author: Bookstaver, J.

text:
    John B. Leverick, Resp’t, v. Weeks W. Culver and Ors., App’lts.

      (New York Common Pleas, General Term,

      Filed June 6, 1887.)

    Contract—Agreement—Construction oe—Right op recovery under.
    On March 30, 1875, Skidman, as receiver and special guardian, leased to one Hart, tor ten years, what was then known as Numbers 545 and 547 Sixth avenue and two lots adjoining said property, known as 1287 Broadway, and Hart, the lessee, entered into possession of the said premises under said lease. On or about September 1, 1875, Hart made a mortgage of said leasehold premises to one Sanders to secure payment of the sum of $25,000 and interest, and on or about September 28, 1875, Sanders assigned said mortgage to one Earle. Leverick, the plaintiff in this action, was a judgment-creditor of Hart, having recovered a judgment November 9, 1876, for the sum of $21,398.88, and on April 27, 1878, an execution was issued against the property of Hart, and under said execution there was sold on or about July 16,1878, by the sheriff, all the right, title and interest which Hart had on the 25th day of October. 1878, in the premises mentioned. At such sale plaintiff Leverick became the purchaser of such right, title and interest for the sum of $750. And the sheriff delivered to the plaintiff the certificate required by law. On or about July 1, 1878, one Laimbeer recovered a judgment against said Hart for $13,399.13, which judgment was duly docketed, and on July 31,1879, the said judgment was assigned by Laimbeer to one Lewis, the said Lewis being the nominee and acting in the interest of the defendants in this action. On or about September 1, 1879, the said Lewis redeemed the premises from the sale under the Leverick judgment, and paid or caused to be paid the sum of $750 to the proper officer for that purpose, and the sheriff granted the proper certificate of redemption, and on or about the 3d day of November, 1879, the said sheriff executed and delivered to said Lewis a deed setting forth the various proceedings with relation to the sale of said premises and the. redemption thereof by said Lewis. Prior to the redemption by said Lewis and in order to enable him to redeem the said premises as the assignee of the Laimbeer judgment from the sale herein before mentioned under the Leverick judgment, the said Leverick and the defendants ii this action, entered into an agreement in writing, whereby it was provided that “whereas the said Leverick'had obtained the judgment referred to against Hart, and whereas under an execution on such judgment, all the right, title and interest of said Hart in and to the premises' known as The Standard Theatre, was sold by the sheriff, and whereas Lewis as assignee of the judgment against said Hart, is to be premitted by said Leverick to redeem the said premises from the said sale aforesaid, therefore the defendants Culver and Wright agreed to and with said Leverick to pay him, his executors, administrators and assigns, the sum of $1750 out of and from the first money or property which may be collected, realized or obtained by them or either of them, or by any person for the benefit of them or either of them, in or upon any claim or claims to the lease or leases of the said premises, or the possession of the said premises, or by reason of such claim or claims being made, or by reason of redeeming the premises aforesaid, or the owning or controlling any judgment against said Hart. Between the 8th day of May, 1881, and the 14th day of February, 1884, the defendants received rents from a portion of the premises mentioned in the lease from Skidmore to Hart, being a poition of the premises redeemed from the sale of the Laimbeer judgment, but said rents were not received from that portion of the premises specifically known as the Standard Theatre, or 1287 Broadway. The amount was received by the defendants by reason of their controlling the Laimbeer judgment, by or through which they were enabled to redeem premises from the sale under the plaintiff’s judgment. Held, that the right of the plaintiff to recover under the agreement between himself and the defendants, was not limited to the contingency of the defendants realizing moneys out of that portion of the property specifically known as the Standard Theatre property. •

      Appeal from an order confirming referee’s report, and the judgment entered thereon.

      H. J. Schenk, for resp’t; Samuel Jones, for app’lts.
   Bookstaver, J.

The evidence in this case is almost altogether in writing, and none of the facts are disputed.

These facts, so far as we deem them necessary to determine the questions involved, are as follows :

On March 30,1875, William L. Skidmore, as receiver and special guardian, leased to Joseph Hart, for a term of ten years, what was then known as Nos. 545 and 547 Sixth avenue; and two lots of land in the rear of those lots, No. 547 Sixth avenue, now known as 1287 Broadway. There was then, and is now on it, a four-story building. The lease contained a covenant by Joseph Hart, to expend at least $50,000 in the erection of a building or buildings on the demised premises, exclusive of that portion now known as 1287 Broadway.

Hart entered into possession under the lease on the first of May, 1875. On the first of April, 1875, Hart and Joseph Dowling entered into a co-partnership for carrying on the theatrical business, to continue for ten years, from May 1, 1875. Dowling contributed $60,000 to this co-partnership; and what was known as the Eagle Theatre was erected on the demised premises, other than the lot 1287 Broadway. On September 1, 1875, Hart mortgaged the Skidmore lease and the demised term to Joshua 0. Sanders for $25,000, who, on the 28th of September, 1875, duly assigned the same to Bernard Earle. On November 10, 1875, the co-partnership between Hart & Dowling was dissolved by mutual consent, Hart agreeing to repay to Dowling the $60,000 contributed by Dowling, within five years from November 10, 1875, and that, if the whole, or any part of the sum should remain unpaid at the end of five years from that date, Dowling should have the right to enter into possession of the leasehold premises, and retain absolute possession thereof for his own benefit until wdthin ninety days of the expiration of the Skidmore lease. No part of the $60,000 was ever paid. On the 25th of October, 1877, a transcript of a judgment theretofore rendered, in favor of the plaintiff and against Hart for $21,398.89, was duly docketed in New York county. On the 2d of February, 1878, Hart sublet all the premises covered by the Skidmore lease, except 1287 Broadway, to William Henderson, for two years, from March 1, 1878, at an advanced rental, with privilege of renewal, for five additional years; which sub-lease Hart, on the same day, assignee to Joshua C. Sanders, who, on the 11th of Tebruarj, 1878, executed and delivered to Hart an agreement that he would make certain dispositions of the rent when collected under the sub-lease.

On the 27th day of April, 1878, an execution was issued based on the judgment theretofore recovered by the plaintiff, to the sheriff of New York county, who, by virtue of it, sold at public aution, on the 16th day of July, 1878, to the plaintiff, for $750, all the right, title and interest which Hart had on the 25th of October, 1877, in and to the premises demised to him by the Skidmore lease, and thereupon the sheriff delivered to the plaintiff the proper certificate of sale. On the 1st day of July, 1878, William Laimbeer recovered a judgment against Hart for $13,399, which was, on the 1st day of July, 1879, docketed in the clerk’s office of the city and county of New York, and, on the 31st day of July, 1879, this judgment was assigned by Laimbeer to John D. Lewis.

Lewis was the nominee and acted in the interests of the defendants in this action, and the defendants after the assignment, controlled the last mentioned judgment.

Under this last judgment, Lewis, about September 18, 1879, made the payment and did the acts required to redeem from the sale under the plaintiff’s judgment. This redemption was made under the agreement hereafter to be considered. At the time of this redemption and agreement all the right, title and interest of Hart to the demised premises had been assigned to Lewis by Louis F. Post, as signee in bankruptcy of Hart. But this assignment in no wise affected the lien of plaintiff’s judgments, as the proceedings in bankruptcy were not commenced until after this judgment had been duly docketed.

On November 3, 1879, the sheriff executed to Lewis a deed pursuant to his redemption. Prior to the said redemption, and the docketing of the Laimbeer judgment, but subsequently to the docketing of the plaintiff’s judgment, the following transactions had occurred.

On February 15, 1879, the administrator of Joseph Dowling, who had died before that time, assigned to Weeks W. Culver, one of the defendants herein, the agreement made on the dissolution of the partnership between Hart and Dowling, which was not recorded until after March 21, 1879.

On the last mentioned day, Earle commenced an action to foreclose the $25,000 mortgage assigned to him, making, among others, Hart, the plaintiff, Laimbeer, and the administrator of Dowling, parties defendant.

Plaintiff and the administrator answered, setting up various defenses. Lambeer did not answer.

On receiving from the sheriff the certificate of redemption, Lewis commenced a suit in the supreme court against Joshua 0. Sanders, Bernard Earle, William. Henderson, and others, based upon that certificate and the interest in said premises, which Lewis had acquired in the manner' hereinbefore stated.

The purposes of this last suit were to annul the assignment to Sanders by Hart, and the agreement of February 11, 1879, between the same parties to compel Sanders to account to Lewis for all moneys received by him from Henderson under the lease from Hart to Henderson to compel Hendersen to pay future accruing rents, to Lewis; to restrain Henderson from paying and Sanders from collecting any further rent under that lease; to have a receiver appointed, etc.

An order was obtained restraining Sanders, as in the complaint asked for; and thereafter, and on the 25th of September, 1879, a receiver was appointed.

Subsequently, and on the 15th of May, 1880, all the parties to the Lewis suit entered into a written stipulation; and, on the 30th of May, 1880, judgment was rendered in that action, in accordance with the terms of the stipulation.

The redemption by Lewis, made, as before stated, on the 18th day of September, 1879, was made under the following circumstances: The defendants provided the $750, with interest, amounting to $61.75, for the purposes of the redemption, and the sheriff thereupon granted the proper certificate of redemption. Prior to the redemption, and in order to enable Lewis to redeem, the plaintiff and the defendants in this action entered into an agreement in writing, whereby it was provided that “Whereas, the said Leverich had obtained in the supreme court of the state of New York the judgment referred to against Joseph Hart;, and whereas, under an execution on such judgment, all the right, title and interest of said Hart in and to the premises known as the Standard Theatre was sold by the sheriff for the city and county of New York, on or about July 16, 1878, to said Leverich for $750; and whereas, Lewis as assignee of a judgment against said Hart is to be permitted by said Leverich to redeem the said premises of and from the sale aforesaid, therefore the defendants, composing the firm of Culver & Wright, agreed to and with the said Leverich to pay him, his executors, administrators and assigns, the sum of $1,750, out of and from the first money or property which may be collected, realized or obtained by them or either of them, or by any assignee of them or either of them, or by any person for the benefit of them, or either of them, in or upon any claim or claims to the lease or leases of the said premises, or the possession of the said premises, or by reason of such claim or claims being made, or by reason of redeeming the premises aforesaid, or the owning or controlling any judgment against the said Hart.”

After the delivery of the agreement, the plaintiff paid to defendants $561.75, the difference between $250 and $811.75, which was the amount paid to the sheriff by the defendants, through Lewis.

The complaint, in this action, is founded upon the agreement above set forth, the nineteenth paragraph of which is as follows : “ Upon information and belief, that in said suit last hereinbefore mentioned (the Lewis suit), a stipulation was signed and entered into by all the parties thereto, under which stipulation the defendant Culver collected, realized or obtained before the commencement of this action the sum of $1,750.” This allegation is admitted.

On the trial, the defendants were permitted to amend their answer, changing $1,750 to $1,342.84, as the sum which they so received.

The referee found that the sum which the defendants actually received under the agreement was $1,484.50. It was paid to them by Bernard Earle, and was part of the rent coming from that portiomof the premises, demised to Hart, and redeemed by Lewis, known as No. 1287 Broadway, which adjoined what was formerly known as the Eagle Theatre, but now known as the Standard Theatre.

He, also, found that this sum of $1,484.50 was received by the defendants by reason of their controlling the Laimbeer judgment, by or through which they were enabled to redeem premises from the sale, under plaintiff’s judgment.

The defendant’s contention is that, although they received this money under the agreement, yet, as it did not come from the Standard Theatre premises, but from an- ' other portion of the premises demised to Hart, their obligation to the plaintiff did not mature.

The Skidmore lease to Hart covered the entire premises, including 1287 Broadway. The mortgage given to Sanders and assigned to Earle, also covered the entire premises, and, if valid, was the first hen thereon, The judgment from the time of its docket, became a second hen on the entire premises, as far as Hart’s interest was concerned, and, in the event of the Earle mortgage being declared invalid, for any reason would have become the first hen, subject only to any right Dowling representatives might have had in the property under the agreement for the dissolution of the copartnership between him and Hart. Before the making of the agreement under consideration, Dowhng’s interest, whatever it was, had become the property of Culver, one of the defendants herein; and this right related to the entire premises.

All of Hart’s interest, subject to the Earle mortgage and the Leverick judgment had also vested in Lewis the representative of the defendants, before the making of the agreement in question, by reason of the assignment to him by Hart’s assignee in bankruptcy. This interest whateversit was, related to the entire premises.

The Laimbeer judgment from the time of its docket, was also a lien upon the entire premises, as far as Hart had any interest therein at that time.

At the time the redemption agreement was made between plaintiff and defendants, the action for the forecloseure to the Earle judgment was pending; and this, as before stated, covered the entire premises.

This redemption agreement was made tor the purpose of securing to the defendants, in the name ot Lewis the rights secured to the plaintiff by the sale and purchase under the excution on his judgment.

Under the circumstances, we think that the necessary and proper inference to be deduced from these facts, and from the language of the agreement itself is, that the agreement was intended to cover the entire property, including 1287 Broadway.

The agreement does not describe any premises by metes and bounds; there is nothing in the language of the agreement which would necessarily exclude 1287 Broadway. The parties were negotiating to obtain all of the plaintiff’s interest in the entire premises, for the agreement after reciting the recovery and docketing of the Leverick judgment proceeds: Whereas, under an execution issued upon such judgment, all the right, title and interest of said Hart, in and to the premises known as the Standard Theatre, were sold by the sheriff of the city and county of New York on or about the 16th day of July, 1878, to said John B. Leverich.”

As before^ stated, the lien of the judgment was upon the entire premises, including 1287 Broadway, and Hart’s interest in the entire premises was purchased under the sheriff’s sale in the agreement referred to. Surely, the plaintiff in this action could not have successfully contended that only the Standard Theatre property specifically was transferred to Lewis by the redemption proceedings; and if this is so, we do not perceive how it is possible for the defendants in this action to limit the agreement to the Standard Theatre premises only, and we think the learned referee erred in making such limitation of the agreement. Had he found that the agreement covered the entire premises, as we think he should, there would have been an end to all controversy in this matter.

But while we so think, the agreement was not intended to limit the liability of the defendants to the contingency of money or property to be acquired from something in connection with the Standard Theatre property specifically, but that it may be construed to establish another and independent ground of liability aside from this.

There is nothing in the grammatical construction of the agreement which precludes this, or prevents us from supposing the words “by reason of ” to have been■ omitted in the last clause simply because it had been repeated two or three times before.

The money was obtained by the defendant Culver upon a claim to the lease or leases of the premises known as the Standard Theatre, or by reason of his right to the possession, of the premises, or because of his assertion of such a right, based on the redemption before mentioned, and his right to-control the Laimbeer judgment. The claim was strongly-enforced when the Lewis action was instituted. This claim was of such an imperative character that Henderson could pay no more rent to Sanders, and Sanders was compelled to account for the rent which he has collected. Even if the-claim so enforced were groundless, it might well be contended that the money was paid to the defendants by reason of the claim having been made.

But the defendants contend that the referee erred in finding that the Laimbeer judgment was controlled by defendants. The answer admits such control. The language-of the agreement implies this; and it is admitted chat the defendants furnished the money with which Lewis made the redemption, and we think these facts were sufficient to warrant the referee’s findings.

But if this were not so, we think it would make no-difference, for the agreement does noc say who shall own the claim or who shall make it, or that ‘it shall be valid, nor does it say who shall own or control the judgment against Hart.

We, therefore, think that the judgment may be sustained upon the ground on which the learned referee based his decision.

Although the appellants did not argue any of .the exceptions to the reception or exclusion of evidence, either orally or in writing, we have nevertheless examined them, and think if any evidence wgp improperly admitted that it was afterwards cured by the defendants themselves offering the same and similar evidence.

The judgment should, therefore, be affirmed, with costs.

Larremore, C. J., and Allen, J., concur.


source: Caselaw Access Project

author: Allen, J. Brown, A. C.

license: Public Domain

text:
    Ellen T. Hayes, Resp’t, v. Charles T. Nourse, Jr., App’lt.

      (New York Common Pleas, General Term,

      Filed June 1887.)

    1. Contract of sale — Title — Purchaser is entitled to right to RESCIND AND SUE FOR MONEY PAID.
    The plaintiff in March, 1885, bid off at a public sale a piece of property and made the usual deposit on the purchase, and afterwards found that an action had been commenced in chancery, and a lis pendens filed in 1836 was still on file against this property to enforce the perfoi manee of an agreement made in 1819 for the sale of the property in question, though nothing had been done since 1844, of which action and Us pendens plaintiff had at the time of purchase no notice, while the defendant was fully aware of the suit and lis pendens, and concerning which he had consulted his counsel, who had advised him “that there was no reason why he should not go on and offer the property for sale.” Held, first, That the plaintiff was entitled to a good, indefeasible, marketable title, free from reasonable doubt; second, That the lis pendens and chancery suit were a valid objection to the title and that she had a right to rescind and sue for the money paid.

      %. Same—Lis pendens—Cancellation of.
    The cancellation of the lis pendens subsequent to the day appointed for the closing of the title was of no consequence to the plaintiff so long as she knew that a suit of that character was still pending.
    "3. Same—Attorney and client—When client protected by advice of attorney.
    The advice of counsel, honestly given and faithfully followed, may protect the client from criminal pr. secution, but it is no further protection when the rights of parties are involved.
    4. Same—Effect of enumerating incumbrances—Duty to disclose DEFECTS.
    Where in the terms of 'sale certain incumbrances were enumerated, but the chancery suit or the fact of the Us pendens were not disclosed, and the duty incumbent on the vendor to disclose to the purchaser any latent defects known to him and not to the purchaser was not performed: Held, That its non-performance, coupled with the recitals of incumbrances, amounted to a fraud on the purchaser, and, at her option, avoided the sale.
    Appeal from judgment entered on report of a referee.
    The plaintiff recovered judgment for the amount of a preliminary payment on a contract for purchase of real estate sold at auction, she having rejected the title offered by the defendant.

      Strong & Cadwalader, for app’lts; John L. Cadwalader, of counsel; W. H. Newschafor, for resp’t; W. B. Putney, of counsel.
   Allen, J.

We agree with the referee that the plaintiff has shown that the defendant was not able to give to her, at the proper time, such a title as was required by the obligation of the contract, and that she, therefore, had the right to rescind and recover her deposit.

The reasons given by the referee for his decision, in his careful opinion upon that branch of the case, are satisfactory to us, and lead us to affirm the judgment on that ground.

Judgment affirmed, with costs.

The opinion of the referee is as follows:

Brown, A. C.

(Referee) On the 35th day of March, 1885, the defendant,' who, under an assignment for the benefit of its creditors by the firm of Paulding, Kemble <& Co., and by the members of the firm individually, had succeeded to the title of James N. Paulding to the premises 56 Marion street and 91 Crosby street, in the city of New York, being the lots of land abutting on each other and running through from Marion street to Crosby street, sold the lots at public auction. By the terms of sale it was provided, among other things, that the purchaser should pay ten per cent of the purchase price and the auctioneer’s fee of twenty dollars per lot, immediately on the sale; that the balance of the purchase money should be paid on April 15, 1885, at twelve o’clock noon at the office of the defendant’s attorney, when and where the deed would be ready for delivery, and that the premises were sold subject to taxes and encumbrances, existing mortgages to be paid out of the purchase money as far as possible. Then followed the statement- “ Incumbrances on the property are about as follows: Mortgage to secure $7,000, held by George G. De Witt, Jr., and Jacob K. Lockman, trustees, etc., of Sarah Taiman, deceased, due September 8, 1873, continued on sixty days’ mutual notice.

“ Mortgage to secure $7,500, held by Ellen Kemble. These mortgages cover both properties. They are to be paid off out of the purchase money if sufficient. The assignee believes that all taxes and assessments on the property have been paid. Leased until May 1, 1885.'”

Mr. John Hayes, an attorney at law, on behalf of his sister, the plaintiff, who owned other property on Marion street, attended the sale and bid off both lots at $26,100; signed the usual memorandum of sale at the foot of the terms of sale, and out of the plaintiff’s moneys paid to the defendant the ten per cent and auctioneer’s fees, amounting together to $2,650. Ator soon after the sale, Mr. Hayes disclosed his principal to the defendant’s attorney, and requested that the deed run to her. Soon after the sale Mr. Hayes applied to another attorney for a loan of about $13,000, and at the inception of such examination of the title as he made, a lis pendens was discovered on file apparently affecting the property. Further investigation developed the fact that the lis pendens was filed in a suit brought in the late court of chancery, the bill in which was filed July 21, 1836. The suit was brought by John McGeer and Thomas McGeer and by Peter McGeer and Mary Ann McGeer, alleged to be infants, by John McGeer, their next friend, as heirs at law of one Arthur McGeer, against the children and devisees of one Peter Kemble, to enforce the performance of an agreement alleged to have been made in the year 1819, by Peter Kemble with Arthur McGeer, whereby Kemble was to sell to McGeer the lots in question for the sum of $1,200, and under which McGeer had entered into possession, paid a portion of the purchase money and made improvements and remained in possession until his death in 1825. The bill, among other things, further alleged the death of Kemble in 1823; the probate of his will, the expulsion after their father’s death of the complainants by the defendants from the property, the then possession of the premises by the defendants, or some of them, a deed of the premises in 1824 from the other defendants to the defendant Mary Kemble; knowlege in the defendants of the agreement of 1819; ignorance of complainants as to their rights, and a demand and refusal to perform. An answer and replication were also on file, as well as some other papers showing that proofs had been taken, but nothing appeared on the files to show that anything had been done in the suit after 1844.

In consequence of the discovery of this apparent cloud on the title, the closing of the sale to the plaintiff was adjourned by consent to April 20, then to the 23d, then to May 2, then to May 15, and then to May 16, and on the latter day, but before the hour appointed for the meeting, Mr. Hayes called on defendant’s attorneys and informed them that he declined to take the title, and on the same day the .plaintiff began this action to recover the ten per cent and auctioneer’s fees. The complaint also asks for $175, expense of searching title, but that claim was abandoned on the trial.

There is some dispute as to precisely what occurred between Mr. Hayes and defendant’s attorney before May 16 with reference to the effect of this chancery suit on the title, and what could be done to get rid of any possible effect, but it is agreed that Mr. Hayes expressed the opinion that the suit was a cloud which could not be effectually removed in the manner proposed by defendants’ attorneys, and that, at most, defendants’ attorneys offered to make an effort to get the lis pendens canceled and the suit discontinued. The attorney to whom Mr. Hayes had applied for a loan seems to have taken the same view as Mr. Hayes, as he declined to make the loan. It is in proof that prior to the sale Mr. Hayes knew nothing of the existence of the chancery suit, and that though the defendant knew of it and that its existence had prevented the closing of a sale of the property made some years previous, he did not disclose those facts to Mr. Hayes or other bidders at the sale, his reason for making no such disclosure being, as he states, that his counsel had advised him, after discussing the subject, that “there was no reason why he should not go on and offer the property for sale.” On the last day and hour agreed upon for closing the sale, a deed proper in form and satisfaction pieces of the mortgages were ready at the office of defendants’ attorneys for delivery to Mr. Hayes, but, as before stated, he did not attend, having in the morning of that day declined to take the title. t that time the Us pendens was still on file and the chancery suit still pending.

On the eleventh day of June following, defendants’ attorneys, having been substituted in the chancery suit for two of the defendants, presented a petition to the supreme court, entitled in the chancery suit, and verified by said two defendants, the defendant in this action and James N. Paulding, the grantee of Mary Kemble, one of said two defendants, setting out the facts in regard to the existence of said chancery suit and that no proceedings had been had in it since 1844; that all of the defendants except the two joining in the petition were dead; that in 1870 James H. Paulding and his attorney had caused diligent inquiry and search to be made for the plaintiffs McGeer or their descendants, but they were unable to find further trace of them than that when last heard of one of the brothers ¡McGeer was reported to be connected with river thieves, and the sister to have been put in a poor-house or asylum, and that all of them were supposed by those who had known them to have been dead for many years past;” that defendant Nourse “had recently caused further diligent search to be made for them, or any of them, but that his efforts have been entirely unsuccessful.” That in a partition of the real estate of Peter Kemble in 1844, the other heirs had joined in a deed of the premises in question to the petitioner, Mary Kemble (now Parrott); that iñ 1854 Mary Kemble and husband conveyed to the petitioner, James 2ST. Paulding; that in 1860 Charles O’Conor admitted to said Paulding’s attorney that he had not seen nor heard of the complainants for many years; that said O’Conor was dead; that said Paulding had assigned to Hourse; that Nourse had contracted to sell to Hayes and Hayes objected to the title because of the cloud which he claimed existed by reason of the Us pendens and the pendency of the suit, and prayed that the Us pendens be canceled; the bill dismissed as to the two defendants; the suit declared abated as to the other petitioners, and that on such notice as the court should direct, the suit should abate as to all persons unless continued by the proper parties within a time to be specified.

On this petition and an affidavit giving the name of a late partner of Mr.. O’Conor, and that of one of his executors, an order was made requiring the complainants or their representatives to show cause on June 17th why the relief prayed for in the petition should not be granted, and directing that the same be served on said partner and said executor “as the only persons on whom it was possible under the circumstances to serve notice of the application.”

On June 17th no one appearing to oppose except the executor, an order was made adjudging the service of the order to show cause on the former partner and the executor of Mr. O’Conor to be sufficient notice and the only possible notice which the circumstances presented on the application allowed; canceling the Us pendens of record; dismissing the bill as to the petitioners, and directing that the suit wholly abate unless on or before December 31, 1885, it be continued by the proper parties, the petitioners to publish a notice of the order, addressed to whom it might concern, once a week for four weeks in the months of July, October and December, 1885, in the “Register” and “ Hew York Times "

On or about June 25th defendants’ attorneys inclosed to Mr. Hayes a copy of this last order, and notified him that the Us pendens was canceled on the 17th, and that on the 29th a deed would be ready for him at their office.

In October, 1885, the defendant sold the two lots separately to other parties, whose attorneys accepted the title as it then stood, but one attorney, as it appears, of a party to whom one of the purchasers applied for a loan, objected to the title, and the loan was refused.

On May 1, 1886, on an affidavit showing publication of notice as directed in the order of June 17th, 1885, and that no one had continued the suit, an order was made that the suit wholly abate.

Upon this state of facts the question is presented, can the plaintiff in this action recover from the defendant the ten per cent and the auctioneer’s fees paid by her to him.

Although the terms of sale provided that the purchaser should take subject to all incumbrances, counsel for the defendant in the trial stated that he did not claim that the plaintiff was bound to take subject to any incumbrances other than the taxes and mortgages mentioned, and we can therefore consider the rights and obligations of the parties as if no such clause existed.

Upon principle as well as authority, it cannot be doubted that the plaintiff was entitled to receive from the defendant a “ good title ” to the premises purchased, and that in default of receiving or being tendered such title, she had the right to rescind and sue for the money paid. Burwell v. Jackson, (9 N. Y., 535, 541); Leggett v. Mutual Life Insurance Co., 53 N. Y., 394, 398; Cockcroft v. Muller, (71 N. Y., 367). What a “good title,” such as a purchaser is entitled to, is may be gathered from the adjudged cases. Thus, in Burwell v. Jackson, (supra), page 545, it is said “ a vendee has a right, if he discovers the title to be defective, to refuse to receive it,” In Judson v. Wass, (11 Johns., 525, 527), such a title is called an “ indefeasible ” title. In Rigney v. Coles (6 Bosw., 479, 485, it is called “ a good marketable title.” In Earl v. Campbell (14 How. Pr., 330, 332), “ a perfect title.” In Jordan v. Poillon (77 N. Y., 518, 521), a title which is not doubtful, or one exposing the purchaser to the hazard of a contest with other parties. In Schriver v. Schriver (86 N. Y., 575, 584), one not open to judicial doubt, " a marketable ” one, and in Fleming v. Burnham (100 N. Y., 1, 8, “a marketable title, free'from reasonable doubt.”

I am aware that most of these definitions are taken from actions or proceedings to compel specific performance of contracts for the purchase of lands, and that it is claimed that in such cases, a “good title” is a different thing from a “ good title " in an action at law for damages on rescission. I confess myself unable to subscribe to this doctrine, if it is meant to be asserted that the rights of the parties to a contract are different when looked at from a legal and an equitable standpoint. I can well understand how a court of equity, in the exercise of a sound discretion, and for reasons which cannot be urged in a court of law, may relieve parties from the performance of contracts, but I do not understand that the exercise of this power proceeds upon any other or different construction of the legal rights of the parties under the contract than is recognized in courts of law, and it will be observed that in all the cases above cited when defining “a good title,” the court is speaking of the rights of the purchasers under the contracts. It must be conceded, however, that in the case of O'Reilly v. King (2 Robt., 587), followed in the same court in two cases reported in (52 Supr., 321), and (24 Weekly Dig., 327), a divided court did hold that in an action at law proof of a doubtful title merely is not sufficient, and the prevailing opinion states that there is a difference in this respect between actions at law and suits in equity. The proposition advanced is not sustained by any reasoning, and but one authority is referred to, and that an English one (6 Taunt., 263), decided in 1815. An examination of that authority shows that, although in a remark by one of the judges on the argument, the proposition is perhaps suggested, no reference is made to it in the final decision, and in the later English cases the proposition seems to be disapproved. Thus in Jeakes v. White (6 Excheq. Rep., 873), which was an action at law to recover a deposit paid under a contract of sale, the court says: “A good title was to be understood as such a title as a court of chancery would adopt as sufficient ground for complete specific performance, ” and in Simmons v. Haseltine (5 Jurist N. S., 270), a similar action at law, it was said: "A title dependent on a question of fact which it is impossible to consider reasonably certain is not a good title.” I think, too, that the superior court cases are inconsistent with what ought to be controlling decisions in our own state, for to say nothing of implications contained in some of the more recent decisions of our court of appeals from which the above definitions are taken, in the case of Burwell v. Jackson (supra), after stating on page 540, that: “To require a vendor to make good the title to that which he assumes to sell, is simply requiring him to guarantee that he is not committing a fraud.” Judge Selden says, at page 542: “ But it may be said that this last case as well as those previously cited, arose in equity and that it may well be that a court of equity would not enforce a specific performance, while at law the purchaser would be bound. There is, however, no doubt that the rule at law is the same as in equity.”

Assuming, then, that the plaintiff under her contract was entitled to a good, indefeasible, marketable title, free from reasonable doubt, was the title tendered on the sixteenth of May such a title? I think not. The chancery suit was pending and the Us pendens was on file, and the plaintiff, through her agent, had notice of both facts. A month had elapsed since the title was objected to, but no steps had been taken to remove the objection so far as plaintiff’s agents knew or were informed. True, nothing was done in the suit for many years, but the suit had not abated.

There is no such thing, so far as I know, as abatement of a suit by presumption of law from lapse of time. Even if all the complainants were, in fact dead, which does not appear, the cause of action alleged in the bill was such as would survive, and who could say that there was no one in existence who could assert it. It may very well be that if at any time since 1844 the original complainants had appeared and sought to prosecute the suit, the court would have denied their motion for leave to continue it against the representatatives of the deceased defendants, on the ground of their laches, but it does not by any means follow that it certainly would, much less that it would deny a similar motion made by complainant’s successors in interest, if any, presenting excuses for not having appeared before. It appeared by the bill that two of the complainants were infants. The bill stated a good cause of action, and, if sustained, the title in the heirs of Kemble and their grantees, all of whom had notice of the suit by reas-.n of the Us pendens, would be defeated. The plaintiff was not called on to try the issues in that suit, and take the chances of the correctness of her judgment, or that of any one else, as to the validity of the claim asserted. Any decision of those issues “ would not be controlling upon the parties who were not represented,” and the plaintiff would be “left to the hazard of a contest with other paities.” Jordan v. Poillon, supra, 521, 522; Fleming v. Burnham, supra, 10. Had the chancery suit been of recent origin, no one can doubt that plaintiff’s objection would have been perfectly valid, and I cannot think that it was any the less valid because the suit was of long standing, so long as there was a reasonable doubt—as there certainly was—whether the complainants, or any of them survived, or whether there was any successor in interest in existence who could come in and continue the suit.” See Schriver v. Schriver, supra, 583. In the case of Jeakes v. White, above referred to, the fact which was not considered “reasonably certain” was the non-existence of certain heirs, and the proofs of their non-existence were quite as strong as the proofs of the non-existence of persons interested •as plaintiffs in this chancery suit. No one, I think, can say, on the facts as they then existed, and as they were known to exist by the plaintiff’s agent, that his objection was of the class mentioned in Fleming v. Burnham, supra, as insufficient, namely, ”merely captious, or “a mere suggestion of defects which no reasonable man would consider, although within the range of possibility,” or one which is “ clearly invalid by the law as settled.”

If I am right in the conclusion that this Us pendens and chancery suit were, on May sixteenth, a valid objection to the title, then as to plaintiff, who through her agent had notice, it wouid seem to be clear that the subsequent proceedings, for the cancellation of the lis pendens and the abatement of suit, were of no effect. They were taken on notice to no one interested, and as to the lis pendens, not even on notice to the general public, and this notwithstanding the fact- that it has heen held that the court cannot cancel a lis pendens so long as the suit is pending and undetermined See Mills v. Bliss v. 55 N. Y., 139. They did not bind any parties to the suit or their representatives, who were not before the court actually or constructively, and whatever may be their effect, if any, as to subsequent purchasers, they would furnish no protection to the plaintiff. But if these proceedings did cure the defects, as to everybody, that result was not reached until the order of Hay 1st,. 1886. was entered, and that was after the sale of the property to other parties, and. so of course after defendant had put it out of his power to convey to plaintiff. The canceling of the lis pendens in June, 1886, was of no consequence to-plaintiff so long as she knew that a suit of that character was still pending. It did not cancel notice in her. Six months had to elapse before the suit could be ended, and in my judgment she was under no obligations to .wait eight months for her deed when defendant had stipulated to give it to her within less: than one month of the sale.

If, however, I am entirely in error as to the effect of the chancery suit upon the title, there is another ground upon which I think the plaintiff is justified in disaffirming the contract, and entitled to recover the money paid. .

It cannot be denied that the existence of the chancery suit was a circumstance of at least some importance as bearing upon the questions of title and value. On account of it one previous sale had fallen through. The defendant deemed it of sufficient moment to consult his counsel about it prior to the: sale at which Hr. Hayes bought. At least two attorneys thought it presented so serious a question that they refused to make loans on the property, and defendant’s attorneys admitted the pendency of the suit and its importance by taking steps to have it abated. And yet, with full knowledge of the suit and that it had already defeated one sale, the defendant concealed these facts and offered the premises at auction without a word to put any one on inquiry. He went even further, and by enumerating certain incumbrances impliedly declared that there were no others. Judson v. Wass, supra, p. 528 Mr. Hayes at that time knew nothing of the suit. He bid on the assumption that there were no undisclosed defects, and paid and the defendant received a consideration regulated in view of this implied condition. Fleming v. Burnham, supra, p. 8. As said in Burwell v. Jackson (supra), “It is a principle universally recognized by all civilized codes, that whenever a thing sold has some latent defect, known to th.e seller, but not to the purchaser, the former is liable for this defect unless he discloses his knowledge on the subject to the latter before completion of the sale.” The duty incumbent on the defendant in this respect was concededly not performed, and' its non-performance, coupled with the recitals of incumbrances above alluded to, amounted in law to a fraud on the purchaser, for which he had the right to rescind. Pomeroy's Eq. Juris., vol. 2, § 901. To escape this dilemma the defendant claims in substance that he was advised by counsel that the existence of the.suit was no cloud on the title, and that he was not bound to disclose the facts at the sale. Advice of counsel honestly given and faithfully followed may protect the client from criminal prosecution, but it is no further protection when the rights of parties are involved (45 N. Y., 654; 7 Paige, 364; 1 Duer, 512; and 9 N. Y, 263; 19 Hun, 327. 2 Eds. Ch., 628); and in Hawley v. Bennett (4 Paige Ch., 164), the chan cellor remarked: ■' The rights of parties must be protected against the wrongful acts of the adverse party, although he may have acted under the advice of counsel.” I do not mean to imply that in suppressing the facts the defendant was guilty of any intentional wrong, or that his counsel did not act in entire good faith; all I mean to say being that the withholding of the knowledge he possessed was, as matter of law, a fraud upon the purchaser, which, at his option, avoided the sale. See King v. Knapp (59 N. Y., 462, 467, 468).

In view of the fact that the plaintiff asks to recover only the money; paid by her to the defendant, had I any doubt of her right to recover as a strict question of law, I should, upon the facts presented, and in view of the liberal provisions of our Code and the decisions under it, be inclined to grant her the relief, although the complaint is in form one in an action at law. All that is needful in a complaint under our present system of pleading is, “ to state facts sufficient to show that the plaintiff is entitled to the relief demanded, and it is the duty of the court to afford the relief without stopping to speculate upon the name to be given to the action.” Wright v. Wright, 54 N. Y., 437, 443; and see Murtha v. Curley, 90 N. Y., 372.

My conclusion is that that the plaintiff is entitled to judgment for $2,650, with interest from March 25, 1885, and the costs of the action.


author: Per Curiam.

text:
    Eugene Wiener, Resp’t, v. The New York Central and Hudson River Railroad Co., App’lts.

      (New York Common Pleas, General Term,

      Filed June 27, 1887.)

    Appeal—When court will affirm, though it has great doubts op TRUTH OP TESTIMONY.
    Though the appellate court may have very great doubts as to the truth of testimony, yet where there is no documentary evidence that contradicts ■ the witness, and his testimony is not absolutely uncredited or unreasonable, and considering the opportunity that the justice had of seeing the witness and estimating his character gives him great advantage in judging his veracity, it will defer to his decision and affirm the judgment.
    Appeal from a judgment of the district court of the city of New York against the appellants. The action was brought to recover damages for failure to deliver a box containing music and music stands of a concert troupe at Tarrytown by the same train upon which the plaintiff and his associate performers traveled. On the first trial the plaintiff recovered a judgment which, on appeal to this court, was reversed and new trial ordered.
    By the testimony it appeared that the plaintiff engaged to give an instrumental musical concert at Tarrytown. He purchased of the defendant tickets to Tarrytown and shortly before the time for the departure of the train went to the baggage-room where he met Richard Pachne, who had brought to the baggage-room a box containing the music and the music stands of the performers, which box was lettered on. the top, “New York Philharmonic. Club.” The tickets were exhibited and the box was checked to Tarrytown.
    By the error of '••the defendants the box was sent to Poughkeepsie, and when plaintiff arrived at the place in Tarrytown where the concert was to be given the audience had to be dismissed by reason of the absence of the box and its contents.
    The opinion of the general term, written on the reversal of the first trial, contained the following: “There is no evidence that defendants knew the plaintiffs were to give a concert, or that the box contained music, or that the non-arrival of the box by a particular train would prevent the plaintiffs from giving their concert and earning the money that was to be paid them for their services as musicians. In an action for a breach of a contract, only such damages can be recovered as were within the contemplation of the parties when the contract was made.”
    On the second trial plaintiff testified that he “told the baggage-master he must send the box by the next train to Tarry town, as we need the music for concert to night.”
    This was denied by Sutton, the baggage-master, who testified as to checking the box.
    Plaintiff denied that the witness Sutton was the man who checked the box. Richard Pachne, who brought the box to the depot, could not remember what was said when it was checked.

      Frank Loomis, for app’lt; Edward P. Wilder, for resp’t.
   Per Curiam.

We have very grave doubts as to the truth of the plaintiff’s testimony, but it was believed by the justice in the court below. The witness Pachne would not confirm his statement as to the conversation with the baggageman, and his testimony stands uncorroborated. There is always room for suspicion where a witness at a second trial comes prepared to fill all gaps, to supply all dedeficiencies, and to prove the very point upon which the decision turns, and which, at the first trial, he did not prove at all. But the opportunity that the justice had of seeing the witness and estimating his character gave him a great advantage in judging his veracity; and as there is no documentary evidence in the case that contradicts the witness, and, as his story is not absolutely uncredited or unreasonable, we feel it our duty to defer to the decision of the justice, and to affirm the judgment.


author: By the Referee.

text:
    Hugh M. Reynolds, Pl’ff, v. Mary Welsh and Sarah Welsh, Def’ts.

      (New York Common Pleas, Special Term,

      Filed June, 1887.)

    1. Contract—Not signed by the parties, but orally assented to.
    In a case not within the statute of frauds, if a written agreement he orally assented to by the parties to it, although not signed by them, it will constitute the contract between them.
    3. Same—Builders contract—Payment in instalments—Amount and TIME LEFT UNDETERMINED.
    A contract was entered into whereby a builder agreed to erect a building for a certain sum, it being understood that said sum should be paid ininstalments at different stages of the work, the amounts of such instalments and the times of payment being left undetermined. The builder accordingly commenced and prosecuted his work up to the laying of the first tier of beams. After this had been done a written instrument was executed containing the provisions originally agreed upon and the additional provision among other others that $1,000 of the contract-price should be due and payable when the first tier of beams was laid. Held, that the builder was entitled to demand $1,000 immediately after the execution of the instrument, and, in case of default in such payment, was entitled to file a mechanic’s lien and foreclose it.
    3. Same—Amounts payable at various stages of the work.
    The amounts made payable by a building contract at various stages of the work arejiresumptivelythe correct valuations up to such points respectively. If an owner has defaulted in a payment, and the builder wishes to recover more than the amount made payable at that stage, the burden is on the latter to show that the sum then made due is not justly proportioned under the contract to the actual work then performed. He must further show definitely what proportion the work up to such point hears to the total work contracted for and claim such proportion of the total contract price.
    This is an action to foreclose a mechanic’s hen.
    The case was referred to Wilbur Larremore, Esq., to hear and determine all the issues.
    The facts appear in the following opinion of such referee.

      John M. Bowers, for pl’ff; Arthur J. Delaney, for def’ts.
   By the Referee.

The defendants are respectively owners of two adjoining lots of land, known as 47 and 49 Oak street, in the city of New York. On or about November 12, 1884, they, by their authorized agent, entered into an agreement with plaintiff that he should furnish materials and erect upon such premises a building covering both of said lots, in accordance with plans and specifications theretofore prepared by an architect, for the sum of $9,000. The terms of such contract were agreed upon, except that the times and manner of payment of said $9,000 were left for future determination, and it was understood that the contract should be subsequently completed and signed by the parties. A written, contract complete, with the exception aforesaid, was on or about said date prepared and sent to the defendants. They retained it in their possession until December 24, 1884, when it was completed, by inserting the times and manner of payment, and signed and delivered by the plaintiff and by the' defendant Sarah Welsh. In the interval between his employment, on or about November twelfth and December twenty-fourth, when this contract was executed, the plaintiff commenced work under the plans and specifications, and did substantially all the work upon which the present claim is founded. The contract, as completed, calls for the payment of $1,000 when the first tier of beams was laid. Plaintiff produced the architect’s certificate of the prosecution of his work to this point, demanded payment of said sum, which being refused, he filed a mechanic’s lien and has brought this action to foreclose the same.

There is no doubt as to the authority of the agent who made the original agreement with plaintiff; this is admitted of record. The claim of defendants is that the instrument as originally submitted to them was complete; that according to their understanding the $9,000 was to be paid in a lump sum when the work was finished; that the provisions for payment in instalments were inserted at the time of execution without their knowledge, and that they were fraudulently induced to execute a paper which did not embody their intentions. The evidence, however, does not bear out this contention. In the first place, it would be an unusual thing for a builder to agree to such a proposition. The invariable custom of the trade is to require and receive payments in installments at different stages of the work. Then the contract as originally forwarded to defendants was on its face incomplete. . It called for the payment of $9,000 “in manner following,” and a blank was left after the words quoted. It also appears that some discussion was had in the presence of defendants as to whether the first payment should be made $2,000 or $1,000, and also that the contract was read over before being signed. Furthermore, defendants did not disclaim the liability to pay in instalments until some time after the execution of the contract, for it is shown that attempts were made with their knowledge and consent to mortgage the premises, so that plaintiff might be secured in finishing the building. The testimony, the admitted facts and the surrounding circumstances all tend to uphold the contract.

The contract was signed by the plaintiff and by the defendant Sarah Welsh, but not by the defendant Mary Welsh. The latter, however, was present at the execution of the instrument. Plaintiff testifies that she was in the adjoining room, “which has got a door or partition into it, and she leaned right across it.” Mr. G-rue, the architect, avers that she was in the next room with the door open between. She herself says that she was in the adjoining room and that she “left it (the business) to her sister and “Jimmy” (Baldwin). As she thus admits her sister’s authority it seems reasonable to hold that Sarah Welsh in signing the contract acted both for herself and as agent for Mary Welsh. An agent may bind his principal by his personal signature, even in a case within the statute of frauds and even though the principal’s name does not appear on the instrument. Dykers v. Townsend, 24 N. Y., 57. If this be so, a fortiori, an agent’s personal signature, is sufficient in a contract like the one here involved in which the principal is named and described as a party thereto. This case differs from Dykers v. Townsend in that the defendant who signed acted both in her own behalf and as agent. But it was the intention of all the parties that she should act in such dual capacity, and if it were incumbent upon plaintiff to establish a contract in writing duly signed, it might be held, as counsel for plaintiff contends that the case fell fairly within the doctrine of Dykers v. Townsend, and that the paper was, in contemplation of law, duly signed by Mary Welsh, as it was in fact by Sarah Welsh. It is not, however, necessary to invoke this theory in order to bind the defendant who did not actually sign. In Dutch v. Mead (4 Jones & Spencer, 427; affirmed, without opinion, 59 N. Y., 628), it is held, in regard to a contract like the present one, not within the statute of frauds that a written instrument, although not signed by the parties, will, if orally assented to by them, constitute the agreement between them. Mary Welsh was present on December 24, 1884, when the terms of this contract were discussed. If she did not make herself personally familiar with all its details, her authorized agents, Mr. Baldwin and Miss Sarah Welsh, did do so. She knew that she was a party and a necessary party to it, and that it affected her interests. If she then “left it all to her sister and “Jimmy,” and allowed it to be completed, executed and delivered by such agents, it certainly must be held that she assented to it and that she and her property are bound thereby.

• This action is to foreclose a mechanic’s lien filed under the contract. It has been urged with some little plausibility that as the work for which the hen was filed was completed before the payments were agreed upon and before the written contract was executed, this work cannot be said to have been done under such contract. The effect of the execution of the writing was to make the first payment of $1,000 due immediately, but I cannot see that this consideration affects plaintiff’s right to acquire a hen or to enforce it. The action taken on December 24, 1884, did not constitute the making of a new contract, but simply the completion and formal execution of a contract which, since November 12, 1884, had been in existence in a sufficiently complete state for plaintiff thereunder to commence and prosecute his work up to the laying of the first tier of beams.

Indeed defendants now claim that the contract was then complete, and as it then existed, must be taken as expressing the whole intention and agreement of the parties. It had been in Miss Welsh’s possession since about that time, complete except as to the provisions for payment in question. Under the doctrine of Dutch v. Mead (supra), I think it may be said that the contract was in existence as a written one during the period. The writing contained so much of the understanding between the parties as had then been arrived at and it had been assented to by plaintiff and by defendants’ duly authorized agent, Baldwin. But even on the theory that the contract existed only in parol between the commencement of the work and the signing of the paper, it was still the same existing contract that was completed and formally executed. A written contract supersedes a previous oral understanding in the sense that parol evidence is inadmissible to contradict or vary the instrument. But merely to reduce to writing an existing contract is not to make of it a new contract or a different contract. It will be the same agreement though evidenced in a different manner. In this case the original contract was preserved in all its features when the writing was signed and there were added simply provisions as to payments which were contemplated by all at the time of the beginning of the work, though the amounts thereof were left to future determination. It was agreed on or about November twelfth that the building should be erected according to plans and specifications for $9,000, and also that the times and manner of payment should subsequently be fixed. On December twenty-fourth the parties confined themselves to carrying out the original intentions of November twelfth which latter is the date the instrument bears. Under these circumstances, I think it may properly be held that the work and materials were performed and furnished under and in accordance with the contract, as thus finally completed and executed, and that j)laintiff was entitled to demand the first payment immediately, upon production of the architect’s certificate.

In regard to the claim made by plaintiff for $570.86 in addition to the $1,000 secured by the contract it is difficult to see how it can be substantiated under the evidence. Probably the amounts made payable at different stages of the work are not to be taken as absolute valuations up to such points, but I think they must be considered as presumptive valuations. As matter of fact the work actually done did not progress much if any beyond the first tier of beams. If plaintiff is not bound by the contract valuations, he must at least prove affirmatively that the installments named are not correctly proportioned to the various stages of the building, show definitely what proportion the work up to a given point bears to the total work required and claim such proportion of the total contract price. In other words, he must prove, not a general quantum meruit, but a quantum meruit under and with reference to the contract. The only evidence bearing upon the question is a paper submitted by plaintiff with objection which he averred contained a detailed statement of all work done and materials furnished and the charge for them, amounting in the aggregate to $1,570.86. He does not even give his opinion as an expert of the value of the services and materials, but merely the charge he makes for them. This testimony I should consider insufficient to support even a general claim by way of quantum meruit; obviously it is insufficient to support the extra claim made herein.

(Remarks on questions of fact omitted.)

Allen, J., confirmed the report. Judgment for the amount secured by the contract and directing sale of premises to satisfy same was accordingly entered.

There was no appeal.


author: Van Brunt, P. J.

text:
    People ex rel. Nathan Strauss, etc., Resp’ts, v. Michael Coleman et al., Commissioners of Taxes and Assessments of the city of New York, App’lts.

      (Supreme Court, General Term, First Department,

      Filed March 31, 1887.)

    1. Taxes and assessments—Executors and trustees—What taxable as PERSONAL PROPERTY OF
    The testator died in November, 1885, leaving a will by which the relators, who reside in New York, were appointed executors. At the time of his death the testator was a member of a firm in San Francisco and one in New York, both being composed of the same persons. On the second Monday of January, 1886, the value of decedent’s interest in the San Francisco firm had not been ascertained, nor had an accounting been had between the relators as executors, etc., and said firm, to ascertain the value of said interest. On said day the assets of the San Francisco firm consisted of local securities, government bonds and stock in trade. The tax commissioners (defendants herein) on said day assessed the relators as executors and trustees in the sum of $100,000 personal property. They had then received nothing, but afterward received about $500,000 from the surviving members of said firm. Held, That there was no existing debt due or owing to the relators on the said second Monday of January, from the surviving members of the last named firm. That the assessment was illegal.
    2. Same—Co-partnership—Surviving members—Entitled to assets— Liquidation.
    The surviving members of said firm were entitled to the possession of the whole of the firm’s assets for the purposes of liquidation, and they became trustees for that purpose. They were under no obligation to pay over until all the firm debts have been paid, and until the interest of the deceased partner had been absolutely determined and fixed. Then only would a debt arise due from the surviving partners to the personal representatives of the deceased partner which could be enforced or taxed.
    8. Same—Right of executor before liquidation completed.
    The relators had an equitable lien upon these assets to the extent of having them applied solely to the purpose of liquidation. But they had no legal claim as long as the surviving partners conducted the liquidation in a proper manner, and could not in any way interfere therewith.
    4. Same—“Accounts” means mercantile accounts.
    In the expression “ debts due from solvent debtors, whether on account,” etc., in the statute defining what is subject to taxation: Held, That the word "account ” is there used in its mercantile sense, and does not refer to those cases where a person is entitled in equity to have an account taken to settle the rights and interest of parties to a fund.
    Appeal from a judgment declaring an assessment illegal and an order vacating the same.
    Jonas Strauss, residing in the city of New York and doing business in said city and also in San Francisco, died in New York in November, 1885, leaving a will by which the relators were appointed his executors and trustees.
    The will was duly admitted to probate in January, 1886, and the relators, who also resided in New York city, duly qualified as the executors thereof.
    At the time of his death the said Jonas Strauss was a member of the firm of Levi Strauss & Co., of San Francisco, and of the firm of J. Strauss, Bro. & Co., of New York.
    The members of both firms were Jonas Strauss, Levi Strauss, Estate of David Stern, Nathan Strauss, Jacob Stern and David Marks.
    The value of the interest of decedent in said firm in San Francisco had not been ascertained on the second Monday of January, 1886, nor had any accounting been had between the relators, as executors, and said firm with a view of ascertaining the value of such interest.
    On said last mentioned day the assets of said firm in San Francisco consisted of local securities of California government bonds and stock in trade, all of which were in California, and on said day the respondents assessed the relators as executors and trustees in the sum of $100,000 personal property.
    The value of the interest of Jonas Strauss in the assets of his firm in November, 1885, was supposed to be about $700,000, none of which had been paid over to the relators until after the second Monday of January, 1886.
    Between that date and April 24, 1886, the relators received a little over $500,000 from the surviving members of the firm in San Francisco on account of the deceased member’s interest in the assets of the firm.
    On April 24, 1886, the relators, having objected to the assessment, had a hearing before the respondents upon the question of their liability, and in May, 1886, the respondents decided that the relators were liable to pay taxes on said assessed sum of $100,000. <
    The relators then, pursuant to the provisions of the Laws of 1880, chap. 269, brought certiorari proceedings to reverse such decision.
    Testimony was taken, and, upon the submission of the question to the court, it was held that the assessment was illegal, and, from the order and judgment thereupon entered this appeal is taken.

      George S. Coleman, for app’lts; W. F. Severance, for respt’s.
   Van Brunt, P. J.

The only question which is presented by this appeal is whether or not, on the second Monday of January, 1886, there was a debt or obligation for the payment of money due and owing from the survivors of the California firm to the executors of their deceased partner exceeding $100,000

In determining the question it is necessary to consider for a moment the relations which surviving partners bear to the firm assets and to the personal representatives of the deceased partner.

In the case of Daby v. Ericsson (45 N. Y., 786-789), it is held that “ upon the death of one partner, the demands and choses in action of the co-partnership belong to the surviving partners, and they possess the sole and exclusive right to reduce them to possession, and when recovered they stand as trustees for the representatives of the deceased partner to the extent of his interest.

“The law not only vests the legal title to the choses in action in the surviving partner, but it casts upon him the duty to get in the debts and settle the affairs of the partnership. Thejtis accrescendi exists for this purpose.”

The surviving partners have, therefore, the whole legal title to the assets of the firm, but such assets subject to the payment of debts, are impressed with á lien in favor of the representatives of the deceased partner to the extent of the share of the deceased partner in the firm’s assets, and although the surviving partner is entitled to the possession of the whole of the assets of the firm for the purposes of liquidation, he is a trustee for that purpose and receives them impressed with the lien above stated, and in case the surviving partner misconducts himself as a trustee for the purposes of liquidation, and having disposed of old assets, invested the proceeds in new assets or stock, and mingled such purchases with stock bought upon his own credit so that the same cannot be separated, the lien above mentioned is impressed upon the whole stock to indemnify the trust fund except as against bona fide purchasers or a party having acquired a specifiec lien by the levy of an execution or attachment.

And this right acquired by lien is carried so far that it may be enforced to the exclusion of the individual creditors of the surviving partner, whose debts may have been incurred in the purchase of the very stock mingled as stated above. Hooley v. Grieve, 9 Daly, 104; affirmed in court of appeals on opinion in court below, 82 N. Y., 625.

It would thus appear that the representatives of a deceased partner have something more tangible than a mere claim for an accounting against the surviving partner—that they have a hen upon the firm assets to the extent of the deceased partner’s interest, which lien they may enforce according to equitable principles.

But does the liability of the survivors of the deceased partner constitute a debt or obligation for the payment of money ?

In the statute it seems to have been supposed that the words “debts” and “obligations for the payment of money” were applicable to different species of personal property, and that by “obligations for the payment of money,” the legislature meant to describe written' instruments for the payment of money, and not to the mere duty ■to pay money, which might be represented by the word “debt.”

Did, therefore, any debt exist on the second Monday of January, 1886, which was due or owing to the relators from the surviving members of the firm of the deceased ?

The surviving members as has been seen were entitled to the possession of the whole of the firm’s assets for the purposes of liquidation and they became trustees for that purpose.

The relators, it is true, had an equitable lien upon these assets to the extent of having them applied solely to the purposes of liquidation, but no further.

They had no legal claim as long as the surviving partners conducted the liquidation in a proper manner, and could not in any way interfere therewith, and their legal claim arose only after it had been determined what the interest of the deceased was, and a duty to pay over existed.

The trustee was under no obligation to pay over, there was no debt due or owing by him to the representatives of the deceased partner until liquidation,—until all the firm debts have been paid, and until the interest of the deceased partner had been absolutely determined and fixed.

When these things had been done, then a debt arose due from the surviving partners to the personal representatives of the deceased partner, which could be enforced.

In the case at bar none of these things had been done at the time of the imposition of the tax, and hence no debt existed.

It is true that there was an obligation resting on the surviving parters to liquidate the affairs of the firm as trustees for that purpose, which obligation the personal representatives of the deceased partner could enforce even to the extent of claiming their equitable lien upon the firm’s assets, as above mentioned, but such an obligation cannot be said to be an obligation for the payment of money, but rather an obligation to execute a trust.

Therefore stating the claims of the representatives of the deceased member of the firm in their strongest light, ■they do not seem to be either a debt or an obligation to pay money as these terms are used in the statute under consideration.

We notice in the points of the appellants that particular attention is called to the words debts dm from, solvent debtors, whether on account, etc., as though' the words, debts due on account, referred to a case like the present, where a debt might result from an accounting. We think the word account is there used in its mercantile sense, and that it does not refer to those where a person is entitled in equity, to have an account taken to settle the rights and interests of parties to a fund.

The costs and judgment appealed from must be affirmed, with costs.

Bartlett, J., concurs.


author: Macomber, J.

text:
    Ebenezer Platt Johnson as Executor, etc., of Ann M. Brooks, Deceased, Resp’t, v. Melville A. Kellog, Adm’r, with Will Annexed, etc., of George Brooks, Deceased, App’lt.

      (Supreme Court, General Term, First Department,

      Filed March 31, 1887.)

    1. Executors and administrators—No power to borrow money to carry on business.
    In an action to recover a sum of money advanced to the executors of George Brooks for the purpose of being used in the business of G. Brooks & Co, which had been continued by the two surviving partners. Held, that it was not competent for executors or administrators to make an original contract of the kind mentioned which would bind the estate of a decedent, even though made in the interest and for the benefit of the estate they represented.
    :2. Same—Advances to pay ope debts can be recovered.

      Held, that so much of the original fund as was used by the executors of George Brooks to pay off and discharge the indebtedness of the estate could be recovered.
    Appeal from a judgment for $2,025.76 in favor of the plaintiff entered upon an order confirming the report of a referee to whom the matter in controversy had been referred under the statute. The original plaintiff was Ann M. Brooks, the widow of George Brooks, deceased, who brought this action against the defendants as administrators with the will annexed of the said George Brooks. The amount claimed was $10,000 (less a payment of $1,150), loaned by said Ann M. Brooks in August, 1876, to Anthony Halsey ;and Henry J. Brooks, now deceased, who were then executors of the said George Brooks’ will, and by them placed to the credit of George Brooks’ estate in the co-partnership of a firm known as G. Brooks & Co., of which firm George Brooks had been a member in his lifetime.
    The evidence established the fact that the whole sum of $10,000 was advanced by the plaintiff’s testatrix to the executors of George Brooks for the purpose of being used in the busines of G. Brooks & Co., which had been continued by the two surviving partners from June, 1876, when George Brooks died, until the 1st day of February, 1880.

      Samuel L. Gross, for app’lt; E. P. Johnson and William Pierrepont Williams, for resp’t.
   Macomber, J.

The contract which the executors of George Brooks made with the plaintiff’s testatrix bound themselves personally only, and did not bind the estate of which they were the personal representatives. It is not competent for executors or administrators to make an original contract of the kind mentioned which shall bind the estate of the decedent, even though made in the interest and for the benefit of the estate which they represent. Austin v. Munro, 47 N. Y., 360. In accordance with this well established rule, the learned referee has denied to the plaintiff a recovery for the $10,000 as a whole, so loaned by the testatrix to the executors of George Brooks. But the sum of $2,025.76 rests for its support upon the claim, which is borne out by the evidence, that so much of the original fund was used .by the executors of George Brooks to pay off and discharge the indebtedness. of the estate.. These moneys having been parted with in good faith by the lender, and expended in good, faith by the executors of George Brooks, should be allowed as advances made by them, as the estate of the deceased has by so much been benefited thereby. Had the executors advanced such moneys personally, they would be allowed to recoup therefor in their accounts with the 'decedent’s estate. Livingston v. Newkirk, 3 Johns. Ch., 312; Freeman v. Freeman, 2 Redf., 137.

It is insisted, however, by the learned counsel for the defendant that the sum of $1,150, which was repaid by the executors of George Brooks to the plaintiff’s testatrix, and which forms no part of the $2,025.76 mentioned above, should be deducted from the recovery. We do see how this can properly be done, for it does not appear that this sum was paid out of the property of the estate of George Brooks.

It is further urged that the cause of action arose more than seven and one-half years prior' to the beginning of . the suit, and is consequently barred by the statute of limitations.

This argument does not give proper weight to the payment of the $1,150 already mentioned, which by the fourteenth finding of the referee was made in July, 1881. This payment is not to be applied upon the claim which the referee has allowed to the plaintiff, but upon the whole sum loaned.

The whole transaction proceeded upon an erroneous conception of the rights, powers and duties of personal representatives of decedent’s estates; yet the claim of the plaintiff and of his testatrix has been consistent throughout that a recovery should be had for the whole $10,000. So far as the cause of action is concerned, the claim and the recovery are not separable.

There is a slight discrepancy in the date of the receipt given by the executors to Ann M. Brooks, and the time of the receipt by her of the insurance moneys out of which, it is stated, the loan was made to the executors of George Brooks. That any suspicion should be thrown upon the claim made by the plaintiff by reason of this variance does not by any means follow, for it might well be that, as is claimed by the counsel foi the plaintiff, the arrangement between Ann M. Brooks and the executors was made at the time of the advancement of the moneys by the executors, one-half in the month of August, as is stated in the receipt, and that the sums in that paper recited as having been received were advanced by the executors, but under an agreement with Ann M. Brooks that she should reimburse them as soon as her insurance moneys were received, which seems to have done accordingly.

This circumstance does not vary the legal rights of the parties in any respect.

The judgment should be affirmed, with costs.

Bartlett, J., concurs.