author: Mayham, J. Learned, P. J. (dissenting).

text:
    James Chambers, Limited, App’lt, E. Le Roy Smith, Assignee, Impl’d, Resp’t.

      (Supreme Court, General Term, Third Department,

      Filed May 21, 1891.)

    1. Assignment for creditors—Preferences under chap. 503, Laws of 1887.
    By an assignment for the benefit of creditors the assignee was directed to pay certain preferences in full “ only in case one-third of the value of the assigned estate shall be sufficient for that purpose, and the said preferences shall in every particular be made in accordance with the laws of the state of New York in regard to preferential assignments.” It was objected that this was a direction to pay such claims in full if one-third of the estate was sufficient therefor without deducting therefrom as required by chap. 503, Laws of 1887, the expenses of the trust and the preferred claims for labor. Meld, that it was not the intention of the asssignor to violate this statute and that the assignment was valid.
    2. Same—What are partnership debts.
    The assignor had been a partner of one J. M. Upham and was also his heir at law and next of kin. He preferred certain notes of said Upham given to another person and he stated that the preference was made in good faith; that the money received on the notes went into the firm business. The assignor was not and had not become personally liable upon said notes. Meld, that the preference was fraudulent, the debt being that of Upham. (Learned, P. J., dissents.)
    3. Same—Gift to wife in contemplation of assigning.

      It seems that where upon the day of the assignment the assignor gave his wife $200, such an act is fraudulent and will avoid the assignment.
    Appeal from a judgment entered upon the report of a referee in favor of the defendant. The action was by a judgment creditor to set aside a general assignment of Burr W. Upham to E. Leroy Smith for the benefit of creditors on the ground of fraud. The case shows that prior to October 14, 1888, J. M. Upham and Burr W. Upham were partners in business under the firm name of J. M. Upham & Son.
    That on that day J. M. Upham died intestate, leaving no widow, and that the defendant Burr W. Upham was his only heir and next of kin, and that no administration was ever granted on his estate.
    After his death Burr W. Upham continued the business in his own name and on the 18th day of December, 1889, the defendant Burr W. Upham was indebted to the plaintiff, for which indebtedness the plaintiff on the 8th of day of January, 1890, recovered a judgment for the sum of $1,183.16 which was duly docketed in the proper, county on which an execution was issued to the sheriff and before the commencement of this action the execution was returned wholly unsatisfied.
    On the 13th day of February, 1890, the plaintiff upon an indebtedness which accrued from the defendant to him before December 18,1889, recovered another judgment against the defendant Burr W. Upham for the sum of $487.81 which was duly docketed and on which an execution was in like manner issued to the sheriff and before the commencement of this action returned wholly unsatisfied. On the 18th day of December, 1889, the defendant Burr W. Upham executed, acknowledged and delivered to the defendant B. Leroy Smith a general assignment for the benefit of creditors, in and by which, after providing for the costs and expenses of executing the assignment and the commissions of the assignee and the payment of labor claims preferred by law, he directed the assignee to pay in full the notes made by J. M. Upham to Clark White, one for $1,000 and two of $500 each, and one note for $500 made by J. M. Upham & Son also payable to Clark White. The assignment also directed the assignee after the payment in full of the claims above specified to pay in full twelve other creditors whose names and the amount of whose claims are respectively set out in the assignment, amounting in the aggregate to about $1,600.
    The assignment then provides that the preferred claims shall bo paid in full “ only in case one-third the value of the assigned •estate shall be sufficient for that purpose, and the said preferences shall in every particular be made in accordance with tire law of the state of New York, in regulation of preferential assignments.” The assignment then provides for the payment of all the creditors of the assignor in full, if the assigned estate is sufficient for that purpose, and if not sufficient ratably, and if a surplus remains after the payment of all debts and expenses, then to return that surplus to the assignor.
    ' On the day of the execution of this assignment, the assignor, Burr W. Upham, in contemplation of the assignment, gave to his wife, without any consideration, two hundred dollars ($200.) The •referee ordered judgment for the defendant.

      A. H. Gleason, for app’lt; R. O. Bascom, for resp’t.
   Mayham, J.

The plaintiff attacks this assignment on the ground that upon its face it does not conform to the provisions of chap. 503 of the Laws of 1887.

' By this act, chap. 466 of the Laws of 1877, as the same had been amended, was again amended by adding another section as § 30, which provides that: “ In all general assignments of the estates of debtors for the benefit of creditors, hereafter made, any preference created therein * * * shall not be valid, except to the amount of one-third in value of the assigned estate, left after deducting such wages or salaries, and the costs and expenses of such trust.”

The assignment in this case does not follow the wording of the statute, and it is insisted by the appellant that the assignment directs the payment of the preferred claims in full only in case one third of the entire estate shall be sufficient for that purpose.

The language of the proviso in the assignment is as follows: “ Provided, nevertheless, that all the claims above preferred to be paid shall be by the party of the second part paid in full only in case one-third of the value of the assigned estate shall be sufficient for that purpose; and the said preferences shall in every particular be made in accordance with the laws of the state of ¡New York in regulation of preferential assignments.”

It is quite obvious that this language is broad enough to require the assignee to pay, the preferred claims in full if one-third of the bulk of the estate assigned, before any deduction for expenses or payment to labor was made, were sufficient for that purpose. But it is insisted on the part of the respondent that as the same paragraph of the assignment provided that “ the said preferences shall in every particular be made in accordance with the laws of the state of New York in regulation of preferential assignments, that any misdirection in the assignment was cured by that provision, and that the assignee was required to follow the statute, and not the precise wording of the assignment.”

It is apparent, if we read the assignment in connection with the statute, that the assignor intended that the preferences should be measured by its provisions, and paid in full only out of one-third of the net assets after paying expenses of the execution of the trust and the statutory preference to laborers.

This was the construction given to the assignment by the learned referee, and in that construction we think he is sustained by the case of Richardson v. Thurber, 104 N. Y., 606; 6 N. Y. State Rep., 489.

The next point raised on this appeal by the appellant is that the assignment is void for the reason that it creates fraudulent preferences.

Three of the notes held by Clark White, amounting in the aggregate to $2,000 and interest, were given by J. M. Upham, to which the assignor upon the notes themselves does not appear to be a party, and the only evidence upon this subject is that of the defendant Upham, who says the money was borrowed by his father, that it went into the business, and that, after his father’s death, be paid the interest on the notes.

Did that act amount to such a valid assumption of the notes on his part as to bind him for the payment ?

We think not. Assuming that J. M. Upham borrowed that money of White, and put it directly in the firm business, Upham, and not White, would thereby become the creditor of the firm, and White would be compelled to look in the first instance to J. M. Upham for payment

He would have no claim against the firm as such.

The most he could do would be to procure a judgment against. Upham and then in default of payment enforce it against J. W. Upham’s interest in the firm propertj.

But it is said that on the death of J. M. Upham the defendant succeeded to all of his interest as his only next of kin and heir at law and that he took the estate of his deceased father subject to his debts.

While that is so, the father’s debts in no just sense became the debts of the son.

He may as administrator de son tort have made himself liable to the personal representative of his father’s estate for the property or money of his father’s estate which as against the personal representative or the creditors of such estate he wrongfully converted to his own use without due administration of that estate, but such liability if it existed could not be the subject of a preference in an assignment made by him for the benefit of his own creditors.

The debts of J. M. Upham must be paid out of the estate, and if that estate is insufficient for that purpose this defendant Upham could not make good that deficit by a preference in favor of the creditors of his father as against his own creditors.

The error into which the learned referee seems to have fallen on this branch of the case is that of treating Burr W. Upham as primarily liable for his father’s debts, because of the devolution of his father’s estate to him, as the next of kin of his father J. M. Upham and his taking and appropriating the same to his own use, or that by some valid act he had assumed and made himself personally liable to pay the Clark White notes.

As we have seen, he did not become personally charged with the payment of his father’s debts by reason of his relation as next of kin or heir at law.

Did he make such a valid personal agreement with Clark White ■or the holder of the Clark White notes as to bind him personally for their payment?

Clark White was an uncle of the defendant Burr W. Upham and the only evidence in the case of Upham’s assumption of the White notes is in his testimony and in the receipt for payment of interest and his letter to his uncle after the death of his father.

In his testimony he says: “ I wrote to Mr. White, my uncle, in relation to the matter; Clark White is dead; I never saw Clark White after my father died; I received a reply from White.

“ Q. What, if anything, did you do in relation to these Clark White notes, in July, 1889, or about that time? A. I paid the interest on them up to the 1st of July, 1889.

“ Q. At the time you executed this assignment did you believe that you were liable to pay the Clark White notes? A. Yes, sir, I did believe so; I told Mr. Gleason that the money on these Clark White notes was borrowed by my father.”

The referee received in evidence upon this question, under the plaintiff’s objection, a letter written by the assignor to Clark White, as follows:

“ Glens Falls, N. Y., Oct, 24, 1884.
Clark White, Esq.:
Dear Uncle—In reply to yours I would sa.y, I will take up one note of $500 on November 15th ór 20th ; cannot do it before. And will you kindly send me a receipt for interest paid on all notes July last, and oblige,
“ Your nephew,
“B. W. Upham."

As bearing upon the question of the assignor’s liability upon these notes, the referee received in evidence, under the plaintiff’s objections, a letter from Clark White to the assignor, dated October 25, 1889, containing a receipt in the following form:

“ Received, New York, July, 1889, $187.81-100 of B. W. Upham the amount of interest due on four notes given by J. M. Upham and J. M. Upham & Son, dated as follows,
“April 12th, 1887, one of one thousand dollars.
“Nov. 19th, 1887, one of ($500) five hundred dollars.
“ Feb. 10th, 1888, one of five hundred dollars.
“ Sept. 11th, 1888, one of five hundred dollars.
“Clark White.”

We find no other evidence in the case which either directly or indirectly bears upon the liability of the assignor to pay the Clark White notes made by J. M. Upham.

The only agreement in writing by the assignor is in his letter of October 24, 1889, in which he agrees to “ take up one note of $500 ” without designating any particular $500 note.

There were three $500 notes held by White, one given by J. M. Upham & Son and two by J. M. Upham alone.

As the surviving partner of J. M. Upham & Son, he was liable on the note given by the firm, and his promise in this letter would, in the absence of any evidence to the contrary, be deemed to refer to the note on which he was liable.

Nor do we see how it can bind the assignee if applied to any other note.

If applied to the J. M. Upham individual notes, it would be but a collateral promise to answer for the debt of another without any consideration expressed in it, and should be void within the statute of frauds, as these notes were not made by the assignor, as appears upon their face and as is found by the referee, and as they did not represent a firm debt the assignor could not assume them as surviving partner and thus create a liability against the partnership, nor did his payment of the interest thereon amount to any valid legal assumption which' would bind him as an individual to pay the amount due on these notes.

In no aspect of this case upon the evidence can these Clark White notes be held to be valid claims against the assignor individually or as surviving partner at the time of making this assignment.

But it is insisted on the part of the defendant that at the time of making this assignment, the assignor believed he was liable to pay all of the Clark White notes and that the same were preferred therein in good faith and without intent to defraud his creditors or to create any illegal preferences.

But even if the assignor believed himself liable to pay the notes given by his father to White, and to which he was in no way a party, that belief would not authorize him in his voluntary assignment for the benefit of his creditors to withdraw from his assets which legally and justly belonged to his creditors and direct the application of the same upon the debts of his father which he was not bound to pay.

In First National Bank of Portchester v. Halsted, 20 Abb. N. C., 155 ; 11 N. Y. State Rep., 572, it was held that an assignment by a firm is invalidated by a preference of an individual debt of a partner out of the proceeds of the partnership property.

In Wilson v. Robertson, 21 N. Y., 587, it was held that the appropriation by an insolvent firm of partnership property to the payment of the individual debt of one partner is not simply void, but is fraudulent and avoids the deed of assignment.

In Bank of Granville v, Jacob Cohn, 42 Hun, 381; 6 N. Y. State Rep., 318, it was held that a general assignment transferring the property of a firm for the purpose of paying an individual debt of the partners as well as the firm debts, is wholly void as to the firm creditors, and must be set aside.

All of these cases and many others of a kindred character proceed upon the theory that such a transfer tends to hinder, delay and defraud the creditors of the assignor.

In the case at bar the direct effect of preferring the debts of J. M. Upham out of assets assigned, is to divert some of the assigned property to a purpose other than the payment of the assignor’s debts, and thus to hinder, delay and defraud his creditors.

As was said in Bank of Granville v. Cohn, supra,the effect being known, the intent to accomplish it is just as plain as if it had been confessed in the assignment itself.” And in whatever form such intent is sought to be accomplished the law condemns it. Billings v. Russell, 101 N. Y., 226.

It is true that the statute, 2 R. S., 137, § 4, provides that the question of fraudulent intent “ shall be deemed a question of fact and not of law,” and it is insisted that as the referee has found that this assignment was “ executed by the defendant Burr W. Upham to the defendant Smith'honestly and without attempt to hinder, delay or defraud the creditors of the assignor,” that that finding is conclusive and cannot be reviewed.

But the referee in finding that the three White notes preferred were made by J. M. Upham and not by the defendant Burr W. Upham, has found a state of facts inconsistent with the liability of the assignor upon such notes, and with his right or power to legally prefer the same, from which facts the inference of a fraudulent preference is inevitable.

In discussing the effect of the provisions of the statute above quoted, Earl, J., in Coleman v. Burr, 93 N. Y., 31, uses this language :

“ The statute provides that the question of fraudulent intent * * * shall be deemed a question of fact and not of law ” and ;the claim is made that here there is no finding by the referee of a fraudulent intent; but on the contrary he has found the whole transaction fair and honest.

He has however found facts from which the inference of fraud is inevitable, and although he has characterized the transaction as honest and fair that does not make them innocent nor change their essential character in the eye of the law.

Burr must be deemed to have intended the natural and inevitable consequences of his act and that was to hinder, delay and defraud his creditors. See also Webb v. Daggett, 2 Barb., 9; and Kavanagh v. Beckwith, 44 Barb., 192.

The application of this rule to the facts proved in this case and the findings of the learned referee upon the subject of these three notes would lead to the legal conclusion that they were improperly preferred in this assignment, and that that instrument was for that reason fraudulent and void as against the creditors of the assignor.

If we are right in this conclusion it is unnecessary for the disposition of this appeal to determine the other questions raised by the appellant; that the payment by the assignor to his wife on the day of the assignment in contemplation of that event, and without any valid pecuniary consideration, rendered the assignment fraudulent and void, out as that question is presented and discussed by both parties to this action it may aid in the future determination of this case to examine it.

The evidence is undisputed that the assignor did this in contemplation of the assignment and for a purpose creditable to his nature, unless in doing so he violated the legal rights of his creditors; in which case the law requires him to be just rather than generous.

The assignment purported to transfer to the assignee the assignor’s entire property not exempt from levy and sale on execution.

If, therefore, in contemplation of the assignment the assignor intentionally and for the purpose of putting any considerable portion of his assets beyond the reach of the assignment gave this money to his wife, it would be such a fraud as to taint the whole assignment and tend to show it fraudulent as against the creditors affected by the withdrawal of the assets from the assigned estate.

The assignment and schedules purport to embrace the assignor’s entire estate, and as was said by Finch, J., in Shultz v. Hoagland, 85 N. Y., 469, “If that representation was false to a material extent and consciously and purposely so, the inference of fraudulent intent could hardly be avoided.

The intentional omission calculated to deceive and to lull into slumber and inactivity the interest and diligence of the creditors would plainly argue a fraudulent purpose.

In the case of Rothschild v. Salomon, 52 Hun, 484; 24 N. Y. State Rep., 205, the assignment was made on the 23d of January, and on the 20th of January, three days before, the assignor gave his wife a check of $402 which was charged to household ex. penses, other checks were drawn about the same time, which appeared to have been intended for household expenses, and the court in commenting upon these transactions says, Van Brunt, J., “ In the case at bar, this money was abstracted in anticipation of and in preparation for the assignment.

“ It was intended to reserve it from the operations of the assignment for the future benefit of the assignor, and the assignment was only a part and parcel of the scheme, and therefore the fraudulent intent in withholding this money permitted the making of the assignment which was simply a culmination of the whole scheme, and rendered the whole proceeding void.”

It is true that the amount extracted from the assets in that case is much larger than in the case at bar, but, in other respects, the cases are quite similar in character.

It is true that it has been held that in case of a withdrawal of a small per cent of the assigned estate before making the assignment for the assignor and family to subsist upon and its return to the assignee after assignment, the question of fraudulent intent is for the jury. Fay v. Grant, 5 N. Y. Supp., 910; 23 N. Y. State Rep., 571.

In the case at bar the referee refuses -to find upon this subject, upon request of plaintiff, that the assignor gave his wife the $200, and makes no special finding in reference thereto, but finds generally that the assignment was not fraudulent.

In Vietor v. Nichols, 13 N. Y. State Rep., 461, it was held that the withdrawal of funds just before an assignment did not necessarily vitiate the same, unless it was so connected with the assignment as to show that it was a part of it, or done in contemplation of withdrawing assets from the operation of the assignment

In the case at bar the withdrawal of the money paid by the assignor to his wife is an act of great significance and it is difficult to distinguish it on principle from the cases above cited in which such withdrawal was regarded as evidence of fraud for which assignments were set aside.

For reasons above stated we think the learned referee erred, and that the judgment should be reversed.

Judgment reversed, referee discharged and a new trial ordered, costs to abide event'

Landon, J., concurs.

Learned, P. J. (dissenting).

I should think the reasoning of my brother Mayham’s opinion conclusive, if it were not for the recent decision of Durant v. Pierson, in the second division of the court of appeals, 36 N. Y. State Rep., 463.

In that case a surviving partner of an insolvent firm had borrowed money after the death of his partner. It was admitted that this did not create a debt of the firm, and that the note which he gave was only a debt of the survivor. Inasmuch however as he had used a part of the money thus borrowed to pay the debts of the insolvent firm it was held that he might prefer this individual debt in his assignment and might direct -its payment out of the partnership assets before partnership debts.

Now in the present case the deceased partner borrowed the money and gave his own notes for it; and the money went into the business. The surviving partner who (as in the Person case), was the son of the deceased partner and succeeded to the business and to his father’s property, treated this as a liability which he ought to pay and he did pay the interést. He made assignment and preferred these notes. If then a surviving partner can prefer his own notes over debts of the firm in respect to firm assets, for the reason that part of the money was used to pay firm debts, I see no reason why such surviving partner may not prefer in like manner his deceased partner's notes when the money borrowed thereon has been used in the firm business. As said in the Pier-son case: “ The creditors have not beerr harmed or prejudiced * * * for the assets were increased in value to the amount of the loan." So in this case the assets of the firm were increased in value by the money loaned to the deceased partner, and therefore the creditors of the firm are not prejudiced by the preference.

It may be added that as between the partners, or more accurately as between the surviving partner and the estate of the deceased, this assignment is'more equitable than that in the Pierson case. That preferred the assignee's own debt This prefers a debt of this deceased partner.

It seems to me that the principle established in the Pierson case sustains the finding below; although if it were not for that case I should think the reason of my brother Mayham’s opinion unanswerable. Respect for that decision, therefore, compels me to dissent.


source: Caselaw Access Project

author: Mayham, J. Learned, P. J. (dissenting.)

license: Public Domain

text:
    John Rousseau, Adm'r, Resp’t, v. Jennie Bleau, Impl’d, App’lt.

      (Supreme Court, General Term, Third Department,

      Filed May 21, 1891.)

    1. Executors and administrators—Action by, under chap. 314, Laws of 1858—Receiver.
    An administrator as representing creditors may under chap. 314, Laws of 1858, bring an action to set aside as fraudulent a deed made by his intestate, and in such action a receiver may be appointed with power to sell the land upon its recovery and with its proceeds pay the claims of such creditors. .
    (Learned, P J., dissents )
    2. Evidence—Attorney—Code Civ. Pro., §§ 835, 836
    The plaintiff’s intestate made a deed to the appellant, which remained in the possession of the attorney who drew it until her death, when the attorney gave it to the grantee, who had never before heard of it. The attorney was a subscribing witness, Held, that this did not make him a competent witness against the grantor; that the grantor by accepting him as such did not waive her privilege of preventing him from testifying to information relative to the transaction which he had obtained as attorney, and that his evidence was incompetent against the administrator of the grantor.
    '-8. Same—Res gestae.
    The grantor offered to show that subsequent to the execution of the deed the grantor had stated to a physician that she was largely inde’ ted to the grantee. Held, not a part of the res gestee, and also that such evidence was not competent against the administrator in an action where he was representing the creditors.

      4. Deed—Delivery necessary.
    There was no evidence that the grantee had ever directed the deed to be delivered. Reid, that delivery in some form was necessary to its validity; that if it be assumed that the delivery to the attorney was in escrow to be delivered upon the death of the grantor, then it would not take effect until her death, and it being without consideration, the claims-of creditors would attach.
    The plaintiff, as administrator, recognizes the validity of certain claims made against the estate of his intestate, alleges the inadequacy of personal assets to pay the same, and that unless the real estate conveyed by the deceased in her life-time can be reached, that the estate is insolvent, and charges in his complaint the fraudulent transfer of the real estate by his intestate, and asks-in his own behalf, as administrator, and of the creditors of the estate, that the conveyance be declared fraudulent and void as to> him as such administrator, and the creditors whom he as such administrator claims to represent, and that such conveyance or transfer be set aside, and said real estate may be sold by the order of this court, or by proceedings in surrogate’s court, and the proceeds applied in due course of administration to the payment of the debts of the deceased.
    The defendant Jennie Bleau, the grantee under such conveyance, by her answer, denies the allegations of fraud, alleges the validity of her deed, and denies the validity of some of the claims allowed by the administrator as valid debts against the estate of the intestate.
    The action was tried at the Rensselaer circuit, and no issue-having been settled in the case, the trial judge propounded certain questions of fact to the jury, which they answered by their special verdict.
    Upon the evidence given, the jury, among other things, found some of the claims against the estate valid, and that the deed of conveyance of the land in question was substantially without, consideration.
    That it was substantially intended as a gift to the defendant, Jennie Bleau.
    The learned trial judge adopted the findings of the jury and in addition thereto found that the personal estate of the deceased was, at the time of her death, insufficient to pay her debts, and that the deed was executed by Mary Rousseau with intent to defraud her creditors out of claims then existing and thereafter to be incurred.
    And as conclusion of law, found that the deed was fraudulent, null and void, as against the creditors of the estate of Mary Rousseau, and that the property therein described belonged to her-estate, and is applicable to the payment of her debts, and directed judgment setting aside the deed, and canceling the record thereof and directing the sale of the real estate, and the application of so much of the proceeds thereof as were necessary to pay the claims established against the estate of the deceased.
    Judgment was entered on this decision, and the defendant, Jennie Bleau, appeals to this court.

      John T. Norton, for app’lt; H. D Bailey, for resp’t.
   Mayham, J.

The evidence offered by the plaintiff in this case is substantially like that on a former trial, upon which this court held in setting aside a nonsuit and ordering a new trial: “ That the evidence was sufficient to put the defendant upon her defensa’’ 29 N. Y. State Rep., 337.

That decision establishes the right of the plaintiff to recover in this form of action, and relieves this court from the consideration of that question at this time and makes it only necessary to inquire whether the defendant by her proof established a valid defense, and also whether the trial court erred in his rulings upon the questions raised by the defendant on the trial.

The defense of the defendant upon the merits of this controversy rests solely upon the question whether, or not, she held the premises in dispute under a valid conveyance as against the plaintiff as administrator of the estate of Mary Rousseau and in ihat character representing the creditors of the estate of said deceased.

We think the evidence fully justifies the finding and conclusion of the jury and learned court that the personal estate of the deceased was at the time of her death insufficient to pay her debts, and that recourse could therefore properly be had by'her administrator to any real estate, or any interest in the same, belonging to the deceased, which might be available to a creditor for the collection of a debt against her.

If, therefore, the deed to the defendant was a voluntary conveyance without consideration, it was void as against the creditors of the grantee; or if made with intent to hinder, delay or defraud the •creditors of the grantor it was in like manner void.

But it is insisted on the part of the defendant that it was given upon a sufficient consideration, of a pre-existing indebtedness from the grantor to the grantee, and that indebtedness is sought to be •established by proof that the grantee held the notes of the grantor and also other claims against the grantor which, together with the incumbrance upon the real estate subject to which it was conveyed, constituted a full and adequate consideration for the deed.

The difficulty with that contention is, that the notes were excluded by the trial judge as incompetent evidence. The ground for the exclusion does not fully appear, but we think they were properly excluded, as it nowhere appears that they constituted any part of the consideration of the deed, are nowhere referred to, or shown to have been considered as such, and as it now appears that they are still in the possession of the grantee, and have not been cancelled or surrendered to the maker, and they are in no way connected with the consideration expressed in the deed.

It is also urged by the learned counsel for the appellant that "there was error committed on the trial in testimony by Meyers, the draftsman of the deed, offered by the defendant as to what occurred between him and the grantor at the time of the execution •of the deed and its deposit with him.

It appeared at the time of his examination as a witness that he was an attorney.

We think under the circumstances his testimony as to the personal communication between him and the deceased, who at that time sustained at least the implied relation of client and attorney, was properly excluded, and it appears from the evidence of the witness himself that he so regarded it, for on being interrogated by Elizabeth Rousseau, who claims some interest in the property before the death of Mary, he refused to communicate any information to her as to Mary’s disposition of the property, and put his refusal upon the ground that, “ it would be improper and unprofessional for me to disclose any business given in my charge.”

But it is insisted by the appellant that as the witness subscribed the deed as a witness, and took the acknowledgment of the same, that the grantor thereby waived her privilege, and that the disability was thereby removed, and cites in support of that contention In re McCarthy, 28 N. Y. State Rep., 342, and several other cases.

In the case above cited the attorney was the subscribing witness, to a will, which, being an attorney, he had drawn for the testator, and the court in substance holds, that by making the attorney one of the subscribing witnesses she had waived the privilege and made him a competent witness to testify to what occurred at the. time of its execution.

The other cases cited upon this point by the learned counsel for appellants are of a similar character or where fraud is charged in the execution of the papers.

But we think those cases clearly distinguishable from the one-at bar.

In the case of a witness to a will the testator is presumed to know that by having the attorney subscribe the will as a witness he necessarily becomes a witness on its presentation for proof, and that the will cannot be admitted to probate and become operative without the testimony of the witness as to the transactions and communications between the testator and witness at the time of’ its execution; whereas, in the case of a deed, the official certificate or acknowledgment proves it without production, or examination of the subscribing witness, and on its acknowledgment the necessity for the production of the subscribing witness ceases, and the presumption of the necessity for the examination of the-witness no longer exists, and no waiver of the privilege can therefore be presumed.

In the case of Rosenburg v. Rosenburg, 40 Hun, 91, the communication to the attorney was in the presence of both parties,, and, therefore, was not privileged.

Nor do we see how the declarations of the grantor to Dr. Prefontain after she signed the deed are competent in behalf of the-grantor, when her title is attacked by the creditors or the administrator representing the creditors of the grantor.

Such statements were not a part of the res gestee.

The law seems well settled that when an executor or adminis trator claims aright or interest solely by virtue of his character as such, evidence of the declarations and admissions made by the deceased and his wife in his life time is competent against^ the representative. Abbott’s Trial Evidence, 59, and cases there cited.

Can this rule be extended to a case where the administrator solely as trustee of the creditors of the estate of the deceased seeks to disaffirm the act of the intestate, on the ground of the fraudulent alienation of property by the intestate in his life time for the purpose of defrauding her creditors ?

If that be so, then the declarations of a party to a fraud could be resorted to not only to uphold the fraudulent transaction, but would estop the administrator from disaffirming the fraudulent acts of the intestate.

The theory upon which the declarations of the deceased have been received against the administrator is that there is a privity of estate between the deceased and his administrator or personal representative, and that the interests of the deceased while living and the recipients of the estate after his death are in harmony with the interest of the personal representative or administrator of the estate.

But by chap. 314, of the Laws of 1858, the administrator was authorized on behalf of the creditors of the estate to disaffirm the act of the intestate and, as the representative of the creditors of an insolvent estate, to seek to recover property which the intestate had transferred in fraud of their rights.

By the act referred to, the relation of the administrator to the deceased seems to have been changed, and he becomes the trustee for the creditors, and in that position may disaffirm and commence and prosecute proceedings to set aside a transfer made by the intestate.

He is thus placed in hostility to the acts of the intestate, and to the fraudulent grantee; the estate which he seeks to reach for the creditors of the estate he seeks in hostility to the acts of the deceased grantor, and also in hostility to the interest of the intestate’s grantee, whose acts and interests are in harmony with each other and in hostility to the interest of the creditors and of the trustees seeking to set aside the transfer as fraudulent.

In Harvey v. McDonnell, 113 N. Y., 530; 23 N. Y. State Rep., 501, the court says: “ They (the administrators) stand as trustees of creditors, Laws of 1858, chap. 314, § 1, and, for their benefit, may disaffirm and treat as void any transfer or agreement made in fraud of the rights of creditors interested in any property or right belonging to the estate they represent.” Under such circumstances we do not see upon what principle the declaration of the person whose conveyance is sought to be set aside as fraudulent can be received in evidence to support such conveyance.

The plaintiff stands in the place of the creditor who might have maintained this action, and it could not be maintained, nor would it be contended, that if the action had been prosecuted by the creditors instead of the administrator this evidence would have been proper. The evidence was, therefore, properly excluded.

Excluding the evidence of the draftsman and that of Dr. Prefontain as to the declarations of the deceased, we find no proof of consideration in this case sufficient to uphold the validity of this deed as against the claims of creditors established in this action. But we think that there is another and serious objection in this case as to the validity of this deed as against the creditors of this grantor.

It is conceded that the deed was never delivered to the grantee by the grantor, and that the grantee had no knowledge of its existence until after the death of the grantor.

It is true that a deed may be delivered as an escrow to a third person to be delivered by him to the grantee on the happening of some future event.

But in this case there was no actual delivery by the grantor to the grantee named in it, nor is there any evidence that the grantor ever gave any direction as to the time of its delivery, or that it should be ever delivered.

Delivery in some form was absolutely essential to its validity. Stilwell v. Hubbard, 20 Wend., 44. “Delivery includes surrender and acceptance, and both are necessary to its completion. This must be the result of a contract, the meeting of two minds, the accord of two wills.

“ The grantor must be willing and agree to deliver, and the grantee must be willing and consent to receive, and this accord of wills must be evidenced in some way to. show the unequivocal intention of both parties that the instrument shall take effect according to its purport and tenor." Best v. Brown, 25 Hun, 224; Fisher v. Hall, 41 N. Y., 416.

But if we assume in this case that this delivery of the deed by the grantor to the draftsman, Myers, was valid as an escrow to be delivered to the grantee on the death of the grantor, it would not in that event be operative until delivery, Hinman v. Booth, 21 Wend., 267, and not being upon a valuable consideration would be subject to the debts of the deceased existing at the time of her death, so that in either event the deed would, as to the creditors of the grantor, be inoperative and void.

We have carefully examined all the exceptions taken by the learned counsel for the appellant, many of which have not been discussed here, but we find no. error in the rulings of the learned trial judge for which this judgment should be reversed.

Judgment affirmed, with costs.

Landon, J., concurs.

Learned, P. J. (dissenting.)

The judgment in this action sets aside the deed from the deceased to defendant, and declares the property to belong to the estate of the deceased. It appoints a receiver with power to sell the property and pay the debts of deceased, directing him first to pay the damages of Elizabeth Rousseau; then to pay to plaintiff the amount of any other debts of deceased.

I had occasion to suggest, in a former case, the inconsistency of permitting an administrator to bring an action to set aside a deed of land; and remarked that chapter 314, Laws of 1858, speaks of “ estate or property held by or of right belonging to such trustee or estate." And that the property of the deceased does not belong to the executor or administrator.

But there are expressions in some cases indicating that the executor or administrator may bring the action to set aside a deed of real estate of the deceased alleged to be fraudulent

I cannot think, however, that in such an action the court has the right to change the whole system of enforcing debts of deceased persons against their real estate. The statute, Code § 2749, et seq. has provided a settled course to be pursued when real estate is to be made liable to debts of a deceased person.

If this deed is fraudulent as to creditors, then I think the creditors mus» seek their remedy under the sections above cited of the Code. I do not think there is any right to give preference to one creditor over another. Nor do I think there should be a receiver appointed.

Furthermore, if the deed was never delivered, so that it never took effect, then it is void not only as to creditors, but as to the heirs of the deceased. And there is no ground for returning any of the avails to the grantee, as the decree provides.

These difficulties would not arise if the decree merely set aside the deed and left the creditors to enforce their rights in the mode provided by statute.

Judgment affirmed, with costs.


author: Learned, P. J.

text:
    David McCosker et al., Resp’ts, v. Emanuel Smith, App’lt.

      (Supreme Court, General Term, Third Department,

      Filed May 21, 1891.)

    Venue—Changed by an amended complaint.
    The summons and complaint in an action named Pulton county as the place of trial. After service of an answer, the plaintiff served an amended and fuller complaint naming New "York county as the place of trial. The action could properly be tried in the latter county. Reid, that plaintiff had the right in this manner to change the place of trial.
    Appeal from order denying motion to set aside an amended complaint

      Clark L. Jordan, for app’lt; J. M. & S. Dudley, (H. W. Thorn, of counsel), for resp’ts.
   Learned, P. J.

The action was commenced by service of a summons and complaint. The summons stated that the trial was desired in Fulton county. The complaint named the same county as the place of trial within due time. After service of an answer the plaintiffs amended their complaint, making the same allegations as in the original complaint, though in different language, and naming the county of New York as the place of trial. The plaintiffs are residents of New York and the action -is on a promissory note. The county of New York is therefore a proper county.

The defendant moved to set aside the amended complaint. The motion was denied and the defendant appeals.

The language of the amended complaint is fuller than that of the original; and it would be unjust to deprive plaintiffs of the right to state the cause of action in such language as they prefer. But the real point made is that the plaintiffs could not by such an amendment practically change the place of trial.

It is decided in this department that the plaintiff may do this. Rector v. Ridgwood Ice Co., 38 Hun, 293; affirmed 101 N. Y., 656. In that case the court held that such a change did not prejudice proceedings already had. And inasmuch as a motion of defendant to change the place of trial to another county was pending when the amended complaint was served, such service did not defeat the making of the motion. But the right to serve such amended complaint was admitted. See also Moulton v. Beecher, 1 Abb. N. C., 235; Stryker v. N. Y. Ex. Bank, 28 How., 20 ; Toll v. Cromwell, 12 id., 79.

The same view is recognized in Faherty v. Schuyler S. T. B. Line, 43 Hun, 432 ; 6 N. Y. State Rep., 756. But the court held that the demand of defendant for a change of place of trial made prior to the amended complaint was not prejudiced by the amended complaint and therefore defendant might follow up his demand by the usual motion. That case therefore accords with the decision of the special term in this case.

In Wadsworth v. Georger, 18 Abb. N. C., 199, at special term, a view was taken apparently different, but really not entirely inconsistent with the decisions above cited. Because in that case the amended complaint was served after notice of motion to change the place of trial had been given by defendant Therefore, as held in Rector v. Ridgwood Ice Co., since the amended complaint was without prejudice to proceedings already had, the motion should not be defeated thereby.

We think, therefore, that the special term properly held that the complaint might be amended as was done.

Order affirmed, with ten dollars costs and printing disbursements.

Landon and Mayham, JJ., concur.


text:
    Ira Downs, Resp’t, v. The Central Vermont Railroad Co., App’lt.

      (Supreme Court, General Term, Third Department,

      Filed May 21, 1891.)

    Negligence—Pleading—Sufficiency of complaint.
    In an action against a corporation to recover damages for negligence in killing a horse, the complaint alleged that the defendant was a corporation, and operated a railroad; that because it neglected to repair a certain fence, culvert and cattle-guard, which it was bound to repair, the plaintiff’s horse, without plaintiff’s fault, came on the track, and by reason of defendant’s negligence in moving its cars was killed. Held, that the complaint stated a cause of action, and sufficiently connected defendant with the injury.
    Appeal from order overruling demurrer to the complaint

      Louis Hasbrouck, for app’lt; Shedden & Booth, for resp’t
   Learned, P. J.

This is an appeal by defendant from an order overruling a demurrer.

The action is to recover for the killing of a horse of plaintiff. It avers that defendant is a corporation and operated a railroad ; that by reason of its neglect to repair a certain fence on the side of the railroad at a point described, which it was bound to repair and by reason of its neglect to build or repair a certain culvert and cattle guard, also described, which it was bound to build and repair, the plaintiff’s horse, without plaintiff’s fault, came on the track and, by reason of defendant’s negligence in running its cars, was killed.

The defendant claims that the complaint does not allege facts and does not allege that defendant has done or omitted anything which caused the injury.

Undoubtedly the defendant is entitled to have the plaintiff allege the facts which constitute negligence and thus to show defendant’s alleged connection with the injury caused to plaintiff. This we have discussed at some length and decided at this term in Toomey v. Albany, ante, 91. But in this case the plaintiff has alleged these facts, viz, the neglect to repair the fence and the neglect to build and repair the culvert and cattle guard. It may be that defendant claims that the mode of allegation is not positive; that is, that the plaintiff does not allege that defendant did not do these acts; but alleges only that by defendant’s neglect in not doing them the injury was caused. We do not think that criticism is sound. The object of pleading is to inform the opposing party of the matter on which the pleader relies. And undoubtedly the defendant is informed of the ground of - action in this case.

Whether the allegation of negligence in running the cars is sufficient to permit plaintiff to show any other negligence than that of neglecting to repair the fence and the culvert and cattle guard, we need not say. It is enough that we think a cause of action is set forth in the complaint

Judgment interlocutory affirmed, with costs.

Landon and Mayham, JJ., concur.


text:
    Robert S. Hall, Resp’t, v. John M. Stone, App’lt.

      (Supreme Court, General Term, Third Department,

      Filed May 21, 1891.)

    Limitation—Mutual accounts.
    A mutual account existed between the parties to this action in the years 1876 to 1879. In February, 1879, the plaintiff stated upon his books a balance against defendant, which balance plaintiff in the same month assigned to a third person, who afterwards re-assigned it to plaintiff. In 1884 defendants made one purchase of plaintiff. In 1889 plaintiff brought this action. Feld, that by the assignment in February, 1889, the mutual accounts between the parties were closed and the statute of limitations began to run;- that the account then became the property of the assignee and was taken out of the mutual accounts of the parties; that its reassignment to plantiff, not followed by any recognition of its validity by defendant, did not assist the plaintiff and that the subsequent purchase in 1884 could not in any form revive or continue the former mutual accounts.
    Appeal from judgment of the Warren county court, affirming judgment of a justice’s court rendered on a verdict in favor of plaintiff for $17.55.

      Coyle & Cunningham, for app’lt; S. H. Bevins, for resp’t.
   Learned, P. J.

This action was commenced in justice’s court January, 1889, to recover twenty-five dollars for goods sold in a country store. The defendant pleaded payment, statute of limitations and counterclaim for services of about the same amount. Plaintiff’s demand consisted of about forty items; defendant’s of six.

The case was tried before a jury who rendered a verdict for plaintiff of $17.55.* The defendant appealed to the county court and that court affirmed the judgment. The defendant now appeals to this court.

The plaintiff’s items begin June 29, 1876, and end December 24, 1878, except as mentioned hereafter. In February, 1879, the plaintiff made a balance of the account against defendant by crediting to defendant certain cash and charges therein, which balance was $17.59 ; and in that month he made an assignment and turned over the balance to the assignee. He did no business till June 1, 1879. And at some time, exactly when does not appear, the account as he testifies was assigned back to‘ him. Since that time the only charge for goods sold on his books is in March 8, 1884, for a ham, $2.84. There is what is called a charge for eight years’ box rent, four dollars, which amount was specifically paid. This is not an article sold by defendant, but appears to be for use of post-office box. The plaintiff claims by the charge for the. ham to save the effect of the statute of limitations.

By the assignment from the plaintiff in February, 1879, the mutual accounts between plaintiff and defendant (if such accounts ever existed) were closed. The balance, whatever it was, became the property of the assignee. In the view most favorable to plaintiff the statute of limitations began to run from December 24, 1878, the date of the last item in his account, and the right of action was barred in December, 1884.

It was held in Green v. Ames, 14 N. Y., 225, that where there is a mutual, open and current account between parties, and one of them purchases from a third person and holds an open account against the other without notice to or recognition of its validity by the latter, it does not become a part of the mutual account between them within the statute of limitations. That the demand so purchased is barred in six years from the time it accrued to the assignor, though there existed a mutual account between the assignee and the other party.

Now to apply that case to the present, let us assume (which is not shown) that from June, 1879, down to March 8, 1884, there was a mutual account between these parties. In fact the only account is the ham sold by plaintiff that last mentioned day, and the defendant’s charges for horse hire. The plaintiff buys from some person whose name is not given, called plaintiff’s assignee, this balance of account of $17.50 against the defendant Such balance, we have already seen, would be barred at least six years from February, 1879, if not from December 24, 1878. Now the plaintiff cannot by this purchase make that demand a part of his mutual accounts between himself and defendant, as is said in the case last cited This must be true, although the account so purchased by the plaintiff had once belonged to him. For by his assignment to his assignee it had ceased to be a part of the running and mutual accounts between him and defendant. It became the property of another person. The defendant did not continue to deal with the plaintiff with reference to a running account which no longer belonged to plaintiff.

If, therefore, another running account arose between the parties the plaintiff could not by purchasing this old'demand make it a part of such running account. Of course still less could he by such purchase save the running of the statute, if there really existed subsequently no mutual account.

We may suppose that when the plaintiff assigned the balance alleged to be owing from defendant, defendant knew of this, or was notified of it. He knew, then, that there could no longer be dealings between him and plaintiff on the basis of, and with reference to, mutual accounts.

The learned county judge distinguished this case from the one cited on the ground that the assignment spoken of by plaintiff did not divest this title, but that the demand assigned was only security for his creditors. We do not see that the case shows what was the nature of the assignment of this account. But if it was an assignment for the benefit of creditors, still it transferred the title to the assignee and closed the mutual accounts between plaintiff and defendant. And there is no evidence that after the demand was reassigned to plaintiff there was any recognition of it by the defendant or any agreement between him and the plaintiff that it should be an item in the alleged running account.

The plaintiff urges that even if the claim assigned by the plaintiff is barred, still there must be an affirmance for the sum of $2.84, the price of the ham. But the recovery was for $17.55, while the amount of the balance assigned was $17.59. Evidently, therefore, there was no recovery for the ham.

There, are several other questions raised in this case which we deem it unnecessary to discuss.

Judgments of county court and justice of peace reversed, with costs.

Landon and Mayham, JJ., concur.


author: Landon, J. Learned, P. J. (dissenting.)

text:
    James C. Rogers, Resp’t, v. William G. Wiley et al., App’lts.

      (Supreme Court, General Term, Third Department,

      Filed May 21, 1891.)

    1. Stocks—Waiver op demand for margins.
    The plaintiff had sold a stock “ short,” and had agreed with his brokers to keep with them a margin of twenty per cent. The stock rose and the brokers demanded more margin. The plaintiff had an interview with them, in which they advised him not to buy more stock as he proposed, but to remain short, and said that if he would do so they would carry the stock for him until he could get out all right. Held, that this was a waiver of their right at that time to close him out without further notice, and that a new demand for margin was requisite before they could do so.
    2. Same—Measure op damages.
    The brokers closed out the plaintiff on August 15, but he repudiated the transaction, and on February 10 following he ordered the stock covered. This was refused, and he was referred to the prior transaction in August. Held, that the measure of damages was the difference between the price the defendants paid in August and that at which they could have bought the stock in February.
    (Learned, P. J., dissents.)
    Appeal from, a judgment entered upon the verdict of the jury upon the trial at the Washington circuit, and from the order denying the motion made upon the minutes to set aside the verdict.

      J. S. Potter, for app’lts ; J. C. Rogers, for resp’t.
   Landon, J.

For several months prior to August 15th, 1882, the defendants, who were stock brokers in the city of New York, were carrying for the plaintiff, who resided at Sandy Hill, N. Y, a “ short ” sale of 1,000 shares of Delaware & Lackawanna stock upon a margin furnished them by plaintiff. For about a month prior to August 15th the price of the stock had been rising, and the parties had had some correspondence about it. The plaintiff and the defendant Wiley had interviews at Saratoga respecting it on the 25th and 27th of July. The plaintiff at the first interview said he thought he had better cover, and Wiley advised him to wait At the second interview, the price still rising, the plaintiff again proposed to cover and the defendant advised him to wait, and suggested that he make a “ turn in the market. ” August 9th the defendants at New York telegraphed the plaintiff as follows: “ Lackawanna 143 bid; send more margin or advise us what to do.’’ Plaintiff answered: “Buy 2,000 at market and stoploss with margin either way.” Defendants replied the same day: “Don’t want to carry Lackawanna on six points margin ; may not be able to stop it if it goes up. Will buy in your stock when present margin is about exhausted.” The next day, August 10th, the plaintiff met Wiley at Saratoga and complained that his order of the previous day was not filled, and proposed to cover then and save the balance of his margin. Wiley advised him not to buy, but stay short, and said that if he would do so they would carry the stock for him until he could get out all right. Plaintiff answered that with that understanding he was willing to wait and leave it as it was. August 15th the rise in the price about exhausted the margin and. defendants without notice to plaintiff subsequent to August 9th bought in the stock at an average of 148|- and covered the short sale and notified the plaintiff. Plaintiff immediately repudiated the transaction by letter sent to the defendants. The matter ran along until February 10, 1883, when defendants received an order from plaintiff to cover his stock at market price. The price was then 121f. Defendants, insisting that the stock had been covered August 15th, refused to comply with the order of February 10th. Upon the basis of the purchase of August 15th there would be due plaintiff $83.71. Upon the basis of the order of February 10th there would be due him $16,-420.43. The jury gave plaintiff a verdict for one-half the latter sum.

The defendant Wiley contradicted the version of the interviews at Saratoga given by the plaintiff and gave a different one, but as the jury found for the plaintiff we adopt his version.

The testimony tended to show that if defendants had filled plaintiff’s order of August 10th the plaintiff might have made some money if he “had struck it right," as he expressed it, in .giving his subsequent orders. But the trial judge held that the defendants were not obliged to fill that order because plaintiff’s margin was then below twenty per cent, at which figure he was to keep it. But the trial judge instructed the jury that if Wiley at the interview with the plaintiff at Saratoga, August 10th, agreed to keep the stock borrowed, the defendants’ purchase of August 15th was unauthorized, because it was concededly made without a further request to put up more margin. The judge further held that such an arrangement if made was not an agreement binding the defendants to carry the stock for any given time because it was without consideration, but it was a waiver of their right under the contract to cover until they had given plaintiff notice to make his margin good. He further held that unless such an arrangement was made the plaintiff could not recover.

The learned counsel for the defendants urge that the arrangement if made, whether termed an agreement or a waiver, was void for want of consideration. They argue the case as if the defendants had agreed to carry the stock after the margin was exhausted, and incur whatever loss might result and give the plaintiff whatever profit might result.

But the trial court distinctly held that the arrangement was nothing but a waiver of the existing right under the contract to cover until, the defendants had given further notice.

Before the interview of August 10th the defendants had given plaintiff notice to furnish more margin. With that notice in force the defendants had the right to buy as they did on the 15th. If no notice was in force they had no right to buy without giving plaintiff notice. Gillett v. Whiting, 120 N. Y., 402; 31 N. Y. State Rep., 495 ; White v. Smith, 54 N. Y., 522; Hess v. Rau, 95 id., 362.

If the defendants waived that notice they thereby took upon themselves no additional obligation; they retraced their previous steps; they simply said, in effect, we do not stand upon that notice or upon any right to cover without notice; we hope no notice will be necessary, but if it should be, you may wait until we give it. Clearly, the plaintiff could safely wait until he received notice. Besides the loss, if any, would have to be made good by the plaintiff. It would be a case of trusting to his credit instead of to his cash.

The complaint characterizes the transaction between Wiley and the plaintiff on the 10th of August as a contract by which the defendants agreed to carry the short sale of stock as long as plaintiff pleased. We assume this characterization to be wrong. > Butin addition to this erroneous characterization, the complaint sufficiently alleges what the actual contract between the parties was, and what the acts of the defendants were which are relied upon as constituting its breach. The breach of the contract is no part of the contract itself, but results from acts in pais under it The question is whether such acts do in fact constitute a breach. Holmes v. Holmes, 9 N. Y., 525. If these acts show that the defendants closed the transaction without giving the plaintiff the notice to protect himself, which the circumstances required, then they are liable for the loss resulting from this breach of duty. And in determining whether any notice was due from the defendants to plaintiff, we must look into the circumstances as they actually existed. Any one can see that a notice might be given one day under the pressure of the circumstances of that day, and be withdrawn another day under changed circumstances, or upon a personal explanation or solicitation. Fair dealing is the main test with respect to such matters; the duty of each party being not to mislead the other to his loss. It seems to us that the least' that can be made of the interview of August 10th is, that the plaintiff could rely upon not being closed out under any previous, notice, but could wait until he heard further from the defendants.

Exception is taken to the rule for the measure of damages. The court stated it to be the difference between the price at which defendants actually bought the stock and the price at which they could have bought it in when they received plaintiff’s order to do so on the 10th of February following. This rule is sanctioned by authority. Campbell v. Wright, 118 N. Y., 594; 80 N. Y. State Rep., 32; White v. Smith, 54 M. Y., 522. It is urged that the plaintiff ought to be confined to the best price for which he could have bought the stock within a reasonable time, say, thirty or sixty days, as in cases of unauthorized sales. Wright v. Bank of Metropolis, 110 N. Y., 237; 18 N. Y. State Rep., 92. But the plaintiff sustains no damages uniil his order to buy is disobeyed, and the date of that order fixes the date of the measurement of his damages. We can see that this rule may operate harshly, but it would be equally harsh to compel the plaintiff to buy against his judgment and inclination and thus give to the' defendants' wrong a compulsion which would deprive plaintiff of his liberty of action.

The case was submitted to the jury upon the questions of fact in a careful and satisfactory manner, and the fact that the jury gave the plaintiff only half the amount which they ought under the rule of damages given them by the court, we think is satisfactory evidence that they were not influenced by passion or prejudice.

Judgment affirmed, with costs.

Mayham, J.. concurs.

Learned, P. J. (dissenting.)

The question in this case seems to narrow itself down to one point The plaintiff was dealing in stocks through defendants as his brokers. By the terms of the agreement he was bound to keep with them twenty per cent margin. He had sold through them 1,000 shares of D., L. & W. stock, “ for the short account ” at 120. On the 9th of August, 1882, defendant telegraphed plaintiff: “ Send more margin or advise us what to do.” On that day the stock was 143. Plaintiff answered Buy 2,000 at market, and stop loss with margin either way.” Defendant responded at once “ Don’t want to carry D., L. & W. on six points margin; may not be able to stop it. If it goes up will buy in your stock when present margin is about exhausted.’’ The plaintiff’s margin would be about exhausted when the stock should reach 149. A letter was written by defendant to plaintiff on this same day, stating the matter substantially as in the telegram and asking if this met his approval.

On the 10th of August the plaintiff and one of the defendants met in Saratoga and had a conversation. There is a conflict between them as to what took place. Since the verdict of the jury, we must take the plaintiff’s version as correct. It is as follows : He complained to Mr. Wiley that the firm had not bought the 2,000 shares, and said: “ if you want more margin I can give it.” Mr. Wiley advised him to stay short, saying: “ I do not want to carry this stock and be long of it for anybody.” The plaintiff said to him : “ Your telegram said that if the market went up you were going to cover my shorts, that would bring it up to 49 or 50. I do not want to leave it in any such position as that; if I am liable to be closed out here within a day or two, or when it gets there, I want to know it.” Mr. Wiley replied: “We will carry the stock for you until you can get out all right. I had rather do it than buy it and be long of it at that price. ”

On the strength of this conversation the plaintiff avers in his complaint that defendant agreed to carry and keep good plaintiff's said short sale and contract in such stock as long as plaintiff pleased.

The learned justice who tried the action held that this conversation was not binding as a contract for want of a consideration ; but that it was a waiver by defendants of their right to a margin for the time, and that they could not go on and purchase to cover until they had given plaintiff notice to furnish the requisite margin.

It will be seen that neither the complaint nor the plaintiff’s testimony states in terms any waiver of the right to require a margin. Both the complaint and the plaintiff’s testimony aver an absolute contract and promise on the part of defendants to carry the contract as long as plaintiff pleased, or at least till he coulcl get out all right. So that if the complaint and plaintiff’s testimony are true, the defendants would never have any right to close the contract against plaintiff’s wishes, whether they demanded farther margin or not, at least until plaintiff could get out all right. This it would seem would be when the stock dropped to 120. That appears to be the price at which plaintiff had sold the 1,000 shares short. And therefore the promise of Mr. Wiley, according to plaintiff, was that defendants would carry the stock until it should fall to that point if plaintiff wished.

How the learned justice held that the agreement was void for want of a consideration, as it was a mere naked promise on defendants’ part, for which plaintiff paid or parted with nothing. But he held that this was a waiver of the right to demand a margin until such right should again be obtained by another demand. So that the learned justice construes this conversation as if Mr. Wiley had said: “You need not send away any margin until further notice.”

That is not the agreement as plaintiff testifies. He says that Mr. Wiley promised: “We will carry the stock for you until you can get out all right. I had rather do it than buy it, and be long in it at that price.” If ‘defendants had bought the 2,000, they would have been entitled to call for a large margin from plaintiff. Bather than buy at that price these 2,000 shares, for which plaintiff would have had to advance a margin, the defendant Wiley agrees absolutely to cany the stock until plaintiff can get out right, which is equivalent to saying until the stock falls to 120, if we are right in understanding that to be the price at which the transaction began.

Then Mr. Wiley, as plaintiff testifies, said further: “ If it should go up to 149 or 150 we will not close you out; we will carry the stock for you until you can get out all right. We will work it out for you, and you will yet make money.” Such language as this did not mean simply that defendant waived the demand for a margin already made, but might renew the demand the next day. It meant an absolute promise to carry the stock and work it out. And the reason is explained by plaintiff when he testifies that Mr. Wiley’s previous advice had proved incorrect, and therefore that Mr. Wiley may have desired to save plaintiff from loss.

Now, it is undoubtedly true that an absolute agreement to carry the stock, to work it out so that plaintiff would make money, might carry, by implication, a waiver of the existing demand for a margin. But it included much more. And if the whole agreement be held void for want of a consideration, on what principles can it be held valid as to a waiver implied in it.

This statement of the conversation appears in plaintiff’s copy of a letter to Mr. Wiley, August 16, which defendants deny having received. The plaintiff says in that letter that Mr. Wiley “ said if I would stay short of it you would take care of it for me until I could get out all right, and that I would make money by so doing. Belying on this I went home satisfied.” That is, the plaintiff relied on defendants’ promise that they would take care of the stock until he could get out all right. If the understanding was- that plaintiff was to advance the necessary margin when called on, the defendants would not be taking- care of the stock for him.

And that letter, in which plaintiff repudiates a purchase made for him the 15th, does not place such repudiation on the ground that there had been a neglect to call for a margin, but on the ground of the promise to carry the stock.

At the time of the conversation the plaintiff was under obligation, by the terms of the agreement with defendants, to send more margin. If defendants had said to him, “ you need not send the margin ” till we notify you again, and plaintiff had waited for such notification, very possibly that would have been a waiver by defendants of their demand for margin, so that they could not have closed out the transaction until they had made another demand for margin.

But instead of that the defendants, as plaintiff says, made a general promise to carry the stock for him until he should get out all right. If this was not binding, because without consideration, we cannot substitute a different agreement, a mere waiver, which might be binding.

Judgment affirmed, with costs.