you if anything was said on that occasion about a check? A. Yes, sir. Please state what was said on the subject of the check on that occasion? A. Well, he said he went to work and gave Mrs. Miner the check.” The witness stated that he had not talked about the conversation until the time of the prior trial of this case, which was about four years afterward. This was a casual conversation about a matter in which he had no interest. Such evidence of distinct conversations has always been regarded as the most unsatisfactory and unreliable evidence. The precise words used by the testator may have been misunderstood or misremembered. But even if the evidence of this witness be taken to be accurate’ as he gave it, it proves only that the check was in existence early in May, and about that there is now no dispute.

Mrs. Dye testified that after the death of Mr. Dodge she was at the plaintiff’s house; that the defendant came there, and she saw the plaintiff come through the room where she was sitting and pass to the door opening into a hall, with some papers in her hand, and heard her say to the defendant, who was standing outside, “ those were the papers Mr. Dodge told her to give to him.” The counsel for the plaintiff then put this question, “Will you state whether or not anything was said about a check on that occasion ?” Then the witness answered that she handed the defendant the papers “ and remarked at the same time, that is the check that Mr. Dodge had told her to give to Mr. Wheeler.” That something was then said about a check is not inconsistent with the evidence of the defendant. He testified that in July, after the death of Mr. Dodge, thecplaintiff brought to him, in her house, two checks written by Mr. Dodge with alead pencil, one for $5,000’ and another for $10,000, drawn to the order of the plaintiff on Clark, Dodge & Co., and she handed them to him and he then said to her, “these are two papers which Mr. Dodge spoke to me about at the time he stated to me that he had made me sole executor, striking out Mr. Clark as co-executor, and he said: ‘ I have drawn my will in my own handwriting. It has not yet been witnessed, but I have drawn two memorandum notes or checks, showing that I desire to leave Mrs. Miner the sum of $30,000. The old will called for $15,000, the new will $30,000 as her legacy, and upon the completion of the new will I shall destroy the old willthen I said to Mrs. Miner, ‘You see that these two sums of $15,000, stated in these two papers, added to the sum of $15,000 in the original will, shows that Mr. Dodge has carried out that which he said to me he desired to do. They have no value.’ To this Mrs. Miner said: ‘ I understand that perfectly.’ ” It is quite-true that this evidence of the defendant is denied by the plaintiff. For reasons we have already given, we think the evidence of the-defendant entitled to the most credit, and it is entirely inconsistent with the whole theory of the plaintiff’s case. It may well be that the occasion of the delivery of these two checks was the occasion referred to by Mrs. Dye, who testified that she did not hear what the defendant said at that time.

Mrs. Eorlence, who was in the plaintiff’s service in some capacity, testified that in October, after the death of Mr. Dodge, she heard the plaintiff ask the defendant “ to please pay that $20,000 check,” she being in one room and they in another. She admitted that, although she was a witness upon the first trial of the case, she did not testify to anything about this check. During the summer and fall of 1886 the defendant did give the plaintiff, upon her request, several checks for money used by her in repairing her house, and for her expenses, and the money so advanced was to apply, and afterward was applied, upon her legacy, and this witness testified that she heard those checks mentioned many times. She gave her evidence about six years after the occasion mentioned by her, and even if it had not been contradicted by the defendant, the referee could well hesitate to place much reliance upon it.

We have now called attention to all the evidence which tends to support the plaintiff as to any questions now in dispute between the parties. The referees had the great advantage of seeing and bearing the witnesses, and were thus more competent to judge of their credibility than judges sitting in review. Here the plaintiff is upon one side confirmed to some extent by other witnesses, and the defendant is upon the other side confirmed to some extent by other witnesses and by undisputed facts and the inferences from them. Two referees, hearing and seeing the witnesses, have sustained the position of the defendant, and while there is more or less mystery and doubt still surrounding the mortgage and the check, we think the balance of the probabilities is that if they ever had any real foundation as securities for money to be paid, they were discharged in some way in the lifetime of Mr. Dodge, and that they were never meant to co-exist with the legacy-given to her in his will.

Public policy requires that claims against the estates of dead men should be established by very satisfactory evidence, and the courts should see to it that such estates are fairly protected against •unfounded and rapacious raids.

Our conclusion is that the judgment of the general term should be reversed, and that entered upon the report of the referee should be affirmed, with the costs in this court and the courts below.

All concur, except Andrews, Oh. J., not sitting.