text:
    Catharine Dempsey, as Administratrix, etc., Resp’t, v. New York Central and Hudson River Railroad Company, App’lt.

      (Supreme Court, General Term, Fifth Department,

      Filed October 17, 1894.)

    Negligence—Employe of contractor.
    Where the employes of a contractor, engaged in repairing the depot, are obliged to cross frequently each day the tracks, the company owes them the duty to use reasonable care for their protection while so crossing.
    Appeal from a judgment entered on a verdict in favor of plaintiff, and from an order denying a motion for a new trial, made on a case and exceptions.

      James F. Gluclc, for app’lt; Charles Oishei, for resp’t.
   Bradley, J.

The death of the plaintiff’s intestate was caused by cars suddenly coming together while he was between them, upon the track in the defendant’s yard at Buffalo, on December 13, 1892. The question is whether the charge that the death was the result of the negligence of the defendant is supported by evidence. On October 6,1892, the defendant entered into a contract ■with W. J. Gillette, whereby the latter agreed to repair, in the manner specified, the roof of the train shed of the Exchange street passenger station of the defendant, at the city of Buffalo, and to commence the work within five days. Gillette sublet the work to one Talbut, who proceeded to perform it. He employed Dempsey as foreman, who acted in that capacity until his death. In the rear, i. e., the south side of the building, and between it and Green street, were two parallel tracks, running east and west, and south of Green street was also a track, upon which the defendant placed a car for the use of the contractor. It is designated as a tool car. In that car much.of the material for the work was kept and prepared for use, and was taken from there to the building, from time to time, as wanted for use in the work upon the roof; and the workmen, in number from twelve to eighteen, deposited their lunch pails in the car, and there ate their lunches. The material for the work was taken from the tool car across the railroad tracks of the defendant to the depot building, and hoisted onto the roof. The track next to the building was mainly appropriated to the use of the switch engine in switching cars. None were left upon it. That track was generally clear. The next track south of it was occupied by passenger, mail and baggage cars, placed there and taken from it as the business of the company required. And, for the convenience of crossing that track in going from and to the tool car, the evidence on the part of the plaintiff tended to prove that in the outset of the work the defendant’s head switchman, or “ switch conductor,” as he is sometimes called, was requested by Dempsey, and promised, to make and leave an opening for the workmen to pass through between the cars; that the opening was so made and used; that it continued substantially all the time up to the time of Dempsey’s death; and that being found closed on one occasion, about two weeks before the accident, it was, on a like request, opened, and so remained up to that time. This is contradicted by the head switchman, who testified that no such request or promise was made, that no arrangement was made to that effect, and that he knew of no opening being kept there prior to the accident; and the defendant gave evidence tending to prove that the switch conductor had no authority to effectually make such an arrangement.

The defendant, through its agencies, was advised that the tool car was used by the contractor in connection with the work, and that he, by his employes, was engaged in the performance of the contract, and the jury were permitted by the evidence to find that the workmen frequently, each day, carried materials for the work from the car to the building, and, in going back and forth for such purpose, passed over the defendant’s track, through an opening between the cars standing upon it, and that this was known to the company, through those conducting its business in and about the premises. In view of such facts, the deceased and his coemployes were not mere volunteers upon the defendant’s tracks. Their relation to the work required them to go to and from it, and in doing so they had rights which it was the duty of the de„ fendaut to recognize; and assuming as we may, upon the finding of the jury, that the defendant was advised that the persons engaged in the work o'f performing the contract were for that purpose passing over its tracks through an opening, or at the place in question, the defendant owed to them some duty to use reasonable care for their protection, and that they should not, while so engaged, suffer injury by its negligence. Indermaur v. Dames, L. R, 2 C. P. 311. Smith v. Dock Co., L. R., 3 C. P. 326; Newson v. N. Y. C. R. R. Co., 29 N. Y. 383; Driscoll v. N. Y. & R. Lime & Cement Co., 37 N. Y. 637; Stinson v. N. Y. C. R. R. Co., 32 N. 333; Murphy v. N. Y. C. & H. R. R. R. Co., 118 N. Y. 527; 29 St. Rep. 941; Young v. N. Y. C. R. R. Co., 30 Barb. 229", McDermott v. N. Y C. R. R. Co., 28 Hun, 325; Goodfellow v. Railroad Co., 106 Mass. 461. The question of negligence on the part of the defendant was submitted to the jury, and it had for its support the facts that the switchman shoved some cars down an incline against the west end of the cars on thé track with such force that the gap, in which the deceased was at that moment, was suddenly closed, causing his death. This was done without any signal or warning to appraise him of the danger. And there is evidence tending to prove that he was chargeable with no contributory negligence. He .left the tool car, and was proceeding towards the building where the work was being done under his direction, and the evievidence is to the effect that he looked in the westerly direction as he approached the track; that the cars which were run in onto the track there came on a curye around the west end of the depot, and could not be seen by him; and that' there was also a dirt car on a spur of the track, at the west end, which was also some obstruction to the view of the cars so brought on the track. The witnesses testify that they heard the crash, and then saw that the deceased was pinned or crushed in between the cars where the opening was through which he attempted to- pass. The conclusion is permitted that the cars may have been put onto the track at the west end of the standing cars in such manner as not to move the one at the place of the injury, and that a notice or signal may have in some manner' been given to warn the workmen of the danger which might arise from the sudden movement of the cars standing there. ' •

It is urged by the learned counsel for.the defendant that it was practically impossible to provide for or- maintain an opening for the workmen to pass through upon this track, because the defendant was frequently daily- putting ears- upon it, and, as they were wanted for use, taking cars from the .track, and, in doing so, necessarily had to-move, more or less, the cars upon it, and that the deceased must have known that this was being done. While there is much force in that suggestion, founded upon the evidence, the facts before mentioned, which the jury could find, still remain,— that the workmen, for the purposes of the business in which they were engaged, were, with the knowledge of the defendant frequently crossing the track, and the use which was made of the track by the company did not necessarily deny to its servants the opportunity to use such care' as was reasonable under the.circumstances for the protection of those workmen against injury by the' movement of its cars. The case may be a close one, but the facts were fully and fairly submitted to the j ury.

The conclusion is that the verdict is supported by the evidence.

The judgment and order should be affirmed.

All concur.


source: Caselaw Access Project

author: Bradley, J.

license: Public Domain

text:
    Alfred C. Dodge, App’lt and Resp’t, v. Nelson Miller, App’lt and Resp’t.

      (Supreme Court, General Term, Fifth Department,

      Filed October 17, 1894.)

    1. Specific performance—Assignee.
    An assignee of an oral contract may enforce specific performance.
    2. Same—Judgment.
    The decree, in such case, will be made subject to the rights of the vendor against the purchaser.
    Appeal from a judgment directing a conveyance subject to a certain judgment.

      G. A. Norton and K A. Nash, for pl’ff; Geo. W. Daggett, for def’t.
   Bradley, J.

The only proposition urged in support of the defendant’s appeal is that the plaintiff could not, by the assignment to him, effectually take the relation and rights of vendee which Jones had to the parol contract with the defendant. It is not questioned that there had been such part performance as to relieve it from the statute of frauds, for the purposes of equitable relief, but it is insisted that such relief is available to Jones only. No reason appears why the equitable right to specific performance perfected in him might not be transmitted by assignment to the plaintiff, and the execution of the contract in his behalf directed. The subject of the controversy, mainly, is whether the defendant’s judgment for the money advanced by him to Jones is entitled to ■or should have priority to the claim of the plaintiff. When the parol agreement of sale to Jones was made, the defendant’s title was incomplete; but he contemplated perfecting it, and did so after the assignment to the plaintiff, and thereupon tendered a deed to Jones, and required him to pay the purchase money and the amount of money so loaned to him, or secure the payment of it by mortgage on the premises. This Jones declined to do. It may reasonably be supposed that the defendant, having the legal title, advanced the money to Jones to aid him in the erection of the house upon the land, as the value of it, thus enhanced, would be adequate security for the loan, and with a view of -having the benefit of it as such. He would not, however, have a vendor’s lien for the money so loaned, unless it could be treated as a part of the purchase money. If the legal title had been in Jones, the loan of money to him upon his parol promise to secure it by mortgage at some future time upon the land wonld not have been effectual to create an equitable lien upon the premises. The promise, without something further, would be within the statute of frauds, and void. 2 Rev. St. p. 134, § 6. The English doctrine that the deposit of title deeds as security for money advanced constitutes an equitable mortgage has been recognized in this state. Rockwell v. Hobby, 2 Sandf. Ch. 9; Chase v. Peck, 21 N. Y. 581, 584.

In the present case, Jones had no muniment of title. The evidence does not permit the inference that the money loaned by the defendant to Jones became a part of the purchase money of the premises; and it is not seen that an equitable mortgage or lien is supported by the fact that the defendant, in his relation of vendor, held the title in trust for Jones. The difficulty with the defendant’s claim of lien is that his loan was made upon the mere oral promise of Jones to secure it when he obtained the title. In Smith v. Smith, 51 Hun, 164; 20 St. Rep. 597, cited by the defendant’s counsel, money was expended by the plaintiff in the erection of a building upon premises pursuant to an arrangement with the owner that he should have a lien upon it for the amount so expended, with the right to sell, if necessary for his protection. It was there held that the lien was not dependent upon the agreement alone, but was also founded upon the fact that it would be repugnant to natural justice to permit the owner of the legal title to retain the building without compensating the plaintiff for the money so expended by him. This was affirmed. 125 N. Y. 224; 34 St. Rep. 857. While in the case at bar the facts do not establish an equitable lien in behalf of the defendant, enforceable by affirmative action on his part, there is, in view of the fact that the money was advanced to aid in the erection of the house on the premises, and on Jones’, promise to so secure it, an equity which the court may recognize in an action for specific performance of the parol contract. An action for such relief is addressed to the sound-discretion of the court, in such sense that the party in pursuit of it must come into court with clean hands, and, seeking equity, must do equity. Such discretion is not arbitrary or capricious, but its exercise is qualified by the application of recognized principles. Seymour v. De Lancey, 6 Johns. Ch. 222; 3 Cow. 445. The circumstances, as found, of the advance of the money to Jones, were such as to legitimately bring the subject with the consideration of the court. The purpose of it, in its relation to the premises in question, and the promise and faith of the contemplated security upon which the loan was made, were such as to justify, as between the defendant and Jones, the direction of the court that the amount be paid or secured, pursuant to the understanding, as a condition of granting specific performance of the contract in behalf of the latter. Canajoharie Church v. Leiber, 2 Paige, 43; Sutphen v. Fowler, 9 Paige, 280. And, upon the facts found by the trial court, the plaintiff took the assignment from Jones subject to the equities between him and the defendant. Reeves v. Kimball, 40 N. Y. 299. The judgment,'therefore, should be affirmed, without costs on this appeal to either party.

411 concur.


author: Lewis, J.

text:
    The People ex rel. E. Devillo Root, as Supervisor, etc., Resp’t, v. Board of Supervisors of Steuben County, App’lt. The People ex rel. Marcus Stowell, as Supervisor, etc., Resp't, v. Same, App’lt.

      (Supreme Court, General Term, Fifth Department,

      Filed October 17, 1894.)

    County—Liability—Bridges.
    A county is liable for a part of the expense of a bridge wholly within, in the same case as of a bridge on, the boundaries of the town.
    Appeal from an order, in each case, directing a peremptory writ of mandamus to issue.

      M Rumsey Miller, for app’lt; J. F. Parlchurst, for resp’t.
   Lewis, J.

The highway commissioner of the town of Addison, county of Steuben, during the year preceding the 1st day óf November, 1893, incurred, in the construction, care, maintenance, and repair of the free public bridges within said town, expenses amounting to the sum of $7,114.62. The assessed valuation of the taxable property of said town for that year was $956,177. The excess of the expenses to which said town was thus subjected exceeded one-sixth of 1 per centum of said assessed valuation of its taxable property by the sum of $5,521. A verified itemized statement of said expenses was made by the commissioner of highways of said town showing that he had expended for a new iron bridge across the Canisteo river, in the village of Addison, $6,265, and, for repairs of various other bridges within the boundaries of the town, sums of money, aggregating in all, including the cost of the Addison bridge, said sum of $7,114.62. An explanatory statement was at the same time presented to the said board, in words and figures following:

Assessed valuation............................. $956,177 00

One-sixth of 1 per cent, of valuation............... 1,593 62

Total expenses of bridges during the present year... 7,114 62

Excess of cost of bridges over one-sixth of 1 per cent, of total valuation........................ 5,521 00

One-third of excess...........!.................. 1,840 03

Steuben county debtor to town of Addison......... .1,840 03

These statement were presented to said board with a request that they pay said town the said sum of $1,840.03. The board acted upon the claim, and wholly disallowed the same, upon the ground that it was not a legal charge or claim against the county. These facts being made to appear to the court at special term, a peremptory writ of mandamus was directed to issue to said board requiring them to forthwith convene, and to levy upon the taxable property of the county of Steuben a sum sufficient to pay its proportion of the expenses of the town aforesaid for the year ending November 1, 1893, to wit, the sum of $1,840.03, and that the same, when collected, should be paid towards the payment of such expenses; and from the order thus granted an appeal was taken to this court.

The relator’s claim against the county is based upon the provisions of § 130, ch. 568, of the Laws of 1890. The appellant’s contention is that this section has no application, for the reason that the expenses were incurred for bridges over streams or other waters within the boundary lines of the town, and which did not form the boundaries of the town. This is the principal question presented by this appeal, and it involves the construction of said section, which is as follows: “ When Town or County Expense. The towns of this state except as otherwise herein provided shall be liable to pay the expenses for the construction and repair of it3 public free bridges, constructed over streams or other waters within their bounds, and their just and equitable share of such expenses when so constructed over streams or other waters upon their boundaries, except between the counties of Westchester and New York; and when such bridges are constructed over streams or other waters forming the boundary lines of towns either in the same or adjoining counties, such towns shall be jointly liable to pay such expenses, except that when the whole expense in any one town, for any one year, for the construction, care, maintenance, preservation and repair of its bridges, shall exceed one-sixth of 1 per centum on the assessed valuation of the taxable property of the town for that year; the county in which such town is located shall then pay not less than one-third part of such excess. Each of the counties of this state shall also be liable to pay for the construction, care, maintenance, preservation and repair of public bridges, lawfully constructed over streams or other waters forming its boundary lines, not less than one-sixth part of the expenses of such construction, care, maintenance, preservation ana repair.”

Section 131 of said act is as follows: “Additional County Aid. When it shall appear to the board of supervisors of any county that any one of the towns in their county will be unreasonably burdened by erecting or repairing any necessary free bridges in such town or upon its borders, such board of supervisors may cause said sum of money not exceeding $2,000 in any one year in addition to the amounts provided for in the last preceding section, to be raised and levied upon the county to be used to pay such portion of the expenses of erecting or repairing such bridge as such board may deem proper.”

This latter section was repealed by chapter 686 of the Laws of 1892, known as the “ County Law; ” and § 63 of the latter act was substituted for the repealed section. Section 63 is as follows: “County Aid to Towns for the Construction and Repair of Bridges. If the board of supervisors of any county shall deem any town in the county to be unreasonably burdened by its expenses for the construction and repair of its bridges the board may cause a sum of money not exceeding $2,000 in any one year to be raised by the county and paid to such town to aid in defraying such expenses.”

We are of the opinion that the true meaning of the section requires a county to contribute to the town the one-third part of the excess mentioned when the expenses are incurred upon the town’s free bridges within its boundaries, as well as those upon the boundaries. This is the natural and reasonable construction of the language of the section. The section says : “ The towns of this state except as otherwise herein provided shall be liable to pay the expenses for the construction and repair of its public free bridges, constructed over streams or other waters within their bounds.”

And then follow the provisions as to the construction of bridges over streams forming the boundaries, “except that when the whole expense in any one town, for any one year, * * * shall exceed one-sixth of one per centum,” etc. The phrase “except as otherwise herein provided ” manifestly applies to all three of the classes mentioned. Had it been the intention of the legislature that it should apply only to the second and third classes, it would have been incorporated into that part of the section, and not have appeared in the part of the section relating to the first class. The section refers to the bridges of the town generally, including those within as well as those upon its. boundaries. There would seem to be no good reason for providing for assisting a town in the construction of bridges upon its boundaries, and not for those within its lines. When building a bridge upon a boundary line between two towns, the expense thereof is borne equally by the towns.

A review of the legislation of the state upon this subect may aid in construing this section. At an early day, under the common law of England, the duty of repairing bridges in that country developed upon the counties, they being regarded as for the common good and convenience of the residents of the entire county. In this state, as early as 1784 (1 Greenl. 105), the construction and reparation of bridges was committed to town officers. It seems to have very soon become apparent to the legislature that requiring the towns to bear the entire expense of constructing its bridges imposed in some instances an undue burden, and as early as 1801 an act was passed giving to the boards of supervisors the power of assisting the towns when it was made to appear that the town was unreasonably burdened by the erection or repair of its bridges. It undoubtedly came to be known that it was difficult to obtain relief under this law, for the reason that members of-.boards of supervisors were as a rule reluctant to impose upon the taxpayers of the towns which they immediately represented the burden of^ assisting other towns in the construction of their bridges ; and an act was accordingly passed giving to the court of sessions the power to review the decision of the board of supervisors in such cases. By subdivison 4 of § 1 of chapter 482 of the Laws of 1875, counties were made absolutely liable to pay not less than one-sixth of the expenses of constructing public bridges over streams or other waters forming the boundary lines of counties between the towns at such points; and if the board of supervisors deemed the bridge of general benefit to the county, and that the payment of two-thirds of the expense by the towns would be unjust to them, they were authorized to give additional assistance. This rule was continued in chapter 346 of the Laws of 1883 and chapter 126 of the Laws of 1886, and then came the highway law of 1890, containing the section above quoted. It will be observed that the legislation, down to the time of the passage of the act of 1890, had tended towards a more liberal treatment of the towns which might be thus overburdened. As the country was cleared up and became more thickly populated, a more general system of bridging streams and ravines was called for by'the necessities of the people. The cultivation of the land and the construction of ditches and sewers increased the volume and number of freshets, and very frequent destruction of bridges, and thereby increased the expense to the towns of maintaining them, and hence came, from time to time, the legislation looking to their relief. The legislature very properly provided for compelling the boards of supervisors to pay a definite and fixed percentage of the expenses of the towns in the construction and repair of their bridges, especially in view of the well-known fact that the bridges of the county are used indiscriminately by the residents of the county.

The account prepared and presented by the commissioners was in conformity with the requirements of § 182 of the act of 1890. It was a verified statement, containing a description of the bridge, and the whole expense in items incurred by the town during the year preceding for constructing and repairing bridges. The claim was not rejected by the supervisors because of any informality in the account. The claim of the defendant’s counsel is that the county was not liable in any event for any portion of the expense incurred. As there was no apparent reason why the claim should have been rejected, a writ of peremptory mandamus was properly granted; and the order appealed from should be affirmed, with costs.

The same disposition should be made of the case of People ex rel. Stowell, Supervisor, v. Same Defendant, as the material facts and questions involved are the same in both cases.

All. concur.


text:
    Harvey F. Drake et al., App’lts, v. Severin Siebold, Resp’t.

      (Supreme Court, General Term, Fifth Department,

      Filed October 17, 1894.)

    1. Contracts—Validity—Public policy.
    A'contract for the purchase and sale of coal at prices to be fixed by an unlawful association, organized to control the price of coal, is void as against public policy so far as it is not executed.
    2. Same.
    But it is not void so far as to deny to the vendor all remedy for nonpayment for coal delivered under the contract.
    8. Pleading—Amendment.
    An answer, in an action on contract valid on its face, cannot be amended on trial, so as to aver that the .contract was against public policy.
    Appeal from a judgment dismissing the complaint

      Albert H. Harris, for app’lts ; H. 0. Pierce, for resp’t.
   Bradley, J.

The referee found the facts in support of the plaintiffs’ alleged claim for breach of the contract by the defendant, but determined that the contract was illegal, by reason of the fact, as found by him, that during the year commencing May 1, 1888, there existed a combination of all the coal dealers in Bochester, except a few small dealers, who sold by the bushel, including the parties to the action; that the combination was known as the Bochester Coal Exchange; that at meetings held monthly the retail price of coal was fixed ; that it was'agreed among the members of the association that coal should not be sold in the city of Bochester by them for prices less than those fixed by it; that a disregard of the action of the association in that respect subjected the member violating it to some fine or penalty; and that the object of the association was to fix a uniform price for coal in the city, and to prevent competition among the members, of the coal exchange who dealt in coal, which was during that time an article of prime necessity to the public. And the referee further found that the retail price of coal, as determined by the association, entered into and formed a part of the consideration for the contract mentioned in the complaint. The evidence warrants the conclusion that'such an association existed in Bochester for the purposes so found, and that substantially all the dealers in coal there, including the parties to this action, were members. And, as the object of it was to destroy and prevent competition in the sale of an* article of prime necessity, the combination between the dealers, followed by overt acts, was a conspiracy, within the meaning of the statute, which provides that when two or more persons conspire “ to commit any act injurious * * * to trade or commerce,” they are guilty of a misdemeanor. Pen. Code, § 168, subd. 6; People v. Sheldon, 139 N. Y. 251; 54 St. Rep. 513.

It is urged on the part of the plaintiffs that the contract in question was not tainted by any relation to the association, that it was independent of it, and that reference to the circular was incidentally made to designate, as between the parties, the standard prices during the time their contract was to run. It is true that persons, in their dealings, may ordinarily adopt such method as they please to regulate the measure of compensation or prices in the future, through the period of the operation of their contracts. This they cannot effectually do to accomplish any unlawful purpose. The only object of the association known as the Bochester Coal Exchange was to govern the price of coal within the city, and make tue’retail price of that article there uniform. The primary-purpose was to prevent competition in the trade. The parties to this action, being members of it, sought by their contract to accomplish, so far as related to their dealing as represented by it, the purpose for which the coal exchange was organized and existed. One of the considerations of the sale and purchase seems to have been the prices fixed from time to time by the association for the purposes before mentioned. It therefore cannot be said, in view of the facts which the referee was permitted to and did find, that the contract was made independently of any relation to the association, or that it was free from any consideration in support of its purpose. In Armstrong v. Toler, 11 Wheat. 258, cited by the plaintiffs’ counsel, Mr. Chief Justice Marshall discussed the subject of 'the validity of contracts having relation to illegal acts, and tainted by them. And it was there held that if a promise be unconnected with the illegal'act, and is founded upon a new consideration, it is not tainted by the act, although it was known to the person to whom the promise was made, and he the contriver and conductor of the illegal act. If, therefore, a person knowing all the circumstances had lent to the defendant in the present case the money to pay for the coal pursuant to the contract in question, or had paid the plaintiffs for the coal, for the defendant, upon the promise of the latter to repay him, the promise would, within the doctrine of that case, be effectual to support an action, because, as there held, lending the money or making the payment would have constituted a new consideration, and the foundation of a new contract, which could not be vitiated by acknowledgment of the purpose for which the money was so loaned or paid. By taking the relation which the parties had to the association, as its members, it would seem that they intended to observe, in their dealing in coal, the prices fixed by it, and to adopt them in making their contracts. They did so by the contract in question, and to that extent they effectuated the purposes of the illegal combination by the means contemplated by it. And so far as related to the price the contract must be infected by the unlawful object of the association, and be subject to the consequences of it. In Roller Co. v. Cushman, 143 Mass. 353, one of’ the features distinguishing the principle of that case from that of the present one is that the agreement in question there did not refer to an article of prime necessity, nor to a staple of commerce, or to merchandise to be bought and sold by the parties in the market, but to certain fixtures manufactured by them. The other cases cited by the learned counsel for the plaintiffs do not seem to have any necessary application in support of his contention on the subject. As the business of selling and buying coal is in itself legitimate, the fact that the price adopted is in furtherance of the scheme of the association would not deny to the seller all remedy for nonpayment of the coal delivered upon such contract. The view taken of the contract in question is that so far as the prices are founded or dependent upon the circulation before mentioned, of the Rochester Coal Exchange, it is ineffectual and void.

There is a further question of pleading presented. The de-fendant, by his answer, admitted the partnership of the plaintiffs, and that he signed the instrument set forth in the complaint, and denied each and every other allegation of the complaint. He did not allege that such instrument, which is the contract in question, was invalid for any cause. At the close of the evidence the defendant moved to amend his answer, by inserting an allegation to the effect that the contract was based in part upon a criminal-conspiracy to injure tade and commerce, and is against public policy and void. The amendment was allowed by the referee, against the objection and exception of the plaintiffs. The question arising upon the exception is here for consideration. Quimby v. Claflin, 77 N. Y. 270. The allegations of the amendment constituted a new defense, and if it was essential to the support of the conclusion of the referee, dismissing the complaint, the exception was well and effectually taken, for the reason that it was not within the power of the referee to allow the answer to be so amended. Code Civ. Proc., §§ 723, 1018; Shaw v. Bryant, 65 Hun, 57; 47 St. Rep. 227. It has been held that when it appears that a contract which is the subject of an action is void, as against public policy, the court will decline to enforce it by judgment, although such infirmity is not pleaded. Oscanyan v. Arms Co., 103 U. S. 261; Russell v. Burton, 66 Barb. 539. But in those cases the invalidity of the contracts there in question appeared by the presentation of them by the plaintiff at the trials. In that respect they were distinguished from Milbank v. Jones, 127 N. Y. 370; 38 St. Rep. 910, where it was held that when the contract, as alleged and proved by the plaintiff, is valid on its face, the defense that it is in fact against public policy and illegal is not available-unless specially pleaded. The rule seems to be that a plaintiff must to support his action, allege and prove a contract valid on its face. If he fails to do so, his complaint may be dismissed, although the invalidity of the contract is not pleaded as a defense. But otherwise, to enable the defendant to raise the question upon his evidence, it must be alleged in the answer. The contract, as set forth in the complaint, was not invalid on its face. The evidence on the part of the plaintiffs does not appear in the record, but the referee finds upon it facts which entitled the plaintiffs to recover. The evidence on the part of the defendant, upon which arises the charge of illegality of the contract, was not objectionable, as it related to the source of the circular of retail prices, into which the defendant had the right to inquire, and for that reason the plaintiffs are not prejudiced upon this question by not taking objection to the evidence. Honegger v. Wettstein, 94 N. Y. 252. These views lead to the conclusion that the referee erred in allowing the amendment, which substantially changed the defense alleged in the answer; and for that reason the judgment should be reversed and a new trial granted, costs to abide the’event. All concur.


text:
    David Drew as Assignee, etc., App’lt, v. Fred. C. Keufer et al., Impleaded, etc., Resp’ts.

      (Supreme Court, General Term, Fifth Department,

      Filed October 17, 1894.)

    1. Corporations—Directors—Liability.
    Directors, unless they specially promise to pay, are not personally liable for services rendered, at their request, for the corporation.
    2. Pleading—Amendment—Answer.
    In an action on a joint contract for services, an amendment of the answer of some of the defendants, who denied the performance of the services, so as deny a personal promise, is not a substantial change of the defense, where the same was already alleged by the other defendants.
    3. Evidence—Opinion—Conclusion.
    In an action to charge directors personally for services rendered for the benefit of a corporation, a question as to whose credit plaintiff relied upon calls for the conclusion of the witness.

      Appeal from a judgment dismissing the complaint.

      Walter S. Drew and James 0. ■ Sebring, for app’lt; Geo. W. Hall, for resp’ts Keufer & Karle ; Briggs & Sunderlin, for resp’t Hoover.
   Bradley, J.

The facts found by the referee are to the effect that, at a meeting of a majority of the board of directors, proceedings were directed and taken, pursuant to the statute, for the voluntary dissolution of the corporation, and Mr. Sebring was employed as attorney to conduct them, and that he prepared their petition, which was presented, and the requisite proceedings were had to accomplish the purpose. Code Civ. Pro. §§ 2419-2429. This proceeding was set in motion by the action of the defendants in their relation as directors of the corporation, and as such they made the petition and caused the proceedings to be had. They were therefore not personally liable to the attorney, unless they, by some special promise, undertook to pay him for his services. The referee found thát they assumed no such personal relation to him by any individual promise to compensate him in the premises, and such finding is supported by the evidence. His conclusion that there was no personal liability of the defendants necessarily followed. The proceedings were those of the corporation by its constituted agencies. Skinner v. Smith, 56 Hun, 437; 31 St. Rep. 448. The life of the corporation continued until the final order .was made dissolving it (Code Civ. Pro. § 2429; Iron Works v. Smith, 4 Duer, 362); and then the receiver appointed was, in practical effect, its representative for certain purposes.

The defendants Keufer and Karle, by their answer, put in issue the allegations of the complaint other than that the defendants were directors of the corporation. The defendant Hoover, by his answer, denied any knowledge or information sufficient to form, a belief that Sebring performed all the services mentioned in the complaint, and alleged that his services were of little or no value to the corporation. Upon the trial a motion in behalf of the defendant Hoover, made to amend his answer by alleging denial" of the employment of Sebring by the defendants as their attorney, was granted. This was opposed, and exception taken by the plaintiff’s counsel; and it is insisted that it was not within the power of the referee to grant it. Although his power to allow amendments is limited by the statute (Code Civ. Pro. §§ 723, 1018), we think the exception was not well taken. Treating the facts alleged in the complaint as sufficient to charge the defendants personally, their alleged contract, according to the rule at common law, must be treated as the joint contract of all the defendants, as nothing appeal's in the allegations to the contrary; and although the rule has been so modified by statute as not to •render the misjoinder fatal when the joint liability of all the defendants is not established and the several liability of some of them is made to appear by evidence, the apparent liability alleged is that of all the defendants upon their joint promise ; and nothing appeared in the evidence to distinguish the relation of the defendant Hoover to the alleged promise from that of the other defendants to it. The promise was alleged to have been made by the defendants jointly, and no attempt by evidence was made to show that it was otherwise. In that view the amendment of his answer made by defendant Hoover in denying that the defendants promised as alleged, was not a substantial change of the defense, as the same had already been alleged by other defendants. Beyond that the. amendment was immaterial.

The answer of witness Sebring to the question on whose credit he relied in performing the services was properly excluded upon the defendant’s objection. It called for the conclusion of the witness, rather than the facts upon which its determination depended; and it was quite immatarial whose credit he relied upon, unless his contract with the defendants or their promise permitted him to rely on their credit That was a question for the referee to determine. Merritt v. Briggs, 57 N. Y. 651; Pope v. McGill, 58 Hun, 294; 34 St. Rep. 281.

There was no error in the rulings on the trial or in the determination of the'merits.

The judgment should be affirmed.

All concur.


text:
    The People, Resp’t, v. Edward Hodnet, App’lt

      (Supreme Court, General Term, Fifth Department,

      Filed October 17, 1894.)

    Costs—Penalty—County.
    In an action for tlie recovery of a penalty for selling adulterated milk, tlie county is not chargeable with the costs.
    Appeal from an order denying motion to charge county with costs.

      jK K & G. W. Harding, for app’lt; Charles H. Brown, dist-atty., for resp’t.
   Bradley, J.

In this action, prosecuted by one of the assistants of the state dairy commissioner, the defendant was charged with bringing to the Filmore Cheese Factory, in Allegany county, adulterated and impure milk, to be made into cheese, in violation of the “ Act to prevent deception in the sale of dairy products and to preserve the public health.” Laws 1885, chap. 183. The trial resulted in a verdict for the defendant, and a judgment in his favor for costs. He seeks to have his costs awarded against the county of Allegany, pursuant to the statute which provides that in actions brought in the name of the people of the state to recover money or property, or to establish a right or claim for the benefit of a county, “ costs shall not be awarded against the people, but where they are awarded to the defendant, they must be awarded against a body for whose benefit the action * * * was brought.” Code Civ. Pro. § 3243. The state dairy commissioner is charged with the enforcement of the provisions of the act. Laws 1885, chap. 183, §§ 12, 19; Laws 1887, chap. 583, § 2. And the expenses incurred in the discharge of his duties are paid from the state treasury. No "duty is, by the statute, devolved upon the officers of any county, as such, to proescute actions against those violating its provisions. The money obtained on recovery is, however, divided equally between the state and city or county where the prosecution is had, —Laws 1886, chap. 577, § 5, — except that money recovered in actions prosecuted by a citizen of the state is divided equally between him and such city or county. Id. §§ 6, 25. The products of cheese factories are ' articles of commerce, go into the markets of the country, and are dealt out to the public through the retail trade in the towns, villages and cities of the state. The resulting benefits contemplated by the provisions of the act, in their observance and enforcement, are to the community at large, and they are not necessarily any less to other counties than to those within which the prosecutions are had. The penalty is not imposed as a benefit, but is a means ■prescribed to render the beneficial purposes in view impressive and effectual. The recovery of it, therefore, is merely incidental to the object to be attained, and the contribution to the county whose courts are employed to determine such -prosecutions is quite reasonable.

It is urged that, for the purposes of the relief sought, it is sufficient that the object of the action was to benefit the county in any degree. The protection of the public health is an aim of the act. The people of the county where the prosecution is had participate in the benefits in that respect, as well as in the money which may be derived from a successful result of such prosecution. But the sanitary advantages to the county are in common with tfypse to other portions of the state. The reasonable intendment of §3243, before mentioned, is that the benefit there referred to is one peculiar to the county, in its relation to the main object sought to be attained by the prosecution of the action; and it is then that the burden of the costs awarded to defendants, resulting from the unsuccessful prosecution of actions, is cast upon the county. Then it may be assumed that actions would and should be somewhat under the control or direction of the local official authorities. They do not necessarily have any such relation to those prosecuted pursuant to the act in question, and, as has been observed, the recovery of the penalty is not the chief purpose of it, or the ultimate object in view by the prosecution of actions therefor. The purpose is well expressed in the title, before mentioned, of the act. In People v. Alden, 112 N. Y. 117; 20 St. Rep. 496, it was held that the costs were necessarily awarded against the county of Warren because the statutes under which the action was brought “ assume that the protection of game and the enforcement of the game laws is a county interest.” To the same effect is People v. Smith, 47 St. Rep. 170; 20 N. Y. Supp. 332. That interpretation cannot, we think, be given to the dairy act, and, therefore, those cases do not seem to aid the defendant in the present case. The view taken is that the county of Allegany is not chargeable with his costs.

The order appealed from should, therefore, be affirmed.

All concur.


text:
    Empire State Savings Bank of Buffalo, Resp’t, v. Daniel C. Beard et al., Impleaded, etc., App’lts.

      (Supreme Court, General Term, Fifth Department,

      Filed October 17, 1894.)

    1. Pleadings—Corporations—Parties.
    A complaint, in an action by a corporation against its directors for a loss caused by their negligence, was held to be sufficient, though the charge is made against them individually, and not as a board.
    2. Equity—Multiplicity op suits.
    To avoid a multiplicity of suits, an action against numerous directors of a corporation for losses extending over a number of years, caused by their negligence, may be brought in equity.
    8. Parties—Defect.
    The omission of the name of a decedent as a defendant from the amended complaint, where it does not appear that he has a personal representative, is not a defect of parties.
    4. Pleadings—Demurrer.
    The misnomer of a plaintiff corporation is not a ground of demurrer, but may be cured by motion.
    Appeal from an interlocutory judgment, overrvling the demurrer to the complaint with lea-ve to answer on payment-of costs.

      John G. Milburn and K C. Sprague, for app’lts Trott and Berriek and the executors of Wilkeson ; Frank Brundage, for app’lts Beard, Otis, and Potter; Frank G. Ferguson, for app’lt Ferris ; Charles Daniels, for resp’t.
   Bradley, J.

The act of 1867, by which the National Savings Bank of Buffalo was created, provided that the persons there named as trustee? and their successors were constituted a body corporate and politic by that name; that its business should be managed by a board of trustees, 15 of whom, including the president or one of the vice presidents, should constitute a legal meeting for the transaction of business ; and that the general business and object of the corporation should be to receive on deposit and invest such sums of money as might be offered therefor. By the general act of 1875 (chapter 371), relating to savings banks, it was provided that the number of trustees should not be less than 13. This act was superseded by chapter 409 of Laws of 1882, which was “An act to revise the statutes of the state relating to banks,banking and trust companies.” This act, so far as relates to savings banks, is substantially the same as that of 1875, and it provided that the business of the corporation should be managed and directed by a board of trustees of not less than 13 (§ 250) ; that the board of trustees should have power from time to time to make such by-laws, rules, and regulations as they should think proper for the election of officers, prescribing their powers and duties, and the manner of discharging the same, for the appointment of committees for certain purposes, and generally for transacting, managing, and directing the affairs of the corporation (§ 251); that regular meetings of the board of trustees should be held as often as once in each month for the purpose of receiving reports of its officers and committees and for the transaction of other business, and a quorum to consist of not less than seven trustees (§ 252); that the corporation should, on or before the 1st day of February and August in each year, make a report to the superintendent of the bank department, stating fully and specifically the situation, condition, affairs, and transactions of the corporation particularly mentioned in the statute (§§ 270-272) ,> and verified by the oath of its two principal officers (§ 278); that it should be the duty of the trustees, by a committee of not less than three of such trustees, on or before the 1st day of January and July in each year to thoroughly examine the books, vouchers, and assets of the institution, and its affairs generally, and that the statement or schedule of assets and liabilities reported to the superintendent of the banking department for the 1st of January and July in each year should be based upon such examintion, and be verified by the oath of a majority of the trustees making such examination ; and that it should be the duty of the- trustees as often as once in each six months to cause an accurate balance to be taken of their depositors’ ledgers, etc. (§ 279). The provision of this act, as had that of 1875, .prescribed the rules for the existence of savings banks, and the exercise of their powers, Van Dyck v. McQuade, 86 N. Y. 38, and, although repealed by Laws 1892, c. 689, § 215, such repeal did not impair any liability existing prior to and at the time the latter act took effect, Id. c. 677, § 31. It is therefore seen that the provisions of the act of 1882 during most of the time in question prescribed a system for the management of the affairs and business of the corporation, and imposed upon the trustees certain duties to accomplish the purposes in view.

It is, however, urged on the part of the defendants that the complaint contains no allegations of fact to charge them with liability for embezzlement of the funds of the institution. There is no charge of malfeasance against them. The theory of the action is that the trustees, by their failure to perform the duties which they by their relation to the bank assumed or undertook to exercise, were chargeable with negligence, and its consequences. When the statute placed the management and direction of the business of the bank under the control of the board of trustees, it imposed upon them some duties in respect to it. All of those duties are not specifically defined by the statute. They are such as the nature of the supervision fairly requires. Negligence is dependent upon failure to exercise the care which persons are, by their relation, called upon to exercise, and that is more or less dependent upon circumstances. In Briggs v. Spaulding, 141 U. S. 132, which was an action against the directors of a national bank, it was held that they were required to exercise ordinary-care and prudence, and, if they did that, they were not chargeable with negligence. And Mr. Chief Justice Fuller, in the prevailing opinion, said substantially that the degree of care which the defendants were bound to exercise is that which ordinarily dilgent and prudent men would exercise under similar circumstances. “What may be negligence in one case may not be want of ordinary care in another, and the question of negligence is therefore ultimately a question of fact to be determined under all circumstances. In Hun v. Cary, 82 N. Y. 65, in considering the subject of the measure of diligence required of trustees of a savings bank, Judge Earl, speaking for the court, said that they are not bound to exercise the highest degree of diligence, nor is their duty discharged by slight care, but that they are to “ exercise ordinary care and prudence in the trusts committed to them ; the same degree of care and prudence that men prompted by'self-interest generally exercise in their own affairs.” Pom. Eq. Jur. § 1070; Brinckerhoff v. Bostwick, 88 N. Y. 52.

It is unnecessary, for the purposes of the present case, to extend the discussion of the subject of the degree of diligence required of trustees in such cases. The inquiry here is whether the complaint charges the defendants with negligence in the matters to which their duties as trustees of the bank pertained, and, if it contains the elements essential to a cause of action, it will not be necessary on this review to proceed to consider the nature of the proof required to establish the liability of the trustees, or the difficulties the plaintiff may encounter in that respect. A careful examination of the complaint leads us to the conclusion that facts constituting negligence of the defendants are alleged as such in the complaint, and sufficiently specific, in view of the consequences charged, to sustain the pleading in that respect. It is urged on the part of the defendants that no duty is imposed upon the trustees individually, but as a board only, and, as no charge is made against the board as such, there is not necessarily any allegation of their failure to perform any duty devolved upon them. And in support of the proposition are citied Insurance Co. v. Jenkins, 3 Wend. 130, and Gaffney v. Colvill, 6 Hill, 567. In the former four of the sixteen directors of the company were charged with malfeasance in their office as directors in loaning its moneys on inadequate security, and upon demurrer the declaration was held bad, because less than a majority of the directors acting as a board were incapable of performing any corporate act. There was no allegation that the defendants, with others, constituting a majority, participated in making the alleged loan. The Gaffney Case was an action under the statute by a stockholder against a single director of a bank for damages resulting from the depreciation in value of his stock by making a dividend from the capital instead of from the surplus profits. The defendant’s demurrer was held well taken to some of the counts of the declaration, because a single director could not make a dividend, and the plaintiff did not allege that the board of directors participated in the act complained of. In both of those cases it was held that the directors would be severally liable for like acts of the board of directors accomplished by their aid or participation. In the present case the alleged negligence in office is charged against all the defendants as trustees of the bank, and it is founded upon their failure or omission to exercise the care which, by their relation to it, they assumed, and were required to exercise, in the management and conduct of its affairs. Their failure to properly act and discharge their duties as a board, as well as their supineness as trustees, is one of the alleged causes of complaint against them. No discrimination is made by' allegation between them. If they are entitled to any, that question can be disposed of upon the evidence in case the defendants by answer tender issues of fact for trial.

The objection by the demurrer that the court has no jurisdiction of the subject of the action is made upon the ground that the remedy for damages.or losses occasioned by negligence is by action at law. The distinction between causes of action legal and equitable and their appropriate remedies is still to be observed. Peters v. Delaplaine, 49 N. Y. 362, 371; Stevens v. Mayor, etc., 84 N. Y. 296. It follows that to entitle a party to equitable relief his complaint must state facts, by way of the cause of action, which permit it. Actions against trustees as such are of equitable cognizance. But it is said that as between the directors of a corporation and them their relation is not that of trustees, but is that of agents. It is true that they are vested with no title to the corporate prop- • erty. In Pom. Eq. Jur., § 1089, it is said, “In fact directors are clothed at the same time with a double character,—that of quasi trustees and that Of agents.” In Hun v. Cary, 82 N. Y. 65, which was an action by the receiver of a savings bank against its trustees for damages occasioned by their improvidence in the management of its affairs, the court, treating the defendants as agents of the bank, held that the action was properly tried as one at law by jury. In Ex parte Chippendale, 4 De Grex, M. & G. 52, Lord Justice Turne© said that: “Although directors undoubtedly stand in the position of agents, and cannot bind their companies beyond the limits of their authority, they also stand in some degree in the position of trustees. * * * There is no inconsistency in this double view of the position of directors.” The views of judicial writers and courts have differed upon the subject whether the relation of the managers or directors of their corporations has the character of trustees, in the sense applicable to that term or is that of agents merely. It is quite evident that they have legal privity with the corporation only, and that for the consequences of their malfeasance or want of due care their liability is to it, and it is only on the refusal of the corporation to sue that a stockholder, by virtue of his equitable interest, may do so in behalf of the corporation, and thus for the ultimate benefit of himself and other stockholders, making the corporation a party defendant, and not otherwise; and then the action must necessarily be in equity. Davenport v. Dows, 18 Wall. 626; Greaves v. Gough, 69 N. Y. 154; Robinson v. Smith, 3 Paige, 222; Smith v. Hurd, 12 Metc. (Mass.) 371, 384; Craig v. Gregg, 83 Pa. St. 19. While the directors may be treated as agents of the corporation they may upon authority be deemed to have in some sense the relation of trustees. In Poole, Jackson & Whyte's Case, 9 Ch. Div. 322, 26 Moak, 142, Jessel, M. R, said: “It has alway been held that the directors are trustees for the shareholders ; that is, for the company. They are managing partners of the company, and if they abuse their powers, which they hold in trust for the company, to the damage of the company, for their own benefit, they are liable to make good the breach of trust to their cestui que trust like any other trustees.”

And in Peabody v. Flint, 6 Allen, 52, it was said: “ As between the corporation itself and its officers, it was long since held that they were trustees, and that a court of equity would hold them responsible for every breach of trust.”

It is in that view that a right of action by a corporation against its directors in equity has been recognized for loss of corporate property occasioned by breach of their fiduciary obligations,whether arising from malfeasance or culpable want of care; and for the purpose of such equitable remedy no distinction seems to be observed between the relation of the corporation and its corporators to the directors. .As between the directors and stockholders, a trust relation exists, and that of the latter is deemed the relation of cestui que trust. And it may be that the corporation is, for the purposes of such remedy, treated likewise by reason of its fiduciary relation to the stockholders or ‘ depositors, and in view of their equitable interest in the subject matter and relief sought in such cases. Pom. Eq. Jur. §§ 1091, 1094; 1 Perry, Trusts (2d Ed.) § 207; Charitable Corp. v. Sutton, 2 Atk. 405; Discount Co. v. Brown, L. R. 8 Eq. 381; Bank v. Hill, 56 Me. 385; Williams v. McKay, 40 N. J. Eq. 189; Brinckerhoff v. Bostwick, 88 N. Y. 58; 99 N. Y. 193; id., 105 N. Y. 567; 8 St. Rep. 196. It was held in Overend v. Gurney, 4 Ch. App. 701, that for a loss sustained by a corporation beyond the loss of its capital in the absence of fraud the only remedy, if any, was by action at law for negligence. In Spering's Appeal, 71 Pa. St. 11, the form of remedy was not considered.

But the view taken of the present case renders it unnecessary to determine the question whether, for the purposes of an action against directors for loss of corporate property occasioned by their negligence, they may be treated as its trustees in the sense requisite to equitable cognizance upon that ground alone. The plaintiff in the complaint alleges that on account of the different periods of time during which the defendants were trustees of the corporation no adequate recovery of damages without a multiplicity of suits can be had to reimburse the losses of the corporation occasioned by reason of the matters charged against them, that such losses can only be properly apportioned by an accounting, and that the object of the action is to apportion such losses justly and equitably among the defendants for the benefit of the depositors and creditors of the plaintiff. The purpose of the action is to reimburse the plaintiff for losses suffered by it during the period about fourteen years, and occasioned by the alleged negligence of the defendants. ■ Some only of them were trustees during the whole time; others of them became such from time to time during that period. The cause of action arises out of the same relation of all the defendants to the plaintiff. Their alleged liability is of the same character, but the extent of it in amount may, as between them, be different, and it seems to be necessarily so. And the nature of their duties as trustees was such that, to charge any one of them, the participation or implication of others of them may be necessary. It seems, then, that the case as presented by the complaint' is a proper one for equitable cognizance to avoid multiplicity of suits, and to apportion between the defendants, as their liabilities respectively may appear, the burden of such reimbursement as the plaintiff may be entitled to for the causes alleged. Brinkerhoff v. Brown, 6 Johns. Ch. 139; Brinckerhoff v. Bostwick, 105 N. Y. 567, 571; 8 St. Rep. 196; N. Y. & N. H. R. R. Co. v. Schuyler, 17 N. Y. 592.

It is insisted that there is a defect of parties, because the personal representatives of Edward S. Dann, deceased, are not made parties defendant. He was a trustee and secretary and treasurer of the plaintiff. It is the general rule in equity that all persons within the jurisdiction of the court whose presence is necessary to the determination of the interests involved in the matters alleged must be made parties, so that a complete judgment in that respect may be the result, and this includes the representatives of such of the persons as are dead. 2 Perry, Trusts, §§ 875, 878, 883; Munch v. Cockerell, 8 Sim. 219; Green v. Milbank, 3 Abb. N. C. 138. The omission to include a person as party who should be one is not necessarily a cause for dismissal of the complaint. The plaintiff.will be permitted to bring him in. If he fail to do so, the court, in its discretion, may dismiss the complaint. Sherman v. Parish, 53 N. Y. 483. There is no support for the demurrer on the ground of defect of parties. Dann was Originally made a party defendant. He has since died, and his name for that reason is omitted from the amended complaint. It does not appear that he has any personal representatives. The case comes within the provision of the statute to the effect that, if one of two or more parties to an action dies, it may proceed in favor of or against the survivors, and the court may make an order to bring in the representatives of the decedent. Code Civ. Proc. § 758.

Upon the question of the legal capacity of the plaintiff to sue, raised by the demurrer, it is said that there was at the time the change of the name of tire corporation from that of the National Savings Bank of Buffalo to that of the plaintiff is alleged to have been made no power in the court to make the change. • The provisions of chapter. 518 of Laws of 1887, authorizing the court to change the name of any bank, etc., was repealed by Laws 1892, ch. 689, §'2l5, and our attention is called to no statute thereafter existing which permitted such change by the court. "While it may be that the plaintiff has misnamed itself, that is no effectual ground of demurrer. The error is merely formal and amendable. The remedy for correction is by motion. Bank of Havana v. Magee, 20 N. Y. 355.

The views already indicated are to the effect that there is no misjoinder of causes of action, and the conclusion follows that the judgment should be affirmed.

All concur.


author: Lewis, J

text:
    Charles W. Etz et al., Resp’ts, v. Almira M. Place, App’lt.

      (Supreme Court, General Term, Fifth Department,

      Filed October 17, 1894.)

    Statute oe erauds—Consideration.
    The consideration, recited in a note executed at the same time as the guaranty thereof and forming a part of the same transaction, is a sufficient consideration for the guaranty under the statute of frauds.
    Appeal from a judgment entered on a verdict directed in.favor of plaintiff, and from an order denying a motion for a new trial, made on the minutes of the court.

      J H. & G. W. Stevens, for app’lt; Milo M. Aclcer, for resp’ts.
   Lewis, J

The complaint states that E. J. Wright and A. EL Ryno made their certain promissory note in writing, of which the following is a copy, to wit: “Alfred Center, N. Y., Nov. 16, 1891. Eight months after date we promise to pay Frank Hall or order two hundred dollars, value received, with interest, payable at University Bank, Alfred Center” (signed by the makers),—and that the defendant then and there, for a good and valuable consideration, duly guaranteed the payment of said note, which was then delivered to the said payee, Frank Hall, who then became the owner and holder thereof for value received ; and that thereafter, and before the note became due and payable, the payee, for value received, sold, transferred, and delivered the same to the plaintiffs. The note was not paid at maturity, and judgment was demanded against the defendant for the sum of $200 and interest. The answer of the defendant, among other defenses, pleaded the statute of frauds as a defense to the action. It was shown upon the trial that the makers of the note, Wright and Ryno, wishing to purchase a bakery from Hall, the payee of the note upon credit in part, agreed that they would give the note mentioned in the complaint, and procure a responsible person to guaranty the payment thereof. They thereupon fully explained to the defendant the terms of their agreement with Hall, and she consented to guaranty the payment of the note. They made the said note, and the defendant, at their request, guaranteed its payment by writing upon the back thereof as follows: “I guaranty the payment of the within note,”—with her signature thereto. The makers thereafter delivered the note with the said guaranty to Hall in part payment for the said bakery. The note was thereafter transferred to the plaintiffs, and, not being paid at maturity, this action was brought against the defendant. It came on to trial, and upon proof of the facts above stated a verdict was directed against the defendant for the amount of the note with interest.

It is the contention of the appellant that the plaintiffs failed to make a case against the defendant; that the defendant’s undertaking was to answer for the debt, default, or miscarriage of the makers of the note, and, it not appearing upon the face of the guaranty that it was made for a valuable consideration, it was void under the statute of frauds ; and that it was not competent to prove by parol evidence the real consideration for the undertaking of the defendant. There would be much force in the appellant’s position if the guaranty had been a contract collateral to the note. If it had been- given to secure the payment of a note .which had theretofore had' an inception, for a past due debt, in such case the undertaking of the defendant would have been void. The undisputed facts are that the guaranty was made upon the note before it was delivered by the makers to the promisee. The payee required, as a condition of accepting the makers’ note in part payment for his bakery, that the payment thereof should be guaranteed by a responsible person, and when the note was delivered to him in part payment for his property the defendant’s undertaking was indorsed upon it, and he parted with his property upon the strength of her undertaking. The defendant was aware, when she signed the guaranty, of the use which was to be made of the note. Th.e guaranty thus became a part of the principal contract; and the-consideration stated in the note, though none was stated in the guaranty, became the consideration for the guaranty. The defendant, under the circumstances of the case, became the original debtor to the payee of the note, and not simply the guarantor of another’s indebtedness. Where the consideration is contained in a written instrument contemporaneously executed with the guaranty, and forming a part of the transaction, it will satisfy the requirements of the statute. Evansville Nat. Bank v. Kaufman, 98 N. Y. 278. We have examined the authorities to which our attention was called in the appellant’s brief, and think they can be distinguished from the case at bar. It would require very much time, and be a fruitless task,, to undertake a review of the very many authorities to be found in the books discussing similar questions arising under our statute of frauds. The current of them, we think, will be found to sustain, the views we have taken of the questions here presented. The following are some of the cases bearing upon the question before us: Bickford v. Gibbs, 8 Cush. 154; Benthall v. Judkins, 13 Metc. (Mass.) 265; Gates v. McKee, 13 N. Y. 232; Union Bank v. Coster, 3 N. Y. 212; Erie Co. Sav. Bank v. Coit, 104 N. Y. 537; 5 St. Rep. 790.

No place of payment was inserted in the note when defendant executed the guaranty, but thereafter, and before the delivery of the note to the payee, the words, “payable at the University Bank,” were written in the note without the knowledge or consent of the defendant. This bank was located in the village where the defendant and both makers of the note resided at the time, and was within a very short distance of their residences. We do not think the alteration was a material one. Troy City Bank v. Lauman, 19 N. Y. 477.

The defendant offered to show that when she signed the guaranty the makers agreed that before using the note they would procure the signature of a Mr. Shaw as one of the makers of the note, and that they failed so to do. As it is not claimed that the payee ever had any knowledge or information of such agreement, he cannot be affected thereby. The judgment and order appealed from should be affirmed. All concur.


author: Per Curiam.

text:
    David A. Lamming, App’lt, v. Norman H. Galusha et al., Resp’ts.

      (Supreme Court, General Term, Fifth Department,

      Filed October 17, 1894.)

    1. Coppokation—De pacto.
    Organization with color of law, and exercise of corporate franchises for many years under claim of right, constitute corporation defacto.

    2. Same.
    The legal existence of a defacto corporation cannot he questioned collat • erally.
    Appeal from a judgment dismissing the complaint.

      Henry W. Conklin, for app’lt; Charles J. Bissell, for resp’ts.
   Per Curiam.

Judgment appealed from affirmed, with costs, on the opinion of Bradley, J., at special term.

The opinion of Mr. Justice Bradley at special term is as follows:

The plaintiff alleges that the defendants have for some years wrongfully and unlawfully maintained and operated the railroad in question within and along North avenue, from Bay street, in the city of Rochester, to the intersection of the avenue with the Ridge road, and along that road upon and across his premises in the town of Irondequoit, in the county of Monroe, to his annoyance and damage, specifically mentioned. If the facts as alleged are supported by the evidence, the plaintiff is entitled to relief. It appears that on May 29, 1879, articles of association were filed in the office of the clerk of Monroe county, and in the office of the secretary of state on June 8, 1879, purporting to incorporate the Rochester & Lake Ontario Railway Company pursuant to the provisions of chapter 606, Laws 1875, commonly known as the “ Rapid Transit Act.” The railway was constructed in the summer of 1879, and ever since then it has-been operated. Directors have, from time to time, been elected, reports have been made by the company in the manner provided by law, it has been assessed for and paid taxes upon the railroad and property, and in fact it has assumed to be, and has been, recognized as being a corporation having the corporate name before mentioned. The defendants, having been elected as directors of the company, were acting as such at the time of the commencement of this action in February, 1891, and they assumed to have no other relation to the railroad and its operation than as such directors, nor were they, as such, chargeable in that capacity with negligently or willfully so operating the railroad as to unnecessarily injure the plaintiff or prejudice his rights.

The leading proposition jipon which the plaintiff relies to support the action is that the company did not become legally incorporated under the rapid transit act, and therefore the persons so elected as directors, and who controlled the operation of the road by reason of such relation, are chargeable as individuals for the consequences, injurious to him. As represented by the articles of association, it appears that the five commissioners were duly appointed, that they duly qualified and organized themselves into a board, and did all that was essential to enable them to prepare articles of association for the company, and made and delivered to the directors the requisite certificate, duly verified, as provided by § 9 pf the act, which, with the articles of association, was filed as before mentioned. It is provided by § 7 of the rapid transit act that the commissioners shall prepare appropriate articles of association for the company, in which “shall be set forth and embodied as component parts thereof the several conditions, requirements and particulars by the said commissioners determined pursuant to §§ 4, 5 and 6 of this act.” By § 4 it is provided that they fix and determine the route and locate it; by § 5, that they, by public notice, invite the submission of plans for the construction and operation of the railway, and on the day named in the notice meet and decide upon the plans for its construction, “ with the necessary supports, turn-outs, switches, sidings, connections, landing-places, stations, buildings, platforms, stairways, elevators, telegraph and signal devices, or other requisite appliances upon the route or routes, and in the locations determined by them; ” and by § 6 that they, within the period named, shall determine the time within which such railway shall be constructed and ready for operation, together with the maximum rates to be paid for transportation and conveyance over it, and the hours during which special cars shall be run at reduced fares; that they shall fix and determine the amount of the capital stock of the company, the number of shares into which it shall be divided, and the percentage of it to be paid in cash by the subscribers at the time of subscription. As before remarked, it appears by the articles of association that the commissioners had done and determined substantially all things made by the act requisite to the incorporation of the company for the construction of a surface railway. The conditions, requirements, and particulars determined pursuant to the provisions of §§ 4, 5, and 6 are sufficiently set forth in the articles of association. In respect to tha matters mentioned in § 5, the articles represent that the commissioners, by public notice, invited the submission of plans for the construction and operation of the railway, and that at the time and place in the notice named “ they determined upon the plans for the construction and operation of said railway with the necessary supports, turn-outs, switches, sidings, landing-places, stations, buildings, platforms, stairways, and other requisite appliances submitted in the plans and profile of George M. Rafter.” It will be observed that the commissioners set forth in the articles in the respect last mentioned what they had determined, and not the result of their determination ; and that, if they were required by the statute to do more, they failed to comply with it, unless the reference made to the plans submitted by George M. Rafter was sufficient for the purpose. Those plans were not filed in either of the offices where the articles were filed. The evidence tends to prove that they were kept in the office where the commissioners met to transact business until their duties were performed, then were handed over to the directors. One, and the main, purpose of the plans which the commissioners had adopted by their determination was to have the railway constructed in accordance with them. This is within the requirements of the act, and to accomplish it reference could be made to them as effectually as if a definite description of them were in the articles. There was evidently also within the contemplation of the statute the further purpose of enabling the public to have the opportunity, which would be afforded by the public records, tó be advised what the plans were which the directors were required to observe and follow m the construction of the railway. The reference made to the unfiled plans was not a compliance with the legislative purpose and requirement before mentioned, and therefore the articles of assooiation in that respect were defective.

Complete plans were not produced at the trial, and it is contended on the part of the plaintiff that none were perfected. There was, however, evidence tending to prove, that plans for the construction of the railway were submitted by George M. Rafter; that portions of them had disappeared, and could not be found; and that those brought into court at the trial were a part only of the plans-submitted to the commissioners, and upon which their determination was made. It may, upon the evidence, be assumed that plans were submitted to and adopted by them. Whatever effect such omission might have in an action or proceeding in behalf of the people of the state to terminate the corporate existence which the railway company has, or assumes to have, it is not in' the view here taken, available to the plaintiff in support of the present action. The plaintiff, by his action, proceeds upon the theory that the Rochester & Lake Ontario Railway Company is not a corporation, and founds the charge of liability of the defendants upon their relation as directors of the company, and for the reason that by such relation they may be supposed to have the •control and direction and management of the railway. While the attack upon the corporate character of the company is collaterally made by seeking to charge the defendants, the question of its power to confer upon them the authority which they assumed to exercise as directors is directly presented for consideration. It is true that the substantial performance of the statutory condition precedent is essential to the creation of a railway corporation sought to be organized under the act before mentioned; and it may be assumed that those conditions were not fully or substantially complied with in the attempt to create and organize the compatiy in question, and therefore that that company did not thereby become a corporation de jure. B.ut there was a colorable compliance with the requirements of the statute under which the company may lawfully have been incorporated, and the defect was in the omission to comply in the particular before suggested. And there has been for many years user by the company of the corporate rights and franchises which it is claimed were conferred upon it, and which it assumed to exercise. By reason of such organization, with color of law, and such exercise of corporate franchises, the company became and was a corporation de facto. This proposition may not be questioned, and yet it is insisted on the part of the plaintiff that the denial of the right to successfully attack in such case the corporate existence of the company is dependent upon a relation in respect to the subject matter of an action which, is not applicable to- the remedy sought by him.

It has been held in many cases that the subscribers to the stock of a corporation prior to the completion of its creation are not estopped from asserting its nonexistence as such when sued to recover the amount so subscribed. Society v. Rapalee, 16 Wend. 605. The question arose in Buff. & A. Railroad Co. v. Cary, 26 N. Y. 75, where it appeared that the affidavit indorsed upon and filed with the articles of association of that company was not in compliance with the provisions of the general railroad act of 1850. The recovery was sustained. No opinion of the majority of the court was put in ,writing, but in that of the court below it was said that: “ If the papers filed by which the corporation is sought to be created are colorable, but so defective that in a proceeding on the part of the state against it it would for that reason be dissolved, yet by acts of user under such an organization it becomes a corporation de facto, and no advantage can be taken of such defect in its constitution collaterally by any person.” In Eaton v. Aspinwall, 19 N. Y. 119, in referring to the Mexican Ocean Mail & Inland Company, which its promoters had sought to incorporate pursuant to Laws 1852, chap. 228, the court held that by reason of noncompliance with the statute the company was not a corporation de jure, but in view of its user it was one de facto, and added: “ Thus it will be seen that this corporation, though not a valid corporation in point of law, may carry on its enterprises, have its day in court, and divide its revenue among the holders-of the shares of its capital, until the state shall interpose and ask that it be dissolved; and that the only real necessity of complying with the statute in relation to the payment of the ten per cent was to prevent proceedings in behalf of the people to put an end to its corporate functions.” In that case the certificate required by the statute was made and filed. The statute also provided that._ when that shall have been filed, and ten per cent, of the capital named paid in, the persons who shall have signed and acknowledged-the same, etc., shall be a body politic and corporate. It may be that, in respect to the corporate existence of the company, the failure to pay in the ten per , cent, may not have had the same effect as the omission to- make and file the requisite certificate. But no such distinction seems to have been observed by the judge who delivered the opinion. The company was treated by him as a corporation de facto only. The^erformance of a condition like that last mentioned was held essential to the incorporation in Farnham v. Benedict, 107 N. Y. 159; 11 St. Rep. 450. It was said by the court in Snider's Sons’ Co. v. Troy, 91 Ala. 224, that corporations defacto'are under the protection of the same law, and governed by the same legal principles, as those de jure, “ so long as the state acquiesces in their existence and exercise of corporate functions.” The same principle was declared in Lehman v. Warner, 61 Ala. 455; and the case of People v. Montecito Water Co., 97 Gal. 276, was a proceeding by quo warranto to dissolve the defendant, or terminate its exercise of corporate franchises, because of noncompliance with the statute in its attempted creation, and the complaint alleged such facts and to the effect that it was only a corporation de facto. Upon demurrer by the defendant, which was sustained below, it was urged that if the defendant had failed to become a corporation; it could not be properly made a party, and that by making it such its corporate character was admitted. The court, on review, in overruling this demurrer, held that the corporation, being one de facto, was a proper and necessary party, and said, in quoting from a previous case in the same court, that “ a corporation de facto may legally do and perform every act and thing which the same entity could do or perform were it a de jure, corporation. As to all the world except the paramount authority under which its acts, and from which it receives its charter, it occupies the same position as though in all respects valid; and even as against the state, except in direct proceedings to arrest its usurpation of power, it is submitted, its acts are to be treated as efficacious.” A remark to the same effect was made by the justice delivering the opinion of the court in Doyle v. Petroleum Co., 44 Barb. par. 3, p. 239. And it has been held, and such, I think, is the well established rule, that the validity of a corporation cannot, be impeached by third parties by showing aliunde the articles of association that certain prerequisites of the statutes have not been complied with. Powder Co. v. Sinsheimer, 46 Md. 315; Jones v. Dana, 24 Barb. 395. And in People v. Selfridge, 52 Cal. 331, it was held that the assumed corporate character of the defendant could take no benefit for its support from -the fact that a requisite condition omitted in the articles was actually performed, but that the insertion of it in the articles was as essential as its performance for the defense of an action by the state to terminate the exercise of corporate franchises. The plaintiff’s counsel has called attention to Mining Co. v. Woodbury, 14 Cal. 424, where it was said that: “ There is a broad and obvious distinction between such acts as are declared to be necessary steps in the process of incorporation and such as are required of the individuals seeking to become incorporated, but which are not made prerequisites to the assumption of corporate powers. In respect to the former, any material omission will be fatal to the existence of the corporation, and may be taken advantage of collaterally in any form in which the fact of incorporation can properly be called in question.” Reference may be had to that case, and the same proposition is stated in Beach, Corp. § 16. This question did not necessarily arise in that case, as the court held ‘such defense was not available to defendant in that action. Nor do the views there so expressed seem supported by those of the court in the later case in the same state of People v. Montecito Water Co., supra.

' A distinction between corporations having their charters directly from legislative enactment and those created pursuant to géneral laws is observed by the courts in some cases, where it is held that failure of the former to perform certain conditions imposed to enable them to take the benefit of the charter will not subject their corporate character to attack by third persons, while it is otherwise in respect to corporations sought to be created under general laws, when there is a failure to comply fully with the conditions precedent to their creation. , That distinction may be well founded so far as relates to the organization of them, as in the one case they are created by the statute and in the other their creation is authorized by it. But when, by proceedings taken for the purpose, there has been an- attempt to comply with the statute to incorporate the latter, and articles of association filed, by which the formation of the corporation is colorable, it, by user as such, becomes a corporation de facto, with all the rights as to third persons which that imports, although its articles filed are in some particular defective. I see no reason why it does not then stand on the same footing as does a corporation de facto whose charter has come directly from legislative enactment, and by which certain conditions made requisite to its creation or organization have not been performed. The plaintiff, in Brooklyn Steam Transit Co. v. City of Brooklyn, 78 N. Y. 524, had been duly incorporated, but had failed to perform conditions subsequent. By the statute which granted the charter it was provided that on failure to comply with such conditions the act by which the plaintiff was incorporated, and the powers, rights and franchises, granted by it, should be deemed forfeited and terminated; thus providing for self-executing forfeiture, and therefore the plaintiff there had no existence at the time the action was commenced. As has been said later by the court, that was a border case, and such effect will not be giveh to default in performance of conditions subsequent unless such legislative purpose is plainly manifested. In re Brooklyn Elevated R. Co., 125 N. Y. 434; 35 St. Rep. 451. The statute under which the corporation in the latter case was ■organized provided that for the default with which it was charged t should “forfeit the rights acquired by” it unnder the statute. ■ And it was held that, although the state could not take away its corporate life, until then a private individual could not effectually assert the forfeiture or in any way challenge it corporate existence. In Farnham v. Benedict, 107 N. Y. 159; 11 St. Rep. 450, the defendant was charged with fraud in procuring the issue •of town bonds which he had taken and transferred to bona fide holders. They purported to have been issued in aid of the construction of a railroad as provided- by the statute, pursuant to which it was represented to have been incorporated. It appeared that a requisite affidavit in the articles of association, and which was made by the defendant',’ was false; that thercompany was not only not a corporation de jure, but was a sham crporation, and that the defendant was a promoter of the scheme. Nothing was done by way of construction, although the time prescribed therefor by the statute by which the incorporation of the company was authorized had expired. That case does not seem to have any necessary application to the questions in the present case. The attention of the court is called to New York Cable Co. v. Mayor, etc., 104 N. Y. 1; 4 St. Rep. 308, 330, and it is forcibly urged by the plaintiff’s counsel that the doctrine of that case supports his alleged cause of action against the defendants. It was the determination on review of an order of the general term denying motion of the Cable Company made to conform the report of commissioners, etc.; and the question was whether or not the company could, in the exercise of the right of eminent domain, take property for the purposes of its contemplated railroads in the streets of theocity of New York. The court held that it could not, unless it was validly organized pursuant to the rapid transit act; and that, as the act prescribed the proceedings by which such- rights could be acquired, substantial compliance with the material requirements was a condition precedent and essential to the legal incorporation of the company, and to enable it to acquire corporate rights under the act. The articles of association filed were in some respects defective, in that they failed to provide for the release and forfeiture to the supervisors of the county of all rights and franchises acquired by such corporation in case the railways should not be completed within the time therein provided, and it appeared by the articles that the commissioners failed to substantially comply with the requirements of § 5 of the act to determine the plans for the construction of the railway, etc. This noncompliance with the provisions of the act denied to the company corporate existence, and, therefore, it, as was held, had no right to take or appropriate to its use the property of others for-the purpose of constructing the railway which it had in view. This was a direct proceeding by the company to acquire, by the exercise of the alleged right of eminent domain, that which was essential to its purposes, and the right or power to do that was dependent upon its creation and organization as a corporation. This it had not accomplished, and consequently had assumed no relations to the public which enabled it, through the action of the court, to have or exercise such attribute of political sovereignty. The principles upon which that case was determined against the company do not seem to have any controlling application to the present action against the defendants. As has already been observed, user, as well as colorable creation, is essential to a corporation de facto. Buff. & A. Railroad Co. v. Cary, 26 N. Y. 75. And when it becomes such there is a relation between it and its officers which will be recognized as effectual to enable them through such relation to justify the exercise of their functions in the control, management and operation of the business of the corporation de facto, which they represent. For that- purpose it is to third persons no less effectual than a corporation de jure. The former is the corporate character of the Bochester & Lake Ontario Bailway Company, and such is the relation of the defendants as its directors to it.

It is claimed on the part of the plaintiff that his property is invaded by the operation of the railway, and for that reason the defendants are liable. His premises are situated on the northerly side of Bidge road, a public highway. The southerly line of his land is the center of the highway. The line of the route of the railroad, as appears by the articles of association to have been fixed by the commissioners, was in that highway, and the railway was constructed within and on the northerly side of it. Prior to and at the time of the construction of the railway those premises were owned by James Schooley, and he signed a written consent for the construction and operation of the railway on the route so determined by the commissioners in North avenue and Ridge road as should be authorized by the local and proper authorities of the town; and, including him, the owners of more than one-half in value of the property bounded upon the streets and highways of such route signed a like consent, and the local authorities having control of them also consented thereto. The plaintiff became the owner of the premises before referred to, by purchase from Schooley in 1883,—nearly four years after the railway was constructed and put in operation. If this consent of Schooley was effectually given, it was, in view of the statute, something more than a mere license. White v. Railway Co. (N. Y. App.), 34 N. E. 887. But what, if any, effect the insufficiency of the articles of association may have upon the force of such consent, it is now deemed unnecessary to consider. The property of the plaintiff was not invaded by ttie act of the construction of the railway, and since his purchase the railroad has been in the possession of the company, and operated by it through its constituted officers, against whom no charge is sustained that they have done more than to exercise the functions of that relation to the company, and therefore, the continued operation of the railroad in the place where it was located and constructed is the act of the company, and it only. In the case of Fanning v. D. M. Osborne & Co., 34 Hun, 121; Id. 102 N. Y. 441, the railroad there referred to was used exclusively for the private business purposes of D. M. Osborne & Co., and it was held that, as there was no right under the statute to appropriate a street for the operation of a railroad for other than the public purpose of transportation of persons or property, or both, it was a nuisance. The railway in question here is appropriated to the .public purposes contemplated by the rapid transit act. And if, in its operation, the proprietary rights of the plaintiff are violated, the responsibility is that of the company, and the remedy to be sought against it. The view taken is that, although the omission before mentioned in the articles of association may have been a failure in that respect to comply with the statutory provisions for the creation of a corporation under the rapid transit act of 1875, the Rochester & Lake Ontario Railway Company, by the filing of the articles in question, in connection with the user which followed, became a corporation de facto, and as such effectually supports the relation to it of the defendants as its directors, and that in the performance of their functions they are sheltered by that relation to it as such corporation, from personal liability. The effect upon the status of the company as a corporation under the statute, whatever it may have been, of chapter 311, Laws 1880, which purports to ratify the location of the route upon which the railroad was constructed, etc., is not considered, because the disposition of that question is deemed unnecessary for the purposes of this action. The conclusion follows that the complaint should be dismissed.