author: Andrews, Ch. J.

text:
    Charles M. Titus, Resp’t, v. Charles F. Poole et al., App’lts.

      (Court of Appeals,

      Filed April 9, 1895.)

    1. Executors—Claim against estate.
    A claim presented against a decedent’s estate, need not be stated with legal precision : it is sufficient if the transaction, out of which the claim arises, is identified, its general character indicated, without technical formality, and the amount of the claim stated.
    3. Same—Limitations.
    A party, who presents a claim which is rejected, cannot be permitted to evade the short statute of limitations by successive presentations of claims founded on the same transaction, but varying in form or detail.
    3. Same.
    Section 505 of the Code is applicable to actions brought against an executor or administrator upon a claim against a decedent, which has been rejected by the executor or administrator after presentation, pursuant to notice.

      4. Same.
    Where an action for fraud, based on the original claim, is brought within six months after rejection, in which the claimant is nonsuited,' a second action on contract may be brought within one year thereafter, though after the expiration of such-six months.
    5. Sale—Warranty—Representations as to value.
    If the vendor makes a representation as to value, which is intended as a. warranty, and it enters as a constituent element into the transaction, it becomes a part of the contract and may be enforced as a warranty.
    6. Same—Question of fact.
    Whether a particular affirmation, made by a vendor on an oral contract for the sale of property, is intended as a warranty, is often a question for the jury.
    Appeal from judgment of the general term of the supreme court in the fourth judicial department, entered upon an order, which affirmed a judgment in favor of plaintiff entered upon a verdict, and also affirmed an order denying a motion for a new trial.
    In February, 1883, the plaintiff, Titus, and defendants’ testator, E. V. Poole, entered into an agreement whereby Poole was to purchase of Titus certain hotel property in the city of Ithaca at an agreed price of $9,000 ; $4,000 of which was paid by Mr. Poole assuming a mortgage for that amount then on the premises and $5,000 by assigning to Titus a certain cei’tificate of the alleged bank stock of the “Home Savings Bank” of South Waverly, Pa., it being for 50 shares of one hundred dollars each.
    The negotiation for the sale took place at Ithaca, where the plaintiff resided, and was consummated there February 9, 1883, under the supervision of Mr. Ellsworth, by the conveyance by the plaintiff to Poole of the hotel property subject to a mortgage of $4,000, and by the transfer and delivery by Poole to the plaintiff of the certificate. The certificate was printed and was in the following form:
    “No. 33. State of Pennsylvania. 50 shares.
    “The Home Savings Bank. Organized under act of Legislature (of Pennsylvania.
    “Authorized capital, $100,000. Shares $100 each.
    “Virtue, Liberty, Independence.
    “South Waverly.
    “This is to certify that E. V. Poole is entitled to fifty shares in the capital stock of the Home Savings Bank of South Waverly, transferable only on the books of the bank in person, or by attorney on the surrender of this'certificate.
    ‘“South Waverly, Dec. 10th, 1871.

    “S. Kirby,

      “Pres.

    “0. E. Peudletoh,
    “Endorsed: ‘ Cash'r7'

    _ It was transferred to the plaintiff by. the indorsement of Poole, signed to the blank power of attorney printed on the back.
    St. Rep., Vol. LXV. 44

      The action was brought December 26, 1888, against the executor of Poole for the breach of alleged warranties made by Poole on the transfer of the stock to the plaintiff, viz.: (1) That the Home Savings Bank was a regularly organized bank under the laws of Pennsylania; (2) that it was all right, and that the stock was good, high stock and worth one hundred cents on the dollar; (3) that it was a dividend-paying stock. There was but one witness as to the transaction between Poole and the plaintiff, and his evidence is uncontradicted. One of the parties was dead and the plaintiff was not a competent witness. Ellsworth testifies that the parties being present in his office, Poole produced the certificate of stock and that the witness opened and looked at it and then said: This isn’t stock; that is a savings bank; a savings bank has no stock;” and Mr. Poole said: It is a regularly organized bank under the laws of Pennsylvania and has savings bank privileges.” The witness further testified: “Mr. Poole said in answer to my statement it was good stock, worth 100 cents on the dollar; a dividend-paying stock; that he was one of the original, or one of the early stockholders; I don’t know but he used the word 1 first; ’ Mr. Titus said; ‘ If that is so, Mr. Poole, and it is all right, I will take the stock at $5,000 in the trade and -deal.’ He said the capital was all paid up; I think he told the amount, $100,000, if it was $100,000 ; he said $100,000 capital paid up. * * * He said it was worth 100 cents on the dollar and was good high stock. * * * I think he said what kind of hands the bank was in, but I do not recollect the language he used. Mr. Titus said at that time in Poole’s presence, if the stock is all right as you say, we will make the trade or deal.”
    It appeared on the trial that the Home Savings Bank was not an incorporated bank, but was conducted by a partnership, of which one Kirby was the principal member. The business was established at Waverly, Pennsylvania, in 1873. It seems that in Pennsylvania there is no restriction upon individuals carrying on the business of private bankers.' The laws of that state do authorize the establishment of banking corporations, subject to visitation, and the laws carefully guard the business of such corporations in the interest of stockholders and depositors. The capital stock of the Home Savings Bank was never paid up in full. When the stock in question was transferred by Poole to the plaintiff, there had been paid only the sum of $86,338. The evidence establishes beyond controversy that in February, 1883, the bank was hopelessly insolvent. It held the paper of Kirby to an amount nearly equal to its paid-up capital, and when the bank failed in 1887 the debt of Kirby amounted to $112,000, and but a small part of it has been paid.- The public were not informed of the condition of the bank, and it was regarded by outsiders as solvent, and in some cases after that year the stock was sold in small amounts at par to persons who supposed the bank was incorporated. It paid occasional dividends from 1873 to 1887. It paid none in 1874, 1876, 1879, 1881, 1883, and none in 1884. The dividends when paid were four per cent, per annum, with the exception that eight per cent, was paid in 1875.

      Poole, the defendants’ testator, died October 7, 1887, the same year that the bank went into bankruptcy, leaving a will by which he appointed the defendants his executors. May 7, 1888, the claimant presented a verified claim to the executors in words following : “ Estate of Edward V. Poole, deceased. To Charles M. Titus, Dr. To amount due from E. V. Poole in his lifetime, on exchange of real estate for which a worthless certificate of alleged Home Savings Bank stock was fraudulently assigned to said Titus —$5,000, with interest on the same from February 10, 1883,” together with written offer to refer the same. June 19, 1888, the •executors rejected the claim. J une 28,1888, the plaintiff brought suit in the supreme court against the executors, founded on the transaction, and alleging fraud and deceit on the part of the testator in respect to the transfer of the stock and the making by him of representations (substantially like those set forth in the complaint in this action), which were alleged to have been false and fraudulent, and the plaintiff claimed $5,000 damages and interest from February 10, 1883. The action was tried in October, 1888, and resulted in a non-suit, on the ground that the facts proven did not constitute a cause of action. It was said on the argument that the precise ground of the non-suit was the failure of the plaintiff to prove the scienter. Subsequent to the non-suit, and on the 26th day of December, 1888, and more than six months after the rejection of the claim originally presented to the executors, the present action was brought, based on warranty and not on fraud. Before bringing the second action a second claim, based on the transaction of February 9, 1883, but setting out the representations as warranties, was presented and rejected. The action was tried before a jury, and resulted in a verdict for the plaintiff, $7,647.75, being the sum of $5,000, and interest thereon from February 9, 1883.

      David M. Dean, for app’lts; F. E. Tibbits, for resp’t.
   Andrews, Ch. J.

The principal question arises upon the defense of the short Statute of Limitations applicable to claims against the estate of a decedent, presented to an executor or administrator after the publication of notice for the presentation of •claims, pursuant to the order of the surrogate, and disputed or rejected by him and not referred. Section 1822 of the Code of Civil Procedure, which is a substantial re-enactment of a provision in the Revised Statutes, declares that in such cases the claimant must commence an action for the recovery of the claim against the executor or administrator within six months after the dispute or rejection; or, if no part of the debt is then due, within six months after a part thereof becomes due, and in default thereof, he and all persons claiming under him are forever barred from maintaining such an action thereupon, and from every other remedy to enforce payment thereof out of the decedent’s property.” It is plain that if § 1822 of the Code is the only provision applicable to the case, the claim of the plaintiff was barred at the time of the commencement of the action. The decedent died October 7,1887, and the executors having duly advertised for the presentation of claims the claim of the plaintiff was presented May 7, 1888, and was rejected by the executors June 19, 1888, and not having been referred this action was commenced December 26, 1888, more than six months after the rejection of the claim. The claim, if any existed, was due at the decedent’s death, and all the conditions existed which made the six months' limitation a bar to the action, if the section referred to is alone to be considered. The fact that a second claim was presented November 29, 1888, was immaterial. The claim then presented was founded on the same transaction as that specified in the claim first, presented. It was for the same amount, and it differs from the claim originally presented only in the circumstances that it ignores the suggestion of fraud, and sets forth in detail the representations made by the decedent to induce the plaintiff to accept the certificate of stock in the Home Savings Bank, and treats them as warranties. The transaction set forth in the first claim was sufficient to apprise the executors that it was founded on the transfer of the certificate of stock by the decedent to the plaintiff, and that out of the transaction there might arise either an action for deceit or for breach of warranty, or for failure óf consideration, and if a reference had then been had evidence to support either of these claims might have been given and a recovery had for either cause of action if established by evidence. Proceedings under the statute to determine claims against the estate of a decedent are informal. There are no pleadings in the ordinary acceptation of the term. It is not required that the claim presented shall be stated with legal precision. It is sufficient if the transaction out of which the claim arises is identified and its general character indicated, without technical formality, and the amount of the claim is stated. The plaintiff, therefore, by the presentation of his original claim, under the statute subjected himself to the conditions which attached on its rejection, and thereupon the statute commenced to run against any cause of action founded upon the transaction embraced in the claim, whether an action for deceit or for breach of warranty. The party who presents a claim which is rejected cannot be permitted to evade the statute by successive presentations of claims founded on the same transaction, but varying in form or detail. The caséis, therefore, to be considered as if the claim had been but once presented at a period more than six months prior to the commencement of the present action.

It is conceded that if § 405 of the Code, in the chapter upon “ limitations of the time of enforcing a civil remedy,” is applicable to actions brought against an executor or administrator upon a claim against a decedent, which has been rejected by the executor or administrator after presentation, pursuant to notice, the cause of action was not barred when the action was commenced. The first action was brought within six months after the rejection of the claim, and terminated in a non-suit, and this, action was brought within two months thereafter, but seven days after the expiration of the six months from the time of the original rejection of the claim. The case is, therefore, brought directly within the saving provision of § 405 of the Code, if applicable to this case. That section declares that “ if an action is commenced within the time limited therefor, and a judgment therein is reversed on appeal, without awarding a new trial, or the action is terminated in any other manner than by a voluntary discontinuance, a dismissal of the complaint for neglect to prosecute the action, or a final judgment upon the merits, the plaintiff, or, if he dies'hnd the cause of action survives, his representatives, may commence a new action for the same cause, after the expiration of the time so limited, and within one year after such reversal or termination.” The first action was terminated by non-suit, was not voluntarily discontinued, was not dismissed for neglect of prosecution, nor was there any final judgment therein on the merits, and the present action was brought within a year after the termination of the former action. The second action also was an action for the same cause as the first action, within the meaning of § 405. According to the nomenclature of actions the first was an action for fraud and the second on warranty—one ex delicio and the ether ex cont/ractu. It is often important to observe the distinction. But the same facts may often give a plaintiff the right to bring the one action or the other at his election, and when dealing with remedies with a view to determine whether remedies applicable to actions of the one kind or the other are to be administered, it is common and proper to speak of the two remedies as based upon distinct and different causes of action, although the right in both cases is founded upon the same transaction. But it cannot be supposed that the words “ same cause ” in § 405 were intended to have this narrow meaning. Such a construction of a beneficial provision, intended to preserve and continue.the right of parties, would be very inconvenient, and would often defeat the purpose of the statute. The words were intended, we think, to remove the disability whenever a new suit was brought within the year, based upon the same transaction as the former one, without regard to its technical form, and was intended in part to prevent mere mistakes as to the form of the remedy from concluding the party from subsequently pursuing his real right under a more appropriate form of action.

Coming, therefore to the question whether § 405 applies to actions under § 1822, it is to be observed that there could be no doubt of its application except for the provisions of § 414. That section, so far as it affects the question now under consideration, is as follows: “ Sec. 414. The provisions of this chapter apply and constitute the only rules of limitation applicable to a civil action or special proceeding, except in one of the following cases: (1) A case where a different limitation is specially prescribed by law, or a shorter limitation is prescribed by the written contract of the parties." . The general purpose of the exception in this section seems plain. It was to preserve the limitations prescribed by special statute or by the contract of parties, and to prevent any misapprehension that actions subject to special limitations by statute or contract were affected by the periods of limitation prescribed in chapter four in the several classes of action therein specified. The statutes prescribing • special and unusual ■ limitations are numerous. Many of them are enumerated in a note to § 414 by Mr. Throop. They are frequently cases which would fall within the classes enumerated in the general chapter, except as taken out by the special law. The legislature, by § 414, preserved the special cases from the operation of the general rule of limitation prescribed in chapter four. Section 414 does not declare in terms that § 405 and other general provisions in title three of chapter four shall not apply to actions governed by § 1822. If it is construed as though it affirmatively declared that the “ rules of limitation ” in chapter four shall not be applicable when a different limitation is specially prescribed by law, then the .question arises, -is the provision of §405 a “rule of limitation ’’within the language of § 414, or do these words refer to those specific periods prescribed in articles first and second of chapter four for the bringing of actions? This would seem to have been all that could reasonably have been intended. It preserved the special limitations where they differed from the limitations in the general statute. To restrict the general provisions in article three to-eases subject to the limitations of the general statute would often be productive of great injustice. Among these general provisions are those which prescribe what shall be deemed the commencement of an action • what shall be the consequence of the absence of a defendant from the state ; the effect of the death of the plaintiff ; of an injunction preventing the commencement of an action; and § 405 provides for the case of the termination of an action and an enlargement of the time, under the circumstances specified. The present case illustrates the hardship which would often follow if the benignant provisions in the general act were held to be inapplicable to cases of special limitation. The plaintiff was non-suited in the first action and has succeeded in this. He was defeated in his first action presumably because he had mistaken his remedy. He. then brought his second action. The statute is a bar unless saved by § 405.. We had occasion recently to decide a very similar question in the case of Hayden v. Pierce, 144 N. Y. 512; 64 St. Rep. 42, and the reasoning in th.e careful opinion in that case is applicable to this case. It was there held that § 401 of the general provisions of chapter four of the Code was applicable to a cause of action kgainst executors, which was subject to the six months limitation prescribed' by § 1822, and that absence of the executor from the state when the cause of action accrued enlarged the limitation of § 1822, so as to exclude such absence in the computation of time.

The principle of this case is decisive against the defense of the Statute of Limitations in the case at bar. It becomes unnecessary, in view of this decision, to review the various decisions theretofore made, bearing more or less upon the subject. We adhere to the decision in Hayden v. Pierce as a sound and reasonable construction of the somewhat ambiguous provisions of section 414. There is an apparent incongruity in the particular case, that the legislature should give to a plaintiff a year after the termination of the former suit to bring an action against an executor or administrator, when the original action must have been brought within six months after the rejection of the claim. But the legislature was declaring a general rule applicable to all cases, and Inade no distinction, as it might perhaps have done, if its attention had been drawn to the special case of an action to enforce a claim against the estate of a decedent which had been presented and rejected.

Exceptions were taken by the defendants on the trial to the admission and rejection of evidence and to the charge of the court. We deem it unnecessary to refer to more than one of the exceptions, and that exception raises the question as to the propriety of permitting the jury to find that there was a warranty of the value of the stock. It is well settled that a mere naked representation by a vendor of the value of property sold is to be regarded as an expression of opinion merely, and will not sustain an action for deceit, although the representation was known to the vendor to be untrue and was made with intention to deceive the purchaser. The case of Ellis v. Andrews, 56 N. Y. 83, was a case of this character. The doctrine that such a representation is mere dealers’ talk was applied in that case, and Mr. Benjamin, in his work on Sales, regarded it as having carried the doctrine “very far” (1 Benj. on Sales, p. 561). But a vendor may give a warranty as to value as in respect of any other fact, and if he makes a representation as to value, which is intended as a warranty, and it enters as a constituent element into the transaction, it will then become a part of the contract and may be enforced as a warranty. The learned author referred to, speaking of the subject, says (Sec. 932, p. 811): “And in determining whether it was so intended,, a decisive test is whether the vendor assumes to assert a fact of which the buyer is ignorant, or merely states an opinion or judgment upon a matter of which the vendor has no special knowledge and on which the buyer may be expected also to have an opinion and to exercise his judgment. In the former case there is a warranty; in the latter not.” The court, in the charge to the jury, properly instructed them that the naked expression of opinion as to value of property made by the vendor is not a warranty upon which a recovery could be had, but added, “if you find that what Mr. Poole stated was intended to be an affirmative fact upon which he intended this man to rely, that the stock was worth 100 cents on the dollar, he being one of the original stockholders or owners himself claiming to have knowledge that it was worth 100 cents on the dollar, it is for you to say whether it amounted to something more than the expression of an opinion.” Whether a particular affirmation made by a vendor or an oral contract for the sale of property was intended as a warranty is often a question for the jury. (Shillen v. Bowen, 122 U. S. 575, and cases cited.) Many circumstances in this case might properly be considered as bearing upon the question ; the fact that the sale was not of a chattel, open to inspection by the purchaser, but of stock in a supposed corporation in another state; the assertion made by the vendor in connection with the statement of value, that he was one of the original or early stockholders, and that the stock w.as a dividend-paying stock (which was true only in a very limited sense); the fact that it was only after these statements were made that the plaintiff agreed to take the stock at its par value, saying to Mr. Poole: “If the stock is all right, as you say, we will make the trade.We think the' jury might well' have found, upon all the circumstances, that the assertion of Mr. Poole, as to the value and character of the stock, was something more than the expression of a mere naked opinion, and was intended to be and was relied upon as a warranty of the fact. The vendor assumed to know the value of the stock, and stated circumstances calculated to impress the plaintiff with the belief that the value was known to him. The plaintiff was about to take the stock as payment at its face value for his property. It was natural that he should require information as to its value, and both parties must have regarded the affirmation of the vendor on the subject as a material element in the transaction. We think there was no error in submitting this question to the jury.

We find no error in the record requiring a reversal of the judgment, and it should, therefore, be affirmed.

All concur.

J udgmént affirmed.


source: Caselaw Access Project

author: Gray, J.

license: Public Domain

text:
    Peter J. Soderman, Resp’t, v. William Kemp et al., App’lts.

      (Court of Appeals,

      Filed April 9, 1895.)

    1. Masteb and sebvant—Appliances.
    Though a master is bound to furnish safe appliances in the transaction of his business, he is not bound to fusnish the most approved, or newest, design, or any particular description, of such appliances, so long as those furnished are not dangerous to those who have to work in and about them.
    3. Same—Nesligence.
    No recovery can be had, where the inference of an entire freedom from any failure of duty on the part of the master is quite as consistent, upon the evidence, as an inference that there had been, in some manner, an omission of a duty.
    Appeal from judgment of the general term of the supreme -court in the third judicial department, entered upon an order, which affirmed a judgment in favor of plaintiff entered upon a verdict.
    This action was brought against the Troy Iron and Steel Company, the original defendant, to recover damages for injuries received by plaintiff alleged to have been caused by said defendant’s negligence.

      R. A. Parmenter, for app’lt; James Lansing, for resp’t.

       Reversing 53 St. Rep. 678.

   Gray, J.

The plaintiff has recovered damages against the defendant for personal injuries sustained by him, upon a claim that it was negligent. In our judgment, the evidence was altogether insufficient- to establish any cause of action and the defendants’ motion for a non-suit should have been granted. There was noth-, ing disclosed in the circumstances surrounding the occurrence, which evidenced any failure of that duty which the defendant owed to the plaintiff as its employe, and it was error to submit the case to the jury for a verdict, when no inference of neglect was possible.

The defendant was engaged in the manufacture of steel and iron and the plaintiff had been in its employ as a laborer for about nine years. ■ In August, 1888, he was directed to assist in loading up slag, sand and dirt from the defendant’s pit upon a car. The car was one that dumped its load on the side and was in a train, which was drawn by a locomotive to a point, or “ dump,” at some distance from the works. The plaintiff and another man, who had helped him to load the car, rode upon it; the plaintiff sitting upon the top of the load and his associate upon the end of the car. They had made one trip that morning and, at the time of the accident, were making a second trip to the dump. After they had proceeded a short distance from the works, the car suddenly dumped and threw the plaintiff upon the ground. He says that he struck upon his face and shoulder and that an iron bar fell upon him, as well as a large part of the load; as the result of which he was seriously injured. The defendant used three kinds of cars for the purpose of carrying away the furnace refuse. Some were double side dumpers ; some dumped on both sides and at the end and some, like the one upon which the plaintiff rode, dumped only on the one side. The car in question was, in some respects, of an older pattern than the others. The mode of fastening the car body to the truck was by means of two hooks, which were attached to a fixed bar upon the car truck and which served, when in place, to hold the car body in position and to prevent it from dumping. It was the duty of the men employed about the car, after it was dumped, to crank it back into place and to adjust the hooks. Upon the morning in question, the plaintiff says that upon the first trip down to the dump, and after the car had been unloaded, it was cranked back and the hooks were attached by two of the men on the train. The plaintiff did not look to see if the hooks were on, upon either trip ; and he does not claim to have discovered any thing wrong about the car on either trip, up to the time of the accident. ^Neither does he personally give any account of the car immediately after the accident. In order, however,0 to attribute the cause of the accident to some negligence on the part of the defendant, he called and examined several witnesses, who were fellow-laborers with him. Their evidence failed to make out any case, however, and even tended to discredit his own story as to the manner in which he was injured—an unimportant matter, however. One witness was the brakeman on the dumping train, who was riding at the time upon the engine. The train was composed of five or six cars, and was proceeding at the moderate speed of about three miles an hour, and, when the car dumped, was stopped almost immediately. The brakeman saw the dumping and went back to where the plaintiff was sitting upon the ground. He says that that was the only time he had ever seen the car dump in that way ; that he had never seen it dnmp with the hooks on ; that he saw nothing the matter with the hooks when he went hack to where the plaintiff was. Another witness, who was riding upon the engine, saw the accident, and, after the train had backed to the furnace and the car in question had been put upon the side track tó be repaired, if needed, he told the car repairer of the defendant, that the car had dumped and that hethoug'ht one hook was slightly bent or straightened. The car repairer looked at the hook, but, finding nothing the matter, did not take the car to the shop for repairs. The car was again put in use without anything being done to it and continued to be used. Two or three months after the accident, the plaintiff went with a. draughtsman to the works for the purpose of finding the car and of examining it. He found a car in the yard house, which was a single side dumper, and pointed it out to the draughtsman as being the one which had thrown him off. The draughtsman was examined as a witness for the plaintiff and testified that the hooks on the car shown him had been either repaired, or were new hooks. He also testified that the car was defective in certain respects. In describing the car which he saw, he said that the.door, or board, on the side, which opened for the discharge of the load, was hinged at the top and opened from the bottom outward. The plaintiff did not identify the car by any number, and that it was the identical car was made altogether improbable by the testimony of the plaintiff’s own witnesses, who described the one in use-at the time of the accident as having a door on the side, which was attached by hinges to the bottom of the car and was fastened by hooks at the top. ’ The evidence with reference to the description of the car by the plaintiff’s witnesses, who were with him at the time of the accident, was corroborated by that of the witnesses for the defendant; who were the engineer upon the locomotive, the car repairer and the foreman of the laboring force. They all testified positively that the car in use at the time had its side board, or door, attached by hinges at the bottom of the body and was hooked at the top. The car repairer testified that the company had no single side dumpers in use, that had the side open at the bottom. With respect to a possible defect in one of the hooks which held the body of the car in place, there was not only no evidence that it had been so bent, or that it was so out of order, as to be unserviceable; but all the evidence was to the effect that its usefulness was unimpaired. The car was placed upon the side track, on the return trip, merely because it had dumped, and m order that it might be examined, and to see if it needed repairs. It was not sent to the repair shop. Ho defect was found about tlie car gear and it was put within half an hour back upon the train and, as some of the witnesses testified, it worked all right. It was in continuous use thereafter and was never known to have been taken out of the service. The bending or straightening of the hook, which plaintiff's witness had spoken of in his testimony, was described as being a slight straightening towards the point of the hook ; but its holding power was not affected. The draughtsman in the employ of the defendant made a diagram of the car, after having been shown it by the car repairer, who had marked the ear, and he described it in all its details. The case was, therefore, left upon all the evidence, without any other proof in aid of the plaintiff’s complaint than that the car had overturned with him, and the defect, upon which he relied for the purpose of establishing a neglect of duty on the part of his employer, could only consist in the feature of the slightly straightened point of the hook. But there is no evidence in the case, which shows that that had anything to do with causing the overturning of the car, or that it was of such a nature as to require any attention or repair, or such as to prevent the continued and safe service of the car.

Nor does the evidence show that the car was unfit for the purposes for which it was used. With several others of a similar description, it had been used for years and was continued in use. While there were other cars of more or less different construction and design, nothing in the evidence warrants the inference that its use was a source of danger to the defendant’s employes.

The defendant was bound to furnish safe appliances and cars in the transaction of that part of its business; but it was not bound to furnish the most approved, or newest, design of dump cars, or any particular description of such cars; so long as those which it did furnish were not dangerous to those who had to work in and about them. This car had been in daily use for a long time and had proved itself safe and there was no evidence that it was otherwise. Its continued use was proper enough. It was proved in the case that, when the hooks on the car body were adjusted to the fixed bar upon the truck, the car could not overturn; but, if they were not so adj usted, it was quite possible, if any considerable movement was communicated to the car body, by the motion of the train from the unevenness of the track, or from any other cause, that the car might overturn. Upon the evidence, there is a very natural inference, which can be drawn to account for the accident, and that is that the fellow-workmen of the plaintiff had neglected to properly adjust the hooks, after the car had been dumped upon the first trip. That duty belonged to the laborers upon the train and, if it was not properly performed, any resulting accident would not be attributable to the defendant’s, but to their neglect.

If the plaintiff had given any evidence going to show that there was some defect about this car, or its gear, which made its use improper, we might then have a case where a conflict between his evidence snd the evidence on the part of the defendant might fairly be submitted for the consideration of the jury; but there was no such conflict. The evidence is overwhelming to show, that the car, which the plaintiff pointed out to his draughtsman for the purpose of description to the jury, could not have been the car from which he fell. His own testimony, that it was the same car, is not only not subtantiatedby some identification, as by a mark or number; but it was contradicted by the evidence of his own witnesses, as well as by that of the defendants’.

So far as appears from the evidence, if the accident was not caused by some neglect on the part of the plaintiff’s fellow-workmen, in properly adjusting the hooks of the car, it was an unexplained occurrence, which does not permit of any inference of some neglect on the part of the defendant; or, where, to put the case at its strongest, the inference of an entire freedom from any failure of duty on the part of the defendant is quite as consistent, upon the evidence, as an inference that there had been in some manner an omission of a duty. A recovery in these cases must rest upon affirmative evidence of some violation or neglect of duty. The burden is upon the plaintiff to negative the presumptions in favor of his employer, and it is not enough that he shows an injury sustained, but he must go further and show some specific act of negligence.

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

All concur.

Judgment reversed.


author: Finch, J.

text:
    Matilda A. Sloane, as Executrix, etc., Resp’t, v. William R. H. Martin, App’lt.

      (Court of Appeals,

      Filed April 9, 1895.)

    Jurisdiction—Federal court—In rem.
    Service of process upon an infant is not essential to the attaching of the jurisdiction of a Federal court, where such jurisdiction isinvoked, with reference to real estate in which such infant has an interest, by proceedings in rem or of that nature.
    2. Same.
    If the parties interested have notice in fact, any irregularity, though it may be reversible error, does not necessarily render the judgment void.
    Appeal from judgment of the general term of the supreme court in the first judicial department, entered upon an order which affirmed a final and an interlocutory judgment in favor of plaintiff entered upon the report of a referee.
    This was an aótion for the specific performance of a contract for the purchase of real estate, and arose out of defendant’s refusal to complete his purchase on the ground that the title was not good and marketable, George Sloane, plaintiff’s testator, having derived title to the larger part of the premises in question through a judicial sale under a decree of the circuit court of the United States for the southern' district of New York in an action in equity wherein certain infants were defendants. The defect claimed was that said infants were not served with process. On petition of their mother a guardian ad litem for the infants was appointed and a solicitor appeared for them.

      William G. Choate, for app’lt; Charles I. McBurney, for resp’t.

       Affirming 59 St. Rep. 828.

   Finch, J.

The very elaborate and exhaustive opinion of the learned referee, before whom this action was tried, so states the arguments upon the fundamental question, involved as to simplify our duty of review and enable us to narrow the discussion, which has taken a wide range, to the single ground on which our decision should rest. The jurisdiction assailed is that of a Federal court over infants not served with process, but for whom an appearance was entered anda guardian ad litem, appointed, who defended in their behalf. The question thus is one of Federal jurisdiction and practice, taking us away from our own procedure'and into somewhat unfamiliar territory, and where the decisions of the United States courts should be our authority and guide. The precise question involved carne before one of those courts and was decided in favor of the validity of the judgment. The decision has not been reported and does not appear in the books, but what it was the record before us distinctly and accurately shows. The action was brought in equity in the circuit court by Drake and others against Groodridge and others, among whom, named as defendants, were the infant children of Groodridge. The plaintiffs alleged in brief that they were creditors of the co-partnership of Groodridge & Go., and had obtained judgment for specified amounts; that in such actions attachments had been issued and duly levied upon the land here in controversy; that the legal title stood in the individual name of one or more of the partners, but was in truth held in trust for the firm to which it actually belonged, and asked judgment that the land be declared to be partnership property, and that a receiver be appointed to sell it and apply the proceeds to the payment of plaintiff’s debt. Judgment was rendered to that effect, and, in pursuance of its directions, the receiver sold the land at a judicial sale. The purchasers thereafter refused to take the title tendered, alleging it to be defective and not marketable. Thereupon the receiver presented a petition to the court setting forth the facts, and praying that the purchasers be required to accept the deed and pay the purchase price. For the purposes of the motion it was stipulated, among other things, that the infant defendants were not in fact served with a subpoena or other process. Judge Blatchford, before whom the judgment had been obtained, decided that the title proffered was good, and the purchasers were bound to accept it. Deciding thus, with the stipulation before him, he necessarily ruled that the court obtained jurisdiction even though there had been no actual service of process upon the infants, but instead merely the appointment of a guardian ad litem upon the petition of their mother.- What we are now asked to do is to disregard that decision and hold it to be erroneous, upon a presentation of the same question, founded upon the same alleged defect in the same judgment, and affecting the same land. I am very sure we ought not to do that unless upon some strong and clear conviction that the circuit court went astray and in opposition to the decided and manifest trend of Federal authority. It is to that inquiry that the .learned counsel for the appellant has addressed himself in an extremely able argument.

His principal reliance is upon the case of Woolridge v. McKenna, 8 Fed. Rep. 620, decided by Judge Hammond in the circuit court of the western district of Tennessee. H I regarded the language of the decision as applicable, or' intended to be applicable, to a case like the present, where, instead of a mere personal action against infants, we have one in the nature of a suit in rem, prosecuted against property in which they had or claimed an interest, seeking to impress upon it a partnership character and devote it to the discharge of the partnership debts, I should feel bound to admit that it held service upon the infants to be imperative, without which the application of the mother and consequent appointment o£ a guardian ad litem would be ineffectual to conier jurisdiction. But I observe that the learned judge himself drew the distinction between the two classes of cases, and held the one at his bar to be a personal action against the infants. I am not sure that he was entirely right in so holding, but that for the presentís an immaterial inquiry. He did so hold, and I think intended to confine his ruling to the class of cases in which he ranked the one before him. Speaking of the character of the action, he said: “It is rather in the nature of a personal suit against her / to cancel as void the deeds under which she claims than a proceeding against the land.” After some further argument, he says again: “ If this were a case originally brought in this court, standing as to parties in the shape it now does, there is no doubt whatever that this infant defendant, like all other defendants, assuming that she is a citizen of Kentucky, would have to be sued in -the district of her residence, so that process could be personally served on her, if the case is to be treated as a personal action to cancel the deeds of conveyance.” He had already said that it should be so treated, and, therefore, was correct in the assertion that she would have to be sued in the district of her residence, irrespective of the possible fact that the land itself might be in another district, and in holding that personal service was required. He then proceeds thus : '“ Or if it be a suit in rem, or of that nature, against the land, there might be substituted process under the act of March 3d, 1875, which is understood to dispense with the requirement of personal service as well in the case of infants as other defendants.” Here again the distinction between the two classes of cases is recognized, and when it is finally held that actual service is essential to the jurisdiction the ruling must relate to merely personal actions such as the one before the court was assumed to be. It, therefore, decides nothing as to the necessary mode of obtaining jurisdiction in a suit against the land. If what is said as to such an action permits an inference that where there is no service on the infants the only other mode of obtaining jurisdiction is under the act of 1875, there are three answers to be made. First. The opinion does not so declare. The reference to the act of 1875 grows out of the non-residence of the infant in the district of the litigation, and assumes the necessity of making her a party against her will or without movement or intervention on the part of her natural guardian. Second. If the opinion had so declared, the statement would have been obiter, because relating to a class of cases not before the court; and, third, in that event the decision would stand wholly and entirely unsupported by the authorities cited to sustain 'it. If on examining them it shall become apparent that, so far as they are applicable at all, they do sustain the court in holding that actual service on the infants is imperative in a merely personal action, but do not support the decision, indeed tend to contradict and overthrow it, if regarded as applicable to a suit against the land, we shall be bound to understand the learned judge as I think he meant to be understood and not put upon him a decision which he did not need or undertake to make.

The first case which he cites in Bank of the U. S. v. Ritchie, 8 Pet. 128. That was a bill of review and a direct attack upon a judgment decreeing the sale of property in which infants had an interest. It did not appear that process had been served upon them. It did appear that a stranger had been appointed guardian ad litem, on the motion of counsel for the plaintiffs, without bringing the minors into court or issuing a commission for the purpose of making the appointment. As to that, Chief Justice Marshall said: “It is not error, but is calculated to awaken attention.” After-pointing out other defects in the procedure, he affirms the reversal of the decree, citing many departures from correct usage, but never once intimating that the judgment was absolutely void for want of actual service of process on the infants. It is inconceivable that so great a jurist should have overlooked such a defect if he so regarded it at all. The learned counsel for the appellant perhaps weakens the suggestion by an explanation that something in the law-of Maryland following the cession of the District of Columbia may have saved the j urisdiction. I do not know how that is, but obviously the authority, if not positively adverse, does not support the decision of Judge Hammond as the appellant would construe it.

The second case cited is O'Hara v. McConnell, 93 U. S. 150. That was a case in which the assignees of the bankrupt sued to set aside his conveyance as fraudulent against creditors, making his wife, who was an infant, a party defendant. The subpoena was served only on the husband, but that was held sufficient before 1874, while yet it was decided that the decree should be reversed because no appearance for the wife had been entered and no guardian ad litem had been appointed. The reversal was for the lack of the very steps which were taken in the judgment assailed on this appeal. The case, therefore, does not sustain the doctrine for which it is claimed to have been cited.

The third case cited is N. Y. Life Ins. Co. v. Bangs, 103 U. S. 435. The question involved was the validity of a judgment pleaded as a defense, and it was adjudged void as against an infant not actually served with process, although a guardian ad litem had been appointed and had answered. But the court specially point out with constant reiteration the character of the action as having been purely personal. It is said that the infant had no property in Michigan ; that the suit did not concern any property, real or personal, and that it was brought to cancel a contract of insurance made with the infant’s father. Then it was added that “In all cases brought to enforce or cancel personal contracts, or to recover damages for their violation, the statute requires a personal service of process upon the defendants or their voluntary appearance.” So far it is clear that the case is authority for the doctrine, in support of which Judge Hammond cited it, that is, as applicable to personal actions, but not at all to the opinion imputed to him as covering also actions, in the nature of a proceeding in rem. But the opinion cited goes further. The attention of the court was called to three cases which held that non-service upon the infant did not render the j udgment void where a guardian ad litem had been appointed. It is important to observe the attitude of the court towards these cases. They are in no respect criticised or even doubted, but, on the contrary, are said to be consistent with the doctrine asserted. One by one their fabts are developed, and it is shown that the actions were in the nature of suits in rem, and then the court added that there was nothing in them inconsistent with the doctrine asserted as applicable to a case which did not touch any property in the district, but to one brought to cancel a personal contract. I think this case fairly holds that the need of service on the infant exists in personal actions, but does not exist in those quasi in rem.

There is still another case cited by Judge Hammond, which is Carrington v. Brents, 1 McL. 174. Speaking of a judgment obtained by Carrington, the court said: “It does not appear that in the above suit process was served on the infant, nor that the guardian ad litem was appointed by the court, and for these omissions or errors in the proceedings the decree might be reversed by an appellate court; but when the decree is used as matter of evidence it cannot be disregarded or treated as a nullity.”

This examination of the cases cited by Judge Hammond makes it very clear, I think, that the rule which he formulated was a rule applicable only to personal actions, and that he did not at all intend or contemplate its extension beyond those. The difference between the two classes of cases was clearly noted in Mohr v. Manierre, 101 U. S. 422. In discussing the mode in which the Federal courts acquired jurisdiction Mr. Justice Field said: “This necessarily depended upon the nature of the subject upon which the judicial power was called to act. If it was invoked against the person to enforce a liability, the personal citation of the defendant, or his voluntary appearance, was required. If it was called into exercise with reference to real property by proceedings in rem or of that nature, a different mode of procedure was usually necessary, such as a seizure of the property with notice by publication or otherwise to parties having interests which might be affected.” He proceeds to say that these rules were “part of the general law of the land," and were to be applied by the courts of the United States. The words of the learned jurist indicate to my mind what is the vital difference between the two classes of cases, and the distinctive directions in which we should approach the question of jurisdiction. In the case of merely personal actions there is no possible ground upon which that jurisdiction can attach except the service of process upon the individual. The court must lay hold of him. In suits in rem it may lay hold of the land, aided as in this case by an attachment and Us pendens, and thereby, the jurisdiction may attach, but can only be exercised upon notice to the parties interested. If they have -that notice in fact, any irregularity in giving it may, indeed, be reversible error, but does not necessarily render the subsequent judgment void.

A similar, though not the same, distinction runs through our cases in this state. On the one hand we held in Ingersoll v. Mangam, 84 N. Y. 622, by force of an explicit statute, that in foreclosure actions service of the summons must precede the appointment of a guardian ad litem; while, on the other hand, in an action of partition which that statute did not govern, we also held that such precedent service was not essential to the jurisdiction. Gotendorf v. Goldschmidt, 83 N. Y. 110.

It seems to me, upon this review of the subject, that the decision of Mr. Justice Blatchford pronouncing the title good under the judgment authorizing the sale is not contradicted and not even made doubtful by the other Federal authorities, but that, on the contrary, their manifest drift is toward the result reached by that" decision. I think, therefore, we ought to follow it, and that, if it is to be overruled at all, it should meet that fate, not at our hands, but from the ultimate Federal tribunal, carefully considering the nature and limits of its own jurisdiction.

I have said nothing of the rules of the United States court, because Ido not think that they at all settle the question or bear very seriously upon the argument, and also because they have been sufficiently discussed in the report of the referee. Uor have I adverted to the position sustained by him and adopted by the general term that the jurisdiction is saved by the presumptions which attach to the judgment in view of the condition of the record ; not because I disapprove of the conclusion which has been reached,, but because I think we ought to put our decision upon the ground which I have already stated.

The judgment should be affirmed, with costs.

All concur.

Judgment affirmed.


author: Haight, J.

text:
    City of Schenectady, App’lt, v. Catharine A. Furman et al., as Executors, etc., Resp’ts.

      (Court of Appeals,

      Filed April 9, 1895.)

    Eminent domain—Municipality.
    A city has no right or power to take and appropriate lands along the . natural and permanent banks of a stream without rendering the owner compensation therefor, either under the constitution or the statutes.
    Appeal from judgment of the general term of the supreme court in the third judicial department, entered upon an order, which affirmed a judgment in favor of defendant entered upon a decision of the court on trial at circuit without a jury.

      S. W. Jackson, for app’lt; Robert J. Landon, for resp’ts.

      Affirming 60 St. Rep. 813.

   Haight, J.

This action was brought to recover the expenses incurred by the plaintiff in removing certain alleged obstructions and deposits from Mill creek where it runs through the lands of the defendants’ testator. Mill creek is a non-navigable, natural watercourse, not a public highway, running through the plaintiff’s: boundaries. On the 16th day of April, 1889, the plaintiff’s common council adopted a series of resolutions in and by which they declared that obstructions and deposits existed in Mill creek running through the defendants’ testator’s lands and that such ob~ structions and deposits caused large bodies of stagnant water to accumulate detrimental to health, the removal of which was proper and necessary and that such removals should be made at the expense of the owners or occupants of the lots adjoining that portion of the creek. The resolution then proceeded to describe the width and depth of the creek and concluded by adjudging the description so given to constitute the natural and normal channel and grade of the creek, and that all earth and other matter lying in and above such grade and channel, as described, to be obstructions and deposits in the stream. The description, however, does not locate the center line of the stream or the banks thereof farther than to specify the width of the channel. The five days’ notice required by' the charter of the final adoption of these resolutions was then given and on the 23d day of April they were ratified and confirmed. Subsequently, andón the 7th day of May, 1889, the common council adopted another resolution amending that adopted on the 16th and confirmed on the 23d, by reducing the width of the stream and changing the slopes of the banks. Thereafter and in August, 1889, the plaintiff’s superintendent of .streets entered Mill creek where it flows through defendants’premises, cut down banks and widened the natural channel of the stream, excavating the earth therefrom, and in so doing cut sev■eral trees growing on the banks thereof and dug out the stumps, making a new channel for the creek. Can the plaintiff recover for the expenses incurred in doing this work ?

The trial court has found as a fact that after the adoption of the resolutions alluded to and during the month of July, 1889, and before the plaintiff’s superintendent entered upon the excavation of the creek, the defendants’ testator cleaned out the creek where it flowed through his lands- from bank to bank to the hard pan thereof, and to the natural and normal bed and banks of the stream. These findings are'based upon the testimony of the witness McG-owan whose statement we do not understand to be controverted. To our minds these findings dispose of the plaintiff’s case, for, assuming the resolutions of the plaintiff’s common council to be regular, these findings show a compliance therewith on the part of the defendants’ testator. He caused the channel of the •creek to be cleaned to the natural and normal banks and bed thereof. This is all that the common council had the power to require. If by its resolutions it required more they wer.e unauthorized and void, for the 'city had no right or power to take and appropriate his lands along the natural and permanent banks of the stream without rendering him compensation therefor either under the Constitution or the statutes. This question was fully discussed by Learned, P. J., when this case was first considered in the general term. 61 Hun, 171; 39 St. Rep. 975. We fully ■approve of the views then expressed with reference to this branch ■of the case.

The judgment should be affirmed, with costs.

All concur.

Judgment affirmed.


text:
    Henry A. Buck et al., as Administrators, etc., Resp’ts, v. William S. Alley et al., App’lts.

      (Court of Appeals,

      Filed April 9, 1895.)

    1. Partnership—Limited.
    The provision of § 13 of 1 R. S. 766, as amended by chap. 476 of 1862 does not permit the use, by a limited partnership, of the words, “and Company,” or “& Co.,” as a part of the firm name, where there is but one general partner, to represent the special partner.
    2. Same—Liability.
    The use of those words, in such case, though with the privity of the special partner, does not render him liable as a general partner for the debts of the firm.
    Appeal from judgment of the general term of the supreme court in the first judicial department, entered upon an order which affirmed a judgment in favor of plaintiffs entered upon a decision of the court on trial at-circuit without a jury.
    This was an action upon a promissory note given by the firm, doing business under the name of W. S. Alley & Co., to Elisha A. Buck, plaintiffs’ intestate. Said firm consisted of W. S. Alley, as general partner, Ferdinand T. Hopkins and Thomas H. Thomas, as special partners. The execution of the note by Alley in the name of the firm was admitted. All of the partners were made parties defendant, but only the special partners were served with process and appeared in the action. They were sought to be made liable as general partners, because of the use of the “& Co.” in the firm name.

      Austin Abbott, for app’lts; Waldo W. Willard, for resp’ts.
   Andrews, Ch. J.

Theclaim that § 13 of the Limited Partnership Act (2 Bev. St. 704), as amended by c. 661 of the Laws -of 1866, permits the use by a limited partnership of the words ‘ and Company,’ or Co.,’ as a part of the firm name, to represent the special partner, cannot be supported. The section, so far as now material, .is as follows: 11 The business of the partnership shall be conducted under a firm in which the names of the general partners only shall be inserted, except that where there are two or more general partners the firm name may consist of either one or more of such general partners, with or without the addition of the words “and Company,’ or Co.,’ and if the name of any special partner shall be used in such firm with his privity, he shall be deemed a general partner; but the said partnership shall put upon some conspicuous place on the outside and in front of the building some sign on which shall be printed in legible English characters all the names in full of all the members of said partnership,” etc. By the natural reading of the section the use of the words 1 and Company,’ or 1 & Co.,’ are only permitted where there are two or more general partners, in which case the firm name may consist of the names of one or more of the general partners and of the addition1 and Company,’ or 1 & Co.,’ to represent the general partners whose names are not expressed. The section makes a special partner liable as a general partner, if his name is used in the firm title with his privity. It is difficult to suppose that the legislature, while interdicting the use of his name, except at this hazard, intended at the same time to permit the use of an addition to represent him. The history-of § 13 strongly corroborates this view. It discloses a consistent purpose in the legislature from the beginning to prevent the name or the existence of a special partner to be indicated in the firm name. The original policy was doubtless to prevent credit being given to a person not liable as a general partner for the debts or liabilities of the firm, though this policy has been greatly modified and to a great degree subverted by recent legislation. The original section passed in 1822 (G. 244, sec. 4) required that the business of a limited partnership should be conducted “ under a name or firm name consisting of the names of all the -partners interested, excepting special partners, whose names shall not be used under the penalty of being liable as general partners.” Section 13 of the Limited Partnership Act in the Revised Statutes, relating to the same subject, and which superseded § 4 in the act of 1822, omitted the requirement that the names of all the general partners should be inserted in the firm name, and in place of that requirement prescribed that the business should be “ conducted under a firm'in which the names of the general partners only shall be inserted, without the- addition of the word ‘ company’ or any other general term.” This was the first enactment referring to the use of the addition “ company” in the name of limited partnerships, and such use was prohibited. Under this section the firm name might be that of one or more of the general partners, but it could not be supplemented by the word “company” or any other general term. The firm name might comprise the names of all the general partners or a part of them only, but if part only were named the suggestion that there were others could not be made through the vague designation of “ company” or the use of a similar general word. The amendment of § 13 by chapter 476 of the Laws of 1862, modified the provision prohibiting the use of an addition, contained in the original section, and declared that where there are more than two general partners the firm name may consist-of either two of such partners with the addition of the words “ and Company;” and made provision for the first time requiring that a sign should be placed on the building occupied by the partnership containing the names of all the partners. The amendment of 1862 was designed to relieve the general partners where there were more than two (all of whom might desire to be represented in the firm name) from the inconvenience of having all the names inserted in the title and to pez-mit the addition “ and Company” to be added to represent them. The amendment in no respect modified the position of a special partner. The amendment was not intended to give him representation in the firm name. His position was unchanged, and the provision remained as originally enacted, that, “ if the name of the special partner shall be used in such firm name, with his privity, he shall be deemed a general partner.” There was obvious propriety in permitting genez-al partners to b.e represented by the addition “ and Company,” bufz none in view of the policy of the legislature to extend this privilege to special partners. Section 13 was again amended by chapter 43 of the Laws of 1864 by removing the restriction in the amendment of 1862 of the use of the addition to the case where there was more than two general partners, and allowing it to be used “ where there are two or more,” and the section was again amended by chapter 661 of the Laws of 1866, which did not change the section in any respect relevant to the present case from what it was under the amendment of 1862. This review of the course of legislation seems to show beyond reasonable doubt that the legislature, from the time of the act of 1822 through all the changes in the law on the subject of the firm name, have maintained the principle that the firm name of a limited partnership should represent only general partners, and that the modification intended by the amendments in the subsequent revisions of § 13 were designed to remove the stringency of the original enactment so that general partners might be represented in the firm name, either by specification or by inclusion under the addition “ and Company.” This interpretation of the statute leads to the conclusion that the use of the firm name of W. S. Alley & Co., in the business in which the defendant William S. Alley was the sole general partner, and the defendants Ferdinand T. Hopkins and Thomas H. Thomas were special partners only, was unauthorized and in violation of the implied prohibition of § 13 of the Limited Partnership Act.

The remaining question is whether its use in this case, made as the certificate shows, with the privity of the special partners, rendered them liable as general partners for the debts of the firm. In Ward v. Newell, 42 Barb. 482, the question was presented and considered by Clerke, J., who delivered the prevailing opinion in that case and who “ was inclined” to the opinion that such a firm designation rendered the special partners liable as general partners, but the judgment proceeded on another ground. In no case in this state, so far as we can ascertain, has it been so adjudged prior to the decision in the present case. The question depends upon the construction of the statute, and in construing a statute all its provisions may be considered to arrive at the intention of the legislature. The remark of Cowen, J., in Bowen v. Argall, (24 Wend. 501) that “ no doubt the provision of 1 Bev. St. 753, prescribing the manner of instituting limited partnerships must be substantially complied with, or the creditors may treat the members of the firm as general partners,” may be admitted as stating a true general principle applicable to the construction of the Limited Partnership Act. But he held in that case that it is not every departure from the provisions of the act which would subject a special partner to a general liability. There a general partner had made a general assignment for the benefit of creditors, which provided for the payment of a debt due to a special partner ratably with the other creditors of the firm, which was held by the chancellor in Mills v. Argall, 6 Pai. 577, to be a violation of the 23d section of the Limited Partnership Act, and Judge Coweu, in his opinion, assuming the correctness of the decision of the chancellor, said: “ I see nothing in the act declaring as a consequence of an assignment or other act providing for the forbidden preference, that the special partner should thereby become liable as a general one. The only consequence of the construction contended for by the plaintiff in error would be the avoiding of the partnership -provision for the benefit of other partnership creditors.”

Coming to a particular consideration of the question now presented, and looking at the Limited Partnership Act, the first thing which strikes the attention is that section 13 contains only an implied prohibition of the use of the addition “ and Company,” or “ & Co.,” to designate a special partner, and does not declare any consequence of such unauthorized addition, but that the section does affirmatively declare that when the name of the special partner shall be used in the firm name with his privity “ he shall be deemed a general partner.” It affixes the penalty to the use of the name only. ■ This is not the only instance where the penalty of liability as a general partner is -imposed in express terms for violations of the provisions óf the act. Indeed, it is difficult on an examination of the various provisions to escape the conclusion that where the legislature intended this result to follow it so declared in unmistakable terms. The 8th section declares that if any false statement be made in the certificate or affidavit required to be filed on the organization of the partnership, “ all the persons interested in such partnership shall be liable for all the engagements thereof as general partners.” The case of Van Ingen v. Whitman, 62 N. Y. 513, and Durant v. Abendroth, 69 id. 148, were founded on a violation of this section. Section 9 declares a similar penalty if the publication of the terms of the partnership-shall not be made as required thereby, and the special partner was held liable for a non-compliance with this section in Smith v. Argall, 6 Hill, 479, which was affirmed on error, 3 Den. 435, the court saying: “The consequence is declared in plain terms; the partnership shall be deemed general.” . The 11th section, which prescribes the manner of renewing or continuing a limited partnership, declares: “And every such partnership which shall be otherwise renewed or continued, shall be deemed a general partnership.” Section 12 provides that every alteration “made in the name of the partners, in the nature of the business, or in the capital or shares thereof, or in any other matter specified in the original certificate, shall be deemed a dissolution of the partnership, and any such partnership which shall be in any manner carried on after any such alteration shall have been made, shall be deemed a general partnership, unless renewed as a special partnership according to the provisions of the last section.” In Beers v. Reynolds, 11 N. Y. 97, the special partner, before the time fixed in the certificate for the termination of the partnership, sold out his interest to the general partner, and took a mortgage on the goods to secure the consideration. It was held that this was a violation of the 12th section and that the special partner was liable as a general partner to a creditor who dealt with the partnership after-wards without notice. Section 13, as stated, prescribes the penalty of general liability where the name of the special partner is used in the firm name with his privity. Section 17 prohibits the special partner from transacting any business on account of the partnership as agent, attorney or otherwise, and declares that “if he shall interfere contrary to these provisions, he - shall be deemed a general partner.” We have said that no case in this state except the present one has imposed the penalty of general liability upon a special partner for having the addition of ‘company’ to the firm name, where there was but one general partner. Nor have we found any case imposing such liability for any departure from the act, except where this penalty is specifically prescribed. The case of Madison County Bank v. Gould, 5 Hill, 309, is not an exception. In that case the special partner had drawn out his contribution of capital and it had been invested in real estate, used in the business, the title to which was conveyed to all the partners, general and special, as tenants in common. The court held that, assuming that this was done with the concurrence of the special partner, it was a violation of the 17th section of the act prohibiting the special partner transacting any business on account of the partnership. The withdrawal of capital contributed by him as special partner violates section 15 of the act, and the court further held that this would make him liable as a general partner. We are not prepared to say that an act so subversive of the whole policy of the statute might not be justly visited by the imposition of a liability as general partner, even if not so declared. But the withdrawal of capital by a special partner is a plain violation of section 12. It was an alteration in the capital of the" business. Judge Bronsou, in the case cited, referred to the fact that the legislature evidently intended that the legal title to all the partnership property should be vested in the general partners. It was a most material change in the capital to withdraw the contribution of the special partner from the business and put it into land, the title to which was vested in all the partners jointly, including the special partner. Moreover, if the purchase of the mill, with the co-operatian of the special partner, was doing business in violation of the 17th section, the withdrawing of his capital by his participation was an intermeddling with the business also. Both sections 12 and 17 specially declare the penalty of general liability for a violation of their provisions.

It is claimed in behalf of the plaintiff that as section 1 of the act declares that limited partnerships may be formed “upon the terms, with the rights and powers, and subject to the conditions and liabilities herein (in the act) prescribed,” and as section 13 impliedly prohibits the use of the addition “company” to a firm name where there is but one general partner, the conditions upon which a limited partnership is permitted have not been complied with, and that the parties stand as if the formation of a limited partnership had never been attempted. There was no irregularity other than the one specified. The certificate made and filed stated the “name or firm under which the partnership is to be continued.” (Sec. 4.) The only defect in the proceedings is that the firm name, W. S. Alley & Go., was not permitted by section 13, under the circumstances. In a general sense the use of a correct firm name may be a condition. But the statute carefully enumerates certain original conditions, the violation of which shall impose a general liability. The condition as to the use of the name of the special partner in section 13, and the condition as to publication of notice in section 9, are illustrations. Why should the legislature have made particular mention of these and other failures to comply with the act, and prescribed the penalty of general liability in terms, if it was intended that every failure to follow the precise directions of the statute should be followed by this result. The act should have a fair and reasonable construction, and we think the defect in the present case did not render the proceeding void from the beginning, or impose on the special partner a general liability. See Peckham, J., Manhattan Co. v. Laimbeer, 108 N. Y. 582 ; 13 St. Rep. 869. By recent legislation the strict policy which prevailed under the original enactment has been departed from. It is now possible to continue the use of a former firm name on the constitution of a new partnership, although the names of those who become special partners in the new firm are found in the original firm name. (Laws of 1882, c. 425 ; d¿. 1893, c. 263.) We are not required in the absence of binding authority to impose a liability upon a special partner upon a technical and severe construction of the statute, not in harmony with legislative policy indicated by recent legislation. A party dealing with a firm having the word “Co.” attached to the firm name, would not be likely to give credit on the faith of that addition without knowing who were represented by it. The facts in relation to the organization of the special partnership of W. S. Alley & Co. were matters of public record, and it is not claimed that the names and ’character of the several co-partners were not posted on the building as required by the act. The case of Andrews v. Schott, 10 Pa. St. 47, in the supreme court of Pennsylvania, which has been followed in some of the other courts in that state, construed a section in the Limited Partnership Act of that state, similar to section 13 of the Eevised Statutes in the act of this state. The court got by the difficulty that the legislature had not declared that the use of the word “company” should make the special partner liable as a general partner, by saying, “Mo doubt the legislature supposed that the latter part of the sentence, ‘he shall be a general pdrtner,’ referred to the whole section.” In this state the section has been frequently amended, and the phraseology upon the point now in question has remained unchanged. The court is not called upon to remedy an inadvertence or omission (if any occurred) in order to impose the penalty of general liability. The conclusion we have reached in this case does not, we think, contravene the statute, while at the' same time it is not inconsistent with the present public policy of the state.

The judgment of the general term and of the circuit should be „ reversed and a new trial ordered, with costs to abide the event.

All concur.

Judgment reversed.


author: Peckham, J.

text:
    Emmet M. Fitch as Administrator, etc., Resp’t, v. Edward M. McDowell et al., App’lts.

      (Court of Appeals,

      Filed April 9, 1895.)

    1 Payment—Note.
    The transfer of a note, given by a mortgagor to the mortgagee on condition that, when paid, it should operate as a payment on the bond secured by the mortgage, operates as a payment pro tanto so long as it remains in the hands of a third person and cannot be produced and delivered up by the mortgagee.
    2. Same.
    . The holder of such note takes no interest in, or right to, the bond and mortgage, and is not entitled to have the amount of the note paid to him out of the proceeds of sale, on foreclosure, in preference to the claim of the holder of the mortgage for the balance unpaid thereon.
    3. Same.
    But, if the mortgagor assents thereto, a judgment, directing payment out of any surplus arising on the foreclosure sale, is proper.
    Appeal from judgment of the general term of the supreme court in the third judicial department, entered upon an order which modified and affirmed as modified a judgment in favor of plaintiff entered upon a decision of the court on trial at special term.
    This was an action for the foreclosure of a mortgage executed by Edward W. McDowell to John H. Whiteside and Timothy Howe, as trustees, and by them assigned to Andrew Williams. In 1886 Williams assigned said mortgage to Jane Ellis, plaintiff’s intestate, as collateral security to the extent of $5,000, which assignment remained in Williams’ possession until June 20, 1888, during which period he received payments from McDowell, who believed Williams to be the absolute owner. It was then destroyed and an assignment executed, which transferred absolutely to said Ellis the bond and mortgage in payment of the debt to which the other assignment was collateral. This assignment was recorded October 5, 1888. On January 24, 1888, McDowell delivered to Williams, at his request, a negotiable promissory note for $1,765, payable in two months, the amount when paid to apply on the bond and mortgage. This note Williams procured the Iron National Bank to discount before maturity. This note was not paid, and the bank recovered a judgment upon it against Williams and McDowell. The bank and McDowell were made defendants to the foreclosure suit. They both answered, the former claiming it was entitled to the proceeds of the sale and the benefit of the security to pay the amount due on its judgment on the note, and asked that the foreclosure proceed. McDowell claimed the same thing, but also asked that if it should be found that the bank was not entitled to that relief, then that the note and judgment, being on outstanding liability against him in the hands of a third party, the amount thereof should be credited to him as a payment. The trial court directed judgment in favor of plaintiff for the amount due on the mortgage. This judgment was modified by the general term by allowing McDowell credit for the $1,765 note, and directing that plaintiff be paid out of the proceeds of sale the amount due less the allowance to McDowell upon said note, and that if there is any surplus, then that the same be applied in payment of the note.

      T. F. Conway, for app’lts; L. L. Sheldon, for resp’ts.

       Affirming 61 St. Rep. 776.

   Peckham, J.

We think the general term made a proper disposition of this case. The' transfer of the note by Williams to the defendant bank operated as a payment pro tano of the mortgage so long as the note remained in the hands of a third party, and in such condition that the mortgagee could not produce and deliver it up on the trial of the foreclosure action. This principle is decided in Battle v. Coit, 26 N. Y. 404. The bank upon taking the note took no .interest in or right to the bond and mortgage. The mortgage was not given to secure the payment of the note, and a transfer of the note to the bank did not operate as an assignment pro tanto of the mortgage. The case is not within the principle that the assignee of a debt secured by a mortgage is entitled to the benefit of that security, although ignorant of its existence-at the time of the assignment of such debt. The debt in this' case, which was secured by the mortgage, was never assigned to the bank. -There was an original debt due from McDowell, the mortgagor, -which.was thus secured, but the note which he subsequently gave to the mortgagee, and which when paid was to operate as a payment pro tanto upon the mortgage, was not the debt which was secured by that mortgage, but was a simple promise in writing to pay a certain sum of money which when paid was to operate as a payment on the mortgage. The disposition made by the general term provides for a deduction from the full amount, otherwise due on the mortgage of the amount of this note, because it is in the hands of the bank and the bank has a judgment upon it and the mortgagee is thus unable to surrender it, and, as between the maker of the note and the mortgagee, the note operates as a payment pro tanto. If there is any surplus after paying the amount due on the mortgage, less the amount of the note, that surplus is to be applied, under the decision. of the general term and with the consent of the mortgagor, to the payment of his note in judgment in the hands of the bank. This is.all that the bank has any right to demand, and the judgment must, therefore, be affirmed, with costs.

All concur.

Judgment affirmed.


text:
    Hugh J. Grant, as Receiver, etc., Resp’t, v. Patrick J. Walsh, App’lt.

      (Court of Appeals,

      Filed April 9, 1895.)

    1. Contract—Rescission—Fraud.
    One who has been induced to part with his property by the fraud of another, under guise of a contract, may, upon the discovery of the fraud, rescind the contract and reclaim the property, unless it has come into the possession of a bona fide holder.
    3. Same—Burden.
    When such fraud is established, the burden of showing that he is a bona fide holder is upon the party claiming title.
    3. Evidence—Fraud.
    Permitting a party to make a deposit in reliance upon the supposed solvency of a bank, with knowledge on the part of its officers of its insolvency, is a fraud upon such depositor, and evidence, tending to establish such fact, is competent in an action on the deposited check.
    4. Same.
    Evidence, in such case, tending to show that the officers of the bank had knowledge of its insolvency before the time of the deposit, is improperly excluded.
    Appeal from judgment of the general term of the supreme court in the first judicial department, entered upon an order which overruled defendant’s exceptions and ordered judgment in favor of plaintiff upon a verdict directed by the court.

      Thomas C. Ennever, for app’lt; Smith & White, for resp’t.

       Reversing 63 St. Rep. 360.

   Haight, J.

This action was brought upon a check drawn by the defendant on the 8th day of August, 1893, upon the Farmers’ Loan & Trust Company, payable to his own order and endorsed' by him “for deposit.” About 2--30 o’clock in the afternoon of that day he caused the same to be deposited to his credit in the Madison Square Bank, in which bank he then had an account with a balance still standing to his credit. At 3 o’clock of that day the Madison Square Bank closed its doors and never thereafter opened for business. The officers of the Madison Square Bank then caused the check in question with others to be delivered to the St. Nicholas Bank, which was then acting as the cléaring house agent of the Madison Square Bank. On the next morning the St. Nicholas Bank caused the check to be presented to the Farmers’ Loan & Trust Company for payment, which was refused, the defendant having in the. meantime learned of the failure of the Madison Square Bank and notified the Farmers’ Loan & Trust Company not to pay it.

The answer of the defendant alleges that at the time of the deposit so made by him in the Madison Square Bank it was hopelessly insolvent, and that that fact was well known to the officers, agents and employees of the bank; that he did not know of its condition, but supposed it to be solvent, and that, in taking his check upon deposit without notifying him of its condition, a fraud was committed upon him. The answer also alleges that the St. Nicholas Bank did not lawfully obtain possession of the check, and is not the owner thereof in good faith or for value; that the St. Nicholas Bank knew, prior to the time of the making of the deposit of the check by the defendant, that the Madison Square Bank was hopelessly insolvent; that such insolvency was known to its officers, and that the check had been obtained from the defendant by fraud.

Hpon the trial the plaintiff produced the check, offered it in evidence and rested. The defendant then, after showing the circumstances under which the check was drawn and deposited by him, called as a witness the receiving teller of the Madison Square Bank and asked him the following question : “ On August 7th, 1893, or prior thereto, had any of the officers of that bank told you anything about the financial condition of the bank?” This was objected to by the plaintiff as immaterial and incompetent. The objection was sustained and an exception taken by the defendant. The witness then testified that he did not hear from any person connected with the Madison Square Bank at any time prior to August 7, 1893, that the bank was insolvent and would have to discontinue business. The question was then asked: “Did you on August 7, 1893?” This was objected to as immaterial and incompetent. The objection was sustained and an exception was taken. The discount clerk of the Madison Square Bank was also sworn as a witness for the defendant and asked if he was present at a conversation on the day preceding August 8th, when the directors stated that the bank was busted and that they would have to stop business. This question was also objected to upon the same grounds, excluded and -an exception taken. The cashier of the St. Nicholas Bank was also sworn as a witness for the defendant, and testified that he knew Mr. Judson, the bank examiner, and was then questioned as to whether he knew that Mr. Judson had examined the affairs of the Madison Square Bank prior to August 8, 1893, and as to whether he had had a conversation with -him relative to the financial condition of the bank prior to that time. Each of which questions was objected to upon the same grounds, excluded and exceptions taken.

At the conclusion of the defendant’s evidence the court directed a verdict for the plaintiff for the amount of the check, to which direction an exception was also taken.

We think the rulings alluded to were erroneous and that a new trial is required. It was shown that the Madison Square Bank was insolvent; that an action had been brought against it by the People and judgment entered dissolving it on the ground of insolvency, and appointing a permanent receiver. It is, therefore, apparent that no action could have been maintained upon the check by that bank if, as is claimed, the check was received after the officers of the bank knew of its condition, and of their inability to continue, its business. The rule appears to be well settled that one who has been induced to part with his property by the frond of another, under guise of a contract, may, upon the discovery of the fraud, rescind the contract and reclaim the property, unless it has come into the possession of a bona fide holder.

In Cragie v. Hadley, 99 N. Y. 131, an action was brought by the plaintiff against the receiver of the First National Bank of Buffalo to recover the amount of a draft deposited with the bank at a time when the managers thereof knew that it was insolvent. It was held that permitting the plaintiff to make the deposit in reliance upon the supposed solvency of' the bank was a gross fraud upon the plaintiff, and that the latter was entitled to reclaim the draft or its proceeds.

The same rule was recognized in Metropolitan National Bank v. Lloyd, 90 N. Y. 530-537, but in that case there was no allegation of fraud in the answer, and, consequently, it was held that the evidence offered, tending to show fraud, was properly excluded. In this case, as we have seen, fraud on the part of the officers of the Madison Square Bank is alleged, and it appears to us that the defendant had the right to establish his allegations in this regard, and that they might have been sustained by the evidence excluded.

If the Madison Square Bank fraudulently procured possession of the defendant’s check the plaintiff could not recover without showing that the St. Nicholas Bank was a bona fide purchaser and holder.

In Canajoharie National Bank v. Diefiendorf, 123 N. Y. 191-206, 33 St. Rep. 389, Huger Ch. J., in delivering the opinion of the court, says: “The burden of making out good faith' is always upon the party asserting his title as a bona fide holder, in a case where the proof shows that the paper has been fraudulently, feloniously or illegally obtained from its maker or owner. Such a party makes out his title by presumptions, until it is impeached by evidence showing the paper had a fraudulent inception, and when this is done the plaintiff can no longer rest upon the presumptions, but must show affirmatively his good faith.

In Vasburg v. Diefiendorf, 119 N. Y. 357-364; 29 St. Rep. 448, O’Brien, J., says: “In this state it must be regarded now as a settled rule that when a maker of negotiable paper shows that it has be'en obtained from him by fraud or duress, a subsequent transferee must, before entitled to recover on it, show that he is a bona fide purchaser.”

In First National Bank v. Green, 43 N. Y. 298, it was held that a party suing upon a negotiable note purchased before maturity is presumed, in the first instance, to be a bona fide holder, but when the maker has shown that the note was obtained from him under duress, or that he was defrauded of it, the plaintiff would then be required to show under what circumstances and for what value he became the holder. The reason of this rule, as stated by Batallo, J., is that “where there is a fraud the presumption is that he who is guilty will part with the note for the purpose of enabling some third party to recover upon it, and such presumption operates against the holder, and it devolves upon him to show that he gave value for it.” F., Farmers & C. Nat. Bank v. Knoxson, 45 N. Y. 762 ; Ocean Nat. Bank v. Carll, 55 id. 440 ; Wilson v. Rocke, 58 id. 642 ; Nickerson v. Buyer, 76 id. 279; 2 Greenl. Ev. § 172; Bailey v. Bidwell, 13 Mees. & Weis. 73. If, therefore, the defendant had been permitted to show that a fraud had been practiced upon him by the officers of the Madison Square Bank, the presumption that the St. Nicholas Bank was a bona fide holder would no longer obtain, and then the St. Nicholas Bank could not recover without showing that it had received the check without knowledge of the fraud, in the regular course of business, and had paid value therefor. This it has failed to do. Not only has it failed to establish these facts, but the trial court excluded the evidence offered tending to show that its officers had knowledge of the actual condition of the Madison Square Bank and the circumstances under which that bank received the defendant’s check.

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

All concur.

Judgment reversed.