author: Ward, J.

text:
    John O’Connor, Pl’ff, v. Germania Life Insurance Company, Def't.

      (Supreme Court, Erie Special Term,

      Filed January, 1895.)

    Insurance—Life—Paid-up policy.
    Where a policy-holder notifies the actual or assumed manager of the company of his intention to surrender his policy and take a paid-up policy, he is entitled to be informed as to mode of procedure required in such cases ; where no such information is given, but the agent simply demands tile surrender of the old policy, equity will relieve against a forfeiture of the right to a paid-up policy, created by lapse of time.
    Action to compel defendant to issue to plaintiff a paid-up policy.

      Herbert P. Bissell and Martin Cary, for pl’ff ; Adelbert Moot, for def't.
   Ward, J.

In December, 1888, the defendant issued its policy insuring the life of the plaintiff to the amount of $15,000, at an annual premium of $59460. The policy contained this provision :

“ It is also agreed that if this policy shall, after three or more whole years premiums shall have been paid, become void by nonpayment of premiums, the company will, on surrender of this policy -and all additions thereto, if such surrender shall be made within six months after this policy shall have thus become void, issue a nonparticipating policy of paid-up insurance, payable at the same time and under the same conditions as this policy, for the amount prescribed by the law of the state of Hew York.”

The plaintiff made three payments upon the policy, the last of which was made December 22, 1890, which extended the policy for another year. Shortly after he had made the last payment, he met Mr. Rohr, the agent of the company, and told him, in effect, that he did not intend to make any more payments upon the policy, but would let it lapse, and within the six months provided he would take a paid-up policy. After the time for making the next payment (December 22, 1891), and within the six months, the plaintiff had an interview with the agent at his office, and he stated to the agent that he had come to surrender the policy, and asked him for a paid-up policy. The agent said he had none, and the plaintiff’s evidence discloses that:

“I asked him when he would have any. He didn’t say when. I asked him if he would give me any at all, and he didn’t say ‘Yes’ or ‘Ho.’ He asked me for my policy, and I said : ‘Here it is in my pocket I am ready to surrender it when you give me something in return for it.’ Q. Did he offer to give you a receipt for it or anything? A. Ho, sir; he did not. If he had given moo receipt for it, I would have given it to him.”

The witness further stated that no blanks were sent him to be-filled out to surrender the policy, nor was he asked to fill out or sign any blanks for the surrender of the policy or otherwise. After the six months had expired, and before the action was brought,, the plaintiff asked the agent what he had done about procuring him a paid-up policy. The agent said he had done nothing; that he had not got the policy back. Two or three conversations occurred between the plaintiff and the agent of about the same import as the one quoted above, before the six months expired, and with the same result. The defendant never issued to the plaintiff the nonparticipating policy of paid-up insurance, and this action was brought to compel the company to issue it, the plaintiff claiming that he was ready and willing to surrender the first policy, with all additions thereto, upon the reeéipt of the new one. The company defends principally upon two grounds: First. That the agent Eohr had no authority to receive notice of the intention to surrender or the surrender of the policy, and to issue a new one, or. take any action in relation thereto, but had simply the power to receive the old policy and the additions from the plaintiff, forward them to the company, and to await their action. Second-That the plaintiff had neither surrendered within the time prescribed (of six months) the policy, or offered to do so, or tendered the same, and that the payments made by plaintiff were forfeited ; the unconditional surrender within the six months of the policy being a condition precedent to be performed by the plaintiff before he was entitled to a paid-up policy.

As to the first objection, I have reached the conclusion from the-evidence that it is not well taken. The office and place of business of the defendant was in New York City. The plaintiff resided in the city of Buffalo. Mr. Eohr, assuming to be the agent, of the company, solicited the insurance of the plaintiff, who made due application therefor, and Eohr delivered to him the policy.. Rohr had an office on Main street, where he transacted insurance business, and each payment of premium was made either to Rohihimself or at his office, and renewal receipts of the policy-received by the plaintiff were received from Rohr or at his office, from the-person in charge thereof, to Rohr’s knowledge. A letter was received by the plaintiff from the defendant, with a card upon the envelope as follows : “Matthias Eohr, Manager Germania Life Insurance Company, New York.” There is no doubt but what Eohr assumed to_ act as manager for the company at Buffalo, and held himself out to the public as such, and from the whole evidence L think it is fair to assume it was with the knowledge and consent, of the company. It is true Mr. Eohr testifies that, as a matter of fact, he did not have the power ascribed to him by the plaintiff, and states particularly what his duties were as between himself and the company. It does not seem, however, that the plaintiff had any notice of any limitation upon his powers, or that he had less power than he held himself out to possess.

The serious question in this case grows out of the second objection. This is an action in equity, and the question is whether equitable relief can be granted the plaintiff under the eireumstances of this case. It is conceded that he has paid about $1,800 to the defendant, and had proper surrender of his policy been made, or a proper offer to surrender within the six months within which he was permitted to do so, he would have been entitled to a paid-up policy, under the provisions of his contract, as a matter of ab-. solute right. By reason of the lapse of time and the failure, as the defendant claims, to make the proper surrender, this right was lost, and the defendant absorbs the money of the plaintiff as a forfeiture. It is a familiar rule that equity relieves as against penalties and forfeitures. Ho better illustration of this can be found than the relief frequently given to vendees of real estate whose contracts provide that, if they are in default of payment, the contract shall be void, and the vendor can re enter and take .possession of the lands contracted to be sold. It is true that at law the proposition is often asserted that performance of a condition precedent is indispensable to a recovery upon the contract where damages are sought, and the tender of performance must be without condition or reservation ; but in the forum of conscience and equity this strict rule of the common law has been often softened and relieved against where justice and equity require it. It would seem that fair dealing would require the company, after repeated notice from the plaintiff, who was not familiar with their mode of doing business, that he desired the paid-up policy, and was ready to surrender his policy upon receiving it or some recognition from them of his right, to have pointed out to the plaintiff how he should proceed to obtain the paid-up policy, what kind of an application he should make, what paper he should execute, and, in short, the mode of procedure the company required under the circumstances. The plaintiff knew nothing of the company except what he had learned through his dealings with it in this transaction, and that had been through the agent, Mr. Bohr; and, when he goes into-Bohr’s office with his policy ready to deliver, he had a right to expect such information and instruction as the agent could give to carry out the purpose of the visit. But the agent does nothing of the kind; he simply requires the policy to be delivered to him, without promising to take any steps to obtain a new one, or that a new one should be issued to the plaintiff, and in fact, by his words and conduct refused to give the plaintiff any information or guaranty that, if he surrendered his policy, his rights should be protected. If the conduct of the plaintiff under the circumstances did not strictly, at law, put him in a position to secure the new policy, it was at least such that would occur to a prudent business man, perhaps unacquainted with the business in hand. In addition to the jurisdiction given a court of equity in this case growing out of the forfeiture, it may be said that this case has elements of mistake and surprise as well. Time, ordinarily, in insurance contracts, is of the essence of the same; but it is not perceived how the delay in this case that has been occasioned since the expiration of the six months has worked injury to the defendant. It has lost nothing by the delay.

I have reached the conclusion that the plaintiff is entitled to the relief sought in this action, and also to recover costs, and judgment should be entered accordingly.

Judgment for plaintiff, with costs.


source: Caselaw Access Project

author: Beekmam, J.

license: Public Domain

text:
    Walter A. Weber, Pl’ff, v. Edward Huerstel et al., Def’ts.

      (Supreme Court, New York Special Term,

      Filed January, 1895.)
    Mortgage—Default clause.
    A mortgagee can, after simply extending the time of payment of the mortgage debt, exercise the right, under the option clause as to taxes contained therein, of considering the principal sum immediately due and payable, by reason of the failure, on the part of the mortgagor, to pay taxes which were liens on the mortgaged premises prior to the extension.
    Demurrer to the complaint.

      J. Noble Hayes, for pl’ff; Joseph Kling, for def’t Fuller.
   Beekmam, J.

This action is brought to foreclose a mortgage upon real property in the city of New York. The mortgage and accompanying bond were given to secure the payment of the principal sum of $12,000 on or before the 17th day of December, 1890, and interest thereon, which was to be paid semiannually. The bond and mortgage provided, among other things, that if any tax or assessment should be imposed upon the premises after the date of the execution and delivery of the same, and remain unpaid for six mouths, the said principal sum, and all arrearages of interest thereon, should, at the option of the mortgagee or his legal representatives, become and be due and payable immediately thereafter, although the period limited in the bond and mortgage for the payment thereof may not then have expired.' On February 18, 1891, by agreement under seal, duly executed by the parties in interest, the time for the payment of the principal sum was extended to the 17th day of December, 1895, upon the express condition and agreement that “nothingtherein contained should in any wise impair the security then held for the said debt." The complaint then alleges that “ taxes and assessments to the amount of $1,500, or thereabouts, have been levied upon the said property, * * * and have remained unpaid for the period of live years or thereabouts, and that more than six months have elapsed since the greater portion of the same became due, and that the defendant, the said mortgagor, has failed and neglected to pay the same, and that the plaintiffs elect to deem the whole principal sum of the mortgage to be immediately due and payable," etc. The defendant Fuller, who is made a party defendant, under the.general clause charging defendants not parties to the mortgage, has demurred to the complaint, on the ground that it does not set forth facts sufficient to constitute a cause of action against him, and in support of his demurrer contended upon the trial that the allegation of default should have specifically stated when the taxes and assessments came, due; that the averment is that the taxes and assessments were due five years or thereabouts before the action was commenced, which would make the default occur before the extension of the mortgage, and that the mortgage cannot be foreclosed for any, such default so occurring. I am unable to agree with the learned counsel for defendant, if by this he means that a mortgagee cannot, after simply extending the time of the payment of the mortgage debt, exercise the right, under the option clause above mentioned, of considering the principal sum immediately due and payable, by reason of a failure on the part of the mortgagor to pay taxes which were liens on the mortgaged premises prior to the extension. The plaintiff is not bound to exercise his option at any particular time. The clause is for his protection, and, whenever the conditions exist which bring the case within the purview of the provision, he is at liberty to exercise his privilege, without regard to the fact that he might have done so before, premising that he has not been guilty of any act which has operated as a waiver of his right It is entirely optional with him, and with him alone, whether the mortgage debt shall be deemed payable under such circumstances. It is certainly to the advantage of the mortgagor that he should not so elect, and his forbearance is not to be urged as a waiver of his privilege, unless associated with acts which indicate an intelligent purpose to renounce it, or which make it inequitable or unconscionable for him to enforce it. The complaint does not disclose any such purpose or acts on the part of the mortgagee. The extension of time for the payment of the mortgage debt was in terms given “ upon the express condition that nothing therein contained should in any wise impair the security then held for the said debt.” It did not operate as a waiver of the right which the plaintiff has exercised. The extension agreement is to be read in connection with and as a part of the bond and mortgage, and the legal effect of the papers thus read together is precisely the same as if the time originally stipulated for the payment of the principal had been the 17th da’y of December, 1895, instead of the 17th day of December, 1890. Every other stipulation and agreement contained in the bond and mortgage continued operative and unimpaired, and the extended time for payment still contained subject to an earlier maturity of the debt, at the election of the mortgagee, whenever conditions existed which, under the option clause, made the election exercisable. The mortgagee had" a right to assume, down to the time that the option was exercised, that the mortgagor would perform the duty he owed him and pay the taxes. He was entitled to rest on this assumption when he extended the mortgage, and it comes with ill grace from those who benefited by his leniency to urge his forbearance as a waiver on his part of so important an element of his security. Furthermore, there is nothing in the complaint which shows that the mortgagee knew that any taxes were in arrears at the time the extension was given, and there is no presumption of law that he had such knowledge. He cannot be said to have waived a right where he had no knowledge of the facts in which it rested. Clauses similar to the one in question have for years been of universal use in bonds and mortgages. They are eminently reasonable, and have been found necessary for the proper protection of the security upon which loans of money so made rest. They are not in the nature of forfeitures in any obnoxious sense, and should be sustained by the courts under the same rules of construction ordinarily applied to contracts in general. The drift of all adjudicated cases upon the subject has been in'that direction, and mortgagors have been relieved from such apparent defaults only where it has been made to appear that the mortgagee has been guilty of some act, or is responsible for conditions, rendering it inequitable and unjust, upon the facts of the case, that the-privileges should be exercised.'

The case under consideration fails to present any such features. But assuming, for the sake of argument, that the defendant’s position is correct,—that, if the taxes in question were due and payable at the time the extension was granted, the plaintiff could not thereafter elect to call the whole mortgage debt by reason thereof, —still the construction he puts upon the complaint that the taxes were so due and payable is entirely too narrow. The allegation is “that taxes and assessments to the amount of $1,500, or thereabouts, have been levied upon the said property hereinabove described, and have remained unpaid for the period of five yéars or thereabouts, and that more than six months have elapsed since the greater portion of the same became due," etc. The allegation may. and more properly does, bear the construction that during the period of five years, and from time to time within such period, taxes and assessments were imposed and became due and payable, which, of course, would cover several years subsequent to the extension. And this construction is further reinforced by the fact, of which judicial notice will be taken, that the statutes of the state require taxes to be levied from year to year. I am of the opinion that this allegation of the complaint should be so construed, especially as the rule of law is that where a matter is capable of different meanings that should be adopted which will support the pleading. Code Giv. Proc. § 519 ; Olcott v. Carroll, 39 N. Y. 436; Marie v. Garrison, 83 id. 14; Lorillard v. Clyde, 86 id. 384. If there is ambiguity in the allegation, the defendant’s remedy was to move for an order requiring the plaintiff to make his complaint more definite and certain. He cannot successfully demur, for, although the pleading may be indefinite and uncertain, it states a cause of action within the rules. The demurrer is overruled, but with leave to the defendant Fuller-to answer within twenty days on payment of costs; otherwise judgment absolute is awarded to the plaintiff upon the demurrer, with costs. Ordered accordingly.


author: Gaynor, J.

text:
    The People, Pl’ff, v. John T. Stephenson, Def’t.

      (Supreme Court, Kings Special Term,

      Filed January, 1895.)

    1. Criminal law—Stay—Reasonable doubt.
    If any assigned error, sufficient, if well founded, to reverse the judgment, gives rise to “a reasonable doubt,” the law makes it the duty of the judge to whom an application for a stay is made, to inquire no further, but to stay the execution of the judgment until the question is settled upon appeal.

      3. Same—Reasonable doubt.
    A statement in a charge, in a criminal action, that the rule that the defendant’s guilt must be established beyond reasonable doubt does not mean that it must be conclusively established, is erroneous.
    Application for a stay of proceedings.

      Benjamin F. Tracy, Almet F. Jenks, and John Vincent, for the motion; Johu D. Lindsay, Asst. Dist. Atty., opposed.
   Gaynor, J.

The law does not cast upon me the duty of concluding or deciding whether error was committed upon the trial, in order to determine whether I must grant the stay applied for. On the contrary, if any assigned error, sufficient, if well founded, to reverse the judgment, give rise to “a reasonable doubt,” the law makes it my duty to inquire no further, but to staj the execution of the judgment until the question be settled upon appeal. Code •Cr. Proc. § 527. I think there is reasonable doubt of the correctness of a vital part of the charge of the learned trial judge. It was the duty of the learned trial judge to instruct the jury, clearly and ungrudgingly, in behalf of the defendant that, “in case of a reasonable doubt whether his guilt is satisfactorily shown, he is entitled to an acquittal.” Id. § 389. This safeguard of persons accused of crime is not peculiar to our law, but substantially existed in the Roman law, and also in the Jewish, which probably constituted the most minute and scrupulous system of criminal jurisprudence which ever existed. Having in mind his duty in the premises, the learned trial judge correctly told the jury that the guilt of the defendant had to be established beyond a reasonable •doubt, and he then added:

“That does not mean beyond all doubt. It does not mean that it shall be conclusively established. It means a higher order of proof than a mere preponderance of evidence. It must be more specific than a mere preponderance of evidence.”

And then he added, in conclusion:

“You must be in such a frame of mind that (after considering all. of the evidence and circumstances) you can say that your reason is satisfied; that there is no reasonable doubt; not that you are «evenly divided, not that you think it possible that it is so, but that there is such a reasonable- certainty that you can say that this defendant is guilty.”

It seems to me that there is reasonable doubt whether the learned trial judge, after charging the proposition which the defendant was by law entitled to the benefit of in all its fullness and expressiveness, did not straightway so reduce and minimize it by what he added as to fall short of submitting it in its full force .and meaning. The rule of reasonable doubt is more often ob-scured than elucidated by attempts to define it. After correctly ■stating the rule, that the prosecution had to establish the defendant’s guilt beyond a reasonable doubt, the learned trial judge immediately added, in warning and caution, which must have affected the minds-of the jury: “That does not mean beyond all doubt. It does not mean that it must be conclusively established.” I think it open to reasonable doubt whether this be not a diminution of the rule,'whereas it will bear no diminution. Is.it so that the guilt of a defendant need not be conclusively established? What does conclusively mean ? In the nomenclature aud terminology of the-law, has it any other than its ordinary meaning ? Aud, in the ordinary understanding of the word, must not the guilt of one accused be conclusively established; that is to say, established as the only conclusion which may in reason follow the facts? It may be-that even this does not exclude reasonable doubt; but, at all events, can anything short of it exclude reasonable doubt? Not only must the guilt of the defendant follow as the only .conclusion of reason before a conviction may be had, but, in addition to that, if a reasonable doubt follow, a conviction may hot be had; so that-beyond reasonable doubt seems to be even stronger than conclusively. It seems to me that a thing is correctly said to be conclusively established when it is the reasonable conclusion, and the-only reasonable conclusion, from the facts; and this, at least must be the case to establish guilt, for, it even a reasonable doubt of guilt result from the facts, guilt may not, under our law, be found as the conclusion. And why not? Simply and only because in that case the evidence is not legally conclusive of guilt, because it leads to reasonable doubt, which by law excludes the conclusion of guilt, or, in other words, prevents guilt from being conclusively established, which but for it would be the case. Professor Green-leaf, in his Treatise on Evidence, which has become a legal classic,, says:

“In civil cases it is sufficient if the evidence, on the whole, agrees ■' with and supports the hypothesis which it is adduced to prove; but in criminal cases it must exclude every other hypothesis but. that of the guilt of the party.”

Arid again:

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

Is not this, at least, saying that guilt must be conclusively established? Is saying that every other conclusion, and also reasonable doubt, must be excluded before guilt may be found, less than saying that guilt must be conclusively established ? The reverse seems to me the case. When we say that we have conclusively proved or shown a thing, we mean that it follows as the-only conclusion that may flow from our facts. We do not mean that we have that actual knowledge which precludes the possibility of error or mistake. The word “conclusively” has never had such a meaning. I may exhibit the word in all its infirmity and weakness by saying that it often happens that things universally believed in and deemed conclusively established in one age of mankind become to a subsequent generation such palpable absurdities that the difficulty is to imagine how they ever appeared credible. In this sense do men use the word, and not as excluding the possibility of error. So that, when the learned trial judge told the jury that the guilt of the defendant did not need to be conclusively established, I do not see that they could have understood him in the exaggerated sense that it did not need to be established beyond the possibility of the defendant being innocent in fact, in spite of appearances» but rather that they understood it in the sense in which we ordinarily use it. It is true that the learned trial judge told the jury in the same connection that beyond a reasonable doubt “ means a higher order of proof than a mere preponderance of evidence,” and that it must be more specific than a mere preponderance of evidence;” but this fixed no rule or standard for the jury, and may have tended to perplex them. And it seems to me that the concluding words of the learned trial judge did not restore to the rule the force of which he had already stripped it. He told the jury that it is enough if, upon a consideration of all thé evidence and circumstances, they are in such a frame of mind that they can say that their reason is-satisfied ; that there is no reasonable doubt; and then finally added: “Hot that you are evenly divided; not that you think it possible that it is so, but that there is such a reasonable certainty that you can say that' this defendant is guilt.” Instead of seeing anything in this tending to a just definition of the meaning of reasonable doubt, it seems to me that it only detracts from the true, obvious, and forceful meaning which the words themselves convey. The rule of “ reasonable certainty ” which the-learned judge lays down as excluding reasonable doubt seems to me questionable. The rule of reasonable certainty may be applied by juries in civil actions, because the certainty required in such actions does not exclude the existence of reasonable doubt. In a civil action it is enough that the jury be reasonably certain, by reason of a preponderance of evidence, which does not mean that they must have no reasonable doubt, no doubt founded in reason. But in a criminal action the jury may not convict because-on the whole they are reasonably certain of guilt. On the- contrary, to convict, they must be without a reasonable doubt, even though there be a clear preponderance of evidence on the side of guilt. There seems to be a question concerning the punctuation in a sentence of the learned trial judge above quoted; but if we read it that the jury must be in such a frame of mind that they, that “ you can say that jour reason is satisfied that there is no reasonable doubt,” without any stop after the word satisfied, I still fail to see in it any definition of reasonable doubt by which the grave previous detraction from the just meaning of the words may be deemed nullified or withdrawn.

I have looked into this case with all the more care because it is one in which it is not less important that all the forms and appearances of justice be carefully observed than that justice itself be done. The defendant, a captain of police, was convicted of receiving two baskets of peaches for refraining from doing his official duty. It is therefore wholesome that I should not altogether ignore the. statements that others who are his superiors are without prospect of punishment or reprobation, though they stand accused, or indeed confessed, of having received large sums of money, even. hundreds of thousands of dollars, as gifts from individuals for having performed official duty, or for the way in which it was performed. If there be even in casuistry any distinction between receiving private gifts for doing official duty, or for not doing it, by any public officer, whether governor, judge, or police official, the moral sense of civilization has never perceived, much less tolerated it. The circumstances surrounding this defendant’s case make manifest the grave necessity of observing every form and appearance of justice before he be finanlly imprisoned, lest his ■conviction, affording a disagreeable contrast, prove more demoralizing to society than his acquittal would have been; for, through mazes of sophistry and masses of immaterial facts and suggestions, the aggregate mind goes straight to the mark.

Let the certificate be prepared ; bail to be fixed on notice. Application granted.


author: Parker, J.

text:
    In the Matter of the Application by the Board of Railroad Commissioners for a Writ of Mandamus.

      (Supreme Court, Ulster Special Term,

      Filed January, 1895.)

    Free passes—Railroad commissioners.
    Section 5, art. 13 of the Constitution, which went into effect on January, 1895, does not prohibit railroad commissioners from accepting passes from the secretary of state providing for transportation while engaged in public business.
    Application by the board of railroad commissioners for a writ of mandamus to compel railroad companies to carry officers and ¡agents of. the railroad commission on passes signed by the secretary of state.

      John D. McMahon, for the motion; W. E. Kisselburgh, Jr., Dep. Atty. Gen., opposed.
   Parker, J.

By chapter 353 of the Laws of 1882 the legislature -created a board of railroad commissioners, and defined and regulated its powers and duties. In addition, it assumed -by that act the authority to assess upon the railroads of this state a sum not to exceed $50,000 a year to defray the salaries of the commissioners, and pay the necessary expenses of the board. By the same act it undertook to provide that, in addition to the $50,000, the actual and necessary cost of transportation upon all railroads actually visited or inspected by the commissioners, their ■officers, clerks, experts, and agents in the course of a due performance of the duties enjoined by law should be borne by the railroads so visited or inspected. To accomplish this result the statute provided that—

“ In the discharge of the duties of their office they should be ■transported over the several railroads in the state of Hew York free in charge, upon passes signed by the secretary of state; they may employ and take with them experts or other agents whose ¡services they may deem to be temporarily of importance, and who shall also be transported while on such duty, free of charge, upon ¡passes signed by the secretary of state.”

From, the time of the appointment of the railroad commissioners under the act referred to, down to January 2, 1895, the commissioners have proceeded in the discharge of the duties by law commanded ; the sums necessary to pay the expenses of the board, not exceeding $50,000 a year, have been assessed upon the several railroads in this state by the comptroller, and the assessments paid ; the secretary of state has issued such passes, in pursuance •of the act, as the railroad commissioners have requested, and the passes have been recognized by the railroads affected by them. But the application made to the secretary of state January 2,1895, to issue passes in accordance with the statute, was refused, the reason assigned being that section 5 of article 13 of the constitution of the state of New York, which went into effect January 1, 1895, prohibits the issuing of such passes. It reads :

“ No public officer, or person elected or appointed to a public office, under the laws of this state, shall directly or indirectly ask, demand, accept, receive or consent to receive for his own use or benefit, or for the use or benefit of another, any free pass, free transportation, franking privilege or discrimination in passenger, telegraph or telephone rates from any person or corporation, or make use of the same himself or in conjunction with another.”

In view of the statute to which we have referred, the limitation of the provision commanding a public officer not to accept or receive a pass or free transportation “for his own use or benefit,” is significant. The office of the word “own,” when following a possessive pronoun, is to emphasize or intensify the idea of peculiar or personal interest. It suggests, what was undoubtedly the intention of the framers of this constitutional provision, that the practice of giving passes to public officers for their individual use, and to save them from personal expense, should be stopped, but the power of the legislature to provide for the necessary traveling and other expenses of public officers while engaged in public business should not be abridged. This provision of the constitution must not only be construed in the light of existing public statutes, but it will be presumed that it was drafted with full recognition of them. Section 168 of the general railroad law provided that neither the rail-Toad commissioners, nor their secretary, clerks, agents, emplo}res, or experts should accept, receive, or request any pass from any railroad in this state for themselves or for any other person. Section 169, on the other hand, declared that such officers, in the discharge of their official duties, should be transported over the railroads of this state free of charge, upon passes signed by the secretary of state. In short, the statute prohibited the public officers named from accepting passes for their own use, but authorized them to use a pass issued by the secretary of state for the public use. So this provision of the constitution prohibits these as well as all other public officers from accepting free passes for their own use or benefit, but it does not prohibit them from accepting passes from the secretary of state providing for their transportation while engaged in public business, as it certainly would do if it were intended to annul the provision of section 169 relating to that subject. Other reasons might be presented tending to show that the provisions of section 169 are not condemned by the section of the constitution relating to passes, but, as the one given seems to be fully adequate, a further discussion will not be indulged. A peremptory writ of mandamus will issue.

Application granted.


author: Beekman, J.

text:
    James C. Bayles, Pl’ff, v. Frank F. Vanderveer et al., Def’ts.

      (Supreme Court, New York Special Term,

      Filed January, 1895.)

    1. Corporations—Directors—Neglect of duty.
    The directors of a corporation are not chargeable with neglect of duty in refusing to accept a beneficial proposition, conditioned on their resignation.
    3. Conspiracy—When action for lies.
    An action for conspiracy cannot be maintained, unless actual damage results therefrom to plaintiff. ,
    Demurrer to the complaint.

      Edward A. Sumner, for pl’ff; Hennessy, Creedon & Rowan, for def’t Ryan.
   Beekman, J.

The defendant Yincent A. Ryan has demurred to the complaint on several of the grounds authorized by section 488 of the Code of Civil Procedure. Two of these grounds are (1) That a cause of action against all of the defendants has been-improperly united with a cause of action affecting only some of the defendants; (2) that the complaint does not state facts sufficient to constitute a cause of action. This court, at special term,, has already sustained a demurrer to this complaint interposed by the defendant Yatiderveer on the first of the grounds above stated, and this decision should be taken to be the law of this case and followed until reversed by the appellate court. I think, however, that the complaint also fails to state facts sufficient to constitute a cause of action against the defendant Ryan, and that the demurrer should be sustained on that ground. The gist of the action is conspiracy. Stripping the complaint of all verbiage, the following is a concise statement of the plaintiff’s alleged grievance : The plaintiff is the owner of 1,495 shares of the capital stock of the Cape Fear Harbor & Coal Company, a foreign corporation, duly incorporated under the laws of the state of North Carolina. The total issue of stock is 1,508 shares, of the par value of $100 each. The defendants, other than Reckless, own one share each. The defendant Reckless owns two shares. The board of directors consists of the plaintiff and all of the defendants. The plaintiff and two of the defendants reside in New Jersey. The other defendants reside in the state of New York, in which latter state substantially all -of the meetings of the stockholders and directors have been held and the business of the corporation has been transacted. The plaintiff is the president of the corporation. The defendant Ryan is its secretary, and the defendant Hawkins is its treasurer. By its charter the principal office of the corporation is required to be in North Carolina, but branch offices are authorized in any other state or country. The complaint is otherwise silent as to the terms of incorporation. The only asset of the corporation which is mentioned is a block of 1,509 shares of the Brunswick, Western and Southern Bailroad of North Carolina, which is represented to be a controlling interest. The plaintiff is also president of the company. The interests of the two companies are therefore closely associated. The plaintiff alleges that he undertook to procure the money necessary to “float and finance and put into active operation both of said companies,” and that “ he forthwith secured promises to furnish a part of the $350,000, more or less, and to so float and finance and put into operation said companies.” If this allegation has any relevancy at all, it must be assumed to relate to the subsequent statement that on or about the 1st day of September, 1894, the plaintiff concluded an arrangement with certain persons in this city for the immediate equipment and operation of the two companies, which arrangement gave promise of par value to all of the stock of the same. The complaint does not state the particulars of the arrangement, except that it was conditioned upon an immediate change of directors, by which the defendants should be replaced by others “ to be named by and to control for said persons with whom those negotiations were concluded; that otherwise said negotiations should fail.” This proposition - was laid before the defendant directors of the Cape Fear Harbor & Coal Company, and their attention was called by the plaintiff to the great advantage which it offered to the corporation, and to the necessity of electing other directors in order to satisfy the above condition exacted by the negotiators. The directors refused to consider the matter, and, as the complaint states, “when the plaintiff himself moved the resignation of said directors, with the election of their successors, they sat mate, and refused to second said motion.” The plaintiff alleges that this act, or failure .to act, was pursuant to a conspiracy between the defendants to cheat and defraud him, and in support of his charge, states that, when he mentioned the favorable result of his negotiations to the defendant Yanderveer, the latter falsely asserted a claim to $62,500 worth of the plaintiff’s stock, and demanded a transfer of the same to him, and made other claims against him, and insisted that if his demands were refused he would prevent a meeting of the company, or, if there were a meeting, he would prevent the consummation of the negotiations in question, and that the directors would act as he instructed. The plaintiff instantly refused to accede to these demands. The complaint further states that the certificate of stock representing the shares held by the plaintiff was in Yanderveer’s possession. It does not appear why this was so. The fact only is stated, with the averment that the certificate was held subject to plaintiff’s demand, and that Yanderveer had, no interest in or lien upon it. The plaintiff immediately endeavored to secure possession of it, but failed, and he alleges that the defendant Yanderveer and the defendant McPherson, to whom the former said he had delivered the certificate,purposely obstructed him in his efforts to resume possession of his property. The particular need for the certificate at that time was that the plaintiff might transfer certain shares to the persons with whom he had made the contingent arrangement for capital above mentioned,, in order to qualify them for election as directors. Failing in his effort to obtain the certificate, the plaintiff made written assignments to these persons of the shares he intended to transfer, which assignments were tendered by them to the defendant Ryan, who-was the secretary of the company, and a demand was made upon him to issue certificates of stock of the company accordingly. At first Ryan assented and appointed a time when he would do so, but subsequently he refused, stating that in the meantime he had seen the defendant Yanderveer, but the complaint is silent as to what, if anything, passed between the two .on the subject. The plaintiff also alleges that he is the owner, by assignment from the defendant Hawkins, of a contract for land in North Carolina necessary to the railroad company above mentioned for terminal purposes; that said contract was in the possession of the defendantYanderveer, who refused to surrender it; that the defendant Hawkins, upon conferring with Yanderveer, refused to execute to the plaintiff another assignment, and that both of them were informed that the paper was necessary in order that the negotiations above referred to might not fail. There is also an allegation that the directors of the Cape Fear Harbor & Coal Company had issued a call for a meeting of stockholders to elect a board of directors, and that, owing to certain by-laws of the company, which the plaintiff characterizes as pretended by-laws, and which he else where charges to have been fraudulently devised or manufactured by the defendants or some of them, the election will be determined by a majority of the votes cast, without regard to the number of shares held by the voting stockholders, and that the defendants propose through these means to re-elect themselves, and thereby prevent the consummation of the said negotiations. He also alleges that the meeting was otherwise irregularly called. He finally sums up the case by alleging that, by reason of the conspiracy, he has been injured to his damage in the sum of $100,000, for which he demands judgment.

The facts I have enumerated are set out in the complaint as elements of the conspiracy charged, and are found in paragraphs severally indicated by letters of the alphabet, as specifications of the acts constituting the fraudulent combination and its execution. Assuming the material facts stated in the complaint to be true,, as we must for the purposes of the demurrer, the plainti ff may justly claim to have been outrageously treated by the defendants or by some of them, but this is far from justifying the claim that the wrong committed is an actionable one. The substance of the charge is that the various acts assigned in the complaint were-done to aid the defendant Yanderveer in his efforts to extort from the plaintiff $62,500 worth of his stock, but it appears that they failed to accomplish this purpose, as the plaintiff has refused to recognize the claim or to yield to the demand. If the claim for damages is based upon the loss resulting from the failure of the defendants, as directors of the company, to accept the propositions made to supply the company with additional capital, it will be recalled that these propositions involved the resignation of the defendants, ana, whatever may have been their moral obligations in view of the great advantage to the company which would so result from their resigning, they were within their legal rights when they refused to consider a proposition which involved any such requirement. Cook, Stock, Stoclch. & Corp. Law (3d. Ed.) § .711. The plaintiff seems to suppose that, because he held almost the entire capital stock of the corporation, the directors were bound,, in the performance of their duties, to comply with any request he might make. How much mistaken he is in this theory will appear from the case of Beveridge v. Railroad Co., 112 N. Y. 1 20 St. Rep. 962. Where, then, is the damage to-the plaintiff? “A. simple conspiracy, however atrocious, unless it results in actual damage to the party against whom the conspiracy is aimed, is not the subject of a civil action.” Buffalo L. Oil Co. v. Everest, 30 Hun, 586. In the case of Verplanck v. Van Buren, 76 N. Y. 259,. Folger J., says that in such action the evidence of a technical conspiracy is not essential. The damage is the cause of action, and the conspiracy mere matter of aggravation.” See, also, Place v. Minister, 65 N. Y. 89. In the case of Lee v. Kendall, 56 Hun, 610 ; 32 St. Rep. 165, the above definition is followed, with the-further statement that proof of conspiracy is only essential when a verdict is demanded against two or more defendants, and that the practical importance of such proof arises from the rule which thereupon permits the plaintiff to give in evidence the declarations-of co-conspirators as against each other while engaged in furthering the conspiracy. An actionable wrong must exist, and, if that-wrong has been perpetrated under an agreement or partnership of two or more persons, the person wronged may avail himself of a, form of action which offers him certain facilities of proof.

In piecing together the diffuse and in many respects vague and uncertain allegations of the complaint, I have been unable to find that the plaintiff has been damaged in any respect for which he can find relief in this action under what seem to inc to be well-settled principles of law. If the directors of the company had been bound to accept the propositions made by the persons with whom plaintiff had been negotiating, their refusal might then have been actionable ; but the resulting damage would have been damage to the corporation, and the cause of action would have been that of the company. If the corporation is under the control of the guilty parties, any stockholder, on behalf of himself and the others, may sue the delinquent directors, but the corporation must be a party defendant, as the suit is really prosecuted in its behalf, and the recovery is for its benefit. Robinson v. Smith, 3 Paige, 222 ; Greaves v. Gouge, 69 N. Y. 154; Brinckeroff v. Bostwick, 88 id. 52. Such an action, it seems, may be prosecuted in this state, even where the corporation is a foreign one. Prouty v. Railroad Co., 1 Hun, 665. The plaintiff has not assumed to prosecute the defendant on this theory, nor does it appear from the complaint that he could successfully state a cause of action in its favor, at least so far as the principal charge of the complaint is concerned. He is evidently the victim of the not infrequent occurrence of a hostile majority in a board of directors, controlled by men who were unknown to him when he acquired his stock. His remedy must "be sought in the methods provided by law, by which directors may be changed or be held responsible for their fraudulent ■acts. That the pleader was conscious of his difficulty is apparent from the impression which the pleading, as a whole, leaves upon the mind that he was in pursuit of a statement of actionable damages, which was constantly eluding his grasp. The charges against the defendant Eyan are especially vague. His acts of ofíense are that he refused to transfer stock of the plaintiff without the production of the original certificate, and that he was one of the directors who refused to vote for the proposition which involved his resignation from the board. ' It is true that these acts are ■charged to have been done in furtherance of the combination alleged to aid the defendant Vanderveer in his efforts to compel the plaintiff to give up a portion of his stock, which, as we have seen, was unsuccessful; but the intent is felt a matter of interference, from the statements of Vanderveer that he could control the other directors. For the reasons I have stated, I am of the ■opinion that the complaint fails to set out a cause of action against the defendant Eyan. The demurrer is therefore sustained, and judgment ordered thereon for the defendants, with costs, with leave to the plaintiff to amend his complaint on payment of costs. Demurrer sustained, and judgment ordered for defendants, with leave to plaintiff to amend on payment of costs.


author: Mayham, P. J.

text:
    Henry W. Sage et al., App’lts, v. David G. Burton, Resp’t.

      (Supreme Court, General Term, Third Department,

      Filed February 12, 1895.)

    Payment—Check.
    The delivery by the debtor to the creditor’s duly authorized' agent of a check payable to the creditor for the amount of the debt, which is subsequently paid by the bank on which it is drawn, is a payment of the debt, though the age’nt without authority indorses (the check and applies the proceeds to his own use,
    Appeal from a judgment entered on a verdict in favor of defendant, and from an order denying a motion for a new trial.

      Tracy & Cooper (James Fenimore Cooper, of counsel), for app’lts; George H. Stevens, for resp’t.
   Mayham, P. J.

This action was brought by the plaintiffs to recover the amount of the balance of an account accruing in favor ■pf the plaintiffs for some kind of ■ merchandise. The answer in effect admitted the accruing of the account and its correctness, but set up payment in the • defendant’s check given by the defendant to one Abbott on account of such indebtedness, payable to the order of the plaintiffs. Abbott had been for along time in the employ of the plaintiffs, and was salesman for them, and at times collected accounts for them, and received checks of customers for accounts due the plaintiffs. He had also made settlements of accounts with customers of the plaintiffs, and on such settlements abated from the amount claimed, and such settlements and abatements had been acquiesced in by his employers. The proof showed on the trial of this action that the defendant settled the account in suit with the agent Abbott, who on such settlement made a reduction from the amount claimed of $100, •and took the defendant’s check for the balance of $234.11, payable to the order of the plaintiffs, and at the same time receipted the bill of the plaintiffs in their firm name in full for that amount. The proof also shows that the check was subsequently indorsed in the name of the plaintiffs’ firm, and was paid at the bank out of the funds of the defendant. The indorsement of the firm name of the plaintiffs on the check was made by Abbott without the express authority of the plaintiffs, and the money received by him on the same from the bank, but the same was not paid by him to the plaintiffs, and they were never in fact paid the amount of their bill. The main question in this case and the one upon which the rights of the parties turned in the trial court, and must turn here, is whether the act of the agent, Abbott, bound the plaintiffs so that, under the circumstances of this case, the giving of this check by the defendant, and its subsequent payment by the bank, amounts to a payment by the defendant so as to discharge him from this debt. It is unnecessary for us to consider here the right or power of Abbott to adjust amounts due on claims of plaintiffs and make reductions on the same, as that seems to have been conceded on the trial by the plaintiffs’ consent to reduce the amount of their claim to the sum represented by the check.

There was on the trial a sharply contested question of fact as to whether or not the plaintiff Dean Sage told the defendant, in the presence and hearing of Abbott, before the transaction in question, that his dealings with the plaintiff’s firm must be with Abbott. The defendant testified upon that subject as follows: “ He [Sage] then told me, in the future I must deal with Mr. Abbott individu- • ally in buying, adjusting, and settling.” This is contradicted by Sage, and the learned trial judge left it to the jury to say whether this general and sweeping authority was given to Abbott by the plaintiff Sage, and was relied upon by the defendant as authority for him to settle all claims between him and the plaintiffs with Abbott. That was, we think, a proper disposition of that disputed question. It is true that payment of this check to Abbott was not in fact payment to the plaintiffs, and if Abbott improperly indorsed the check in their name, and appropriated the proceeds to his own use, it would in effect be a larceny from the plaintiffs, and they would be the losers to that amount. But so long as the defendant was authorized to make settlements with and payments to Abbott of all claims in favor of plaintiffs against him, the giving of the check and the subsequent payment of the same by the bank out of the funds of the defendant was payment by the defendant so as to discharge him of liability to the plaintiffs. While a check of the debtor does not until paid, ordinarily, amount to payment of the debt, it does after payment of the check extinguish the debtor’s liability, if the same is paid to the creditor, or to the agent of the creditor authorized to receive the check of the debtor, for the reason that after he has parted with the check to the creditor, or his agent, he lias no further duty in the matter, except to see that funds are in the bank on whicli it is drawn for its payment; “ A check given in payment, and afterwards paid, becomes a valid payment as of the date of its receipt.’’ 18 Am. & Eng. Enc. Laws, p. 147, and cases there cited. The plaintiffs, having authorized the agent to receive the check, and thus removing it beyond the control of the defendant, took, as between them and the defendant, the risk of the acts of their own agent; all the risk that the defendant took in the matter was that of establishing that the agent had power and authority to-take the check on settlement, and that the drawer had funds in the bank with which to pay it on presentment. He did not even take the risk of a forged indorsement. That probably was the risk of the bank. The jury, under the charge of the court, have, we think, found upon sufficient evidence that the agent in this matter was authorized by the principal to receive- this check, and that, coupled with their finding of payment of the, check, operated to discharge the defendant’s liability. Carroll v. Sweet, 128 N. Y. 20-22; 87 St. Rep. 868. If it be held that Abbott in this transaction was not the alter ego of the plaintiffs, and had noauthoritv to indorse this check yet, if he was authorized by the-plaintiffs to receive this check from the defendant, any misappropriation of its proceeds by him is at the risk of the party who set him in motion and put it in his power to perpetrate the wrong. Such party must suffer, rather than the party which is in no. wise accountable for, and has no control of, the perpetration of the wrong.

We have examined the exceptions taken by the plaintiffs to the various rulings of the trial judge, and his charge, and see no error for which this judgment can be reversed. Judgment affirmed, with costs.

Herrick, J., concurs; Putnam, J. dissents.


author: Herrick, J.

text:
    In the Matter of the Application by John W. Olmstead for a Writ of Mandamus.

      (Supreme Court, Albany Special Term,

      Filed March 14, 1895.)

    1. Taxes—Sale—Vacation.
    Where land, hid in by the state at a tax sale, is afterwards sold and conveyed to a third person, such grantee is not within section 30, chapter 711 of 1893, and cannot make an application for the cancellation of such tax sale.
    3. Same.
    Such grantee is not an assignee of the purchaser, within the meaning of' the said section, and his only remedy, in cáse the title of the state to such land shall fail, is that given by section 6 of 1 R. S. 198.
    Application for writ of mandamus for cancellation of a tax sale.

      Steadman, Thompson & Andrews, for the application; T. E. Hancock, Atty. Gen., opposed.
   Herrick, J.

At various state tax sales held between the years 1877 and 1885, inclusive, several lots of land located in the county of Saratoga were exposed for sale by the comptroller of the state for nonpayment of taxes, and were bid in by the state at such tax sales, and deeds therefor were executed and delivered to the state of New York by the comptroller, and the county of Saratoga was credited with the amount of such sales, which appear to have amounted to the sum of $2,069.96. On or about the 14th day of December, 1891, all the right, title, and interest of the state in said lots were conveyed to John W. Olmstead, by the state of New York, the deed reciting that such conveyance is made by virtue of a provision of section 8 of chapter. 283 of the Laws of 1885, as amended by chapter 475 of the- Laws of 1887, and upon the recommendation of the forest commission of said state, with the advice of the attorney general of said state. The laws referred to authorize a conveyance of portions of what is known as the “ Forest Preserve of the State,” upon the recommendation of the forest commission, coupled with the advice of the attorney general. On the 26th day of December, 1893, the deputy comptroller of the state, upon the application of said Olmstead, canceled the tax sales of the lots in question, and directed “the refunding to John W. Olmstead of the sums due by reason thereof." The amount paid by John W. Olmstead to the state upon receiving the deed above described was the sum of $1,551. Thereafter the said Olmstead applied to the present comptroller, James A. Roberts, and demanded the payment of the sum of $2,-069.96, with interest from the 26th day of December, 1893, which the comptroller refused to pay, and an application is now here made to this court that a peremptory writ of mandamus issue, directing the comptroller to draw his warrant upon the state treasurer, for the payment from the state to the said John W. Olmstead of the sum of $2,069.96, with interest from the 26th day of December, 1893. The relator, Olmstead, having paid $1,551 for lands purchased by him from the state, now, upon the failure of the state’s title, asks that there shall be refunded to him, not the amount paid by him upon his purchase, but the amount that the state paid therefor upon its purchase of said lands, by giving credit to the county of Saratoga for the amount due from the state to the said county for state taxes. A bare statement of the facts shows that there is no equity in the relator’s claim, and that he is seeking to obtain from the state money he has never expended, under the provision of a statute intended to afford equitable relief to persons purchasing at tax sales, who have acquired defective tax titles, by refunding to them the moneys expended by them in making such purchases.

The statute under which he claims to be entitled to reclaim the money is section 20 of chapter 711 of the Laws of 1893. This section provides for the cancellation of tax sales by the comptroller. The first part of the section provides for such cancellation in the event of the discovery of an illegality before the delivery of the conveyance, and another portion of the section provides for the cancellation where the discovery of the illegality of the sale is made- after the delivery of the conveyance. The latter portion reads as follows:

*! If he shall not discover that the sale was invalid until after a conveyance of the lands sold shall have been executed, he shall on application of any person having any interest therein at the time of the sale, on receiving proof thereof, cancel the sale, refund ■out of the state treasury to the purchaser, his representatives or assigns, the purchase money and interest thereon, and recharge the county from which the tax was returned, with the amount of pureliase money and interest from the time of the sale, which the county shall cause to be levied and paid into the state treasury ; on any such application the comptroller may appoint a commismissioner with like powers and duties as in case of an application for redemption."

Under this provision it seems to me that the cancellation of the tax sale in question here by the comptroller was illegal; that the comptroller had no jurisdiction to make it. The power attempted to be exercised by the comptroller is purely a statutory power, and must be executed in strict compliance with the statute, and it will be observed that such cancellation is to be made “ on application of any person having any interest therein at the time of the sale.” This means the tax sale, not any subsequent conveyance by the purchaser at such tax sale. There can be no claim in this case, I think, that the relator, Olmstead, had any interest in the lands in question at the time of the sale, or was a purchaser thereat. It has been decided under this and similar statutes that the only person who can make an application for such cancellation is the purchaser at the tax sale. People ex rel. Witte v. Roberts, 144 N. Y. 234; 63 St. Rep. 100. While it has been held that the assignee, or the personal representative of the purchaser, is entitled to receive the money to be refunded upon such cancellation, and that a grantee of the purchaser is an assignee within the mean ing of the statute. People ex rel. Ostrander v. Chapin 109 N. Y. 177 ; 15 St. Rep. 76, yet that does not affect that portion of the statute which requires the application to be made by a person interested in the premises at the time of the sale. In this case the purchaser was the state. The state has made no application for a cancellation, and, the purchaser having failed to make any application, the act of the comptroller in canceling such sale was without jurisdiction and void. But further than that I do not think the statute in question is applicable to a case like the one now under consideration. It was intended for the relief of parties purchasing property at tax sales, when the title proves defective, to enable them to recover back the amount of money paid by them at such tax sales. Here the state has bid in the property in question, in default of purchasers. Under the statutes of the state it has become a part of the forest preserve, and has been conveyed by the state to the relator, not as an assignment of a-tax title, but under the laws in relation to the forest preserve. The relator is not an assignee of the purchaser at a tax sale, within the meaning ‘ of the statute. The relator has paid no taxes. He is not the assignee of any one who has. The statute, as before stated, was intended to afford equitable relief to boria fide purchasers. It was not intended to afford opportunities for swindling the state. For the money he has actually expended the relator has his remedy under section 6, art. 1, tit. 5, c. 9, pt. 1, of the Revised Statutes (Birdeye’s Ed., p. 1781, § 6), reading as follows :

“ Whenever the title of the people of this state, to lands granted under its authority shall fall, and a legal claim for compensation, on account of such failure, shall be preferred by any person entitled thereto, it shall be the duty of the commissioners to direct the payment of the original purchase monies, which may have been paid to the state by such person, with interest at the rate of six per cent., from the time of such payment, to be paid out of the treasury, on the warrant of the comptroller.”

That statute affords all the relief to which the relator is honestly entitled. The present application seems to me to have no foundation in either law or equity, but to be simply a bald attempt to obtain from the state money that it has never received, which the relator never paid, and to which he has neither a legal nor a moral claim. The application is denied, with costs.


author: Van Brunt, P. J.

text:
    New York Insulated Wire Company, App’lt, v. Westinghouse Electric and Manufacturing Company, Resp’t.

      (Supreme Court, General Term, First Department,

      Filed March 15, 1895.)

    Pleading—Amended answer.
    Upon a motion for the severance of the action and entry of judgment for the amount claimed to be admitted to be due by the answer, the original answer cannot be resorted to for the purpose of explaining the allegations of the amended answer.
    Appeal from an order, denying a motion for the severance, of the action and entry of judgment for the amount claimed to be admitted to be due by the answer.

      W. B. Putney, for app’lt; Paul D. Cravath, for resp’t.
   Van Brunt, P. J.

The summons aud complaint in this action were served on the 16th of August, 1894, and on the 12th of November the defendant served an answer. On the 24th of November a notice of motion for a severance of the action and for a judgment pf $17,079.24, claimed to be admitted to be due in said answer, was served; said notice being returnable on the 3d of December, the last day for the defendant to serve an amended answer. The defendant asked that the motion stand over until the following day in order that it may serve its amended answer. This application was granted, and the next day the defendant, pursuant to such leave, served and submitted to the court such amended answer, and at the same time served upon the plaintiff an offer of judgment for $24,000. The original answer and the offer to allow judgment are contained in the papers handed up upon this appeal. It is undoubtedly true that the plaintiff was entitled to the relief demanded by this motion under the original answer. .But the amended answer contains no such specific-admissions as were embraced within the original answer, and the court cannot determine, upon an inspection of the amended answer, the amount which is admitted to be due. It is urged, however, upon the part of the apppellant, that recourse may be had to the original answer for the purpose of explaining the allegations contained in the amended answer. But we think that this cannot be done, as it is a well-settled rule of pleading that where an amended pleading is served it takes the place of the original pleading, and the action proceeds as though the original pleading had never beenserved. Such original pleading,under such circumstances forms no part of the record, and does not set forth the issues which are involved. It is diffcult, therefore, to see what bearing or relevancy the original answer can have upon a motion of this description ; and upon reading the order in this case it would seem not to have been considered by the court below. The summons and complaint and the amended answer are referred to in definite terms, but, although the words, “and upon all the papers and proceedings herein,” are inserted in the order, it is manifest that the court did not consider the original answer in determining the application ; and, if it did, it would have been error. Neither can the plaintiff’s application receive any support because of the offer of judgment which is contained in these papers. The only way in which the plaintiff can avail himself of an offer of judgment is set forth in the Code. It is not upon such a motion as the one now under review that any use is permitted of such an offer. If the amended answer in question was served in bad faith, simply for the purposes of delay, the Code points out the remedy which a party aggrieved is entitled to pursue. He may have it stricken out upon motion, and then the action proceeds upon the original pleading. No such course was taken in the case at bar, and we no means of aiding the plaintiff in procuring the judgment which he was entitled to under the original answer, and to prevent the recovery of which the amended pleading seems to have been served. The order appealed from must be affirmed, with $10 costs and disbursements.


author: Finch, J.

text:
    Arthur Hopson Sawyer, by Guardian, etc., Resp’t, v. William Cubby et al., App’lts.

      (Court of Appeals,

      Filed May 21, 1895.)

    1. Will—Suspension of alienation.
    The statutory test of what constitutes a suspension of the power of alienation as to real estate, and of absolute ownership as to personal property, is that it occurs only when there are no persons in being by whom an absolute estate in possession can be conveyed.
    2. Same.
    A contingency, dependent upon a future event which may or may not occur, does not necessarily make a legacy inalienable.
    Appeal from an order of the general term of the supreme court in the fourth judicial department, which reversed a judgment in favor of defendant entered upon the report of a referee and ordered a new trial.
    This action was brought to have the fifth paragraph of the will of Jennie Sawyer, deceased, declared void, and probate of said will, .so far as it relates to said paragraph, canceled and revoked, and that William Cubby, the legatee named therein, be adjudged to have failed to perform the conditions of said bequest, and that the executors be enjoined from paying any portion of said estate to said Cubby.

      Walter Welch, for app’lt; Frank Hopkins, for resp’t.

      Reversing 58 St. Rep. 68.

   Finch, J.

The general term have reversed the judgment of the trial court which upheld the legacy in dispute, upon the ground that the bequest, as made in the will, worked a suspension of the absolute ownership of personal property for a longer period than two lives in being. The question is wholly one of construction. With the peculiar and unusual contracts which led to the bequest by the testatrix we have nothing whatever to do except so far as it may possible throw light upon testamentary intention. The two clauses in the will out of which the controversy springs are as follows:

“’Fifth. In the event that William Cubby, of Syracuse, N. Y., shall promptly pay all assessments, dues aud premiums which during my life, shall become due and payable on my insurance on my life, in any insurance company, association or organization, which insurance is or shall be for the benefit of and payable to my adopted son, Arthur Hopson Sawyer, and in the event further that such insurance, or some part thereof shall be actually paid to said Arthur Hopson Sawyer one year from my decease, then, in those events, I give, devise and bequeath to said William Cubby a sum of money which shall be equal in amount to the insurance moneys so paid to said Arthur Hopson Sawyer, not exceeding, however, the sum of $6,000. Sixth. All the rest, residue and remainder of my property and estate, of every name and nature and wheresoever situated, I give, devise and bequeath unto my ex-ecutor hereinafter named, in trust, however, to manage, control, hold and keep the same invested in such securities and property ras to my executor shall seem proper, and to pay the income therefrom annually or oftener, if it shall seen proper to my said executor, to my adopted son, Arthur Hopson Sawyer, until he shall arrive at the age of 35 years; and upon his arriving at the age of 35 years to pay, and I direct my said executor to pay, the principal of such rest, residue and remainder over to said Arthur Hop-son Sawyer.”

Upon these two clauses the general term held that the legacy to 'Cubby did not vest in him at the death of the testatrix in possession or in the interest, but was a gift both future and contingent. That is probably a correct conclusion, and I shall assume it as the most favorable view for the respondents, and give them the benefit of their contention in that respect. The inference which the -general term drew from the consequent character of the bequest as being both contingent and future is that the ownership is left abeyanee and for a period not measuréd by lives. I think that is not a correct conclusion. The statutory test of what constitutes a suspension of the power of alienation as th real estate, and of absolute ownership as to personal property, is that it occurs onty when-there are no persons in being by whom an absolute estate in possession can be conveyed. Murphy v. Whitney, 140 N. Y. 545; 56 St. Rep. 510. Tried by that test I think we shall find that there never was a moment after the death of the testatrix when a good title in present possession might not have been given to the legacy, and the property covered by it, save only during the continuance of the trust created by the sixth clause. Certainly the interest of Cubby, although future and contingent, vested as a right and so was not inalienable by him, for even in the case of lands expectant estates,which include those which are future and contingent,, are declared by the statute to be descendible, devisable and alienable in the same manner as estates in possession. (R. S. part 2', chap. 1, title 2, art. 1, § 35. Cubby could sell his right at any moment. If he sold to those holding the fee of the land, or the absolute ownership of the personalty, subject to its being in part divested by the happening of the contingency, he with such persons could give a perfect and absolute title, and if he joined with them in the sale the purchaser would have an absolute right of present possession, save only for the suspension accomplished by the trust. Whether that violated the statute becomes the principal question. The trust covered the entire residue and remainder of the property; the whole of it except the contingent estate bequeathed to Cubby. The legal estate in that residue vested in the trustee for the purpose of the trust, and since the trustee could not alienate the fund, nor the beneficiary sell his interest, there was of necessity a suspension during the running of the trust; but that suspension was legal and permissible. The duration of the trust by its very terms was limited to the single life of the adopted son Arthur. The limitation of thirty five years was of a period less than his life and wholly within it, because the trust ended at Arthur’s death whether he lived to the prescribed age or not. If he did, the trust terminated during his life; if he did not, it ended, nevertheless, upon his death. It was clearly a trust for the life of Arthur or the shorter period within that life of thirty-five years. The trust, therefore, did not create an illegal suspension, and the moment that it should- end the whole fund would be alienable by persons in being. Let us make every conceivable supposition. Take it Arthur dies ten days after testatrix and before any money has been paid him by the insurance company. The trust ends and the entire estate at once passes. If the construction be that Cubby could take nothing because there could be no payment of insurance to Arthur personally and a payment to his representatives would not fulfill the condition, then, the trust having ended and Cubby’s expectancy having failed, the entire legal estate in remainder would be vested either in the next of kin of Arthur or the next of kin of the testatrix, and their transfer would pass a complete and perfect title and a present right of possession. If we say that Cubby’s right could survive the death of Arthur before pajmient made, then a transfer by him joining that by the next of kin either of Arthur or of the testatrix would again pass a complete and present right. For at the end of the trust, the property, subject, to Cubby’s right in it, would necessarily pass, either by the will to Arthur on his reaching the age of thirty-five, or if he should die earlier would go by his will or descend by the Statute of Distributions in case of his intestacy to-his next of kin on one theory, and to the next of kin of the testatrix on another. We should regard Arthur’s estate as vested and its enjoyment only postponed, since the whole accruing interest is given him, in which event his death before the age of thirty-five would end the trust and vest the propertjr in his legatee or next of kin. Even if it be possible to say that he took no vested estate, but only one conditioned upon his reaching the prescribed age, then his earlier death would again end the trust and the property vest at once in the next of kin of the testatrix, who would take as. the result of partial intestacy following the lapsed bequest to Arthur. So that upon his death, whenever occurring, it inevitably results that a joint transfer by Cubby and by the next of kin either of Arthur or of testatrix, as the construction might be settled, would pass the entire and absolute ownership of the trust fund. Indeed, Cubby’s legacy never went into the trust at all. The moment the contingency of payment happened the legacy vested in him absolutely and escaped any control of the trust. If such contingency did not happen, then there would be no legacy, and his rights would disappear. The test is the inquiry whether always and at any moment after the termination of the trust there were absolute owners of the property who could transfer a good title. The suggestion, seriously urged and deemed important, that the condition of the legacy requiring within a year payment, of insurance to Arthur should be construed as if it read to him and to his heirs and assigns, and that the condition might not be fulfilled within two lives in being, is totally immaterial, for it. does not at all follow that a suspension of ownership resulted. The contingent character of the -estate is one thing; its alienable or inalienable character is quite another. It is not every contingency which works the latter result. The interjected words would not make the legacy inalienable. Cubby conld sell it; his assigns could sell it if he transferred it to them; his next of kin or legatees could do so if he died. The mistake of the decision is in construing a contingency dependent upon a future event which may or may not occur as necessarily making the legacy inalienable. It does not do so. The contingency which works that result is one relating to the persons who shall take, and who either may come into being or gain capacity to take and hold within the prescribed two lives, whereby it happens that there is-no one who can alienate. Here, at the moment of the ending of the trust there always are or will be ascertained persons in being who, grouped together, have the absolute ownership and can sell, and so there is thereafter no suspension. The suspension worked by the trust is for one life or a shorter period. At its termination there is no further suspension, but the absolute ownership vests at once in Arthur or his representatives, ■ and Cubby and these joining can at once transfer an absolute and present ownership.

The cases cited on behalf of the respondents do not hold any different doctrine. In one there was a legacy to a corporation not existent or in being, and to a church upon a special trust to pay off a mortgage where the legacy was necessarily made inalienable in the bands of the legatee. Booth v. Baptist Church, 126 N. Y. 215 ; 37 St. Rep. 79. In another the corporate legatee had mot come into being, and the executors held in trust. Rose v. Rose, 4 Ct. of Ap. Dec. 108. In a third there was, first, a trust and then a devise to those who at the death of the widow should prove to be testator’s living heirs. Haynes v. Sherman, 117 N. Y. 433 ; 27 St. Eep. 254. By these cases it is established that a ■contingency which results in there being no person in existence -or capable of talcing or of alienating who is yet the intended legatee does work a suspension of ownership since there is no one to give a complete title. That is not the case hére. The contingency is an event and not dependent upon the existence or capacity of a person. The true construction of the will is, Arthur had a vested interest in the residue and remainder, subject to the trust and to the contingent right of Cubby, and at Arthur’s death whenever securing, the suspension caused by the trust would end and the residue vest at once in his next of kin, subject only to Cubby’s right. If he released to them they would have the absolute ■ownership. If he joined them in a sale, the purchaser would have the a complete and perfect title.

The judgment of the general term should be reversed and that of the trial court affirmed, with costs.

All concur.

Judgment accordingly.


author: Haight, J.

text:
    Edmund W. Converse et al., App’lts, v. Daniel E. Sickles, as Sheriff, etc., Resp’t.

      (Court of Appeals,

      Filed May 21, 1895.)

      1. Sale—Fraud—Tracing prooceeds.
    Upon a sale of goods on credit which has been induced by fraud on the part of the vendee, the vendor may, on discovering the fraud, disaffirm the sale and follow the proceeds of the goods in the hands of a sheriff, who has levied upon and sold them by virtue of an execution against the vendee.
    A Same.
    In such action, it is immaterial whether the identical money received for goods was paid over tc the sheriff or other money substituted in its place, so long as it was paid over as the proceeds of the goods.
    ■3. Former adjudication—Disposition op.
    The question of estoppel, res adjudieata or bar cannot be disposed of from the judgment alone, but has to be determined from the judgment roll, composed of the pleadings, the-clerk’s minutes of the trial and judgment.
    Appeal from judgment of the general term of the supreme ■court in the first judicial department, entered upon an order, which affirmed a judgment in favor of defendant entered upon a decision of the court on trial at special term dismissing the complaint.

      Frederic R. Kellogg, for app’lts; Alex. Blumenstiel, for resp’t.
   Haight, J.

This action w.as brought to charge the defendant, as a trustee for the benefit of the plaintiffs, with the sum of $5,-312.99, as the proceeds of certain merchandise alleged to have belonged to the plaintiffs, but wrongfully detained by the defendant.

The plaintiffs claimed that they were induced by fraud and deceit to'sell and deliver the goods in question to the firm of Fechheimer, Rau & Co., and that shortly thereafter the same were seized by the defendant, who claims to have levied thereon by virtue of executions issued to him by judgment creditors of the firm ; that the plaintiffs immediately after the discovery of the fraud practiced upon them disaffirmed the contract of sale and replevied the goods, which they subsequently disposed of. Two actions jn replevin were commenced. A portion of the goods were taken in one action and the remainder in the other. When one of the actions was brought to trial the plaintiffs’ counsel, in his opening, stated “that he was unable to show that prior to the commencement of the action a demand was made upon the sheriff for a return of the goods, and that the same was refused, and conceded that the goods had been taken by the plaintiffs and disposed of.” The court thereupon, on motion of the defendant, directed a verdict for the sheriff for the return of the goods, and assessed the value at an amount agreed upon. Similar direction was made in ■each action, varying only in amounts. Ho evidence was taken upon the trial of either action ; the verdicts being directed solely upon the plaintiffs’ opening in each case. A stay of execution upon the judgments was ordered until July 12, 1892, at which time the plaintiffs being advised that it was hopeless to prosecute an appeal, paid the amounts to the sheriff as they claimed under duress of judgment, at the same time demanding from the sheriff in writing the return of the money as the proceeds of the goods which they claimed had been procured from them by the fraud and deceit of Fechheirner, Rau & Co. The sheriff having refused to return the money, this action was brought. Upon the trial the court found as a conclusion of law that the judgments in the two replevin actions are binding adjudications against the right of the plaintiffs to maintain this action, and constitute effectual bars to the same, and that the money paid over to the defendant in satisfaction of those judgments was not, therefore, impressed.with any trust in favor of the plaintiffs.

If this case is to be treated as an action to recover back the amount paid in satisfaction of the two judgments entered in the replevin actions, it cannot be maintained for reasons well stated in the opinion delivered by the general term. But such we do not understand to be the cbiaracter of the action. In the demand made upon the defendant for the money paid over, it was stated that it represented the proceeds and value of the goods which were obtained from the plaintiffs by Fechheirner, Rau & Co., by fraud and deceit, and to which neither Fechheimer, Ran & Go., nor the sheriff, nor the parties he represents, had any right or color of right In the complaint this fund was alleged to be the proceeds of the goods which had been procured from the plaintiffs by Fechheimer, Ran & Co. by fraud and deceit, and with intent on the part of Fechheimer, Rau & Co. not to pay therefor; that thd same had been demanded from the defendant, and the notice before mentioned served upon him. The complaint then proceeds: “That the said defendant still holds and retains the said sum ; that said demand has been wholly refused, and no part of said sum has been paid to said plaintiffs, and that by reason of the foregoing facts the above-named defendant holds the said sum as trustee of these plaintiffs, and the plaintiffs are entitled to compel the said trustee to account to said plaintiffs for the full value and proceeds of the said goods, together with interest thereon as aforesaid, which said value, with interest thereon up to July 12, 1892, amounts to the sum of $5,812.99, and that the said defendant be compelled to pay over the whole of said sum for which he may be accountable to the said plaintiffs.” The complaint then concludes with the following demand for judgment: “Wherefore, plaintiffs demand judgment against the said defendant, that he be compelled to account to the said plaintiffs for the full value of the said goods and proceeds, with interest thereon as aforesaid, and that he be compelled to pay over to the said plaintiffs the full sum with which he may be found accountable, and for such other and further relief as may be just.” It thus appears to us that this action was brought, to recover the proceeds derived from the sale of the goods which it is alleged were procured from the plaintiffs by Fechheimer, Rau & Co. through fraud and deceit, without intention to pay therefor, which proceeds are now in the hands of the defendant as sheriff. That such proceeds can be followed into the hands of a sheriff, or of an assignee for the benefit of creditors, is now too well settled to admit of question. Am. Sugar Refining Co. v. Fancher, 145 N. Y. 552; 65 St. Rep. 506.

It is contended, however, that the judgments in the replevin actions'are estoppels, res adjudícala and. a bar to the litigation in this action of the question of fraud and rescission. As we have seen, there was no trial of those issues in those actions. The verdict was directed by the court upon the motion of the defendant, based upon the statement of the plaintiffs’ counsel in his opening that no demand had been made upon the defendant for a return of the goods before the actions were brought. Such a demand was necessary. Goodwin v. Wertheimer, 99 N. Y. 149. The actions were, therefore, prematurely brought, and were disposed of upon that ground without a consideration of the issues now raised, or an opportunity given to be heard with reference thereto. There was no trial or adjudication upon the merits. There is no mention of the merits in the judgments entered. The only expression that appears having any bearing upon that subject is the recital that the jury had duly rendered a verdict in-favor of the defendant. This does not conclude the parties. Under the circumstances it is in effect nothing more than a non-suit. The questions of estoppel, res adjudícala or bar, cannot be disposed of from the judgment alone. These questions have to be determined from the judgment roll, composed of the pleadings, the clerk’s minutes of the trial and the judgment. The pleadings disclose the subject-matter in litigation and the issues formed, the minutes of the clerk, the proceedings had upon the trial and the judgment, the award made thereon. A knowledge of the subject-matter, issues formed, proceedings had and determination made, is essential in order to determine whether a party has had a day in court with a hearing as to the merits of his controversy. There are many cases in which close distincions have been made upon the subject of res adjudícala as applied to second suits, but in support of our views we deem it unnecessary to here refer to more than the general principles recognized by the cases.

Freeman, in his work on Judgments, at section 263, upon the authority of Smith’s Leading Cases, divided judgments which are not a bar to another action, because not on the merits, into the following classes : 1. Where the plaintiff fails for want of jurisdiction in the court to hear his complaint or to grant him relief. 2. Where he has misconceived his action. 3. Where he has not brought the proper parties before the court. 4. Where the decision was on demurrer and the complaint in the second suit sets forth a cause of action in proper form. 5. Where the first suit was prematurely brought. 6. Where the matter in the first suit is ruled out as inadmissible under the pleadings.” At section 260 he says: “ The estoppel arising from a judgment or decree is not odious because it is confined to those points which either were in fact litigated and determined between the parties, or which were determined in the absence of any actual contest, but not until after a full legal opportunity was given both parties to make such contest as they might deem proper. It follows from this that no judgment can be available as an estoppel unless it is a judgment on the merits.” And at section 272 he says: “ A judgment of a court possessing competent jurisdiction is final, not only in reference to the matters actually or formally litigated, but as to all other matters which the parties might have litigated and have decided in the cause.’’

In Marsh v. Masterton, 101 N. Y. 401-407, it is said that, “ in "order to bar the second action, the circumstances must be such that the plaintiff might have recovered in the first for the same cause alleged in the second. The estoppel of an adjudication made on grounds purely technical, and where the merits could not come in question, is limited to the point actually decided and will not preclude a subsequent action brought in a way to avoid the objection which proved fatal in the first. When a suit fails in consequence of a want of jurisdiction, or because the plaintiff misconceives the remedy, or did not bring the proper parties before the court, and not from any inherent defect, the substance of the cause is left at liberty and may be made the subject of another action. To render a judgment effectual as a bar, the cause of action must be substantially the same.”

In Shaw v. Broadbent, 129 N. Y. 114-123; 41 St. Rep. 499, Euger, Ch. J., says: “ In order that the judgment- should have the effect claimed, it is not enough that the party produce a record showing a judicial determination of the same question litigated in his favor, but it must also appear that it was rendered upon the merits upon a material point and substantially upon the same facts, presented in the subsequent case.”

In Rose v. Hawley, 131 N. Y. 366-375 ; 41 St. Rep. 499, it is-said : “Where a party has been defeated in his action by reason of neglect to perform some preliminary act necessary to perféct the cause of action, such as the giving of notice or the like, the judgment is not a bar to another action begun after the cause of action has become perfected by the giving of notice, or the performance of the requisite preliminary act, whatever it may be.”

In Appleby v. Astor Fire Ins. Co., 54 N. Y. 253-261, it is said per curiam that “there was no motion for a non-suit, but. the court upon the whole case was requested to direct a verdict for the defendant. W.e are of the opinion that this request was in substance and effect the same thing as a non-suit.” See, also. Spelman v. Terry, 74 N. Y. 451; Webb v. Buckalow, 82 id. 559 ; Pray v. Hegeman, 98 id. 358, and Bell v. Merrifield, 109 id. 210; 14 St. Rep. 796.

It is now urged that the money in the hands of the sheriff sought to be recovered is not shown to be the proceeds of the goods procured by Fechheimer, Eau & Co. from the plaintiffs. Some of it may be money paid for costs, etc., in the replevin actions, but as to the greater portion we "think it must be regarded as the proceeds of the goods. It was paid over to the sheriff as such. The plaintiffs disposed of the goods whilst they were in their hands, pending the determination of the replevin actions. Money has no earmarks, and it makes no difference whether the identical money received by the plaintiffs for the goods was paid, over to the sheriff or other money substituted in its place, as long-as it was paid over as the proceeds of the goods.

The trial court refused to pass upon the question of fraud and deceit or to make findings upon that subject. We do not deem it advisable to now indulge in any expressions of opinion in reference thereto. The evidence upon that subject calls for the careful consideration of the trial court, and the issues raised by the plead-, ings should be determined by it.

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

All concur, except Gray, J., not voting.

Judgment reversed.