author: Andrews, Ch. J.

text:
    The Central National Bank of the City of New York et al., Resp’ts, v. Sigmund J. Seligman et al., App’lts.

      (Court of Appeals,

      Filed June 6, 1893.)

    1. Assignment for creditors—Preferences.
    A preference in a general assignment for the benefit of creditors, made either in the assignment itself or by separate instruments, which may be construed as parts of the assignment, whei’e such preferences exceed in amount one-third of the assets of the assignors, after making the deductions mentioned in the act, does not make the assignment void. It only operates to scale down the preferences if in excess.
    3. Same.
    An insolvent firm made an assignment for creditors and allowed judgmerits to be taken against it on the same day for more than one-third of its assets. The judgments were entered a few minutes after the filing of the assignment, and almost all the assets of the firm were levied upon and sold under executions issued upon said judgments. Held, that the assignment was not void, and that the only way in which the judgment creditors could be compelled to account for the proceeds of the property sold on the execution would be in an action brought by the assignee or in Ms right asserting title under the assignment.
    Appeal from judgment of the supreme court, general term, first department, modifying and affirming a judgment for plaintiffs, rendered at special term.

      Nathaniel Myers and A. J, Dittenhoefer, for app’lts; Alex. Blumenstiel, for resp’ts.

       Reversing 47 St. Rep., 17 .

   Andrews, Ch. J.

The firm of Seligman Bros. & Co., on the 2d day of July, 1888, made a general assignment of their property for the benefit of creditors. This action was brought by the plaintiffs, to whom the firm was indebted at the time of the assignment, and who subsequently procured judgments against the assignors for their debts, to set aside the assignment for fraud, and to have the property of the assignors applied to the payment of the judgments of the plaintiffs. The plaintiffs joined as defendants with Seligman Bros. & Co. and the assignee one Moses, and the members of the"firm of Herts Bros. & Co., and one Sonneborn. Moses and the firm of Herts Bros. & Co. obtained judgments against the assignors, which were entered on the same day the assignment was made, but a few minutes after the filing of the assignment. They were obtained upon suits commenced, followed by offer and acceptance under the Code. The plaintiffs in these judgments issued execution thereon, and the sheriff levied on the stock of goods assigned, and subsequently, on being indemnified, sold the property on the executions, and realized thereon sufficient to satisfy the Moses judgment of $4,218.53, and the additional sum of $19,289.85, which was applied on the judgment of Herts Bros. & Co. The assignors, on the day of the assignment, but, as is to be inferred, prior to its execution, assigned to Sonneborn accounts due the assignors, upon which he collected the sum of $7,806.32 to apply on a debt owing by the assignors to him.

The plaintiffs demanded, in addition to the other relief, that the judgments in favor of Moses and Herts Bros. & Co., and the executions thereon, be vacated and set aside, and that they account for and pay over to a receiver, to be appointed for the benefit of the plaintiffs, the sums severally collected by them on the executions, and that the transfer of accounts to Sonneborn be set aside, and that he likewise be required to account for and to pay over the sums collected by him thereon. The judgment at special term set aside the general assignment, the judgments and executions in favor of Moses and Herts Bros. & Co., the transfer made to Sonneborn, and adjudged that these parties respectively account for and pay over to a receiver the sums severally received by them as above stated, with interest, to be applied in satisfaction of the judgments obtained by the plaintiffs, which in the aggregate are nearly equal.in amount to the sums which the defendants, Moses, Herts Bros. & Co. and Sonneborn, are required to pay. The general term modified and affirmed the judgment of the special term as modified; the modification, however, not affecting the theory of the action, or of the special term judgment.

This case presents an important question arising under chapter 4503 of the Laws of 1887, which has not been considered or decided by this court That question is whether a preference in a .general assignment-by insolvents for the benefit of creditors, made ■either in the assignment itself or by separate instruments which may be construed as parts of the assignment, where such preferences exceed in amount one-third of the assets of the assignors, after making the deductions mentioned in the act, renders the assignment void. In considering this question, it will be for the present assumed that the judgments in favor of Moses and Herts Bros. & Co., and the transfer of accounts to Sonneborn, constituted preferences exceeding the statutory limit. These alleged unlawful preferences furnish the only ground upon which upon the evidence the validity of the assignment can be assailed. There were no facts shown upon which any common law fraud could be predicated, or to bring the case within the statute as to fraudulent ■conveyances. 2 Rev. St., 137, §§ 1-8.

It is not claimed that the assignors withheld any of their property from their creditors. It was formally admitted on the trial that the debts for which the judgments were obtained, and the •debt of Sonneborn, were bona fide.

The only ground of attack upon the assignment and the other transactions mentioned is that the assignors, in contemplation of the assignment, promoted a scheme by which certain creditors holding just and valid debts were given preferences exceeding the -statutory limit, and that the creditors had knowledge at the time that a general assignment was contemplated. The assignors, in .giving such preference, violated no rule of the common law. The giving of such preference was not a hindering, delaying or defrauding of their other creditors, as these terms have been uniformly understood and interpreted. Whether, under the statute of 1887, .an excessive preference makes an assignment wholly void has not been hitherto decided in this court. The cases of Berger v. Varelmann, 127 N. Y., 281; 38 St Rep., 813, and Spelman v. Freedman,, 130 N. Y., 421; 42 St Rep., 531, were actions by creditors in. aid of a general assignment to set aside preferences exceeding the statutory limit, and for an accounting by the preferred creditors to the assignee for the proceeds collected or received by them. The actions assumed that the assignments to which they related were not invalidated, but only the preferences. The question whether an excessive preference made the assignment void, or only affected the preference, was not decided in either of the cases mentioned. In Manning v. Beck, 129 N. Y.,1; 41 St. Rep., 199, this court reversed a judgment setting aside a general assignment and an alleged .preferential transfer, in an action brought by a judgment creditor of the assignor, on the ground that the creditor who took the bill of sale from the insolvent had no knowledge at

the time that a general assignment was contemplated. Judge Beckham, in his opinion, carefully reserves the question of the effect of an excessive preference on the assignment, and the further question whether such preference affects the whole claim of the preferred creditor, or only makes it subject to reduction within the statutory limit. These questions, therefore, being res nova, must be decided in view of the language and policy of the act of 1887.' The object of the act is plain and unmistakable. It was intended to insure to the general body of the creditors of an insolvent debtor, upon a transfer of his property by general assignment, the right of participation in the distribution of the debtor’s property to the extent of at least two-thirds of the assets of the insolvent after certain deductions. In order to secure this result, the act declares that “ any preference ” contained in a general assignment, other than for wages or' salaries of employes, “ shall not be valid except tó the amount of one-third of the assigned -estate left after deducting such wages or salaries, and the costs and expenses of executing such trust.” The statute operates upon the preference only, and not upon the assignment or the title of the assignee. It does not undertake to destroy or affect the assignment, except in so far as it provides for preferences beyond the prescribed limit. When the preferences made exceed this limit, the statute intervenes and declares the consequence. It reduces the preference to the limit mentioned in the statute. The “ preference,” it declares, shall not be valid “ except ” to the amount of one-third of the assets.

The statute enacts a rule for the administration of the trust in case of preferences. It may not in many cases be known until ■the closing of the trust and the ascertainment of the amount due for wages and salaries, and the expenses of administration, whether the preferences exceed the statutory limit. Creditors may or may not know in advance that they are to be preferred, and if they know that preference is intended they may or may not know the amount of the assets, or whether the intended preference exceeds the statutory limit. They do know the rule, and other creditors are not defrauded by a preference in excess of the one-third. The statute, we think, only operates to scale down the preference, if in excess. This construction accomplishes the purpose of the statute.

The consequences which follow from the theory upon which this case was decided, viz.: that an excessive preference makes the assignment absolutely void where the assignors and the preferred creditors are cognizant when the assignment is made or securities taken, operating as a preference, that the preference exceeds the statutory limit, would involve great inconsistency. Such a rule would defeat the purpose of the statute, and enable a creditor, who by reason of the maturity of his debt or favorable circumstances enabling him to commence his action earlier than other creditors, to appropriate the property of the insolvent to the payment of his debt, to the exclusion of the other creditors. The violation of the act of 1887 would be the very circumstance which would enable him to exclude other creditors from sharing in the assets.

The present case is an apt illustration. The plaintiffs complain that the assignors have given preferences in excess of the statutory limit, thereby depriving the general body of creditors of participation in the insolvent’s property, intended to be secured by the statute of 1887. Thereupon they claim, and the judgment awards to them, nearly the whole available property of the assignors, to be applied to the satisfaction of their debts exclusively, wholly ignoring the rights of the other creditors. We are of the opinion that the judgment proceeds upon an erroneous view of the statute. An assignment is not, we think, invalidated because it provides for preferences exceeding the statutory limit Nor, in our opinion, does an excessive preference deprive the party preferred of all benefit of the preference. The statute, and not the direction in the assignment, is, in such a case, the rule by which the assignee is to be guided in administering the trust The preference is to be reduced so as to make it conform to the statutory limit, and is not annihilated. And if the statute has been violated and the judgments in favor of Moses, Herts Bros. & Co., and the transfer of accounts to Sonneborn, constituted unlawful preferences, the right of creditors can, we think, only be asserted by the assignee or by an action in aid of the assignment for the benefit of th'e body of creditors, as in the case of Spelman V. Freedman, supra.

But the assumption which has been made that the judgments in favor of Moses and Herts Bros. & Co., and the transfer of accounts to Sonneborn, constituted preferences within the act of 1887, is not sustained by the record. The judgments, though entered on the same day on which the assignment was executed and filed, were subsequent, in fact, and the property vested in the assignee who took possession under the assignment before the judgments were entered or the executions were issued. The entry of the judgments was intentionally postponed until after the execution and filing of the assignment. It wms disclosed by the evidence introduced by the plaintiffs that the assignees refused to permit the judgments to be entered so as to give them priority over the assignment; “they were to stand like all creditors; whatever value a judgment gave them after the assignment they were to have, but no other value.”

The case of Berger v. Varrelmann, supra, is authority for the proposition that a preference, within the act of 1887, may be obtained through separate instruments executed before, but in contemplation of, the execution of a general assignment. But it is legally impossible that a preference can be created by the confession of a judgment made and entered after the assignment is executed and filed and the assignee has taken possession of the assigned property, and the fact that but a few moments intervened between the two transactions can make no difference. The finding that the execution of the assignment and the entry of the judgments were parts of a scheme to create an unlawful preference does not alter the fact that the sequence of events made the scheme impossible of execution. The levy and sale of the property on the executions were in hostility to the rights of the assignee, and he brought an action for the conversion of the property.

It so happened that chap. 294 of the Laws of 1888 went into force July 1, 1888, the day before the execution of the assignment, whereby it was required, that in all general assignments the assignor should state his residence and the kind of business carried on by him. It was held by the court óf common pleas in the city of Hew York, in the case of Bloomingdale v. Seligman et al., 22 Abb. N. C., 98; 19 St. Rep., 64, which was another attack on, the assignment now in question, that the non-compliance with the act of 1888 rendered the assignment void, and the suit brought by the assignee for the levy and sale of the property under, the judgments of Moses and Herts Bros. & Co. was thereupon discontinued.

This court, in Dutchess Co. Mut. Ins. Co. v. Van Wagonen, 132 N. Y., 898; 44 St. Rep., 441, held that the omission to comply with the act of 1888 did not invalidate an assignment. In this case it is true that the assignors promoted the securing of the judgments. But in so doing they violated no rights of the creditors. The judgments were for valid debts, and they were not suffered to be entered until the right of the assignee under the assignment had become vested and perfect. The judgments and executions constituted and could constitute no preference under the act of 1887. If no assignment had been made the judgments could not have been assailed by the other creditors, Manning v. Beck, 129 N. Y., 1; 41 St. Rep., 199, and having been entered after the assignment the other creditors have no ground for complaint. We can perceive no way in which Moses- and Herts Bros. & Co. can be compelled to account for the proceeds of the property sold on the executions, except in an action brought by the assignee, or in his right, asserting title under the assignment. Assuming, as we must, that the property sold under the judgments and executions of Moses and Herts Bros. & Co. belonged to the assigned estate, it was not made to appear that the accounts assigned to Sonneborn exceeded in amount one-third of the assets of the insolvents, after making the deductions specified in the act of 1887.

These views lead to a reversal of the judgments of the special and general terms and the granting of a new trial.

Judgments reversed, and new trial granted, costs to abide event.

All concur.


source: Caselaw Access Project

author: O'BRiEisr, J.

license: Public Domain

text:
    Augustus B. Dudley, App’lt, v. The Congregation of the Third Order of St. Francis, Resp’t.

      (Court of Appeals,

      Filed June 6, 1893.)

    1. Mortgage—Benevolent corporations.
    A mortgage of real estate made by a religious or charitable corporation without obtaining leave of the supreme court is-void.

      2. Same.
    In an action brought to foreclose a mortgage given by a religious or

      charitable corporation, for the execution of which the requisite leave of the court had not been obtained, the court cannot allow plaintiff to prove the loan and recover a judgment at law upon the debt.
    Appeal from judgment of the supreme court, - general term, first department, modifying and affirming judgment at special term dismissing complaint and granting defendant affirmative relief.

      Wm. H. Shepard, for app’lt; Peter B. Olney, for resp’t.

       Affirming 47 St. Rep., 60.

   O'BRiEisr, J.

It is important in the determination of the legal questions arising upon this appeal to get a clear view of the precise nature and character of the action. The complaint alleges that on or about the 21st day of July, 1888, the defendant, a domestic corporation, for the purpose of securing to the plaintiff the payment of the sum of $2,000, with interest, executed and delivered to the plaintiff a bond in double that sum, conditioned for the payment of the debt in one year from date, with semiannual interest. That as collateral security for such payment the defendant also executed and delivered at the same time to the plaintiff a mortgage upon certain real estate therein described, which contained a promise or covenant for the payment of the debt at the time and in the manner stipulated in the bond. That the debt was not paid, but default made in the conditions upon the performance of which both instruments were to become void. The prayer for judgment is that the lands be sold and the proceeds applied upon the debt, and in case of a deficiency, that the defendant be adjudged to pay the same.

The answer averred that the defendant was incorporated under the act for the formation of charitable, benevolent and other societies, being chap. 319 of the Laws of 1848. That no order of the supreme court was ever made permitting the defendant to mortgage its real estate, as required by chap. 50 of the Laws of 1854, and the execution and delivery of the mortgage was, therefore, put in issue by a denial of these allegations in the complaint. For another defense it was separately stated that the bond was not the obligation of the defendant. That it was executed together with the mortgage by or under the direction of certain persons named, who had previously usurped and intruded into the office of directors, which places they held wrongfully, to the knowledge of the plaintiff, when the bond and mortgage was executed and delivered, and that subsequently, in an action brought by the People, they were ousted and the rightful and lawfully elected directors reinstated. That the instruments were not sealed with the corporate seal or executed or delivered by any corporate au- * thority. It is stated that evidence was given in support of both defenses, but in the disposition of the case the courts below have passed upon but one of them. It was not claimed that the court had ever given its assent to the execution or delivery of the mortgage, and it is found that no such assent was given and no application therefor ever made. There are also findings that the defendant carried on and maintained “ St. Elizabeth’s Hospital ” upon the lands covered by the mortgage. That both the bond and mortgage were executed by and under the direction of persons who at the time were in possession of the offices of the corporation, and it was authorized by persons who, at the time, assumed to be and were in fact acting as the trustees and directors, though they were afterwards ousted from these places by the judgment of the court. It was held that the mortgage was void for the reason that it was made without the order of the court and that the plaintiff was not entitled to a judgment at law upon the bond. The record, therefore, presents two questions: (1) The validity of the mortgage. (2) The right of the plaintiff to recover in this action a general judgment at law upon the debt, evidenced by the bond, in the event that the mortgage is invalid.

The better opinion and the weight of judicial authority is in favor of the view that the English statutes passed in the reign of Elizabeth, restricting religious and, charitable corporations from alienating their real estate, have been adopted and followed by the courts of this state in determining the powers which such corporations possess to alienate or incumber their real property. It may be true, as the learned counsel for the plaintiff contends, that these statutes, as such, were never introduced here, but the principle embodied in them became the rule of our courts and the policy of the legislature in dealing with questions of the same nature and character, and, therefore, a part of our municipal law. Mad. Av. Bap Ch. v. Bap. Ch. in O. St., 46 N. Y., 141; De Ruyter v. Tr. St. Pet. Ch., 3 Barb. Ch., 122; Bogardus v. Trinity Ch., 4 Paige, 178. But the question whether these statutes were or were not actually adopted here we do not regard as an important or practical one in this case. This court is firmly committed to the doctrine that § 11 of chapter 60 of the Laws of 1813, 3 R. S. (Banks’ 8th ed.), p. 1888, § 11, which is substantially identical in language with that now under consideration, operates to forbid sales oh the real estate of religious corporations without the assent of the court, though the statute in terms simply makes it lawful for the chancellor to make the order in case he shall deem it proper. Mad. Av. Bap. Ch. v. Bap. Ch. in O. St., supra; Refd. Gh. v. Schoolcraft, 65 N. Y., 134, 143; Christie v. Gage, 71 id., 189, 190; Manning v. Moscow Pres. So., 27 Barb., 53 ; Mad. Av. Bap. Ch. v. O. St. Bap. Ch., 73 N. Y., 82. The act of 1854, ch. 50, § 1, applied to benevolent, charitable, scientific or missionary societies, but as it is almost identical in terms, and as it must be presumed to have originated in the same general policy, and was intended to prevent the same abuses, it should receive the same construction as the act of 1813, which applied to religious corporations. It cannot, we think, be doubted that the legislature intended to and did enact that compliance with that statute should be absolutely necessary to the validity of any mortgage of real estate which corporations of the class described therein should execute and deliver. It was assumed that without the statute such corporations could not mortgage theirlands at all, and the legislative intent was to permit them to do so only when the assent of the court was first obtained. Therefore, the mortgage in question lacked an element indispensable to its validity, and the courts below properly denied to the plaintiff a judgment of foreclosure.

The ruling of the court refusing to allow the plaintiff to prove the loan and recover a judgment at law upon the debt remains to be considered. An action to foreclose a mortgage is a proceeding in a court of equity which is regulated by statute. Code Civ. Pro., chap. 14, title 1, art. 4, § 1626. The holder of a bond and mortgage has two remedies. He may proceed at law to recover a judgment for the debt, represented by the bond, and enforce the judgment in the usual way, or he may proceed in equity by action to foreclose the mortgage and appropriate the land embraced in it to the payment of the debt. While an action is pending for the foreclosure of the mortgage, or of the final judgment therein, an action at law upon the bond is prohibited, without leave of the court, § 1628. In an action to foreclose, the complaint must state whether any other action has been brought to recover any part of the mortgage debt, and if so, whether any part thereof has been collected. § 1629. And where the plaintiff has recovered judgment upon the debt, he cannot maintain an action on the mortgage unless an execution has been issued upon the judgment and returned unsatisfied in whole or in part. § 1630. Therefore, a party is not entitled, as of right, to both remedies at the same time. In an action in the nature of a proceeding in revi to foreclose a statutory lien, and where a personal judgment against some of the parties follows as incidental to the general relief, such judgment cannot be rendered where the plaintiffs fail to establish the lien. Burroughs v. Tostevan, 75 N. Y., 567.

In an action to foreclose a mortgage a judgment for deficiency is authorized, and may be rendered as incidental to the principal relief demanded, but it cannot be rendered in an action where the plaintiff fails to establish the mortgage. The peculiar statutory provisions applicable to actions of foreclosure above referred to indicate that it was never intended to permit the joinder in the same complaint of two separate causes of action, one at law to recover a personal judgment on the bond for the debt, and the other in equity to procure a sale of the land covered by the mortgage given to secure the same debt and the application of the proceeds thereon, and if not, then the complaint in this case does not contain but a single cause of action, and that in equity, for the foreclosure of the mortgage lien. It is true that the giving of the bond is stated, but that is incidental to the main facts alleged, and only necessary, if at all, for the purpose of showing the consideration of the mortgage and the amount of the deficiency, if any.

When the plaintiff failed to establish the mortgage he failed to establish his cause of action in its whole scope and meaning, and he could not stand upon the incidental allegations in regard to the bond. It is not necessary to inquire how far or under what circumstances it was within the power of the court to permit him to change the form of the action to one for the enforcement of some purely legal remedy. He applied to the court for that purpose at the trial, and the permission was refused, in the exercise of that discretion which the court undoubtedly possessed. The question that we are now concerned with is whether it was legal error in the court below to hold, after the plaintiff had failed to establish his equitable cause of action, that he was not entitled, upon the same complaint, to a personal judgment against the defendant. We think not. The case, as an action in equity, was terminated by the finding of the court that the plaintiff had no valid mortgage to foreclose, and, without the permission of the court in some form, the plaintiff was not entitled in the same action to a different remedy. Beck v. Allison, 56 N. Y., 366.

The established rule, that when equity has obtained jurisdiction of the parties and the subject-matter of the action it may adapt the relief to the exigencies of the case, even to the extent of rendering a personal judgment, in order to prevent a failure of justice, does not apply here. That rule applies when the general basis of fact, upon which equitable relief was sought has been made out, but, for some reason, it becomes impracticable to grant such relief, or where it would be insufficient, and not to a case like this, where it appears that there never was in fact any ground for equitable relief whatever, but the sole remedy was an action at law. When facts are made out which bring the case within the general jurisdiction of equity, the court will not allow the case to fail because the specific relief prayed for is no longer practicable, but in such a case, as a substitute for the relief demanded, will- award an equivalent in damages, thus ending the controversy, instead of sending the parties to a court of law for that purpose. Valentine v. Richardt, 126 N. Y., 277; 37 St. Rep., 12; Lynch v. El. R. R. Co., 129 N. Y., 274; 41 St. Rep., 541; Van Rensselaer v. Van Rensselaer, 113 N. Y., 213; 22 St. Rep., 947.

In this case the plaintiff has failed because he never had any ground upon which to invoke equitable jurisdiction, and, in such a case, the court will not attempt to try another and purely legal cause of action. The question is not one of the right to a jury trial. That mode of trial is waived by the plaintiff when he elects to bring an action for relief, both legal and equitable in its nature, in respect to the same cause of action, and by a defendant when he omits to insist upon it in the answer by taking the proper objection, which is usually done by a distinct allegation that an adequate remedy exists at law, or by demanding it, or raising the question at the proper time in cases where he is entitled to that mode of trial according to the practice in equity cases. Cogswell v. N. Y. N. H. & H. R. R. Co., 105 N. Y., 319; 7 St. Rep., 203; Town of Mentz v. Cook, 108 N. Y., 504; 13 St. Rep., 845; Ostrander v. Weber, 114 N. Y., 95; 22 St. Rep., 979; Truscott v. King, 6 N. Y., 147. It is the case of an action in equity where none but equitable relief was demanded or claimed, commenced and tried before the court as such, and a finding made that the plaintiff was not entitled to the relief sought, with facts appearing upon the trial that might entitle the plaintiff to a money judgment in an action at law, which he did not claim in his complaint, and the right to which he in no way suggested to the court until the whole theory of his action, as presented by the pleadings, failed. Whatever power the court may have to permit a party, by amendment or otherwise, to thus change the whole scope and nature of his action, it cannot be demanded as a right, and a refusal by the court, under such circumstances, to go on and try other questions upon the same pleadings, and administer other remedies, purely legal in their nature, which are properly the subject of another and different form of action, is not error. Bradley v. Aldrich, 40 N. Y., 504; Wheelock v. Lee, 74 id., 500; Hawes v. Dobbs, 137 id., 465 ; 51 St. Rep., 271.

There are no other questions in the case, and no exceptions presenting any points that could possibly aid the plaintiff or change the result

The judgment should be affirmed, with costs.

All concur, except Andrews, Cli. J., not voting.


author: Per Curiam.

text:
    Charles A. Burt, App’lt, v. The Oneida Community et al., Resp’ts.

      (Court of Appeals,

      Filed June 6, 1893.)

    Appeal—Keakgumekt.
    Motion for reargument

      George H. Hart, for motion ; Wm. G. Tracy, opposed.

       See 50 St. Rep., 723.

   Per Curiam.

The plaintiff moves for a reargument, and one of the grounds upon which it is sought is an alleged error in the record, consisting of a misstatement in the findings of the referee. It is admitted that a correct copy of the record has been filed with the reporter of the court. The copies handed up when the argument was had and upon which the court rendered its decision have been compared with this copy and shown to be correct, and if there were any faulty or defective copies printed they were not before the court, and could not have affected its determination.

All of the other points relied upon were presented upon the former argument, either orally or in the elaborate briefs filed, and none of them were overlooked in the decision rendered. The exceptions to the introduction of the records of the meetings of the administrative council and business board were fully considered. These records were produced by one of the officers of the council upon the subpoena of the plaintiff, who testified upon the examination of plaintiff’s counsel that they were all the records of the meetings of the administrative council, the business board or the family meeting relating to the expulsion of the plaintiff that he could find. The witness also testified that he kept the minutes of the council, and than they were correct.

The plaintiff read in evidence extracts from the minutes of the business board before they were offered by the defendant. The records of both boards were read over at the family meeting, which was the ultimate and final authority, and a vote taken confirming the action of the council and of the board as it appeared in these records without a dissenting vote. Under such circumstances it must be apparent why it was not deemed necessary to discuss these exceptions upon the decision of the appeal.

It is also very plain from the opinion that the plaintiff failed because in the judgment of the court he was not entitled, as matter of law, upon his own proofs, to any relief. It may be that a different view was taken here of the legal effect of some of the facts proven from that adopted by the learned referee, but if so, it does not follow that the facts were overlooked or misapprehended.

The motion must be denied, with costs.

All concur.


author: Andrews, Andrew, Ch.J.

text:
    Francis Curnan, Resp’t, v. The Delaware & Otsego Railroad Co., App’lt.

      (Court of Appeals,

      Filed June 6, 1893.)

    1. Contract—Suspension op work.
    A contract for building a railroad provided that the company could dissolve it on five days’ notice and on payment of the amount due and a liquidated sum. On the death of Mr. Cornell, its president, who furnished funds for the work, the secretary of the company, in March, 1890, directed the work suspended, and finally ordered the removal of all tools, etc., by a letter which stated that the vice-president was in New York, and that "it was desired by Mr. Edwin Young, the executor of Mr. Cornell’s estate, that you suspend your work until he can officially take action, at which time you will he duly informed, and he hopes that no serious delay will occur.” Plaintiff waited for several months, and frequently applied for the resumption of the work, hut it was never resumed. Held, that the finding that the work was suspended in March, 1890, by direction of the defendant, was supported by evidence.
    3. Same.
    By the eighth article of (he contract, ten per cent of the contract price was to he retained until the final completion of the work. Held, that the company could not suspend the work six months and refuse to give the plaintiff any assurance that the work would ever he resumed, and yet use said eighth article as a defense when called upon for payment of the sum retained.
    3. Same—Damages.
    The trial judge awarded to plaintiff asum equal to the value of the use of teams and properly which plaintiff kept unemployed on the road, and for wages for the men for ten days. There was evidence that this was done at the request of the secretary and of Young, the executor of Cornell. Held, no error; that there was an implied contract on the part of defendant to compensate plaintiff for his loss in foregoing the use of his teams and property during this period, and for his expenses in retaining the men, and that the arrangement was within the incidental powers possessed by the secretary of the company.
    4. Same—Liquidated damages.
    By the twelfth article of the contract, the company reserved the right to terminate and end the contract at any time by formal notice in writing, and by paying for labor performed, and of $3,000, which payment "shall be in full for all labor performed and materials furnished, and damages that the party of the second part may sustain by the non-performance and completion of t.he work provided for in and by the above agreement.” Held, that the provision as to liquidated damages had no application to the situation which arose upon the facts in this case.
    Appeal from a judgment of the supreme court, general term, in the second department, affirming a judgment rendered on the decision of the trial judge awarding damages to the plaintiff in the sum of $20,406.89, against the defendant.
    The parties entered into a contract, dated June 30, 1887, for the construction by the plaintiff for the defendant of the roadbed ■of the defendant’s proposed road, about twenty-five miles in length, in the county of Delaware in this state, for which payment was to be made to the plaintiff at prices fixed for the several kinds of work, according to the amount. The contract required that the work should be commenced within ten days after its date, and that it should be completed within one year and six months. The company agreed to pay the contractor monthly, on or about the 15th day of each month, for all work done and materials furnished by him up to and including the last day of the preceding month, on the certificate of the chief engineer, at the rates specified in the contract, “ less ten per centum of such amount,” to be withheld until the final completion and acceptance of the work, at which time the sum retained, together with the balance due on the final estimate, was to be paid by the company to the contractor on the certificate of the chief engineer “that the whole work provided for in this contract is completed and acceptably finished within the time specified.” By the eighth article of the contract it was provided that the contractor should make no claim for damages from hindrance or delay from any cause, in the progress in any portion of the work or in case the work for any reason should be suspended or delayed, “ and that in no event shall the • contractor claim or have a right to extra compensation for damage arising from any suspension or delay in the prosecution of the work,” but bis time for the performance of the contract was 'extended in case he was delayed by the acts or omission of the company, “ or on account of failure to secure right of way, or for any other reasons,” for a time equal to the hindrance or delay on the prosecution of the work so occasioned.
    The fourteenth article is as follows:
    “ Fourteenth. It is further mutually agreed by and between all ■ the parties hereto, that the party of the first part reserves the right to dissolve this contract at any time; and the party of the second part hereby agrees to discontinue all work provided to be performed by the party of the second part, for the party of the first part, by this agreement upon five days notice by the party of the first part in writing to the party of the second part, notifying the party of the second part to discontinue all work provided by said contract. It is, however, further provided and agreed by and between the party of the first part and second part hereto, that the power to dissolve this agreement can only be exercised by the party of the first part upon the notice aforesaid, and the payment of all sums due the party of the second part for all labor performed for the party of the first part-, and the payment of the further sum of $3,000 hereby agreed upon to be paid to the party of the second part as liquidated damages, which payment shall be in full for labor performed, for all material furnished and damages that the party of the second part may sustain by the non-performance and completion of the work provided for in and by the above agreement, and the .offer or tender of the sums above mentioned by the party of the first part to the party of the second part shall be accepted by him in full for all claims, charges, demands he may have against the party of the first part for any cause what■ever, because of the above contract, and the dissolútion of the same, and shall be a bar to any action brought or attempted to be brought by the party of the second part, his heirs or assigns against the party of the first part or its assigns.”
    The defendant was organized as a general railroad corporation, and its stock consisted of 8,551 shares of $100 each, of which one Thomas Cornell held about 3,400. He was the promoter of the road, and the defendant requested a finding “ that Thomas Cornell was building the roadbed of the defendant through the agency of this company,” which finding was made by the trial judge. The enterprise of building the road was his, and he was substantially the principal in the transaction. He furnished the means for building the road, and whatever gains might accrue from the enterprise would inure almost wholly to his benefit, or in case of loss it would fall upon him. Cornell was president of the defendant, and one Dimmick, who was the confidential clerk and agent of Cornell, was its secretary, treasurer and also a director of the company. The contract was executed in behalf of the company by the president and secretary. The plaintiff, within a few days after the execution of the contract, entered upon its performance and diligently prosecuted the work until November, 1887, when, by direction of the defendant, the work was suspended, and the plaintiff was not permitted to resume the work until November, 1888, although he desired, and kept himself in readiness, to proceed. The work done and materials furnished up to the suspension of the work in November, 1888, had been certified by the chief engineer of the company. In November, 1888, the defendant directed the plaintiff to resume work, which he did, and continued its prosecution until March SI, 1890, when he received the following letter :
    “Eondout, N. Y., March 31, 1890.
    “.Francis Curnan, Esq.:
    “ My dear sir.—The death of Mr. Cornell has left the executive office of the Delaware & Otsego Bailroad Co. vacant. The vice-president resides in New York city, and it is desired by Mr. Edwin Young, the executor of Mr. Cornell's estate, that you suspend your work until he can officially take action, at which time you will be duly informed, and lie hopes that no serious delay will occur. ‘
    “ Very truly yours,
    “ Samuel G-. Dimmick,

      “Sec. D. & O. R. R. Co.”

    Mr. Cornell died March 30, 1890, the day before the letter was written.
    The plaintiff immediately after receiving the letter called on Dimmick at the office of the company at Eondout, and there met Mr. Young, the executor of Mr. Cornell’s estate, and there the direction to suspend work was substantially repeated, and he was informed that the suspension would probably be for about four months, and, as the plaintiff testifies, he was requested by Dim-mick and Young to keep his teams upon the work so as to be ready to resume when required. "’The plaintiff suspended the work and kept his teams and men to take care of them employed for several months, until July, when he was directed, as he testifies, by Dimmiclc and Young to keep them no longer awaiting the resumption of the work, and he then took them away. The plaintiff repeatedly applied to Dimmiclc for permission to resume work, but was put off, and he was informed by Mr. Young that it was impossible for him to say what would be done with the road, and that “ the whole question would ultimately turn upon whether or not the Ulster & Delaware Railroad would take the road and conclude to finish it, and what their action would be I told him I could not state.”
    In September, 1890, the plaintiff made application to the vice-president of the defendant in New York for payment of amount due him, and that officer informed him that lie knew nothing* about the matter, and that he had never met with the board of directors since its first organization. Similar demand was made of Dimmiclc. The work on the road has never been resumed. When the work was stopped, on the death of Mr. Cornell, there was a few hundred dollars only in the company’s treasury, and the company had no means then or afterwards with which to carry on the work. It would have required an expenditure of about $10,000 to complete plaintiff’s contract.
    This action was commenced in October, 1890. The plaintiff was allowed to recover (1) the sum unpaid for work and materials furnished, including the ten per cent, reserved; (2) the expenses incurred by him between March 81, 1890, and July in the same year, in keeping men and teams in readiness to proceed with the work pursuant to the request of Dimmiclc; (3) the sum of $3,000, liquidated damages mentioned the 14th article of the contract.
    Other facts are stated in the opinion.

      G. D. B. Sasbrouck, for app’lt; P. Cantine, for resp’t.

       Modifying and affirming 44 St. Rep., 923.

   Andrews, Andrew, Ch.J.

The that the work was suspended in March, 1890, by direction of the defendant, is supported by evidence. The letter of March 31, 1890, addressed by Dimmiclc, secretary of the company, in his official character to the plaintiff,, was justly interpreted by the trial judge as containing a request by the defendant to suspend work under the contract. It is true that the letter states that “itis desired by Mr. Edwin Young, the executor of Mr. Cornell," that the work shall be suspended. But the relations between the Cornell estate and the defendant were of such a character that the work could only be prosecuted with the consent and co-operation of the former. Cornell in his lifetime was the promoter of the enterprise of building the road, and the only source from which funds could be obtained for continuing the work. He owned nearly the whole stock, and seems to have been vested with the exclusive management of the affairs of the -corporation. The board of directors do not appear to have had .any meetings, but all its powers were exercised by Mr. Cornell and the secretary, Dimmick.

In view of the circumstances, when the secretary informed the plaintiff of the wish of the representative of the Cornell estate that the work should be suspended, which was confirmed at the subsequent interviews between the plaintiff and Dimmick and Young, he had a right to regard the letter as a notification by the company to suspend the work, There were no funds in the treasury. The work could not go on unless the means should be furnished out of Cornell’s estate. The executor was not ready to act. Both the plaintiff and Dimmick, the secretary, understood the situation, and when the plaintiff was informed by the secretary -of the. company that the executor desired that the work should be suspended, he had a right to understand that this was also the wish of the company. The actual authority conferred by the corporation upon Dimmick does not appear. But his authority may be implied from the power he had been accustomed to exercise without dissent of the company, and presumably with its acquiescence. He was a director of the company and its secretary and treasurer. He was the person through whom the directions of the company to the plaintiff were communicated, and the plaintiff was justified in regarding directions given by him in his official character respecting the prosecution or suspension of the work under the contract as authorized by the company. That the company was an actor, in suspending the work, and that the letter of March 31, 1890, was intended as a direction by the company to the plaintiff to suspend the work, is also a reasonable inference from other facts. The company treated the work as suspended. It made no request upon the plaintiff to proceed. On the contrary, he was unable to get the consent of the company to resume the work, although he made repeated applications for this purpose to the secretary at thp company’s office, and upon Application to the vice-president that officer disclaimed any knowledge of the affairs of the company. The chief engineer of the defendant in charge of the work testified that on March 31, 1890, he received orders to stop the work from Mr. Dimmick, the secretary, 'and that he was the official through whom he was accustomed to receive the orders of the company, and thereupon he -discontinued engineering work which was necessary to be done before the plaintiff could proceed.

The right reserved to the company in the eighth article of the contract, to suspend or delay the work, is to be reasonably construed. It could not abandon the enterprise or delay it for an indefinite and unreasonable time, and still refuse to pay the plaintiff the ten per cent withheld on the ground that by the contract that amount was to be retained until the completion and acceptance of the work. When the action was commenced the ability of the company to further prosecute the work was upon the evidence contingent upon the action of third parties. The company refused to give the plaintiff any assurance that the work would ever be resumed. The last suspension had already continued six months. Under these circumstances we think the eighth article was not available to the defendant as a defense when called upon for payment of the sum retained, which represented an indebtedness for work done and materials furnished under the contract.

The trial judge awarded to the plaintiff, in addition to the ten per cent withheld under the contract, the sum of $2,000 for the value of the use of teams and property which the plaintiff kept unemployed upon the line of the road from March 81, 1890, to J nly 22, 1890, and for .the wages of men for a period of about ten days from April 1, 1890. There was evidence tending to show that Dimmick the secretary, on suspending the work March 31, 1890, and Young, the executor of Cornell, requested the plaintiff to keep the men and teams upon the line of the road in readiness for the resumption of the work, and that at their request the men were discharged on the lltli of April, and the teams on the 22nd of July. Under the circumstances an implied contract arose on the part of the defendant to compensate the plaintiff for his loss in foregoing the use of his teams and property during this period and for his expenses in retaining the men, provided the arrangement was one which Dimmick was authorized to make in behalf of the company. We think the arrangement was within the incidental powers possessed by Dimmick as the representative of the company in directing a suspension of the work. When the suspension was directed it seems to have been supposed by all the parties that it would continue for a short time only, and it may well have been regarded that any delay in resuming the work when its resumption was decided upon would be to the detriment of the company.

We are unable, however, to concur with the courts below in the award of the sum of $3,000 liquidated damages under the provisions of the 12th article. By that article the right was reserved to the company to terminate and end the contract at any time by formal notice in writing of its election so to do, and upon payment to the contractor for all labor performed and of the further sum of $3,000 as liquidated damages, “ which payment,” the contract declares, “ shall be in full for all labor performed and materials furnished, and damages that the party of the second part may sustain by the non-performance and completion of the work provided for in and by the above agreement.” The provision as to liquidated damages applies only in case the contract should be terminated by the election of the company before the work was completed, which election was to be signified by written notice to the plaintiff, and notice alone would be ineffectual to dissolve the contract, unless the payments, including the sum paid for liquidated damages, should be made. The liquidated damages were not fixed for a breach of the contract. The dissolution of the contract under the terms of the 14th article, would in no sense constitute a breach, but would be a power reserved in the contract itself. The company never exercised the power conferred by the article. It never terminated the contract. The contract was bind-: rag upon the company at all times up to the commencement of this action. By its refusal to permit the plaintiff to proceed with the work, and its unreasonable delay, it had subjected itself to liability to pay the plaintiff in full for the work done and materials furnished by him under the contract, and could no longer insist on retaining the ten per centum under the provisions of the contract. By its own acts, the company had forfeited the right longer to withhold payment. Any damages which the plaintiff sustained by the unreasonable delay of the company and its practical abandonment of the' enterprise the plaintiff was entitled to recover as upon a breach of the contract by the defendant. But the provision for liquidated damages had no application to this situation, and it cannot be extended beyond its obvious scope and purpose.

For the reasons indicated, we think the judgment, so far as it embraces the allowance for liquidated damages, is erroneous.

The judgment should, therefore, be modified by striking out the sum awarded as liquidated damages and, as so modified, affirmed, without costs in this court to either party.

All concur.


author: Van Brunt, P. J.

text:
    Sarah Lazarus et al., Resp’ts, v. The Metropolitan Elevated Railway Co. et al., App’lts.

      (Supreme Court, General Term, First Department,

      Filed May 12, 1893.)

    1. Eailboad—Elevated—Evidence—Vacant booms.
    In an action against an elevated railroad it appeared that some of the rooms in plaintiffs’ building were vacant. The referee excluded evidence as to the charge or price of such rooms, and in his findings as to actual rentals included the amount for which the building rented exclusive of the vacant rooms. Held, error; as such vacancies may have been caused by the demand of exorbitant rentals.
    8. Same.
    Where it appears that during certain periods the premises had been let as a whole to certain tenants and sublet by them, evidence as to the occupancy and rent thereof during such periods is competent and material, and an exclusion thereof error.
    3. Same.
    Where a tenant of the premises has testified to the physical presence and the proximity of an elevated railway, Held, error to exclude the question whether in fact the railroad structure and the operation of its trains interfered with the business of such occupant.

      4. Same—Accessibility. ■
    A rejection of testimony as to whether plaintiffs’ premises were rendered .more accessible from uptown and distant points by reason of the proximity of a station, and whether such station is conveniently located, is not error, as the referee is as competent to judge of these facts as the witness, and it is his province to do so.

      5. Same—Findings.
    The referee refused to find, on request, that the easements appurtenant to plaintiffs’ land taken for railroad purposes, apart from any damages to said land from such taking, have, in themselves, only a nominal value; hut found that plaintiffs were not entitled to recover damages, except to the extent, if any, by which the disadvantages of the railroad have exceeded the advantages thereof to said premises. Held, that the requirements of the case were met by this finding, and, therefore, that the refusal to find as requested was not reversible error.

      S. Same—Parties.
    In such an action, the executors of the ancestor of the plaintiffs are not necessary parties merely because they have a power of sale under the will.
    Appeal from a judgment entered on the report of a referee. Premises Nqs. 33 Trinity PJace and 57 Broadway.
    Davies, Short & Townsend (Julien T. Davies and Arthur O. Townsend, of counsel), for app’lts; Stickney, Spencer & Ordway (Nelson S. Spencer, of counsel), for resp’ts.
   Van Brunt, P. J.

This action was brought to enjoin the operation of the defendants’ road in Trinity Place, in the city of New York, in front of plaintiffs’ premises, situate on the northeast corner of Trinity Place and Exchange alley, having a frontage on Broadway, and extending along. Exchange alley to Trinity Place.

The referee before whom this action was tried has not thought it necessary to give any intimation as to how he arrived at the ■results which were included in his report, which contains some rather novel conclusions of law; and, as a consequence, this court has been compelled to examine the whole of the bulky record presented upon this appeal for the purpose of ascertaining, if possible, the theory upon which the referee has reached the conclusions embodied in his report, and these labor's have resulted in but little success. But it seems to be apparent from an examination of such report that the referee has fallen into serious errors, in consequence of which a new trial must be had.

There is one peculiar feature which is presented by his finding in his report in respect to past damages, and the evidence which was introduced in respect thereto, which shows that he seems to have been of the opinion that vacant rooms, caused perhaps by the demand of exorbitant rentals, formed an indication of the •damages sustained by the maintenance and operation of the defendants’ railroad, because all evidence was excluded by the referee in the case of rooms which were vacant in the building as to the amount of rent which was asked for the same; and the amount of annual rentals at the time of the making of the report included therein was the amount for which the building was then rented exclusive of such vacant rooms. We find that certain rooms which had been accustomed to be rented happened to be vacant at this time, and the question was asked of the witness who had charge of the premises: “ What is the charge or price it which you hold that room at the present time ? ” This question was objected to and excluded, and the referee finds the actual rentals of the premises excluding the vacant rooms, and we have no indication whatever as to whether the cause of such vacancy may not have been the demand of exorbitant rents. If such a rule were to prevail, all that it would be necessary for the owner of premises upon the line of the elevated railroad to do would be to ask rents far beyond the amounts which persons always pay for similar accommodations, and he would have an empty building, and could claim that it was the result of the operation of the rrailroad, and could recover as damages the total value of his property. The results of this ruling necessarily affect both past and future damages, because the value of the premises is necessarily affected by the annual rental received therefrom.

These premises having been let during certain of the periods covered by the evidence as a whole, and sub-let, the referee •excluded evidence upon the part of witnesses upon the part of the plaintiffs as to the occupancy of these buildings, and the rent thereof, during the times when said building was rented ■as a whole to certain tenants, and sub-let by them. It is sought to sustain such ruling now by the claim that the witness had no personal knowledge in regard to this matter, and therefore could not testify thereto, and that a subsequent witness did give testimony upon that point. But no objection was taken upon that ground, and it is impossible for the court to determine whether the witness had personal knowledge or not until he claimed inability to answer because of ignorance. The objection was based upon the ground, apparently, that such evidence was incompetent and immaterial, which clearly was error. And although a subsequent witness may have given testimony which covered this ground, which we have been unable to determine by an inspection of this record, the rulings show that the referee had an erroneous view in regard to the relevancy of testimony affecting the question of value, and it may have pervaded the whole of his action.

The referee further excluded evidence from occupants of the premises as to whether, in fact, the structure of the railroad and the operation of its trains interfered with the business of such occupant, upon the ground that it called for the conclusions of the witness. The witness had already testified to the physical effects of the building and operation of the road, and that his rental had steadily risen until it had nearly doubled, and that most of his goods were delivered at Trinity place. And he was then asked the question whether, as matter of fact, the elevated structure and the operation of trains in Trinity place interfered with his business as a restaurant keeper, and this was excluded upon the ground that it called for a conclusion of the witness. And the further question was asked: “ Have you ever noticed any difficulty attending the delivery of goods in the rear of your building ? ” which was excluded for the same reason.

These questions certainly called for no greater conclusion of a witness than much which he had testified to in regard to the physical effects resulting from the maintenance and operation of the road. They were facts which he was as competent to testify to as anybody else, as to whether his business was injured by that road, or whether access to his premises was affected thereby. It might as well be said that the witness could not testify as to the distance between two given objects in sight, as that is a conclusion as much as was the evidence asked from the witness. Both are the results of mental operations. These questions would seem to be especially pertinent, as the witness was examined upon the part of the plaintiffs.

Another witness who was examined on the part of the plaintiffs, for the purpose of establishing the facts of the maintenance, and operation of this road, having testified upon this point, was asked the question: “ The elevated road has never interfered with your work and occupation there, has it, personally ? ” This question was objected to, as calling for a conclusion, and was excluded. And subsequently the witness was asked: “ Did you personally experience any inconvenience in your "work from the presence of the elevated railroad ? ” This was answered, “ It has never interfered with me in any way.”

Objection is also taken to the refusal of the referee to permit certain witnesses to testify, some of -whom were examined as experts as to value, whether the premises in suit were rendered more accessible from uptown and distant points by reason of the presence of the station of the elevated road at Rector street, and whether this station is located conveniently to these premises, or whether the premises are easily reached from the Rector street station, and whether the railroad in Trinity place renders the premises in suit more accessible than they otherwise would be.

There seems to be no error whatever in these rulings, because the referee was as competent to judge of these facts as the witnesses. The situation of the premises, the construction of the road, etc., were facts proven before the referee, and it was his province so to do, and not that of the witness.

There seems also to be an exception to a refusal to find which requires notice. The referee was asked to find that the easements appurtenant to the plaintiffs’ land taken for railroad uses, apart from any damages to said land, from such taking, have in themselves only a nominal value, which was refused. In the case of Bookman v. N. Y. E. Ry. Co., 50 St. Rep., 703, a similar request was made and refused, and the court held that the request should have been found, and the refusal to find showed that the court misapprehended the principles of law laid down in the cases of Newman v. Met. Elevated, 118 N. Y., 618; 30 St. Rep., 36; and Bohm v. Same, 129 N. Y., 576; 42 St. Rep., 247.

The learned counsel for the respondent clainis that the referee committed no error by this refusal, because the case at bar is substantially different from the cases in which this rule was enunciated in the following particular: That in the Sperb, Bookman and Sutro cases, the court said they had carefully read the evidence and failed to find that the plaintiffs had suffered any damage by reason of the defendants' acts. And the counsel urges that from that fact the court reasoned that the trial court must have failed to apply the proper rules of law, and that they were confirmed in that conclusion by the refusal to find not only the request in question, but several others of like tenor, all tending to show them that the proper rule had not been applied.

We have read all that the opinion in the Bookman case contains, and we fail to find that the court anywhere stated that they failed to find that the plaintiffs had suffered any damage by reason of the defendants' acts. What they did say is that they were satisfied that in the estimate of damages injustice was done to the defendant, and the proper rules of law were not applied in awarding the judgment; a very different condition of affairs from that assumed by the counsel. It is true that other findings are referred to as having been refused without any just reason. But the court expressly stated that the finding to which their attention was cálled was in that case a crucial test as to the principles under which the court acted; and they say that because of the principles laid down in the Newman and Bohm cases it was important for the defendant to have a finding that substantially all the damages were consequential, so as to give room for the allowance of benefits. This importance is as great in the case at bar as it was in the Bookman case. But it seems to us that the requirements of that case were met by the finding of the referee that the plaintiffs were not entitled to recover damages in this action except to the extent, if any, by which the disadvantages of defendants’ railroad have exceeded the advantages thereof to the said premises; which seems to indicate that be had in mind the points which were pronounced to be so important in the Book-man ease.

It is also urged upon the part of the appellants that it was error not to compel the bringing in of the executors as plaintiffs in the action, upon the ground that they bad a power of sale, and there was no proof that debts and legacies had been paid, or that the estate had been administered upon. We do not see that , the executors of the ancestor were necessary parties merely because of the existence of a power of sale in the will of such ancestor; and it was incumbent upon the defendants to show some reasonable ground for apprehending some infirmity of title by reason of the claimed unsettled condition of such estate.

The point is also made that the referee erred in allowing all the past damages to the plaintiffs in this action. It appears that Moses Lazarus, the ancestor, died on the 9th of March, 1885, and the past damages recovered are computed from this date. He left seven children, the plaintiffs and their sisters, who, under his will, were devisees of the premises in question. Emma Lazarus died on xhe 19th of February, 1887, intestate, leaving the plaintiffs her only heirs at law and next of kin. It is perfectly clear that her administrator is entitled to her share of the damages accruing between the 9th of March, 1885, and the 19th of February, 1887. But the difficulty with the appellants’ objection is that this question was raised for the first time upon this appeal. If it had been, raised at the trial we think the court should at least have excluded her share from the amount recovered. But the better practice would have been to bring in her administrator in order that the whole matter might be settled. It is urged that under the provisions of the Code as to defects appearing upon the face of the complaint, it must have been taken advantage of by demurrer or it is waived. But the counsel confuses the rule prevailing in actions at law and actions in equity. The court in equity is bound before rendering judgment to bring in all parties who may be interested in the result, whether upon the demand of the parties or not.

There are various other exceptions to which attention might be called, but it does not seem to be necessary to discuss them in detail, as we have been left entirely in the dark, as already suggested, as to the method by which the referee has reached his conclusions; and it is impossible for us to say but that he may have been affected to the injury of the defendants by the errors to which attention has been called. And it would seem probable, from the nature of many of the rulings, that the referee had an erroneous view of the effect of evidence.

Under these circumstances, therefore, there is nothing to be done except to reverse the judgment and order a new trial before a new referee to be appointed by this court,- with costs to the appellants to abide the final event.

O'Brien and Follett, JJ„, concur.


author: Barrett, J.

text:
    Theodore Moss, App’lt, v. Eugene Tompkins, Resp’t.

      (Supreme Court, General Term, First Department,

      Filed May 12, 1893.)

    Contract—Breach—Evidence of damage.
    In an action for breach of contract to produce a new play with defendant’s company at plaintiff’s theatre, the court ruled out an offer by plaintiff to show, by the previous receipts of the theatre and proof of the success of the play elsewhere than in New York, that the receipts during the term of the contract would have been greater than the amount actually received by plaintiff from other sources during the same period. Held, that the ruling was correct, as the proposed elements were speculative and insusceptible of anything like certain proof; that increased profits could not be predicated of the success of the play in other cities before it had acquired a general or established reputation.
    APPEAL from a judgment entered upon a verdict at circuit allowing the plaintiff six cents damages and awarding costs to the defendant.

      Stephen H. Olin, for app’lt; A. J. Dittenhoefer and David Gerber, for resp’t.
   Barrett, J.

The action was for breach of contract. The plaintiff is the lessee of the Star Theatre in this city. The defendant is a Boston theatrical manager. The parties entered into what is known as a “ sharing terms agreement,” wherebj the plaintiff was to furnish his theatre, orchestra, attendants and equipment for a given period, and the defendant was to furnish a new play called “The Soudan,” together with a dramatic company. The gross receipts were to be divided between the parties, each week, in certain specified proportions. Some months before the date when the first performance was to be given the defendant notified the plaintiff that he would not produce the play at the Star Theatre, and he has since persisted in that refusal. Upon the trial, the breach being conceded, the plaintiff offered to show by the previous receipts of his theatre, and by proof of the success of the play elsewhere than in New York, that the receipts during the term of the contract would have been greater than the amount actually received by him from other sources during the same period. The latter amount was specified in the bill of particulars as $13,600. This offer was objected to and the objection was sustained. The plaintiff excepted to the ruling, and the exception presents the sole question upon this appeal.

We think the ruling was correct. The plaintiff could, of course, have proved the amount which he actually received for his theatre during the term of the contract, but it would have been impossible for him to prove what the receipts from the defendant’s play would have been during the same period. His offer specified two elements, namely, the previous receipts of the Star Theatre from other attractions, and, second, the success of the defendant’s attraction elsewhere than in New York. The first element could have had no possible bearing upon the question of damages. The theatre did not draw people because of its attractiveness as a building. Each entertainment there stood upon its own merits. The second element was equally uncertain. Profits, that is, the certainty of receipt beyond what the plaintiff actually took in during the contract term, could not be predicated on the success of the play in other cities before it had acquired a general or established reputation. The play was new, and it was entirely untried in this city. No one could possibly know, therefore, how it would succeed here. The defendant’s dramatic company was not shown to include artists of such exceptional and well-known talent as to guarantee, apart from the play, audiences of reasonably certain numbers. Nor was any special attraction of the latter kind contemplated by the contract The proposed elements were, therefore, speculative, and insusceptible of anything like certain proof. The language of Bradley, J., in Bernstein v. Meech, 130 N.Y., 359; 41 St. Rep., 700, is directly in point, and, we think, controlling. The latter case does not conflict with Wake-man v. The Wheeler & Wilson Manufacturing Co., 101 N. Y., 205. The doctrine there held was that where particular damages are the certain result of the breach, their uncertainty in amount will not prevent a recovery. But here it is by no means certain that any damages, such as the plaintiff claims, resulted from the breach. It is, in fact, entirely uncertain whether the receipts from the defendant’s play would have exceeded the amount which the plaintiff actually received during the contract term. The reasonable certainty that there would have been some receipts from the play, therefore, involved no certainty that damages on that line were caused by the breach.

The plaintiff did not offer to show, as did the plaintiff in Bernstein v. Meech, any expenses which he had incurred in preparing for the contemplated performances. This was, doubtless, because there were here no such expenses, as the plaintiff was notified, months in advance of the first performance, that the defendant would not produce the play in the Star theatre.

The generality of the plaintiff’s offer at the close of the trial was clearly in the line of the two elements which he had previously specified. The “ whole line of testimony ” which the court excluded was the whole line in these two directions. If the plaintiff intended to offer anything else, he should have specified it.

We think that the offer, as made, was properly ruled upon, and that the judgment should be affirmed, .with costs.

Van Brunt, P. J., and Follett, j., concur.


text:
    In the Matter of The Broadway & Seventh Avenue Railroad Co., Resp’t, for Condemnation of the Leasehold Estate and Property of The Acker, Merrall & Condit Co., App’lt.

      (Supreme Court, General Term, First Department,

      Filed May 12, 1893.)

    1. Condemnation proceedings—Appeal.
    An appeal may be taken from an order appointing commissioners in condemnation proceedings.
    2. Same—Notice.
    The notice of application for the appointment of commissioners must state the time and place at which it will be presented. A notice stating that application would be made to the “special term of the supreme court of New York” on a specified day is not a compliance with this requirement, as the term would be applicable to the special term in any county of the state, and is insufficient to give the' court jurisdiction of the proceeding.
    Appeal from order appointing commissioners in condemnation proceedings.

      Henry G. Atwater, for app’lt; Chandler & Kremer, for resp’t.
   Van Brunt, P. J.

This proceeding was instituted by the respondent under chapter 23, title 1, of the Code of Civil Procedure, for the condemnation of certain property as necessary for the prosecution of its business. Upon presentation of the petition, with notice attached, to the court, the appellant objected to the jurisdiction of the court upon the ground that the notice of the presentation of the petition was insufficient and defective, which objection being overruled, the appellant demurred to said petition upon the ground of its insufficiency, which demurrer was overruled, and an order made appointing commissioners of appraisal, and from such order this appeal was taken.

It is urged upon the part of the respondent that this appeal is premature, and that no appeal lies from any order made in the progress of the proceeding until the final order or judgment is entered, referring to § 3375, which engrafts upon this proceeding the pernicious practice, first injected into our system of procedure by the Code of Civil Procedure, of allowing all proceedings antecedent to the judgment to be reviewed upon appeal from the judgment if the appellant states in his notice that the same will be brought up for review.

The sections under which this proceeding is instituted are part of the Code of Civil Procedure, and the provisions of such Code seem to be applicable thereto so far as they are not inconsistent. Under the definitions of the Code this proceeding seems to be a special proceeding (§ 3334), and by § 1356 an appeal may be taken from an order affecting a substantial right made in a special proceeding, and the appointment of these appraisers in this special proceeding seems to come within this provision.

It is further claimed by the respondent that, by the so-called demurrer to the sufficiency of the petition, all objection to the sufficiency of the notice is waived.

We find in the regulation of the practice in these proceedings no provision for the filing of what is technically called a demurrer. In fact, the grounds stated in the so-called demurrer were nothing but additional objections to the jurisdiction of the court because of the insufficiency of the allegations of the petition, and nothing was waived. Indeed, under the system inaugurated by this Code it is difficult to see how any of these objections can be waived by any further proceeding, as the order overruling them, may be reviewed upon appeal from the final order or judgment; and if re viewable upon the" final order or judgment, such order overruling them may certainly be reviewed upon a direct appeal therefrom.

The section of the Code, 3361, requires that there must be annexed to the petition a notice of the time and place at which it will be presented to a special term of the supreme court, held in the judicial district where the property or some portion of it is situated, and a copy of the petition and notice must be served, etc.

The notice in the case at bar reads: “ Please to take notice that we shall apply to the special term of the supreme court of New York, on Thursday, the 16th day of March,” etc. This clearly was not a compliance with the law ; no place whatever was mentioned ; the term “ special term of the supreme eourt of New York was just as applicable to every special term in the state of New York, wherever held, as to the term held in the county of New York. If it be said that there could be no mistake or misapprehension because the application was required to be made in the judicial district where the land is situated, it seems to be sufficient to say that the legislature did not appear to think that this was sufficient, but required the party calling upon the court to exercise this sovereign power to be precise and definite in his notice as to the place of presentation of his petition. These proceedings tending to deprive a citizen of his property against his will, the statute authorizing the same must be strictly pursued, or jurisdiction will not be acquired.

It would seem, therefore, that the notice of presentation of petition not complying with the statute, the court did not acquire jurisdiction, and the order appealed from should be reversed, with ten dollars costs and disbursements, and the proceeding dismissed, with costs.

Barrett and Follett, JJ., concur.


author: O’Brien, J.

text:
    William Knox, an Infant, Resp’t, v. The Hall Steam Power Co., App’lt.

      (Supreme Court, General Term, First Department,

      Filed May 12, 1893.)

    JSesligence—Contributory.
    Plaintiff was employed by a tenant of defendant’s building, in which was an elevator for freight for the use of the tenants. The entrance to the shaft was protected by iron gates six feet high, which could he opened from the outside, and also by a chain fastened by a hook. Plaintiff, having to go out, and finding the gates open, and wishing to ride, leaned oveiinto the shaft to see if the elevator was coming, and leaned on the chain, which gave way and precipitated him down the shaft. Meld, that his leaning upon the chain was contributory negligence on his part, and that a, refusal to dismiss the complaint, or to direct a verdict for defendant, was. error.
    Appeal from judgment entered upon verdict of a jury, and from order denying motion for a new trial.

      James Dunne, for app’It; James M. Smith, for resp’t.
   O’Brien, J.

This action was brought by plaintiff, a boy about twelve years old, to recover damages for injuries sustained in falling down an elevator shaft on premises leased by defendant In the building was a freight elevator, the care and management of which devolved on defendant, and which was used by the several tenants who occupied portions of the premises. In front of the opening to the shaft was a chain fastened by a hook, and in addition two iron gates about six feet high, which could be opened when needed for placing freight on the elevator, and when not so-needed could be closed. These gates, when closed, were fastened with a piece of iron, hook shaped, which could be removed from either the inside or the outside of each landing, and when removed would permit of the opening of the gates. The building was-also provided from top to bottom with a staircase, connected with each floor, and affording the means to tenants and their employees-of reaching their several floors The manner in which the elevator was constructed and the uses to which it was put, as shown by all the witnesses, demonstrates that it was a freight and not a passenger elevator; and while it is true that frequently tenants, or their employees, rode upon such elevator, their presence there was usually in connection with freight which théy were engaged in taking up or down from the various floors in the building. Occasionally, too, the elevator boy would permit other boys, or even tenants, to ride on the elevator, in which, however, there was a cardboard sign, bearing the following printed notice: “ This is not a passenger elevator; all persons riding on it do so at their own risk.” The elevator boy testified that this sign had been called to the attention of the plaintiff ; but without attaching any weight to this testimony, which was denied by plaintiff, we have the plaintiff's own statement to the effect that the elevator boy sometimes prevented him from riding on the elevator and compelled him to walk up the stairs, and that when he did ride, it was only after obtaining the elevator boy’s consent. Plaintiff was asked if he had ever been told by his employer to ride on the elevator, to which he made answer, “Yes; if I had any freight with me, he told me." Plaintiff’s employers occupied a portion of the fourth floor of the building, and were engaged in the manufacture of looking glasses, and plaintiff’s occupation consisted of sweeping about the premises and running errands.

With these facts showing the character of the building, occupied as it was by persons engaged in manufacturing or similar business, and the construction of the elevator, the guards placed about it on each floor, and the use to which it was applied in moving freight for tenants, we are brought to a consideration of the question of defendant’s responsibility for the injuries suffered by plaintiff under the circumstances narrated by him.

The plaintiff testified that at ten o’clock in the morning he was going out for beer; that he did not go on the stairs and “ rattle the chain,” which was the means resorted to by those who desired to attract the attention of the boy in the elevator for the purpose of having it either hoisted or lowered, but that, finding the gates which protected the elevator shaft open, he went towards the shaft and looked over the shaft to see if the elevator was coming up ; that he leaned on this chain, and as he did so it broke; that he held on to it until “ it slapped me against the wall, and I let go of it, and it knocked me down four stories.” He further testified that he went for beer three times a day; that he rode on the elevator, but that sometimes the elevator boy would refuse to let him ride, and that then he walked. The chain upon which the plaintiff leaned was fastened by a hook, which was so placed that it could be removed and let down when necessary for the purpose of permitting freight to be taken on or off the elevator. He further testified that on occasions when he either got on or off the elevator, the gates were shut by the elevator boy, who also put the chain up.

By plaintiff’s witness, one of his employers, it was shown that on the evening before the accident the gates on that floor were closed and fastened, and that next morning, prior to the accident, they were in the same condition. No testimony was given to show that these gates were left open by defendant’s employees, nor was there any testimony in the case showing just how the gates, which were closed prior to the accident, happened to be open at the time the plaintiff was proceeding on his errand. He testified that when he went out the doors were open, but, as stated, his employer testified that when he saw' the gate that morning it was locked, and that one standing on the landing could open the door by lifting the latch from the inside and the outside; “this was a regular steel wire ; it may have been iron.” This testimony, therefore, did not furnish proof of negligence on the part of defendant in leaving such gates open, and this ground may be disregarded.

Apart, however, from the gates being open, it was shown that the proximate cause of the injuries was the imperfect and defective condition of the hook to which the chain was attached upon which the plaintiff leaned. The only notice of such defect brought home to defendant was the fact that the day before the elevator boy called the attention of the engineer of the building to the insecurity of such hook. That defendant had actual notice of the defective hook is not claimed, and it is doubtful if this evidence is sufficient to prove constructive notice of such defect, or to present, the question of defendant’s negligence. But, assuming such to be the case, there is the remaining question as to whether or not the "burden placed upon the plaintiff of showing freedom from contributory negligence was sustained. The plaintiff was over eleven years old, and, according to the testimony, had gone to different schools seven years, and was regarded as a bright boy, “ pretty smart when he went to work in that building.” One of the witnesses testified, respecting plaintiff, that he found him an exceedingly intelligent boy, and, as shown by the plaintiff’s own examination, he was familiar with the methods employed to summon the elevator, and knew the uses to which it was applied. Notwithstanding such knowledge, he purposely refrained from either walking down the stairs, or, if he was desirous of soliciting a ride, summoning the elevator by going up on the steps and shaking the elevator rope or chain, but, the gates protecting the elevator being open, he saw fit to place his weight upon the chain and look down the shaft to ascertain if the elevator was coming up.

As said in Greany v. Long Island R. R. Co., 101 N. Y., 423: It would be error for a trial court to grant a nonsuit if, by any allowable deduction from the facts proved, a cause of action might be sustained by the plaintiff. And when such a ruling has been upheld, by reason of the contributory negligence of the person injured, it appeared that such negligence was conclusively established by evidence which left nothing either of inference or of fact in doubt or to be settled by a jury.” Upon appeal, for the purpose of sustaining a judgment, the court will indulge in every fair inference or presumption, and where, as here, the question relates to whether or not there was sufficient evidence as to plaintiff’s freedom from contributory negligence, the rule just referred to should be applied. But, applying this rule, which is as strongly in plaintiff’s favor as language could express it, to the facts as shown by the plaintiff’s own testimony, we fail to see how this judgment can be sustained. No inference that can be drawn from the testimony, and no presumption that can be indulged in, is consistent with the exercise of that care and prudence which the law exacts from a boy of the age and intelligence of the plaintiff.

At the time of the accident he was not engaged in handling .any freight for his employers, but had been sent upon an errand for beer, which should have been discharged by going down the stairs, instead of waiting to see if he could obtain permission from the elevator boy to ride. This latter desire was seemingly so strong with him that, disregarding the ordinary precautions of prudence and care, he proceeded to the elevator shaft and leaned the weight of his body upon a chain for the purpose of' looking down and ascertaining if the elevator was coming up. Such conduct cannot be regarded as furnishing evidence that he was free from negligence that contributed to his injuries, but, on the contrary, we fail to see why his leaning upon the chain did not constitute negligence on his part in depending upon the security of .an appliance on which, under the circumstances shown, he had ,no right to rely.

Had this been a passenger elevator for the use of tenants in the building and their employees, then there might be some argument based upon the claim that the failure to provide suitable and properly, secured chains or other safeguards across the opening was such negligence that one who had a right to use such elevator, and who, relying on the invitation and the right to enter upon the same, was injured, could recover the damages which he .sustained by the failure to perform the obligations thus imposed upon those having the care and management of such elevator. But where, as here, the plaintiff proceeded to the opening in the •elevator shaft, which, when the elevator was not at that floor, was secured by iron gates six feet high, closed and fastened with a latch, and thus deliberately, without having a right when going •on errands to ride on such elevator, placed himself in a position •of danger, and did more, by putting the weight of his body upon a chain which was not intended for that purpose, so that he might look over and down the shaft, we fail to find any such case as justified inferences favorable to the burden which the law places upon a plaintiff of showing freedom from contributory negligence.

Upon this ground the defendant moved for a dismissal of the «complaint, and subsequently for a direction in its favor, which motions having been denied, were duly excepted to, and thus the question which we have discussed was directly presented. Having reached the conclusion that the disposition of these motions made by the trial judge was erroneous, we are of opinion that the judgment appealed from should be reversed and a new trial ordered, with costs to appellant to abide the event.

Yan Brunt, P. J., and Follett, J., concur.