author: BEEKMAN, J.

text:
    New Jersey and Pennsylvania Concentrating Works, Pl’ff, v. Charles F. Ackermann et al., Def’ts.

      (Supreme Court, New York Special Term,

      Filed February, 1896.)

    1. Insurance—Restrictions—Public policy.
    The stipulation in a policy, on which 100 insurers are severally liable for a hundredth part of the insurance, that the assured shall not sue more than one of the insurers at one time, and that a final decision in any such action shall be decisive of the insured’s claim against each of the insurers, is against public policy.
    2. Same—Limitation.
    A condition in such policy that no action shall be brought on it for three years, is sufficiently complied with by an action being brought, and some of the insurers served with process, within that time.
    3. Same.
    In such case a more enlarged meaning cannot be given to the stipulation because the condition binding the assured to a single action is found to be void.
    Demurrer by plaintiff to the answer.
    A. Walker Otis, for pl’ff; Julien T. Davies, for def’ts.
   BEEKMAN, J.

On June 8, 1892, in consideration of a premium of $500 paid to the defendants, the latter issued and delivered to the plaintiff their policy of insurance, whereby they insured it for one year “against all liability arising 'from .accidental bodily injury or loss of human life caused to an employe or employes of the assured at the place or places mentioned in the application, and situated at Ogden, Sussex county, New Jersey, or elsewhere in the service of the assured.” The policy further provided that the aggregate liability should not exceed $5,000 for any individual injured or killed, and not exceed $25,000 for any number of individuals injured or killed at one time. The underwriters are 100 in number, each insuring “as a separate underwriter * * * for himself and not one for the other; ” and the extent of the liability of each is defined in the following stipulation: “The liability of each of the underwriters, and the amounts insured by him, shall be the hundredth part of the aggregate amounts insured hereunder;” and at the end of the policy, in the clause which reads as follows: “Each of the present subscribers, as a separate underwriter, binds himself severally, and not jointly with any other, for the true performance of the premises for the amount expressed to be insured by him.”

The following conditions are involved in questions raised by the demurrer:

“(4) No action shall be brought upon this policy in any court after three years from the time when the accident occurred upon or by reason of which the cause of action accrues, unless at the expiration of said time some suit brought by the injured person, or by his legal representatives, be then pending against the assured, in which case an action may he brought within six months after the termination of such suit, and not later.” “(9) The assured stipulates that suit shall not be brought or maintained upon any claim arising out of the present insurance against more than one of the underwriters at one time, nor in any court other than the highest court of original jurisdiction, and that a final decision in any suit so brought shall be decisive.of his claim against each of the underwriters; and in consideration of such stipulation, each of the underwriters hereto waives any limitation as to costs, and agrees to abide by the event of any such suit, and authorizes the attorneys to pay to the assured, out of any of the funds in their hands, the amount due under this policy. Each of the underwriters also hereby authorizes the attorneys to receive and admit service of process for him in any suit brought as aforesaid.”

Certain of the defendants have interposed a joint answer to the complaint; setting up, among others, the following defenses:

“And for a second separate and distinct defense these answering defendants allege that, in and by the policy set. forth in the answer the plaintiff stipulated that suit would not be brought or maintained upon any claim arising out of said policy against more than one of the underwriters at one time, and that in and by the said policy the said stipulation was made a condition thereof, and the insurance thereby given was made subject thereto, and that, in violation of the said stipulation and of said terms and condititions of the said policy, the plaintiff has brought this action against more than one of the persons who were underwriters, on the policy set out herein, at one time. And for a third separate and distinct defense these answéring defendants allege that) in and by the policy set forth in this answer, it is provided that no action shall be brought upon said policy, in any court, after three years from the time that the accident occurred, upon or by reason of which the cause of action accrues; that in and by said policy said provision is made a condition thereof, and the insurance thereby given was made subject thereto; that the accident upon or by reason of which the cause of action is herein alleged to have accrued occurred on the 12th day of August, 1892; that the summons and complaint in this action were sérved upon the defendants Aaron H: Rathbone, Frank S. Bond, and Charles F. Ackerman prior to the 12th day of August, 1895, but the summons was not served upon the other answering defendants until after tiie 12th day of August, 1895. And these defendants allege that, except as to the said defendants Rathbone, Bond and Ackerman, this action was brought more than three years after the time when the accident occurred, upon or by reason of which the cause of action herein alleged to have occurred, in violation of the terms and conditions of the said policy.”

The plaintiff demurs to each of these defenses upon the ground that it is insufficient in law upon the face thereof. The question raised in respect to the second defense involves the consideration of the validity of the ninth clause of the policy above quoted. The clause in question reveals a purpose to confine litigation under the policy to a single action brought against one of the underwriters. As the policy phrases it, no suit is to be brought or maintained upon any claim arising out of the insurance against more than one of the underwriters at one time; and a final decision in any suit so brought, it is declared, shall be decisive of the claim of the insured against each of the underwriters. It will be recalled that the liability of the underwriters is several, and not joint, and that each is responsible only for a definite and separate' proportion of the amount of the loss, and that, upon the loss being ascertained and liquidate, it becomes his duty, and his only, to pay it, and yet, under this stipulation, he enjoys immunity from the compulsory processes of the law until the debt of another under the policy shall have been finally determined by the judgment of the court,—that is, until the judgment has become final by affirmance on appeal, if appeals shall have been taken. The object of this is made plain when we consider the scope of the requirement that such determination shall be decisive of the claim of the insured against each of the underwriters,—decisive, it will be observed, whether the decision be for or aginst the insured. Doubtless, where underwriters intend honestly to meet their obligations, and to litigate only when they conceive that they have a meritorious defense, there is a measure of convenience, suitable to both sides, in this economy of legal procedure; but experience has shown that provisions of this character are so frequently used oppressively, and in aid of attempts to shirk the payment of just claims, that the courts have come to look with disfavór upon agreements in any way restricting freedom of access to them; and, while arbitration by agreement is recognized, even then the sanetion of the law is qualified by the right of a party to withdraw from it at any time before the dispute has been finally submitted to the arbitrator for decision, irrespective of the fact that the agreement to arbitrate rnajr have been based upon a substantial consideration, and the party against whom the revocation is made may have parted with rights and advantages on the faith of the agreement. People ex. rel. Union Ins. Co. v. Nash, 111 N. Y. 310; 19 St. Rep. 75. The whole matter is summed up in the state-merit that “no stipulation in the agreement will be sustained, either at law or in equity, as defeating this right, so as to prevent the parties from having recourse to the courts.” 1 Am. & Eng. Enc. Law 664, and cases there cited. I am not unmindful of the line of cases which sustain the binding force of a certain class of stipulations, by which the contracting parties agree, as a condition percedent to liability, that a certain fact shall be determined by arbitration, where a dispute arises in respect to it, or that a disputed amount shall be ascertained in that manner. The distinction, however, is clearly made in the case of President, etc., Delaware & H. Canal Co. v. Pennsylvania Coal Co., 50 N. Y. 250. In that case Judge Allen says (page 266):

“The distinction between the two classes of cases is marked and well defined. In one class the parties undertake, by an independant covenant or agreement, to provide for an adjustment and settlement of all disputes and differences by arbitration, to the exclusion of the courts, and in the other they merely, by the same agreement which creates the liability and gives the right, qualify the right by providing that, before a right of action shall accrue, certain facts shall be determined, or amounts and values ascertained; and this is made a condition precedent; either in terms, Or by necessary implication.”

It may therefore be taken as within the realm of well settled law in this state that parties cannot bind themselves in advance not resort to the courts for the settlement of their differences. But the question immediately arises, how far does this doctrine extend? Does it stop with the protection of the right of access, or does it secure to the litigant full liberty to prosecute and defend according to the course and practice of the courts, unhampered by any restrictions or qualifications of any kind which the contract may have sought to impose? I think the affirmative of the last inquiry embodies the correct view. It being conceded that the right to appeal to the courts cannot be stipulated away, the logic of the case demands that the litigant should not be maimed in the assertion of his right by restrictions which the law does not impose upon others. Freedom of approach must also import freedom from restraint in the exercise of all the rights which the law declares to be a part of its remedial justice. This rests upon consideration of public policy, and experience has confirmed the wisdom of refusing to parties, in anticipation of possible disputes, the erection of other tribunals for their settlement, or the imposition of limitations unknown to the law, upon the manner in which the jurisdicton of the courts shall be exercised. The subject has received recent illustration in the case of Sanford v. Association, 147 N. Y. 326; 69 St. Rep. 689. In that case a certificate of insurance contained this clause:

“ It is hereby stipulated and agreed by and between this association and the member named herein, .and his beneficiary, that the issues in any action brought against it under this certificate shall, on the demand of this association or its attorney, be referred for trial to a referee to be appointed by the court in which such action is brought.

The agreement was held to be void. In the closing paragraph of the opinion of the court, Judge GRAY says:

“ I think we may safely base the reason for the application of this rule upon the proposition that public policy is opposed to the enforcement of an agreement which supersedes the law, and deprives the individual of the protection which it was designed and framed to afford.”

The opinion below, referred to with approval by the court of appeals, is more elaborate in its discussion of the question. Sanford v. Association, 86 Hun, 380; 67 St. Rep. 225. At page 383, 86 Hun, of the opinion, the court says:

“ But parties cannot, in advance, by a general agreement, provide that their differences shall be submitted to arbitrators^ or referees, and thus entirely oust the court of its jurisdiction; nor can they, by such an agreement, oust the court of any part of its jurisdiction, or supersede the law which provides the method of trial and regulates the proceedings in an action.”

I do not see how the wisdom of this statement, taken in its broader sense, can be questioned. Experience has demonstrated its wholesomeness, and a departure from it cannot be allowed without conceding to private persons the right to suspend the operation of general laws, founded-on public policy, to meet what they may conceive to be the exigencies of a particular case, and to establish a code of practice of their own for any litigation which might arise under their contract, the result of which may easily be imagined.

The question now arises, has this principle been violated in the present case? As has been said, the scheme of the policy is that • but one suit shall be brought upon it by the assured, and against one of the insurers ouly, and that the decision in that case shall be determinative of the claims of the assured against the ninety-nine other underwriters. If the claim is sustained against one, the others agree that they shall be barred of the assertion of any defense. If, on the contrary, judgment passes against the assured, he agrees that the judgment shall be a bar to any suit he might thereafter institute against any of the others. In either case the judgment in an action between the assured and one of of the'underwriters is to be decisive of the claim or defense between him and the others.- It is sufficient to say that this attempts an extension of the doctrine of res adjudicata not recognized by the law. Where controversies have arisen, and litigation in some form has ensued, it may well'be that agreements and stipulations in preaesenti are valid, providing that one or more of such controversies shall halt and abide the event of another; but that is not this ease. It is here attempted to bind -the parties, in advance of any controversy, and without expectation that any will arise, to renounce their remedies for prosecution or defense, thus depriving the contract of validity as an obligation capable of enforcement. As has been said, the liability of the defendants is several; none can be held for more than a sum equal to a one-hundredth part of the loss ; and each is therefore, in a certain sense, a stranger to the controversy between the assured and the others, and whether the assured collects, or fails to collect, from them or any of them, in. no way concerns him, as he is bound .and can be held for nothing more nor less than his own part of the loss, as determined by the contract. Each owes his own debt, and each debt is distinct and individual, although all arise out of the same circumstances and conditions, and are the product of a common venture. The contract, then, demands in advance a surrender by the plaintiff of his rights of action against all of the defendants but one. It is true that it does not in terms say that he shall never sue any -of the others, but it compels him to renounce his causes of action against them, if the single suit which he is authorized to prosecute is adverse, which is the same thing. If, however, judgment passes in his favor, the contract compels each of the underwriters to waive every defense which he might otherwise successfully "as-. ssert in respect to the particular claim made against him, and to submit to judgment without the right of being heard upon the merits of the claim for which he is sued. The principle which forbids agreements not to sue applies equally to similar contract waivers of particular defenses. Shapley v. Abbott, 42 N. Y. 443. It seems clear to me that the entire scheme embodied in the stipulation under consideration is whithin the prohibition of the rule as I have attempted to explain it, and that the contention of the defendants that the plaintiff cannot sue more than one of them at one time is untenable.

A consideration of the demurrer to the third defense is now necessary. Under this defense, it is claimed, on behalf of certain of the defendants, that the action has been commenced more than three years after"the accident in respect to which the liability accrued, and that, under the stipulation of the policy in that regard, it cannot be maintained as to them. The validy of such a provision cannot now be questioned. Mayor, etc., v. Hamilton Fire Ins. Co., 39 N. Y. 46; Steen v. Insurance Co., 89 id. 315. The only point, therefore, which is presented, is whether this condition of the policy has been violated. In considering the question it must not be lost sight of that the stipulation is not a statute of limitations, and is not to be construed as such. It is purely contractual and is therefore like any other condition which the parties may agree upon, and is to be construed in precisely the same manner. While, therefore, the court must, in a plain case of infraction, support the agreement of the parties, and give it due effect, its exact import is always a matter of construction; and if there is ambiguity the words must be construed most strongly against the insurer, and in favor of the assured, as he might fairly have understood them, so as to sustain, rather than defeat, the contract of indemnity. Steen Insurance Co., 89 N. Y. 324; Hoffman v. Insurance Co., 32 N. Y. 405. In the case of Mayor, etc., v. Hamilton Fire Ins. Co., supra, Hunt, C. J., speaking of a similar contract limitation, says (page 46) :

“ The condition is extremely stringent. It is in derogation of the rights of the assured, as given by the statute of limitations of the state. It is often not known or not considered by the assured, and should only be permitted to prevent a recovery when its just, and honest application would produce that result..”

Although I have held certain provisions of the contract to be invalid, it is yet permissible to consider them for the purpose of arriving at the intention of the parties, in aid of the proper construction of other portions of the instrument-. It is plain that but one action upon the policy was contemplated, in which the liability of the underwriters was to be settled in case of dispute: They agreed, as we have seen, that the judgment in that action should be decisive of the right of the insured, and the obligations of the insurers, in respect to the entire loss; and it was with tint in mind, and intending to require only that the action in which the case was to be litigated on the merits should be brought within the contract period, that the stipulation in question was framed and entered into. When that was determined the whole loss was to be paid. Assuming the agreement limiting the plaintiff to a single action to be valid, would anjr court hold that the plaintiff was precluded from enforcing its rights against the other underwriters because the three years had expired while the litigation between it and the single underwriter was progressing? And yet, this is what the claim of the counsel for the defendants logically'leads to, if his construction of the whole contract is to be accepted. Taking the defense by itself, and separating it from the rest of the pleading, his claim is that, while the plaintiff is entitled to recover from each of three of the defendants his proportion of the loss, it is forbidden by the terms of the policy from recovering anything from the remaining ninety-seven. It is thus gravely urged that under the contract limitation, which, in form and in substance applies, and was intended to apply, to a recovery of the entire loss, the -plaintiff' may still recover three per cent, of it, but no more. Suppose a case where an action on such a policy has been brought against a single underwriter withiri the three years. A contest takes place, a trial is had, and appeals are taken, so that the period of limitation has expired before a final decision in favor .of the assured is reached. Can it be for a moment maintained that the assured — nay, even the underwriters themselves—could have understood or intended that there should be then no capability of enforcing the obligations of the ninety-nine who had not been, and who were not to be, sued while the single auction was pending? Surely not, for has not each underwriter bound the assured not to sue under such circumstances, and also agreed to abide the event of the pending action ? How, then, can he be heard to plead the limitation, when, according to his own construction of the agreement, his duty to pay becomes absolute only after ■the determination of the suit first brought? The absurdity and immorality of the conseqences flowing from the construction for which the defendants now contend demonstrate its fallacy. Plainly, then, the true intent and meaning of the contract limitation were that, if no action was brought within the three years, none should be brought thereafter, bat that, if one suit—for that was all the parties had in contemplation — was brought within that time, the demands of the stipulation would be fully complied with' That was the intent and purpose of it, and it cannot now be given a more enlarged meaning because the condition binding the assured to a single action is found to be void. If, however, such an unjust and perverted meaning is unavoidable, it can only be because the contract limitation is an essential and inseparable part of the scheme which has been condemned; and, under well-settled principles, it must then follow the fate of its associate. But it is not necessary to go so far. When the plaintiff commenced its action within the prescribed time, as it is admitted it has dono in respect to certain of the defendants, it had substantially complied with the condition. That it has not served all of the defendants with process within that period is aside from the question. It is enough that a suit has been commenced before the time expired. Thereafter no limitation cambe pleaded nqt founded upon the statute.

In closing, I think it is proper to say that the court is being burdened with litigations between such underwriters as these, genetically known as “Lloyds," and those whom they have agreed to insure. Defenses of a technical character are interposed by them, under policies containing strange and unusual provisions, making it difficult, if not practically impossible, for the insured to collect an honest loss from unwilling debtors. Such contracts and expedients are justly regarded by the courts with extreme disfavor, and, in the exercise of the ample powers which the law bestows upon its tribunals, will be promptly met with that corrective treatment which the justice of the ease demands. But in saying this it is also due to these defendants to state that the policy in this case is less obnoxious than many of the same class which have been brought to the attention of the court.

As I am of the opinion that the demurrer is well founded in respect to both defenses, it follows that it must.be sustained, with costs.


source: Caselaw Access Project

author: LANSING, S.

license: Public Domain

text:
    In the Matter of the Judicial Settlement of the Accounts of George A. Stone, as Executor of the Will of Helen Torrance, Deceased.

      (Surrogate’s Court, Rensselaer County,

      Filed December 18, 1895.)

    1. Will—Construction.
    Where a will is capable of two constructions, one of which will dispose of the entire estate of the testator, and the other leave a portion undisposed of, the former will be adopted.

      2. Same.
    The testatrix, in this case, was held to intend that the legacies in her will should be paid out of her entire estate, whether it consisted of cash in hank or securities.
    3. Same—Chaiuties.
    Under section 1, chapter 360 of 1860, a testator Cannot give to two or more charitable objects more than he can give to a single object, viz., more than one-half of his estate.
    Judicial settlement of the accounts of George A. Stone, as executor of the will of Helen Torrance. Testatrix, who left surviving her two sons and a granddaughter, gave general legacies, amounting to $6,500, and provided by the seventh clause of the will that, “should there be any money in the bank to my credit after the preceding sums have been paid. I give and bequeath the same to the board ministerial relief of the United Presbyterian Church of North America.” At the date of the will, testatrix had $400 in cash in bank, and about $7,300 which the president of the bank had invested in securities for her. At the time of her death, five years later, the amount in bank was over $5,000, and her securities amounted to $11,000. Mr. Stone, the executor, was president of the bank, and acted as testatrix’s agent in investing her 'money, which he did without consulting her. The money so-invested was the income left to testatrix by her husband, and it was received by Mr. Stone.
    E. W. Douglas, tor executor; Clarance E. Akin, for the board of ministerial relief of the United Presbyterian Church of North America; George R. Donnan, for next of kin.
   LANSING, S.

The sole controversy in this case is as to the proper construction of the seventh clause of the will, which is stated above. A narrow and limited construction of the clause, “Should there be any money in the bank to my credit after the preceding sums have been paid [which amount to $6,000], I give it to the board of ministerial relief,” would render that clause entirely inoperative; for neither at the time of making her will nor at her death did she have enough money (strictly such) to her credit in the bank to pay the general legacies, and 'the result would be that the legacies which she . had provided for the several objects of her bounty could not be paid in full; and it is further obvious that she would die intestate as to the body of her estate, which consisted of securities in the possession of Mr. Stone, readily convertible into money to the amount, at the time of her death, of $11,000.

The cardinal rule in the interpretation of wills, as other instruments, which must be followed if consistent with the rules of law, is to ascertain the intent of the testator. This intent must be first sought in the language of the instrument. The intent inferable from the language of one clause may be qualified or changed by other portions of the will evincing a different intent. Hoppock v. Tucker, 59 N. Y. 292. Another rule is that every clause of the will must receive a reasonable construction, and the whole rendered effective if possible. Extrinsic evidence • may also be employed, not to contradict the will, but to interpret it in accordance with the intent of the testator. When extrinsic evidence, properly introduced, creates an ambiguity in an instrument otherwise reasonable and clear in its language, the ambiguity may be explained by the same kind of evidence. Galen v. Brown, 22 N. Y. 37; Tillotson v. Race, Id. 126; Abb. Tr. Ev. 130, note; In re Hastings, 6 Dem. Sur. 307. Another well-settled rule of interpretation of wills is that where a will is capable of two constructions, one of which will dispose of the entire estate of the testator, and the other leave a portion undisposed of, the former will be adopted. Vernon v. Vernon, 53 N. Y. 351; Lamb v. Lamb, 131 N. Y. 227; 43 St. Rep. 112. Applying these rules of interpretation to this instrument, I am of the opinion that the testatrix, intending, as it must be assumed, to dispose of her entire estate by will, did not intend to cut down the provisions which she had made for the objects of her bounty to the sum which she might chance to have at her death in cash at the bank, or subject her beneficiary in the seventh clause of the will to the hazard of receiving a nominal sum or none at all, if she did not chance to have more than the $6,000 in cash to her credit at the time of her death. The evidence shows that at the time of making her will she had only the sum of $400 subject to draft at the bank, and she knew it. It further shows that Mr. Stone, the president of the bank, was her financial agent, handled her funds as he.did his own, converting her securities into money and her money into securities, as he judged for her interest, informing her from time to time of what he had done. It further appearso that at the time of the making of her will she was possessed of about §7,700, including securities and cash in the bank of $400, and that by her will, if she countéd the securities as money, she had sufficient to pay all the general legacies in full, and about $1,700 would fall under the seventh clause of her will to the ministerial relief association, which was a very reasonable disposition of her property in view of her apparent desire to dispose of it for benevolent purposes. I am very clear, taking the will and all the circumstances together, and the fact that the will was prepared by a layman, that the language “money to my credit in the bank” she meant not only her money, but also her securities in the hands of Mr. Stone, the president of the bank, using the word “money” as synonymous with and embracing securities; that by the phrase “to my credit in the bank” she meant her monev anil securities in the hands of Mr. Stone; and that she intended to give the rest and residue of her estate to the board of ministerial relief. This, I think, is the only reasonable construction to be given to her language under the circumstances disclosed in this case; for, at the time of making the will, she directs, “after the proceeding sums have been paid,” which amounted to the sum of $6,000, then, “should there be any money in the bank” to her credit, that the same should go to the board of ministerial relief, showing clearly that she did not intend to die intestate as to any of her property, and also that she regarded the securities as money to her credit in the bank. This interpretation of her language renders all the provisions of the will operative, and is in harmony with the facts and circumstances connected with the disclosure of the value and situation of her estate and the production of the will. Treating, then, the $16,000 in the hands of Mr. Stone, her agent and executor, as “money in the bank to her credit,” the general legacies must be first paid, and the balance will fall in the seventh or residuary clause of her will, as the testatrix doubtless intended.

But there is an arbitrary statute which has not been considered and was doubtless unknown to the testatrix and the draftsman of her will, which reads as follows:

“No person having a husband, wife child, or parent shall by his or her last will and testament, devise or bequeath to any benevolent, charitable, * * * religious or missionary society, * * * or corporation, more than one-half part of his or her estate after the payment of his or her debts, and such devise or bequest shall be valid to the extent of one-half, and no more.” Laws 1860, c. 360,

A testator cannot give to two or more charitable objects more than he can give to a single object, viz. more than one-half of his estate. Chamberlain v. Chamberlain, 43 N. Y. 425. Where a testator makes devises which are invalid, he dies intestate as to such portion as is not effectually disposed of-by will. Lefevre v. Lefevre, 59 N. Y. 446.

Applying this statute to the distribution which would otherwise be made, it must be modified as follows:

(1) There must be deducted from the entire estate the debts of testatrix, the expenses of administration, including commissions. (2) The remainder must be divided into two equal parts, one moiety of which must be distributed to the next of kin of the deceased, in accordance with the statute of distribution; out of the remaining moiety there must be paid the several legacies, amounting to the sum of $6,500, provided in the will and the balance must be paid, under the seventh clause of the will, to the board of ministerial relief of the United Presbyterian Church of North America.

Decreed accordingly.


author: SILKMAN, S.

text:
    In the Matter of the Judicial Settlement of the Accounts of Frank Curtiss et al., as Executors and Trustees of Abijah Curtiss, Deceased.

      (Surrogate’s Court, Westchester County,

      Filed February, 1896.)

    1. Trusts—Resignation—Conditions.
    On the resignation of a testamentary trustee, the court may impose a condition that he relinquish commissions on the principal of the trust estate.
    3. Same—Commissions.
    , _ A person, who is both executor and trustee, is entitled to commissions in both capacities, where his duty as executor and trustee is separate.

      3. Same.
    In this case, the duties of the persons named as executors were held to be distinct from their duties as trustees.
    4. Same.
    Where the trustees are legatees and devisees of the entire residuary-estate and as such have a right to elect to take it in the form in which it was left by the testator, provided it is unnecessary to convert it for the purpose of paying debts and legacies, such election does not deprive the executors of commissions thereon, nor does the fact that the same persons are executors and trustees impair such right to commissions.
    5. Same—Unconverted securities.
    Where, in such case, the executors receive securities as part of the estate which it is not necessary to convert in order to pay debts or legacies, and they elect to retain them as investments, they are entitled to commissions, as executors, on such securities considered as cash.

      6. Executors—Resignation.
    Executors cannot resign, but can only be relieved from their duties by an application to have their letters testamentary revoked under the authority contained in section 2689 of the Code.
    7. Same.
    On the resignation of a trustee, the trust money and securities should be deposited in court before the entry of a decree settling the account and appointing a successor.
    Judicial settlement of the account of Frank Curtiss and Frederick De Billier as eqecutors and trustees tinder the last will and testament of Abijah Curtiss, deceased. The executors applied for leave to resign as such, and have their successors appointed.
    Yanderpoel, Cuming & Goodwin (Henry Thomson, of counsel), for executors; Potter & Johnson, for Caroline C. Johnson; William P. Fiero and J. Q. A. Johnson, special guardians.
   SILKMAN, S.

The court, upon the application of the petitioners, permitted their resignation, but upon condition that trustees’ commissions upon the principal of the trust estate be waived. The authority for imposing such a condition is found in the case of In re Allen, 96 N. Y. 327. The court intended that the petitioners should have commissions as executors, but none as trustees, upon the principal of the trust. It was directed that the decree to be entered should be upon notice, and now the settlement of the decree to be entered is before the court for consideration.

It is urged by the special guardians, with much insistence: First, that the petioners would not be entitled, in any event, to commissions in the two capacities,—as executors and as trustees— because, it is claimed, the functions and duties of executor and trustee coexist and run together, that the will does not provide for separate and successive duties; second, that the decree entered on the 17th day of June, 1891, is not conclusive as to the allowance of commissions, because the life beneficiaries only were made parties to the proceeding, the infant cestui que trust not having been cited; and, third, that the duties to be performed under the will are not duties which can be performed by a substituted trustee, but must be performed by an administrator with the will annexed.

The testator, by the seventh clause of his will, provided as follows:

“All the rest, residue, and remainder of my estate, both real and personal of whatsoever nature, and wheresoever situated, I give, devise and bequeath unto my executor hereinafter named, their survivors, successors, and assigns; in trust, however, to take the same in their possession; to convert the same into money, without needless sacrifice, subject to the exceptions above set forth ; to invest the same in such securities as they may from time to time see fit, whether they are the securities recognized by law for investment by executors and trustees or not; to continue, in their discretion, any investment'which I have made; and to dispose of the same as follows, viz.: The said residuary estate shall be divided into two equal parts, to be separately invested, to be known as ‘Fund No. One and Two.’ Fund No. one shall, for purposes both of division of income and principal, be divided into shares, one share for each of my surviving children, and one share for each child of mine that shall have died before me, leaving issue; and, for the purposes of such subdivision and apportionment, the amount of my balance appearing on my books at my death against any child of mine, or any sum which shall be owing to me, except as above released, shall be considered, not as a debt, but as an advancement, and shall be counted as cash in making up the apportionment aforesaid, and the share of each child shall be less by such amount than it otherwise would be. I direct my executors to pay over or apply the net income of each child’s share, ascertained as above stated, to his or her use daring the term of his or her natural life, except that no more than fifteen hundred dollars a year shall be paid or applied to the use of my son Frederick during his minority. I also authorize and empower' "them, or the survivor of them, their successors in the trusts, in their discretion, to make to each child advancements out of the principal of each one’s shares so held in trust for them respectively, as may be deemed for their highest good,"in the following sums.”

Testator then names the times at which the part of the principal may be advanced to his children, respectively. He then provides:

“ The net income of the respective sums so held in trust for my children shall be paid to them, or applied-to their use, during the term,of their natural lives, for their maintenance and support; the principal, or so much thereof as shall remain at their respective deaths, to be paid or transferred to their heirs or next of kin ”

The testator then provides as to fund No. 2 as follows:

“ The net income of fund No. two shall be paid over, as the same accrues, to my wife, Mary E. Curtiss, during her life, for her own use absolutely. After1 her death, or incase she reject this provision, and claim dower instead, the income and principal, both of said fund No. two and of the other-property mentioned in this will, not specifically devised or bequeathed, shall be disposed of in the same manner as-fund No. one; but the amount of advancement to my children, respectively, shall not be increased thereby.”

The testator then, by the eighth clause of his will provides:

“The legal title to all my real estate subject to,the provisions of this will shall vest in my executors and trustees, and they are hereby authorized and empowered to sell and convey, lease, and, in general, deal with the same in their discretion.”

He then provides that the property which his wife is given the use of for a period of years shall not be sold without her consent, and that property specifically devised to his son Frederick shall not be sold unless he refuse to accept the same upon the terms provided, and further provides that the distributive shares of any of the distributees might be valued and set off in lieu of sale and distribution of the proceeds. Testator then, by the ninth clause, nominates and appoints “ my brother, Frank Curtiss, and my friend Frederick DeBillier, executors of this my last will and testament.”

It is claimed that the duties undér the provisions above quoted are so mingled with the duties of executorship that there is an intention evident on the part of the testator not to separate the offices of executor and trustee, and that the legal conclusion from such provisions is that the duties and functions run together and are inseparable, and that the executors and trustees named are entitled to commissions in capacity of executors only. In this claim I think the special guardians are in error. While it is true that the testator uses the term “executors” whpn, perhaps, it would have been■ more appropriate to have used the term “trustees,” the use of the term “executor” or “trustees” does not necessarily define the character of the office. Whether they are to act in the capacity of executors, or that of trustees, is to be determined by the functions which they are to perform. The duties of an executor are usually simple,—the burial of the deceased, the collection of his assets, the payment of his debts and legacies, and the distribution of the residue to those entitled thereto, as residuary legatees, heirs at law; or next of kin. The distribution of the residue may be immediate, or it may be postponed, and be paid in installments or •by wajr of annuity, or paid to trustees for the use and benefit of beneficiaries named. The retention by executors of any portion of the estate upon a trust provided for is a distribution of that part,—as much so as if the same had been paid to other persons as trustees. If paid to a trustee, -or retained by the executor as trustee, the distribution, to be valid, must be under one of the trusts authorized by the Revised Statutes. Bearing in mind the simple duties of an executor, and the fact that the duties of a trustee must be those in the execution of a trust authorized by statute, we will have no difficulty in determining where the executorial duties leave off, and the trustee’s duties begin. In this case the testator has given his residuary estate to his executors, in trust, to pay to, or apply to the use of, his wife and children the income thereof during their natural livea This is a trust duty, pure and simple, and depends upon the Revised Statutes for its validity. While it may be true that for a certain period the duties of the executors and of the trustees coexist and run together, by reason of the fact that, the trust being for the support and maintenance of the testator’s wife and children, they are therefore entitled to the income from testator’s death, the running together of Such duties lasted only until the ordinary executorial duties had been fulfilled, and the amount of the residue of the estate established. The Code provides for the compensation of executors (section 2736), and also for the compensation of testamentary trustees, separate from that of executors (section 2802). It is clear from the authorities that, where it is contemplated that the executors’ duties are to end and the trustees’ duties are to begin, double commissions may be allowed,—one commission to the executors, and another commission to the trustees. Laytin v. Davidson, 95 N. Y. 253. In fact, under/the provisions of the Code as ' they exist, there is no power to deny such commissions, except for misconduct on the part of the executor or trustee. The facts in the case of Laytin v. Davidson, where double commissions were allowed, are similar to those in the case before us. It was said in that case that the duty of distribution into shares, and to receive and apply the income of the several shares to the use of the beneficiaries, respectively, could not be performed until the residue given to the executors in trust to divide into shares, and pay over and apply the income of the several shares to the testator’s wife and children, had been ascertained. In the case before us, the residue was ascertained by the decree of the surrogate upon the accounting of the executors in 1891. I have carefully examined the case of McAlpin v. Potter, 126 N. Y. 285; 37 St. Rep. 6, relied upon by the special guardians, but do not think the facts in that case admit of its being cited or of its being an authority in this. There the testator gave to his trustees all his real and personal estate, in trust, for the purposes named, and to retain his estate entire and undivided, except as provided for, and then provides for the payment by his trustees of his funeral expenses, debts, taxes, etc. There were no duties to be performed by the executors as such, and there was no residuary estate to be ascertained. The duties were to be performed by the trustees from the beginning. Judge FINCH says:

“ At its very outset it makes the executors wholly and continuously such, or wholly and continuously trustees ; for in its first sentences it gives the entire estate in trust, and directs the executors and trustees hereinafter named to retain it undivided till the period of distribution, and meanwhile to pay funeral expenses, debts accruing, taxes, repairs, reasonable insurance, one fixed and definite annuity, and aliquot parts of the net accruing income until the final distribution.”

It is a proper criticism of the will under consideration in McAlpine v. Potter, to say that it appointed trustee only, and that there were no duties to be performed by executors. Here the duties of executors and trustees are separate and distinct, and in such a case the law not only permits, but directs, the allowance of double commissions.

We are then brought to the point that the allowance of commissions by the surrogate in the decree of June, 1891, is not conclusive upon the infants represented by the special guardians, because such infant cestuis que trustent were not made parties thereto. The mere statement of the position of the special guardians carries with it the answer that, as to such parties, the court must now review the allowance of commissions upon principal. All the parties interested in the income were made parties to the proceeding, and are consequently bound by the decree. It is urged that the executors were not entitled to commissions allowed upon securities possessed by the testator at the time of his death, and retained by"the executors and trustees, but which might have been converted into cash in order to determine the cash value of the residuary estate. I disagree with the position' of the special guardians as to the right of the executors to commissions upon the value of these securities received by them and retained by them as trustees under the trusts contained in the will. The trustees were legatees and devisees of the entire residuary estate, and as such had a right to elect to take it in the form in which it was left by the testator, provided "it was unnecessary to convert it for the purposes of paying debts and legacies; and such election does not deprive executors of commissions thereon, nor does the fact that the same persons are executors and trustees impair such right to commissions. In re Moffat, 24 Hun, 325; In re Mason, 98 N. Y. 536; Phonix v. Livingston, 101 id. 451; In re Willets, 112 id. 289; 20 St. Rep. 735. It would be impolitic for the law to deny to executors commissions under such circumstances, because to do so might invite the disposal of investments judiciously made by the testator, for the purpose only, of entitling such executors to commissions upon the proceeds. It is the policy of the law to remove this temptation. It must therefore be held that the executors have the right to have the securities considered as cash, for the purpose of computing their commissions. There has been uo judicial determination, however, as to the value of these securities, in a proceeding in which all the parties interested could have been heard as to such value. Their value, therefore, can only be considered as it has been fixed by the appraisers upon the inventory and appraisement made under the order of the surrogate.

I do not understand .that the case of McAlpine v. Potter holds contrary to the views expressed. As has been stated, the will in that case provided for the functions of trustees only, and directed the estate to be held entire and undivided until disposed of as provided. The court held that the period of distribution had not arrived, and, until that time arrived, no commissions could be allowed upon the securities which came into the hands of trustees. The language of Judge FINCH clearly distinguishes the case from the present one. He says;

“ The bulk of the estate came to the executors in the form of securities which have not been turned into money. No law justifies the allowance of half commissions upon their estimated value in advance of their conversion intq money or its equivalent.. * * * A time may come when the allowance may be entirely just and proper. That will be when the securities have been turned into money for the purpose of payment, or have been accepted by the legatees as cash without being converted.”

In the case before us the trustees, as residuary legatees, accepted the securities ; and it- must be assumed that they were of the value determined by the official appraisers, and were taken at that value.

I am, however, of the opinion that the executors are not entitled, as such executors, under the provisions of testator's will, to any commissions upon the real estate sold. The title to this real estate passed to the trustees under the devise of the rest and residue of testator’s property. There was no necessity for, nor purpose to be served by, a sale of the realty by the executors. The executors had no right to deal with it, unless it should become necessary for them to convert it for the purpose of paying debts and the legacies provided for in the will. While it is true that the testator provides, in the eighth clause, that “the legal title to all my real estate, subject to the provisions of this my will, shall vest in my executors and trustees,” the language used must not be construed in its literal sense, but according to testator’s evident intention to give- the title to his executors, as trustees, for thé purpose of 'the trust. The eighth clause must be read in connection with the seventh, in which he gives all the rest, residue, and remainder, both real and personal, to his executors, their survivor and successors in trust, to take the same into possession, and tó convert'the same into money. The sale of the real estate was á duty to be performed by the trustees, and not by the executors, and commissions can be allowed only upon the proceeds of the real estate to the executors as trustees ;■ and, as I have decided that the trustees shall be allowed to resign only upon waiving their' commissions as trustees ‘upon the principal, whatever executor’s commissions may have been allowed in the former decree upon such proceeds of the real estate sold must be disallowed. ' i i

■ As to the point tak’en that there should be an administrator with the1 will annexed appointed, Tcannot agree with the special guard"ians. The duties of the executors have been performed, and the ■residuary estate'ascertained-for the purpose'of the trust, although it may sot all have been sold and converted into cash'and reim vested. ' There remain only trust duties to be performed. I-have-examined the case of Greenland v. Waddell, 116 N. Y. 234; 26 St. Rep. 667, relied upon by the special guardians.- The facts-'iti that case were very different from those under consideration.- In that case the will'under consideration contained a.power in trust given to the executors"-to sell and dispose of the testator’s real and personal property, and to distribute the proceeds, one-third "of which only they were'to hold under a valid trust—a clear ease of power in trust only, except as' to the one-third-, as to which they •had -the legal title. Powers in trust are to be.exercised by exeeu!: tors,land .not -by trustees. ■ Mr. Curtiss, however, gave his' entire Residuary estate to his executors, as trustees under; a valid trust'; ánd: they were -possessed not only with a power óf salé, but thé legal title as-well. . I think the cases are clearly-distinguishable; This proceeding, as appears by the petition, is an application,on •thé part-of the.'testamentary trustees for leáve to resign, under-the authority of section 2814 of, the Code. The petitioners-cannot resign as executors. From such duties they can only be relieved by an application to have their letters testamentary revoked under the authority contained in section 2689 of the Code.

My conclusions are, therefore, upon the objections by the special guardians to the decree proposed by the petitioners: (1) That the duties of executors and of trustees under the will of testator are clearly separate and distinct, and the petitioners were entitled to full commissions as executors when the residuary estate was ascertained,-and would have been entitled to another full commission as trustees, had they continued to fulfill their duties as such. (2) That the petitioners were entitled to commissions as executors upon the securities which came into their hands from the testator, and were retained by them and held by them, as trustees, as investments. (3) That no commissions should have been allowed upon the proceeds of the real estate sold.

The commissions to which the executors were entitled upon their previous accounting must be based upon the following statement o£ account: The executors are chargeable with the amount of the inventory, $282,323.85, less the assets uncollected and undisposed of, $5,670.75, leaving a balance of $276,653.10, upon which balance each executor was entitled to a commission of $2,941.53. The amount of commissions upon income allowed upon the former accounting does not appear to be separated from the gross amount of commissions allowed. If the amounts had been separately stated, that decree would have been conclusive as to income, because all the beneficiaries interested in the income were parties to the proceeding. It is therefore necessary to .determine now what commissions the executors were entitled to upon such income, either as such executors ór trastees. The income of the personal property seems to have been $29,228.16, and the income of the real estate $11,564.91. The account covered the period from October 24,1888, to April 30, 1891. I find commissions on such income to be the sum of $582.93, to.be divided between the executors. The total of amount of commissions,therefore, to which the executors were together entitled on the former accounting, as executors and trustees, is the sum of $6,465.99, of which $5,883.06 is .chargeable to principal and $582.93 to income. Upon the present account I compute the commissions to which the trustees áre entitled upon income to be $1,453.72. As the estate seems to have been managed almost entirely by the trustee- Curtiss, two-thirds of the latter sum is awarded to him. Flo final decree, 'however, can be entered at the present time. An interlocutory order- may be entered declaring that certain reasons exist for accepting the'resignation of the petitioners as trustees, upon the-.condition imposed, directing the payment of all'money and securities belonging to the trust,-and the delivery of all books, papers, and other property of the trust, to , ■the county treasurer, and directing that the petitioners bring into court a-n account of their proceedings under such order, as well as since the date of the account filed-herein, to the end that a decree may be made finally settling their accounts, and forever discharg ing them and appointing a new trustee. . This would seem to be the correct practice under the Code of Ci vil Procedure (sections 2814, 2818). The final decree may provide for the payment of the costs and expenses of this proceeding out of the moneys so to be deposited.


author: McADAM, J.

text:
    Robert Goelet et al., App’lts, v. Julia Lawlor et al., Resp’ts

      (Supreme Court, Appellate Division, First Department,

      Filed Feb. 26, 1896.)

    1. Landlord and tenant—Summary proceedings.
    In a summary proceeding to recover possession of .demised premises, on the ground that the tenant kept a disorderly house, it is admissible to show that such fact existed continuously and for over three months prior to the time the proceeding was commenced.
    2. Appeal—Objections.
    Where an objection to evidence has once been made and overruled, it is. not requisite to repeat the objection, if subsequent questions called for the same class of evidence relating to the same subject-matter.
    8. Same.
    Where competent evidence has been rejected, error is proved and injury will be inferred.
    Appeal from a final order in summary proceedings in favor of defendants.
    De Witt, Lochman & De Witt, for app’lts; M. F. McG-oldrick, for appellee tenant; Hoffman & Hoffman, for appellee undertenant
   McADAM, J.

As the justice at the close of the landlords’ case overruled the various objections made by the attorneys for the tenant and undertenant, and apparently agreed with the landlords in their view of the law, it is not necessary to consider the questions thus raised. There was no such severance of the tenancy as would operate to defeate the proceeding.

The justice took evidence pro and con, and, after reserving his decision, finally found for the tenants. As no reason have been assigned for the decision, we will assume, from the rulings at the trial, that the justice found for the tenants on the facts. This leads to the inquiry whether the exceptions taken by the landlords to the exclusion of evidence require a reversal of the order.

The proceeding was institute by the landlords to recover possession of the premises No. 93 Bowery, known as the “Shelbourne Hotel,” upon the ground specified in the fifth subdivision of section 2231 of the Code. The petition, after setting forth the facts, alleged that “the said premises are now being used and occupied as a bawdy house, and house of assignation for lewd persons, for purposes of prostitution, and as a place of resort for such persons for similar purposes.” The charge was denied, and, in their effort to establish it, the landlords called several witnesses, among them police officers, to prove what occurred from June, 1895, up to October 11, 1895, when the proceeding was begun. The justice excluded all evidence of what occurred prior to Octobev 1, 1895, saying he would exclude all testimony as to the character of the premises in the months of June and September, and admit testimony on that point for a reasonable time prior to the commencement of the proceeding; and, according to the rulings subsequently made, everything which occurred prior to the latter part of September, 1895, was held not to be within such reasonable time. The landlords’ counsel excepted to the ruling, and stated he proposed to prove that the premises were kept as a bawdy house from June continuously. This statement was made to demonstrate the materiality of the proofs offered, if the purpose was not otherwise apparent. The occupants of the premises were the same during the entire period covered by the proposed inquiry; and, when a condition of things is once established, there is a legal presumption of continuance. Thus, as was said by the court of appeals, in Wilkins v. Earle, 44 N. Y., at page 192:

“A partnership, once established, is presumed to continue. Life is presumed to exist. Possession is presumed to continue. The fact that a man was a gambler twenty months since justifies the presumption that he continues to be one. An adulterous intercourse is presumed to continue. So of ownership and nonresidence.”

And see McMahon v. Harrison, 6 N. Y. 443; Graham v. Chrystal, 2 Abb. Dec. 263; Smith v. Smith, 4 Paige, 432.

The evidence excluded was certainly material on the question of scienter. It might have established that the same women had, from June until October, frequented the premises with different men, and occupied rooms, so as to exclude the idea of surreptitious immoral use of the premises, without the knowledge or acquiescence of those in the responsible control and direction of them. It was not intended to show isolated acts, but a systematic, continuous course of pandering to vice, from June to October 11th, when' the proceeding was instituted. It might, if it had been received, have furnished such strong corroboration of the landlords’ proof as to lead to a different conclusion from that arrived at bv the justice. The allegation, in the petition, that the premises “are now being used and occupied as a bawdy house,” etc., did not necessiarily mean that they, at the date of the petition, were for the first time being so used. It opened a broad field of inq uirv, whether the premises were then, and had prior thereto been, devoted to that purpose; and the longer they had been so used, if the use was continuous, the stronger the case presented against the evil doers would have become.

The offense charged consisted of a series of transactions; and where they intermix, as they do in cases of this kind, the court must go through with the detail. Rose. Or. Ev. (10th Ed.) 90, 91. As, in counterfeiting, it is competent to receive evidence of other transactions, though they amount to distinct offenses, and of the demeanor of the prisoner'on other occasions, from which it might be fairly inferred the prisoner was conscious of his guilt while he was doing the act charged in the indictment, so, in regard to the charge of fraud, evidence of contemporaneous frauds may be given in corroboration of evidence of the fraud complained of, and the proofs may, when taken together, clearly establish the offense. See 1 Phil. Ev. (Oow., H. & E. Notes) 750, 751, and cases collated, in 3 Abb. Dig. (New Ed.) p. 206, par. 3081.

In a charge made up of independent acts of a continuous character, like that in question, it is dangerous to confine the complaining party to a period of two weeks. Courts are more liberal than this in admitting proof of contemporaneous frauds. Bliss v. Sickles, 142 N. Y., at pages 649; 59 St. Rep. 168. To put a barrier at such a period, and say to a complaining party that he cannot go beyond it, may exclude the strongest proofs he has at hand; and, while the limit may be to an extent discretionary, 'we think the discretion was not wisely exercised in this instance.

When an objection to evidence has once been made and overruled, it is not requisite to repeat the objection, if subsequent questions call for the same class of evidence relating to the same subject matter. Church v. Howard, 79 N. Y. 415, 421. And where competent evidence has been rejected, error is proved, and injury will be inferred. Greene v. White, 37 N. Y. 405, and kindred cases.

For these reasons, and without passing on the other questions presented by the record, the final order must be reversed, and a new trial ordered, with costs to the appellants to abide the event


author: DALY, P. J.

text:
    Franklin B. Lord, as Executor, etc. Resp’t, v. John Van Gelder, App’lt.

      (Supreme Court, Appellate Term, First Department,

      Filed Feb’ry 26, 1896.)

    1. Appeal—Charge.
    . Error cannot be predicated on an instruction which assumes facts where no objection was made at the trial.
    3. Same—Practice.
    Where the defendant, desires to raise a question for the general term upon the occurrences at the time the jury were polled, the proper practice is to have a statement of the facts settled and inserted in his case on appeal from the order denying his motion for a new trial.
    Appeal from a judgment affirming an order made at trial term denying defendant’s motion to amend the order, denying his motion for a new trial on the judge’s judge’s minutes, by inserting therein reference to affidavits containing statements as to what occurred when the jury was polled, after rendering their verdict in favor of the plaintiff.
    Rufus D. Livermore, for app’lt: George Lord Day, for resp’t
   DALY, P. J.

The defendant’s affidavits alleged that the seventh juror, when asked if the verdict was his, asked certain questions, and then declared he was for the defendant. The plaintiff’s affidavits alleged that the juror answered in the affimative when asked if the verdict in plaintiff’s favor was his, and afterwards , asked if a certain five per cent, included in the verdiet was for the defendant; that other jurors unanimously stated that the whole matter had been explained to him in the jury room, and that it was all understood; that, the juror’s, objection seemed to be explained away to his satisfaction, and he appeared to assent to the verdict The assent of the juror to the verdict must have been understood by the trial justice, for he denied the motion for a new trial; but, however that may be, the motion to recite these affidavits in the order denying that motion was properly refused. The affidavits were not used upon the motion, and, therefore could not be recited nor referred to in the order denying it. The motion w,rs made immediately after the verdict on the 14th of March, 1895, and the order denying it was entered the same day. The affidavits which defendant asked to have rociied in it were not made until the 22d, 28th, and 30th of March, and the 1st of April, 1895, respectively. If defendant desired to raise a question for the general term upon the occurrences at the time the jury were polled, the proper practice would have been to have a statement of the facts settled and inserted in his case on appeal from the order denying his motion for a new trial. Weeks v. Hart, 24 Hun, 181.

Order appealed from affirmed, with costs and disbursements.

All concur.


author: BISCHOFF, J.

text:
    Joseph Segal, Resp’t, v. Hyman Ensler, Appl’t.
    [(Supreme Court, Appellate Term, First Department,

      Filed Feb’y 26, 1896.)]

    1. Landlord and tenant—Breach.
    A lessee, who gives notice, before his term commences, of his refusal to take possession or pay rent, is guilty of a breach of the lease and liable to an action by the lessor for damages.
    2. Same—Damages.
    In such case, the measure of damages is the rent reserved for the term, less (he payment on account, and the amount received for the use and occupation of the demised premises during the term, from others.
    8. Same.
    But where it is not shown that the lesser occupied the demised premises or otherwise derived advantage therefrom during the term, (lie recovery should he limited to the balance of the rent which the lessee had agreed to pay.
    4. Same—Performance.
    After a breach of the lease by one of the parties thereto, it is not compe tent for him to place the other party, whose performance was prevented by the breach, in default, by a tender of performance.
    Appeal from a judgment in favor of plaintiff.
    Abraham D. Levy, for app’lt; Sol. A. Hayman, for resp’t.
   BISCHOFF, J.

The facts determined by the justice upon sufficient evidence are that on March 22, 1895, the plaintiff and the defendant entered into an oral contract whereby the plaintiff agreed to let and the defendant to take certain apartments, at- the time in the possession of another, and situated in the .plaintiff’s premises, for the term of one month, commencing on the next succeeding 1st day of April, at the rental of $25, payable in advance, $5 whereof were paid at once; and that thereafter, and before the commencement of the term, the defendant notified the plaintiff of his refusal to enter into possession of the demised apartments, and to pay the balance of the rent as agreed. The plaintiff was awarded recovery of $20, and the judgment is assailed upon two grounds: Firstly, that, inasmuch as it was undisputed that the plaintiff failed to give possession of the demised apartments upon the defendant’s demand after the commencement of the term, and while the former occupant continued in possession, no recovery should have been allowed ; and, secondly, that an incorrect measure of the'plaintiff’s damages was applied. 'Neither ground is well taken. The controversy was to be determined by the rules of law which ordinarily prevail in the cases of contracts. The defendant’s repudiation of the contract, though before the commencement of the term, constituted a breach of performance on his part, which entitled the plaintiff to maintain an action forthwith for the resulting damages. Howard v. Daly, 61 N. Y. 362. The case cited was one of a contract of service, ibut in principle it is not distinguishable from the one at bar. No sound reason can be advanced why an employe should not be required to wait his employer’s change of mind while the lessor should be' subject to the caprice of his lessee at the risk of being unable to let his premises to another after the time for the commencement of the term has arrived; and the principle laid down in Howard v. Daly was ajxplied to the case of a vendor and vendee, where it was’ held that the vendee’s notice of his intention, before the time fixed for the delivery of the goods, not to accept them, entitled the vendor to treat the contract as broken, and to maintain an action for damages for such breach. Windmuller v. Pope (N. Y. Ct. App.) 14 N. E. 436.

The measure of the plaintiff’s damages for the defendant’s breach of contract was the rent reserved for the term, less the payment on account, and the amount received for the use and occupation of the demised premises during the term, from the others. Gear, Landl. & Ten. § 12; Cleveland v. Bryant, 16 S. C. 634. At the time of the trial in the case at bar the term had expired. It was not shown that the plaintiff occupied the demised apartments or otherwiee derived any advantage therefrom during the term, and the recovery was limited to the balance of the rent which the defendant had agreed to pay. No error with regard to the computation of the damages awarded therefore appears. Bassett v. French, 10 Misc. Rep. 672; 64 St. Rep. 292.

Obviously, the question which the defendant’s counsel sought to raise upon the argument of this appeal—whether, in the case of • a lease of such short duration that the incoming lesses may not avail himself of existing remedies to. secure possession from a third person wrongfully withholding it, before the expiration of his term, there is not imported into the contract an implied undertaking on the part of the lessor to deliver such'possession, Contrary to the rule adjudged in the case of a lease for a longer period (Insurance Co. v. Scott, 2 Hilt. 550)—is not presented by the facts determined upon the trial as they appear from the record. The contract of lease was terminated by the defendant’s breach, before the commencement of the term ; and, should we assume the rule to be consistent with the contention of the defendant's counsel, it remains that it was optional with the plaintiff to waive the defendant’s breach, and to reinstate the contract with its original effect. After a breach of the contract by one of the contracting parties, it is not competent for him to place the other, whose performance was prevented by the breach, in default, by a tender of performance. Windmuller v. Pope, supra.

The judgment should be affirmed, with costSo

All concur.


author: WILLIAMS, J.

text:
    James H. Snyder, Resp’t, v. Lloyd I. Seaman, App’lt.

      (Supreme Court, Appellate Division, First Department,

      Filed, March 6, 1896.)

    1. Contract—Construction.
    Where the terms of a contract are uncertain, the actual construction by the partners through a number of ye irs is conclusive. So held, where it was uncertain, from the terms of a copartnership agreement, whether per sonal taxes of one of the partners should be charged to the firm’s expense account.
    3. Evidence—Parol.
    Where the words “net earnings" or “profits,"as used in a copartnership agreement, is ambiguous and uncertain, evidence may he given of the conversation between the parties at the time the-agreement was made, and the acts of the parties in the conduct of the copartnership is admissible, to show what the parties intended by the use of these words in the agreement.
    Appeal from a judgment in favor of the plaintiff.
    The action was'brought for an accounting between copartners, the plaintiff claiming .that certain personal taxes of defendant had been improperly paid with copartnership moneys, and charged to business expenses, in arriving at the net profits or earnings of the copartnership, which were to be divided between the co-partners. The first copartnership agreement was made May 1, 1885. Prior to that time the defendant had carried on the business as an individual, and plaintiff had been in his employ in the business from August, 1871, until the agreement of May 1, 1885, was made. By the terms of that agreement the copartnership lyas to commence at its date, and to continue for three years; defendant was to contribute as capital 315,000, and plaintiff $5,-000, and interest was to be paid half-yearly to each on the capital contributed, at six per cent.; and the defendant was entitled to two equal third parts of the net profits of the business, and the plaintiff to the-remaining equal third part thereof, and all losses sustained in the business were to be borne and paid by the parties in the same proportion. The character of the business was butter and cheese commission business. Books of account were to be kept open at all times to the inspection of each of the partners, in which all the business dealings of the copartnership should be correctly and truly entered. May 1, 1886, a change in the co-partnership agreement was made, for the balance of the term, respecting the division of the net earnings. In place of the defendant being entitled to two equal thirds, and the plaintiff to the remaining one equal third, the net earnings thereafter were to be divided equally; each receiving one-half thereof, and each sharing one-half the losses thereof. Both of these agreements were in writing. The copartnership continued beyond the term of three years, and until April 30, 189,2, under the agreement as modified, and then was dissolved by mutual consent During the continuance of the copartnership, personal taxes of the defendant assessed by the city of New York were paid with the copartnership moneys, and charged in the books to business expenses, viz.; In 1885, $180; in 1886, $171.75 : in 1887, $165 , in 1888, $166.-50; in 1889, $146.25; in 1890, $197; and in 1891, $190. 'The referee held that these taxes were improperly charged ; that tire plaintiff was entitled to recover his one-third thereof for the year 1885, and one-half thereof for the balance of the years, with interest,—and ordered judgment accordingly. From the judgment entered upon.the referee’s report, this appeal is taken.
    John W. Weed, for app’lt; Herbert M. Lloyd, for resp’t.
   WILLIAMS, J.

The referee evidently based his decision upon the language of the agreement alone, without taking into consideration the evidence offered bearing upon the construction or mean ing given to/the language by the parties to the agreement. In the absence of such evidence, and construing the language of the agreement without the aid of such evidence, the conclusion of the referee would undoubtedly have been correct. In the ordinary-meaning of the term “ net profits ” or “ net earnings ” of the business, these personal taxes of the defendant, which were not shown to have been assessed solely upon his share of the ca pi tal invested in the business, would not have been properly chargeable as expenses of the business. We are of .opinion, however, that the parties have by their acts given a practical construction to the agreements, in accordance with the defendant’s claim that these taxes were to be regarded as a part of the expenses of the business, for the purpose of arriving at the net profits or earnings of the business. These two words,1 “ profits ” and “earnings,” were clearly used by the parties in these agreements as synonymous terms. The word “ profits” alone was used in the agreement of May 1, 1835;. and when they came to make modification of the contract, May 1, 1886, the language used was:

“We agree to change its terms relating to the net earnings. In place of Seaman being entitled to two-thirds, and Snyder one-third, the net, earnings shall hereafter be divided equally.”

This language conclusively shows phey undertood “earnings” and “profits” were the same thing. In the modification they spolce of “ earnings ” as though that had been the word used in the original agreement, when no such word had there been used, but only the word “profits.” This shows they understood the words to mean the same thing. They so used them in these agreements, at least. The evidence to which we have referred esta-. blished the following facts: The plaintiff was in defendant’s employ from 1871 until the first agreement was made, May 1, 1885; and from about 1877 the plaintiff was paid for his services by a certain fixed salary, and, in addition,- a percentage of the net profits or earnings of the business. Plaintiff was bookkeeper until 1881, and from that time until 1885 was salesman, but remained familiar with the‘ books. During all the time plaintiff was receiving a percentage of the net profits or earnings, and up to the time the copartnership was formed the defendant’s personal taxes were entered in the books of the business as expenses of the business, as plaintiff well knew. At the time the copartnership was formed, defendant told plaintiff he would give him a one-third interest, and this was the only change they would make in the business. This evidence was stricken out, upon motion of plaintiff, and defendant excepted. After the copartnership was formed the plaintiff kept a supervision of the books, and with his knowledge, and without objection from hitn, the personal taxes of defendant were continued to be charged as a part of the business expenses during the whole'existence of the copartnership. Plaintiff raised no question in regard to such charges until 1891. He was present at the time the annual accounts of the copartnership were cast up for the purpose of determining the net profits, and when the balances were struck, and there was carried to his account so much of Ills undrawn profits, so arrived at, as appeared to his credit on the books, and this continued during all the years the copartnership existed. Soon after the copartnership was formed, defendant went to Europe, and was a way for more than a year. While he was away his-taxes were paid by checks drawn by the plaintiff himself. This occurred as to two years’ taxes,—1886 and 1887,—and the amounts were charged in the copartnership books to business expenses. In .the fall of 1889, plaintiff first charged his own personal taxes to the account of business expenses on the copartnership books, and similar charges were made in 1890 and 1891. No question as to those taxes had ever arisen before 1889. At some time after the charges were made the. defendant objected to them, and these taxes were thereupon charged hack to the plaintiff. In the year 1891, after the yearly balance had been struck, the plaintiff protested against defendant’s personal taxes being charged to business expenses, and subsequently, at some time, the defendant insisted upon so remaining; and the plaintiff made no further objection until "the dissolution of the copartnership, about the 1st of May 1892. The balance was struck at the time of the dissolution, as it had been before, with these taxes in the account; and plaintiff accepted the balance coming to him as so ascertained, though protesting against the charges for defendant’s personal taxes. This action was not commenced until August, 1893. In Insurance Co. v. Dutcher, 95 U. S. 273, the policy of insurance declared that the amount of the paid-up policy should be determined by the sum of the premiums paid in cash. It appeared in the case that the insurance company always issued paid-up policies upon the basis of the full amount of premiums paid, making no distinction between the notes and the money received by the company for the premiums. The words “ paid in cash ” were construed by the court to cover, not only premiums for which cash had actually been paid, but those, also, for which, notes had been given. In this connection the court said:

“The practical interpretation of an agreement by a party to it is always a consideration of great weight. The construction of a contract isas much a part of. it as anything else. There is no surer way to find out wlnit parties meant than to see what they have done. Self-interest stimulates the mind to activity, and sharpens its perspicacity. Parties in such cases often claim more, but rarely less, than they are entitled to. Probabilities are largely in the direction of the former. In considering the question before us, it is difficult to resist the cogency of this uniform practice during the period mentioned, as a factor in the case.”

In Woolsey v. Funke, 121 N. Y. 87; 30 St. Rep. 768, the court was considering the construction of a charter party which provided that the plaintiffs should furnish the vessel, at their own expense, with all the supplies required, except water, the cost of which the defendant was to pay. It was claimed by the defendant that under this charter party the plaintiffs were bound to furnish the water, and not having done so, had broken the contract, and were, not, therefore, entitled to recover certain damages claimed. The court held otherwise; among other things saying that, if they were not right in the interpretation of the language of the charter party, it' must at least be admitted that the language was samewhat ambiguous or indefinite, and under snch circumstances the practical interpretation of the charter party by both parties was a consideration a great importance,a-citing with approval, Insurance Co. v. Dutcher, above. And in Nicoll v. Sands, 131 N. Y. 19, 24; 42 St. Rep. 282, this same doctrine was approved; citing Woolsey v. Funke and Insurance Co. v. Dutcher, above. In Story on Partnership (Gray’s Ed. §§ 191, 192, and notes), it is said:

“In all cases of doubtful interpretation, the actual construction adopted by the partners in their partnership transactions will be, and indeed, ought to be, adopted, as the true, legitimate, and appropriate interpretation intended by themselves. Entries in the books of a partnership have been said to be as conclusive of the rights of the partners as if prescribed in the regular contract. Partnership articles, in the view of courts of equity, whatever may be the rule of law, are liable to be controlled, superseded, qualified, or waived by the acts and transactions of the partnership in the course of the business thereof, wherever the assent of all the partners thereto may be farily inferred, and however positive or stringent those provisions may be. Partners, if they propose, may in the course of the partnership, daily, come to a new arrangement, for the purpose of making some addition or alteration in the terms on which they, carry on business, provided those ¡additions or alterations be made with the unanimous concurrence of all the partners. In short, in many cases of this kind, looking to the course oE conduct of the partners, and the special circumstances of their business, or to «heir general acquiescence or their positive acts, we may often have the ■ most satisfactory evidence that the partnership articles have been laid aside, either pro tanto or in the whole, and that new articles and arrangements have been entered into in their stead.”

It seems1-to us that the evidence in question, under the circumstances, is not to be considered for the purpose of varying the terms of the written agreements, but rather as giving a proper construction to the agreements, and the words “net earnings” or “profits,” as therein contained. These word-s, as used in these agreements, may be considered as so ambiguous and uncertain as that evidence may be given of the conversation between the parties at the time the agreements were made, and the acts of the parties in the conduct of the copartnership, to show wliat the parties intended by the use of those words in the agreements. Whether we'are to give this effect to the evidence, and construe the language of the contracts accordingly, or whether we are to regard the agreements as modified, in view of the evidence, in either event the right of the parties are to be determined by regarding the personal taxes of the defendant as properly part of the expenses of the business.

We therefore conclude that the decision of the referee was erroneous, and that the judgment should be reversed; and we think under the circumstances, thafcjudgmentishould be entered for the defendant, with costs of appeal and costs of the court below.

All concur.


author: INGRAHAM, J.

text:
    Marie Brunner, Resp’t, v. Max Kaempfer, App’lt.

      (Supreme Court, Appellate Division, First Department,

      Filed March 6, 1896.)

    Injunction—Decree.
    Where, after all of the contested questions are decided in favor of the defendant, a judgment is granted which enjoins the defendant from doing what-he never intended, on threatened, or claimed he had a right to do, and adds to the contract an entirely new clause, by which a time limit is added to the agreement, it is erroneous. So held, where in an action for an accounting of sales of a patented article, and to enjoin the manufacturing or selling of the article in excess of the stock on hand, the court found that defendant had fully accounted!, and was entitled to manufacture certain elastic on hand, and dispose of the same under the agreement, and there was no evidence that he intended to sell articles not manufactured from elastic purchased in accordance with the agreement.
    Appeal from a judgment in favor of plaintiff.
    The following is a copy of the contract sued on:
    Contract and agreement, made this 2d day of October, 1893, between Marie Brunner, of the city of Brooklyn, party of the first part, and Max Kaempfer, of the city of Hew York, party of the second part, witnessethr That whereas, the party of the first part is the owner o£ letters patent No. 404,163, relating to the Universal skirt belt, and the parties hereto are desirous of placing the same on the market under conditions of mutual advantage and benefit, it is agreed as follows: First, That the party of the second part will, at his own expense, manufacture and sell, and advertise largely the merits of, said belt, and will promptly fill all orders therefor, keeping accurate books of account, in which all manufacture and side thereof, shall be set down, with the prices realized for the term of fifteen months from October 1, 1893, unless this agreement shall be canceled or abrogated as hereinafter set forth. Second. That the party of the second part will pay unto the party of the first part the sum of three dollars per gross royalty on each and every gross of such belts sold’ or disposed of by him, until . five hundred gross thereof shall be sold, and the sum of two dollars and fifty cents on each and every gross thereof sold or dis- 1 posed of by him in excess of five hundred gross up to the 1st day of January, 1895. Third. That the party of the second part will keep said books of account open for inspection and examination of the party of the first part, or her representative, at any time for one hour in each month, such hour to bedetermined by the party, of the second part, during business hours, and will render unto her on the first business day of each .month, an accurate account of the number of belts sold, and will on each of said dhys pay unto her the royalty as agreed herein, on all goods manufactured and sold up to the time of such payments respectively. Fourth. In case the sales shall amount to at least five hundred gross per year for the year ending January 1, 1895, then this agreement shall be renewed for .three year from said sale, on the same terms exceptas to renewal, and the royalty in each and every year during the continuance hereof, to be-paid to the party of the first part, shall be three dollars on the first five hundred gross manufactured and sold in such year, and two dollars and fifty cents on each additional gross manufactured and sold in such year. Fifth. And it is agreed "further, that, dnring the continuance hereof, the party of the first party will grant: no rights to parties outside of this contract to manufacture and sóll said' bel.t, without the consent of,the party 'of the second pair. 'Sixth. And it is agreed, further, that, in case this agreement be discontinued for any cause, the party of the second part shall pay the said royalty on all stock on hand or in process of manufacture, and shall thereafter be allowed to sell and dispose of all such goods already made up or in process of manufacture, atsums not less than the regular prices thereof, arid the party of the first part shall sell no goods at less prices than such market price,' until the party of the second part shall, dispose of all such stock. In ■ witness whereof,, the parties hereto have hereunto set their hands and seals the day and year first'above written. -
    Marie Brunner, [l. 9.]
    Max'Kaempfer. [l. s.]
    Samuel Fleischirian, for app’lt;' Julius J. Frank, for resp’t;
   INGRAHAM, J.

— This action was brought to obtain an accounting of sales made, by the defendant of a certain patented article, the patent of which was owned by the plaintiff, and which had been manufactured by the defendant, under an agreement between himself and the plaintiff, and for an injunction to restrain the defendant from manufacturing or selling the patented article in excess of the stock on hand or in process of manufacture January 1, 1895. The complaint alleges, after setting up the contract between the parties, that the defendant has failed and refused to account or make payments under the contract, and continues ami threatens to continue the manufacture ■ and sales of the patented articles, in violation of the contract On the trial, the principal controversy seems to have been as to whether or not the defendant was entitled to manufacture. into certain skirt belts, known as the “Universal Skirt Belt," which was the patented article in question, certain elastic material which had been purchased by the defendant for the purpose of manufacturing the said belt. The court in its decision states :

“The undisputed evidence shows that the total sales during the fifteen months amounted to 487 gross and eleven five-twelve dozen belts. On these the defendant paid the stipulated royalty, and, on the trial of the action, further accounted for his sales "to and including the 30th day of April, 1895. On or about said last-mentioned date, the defendant had on hand 472 seven-twelve dozen manufactured belts and 6,950 yards of elastic, purchased by him exclusively for the purpose of manufacturing said belt. There were no belts on hand on that date in an incomplete or partial state of manufacture."

The decision then states:

. “ Plaintiff contends that the defendant should be enjoined from manufacturing into belts any part of the elastic in question, which, she testifies, is equivalent to between 434 and 435 gross of belts. Defendant, on the other hand, testifies that this elastic is within the .purview of the terms of the agreement, relating to the sale of stock in process of manufacturé, and that, as such, he should be permittéd to manufacture the same, into belts, and sell the same under said agreement."

The decision then continues:

, “1 am of the.opinion that , the, contention of the defendant is right, and that he should be permitted to manufacture the elastic into belts, and dispose of the same under the agreement."

It would thus appear that the defendant had accounted for the sales made by him under the agreement, and that the defendant was entitled to continue to manufacture the belts, or the elastic purchased by'him into belts, and sell the same under the agreement.. There is no evidence that the defendant intended or threatened to manufacture or sell any other belts, except from the elastic so.purchased,, and it would seem, from this decision, that no relief should have been granted .to the plaintiff. Tlius having decided the case in favor of the defendant, however, the court directs, an injunction to be issued, as prayed for in the complaint, the defendant, however, to have leave to sell all.belts manufactured and on hand on May 1, 1895, and also to manufacture into belts and sell all elastic which he had on hand on said date, on condition of his being permitted to sell and manufacture said belts and elastic, he to pay, in advance of such manufacture and sale, to the plaintiff, a royalty of three dollars per gross. Judgment was thereupon entered, requiring the defendant, within ninety days, to pay to the plaintiff, not only the royalty upon the belts manufactured and not sold, but also the royalty on ail stock of manufactured belts, and of all elastic to be used in the manufacture-of the said belts, The judgment further provided that, aifcer the payment of the said royalty, and receipt thereof by the plaintiff, the defendant should be at liberty to sell and dispose of the belts in his possession on May 1, 1895, provided, however, said defendant should sell and dispose of all said belts not later than the 1st day of May, 1897, from and after which date the judgment should be* come absolute and unconditional. And the judgment provided that the defendant, his servants, agents, and employees, and all persons acting in his behalf, be permanently enjoined and restrained from manufacturing and selling, or offering for sale, the belts described in the complaint. And this judgment was without costs.

Thus it would seem that, after deciding all of the contested questions in favor of the defendant, a judgment was granted which enjoined the defendant from doing what he never intended, or threatened, or claimed he had a right to do, and added to the contract an entirely new clause, by which a time limit is added to the contract; and the defendant was enjoined from manufacturing and selling the belts after May 1, 1897, when, un-der the contract between the parties, there is no such limit. We think this judgment entirely unauthorized, and that, upon the decision of the court, there should have been judgment for the defendant. There is not a particle of evidence to justify any judgment against the defendant, adopting the decision of the controversy as to the right of the defendant to manufacture into belts the elastic purchased by him prior to the making -of the agreement sued on. The plaintiff does not appeal from the decision of the question in favor of the defendant

The judgment entered should therefore be reversed, and judgment directed for the defendant, with costs of the appeal, in favor of the defendant, and. against the respondent

All concur,