author: Parker, J.

text:
    Ambrose Van Etten, Resp’t, v. George B. Newton et al., App’lts.

      (Court of Appeals, Second Division,

      Filed June 7, 1892)

    1. Charter party—Demurrage.
    C. purchased a cargo of coal of defendants, fixed the rate of freight, and directed them to advise plaintiff, a boat captain, to call upon them in relation thereto. He did so, and told defendants he did not wish to take the cargo unless it could he promptly loaded. They said it would he ready for loading on the 10th. Coal was first put in on the 15th, and tire balance of the cargo on the 17th. The load could have been put in in five hours. Seld, that although the contract did not provide for demur-rage, plaintiff under it was entitled to recover for unreasonable delay.

      3. Same.
    The fact that the consignee fixed the rate of freight did not constitute him the shipper, or change the relation between these parties, that of ship owner and shipper.
    Appeal from a judgment of the general term of the court of common pleas for the city and county of New York, affirming a judgment of the district court of said city, rendered in favor of the plaintiff.
    This action was brought in the first district court of the city of New York to recover damages in the nature of demurrage for the unreasonable detention of plaintiff’s boat
    A member of the firm-of Merritt Clark’s Sons, of Derby, Ct., called on the defendants on the 7th day of May, 1888, and purchased a cargo of coal, at the same time directing the defendants to advise Captain Yan Etten, this plaintiff, to call upon them in relation to the freight of the cargo. Merritt Clark’s Sons fixed the rate of freight. The defendants immediately wrote the plaintiff asking him to call, which he did the day following.
    The plaintiff was operating two boats, one of them was propelled by steam, and used to tow the other, and he advised the defendants that he did not wish to take the cargo unless it could be promptly loaded, as he could only use his two boats to advantage by having his cargo so arranged as to take both boats on each trip.
    He testifies that he was assured that the coal would be ready for loading at Perth Amboy on the 10th of May.
    Coal was first put in his boat on the 15th of May, at which time eighty tons were loaded, the balance of the cargo, in all 250 tons, being loaded on the 17th of May. The defendants admitted on the trial that if the coal had' been ready for loading the boat could have been loaded in five hours.
    The evidence is ample to support the judgment rendered, provided the défendants are legally chargeable with any damages whatever by way ‘of demurrage. That question alone requires consideration on this review.

      Be Lagnel Berrier, for appl’ts; Nelson Zabrishie, for resp’t

       Affirming 29 St. Rep., 411.

   Parker, J.

When a bill of lading contains a stipulation for demurrage, the acceptance of the goods is evidence of an agreement on the part of the consignee to pay both freight and demur-rage. Jesson v. Solly, 4 Taunt., 52; Wegener v. Smith, 15 C. B., 285.

But in the absence of such a stipulation it is generally held that the consignee is not bound to respond in damages in the nature of demurrage, because not being a party to the contract in the bill of lading, the contract implied from its subsequent acceptance by Mm, cannot extend beyond the conditions upon which its delivery is made dependent. Gage v. Morse, 12 Allen (Mass.), 410; Young v. Miller, 5 E. & B., 755. A delay at the place of delivery, occasioned by the fault of the consignee, furnishes an exception to the rule. Ford v. Cotesworth, L. R., 4 Q. B. 127; Craw ford v. Riltenhouse, 1 Fed. R., 688. Here the direct contract of the plaintiff under the bill of lading was with the defendants, who were the shippers of the coal. Blanchard v. Page, 8 Gray, 281, 290-5. Merritt Clark & Co., the consignees, were not parties to it. The delay complained of was not due to any fault on their part. It did not occur at the place of delivery, but at Perth Am-boy, where the vessel was loaded. Within the rules alluded to, therefore, the consignees were not liable, as the bill of lading contained no stipulation that the consignees should pay demurrage.

Under a contract of affreightment the shipper is liable for the freight, although, as in this case, it provides for the collection of the freight from the consignee. The ship-owner is not entitled to payment unless he performs his part of the contract, and by providing in the bill of lading that the consignee shall pay, performance is first secured by the ship-owner, who "is ordinarily amply protected, as he has a lien on the goods carried for the amount due him, and a cause of action against the consignor in case the consignee refuses to pay and his lien proves insufficient or be lost. The consignee in such cases as to payment of freight being treated as the agent of the consignor. And if the bill of lading provides for demurrage to be paid by the consignee, the consignor is also liable for its payment in the event that the consignee refuses to pay.

If it be silent on the subject of demurrage in case of detention of the vessel for loading by the consignor for an unreasonable time, damages in the nature of demurrage may be recovered from him. Fisher v. Abeel, 66 Barb., 381.

The contract between these parties did not provide for demurrage, but under it plaintiff was entitled to recover for unreasonable delay.

There was evidence tending to show such delay before the trial court, and it was so found as a fact. The general term, on the argument, as well as on the reargument, after carefully considering the evidence in such respect, affirmed the finding, and it is now controlling. So far, the discussion has proceeded on the assumption that the bill of lading "constitutes the real contract of affreightment, and the conclusion necessarily following from that position is that the plaintiff’s recovery is well founded.

The appellants contend, however, that the plaintiff was engaged by the consignee to carry the cargo, and, therefore, the defendants are not liable under the contract although the delay was unreasonable and wholly due to their fault.

His contention is founded on evidence to the effect that plaintiff agreed with the consignees as to the rate of freight, and he insists that it follows that the defendants were not liable, notwithstanding the terms of the written contract to which they were parties.

A bill of lading has a two-fold character. First, that of a re-' ceipt, and second, that of a contract. The receipt as between the shipper and ship owner is explainable, but paroi evidence is not admissible to vary the terms of that portion of it constituting the contract. Parsons on Shipping, Yol. I., p. 190, and cases cited.

The acceptance of a bill of lading by the shipper, with knowl. edge of its contents, makes of that instrument a binding contract, and defines the rights and liabilities of the parties to it. C., H. & D. and D. & M. R. Co. v. Pontius, 19 Ohio St., 221; Germania Fire Ins. Co. v. The Memphis & C. R. R. Co., 72 N. Y., 90.

Now, the defendants do not question the acceptance of the bill of lading with full knowledge of its terms.

The evidence fails even to suggest that there was any understanding or expectation between these parties that their relations were to be other than usually obtains between consignor and ship owner, and such as are evidenced by this contract, although without objection the defendants were permitted to show that the consignees suggested plaintiff for the carrier, and that they agreed with him upon the price to be paid. But such acts are not necessarily inconsistent with the contract which these parties made.

It is usual for the consignee to pay the freight to the ship owner. Ordinarily the bill of lading provides that he shall do it. If he be the purchaser as well as the consignee, although treated for commercial reasons as the agent of the consignor in making payment, in practical effect the payment is on his own account and must necessarily be added to the price paid the consignor for the goods in order to determine the total cost to himself. He is, therefore, directly interested in fixing the rate of freight, and it is not unusual for him to take part in the negotiations for it. But that fact does not constitute him the shipper. The bill of lading names the shipper, and in this case the defendants are so designated, and the acceptance of" it by them created a contract with the plaintiff that their relation to each other was that of shipper and ship owner, and that they would severally discharge the obligations which the law had previously declared vested on those entering into such a contract.

In Bacon v. Erie & Western Tr. Co., 3 Fed. R., 344, the consignee was charged in damages for occasioning delay to the ship owner, but it appeared that it was also the shipper of the cargo, “ and hence as a party to the contract of affreightment, is accountable for any breach of an obligation imputed by it,” citing The Hyperion, 7 Am. L. Rev., 457.

The evidence to which we have referred would doubtless have been excluded had objection been properly made. But as it is before us we have given it such consideration as it seems to merit, and have reached the conclusion that it cannot operate to nullify, destroy or impair the written contract subsequently entered into between these parties by which the defendants declared themselves to be, as they doubtless were in fact, the shippers of the cargo.

The judgment should be affirmed.

Judgment affirmed, with costs.

All concur.


source: Caselaw Access Project

author:
      Parker, J.
      Landón, J.

license: Public Domain

text:
    Maurice Plett, Respt, v. Fowler Willson, Jr., et al., App’lts.

      (Court of Appeals, Second Division,

      Filed June 7, 1892.)

    Limitation—Action upon contract for sale of land.
    In 1870 plaintiff entered into an unsealed agreement with defendant and his father by which plaintiff agreed to sell to the Willsons certain real estate, to he paid for in annual instalments, the last one falling due April 1, 1880, when plaintiff was to convey the land. The vendees took immediate possession, and they or their assigns remained in possession to the time of the trial of this action, 1887, brought to foreclose the contract, and apply the avails toward the payment of the amount still due, a judgment for deficiency being asked against Fowler Willson, Jr., who had sold out in 1875 to his father, and against the widow and heirs of the father who are in possession. Payments were made annually until 1880. Held, that the six years statute of limitations applied, and the suit was barred.
    (Landost, J., dissents.)
    Appeal from a judgment of the general term of the supreme court, fourth department, entered on an order affirming a‘judgment rendered in favor of the plaintiff at circuit.
    In 1870 the plaintiff, Fowler Willson and Fowler Willson, Jr., executed a written contract, not under seal, by which the plaintiff agreed to sell and the Willsons agreed to purchase land at an agreed price, to be paid for in annual instalments, with annual interest, the last payment falling due April 1, 1880 ; upon which date the plaintiff, upon receiving full payment of the purchase price, was to convey the land to the vendees by a warranty deed. The vendees took immediate possession of the land under the contract, and remained in possession thereunder until May 31, 1875, when Fowler Willson, Jr., assigned his interest in the con- ■ tract to Fowler Willson (his father), the two having then paid $1,415.66 towards the purchase price and interest. Thereafter, Fowler Willson continued in possession until August 4, 1877, when he died intestate, leaving Sarah Willson, his widow, and several heirs-at-law. Between May 31, 1875, and August 4, 1877, Fowler Willson paid $150 on the contract. August 5, 1878, said Sarah Willson received letters of administration upon the estate of said Fowler Willson, deceased. Since the death of Fowler Willson his widow and heirs have remained in possession of the land, and were in possession at the time of the trial. Between the date of the death of Fowler Willson (August 4, 1877), and April 3, 1880, said widow and heirs paid (exclusive of $192.50 paid May 6, 1877, by Earned & Smith under an order of the special term granted March 10, 1877) $345. Payments were made annually, except in the year 1877, on this contract, from its date until April 13, 1880, when the last one, except said $192.50, was made.
    This action was begun January 8, 1887, to foreclose the contract and apply the avails towards the payment of the remainder of the purchase price, and a judgment for any deficiency that might arise was asked for against Fowler Willson, Jr., and the administratrix of Fowler Willson, Sr., in her representative capacity.
    The defendants interposed the six years statute of limitations
    ■ as their sole defense, and it was held not good, following Plett v. Willson, 50 Hun, 60; 23 St. Rep., 879, and a judgment in favor of the plaintiff was rendered.

      H, S. Willson, for app’lts; M 0. Worden, for resp’t.

       Reversing 31 St. Rep., 1004.

   Parker, J.

When the vendees made default in payment the vendor who still had the title might have proceeded, in disaffirmance of the contract, by an action of ejectment to recover possession. Such an action is governed- by the twenty year limitation. Code Civ. Pro., § 365. While a possible result of the present suit might be to secure possession by the vendor, it is not an action for the recovery of real property within the meaning of that section. Miner v. Beekman, 50 N. Y., 337; Hubbell v. Sibley, id., 468.

The vendor’-s other remedies were in affirmance of the contract, and were two in number. 1. A common law action against the vendees to recover the balance of the purchase price. 2. A suit in equity to foreclose the contract Whether the vendor1 should elect to enforce the collection of his debt through a personal judgment against his vendees, or by means of a foreclosure and sale of the property, his action would be on the contract which the vendees had failed to perform. Sections 380 and 382 of the Code of Civil Procedure provide that an action upon a contract, obligation or liability, express or implied, except a judgment or sealed instrument, must be commenced within six years after the cause of action has accrued.

As the contract in suit was not under seal the sections quoted apply, and more than six yéars having elapsed after the cause of action accrued and before the commencement of this suit, it is barred. Borst v. Corey, 15 N.Y., 505, criticised 31 N. J. Eq. 773; Trotter v. Erwin, 27 Miss., 772-779.

The judgment should be reversed.

Landón, J.

(dissenting.)—I cannot concur. I do not think the action is strictly upon the contract; it respects the equitable disposition of lands of which the plaintiff has the legal title and the defendant such, equities as his partly performed contract gives him. Defendant refuses further performance, but retains possession of the land. Equity requires that the land be converted into money and the money be equitably distributed. The judgment appealed from provides such relief. If plaintiff had given defendant a conveyance of- the land and this action were simply to enforce his equitable lien for the unpaid purchase money, the debt would be the substantive cause of action, and the right to equitable relief would be barred with the debt itself. Borst v. Corey, 15 N. Y., 505. In that case the plaintiff had parted with his title, and had only the lien which equity gave him. Here the plaintiff retains his title, and the defendant has only such equities as his part performance gives him. These two estates in the land, the one legal and the other equitable, may co-exist for an indefinite period unless the parties merge them. The defendant refuses to act as he has agreed, and the plaintiff, willing to do equity, seeks its aid, not strictly to enforce his equitable lien, but to obtain from his own land what it ought as between him and the defendant to yield him. His action for the debt may be barred, but his right to make an equitable disposition of his land and its proceeds continues to exist. Lewis v. Hawkins, 23 Wall., 119; Hardin v. Boyd, 113 U. S., 757. The six years limitation, under § 382, does not apply, and the ten years limitation, under § 388, had not expired when this' action was commenced.

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

All concur, except Landon, J., dissenting, and Follett, Ch. J., not sitting.;


author: Landon, J.

text:
    Charles Benner, Resp’t, v. The Atlantic Dredging Co., App’lt.

      (Court of Appeals, Second Division,

      Filed June 7, 1892.)

    1. Negligence—Blasting.
    In an action for injuries to plaintiff’s house caused by blasting done by defendant at Hell Gate, under a contract with the U. S. government, the court charged that if the explosions conducted by the defendant injured the plaintiff’s house the defendant was liable, irrespective of defendant’s negligence; that the question of negligence was not in the case; that if the business could not be conducted without producing such injury it must cease. Held, error; that as defendant had the authority of the government and kept within it, it was not liable.
    2. Same.
    The United States government was competently authorized to make the contract, and in making it kept within its powers both as to the subject matter of the contract and the manner in which it engaged and authorized the defendant to perform it.
    3. Same.
    The defendant had all the authority of the U. S. to use all the means contemplated by the contract for the removal of these rocks, provided that he used them carefully; care being a proper regard both to the efficient prosecution of the work and the rights of third persons; the absence of such care being negligence.
    4. Same.
    It being lawful for the sovereign to exercise its lawful power, it must follow that whatever results from its proper exercise is not unlawful, and if any injury, direct or consequential, results to the individual he is remediless, except so far as the sovereign gives him a remedy.
    (Vann, J., dissents.)
    Appeal from a judgment of the general term of the supreme court in the second judicial department, affirming a judgment entered on a verdict and also affirming an order denying a motion for a new trial.
    This action was brought to recover damages caused to a house belonging to the plaintiff at Astoria, N. Y., by blasting done by the defendant in the waters of Hell Grate between January 5, 1887, and April 12, 1888. The complaint alleged that the defendant did “ wrongfully and unlawfully so discharge such blasts * * * as to shake, jar, damage and injure this plaintiff’s said dwelling house * * * and to create a nuisance and did so maintain such nuisance and so negligently and carelessly blast such rock * * * that plaintif£’s Said dwelling was solely thereby shaken and injured,” etc.
    The defendant pleaded, among other defenses, that such blasting “ was done and performed under and by virtue of the authority of the United States and under the direction of the officer of the engineer corps of the United States army in charge of said work; that such operations were a public necessity and requirement and were duly performed in a lawful and careful manner and without any default, negligence or carelessness upon the part of the defendant.”
    Evidence was given upon the trial tending to show that the plaintiff’s house, which had been previously injured by explosions, was placed in good repair in November, 1886, and that afterwards through the blasting operations of the defendant the foundations, walls and ceilings were cracked and injured as alleged in the complaint.
    The blasting was done by the defendant under a contract dated November 16, 1886, between “Lieut. Col. Walter McFarland, Corps of Engineers United States Army, of the first part and the Atlantic Dredging Co. * * * , of the second part.” It witnessed that “the said Lieut. CoL Walter McFarland for and in behalf of the United States of America and the said Atlantic Dredging Co.” had mutually agreed, etc.'
    The subject of the contract was the removal of 50,000 tons of broken rock from Middle Beef, or Flood Bock, Hell Gate, New York, at a certain price per ton, subject to inspection “by an inspector appointed on the part of the government.” The specifications provide that “ the contractor will do such surface blasting as may be necessary at his own expense.” The contract was signed “Walter McFarland, Lieut. Col. of Engineers (L. S.),” and by the defendant through its president, and was “ approved November 29, 1886, by H. Dream, Brig. Gen., Chief of Engineers.”
    Other facts are stated in the opinion.

      Edvj. G. Perkins, for resp’t; N. G. Moak, for app’lt

       Reversing 34 St. Rep., 632.

   Landon, J.

The plaintiff contends that the defendant did not prove that it was authorized by the United States to blast the rocks in Hell Gate.

The defendant had read in evidence without objection the contract under which it prosecuted the work of removing 50,000 tons of broken rock from Hell Gate. This contract was made by Lieut. Col. Walter McFarland, Corps of Engineers, United States Army, as party of the first part, and recited that lie made it “ for and in behalf of the United States of America,” * * * “ subject to the approval of the Chief of Engineers, U. S. A.,” and was approved by that officer. The plaintiff also read a stipulation of the defendant’s attorney that plaintiff might read in evidence the whole or part of the records of the war department concerning the contract by the defendant to do the work in the Hell Gate improvement, and the work done by the defendant under the contract. The plaintiff did prove by Lieutenant Derby, an officer in the United States Government employ, that he was superintendent of the improvement, and as such kept a record of the progress of the work. Plaintiff read from this record under the stipulation matters relating to the explosions. Plaintiff also read in evidence a letter of Lieut Derby to the defendant respecting the explosions. The plaintiff thus attempted to convict the defendant of improperly conducting the explosions, by the-records of the war department. The effort does not appear to have been successful. While the defendant had possession of the case, its counsel was proceeding to give further evidence of the fact that its contract was with the United States when the trial court interrupted him,and a colloquy ensued between the court and defendant’s counsel in which the court said “there is nobody who says it (the contract) was not authorized. * * * These plaintiffs cannot question your right to be there, because you proved the contract which took you there. * * * Col. McFarland was in the habit of making contracts for the government. I presume the government recognized the contracts and paid under them.” ¡Defendant’s counsel thereupon desisted from presenting further evidence respecting the proper authorization by the U. S. There is no suggestion in the record that the plaintiff did not acquiesce in the views presented by the court. The court in charging the j ury, after stating that large masses of broken rock were left in the bottom of Bast Eiver as the result of a great explosion conducted by the U. S. government in 1885, and that the rocks were dangerous to navigation, added: “The Atlantic ¡Dredging Co. entered into a contract with the general government for the destruction and removal of these fragments. * * * Under that contract they went upon the East Eiver and commenced the destruction of these fragments which were scattered about the bottom of the river. The defendants were thus justified in going there.”

Upon these facts this court cannot entertain the suggestion that the defendant must fail because it did not show that in removing these masses of rock it was acting under the authority of the U. S. Evidence had already been given tending to prove that it acted under such authority. The stipulation and evidence adduced by the plaintiff implied that the fact was so. The defendant was giving further evidence to the same end, and practically was not allowed to give any more; the question was put to rest by the statement of the court to the effect that further proof was unnecessary. The plaintiff had the right to rely upon the direction given by the court. Flora v. Carbean, 38 N. Y., 111. True, the record does not present the plaintiff’s exceptions. Why not? Because no exception taken by the plaintiff can aid him. He must defend his judgment against the attack of the defendant. The defendant can say, my authority from the U. S. was conceded, but I was beaten because the court held that that could not aid me. The plaintiff is not harmed, for if a new trial should be granted, the plaintiff can contest the question of authority. If a new trial should be refused because the authority was not sufficiently shown, the defendant will be beaten because denied a day in court upon the question of authority.

That the defendant’s contract was with the United States cannot be questioned upon this appeal. But it is said the authority of the United States to make the contract must be shown. We know that congress has exclusive power to regulate commerce, both foreign and interstate, and that the improvement of rivers and arms of the sea forming the highways of such commerce is vested in the United States. Wisconsin v. Duluth, 96 U. S., 379. Various acts of congress, of which we take judicial notice since they are the supreme, law of the land, appropriated moneys for the improvement of Hell Grate, and authorized it. 22 U. S. Stat., 58, 191; 23 id., 133, 138; 24 id., 310, 318. Other statutes bear upon the subject. . The United States is a sovereign nation with full power over the subject matter, and may by statute provide for the exercise of that power in such legislative meagerness form as suits itself. If its attempted exercise of power is complete according to its own judicial test, it is complete under ours. The case last cited is an exposition of the power of the United States under similar statutes, and we repose upon its authority.

It must be held that the United States was competently authorized to make the contract, and in making it kept within its powers both as to the subject matter of the contract and the manner in which it engaged and authorized the defendant to perform it.

The learned trial court charged the jury that if the explosions conducted by the defendant injured the plaintiff’s house, the defendant was liable irrespective of the question of defendant’s negligence; that the question of negligence was not in the case; that if the business could not be conducted without producing such injury, it must cease. We think this was erroneous. It is entirely clear that the defendant had all the authority of the United States to use all the means contemplated by the contract for the removal of these rocks, provided always that he used them carefully; care being a proper regard both to the efficient prosecution of the work and the rights of third persons; the absence of such care being negligence. The instruction of the trial judge eliminates negligence, and assumes proper care. Thus the defendant had the authority of the United States to do the work carefully, and did it within such authority.

It being lawful for the sovereign to exercise its lawful power, it must follow that whatever results from its proper exercise is not unlawful, and if any injury, direct or consequential, results to the individual he is remediless, except so far as the sovereign gives him a remedy.

The government has provided for such direct injuries as amount to a taking of private property for public use, by the constitutional provision that it must not be done without full compensation. IE the present were such a case, it would seem that the plaintiff’s remedy would be to make the proper application to the government. The defendant having done no more than it was fully authorized to do, and which its duty «to the government under the contract required it to do, would be blameless, and the government liable because of its constitutional obligation.

But this is not a case of taking private property, or of direct, but is of consequential injury. The plaintiff’s house was 3,000 feet distant from the place of the explosions. The injuries to it were caused by the shaking of the earth or pulsations of the air, or both, resulting from the explosions. There was no physical invasion of the plaintiff's premises, by casting stones or earth or other substances upon them, as in Hay v. Cohoes Co., 2 N. Y., 159; Treman v. Same, id., 163 ; St. Peter v. Denison, 58 id., 416, and hence no going outside of the authority actually conferred and conferrible as in those cases. Nor was the "work here prosecuted for the benefit of private ownership, aided by the public grant of the privilege, as in Cogswell v. N. Y., N. H. & H. R. R. R. Co., 103 N. Y., 10; 3 St. Rep., 56, and hence the rules applicable to public grants of privileges to private parties or corporations have no force. This work was done under the government, for the government, and in no sense to the- detriment of public rights or to the advantage of the defendant’s privaté ownership. The principles assumed in the case last cited amply support the defendant’s position.

One cannot confine the vibration of the earth or air within enclosed limits,and hence it must follow that if in any given case they are rightfully caused, their extension to their ultimate and natural limits cannot be unlawful, and the consequential injury, if any, must be remediless.

The defendant had the authority of the government and kept within it, and therefore is not liable. Radcliff’s Executors v. Mayor, 4 N. Y., 195; Bellinger v. N. Y. C. R. R. Co., 23 id., 42; Marvin v. Brewster Iron Co., 55 id., 538 ; Uline v. N. Y. C. R. R. Co., 101 id., 98; Atwater v. Trustees, etc., 124 id., 602; 37 St. Rep., 234; Transportation Co. v. Chicago, 99 U. S., 635 ; Wood on Nuisance, § 752, quoted with approval in Seifert v. City of Brooklyn, 101 N. Y., 145.

Criticism with respect to the extent to which private and municipal corporations have been permitted to expand the authority given them by the government to justify their invasion of private rights, Cogswell v. N. Y., N. H. & H. R. R. Co., supra, may be pertinent when such parties attempt the expansion for such purposes, but it can have no - pertinency to a case where the government itself seeks, by appropriate means plainly adapted to the end, to accomplish for the public benefit any of the objects confided to its jurisdiction. McCulloch v. Maryland,, 4 Wheat., 316-421.

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

All concur, except Yarn", J., dissenting.


text:
    Charles H. Southard, App’lt, v. John J. Curley et al., Resp’ts.

      (Court of Appeals, Second Division,

      Filed June 7, 1892.)

    1. Contract—Mistake—Evidence necessary to correct.
    In an action brought for breach of a written contract for the sale of a building, defendants alleged that they agreed for an option to purchase within thirty days, but did not agree to purchase the same, and that the writing did not express the agreement made, and asked that the writing he so reformed as to express the true meaning of the parties. No exceptions were taken to the admission of testimony showing the mistake and the court refused to charge, as requested by plaintiff, “ that the burden of proof is on the defendants to satisfy the jury beyond a reasonable doubt that there was a mutual mistake in this case.” Held, no error.
    3. Same.
    Relief will be granted in cases of written instruments, when there is a plain mistake, clearly made out by satisfactory proofs.
    (Follett, Oh. J., dissents.)
    Appeal from a judgment of the general term of' the supreme court, second department, entered on an order affirming a judgment entered on a verdict in favor of the defendants.

      Horace Secor, Jr., for app’lt; Charles N. Morgan, for resp’ts.
   Parker, J.

This action was instituted for the purpose of recovering the damages which the plaintiff claims to have sustained by reason of a breach by the defendants of the following agreement :

September 10, 1889.
“I, C. H. Southard, of Baldwins, Queens county, N. Y, agreed to sell to John J. Curley and J. M. Brosnan, of Rockaway Beach, L. I., said county and state, all (here follows a description of the property in question), for the sum of thirty-one thousand dollars, to be paid at 30 or 60 days from date of this agreement; and I hereby acknowledge the receipt of check of one hundred dollars from John J. Curley and J. M. Brosnan, both of Rockaway Beach, N. Y.
“ C. H. Southard.
“ Signed and delivered in presence of J. M. Brosnan and John Curley.”

The property described in the agreement was a portion of the Mammoth Hotel at Rockaway Beach.

The answer averred the purchase of the building by the plaintiff of the owners of the land on which the building was located ; the securing of an option by the defendants to purchase the premises from the owners within a given period; their desire to secure an option for the purchase of so much of the hotel building as remained standing; and, that the agreement which they in fact made with the plaintiff was to pay him $100 for an option to purchase the building within 30 or 60 days for the sum of $31,000, but the defendant Brosnan in the haste of drafting the memorandum of agreement omitted to insert that the sale was optional with the defendants.

The answer demanded, among other relief, that the writing be so reformed as to express the true meaning of the parties.

No exceptions were taken to the admission of testimony. But an exception was taken to the refusal of the court to direct a verdict in favor of the plaintiff, at the close of the case, and the appellant urges that an error is thus presented.

We do not so regard it. The issue presented by the pleadings permitted the introduction of testimony tending to show that the writing relied on by the plaintiff did not state the agreement which the parties made.

On the trial evidence tending to establish, the allegations of the answer in such respect was without objection introduced, and without stopping to recite it, it is sufficient to say that it would support a decree so reforming the writing as to provide that the $100 was paid for the right to purchase the property described within the period provided, and for the sum named.

The denial of plaintiff’s motion to direct a verdict, therefore, was not error.

No exception was taken to the charge of the court, but the plaintiff requested the court to charge “ that the burden of proof is on the defendants to satisfy the jury beyond a reasonable doubt that there was a mutual mistake in this case,” and the exception taken to the refusal of the court to charge as requested is now assigned for error.

It is a rule of the criminal law that the guilt of the accused must be fully proved; that neither a preponderance of evidence nor any weight of preponderant evidence is sufficient for the purpose, unless it generate full belief of thé fact, to the exclusion of all reasonable doubt.

A degree of conviction, it is said, which ought only to be produced when the facts proved coincide with and are legally sufficient to establish the truth of the hypothesis assumed, namely: the guilt of the party accused, and are inconsistent with any other hypothesis.

But a distinction has always been recognized and maintained between criminal and civil cases in respect to the degree or quantity of evidence necessary to support a judgment. In the latter class of actions the law being satisfied with a finding in accordance with the preponderance of, or weight of preponderating evidence.

The difference in the form of oath administered to jurors in civil cases and criminal actions is in accordance with this fundamental distinction.

But it is urged that in an action brought to reform a written contract on the ground that, owing to a mistake, it fails to express the agreement which the parties to it actually made, the courts have at last adopted the rule of criminal actions that the evidence must be such as to establish the mistake beyond a reasonable doubt. That such was not always the rule is conceded, but it is claimed that the later adjudications have settled the rule in accordance with the appellant’s contention.

In Story’s Eq. Juris., vol. 1, § 157, the doctrine is stated as follows: “ Belief will be granted in cases of written instruments only when there is a plain mistake, clearly made out by satisfactory proofs. It is true that this in one sense leaves the rule somewhat loose, as every court is still left free to say what is a plain mistake and what are proper and satisfactory proofs. But this is an infirmity incident to the very administration of justice, for, in many cases, judges will differ as to the result and weight of evidence; and, consequently, they may make different decisions upon the same evidence. But the qualification is most material, since it cannot fail to operate as a weighty caution upon the minds of all judges, and it forbids relief, whenever the evidence is loose, equivocal or contradictory, or it is in its texture open to doubt orto opposing presumptions.”

The rule declared by Story was in accordance with the adjudications at the time of his writing, and in accordance, doubtless, with the general understanding of the profession at the present time.

Judge Bedfield, in his revision, has added to § 157 (Story’s Eq. Juris.,Ilth Ed.), the following: “ The proof must be such as will strike all minds alike as being unquestionable and free from-reasonable doubt. The distinction here attempted to be defined in regard to the measure of proof is much the same which exists between civil and criminal cases.”

Mr. Pomeroy, in his work on Eq. Juris., vol. 2, § 859, reaches the same conclusion. He says: “ The authorities all require that the paroi evidence of the mistake and of the alleged modification must be most clear and convincing, in the language of some judges, the strongest possible, or else the mistake must be admitted by the opposite party; the resulting proof must be established beyond a reasonable doubt.”

We have examined all of the authorities cited by Judge Bed-field and Mr. Pomeroy in support of the rule which they have attempted to deduce from them, as well as those cited by the appellant.

It would hardly be proper in this connection to attempt a review of them all, but we have selected from different jurisdictions a number of cases which are fairly representative as to the expressions made use of by the courts, touching the degree or quantity of proof essential to support a decree reforming a written instrument on the ground of mistake.

It should be observed in passing, however, that in none of the cases was the court called upon to determine whether the trial court observed the proper rule in passing on the evidence, or whether, as here, it had correctly or not instructed the jury in that regard. What rule should guide the trial court was not, therefore, necessarily discussed by counsel,and we have failed to find any evidence of a discussion by any of them of the question whether the rule in criminal actions touching the degree and quantity of proof necessary to support a judgment of conviction is applicable to cases of this character.

It should also be remarked that the expressions in the several opinions relied on as. establishing the rule contended for were generally, if not universally, made in connection with such a discussion of the evidence as induced an affirmance or reversal of the judgments under review.

Lord Hardwick, in Henikle v. Royal Exchange Assur. Co., 1 Vesey, Sr., 317, said: “There ought to be the strongest proof possible.”

In U. S. v. Munroe, 5 Mason, 572, the court said: “ The evidence must be clear, unequivocal and decisive, not evidence which hangs equal or nearly equilibrio.”

In Andrews v. Essex Fire & M. I Co., 3 Mason, 6, by Story, J.: “But a court of equity ought to be extremely cautious in the exercise of such an authority, seeing that it trenches upon one of the most salutary rules of evidence, that parql evidence ought not to be admitted to vary a written instrument. It ought, therefore, in all cases to withhold its aid where the mistake is not made out by the clearest evidence according to the understanding of both parties, and upon testimony entirely exact and satisfactory.”

In Gillespie v. Moon, 2 Johns. Chan., 585, Chancellor Kent remarks: “ Does it satisfy the mind of the court.”

Fry on Spec. Perf., 2 Am. ed.: “The proof must be clear, irrefragable and the strongest possible.”

Bold v. Hutchinson, 5 De Gex, M. & G., 558: “ If it is perfectly palpable that there has been a mistake, the court will correct it. The question before me is whether I am satisfied that a settlement has been made in error.”

Coale v. Merryman, 35 Md., 382 : The evidence must be such as to satisfy the mind of the court”

Lyman v. Little, 15 Vt., 576: “ Equity will not correct a mistake in a written instrument except on clear and undoubted testimony.”

Miner v. Hess, 47 Ill., 170: “ It must leave little, if any doubt.”

Stokbridge Iron Co. v. Hudson Iron Co., 102 Mass., 45 : “The proof that both parties intended to have the precise agreement set forth inserted in the deed, and omitted to do so by mistake, must be made beyond a reasonable doubt.” In laying down this rule the court did not refer to other adjudications.

Sawyer v. Hovey, 3 Allen, 331: “ The mistake must be made out according to the understanding of both parties by proof that is entirely exact and satisfactory.”

White v. Williams, 48 Barb., 222: “ The relief will not be granted, except when the mistake is very plain and operates contrary to the intention of the parties.”

Tufts v. Lamed, 27 Ia., 330: “ The evidence of mistake must be such as will strike all minds alike as being unquestionable and free from reasonable doubt.”

Nevius v. Dunlap, 33 N. Y, 676 : To entitle a party to the decree of a court of equity reforming a written instrument, he must show, first, a plain mistake, clearly made out by satisfactory proofs.”

Mead v. Westchester F. I. Co., 64 N. Y., 453 : “ The proof upon this point should be so clear and convincing as to leave no room for doubt."

Ford v. Joyce, 78 N. Y., 618 : The mistake should be proved as much to the satisfaction of the court as if admitted.”

Newton v. Holley, 6 Wis., 592-604: “ The mistake must be made out in a most clear and decisive manner, and to the entire satisfaction of the court.”

Linn v. Barkey, 7 Ind., 69: The mistake “ must be established beyond a reasonable controversy.”

Hill v. Hill, 10 W. Dig., 239: “ The proof of the mistake should be clear and positive,.it should not leave a reasonable doubt.”

Boarman v. Davidson, 7 Abb. Pr., N. S., 439 : The mistake “ must be shown by clear and entirely satisfactory proof, and the relief will not be granted when the evidence is loose, equivocal, or contradictory, or is in its texture open to doubt or to opposing presumption.”

In Devereux v. Sun Fire Office, 51 Hun, 147; 20 St. Rep., 584, the evidence of mistake “should be clear and convincing and such as to leave no reasonable doubt as to the existence of the mistake alleged.”

Little v. Webster, 16 St. Rep., 107, “ The evidence should be strong and conclusive and in some cases it has been held, should be beyond all reasonable doubt. But perhaps this expression is too strong. There must be at least very conclusive evidence that by mistake the contract does not represent the intention of the parties.”

Simmons Creek Coal Co. v. Doran, 142 U. S., 417-435: “ But. to justify such reformation the evidence must be sufficiently cogent to thoroughly satisfy the mind of the court.”

The quotations made indicate a universal agreement that a contract shall not be reformed on loose, contradictory and unsatisfactory evidence; a settled determination that when a mistake is alleged it must be clearly established by satisfactory proofs, or the contract will stand as made. But in giving expression to the necessity of observing such caution some judges have employed conservative language, others extreme. A difference doubtless due to the fact that the question before the court for discussion in the different cases was not, what is the abstract rule as to the degree or quality of the evidence required, but rather whether the particular evidence under consideration justifies a reformation. While in a few instances apparently unconsidered expressions may be found to the effect that the mistake must be established beyond a reasonable doubt, so may a variety of other expressions differing in form, but equally well supported, be found, such as: “ It must be proved as much to the satisfaction of the court as if admitted“ the proof must be clear, irrefragable, and the strongest possible ; ” or “ there must be a plain mistake established by satisfactory proofs.” A situation which suggests that we heed the caution of Folger, J., in Taylor v. Mayor, 82 N. Y., 17; “ It is not always well to take particular phrases and sentences from an opinion and read them as giving the core of the judgment." The same thought was expressed in Bastings Nat. Bank v. LLbbard, 48 Mich., 457: “ It must always be remembered that general language in legal discussions is to be construed with its surroundings, and cannot be dealt with in the abstract.”

Bearing in mind these admonitions as we examine the opinions alluded to, we reach the conclusion that they do not require us to declare that this strong rule of criminal procedure has become a part of the practice in civil actions. Certainly this need not be done in view of the many authorities which, both before and since Judge Story penned the rule that “ relief will be granted in cases of written instruments only when there is a plain mistake clearly made out by satisfactory proofs,” have asserted the same doctrines in terms or in substance.

We think the refusal to charge as requested was not error. The judgment should be affirmed.

Judgment affirmed, with costs.

All concur, except Rollett, Ch. J., dissenting.

       Affirming 34 St. Rep., 890.


author: Haight, J.

text:
    James J. McComb, Pl’ff, v. The Barcelona Apartment Association et al., Def’ts.

      (Court of Appeals. Second Division,

      Filed June 7, 1892.)

    1. Mortgage—Corporations.
    In 1881 De Navarro, an alien, purchased a large plot of ground in the city of New York for the purpose of erecting eight apartment houses, and took the title in the name of his wife and Clyne, his confidential clerk. He organized eight different incorporations, of which defendant was one, each being divided into sixteen shares, a stockholder being entitled to an apartment in the building. The stockholders paid for their shares to Navarro, some in cash, others in work and materials, taking receipts but having no stock issued to them. Clyne gave eight mortgages upon the land to raise money to construct the buildings, but Navarro being in need of funds to complete the buildings induced plaintiff to enter into the speculation, and a new company was formed called the Central Park Building Co., Limited, in which plaintiff took stock. The money thus received from the new stock proved insufficient. Plaintiff alleged that matters had been misrepresented, and refused further advances. Thereupon in December, 1883, plaintiff and Navarro entered into an agreement which, provided among other things, that plaintiff should obtain moneys for the Central Park Building Co. upon its paper and receive five per cent commission; also that Clyne should execute two mortgages on each of the lots; these were to be used to raise money, but if not negotiated to others, then plaintiff was to retain them as security for further advances. Clyne executed the mortgages, but they were placed in escrow, to be delivered to plaintiff in case the sixteen mortgages previously executed should be found invalid. Clyne under a modified agreement conveyed the lands to the associations occupying them, and they each gave mortgages to plaintiff, upon which he advanced moneys with which the buildings were completed, and the actions are brought to foreclose these mortgages made by defendant. Held, that the obligation to repay the money advanced to the Central Park Building Co. by plaintiff to complete the building became by the several agreements that of defendant, and that the security obtained by plaintiff is free from the taint of fraud.
    8. Same.
    Although plaintiff was a conditional subscriber to the stock of the building company, it was subject to his right of election to surrender his interest therein, and to be repaid-the money advanced to it to be used for the benefit of the associations.
    Cross appeals from, a judgment of the general term of the supreme court, first department, modifying a judgment entered upon the report of a referee, and as modified affirming the same.

      George H. Adams, for def’ts; Thomas H. Hubbard, for pl’ff.

       Affirming 31 St. Rep., 325.

   Haight, J.

This action was brought to foreclose two mortgages executed by the defendant, the Barcelona Apartment Association, to the plaintiff, January 14, 1884, upon the lands of the Association, one for one hundred thousand dollars, and the other for fifty thousand dollars, payable May 1st, 1886. The mortgages were made to secure the payment of the bonds of the defendant, the Barcelona Apartment Association, bearing even date therewith, and containing provisions authorizing the mortgagee to declare the principal sum therein mentioned due at an earlier date if default should be made by the mortgagor, as therein expressed. By the terms of the bonds and mortgages, interest on the principal sums mentioned at the rate of six per cent, per annum was payable half yearly. The defense is that the mortgages were void for the reason that they were given to secure the indebtedness of another association, induced by the fraudulent contrivance of the plaintiff; that two-thirds of the stockholders of the Barcelona Apartment Association never assented to the giving of the mortgages ; that they are tainted with usury, and that the amount found due thereon by the referee is largely in excess of that which is in fact due, etc.

This action was one of eight suits, each of which was brought for the foreclosure of similar mortgages, which suits were tried together before the same referee, resulting in similar judgments, in four of which appeals were taken and submitted with that of the Barcelona Apartment Association. The facts are so connected as to make it advisable to consider them together. It appears that in the year 1881, one Jose F. De Navarro formed a plan for the erection of eight large apartment houses on the block of land in the city of New York, bounded on the west by Seventh avenue, on the north by Fifty-ninth street, on the south by Fifty-eighth street, and extending easterly from Seventh avenue about 430 feet He accordingly purchased the land described, and not being a citizen of the United States, took the title thereto in the name of his wife, who subsequently conveyed the same to one James Clyne, his confidential clerk and attorney in fact, who took title thereto as his agent and representative. For the purchase of the land, and for the making of excavations preparatory for the work of laying the foundations for the buildings, he paid the sum of $1,244,684.38, prior to July 1, 1883. In order to carry out his plans he organized eight different incorporations under the act of 1848, entitled “An act to authorize the formation of corporations for manufacturing, mining, mechanical or chemical purposes, and the several acts of the legislature amendatory thereof or supplementary thereto,” in each of which certificates the object was stated to be “ the purchasing, leasing, acquiring, maintaining and improving real estate for residences and apartment houses, to be leased and conducted by the corporation and occupied by its stockholders and others.” The eight incorporations so organized were known as the Barcelona Apartment Association, the Madrid Apartment Association, the Lisbon Apartment Association, the Cordova Apartment Association, the Granada Apartment Association, the Tolosa Apartment Association, the Salamanca Apartment Association and the Valentía Apartment Association. The capital stock of four of the incorporations was fixed at $280,000 each, and of the other four at $240,000 each. The capital stock of each was divided into sixteen shares. A subscriber to the capital stock became entitled to an apartment in the association building for each share of the stock subscribed for.

The land upon which the building of the association was constructed was to be leased to the association for the period of ninety-nine years, at a fixed rental, with the privilege to the association of purchasing the land at a capital price which1 at five per cent, would yield the rent fixed upon, and the stock of each subscriber was subject to the payment of his proportion of the rent, taxes and other necessary charges. The appellant Kellogg and some other persons became subscribers to shares of stock in these associations, and paid the amount thereof to Navarro, some in cash, others in work and materials furnished and used upon the buildings. They took receipts from Navarro showing that the same were made upon their subscriptions, but no stock was issued to them. The amount of stock so subscribed for was, in the Barcelona, $120,000; the Madrid, $147,750; the Lisbon, $110,000; the Cordova, $110,000. . Four mortgages were executed by Clyne to the Mutual Life Insurance Company, bearing date July 21, 1882, one upon the land to be occupied by the Barcelona building, for $200,000; one upon the land to be occupied by the Madrid, $300,000; one upon the land to be occupied by the Lisbon, $300,000; and one upon the land to be occupied by the Cordova, $240,000. Four other mortgages were also executed by Clyne to the New York Life Insurance Company, bearing date October 8, 1883, of which one was upon the land to be occupied by the Granada, for $240,000; one by the Salamanca, $200,000 ; one by the Valentía, $260,000; and one by the Tolosa, $260,000. These mortgages were made to secure the bond of Clyne and Navarro, and. were for the purpose of raising money with which to construct the buildings. Upon these mortgages the Mutual Life Insurance Company had paid over to Clyne, and • he had turned the same over to Navarro, the sum of $833,000, and the New York Life Insurance Company had paid over the sum of $960,000. Of the four associations appellants, Navarro was the president until April, 1884, after which George S. Lespinasse became the president.

Clyne executed leases to each of the associations as agreed upon, in each of which there was a covenant that the association named therein should within a time fixed commence to erect and build oh the premises an apartment house, but this was not done by either of the associations, but instead thereof Navarro, the president of each, commenced and erected such a building upon the lands of each out of the moneys mentioned.

On the 22d of May, 1883, Navarro, with certain other persons associated with him, organized another corporation to be known as the Central Park Building Company, Limited, the object of which, as stated in its certificate of incorporation, was the purchasing, leasing, acquiring, maintaining or improving of real estate for apartment houses in the city of New York; and also the construction of such apartment houses, which, when completed, are to be leased and conducted under the control of the corporation, and occupied by its stockholders and others. The capital stock of this company was fixed at $800,000. At this time the subscription to apartments of the association had stopped. The money derived from the insurance companies had been exhausted, and it was found that each building would cost $100,000 more than was estimated, making a total of $800,000 for the eight buildings. The Central Park Building Company, Limited, was designed as a construction company to complete the buildings, and with $800,000 capital it was hoped to be able to do so.

At this time Navarro asked his broker to find some one to furnish more capital for the enterprise, who thereupon brought about an interview between Navarro and the plaintiff, at which the plaintiff was asked to subscribe to the capital stock of the Central Park Building Company, Limited. This interview finally resulted in an agreement by which the plaintiff subscribed and paid for $300,000, one Adams subscribed for $100,000, which was paid for by the plaintiff, and Navarro agreed to subscribe and pay for the other $400,000, but did not do so.

The subscription by the plaintiff was under the agreement that Navarro should repay to him such amounts as the plaintiff should pay on his subscriptions, with the interest, and assume all liabilities of the company remaining unpaid, within ninety days after the completion of the buildings, if the plaintiff should elect or transfer to him all his interest in the company, notice of such election to be given within sixty days after the completion of the buildings. With the capital so acquired, the Central Park Building Company, Limited, undertook the completion of the buildings, and carried on the work until October 24, 1883. By this time its capital had become exhausted, and the plaintiff declined to advance more money, in consequence of which the work upon the buildings was stopped. This resulted in another agreement between the plaintiff and Navarro, bearing date December 1, 1883, in which agreement Navarro undertook to repay the plaintiff, with lawful interest, all sums of money theretofore advanced by the plaintiff * on account of his subscription to the capital stock of the building company and of the $100,000 subscribed by Adams and paid for by the plaintiff, together with all sums which the plaintiff should thereafter advance or become liable for in order to secure the completion of the buildings; and for the purpose of providing means for the prosecution of the work upon the buildings, the plaintiff agreed to obtain and provide upon the commercial paper of the company, at lawful interest and five per cent commission, in case it should be necessary for the plaintiff to furnish credit for security in order to raise the money on such commercial paper, such additional funds as should be necessary to pay the contractors for the work according to the terms and conditions of their several contracts, and to carry the work of the buildings on to completion, provided that the total cost of the lands and buildings should not exceed the sum of $4,500,000, which amount by a subsequent agreement was increased to $5,000,000.

The agreement further provided that James Clyne, in whom was vested the legal title to the land upon which the apartment houses were being erected, should make to the plaintiff eight mortgages of $100,000 each, with interest at six per cent, payable May 1, 1886, one on each of the eight several lots of land and buildings on which the houses were respectively situated, for the purpose of obtaining additional loans from the insurance companies, and if such mortgages were not taken by the insurance companies, or other parties, they were to be held by the plaintiff as securities for the advances to be made or procured by him. They also provided that Clyne should make to the plaintiff eight other additional mortgages for $50,000 each, with like interest, one upon each of the several eight lots of land and buildings, payable May 1, 1886, to be held by him as security for the repayment of such money as he may advance; and as further security, it was' agreed that Navarro should also execute to the plaintiff a mortgage upon other property owned by him, in the sum of $300,000, as a security for the payment of the sums previously advanced by the plaintiff, or procured by him. A bond was to accompany each mortgage. Pursuant to this agreement, the sixteen bonds and mortgages to be given on the lands occupied by the associations were executed by Clyne, but instead of delivering them to the plaintiff, they were, pursuant to another agreement bearing date the 14th day of January, 1884, placed in escroto, to be delivered to him and used for his protection in case it should be determined that sixteen other bonds and mortgages executed under the agreement of January 14th were invalid.

After the agreement of December 1st, and the execution of the bonds and mortgages by Clyne, the agreement of January 14th was entered into. Under it, Clyne conveyed the lands in question to the several associations occupying them, and thereupon each association executed and delivered to the plaintiff a bond and mortgage for $100,000, payable on the 1st day of May, 1886, and each association executed and delivered to the plaintiff an additional bond and mortgage for $50,000, payable at the same date. It was upon these securities the plaintiff advanced’ the moneys through the building company, with which the buildings were completed. The amounts so advanced by him, including the $400,000 previously advanced to the building company, is, in the aggregate, $2,039,120.69. Of the moneys so procured and advanced by him, there were used and applied to the construction of the several apartment buildings, as aforesaid, the following sums, to wit:

The Madrid ... $226,814.13
The Lisbon____ 239,422.82
The Cordova .. 205,023.70
The Barcelona , 207,399.24
The Granada .. 272,748.98
The Salamanca 282,011.11
The Yalentia .. 305,264.48
The Tolosa____ 300,436.23

Within the time prescribed by the agreement, the plaintiff elected to take back the moneys advanced by him under the several agreements referred to, and gave due notice thereof to the defendant Navarro. This action was brought upon the last mentioned bonds and mortgages ■ given by the defendant, the Barcelona Apartment Association. The referee ordered j udgment for the full amount called for by the bonds and mortgages, with the interest accrued thereon at the date thereof, amounting to $190,-775; that the premises be sold, and out of the surplus arising from such sale, if any, there be paid to the plaintiff the full amount of money advanced by him to the Barcelona Association, namely, $207,339.24, with the interest thereon. The general term modified the judgment entered upon the report of the referee, in so far as it provided for the paying to the plaintiff of the surplus, arising upon the sale, over and above that called for by the mortgages.

It is claimed that the judgment entered herein is for $120,000 more than it should be; that the plaintiff should be charged with that amount, it being the par value of eight shares of the stock of the Barcelona Apartment Association. The facts are in substance as follows:

Pursuant to the agreement of January 14th, 1884, a meeting of trustees of each, the Madrid, the Lisbon, the Cordova, and the Barcelona Associations was held, at which resolutions were adopted to issue to Jose F. de Navarro, and certain other persons therein named, associated with him, the capital stock of the associations remaining unsubscribed for, amounting to thirty-two shares in all, which stock was to be issued to them as full paid, on behalf of and for the benefit of the Central Park Building Company, Limited. Pursuant to such resolution, subscription was made for such stock by the persons named, and on the 17th day of January thereafter, at a meeting of the trustees of the Central Park Building Company, Limited, such subscription was by that company ratified. It does not appear, however, that any of the above mentioned stock was ever in fact issued. The plaintiff was not one of the parties to such subscription, nor was he ever a shareholder or an officer of any one of the associations. The stock so subscribed for in the different associations was of the par value, as follows:
The Madrid, six shares, par value.............. $105,000 00
The Lisbon, ten shares, par value............... 175.000 00
The Barcelona, eight shares, par value.......... 120.000 00
The Cordova, eight shares, par value........... 120,000 00
$520,000 00

It is now claimed that these items should be charged to the plaintiff, and the amount thereof deducted from the several, judgments under review upon this appeal; that the stock was subscribed for on behalf of the Central Park Building Company, Limited; that the plaintiff was the principal stockholder in such company, and as such he came into reciprocal relations of rights and obligations towards his fellow stockholders in the associations, and. that those rights and obligations could not be affected by any subsequent action on his part.

The question thus presented involves a more careful consideration of the contracts of December 1, 1883, and January-14, 1884.

It will be remembered that at the time the plaintiff subscribéd for the stock of the Central Park Building Company, Limited, it was upon the express agreement with Navarro that the plaintiff should have the right to return his interest in the company upon his election within sixty days after the completion of the buildings, and to recover the amount paid in and advanced to the company. The subscription, therefore, was a conditional one, depending upon the election that should subsequently be made. This understanding was recognized and more fully elaborated in the agreement of December 1, 1883, wherein Navarro expressly agreed that he is liable and undertakes to repay the plaintiff, with lawful interest, all sums of money theretofore paid by the plaintiff on account of his subscription to the, capital stock of the company, viz.: $400,000 ; and also any and all sums which the plaintiff may thereafter advance or become liable for, in order to secure the completion of the buildings, provided the plaintiff shall elect, within sixty days after the completion of the buildings, to take such moneys and interest.

As we have seen,' this agreement was with JN avarro, and is the one under which the sixteen bonds and mortgages were given by Clyne and placed in escrow, under the agreements bearing date the 14th day of January, 1884. These agreements were eight in-number, one executed by each of the apartment associations named, Clyne, Navarro, The Central Park Building Company, Limited, and the plaintiff, all of whom were parties to such agreements. They are known as the five-party agreements. They are in substance the same. That of the Barcelona recites that it was originally intended that the association should erect and pay for an apartment house, on the land owned by. Clyne, describing it, and to take a lease thereof for ninety-nine years, with the privilege of purchasing the same for the amount of the first mortgage thereon, made by Clyne to-the Mutual Life Insurance Company. That as the building progressed it was found necessary to expend moneys in excess of the sum then obtained from the insurance company and subscriptions to apartments. That such necessary moneys were furnished to a large amount by the Central Park Building Company, Limited, and by the plaintiff. That on December 1, 1883, the plaintiff and Navarro made an agreement designed to provide funds and securities therefor, sufficient to complete the buildings, and that to carry out the details of that agreement the sixteen bonds and mortgages were made already alluded to. That they had decided that- a more simple method effecting the intent of the parties was to have the land conveyed by Clyne to the association, and that the bonds and mortgages of the association should be made to the plaintiff in place of those made by Clyne. The agreement then provides that “ all the aforesaid bonds and mortgages which were made subsequent to December 1, 1883, were made for the purpose of carrying into effect the provisions of the agreement of that date, between said Navarro and McOomb, and in the event of any controversy in respect thereto, the said bonds and mortgages should be construed and enforced with reference to, and in connection with said agreement, and in the same way as if said agreement, or the relevant portions thereof, had been written in each one of said bonds and mortgages. * * * That the said association acknowledges that it is liable for, and it promises to pay the money advanced by any of the parties hereto for- the construction of the building on said land. The conveyance to said association is not to be treated as a conveyance of the building erected on said land, free and clear of the obligations to pay therefor, but the consideration mentioned in said conveyance is the value of the land only, and does, not include the cost or value of the building thereon. The mortgages given to said McOomb as aforesaid, shall be enforced, and their avails applied according to said agreement of December 1, 1883, and to that extent in reduction of the liability of said association to pay for said building.”

It will thus be seen that the association by this agreement expressly undertakes to pay the money advanced by the plaintiff through the construction company, and that his mortgages shall be enforced and the avails applied according to the agreement with Navarro, under date of December 1,1883. So that we have here recognized and adopted by the association all of the rights which the plaintiff had under the former agreement, one of which was the right to terminate his connection with the building company and recover the money that he had advanced. As we have seen, the plaintiff was not a subscriber for any of the stock of the associations. His election, made in accordance with the agreements referred to, terminated his interests in the building company,and with it all interest that that company had in the stock held in trust for it. Whatever his relations or liabilities may be as to the contractors and persons doing work or furnishing material for the construction of the buildings it is not material to now determine; but so far as the -defendant association is concerned, his election constituted him a simple contract creditor. The association took the title to the land from Clyne subject to the conditions of the December contract, which provides for the repayment of all of the plaintiff’s advances. The purpose of the contract is to give the plaintiff security to the limit fixed in the mortgages for his advances.

Again, it is claimed that the mortgages in suit were not given to secure a debt of the appellant association; that they were fraudulently contrived by the plaintiff to secure the payment of his claim against Navarro, and that they were consequently void. As we have seen, it was recited in the five-party agreement, executed by the defendant association, that it was originally intended that this association should erect and pay for the apartment houses, but this was not done by the association. Navarro, however, as its president, commenced the building, and carried it on until the moneys provided by the subscription to the stock and the loans of the insurance company had been exhausted. Navarro, in this regard, acted for the association, evidently with the knowledge and consent of its officers, and must be deemed, therefore, to have been its agent After the money to which we have referred was exhausted, the Central Park Building Company, Limited, was organized, and with the money obtained from the plaintiff that corporation undertook the completion of the buildings. This was done with the knowledge and consent of the officers of the defendant association.

The building company must therefore be considered as the agent of the association. The acts of Navarro and of the building company were in effect ratified and adopted by the defendant, association in the five-party agreement alluded to. In that agreement it is provided that “ as evidence ofc the amount of his advances, the said McComb may take receipts from said Central Park Building Company, Limited, signed by its president and treasurer for the time being, and such receipts shall be conclusive evidence of the amounts advanced or procured by the said McComb under the agreement of December 1, 1883, and of the dates of such advances.”

The plan of operation thus adopted was simply this: The completion of the buildings of the associations was carried on by the building company; the money advanced by the plaintiff for the completion of the buildings was paid over to the building company, he taking the receipt of its officers therefor, in accordance with the agreement with the defendant association, and which it promised to repay to him.

It appears to us that the obligation became that of the appellant association, and that the security obtained by the plaintiff is free from the taiüt of fraud.

The payment of the mortgages is further resisted upon the ground that the five-party agreement, so-called, is claimed to be invalid, for the reason that it was executed on behalf of the appellant association, by Navarro, as president, and Lespinasse, as secretary, and by the Central Park Building Company, Limited, by Navarro, as president, and Clyne, as secretary. That these persons were interested in each of the corporations, and could not contract with themselves.

We do not regard it as necessary to consider the rights of Navarro, Lespinasse and Clyne, or that of the Central Park Building Company, Limited, for neither are here seeking relief under the contract. The plaintiff was an independent party to the contract, and the obligations entered into by the several corporations were chiefly with him. It is true, as we have seen, that he was a conditional subscriber to the stock of the building company, but this was subject to his right of election to surrender his interest therein, and to be repaid' the money advanced to it to be ysed for the benefit of the associations.

The association was engaged in the construction of the building, the construction was being made first through Navarro, and subsequently through the building company. Through the election of the plaintiff he stands simply as an individual loaning the money necessary to complete the construction of the building. The association derived all of the benefits. There is no pretense that as to him there was anything unjust or unfair in the contract, or that the association is called upon to pay for anything that it has not had. It consequently appears to us that as to the plaintiff the contract was valid and binding upon the association.

It is claimed that the association has been charged with the expenses of the organization and running of the Central Park Building Company, Limited, the salaries of its superintendent, fees of architect, etc. Were the building company here seeking a recovery against the association there might be some question in reference to these charges, but treating the plaintiff as occupying the relation to which we have already alluded, they have no force, for the reason that he was loaning the money for the construction of the building, and the building was being constructed by the building company. He was under the five-party agreement to pay the money over to that company, and take its receipt therefor, which receipt under the terms of the contract was to be conclusive evidence against the association.

Questions are also raised to the effect that the mortgages in suit were executed expressly to secure future advances only, and do not include the $400,000 advanced by the plaintiff to the building company; that the mortgages were tainted with usury, and that as to the appellant, the Barcelona Association, the requisite assent of two-thirds of the stockholders was not obtained to the making of the mortgages.

These questions have been fully considered in the opinion written in the general term. Our views are fully in accord . with the conclusions there reached, and a further discussion of the questions we do not regard essential, for it of necessity would be largely a repetition of that which has been already stated.

As to the modification of the judgment by the general term, we must also approve, and for the reasons stated by that court. It follows that the judgment should be affirmed, but without prejudice to the rights of the lienors in the surplus moneys, without costs in this court to either party.

All concur.