text:
    The Tonawanda Valley and Cuba Railroad Company and B. W. Spencer, Rec’r, App’lts, v. The New York, Lake Erie and Western Railroad Company, Resp’t. The Bradford, Eldred and Cuba Railroad Company and Thomas C. Platt, Rec’r, Appl’ts, v. The Same, Resp’t.

      (Supreme Court, General Term, First Department,

      Filed December 30, 1886.)

    1. Contract—By one railway to secure payment of interest on bonds-of another is lawful.
    An agreement was made by one railway company with another that, in consideration of the latter using its influence and exercisi g its co trol to-promote the interests and business of the former company, it will make good any deficiencies in the net earnings of that company to meet its-interest upon its then existing bonded indebtedness from time to time as-the same may become payable. Held, that none of the provisions of the-agreement were obnoxious to the law of this slate.

      2. Same—May be secured.
    As collateral security for the performance of its agreement to exert its. influence in favor of the other company, the party so contracting agreed to-cause a deposit of a majority of its capital stock with that company in any manner required, upon which, so long as the management of the party so depositing should be satisfactory, the party receiving the stock should give its representative the right to vote; that in event of dissatisfact.on the-party receiving the stock sir- uld, by the exercise of the voting power on that stock, appoint such a board of management as would carry out the agreement. Held, that the principal contract being unlawful the perform • anee of it might be thus secured.
    3. Same—Ultra vires—When a party is estopped from setting up defense of.

      Held, that a contract made between two corporations having been par tially executed, in an action brought upon the contract, a party who so-entered upon and enjoyed the benefits of the contract was estopped from claiming that the contract was ultra vi <s. That in order to avoid the agreement it must show it to be void as against public policy or some provision of law.
    Appeal from judgments of special term dismissing complaints in these actions on the pleadings and opening of the-plaintiffs.

      W. W. MacFarland, for app’lt; J. Buchannan and (A Steele, for resp’t.
   Davis, P. J.

These cases present indenfcically the same questions and they were for .that reason argued together. The contracts upon which the actions were brought were alike in form and identical in their objects and purposes. They were mere traffic agreements by which the parties arranged for an interchange of business for their mutual benefit and advantage, and stopping with the provisions which effect such interchange, there would seem to be no serious questions of their legality.

The plaintiff company in each case contracted “that it will at all times deliver to the Erie Company for transportation all the freight and passengers, that it can lawfully control or influence, destined to points that can be reached by way of the railroad of the Erie Company, or its connections, and will use its influence to promote the interests and the business of the Erie Company, so far as it can, with proper regard for its own interests. ” And the Erie Company contracted “ that so far as it can, with a proper regard for its own interests, it will use its influence and exercise its control to promote the interests and the business of the plaintiff company.”

And in consideration of the performance of the agreement on the part of the plaintiff company, the Erie Company agreed to make good any deficiencies in the net earnings of that company, to meet the interest upon its present bonded indebtedness from time to time as the same becomes due and payable.

We think there is nothing in these provisions obnoxious to any law of this state.

As collateral security for the performance of its agreement each of the plaintiff companies agrees to cause to_ be deposited with the Erie Company a majority of the capital stock of the plaintiff company, in such manner as shall be required, upon which so long as the management of the plaintiff company shall be satisfactory to it, the Erie Company will give or cause to be given to such representative of ■ the plaintiff company as shall be designated by it the right to vote upon the stock so deposited. And the promise of the Erie Company to make good deficiencies in the net earnings of the plaintiff company, is made upon the condition "that the corporate control of the plaintiff company shall become and remain vested in the Erie Company as above provided.

The only question in the case is whether this provision in regard to the deposit of the stock as security for the performance by the plaintiff company of its contract,_ and the condition that the corporate control of the plaintiff shall in that become and remain vested in the Erie Company are invalid in law, and for that reason the whole contract between the parties is void. It is not contemplated that the plaintiff company shall not continue to carry on its business as a corporation by continuing to operate its railroad, as is its duty as a corporation. On the contrary, it is bound by the contract to do so in order to carry out the provisions to deliver to the Erie Company all freight and passengers that it can lawfully control or influence destined to the points mentioned. This is to be done under its own management and control so long as it performs the contract, but when it fails to perform its contract, then the provision is that the Erie Company may by the exercise of the voting power of the stock deposited as collateral, place in control such a board of management as will perform the agreement. It cannot take the control itself, so that the Erie Company will manage and conduct the business of the corporation, but it can appoint such officers and agents of the plaintiff company as will manage the business of that company as required by its contract. Beyond this, the contract confers no power or control upon the Erie Company over the plaintiff Company, and the power given is purely contingent, and does not appear from anything in the case even to have been exercised, nor does it appear that any necessity for its exercise has arisen.

It is averred by the plaintiff companies that the contract was performed on their part by the deposit of a majority of the stocks required, and that the performance of the contract by both parties was entered upon and continued until the defendant company saw fit to repudiate the same.

The question arising upon these facts is an interesting one, by no means free from doubt, but we are inclined to the opinion, inasmuch as no decision is brought to our notice upon a precisely similar state of facts, that this arrangement is not per se void, because in violation of law. If there be no question but that contracts between railway companies for the arrangement of their intermutual traffic may lawfully be made by which one company may bind itself to pay stipulated ■ sums or assume obligations to pay interest upon the bonds of the other, it is not clearly perceived why the company that undertakes so to pay may not secure the performance of the contract by arrangements which will enable it, in case of breach of the agreement, to appoint such officers or agents for the defaulting company as shall secure performance.

If the question be considered as purely one of ultra vires, then it is obvious that the defendant is in no condition to avail itself of that objection. It entered upon and enjoyed the benefit of the contract for a long period of time, .and it is too late to assert that the contract was void, because it had no power to secure its performance in the manner stipulated in the instrument. Neither company could assert such a defense after entering upon and enjoying the benefits of the contract. To avoid the agreement, the defendant must be able to assert that it was void in law as against public policy, or by reason of conflict with some provision of law, statutory or otherwise.

We are of the opinion that the judgment should be reversed and a new trial granted, with costs to abide event.

Daniels and Brady, JJ., concur.


source: Caselaw Access Project

author: Daniels, J.

license: Public Domain

text:
    The People ex rel. Annie M. Hoffman v. The Board of Education of the City of New York and John Jasper, Superintendent of Schools.

      (Supreme Court, General Term, First Department,

      Filed December 30, 1886.)

    1. Board of education—Powers of—Laws 1882, chap. 410, §§ 102?, 1026.
    The board of education of the city of New York has, by Laws 1882, chap. 410, §§ 1022 and 1026, full control of the public schools and the public school system of the city subject only to the general statutes of the state upon education. This includes all that may be necessary for the government of the schools and the control and management of the teachers employed therein.
    2 Same—Action when not re view able by certiorari.
    Where the facts upon which their action is based aro sufficiently proved their resolution fining a teacher for disobeying their instructions can not be set aside or reversed by a review of the proceedings obtained by means of a writ of certiorari.
    Certiorari to review an order or resolution withholding from the relator fifteen days’ pay as a teacher in one of the public schools of the city of New York.

      N. J. & N. J. Waterbury, Jr., for relator; B. G. Beardslee, for resp’ts.
   Daniels, J.

The relator was charged with improperly conducting herself as a teacher in the course of the examination of one of her female pupils named Ella Luyster. It was alleged that she had discriminated against the pupil in such a manner as to obtain an improper result of the school examination and thereby exclude her from that promotion which it was insisted she was entitled to for the progress she had made in her studies. The relator denied this as well as all other charges of misconduct, and an investigation took place before a committee appointed for that purpose as to the truth of the charges made against the relator. The final result of the investigation of the committee has been stated in their report in the following manner :

“But more serious matters transpired upon the second hearing.

For the purpose of ascertaining the truth of the charge that Mr. Luyster’s child had failed to receive promotion, though deserving it, your committee requested the city superintendent to have the entire class examined, and each child marked. It was upon the reported result of this examination that the committee’s former report was founded.

It appeared upon the second hearing before the committee, that on the day fixed for the examination, the city superintendent attended the school, and directed Miss Hoffman not to interfere with the class in any way while the examination was going on.

Disregarding this admonition, Miss Hoffman entered the class-room, and during the temporary absence of the examiner, Assistant Superintendent McMullin, changed the seat of Mr. Luyster’s daughter (her usual place being in the rear of the room), and caused her to sit in one of the front seats. At the same time she instructed the teacher of the class to maintain a strict watch over the girl.

The object of the examination was defeated.

Even had no direction been given by the city superintendent common fairness dictated that nothing should be done to intimidate the child for whose sake the examination was taking place to render her nervous, or cause her to lose her self-possession. It was for this reason that Miss Hoffman was directed to leave the class entirely in the charge of the examiner.

The course pursued by her was calculated to frustrate the purpose of the committee, which was to ascertain the fitness of the girl for promotion. As the case stands,- we know but little more than we did before, because it is claimed by Mr. Luyster and his daughter, and we believe it to be the fact, that the change of position made by Miss Hoffman, and the close espionage of the class teacher (which was so marked as to be noticed by the examiner, who did not know which member of the class was interested in the result), agitated and confused the child to such an extent that she was unable to do justice to herself.

The effect of all this was that she was found not qualified for promotion.

Miss Hoffman’s excuse for interfering is that she had known the girl to copy from other children, and wished to prevent her from doing so on this occasion. The examiner was perfectly competent to detect anything of this kind, but, at all events, Miss Hoffman had received positive directions from the city superintendent to have nothing to do with the examination.

The committee consider this conduct deserving of severe censure, and propose the following resolution for adoption:

Resolved, That Miss Annie M. Hoffman, principal of F. D. No. 69, be fined fifteen days’ pay for disobeying the instructions of the city superintendent.
Eugene H. Pomeroy, ) Committee Gilbert H. Crawford, V on William Wood, ) Teachers.”

The information they obtained, as well from the relator as from the pupil herself and otherwise, was sufficient to entitle them to consider the facts reported by them as being proved. It was true there was a conflict in the statements made to them, but to a great extent the relator herself conceded her intervention in the proceedings for the final examination, which the committee by their report deemed it to be their duty to condemn. When that is the state of the evidence that may be given, the action of the board or officers to which it may be addressed are entitled to make their decision upon it, as it may strike their minds, and justify what they may believe to be correct conclusions to be drawn from it. People v. Board of Police Commissioners, 93 N. Y., 97; People v. Board of Fire Commissioners, 96 id., 644.

And the result cannot be set aside or reversed by a review of the proceedings obtained by means of the writ of certiorari. It must therefore be assumed that the facts were as the committee reported them to be, and as they were acted upon by the board to which the report was made.

It has been contended by the counsel for the relator that the board had no authority to make the decision which they did, even though these facts may have been reasonably well established. But the board has been invested with “full control of the public schools and the public school system of the city, subject only to the general statutes of the state upon education.” Chap. 410, Laws of 1882, §§ 1022, 1026.

Neither their proceedings nor the authority exercised by them appear to be in contravention of any statutory provisions of the state upon the subject of education. And as the board has, subject only to this qualification, been given full control over the public schools and school system of the city, the power exercised by it appears to be within this delegation of authority. It was a part of the discipline which in their judgment might be applied to punish and correct the conduct forming the subject of the complaint in the case. In this right the authority of the board has been created in very general terms, including all that may be necessary for the government of the schools and the control and management of the teachers employed therein.

It has been claimed that the power to proceed was vested wholly in the trustees, but that which has been given to this class of officers is entirely consistent with the existence of the very broad authority vested in the bord of education. Without, therefore, determining whether a writ of certiorari may be issued to obtain a review of these proceedings, it is sufficient to say that there is no legal ground upon which the court can interfere with what has been done or the result that was declared. The proceedings were carried on with great deliberation and care, being postponed from time to time, and thoroughly considered by the board, and they should be affirmed, but as the circumstances are peculiar, justice will probably be best promoted by directing the affirmance, without costs.

Davis, P. J., and Brady, J., concur.


author: Per Curiam.

text:
    Mary Maud Watson, an Infant, App’lt, v. John D. Phyfe et al., Resp’ts.

      (Supreme Court, General Term, First Department,

      Filed January 15, 1886.)

    1. Complaint—Dismissal of—When proper.
    If the evidence upon the main issue in an action be so slight or of such a character that it would be the duty of the trial court to set aside a verdict rendered resting upon it, the complaint should be dismissed. The condition of the evidence should, however, be such as to leave no doubt of the plaintiff’s failure to establish his claim, and that if there be a conflict the responsive proof should be full, complete and certain.
    2. Same—When improper.
    Where it is difficult to draw the line between the dismissal of the complaint and the submission of the issues to the jury, it is the better course to to ask their judgment.
    Appeal from judgment.

      George M. Curtis, for app’lt; W. H. Arnoux, for .resp’ts.
   Per Curiam.

The exceptions presented for review in this case are numerous and some of them perhaps well taken, notably the exceptions taken during the examination of Mr. Herrick and some of those taken upon the exclusion of hypothetical questions. The views of the respective counsel have been elaborately expressed and the examination of the record in its various complications has been examined, re-examined and sifted. The impression which remains after that process is that the issues herein, particularly as to the mental competency of the testator to make a will, should have been submitted to the jury. After the will and codicil were offered in evidence the plaintiff began an assault upon their validity, and upon the ground particularly that the testator was incompetent. Many witnesses were examined, including two experts, and the opinion expressed founded upon the conduct, conversation, demeanor, opinions and peculiar theories of the testator that he was irrational. The experts declared their opinion to be that he was insane, upon elements presented to them in hypothetical form. It is true that their opinions were modified to some extent by the cross-examination to which each was subjected; but there still existed the facts springing from all the evidence on behalf of the plaintiff that the conduct of the testator was irrational, and in the opinion of the experts that he was insane. It is true that the peculiar, if not extraordinary acts, declarations, theories and convictions of the testator were by some of the witnesses described as events occurring some time prior to the making of his will, which was executed in October, 1879; but they were observed as distinguishing characteristics by other witnesses for a period later and up to the time the will was made and subsequently. It may be that all these manifestations of a wayward mind were overcome by proof of the successful business habits of the testator, which were shown chiefly on the cross-examination of the plaintiff’s witnesses, but that was for the jury to determine after a proper consideration of all the evidence given before them; and this, although the more modern rule will be applied, which requires the dismissal of the complaint if the evidence be so slight or of such a character on the main issue that it would be the duty of the trial court to set aside a verdict rendered and resting upon it. When it is difficult to draw the line between the dismissal of the complaint and the submission of the issues to the jury, it is the better course to ask their judgment. The condition of the evidence should leave no doubt of the failure of the plaintiff to establish the claim, and if there be a conflict that the responsive proof is full, complete and certain. Here there was a conflict. The three witnesses called by the defendants to establish the testator’s sanity when the will was executed were met by facts and circumstances and by witnesses, laymen and experts, assailing the correctness of their views. The defendants gave no proof when the plaintiff rested. Their learned counsel, indeed, asked the court to direct'a verdict for them and the request was complied with. It might be advisable to consider the propriety of some of the questions excluded, but it is not deemed best to do so, inasmuch as the next trial, if another take place, may present no exceptions kindred to those in the record.

The judgment of this court is therefore that a new trial should be ordered, with costs to abide the event.


author: Daniels, J. Brady, J. Macomber, J.

text:
    People of the State of New York, Resp’t, v. Emil H. Brie, App’lt.

      (Supreme Court, General Term, First Department,

      Filed January 15, 1887.)

    Forgery—Uttering forged certificate—What bill of credit—Rey. Stat., Part 4, Art. 3, § 32.
    The defendant was convicted of the crime of uttering a forged certificate under an indictment drawn pursuant to Part 4, Art. 3, § 32, of the Rev. r Stat. The certificate so uttered is as follows:
    “No. 2676. $347.16.
    It is hereby certified that the State of Missouri, is indebted to Sanford Tunicliff in the sum of $347.16, on account of services in Company B, 5th Regiment, E. M. M. This certificate is not payable by the state until after the claim of said Sanford Tunicliff, for his services has been presented to the United States government, and the amount allowed and paid to the state, and then only for the actual amount received from the United States government.
    J. D. GRAFTON, Acting Paymaster General.

    SILAS W OODIN, Governor of Missouri.

    City of Jefferson, Mo., August 19, 1874.”
    The certificate bears on its back the words, S. Tunicliff Eeld, that the certificate was issued in compliance with the authority contained in the Act 1 (Laws Mo., Approved March 19, 1874, §§ 10 and 13), inasmuch as it was certified by the governor, and by the acting paymaster-general. That upon its face, therefore, it was not a void instrument, issued under this statute, and accordingly incapable of being the subject of forgery Nor were these certificates bills of credit, which the state was forbidden to issue by the federal constitution. That such certificates may be the subject of a forgery. Macomber, J., dissenting.
    Appeal from a judgment of the court of general sessions of the county of New York, convicting the defendant of the crime of uttering a forged certificate of indebtedness.

      Alex. S. Bacon, for app’lt; Be Lancey Nichol, for resp’t.
   Daniels, J.

The certificate for the uttering of which the defendant was convicted was dated in August, 1874. It was issued under a law of the state of Missouri, enacted on the 7th of January, of the same year, and it obligated the state of Missouri to pay the sum of $347.16, on account of services in Company B, 5th Regiment of the enrolled Missouri militia, after the claim of the person therein named for his services had been presented to the United States government, and the amount allowed had been by it paid to the state, and then only for the actual amount received from the United States government. This was an evidence of debt or engagement, for the payment of money upon a contingency, the forging and uttering of which was made a crime under the statute of the state, upon which the indictment was found. 3 R. S. (6th ed.), 944, J 33, subd. 1. That the contingency was a remote one upon which the payment was to be made, did not exclude the certificate from the operation and effect of the statute. It was still an engagement for the payment of money upon a future contingency.

The statute of the state of Missouri, under which it was issued, provided for the auditing and allowance of two classes of claims. The first included claims on file in the office of the quartermaster-general, or which should be there filed up to the first of August, 1874, and were denominated irregular claims, including generally quartermaster supplies. The other provisions of the statute included claims of officers and soldiers of the enrolled Missouri militia, and the Missouri militia, for services rendered during the war. And the claim for which the certificate set forth in the indictment was issued, and for the uttering of which the defendant was convicted, was of this description. The statute by its tenth section authorized and empowered the acting paymaster-general to examine such claims on file in his office, and provided, when he should find them correct and just, that he should allow the same, and indorse his allowance on the claims. And by the thirteenth section of the act it was further provided, that a duplicate of each claim allowed, should be filed in the office of the paymaster-general. And it was then directed that “he shall issue a certificate of state indebtedness • for the amount allowed thereon, which certificate shall be signed by the governor and countersigned by the acting paymaster-general, and shall read as follows: A form of the certificate was then given, which at its foot contained on the left side the word “countersigned ” followed by a space for the name, and that, in completing the line is further followed by the words “acting quartermaster-general of Missouri.”

As the statute was enacted, therefore, it in its language directed the certificate to be issued by the acting paymaster general, while the form prescribed dispensed with his authentication of the certificate and provided for that being done by the quartermaster general. In this manner a direct conflict was created between the mandatory provision of the act and the form' prescribed for carrying it into effect. And the question presented on this part of the case is, which was the paramount authority; and its solution depends upon the intent and design of the act as that has been disclosed. And that seems to be consistent only with the construction that the certificate should be signed and authenticated by the officer whose duty it was made to examine the claim upon which it should be issued. This construction is sustained by the general purposes and objects of the act, for the officers who were to examine, audit and allow the claims provided for were those in whose offices they were at the time, or should afterwards be filed. Those relating to the quarter master general’s department were filed, and were directed to be filed, in his office. He was the person who, in the ordinary course of the exercise of his authority, would be best acquainted with the merits of that description of claims, while he could not reasonably be expected to be familiar with the other class, including only the claims of the officers and soldiers in the militia. Those claims appertain to, and were especially within, the province of the paymaster general, and it was to his audit and allowance that they were committed by the act. The act further provided, that when the claims subjected to the commission, of which the quartermaster general was made a member, should be allowed, that they should be certified by a certificate authenticated in the form consistent with that allowance, by the acting quartermaster general of the state. He had no duty whatever to perform concerning the claims made for the services rendered by the officers and soldiers of the militia, and could not be familiar with them, as he would be with the other class of claims. And it could not reasonably be expected that he should certify as correct claims, those he was not required to examine or investigate, and of which he could practically have no knowledge. But what the legislature designed by the act was that the claims of each class should be certified by the officer knowing the fact of the truth of the certificate required to be made. And that intention is further disclosed by the thirteenth section of the act directing the acting paymaster general to issue' the certificates of state indebtedness for the amounts allowed for the services of the officers and soldiers. And he could not do that without authenticating them as the law intended that to be done, and from that fact, as well as the general scope and tenor of the act, it is quite manifest that in giving the form of the certificate in the act to be issued by the acting paymaster general, a mistake was made in omitting his official designation, and in place of it inserting the word “quartermaster.” And as this was evidently a mistake, it is required to be rejected, for the intent of the act is clearly to that effect, and that intent is required to be followed in its construction. That has not only been manifested by its general object and purpose, but in addition to that, by the explicit direction that the paymaster general should be the officer who, with the governor, should issue the certificate. This certificate must accordingly be held to have been issued in compliance with the authority contained in the act, inasmuch as it was certified by the governor and by the acting paymaster general.

Upon its face, therefore, it was not a void instrument issued under this statute and accordingly incapable of being the subject of a forgery, within the principle supported by the cases of Cunningham v. People (4 Hun, 455), and Fad ner v. People (2 N. Y. Crim. Rep., 553, and by 2 Bishop Crim. Law, § 533).

Neither was it invalidated by anything contained in section 52 of article 4 of the constitution of the state of Missouri, adopted in 1875, for that merely prohibited an appropriation of money by the legislature of the state to pay these certificates, until after the claims audited had been presented to and paid by the government of the United States to the state of Missouri. This section of the constitution leaves the certificates precisely as they were allowed tó be made and issued under the act of 1874. The obligation expressed in them, as that was provided for by the act, was in no manner changed or intended to be changed by the constitution. And, indeed, it could not have been, as the constitution of the United States restrained the state of Missouri from passing any act impairing the obligation of its contracts. But it left the certificates as they had been issued, creating an obligation against the state to pay over the money whenever it should be received from the government of the United States.

These instruments being merely certificates of indebtedness, to be paid by the state when the money should be received from the federal government, were not designed to be used or circulated in any form as money, but only to exhibit the obligation incurred by the state to the person named in each certificate. And they were accordingly not bills of credit which the state was forbidden to issue by the federal constitution. That was held in Craig v. Missouri (4 Peters, 410, 432), not to include “contracts by which a state binds itself to pay money at a future day for services actually received, or for money borrowed for present use.” And as a certificate of indebtedness, it was capable of being sold, and transferred by the person to whom it is stated to have been issued, for evidence of an indebtedness, not restricted in the right to transfer it, may be assigned by the holder to any other person or persons. And a delivery of the instrument intending to pass the title to it is, in judgment of law, equivalent to its formal assignment, giving the assignee the right to demand and receive the money mentioned in it. Upon neither of the grounds which have been considered, nor for any other reason presented by the case, does the conviction appear to have been unwarranted. It was, on the contrary, legal and regular, and the judgment should be affirmed.

Brady, J.

I concur with Brother Daniels, after full examination and reflection.

Macomber, J.

(dissenting).—The defendant was convicted in the court of general sessions of the peace in New York, on the 12th of February, 1886, of the crime of uttering a forged certificate, under an indictment drawn in pursuance of part 4, article 3, section 32 of the Revised Statutes. The certificate so uttered is as follows:

No. 2676. $347.16.
It is hereby certified that the State of Missouri is indebted to Sanford Tunicliff in the sum of three hundred and forty-seven 16-100 dollars, on account of services in Company B, Fifth Regiment, E. M. M. This certificate is not payable by the state until after the claim of said Sanford Tunicliff for his services has been presented to the United States government and the amount allowed and paid to the state, and then only for the actual amount received from the United States government.
J. D. GRAFTON, Acting Paymaster GenP
SILAS WOODSON, Governor of Missouri.
City of Jefferson, Mo., August 19, 1874.
The certificate bears on its back the words, S. Tunicliff.

No question is raised on this appeal except the question whether the forged certificate, for uttering which the defendant was convicted, is the subject of a forgery. It is claimed by counsel for the appellant that it is not, because the issuing of it by the State of Missouri was unconstitutional, being prohibited by section 10, article first, of the constitution of the United States, which declares that no state shall emit bills of credit. In this contention we think the learned counsel is in error. The certificate is an agreement by the State of Missouri to pay upon a contingency a certain indebtedness which it had incurred, arising out of the raid within its borders of General Price during the late war. In the case of Craig v. The State of Missouri (4 Peters, 410) it was held that the term “bills of credit,” .as used in the constitution of the United States in its enlarged and perhaps in its literal sense, comprehended any instrument by which a state engages to pay money at a future day, and for which, of course, it obtains a present credit, and that thus it would include a certificate given for money borrowed. The court there says that “The language of the constitution itself, and the mischief to be prevented, which we know from the history of our country, equally limit the interpretation of the terms, The word f emit ’ is never employed in describing those contracts by which a state binds itself to pay money at a future day for services actually received, or for money borrowed for present use. Nor are instruments executed for such purposes in common language denominated bills of credit. ‘ To emit bills of credit’ conveys to the mind the idea of issuing paper intended to circulate through the comm unit)--for its ordinary purposes as money, which paper is redeemable at a future day. This is the sense in which the terms of the constitution have been always understood.” See opinion of Chief Justice Marshall.

The more serious question in the case is (the requirements of the Statute of Missouri hi respect to the signatures thereto not being complied with), whether or not the instrument uttered was a forgery at all. By the act of the legislature approved March 19, 1874, it was provided, among other things, as follows :

“ Section 10. That for the purpose of settling the claims of officers of the enrolled Missouri militia, and Missouri militia for services rendered during the war, the acting paymaster general is hereby authorized to examine the claims of all officers and soldiers whose names appear as not paid on the record of unpaid claims on file in his office, and if he finds such claims correct and just, he shall allow the same and indorse said allowance on said claim, and if not correct he shall indorse such fact on the claim and return the same for correction, provided, however, that whenever a person is reported on the record of unpaid claims as absent without leave, the acting paymaster general shall not audit and allow said claim until he has presented sufficient proof that he was not absent without leave, or had not deserted.”
“Section 13. That the duplicates of all claims passed upon by the acting paymaster general shall be filed in his office—those rejected with the cause of their rejection and those allowed with the amount allowed thereon and the originals o£ all claims with the indorsement of their allowance, or rejection, shall be returned to the party filing the same; and on presentation of the original of any claim allowed as aforesaid to the acting paymaster general, he shall issue a certificate of state indebtedness for the amount allowed thereon, which certificate shall be signed by the governor, and countersigned by the acting paymaster general and shall read as follows :

By inspection of the certificate which was uttered by the defendant, and the form prescribed by the statute already quoted, it will be seen that in the certificate which the defendant uttered, the name of the acting quartermaster-general of Missouri does not appear, but there is placed off to the left of the certificate, the name of a person who is called acting paymaster-general. It appears, therefore, that the paymaster-general would, had this certificate been true, have issued a paper purporting to be an indebtedness of the state of Missouri, without having attached thereto the name of one of the persons whose signature was made absolutely indispensable by the very terms of the statute under which a genuine certificate could be issued.

The rule as now thoroughly established in this state is this: “ If an instrument be invalid on its face, it cannot be the subject of a forgery, and forging any instrument or writing which, as appears on its face, would have been void of genuine, is not an indictable offense. In the case of Fadner v. The People (2 N. Y. Crim. Rep., 553), the accused was indicted for forgery in having uttered a false and forged impression of the seal of the supreme court, with intent to defraud, and it appeared on the trial that no such pretended judgment had ever been granted, and that the alleged copy was a forgery. It was held that as the pretended certificate of the county clerk, upon which the seal was impressed, was not in the form prescribed by the Code of Civil Procedure, sections 957 and 958, it was void on its face, and that the act specified did not furnish the basis of an indictment for forgery. See Bishop on Criminal Law, section 538.

It is apparent upon the reading of the statute and the form of the certificate that the purpose of the legislatures of Missouri was, in order to secure greater safety to itself, to require at the foot of the instrument, both the signature of the governor and of the acting quartermaster-general, and that then, and only in such case could it be permitted to the acting paymaster-general to perfect it by countersigning and delivering such certificate to the person for whom it was designed. An instrument bearing the signature only of the governor, when the name and signature of the quartermaster-general is required to be written underneath the governor’s cannot be deemed to be such an imitation as, in a legal sense, can be said to be calculated to deceive. This instrument had no validity at common law and derives whatever value it possesses solely from the act of the legislature. Nor can any strength be given to the case of the people by reference to the general scope and purpose of the statute outside the form prescribed for the certificate. The acting paymaster-general had devolved upon him by section 10, the duty of approving or disapproving of the claims presented against the state. That duty, however, is far different from any power given him to issue a completed and negotiable certificate of indebtedness of the state for such claim. To the extent of allowing a just claim, the part required of him by the statute was quasi judicial and wholly independent of other officers of the state. His affirmative and favorable action upon an application established an equitable, though contingent liability against the state, but it went no farther.

Whether or not such allowance by him should ripen into a negotiable certificate, for the amount of such demand, was made dependent, under section 13, upon his preparing (“issuing” it is called in the statute) a certificate for the signature of the governor and of the acting quartermaster-general, which should thereafter be countersigned by him, and which when so signed and countersigned and delivered, became a valid and negotiable instrument for the payment of money upon a contingency. The circumstance that the name of the acting quartermaster-general is prescribed and made essential in the form only and not in the preliminary clause of the section, is of no moment. The form required is contained in and is a part of the same section which permits the issuing of any certificate. It is not inconsistent with the purely inactive portion of that section, but provides an additional safeguard against mistake, fraud or collusion.

The makers, in the common acceptation of the term, of the certificate were the governor and the quartermaster-general. The acting paymaster-general was required to countersign the instrument so signed by the other officers, when, and then only, it became a completed instrument. In the making of the paper itself the part taken by the acting paymaster-general was auxilliary and subordinate to the previous signatures of the governor and of the quartermaster-general. To countersign is to sign what has already been signed by a superior, to authenticate a writing. Webster’s Diet.

The argument, therefore, of the learned assistant district attorney to the effect that the name of the quartermaster-general in the form, was a mere mistake and not contemplated by the act, lacks cogency, in my judgment, because, first, it confounds the judicial duties of the acting paymaster-general, under section 10, in allowing claims against the state at the outset, with his purely clerical duty in countersigning an instrument executed by other officers which would, through the joint names of the three, become negotiable; and, secondly, because it asks the court"to say that a part of one section, and that, too, the concluding portion, of a statute, shall be disregarded by us as superflupus and as a mistake, when there is no inconsistency or discrepancy between the several parts.

Moreover, in the absence of actual inconsistencies, we are not called upon to seek reasons for a peremptory clause of a statute, but if we were, a most excellent one is apparent in the requirement of the name of the quartermaster-general as a maker of the certificate as an additional guaranty against imposition and fraud.

If the defendant had been indicted for the deceit in getting money by a false token, the questions would be essentially different from those herein considered.

For these reason's the conviction should be reversed and the defendant discharged.

Judgment affirmed._


author: Magomber, J. Daniels, J.

text:
    David Stewart, Resp’t, v. Collins P. Huntington, imp’ld with others, Appl’ts.

      (Supreme Court, General Term, First Department,

      Filed January 15, 1887.)

    Contract—For purchase of stock—Rescission—How made—Effect of.
    Plaintiff on 21st of April, 1870, owned 200 shares of the capital stock of the C P. R. R. Co., and on that day the defendants jointly purchased these shares of him, under an agreement that they weie to pay for the stock its par value and interest from September 1, 1864, and if they or either of them should pay anybody else any higher price for any of the shares of the stock of the company, the defendants were to pay to plaintiff on demand, in addition to price already paid, the difference between that sum and the highest price paid to anyone else; and further, in case, during or after the then contemplated visit to California of one Aspinwall, the plaintiff should be dissatisfied with the sale of the slack, the defendants were, upon demand and upon the repayment of the purchase price, to return to plaintiff his shares. While Aspinwall was in California, the plaintiff became dissatisfied with the sale, and demanded that defendants should return to him the stock and that the contract be rescinded, and offered to return the purchase price. The contract, as construed by the trial judge, was to be rescinded at the plaintiff’s election, if Aspinwall should express his dissent after his visit to t alifornia. After such visit, plaintiff called upon Huntington, one of the defendants for the two hundred shares, and demanded that they be returned to him, and Huntington failed to deliver them to him. held, that the obligation of the contract was upon demand and offer to pay what he had received for it that he would return the stock. The omission or neglect to return it under the circumstances was a breach of the contract. That the plaintiff himself made an effective and irrevocable rescission of the whole contract when he demanded back his stock and tendered to the defendant the ¡lurchase price. The remedies of the parties were fixed and determined by that action of the plaintiff himself.
    Appeal from a judgment entered upon the verdict for the plaintiff in the sum of $102,923.82 at the circuit, and from an order denying a motion for a new trial.
    None of the defendants except Huntington were served with process, nor did any but him appear in the action.

      Joseph H. Choate, for the resp’t; James C. Carter, for app’lt.
   Magomber, J.

The plaintiff on the 21st day of April, 1870, owned 200 shares of the capital stock of the Central Pacific Railroad Company of California, and on that day the defendants jointly purchased these shares of him.

The agreement, as set forth in the complaint, is as follows: The defendants were to pay for the stock its par value and interest from September 1, 1864, and if they or either of them should pay to anybody else any higher price for any shares of the stock of the company than the price so paid to the plaintiff, in such event the defendants' were to pay to the plaintiff on demand, in addition to par and interest already paid, the difference between that sum and the highest price paid to any one else; and further, in case during or after the then contemplated visit to California of one William H. Aspinwall (who also had 500 shares, which were sold at the same time and on the same terms), the plaintiff should become or be dissatisfied with the sale of the stock, the defendan s were, upon demand and upon the repayment of the purchase price, to return,to the plaintiff his shares.

The complaint further alleges that while Mr. Aspinwall was in California the plaintiff became dissatisfied with the sale and demanded that the defendants should return to him the stock and that the contract be rescinded, and offered to return the purchase price.

The answer of the defendant, Huntington, further than that it put the plaintiff to proof of his allegations, is unimportant, for upon the trial no evidence was given in his behalf. The defendant’s counsel rested upon the defects and deficiencies of the plaintiff’s case alone.

The evidence being undisputed, the contract established thereby was a matter of judicial construction. As stated by the learned judge in his charge to the jury it was not materially different from that which was alleged in the complaint, except, as the judge has it, the contract was to be rescinded at the plaintiff’s election if Mr. Aspinwall should express his dissent after his visit to California. The evidence established the fact also that after the visit of Mr. Aspinwall to California the plaintiff called upon Mr. Huntington for the 200 shares, and demanded that they be returned to him, and that Huntington failed to deliver them to him. The judge’s interpretation of this part of the contract was correct. “ The obligation of the contract was upon demand and offer to pay what he had received for it that he would return the stock. The omission or neglect to return it, or refusal to return it, under the circumstances was a breach of the contract. ”

It further appeared in the case that under circumstances, which will be adverted to hereafter, the defendants did actually receive from other persons than the plaintiff, stock of the same corporation which cost them, with other things, the sum of $400 or $425 per share. It is the difference between the sum so paid by the defendants to the plaintiff and the amount which the same number of shares would come to at the price of $400 or $425 per share that the verdict of the jury is supposed to be based upon.

The complaint had a double aspect, one cause of action being to recover the value of the shares which the plaintiff had sold and delivered to the defendant, and was founded on a claim of a total rescission of the contract, and the other was to recover upon the terms of the contract alone the enhanced price produced by the subsequent alleged purchase by the defendants of other shares at higher rates. The court at the trial compelled the plaintiff to elect between these inconsistent remedies, and the plaintiff elected to abide by the allegation and proofs relating to a recovery for the additional sum under the contract itself, by which the defendants were to pay the plaintiff an additional sum of money measured by their future purchases. By the terms of the contract, as testified to by the plaintiff, the plaintiff, after the sale and delivery of the stosk to the defendants, had a right of selection of two things. He could abide his time, and in the event of payment to others of higher prices, demand of the defendants a sum of money which, with the sum already received, would be equivalent to the prices of the new purchases. No limit of time seems to have been made to this portion of the contract. The other part of the contract, and dominating the rights of the parties while it existed, was the privilege given to the plaintiff within a specified time to rescind the whole transaction, and by returning the purchase price which had been paid to him, receive back the shares of stock which he had parted with.

The parties contemplated an immediate decision of the question, whether the transaction should remain a conditional and provisional sale, as it was in the beginning, or whether it should become absolute and irrevocable, leaving open only the question as to how much money should ultimately be paid by the defendants for the stock.

One of the principal questions in the case is, whether the election which the plaintiff made to rescind the contract altogether was not binding upon him. The learned judge at the trial declined to rule in the affirmative of this proposition, but held that inasmuch as the defendant did not as a matter of fact return the shares of stock, the right of the plaintiff to maintain an action upon the residue of the contract was unimpaired.

It is difficult to find an answer to the proposition contended for by the learned counsel for. the defendants that there was, by the action of the plaintiff, a complete and effective rescission of the contract.

The fact of such rescission is distinctly and positively averred in the fifth paragraph of the complaint. The evidence in the case corroborates that allegation. The case is devoid of any evidence to show any agreement of the parties after the demand by the plaintiff of the return of the certificates and the tender by him of the purchase price by which the rescission was waived or revoked. Whatever the rights of the parties were, they were fixed and determined primarily by the mutual agreement, as testified to by the plaintiff, and secondarily, by the independent action of the plaintiff alone by which, in pursuance of the terms of the original agreement, the contract was rescinded and demand made for the restoration of the respective parties to their former condition.

The error committed by the trial judge was in holding that there was no rescission of the contract, because of the failure of the defendant to comply with the demand for the redelivery of the stock. If this rule could be applied to a case where, by the terms of the agreement, the right to rescind existed on the part of one person, as in this case, it would produce much embarrassment.

The general rule is that the right of election of two remedies when- made is final and conclusive; and that where the contract itself provides for a rescission of a sale of personal property such rescission may be made by the person alone who has the right to make it under the agreement, and, when made, it is irrevocable; and thereafter nothing but a new agreement between the parties can change their respective duties and obligations. The case thus far proceeded at the trial upon the assumption that in no event could the defendant Huntington become possessed of any rights under the contract which were not subordinate to the claim of the plaintiff. The true construction of this agreement is that after the plaintiff had made his election to rescind the contract, to receive back his shares, tendering therefor the original purchase price, the defendant bad a right to assume that the plaintiff thereby abandoned wholly the alternative part of the original agreement relating to future purchases. There is nothing in that portion of the agreement out of which any special equities can be worked in favor of the plaintiff. Persons commonly bargain and pay for stock according to the market price or according to the agreement then presently made. While it is competent to make an agreement to pay an additional sum in a certain event, as was done by these parties, there is nothing in the claim of the plaintiff of a specially equitable nature, because that part of the claim, as developed in this case, is based largely upon a demand in the nature of a penalty.

This conclusion is, however, not reached upon any supposed inequitable claims made in behalf of the plaintiff. On the contrary, it is based solely in respect to this branch of the case upon the proposition that the plaintiff himself made an effective and irrevocable rescission of the whole contract when he demanded back his stock and tendered to the defendant the purchase price thereof.

The remedies of the parties thereafter were fixed and determined by that action of the plaintiff himself.

In the case of Andrews v. The Ætna Life Insurance Co. (92 N. Y., 596), it was held that an election by a principal of an unauthorized act of his agent when once made was irrevocable. In the case of the Second National Bank v. Burt (93 N. Y., 249), it is said: “In the case of adult parties subject to no legal disabilities, the adoption or repudiation of a transaction involving the unauthorized use of their funds, must be promptly made upon discovery of the facts, and when once deliberately made is finally made. The plaintiff in this case had no light to impose upon the defendant the risk attending the final result of the venture and still claim to hold an interest in it.” So also is the case of Kinney v. Kiernan (49 N. Y., 164), which decides that after a contract of sale has been rightfully rescinded by the vendor, the contract is at an end, and no act on the part of the vendor alone can revive it, and that thereafter an action upon the contract is not maintainable. See also Boerum v. Schenck, 41 N. Y., 182. In Junkins v. Simpson (14 Maine, 364), it is held that the contract cannot be repudiated in part and retained in part. In Weeks v. Robie (42 N. H., 316), it is held that a party who is entitled to repudiate a contract and wishes to rescind it, must do so distinctly and unequivocally. He cannot treat the contract as binding and rescind it at the same time. In Voorhees v. Earl (2 Hill, 292), it is held that a sale cannot be rescinded in part. The court says: “When one party is desirous of rescinding a contract by reason of the other’s default, he must do so in toto, and cannot hold on to any part.” In Stevens v. Hgde (32 Barb., 171), it is also held “That an election by the vendor to rescind, when distinctly and definitely made, cancels and puts an end to the contract in toto, and restores the vendor to his original title as general owner of the property, and leaves the parties in their original position in respect to the title.” In the case of Sage v. Hazard (6 Barb., 179), the defendant agreed to charter to the plaintiff a ship, then on her passage from Havre to New York. If the vessel should, not arrive in New York by the 10th of December the plaintiff had the option of continuing the agreement or not. The vessel did not arrive until the 28th of December, and on that day the plaintiff elected to continue the agreement. It was held by the court that the option expired on the 11th day of December, and could not be exercised afterwards. The court there further held that a question of that nature was one of law for the court and not for the consideration of the jury, where the agreement can be fairly construed to settle the time at which the option is to be determined. See also Lawrence v. Ocean Insurance Co. (11 Johnson, 261).

We have not been cited to any cases which controvert this principle.

The only other question upon the merits of the case relates to the alleged purchase by the defendant of stock of other persons at higher prices than the sum paid to the plaintiff. No claim is made that the defendants or any of them had bought stock of other persons at higher prices between the time of the sale by the plaintiff to them and the rescission by him of the contract of sale.

Subsequently to that, it is shown that a suit was brought in the state of California, against the Central Pacific Bail-road Company, and other defendants, by one Lambard and others, in their capacity as stockholders, which was finally settled, before judgment, by agreement, one of the terms of which was, that the plaintiff in that action should turn over the stock which he held to a certain company called the Contract and Finance Company, one of the defendants in that action. The stock was in fact so transferred. Another suit was brought by one Braman and others, against the Central Pacific Bailroad Company, of California, and others, and compromised in a similar way.

Undoubtedly the learned judge was correct in holding that the Contract and Finance Company, was substantially the defendants in this action, in respect to its connection with that litigation, and that consequently any purchases which they made under the name of the Contract Company should be deemed to have been made by themselves.

It was in settling these suits that the defendants, either directly or indirectly, paid sums of money, variously figured from §400 a share to §425 a share.

The nature of the settlements of the California suits which is made the measure of damages in this action, is shown •mainly by the deposition of Mr. Brown and Mr. Leland Stanford. From the evidence it appears that the two suits mentioned, were begun in the year 1870. The actions were based upon an allegation that the individuals instrumental in carrying out the enterprise of which the Central Pacific Railroad Company, of California, was a pioneer corporation, had by themselves and through the instrumentality of the Contract and Finance Company, of which they were the principal stockholders, contracts with the Railroad Company and other large transactions connected with it by means of which they had received large amounts of money and property as profits. It was claimed that such contracts were void and that the property so received was equitably the property of the Central Railroad Company of California, and that the plaintiffs therein had brought the actions, inasmuch as the corporation itself was unable to bring them, being under the control of authors of the fraud themselves. It was further declared by the plaintiffs in those actions that the only stock issued in a bona fide 1na.11-ner was about 7,150 shares, and belonged to the original issue of capital stock of $8,500,000, and that all other subsequent issues were fraudulent and void. In one action it was alleged that the amounts which had been wrongfully obtained and withheld came to the sum of $50,000,000. There is some evidence in the case from which a just inference could be drawn, that those actions were at the best but speculative operations to compel the defendants therein to settle with the plaintiff rather than to incur the risks to which such litigation would expose the market price of the stock and the value of the company’s property. As the result of the settlement of the Lambard suit, the Contract and Finance Company agreed to'pay a gross sum of $280,-000, and the notes of Huntington Hopkins, Stanford, Charles Crocker and E. B. Crocker were issued in payment thereof. It is upon this basis that the price of the plaintiff’s stock has been obtained. As a part, however, of that $280,000 the sum of $90,000 was given to one John B. Felton for his professional services. But the court did not permit the $90,000 claim to be considered. The defendants in those actions, as a part of the consideration of the moneys paid, received a discontinuance of the action and an agreement by which the parties thereto and the attorney should prosecute no more actions, and also certain receipts for money paid on stock subscribed for, but never issued, and 700 shares of the stock of the Central Pacific Railroad Company of California. The Braman suit was settled in the same way, except that the sum actually paid paid was $85,000 and the amount of the stock received was 200 shares.

Irrespective of the question whether the settlements covered the same kind of stock—that is to say, stock of the same issue sold by the plaintiff to the defendants—it seems to me that the transaction as proved does not show a purchase of stock within the meaning of the original contract between these parties. What doubtless was in the minds of the contracting parties at the time of making the agreement was not purchases which the defendants in one way and another might be coerced into making, but such as would be had by private contract or in the public market. It is impossible from the evidence to discriminate between the amount which the defendants paid to get rid of embarrassing litigation and the sum which they paid for the stock of the plaintiffs in the California suits, or to say how much value was assigned to the agreement of John B. Felton not to engage in any further litigation of that kind.

Upon the assertion that the defendants did in fact pay a higher price for like stock, the affirmative was with the plaintiff. He was bound to adduce proper and sufficient evidence to show that under the original agreement between the parties the defendants had voluntarily paid a higher price than had been paid by them to himself.

It is doubtless true that the courts, as is contended by the learned counsel for the plaintiff, have the power to go back of all transactions, even those undertaken in the courts of law, which are devised for the purpose of evading or eluding the terms of a contract. But there is no evidence that the California suits were brought for the purpose of obscuring or hiding the purchase of that stock thereby obtained by the defendants.

The exceptions to the refusal to nonsuit the plaintiff and the exceptions to the charge of the learned judge are all embraced within the two propositions which have been above mentioned, and need separately no special comment.

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

Brady, J., concurs in the result.

Daniels, J.

The evidence on which the plaintiff’s right to the damages recovered falls far short of supporting the verdict. On that ground it is necessary that there shall be another trial of the action. But whether the ineffectual effort to rescind the sale will deprive the plaintiff of the right to recover damages for the breach of the agreement is by no means clear. To complete the rescission, the concurrence of the defendant was as necessary as the election and demand of the plaintiff. A return of the stock was indispensable, and that the defendant refused to surrender, which prevented the rescission. Whether he can stand on that refusal and justify himself in it, and still assert that the contract had been rescinded, is certainly subject to very grave doubt, not requiring now to be settled. But on the other ground, I agree that there should be another trial, and therefore concur in the result.


author: Bockes, J.

text:
    Albany County Bank, Resp’t, v. William B. Scott, App’lt.

      (Supreme Court, General Term, Third Department,

      Filed November, 1886.)

    1. Promissory notes—Action against maker—What is sufficient consideration.
    In an action upon promissory notes made by defendant and one I. J., one of the grounds of defense was that the notes were without consideration. It was shown that until shortly before the making of the notes I. J. had been president of the J I. Co., and that the defendant was then and thereafter vice-president; that the company was then indebted to the plaintiff in about the sum of $60,000 upon notes made by the company for its accomodation, on which J. and the defendant were respectively liable as indorsers; that the notes in suit were made as a change of or substitute for such indebtedness to the amount of such new notes. ]£. Id, that the notes were made upon good consideration.
    2. Collateral security—Taking of, on time not an extension of time OF THE ORIGINAL DEBT.
    It was urged that the action was premature, inasmuch as the collaterals pledged for the payment of the notes were not yet due when the suit was commenced. Held, that the mere taking of collateral security on time was not per se, and in the absence of any agreement beyond it, an extension of time for the payment of the original debt.

      W. Frothingham, for app’lt; Hungerford & Hotaling, for resp’t.
   Bockes, J.

This is an appeal by the defendant from a judgment directed by a referee for $22,413.91, with costs of suits—in all $23,408.03, in favor of the plaintiff.

The action was brought upon two promissory notes made by the defendant and Ira dagger, one dated October 16, 1815, for $22,500; the other dated December 14, 1815, for $13,500; both payable to the plaintiff on demand, with interest. The notes, as alleged in the complaint, had been reduced by payment to the sum of $20,550.60, March 21, 1884, for which sum, with interest from this date, judgment was demanded. The notes were in form joint and several, and Scott was alone sued.

Each note contained a declaration of a deposit as collateral security for its payment; that of October sixteenth, of $25,000, par value, of the mortgage bonds of the dagger Iron Company; and that of December fourteenth, of $15,000, par value, of like bonds, with liberty to sell the same as therein provided.

The principal grounds of defence were: first, that the notes were without consideration; and secondly, that the plaintiff had accepted other notes in payment, or as collateral, which were not due at the time of the commencement of the action, and therefore it was prematurely brought. The referee found in favor of the plaintiff on all the material and controlling issues; and as we conclude, his findings must be accepted as the truth of the case.

First, then, as to the consideration of the notes: It seems that until a short time before the notes were made, dagger, the co-maker with the defendant, had been the president of the dagger Iron Company, and the defendant was then and thereafter its vice-president; that the comfany was then indebted to the plaintiff in about the sum of 60,000, upon notes made by the company for its accommodation, on which notes dagger and the defendant were respectively liable as endorsers, and that the notes in suit were made to reduce, or rather as a change of or substitute for such indebtedness, to the extent and amount of such new notes, with dagger and the defendant as makers. If the notes in suit were made and delivered to carry out an arrangement having this change or substitution of indebtedness in view and in consummation of it, they were unquestionably on good consideration. That they were so made and delivered the referee has found on the evidence, and, as we think, he has so found in accordance with the preponderance of proof; indeed, in accordance, if credited, with the direct and positive proof given on the part of the plaintiff. We may start with the request and agreement, in writing, signed by the defendant and dagger, and delivered to the plaintiff, as follows:

We hereby request the Albany County Bank of Albany to subscribe for $25,000 of the bonds of the dagger Iron Company, secured by the third mortgage of said company on their furnace property, payable at ninety cents on the dollar in the paper of said company, indorsed by us and discounted by said bank, and in consideration thereof we hereby agree to guarantee the payment of said indebtedness to said bank by our notes, the said bonds to be held by said bank as collateral thereto.

IBA dAGGER, W. B. SCOTT.
Albany, October 16, 1875.

This paper bears the same date with the first note, which, as is manifest, was made, anticipatory of the subscription for the bonds, to answer the “guarantee” agreed thereby to be given. The subscription for the bonds was made as requested; and on or about the 15th of December following, the bonds in the meantime having been obtained, the note was discounted or accepted by the plaintiff, and the bonds delivered as collateral security as provided for in the request and agreement above set out and as stated also in the body of the note, and the indebtedness of the dagger Iron Company, on which the defendant and dagger were liable, was changed to an indebtedness against them alone, to the extent and amount of the note, with the latter two as makers.

Then as respects the note for $13,500 of December 34th: The proof is to the effect that this note was also made by the defendant and dagger, and accepted by the plaintiff, with the bonds of the company as collateral security for its payment, in reduction or change of their liability to the plaintiff on the paper of the company. The future action of the defendant goes to show that the notes had their origin on a state of facts substantially as above briefly stated. Both the defendant and dagger repeatedly during the course of several years prior to the bringing of the action, recognized the notes as valid and binding on them by writings over their own signatures; made changes of securities held as collateral, and gave additional collateral security for their payment and also made payment thereon; which recognition is quite inconsistent with the alleged defense that the notes were without consideration and invalid against them. If the notes were made, as is urged by the defendant, to evidence an indebtedness to the Iron Company, which had already been paid and canceled by a purchase by the plaintiff of its bonds, and the bonds described in the notes as collateral thereto were actually the property of the plaintiff at the time the notes were accepted or discounted, then of course there was no such consideration for the notes as would bind the defendant and dagger to their payment. But the proof fails to sustain this theory. The written evidence is against it by all fair intendment; and the oral proof in its preponderating influence does not. contradict and overcome such intendment, but, as we think, decidedly supports it. If the oral testimony submitted on the part of the plaintiff—especially that given by Mr. Templeton, plaintiff’s cashier—is to be credited and considered in connection with the written evidence, with which it seems entirely consistent, the defense of want of consideration for the notes is absolutely groundless. Without here attempting a criticism of the testimony submitted on the part of the defendant in detail, or to show its improbability where it is in conflict with that submitted on the part of the plaintiff, both written and oral, it must suffice to say that the weight of evidence on every material matter in dispute is with the plaintiff on this branch of the case.

It should be added that the testimony of Mr. Templeton, plaintiff’s cashier, has been assailed as contradictory, inconsistent with itself and inconsistent with the written evidence; and also that it is contradicted by other proof— hence that it is unreliable to an .extent, rendering it valueless. His testimony has been carefully and skillfully dissected and collated by the defendant’s counsel; but on our examination of the proof, it fails, as we think, to support such conclusion. He was closely and critically cross-examined, and in some instances discrepancies are pointed out in his testimony, principally, however, as to matters of secondary importance, which might well occur without an impairment of its general scope. In so far as we are able to see, the line of proof given by him on the material points, considered under all the proof submitted outside of it, afforded fair matter for consideration by the referee, in his effort to determine the truth of the case; so the referee had the right to give it force in making up his findings of fact, and may well have done so in determining the question as to the preponderance of proof on subjects as to which there was a conflict of evidence; and as the case is here presented, this court on appeal cannot properly hold that in giving the evidence even controlling force there was error.

It is next urged that the action was prematurely brought, inasmuch as some of the collaterals pledged for the payment of the notes were not yet due when the suit was commenced. But this objection is answered by the fact that it does not appear that there was, at any time when collaterals were given, any agreement to defer or suspend plaintiff’s right to proceed on the principal indebtedness. It was laid down in Cary v. White (52 N. Y., 138) that the mere taking of collateral security on time was not per se, and in the absence of any agreement beyond it, an extension of time for the payment of the original debt; and this case was cited with approval in the recent one of Linderman v. Farquharson (101 N. Y., 438). Now, in no instance where collaterals were delivered to and accepted by the plaintiff, was there any agreement that its right to proceed on the original indebtedness should be suspended; but in every such instance the securities pledged were expressly as collateral.

On the trial, and after the plaintiff had rested the case, the defendant moved that the plaintiff be instructed to furnish the items of its claims and of payments made thereon. The motion was denied on the ground of want of power in the referee so to direct. This ruling is urged as ground of error. Error cannot be predicated on this ruling, if for no other reasons than these, that it is plain the request was without merit; and also that as the case was then and subsequently made on the proof, the refusal was harmless to the defendant.

There were no rulings on questions of evidence during the trial, as we think, injurious to the defendant’s rights. Judgment affirmed, with costs.

Learned, P. J., and Landon, J., concur.


text:
    Robert L. Day et al., Resp’t, v. The Ogdensburgh and Lake Champlain Railroad Company, App’lts.

      (Supreme Court, General Term, Third Department,

      Filed November, 1886.)

    1. Trust — Fund impressed with—Equity will prevent improper DIVERSION.
    Where an instrument contained a provision that certain bonds therein specified should bear interest, at a rate not exceeding six per centum per annum, payable out of the net earnings of the company, and defining wliat should be deemed net earnings: t.e-d, that its effect was to declare a fund, and set it apart as a means and security for the purpose declared; that the fund became impressed with a trust in favor of the bondholders, which equity would protect from an improper diversion.
    2. Same—Parties injured have a standing in court.

      Till, that the fund, when brought into existence, inured directly and especially to the benefit of the bondholders, and that they had a standing in court to demand the protection of their rights.

      Louis HasbroucJc, • for app’lt; James & Herriman, for resp’t.
   Bockes, J.

We are of the opinion that the interlocutory judgment overruling the demurrer to the complaint is right, and concur in the reasoning of the special term, expressed in the opinion there delivered, in its geneial and controlling features. It is, as we think, quite manifest that it was the intention of the parties to exhibit “A,” that the “net earnings,” there particularly defined, should constitute a fund from which to meet the interest to accrue on the income bonds, to the extent that such earnings should suffice to pay the rate of interest provided for. This conclusion is well supported, as we think, by the language employed in that instrument, interpreted by the circumstances surrounding the subject and the purpose the parties had in view. It was intended to issue an exceptional class of bonds with a special provision as to their drawing interest, dependent upon the accumulation of a fund, íesting upon contingency; but if brought into existence, then to be devoted to the purpose expressly and definitely declared. So it was provided that the income mortgage bonds should “ bear interest at a rate not exceeding six per centum per annum, payable only out of the net earnings of said company,” defining what should be deemed “net earnings,” and the bonds themselves were to carry a similar provision on their face. Its effect was to declare a fund and set it. apart as a means and security for the purpose declared. Interest was obtainable in no other way. So it is manifest that this fund was, in the intention of the parties, to be devoted to the purpose and end declared. Such is the spirit and meaning of the provision under discussion. Thus in equity it became a fund impressed with a trust in favor of the bondholders, which équity will protect against an improper and unjust diversion. This conclusion we deem fully sustained by the authorities cited in the opinion of the special term, where the subject is further elaborated. If right in this, that the fund when brought into existence inured directly and especially to the benefit of the bondholders, it follows that they have standing in court to demand that their rights should be respected, and the only remaining question is whether an unjust and illegal diversion is charged in the complaint. On this branch of the case we may content ourselves by referring to the opinion of the learned judge, given at special term, and the authorities cited by him in support of his line of reasoning and conclusion.

It is there made plain, as we think, that according to the averments of the complaint, there has been an improper and illegal diversion of the earnings of the defendant’s road to the injury of the plaintiff’s rights as holders of income mortgage bonds, and that such diversion is intended to be continued in the future. If correct in our view of the case, the judgment appealed from should be affirmed.

Interlocutory judgment affirmed, with costs, but with liberty to the defendant to answer on payment of the costs of the demurrer and of appeal.

Learned, P. J., and Landon, J., concur.


author: Learned, P. J.

text:
    Moses G. Wells, App’lt, v. The Village of Herman, Resp’t.

      (Supreme Court, General Term, Third Department,

      Filed November, 1886.)

    1. Contributory negligence—Is a question for the jury.
    Contributory negligence generally presents a question for the jury. If there be any evidence from which a jury might find proper care, it is for them to pass on the question.
    2. Proper care—What is.
    Proper care in any given case is such care as an ordinarily prudent man wbuld exercise in like circumstances.
    3. Sidewalk—Right of person to use.
    A person is justified in walking along the sidewalk of a village, although its slippery condition makes it dangerous.
    4. Contributory negligence—What cannot be called negligence as A MATTER OF LAW.
    Where a person walking on the sidewalk of a village which was icy, crossed over a ridge in the middle of it, believing the walk to be safer on the other side, and sustained injuries because of the condition of the walk: Held, that he could not, as a matter of- law, be held to he guilty of negligence in so doing.

      D. if. Robertson, for app’lt; L. W. Russell, for resp’t.-
   Learned, P. J.

The plaintiff sues for damages caused by his falling upon a sidewalk, covered with ice and snow. He was nonsuited on the ground of contributory negligence and appeals.

No point is made on the appeal that there was not negligence in defendant. We only need to consider whether the evidence was conclusive against him as to his contributory negligence.

It has often been said that contributory negligence generally presents a question for the jury. If there be any evidence from which a jury might find proper care, it is for them to pass on the question. And proper care may be said to be such care as an ordinarily prudent man would exercise in like circumstances. Hence, to judge what an ordinarily prudent man would do is generally a matter for the jury. It can seldom be laid down with safety, as a matter of law, that an ordinarily prudent man would not have done such and such acts.

The plaintiff is, of course, entitled, on this hearing, to the most favorable conclusion which can be drawn from the evidence.

He was_ going home soon after 3 p. m., March fifth, and was moving as carefully as he could, because he knew there was danger. Of course he was justified in walking along the sidewalk, although its slippery condition made it dangerous. There was a ridge in the middle of the sidewalk, and he was on the side of the ridge next the fence. It was more wet and glory on that side, and on the side next the street was snow. He thought if he could get over the ridge he would be safer. He had on a pair of moccasins. He felt with his foot until he got on the ridge, and the moment he raised on that his foot slipped and he fell. He had a small empty pail on his left arm, nothing else in his hands. He stepped on the ridge to get over it, because he thought it safer on the other side. There was hardly room to walk near the fence. He says he would have had to cross the ridge anyway before he got to the gate, even if he had not tried to cross it when he. did, for the ridge, he thinks, turned right in.

Thus, it appears, that the slippery ridge was on the sidewalk, and apparently running in the direction of the sidewalk, and finally, as plaintiff thinks, turning in towards the fence, so that he would be obliged to cross it.

Can it be said, as a matter of law, that if a foot passenger on a sidewalk crosses from one side of the walk to the other, influenced by the belief that the other side is less slippery, he commits an act of negligence, even though a ridge of ice intervene between the place where he is walking and that to which he would go % It seems to us not.Hen are obliged to choose the place where they shall walk, and if they try to get to the safest and least slippery place, they are not to be blamed if in the attempt they step on a ridge of ice.

Let us reverse the case. Suppose the plaintiff had not attempted to cross and had slipped on the place where he had been walking. It might then been argued that he believed it to be safer on the other side of the ridge, and therefore was negligent in not crossing over the ridge to that safer place.

It seems to us that this really presented a question for the jury. Taking all the circumstances together—the ridge of ice, the turning of the ridge towards the fence, the apparently safer walking on the other side, the slippery condition of the ridge itself, the safer condition near the fence—taking all these into account, did the plaintiff act like a prudent man?

We think, therefore, that a nonsuit should not have been granted. There is little use to cite authorities. The principles are familiar. The question is, how do the facts of this case appear under those principles.

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

Landon, J., concurs._


author: Bocees, J.

text:
    Simeon Cunliff, App’lt, v. The Delaware and Hudson Canal Company, Resp’t.

      (Supreme Court, General Term, Third Department,

      Filed November, 1886.)

    1. Pleading—Amendment allowed after judgment—Code Civ. Pro., § 723.
    Code of Civil Procedure, section 723, provides that the court may at any stage of the action, before or after judgment, amend any process or pleading by correcting a mistake in any respect, or by inserting an allegation material to the case. The question of allowing amendments is one resting in sound discretion, and it seems sufficient that the proposed amendment be material to the rights of the parties or to the right of either of them, and that it is in the furtherance of justice.
    2. Same—What considered a proper exercise of discretion.
    Where it was claimed by the defendants that the defense of the statute of limitations was omitted through inadvertence, the case having proceeded before the referee as though the defense were well pleaded. Reid, that the allowance of an amendment interposing the defense was a proper one.
    3. Same—Diligence;—What considered suitable.
    The motion for the privilege to amend not having been made until after judgment and appeal to the general term: Reid, that the better practice would have been to make the motion on delivery of the referee’s report, but the plaintiff not appearing to have suffered injury, and the delay having been short, the defendant was not chargeable with lack of diligence.
    Appeal from an order of the special term setting aside a judgment rendered in favor of the plaintiff amending the answer and ordering a new trial upon the amended pleadings, on terms therein dictated, before the same referee before whom the case had been originally tried.

      Parker & Countryman, for app’lt; Edwin Young, for resp’t.
   Bocees, J.

The power of the court here exercised, allowing the amendment of the pleading asked for, even after judgment, cannot, as we think, be well doubted. It seems fully conferred by section 723 of the Code of Civil Procedure, which provides, among other things, that the court may at any stage of the action, 11 before or after judgment, * * * amend any process or pleading * * * by correcting a mistake in any respect or by inserting an allegation material to the case.” It seems sufficient that the proposed amendment be material to the rights of the parties or to the right of either of them, as such right or rights are made to appear to the court on the facts laid before it on the application to amend, and that it be in furtherance of justice. The question of poiver seems put at rest by tlie decision in Hatch v. Central Nat. Bank (78 N. Y., 487), and it has also been frequently exercised in cases like the present, after judgment. As a question of power merely it is not arbitrarily limited by the recovery and entry of judgment, but it may be exercised after judgment as well as before judgment in furtherance of justice. Undoubtedly great caution should be observed in the former class of cases, to the end that there should be no abuse of power. But if a party has rested in excusable misapprehension, or has been misled intentionally or unintentionally, or has mistakenly acquiesced in a supposed state of pleading that was subsequently found not to exist, because of which a right was imperiled or lost, a case might be made having-sound basis for relief on the ground that the granting of it1 would be in furtherance of justice. So the power in a case like the present—and indeed in all other cases— should be exercised only in furtherance of justice, and on such terms as should be deemed just in view of the facts of the particular case. The question, therefore, as to the allowing of amendments is one of sound discretion; and this brings us to consider the facts here presented to the special term as the basis of the application.

The affidavit of Mr. Harris and of Mr. Young, the attorney and counsel who conducted the defense, are very distinct and emphatic to the effect that they supposed the statute of limitations had been pleaded; that the case was tried before the referee upon the hypothesis that the statute • was available under the pleadings as matter of defense, the same as if pleaded, and that it was so there treated by the counsel of both parties and by the referee; that if the objection that the statute was not pleaded had then been interposed, or attention had been called to the omission, steps would have been taken to procure the needful amendment to obviate such objection; and further, that the fact that the statute had not been pleaded was first brought to their notice by the suggestion to that effect made by the referee on rendering his decision. Some circumstances of excuse for the omission to notice the defect in the pleading until the referee gave his decision were also given, being principally those arising from the alleged facts above alluded to, because of which the affiants were misled or rested on misapprehension. The statements of facts above referred to are, directly or inferentially, met, at least to a very considerable extent, by the answering affidavit of Judge Parker; their denial, however, not being quite as direct and distinct as are the affirmative averments. It is, however, therein stated that reliance was put throughout on the failure of the defendant to plead the statute, and that the counsel did not by word or deed intimate anything to the contrary, or waive any right on the pleadings or issues in the case; and that one of the points on his brief on which the case was argued and submitted to the referee was that the statute was not pleaded. It is insisted, as to this last suggestion, that the defendant’s counsel had no knowledge of this point in the plaintiff’s brief, having been submitted to the referee after argument; and this seems probable if full credit, or indeed any credit, is given to the material averments contained in the moving affidavits. But there is one important statement made on the papers, which we think, when considered with other undisputed and probable facts, of controlling significance. Mr-. Harris says that “when the said objection (the objection to a recovery because of the statute) was urged on the motion for a nonsuit, the referee stated that he would consider it when he came to consider the whole case.” t Mr. Young says “that thereupon the question as to whether said statute was applicable was discussed by counsel on both sides; and the referee overruled defendant’s objection, and said he would consider the question as to whether or not the statute was applicable, as plaintiff claimed the several acts complained of were one continuous act, before deciding the case.” This remark and promise of the referee, sworn to by both Mr. Harris and Mr. Young, seem clearly to imply an understanding that the question as to the applicability of the statute to the case was open to him as if well pleaded; and it may be here noted that it is undisputed that a question as to the applicability of the statute to the case was held open for consideration and decision by the referee.

It is so stated in the answering affidavit, where it is said: “The question made by the defendant was one purely of law, and arose on the plaintiff’s evidence, and when the question was raised its decision was reserved by the referee till the final disposition of the case.” The reservation by the referee here referred to, as is urged by the plaintiff’s counsel, was as to whether the statute was or was not applicable without pleading it. But if the moving affidavits are to be credited, it was not so understood by the defendant’s counsel and attorney. As they understood it, according to their statement, the question was reserved as if unembarrassed by any omission in the pleading. To hold against them in this respect would be simply to discredit their direct and positive averments, which result is not here a necessary consequence on the awarding of entire credit and force to the answering affidavit; for in this view the case would be one of mistake or misapprehension as to the real point agreed to be reserved for decision by the referee. That the question as to the applicability of the statute to the case was reserved for ultimate disposition by the referee, is manifest from the papers submitted, indeed, is not disputed. That such question, as it was understood by the defendant’s counsel and attorn* y, was to be considered by that officer as if well pleaded, is distinctly asserted in the moving papers; and that the fact was otherwise, and was otherwise understood by them, is not, as we think, made sufficiently plain and certain to cast discredit upon and overthrow those positive assertions.

Our conclusion is that the referee held the case for ultimate disposition, or was to so hold it, as understood by defendant’s counsel and attorney, on the hypothesis that the objection to a recovery because of the statute was open to him on the facts and the law applicable to them, the same as if the statute had been pleaded. If this be so, then the rejection of;this defense by the referee on the ground that it was not interposed by answer, was undoubtedly a surprise to the defendant’s counsel, growing out of mistake or misapprehension, under circumstances affording reasonable and just ground for relief. In this view of the case—and we think this is the correct view to be taken of it—the defendant in justice and right is entitled to a rehearing before the referee; and this on a state of pleading which will afford to it the benefit of the defense of which it was deprived through a misapprehension of the question believed to have been reserved for decision by that officer; and it is, as we think, but in furtherance of justice to put the parties now in the same position held by them when this misunderstanding occurred, unembarrassed by any question of pleading.

As to the subject of diligence in making the motion, it would have been better practice on the part of the defendant had the motion been made at once when its necessity was made known on delivery of the referee’s report, and before judgment and appeal to the general term; but the delay, in point of time, has not been great, nor does it appear that the plaintiff has suffered injury because of it not answered by the conditions imposed by the order.

Order affirmed, with ten dollars costs and disbursements for printing.

Learned, P. J., and Landon, J., concur.