text:
    ELIZABETH J. GRAHAM, as Executrix of JOHN GRAHAM, Deceased, Appellant, v. LEWIS H. MEYER, Respondent.

      Settlement of an action — when the failure of the defendant to disclose his pecunia/ry condition mil not vitiate it.

    The plaintiff recovered a judgment against the defendant and against his partner, one Stueken, in theUnited States Circuit Court for the alleged conversion of three ships belonging in part to the plaintiff. Pending an appeal taken by the defendant to the Supreme Court of the United States he made a general assignment, giving all his other creditors a preference over the plaintiff. Thereafter the plaintiff brought an action to set aside the assignment as fraudulent. Subsequently a settlement was made, the plaintiff receiving some $90,000 in cash and. a note of the defendant for $28,700, and satisfying his judgment for $243,204.42 against the defendant and assigning the one recovered against Stueken. Subsequently the note for $28,700 was surrendered upon the payment by* the defendant of $12,000. It appeared that after the assignment was made the-attorney for the assignee, in preparing his answer to the action brought by the plaintiff to set it aside, discovered that the property assigned was more thansufBcient to pay all the creditors of the defendant, including the plaintiff: that he so informed the defendant and advised him to try and settle the matter • with the plaintiff, as otherwise the plaintiff might collect the amount of his judgment before the appeal could be heard in the Supreme Court, and that in pursuance of that advice the settlement was made.

      L[eld, that the concealment of the fact of his solvency by the defendant 'in negotiating the settlement with the plaintiff did not authorize the latter to vacate the settlement upon subsequently discovering it, in the absence of proof showing that the defendant had made some misrepresentation as to his pecuniary condition, or that the plaintiff had put some question to him in regard, thereto.
    Appeal from a judgment in favor of the defendant, recovered-on a trial at Special Term.

      Wm. J. Gibson and S. P. -Rash, for the appellant.

      B. BoeTker and Joseph R. Ghoate, for the respondent.
   Daniels, J.:

The action was brought by the testator himself, who departed this life after the trial had taken place. The object of it was to set aside the assignment of a decree against Edward Stucken, and a release and satisfaction of a judgment recovered by him against the defendant, and to recover the balance still remaining unpaid upon the judgment. The judgment was recovered upon a verdict in an action in the Circuit Court of the United States. It was entered on the 20th of May, 1859, and then amounted to the sum of $243,204.42. The verdict in the action was recovered for the value of the plaintiff’s interest in three ships, after deducting the amount of money advanced upon them, and for the payment of liens to which they had been subjected. The recovery proceeded upon the ground that the money advanced was a loan and not, as the formal transaction indicated it to be, the consideration for the absolute sale of the plaintiff’s interest in the ships. The transaction through which the apparent title was transferred took place between the plaintiff and Edward Stucken, who at the time was in business as a copartner with the defendant Meyer. The latter was absent then from the United States, and the purchase of this interest in the . ships seems to have been outside of the scope of the copartnership business. When Meyer returned to the United States information was given to him of the facts that this interest in the ships had been purchased by his partner, and an agreement had also been entered into, to again transfer it to the plaintiff, upon the payment of the consideration mentioned in the sale, and an additional sum ■ of about $25,000, and that was approved by the defendant Meyer. The ships were not transferred by the firm to the plaintiff, neither did he pay to Stucken or Meyer the amount of money for which it was agreed the transfer to him should be made, and they accordingly sold the ships to other parties, and an action was brought by the plaintiff against Meyer to recover their value. It proceeded upon the allegation that no sale was in fact intended or made to Meyer and Stucken, but that the plaintiff borrowed $100,000 of them, and that his interest in the ships was to be reconveyed to him upon the repayment of the amount with a usurious rate of interest. And upon the trial in the United States Circuit Court it was held by Mr. Justice Nelson, that Meyer was liable for the conversion of the ships, although he was not informed that a loan was contemplated ■or intended, or that a usurious rate of interest had been agreed upon, inasmuch as he had approved of and ratified the purchase of the ships and the agreement for their reconveyance to the plaintiff, .as that ■ appeared by the papers which had been executed. This ruling was resisted by the counsel of Meyer upon the trial, and a bill of exceptions was proposed and served for the purpose of reviewing it, together with other rulings deemed to be objectionable, upon a writ of error to the Supreme Court of the United •States. Amendments were proposed to the bill, and they were brought before Mr. Justice Nelson for settlement, but their settlement was not completed on account of his inability to give them that attention at the time which was required for that purpose, and the further settlement of the bill was deferred until the counsel •could appear before him in the city of Washington for its completion. Meyer’s circumstances were such that bail could not be obtained by him to stay the plaintiff’s proceedings upon the verdict .and the judgment, and immediately after the recovery of the verdict he made a general assignment for the benefit of his creditors “to George W. Hennings and George Mosle, in which he preferred •all his other creditors, leaving the surplus or residue of his property •only, subject to the payment of the plaintiff’s judgment. After the issuing and return unsatisfied of an execution upon the judgment, the plaintiff commenced a creditor’s suit to set aside the assignment as fraudulent, and to secure out of the assigned property, and other property alleged to belong to the defendant, the payment of his judgment. This action was resisted by the assignees in the assignment, and while the litigation stood in this condition an effort was set on foot to settle with the plaintiff and - obtain a satisfaction •of his judgment against the defendant Meyer, and .an assignment- of the decree which, for the same cause of action, had been recovered against his copartner Stucken on the 21st of November, 1859, for the sum of $250,369.70. The negotiations which took place to accomplish this object resulted in an agreement by which the plaintiff was to receive in cash and notes the sum of $128,700. Of this amount $45,000 were to be in good notes and $25,000 in a note or notes of Meyer himself, for which the judgment and decree were to stand in escrow as security, and $28,700 in the unsecured note of the defendant Meyer. The terms, however, were so far changed that the notes, with the exception of the one last mentioned, were dispensed with, and upon the allowance of a discount for the time it was agreed they should run, the money itself was paid to, or applied upon obligations entered into by the plaintiff, which were a lien upon the indebtedness. To extinguish such liens and. make other payments, the sum of $36,878.71 was appropriated and used, and the residue of the cash, after deducting the discount, and amounting to the sum of $60,971.29, was received by the plaintiff, and the note of $28,700, in the form which bad been agreed upon, was also executed and delivered to him. The judgment recovered by him against Meyer was released, and also satisfied of record, and the decree recovered by him against Stucken was. assigned to Charles Luling and Charles G. H. Sehloettner, one of whom was a relative by marriage and the other a friend of Meyer’s, who, together, advanced the money used in carrying out the terms of, and consummating, the settlement.

After this settlement was completed an adjustment was made of the assigned estate, which resulted in a surplus over and above the preferred indebtedness being returned to Meyer of between one hundred and forty and one hundred and fifty thousand, dollars. In addition to that he received from his partner Stucken, as his proportion voluntarily paid of the expenditure made to obtain the settlement, the sum of about $55,000. And when knowledge of these facts was acquired by the plaintiff, and in the year 1866, he instituted this action to set aside the release and satisfaction of the judgment, and the assignment of the decree recovered against Stucken. His right to that relief was placed by his complaint upon two grounds, in support of which it was alleged by him that Meyer represented to him that he was unable out of his estate to pay his indebtedness, and that his assets would not realize enough to pay twenty-five per cent upon the debts owing by him, and further that at the time the settlement itself took place, and afterwards also, he agreed to pay the balance of the plaintiff’s indebtedness whenever he should become able so to do. Hpon these allegations issue was taken by the defendant Meyer, who denied making either of the representations or promises relied upon in support of the action. It was also alleged that the same promise was renewed when the plaintiff surrendered the note of $28,700, which he did upon the payment to him of the sum of $12,000. This note entitled Meyer to a long period of time for the final payment of the indebtedness mentioned in it, and secured to him the privilege of taking it up within six months from its date by paying the sum of $14,350. And it was because of the reduction of that sum to $12,000, the amount actually paid by another person for the note, that one of the promises set forth was alleged to have been made. This, however, was denied by the defendant, and in support ot' the plaintiff’s case, so far as it depended upon the alleged representations and promises, it rested upon the plaintiff’s own evidence. It was met directly by the testimony of the defendant, who denied the making of these representations and promises, and also denied entering into any agreement himself personally with the plaintiff for the settlement of these demands. In these denials his evidence was materially sustained by that which was given by Charles F. Southmayd and James B. Bond, for in their testimony the fact was stated to be that the settlement itself was proposed by Southmayd on behalf of Meyer and negotiated by Bond acting in behalf of the plaintiff Graham, while he himself testified that the terms of the settlement were negotiated and agreed upon between himself personally and Meyer, and that all jSouthmayd and Bond had to do with it was to carry the agreement so made into effect. And the papers which were made between the parties also had a direct tendency to confirm the evidence of the defendant and his witnesses.

Upon this state of the evidence the judge presiding at the trial determined that the plaintiff had failed to prove the representations relied upon by him, or either of these promises to pay the residue of the debt when Meyer should become able to do so. And in the state of the proof which appears in and has been presented by the case, it must be concluded that the determination of the judge was the most consistent which could be made upon the evidence produced before him. He had the witnesses from whom it was obtained in his presence, observed their manner and demeanor, and considered their statements, and there is nothing in the case which would warrant this court in holding that his conclusions upon this part of it were not entirely just and right.

But it has been further urged in support of the appeal, and mainly upon the evidence of Mr. Southmayd, that there was such a concealment of the financial condition of the defendant Meyer as rendered the settlement fraudulent and inoperative. The evidence given by him upon which this position has been taken was that he discovered in the examination of the facts of the case, which he made to prepare the answer drawn by him for the assignees in the suit of the plaintiff as a judgment creditor, that a large surplus would remain after the payment of the debts preferred by the assignment, and that this surplus in the hands of the assignees would be applicable to the plaintiff’s judgment, and that it might be obtained and so applied before any writ of error upon the judgment recovered by the plaintiff could be brought to an argument in the Supreme Court of the United States, and accordingly that there was danger that the plaintiff would obtain this surplus, and not being himself financially solvent would be able to hold it against the judgment for restitution, even if the judgment recovered by him against the defendant should be reversed by the action of that tribunal. Because of this knowledge it was insisted that the settlement was inoperative and fraudulent, inasmuch as there was no- disclosure of the fact that a large surplus would probably remain in the hands of the assignee after paying all the creditors preferred by the assignment. That the defendant himself had good reason to believe that there would be such a surplus is disclosed by the facts stated by him in his deposition, that his assigned estate amounted to about the sum of $404,000, while the debts owing by him, exclusive of the plaintiff’s demand, amounted to the sum of between two hundred and forty and two hundred and fifty thousand dollars, which would indicate a surplus still larger than that obtained after the adjustment of the preferred debts and the closing of the trusts vested in the assignees. It must therefore be assumed that both the defendant himself and Mr. Southmayd, without knowing precisely what the surplus would be, had good reason to believe, and did believe, that a large surplus would remain in the hands of the assignees subject to the ulaintiff’s demand, if the settlement proposed did nc take place. In making it, a basis of about fifty cents on tbe dollar (of the plaintiff’s judgment was adopted, and that left in the defendant’s hands, after repaying the amount advanced to carry the settlement into effect by Luling and Schloettner, between thirty and forty thousand dollars.

The complaint was not framed in such a manner as to allege the concealment of these facts as a ground of relief in the action, but as it did aver representations stating the defendant’s actual insolvency when the facts were affirmed to be otherwise, proof of this surplus, and of knowledge of its existence, was not deemed by the judge to be inappropriate to the issue, and as the proof was supplied by the defense itself, it was urged upon the consideration of the court as a special ground of relief made to appear by the defendant upon the trial of the action; but in the disposition which was made of the case, as no representation was found to have been made concerning the defendant’s financial condition, it was considered that the action could not be maintained upon this ground alone.

As the settlement appears by the testimony both of Bond, Southmayd and Meyer to have been made and consummated, no questions were asked and no intimation whatever was given concerning the financial condition of the defendant, but it proceeded wholly and. exclusively upon the fact that the plaintiff had recovered this judgment and decree, and had a creditor’s suit pending against the-defendant and his assignees, while the defendant himself was continuing the contest as to his liability to the plaintiff upon the facts made to appear on the trial of the action in the United States Circuit Court. The decree against Stucken was not the subject of contest, and these facts were all well known not only to each of the parties, but also to the other persons who were engaged in endeavoring to bring about the compromise. For that purpose a proposition was first made at the instance of Mr. Southmayd himself, and that resulted in opening negotiations which finally ended in the adoption of mutual terms of settlement. .Each party acted upon the knowledge and information which he had, without, as the case has been established, endeavoring to obtain any information whatever from ■ the other. It was upon the basis that Graham had this judgment and decree and was prosecuting his creditor’s suit that he through. Bond carried on the negotiation, and it was upon the knowledge •acquired by Southmayd from his investigations of the affairs of the assigned estate, and of Meyer from the condition of his circumstances at the time when the assignment was made, that the negotiation on his behalf was carried on. Neither party attempted to extend his sphere of knowledge or information by interrogating the ■other party, but each appeared to be satisfied to proceed upon what he himself knew concerning the case, and as this was a negotiation for a settlement between contending parties, and no questions were asked, or information sought, by one from the other, there seems to be no •legal principle upon which the defendant can be held liable for ■omitting, voluntarily by himself, er by his counsel, to disclose the facts known to either, as to the favorable condition of the assigned ■estate. No artifice or device whatsoever was resorted to for the purpose of creating any wrong impression in the mind either of the plaintiff or of Bond, who represented him, neither was anything done or said which would have the effect of diverting attention from the probable condition of this estate, but each person assumed to act upon what he himself knew concerning these differences, and upon that basis entered into and completed the terms of this settlement. Upon these facts it cannot be inferred that any intention existed to deceive either the plaintiff, or Bond, who acted for him, but there was simply the design to volunteer no information possessed either by Mr. Southmayd or Meyer upon this subject, and that, under the circumstances appearing in this case, would not warrant the conclusion that any fraudulent concealment intervened upon which the terms of this settlement could be set aside by the ••court. The facts themselves wére extrinsic of the transaction between these parties, and within the judgment of the court in Laidlaw v. Organ (2 Wheat., 178) were not required to be disclosed either to the plaintiff or his agent. That was a case where the defendant had acquired information of circumstances which might influence the price of the commodity .sold, and were not known to the plaintiffs, but the court held that withholding the information was not sufficient to entitle the plaintiffs to annul the ■sale. A point quite similar to that now being considered arose in Shank v. Shoemaker (18 N. Y., 489), where a settlement was sustained which took place after the repeal of the statute upon which the right of action depended, and which fact was known to the plaintiffs, and not communicated to the defendant although he had .acquired no knowledge on the subject. Grover v. Wakeman (11 Wend., 187) contained no intimation which in any manner can be deemed to be adverse to this conclusion, for what was there said related to parties sustaining an altogether different relation from that existing between these individuals. This particular point was .also considered by this court in the case of Dambmann v. Schulting (12 Hun, 1), but there was the essential difference between that case and this one, that there the debtor had made a representation concerning his pecuniary condition to' the creditor, which he discovered to be untruthful by reason of facts afterwards occurring and which became known to him before he obtained the. release whose validity was in controversy. The plaintiff accordingly acted under a false conviction as to the facts, which had been produced by the defendant himself, and which, from the knowledge acquired from circumstances subsequently occurring, he understood to be untruthful. It was therefore deemed to be unconscionable and fraudulent for him still to take advantage of the belief caused by his representations which, at the time they were acted upon, he knew were unfounded. But in that case, for reasons not now requiring special consideration, the judgment was reversed by the Court of Appeals (75 N. Y., 55), and a new trial ordered, and the defendant was subsequently altogether exonerated from liability. (Dambmann v. Schulting, 85 N. Y., 622.)

This decision has an exceedingly important bearing upon the disposition of this part of the present appeal, for it was distinctly held by the court that the debtor was under no legal obligation voluntarily to disclose his financial situation to the creditor, to render a settlement or compromise of their affairs operative and binding. That was precisely this case, and the decision for that reason ■seems to be controlling over this controversy. The inclination of courts of justice has been to maintain settlements of disputed rights when they have been fairly entered into, and when no artifice, deception or fraud has been practised by the debtor upon his ■creditor, or any person acting in his behalf. (Adams v. Sage, 28 N. Y., 103, and other authorities maintaining the same point will be found in Erie R. R. Co. v. Vanderbilt, 5 Hun, 123, 139-140.) In defining this rule the courts have guarded themselves against material defects in an article which may be the subject of a sale. There the concealment intentionally made of facts essential to be known to the opposite party, will avoid the transaction. Such were the cases of Brown v. Montgomery (20 N. Y., 287), and Fleming v. Slocum (18 Johns., 404). But that class of cases have no bearing or effect upon the transaction now under consideration.

As no artifice whatever was made use of to withhold this-information from the plaintiff, or the person acting for him, and no-request was made for a disclosure of the defendant’s condition, but the parties each undertook to act independently upon the facts-known to himself, and proceeded in that manner to compromise the plaintiff’s judgment and decree, he was not entitled to set aside or vacate the settlement made because it turned out as a matter of fact that the defendant was in a much better situation financially than the plaintiff supposed him to be.

There' was no evidence given upon the trial in any manner tending to establish the fact that the assignees under the defendant’s-assignment were parties to this negotiation or settlement. It is true that Mr. Southmayd was at that time their attorney and counsel, but he neither acted nor professed to act in bringing about or completing the settlement in their behalf. That was wholly proposed, according to his own uncontradieted testimony, on behalf of the defendant Meyer himself, and after it was brought about, then, information of it for the first time was given to the assignees, and upon the basis of the plaintiff’s demand having been withdrawn from the effect of the assignment, the adjustment of the assigned estate was made, and the residue of the property surrendered up to-the defendant. There was no fact or circumstance, therefore, in the case upon which it could be held that the assignees themselves-had failpd to make disclosures which they, in the discharge of their duties, would be required to make to a party beneficially interested in the maintenance and execution of their trusts.

The circumstances that Meyer stated to Graham in the preceding interview had between themselves, that he could find friends to enable him to carry out his offer of twenty-five per cent, will not aid the plaintiff’s action, for as a matter of fact it appeared upon the trial that he was dependent upon the assistance of his friends to carry out and complete the compromise as he did. The surplus in the hands of the assignees was not available for that purpose. It was subject to the assignment while that instrument remained in force, and could not be liberated as it was not until the plaintiff’s claims should be entirely relinquished. Up to that time the surplus could be made of no advantage or benefit to the defendant, by the way of performing any offer made by him to the plaintiff for the settlement of their controversy. What he said was truthful therefore, and it appeared as a matter of fact that he was dependent upon the interposition and assistance of friends for the money or notes required to carry the terms of the compromise into effect.

The rulings of the court by which the pleadings, bill of exceptions, and other proceedings in the litigation were received in evidence, violated no principle of law. These documents were important by way of information in the action, affording the court the means of discovering the precise situation of these parties at the time when their settlement took place. They were circumstances having a bearing upon and indicating the motives which might be assumed, in some measure certainly, to induce the plaintiff’s action, and as they were pertinent to that purpose the court was justified in receiving them, so that the court itself could be placed in the situation of these parties at the time when this negotiation was commenced and carried into effect. No other points arise upon the appeal, which it is important to consider for the disposition of the case. They were all disposed of at the trial as the evidence justified the court in determining them, and the judgment from which the appeal has been taken should be affirmed, with costs.

Bradv, J., concurred; Davis, P. J., concurred in the result.

Judgment affirmed, with costs.


source: Caselaw Access Project

author: Daniels, J.:

license: Public Domain

text:
    GEORGE GOETTING, Appellant, v. MATHIAS BIEHLER and Others, Respondents.

      Bequests for findings of fact and conclusions of law — the court must pass upon each of them — it camot reject them as unnecessary — Oode of Owil Procedure, sec. 1038.
    Where, before the decision of an action on trial before a court without a jury, requests for findings of facts and conclusions of law are submitted to the court, the court ’cannot refuse to find any of them because they are considered to be unnecessary. It must, at or before the time when the decision is rendered, note, in the margin of the statement submitted, the manner in which, each proposition has been disposed of, and either file or return to the attorney submitting it the statement so made.
    Appeal from a judgment in favor of the defendant, recovered on a trial at Special Term.

      Hyla/nd <&'Zabrishie, for the appellant.

      D. 8. Biddle, for the respondents.
   Daniels, J.:

Before the decision of this action by the court before which the trial took place, findings of fact and law were presented and submitted to the court, and the court refused to find- either of them because they were considered unnecessary. That was not the disposition of them which, in any possible view, the court was authorized to make. For by section 1023 of the Code of Civil Procedure it has been provided and directed that the court shall, at or before the time when the decision is rendered, note in the margin of the statement, the manner in which each proposition has been disposed of, and must- either file or return to the attorney the statement so noted. This provision is mandatory in its language, and no authority has been given to disregard it when the propositions may lie considered not to he either important or material. The party is entitled to have each proposition of fact or law acted upon and noted. And it is only after that has been done that tbe materiality of either is tb be regularly considered. This is the clear intention and effect of this part of the Code, and it has been so regarded in James v. Cowing (82 N. Y., 449). Until that shall be done this appeal is not in a condition to be beard. A practice somewhat similar existed before this section went into effect. And when it was not followed it rwas considered to be proper to send the case back to have the propositions submitted passed upon and noted. (Bigler v. Pinkney, 80 N. Y., 636.) The decision of the points presented by the appeal should be suspended until these propositions shall be considered and separately noted, and to have that done, they should for that purpose be returned to and disposed of by the learned justice before whom the trial took place.

Davis, P. J., and Beady, J., concurred.

Decision suspended; case referred to trial judge as directed in opinion. ,


author:
Daniels, J.:
      Brady, J.

text:
    ALFRED H. SMITH and HARRISON B. SMITH, Respondents, v. HENRY CLEWS, Appellant, Impleaded, etc.

      Purchaser of personal property — when liable to the true owner therefor — mere possession of personal property does not gime an apparent title— an action of replevin lies against one who has ceased to retain possession of the property.

    The plaintiffs sent through their agent Plumb a pair of diamond earrings to one Miers, who signed a receipt acknowledging that he had received them “ on approval to show to my customers; said knobs to be returned to said A. H. Smith & Co. on demand. ” The plaintiffs denied that they ever authorized Miers to sell the diamonds. The diamonds were subsequently purchased by the defendant from Miers in good faith and without notice of his want of authority to sell.

      PLeld, that the court properly submitted to the jury the question whether Miers was in fact authorized to sell, and that their verdict in favor of the plaintiffs would not be disturbed. (Brady, J., dissenting.)
    That the fact that the defendant had parted with the possession of the diamonds did not prevent the plaintiffs from recovering the possession or value of them in this action.
    Appeal from a judgment in favor of the plaintiffs, entered on the verdict of a jury, and from an order denying a motion for a new trial.
    The plaintiffs, who are importers and dealers in diamonds, in New York, brought this action to recover the possession or the value of certain diamonds alleged to belong to them.

      Albert A. Abbott, for the appellant,,

      Charles H. Woodbury, for the respondents.
   Daniels, J.:

The judgment was recovered for the possession, or value, of a pair of single stone diamond earrings, purchased by the defendant of Elijah Miers. His authority to make the sale was denied by tbe plaintiffs, who were the owners of the diamonds at the time when they went into the possession of Miers. And as the defendant declined to surrender them, when that was afterwards requested, this action for the recovery of their possession was brought by the plaintiffs. The proof showed that these diamonds had been delivered by the defendant to his wife after they were purchased by him, and that they both contributed to the payment of the purchase-price to Miers. But the fact 'that the defendant had parted with their possession was no legal obstacle in the way of the plaintiffs’ right to maintain the action, if they were entitled to recover the property from him. (Barnett v. Selling, 70 N. Y., 492, 494.)

Whether Miers had authority from the plaintiffs to sell the diamonds, as he did, was the fact most earnestly disputed and litigated upon the trial. Hpon this point Alfred H. Smith, one of the plaintiffs, upon his cross-examination, testified as follows :

Q. Did not Mr. Miers call on you before you delivered these diamonds to Mr. Plumb ? A. He did.

Q. Did he not tell yon he had a customer for a pair of diamond ear-knobs ? A. He did.

Q. And.did you not say you would send to him, through Mr. Plumb, a pair such as he described? A. I do not know that I stated that to him; I certainly stated to Mr. Plumb I would do so, and did so.

Q. And you instructed Mr. Plumb to deliver them to Mr. Miers ? A. I authorized him to do so.

Q. And that is the way Mr. Miers got the diamonds ? A. Yes.

But he did not, at the time of this conversation, deliver the diamonds to Miers. Neither did Miers act in what he afterwards did •with them wholly under this authority. The diamonds were delivered to Plumb, who acted in the capacity of an agent of the plaintiffs. He was authorized to pass them over to Miers, and he afterwards did so. When that was done he‘took from Miers the following receipt:

“New York, April 12, 1879.
“ ^Received from Alfred H. Smith & Oo., by their representative B. W. Plumb, a pair of single stone diamond earrings, ten and one-eighth carats, of the value of fourteen hundred dollars, on approval, to show to my customers; said knobs to be returned to said A. H. Smith & Co. on demand.
" E. MIERS."

It has been claimed upon the argument that it was not proved that this receipt was taken at the time of its date, or when the diamonds were delivered by Plumb to Miers. But that it was so taken was a fact that was practically assumed in the trial of the cause, and no objection was made to it as evidence because of the omission to give direct testimony that it was taken at the time of its date. The probabilities arising upon the face of the transaction were with the plaintiffs as to this fact, although the receipt itself did not come to. their knowledge for a number of days after the day of its date. It was, however, delivered to them by Plumb, who transacted the-business for the plaintiffs, and in their interviews it was referred to and regarded as an instrument received from Miers when the diamonds were delivered to him. If the defendant had intended to question that fact the objection should have been made when it might have been met and obviated by direct proof that it was taken at the time when by its terms that imports to have been done. As the case is now presented it is tq be considered as an instrument taken from Miers when the diamonds were passed into his possession, and as evidence of his right to control or dispose of the property. This gave him nó right or power of sale, but limited him to the act of showing the diamonds to his customers. And so far as the interview between the plaintiff Smith and Miers was in any respect uncertain or ambiguous, the receipt tended to render it definite and remove the uncertainty.

The question whether Miers was in fact authorized to sell the diamonds was submitted to the jury upon the receipt, together with the evidence already mentioned that was given by Smith, and' they were directed to find for the defendant if Miers had in fact been authorized ,to sell the diamonds. This was as much as the defendant was entitled to ask on this part of the case; and it complied with all that could be required under the authority of Fitzgerald v. Fuller (19 Hun, 180), for what the court there held was that under evidence of a somewhat similar description the question of authority should he submitted to the jury.

As it is to be assumed from the verdict of the jury that there was no actual authority given to Miers to sell the diamonds, the right of the defendant to withhold them is dependent upon the fact that possession of them was voluntarily transferred to Miers. That, however, in and of itself, has been held to be.insufficient to enable the party in possession, without further authority, to transfer the title, to a purchaser, in property of this description. (Ballard v. Burgett, 40 N. Y., 314, 316.)

To empower a person having possession of tangible personal property of this description to transfer the title to it to a purchaser, the law requires that there shall be superadded to the fact of possession the apparent title or authority to dispose of the property. (Barnard v. Campbell, 55 N. Y., 456, 463.) And no such appearance as this was added to the fact of possession of the diamonds by Miers.

The principle governing this class of cases is in no manner in conflict with the ruling that a bona fide purchaser may protect'himself by means of a title acquired from a fraudulent vendee of the property. For, until the right of such a vendee has been annulled by a rescission of the sale, the title remains vested in him, and he may accordingly, during that time, transfer it to another purchasing the property in good faith and for value from him. (Stephenson v. Newnham, 16 Eng. Law and Eq., 401, 408.)

The case was certainly an unfortunate one for the defendant, but as the law upon the subject of sales of personal property has been settled, he could not, under the facts found to have been sustained by the evidence, legally withhold the diamonds from the plaintiffs, but must be limited to an action for his redress against Miers. ‘ The evidence was itself sufficient to sustain the jury in their conclusions, and there was, accordingly, no ground upon which the court could properly interfere and set aside their verdict.

The judgment and order should therefore be affirmed.

Davis, P. J., concurred.

Brady, J.

(dissenting):

The respondents voluntarily delivered tbe diamonds claimed toMiers, from whom the defendant purchased them in good faith. It is true that by the receipt which Miers signed, the diamonds were • to be returned to the plaintiffs on demand, but the object of the ■ delivery to Miers was known and also stated in the receipt, namely,, on approval that he might show them to his customers. Miers was thus clothed with possession and an apparent title to, or authority to sell them, and the defendant knowing nothing of the receipt, acted upon the faith of such title or authority and this created an estoppel. The subject is considered and the distinctions proclaimed in Barnard v. Campbell (55 N. Y., 463). The plaintiffs, by giving possession of the diamonds to a person whom they knew to be a dealer in them, thus gave him the means of practicing a fraud upon a bona fide purchaser if they can be allowed to recover here.. The consequences of the act named should fall on them.

I dissent, therefore.

Judgment and order affirmed.


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    THE PEOPLE OF THE STATE OF NEW YORK, Respondent, v. GEORGE GRIMSHAW, Appellant.

      Perjury — requisites of the indictment— it need w>t specify in detail the issues in the - action in which the false testimony was given— the testimony is material if it relate • to one of several facts constituting the issue involved — what evidence in corroboration' qf the testimony of the im/peaahing witness is required.

    The accused was indicted for perjury for having sworn falsély in an action for a limited divorce, brought by a wife against her husband and tried before a referee. The indictment described the action sufficiently to enable the accused to understand the charge intended to be made against him.
    Held, that it was not necessary 'that the indictment should contain any further statement of the issues in the action.
    That it was sufficient to charge generally that the false oath was material on the trial of the issue upon which it was taken, without showing how it was material.
    In the action for divorce the husband set up, as one ground of defense, that the plaintiff on or about July 9,1879, committed adultery with a man, whose name was unknown to him, at a house in Twelfth street, in Brooklyn. The indietment charged that the accused swore upon the trial of the action that on. July 9, 1879, he saw the wife walking with a man in that street, and saw her go into a house with him; that the house was a bed-house, and that they remained there about an hour. It was claimed that this evidence was insufficient to sustain a charge of perjury, for the reason that it did not appear that the man walking with the wife was not her husband.

      Held, that the claim was not sustainable, as the testimony tended to establish one of the material facts relating to the issue raised by the defendant’s answer.
    The wife testified upon the trial of the indictment that she went into no house of the character of that stated by the accused, Two witnesses, examined on behalf of the prosecution, who were familiar with the locality in which the house Was situated, gave evidence tending to show that no house of the character mentioned by the accused existed, or was to be found, in that locality.

      Held, that this was evidence tending materially to strengthen and corroborate the evidence of the wife, and that it was sufficient to place the accused under the obligation of proving that there was such a house at that time in the locality, if one in fact then existed.
    Appeal from a judgment of tbe'Court of General Sessions of the county of New York, by which the defendant was convicted ■of the crime of perjury.

      Frcunh J. Keller, for the appellant.

      John Vincent, assistant district attorney, for the people.
   Daniels, J.:

The indictment charged the defendant with having feloniously, ■willfully and knowingly sworn falsely by giving material evidence In an action brought by Fannie A. Devine against Thomas A. Devine, for a limited divorce. The action was referred to a referee, who duly qualified as such, and administered an oath to this defendant as a witness upon the trial. No further statement of the issues in the action was contained in the indictment, and it .was objected to as being insufficient in this respect, and Gaston v. People (61 Barb., 35), has been relied upon as sustaining this objection. But as the indictment in that case was in another respect materially defective, the decision may very well have .secured the concurrence of the members of the court for a reversal, because of that defect, without any stress being placed upon the absence of the statement of the issue in the civil action. This case is also distinguishable from that by the fact that the nature and ■ description of the action was sufficiently given to enable the defendant to understand the charge intended to be made against him. That conformed to the preceding rule required to be •observed before the enactment of the Code of Criminal Procedure. Por by that rule it was “sufficient to charge generally that the false oath was material on the trial of the issue upon which it was taken. It is not necessary to show particularly how it was material, and this is the case though the record does not itself show that the false oath- was material.” (Wharton on Grim. Law [4th ed.], § 2263.) And the substance of this rule has been embodied in the Code of Criminal Procedure prescribing the form and contents of an indictment. Por to comply with the law all that is required is that the indictment shall contain “ the name of the crime, if it have one, such as treason, murder, arson, manslaughter and the like, or if it be a misdemeanor, having no general name, such as libel, assault or the like, insert a brief description of it as it is given by the ■statute. (Code of Crim. Pro., § 276.) This indictment conformed to both of these requirements, for it not only stated the nature of the action in which the defendant was sworn, but, in addition thereto that the inquiry made of him was a material one, and by falsely and knowingly giving his evidence he “ did commit willful and corrupt perjury.” These allegations brought the case clearly within the Code'of Criminal Procedure and also within section 96 •of the Penal Code, by which the crime of perjury has been ■defined and declared.

It was charged in the indictment that the defendant committed perjury “ by knowingly and falsely giving the following evidence upon the trial of the issue before the referee:

“ I (himself the' said George Grimshaw thereby meaning) saw her (the said Pannie A. Devine thereby meaning) in Twelfth street, Williamsburgh (the said Williamsburgh in the city of Brooklyn thereby meaning), on the 9th day of July, 1879, walking with a man side by side, and I (himself the said George Grimshaw thereby meaning) saw her (the said Pannie A. Devine thereby meaning) go into a house with him in Twelfth street, between South Third and 'South Pourth streets; I (himself the said Grimshaw thereby meaning) knew the reputation of the house ; it (the said house thereby meaning) was a bed-house, properly speaking; I (himself the said ■George Grimshaw thereby meaning) mean a house where men can take women for sexual intercourse; I (himself the said George Grimshaw thereby meaning) should judge they (the said Fannie A. Devine and the said man thereby meaning) remained there about an hour.” And the proof given upon the trial established the fact that he did give that evidence before the referee This, however, was objected to as insufficient to create the crime of perjury, for the reason that the man who was stated to have accompanied the plaintiff in the action was not alleged not to have been the plaintiff’s husband. But this allegation was not essential for the purpose of setting forth that the crime of perjury had been committed. The pleadings in the action tried before the referee were produced and given in evidence upon the trial of the defendant, and one of the defenses contained in the answer of the defendant in whose behalf the present defendant was'sworn as a witness, was the following:
3. That the defendant is informed and believes that the plaintiff has been guilty of gross and immoral conduct; and that on or about the 9th day of July, 1879, committed adultery with a man, whose name is unknown to defendant, at a house in Twelfth street, in the city of Brooklyn, E. D.

And this was a defense which the law allowed to be made to an action for a separaitón or limited divorce. For, by section 1765 of the Code of Civil Procedure, the defendant in such an action has been permitted to set up by way of justification the misconduct of the plaintiff, and if such misconduct is established it entitles the defendant to judgment in his favor. And this branch of the answer set forth the commission of misconduct on the part of the wife which, if it had been proven, would have justified her husband in abandoning her, as he is alleged to have done, on or about the 18th of October, 1880, when he discovered her guilt in that respect. And it was to establish that part of the issue in the action that this evidence was given. It was proven upon the trial that the defendant did give the testimony set forth as having been given by him in the indictment. And that tended to establish a material fact in the way of supporting and sustaining this defense. It was not necessary to render ,it material that it should also include the fact that the man stated to have been with the plaintiff in the action was not her husband. That was an important fact to complete the proof of the defense set forth in the answer, and without it the defense itself could not have been made out. But it was still a material inquiry upon the trial whether the plaintiff did go into the house referred to in the indictment in company with a man. That was an important fact included within the limits of thei defense set forth. If she did, then the ease would clearly be ready for the further proof that the man accompanying her was not her husband, and both together would tend very decidedly to establish the defense. For this purpose each of the alleged facts was probably of equal importance. It was necessary that it should be shown that the plaintiff went into the house with a man, and also that the man with her was not her husband. Each included a material inquiry in the case, and evidence given to prove either of these facts would consequently be material to the issue. And as the defendant is shown to have given evidence directly tending to establish the existence of one of these facts, if that was willfully false, he committed the crime of perjury in giving it, for it has been held that “if a person swears falsely in respect to any fact relevant to the issue being tried, then we thinlc he is guilty of perjury, although the case failed from defect of proof of another fact, and although the other fact alleged had no; existence, * * * the evidence would be relevant to the cause, and it does not lie ■with the perjurer to say that if he had sworn to the truth, the case for other reasons, would have failed.” ( Wood v. People, 59 N. Y., 117, 123.)

The evidence given by the defendant related to an important fact directly within the issue, and which was made to appear by the indictment to have been material upon the trial of the action in which he gave his testimony.

Upon the trial of the indictment two witnesses were examined on behalf of the prosecution who were familiar with the locality in which the house was situated, where it was stated by the evidence of the defendant the plaintiff in the action against her husband was seen by him to have entered. These witnesses gave evidence very directly tending to establish the fact that no house of the character mentioned by the defendant in his evidence existed, or was to be found, in that locality. And that was probably as far as the prosecution could be expected to give evidence negativing the existence of a house of bad character, or bad repute, in the neighborhood. The evidence of the plaintiff herself, upon the trial of the indictment, was direct and positive that she went into no.house of the character of that stated by the defendant. That fully met the evidence given by him upon the trial of her action, and the further proof was produced to sustain the indictment that there was no such house as the defendant had stated she went into with the man, within the bounds mentioned by him in his testimony. And that seems to have been all that could reasonably be required to put him upon upon his defense. For what the law has exacted is not positive proof of the falsity of the evidence in addition to that given by the prosecuting witness, but that there should be additional evidence strongly corroborative of that given by the accusing witness. (Greenleaf on Evidence [vol. 1, 7th ed.], sec. 257; Id. [vol. 3], sec. 198.) United States v. Wood (14 Peters, 430) where the testimony of one witness, corroborated by circumstances proved by other evideface, was declared to be , sufficient. This point was also considered in Woodbeck v. Keller (6 Cow., 118). That was an action of slander in which the defendant justified the speaking of the slanderous words, and it was held that it required the same measure of proof to sustain the defense as would be necessary to sustain an indictment for perjury, and that'such measure would be supplied if the additional evidence was strongly corroborative of the testimony of the complaining witness.

The evidence given upon this trial was of that description, for it tended very directly to establish the fact that there was no house of assignation within the limits mentioned by the defendant in his evidence at the time referred to by him, or near that time, and if there was none then it is entirely certain that she could have gone into no such house as he described.

This evidence was sufficient to place him under the obligation of proving that there was such a house at that time in the locality, if it actually existed. If there was, it was a fact within his knowledge and that of persons who were accessible to him, and his failure to produce any witness upon the trial to establish the truth of this part of his statement tended materially to strengthen and confirm the evidence given by the witnesses sworn on the part of the prosecution. (People v. Dyle, 21 N. Y., 578; Gordon v. People, 33 id., 501; Bleecker v. Johnston, 69 id., 309.)

In tbe submission of tbe ease to tbe jury tbe court charged that as Mrs. Devine had been a witness on the trial of her action against her husband, that the evidence of the defendant was material in so far as it affected her credibility, and to that charge the defendant’s counsel excepted. It is not necessary to consider this exception with any considerable degree of detail, for if the court was wrong-in the direction so given, the error could not have prejudiced the defendant. For, as the evidence was material to the issue in the action, that was all that could be required to sustain this part of the people’s case. And that it was so material has already been shown, and the fact that the court erroneously assigned to it a further material effect would not change fhe case, and could not have prejudiced •the defendant upon the trial. The evidence he gave was directly material to the issue, for it tended to prove a fact essential to-support it, and whatever else the court may have said upon the-subject of its materiality would impair no right whatever which the defendant could claim in the case. The defendant’s counsel also requested the court to charge T.

That the jury must find not only that Mrs. Devine went into no house in Twelfth street, Williamsburgh, between South Third and South Fourth streets, on the 9th July, 1879, but that the prosecution has established that there was no house or place of assignation in said street between South Third and Fourth streets.

This was refused and an exception taken to #the refusal. But' this exception is clearly of no advantage to the defendant. For if’ Mrs. Devine went into no house in Twelfth street, Williamsburgh, between South Third and South Fourth streets on the 9th of July, 1879, then the defendant swore falsely in his testimony, and he-could be convicted under the indictment for that false statement, even if the prosecution did not establish that there was no house or place of assignation in Twelfth street, between South Third and Fourth streets. That fact of itself presented a material inquiry in the case, and willfully false testimony. given to establish it by the defendant would create the crime of perjury. The court in answer to a question by one of the jurors, stated that they were bound by the specific date of the 9th of July, 1879, upon the inquiry whether there was a hoiise of assignation within the bounds mentioned in: the indictment and the evidence given by the defendant. And to-■that direction, an exception was taken by his counsel. But as the whole of the issue presented by the indictment and the evidence which the defendant gave upon the trial before the referee, and that presented by the defense in the civil action, confined the time to • the date of the 9th of July, 1879, and no uncertainty was in any respect connected with either of the statements relating to it, the ■ court rightly confined the investigation of the jury to the question whether on that date there was such a house within the prescribed locality. This was no disadvantage to the defendant, for if the prosecution failed to satisfy the jury that there was no such house .there on that date, then he was entitled to his acquittal. And as he had given his evidence concerning it positively as to the date, it was his right to have the range of inquiry by the jury restricted in ■this manner. No injury whatever resulted to the defendant from the denial of the motion to strike out the evidence relating to the fact that the defendant had falsely sworn that he had seen the plaintiff in company with a person not her husband in August, 1880, ■even if such a motion could be regularly made after the proof had been received in the case. .For the court had already decided that perjury could not be assigned upon that evidence, which as completely disposed of it as though it had been stricken out of the case. In neither one of the respects to which exception has been taken in the case, does there appear to have been any error to the prejudice -of the defendant upon the trial. The offense was sufficiently -charged by the indictment and made out by the proof and the judg- : ment accordingly should be affirmed.

Davis, P. J., and Brady, J., concurred.

. Judgment affirmed.


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    THE CENTRAL TRUST COMPANY OF NEW YORK, as Trustee, etc., Respondent, v. THE NEW YORK CITY AND NORTHERN RAILROAD COMPANY and Others, Appellants.

      Mortgage, allowing the mortgagee to enterr into possession after a default of twelme ‘months — construction of it — when the mortgage may he foreclosed, at once on a failure to pay the interest.

    The defendant, a railroad company, executed a mortgage upon its road to the plaintiff, as trustee, to secure the payment of bonds issued by it. The mortgage provided, among other things, that if the company should make default in the payment of the principal moneys secured by the bonds, or any part thereof, “ or in the due and punctual payment of the interest, or any part thereof, from time to time accruing and payable upon such bonds, or any of them, at the time and in the manner provided for payment of such principal or interest; ” and if such default should continue for twelve months, then the trustee might enter into and take possession of the road, and might sell the same upon giving three months’ notice of the time and place of sale. Another provision of the mortgage authorized the company to remain in the possession of the road until some default had been made in the payment of the principal and interest.

      Meld,, that the provision authorizing the entry and sale by the trustee, upon the expiration of twelve months after the default of the company in paying the principal or interest, did not prevent the trustee from at once bringing an action to foreclose the mortgage, to collect any installment of interest falling due under the terms of the bonds, as soon as default was made in its payment.
    Appeal from an interlocutory judgment, entered upon an order overruling a demurrer to the complaint.

      Janes G. Ccvrter, for the appellants.

      William Allen Butler, for the respondent.
   Daniels, J.:

The action has been brought to foreclose a mortgage executed by the New York City and Northern Railroad Company to the Central Trust Company of the city of New York, to secure the payment of bonds of the railroad company in an aggregate amount not exceeding the sum of $4,000,000. The interest upon the bonds which were issued became due on the 1st day of May, 1882, and it was for the purpose of collecting that interest which has since remained unpaid, and foreclosing the mortgage and selling the mortgaged property, and out of the - proceeds paying the indebtedness, that this action has been commenced and prosecuted. The summons was issued on or about the 1st of September, 1882, and the complaint was demurred to, by the appealing defendants, for the assigned reason that it did not state facts sufficient to constitute-a cause of action.

A copy of the mortgage was annexed to and formed a part of the complaint. This mortgage declared and provided “ that if the-railroad company shall at any time make default in the payment of the principal moneys, or any part thereof, secured by or payable-upon bonds issued by it, which shall be entitled to the benefit of the mortgage security of and under this indenture, or by and upon, any of such bonds, or in the due and punctual payment of the interest or any part thereof, from time to time accruing and payable upon such bonds, or any of them, at the time and in the manner provided for payment of such principal or interest, as the case maybe, in the said bonds or the coupons thereto attached, and if such default on the part of the railroad company shall continue for twelve calendar months after due demand for payment of such principal or interest, as the case may be, at the proper place for such payment, accompanied by due presentment of and offer to-surrender the proper bonds or coupons, as the case may be, then after the expiration of such twelve months, and without any further demand or notice, the said party of the second part, as trustee as aforesaid, or its successor or successors in said trust is and are hereby authorized and empowered to and may, at any time or times and upon the written request of the holders of one-third in amount of all bonds issued hereunder and then outstanding, and upon being indemnified as hereinafter mentioned, it and they shall,, either personally or by its or their agents or attorneys, by it or them thereunto authorized, enter into and take possession of the said railroad and demised railway hereby mortgaged or expressed so to be, with the appurtenances and the other premises and property, rights and interests embraced in and covered by the mortgage lien hereby created, and have, hold, use and enjoy the same, with the privileges and franchises thereunto respectively appertaining, and take and receive the income, tolls, freights, rents and profits thereof and therefrom accruing, with the right to it or them, to rent, operate and use the said railroad and demised railway.”

The mortgage further provided, in ease of such continued default for the period of twelve months that the trustees should be empowered, upon at least three months’ previous notice of the time of sale, to sell the mortgaged property and apply the proceeds in payment of the indebtedness of the company upon its bonds secured by the mortgage. It also provided for the purchase of the property at such sale by the parties themselves in interest and the reorganization of another railway company; and it was mainly because of these provisions that the demurrer to the complaint was interposed. This period of twelve months had not elapsed after the company had made default in the payment of its interest, before the commencement of the action to foreclose the mortgage and sell the mortgaged property, and as these provisions in the mortgage rendered the power of sale created by them dependent upon a continued default of twelve calendar months, it has been urged that an action brought before the expiration of that time for the foreclosure of the mortgage was premature.

But the right to commence and maintain such an action, in case of default in the payment of interest within this period of twelve months, has not been excluded by anything contained in the mortgage. Neither has it provided absolutely for the’continued possession of the property by the mortgagor during this period of time. The mortgage, according to its own provisions, was given to secure the punctual payment of the interest as well as the principal of the bonds. By the express terms of each, bond the company bound itself to pay the principal on the 1st day of May, 191C>, and interest thereon at the rate of six per cent per annum, payable semi-annually on the first days of Majr and November, in each year, until the principal should become due. And it was further provided in the bond that in case the interest should remain unpaid or in arrear for twelve months after the time specified for its payment, the whole of the principal should become due and payable. By the language which was employed the company, therefore, became absolutely bound to pay the interest upon the indebtedness from time to time as it matured, and that would be sufficient to entitle the holder of the bond to maintain an action for the recovery of such interest as soon as it accrued, and default should be made in its payment. The mortgage was given upon the same theory.' One of the objects was to secure the payment of the semi-annual interest on the first days'of May and November in each year, and the principal of the debt whenever default in the payment of interest should continue for the period of twelve months. And the mortgage is declared to have been given, “ for the purpose of securing tire due payment of the principal of the bonds proposed to be issued as aforesaid, and the interest to accrue thereon, according to the tenor and effect of the said bonds and the coupons or interest warrants thereto attached.” To secure such payments the trustee or mortgagee was to have, and to hold, the property, franchises, rights and interests mortgaged, in trust for the equal pro rata use, benefit and security of all the persons and corporations who shall at any time hereafter become, or be, the lawful owners, or holders, of the aforesaid bonds, to be issued by the railroad company, and which shall be entitled to the benefit of the mortgage security hereby provided, under or in pursuance of the provisions of this indenture'.”

It was further provided in the mortgage that the security should cease, determine and become of no effect, “ if the railrpad company shall well and truly pay and satisfy, or cause to be paid and satisfied, the principal and interest secured by, or payable upon, all and singular the said several bonds, to be issued by the railroad company, which shall be entitled to the benefit of the mortgage security* hereby provided under or in pursuance of the provisions of this indenture, 'at the times and in the manner prescribed for the payment thereof in the said several bonds and the coupons' thereto attached.” By these provisions it was the evident purpose of the mortgagor to create a security for the payment of the interest on the bonds as that should from time to time accrue and become pay-, able, and as an' action could be at once maintained for'the collection of the interest according to the terms of the bond, and the mortgage was given in part to secure the payment of that iuterost, the right to enforce it, whenever such a right of action should accrue, would seem legally and directly to follow; for in no other manner could the mortgage be made available as a security for the payment of the interest according to the terms contained in it. Its object in part was, as that was very clearly expressed, to secure the payment of the interest as it from time to time should accrue upon the bond, and that could only be attained, under the circumstances, by an action of the description of that which is now before the court. The mortgagor obligated itself to pay semi-annual installments of interest as it matured upon the bonds, and the mortgage was in part given to secure precisely that payment, and no restriction was in any form imposed upon the effect of these provisions, which would prevent the creditors from making the security available in this manner. The clauses providing for an ent.ry into and the use or sale of the mortgaged property by the trustee after a continued default for the period of twelve months, were designed to affect and qualify only this right of entry, possession and power of sale. If that should be resorted to by the trustee, then by the terms of the mortgage it could only be done after twelve months’ default in the payment of the interest. But it was not provided in the mortgage, neither is it to be implied from any of the language made use of, that the creditors were to be deprived of the right of making the security available to themselves in any other manner than this, upon a default in the payment of the interest stipulated both by the bond and mortgage to be payable at the times therein mentioned. Neither did the mortgage provide for the continued possession of the mortgaged property by the mortgagor for this intervening period of twelve months. The provisions relating to that excluded the trustee from the stipulated right of entry, possession and sale when that might be insisted upon under these provisions, and that is all that was attempted to be expressed or accomplished by them. They did not declare or provide that an action to collect the debt and appropriate the security to its payment should not be instituted within the period of twelve months, but that was left entirely unqualified and unaffected by these provisions of the mortgage, and as the mortgage was also by its terms made as a security for the payment of the interest as it should accrue and become due, according to the tenor and effect of the coupons or interest warrants attached to the bond, the trustee had the right to enforce it for that purpose as soon as a default in payment was made. And that, it is also to be inferred, was the intention of the parties from the further provision contained in the mortgage that the company should remain in the possession, use and enjoyment of the railroad and other' property included until it “ shall have made some default in the payment of the principal or 'interest secured by or payable upon the bonds issued by the railroad company, which shall be entitled to the benefit of the mortgage security of and under this indenture, or of some part of such principal or interest.” The effect of this provision very clearly was to extend the absolute right of the mortgagor to the possession of the property no longer than it should pay the principal or interest secured and payable upon its bonds, and it is clearly to be implied from it that when the event of failure should arise, and default in the payment of interest should be made, that the right of the company to the possession, use and enjoyment of the property mortgaged should thereupon cease and determine, and that, with the other provisions, entitled the holders of the bonds to the appropriation and sale of the property by means of judicial proceedings for the payment of the over-due indebtedness. It is true that neither they nor the trustee could voluntarily enter into and take possession of the property under the other clauses contained in the mortgage, but as these clauses did not deprive the trustee of the right to collect the debt as it should become due, and the obligation to pay it in that manner was clearly and distinctly created, and one of the purposes of the mortgage was to secure payment of the interest as it matured, and the absolute right of the company to the possession of the property was limited to the performance of this obligation, the right to institute and maintain a foreclosure suit is clearly to be deduced from the mortgage.

A similar subject was considered in Chicago, etc., Railroad Company v. Fosdick (106 U. S., 47), and it was there said in the opinion of the court, that “ inasmuch as by the terms of the first article, the conveyance is declared to be for the purpose of securing the payment of the interest as well as the principal of the bonds, and by the fourth article the mortgagor's right of possession terminates upon a default in the payment of intei-est as well as principal on any of the bonds, we are of opinion that, independently of the provisions of the other articles, the trustees, or on their failure to do so any bondholder, on non-payment of any installment of interest, on any bond, might file a bill for the enforcement of the secui’ity by the foreclosure of the mortgage and sale of the mortgaged property. (Id. 68.) And Holden v. Gilbert (7 Paige, 208), supports the same view.

This legal conclusion is particularly applicable to the present ease and seems to be conclusive as to the proper construction which should be placed upon the mortgage. But beyond that it is also to be inferred, from the other portions of the mortgage itself, that the voluntary right of entry, possession and sale by the trustee, was not intended to be exclusive of the right to collect the debt as it matured in the ordinary course of legal proceedings. For that a sale might be made by virtue of such proceedings, appears to have been contemplated in the language employed providing for the re-organized company after it should be made; for it was not only provided that such a re-organization might take place after a voluntary sale under the power expressly vested in the trastee, but that it might also follow a sale made by judicial authority.” And this phraseology was again repeated in the power provided for the trustee to employ and retain counsel, agents or attorneys. By means of it the mortgagor appears to have contemplated not only that the property, rights and franchises mortgaged might be acquired by‘a sale under the power expressly providing for, but in 'addition to and without resorting to that it might also be acquired by the exercise of judicial authority over the mortgage, and that would ordinarily be limited to an action to foreclose the mortgage and sell the property mortgaged.

The right to prosecute such an action and to sell the property under the judgment which might be obtained in it upon a default in the payment of interest, was considered and sustained in Howell v. Western Railroad Company (94 U. S., 463), and it is in strict accordance with the practice of the courts in this State, permitting property mortgaged to be sold under a judgment in an action for the foreclosure of -the mortgage, even where only a part of the mortgage debt may have matured and become payable.

This case is clearly distinguishable from that of Second American Building Association v. Platt (5 Duer, 675), for there the right to proceed for the collection of the amount claimed had been expressly limited and restricted to the period specified in the mortgage ; while in this case no such restraint, nor any other, was imposed upon the trustee preventing the enforcement of the security, by legal proceedings, for the payment of the indebtedness as it should mature and become due. On the contrary, the mortgage created precisely that security, and as no right of possession in the railway company to the .property was secured after a default should be made in payment, it must have been intended that it might be made available in the ordinary manner for the purpose of carrying this object into effect. By the bond the interest became absolutely due and payable at the times therein mentioned' for that purpose, and the mortgage has as absolutely secured that payment, and these provisions together with that rendering the right of the company to the possession of the property dependent upon such payment, were sufficient to authorize the commencement of this action for the collection of the interest and the sale of the property mortgaged to secure its payment.

The judgment from which the appeal has been taken was authorized by the facts appéaring in the case, and it should be affirmed, with the usual costs and disbursements.

Davis, P. J., and Brady, J., concurred.

Judgment affirmed, with costs.