text:
    William T. Hart et al., App'lts, v. The Ogdensburg & Lake Champlain Railroad Co. et al., Resp'ts.

      (Supreme Court, General Term, Third Department,

      Filed May 9, 1893.)

    Bailboad—Consolidation—Bonds.
    The O. & L. C. Co. in 1880 issued income bonds, which were payable in forty years, with interest payable out of net earnings, and which gave the holder the right to vote for directors. Thereafter it entered into an agreement with the other defendant, a Vermont company, for a consolidation, forming a continubus line. Held, that the act of 1880, under which the bonds were issued, contains no provision against consolidation, and that the holders of such bonds must be deemed to have taken them subject to the contingency of such consolidation.
    (Herrick, J., dissents.)
    Appeal from order vacating and setting aside an injunction order restraining the defendant corporations from consolidating under the laws of this state.
    The facts appear in the opinion of the special term, as follows :
    Kellogg, J.—A motion is made herein by defendant to set aside an injunction granted on plaintiffs’ ex parte application.
    On this motion no dispute exists as to the facts. The admissions of defendants’ counsel and the moving and opposing papers present the case on its’merits, and, so far as plaintiffs are concerned, in an aspect as favorable at least as they could be presented upon trial.
    The sole question involved may be said to be one of construction of a contract. Whether or not the defendant has obligated itself to the plaintiffs not to consolidate with any other railroad company, as provided by the Laws of 1869, more recently amended.
    By chapter 73 of the Laws of 1880, the Ogdensburg k Lake Champlain Railroad Company were authorized to issue four million five hundred thousand dollars in bonds, to be used in the purchase, exchange or retirement of its preferred stock, and in payment of its outstanding bonds, and in making improvements to its property; and was authorized, with the consent of a majority of its stockholders, to secure such issue of bonds by a mortgage upon all its property, franchises, etc. It was further provided by this act that the bonds so issued should possess the anomalous quality of investing the holders with the right to vote “ in the election of directors of said company,” one vote for each hundred dollars of bonds. This unusual power given to a bondholder, altering the voting power of the stockholder, and impairing his control over his own enterprise, must be interpreted to mean no more than it says, for this power is not confined to the bonds issued in exchange for preferred stock, and might be considered, within State v. Greer, 78 Mo., 188, as subject to attack by any non-consenting stockholder as unconstitutional. Clearly none of the rights of stockholders were intended to be disturbed, except the right to vote for directors. Such rights as stockholders possessed respecting mortgages, loans, consolidations, etc., were left unimpaired by this law, and whatever was done under it must have been understood by the parties as subject to strict construction, the bondholders taking and the stockholders losing as little as strict construction permits.
    Under this law bonds were issued of two classes, both secured by one mortgage upon all the property and franchises of the company, aggregating in all the full amount of $4,500,000. The first class was called “ First Consolidated Mortgage Bonds,” aggregating $3,500,000. The second class was called “Income Mortgage Bonds,” aggregating $1,000,000. Tlie interest upon the first class was payable periodically and absolutely. The interest on the second class, or “ Income Bonds,” was payable yearly out of the net earnings of that period, if sufficient; and if there were: no net earnings during the year, then no interest was payable; and the “ board of directors of said company shall determine the amount of such net earnings in each of such periods.”
    The principal of all the bonds was to be paid in forty years. The mortgage given with these bonds and for their security by the Ogdensburg & Lake Champlain Railroad Company is given ; “ Subject, however, to the right of the party of the first part (said company), its successors or assigns, to retain the free and uncontrolled use, enjojment, possession and management of the premises, rights and property hereby granted,” so long as the principal and interest of the bonds of the first class, and the principal of the bonds of the second class are paid according to their terms; no reference being made in the mortgage to the interest of the second class bonds.
    The plaintiffs are owners of a portion of the second class, or “income bonds,” and are entitled to vote for directors of said company, one vote for each $100 of said bonds.
    The income bond and mortgage provided for by the law referred to, and held by plaintiffs, constitute the contract between plaintiffs and the Ogdensburg & Lake Champlain Railroad Company, which plaintiffs allege is about to be violated, to their irreparable injury, by a vote of the stockholders in ratification of an agreement of consolidation, entered into by and between the directors of the Ogdensburg & Lake Champlain Railroad Company and the Central Vermont Railroad Company, which two companies now own a continuous or connected line of railroad; and plaintiffs base their claim upon two grounds:
    1. The projected consolidation, if consummated, will destroy their right to vote for directors in the Ogdensburg & Lake Champlain Railroad Company by working a practical dissolution of that corporation.
    2. That consolidation will so mix and intermingle the properties and earnings of the two roads that it will be impossible to determine the net earnings which the bonds have a right to claim for interest.
    Each of these two things plaintiffs claim the defendant has contracted shall not be done.
    Without doubt the consolidation act, which was passed in 18611 and was in force when the law authorizing these bonds was en_ acted and when these bonds were issued, does contemplate that the directors of the old consolidating companies shall, in the event of consolidation, be shorn of most of their functions; that the corporate body shall be reduced to a skeleton, without rags and with very limited powers; but it does not contemplate its complete dissolution. It expressly says that the old corporation shall continue in existence to preserve the rights of all creditors, and the limit of such existence can be measured by the duration of creditors’ rights. It is not quite plain, under this provision, how there can be valid objection to the annual election of directors for these old corporations, so long, at least, as there are in existence stockholders or bondholders capable of voting. I see none, and until the law points out a different method of exhibiting a tangible existence, the life of a corporate body, I think, must be shown in, and its functions, whatever they may be, must be discharged by a board of trustees or directors.
    Justice Gray, speaking of this consolidation act, in Polhemus v. Fitchburg R. R. Co., 123 H. Y., 502 ; 34 St. Eep., 420, says: “ The true theory of this act is that each consolidating company survives in the consolidated company, and that it represents each company in its claims and its obligations.”
    This is theoretically true, since the new company springs from the old ; but this theory is not inconsistent with the existence, as the statute provides, of the old corporations distinct from the new, and with sufficient vitality to discharge, in the ordinary way, through directors, the duties imposed by the law.
    If the idea was contemplated and expressed in the bonds and mortgage, as plaintiffs now claim that for forty years the directors of the Ogdensburg & Lake Champlain Eailroad Company should exercise undiminished functions; that for this full term there should be no consolidation of interests with any other company, as the law at the time permitted, then the same idea must be expressed in the law of 1880 authorizing the issue of the bonds ; for it is only by virtue of the provisions of that law that bondholders have the right to vote for directors. They are not given the right to vote on the question of consolidation. The law then conferred upon stockholders, not bondholders, the right to vote upon any agreement entered into by the directors. Can it be reasonably urged that the giving to a bondholder owning a $100 bond the right to vote for directors shows a manifest intention in the law to place it within the power of that bondholder to prevent consolidation for forty years, because, in case of consolidation, the directors he may vote for thereafter will have diminished functions? The law does not so declare; and if such power were conferred with the right to vote for directors, it must be implied. The implied rights which the bondholders take under this law, for the reasons before given, must be those only which necessarily go with the language used, interpreted in utmost strictness. And I see no reason here to conclude that the right to vote for directors meant anything more than to vote for such directors with such as might be needed by the corporate body in its then or in any changed condition. There is no intention manifest in the law to deprive the stockholders of any rights which any existing law conferred upon them exclusively, even though the exercise of such rights should operate, directly or indirectly, to diminish the value of the bondholder’s right to vote. Nor can it be reasonably claimed that the contract expressed by the bond and the accompanying mortgage contemplated or expressed upon this head more than the law itself. In case, then, the threatened consolidation is effected, the bondholders will possess still the right to vote for directors as now, during all the time that they are bondholders. The directors will possess the powers and be burdened with duties as expressed in the consolidation act, and one of these duties will be that declared in the bond relating to the ascertainment of net earnings applicable to interest upon the income bonds.
    If there had been any intention in the law, or in the contract evidenced by the bond and mortgage, to curtail the rights of stockholders touching a step so important, and possibly vital to their interests, as consolidation with connecting roads, making a continuous line, I think that intention would have been clearly expressed. It might be urged that by the same contract the corporation promised not to propose another mortgage upon their property and franchises, and the stockholders were not permitted to authorize a mortgage, since the mortgage might be foreclosed, the property and franchises sold, and the corporation dissolved, and in this method the plaintiffs might be deprived of their right to vote for directors. Indeed no indebtedness could be created by the company without risk that such debt might ripen into a judgment and result in a judicial sale and dissolution of the corporate body. And still I think no one will contend that these rights were by implication taken from the directors or the stockholders by this law or this contract. All contracts are supposed to be made in view of the existing law and must be interpreted to have been so mada The statutory conditions must be deemed to have permeated the agreement and to have constituted elements in the obligation. The contracting parties here knew of the provisions of the consolidation act. They knew of the diminished powers of directors in case of consolidation. They knew that no consolidation could be effected unless the board of directors first entered into an agreement to consolidate. The/ knew their power through these bonds over the election of directors and may have, wisely or unwisely, concluded that no consolidation could be had except the bondholders were friendly to it; or they may have concluded that no consolidation would be ever considered except for the purpose of increasing the earnings and so benefiting bondholders. So also they knew that only through this same board of directors created by their votes, if their votes were so potent as to be of any value whatever, could any new mortgage or debt be created, and the existence of the corporation be imperilled, or any leases be made, and they were content to exact nothing in express terms of the nature now contended for. Referring to the right of the company under this contract to lease a road and pledge its earnings in payment in part for its construction, the court of appeals in Day et al. (these plaintiffs) v. 0 & L. C. R. R. Co., 107 1ST. Y., 146; 11 St. Eep., 335, uses this pertinent language.
    “ It is the contention of counsel * * * that the power to change the .condition of the road * * * is limited and restrained by those provisions. It does not seem probable that such was the intention of the parties.
    “Uniformity is not bargained for nor promised. If that was intended it is difficult to see why the bond and mortgage did not provide that the operations of the company during the forty years of credit should be confined to the running of its road between the then termini; * * * nor do I think the construction contended for is warranted by the words actually used, and that in according to it that construction the court below has inserted by implication that which the parties have not expressed.”
    And it was there held, in effect, that the company was in no manner restrained by this contract in doing what in the judgment of the directors was for the best ultimate interest of the road, even if the thing done resulted in the absorption of the entire earnings and left nothing to apply as interest on income bonds. While this may have little direct bearing upon the question of diminishing the power of plaintiffs’ vote, it does bear upon the construction to be placed upon the contract respecting implied limitations therein upon pre-existing powers of directors and stockholders. If upon reading the terms of plaintiffs’ bond and mortgage the court of appeals says in substance, “these parties, when this contract was entered into, knew that by the law of 1869, then in existence, that this corporation might lawfully agree with any other corporation for the use of its road, and if it had been intended to deprive this corporation of that power it should have been so plainly declared, the court below has erroneously inserted by implication that which the parties have not expressed, even though it is conceded that the exercise of this power will deprive plaintiffs of all interest on their bonds,” why must not we also say: “ These parties, when this contract was entered into, knew by the terms of the consolidation act, then in existence, that this corporation might lawfully unite with a connecting road making a continuous line, and if it had been intended to deprive this corporation of that right, it should have been so plainly declared. This deprivation of so valuable a right cannot be implied, even though it is conceded that its exercise will diminish the power of the directors for whom plaintiffs have a right to vote.”
    , Considering, as the parties must, what the demands of forty years might be in the great progress of railroad enterprises, the changes which might be forced by competition and strife for business; considering, as said by Justice Euger in Woodruff v. Erie .Railway Co., 93 U. Y., 615, that; “The public policy in this state as manifested by numerous acts of the legislature has always been not only to afford the fullest scope for the consolidation of non-competing railroads and railroad corporations, but also for the transfer of the use of such roads and their functions by one corporation to another,” and considering the grave consequences to this corporation which might result in being deprived of the privilege of uniting with any other road, is it likely that the parties intended to give each holder of a $100 bond the power to prevent such a union when the interests of all concerned demanded it ? I think not. The implication, it seems to me, points to just the reverse.
    The impossibility of ascertainment of the “ net earnings" applicable to interest on the income bonds, which plaintiff claims will be the result of consolidation, and which constitutes the second ground of plaintiffs’ objection, calls for the examination of the proposed agreement.
    The agreement of consolidation contemplates no change of stockholders; a union of corporate interests; a union of two roads, forming a continuous line of railway, under a- single management Neither the law or the agreement suggests relief directly or indirectly from any existing liability or obligation. On the contrary, by language unmistakable, the law and the agreement each fasten upon the new management every obligation, liability and duty which either of the consolidating companies has created or consented to by contract, express or implied.
    The obvious purpose of union is the obtaining of increased “net earnings.” Stockholders have interest in nothing else; only out of net earnings can dividends be made. No question is made of good faith of directors in making the agreement, or of stockholders in their threatened ratification of it.
    The income bondholders are also interested in “ net earnings," and if the amount can be increased, certainly no harm can result to them from that. The only question is, can it be ascertained, if the two roads are run under one management, what proportion of net earnings properly belong to each ?
    Will it be possible under any plan, or by any method which the new board of directors can devise, to determine the “ net earnings ” properly attributable to the O. & L. 0. road and its properties? If so, then there is nothing for plaintiffs to fear. For this is just what by the agreement the new company undertakes to do.
    It is a matter of common knowledge that the earnings of a railroad are mainly derived from freight and passenger traffic which neither begins or ends with that particular road. Each road is but a link in a long chain; and though the entire line is made up of separate roads under separate corporate management, the earnings of each must for the most part be ascertained by arbitration or agreement with all roads in the line. Consolidation can have no effect to confuse the data by which the amount of such earnings are determined. Neither can it confuse the accurate data always accessible respecting local traffic (passenger or freight) over which each company has exclusive control. What then will necessarily prevent the ascertainment of the earnings of the separate properties ? The new company possess the same data and means of determining which were possessed by the two old. The business being operated by one corporate body instead of two does not explain how confusion can be necessary. So far as the commingling of assets goes, it should be borne in mind that plaintiffs have no interest in such assets only in their earnings, and that the proposed union of assets, is upon a fixed basis which the agreement of consolidation determines. The union is upon a basis of valuation of the properties of the two consolidating companies, and has relation to earning capacity. It is presumed to be a fair valuation. Ho question is raised as to this. This is yet to pass the examination of the stockholders of the 0. & L. C. R R. Co., and it may be presumed that their personal interest will be sufficient to insure a fair ratio of valuation for the properties of this company. If the basis of union or ratio of valuation fixed by the agreement is right, then a division of earnings of the new company between the two old companies on that basis, or in that ratio, must be right; and no one interested in the earnings of the O. & JL C. R. R. Co. can be injured. I see no practical difficulty in reaching a just and accurate division of earnings. Hor do I see how the plaintiffs can be injured in any respect as to their interest in such earnings. The learned counsel for plaintiffs, in support of this ground of contention cites: Maine Central R. R. Co. v. Maine, 96 U.S., 499, but the case is hardly authority for so much as is claimed here. It was there a question whether the parties in interest, as against the state, had not voluntarily abandoned a contract right to a certain mode of taxation by taking on the new form of consolidation with five separate companies. That act made it impossible for the officers stipulated for in the law conferring this right to make an annual report to the legislature which was to be the basis of taxation; and the court held that the state could not be compelled to accept a substituted service, and uses this language:
    “ The new company was subject to no such duty of keeping an account of expenditures and receipts of the original lines; its directors were not called upon to make any report as to the income of such lines, nor was its treasurer required to make any annual exhibit of the net profits derived from them.”
    This would have been sufficient to support the decision. The court, however, does use this further expression:
    “ The assets of all the companies were intermingled and continuous trains were run over the whole length of the several roads. It would have been impossible to show what would have been the profits of each road without the consolidation. Only an approximation to them would have been obtainable;' and that would have been based upon estimates more or less speculative in their character.”
    It is quite possible that the facts of that case and those roads may have been peculiar. It is not obvious how such conclusions could be reached in the case of the proposed agreement of consolidation now being considered. It is true the assets of the two old companies will be intermingled, but in the union each old company through allotment of stock in the new company will bo accurately apportioned its proper fraction of the unit. It is also true that “ continuous trains ” may run over the whole length of the two roads, but if that has not been the practice in the past, and necessarily the practice, then from common knowledge we must say that these two roads must be an exception to the universal practice in railroading, where the two roads make a continuous line. As to the conclusions drawn by the court in that case from those two facts, if such conclusions are predicated on those facts alone, there must have been, it seems to me, something exceptionally confusing in the agreement of consolidation, or in the operations under it, which does not appear in the agreement we are considering. The state, in the case cited, did not seek to restrain the union of the several roads. It had granted certain immunities to two of them and fixed the conditions upon which these immunities might be retained. The two companies voluntarily placed themselves in a position where it became impossible to perform the conditions in the manner by the law prescribed. No officers were in existence or could be brought into existence whose duty it was under the law to make the required report; and the court held that the state could not, without the passage of a new law, accept the report of a substitute, a stranger upon whom no duty to report rested.
    I think the plaintiffs, for the reasons stated, are not entitled to this restraining order, and direct that it be vacated, with costs.

      Theodore H. Swift (William C. Loving and Charles O. Tappan, of counsel), for app'lts; Louis Hasbrouck (Daniel Magone and John C. Keeler, of counsel), for resp’ts.
   Mayham, P. J.

Appeal from an order made at term vacating and setting aside an injunction order granted by a judge of this court restraining the defendant corporations from consolidating under the laws of New York

The defendant, the Ogdensburg & Lake Champlain Railroad Company, is a corporation incorporated under the laws of New York, owning and operating a railroad with a capital stock of over three million dollars.

The defendant, the Central Vermont Railroad Company, is a corporation organized under the laws of the state of Vermont, owning and operating a railroad in the state of Vermont with a, capital of $1,000,000. The railroads of these respective corporations connect with each other at the state lines and together form a continuous line of railroad into both states.

In 1880 the defendant, the Ogdensburg & Lake Champlain Railroad Company, issued its income bonds to the amount of $1,000,000. These bonds by their terms bore annual interest at the rate of six per cent, payable semi-annually, provided that the net earnings of the railroad company and other property of the company, after satisfying the expenses of operating and maintaining the same and the'interest on all liens, charges, incumbrances and other indebtedness, with all taxes and assessments and floating indebtedness on the property of or owned by said company, shall respectively suffice to pay such rate of interest on all of this issue of bonds outstanding at the time any instalment of interest shall fall due, or such interest less than six per cent, per annum, as such net earnings shall be sufficient to pay upon such bonds, each being entitled to the ratable share thereof on presentment and surrender of the coupon representing the same, and that the board of ■directors of such railroad company shall determine the amount of such net earnings.

These bonds also provided that on the registration of the bonds by the holder thirty days previous to an election of directors, such holder may have one vote for each $100 of such bonds held by him for directors of said company.

The plaintiffs are holders each in his own right of some of these income bonds, and as such owners and holders are entitled to such privileges and immunities as are provided in such bonds to the holders thereof^

The Ogdensburg & Lake Champlain Company now propose to ■consolidate their railroad company with the Central Vermont Railroad Company under the provision of the statute which authorizes -railroad companies upon conditions therein provided, and preliminary to such consolidation entered into an agreement for consolidation with the directors of the Central Vermont Railroad Company.

By the terms of this agreement of consolidation the capital of the new and consolidated company is $1,807,700, and the capital ■stock of each of the old companies is made convertible into the stock of the new company, ten shares of the Ogdensburg & Lake ■Champlain stock for one of the consolidated company, and that of the Central Vermont Company into such consolidated company stock share for share.

The agreement provides for the naming of the directors of the new company, and their election annually thereafter. The contract also provides for holding a meeting of the stockholders of each of the old companies and the submission to them of the question of such proposed consolidation.

The contract also provides for the vesting in the new corporation of all the property and effects of each of the old corporations, but expressly provides that the rights of all creditors of and liens upon the property of either of said corporations, parties to this agreement and act, shall be preserved and unimpaired, and the respective corporations shall be déemed to continue in existence to preserve the same, and all debts and liabilities incurred by either of said corporations shall thenceforth attach to such new corporation and be enforced against it and its property to the same extent as if incurred or contracted by it”

It is insisted on the part of the plaintiffs and appellants that this proposed consolidation, if carried into effect, would essentially impair the obligations of the contract between them and the Ogdensburg & Lake Champlain Railroad Company, first, by depriving them as bondholders of the right to vote for those persons whose judgment as to the application of earnings is practically decisive of their rights to interest.

Second. Bjr depriving them of directors who would have any motive to promote the interests of the plaintiffs, and who, from their position, would be familiar with the facts, and in whose selection they, as bondholders, have a right to participate.

Thirdly. That the net earnings of the property of the company belong to the bondholders, and that by the article of consolidation no provision is made for keeping separate accounts and no accounting is provided for for the same.

Fourthly. That the bondholders are deprived of their share in the extension of the business of the company.

If it be true that for any other objections suggested by the plaintiffs the lav/ authorizing the consolidation of these companies impairs the obligation of the contract between the Ogdensburg & Lake Champlain Railroad Company and these bondholders, then the contention of the plaintiffs that the law is unconstitutional must prevail.

But there is no express provision in chapter 73 of the Laws of 1880, under wdiich these bonds were issued, nor in the condition of the bonds themselves, against consolidation of the company with any other railroad company under the provisions of chapter 917 of the Laws of 1869 and the amendments of the same, and as has, I think, been clearly shown in the very able and exhaustive opinion of the special term, these bonds must be deemed to have been issued and taken by the plaintiffs subject to the contingency which might occur of a consolidation. If, therefore, the right to consolidate existed at the time of the issuance and negotiations of these income bonds the purchaser must be deemed to have taken them subject to that right, which vested in the company by the act of 1869, and which, like Aaron’s rod, swallows up all the objections of the appellants; and against which they cannot now be heard to contend.

I think, therefore, that the order should be affirmed on the opinion of the special term, with costs and printing disburse^ ments.

Putnam, J., concurs; Herrick, J., dissenting.


source: Caselaw Access Project

author: Mayham, P. J.

license: Public Domain

text:
    John P. Felts et al., Resp'ts, v. Lester Clapper, App'lt.

      (Supreme Court, General Term, Third Department,

      Filed May 9, 1893.)

    1. Trial—Affirmative of issue.
    The complaint herein alleged a sale of pork to defendant; that it was not fully paid for and claimed for a balance; the answer consisted of a general denial, and alleged payment of all pork bought of plaintiffs. Held, that plaintiffs had the affirmative of the issue, and were properly allowed to open and close.
    3. Pleading—Parties.
    There was some evidence that the property sold belonged to both plaintiffs, and it seemed undisputed that at the time of the sale it belonged to both. Held, that a nonsuit on the ground of misjoinder of parties plaintiff was properly denied, and the question of ownership left to the jury as a question of fact.
    Appeal from judgment of the Columbia county court, affirming judgment of a justice in favor of plaintiffs.

      Plaintiffs’ complaint alleged, in substance, that plaintiffs were, before the commencement of the action, joint owners of a number of hogs and a quantity of dressed pork, which they sold and delivered to defendant at an agreed price, and that on account of such transaction defendant was indebted to them in the sum of fifty dollars.
    The defendant's answer: First, denied every allegation in complaint ; second, alleged “ that he has fully paid for all pork ever purchased by him of plaintiff.”
    Plaintiffs were farmers, and plaintiff Felts worked the farm of the other plaintiff on shares, each owning one-half of this pork at the time of its sale and delivery to defendant, who was a meat peddler.
    The pork amounted to $290.49, and the payments thereon, as sworn to by Felts, amounting to $240.49, are not contradicted by defendant, except that defendant claims to have paid fifty dollars on February 18, 1891, which Felts denies.
    Felts testified that on April 1, 1891, he settled with Collins, and that the latter had his share of the pork money.

      E. R. Harder, for app'lt; E. R. Peck (W. C. Daly, of counsel), for resp’ts.
   Mayham, P. J.

This is an appeal from the judgment of the county court of Columbia county, affirming the judgment of a justice of the peace.

The first point made by the appellant is that the justice erred in refusing to admit the defendant to open and close the case on the grounds that he had the affirmative of the only issue. The action was to recover for goods sold and delivered, and the answer contained a general denial of the allegations of the complaint, and put in issue the question of sale and delivery as well as that of price and payment

Upon the pleadings, therefore, the plaintiff had the affirmative of the issue, and the justice was right in giving him the right of opening and closing the case.

It is also objected by the appellant that there was a misjoinder of parties plaintiff,and that for that reason the justice erred in not non-suiting the plaintiffs on the trial. There was some evidence that the plaintiffs owned the property sold and for which this action was prosecuted together, and enough, I think, to uphold the verdict of the jury upon that subject; and the rule is universal, that when the evidence upon a disputed question of fact is sufficient to sustain the verdict of a jury on such disputed fact, it is the duty of the trial court to submit such question of fact to the jury.

1 think that that question was one of fact in this case, and was, therefore, properly disposed of by the justice.

The evidence seems undisputed that at the time of the sale of this property to the defendant, it belonged to both the plaintiffs.

We have carefully examined the objections and exceptions by the defendant to the ruling of the justice in the receipt and rejection of evidence on the trial, and find no error for which this judgment should be reversed.

Judgment affirmed, with costs.

Putnam, J., concurs; Herrick, J., concurs in result


author: Hardin, P. J.

text:
    In the Matter of the Final Accounting of De Witt Gardner, Ex'r of Mary D. Tyler, Deceased. Fannie M. Rice et al., App'lts, v. R. Frederick Tyler et al., Resp'ts.

      (Supreme Court, General Term, Fourth Department,

      Filed May 13, 1893)

    Will—Construction.
    By the will of one T. he gave the residue of his estate to his wife, “to have and to hold the same and every part and parcel thereof to my said wife, her heirs and assigns forever, provided, however, that if any of the same shall remain unexpended or undisposed of at the decease of my said' wife, what shall so remain I give, bequeath and devise to my said son, his heirs and assigns, and I expect and desire that my said wife will not dispose of any of said estate by will in such a way that the whole that might remain at her death shall go out .of my own family and blood relation. I have already advanced, at different times, to my said son since he started out for himself, or for his benefit, in the aggregate, over $5,000, which is one reason why I do not now see fit to make a more liberal provision for him in this will.” The son was hy a former wife. The wife died, leaving á will by which she gave legacies to her own relatives. Held, that the will clothed the wife with power to dispose by will of what remained at her death.
    Appeal from a decree of the surrogate’s court of the county of Oswego, granted on the 2d day of August, 1892, and also from the decree of said court granted on the 22d of June, 1892. Hon. Eansom H. Tyler, ex-county judge of Oswego county, died at Fulton on the 2d day of November, 1881, leaving a last will and testament, bearing date the 19th day of February, 1880, which was admitted to probate on the 1st of December, 1881, and letters testamentary were issued to De Witt Gardner and Mary D. Tyler {his widow), who are named in said will as executors. He left him surviving his widow, Mary D. Tyler, and his son E. Frederick Tyler, ■ his only heir at law and next of kin. He left three pieces of real estate, valued at about $13,000, and personal property amounting to about $8,791.82. The executors took possession of the property, paid his debts and funeral expenses, and on the 11th of September, 1883, paid to his son, Frederick, $500, and took from him a release, under seal, of all right, title and interest in and to his estate, bearing date the 11th day of September, 1883.
    On the 28th day of June, 1884, Mary D. Tyler (his widow) died in Oswego county, leaving her last will and testament bearing date April 9, 1884, and a codicil thereto, bearing date the 28th day of May,’ 1884; and her will and codicil were admitted to probate on the 5th day of July, 1884, and letters testamentary thereon were issued to De Witt Gardner, Mrs. D. W. Gardner and Mrs. B. J. Dyer, executors named therein. She left her surviving Charles F. Douglas, a brother, her only surviving heir-at-law and next of kin, she having been the second wife of Tyler and step-mother of his son Frederick. In the testator’s will the first clause gave the piece of real estate situated in the village of Oneonta to his son Frederick, during his natural life, with power to sell and convey, provided the executors would join in the conveyance. That parcel was conveyed by the testator in his lifetime, and he requested his executors to pay to his son $500 in substitution therefor, which they did as already stated. The testator’s will contained the following:
    “ Second. All the rest, residue and remainder of my property and estate, both real and personal, whether in law or equity, of what nature or kind soever, I give, bequeath and devise to my dearly beloved wife, Mary Douglas Tyler, to have and to hold the same and every part and parcel thereof to my said wife, her heirs and assigns forever, provided, however, that if any of the same shall remain unexpended or undisposed of at the decease of my said wife, what shall so remain I give, bequeath and devise to my said son, Ransom Frederick Tyler, his heirs and assigns, and I expect and desire that my said wife will not dispose of any of said estate by will in such a way that the whole that might remain at her death shall go out of my own family and blood relation. I have already advanced, at different times, to my said son since he started out for himself, or for his benefit, in the aggregate, over $5,000, which is one reason why I do not see fit to make a more liberal provision for him in this will.”
    The surrogate found as conclusions of law, viz.:
    ■ “ First. That such and so much of the personal assets and property mentioned in the account of De Witt Gardner, executor of said Mary D. Tyler, deceased, in this proceeding, as came from the estate of Ransom H. Tyler, deceased, are not assets and do not belong to the estate of Mary D. Tyler, deceased, and are not applicable to the payment of .the legacies and bequests contained in her will.
    “ Second. That no power or authority was given to Mary D. Tyler by the last will and testament of Ransom H. Tyler, deceased, to dispose of by will any of the property or estate of said Ransom H. Tyler, deceased, remaining at the time of death of said Mary D. Tyler.
    “ Third. That the only legal effect of the receipt given the executors of Ransom H. Tyler’s will by Ransom F. Tyler of date September 11, 1883, was an acknowledgment by him of the receipt of the verbal bequest of $500, and an acquiescence in the provisions of his father’s will, and in no degree did said receipt enlarge, extend or fortify the title of Mrs. Mary D. Tyler to the estate of her deceased husband beyond that given her by his will.
    “ Fourth. That said executor is entitled in this proceeding to be credited with the amount of such personal assets now in his hands which came from and belonged to the estate of Ransom II. Tyler, husband of his testatrix.”
    At the close of the opinion delivered by the surrogate he says: “It is clearly apparent that the will of her husband gave this testatrix no power to dispose of any part of his estate by will, and that her will is inoperative as to any of such property which remained undisposed of at the time of her death.”

      George T. Clark, for app'It Rice; Piper & Rice, for app’lt Bunnelle; C. H. David, for resp’ts.
   Hardin, P. J.

Apparently the intention of the testator was to confide to his wife the power to have and to hold his property and estate, both real and personal,” and to give her the power to use the income thereof, as well as the body of the estate; and foreseeing that she might not use up or consume the whole of the property, he provided for two contingencies: First, that in the event she did not make a disposition of any of the property that remained at the time of her death, that the same should pass to his son Frederick ; and secondly, he apparently clothed her with power to dispose of what remained of the property at her death by will; and he circumscribed the execution of that power by a declaration of his expectation and desire to be observed and followed by his wife in the event she exercised the power of disposition of the property ; and in doing so he used the words: “ and I expect and desire that my said wife will not dispose of any of said estate by will in such a way that the whole that might remain at her death shall go out of my own family and blood relation.”

Such interpretation; such declaration of the intention of the testator, seems to be reasonable in the light of the language used by the testator. Such construction gives full force and effect to all the language used in the will, whereas, the construction put thereon by the surrogate seems to be in defiance or disregard of' the last clause of the will. When the testator, by the language in the early part of the second clause of the will, had provided liberally for his wife, evidently two ideas came to his mind in respect to his property ; the one being a contingency that his wife might leave at the time of her death, unexpended or undisposed of, a portion of his estate, and in that event he provided it to pass to his son; and his second idea seemed to be that if she should dispose of the same (that is by will), then in providing for the contingency of her disposing of the same by will, he declares to her his expectation and desire that she “ will not dispose of any of said estate by will in such a way that the whole that should remain at her death shall go out of my (his) own family and blood relation.” Apparently he had great confidence that his wife would carry out his wishes, The clause which we have been considering is followed by a declaration by the testator that he had at different times advanced over $5,000 to his son, and having said that he inserts a clause, viz. : “ which is one reason why I do not now see fit to make a more liberal provision for him in this will.” The words “ not now see fit to make a more liberal provision for him in this will ” are suggestive of the idea that he had reposed confidence in his wife that when she came to dispose of such part of the estate as should remain at her death that she would provide for his son. She seems to have acted upon that expectation and desire and fulfilled to a large extent the confidence reposed in her by her husband, as in the first clause of her will she devises to the son the brick house and lot situated on the corner of Broadway and Third streets, and also bequeaths to him his father’s gold watch and the family library; “ all silver purchased by his father ; his father’s portrait in oil, dinner, breakfast and tea set of white china, best black walnut chamber set with some bedding,” as well as some other articles of furniture. And in the residuary clause of her will she provides that what shall remain after disposing of the specific legacies and devises that the remainder shall be divided into four equal parts, one of which is given to the son.

In view of all the provisions alluded to we are of the opinion that what portion of the testator’s estate remained unexpended or otherwise undisposed of at the time of the decease of the wife passed under the provisions of her will, and that the execution of her will was in pursuance of the expectation and desire expressed to her by the testator, and the authority and power given to her by his will to dispose of such portion of his estate as remained in her hands at the time of her death. Terry v. Wiggins, 47 N. Y., 512; Flanagan v. Flanagan, 8 Abb. N. C., 418; Greyston v. Clark, 41 Hun, 125; 4 St. Rep., 4; Wells v. Seeley, 47 Hun, 109; 13 St. Rep., 239; Norris v. Beyea, 3 Kernan, 273; Leggett v. Firth, 53 Hun, 152; 25 St. Rep., 332; Crozier v. Bray, 120 N. Y., 366; 31 St. Rep., 506; Smith v. Van Ostrand, 64 N. Y., 278; Rose v. Hatch, 125 id., 433; 35 St. Rep., 443; Wortman v. Robinson, 44 Hun, 357; 8 St. Rep., 829; In re Williamson s Estate, 9 N. Y. Supp., 476; Colt v. Heard, 10 Hun, 189; Matter of Blauvelt, 39 St. Rep., 774. The foregoing views lead to a reversal of the orders appealed from.

Orders or decree reversed and proceedings remitted to the surrogate’s court for further hearing, with a provision that the costs of appellants be paid out of the estate.

Martin and Merwin, JJ., concur.


text:
    Mary Ann Burke, Adm'rx, App'lt, v. The Syracuse, Binghamton & New York Railroad Co., Resp't.

      (Supreme Court, General Term, Fourth Depmtment,

      Filed May 13, 1893.)

    Master and servant—Railroad—Negligence.
    At the station in question there is a siding which connects with the mainline by means of a Safety Wharton switch, operated by lifting a lever to connect the siding. On the evening of the accident there was a coal train on the siding waiting for the passenger train, on which plaintiff’s intestate was engineer, to pass. The train hands were in the telegraph operator’s shanty talking with him when the passenger train was seen, and he ran out to signal it, when, suddenly thinking the switch was wrong he ran to it, raised the lever, and the engine ran on the siding into the other engine, causing the death of intestate. The main line was clear if the switch had not been touched. The operator was 17 years old, but appeared older, had long lived by railroads and understood switches, and had operated this one for some time properly, locking it at night, and it appeared that his act was the result of thoughtlessness. Meld, that there was nothing that showed that he was unfit for the place, or was unable to attend to all the work at that place, or that defendant was negligent in not adopting a rule in relation to this switch, and that the court properly refused to submit these questions to the jury.

      Appeal from a judgment entered upon a nonsuit granted at the Onondaga circuit dismissing the plaintiff’s complaint upon a trial before the circuit and jury.
    The action was brought to recover damages for an alleged negligent tilling of plaintiff’s intestate, who was an engineer in defendant’s employ, on the 3d day of November, 1890. Rock Cut is a station some three miles south of Syracuse on defendant’s single track road running from Syracuse to Binghamton. It is a telegraph station and there is a siding there so arranged that trains may pass each other. The highway from Syracuse to Jamesville crosses the track near the station, where there was a cabin of two rooms, in one of which were telegraphic instruments and the other room was sometimes used for a postoffice. The siding leaves the main track some half a mile to the north of the cabin and joins it again a few rods to the south. At this point a Safety Wharton switch was in use at the time of the accident, which has a lever with a heavy iron ball at the end, which lies upon the ground when the main track is closed. To connect the main track and the siding this lever is raised to a perpendicular position and held, otherwise the weight of the ball drags it to the ground and closes the main track. Martin Clark was in charge of the station at the time of the injuries, and it was his duty to report trains and to receive and carry out telegraphic instructions from the train dispatcher at Sj^rac-use, and to flag the crossing and to attend to some other duties. His time of service was from seven o’clock in the morning until six o’clock in the evening, and during that period some ten trains passed the station. About six o’clock p. M. on the 3d of November, 1890, a coal train going southward halted on the side track about twenty-five feet from the switch and awaited the passage of the regular passenger train from the south, upon which the deceased was the engineer, going northward. The trainmen visited the shanty of the operator and chatted with him until he saw the passenger train approaching from the south, when he left the shanty with his lantern to signal the train in accordance with his custom; having reached the crossing he suddenly was seized with the thought that the switch was set wrong for the passenger train, and impulsively, with a view of preventing a catastrophe, he rushed up to the switch and lifted the lever'thereof and held it in position long enough to divert the train from the main track 'into the stationary locomotive of the coal train, thereby causing the death of the plaintiffs intestate.
    As soon as Clark saw the locomotive take the side track he realized what he had done ; recovered his presence of mind, and dropped the lever, thus saving the coaches containing the passengers on the main track. Clark was seventeen years of age on the 18th of August, 1890; was tall, lame and robust, and appeared to be nineteen years of age. He came from Auburn, where he had lived with his father within 200 feet of a railroad, and had for eight years, and “ was familiar with the railroad tracks, and had frequently seen side tracks and switches operating.” He attended the public schools until he was sixteen years of age, and having decided to become a telegraph operator, studied for a year and a half under the tuition of the train dispatcher at Auburn, and became familiar with receiving and sending dispatches, and for a month or more worked at a railroad station at Auburn familiarizing himself with practical railroad work, when he applied to the defendant for employment. Mr, Ferris, defendant’s agent, made some examination of him, and employed him, and sent him to Tully, where he remained for a month performing active service, sending and receiving railroad and commercial telegrams; signalling trains; reporting cars, and doing other work incident to the station duties. From there he was detailed for duty at Rock Cut, to take the place of one Fisher, a young man nineteen years of age, who had for considerable time conducted the business of the station successfully. Upon arriving at Rock Cut Clark was informed by Fisher as to the several duties devolving upon him, and among others the duty of opening the switch was explained to him, and all its workings, and that it was to be opened in the morning to permit a north bound coal train to be sidetracked in order to allow a passenger train, which awaited its arrival on the main track, to pass south. He informed Mr. Ferris, his superior, • that Fisher had fully informed him as to' the duties, and that he well understood them; and he successfully operated the switch each morning prior to the accident, locking it each night; and he testified that “At the time of the accident the main track was unbroken before I lifted the ball, and if I had left it alone the express train would have gone right by as usual; *. * * when I got there I knew as a matter of fact that the main track was unbroken, and that lifting the ball would break the main track and send the express train on to the branch; that I didn’t think of at the moment; * * * I fully understood its operation ; there was nothing difficult to understand about it.” Hoyt, who had previously been employed by defendant at Rock Cut, and who had been engaged in railroad business for ten’years at different stations, testified that he was familiar with the operation of Wharton switches and other switches, and also “ a man of ordinary intelligence ought to learn to open and shut the switch after it was shown him a few times; ought to be able to attend to it in short order; if he did operate it, and operate it right, that would show that he had sufficient experience "in that line.” At the close of the evidence the defendant moved for a nonsuit upon the grounds:

      First. “ That the plaintiff has not established sufficient facts to constitute a cause of action.”

      Second. “ That the evidence fails to show any actionable negligence on the part of the defendant.”

      Third. “ That the evidence shows that the death of the plaintiff’s intestate was occasioned through the negligence of a fellow servant of the deceased."

      Fourth. “ That the plaintiff’s intestate by accepting employment from the defendant assumed the risk of any negligence of which a fellow servant might prove guilty.”

      Fifth. “ That the evidence fails to show that the wrongful act of the boy, Clark, could in anyway have been foreseen by the defendant, or that there was anything from which the defendant could have anticipated that this accident would havé occurred or could have arisen.”
    Thereupon the court intimated that there was no case made for the jury; thereupon the plaintiff asked “ to go to the jury upon the question whether the railroad company was negligent in the employing of this man Clark at that place ; whether it exercised due care in the selection of fellow servants of the deceased."

      Second. “ Upon the question as to whether the railroad company employed a sufficient number of men at this point; whether it was not negligent in not failing to employ a sufficient number of men.”

      Third. “ Whether it was negligent in failing to adopt and notify Clark of the existence of the rule requiring the switch to be locked, and the requiring a switchman to be at his post upon the passage of trains on the main track.”
    The requests were refused, and thereupon the court directed a nonsuit, and judgment thereon has been entered in favor of the defendant.

      W. S. Andrews, for app'lt; Louis Marshall, for resp’t.
   Hardin, P. J.

Upon the occasion of the injuries no duty rested upon Clark to open the switch. His act in raising the ball and breaking the main track was voluntary, thoughtless and mistaken. Nothing appears in the case showing that he had not physical power to perform all the acts and duties required of him at the station, or that he was not mentally fit for the position assigned to him by the defendant. Judged by the rule laid down in Coppins v. N. Y. C. & H. R. R. R. Co., 122 N. Y., 557; 34 St. Rep., 214, the evidence fails to show a want of competency on the part of Clark to perform the duties required at the station. The observations made by the learned counsel for the respondent seem appropriate and pertinent where he says: “ The defendant could not make a psychological examination of Clark, or delve into the secret recesses of his brain to ascertain whether at some future period he would for an instant become the prey of a delusion and work destruction. It was no more bound to anticipate this unnatural occurrence than it would have been the act of Clark, had he,in a moment of temporary abberration, drawn a pistol and killed the plaintiff’s intestate.”

In Harvey v. N. Y. C. & H. R. R. R. Co., 88 N. Y., 486, it was said: “ The duties of a switchman are not complicated or difficult, and there can be no doubt that on the day in question Baldwin was entirely competent to perform the duties imposed on him. It appears from his own evidence that his failure to close the switch on the day in question did not arise from any inability on his part to perform the work he was set to do, but that such failure was the result of sheer inattention and carelessness on his part. He was a man of but fifty-six years of age, and there is no suggestion that he was not possessed of ordinary intelligence.” After further commenting on the circumstances of that case the court observed : “ There is no evidence in this case which warranted the jury in finding that any act of neglect on the part of the defendant contributed in any manner to produce the injury which resulted in the death of plaintiff’s intestate.” We think the rule there laid down is applicable to the facts before us, and we are of the opinion that the evidence was insufficient to warrant the jury in finding that the defendant had been negligent in employing Clark or leaving him in charge of the station at the.time of the accident.

In Sutherland v. The Troy & Boston Railroad Co., 125 N. Y., 739; 35 St. Rep., 853, it was said: “We think, under the circumstances, the jury could not be permitted to infer that Johnson was incompetent in fact from his age only, or that the company was negligent in employing him, or to speculate ‘whether, if the operator had been a man of mature years or judgment, he would have been less likely to have committed the mistake which Johnson did.” We think Mann v. President, etc., of D. & H. C. Co., 91 N. Y., 500, differs from the case before us, as in that case there was no reasonable doubt of the fact that Townsend was “ an incompetent and unsuitable person to discharge the important and responsible duty of flagman.” And it appeared he had not been informed of, and did not know of the rule requiring the use of torpedoes, and that he had never flagged a train in the night except the second night before, when he was acting as flagman on a train, on which occasion he failed to obey orders and it was, therefore, held “ that the evidence justified the submission to the jury of the question as to the negligent performance, by defendant, of the duty it owed to its servants, to use due care in the selection of competent co-servants.” Nor do we think the absence of more men at the station “ contributed to produce the injury complained of.” Harvey v. Central Road, supra. It appears that Clark had sufficient time to do all the work that was required of him at the station and that at the time of the accident he was under no obligation to do anything with the switch. He was at leisure as the train approached, and if he had remained chatting with the trainmen on the coal train no accident would have taken place. Not' do we think the defendant was negligent in not having adopted a rule as to the switch in question, as it did not appear that the defendant in the exercise of reasonable care could have foreseen the necessity of such a rule. Morgan v. The Hudson River Ore & Iron Company, 133 N. Y., 666; 45 St. Rep., 112; Berrigan v. The N. Y., L. E. & W. R. R. Co., 131 N. Y., 582; 42 St. Rep., 858; in the latter case it was said: “ It cannot be assumed that it can by rule guard against and prevent every injury to employes.”

No evidence was given tending to show that such a rule was necessary to prevent an employe from opening the switch on an improper occasion. Clark had a key to the switch, and if it had been locked it is mere conjecture to say that he would not have reached the switch in time to make use of the key, even in the event he had found that the switch was locked. We think the evidence was insufficient to carry the case to the jury upon the ground that the defendant had been negligent in omitting to adopt a rule or rules to guard against such an accident as the one that occurred.

It was said by this court, in Forey v. S., B. & N.Y. R. R Co., 12 St. Rep., 201, that “ it is the duty of an employer, engaged in a complex business, to establish rules for the protection of employees. But the business in which this plaintiff was engaged was not complex, and it is difficult to see how any rule ¿ould have given him more information than he might easily have obtained by ordinary attention to the operations in which he was engaged.” That case was affirmed in 122 N. Y., 667; 34 St. Rep., 1015. Wemay add that it is difficult in the case in hand to discover any solid ground upon which it $nay be averred that the defendant was negligent in not having promulgated a rule requiring the switch to be locked on each and every occasion when the same was used. It appears by the evidence that Clark was accustomed to lock it-on leaving it nights, and that custom was apparently to prevent the switch being interfered with by outsiders, when no one was present to detect the interference.

We are of the opinion that the trial judge properly refused to submit any of the questions to the jury mentioned by the plaintiff at the close of the evidence, and that no error was committed in directing a nonsuit.

Judgment affirmed, with costs.

Merwin, J., concurs; Martin, J., not sitting.