author: Adams, J.

text:
    The Eastman Kodak Company, Resp’t, v. Henry M. Reichenbach et al., App’lts.

      (Supreme Court, General Term, Fifth Department,

      Filed June, 1894.)

    1. Inventions—Creative act op inventor.
    The actual creative act of an inventor is recognized as an invention, though he may have called to his assistance the ideas and creations of other parties, provided they are so used as to achieve new results.
    2. Same—Relief.
    A court of equity will enjoin an employe from using his knowledge of his employer’s valuable trade secrets, which were either discovered by him or necessarily disclosed to him while occupying a confidential relation, where he has agreed to give his employer the exclusive property in and control over such inventions, and subsequently undertakes, in violation of such agreement, to make use of them in such manner as materially to injure his employer’s business.
    Appeal from a judgment in favor of the plaintiff, entered upon tbe decision of the court rendered after a trial at special term enjoining and restraining the defendants from using or in any manner divulging or imparting any knowledge or information acquired by them in regard to certain processes, formulas and appliances belonging to the plaintiff.

      Theodore Bacon, for app’lts; Walter S. Hubbell, for resp’t.
    Judgment appealed from affirmed, with costs on the opinion of Adams, J., at special term.
   The opinion of the special term was as follows:

Adams, J.

This case is invested with questions so interesting, and with consequences so important to all the parties interested, as to fully justify the large expenditure of time and labor which has characterized the trial and submission of the same; and, as introductory to any discussion of the facts or law, the court desires-to acknowledge its obligations to counsel for the very elaborate and careful briefs which have been submitted and which in their arrangement of facts and reference to precedents have been helpful beyond measure.

It would seem that an orderly and intelligent disposition of the case can best be accomplished by a review of the several questions-of fact involved, in substantially the same connection as they are-presented by the pleadings ; and, therefore, the one which demands consideration at the outset relates to the matter of valuable secrets-of trade, which the plaintiff claims to be the owner of. Did the plaintiff possess such secrets, processes and appliances, and were the same discovered or invented by the defendants, or either pf them, or imparted to them, while occupying confidential relations-with the plaintiff?

That this proposition must be met with an affirmative answer is-practically admitted by the defendants, for the very specific allegations upon this branch of the case, which are contained in the-plaintiff’s complaint, are put in issue but partially, if at all, by the somewhat evasive denial that “all of the inventions made by the defendants, or either of them, belong to or are the exclusive property of the plaintiff.” But, aside from this concession, the very nature of the business in which the plaintiff is engages suggests processes, appliances, substances and methods, which must, of rtecessity, depend for their successful use and operation upon the enforcement of the utmost secrecy ; and the fact that this plaintiff has established and is now conducting this extensive and remunerative business, is of itself evidence so strong as almost to require the court to take judicial notice that discoveries and inventions unknown to the public at large constitute the foundation upon which that business rests. It would be useless to indulge in a further expenditure of time upon a proposition so self-evident, and it must be assumed, therefore, that the plaintiff is and was at the time defendants were in its employ, the owner of inventions, discoveries and secrets which were its own special property and to-which great value attached.

That these inventions or discoveries were, some of them, at least, made by two of the defendants is, as has just been shown, also a conceded fact, and that these same defendants possessed knowledge as to all of them, which was regarded as confidential in its nature, is abundantly established by the evidence in the-case. As illustrative of this proposition may be cited those portions of the testimony, which show the care and pains which were taken by the defendants to conceal from the curious public, and even from the knowledge of their employees, the several processes-employed to obtain certain results. Again, men employed in one-department were not allowed to go into another department. Ingredients employódin compounding certain mixtures were guarded by lock and key, and the various formulas were given only to those whose business it was to use them, It would be absurd to claim that the defendants could have" been conscious of the precautions thus taken to hedge in the plaintiff’s business affiairs, without understanding very clearly the meaning of it all, and no conclusion, consistent with sound reason, can be indulged in, other than that which is contended for by the plaintiff, viz., that it was the possessor of several valuable trade’ secrets which were confidentially known by or disclosed to the defendants Beichenbach and Passavant.

But, however satisfactorily this fact is made to appear, another, and an equally important one, is, in my judgment, made quite as apparent, and that is, that one or both the parties just named, while in plaintiff’s service, made certain valuable discoveries which, under the terms of their employment and by the strict letter of their contract, plaintiff was entitled to the benefit of. As has already been suggested, both Beichenbach and Passavant were chemists of skill and experience. The services of the former were sufficiently valuable to command a salary of $5,000 per annum, in addition to which he had been presented by the company with a quantity of its stock, upon the sale of which he had realized nearly $20,000. Passavant was receiving a salary of $2,500, and both were intrusted with duties and responsibilities of the most delicate and confidential character. Among these duties was that of constantly experimenting, with a view to improving the products of the establishment, and these experiments were continually developing new results which the company was entitled to the sole enjoyment of. This much of the plaintiff’s claim is, as I understand it, conceded, but defendants now insist that these results were not in the nature of discoveries, because all the agencies employed to produce them, and even the particular properties of these, agencies, or some of them, were already known to the scientific mind; and it is argued that nothing can be invented which already exists, nor can anything be said to be discovered the existence of which is already known.. This argument is true, to a certain extent, but it has its limitations. To illustrate, it cannot be truly stated that Alexander Bell invented or discovered electricity, but it may be said, without fear of contradiction, that he did invent the telephone, although it was known long before his day that by means of á continuous current of electricity, both vibration aud sound could be transmitted over considerable distances. Again, the existence of aluminum, and its value in the industrial arts, has long been known, but its usé has to a very great extent been prevented by the expense involved in its production; and it is within a very recent period that chemists have been able-to devise methods by which it can be extracted from the clay so cheaply as to admit of its extensive use. However well known the substances mav have been, or the chemicals by the use of which such a result has been accomplished, it cannot be denied that this was a new and valuable discovery. So, in regard to some of the inventions or discoveries claimed as property by the plaintiff. They were obtained by compounding certain well-known ingredients, possessing well-defined properties, but in such a manner as to produce new results, and these results were found to be useful in the manufacture of photographic instruments and supplies, to such an extent as to give the plaintiff great advantage over its competitors. Perhaps the composition which will best illustrate the idea sought to be conveyed, is that which is referred to in tbe evidence as the “ doctor.”

The principal ingredient of this composition is an article known the world over as saponin, and it is likewise a well-known scientific fact that saponin is useful for the removal of grease, In a certain foreign periodical known as The, British Journal of Photography, under date of February 13,1885, appeared an article suggesting that this substance might be used with good effect in photography. The plaintiff, in its attempt to manufacture a superior article of bromide paper and pbotograpbic plates, had experienced considerable difficulty from spots appearing upon tbe surface of tbe paper and plates, which were thought by some to be occasioned by grease, while others entertained different theories respecting them. After reading the article above mentioned, ■which referred only in a general sort of a way to tbe use of saponin in photography, without specifying that it might have the effect of freeing gelatine emulsion from fat or grease, Reichenbach conceived the idea of employing it for that purpose, and after numerous experiments in which this substance was compounded with others in different proportions, the desired result was obtained, tbe spots disappeared from the plates and paper, the plaintiff bad a remedy for these defects which no rival manufacturer possessed, and the “doctor” came into existence. So important was this result regarded that it was kept under lock and key, and lest it should be discovered by other manufacturers the different ingredients composing it were purchased in the name of a third party. Under these circumstances can it be claimed that the “doctor” is neither a discovery, an invention, nor a valuable secret ?

And what is here said respecting tbis particular substance applies with equal force to some of the other articles claimed by plaintiff to be invested with a proprietary character. Tbe machine used for washing emulsion, although termed by Reichenbach an “ ordinary washing machine,” turns out to be-something more than that. In other words, it is an “ordinary washing machine” so altered and remodeled as to serve a new and altogether different purpose from that for which it was originally designed, and when used in connection with a new method of placing the emulsion, which was also the result of experiments made by Reichenbach, it caused a great saving of time and labor. So, too, the formula known as the “Peerless” appears from the evidence to be a modification or combination of otlier formulae which, while doubtless composed of similar ingredients, is so compounded as to produce better results and to give greater satisfaction. .And so I might continue through tbe entire list of articles named by tbe plaintiff, and sbow that in some particular, even though a slight and apparently unimportant one, each of them had its superior characteristics and variations, these characteristics and variations resulting from experiments made by some of plaintiff’s officers or agents. But enough has been said to indicate my views respecting this branch of the case, and I am unable to see why they do not coincide with the established rules of all civilized countries respecting inventions and the right of inventors, the fundamental idea of which is to recognize as an invention the actual creative act of the inventor, although'he may have called to his assistance the ideas and creations of other parties, provided such ideas and creations are so used as to achieve new results.

The remaining questions of fact relate to the intentions of the defendants and their probable effect upon the plaintiff’s business. That defendants, while in its employ, did organize a new company, which was designed to engage in the same general business as that carried on by the plaintiff, is a fact so clearly established by the proof as to admit of no controversy. Indeed, it is virtually admitted in the answer. It is contended, however, that although it is their design to engage in this business, they do not intend to make use of any inventions, discoveries or secrets in which the plaintiff has any proprietary interest. The real significance of this contention can be better understood, perhaps, when it is borne in mind that the main effort of the defendants from the very outset has been to show that the plaintiff has no such inventions, discoveries or secrets. It would, therefore, seem to follow, as a logical sequence, that if, as a matter of fact, plaintiff did pos sess valuable secrets and inventions which were either disclosed or discovered while defendants were in its employ, they were to be made use of by this rival organization. And this, I think, is the fair construction to be placed upon the acts, language and conduct of the defendants. Their operations were carried on with the utmost secrecy, and their interviews with Millington and Brownell, as detailed by the last-named parties, were almost ludicrous in this particular. Their “prospectus” is so constructed as to relieve defendants Keichenbach and Bassavant from any liability under their contracts, and to make Milburn the responsible party, but the statements therein contained furnish, nevertheless, indubitable proof that the- new company is intended to avail itself of certain trade secrets which, as has been shown, are the property of plaintiff. To particularize, the “Corona film” referred to, is said to be “a cut-sheet sensitive photographic film, made by a new process; ” and concerning the “bromide paper,” it is represented that the new company is peculiarly strong by reason of the fact that tliue” have “manufactured and sold if for a manufacturer that has, at present, the market monopoly.” Now, inasmuch as Keichenbach and Passavant were in plaintiff’s employ when this prospectus was issued, it necessarily follows that the new process ” for manufacturing film and bromide paper was either one that was then in use by plaintiff, or else it was one which had been discovered by them, or one of them, while in the plaintiff’s employ, and in either case it was the property of the plaintiff. The probability is that the “ new process ” is the same as that concerning which so much evidence has been given, and which the defendants now insist is in no sense new.

To briefly summarize, then, the established facts of this case, it appears thas the plaintiff is the owner of valuable trade secrets, which were either discovered by one or more of the defendants or necessarily disclosed to them while occupying a confidential relation towards the plaintiff; that as to such trade secrets as were discovered by either Reichenbach or Passavant, they have undertaken and agreed to give plaintiff the exclusive property in and control over the same, and that, in violation of this agreement, they are now proposing to make use of them, or some of them, in such a manner as to materially injure the plaintiff’s business.

With these facts established, the application of .the legal principles which must govern the disposition of the case does not appear to be a very formidable undertaking. It may be safely assumed at the outset, I think, that whatever remedy plaintiff may have does not reside in a court of law. The very nature of the case, the peculiar injury liable to be inflicted, and the incalculable damages which may possibly result, all show most conclusively that legal relief is totally inadequate for plaintiff’s protection, and that its only resort must be in a court of equity. The learned counsel for defendants has contended with all the adroitness and skill at his command—which is but another way of saying that such contention has been put forth with all possible adroitness and skill — that this case is not one of which a court of equity can take jurisdiction, and several authorities, of both English and American courts, are cited in support of this claim. I am constrained, however, to hold that the weight of authority is opposed to his view of the law. The question presented is an interesting one, and would justify a somewhat analytical review of the cases which bear upon either aspect of it, did time permit, but for the purpose of this, adjudication it will be necessary to advert to such only as are deemed conclusive upon this court.

In Morrison v. Moat, 9 Hare, 241, which is an English case, it was held that an injunction would issue to restrain the use of a secret in the compounding of a medicine, not being the subject of a patent, and to restrain the sale of such medicine by a party who acquired knowledge of the secret in violation of the contract of the party by whom it was communicated and in breach of trust and confidence. An appeal was taken from the decision of the vice' chancellor, and in 1852 the case was affirmed by the court of chancery, and it was there held that “there is no doubt whatever that where a party who has a secret in a trade employs a persons under contract, cither express or implied, or under duty express or implied, those persons cannot gain the knowledge of that secret and then set it up against their employer.” Morrison v. Moat, 21 L. J. (N. S.) Eq. 248.

In 1868 the supreme court of Massachusetts recognized and followed the authority of Morrison v. Moat, and in the opinion of Gray, J., the law is thus stated: If a party “ invents or discovers and keeps secret a process of manufacture, whether a proper subject for a patent or not, he has not, indeed, an exclusive right to it as against the public, or against those who in good faith acquire a knowledge of it, but he has a property in which a court of chancery will protect against one who, in violation of contract and breach of confidence, undertakes to apply it to his own use or to disclose it -to third persons. The jurisdiction in equity to interfere by injunction to prevent such a breach of trust, when the injury would be irreparable and the remedy at law inadequate, is well established by authority.” Peabody v. Norfolk, 98 Mass. 452. The language above quoted was cited with approval in Saloman v. Hertz, 40 N. J. Eq. 400, and it is almost identical with that employed by elementary waiters of recognized standing in discussing the same question. Judge Story says: “Courts of equity will restrain a party from making a disclosure of secrets communicated to him in the course of a confidential employment, and it matters not in such cases whether the secrets be secrets of trade, or secrets of title, or any other secrets of the party important to his interests.” 2 Story’s Eq. 952. See, also, 1 High on Inj. [2d ed.] 15.

The same doctrine has obtained in this state for at least half a century, and it has been enunciated by a line of decisions which, with a single exception, is unbroken. Jarvis v. Peck, 10 Paige, 118; Hammer v. Barnes, 26 How. 174; Champlin v. Stoddart, 30 Hun, 300; Tabor v. Hoffman, 118 N. Y. 30; 27 St. Rep, 756. The Champlin Case was decided by the general term of this department, Smith, P. J., writing the opinion, in the course of which he takes occasion to say that “ a secret of trade is fully recognized in equity as property, the disclosure of which will be restrained by injunction.” By a careful reading of the various decisions upon this subject, it will be seen that some are made to depend upon a breach of an express contract between the parties, while others proceed upon the theory that where a confidential relation exists between two or more parties engaged in a business venture, the law raises an implied contract between them that the employe will not divulge any trade secrets imparted to him or discovered by him in the course of his employment, and that a disclosure of such secrets thus acquired is a breach of trust and a violation of good morals, to prevent which a court of equity should intervene. It may also be observed in this connection that the word “ property,” as applied to trade secrets and inventions, has its limitation, for it is undoubtedly true that when an article manufactured by some secret process, which is not the subject of a patent, is thrown upon the market, the whole world is at liberty to discover, if it can by any fair means, what that process is, and, when discovery is thus made, to employ it in the manufacture of similar articles. In such case the inventor’s or manufacturer’s property in his process is gone, but the authorities all hold that, while knowledge obtained in this manner is perfectly legitimate, that which is obtained by any breach of confidence cannot be •sanctioned; and this distinction is quite forcibly presented in a recent decision of the court of appeals,,to which the attention of this court has been directed by the supplemental brief of defendants. Judge Landon, in his opinion, speaking of the plaintiff’s claim, says: “ His case is unlike those in which the injunctive process of the court is sought to restrain the disclosure of a secret or the publication of a letter, which may prove injurious to business or character.” Bristol v. Equitable Life Assurance Society, 132 N. Y. 264-267; 43 St. Rep. 786. But, without multiplying citations or prolonging consideration of the legal aspect of this case, it may be said by way of conclusion that the principle contended for by the plaintiff is not only abundantly supported by authority, but is likewise founded on good common sense, and is peculiarly applicable to the case in hand. Here is a party which, by the expenditure-of vast sums of money and the exercise of much skill and ingenuity, has built up a large and prosperous business, the capital of which consists largely in certain Inventions and discoveries made by its officers, servants and agents. The world at large knows nothing of these inventions and discoveries, because they are locked within the brain of those who conceived them. The defendants, who have been largely instrumental in perfecting them, while under both an express and implied contract to give the plaintiff the benefit of their inventive genius, propose now to disregard their legal and moral obligations by creating a new establishment where these inventions and discoveries may be employed to plaintiff’s serious injury. This is not legitimate competition, which it is contra bonos mores, and constitutes a breach of trust which a court of law—and much more a court of equity—-should not tolerate. It follows, therefore, that the plaintiff is entitled to the relief sought by this action, certainly s-against the defendants Reicheubach and Passavant; and, as thu defendant Milburn has allowed himself to engage in an illegitie mate enterprise, with knowledge of or the means of knowing what its operation involves, I can see no good reason why he should be subjected to the same restraining process as his co-defendants.

Judgment is accordingly directed against all three defendants, with costs of the action.


source: Caselaw Access Project

author: Ingraham, J.

license: Public Domain

text:
    People’s Trust Company, as Executor, etc., Pl’ff, v. John J. Smith et al., Def’ts.

      (Supreme Court, New York Special Term,

      Filed June, 1894.)

    W ill—-Bequest—Cha rities.
    A bequest of personal property to the “ Presbyterian Home for Aged ■Women ” is valid, though the will was not executed two months before the testator’s death.
    Action for construction of a will.

      Wingate, Cullen & Miller, for pl’ff; Dunning & Foiuler, for def’t Smith; Arnold, Green & Patterson, for def’t Mason ; W. F. Dunning, for def’t Association for the Relief of Indigent Pernales; Townsend, Dyett & Einstein, for def’t Presbyterian Home for Aged Women.
   Ingraham, J.

The only question presented is whether the provisions contained in § 6 of the act of 1848 for the incorporation of benevolent and charitable corporations, which invalidates tbe bequests contained in a will which bad not been made and executed at least two months before the death of the testator, is binding upon the defendant the Presbyterian Home for Aged Women. This corporation was created by special act of the legislature (Laws 1869, chap. 413), and is thereby “authorized to take and hold, by gift, purchase, devise or otherwise, subject to all provisions of existing laws in relation to devises by last will and testament, * * * and shall be entitled to all the provisions and privileges of law relating to charitable institutions.” The next of kin of the testatrix claim that the bequest of one-half of the residuary estate to this corporation is not valid, because the testatrix died within two months after the execution of the will; it being claimed that the limitation of the right of a corporation organized under the general act of 1848 to take by virtue of bequests contained in a will applied to this corporation. Two provisions of the act of 1869 are relied on to make the act of 1848 applicable : First, that the authority to take, given by the act of 1869, being made subject to all provisions of existing laws in relation to devises by last will and testament, it was the intention to include the provision of law regulating bequests, so that the word “ devise” should be considered to mean any gift of property, either real or personal, by a last will and testament. The word “ devise ” has a well-defined legal meaning. It is a gift of real property by a person’s last will and testament, and the object must, therefore, be that kind of property. Bouv. Law Diet. And although the courts have, in order to give effect to a testator’s evident intention, included personal property as covered by the word “ devise ” when used in a will such a meaning has never been given to the word in order to restrict or abridge a right or privilege granted, wliere it was not necessary to carry a clearly expressed intention into effect. The right of this corporation to take this bequest does not come from the act of 1848. It is given by the special act of incorporation in the most general terms, being made subject to the provisions of existing laws in relation to devises by last will.and testament. The act of 1848 is not mentioned, and I do not think it could be said that the provision of the act in question is a law in relation to last wills generally ; it is only a limitation as to the power of corporations organized under its provisions to take property by virtue of a devise or bequest. There were many corporations in existence, at the time of the passage of the act of 1869, authorized to take by devise or bequest without this limitation, and I can see no reason why the provisions which are contained in such acts are not as applicable to this corporation as the provisions of the act of 1848. There is here no clearly defiued' intention of the legislature that this provision in the act of 1869 should have reference at all to the act of 1848, or that the limitation as to corporations organized under this act should apply to this corporation •; and there is .nothing to show that the legislature had the intention, by the insertion of this clause, to restrict the right of this corporation to take any bequest.

The second claim made by the next of kin is that the words “ shall be entitled to all the provisions and privileges of law relating to charitable institutions ” made this limitation in the act of 1848 applicable to this corporation.’’ It is not entirely clear what the word “ entitled,” as used in this connection, means. To 4‘ entitle ” is defined as “to give a title, right or claim; to give a right to demand or receive; to furnish with grounds for claiming, with a direct object of the person claiming, and a remote object of the thing claimed.” It is directly opposed to the idea of imposing an obligation or limitation, but gives to the person named a right to demand or receive. Thus, when this corporation was said to be entitled to all the provisions and privileges of law relating to charitable institutions, it was given the right to have and enjoy the provisions and privileges; not to have imposed upon it limitations and disabilities which it did not ask for. By reference to § 6 of the act (1 Laws 1869, 937) it will be seen that very different language was used when it was the intention to impose upon the corporation the limitations and restrictions contained in another act of the legislature. I think it clear, therefore, that this corporation is entitled to take an undivided half of the testatrix’s property upon the death of the beneficiaries for life, and judgment is directed accordingly; costs of all parties to be paid out of the estate; judgment to be settled on notice.


author: McAdam, J.

text:
    Bennett J. King, Pl’ff, v. Alfred Munzer et al., Def’ts.

      (New York Superior Court, Special Term,

      Filed May, 1894.)

    Costs—Stenographer’s fees.
    Back party will be directed to pay one-half tke expense for stenographer's minutes, where they are required for the use of the court.
    Motion to require each party to pay half of expense of transcribing the stenographer’s minutes.

      Blumenstiel & Kirsch, for pl’ff; M. L. JErlanger, for def’t.
   McAdam, J.

The decision in Griggs v. Guinn, 21 N. Y. Supp. 451, applies only to trials before referees. This action was tried at the special term of the court, and the stenographer’s minutes were required in order to aid the court in reaching a decision. Section 289 of the Code covers the case. It authorizes the court to direct that one-half the expense be paid by each of the parties, and the amount so paid by compulsory order becomes a necessary disbursement. The order may be made at the trial or at any time afterwards. Abendroth v. Man. Railroad Co., 9 Civ. Pro. R. 406. The case cited is directly in point, and will be followed. The order there will be granted here, to the end that the stenographer’s fees be taxed as a disbursement.


author: Bischoff, J.

text:
    Rosa M. Kahn, Pl’ff, v. Hows Coen, Def't.

      (New York Common Pleas, Special Term,

      Filed May, 1894.)

    Costs—Term pees.
    Successful party may tax fees for all terms, during which, cause was necessarily on general calendar awaiting trial.
    Motion to retax costs.

      L. B. Bunnell, for motion; Gogyill & Smith, opposed.
   Bischoff, J.

The clerk properly allowed the item for term fees, it appearing that the cause was “ necessarily ” upon the calendar during the period in question, within the definition found in Sipperly v. Warner, 9 How. Pr. 332, and the requirements of practice as to service of notice were complied with. See Gowing v. Levy, 43 St. Rep. 767; 17 N. Y. Supp. 771. I find no reason for a departure from the rule, which obtains in this city, that term fees for terms during which a cause is upon the general calendar, awaiting trial in the usual course, may be taxed by the successful party. Code Civ. Proc., § 3251, subd. 3; Simpson v. Rowan, 13 Civ. Proc. R. 206; 11 Rum. Pr., p. 509. Motion denied.


author: Daly, C. J.

text:
    In the Matter of Owens, an Alleged Lunatic.

      (New York Common Pleas, Special Term,

      Filed May, 1894.)

    Costs—Application por judgment.
    Where the court has only to render judgment or grant the final order on a special verdict, allowance on application for judgment before argument, and on argument, is proper.
    Motion for retaxation of costs.
   Daly, C. J.

Appeal from taxation of costs by clerk, allowing-party $20 on application for judgment on special verdict before argument, and $40 for argument. Proceeding to traverse inquisition of lunacy. Issues were framed and submitted to a jury, and verdict rendered thereon. The Code allows the costs as taxed Where there has been a special verdict and judgment thereon; and it defines a special verdict to be one by which the jury finds the facts only, leaving the court to determine which party is entitled to judgment thereon. Code Civ. Proc., § 1186. This is such a case, for the whole issue of facts between the parties was embraced in the questions submitted to the jury, and the court had only to render judgment or grant the final order thereon. The final order recites that the verdict embraces all the material issues in the case. Motion for retaxation denied. No costs.


author: Wright, J.

text:
    John Dunn, Pl’ff, v. Hooper C. Sharpe et al., Def’ts.

      (Supreme Court, Oswego Special Term,

      Filed September 22, 1894.)

    1. Bond—Construction.
    A provision, in a bond to secure past and future debts, that on default tbe whole sum. should become due, was held to apply only to subsequent debts.
    2. Same—Estoppel.
    A surely on such bonds is estopped from setting up the fraud of his principal in procuring its execution as against subsequent advances made in reliance thereon.
    Action to foreclose a mortgage.

      Wilson & Forbes, for pl’ff; J. J. Lamoree and J. B. Higgins for def’ts.
   Wright, J.

At the time of the execution of the mortgage, the defendants, Hooper C. Sharpe and Charles Hannan, as partners, owed the plaintiffs $4,500 for goods purchased. The mortgage in question was executed by Hooper C. Sharpe and his wife, the defendant Celia Sharpe, on lands belonging to Celia Sharpe individually, and also lands belonging to Hooper C. Sharpe, to secure the payment of said indebtedness and an additional sum of $2,000, that day loaned by the plaintiff to the firm of Sharpe & Harman, and “as a continuing security * * * to secure any other or further advances of goods or loans of money sold to or supplied to said firm * * * from time to time by the parties of the second part, to be used in and about the business of said firm of Sharpe & Harman; * * • * said debt and every part thereof to be paid according to the conditions of the bond this day executed and delivered by the said Hooper C. Sharpe and Celia Sharpe.” The bond is made by said mortgagors in the penal sum of $13,000, and provides for the payment of $6,500 and interest within one year from its date, and for the payment of all goods thereafter to be sold by the plaintiffs to said firm according to said provision of the mortgage, no date of payment for such goods being mentioned in either instrument, The bond further provides “that in case any installment of principal or any part thereof, * * * hereby secured to be paid, shall remain due and unpaid for a space of thirty days, after the same shall, by the terms thereof, become due and payable, in that case the whole principal sum hereby secured to be paid, together with interest thereon, shall, at the option of said obligee, * * * become due and payable forthwith.” After the delivery of the bond and mortgage, the said firm purchased of the plaintiffs, on several dates, up to February 22, 1893, various items of goods, amounting to $225.73, agreeing to pay therefor within thirty days from the date of the respective purchases. No part of said indebtedness was paid at the time when this action was begun, April 26, 1893. The question is, was the action prematurely brought? It is urged by the defendants that the thirty days’ default clause does not apply to the contract for the subsequent purchases of goods. The intent of the parties must be gathered from the instruments considered together. In the mortgage no date for the payment of the $4,500 portion of the debt is mentioned, but it provides that the entire debt shall be paid according to the condition of said bond, which provides for the payment of the said entire sum of $6,500 and interest within one year. It is clear, therefore, that the thirty-day default clause does not relate to the payment of that sum. But the parties contemplated making additions to the amount of the principal sum named in the mortgage by the subsequent purchase of goods. They contemplated credits for the same to be fixed outside of the bond and mortgage, no date for such payment being mentioned in either; and this default clause, since there is no other part of the indebtness to which it can apply, was evidently made to secure prompt payment of said additional indebtedness; and, more than thirty days having expired since said additional indebtedness became due, the entire sum secured by the mortgage became due on the election of the plaintiffs.

On the second branch of the defense—the allegation of fraud— it appears that the defendant Celia Sharpe was induced by her husband to execute the bond and mortgage under the belief that they were given to secure only the sum of $2,000 and interest. She signed and acknowledged their execution without reading them, and thereupon delivered them to her husband, with the understanding that he should deliver them to the plaintiffs. It is now urged by the defendants that Celia Sharpe, being surety for her husband, is entitled to set up his fraudulent representation as to the amount of the bond and mortgage as a defense. It appears that the plaintiffs had no knowledge of this representation, and took the instruments in good faith, and, relying upon their validity, loaned the said $2,000, and subsequently sold goods to said firm of Sharpe & Harman of the value of $332.07. The contention of the defendants is untenable. The defendant Celia Sharpe is an intelligent and educated lady. The error in the instruments was due to her negligence in not examining them, as well as to the fraud of her husband; and, she having intrusted those instruments to her husband for the purpose of delivering them to the plaintiffs, he became her agent for that purpose; aud he being thus clothed with the indicia of authority, and the plaintiffs being ignorant of the fraud, they had a right to rely upon the terms of these instruments as expressing the scope of his authority, and the precise obligation for which she was his surety. Bank of Albion v. Burns, 46 N. Y. 171; Bodine v. Killeen, 53 N. Y. 93; Moore v. Metropolitan National Bank, 55 N. Y. 41. Equity and good conscience require that Mrs. Sharpe should be estopped from denying the authority of her husband, but the extent of such estoppel is limited by the change of situation of the plaintiffs, caused by their reliance upon his apparent authority. It does not appear that the plaintiffs have been injured in their interests with respect to the $4,500 indebtedness by its inclusion in the bond and mortgage. On the contrary, it may be reasonably inferred that their interests have been advaneed thereby, as against the defendants Hooper C. Sharpe and Charles Harman, since they thus obtained the benefit of a security for that prior unsecured indebtedness, a security not shown inadequate ; and, from the fact that the plaintiffs voluntarily increased the principal thereof by the subsequent salés, it is evident that they deemed it adequate and desirable. The amount of the new loan and the purchase price of the additional goods, with interest, is, therefore, the measure of the estoppel against her. Simpson v. Del Hoyo, 94 N. Y. 189; McNeal v. Tenth National Bank, 46 N. Y. 325; Gilbert v. Deshon, 107 N. Y. 324; 12 St. Rep. 492; Barnard v. Campbell, 55 N. Y. 456. This holding is based upon the principle that, where one of two innocent persons must suffer by the fraud of a third person, the one guilty of negligence, which has been a co-operative element in causing the loss, must bear the burden. The plaintiffs, as one reason why Mrs. Sharpe should be held for the whole amount, urge that she should have refunded the amount of the new loan and the subsequent purchases. Ordinarily, that proposition would be sound; but it does not appear to what extent her property may be required to satisfy her obligation after applying on the whole debt the proceeds of the sale of the lands of the principal debtor, her husband, who, in equity, is primarily liable. Therefore, the equities be-between all the parties can be better adjusted in the action without such refunding; and in such a case refunding is not required. The defendant’s theory that Hooper C. Sharpe must be regarded as agent of the plaintiffs in the transaction is not correct.

From the above propositions, it follows that the bond and mortgage must be held valid as against Hooper C. Sharpe for the entire sum secured thereby, and that, after exhausting the remedy on the mortgage against him, Celia Sharpe is liable thereon for the deficiency to the amount of $2,000 and said subsequent purchases, with interest. Erie County Savings Bank v. Roop, 80 N. Y. 591; Vartie v. Underwood, 18 Barb. 561. Costs are awarded the plaintiffs against the defendants Hooper C. Sharpe and Charles Harman, but not against Celia Sharpe.

Judgment is ordered accordingly.


author: Cullen, J.

text:
    Margaret G. Westerfield, as Executrix, etc., Resp’t, v. Henry F. Price, as Administrator, etc., App’lt.

      (Supreme Court, General Term, Second Department,

      Filed July 27, 1894.)

    Partnership—Accounting.
    A partner, in an action for an accounting, cannot be charged with his co-partner’s contribution toward the purchase of land for firm purposes, where latter’s interest was never denied, and he never, though he knew how the title was held, demanded a conveyance.
    Appeal from a judgment entered on the report of a referee.

      B. Burnham Moffat, for app’lt; Edward H. Westerfield, for resp’t.
   Cullen, J.

This is an appeal from a judgment in favor of the plaintiff, entered upon the report of a referee. The original parties to this action, testator of the plaintiff and the intestate of defendant, with others, in 1865 entered into a pool or joint speculation for the purchase and sale of oil lands and options thereon. The plaintiff’s testator was to have a fourth interest, and the defendant’s intestate, was to be manager of the pool. Jayne, a clerk of Price and his partner, O’Neill, was sent to West Yirginia to purchase the land. • He bought some options, and in two instances the fee of the land outright. Plaintiff's testator was furnished with two statements of the outlay by Jayne, which, however, did not enumerate the property acquired, and paid Price his quarter of such expenditure. Shortly after, the bubble burst. The options were suffered to lapse, and the pool was left with the two pieces of real estate in West Yirginia its only assets. The title of one of these pieces was first taken in the name of Jayne, and then subsequently conveyed to Price. The title of the other piece, a tract of 25 acres, was taken in the name of O’Neill and Price. Both pieces still remain unsold. In 1886, Westerfield brought this action against Price for an accounting. It is unnecessary to review the details of the account, as the referee has found that all the moneys contributed by the plaintiff were applied to the purposes of the co-partnership or pool. - But he has charged the defendant with $375,—plaintiff’s contribution of one-quarter of the cost of the 25-acre plot,—because the title 'to that plot was taken in the name of Price and O’Neill, and the propriety of the decision as to this item is the only question in dispute on this appeal. We are of opinion that the learned referee erred. His decision in regard to this tract of 25 acres was in direct conflict with his decision as to the other tract. The latter tract stood in the name of Price and O’Neill. The plaintiff was entitled to own a one-quarter in these lands. • The theory upon which the defendant was charged with the plaintiff’s contribution to the 25-acre purchase was that, the title standing partly in the name of O’Neill, there could be no accounting as to that tract in an action to which O’Neill was not a party,1 and that the heirs of Price could not convey to plaintiff the legal title to his share. We cannot see .why the heirs of Price, holding title to an undivided half, could not convey to the plaintiff an undivided quarter. But we think the whole theory erroneous. Plaintiff was given a receipt from O’Neill and Price, showing that he had a quarter interest in the lands acquired. These lands were acquired, not to hold, but for speculation, for quick sale. Price was to be the manager of the pool. Assuming (which I am not prepared to concede) that the legal title should have been taken in the name of all the parties in interest, Westerfield knew from Price’s letters that the title was not so held. Westerfield never asked for a conveyance of his share. Though he appears to have been anxious for an actual partition, which Price opposed, and there were negotiations between the parties for that purpose, Price never repudiated the trust or denied plaintiff’s interest. The referee has expressly found that this tract was purchased for the pool or partnership. We see no principle on which the plaintiff can now disclaim that purchase, and no obstacle which will prevent him obtaining his full share or interest in the lands. The judgment appealed from should be reversed, and a new trial ordered; costs to abide event.

All concur.


author: Cullen, J.—This

text:
    Elizur G. Webster et al., Resp’ts, v. Kings County Trust Company, App’lt.

      (Supreme Court, General Term, Second Department,

      Filed July 27, 1894.)

    1. Vendor and purchaser—Title—Incumbrances.
    A purchaser cannot refuse to complete his contract because there are past due mortgages on the premises.
    2. Same.
    Nor can he refuse, on the ground that the vendor consented that an existing railroad in front of the property may be operated by electricity.
    3. Trusts—Purchase—Trustees.
    A purchase of trust property at judicial sale by the trustee, when made by consent of court, is valid.
    4. Deed—Escrow.
    After a tender to and refusal by the grantee, a deed, deposited with the clerk under an order of the court, is an escrow.
    5. Same—Death op grantor.
    In such case, the death of the grantor, before delivery to the grantee, will not defeat the validity of the deed.
    Appeal from a judgment in favor of the plaintiffs.

      George V. Brower, for app’lt; Lockwood & Hill and Randolph H. Cole {John L. Hill, of counsel), for resp’ts.
   Cullen, J.—This

is an appeal from a judgment in favor of the plaintiffs, entered on a decision of the court at special term. The action is to compel the specific performance of a contract for the sale of land. The substantial question litigated on the trial was the validity of plaintiffs’ title to the land agreed to be sold. On tills appeal the appellant raises further questions as to the form of the judgment entered, and as to the effect of the death of Agar, one of the original plaintiffs and vendors.

Before we deal with the main objection to the plaintiffs’ title, it will be convenient to dispose of some minor objections to it. First, it is objected that there are two outstanding mortgages on the property. Such was the fact. But both mortgages were past due and payable at the contract time for passing the title. Before that time defendant had notified plaintiffs that it objected to the title on other grounds, and would not complete the purchase. It was not necessary for the plaintiffs to pay off these mortgages in advance, knowing the sale was not tobe consummated. On a sale of real estate it is only necessary that at the time of passing title the property shall be free from incumbrances. The delivery of the deed and the payment of the purchase money are simultaneous acts. The vendor whose property is subject to incumbrance is not bound to raisé money and pay the incumbrance in advance. If he produces the holder of the lien, • ready to satisfy it on payment, he can rely on the purchase money as the fund for such payment. Both mortgages being due, we must assume that the plaintiff could have produced the mortgagees, ready to satisfy the mortgages, had the plaintiff been willing to pay the purchase money.

A secónd objection is a consent given by the plaintiffs that a street railroad in front of the premises might be operated by electricity. The premises described in the contract do not include the adjacent half of the street. Apart from this, the railroad was in operation at the time of the execution of the contract. We think that in case of street or elevated railroads in actual operation in front of property it must be assumed that, so far as the consent of the property holder is necessary, it has been given, and that the contract of sale is made subject to the open easement of the railroad, as is the rule in the case of a highway.

A further objection is made on the'fact that the building erected on the premises to a slight extent encroaches upon the highway. It is a sufficient answer to this that the trial court held that all objections to the title were waived except that as to the defeasible character of plaintiffs’ title, arising from their position as trustees of the Long Island Savings Bank. There is no statement that the case contains all the evidence, .and hence we cannot review this question of fact.

The premises agreed to be sold were formerly the banking house of the Long Island Savings Bank of Brooklyn, and its property. In the year 1877 the bank became embarrassed. The attorney general brought an action on behalf of the People to dissolve the bank and appoint a receiver. To avoid a receivership, the trustees of the bank proposed to the depositors that they would pay to such of them as wished their money immediately eighty per cent, in cash, and to the others the full amount of their deposits in six, twelve, eighteen and twenty-four months, the trustees personally guaranteeing such payment, and agreeing to' pay any surplus that might arise from the assets of the bank to the depositors pro rata. On proof of the acceptance of this proposal by ninety-four per cent, of the depositors, and the filing of the personal undertaking of the trustees to carry out its terms, the court denied the motion to appoint a receiver, and directed the trustees to make the payments provided for. The bank thus went into liquidation under the management'of its trustees. By October, 1879, substantially all of the eighty per cent, class had been paid in full, and seventy-five per cent, paid to the 100 per cent, class. The principal remaining asset of the bank was its banking house, which, in the state of the market, appeared unsalable, though money had been raised on it by mortgage. On an application stating these facts an order was made by the court extending the time'of payment of the final twenty-five per cent. Parts of the last dividend were paid from time to time, and extensions obtained from the court as to the remainder; the three original plaintiffs and one Delano advancing the balance — $20,000 — to make the payment. Finally, in October, 1884, the court directed a sale of the banking house at public auction, .by Ogden, vice-president of the bank. The order gave leave to any of the trustees of the Long Island Savings Bank to purchase the property, and directed that out of the proceeds there first be paid the remaining unpaid deposits, and then the advances made by the plaintiffs and Delano. At the sale held under this order the property was bought in for the plaintiffs for the sum of $88,000. This sale was not reported to the court till 1893, when an order was made confirming the sale. The plaintiffs, in 1893, made their contract to sell the property for the sum of $201,600. The objection is made that this purchase by the plaintiffs is voidable. The general rule that trustees cannot purchase the trust property, or deal with it for their own advantage, is unquestionable. But to this rule there is a well-recognized exception,—that where a trustee has a personal interest to protect, he may, by order of the court, purchase at its sale, and acquire a valid title. Scholle v. Scholle, 101 N. Y. 167. It is clear that the sale here had was a judicial sale, and that there was a proceeding in court in which the plaintiffs could apply for leave to purchase. The action brought by the People was, in effect, to liquidate the bank. The agreement between the trustees and depositors was not an agreement made out of court, and that could only be enforced in an independent action by depositors. While the motion for a receiver was denied, the action was not discontinued, nor did the defendant recover judgment. The order of the court was that the bank be liquidated. It is true, the liquidation was to be made in an exceptional manner, the court considering that the depositors would fare better by the manner proposed than by a receiver, and the depositors being of the same opinion. Nevertheless, the liquidation was a liquidation under the order of the court to the same extent as if made by a receiver, for the court had power to make such an order. People v. Ulster Co. Sav. Inst., 64 Hun, 434; 46 St. Rep. 748, affirmed 133 N. Y. 689; 45 St. Rep. 933. There was, therefore, at the time the order of sale was made, a judicial proceeding pending in full integrity, in which both a sale could be ordered and the plaintiffs be given leave to purchase thereat. In such sale all the trustees had an interest to protect the contingent liability on their undertaking, and the plaintiffs had a further special interest,—their advances to the bank, then about $33,000.

It is claimed that the order granting the plaintiffs leave to purchase was ineffectual and irregular, in that it was made without notice of the application. Whatever force may have been originally in this objection, it has been obviated by the order of the court confirming the sale. The case is not similar to one where the trustee alone is a party to the action, and the cestuis que trustent are not parties. There no order made without notice to the cestuis que trusient could bind them. In an action to dissolve and liquidate a corporation all creditors or stockholders are in one sense parties, and before the court. They are represented by the attorney-gen eral, and by the receiver when one is appointed. All the creditors are subject to the summary jurisdiction of the court' in the distribution of the estate of insolvent corporations. Attorney General v. North America Life Ins. Co., 91 N. Y. 57; Attorney General v. Guardian Mut. Life Ins. Co., 77 id. 272; Innes v. Lansing, 7 Paige, 584. The order of confirmation was made on notice to ‘the attorney general. Thereafter a creditor named Hannah intervened on petition stating the facts relative to the purchase by the plaintiffs, and applied to vacate the order of confirmation, and to declare the purchase voidable or void. This application was denied, except so far as it permitted the depositor to intervene. The order denying the application was affirmed by the court of appeals, and the order of confirmation stands in full force. If we are right in our position that the sale was a judicial sale, and that it was had in a judicial proceeding to which all the cesiuis que trustent were parties, we cannot see how the title acquired by the purchasers on such sale can now be impeached.

Alexander Agar, originally a plaintiff, and one of the vendors died after trial and before decision ; therefore no decision could be made as to him. But we think it was not necessary to revive the action as to his heirs and personal representatives. The contract on the part of the vendors, was joint, not several, to convey or cause to be conveyed to the vendee the entire title, not each to convey his several shares therein; and a single payment of the purchase money was to be made. The rights and obligations of the contract devolved on the survivors. If the survivors could give a full title, we do not see why they could not proceed with the action. On the trial the plaintiffs produced a deed, properly executed, and acknowledged by the three vendors, and tendered it to the defendant. Upon the defendant’s refusal to accept it, it was, under the order of the court, deposited with the clerk for the the defendant’s benefit. This was a delivery in escrow, and it is settled by authority that in such case the death of any of the parties before delivery to the grantee will not defeat the validity of the deed. On complying with the judgment, the defendant will be entitled to the deed, and acquire the title of Agar, despite his death. Hunter v. Hunter, 17 Barb. 25; Ruggles v. Lawson, 13 Johns. 285.

If the decision below is correct on the question of title, then the form of judgment is proper. As already said, all the defendant was entitled to was to have the mortgages satisfied when it paid the purchase money. As it will not pay the purchase money except on compulsion, and even that to be delayed by appeal, there is no justice in compelling the plaintiffs to discharge these mortgages, and lie out of the money, it may be, for years. It is as easy for the defendant to pay the money to the mortgagee in satisfaction of the mortgages as to the plaintiffs in satisfaction of the purchase price. If it contends that such was not its contract, the answer is that the variance is caused by its own fault. .

The judgment appealed from should be affirmed, with costs.

All concur.


author: O’Brien, J.

text:
    In the Matter of the Worthington Company.

      (Supreme Court, New Fork Special Term,

      Filed June 22, 1894.)

    Receiver—Sale—Standard literature.
    The court will not prohibit, in the hands of a receiver, the sale of rare and costly editions of the Arabian Nights and other similar standard literary works on the ground of coming under the designation of immoral literature.
    Application by receiver for instructions as to disposition of certain books.

      James M. Fisk, for receiver; Anthony Comstock, opposed.
   O’Brien, J.

After consultation with some of my brethren, we have concluded that the following views should be expressed concerning the merits of this motion: This is an application made by the receiver of the Worthington Company for instructions concerning the final disposition of certain books which were found among the assets of that company, and which are now in his custody, and respecting which it is alleged by certain parties that they are unfit for general circulation, and come under the designation of “immoral literature,” and as such should be-excluded from sale. That these books constitute valuable assets of this receivership cannot be doubted, and the question before the court for decision on this motion is whether or not they are of such a character as should be condemned and their sale prohibited. The books in question consist of Payne’s edition of the Arabian Nights, Fielding’s novel, Tom Jones, the works of Babelais, Ovid's Art of Love, the Decameron of Boccaccio, the Heptameron of Queen Margaret of Navarre, the Confessions of J. J. Bousseau, Tales from the Arabic, and Alladin. Most of the volumes that have been submitted to the inspection of the court are of choice editions, both as to the letter press and the bindings, and are such, both as to their commercial value and subject matter, as to prevent their being.generally sold or purchased, except by those who would desire them for their literary merit, or for their worth as specimens of fine book-making. It is very difficult to see upon what theory these world-renowned classics can be regarded as specimens of that pornographic literature which it is the office of the Society for the Suppression of Yice to suppress, or how thej1can come under any stronger condemnation than that high standard literature which consists of the works of Shakespeare, of Chaucer, of Laurence Stern, and other great English writers, without making reference to many parts of the Old Testament Scripture, which are to be found in almost every household in the land. The very artistic character, the high qualities of style, the absence of those glaring and crude pictures, scenes and descriptions which affect the common and vulgar mind, make a place for books of the character in question, entirely apart from such gross and obscene writings as it is the duty of the public authorities to suppress. It would be quite as unjustifiable to condemn the writings of Shakespeare and Chaucer and Laurence Sterne, the early English novelists, the playwrights of the Bestoration, and the dramatic literature which has so much enriched the English language, as to place an interdict upon these volumes, which have received the admiration of literary men for so many years. What has become standard literature of the English language—has been wrought- into the very structure of our splendid English literature—is not to be pronounced at this late day unfit for publication or circulation, and stamped with judicial disapprobation, as 'hurtful to the community. The works under consideration are the product of the greatest literary genius. Payne’s Arabian Nights is a wonderful exhibition of Oriental scholarship, and the other volumes have so long held a supreme rank in literature that it would be absurd to call them now foul and unclean. A seeker after the sensual and degrading parts of a narrative may find in all these works, as in those of other great authors, something to satisfy his pruriency. But to condemn a standard .literary work, because of a few of its episodes, would compel the exclusion from circulation of a very large proportion of the works of fiction of the most famous writers of the English language. There is no such evil to be feared from the sale of these rare and costly books as the imagination of many even well-disposeu people might apprehend. They rank with the higher literature, and would not be bought nor appreciated by the class of people from whom unclean publications ought to be withheld. They are not corrupting in their influence upon the young, for they are not likely to reach them. I am satisfied that it would be a wanton destruction of property to prohibit the sale by the receiver of these works, — for if their sale ought to be prohibited the books should be burned,—but I find no reason in law, morals or expediency why they should not be sold for the benefit of the creditors of the receivership.

The receiver is therefore allowed to sell these volumes.


author: Bartlett, J.

text:
    Stephen B. French, Pl’ff, v. George B. Whittlesey, Def’t.

      (Supreme Court, Suffolk Special Term,

      Filed August 17, 1894.)

    1. Taxes—Sale—Title.
    A tax title based upon an assessment, in which several lots are assessed as a whole instead of separately, is fatally defective.
    2. Evidence—Documentary—Assessment-roll.
    Where the validity of the title is questioned, an assessment-roll, which has been in the custody of the county treasurer for twelve years, is admissible in evidence. „
    3. Taxes—Warrant.
    The tax warrant was held, in this case, not to authorize the collector to proceed personally against a non-resident owner.
    Action to prevent, on grounds of superior title and fraud, the foreclosure of a mortgage on land purchased by plaintiffs assignor at a tax sale.

      Daniel 0. Robbins, for pl’ff; B. K. Payne, for def’t.
   Bartlett, J.

On June 12, 1878, Christopher 0. Loomis, a non-resident of this state, was the owner of a house and 2£ lots of land in Sag Harbor. On that date he made a mortgage covering these lots, and other lands in the town of East Hampton, to George D. Whittlesey. The Sag Harbor lots were subsequently sold by the county treasurer for the non-payment of taxes. George 0. Campbell became the purchaser, and subsequently assigned his rights as purchaser to Stephen B. French. Mr. Whittlesey in 1892, took proceedings to foreclose his mortgage by advertisement; and the present suit was instituted by Mr. French to prevent the foreclosure of that mortgage, and procure its cancellation, so far as it affects the Sag Harbor lots, on two grounds'—First, because his tax title is superior tp that of the mortgagee; and, secondly, because the mortgage was fraudulent and void.

There is no evidence in the case which would tend to support a finding that there was any fraud in the making of the mortgage. I so held upon the trial, and in this view the learned counsel for the plaintiff acquiesced. The only question that remains for consideration, therefore, is the validity of the plaintiff’s tax title.

The title cannot be defeated by the application of the doctrine laid down in the case of Sanders v. Downs, 141 N. Y. 422; 57 St. Rep. 580. The ground upon which that case was decided at special term was that the name of the nonresident owner was placed upon the assessment-roll in such a position that the warrant to the tax collector amounted to a direction to that officer to proceed against the owner personally in order to enforce payment of the tax. It did not seem to me possible, in that case, upon any fair construction of the contents of the assessment-roll, to 'say that the name of Mr. Sanders was placed where it was placed, simply as a part of the description of the property assessed. It appeared in a different column, wholly separated from the description. In the present case, however, .there is no such separation. In order to make no mistake on this point, I concluded to defer my decision until I should again have an opportunity to visit Riverhead, and make a personal inspection of the assessment-roll, inasmuch as the copy furnished to me with papers and briefs were not a fac simile of the entries relating to the property in suit. An examination of the book itself, which I made while holding the spring circuit, shows that the name of Mr. Loomis was really used only as a part of the description of the property. That description is not wholly in the column headed “ Description of Property,” but runs across, into the column preceding it. The warrant to the collection of the town of East Hampton directs him to proceed, by distress and sale for the nonpayment of taxes, against “ those persons named in the assessment-rolls, other than such personé as aré named as a part of the description of the lands of nonresidents described therein.” The name of Mr. Loomis appears in such a position that I do not think it would occur to any officer that this direction in. the warrant authorized him to proceed personally against Mr. Loomis. The mere presence of his name in the description constitutes no objection whatever to the validity of the assessment. In Sanders v. Downs, supra, the court of appeals itself says: “There certainly can be no objection to the insertion of the name of the nonresident nor of lands in the second column, for the purpose of describing or identifying the lands, and in many cases that may be necessary.”

See, also, Collins v. Long Island City, 132 N. Y. 325; 48 St. Rep. 427.

But a much more substantial objection to this assessment exists. 'The property is described as consisting of a house and 2% lots. Where the land to be assessed is a tract which is subdivided into lots (and description in this case clearly indicates that this is such land), the law makes it the duty of the assessors to set down in the second column of the roll, and opposite the number of each lot, the quantity of land therein liable to taxation, and to set down in the third column, and opposite the quantity, the valuation of such quantity. 1 Rev. St. p. 391, § 12 ; 3 Birdseye’s St. 2964. The assessors of Bast Hampton, in-disregard of this requirement of the statute, assessed the value of the 2^ lots as a whole, placing it at $400, and imposing upon it á tax of $5.32. This action on their part seems to constitute a fatal defect in the proceedings. The case in this respect closely resembles May v. Traphagen, 139 N. Y. 478; 54 St. Rep. 726. There the defendant’s lands, consisting of two lots, were included in one valuation, and subjected to a gross tax. The property was situated in Brooklyn, but the charter requited the assessors to follow the provisions of the general law, which prescribed a separate statement of the value of the land to be assessed. It was held that their failure to do this, and make such separate statement, rendered the assessment void. “The purchaser takes at his peril the title offered to him,” said the court of appeals in this case, “and depends upon the strict right of the public officer to sell. That right rests upon a succession of steps, which must have been substantially taken to reach the result. The failure in the present case to separately state the value for assessment of the premises in question amounted in law to a failure to impose any tax which the owner could be held for.” In view of the well-established rule requiring substantial compliance with the assessment laws as the basis of a valid tax title, I do not see how. the plaintiff can prevail in this action. This conclusion assumes the sufficiency of the evidence laid before me upon the trial as to the authenticity of the assessment roll, the contents of which have been considered. In their brief, the learned counsel for the plaintiff insists that the assessment roll was not properly proved, and should not have been received by ■the court. It appeared, however, from the testimony of the present county treasurer, that the papers had been in his custody during the 12 years of his official service as public records, and the book in which the entries in question were contained purported to be an account of unpaid taxes of the year 1875 on the lands ■of nonresidents in the town of Bast Hampton. The description in the entry is precisely the same as that found in the plaintiff’s deed, and there are pencil memoranda on the page referring to the sale to Mr. Campbell, his predecessor in title, and also to the assignment to the plaintiff himself. The evidence indicates, beyond any doubt whatever, that this assignment roll is the foundation of whatever title the plaintiff has ; and I think that, produced as it was from the official records in the county treasurer’s office, it was sufficiently authenticated to be admissible in evidence.

There must be judgment for the defendant, dismissing the complaint, but without costs.


author: Daly, O. J.

text:
    Louis Bonadoa, by Guardian ad Litem, etc., Pl’ff, v. Third Avenue Railroad Company, Def't.

      (New York Common Pleas, Special Term,

      Filed September 7, 1894.)

    Parties—Forma pauperis—Infants.
    An infant, whose father is a person of ample means, may sue as a poor person.
    Motion for leave to sue as a poor person.

      Kirk & Schwarz, for pl’ff; Hoadly, Laulerbach & Johnson, for def’t.
   Daly, O. J.

Petition for leave to sue as poor person. I am constrained by a late decision of this court, at special term, Shapiro v. Burns, 7 Misc. Rep. 418; 58 St. Rep. 479, to grant this application of the infant plaintiff for leave to sue as a poor person. But I am of opinion that the case was never within the intention of the legislature, for the term “poor person” cannot be construed to include a child whose pa'rent is possessed of ample means to prosecute bis action. Such á child is not “an object of charity a judicial definition of the term “poor person,” as adopted by the courts. Isnard v. Cazeaux, 1 Paige, 39. As a condition of the order, the attorney and counsel of the plaintiff must stipulate to-prosecute the action without compensation, except taxable costs, and proof must be produced that there has been no agreement nor-understanding for compensation. When such stipulation and proof are produced, the plaintiff’s motion will be granted, and the-defendant’s order for security will be vacated.

No costs of this motion.


text:
    Bechtle, Pl’ff, v. Manhattan Railway Company, Def’t.

      (New York Common Pleas, Special Term,

      Filed May, 1894.)

    Parties—Forma pauperis—Committee of Lunatic.
    The committee of a lunatic cannot sue as a poor person.
    Motion for leave to sue as a poor person.

      E. P. Bullard, for the motion; Davis, Stone & Amerbachr opposed. '
   Bischoff, J.

Section 460 of the Code makes it mandatory upon the court to allow a party to sue as a poor person, in a case where the required facts are made to appear. Shapiro v. Burns, 31 Abb. N. C. 144. But these applications are not encouraged, and the statute is to be construed strictly. Moore v. Cooley, 2 Hill, 412; Brown v. Story, 1 Paige, 588. -That the statute relates to personal actions, and, with the expressed exception in the case of an infant suing by guardian ad litem, provides no justification for extending its application to persons acting in a representative capacity, is, I think, apparent upon a careful reading. Code Civ. Proc., § 458 et seq. With regard to responsibility for costs, a committee of a lunatic is placed in the same .category with administrators and other representative parties. Code Civ. Proc., § 3271. And I can find no more justification for granting such an application upon motion by a committee than would exist in a case where an administrator so petitions. Such a petition the special term has denied. In re Bengtoon, Law J., Feb. 8, 1894, per Pryor, J. Motion denied. No costs.


text:
    Frederick L. Degener, Pl'ff, v. John T. Underwood et al., Def’ts.

      (New York Superior Court, Special Term,

      Filed May, 1894.)

    1. Costs—Term fee—Court of appeals.
    But one term-fee can be charged for each calendar year on an appeal to the court of appeals, excluding the term at which it is argued or otherwise disposed of.
    2. Same—Damages of five per cent.
    Damages of five per cent, allowed on an affirmance by the court of ap- ■ peals, should be computed on the principal amount of both judgments below.
    Motion for re-taxation of costs.

      James A. Hudson, for the motion; J. E. Hidden, opposed.
   McAdam, J.

This court in Becker v. Railway Co., 30 N. Y. Supp. 400, following Palmer v. De Witt, 42 How. Pr. 466, and Powell v. N. Y. C. & H. R. R. R. Co., 3 N. Y. Supp. 763, held that but one term fee can be charged on an appeal to the court of appeals for each calendar year, and that the term at which the cause is argued or otherwise disposed of must be excluded. The cause went on the calendar in 1893, and was. argued in 1894; so that but one term fee, instead of three, was taxable. Twenty dollars must therefore come off the bill.

The court of appeals affirmed the judgment of the general term, with costs and five per cent, damages. This percentage should be computed upon the amount of both the judgments below, but not upon the interest accrued upon the judgments, Adams v. Perkins, 25 How. Pr. 368. The respondent exacted a percentage on the interest, as -well as the damages awarded by the original judgment; and this excess, after charging interest on the general term judgment, must be deducted. . If the respondent returns to the appellants’ attorney the $20 aforesaid and the excess of'interest, as before suggested, the application for a retaxation will be denied; otherwise it will be granted, with costs. Settle order on notice, and specify in the order to be settled the specific amounts to be returned.


author: Andrews, J.

text:
    Vermont Marble Works, Pl'ff, v. Wilkes, Def’t.

      (Supreme Court, New York Special Term,

      Filed June 11, 1894.)

    Contempt—Supplementary proceedings—Receiver.
    It is a contempt of court for the judgment debtor to interfere with tbe collection, by the receiver, of rents of his real property not occupied by himself.
    Motion to punish- defendant for contempt.

      Robert J. Mahon, for pl’ff; James Kearney, for deft.
   Andrews, J.

It has been held that, where a judgment is a lien upon real estate, the creditor must first endeavor to collect the judgment by the sale of the property under an execution, and that the court will not order the defendant to deliver possession of the property to the judgment creditor. Bank v. Gaynor, 67 How. Pr. 421; First National Bank v. Martin, 40 Hun, 571; 18 St. Rep. 414. Nevertheless, § 2468 of the Code declares that the real property of the judgment debtor is vested in the receiver from the time when the order appointing the receiver, or a certified copy thereof, is filed with the clerk of the county where such property is situated. It appears by the moving papers that the order appointing the receiver has been filed in Kings county, where certain real property of the debtor' is situated, but that he has forbidden the tenants to pay their rents to the receiver, has forcibly prevented the receiver from ascending the stairs of one of the houses by pushing him away with his hands, has prevented the receiver from entering another of the houses by closing and locking the door thereof; and, although the debtor has been shown a certified copy of the order appointing the receiver, he has prevented the latter from performing his duties as such receiver. It may be true that the receiver cannot of his own accord sell such property, and that the court will not direct him to sell the same, thereby depriving the debtor of the right to redeem, which he would have if the property were sold under an execution; and it may also be true that, under the decision above cited and some others, the court would not, if it were asked to do so, direct the debtor, if he were occupying the premises, to deliver possession thereof to the plaintiff. The premises, however, are not occupied by the debtor himself, but by certain tenants; and, as the title of the property it vested in the receiver, it seems to me that the latter is entitled to receive the rents; and that, if an application were made under rule 78, the court would, of course, direct the tenants to attorn to the receiver. Under these circumstances, the active interference of the debtor in preventing the tenants from paying their rent to the receiver, and in preventing the receiver from entering upon the premises and from performing his duties, is a contempt of court. An order may be entered imposing a fine- .of $100 upon the debtor, and directing that he be committed until the same shall be. paid. The order will be settled on notice.


author: MoAdam, J. Per curiam.

text:
    Ann McDonald, App’lt, v. Bryan O’Hara, as Executor, etc., Resp’t.

      (New York Superior Court, General Term,

      Filed October, 1894.)

    1. Will-Power op sale.
    The power óf sale fails only when, by reason of a legal and irrevocable election, it becomes extinguished.

      2. Same.
    The rule as to election, in such case, does not apply where one of the beneficiaries is under age and incapable of making a legal election.
    Appeal from an order denying plaintiff’s motion to continue an injunction restraining the defendant, as executor of the will of John T. McDonald, deceased, from selling certain real estate pursuant to the direction contained in said will.

      James Kearney, for app’lt; William J. Lacy, for resp’t.
   The opinion filed below is as follows:

MoAdam, J.

The fourth clause of the will directs the executors to sell; the power is mandatory. Delafield v. Barlow, 107 N. Y. 585; 12 St. Rep. 494. While it is true that when the same person is exclusively entitled to a fund, whether in its unconverted or converted shape, such person being of full age and competent to act, he has the right to take it in its unconverted form; see Story’s Eq., § 793, and cases cited in 69 N. Y. at p. 5; 79 N. Y. 478; Greenland v. Waddell, 116 N. Y. 234; 26 St. Rep. 667; Mellen v. Mellen, 139 N. Y. 210; 54 St. Rep. 670; the rule cannot be applied here because one of the beneficiaries is .under age and incapable of. making a legal election. Such an election without the concurrence of all the beneficiaries cannot extinguish the power of sale, for the divided will of part only does not reconvert the money into land, so as to take it out of the operation of the specific purposes of the will, as declared by the testator, and make it vest as land. Indeed, the action is not on the theory that the money has been reconverted into land, but that the present is not the best time to dispose of the property. The time of sale rather than the right of sale is called in question. The power of sale fails only when by reason of a legal and irrevocable election it becomes extinguished. As the necessary concurrent act of election is wanting, the surviving executor, cannot be enjoined from carrying out literally the provisions of the will, which are his dominating guide. The protests filed by the adults against a sale at the present time ought to have great weight with the executor, but they do not give rise to the equitable relief claimed. It follows that the motion to continue the injunction must be denied, with $10 costs to abide the event.

Per curiam.

The order appealed from is affirmed, with costs, upon the opinion filed by the learned judge below.


text:
    William J. Brewster, App’lt, v. George H. Wooster, Resp’t.

      (New York Superior Court, General Term,

      Filed October, 1894.)

    1. Costs—Security—Additional.
    In the absence of an abuse of judicial discretion, an order for additional security for costs to be given by non-resident plaintiff, may be granted.
    2. Same.
    That the undertaking first given exceeds the sum of $250, is immaterial.
    Appeal by plaintiff from order requiring additional security for costs.

      Arnoux, Bitch & Woodford, for app’lt; T. B. Browning, .for resp’t
   McAdam, J.

On September 28,1892, the court, upon the defendant’s motion, required the plaintiff a non-resident of the state, to file security for costs in the sum of $1,000. This order was complied with. Subsequently, and on June 20, 1894, the court, upon like motion, made a further order, requiring the plaiutiff to made a deposit of $500 or give an additional undertaking for costs in that amount.

The appeal is from the order last referred to, and is founded on alleged want of power in the court, as well as upon abuse of discretion.

Section 3276 of the Code in reference to “ security for costs,” provides that “ At any time after the allowance of an undertaking given pursuant to such an order, or-as prescribed in § 3273 of this act, or after notice of the payment into court pursuant to such an order, the court or judge thereof, upon satisfactory proof that the sum specified in the undertaking, or thp amount of such payment is insufficient” * * * “must make an order requiring the plaintiff to give an additional undertaking, or make an additional payment into court.”

The moving affidavit proved that there had been four trials of the action, two general term arguments, and one appeal to the court of appeals, and that at the last trial the defendant’s costs as taxed, including an allowance, aggregated $1,245.

Under such circnmstances, there was clearly no abuse of judicial discretion in requiring the plaintiff to furnish security, as a nonresident, in the sum of $1,500; and this is the sum of the two undertakings required.

The appellant contends that if the undertaking first given exceeds in amount the deposit required by § 3272 ($250), there is no warrant for an additional undertaking. The Code provisions are not so limited, and will not bear such restricted construction. Section 3272 does not prescribe the amount of the undertaking, but § 3273 does, by requiring that “ the undertaking, specified in the last section, must be executed to the defendant by one or more securities, and must be to the effect that they will pay, on demand, to the defendant, all costs which may be awarded to him in the action, not exceeding a sum, specified in the undertaking, which must be at least $250.”

The Republic v. Soto, 112 N. Y. 310, referred to by the appellant, was decided in 1889, two years before the Code amendment of 1891, and is inapplicable not only on that account, but also for the reason that no deposit was made here at it was there.

The Code provisions cited show clearly that the court had jurisdiction to require the additional undertaking, and acted strictly within the limits of the power conferred ; and, there being no abuse of discretion, it follows that the order appealed from must be affirmed, with costs.

Freedman, P. J., and G-ildersleeve, J., concur.


text:
    National Board of Marine Underwriters App’lt and Resp’t, v. National Bank of the Republic, App’lt and Resp’t.

      (New York Superior Court, General Term,

      Filed October, 1894.)

    1. Cross appeals—Determination.
    Upon cross appeals, the court may dispose of both, by rendering such judgments thereon by way of affirmance, reversal or modification, as the • nature of the case and justice require.
    2. Same.
    The rule that, where a new trial is ordered as to part, it should be so directed as to all, of the plaintiff’s demand, does not apply to a case of cross appeals.
    The plaintiff recovered judgment against the defendant, after a trial had before a referee, and both parties appealed; plaintiff, on the ground that the referee should have awarded <$4,914.62, instead of $2,803.27, the sum allowed; and defendant, on the ground that even the reduced sum was an excessive recovery.
    The court determined (1) on the plaintiff’s appeal, that the judgment was not inadequate, and disposed of such appeal by affirming the judgment as against the plaintiff. (2) It determined on the defendant’s appeal that the judgment was excessive, and that it must be reversed and a new trial had, unless the plaintiff stipulated to reduce the recovery from $2,803.27 to $1,370.42, in which case the judgment for that amount would be affirmed. Proper provision was also made as to the costs upon the two appeals.
    The plaintiff agreed upon the form of the general term order. Plaintiff, however, declined to stipulate to reduce the recovery; so that one judgment was entered on the order, affirming the judgment on the plaintiff’s appeal, but awarding a new trial on the defendant’s appeal. (See 60 St. Rep. 625; 29 Supp. 698.)
    The plaintiff now moves to resettle the order by having it contain the simple award of a new trial. .

      G. A. Black, for motion; Hastings & Gleason, opposed.
   McAdam, J.

Although the referee reduced the plaintiff’s demand to $2,803.27, either party aggrieved by the decision had the right to appeal; the plaintiff for inadequacy, and the defendant because the judgment,- even in its reduced form, was excessive. (Code, § 1294). Such a right was sustained in Monnot v. Merz, 60 N. Y. Supr. Ct. R. 256; 43 St. Rep. 59; aff'd. by ct. of appeals, 131 N. Y. 646.

In that case as in this, the defendant claimed that, notwithstanding a deduction made in the plaintiff's demand by the referee, the judgment was still excessive. The court of appeals made a further deduction on the defendant’s appeal. The plaintiff also appealed from the same judgment, on the ground that certain other deductions allowed by the referee from the plaintiff’s claim should have been disallowed. An application to dismiss the plaintiff’s appeal was denied. 60 N. Y. Supr. Ct. R. 256; 43 St. Rep. 59, supra. The appeals were heard separately, and the plaintiff succeeded upon his appeal in this court. 46 St. Rep. 251; 18 N. Y. Supp. 280, and in the court of appeals as well. 138 N. Y. 673; 53 St. Rep. 932.

In the case cited, as in the one under review, there were double appeals, and the court was called upon to hear each and to render appropriate judgments upon both. See also Genet v. Davenport, 60 N. Y. 194. The judgment directed by the referee in this case, as in those cited, was founded upon items easily distinguishable and separable, so that the general term could readily determine which constituted liabilities against the defendant, and which were not of an enforceable character, that final judgment might be rendered thereon.

The order sought to be resettled declares the judgment rendered by the general term upon both appeals, and it could not have been well expressed in any other form.

The plaintiff’s argument is that as a new trial was ordered as to part of the plaintiff’s demand, it should have been so directed as to all, and Goodsell v. Western U. Tel. Co., 109 N. Y. 147; 15 St. Rep. 73, is cited to sustain his contention. It will be found on examination, that in that case, as well as in the authorities therein cited, there was but one appeal taken from the original judgment, and it was held, that upon such an appeal there could not be a new trial as to part of an entire demand, and an affirmance as to the residue, leaving a fragmentary part to be tried in the court below and the residue to go to the court of appeals. But the principle decided there does not reach the question in the form in which it arises here, nor.has any reported case been called to our attention which holds that. upon double appeals such as were taken in this instance, the court cannot dispose of both, by rendering such judgments thereon by way of affirmance, reversal or modification, as the nature of the case and justice require.

For these reasons, the motion to resettle the order must be denied, with ten dollars costs.

Freedman, P. J., and G-ildersleeve, J., concur.


text:
    Leslie H. Crouch, Pl’ff, v. Addison H. Hoyt, Def’t.

      (New York Superior Court, Special Term,

      Filed September 15, 1894.)

    Attorney and client—Lien.
    Under § 66 of Code, an imprisoned defendant is not entitled to a discharge until the fees of plaintiff’s attorney have been paid, though plaintiff has consented to such discharge.
    'Motion to discharge defendant from imprisonment.

      Josiah T. Lovejoy, for pl’ff; R. J. Haile, for def’t.
   McAdam, J.

The defendant was incarcerated" August 23, 1894, under an order of arrest granted by Judge Freedman. Since then the plaintiff has relented, executed a general release to the defendant, and Consented to his discharge from imprisonment. Josiah T. Lovejoy, the attorney for the plaintiff, objects to the defendant’s discharge on' the ground that his fees in the action, amounting to $250, have not been paid. Section 66 of the Code gives the attorney who appears for a party a lien upon his clients cause of action, which cannot be affected by any settlement between the litigants. This lien extends to all provisional remedies or securities given in the action after its commencement. Therefore, there can be no valid discharge of the defendant, who is totally impecunious, until the attorney who incarcerated him sees fit to consent, and this counsel absolutely refuses to do. This is- a sad casé, but the court can extend no aid.

Motion to discharge denied.