text:
    Charles Jones et al., Resp’ts, v. The Mayor, etc., of the city of New York, App’lt.

      (Supreme Court, General Term, First Department,

      Filed May 13, 1887.)

      1. New York city—Board or health—Liability op city por acts op.
    The plaintiffs were engaged in the construction of a certain sewer, under a contract, for the defendant. In the construction thereof, at two certain places, it was necessary to interrupt during the time the work was being done, the flow and discharge of the water of a certain brook. This interruption produced a pool of water which was unhealthy, and the board of health by an order and other proceedings compelled the plaintiffs to cease the obstruction of the flowage of said water, and thereby interrupted the work at those places during certain months in the summer. This action was brought to recover damages from the defendant by reason of the said delays. Meld, that the board of health was not subordinate to the defendant. That it exercised its own judgment without reference to the defendant, or any of its agents, officers or servants. That as the plaintiffs were interrupted in the construction of the sewer by the order and interference of the board of health the defendant was not responsible for t!ie consequences. Following New York and Brooklyn Sam) Mill Co. v. Brooklyn, 71 N. Y., 580.
    :2. Contract—Construction op.
    It was provided in the specifications forming a part of the contract that an work should he executed in a workmanlike manner and should be commenced and carried on at such points and in such order of precedence, and at such time and seasons as might from time to time be directed by the engineer. It also provided that “the prosecution of the work may be-suspended at such time and for such periods as the board of commissioners of the department of public parks may from time to time determine." Held, that the engineer acting under the authority of the department had ample authority to direct the suspension of the work. That as they did so-direct, the defendant was not liable.
    Appeal from a judgment recovered on the report of a. referee.

      jD. J. Dean, for app’lt; Theron Gr, Strong, for resp’ts.
   Daniels, J.

The plaintiffs were engaged in the construction of a sewer from a point at tide water to One Hundred and Sixty-fifth street, in the Twenty third ward of the city of New York, under a contract made and executed in October, 1870. The work was commenced in the following month and progressed until the summer of 1873, when it was suspended in part in consequence of an order made by the board of health on the 20th of June, 1878, and in part by orders of the inspector and engineer in charge of. the work. These several orders related to but two points-traversed by the sewer. There were, it is true, other orders of a more informal character interfering with the progress of the work at other points, but they were temporary in their effect and included only such directions as in the judgment of the inspector and engineer it was necessary to-give for the proper performance of the work. The two-points to which the more formal orders related included, only the crossing by the sewer of One Hundred and Thirty-eighth street and One Hundred and Fifty-sixth street. It-was about 10,000 feet in length and at these points intersected a stream known as Mill brook. The sewer them was to be constructed through the bed of the brook, interrupting for the time the flowage and discharge of its water. This brook drained a territory of about twenty-five acres, including the larger part of the village of Melrose. Sewerage was discharged into it, polluting its waters, and a prominent purpose of the sewer was to receive and discharge this water. By the interruption of the stream the-water overflowed low ground in the vicinity of One Hundred and Fifty-sixth street, and as it was inclined to putridity, it was believed by the health department of the-city that its detention in that manner would be productive of sickness and disease in the neighborhood. For that-reason, at a meeting of the board of the "health department-of the city, on the 20th of June, 1873, an order was made-directing the removal of all obstructions in the channel of the water course at or near the point of its intersection with One Hundred and Fifty-sixth street. This order was-regularly made under section 14 of chapter 74 of the Laws-of 1866, which, while it related in its language to the-Metropolitan Board of Health, it was applied and made applicable to this board of health by section 12 of chapter 757 of the Laws of 1873.

The order was served upon the plaintiffs accompanied by a notice that if within three days after its service the same was not complied with, or on due application suspended or modified, that then the board in its discretion might make an order directing the execution of the order made, at the expense of the plaintiffs, and for which omission a penalty would be incurred by them. The order was not immediately complied with by the plaintiffs, and criminal proceedings were commenced against them for disobeying-its directions, and that resulted in the suspension of so much of the work of constructing the sewer as included the crossing at One Hundred and Fifty-sixth street.

That the work at this point was suspended because of' this order and the proceedings following it, was quite-clearly proven on the trial. The witness, John McQuade, testified that the board of health interfered with the work, while it was in progress. And the plaintiffs’ witness, Charles Jones, further testified that, “at one time the board of health stopped our work in the summer time.” * * * “I think that we stopped there until fall, from sometime in June until cool weather in the fall. That was-the time when the order came from the board of health, and that is the stopping I referred to as at One Hundred and Fifty-sixth street.”

The plaintiffs’ witness Quinn, also, testified, “There were interruptions of the work in regard to several things, but no direct interruptions until May, 1873, the board of health ordered it.”

He was probably mistaken as to the tune, for the reason that the order of the board of health was not made until the twentieth day of June, and he added that, “the order of stoppage from the board of health named a specific point, 156th street.” “ The actual intereference that compelled the contractor to stop came in July. It commenced May twenty-eighth, you might say the work was stopped May twenty-eighth. The order of the board of health stopped the work.” * * * “ The work of constructing the sewer therefore necessarily interfered with the flow of the water, and as a matter of fact backed the water up and caused it toaccummulate in a pond when the stoppage of the work was compelled by the order, which came to the contractors from the board of health.”

This evidence was not contradicted upon the trial, and it must be assumed, therefore, to properly describe the cause to which the suspension of the work at One Hundred and Fifty-sixth street is to be attributed. And this suspension and the delay and expense necessarily produced by it seems to have entered into the allowance made to the plaintiffs by the referee. The evidence of the proceedings of the board of health was given as a part of the plaintiffs’ case, and against the objection of the defendant’s counsel. And they are contained and set forth in the report of the referee, for no other apparent reason than to establish the fact that the plaintiffs were in the performance of the work, for the enhanced expense of which, as it was afterwards performed, the defendant was held to be liable.

It has been urged in support of the judgment that no part of it was recovered for the delay produced by this interference of the board of health, but that the recovery was placed wholly upon the interference of the agents and servants appointed by the defendant to supervise and direct the work. But this position appears to be incapable of being maintained. For by the evidence of the witnesses the time was aggregated during which the work at these points was interfered with and suspended and the increased expense of the labor and material employed has been stated by them in such a manner as to include the suspension of the work at this point and also at One Hundred and Thirty-eighth street as one entire subject. And in the report of the referee he has aggregated the number of days that were stated to have been required and employed for the completion of the work over and above the time that it would have required if no interruption whatever had taken place. And in this respect he has followed the testimony of the witness Guión, who stated that the work without interruption would have been completed in between three and four hundred days, but as it was done, 735 working days were actually devoted to its performance. The order of the inspector made under the authority of the board of commissioners of the department of public parks in no manner relieved this attribute of the case or created a liability of the defendant, for it was not made until the 6th of July, 1873, which was after the order of the board of health had become obligatory upon the plaintiffs and they had been arrested in criminal proceedings for its disobedience and finally concluded to comply with it. This order of the inspector consequently added no weight or effect to the proceedings of the board of health, for it did not itself in any manner contribute to the suspension of the work. That was done by the order of the board of health according to the testimony of the witnesses already extracted from the case.

The board of health was not subject to the dictation or control of the city authorities. It did not sustain the relation of agent or servant to the defendant, but acted wholly in obedience to the laws of the state defining and delegating its authority and declaring its duties. This was done by the application to this board of chapter 74 of the Laws of 1866, as that was amended by succeding legislation including that of 1873 already referred to. The defendant conse-' quently was not liable for this interference of the board of health, or the suspension of the work at One Hundred and Fifty-sixth street, in consequence of its order. In' making the order and taking the proceedings following it, the board acted in no sense in the way of dependence upon the defendant. It was not subordinated to the defendant, and the board exercised its own judgment, as that was influenced by the circumstances, without reference to the defendant or any of its agents, officers or servants.

For that reason, under the well settled principle applicable to the acts of boards of this description, the defendant was not liable for this interference with the work by which its suspension at this point was secured and continued into the fall of the same year. Ham v. Mayor, 70 N. Y., 459; Mayor v. Bailey 2 Denio, 433; Smith v. City of Rochester, 76 N. Y., 506; Maxmilian v. Mayor, etc., 2 Hun, 263; affirmed, 62 N. Y., 160; Donovan v. Board of Education, 85 id., 117; Morrison v. Lawrence, 98 Mass., 219; Barney v. Lowell, id., 570; Fisher v. Boston, 104 id., 87; N. Y. and Brooklyn Saw Mill Co. v. Brooklyn, 71 N. Y., 580, where the principle is stated to be “that a municipal corporation is not hable for the omission to perform, or for negligence in the performance of a public duty laid upon an independent officer, in which it has no private interest, and from the performance of which it derives no special or corporate benefit, although it is required to elect or appoint such officer, and although the officer was in charge, and the negligence imputed in the use of property owned by the corporation.” Id., 504.

So far, therefore, as the plaintiffs were interrupted in the construction of the sewer at 156th street, by the order and interference of the board of health, the defendant was not responsible for the consequences. It was a lawful interference, for the evidence proved the fact to be, and the plaintiffs conceded it in their communication of the 27th of June, 1873, that the interruption of the flowage of this stream had produced a nuisance. And the board of health proceeded, in strict compliance with the law, in declaring it to be so, and ordered the obstruction to the flowage of the to be removed, which, as a matter of fact, suspended the plaintiff’s work at that point.

But, if the damages resulting from this order were not included in the report, and the judgment entered upon it, the recovery still seems to be erroneous. For by the contract-made for the performance of the work, it was to proceed and be performed under the direction of an engineer and assistants appointed for that purpose by the commissioners of the department of public works. And it was provided and declared in section 5 of the specifications forming a part of the agreement, that all work shall be, in every respect, executed in a thorough and workmanlike manner, and shall be commenced and carried on at such points and in such order of precedence, and at such times and seasons as may, from time to time, be directed by the engineer. And this was ample authority for the board and the engineer and assistants acting under, it to direct the suspension, for the time-being, of the work both at One Hundred and Thirty-eighth street and One Hundred and Fifty-sixth street, which is all that they, in form, attempted to do. For this clause of the-specifications invested them with plenary authority to direct, where the work should be commenced and carried on, and the times and seasons in which it should be done. And they did no more than that by the orders of the twenty-seventh of June and the sixth of July, directing the work at One Hundred and Thirty-eighth street to be stopped, until further orders were given, and at One Hundred^ and Fifty-sixth street until further instructions were received, and the heat of the summer season was over.

The order of the engineer himself made on the 27th of June, 1873, was no broader in its effect, as it extended no further than to direct the work at One hundred and thirty-eighth street, between the two ends of the sewer on either side of that street, not to be connected until such time as the department should afterwards specify. In giving these orders the officers acted under the authority of the department. And that by section 65 of the specifications provided in the most general language that “the prosecution of the work may be suspended at such times, and for such periods as the board of commissioners of the department of public works may from time to time determine.” It. was also declared by sub. N. of sec. 67 of the specifications, that Sundays, holidays and such other days on which the prosecution of the whole of the work, in accordance with the provisions of this agreement, as in consequence of the weather necessarily suspend, should b.e excepted from, the two hundred days in which the plaintiffs agreed to complete it. And a cause of the suspension of the work at these points was the existence of the summer season of the year, and of its effect upon this stagnant water. And that, the plaintiffs were willing to acquiesce in that suspension was stated by them in sub-division 5 of their communication of the 27th of June, 1873. For it was proposed in it, as the disturbing of the soil in such a locality during the summer is likely to prove a nuisance, that the commissioners might direct that the work be suspended -until October, or until the warm weather was over. There was no evidence in the case that either the commissioners, or the engineer, or the. inspector acted capriciously or otherwise than according to their best judgment under the circumstances. But the evidence of the witnesses tends very directly to establish the fact that in the directions they gave they had reasons which were deemed sufficient not only to justify, but to require such directions. And as they were authorized by these provisions in the contract to exercise the authority which they did, and suspend the operation of the work at these particular points, the city cannot be held liable for the result to the plaintiffs of that suspension. It was provided for and contemplated that interference and suspensions of the work might take place in the progress of its performance. And as the power to suspend it was reserved by the agreement, there was no violation of the contract in exercising it for which the defendant could be held legally liable in the way of damages.

The suspension for which substantial complaint was made on behalf of the plaintiffs occurred only at these two points. They were left at liberty to go on with the work wherever it was in an incomplete condition, upon the entire residue of the line of the sewer. And it was stated by one of their witnesses that the work remaining to be done, excluding these two points, might be thoroughly put in progress within a graduated period of not exceeding two months, and that at the end of that time they would have been able to have employed all the men they had upon the work when it was suspended at the crossing of the creek over these two streets. Added to that detention what after-wards remained to be done was to change the apparatus and machinery in use at these points to other places on the line of the sewer, where the plaintiffs were at full liberty to proceed with the execution of the agreement and the progress of the work. But without attributing special importance to these circumstances, it is sufficient for this part of the case to say that what was done in the way of suspending the work at these two streets by the officers of the defendants furnished the plaintiffs no legal ground of complaint upon which a recovery of damages for increased expenditures could be sustained against the defendant. It was proposed by a resolution of the department that the plaintiffs should be at liberty when sections of the sewer should be completed, permitting that to be done, and after their acceptance, to turn the water of Mill Brook into such sections. But no action on their part was taken under this, resolution, and it accordingly is not entitled to any special-prominence in the disposition of the case.

But if the plaintiffs could recover for this interference, the-amount allowed seems to have been excessive. It included $17,442.25 paid for labor, and $13,430.15 for materials— more than it is stated would have been expended if the plaintiffs had not been prevented during the summer season to go on and complete these small sections of the sewer crossings in the bed of the stream at One hundred and thirty-eighth street and One hundred and fifty-sixth street. That is all for which in any view the plaintiffs could claim indemnity. And that their expenditures on that account aggregated these large amounts does not seem to be consistent with the limited extent of the interference complained of, or with the evidence given by the plaintiff’s witnesses, or the probabilities of the case itself.

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

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


source: Caselaw Access Project

author: Brady, J.

license: Public Domain

text:
    In the Matter of the Petition of Priscilla C. Drinker et al., etc.

      (Supreme Court, General Term, First Department,

      Filed May 13, 1887).

    Evidence—Admissions—Method of proof.
    An admission cannot be proved by hearsay evidence. The person to whom it was made must be produced, or some good reason recognized by the rules of evidence as sufficient to warrant the introduction of secondary evidence must be given for his absence.
    Appeal from a decree of the surrogate removing a trustee under a will.

      James M. Smith, for app’lt; John S. Davenport, for resp’t.
   Brady, J.

The appellant was charged with misconduct- and dishonesty as the trustee under the will of Hanford Smith, and removed. Upon the investigation before the-surrogate, it appeared that proceedings for a final accounting by her had been referred to Mr. Harland, and the petitioners designing to avail themselves of her examination therein as conducive to the success of their application herein, offered the whole of her testimony. To, this objection was taken, and that being overruled, exception was-also taken. Prior to this incident, M. Adams, the stenographer, who had as such attended the reference in part, was examined to show that the transcript exhibited was made from the notes taken of the testimony, but he admitted that there were four or five sessions at which he did not record the evidence, and of their being the 13th of May, 1882. The transcript embraced the testimony given on that day, which was quite extensive, covering upward of ten printed pages of the record herein, and containing many of the impressive facts, incidents and circumstances on which the appellants relied to show the unfitness of the trustee to discharge her duties, if not to establish her alleged misconduct and dishonesty. The proceeding was one of condemnation, and was necessarily dependent' upon competent proof, aided upon such proof only and which should be exacted perhaps in such a procedure with more than usual vigor. It was erroneous, therefore, to receive the statement mentioned for the reason that it was not properly authenticated. M. Adams did not know that the notes from which it was taken were correct, and could not, and did not, state them so to be. It was hearsay at best, therefore, having been copied from notes not produced and said to have been destroyed, and which were taken by another person, whose absence was not accounted for. It may be that they were correctly transcribed, but this does not meet the objection. An admission cannot be proved in this mode. The person to whom it is made must be produced, or some good reason given for his absence, recognized by the rules of evidence as sufficient to warrant the secondary proof. This was not done, and it cannot be said that the appellant was not prejudiced by the admission of the testimony. It seems, on the contrary, to have been effective and properly so. For this reason the decree appealed from must be reversed, but we think, under the circumstances, without costs, as we are not entirely satisfied that the conduct of the appellant in the management of the estate was what it should have been.

Ordered accordingly.

Van Brunt, C. J., and Daniels, J., concur.


author: Bartlett, J.

text:
    Emily A. West, Resp’t, v. The West Bradley and Cary Manufacturing Company, App’lts—Actions No. 3 and 4.

      (Supreme Court, General Term, First Department,

      Filed May 13, 1887.)

    1. Corporation—Authority of president of insolvent corporation to provide for payment of debts of corporation to his wife.
    Where the president of a corporation, with knowledge or in contemplation of its actual insolvency, provided for the payment of a debt to his wife out of the assets of the corporation to the exclusion of other creditors: Held, his action was unauthorized and cannot be permitted to stand in the way of others having valid claims against the corporate property.
    2. Interest—Compound interest—Agreement to pay.
    An agreement to pay interest upon interest is not valid unless made after the interest which is to bear interest has become due.

      Appeal by claimants Keller and Waterman from order confirming report of referee in surplus money proceedings.

      Thomas N. Rodman, Jr., for app’lts; Francis C. Reed, for pl’ff and resp’t.
   Bartlett, J.

The main question involved in this proceeding relates to the validity of the judgment under which the plaintiff claims to be entitled to the surplus moneys.

The circumstances attending the recovery of that judgment are somewhat remarkable.

In 1878 the defendant corporation being indebted to the plaintiff in a large amount, secured a portion of this indebtedness by making several mortgages, representing :$75,090 in all, to one F. E. Johnson, who assigned them to "the plaintiff.

After these mortgages had been given, there remained to the plaintiff’s credit on the books of the West, Bradley & Cary Manufacturing Company, in May, 1878, a balance of $139.09.

Subsequently and every six months, as interest became due on the company’s mortgages held by the plaintiff, she was credited with the amount thereof on the books of the company. The amount so entered to her credit itself drew Interest from that time, pursuant to on arrangement made -with her by Joseph I. West, her husband, who has been president of the corporation throughout its whole existence. By compounding the interest semi-annually in this way, the balance to Mrs. West’s credit in her account with the company had become $10,410.10 in January, 1885.

As long ago as August, 1873, the claimants Waterman and Keller began a suit against the defendant corporation, which was litigated with varying fortunes for several years, until they finally obtained a report in their favor from the second referee before whom the cause was tried, •on February 26, 1885.

Before they succeeded in entering judgment on this report, Mrs. West managed to recover judgment against the company on the compound interest account already mentioned. It was done in this way.

Mr. West, her husband and the president of the corporation, wrote a note in her behalf to Francis C. Reed, Esq., requesting him to secure a judgment for her against the company. She signed the note. Mr. Reed was the attorney defending the company in the Waterman and Keller suit. He caused a summons in an action by Mrs. West .against the corporation to be served upon Mr. West, the president. A Mr. O’Connell, who had a desk in Mr. Reed’s office, appeared as attorney for the company, and in due form offered to allow judgment against it for the amount •of Mrs. West’s claim. Her attorney accepted the offer, and judgment was thereupon entered in her favor for $10,509 93 Every step in the action appears to have been taken on March 2, 1885. It was a week later before Waterman and Keller had judgment entered in their suit.

Mrs. West claims the surplus moneys in this proceeding by virtue of the priority of her judgment. The appellants Waterman and Keller question the validity of her judgment on several grounds.

It is settled in this state that an agreement to pay interest upon interest is not valid unless made after the interest which is to bear interest has become due. Young v. Hill, 67 N. Y., 162, 167. In the present case, the arrangement to compound the interest was made, according to the testimony of the plaintiff’s husband, at the outset of the transactions with her to which this litigation relates, and hence before any interest whatever had accrued on her mortgages. We do not think she can maintain a claim to the compound interest included in her judgment as against other creditors of the corporation. But if that be thrown out, the amount of the judgment will still be so large as to absorb the .greater portion of the surplus moneys.

It is therefore necesssary to consider the further point made by counsel for the appellants, who contend that if the president of the corporation, with knowledge, or in contemplation of its actual insolvency, provided for the payment of a debt to his wife out of the assets of the corporation, to the exclusion of other creditors, his action was unauthorized, and cannot be permitted to stand in the way of others having valid claims against the corporate property.

The relation of the directors of an insolvent corporation towards its property and creditors has been clearly stated in a recent decision by the general term of the fifth department, where Smith, P. J., said: “The instant the company became insolvent and unable to pay its debts, the trustees then held the property primarily in trust for its creditors, and they were without power to deal with the'property between themselves for the purpose of paying off their own indebtedness against the company in preference to, and in exclusion of other creditors.” Third National Bank v. Elliott, 42 Hun, 121, 129, and cases cited. An able opinion on this subject was also written by Shepley, J., in the case of Bradley v. Farwell, 1 Holmes, 433. It seems to us that the payment of a claim in behalf of a director’s wife, under such circumstances, is as objectionable as the payment of a -debt to the director himself. See Dundas’s Appeal, 64 Pa. St., 321, 333. In the case at bar, the president of the corporation endeavored by means of the judgment which he enabled her to obtain against the company, to insure payment of his wife’s claim to the exclusion of the claim of the appellants. As the executions issued on the judgments of both the parties to this appeal have been returned unsatisfied, it is evident that the corporation was insolvent at the time Mrs. West procured her judgment. The referee, however, has found that her husband then believed the company would be able to pay all its debts. We entertain grave doubt as to the correctness of this finding. It is difficult to understand why so much haste should have been shown to give Mrs. West a prior lien over the judgment of Waterman and Keller, if her husband, the president of the corporation, supposed it to be perfectly solvent. On the other hand, his conduct is readily explained on the assumption of his knowledge of its insolvency. The evidence on this subject in the appeal book is not so full as seems to us desirable, and we have come to the conclusion to reverse the order appealed from, set aside the referee’s report, and direct a new reference to the end that it may be determined upon fuller proof as to whether the president of the defendant company knew of its insolvent condition when he aided his wife in obtaining her judgment. The costs of this appeal will abide the event of the further proceedings-

Ordered accordingly.

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


author: Van Brunt, P. J. Daniels, J.

text:
    In the Matter of William Tilden.

      (Supreme Court, General Term, First Department,

      Filed May 13, 1887.)

    1. Executors and administrators—Will—Construction of clause in— Commissions.
    A clause in the will of the testator provided that in lieu of all other commissions and compensation to the executors for the performance of their duties under the will, and in addition to them actual and necessary disbursements and expenses, they should receive on all sums to be received, from his partners as capital in the partnership, and on all interest and income on investments in the public debt of the United States, cr in county bonds, and the proceeds of sales of real estate, one per cent of the amount received, and on all personal property sold, or rents, or the collection of debts owing to him, or for the income of other funds or investments, five per cent of the amount received, etc. Meld, that United States bonds were debts and that on sums received by the executors on the sale of such bonds they were, under the above clause, entitled to five per cent.
    2. Same — Nature of commissions — Effect of settlement of account.
    That an executor’s commission was not in the nature of a legacy which is not discharged until paid, but in the nature of compensation for services rendered, and lhat the executors having received a less commission than that allowed by the will were by the settlement, and account precluded, from demanding a greater compensation.

      3. Same—What will not complete eight to commissions.
    That on real estate, which was not sold by the executors, but which was the subject of transactions between the heirs, the executors were entitled to no commissions, and that the fact that they joined in a conveyance of their right therein was not sufficient to give them the right to compensation, but it might operate to prevent them from exercising the power of sale given by the will.
    Appeal from parts of a decree of the surrogate entered upon the final accounting of the executors refusing to allow commissions claimed by them.

      Joseph H, Choate, for the executors, app’lts; W. 8. MacFarlane, for the resp’ts.

      See S. C., 3 N. Y. State Rep., 219.

   Van Brunt, P. J.

It appears that since the death of the testator in 1869, there have been six successive judicial settlements of the accounts of the executors covering the transactions during six successive periods. The decree on the fifth accounting was entered in June, 1885, and the decree on the sixth accounting was entered on the 6th of December, 1886, and from parts of the latter decree this appeal is taken.

The executors received from the United States government during the period of the fifth accounting $65,000 in payment of government bonds which were owned by the testator at the time of his death, and. were paid by the goverment during said period. Into the fifth accounting that item entered, and the executors charged and were allowed one per cent upon the amount so paid by the government. During the period of the sixth accounting the executors received from the United States government $25,000 under like circumstances, and the executors claimed five per cent as the commission on this $25,000 of United States bonds, under the eighteenth clause of the will, which provides as follows :

Eighteenth. In lieu and exclusion of all other commissions and compensation to my executors for performing T, their duties under this will, and in addition to their actual .and necessary disbursements and expenses, I authorize t|hem to receive from my estate the following commissions, namely: On all sums to be received from my said partners els my capital in said partnership, and on all interest and ifncome on investments in the public debt of the United States, or in county bonds, and on the proceeds of sales of ireal estate, one per cent of the amount received, and on all sums received for personal property sold, or rents, or the collection of debts owing to me, or for the income of other funds or investments, five per cent of the amount received, and on all sums of money invested by them, two per cent of the amount thereof, such commissions to be in full for such services, and the amount to be divided among my executors, from time to time, equitably, in proportion to their respective services.”

During the period covered by the fifth accounting an agreement was "made between the four sons of the testator for a division among themselves of certain real estate left by the testator, the youngest son having become of age. To carry out that agreement deeds of conveyance were made by the executors, and Elmira S. Tilden, widow of the testator, three of the four heirs being grantors, and the other heir being grantee, proper words being used to express the execution by' the executors of the power of sale, the release by the widow of her dower and the partition between the said four heirs. The. executors claimed

commissions upon the valuation placed upon said real estate under the provisions of the said eighteenth clause of the will.

The learned surrogate disallowed the commissions at the rate of five per cent upon the United States bonds, and also the claim for commissions upon the value of the real estate partitioned. 3 N. Y. State Rep., 219.

The provisions of the eighteenth clause of the will referred to entitled the executors for the collection of debts owing to the testator to receive five per cent of the amount received, as compensation. The United States bonds which were held by the testator at the time of his death were part and parcel of the interest-bearing obligations of the United States and formed part of the public debt. In the use of the word' “debts” by the testator in the clause .referred to, no distinction is made in the character of the obligations or debts which might be owing to the testator.

The language is that the executors are to be entitled to a commission of five per cent for the collection of debts owing to the testator. This language necessarily includes each and every obligation for- the payment of money which was held by the testator and which, was subse-, quently collected by the executors. There is no meaning! of the word “debt” which excludes the interest bearing! obligations of the United States or of the state. Thew were part and parcel of the public debt and recognize^ as such by the statutes of the United States in reference thereto. The bonds of the United states were as muclh of a debt as the bonds of any corporation which isl-sued its obligations for the payment of money, or as the obligations of any individual who issued his commerciajl paper payable at a future day. It would seem therefore, that the money collected from the United States upoiji the payment of its obligations came within the provisions of the section referred to and the executors were entitled to commissions thereon at the rate of five per cent.

It does not follow however that the executors can collect their commissions at the rate of five per cent on the proceeds of the bonds included in the fifth accounting in which they have charged and been allowed at the rate of one per cent for collection. The learned surrogate has based his decision in reference to this matter upon the ground that this compensation provided for in the will in excess of that allowed by law is to be looked upon as a legacy, and a legacy is not discharged until paid. .But it does not seem to us that this is a correct view. The provisions in the will were intended to be as compensation for services rendered, to be in no respect a gift, but an authority to charge for their services a certain sum. It is sufficient to say that section 2742 of the Code of Civil Procedure provides that a settlement of the account of an executor is conclusive evidence against all the parties who were duly cited or appeared; that the items allowed to the accounting party for money paid to creditors, legatees and next of kin for necessary expenses and for his services are correct. Therefore the decree entered upon the fifth accounting is conclusive evidence that the allowances therein made to the executors for their services were correct. As long as that decree stands it is difficult to see upon what principle the executors can claim additional compensation for services rendered which are included in that accounting.

The next question relates to the exception taken to the action of the surrogate in refusing commissions upon the real estate partitioned. The sons of the testator were the owners of the fee of the real estate subject to certain powers given to the executors under the will. The executors had no power of division of the real estate. The sole power of division contained in the fourteenth clause related to the division of personal estate and the power of sale therein contained was to sell and convert into monéy or personal iSecurities in order to perform, fulfil and keep any contract, agreement or obligation that the testator might be Tinder at the time of his decease.

< Therefore, as far as the real estate was concerned, the Oxecutors could only sell for the purpose of conversion into ?money or personal securities. This was done. The real -estate was not sold for the purpose of being converted into money or personal securities, nor was it in fact sold at all. The owners of this real estate divided it amongst themselves under an agreement made between themselves, and, in the carrying out of that agreement, the heirs executed the deed and the widow released her dower, the executors joining to convey any title they might have, which was none, and perhaps the only effect of their action being an estoppel upon any subsequent demand on their part to execute the power of sale contained in the will. The fact that, for purposes of book-keeping, they entered the appraised prices of this real estate in their accounts, does not alter the legal aspects of the case. They did not sell for money; they received no money, and their conveyance added no weight to the partition which the owners of the fee made among themselves. This, therefore, being no execution of the power of sale contained in the will, the executors are not entitled to commissions upon the appraised value of the real estate.

The executors were, therefore, entitled to commissions at the rate of five per cent upon the $25,000 bonds, were entitled to no additional commission upon the $65,000 embraced within the previous accounting, and were not entitled to commissions upon the real estate partitioned.

The order of the surrogate should be modified accordingly and, as modified, affirmed without costs of this appeal to either party.

Brady, J., concurs.

Daniels, J.

I concur, except as to the commissions on the United States bonds. They do not seem to be debts due, or owing to the testator, in the sense in which he re ferred to debts owing to him in this will. That he did not understand these bonds to be debts owing to him, and, thérefore, chargeable with commissions at the rate of five per cent, seems also to follow, from the allowance of no more than a one per cent commission for collecting their coupons. The same reason as would reduce the commission to one per cent on the coupons, indicates the intention of the testator to have been that only a like commission should be reserved, and given on the proceeds of the bonds.

In all other respects I agree to the opinion of the presiding justice. _


author: Per Curiam.

text:
    Mary M. Watson, App’lt, v. John D. Phyfe, Resp’t.

      (Supreme Court, General Term, First Department,

      Filed May 13, 1887.)

    Pbactice—Calendas—Putting case on day calendan—Pbeeekence.
    Where there has been a reversal at the general term and a new trial hasi been ordered, if the case is upon the general calendar the party may move' upon two days’ notice at the circuit to have the case placed upon the day calendar for trial. If pending the appeal, a new calendar has been made up and the case has been omitted from such new calendar, either party may move at circuit to have the case restored to the general calendar in' the place its original date of issue entitled it to occupy, and may then,' move it on the day calendar on two days’ notice. No new notice of trial-is necessary. . i,

      Appeal from order of special term, granting preference, etc.

      G. M. Curtis, for app’lt; C. N. Bovee, Jr., for resp’t.
   Per Curiam.

In a case like the one at bar where there has been a reversal at the general term and a new trial has been ordered, if the case is upon the general calendar the party may move upon two days’ notice at the circuit to have the case placed upon the day calendar for trial. If, pending the appeal, a new calendar has been made up and the case has been omitted from such new calendar, the party desiring to place the case upon the calendar may move at circuit to have the case restored to the general calendar in the place its original date of issue entitled it to occupy; and may then make a motion upon two days’ notice to have the same put upon the day calendar for trial. No new notice of trial is necessary as the case has not been disposed of. In the case at bar the motion was improperly made at the special term or chambers, but as no such objection was taken upon the hearing of the motion it cannot be considered upon this appeal.

The order appealed from should be affirmed, with ten dollars costs and disbursements to abide the event.


author: Lawrence, J.

text:
    Manhattan Savings Institution, Resp’t, v. The Town of Eastchester, App’lt.

      (Supreme Court, General Term, First Department,

      Filed May 13, 1887.)

    1. Bonds of municipal corporation—Regularity of issue—Prima facie case.
    The defendant town was authorized to issue bonds by Laws 1869, chapter 272, as amended. The plaintiff proved the taking of the oath by the commissioner, and by one of the commissioners it was proved that they entered upon the discharge of the duties prescribed by the act, that a certain avenue was built by them, and that bonds were issued by the town on requisitions from the commissioners for the improvement of said avenue, and that all the commissioners acted. The defendant having admitted that the bonds set forth in the complaint were made, signed and countersigned as therein mentioned Meld, there was a prima facie case made ouc that the bonds were duly and properly issued.
    :2, Same—Stolen bonds—Payment of—Bond of indemnity
    The bonds in question were negotiable with interest coupons attached, and had been stolen from the plaintiff. They having matured, a demand was made for the payment of principal and interest to the plaintiff upon their giving a bond of "indemnity to the defendant. Meld, that a town could be fully protected by a bond of indemnity, and that in a proper case a court of equity would grant the relief asked.
    ,8. Same—Practice—When complaint must be amended.
    The action was brought to recover on five bonds which became due and payable on July 1, 1888, with interest. Meld, that without amending the complaint ihe plaintiff could not recover for bonds becoming due two years after the commencement of the action.

      The complaint, after setting forth that the plaintiff is a-domestic corporation created under the laws of this state, and that the defendant is a town of this state situated in. the county of Westchester, alleges that by an act of the legislature entitled. “An act to authorize the towns, of Yonkers and Eastchester, in the county of Westchester, to-make, extend and improve the several highways in said towns,” passed April 22, 1869, as amended by a certain other act passed April 22, 1870, George W. McLean and six other persons were appointed commissioners, with power to lay out and widen, make and grade the road in the towns of Eastchester and Yonkers in said act described,, and to perform the several acts and duties in said act prescribed.
    That said commissioners were required before entering upon their duties to take and subscribe an oath to faithfully and impartially exercise the duties of said office until the said road should be completed and delivered; and it was further therein and thereby directed and enacted that such sums of money as might be necessary to carry out said improvements should be raised by the issue of the bonds of the said several towns upon the requisition of the commissioners by the supervisor and town clerk of said towns, and should be signed by them and countersigned by such one of said commissioners as should be by said commissioners designated for that purpose. That such bonds should bear an interest of seven per cent, payable semi-annually, and should be drawn so as to become due in sums not less than $3,000 in anyone year, and that they should be in sums not less than $500, and registered in the office of the clerk of the town by which they should be issued, and that said commissioners should receive said bonds and convert them into money at not less than the-par value thereof; and it was further provided that it. should be the duty of the board of supervisors of the county of Westchester to levy and assess upon the taxable property in the respective towns in which said road should be laid out a sum or sums sufficient to pay the principal and interest of the bonds as the same should become due. It is further averred that the commissioners, having taken and subscribed the oath required by the act, entered upon and continued in the performance of their duties, and that, pursuant to a requisition duly made by the said commissioners, the defendant, the town of Eastchester, on or about, the 15th day of April, 1871, made its fifty several bonds, bearing date on said day, and numbered from 27 to 76 inclusive, in and by each of which bonds it acknowledged that it was indebted to the plaintiff, or bearer, in the sum of $1,000, payable at the office of the United States Trust Company, in the city of New York, with interest, at the rate of seven per cent, payable semi-annually; and that in and by each bond the defendant declared that it was issued pursuant to the provisions of the acts of the legislature hereinbefore mentioned; that each of said bonds was signed by William P. Esterbrook, then supervisor, and R. W. Foster, then clerk of said town; and was countersigned by Edward De Witt, a commissioner designated for that purpose by the said commissioners. After alleging that to each of said bonds coupons were annexed duly signed, etc., it is further averred that each of said bonds was registered, in the office of the clerk of the town of Eastchester, and that said bonds so signed and countersigned and registered were issued and delivered to said commissioners by whom they were on or about the second day of May, 1871, sold, and delivered to this plaintiff, and that this plaintiff paid to said commissioners therefor the sum $50,155.56, being the par value thereof, including the interest which had accrued thereon from the 15th day of April, 1871, the date-of said bonds, to the second of May, 1871, the date of said purchase.
    It is further averred that after the purchase of said bonds and delivery of the same to the plaintiff, and from the time of said purchase and delivery the plaintiff continued in possession of the same down to the 27th of October, 1878, on which day the vaults of the banking house of plaintiff were burglariously entered, and the said bonds, with the. coupons attached, stolen therefrom without the consent, knowledge or permission of the plaintiff, or any of its officers or clerks. That the plaintiff has not sold or assigned the said bonds or coupons but still remains the absolute-owner thereof. That the interest coupons attached to said bonds falling due on or before first of July, 1878, had been paid by the defendant, but none of the interest upon said bonds falling due since that time has been paid. That on the first day of July, 1883, five of said bonds, namely No. 27 to 31 both inclusive, became due and payable, but the same have not been paid. That the supervisors of the county of Westchester have. from time to time since the said bonds were issued levied and assessed upon the taxaable property of the defendant sums of money sufficient to-pay the said past due bonds and interest, and that such-sums are now in the hands of the supervisor of the town ready to be applied to the payment of said bonds and interest.
    It is further averred that on the 2d of July, 1883, plaintiff' caused a notice to be served upon the supervisor of said town, whereby he was notified that said bonds had been stolen on the 27th day of October, 1878, and had not been recovered by the plaintiff; that the plaintiff was advised that the said town is bound upon being indemnified to pay the said past due bonds and interest; that the plaintiff was ready and offered to furnish said town a satisfactory bond of indemnity upon receiving payment of said bonds and interest and asked the said supervisor whether he was ready to pay the same upon receiving such bond, and that the said supervisor replied that he could not pay the said bonds or interest unless the bonds themselves, and the interest coupons past due, were delivered up to him. Judgment was therefore demanded for the full amount of said bonds No. 27 to 87 inclusive, which fell due July 1,, 1883, with interest from July 1, 1878, and also the interest on said bonds No. 32 to 76, both inclusive, amounting $45,000 from the said first day of July, 1878 upon the execution and delivery of the bond of indemnity. The defendant in its answer states that it has no knowledge or information ■sufficient to form a belief as to the truth of the allegations contained in the complaint relating to the plaintiff’s being a corporation, to the acts of the legislature and to the burglary committed at the plaintiff’s bank. It admits that it is one of the towns of the state and further “that the bonds of the town of Eastchester which are numbered and of the •dates and amounts set forth in the fourth subdivision of the complaint with coupons attached thereto as stated in said complaint, were made, signed and countersigned as therein mentioned and purported to have been issued in accordance wdth the terms of said acts of the legislature, but it avers that the defendant has not knowledge or information sufficient to form a belief whether or not the said commissioners therein named, took the oath of office or performed the duties required by said act, or whether said bonds were issued in accordance with the terms thereof.”
    It also avers that it has no knowledge whether said bonds, •etc., were sold and delivered to the said commissioners, and by them to the plaintiff for the sum mentioned in the complaint, or for any sum whatever. The allegations of the complaint relating to the payment of the interest upon the bonds, up to the 1st of July, 1878, as to the number of the bonds which became due on the 1st of July, 1883, and as the amount levied and assessed upon the taxable property of the defendant by the supervisors of the county of Westchester, and as to the notice alleged to have been served by the plaintiff upon the supervisor of said town, are all admitted.
    Upon the trial of the action the court, at special term, rendered judgment in favor of the plaintiff directing the defendant to pay the sum of $39,675 within ten days after the service, upon its attorney, of a bond of the plaintiff, with sufficient surety in the penal sum of $80,000, and upon its appearing that such bond had been served, and that no part of the money directed to be paid had been paid by the defendant, it was ordered that the plaintiff have judgment absolute against the defendant for the aforesaid sum.
    From that judgment an appeal has been taken to the general term of this court.

      Charles C. Bigelow and Jacob W. Miller, for app’lt; Augustus S. Hutchins, for resp’t.
   Lawrence, J.

While it is true that where towns are authorized to issue bonds under special statute, to pay the expenses of improvements the holders of the bonds must show that the requirements of the law have been complied with, we think in this case that the plaintiff made a prima facie case, and as the defendant offered no evidence to show that the statute had not been complied with, we do not think the first and second points argued by the appellant’s counsel can be sustained. See Cagwin v. The Town of Hancock (84 N. Y., 532), and other cases cited as to the liabilities of towns.

The plaintiff proved the taking of the oath by the commissioners, and by McLean, one of the commissioners, that they entered upon the discharge of the duties prescribed by the act, and that the Midland avenue road was one of the roads and boulevards built by them, and that bonds were issued by the town on requisitions from the commissioners for the improvement of that avenue, and that all the commissioners acted. As has been stated, the defendant, in its answer, admits that the bonds set forth in the complaint were made, signed and countersigned, as therein mentioned

It seems to us that this admission, taken in connection with the proof by the plaintiff at the trial, in the absence of anything tending to throw suspicion upon the fairness and honesty of the transaction, makes out a prima facie case that the bonds were duly and properly issued. The criticism which is made by the appellant’s counsel, that the proof shows that the work was not wholly completed when the commission was legislated out of office, we do not regard as sound because section 19 of the act of 1869 seems to contemplate that the bonds shall be issued from time to time as the work progresses, and that the commissioners were not obligated to wait until the entire completion of the work before they could draw a requisition for the issuing of a bond by the supervisor and town clerk. McLean’s testimony establishes that those bonds were for that work, and as has been said before, in the absence of any evidence to show bad faith, we must assume, with McLean’s evidence before us, that the commissioners acted in good faith, and that the bonds were issued for work which had already been done, or which was being done in accordance with a contract properly entered into by the commissioners. The evidence establishes beyond all question that the plaintiff fairly purchased the bonds referred to, and paid the par value therefor, and all the interest which had accrued. thereon between the date of the bonds and the sale of them to the plaintiff. We do not understand that it is beyond, the power of-a court of equity to give relief in cases of this, character upon a proper bond of indemnity being furnished. The bonds in question being payable to bearer were negotiable, and independently of any statute, courts of equity,, upon the loss of such securities have, upon a proper bond of indemnity being tendered to the debtor) decreed relief to. the holder of such securities. See 1 Story’s Equity Jurisprudence, § 82, 86, and cases cited. See also The People ex rel. The Manhattan Savings Institution v. Otis, 24 Hun, 524, and cases cited by Gilbert, J.

The decision in that case, which was subsequently affirmed in the court of appeals (90 N. Y., p. 48), is not adverse to the plaintiff’s position here. There an act of the legislature was passed for the relief of the plaintiff, which, after providing that the city of Yonkers could issue duplicate bonds, went on to provide that the city, after the delivery to the bank of the duplicate bonds therein provided for, should be discharged from all liability on the original bonds to all persons purchasing the same, after due publication of the notice prescribed by the act, and gave a right of action against the bank upon the bond of indemnity, to the lawful owner of such bonds, in place of the liability of the original obliger. See Laws of 1880, chap. 59, § 2. The court held that that provision was unconstitutional, as the effect was to destroy the negotiable quality of the bonds, and to impair the obligation of contracts, and also because it deprived a person of property without due process of law.. The case is not an authority for the position that the remedy of the plaintiff is by application to the legislature. See. opinion of Gilbert, J., 24 Hun, pp. 522 and 523.

We see no reason why a town cannot be as fully protected by a bond of indemnity as an invididual nor any reason why, if a proper case is made out, a court of equity should not exercise the powers hereinbefore referred to. See 1 R. S. (7th ed.), 840, §§ 1, 2, 3 and 8.

We do not regard the case of Lorillard v. The Town of Monroe (11 N. Y., 392), as promulgating any doctrine adverse to the views above expressed. It is claimed by the appellant’s counsel that the court would be, in effect, making a new contract for the town of Eastchester, if the judgment below is sustained. We do not accede to this proposition. The contract was made at the time the bonds were issued in conformity with the statute, and when the plaintiff paid its money to the commissioners for the benefit of the town. The object of this action is to enforce the liability thus incurred on the part of the town, and at the same time to protect the town by the same safeguards as would be provided in the case of an individual.

There is one point, however, made by the appellant, which we think must be sustained. The action was brought to recover the sum of $5,000, the amount of the principal of five bonds numbered from 27 to 31 inclusive, which became due and payable on the 1st of July, 1883, with interest thereon, and, also, the interest upon the remaining forty-five bonds from the 1st day of July, 1878,

The action was commenced on or about the 13th of July, 1883, and the court awarded judgment not only for the principal of the bonds which were due on that day, but also for the principal of five other bonds, which fell due on the 1st day of July, 1885. Th complaint was not amended, and it will thus be seen that the plaintiff was allowed to recover upon a cause of action other than that stated in the complaint.

We do not understand the cases cited by the respondent as obviating this difficulty. Those cases were cases in which it was held that if a fact had been assumed on the trial it might be assumed at all future stages, of the action and that for the purpose of upholding the judgment, proof could be given on the argument of the appeal, and that the court may treat the pleadings as having been amended in conformity with the proofs, in any respect, in which the court ought clearly to allow an amendment at special term. This case does not fall, it seems to us, within that class of cases.

It was not assumed at the trial, that this action was brought to recover any other principal sum than the $5,000 due upon the bonds which became due before the com mencement of the action, and there is nothing in the admission made at folio 54 of the case upon which the plaint • iff relies, which indicates that either party supposed that the principal sum of the five bonds which became due in 1885 could be.a subject of recovery. It was agreed by the counsel on the trial: “That the numbers and description of the bonds and time of payment of principal and interest as stated in the complaint be considered as the bonds that were stolen.”

There was no agreement to amend the complaint, to the effect that the plaintiff might claim to recover the sum of $5,000, for the five bonds which became due about two-years after the action was commenced.

. See Barnes v. Quigley, 59 N. Y., 265; Reeder v Sayre, 70 id., 180, 190; Robertson v. Robertson, 9 Daly, 44, 57; Sheldon v. Adams, 18 Abb. Pr., 405.

The judgment below must, therefore, be reduced by deducting from the amount thereof, the principal sum of the five bonds which fell due on the 1st of July, 1885.

The amount of the bond of indemnity must also be proprotionately reduced and with such modification the judgment will be affirmed, with costs.

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


text:
    The People of the State of New York ex rel. John A. McCall, Jr., App’lts, v. George W. Gilbert, Resp’t.

      (Supreme Court, General Term, First Department,

      Filed May 13, 1887.)

    Insurance—Foreign companies cannot do business except aeter complying with Laws 1853, chap. 466, § 23, as amended by Laws 1875, chap. 555—Extent oe prohibition.
    Laws 1853, chapter 466, section 28, as amended by Laws 1875, chapter 555, places certain conditions with which it is necessary for foreign insurance companies to comply before they may do business within this state, and further imposes the following restraint on the agents of such companies; “Nor shall it be lawful for any agent or agents to act for any company or companies referred to in this section, directly or indirectly, in tailing risks or transacting the business of fire or inland navigation insurance in this state, without procuring from the superintendent of the insurance department a certificate of authority stating that such company has complied with all the requisitions of this act which apply to such companies, and the name of the attorney appointed to act for the company.” J3y a further provision, a penalty is recoverable from any agent violating the section quoted. Held, that the adjustment of a loss was-within the purview of the statute; that the statute was meant to be beneficial in its operation to the people of this state, and that the agents of foreign companies not having complied with the requirements of the statute, were not thereby prevented from the adjustment of losses within this state, as this was merely paying obligations which had accrued.
    Appeal from judgment sustaining demurrer.

      Raphael J. Moses, Jr., for app’lts; Thomas Darlington, for resp’t.
   Bartlett, J.

This appeal presents the question whether an uncertificated agent of a fire insurance company, which is not incorporated under the Laws of this state, can legally adjust a loss here under a policy of that company on property in the city of New York.

Section 23, of chapter 466, of the Laws of 1853, as amended by chapter 555 of the Laws of 1875, provides that it shall not be lawful for any fire insurance company incorporated -under the laws of any other state or any foreign government, directly or indirectly, to take risks or transact any business of insurance in this state unless possessed of the capital required of similar companies here.

Other important requirements are also imposed by the statute. An attorney in this state must be appointed upon whom process of law may be served. A copy of the charter or deed of settlement, a statement containing many particulars concerning the condition of the company, and a copy of its last annual report must be filed in the office of the superintendent of the insurance department. A deposit must be made with that officer, by foreign corporations, for the benefit and security of policy holders residing in this country. Then we come to the prohibition concerning agents (Session Laws of 1875, p. 625), which is in these words : “ Nor shall it be lawful for any agent or agents to act for any company or companies referred to in this section, directly or indirectly, in taking risks or transacting the business of fire or inland navigation insurance in this state, without procuring from the superintendent of the insurance department a certificate of authority stating that such company has complied with all the requisitions of this act which apply to such companies, and the name of the attorney appointed to act for the company.

Under the statute a penalty is recoverable from any agent who violates this provision, and the present action is brought to recover a number of such penalties.

The complaint charges that the defendant, at the city of New York, without procuring the statutory certificate, unlawfully acted for the City Fire Insurance Company of Pittsburgh (which is organized under the laws of the state of Pennsylvania and not incorporated under the laws of this state) in the transaction of the business of fire insurance on property located in New York, “in that he did adjust a certain loss or indebtedness of the said City Fire Insurance Company ” on a policy of insurance on property in the city of New York; and that “in making such adjustment the defendant was acting by the direction of and under the employment of the said fire insurance company as its agent for that purpose.”

The defendant demurred on the ground that the complaint did not state facts sufficient to constitute a cause of action, and his demurrer was sustained at special term.

This decision was right unless the adjustment of a loss is “transacting the business of fire or inland navigation insurance ” within the meaning of the statute.

We do not think these words were used with the intent to prevent the fire insurance companies of other states or foreign countries from employing agents to take the necessary steps to pay their debts here.

The complaint speaks of the subject of the adjustment as “a certain loss or indebtedness.” A liability had accrued against the Pennsylvania corporation arising out of insurance on New York property. There is nothing to show that the contract of insurance was not made under such circumstances as to be perfectly legal. The policy may have been issued in Pennsylvania to citizens of that state on property situated in New York. If lawfully issued there, the insurers would be liable here. Hope Mutual Life Ins. Co. v. Perkins, 38 N. Y., 404, 408.

Being under an obligation, therefore, to pay something, the company employed an agent to ascertain how much it ought to pay, by investigation, the extent of the loss in the locality where it occurred. It does not seem to us that the statutory prohibition was aimed at such acts as this. The purpose of the statute is an important consideration in passing upon the question presented here. It was designed to afford our own citizens security in dealing with the fire insurance companies of other states and foreign countries which were allowed to be represented in this state by agents who effected insurance in their behalf. Foreign insurance corporations were not to be permitted to come here into our own territory and solicit business and take risks, unless they would submit to certain conditions imposed for the benefit of those who might deal with them. If they make legal contracts elsewhere, however, relating to property in this state, it is not an' advantage but an .injury to the New York property owner to prohibit them from fulfilling such contracts here. Indeed there might be .some question how far the power of the legislature extends in this direction. So that if we consider the evident object •sought to be attained by the statute it would seem that the adjustment of a loss and indebtedness is not within the purview of the prohibition, which was intended- not as a protection to New York insurance companies against outside competition, but as a safeguard to those seeking insur.ance in outside companies represented within the state.

We are referred to an opinion written by the attorney general in 1882, in which he advised the superintendent of the insurance department that the provision of the statute relating to uncertificated agents covered the adjustment of a-loss “to the extent that the act is designed as an evasion of the statutory^ prohibition.” This qualification deprives the opinion of its principal force as an argument in the present case, for the complaint here contains nothing as to "the intent of the defendant. Mr. Eussell says that the adjustment of a loss is as much a part of the business of insurance as the soliciting of insurances. In one sense this is true, just as it would be to say that the payment of its -debts is as much a part of the business of an insurance company as the issuing of policies. The adjustment of a loss is merely a means of ascertaining the amount of an admitted indebtedness; and we do not think the legislature intended to prohibit such adjustments by uncertificated -agents of fire insurance companies of other states and foreign countries, where there appears to be nothing unlawful in the contract out of which the indebtedness has arisen.

It is also suggested that this construction gives effect only to the prohibition against “taking risks,'’ and none to that contained in the words “or transacting the business of fire and inland navigation insurance in this state.” As to this point, it is sufficient to say that an addition to taking risks the business of insurance involves many other matters to which the foregoing clause may apply, without reference to the adjustment of losses.

The judgment appealed from should be affirmed, with costs.

Lawrence, J., concurs.


text:
    James A. Farley et al., App’lts, v. The Union Mutual Life Insurance Co., Resp’t.

      (Supreme Court, General Term, First Department,

      Filed May 13, 1887.)

    .Insurance (life)—Value oe paid up policy—Elements entering into.
    Where a party insured is of advanced age, and his life is not insurable, as the contract of insurance will in all probability soon be consummated, and the whole amount of it become due, the value of a paid up policy would necessarily be larger than if the life were normal, although the premiums paid must make an important factor in the estimate.
    Appeal from a judgment at special term dismissing the complaint.

      Raphael J. Moses, Jr., for app’lts; Merritt JSJ. Sawyer, for resp’t.
   Brady, J.

Where the insured is of advanced age, and his life is not insurable, as the contract of insurance in all probability will be soon consummated, and the whole amount of it become due, the value of a paid up policy would necessarily be larger than if the fife were normal, although the premiums paid must make an important factor in the estimate. This is particularly so when the insured is willing to continue the insurance and the company objects. He has two remedies then, as suggested in Speers v. Phoenix Life Ins. Co. (36 Hun, 322), one to compel the continuance of the contract and the other to recover a sum equal to the value of his policy, or in other words a sum which would make good to him the loss he sustains by the breach. When the company is willing to continue the contract and the insured is not, but demands a paid up policy, the elements are different necessarily in some respects. The learned counsel for the insured, who is a legal if not an insurance expert in these cases, seems to have determined that the guide to ascertain the value is the same, but this cannot be.

When this case was here before the court, announced the principle which must control in ascertaining the value. Farley v. Union Mutual Life Ins. Co. (41 Hun, 303), and the learned justice in the court below cited and applied it. The amount of the paid up policy depended upon the testimony given to demonstrate its value and the findings on that subject.are in accord with the rule announced. There seems to be but little difference between the witnesses on either side in the testimony given under the rule to be observed, although there is on the appellant’s theory urged by his counsel.

Mr. McCall, who was examined on behalf of the appellants, when asked what was a fair and equitable paid up policy, to be given on the surrender of the original contract, said $3,500. He is an expert of great experience.and ability. The respondent’s witness put the amount at $3,570.

The subject is environed with possibilities and contingencies, and' the elements which present themselves for' consideration are mostly, if fiot entirely, theoretical. The result will doubtless always offer opportunities for review, and it may be that it will never, never be entirely satisfactory. This action, it must be remembered, is not to recover damages for a breach of the contract of insurance, as in Speer v. The Phoenix Mutual Life Insurance Co. supra, but to enforce a provision in the contract in relation to a, paid up policy, and is distinguishable from the Attorney-General v. Guardian Life Insurance Co., 82 N. Y., 336, for the reason that the company had failed, the insured was' dead, a receiver had been appointed, and the policies were in full force when the insured died. The proposition of the appellant’s counsel is that as an insurable life, the amount of the paid up policy should be for $10,000 less, the outstanding notes for $2,210, and the annual premium of $762 which would have become due in April, 1885 and 1886, making a total of $3,734. This would leave the balance $6,266 for which the policy should be given. Or, if the life be regarded as insurable, then it should be valued according to the principle established by the case of Speer v. The Phoenix Life Insurance Co. supra, by reference to the difference in premiums charged by a responsible company for the same policy, at the different ages of sixty and seventy, two, and as to which Mr. McCall had given his evidence,. Neither of these views, however, are sustained by the former decision herein which .the learned counsel for the appellants thinks should be reconsidered, and which would be necessary to carry out" of his estimate of value. During the examination of .Mr. McCall, the learned justice presiding, asked the question, which was free from the insurance complications of the difference of cost of office premiums for the age of sixty to sixty-four, the value of an annuity, or an amount stated at the age of seventy-four and between the ages of sixty and seventy-two, and the question was : “It being understood that more than three annual premiums have been paid, what in your opinion would be the fair value in cash of this policy upon its surrender to the company ? and further, what in your opinion as a life insurance expert, would be the value of a paid up policy % And these related directly to tlie subject under investigation, the demand of the appellants for a paid up policy to which they were entitled, the contention being as the amount. We do not see any reason for interfering with the judgment which already suggested in accord with the principles heretofore and herein announced. We think the allowance justified by the facts and circumstances developed and the claims made.

The judgment must for these reasons be affirmed with costs.

Daniels, J., concurs".


text:
    Huldah H. Clapp App’lt, v. Robert C. Clapp, Individually and as Executor, Etc., et al. Resp’ts.

      (Supreme Court, General Term, First Department,

      Filed May 13, 1887.)

    1. Executors and administrators—Power to bind estate by executory CONTRACT.
    The general rule is that an executor may disburse and use the funds of the estate for purposes authorized by law, but may not bind the estate by an executory contract and thus incur a liability not founded upon the obligation of the testator.
    2. Same—Exceptions to rule.
    The exceptions to the rule are 1st, that when the trustee is authorized to make expenditures and he has no trust funds, and the expenditure is necessary for the protection, reparation or safety of the trust estate and he is not willing to make himself personally liable, he may by express agreement make the expenditure a charge upon the trust estate, and 2d, in case-of the insolvency of the executor an equitable cause of action will be created against the estate where the services are rendered for its benefit.
    S. When compensation for services, rendered under direction of AN EXECUTOR, CAN BE COLLECTED OUT OF THE ASSETS OF THE ESTATE.
    Where a person owning a hotel and managing the business thereof during his lifetime, leaves a will which directs that after his death it shall be carried on by his son and executors for the benefit of his estate, and such business is so carried on after his decease, and an attorney renders services necessary to enable the son and executor to carry out the intention of the testator, and beneficial to the estate under a special agreement that the same are to he paid for out of the estate, and the executor is insolvent, an action will lie to enforce the payment for such services out of the assets of the estate.
    Appeal from order confirming report of referee as to claim of Leo G-. Dessar.

      Charles P. Crosby and Thomas B. Band, forapp’lt; S. G. Adams, for resp’t.
   Brady, J.

Mr. Dessar claiming a lien upon the lease of the Rossmore Hotel, an order of reference was made for the purpose of ascertaining the value of the services rendered by him upon which the claim rested. The services, it was asserted, were rendered for the estate of Hawley D. Clapp, deceased, who was the acting principal in the business which was conducted at the Rossmore Hotel m this city, which he carried on with his son Robert, the defendant, under the name of Hawley D. Clapp & Son.

By his last will and testament he declared that the business mentioned was his chief property, the success of which he was very desirous of securing, entertaining the conviction, he said, that if the business were conducted with system, carefulness and prudence, and with strict and faithful attention, it might and would become a source of large future profit, and reposing great confidence in his son Robert, who was then his co-partner, and whose knowledge and experience in hotel business he thought best qualified him among all his children for the trust, it was his wish that the Rossmore Hotel, upon his decease, should-be conducted by him under the name of Hawley D. Clapp & Son for the benefit of all the family, and that he should have the sole management thereof, without the control of the other members of the family and without interference on their part, other than such friendly advice and counsel as they might from time to time give, and which he charged his son Robert to receive with kindness and respect. He suggested that if any difference of view should unfortunately arise between his son Robert and the other members of his family, his son Mortimer should be regarded as an umpire to adjust and settle such differences, and that his decision and judgment in the matter should be concurred in and adopted by all the parties. He also states that while he gave the sole management of the hotel to his son Robert for the purpose of securing its better success by having one head, until his brothers should be qualified to share it with him, he did not mean that his brothers might not resort to the courts for better protection to their interest, if unfortunately Robert should prove unfaithful to the trust and cofidence thus reposed in him.

A reference to these provisions of the will is deemed necessary in order to sustain the claim made by Mr. Dessar, for the reason that he was employed after the death of the decedent, and his services, unless brought within the exception, would be subject to the rule in the attempt to recover for them, to wit, that contracts of executors, although made in the interest and for the benefit of the estate they represent, if made upon a new and independent consideration as for services rendered moving between the promisee and the executors as promisors, are the personal contracts of the executors, and do not bind the estate, notwithstanding the services rendered are such that the executors should properly have paid for the same from the estate, and be allowed for the expenditures in the settlement of their accounts, the principle being that the executor may disburse and use the funds of the estate for purposes authorized by law, but may not bind the estate by an executory contract, and thus incur a liability not founded upon the obligation of the testator. Ferrin v. Myrick, 41 N. Y., 315; Austin v. Munro, 47 id,, 360; New v. Nicoll, 73 id., 131; Application of Knapp, 38 id., 284.

The exception to the rule is stated in the case of New v. Nicoll (supra). It is that when the trustee-is authorized to make expenditures, and he has no trust funds, and the expenditure is necessary for the protection, reparation or safety of the trust estate, and he is not willing to make himself personally hable, he may by express agreement make the .expenditure a charge upon the trust estate. And a further exception seems to be recognized in the text books, that in case of the insolvency of the executor an equitable cause of action would probably be created against the estate where the services are rendered for its benefit. Redfield on Surrogates (2d ed.), 496.

It will have been observed that the design of the testator was the continuance of the business under the management of his son Robert; and it clearly appears from the testimony in the case, no evidence having been given on the part of the defense, that the services of Mr. Dassar were rendered to the estate, his employment having commenced soon after the testator’s death, and in reference to matters which if not properly cared for by some professional person would have involved the estate in great loss if not in destruction.

It is said, for example, on that subject by Mr. Dessar, that in the suits which were brought against the estate, he must have saved it while acting as attorney, at least $50,000, having given two years of almost uninterrupted devotion to it.

It appears, also, that Robert C. Clapp is insolvent, and that when Mr. Dessar entered upon the discharge of his duties as the attorney for. the estate, Robert C. Clapp explained to him that his affairs were complicated and that he could not be personally liable for the counsel fees in the matter, and that he would have to look entirely to the estate for payment, although he would, from time to time, make such payments as he could.

The record, therefore, presents these features:

First. The continuance of the business by Robert C. Clapp with all the incidents which were connected with that circumstance, involving of course, the right to make such expenditures as were necessary to carry out the object of the testator.

Second. The special agreement that the services should be paid for out of the estate.

Third. The benefit to the estate resulting from the services rendered, and

Fourth. The insolvency of the executor, Robert C. Clapp.

These elements would seem to be all that are requisite to bring the case within the exception stated in New v. Nicoll, and, also, within the principle laid down in Redfield on Surrogates.

It may be added that the referee found that Robert had no trust funds in his hands for the purpose of paying Mr. Dessar’s claim; but the services rendered were necessary for the preservation of the trust estate, and that the contract made with him was acquiesced in and ratified by.the other parties interested in the estate. It is true that as to the acquiescence of the other parties interested in the estate there is some contention. But there seems to be sufficient, perhaps, to justify that finding. At all events there can be no doubt on the evidence that the estate was benefited by the professional exertions of Mr. Dessar and that he should be remunerated by compensation, if it can be secured to him by the application of any legal principle.

It is said, however, that Mr. Dessar having commenced another action in the superior court, could not proceed with this. But the evidence shows that the action in the superior court was substantially abandoned. Mr. Dessar testified that all the arrangements were made for a disconuance of that action although no order to that effect had been entered; and this statement substantially disposed of the action in the superior court without any formal order.

It was virtually a discontinuance. The order appealed from should be affirmed; with ten dollars costs and disbursements.

Daniels, J., concurs.


text:
    In the Matter of the Estate of Freeman J. Fithian, dec’d.

      (Supreme Court, General Term, First Department,

      Filed May 13, 1887.)

    1. Executors and administrators—Power of surrogate to compel executor OF AN EXECUTOR TO ACCOUNT.
    A surrogate has power, under section 3606 of the Code of Civil Procedure, as amended hy chapter 399 of Laws 1884, to compel an executor of another executor to account for property received hy the latter.
    3. Same—Code Civ. Pro., § 3606—Effect of amendment made by chapter 399 of Laws 1884
    By the amendment of Laws 1884, chapter 399, to section 3606, Code Civil Procedure, it was intended to develop all that the representative executor knows or can know about the trust estate and in reference to it, to compel the delivery of any part of it which has reached his hands or is under his control. The surrogate may, upon the accounting, determine what the representative executor owes to the trust, but the decree shall not be evidence conclusive that the representative executor has the assets to pay. It is a proceeding in the nature of an investigation. The design of the law is to invest the power in the surrogate to enforce the delivery of the trust estate remaining.
    Appeal from an order of the surrogate directing an amended account.

      G. W. Cotterill, for app’lt; Horace Secor, Jr., for resp’t.

       Affirming 5 N. Y. State Rep., 375.

   Brady, J.

The question presented by this appeal is whether the surrogate has the power under 2606 of the Code to compel an executor of another executor to account for property received by the latter. The learned surrogate has declared in the affirmative of this inquiry, and his conclusions are based upon the amendment of the section by chapter 399 of the Laws of 1884. He had, prior to that change, in a series of decisions, held the negative, save to the extent that the representative of the deceased executor had come into possession of assets belonging to the trust estate. See opinion herein and cases cited. 5 N. Y. State Rep., 375.

The section prior to the amendment was as follows :

“Section 2606. Accounting by executor, etc., of deceased executor. Where an executor, administrator, guardian, or testamentary trustee dies, the surrogates court has the same jurisdiction, upon the petition of his successor, or of a surviving executor, administrator or guardian, or of a creditor, or person interested in the estate, or of a guardian’s ward, to compel the executor or administrator of the decedent to account for and deliver over any of the trust property which.has come to his possession or is under his control, which it would have as against the decedent if his letters had been revoked.”

By the amendment the words ‘‘ for and deliver over any of the trust property which has come to his possession or is under ms control ” were not omitted, but transposed as we-see. This removed the limit or restriction which existed, and provided for a general accounting such as might under sections 2603-2605 be enforced against an executor whose letters had been revoked—a general accounting, and not confined to the trust property which had come to his possession or under his control. The amendment contained other provisions as follows :

“With respect to the liability of sureties in, and for the purpose of maintaining an action upon, the decedent’s-official bond, a decree against his executor or administrator, rendered upon such an accounting, has the same effect as if an execution, issued upon the surrogate’s decree, against the property of decedent had been returned unsatisfied during the decedent’s life time. So far as concerns the executor or administrator of decedent, such a decree is not within the provisions of section 2552 of this act. The surrogate’s court has also jurisdiction to compel the executor or administrator, at any time, to deliver over any of the trust property which has come to his possession or is-under his control; and if the same is delivered over after a decree, the court must allow such credit upon the decree as justice requires.”

The learned counsel for the appellant contends that they do not show an intention to require the executor to account for any property other than that received by him, and that-the intention of the legislature to be deduced from this and other sections is to compel the delivery of such property at any time, even after a decree, and that but one decree only was contemplated by the section, which was a decree to deliver. There are, it is true, some reasons to support the contention, but the transposition of the words to which particular attention has been called, seems to warrant the thought that it was intended to develop all that the representative executrix knew, or could learn about the-trust estate and in reference to it, if circumstances demanded the exercise of the power, to compel the delivery of any part of it which has reached the hands of the representative-executor or is under his control, although not developed by the accounting, or until after a decree based upon such accounting.

The design to enlarge the sphere of the accounting seems to be apparent from the context by which it is declared that, so far as concerns the representative executor, the-decree rendered upon such an accounting with respect to the liabilities of the sureties, is not within the provision of section 2552 of the Code, that is to say, shall not be conclusive evidence that there are sufficient asssets in his hands-to satisfy the sum which the decree directs him to pay or-for which the order permits the execution to issue. The surrogate may, upon the accounting, determine what the representative executor owes to the trust, but the decree shall not be evidence conclusive that the representative executor has the assets to pay. It is, therefore, a proceeding in the nature of an investigation, based upon the proposition that the representative executor, having succeeded to the property and papers of the decedent, whom he represents, must be in a condition to furnish the best information in regard to the estate. It does not impose any liability upon him beyond the property he has of the trust estate, and should not in the nature of the relation he holds, to the decedent. Its design is also to invest the power in the surrogate to enforce the delivery of the trust estate remaining.

This is the effect of the transposition of the words particularly noted, and is a gift of authority. It is suggested that the view expressed by the surrogate is in contravention of the Revised Statutes, which declare that “ an executor of an executor shall have no authority to commence or maintain any action or proceeding relating to the estate, effects or rights of the testator of the first executor, or to take any charge or control thereof as such executor. 3 Rev. Stats. (7th ed.), 2395, § 11.

But, with great respect, it is thought this does not not. affect the question which relates to existing things, not what is to be gathered in or received, but what was found of the trust estate, and possession taken either formally or informally, and what is the condition of the estate as far as it may be known and disclosed. The law does not seek to create impossibilities, and when an account is sought all that can be required is what is known, not what may be conjectured.

The provisions of the Revised Statutes, prohibiting the interference of an executor with the unadministered estate of the first executor (3 Rev. Stats., 71, §§ 11, 17; id. [7th ed.], 2395, § 60: id., 2292,) are not inconsistent or in conflict with the authority conferred upon the surrogate, which is given, as already said, to secure the exposition of the trust estate so far as it may he, and its delivery to the proper person. Statutes creating summary remedies unknown theretofore are often regarded by practitioners as questionable in policy and uncertain in their construction and implication, but this is the epoch of innovation and all seeming incongruities in our legal system are sought to be remedied by legislation which, gently blending with prevailing laws, produces greater harmony and simplicity in the administration of justice. The object in view thus suggested is not always accomplished, for sometimes confusion, worse confounded, is the outcome. The section under consideration is not free from criticism, but it it is thought it works out the problem for which it was amended, and that its interpretation by the surrogate was correct.

Ordered accordingly, but, as the question is new, only the disbursements of the appeal are allowed to the respondent.

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