author: BRADLEY, J.

text:
    Jacob Snyder et al., Resp’ts, v. Carmi V. Lindsey, Impleaded, etc., App’lt.

      (Supreme Court, General Term, Fifth Department,

      Filed December 28, 1895.)

    1. Joint stock association—Dissolution. •
    One or more of the members of a joint stock association may institute an action for its dissolution, whenever a suitable occasion arises rendering it legitmately desirable to wind up its affairs.

      % Appeal—General objection.
    A general objection to the submission of testimony inadmissible only as to one of several joint defendants is" not available, upon appeal, to such defendant.
    Appeal from a judgment in favor of plaintiffs.
    The plaintiffs and defendants other than the defendant Evans (being about eighty,. more or less, in number) were what was called a “joint-stock association,” doing business in the name of the Farmers’ Exchange, Limited, at Attica, in the county of Wyoming, N. Y, The association was organized in 1891 for carrying on general merchantile business;" abopted a constitution and by-laws; elected a president, vice president, secretary, and a manager and treasurer, also directors and an executive committee; issued stock certificates at $10 per share. The business of the company was carried on until November 11,1893, when the presádent Carmi Y. Lindsey, made in the name of the company, a chattel mortgage on the goods to Grant Lindsey, and he made to the defendant EvanS a bill of sale of them. The latter afterwardssold the goods to the appellant. This action was brought for dissolution of the company, etc. The referee determined that such-mortgage and bill of sale were fraudulent and void, and directed judgment dissolving the association, and for the appointment of a. receiver, etc.
    O. H. Hopkins, for app’lt; O. P. Stockwell, for resp’ts.
   BRADLEY, J.

—-It is urged on the part of the appellant that the joint-stock association created by the parties plaintiff and defendant has the nature of a corporation, and is a corporation^ in such sense that the remedy available to members of a partnership for its dissolution has no application to it, and, therefore, that an action for the dissolution of the association can be maintained only by the attorney general, in the name of the people, as provided by the statute relating to corporations (Code, § 1786). The question was raised at the trial, and, as we think, properly overruled. It is true that in this state a joint-stock association has certain attributes of a corporation, for the purposes of the conduct of its business, and of suing and being sued. Laws 1849, c. 258; Laws 1853, e. 153; Laws 1854, c. 245; Laws 1867, c. 289. But, unlike a corporation, the common-law liability of its members remains upon the obligations legitimately created 'or assumed through the acts of the officers or agents of the association. People ex rel. Winchester v. Coleman, 133 N. Y. 297; 45 St. Rep. 217. The nature of a joint-stock association was the subject of some consideration in People ex rel. Platt v. Wemple, 117 N. Y. 136; 27 St. Rep. 341, where it was held that the United States Express Company, a joint-stock company, was subject to taxaation as such upon its business, pursuant to laws 1880, c. 542, as amended by Laws 1881, e. 361, § 3, which provides that every corporation, joint-stock company, or association incorporated or organized under any law of this state, or any other state or country, and doing business in this state, with certain exceptions, should be subject to and pay a tax upon its corporate franchise or business, into the treasury of the state, annually. The association formed by the parties rests on their contract, into which they entered, and adopted for its creation; and their individuality, in point of personal liability to creditors, remains as effectually as if they had created a partnership. No substantial reason therefore exists, in the nature of the association, for the denial of the right to one or more of the members to institute an action for its dissolution whenever a suitable occasion arises, rendering it legitimately desirable to wind up its affairs.

In November, 1893, the appellant, as president of» the association, mn.de to Grant Lindsey a chattel mortgage upon all of the goods o*' the association, for the purpose, as expressed in it, of securing to him the payment on January 14, 1894, of $1,500, for that amount loaned by him to it, and giving to the mortgagee power, if he deemed himself unsafe, to take before that time the possession, of, and sell the property. Afterwards, on the same day, the mortgagee took possession of the property, and, by bill of sale, sold it to the'defendant James'D. Evans. This bill of sale was made without consideration, other than the undertaking of Evans to proceed to sell the goods and account to his vendor for the proceeds, and such was its purpose. Sudsequently, and on or about the sixteenth day of November, an attachment in behalf of a creditor of the association was levied on the goods; and thereupon an arrangement was made by Evans with the appellant to pay the debt due tOvthe attaching creditor, which, with the costs and expenses, amounted to $669, and take title to the property. Evans sold the goods to'him. He paid the debt, and also paid some other debts which the association owed, to be applied upon the purchase price-of the property. The leading question on the .trial was whether or not the chattel mortgage and those sales were effectual to-transfer the title to those goods. The determination of the referee that they were not was founded upon the fact, as found by him, that the mortage to Grant Lindsey, and the bill of sale by him to Evans, were made without consideration, and with the unlawful intent to enable Grant and Carmi Y. Lindsey to reimburse themselves for moneys theretofore invested by them in the business, and that such transfers were made without authority. It may be that the authority relied upon to make the mortgage was in the proceedings of the board of directors of January 28, 1893, and a power of attorney made in October following. As represented by ■the record of the proceedings of that meeting of the board -of directors, Grant Lindsey and W. A Gowden were each to invest $1,000, take 100 shares of the stock of the association, and at the-end of the year to have the privilege to withdraw that amount of money so invested, by selling goods from the stock in the store at regular rates. Afterwards, Grant Lindsey put in $1,000, and Cowen $500. The latter- assigned his stock and claim to Grant .Lindsey. The power of attorney was subscribed by upwards of fifty members of the association, and, among other things, recited' and provided that Grant Lindsey had put $1,500 in the business of the company, and that the president was empowered, whenever Grant Lindsey might wish to resign his position as manager, to-give him a bill of sale of the goods, or to secure for such $1,500. This money evidently was furnished to assist the association in the business, and the taking of the stock did not necessarily conclude Lindsey and Gowden in treating the money advanced as a loan to it, as distinguished from the shares which were represented by .certificates to members, if it was put in pursuant to any arrangement duly made to so distinguish the relation arising out of such advance. It was therefore competent for the defendant to prove under what arrangement the money was advanced by Lindsey and Gowden. A witness, who was one of. the directors, and present at the meeting of the board before mentioned, was asked : “What was done at that time t What was said at that meeting in regard to what should be done with the money by the company ? ” ‘ The-plaintiff’s objections to the evidence called for by those questions were sustained, and exceptions taken. The defendants’ counsel then offered to prove “that this money was put in by Lindsey and Cowden upon different terms than that which the other members put money into the association, and that they were to have the privilege of selling the goods, and drawing their money out in that way.” This was also excluded, upon the plaintiff’s objection, and exception was taken by the defendants. There is no apparent reason for the exclusion of the evidence, unless it was on the assumption that the facts embraced within the questions and offer were covered by the record of proceedings, before referred to, of the board. It may be that in them the terms under which the money was advanced by Lindsey and Cowden are amply expressed. But it does not necessarily so appear by the offer as made of proof, which was to show in some legitimate manner that the money advanced by them was put into the concern upon terms differing from those upon which other members had put in money and taken •certificates of stock. If the relation of Lindsey and Cowden in respect to the $1,500 was distinguished from that of the other members who were stockholders, in that the former loaned money to, and were creditors of, the association, although stock was issued to them, that might have been treated as an important fact by the referee, and he might not have found, as he did, that the “ mortgage was in fact executed and delivered without consideration, and there existed no indebtedness whatever to said Grant Lindsey for money loaned or otherwise.” This finding may have been founded on his view, as expressed in the opinion of the referee, that there was “ no pretense furnished by- the evidence in the ■case that as to those moneys they occupied any other or different relation to the association than their associates. In other words, the moneys invested by them were put in as capital stock, and not otherwise.”

It is, however, suggested that, if there was any error in the exclusion of the evidence so offered, it was cured by that given later in the trial by the appellant, — that “ this agreement that I executed to him [Grant Lindsey] was given to him to secure the money he .paid under the resolution." In this statement the witness evidently had reference to the record of the proceedings, before mentioned, of the board of directors; and coming from the appellant, that statement has such force agairist him as to quite clearly make it appear that the evidence offered and excluded could have added nothing essential to the defense, not embraced in such record'of proceedings. For that reason the exclusion of the evidence was harmless to him.

. Upon the question of the value of the goods, there was a conflict in the evidence. They were, by schedule, inventoried at $1,528.88. The referee found that such was their value. The defendants gave evidence tending to prove that they were of much less value. A witness called by the plaintiffs’ counsel was asked, “ What did Evans say to you in regard to the inventory? ” The defendants’ •objection to the competency of the evidence was overruled, and -exception taken. It may be assumed that it was inadmissible as against the appellant. But, as Evans was a party defendant, appearing and defending, his declarations were admissible as against himself; and therefore the general objection of the defendants did not render the exception, as taken, available to the appellant. The same may be said of another exception in like manner taken to the reception of similar evidence of another witness. The most of the goods had been sold by the appellant when this action was commenced, and the evidence tends to prove that the proceeds of his sales, including the value of the goods unsold, amounted to very much less than the sum at which they were inventoried. The evidence apparently presents a question of very much doubt whether the property had the value so represented by the inventory, but, in view of the conflict in the evidence on the subject, it cannot, on this review, reasonably be held that the value was less than that adopted by the referee upon the facts as found by him8 ánd which had the support of evidence.

No further question requires consideration. The judgment should be affirmed.

All concur. • s


source: Caselaw Access Project

author: Q’BRIEN, J. INGRAHAM, J.

license: Public Domain

text:
    Sarah E. Holmquist, as Administratrix, App’lt, v. Bavarian Star Brewing Company, Resp’t.

      (Supreme Court, Appellate Division, First Department,

      Filed February 7, 1896.)
    J. Lease—Dowress and heirs.
    A widow entitled to dower, who joins the heirs in a lease of real estate , , for a term of years, becomes vested, as against the tenant, with all the rights of a lessor, and her title to the premises and to the rents cannot he disputed by him.
    3. Same.
    A subsequent conveyance by the heirs of their interest in the land, “ subject to the right of dower,” does not affect the widow’s right to her share of the rents. > ’ .
    3. Same—Parties.
    In such ease, the heirs are not necessary parties to an action by the dowress against the lessee for her proportionate share of the rent.
    4 Same—Proof.
    A finding, in this case, that parol agreement by the agent was a cancellation of and in substitution of the lease was held to be warranted.
    Appeal from a judgment, dismissing the complaint on the merits.
    The action was originally brought by Sebastian Sommer, as administrator of the goods,.etc., of his mother, Diadema Sommer, deceased, to recover balance of rent alleged to be due. said decedent under a lease of premises in which she had a right of dower executed to the defendant under its former name of the Burr Brewing Company, by the four joint owners of the fee, and to which her name was affixed “by W. H. Burr, Her Atty. in Fact,” Sebastian Sommer having died, the present plaintiff was substituted as administratrix, and the action continued in her name. The answer, among other things, alleges that all rents due under the lease have been fully paid; that, at the time the lease was-made, the other lessors named agreed to and did pay said decedent a portion of the rénts reserved in view of her claim to dower up to the time of the defendant’s acquiring legal title to the property, when the decedent surrendered, all claim under the lease,, and annulled the same, and the defendant agreed to and did pay her until her death $62.50 a month for support, in lieu of dower in said premises or of right to rents under the lease; that the legal title to the premises was acquired for the defendant from the heirs and next of kin of the deceased, with her knowledge and consent, without regard to such alleged dower right, for which, by agreement with said heirs and next of kin, no further sum. was to be paid, except the weekly payment to the decedent above referred to; that no demand was made before suit brought; and that there is a defect of parties, in that all the heirs and next of kin are not made to the action. It is admitted that all the rent was paid up to the time the owners of the fee parted with their property. It was purchased from them' by Moser & Heidenbeimer, who on June 27, 1889, conveyed it to the defendant, subject to the right of dower of Diadema Sommer therein. The lease made no mention of dower, nor did it state what proportion of rents Diadema Sommer was to receive. The power of,attorney to Burr, under which the lease purports to have been executed in Diadema Sommer’s behalf, was revoked by one given to Sebastian Sommer dated January 12, 1888, and acknowledged January 81st. The leased was dated January 30, 1888, and says the revocation of- his. power was given him about February 1st. Sebastian Sommer testified that the power of attorney to 'him, which revoked the one given to Burr, and which is dated January 12th, was handed to him, unacknowledged, on January 13st, and was subsequently, and on January 31st, acknowledged; that he saw Mr. Burr sign the lease as attorney in fact; that he (Sommer) acknowledged the lease on February 11th, and that.he had the power of attorney at that time; that the reason he did not sign it as attorney in fact was that it had already been signed, and he did -not think of it. He does not state when he notified Mr. Burr of the revocation of the latter’s power. Mr. Burr testified that the lease was executed January 14th, and the other original a few days after, and about two weeks after the execution of the lease his power of attorney was revoked; that all the knowledge he has of the revocation is that a copy of the power to Mr. Sommer was served upon him ; that he told Mrs. Sommer the lease of the premises was about to-run out, and a new one would have to be given, and she told him to execute another in her name; that this was a verbal direction in addition to the power.of attorney. He further stated that she knew about the lease. John M. Moser, who had been the treasurer of the defendant, testified that after the execution of the lease until November; 1888., he paid the rent as it became due, not to the lessors individually, but to Mr. Holmquist, who, it appears, had authority to collect it for them; that in the beginning of January, 1889, Holmquist informed him there was rent or board ' due for Mrs. Diadema Sommer, and request him to pay it on account of rent, and from that time on until title was acquired from the heirs, and thereafter until her death, the defendant continued to make such remittances, amounting to about íjj$62.o0 a month, to Mrs. Sommer or to a Mr. Bittner, at whose house she boarded. He further states:
    “We bought the property on condition that the lease should be canceled; and further, that, by paying for the maintenance during her life of Mrs. Diadema Sommer, the dower was to be extinguished , ” and that these things -were agreed to both with Mr. Burr and Mr. Sebastian Sommer. The witness Ileidenheimer bears him out in this, but both Mr. Burr and Mr. Sommer contradict their testimony as to the making of auch agreement.”
    Jacob F. Miller, for app’lt; George H. Yeaman, for resp’t.
   Q’BRIEN, J.

—It will be found that many of the interesting legal questions here presented have been already satisfactorily disposed of. The .learned judge, in his opinion overruling the demurrer to the eomplaintin this action says:

“A widow entitled to dower, who joins with the heirs in a lease <of the real estate for a term of years, becomes vested, as against the tenant,with all the rights of a lessor, and her title to the premises and to the rents cannot he disputed by him. Her right of dower gives her an interest in the land whicjj is capable of being sold, transferred, and mortgaged, Mutual Life Insurance Co. v. Shipman, 119 N. Y. 324; 29 St. Rep. 742; Pope v. Mead, 99 N.Y. 201; Payne v. Becker, 87 N. Y. 153 ; and there is no reason why she may not join with the heirs or owners of the fee in a lease of the land * "" In making a lease, she consents to the undisturbed possession by the tenant for the whole term, and must look to the rent for the satisfaction of her right to the rents and profits of the land for that period. The tenant who has received the benefit of her participation in the lease cannot avoid payment of her proportion of the rent reserved. In view of the rights secured to the widow by the execution of the lease, as against the lessee, and also as against the heirs who joined with her as lessors, it is unnecessary to discuss the objections toan action against a grantee or lessee of the heirs by a widow with dower unassigned, or to consider the absence from, this complaint of allegations material to such a cause of action, or to discuss the inability of a widow to execute a lease without the heirs. Hone of the objections which readily present themselves in any such supposed case have any application to an action like the present, founded upon a lease, the validity of which cannot he questioned, and which is brought to enforce the liability of the tenant, who having secured by such lease a fixed term for a fixed rental, seeks to escape his obligations thereunder. It appears that, after the execution of the lease, the other lessors, who were the heirs at law, conveyed from time to time their respective interests to the tenant, leaving the widow the sole remaining lessor. This does not affect her right, for, as she still remained bound by her lease, the tenant still remains bound by his covenant to pay rent, modified or qualified only by her right to a proportionate part thereof; and for such proportionate part as she was entitled to, her administrator has a good cause of action. The fact that the plaintiff’s colessors conveyed their whole interest to the defendant before the commencement of the action made is unnecessary to join them either as plaintiffs or defendants; the plaintiff now being the only party in interest.”

This is a correct statement of the law, and clearly outlines the nature of the action, which is one on a lease, to obtain by one les ser the proportionate part of the rent to which she was entitled. The action is therefore to be treated "as one to apportion rents as between joint tenants, or as between tenants in common with unequal interests, or as between the owners of the fee and the holder of an estate for life.

The suggestion that the other lessors must be made parties is disposed of by what appears, viz. that the other parties have transferred their interests to the defendant leaving but two who could have any interest in the property,—the plaintiff and the defendant. The further suggestion that the plaintiff cannot sue upon the lease because her intestate could not make a lease granting an estate for a term, but could only release her dower interest, is equally without merit; for, if it be conceded that a dowress out of possession cannot lease, it has been frequently held that she may release, or, for an annual payment, agree not to enforce her action for dower. No such action to obtain an assignment of dower was instituted during the existence of the lease, nor would it have been maintainable, for by joining in the lease she estopped herself from taking such action. What the exact agreement was between the plaintiff’s intestate and the heirs is not shown, beyond the fact that, out of the rents, there was remitted to her the sum of $62.50 a month. What this agreement was, however, we do not regard as material, it not being claimed it inured to the benefit of the defendant. At the time the lease was made, and prior to the conveyance by the heirs, the defendant was obliged to pay only the amount of rent reserved in the lease; and the manner of its division among the lessors was a subject of no interest to it, nor is it in any way here involved, because it is conceded that all the rent was paid up to the time that the defendant acquired the title in fee to the property, subject to the dower interest, which, as-we have seen, the dowresswas not in aposition to enforceduring the term of the lease, and, as correctly said in the opinion from which we have quoted, “she must look to the rent for the satisfaction of her rights to the rent's and profits of the land for that period.”

It is claimed, however, that by the conveyance to the defendant, by all those who held the'fee, and who are four of the five joint lessors or lessors in common, such deed per se and by operation of law revoked or merged the lease. We cannot assent to this view, because, whatever may be the right of one or more joint owners or tenants in common to sell, assign, or release by agreement, there could not be as against the fifth, in the absence of any such agreement, a merger by operation of law; and not only was there no such agreement, but just the contrary appears, the deeds being li subject to right of dower.”

Conceding, then, the right of the widow, after the conveyances to the defendant, to maintain an action for her share of the rents reserved by the lease, and her right to have the same apportioned by showing just what her interest was, we are brought to a consideration of the questions of fact upon which we think this appeal must be disposed 'of. The conrt below found that, at the time the lease was executed, the power of attorney, under authority of which the name of Diadema Sommer was signed to it, had been revoked, and that as to her the lease was inoperative; that it did not appear she ever saw the lease or knew its terms, or that she accepted the payments from the defendant as rent, and hence-the proof of ratification by her was insufficient; and that, assuming the defendant was estopped from disputing tenancy, as between her and defendant the lease was canceled and annulled by as. parol engagement on the part of defendant to pay for her maintenance for the rest of her life, which promise was performed.

In regard to the first of these findings, that at the time the-lease was executed, the power of attorney given to Burr had been revoked, we think the court fell into error, because the evidence clearly shows that the revocation was subsequent to the execution of the lease by the attorney, and that, in addition to the written power, the attorney was orally authorized to execute it. As to the other finding, that the lease was canceled and annulled by a parol engagement on the part of the defendant to pay for her maintenance for the rest of her life, which promise was performed, there is evidence to sustain it It is stoutly denied by all the parties with whom it is claimed that this agreement was made. So far as any agreement with Burr is concerned, the defendant can receive no benefit therefrom, because, the evidence being that his power was revoked, he was without authority to make it. But it does not appear that the power of attorney subsequently given to Sebastian Sommer, and never revoked, was in its terms broad enough to authorize him to enter into such an agreement on behalf of his mother, and that he did not enter into a parol agreement by which on her behalf, he accepted a certain sum monthly during her life in lieu of any claim under the lease or for dower, two witnesses positively assert. Besides this testimony, we have the fact that thereafter the defendant continued to pay the amount which the witnesses state was the sum agreed upon for a cancellation of the lease or a substitution of a new agreement therefor in favor of the' dowress, and which was the sum that before the conveyance to defendant had been paid to her. It will thus be seen that the crucial question is, was there any revocation of the lease, or any modification of its terms, or substitution of anew agreement therefor? Or. stated differently, as the lease made no mention of dower, and did not specify what proportion of rents Diadema Sommer was to receive, and as the defendant afterwards acquired the fee from the heirs, subject ■ to the dower "of the widow, was there any agreement by which -the amount she was to receive, whether as rent or as dower, was fixed and agreed upon ? That there was such an agreement between her and the heirs the evidence would seemingly indicate, •and that payments of the same amonnt were continued down to her death is conceded. And when we remember that she continued ■to receive these without objection, and that her attorney in fact, who was her son, and Burr, who was her son-in-law, and those who now appear to support her claim by their testimony, stood by until after her death, we cannot conclude that the trial judge exceeded his province in creating the witnesses for the defendant, * and holding that such an agreement was made. In his decision, ^ he meets the contention that such an agreement “ is nugatory, because a promise to pay a less sum is no discharge of an obligation^ for a greater sum,” by saying: “The engagement to support Dia■demá Sommer for life was quite different from the stipulation to pay her rent for a definite term; and, though the promise of maintenance was by parol, still, being performed, it is a good ■accord and satisfaction.” As this finding that an agreement was made for a cancellation of the lease, or a substitution of a new •agreement in lieu thereof, is not against the weight of evidence, we do not think we should be justified in interfering with the conclusion reached by the trial judge.

The judgment should therefore be affirmed, with costs.

VAN BURNT, P. J., and PATTERSON and RUMSEY,-JJ., concur.

INGRAHAM, J.

—I am unable to agree with" Mr. Justice O’BRIEN as to the effect of the conversation testified to by two of the officers of the defendant in relation to the cancellation of the lease sued on. I cannot agree that we have arrived at a position at which a vested interest in real property can be conveyed by ■a mere conversation, and especially when that conversation is with an agent whose only authority in respect to the property is to sign, seal, execute,=and deliver deeds and conveyances for the leasing or the absolute sale. or. disposal of the property. I am inclined to the opinion that the proof of any agreement is so indefinite, and is ■contradicted by the deeds of conveyance by which the property was conveyed to the defendant, snob deeds purporting to convey only the individual interests of the grantors, subject to the plaintiff’s intestate’s right of dower, and the testimony of each of the others who are said to be the parties to the alleged agreement, as to he so clearly against the weight of evidence that the finding should be reversed. But, assuming that there was some such Agreement between these owners of the fee and the defendant or its representative as the time of the conveyance as was testified to by defendant’s witnesses, I do not think that such an agreement. is binding upon the plaintiff’s intestate or that it was sufficient to either annul the lease which -was under seal, and under which the defendant held the property,- or to operate as an extinguishment or transfer of the plaintiff’s intestate’s right •of dower in the property.

The situation of the parties to tliis transaction at the time this alleged agreement was said to have been made was as follows: The four owners of the fee of this property and the plaintiff’s intestate who had an unadmeasured right of dower in the property had joined in a lease by which they, as lessors, leased t.o the defendant, as lessees, the premises in question. Nothing was said in that lease as to the respective interests of the lessors in the property, or as to the proportion in which the rent was to have been divided; and it is clear that under that lease the defendant was estopped from denying the lessors’ title to the premises, and that the payment by the lessees of the rent to any of the lessors would be a discharge of the obligation to pay the rent. In any suit brought by the lessors to recover the rent, all the lessors would be, necessarily, parties plaintiff; and, on the face of the instrument itself, each of the lessors might be entitled to an undivided one-fifth of the rent. As between the lessors themselves, however, a different principle would prevail. Each party would be entitled to the proportion of the rent that such party’s interest in the property itself justified. The parties owning the property, by joining with the plaintiff’s intestate in the lease, recognized her interest in the property; and in equity, I think, it •could be considered as a setting apart to her the portion of the income to which she was entitled under her right of dower in the premises. As between the lessors themselves, it seems tome she would be clearly entitled to a third of the rents reserved after the payment of the taxes and other charges upon the property.

It is quite clear from the evidence that the defendant understood the interest of the plaintiff’s intestate in the property. The treasurer of the defendant testified that in January, 1889, Mr. Holm•quist, the husband of one of the owners of the fee, and who had been appointed the agent of the lessors to collect the rent, told the treasurer that there was rent or board due for the plaintiff’s intestate, who was at some home or boarding house in Pennsylvania, and the defendant was requested to pay such board on account of the rent. From that time on he paid, on account of the rent, plaintiff’s intestate’s board to the person in Pennsylvania with whom she was boarding, the amount being from $62.50 to $100 a ■month. Subsequent to this time, and in June of the same year, the defendant acquired the title, of the four lessors who were the ownei's of the fee, to the property ; but in all conveyances of the property to the defendant they were made subject to the right of -dower of the plaintiff’s intestate. These conveyances on their face reserved to the plaintiff’s intestate her interest in the property, the ■conveyances being made subject to it, and such interest was expressly stated to be a right of dower in and to the premises conveyed._ They had therefore full notice of the plaintiff’s intestate’s rights in the premises, and took the conveyances subject to those rights. They then occupied a double position to the plaintiff’s intestate. They were her tenants, holding under a lease from her, which prevented them from disputing her interest in the property, with full knowledge of what her interest was, and acquired the fee ■of the property expressly subject to that interest That interest, as between the lessors, was a right to a third of the rents of the property during her life.

There is not a particle of evidence that there was any agreement that the plaintiff’s intestate’s right to the amount that she was to-be entitled to receive was anything less than the law gave her in the property, namely, one-third of the rents and profits during her life; and, upon acquiring the conveyance of the property from the owners of the fee, they acquired just such right as the owners of the fee had, namely, a title to the property subject to the plaintiff’s intestate’s right of dower, which, by the execution of the lease by plaintiff’s intestate with the owners of the fee, was a clear recognition of her right, and, as before stated, gave her a right to one-third of the rents during her life. No agreement that the owners of the fee could make could affect the rights of the plaintiff’s intestate, and the only agreement that is testified to was an agreement by the owners of the fee with the defendant. There is not the slightest-evidence that either of the owners of the fee had any power to make su.ch an agreement. The only authority that plaintiff’s intestate had given to any of them was the power of attorney by which she appointed her son Sebastian Sommer as her attorney, to sign, seal, execute, and deliver such deeds and conveyances-for the leasing of the absolute sale and disposal of the premises in question; and no such deed was executed by the attorney. What the defendant did after this execution was to continue the payments that they had before made to the person with whom plaint iff’s intestate was living, for her board ; and there is no evidence to show that plaintiff’s intestate ever had any knowledge" of the source from which these payments came. They had, before the execution of this conveyance, been made on account of the rent reserved by the lease; and, after the conveyance, there was nothing to show that they were made on any other account, or in any other way, so far as this plaintiff’s intestate was concerned. The amount due to the plaintiff’s intestate was largely in excess of any payments made by the defendant, and there is nothing to show that she had any knowledge of the alleged agreement upon which the defendant relied. No estoppel, therefore, can arise which would prevent the plaintiff’s intestate from claiming at any time the balance due her under the lease; nor can this verbal agreement be upheld as against the plaintiff’s intestate on the ground that it was an executed contract, which a court of equity would enforce; and she had no knowledge of the existence of such a contract, and had received nothing on account of it, knowing that it had been made. She had a right to assume, if her attention was called to it, and that the payments were made in accordance with the original request to the defendant to make the payments on account of the rent.

The right of a person entitled to dower in premises to dispose, of her interest in - the premises before the dower has been ad-measured is fully recognized in this state by the authorities.

In the case of Tompkins v. Fonda, 4 Paige, 448, the chancello;, said:

“But, in equity, if the widow is in possession or is entitled to assignment o£ dower immediately, the want of a mere formal assignment of dower is not considered material. And if she has received the income of the whole premises, either as guardian of the heir at law or otherwise, she will, upon the taking of an account thereof, be entitled to retain her third, although her dower has not been assigned.”

And in Payne v. Becker, 87 N. Y. 153, the court say;

“And it must now be deemed settled that, upon the death of her husband, a widow has an absolute right to dower in the lands of which he had been seised; and that this right of interest, although resting in action, is liable in equity for her debts.”

In the case of Pope v. Mead, 99 N. Y. 201, it was held that where a dowress joined in a conveyance of the property, taking back to herself a mortgage, the mortgage secured to her the purchase money; that, upon a foreclosure of that mortgage, she was entitled to the value of her dower, as secured by the mortgage; and that that right was superior to that of the owners of the fee,' subject to the dower, although dower had not been admeasured or set apart to her.

Applying the principle established in these cases, it must be held that the plaintiff’s intestate was in possession of the premises upon the execution of the lease by her to defendant, and the execution of that lease, reserving the rent to her, put her in the same position as if dower in the premises had been assigned to her. She was thus entitled to an undivided one-third of the rents of .the property reserved by the lease, and that interest was superior to the right of the owners of the fee, and was superior to the right that the defendant acquired by the purchase of the property from the owners of the fee.

I think, therefore, that the judgment should be modified by directing an accounting before a referee as to the amount düe for rent under the lease subsequent to the conveyance of the fee to the defendant, and to the time of the plaintiff’s intestate’s death, and directing judgment for one-third of the net amount of the rents of the property, after deducting all payments made by the defendant for taxes or to her charges upon the property, with costs to the appellant.


author: VAN BRUNT, P. J.

text:
    Mary J. Mooney, Resp’t, v. Anastasia Byrne et al., App’lts.

      (Supreme Court, Appellate Division, First Department,

      Filed February 7, 1896.)

    1. Appeal—-Appealable order.
    No appeal from an order sustaining or overruling a demurrer can be taken, but the appeal must be taken from the judgment.

      % Deed—Mortgage.
    A deed, given as security for money which is due and to become due to . the grantee from the grantor must be treated as a mortgage.

      S. Same—Mortgagee in possession.
    Where plaintiff gave to defendant’s intestate, under whom he went into possession, a deed of land, absolute in form, in consideration that he discontinued foreclosure of the mortgage thereon and canceled it and paid the taxes then due on the land, and the intestate, by written agreement of even date, agreed to relieve plaintiff from all personal liability on the mortgage and to convey to her, on payment, within one year from this date, of all moneys advanced, the intestate was a mortgagee in possession.
    4. Same.
    After the mortgagee in possession sells the premises, he ceases to be such mortgagee in possession and must be deemed to have sold the prem ises for the satisfaction of the indebtedness for which he held the mortgage.
    5. Same—Redemption.
    An action to redeem, in such case, cannot be maintained as such, unless it is shown that the person to whom the conveyance was made had knowledge of tlie-facts of the limitations upon the mortgagee’s title.
    6. Same.
    ■In such case, the action must he brought for an accounting and the judgment obtained will be for a sum of money.
    7. Same—Liability op mortgagee.
    In such case, when the lands are sold, the mortgage is satisfied and the lien thereof does not attach to the moneys, but the mortgagee becomes a debtor for the surplus received in excess of the mortgage indebtedness.
    8. Same—Limitation.
    The statute of limitations is available as a defense to an action for such surplus.
    Appeal from an order, and an interlocutory judgment thereon, sustaining a demurrer to the answer.
    J. M. Shedd, for app’lts; Simon G. Sheehan, for resp’t.
   VAN BRUNT, P. J.

—The complaint in this action alleged that on the fourteenth of August 1878, the plaintiff was seised in fee of certain premises in the city of New York, of the value of $10,000 and upwards; that on said day she was intebted to one Owen Byrne in the sum of $2,875.16, with interest, and in the further sum of $150 paid by said Byrnes on account of the plaintiff, and also for further sums paid by the said Byrnes in discarge of certain assessments, water rates and taxes upon said premises; that upon said day the plaintiff, in pursuance of an arrangement with Byrne to secure the payment of the above indebtedness, executed and delivered to Byrne a deed of said premises, which was duly recorded; that the said deed was given as security as aforesaidr and for no other purpose, Byrnes simultaneously executing and delivering to the plaintiff an instrument in writing whereby, in consideration of the securing to him of the payment of said indebtedness, he covenanted and agreed to restore and reconvey the premises to the plaintiff, upon payment to him, within one year, of said indebtedness, with interest. This instrument was annexed to the complaint and made a part thereof. The complaint further alleged that Byrne entered into and took possession of the premises, and he and his representatives and assigns have ever since been in possession thereof, and received for tlieir own use the rents and profits thereof; that, if Byrne or his representatives had made any conveyance o£ said premises, such conveyance was made without the knowledge or consent of the plaintiff; that Byrne died in January, 1889, his will was probated, and the defendant O’Oonor duly qualified as sole executor; that on the twenty-sixth of May, 1890, O'Conor rendered a final aacount of his proceedings as such executor, and was duly discharged; that said O’Conor was duly appointed, by said will, trustee of certain trusts therein created, and has continued to be, and now is, such trustee; that the rents and profits of the premises now amount to much more than the principal and interest due on said indebtness, and the taxes and assessments and all other sums chargeable to her; that the plaintiff has made a demand for an accounting, and that she be allowed to redeem said premises,'and that said premises be reconveyed upon payment by her of the sums due from her as aforesaid, but the defendants will not consent thereto. The complaint then demands judgment that an account be taken of the amount due from her, and that she be at liberty to redeem, etc.

The agreement annexed to the complaint was dated August 14, 1879, and recited that the plaintiff was the owner of the premises mentioned in the complaint, and that the indebtedness referred to in the complaint existed, and that proceedings were pending by Byrne to foreclose said mortgages. The agreement then provided that the. plaintiff should execute and deliver to Byrne a deed conveying the premises above mentioned, subject to said mortgages, taxes, water rates, and assessments which deed should contain full covenants of warranty, etc. And said Byrne thereupon agreed to discontinue said proceedings, and within a reasonable time, to pay said taxes, etc., and also certain other sums of money, together with the costs and expenses of the foreclosure proceedings, and that if, on or before the fourteenth of August, 1879, one year from the date of the instrument, the plaintiff should pay to Byrne the principal and interest due on said mortgages, and the amount paid for taxes, etc., and the moneys advanced, with interest thereon, and also the proper and necessary expenses of said Byrne, and the costs and expenses of the proceedings in foreclosure, said Byrne would reconvey said premises to plaintiff, free and clear from all-incumbrances by a bargain and sale deed. Byrne also covenanted that the plaintiff should be free from all personal liability by reason of said bonds, and no money judgment or judgment for deficiency should be claimed against her in any action that might be taken upon said bonds and mortgages, so long as she should not dispute the title of said Byrne to said mortgaged premises or the amounts due him on said mortgages. The agreement also contained this provision:

“It is understood and agreed that, as to the agreement by the party of the second part to reconvey said premises, time is of the essence thereof; and, further, that this instrument shall not be recorded by or on behalf of the party of the first part; and that, for a violation of this provision, this agreement, so far as the same provides for such reconveyance, shall thereupon become utterly null and void.”

The defendants answered, admitting some of the allegations of complaint, and alleging that, on the thirteenth day of June, 1881, the premises were conveyed by said Byrne, and that neither he nor any of the defendants had any title thereto or possession thereof subsequent to said conveyance. The answer also pleads the six and ten years’statute of limitations. To the defense of the statute of limitations the plaintiff demurred. The court sustained the demurrer, apparently on the grounds that the twenty years’ statute applied; and from the order and interlocutory judgment thereon entered this appeal is taken.

The appeal from the order must be dismissed, as there is no provision in the Code for an appeal from an order sustaining or overruling a demurrer, but the appeal must be taken from the judgment. Ridgway v. Bacon, 68 Hun, 506; 52 St. Rep. 600.

Upon an examination of the instrument which forms the basis of the action, it is apparent that the deed in question was given as security for the money which was due and to become due to By rue from the plaintiff, and that it must be treated as a mortgage. It is further apparent that it was the intention of the parties that Byrne was to hold these premises for a year, in order to enable the plaintiff to redeem them. It is evidenced, by the clause in the agreement which make time of the essence of the contract, and the prosision which made the agreement, so far as it provided for conveyance, null and void in case the plaintiff recorded the instrument, that the understanding of the parties was that, upon the expiration of the year Byrne was to own the premises, and do as he pleased with" them. This view is further reinforced when we consider the provision that, upon the delivery of the deed, Byrne agreed to relieve the plaintiff from all personal liability by reason of the bonds, to secure which he held the mortgages upon the premises in question. This being the case, Byrne was to be treated as mortgagee in possession; but, after he sold the premises, he ceased to be a mortgagee in possession, and he must be deemed to have sold the same for the- satisfaction of the indebtedness for which he held the mortgages. This brings the action .precisely within the principle laid down in the case of Mills v. Mills, 115 N. Y. 80 ; 23 St. Rep. 604, where it is held that an action of this description must be treated as for an accounting, and a judgment for a sum of money; no other relief being possible upon the facts established.

This action, although an action to redeem, if Byrne has sold, cannot be maintained, as such, unless it is shown that the person to whom the conveyance was made had knowledge of the facts of the limitations upon Byrne’s title. If the purchaser had. no such notice, there was no mortgage remaining, and nothing to redeem. In the case cited it was held that, when the lands were sold, the mortgage being satisfied, the lien thereof did not attach to the moneys, but the defendant became a debtor for the surplus, and that, under such circumstances, he could not be treated as a mortgagee in possession; and it was held that the statute of limitations would run.

In the case at bar the complaint alleges but one cause of action, but demands alternative relief, dependent upon the facts which should be developed upon the trial under the allegations of the complaint. One class of relief looked to redemption. The other asked that, in case Byrne or his representatives had conveyed the premises to a bona fide purchaser for value, or if, for any cause, a reconveyance could not be had, due compensation for the value of the premises should be-made to the plaintiff by the defendants and each of them, in proportion to the share of assets of said Byrne received by them, and up to the amount of the same, whether said shares were given' to them in trust or otherwise.

The defendant, for a separate defense to the cause or action set up in the complaint, pleaded the six and ten years’ statutes of limitations. Under the principles laid down in the case of Mills v. Mills, supra, the statutes pleaded may be a defense to a claim for compensation in case there has been a conveyance. Consequently, demurrer will not lie.

We think, therefore, that the court erred in sustaining the demurrer, and that the appeal from the order' sustaing the demurrer should be dismissed, and the interlocutory judgment reversed, with costs of appeal and costs of the demurrer in the court below to the appellant.

All concur.


author: O’BRIEN, J.

text:
    Hugh J. Grant, as Temporary Receiver, etc., Resp’t, v. George C. Treadwell Company et al., App’lts.

      (Supreme Court, Appellate Division, First Department,

      Filed February 7, 1896.)

    1. Corporations—Promissory notes.
    Where the president of a corporation who was also its founder and general manager, executes in good faith and with the knowledge of the directors promissory notes in the name of the company for money needed and used in its business, such notes are binding on the corporation, though its by-laws require the signatures of both the president and secretary to notes of the company.
    S. Same.
    The fact that a promissory note signed by the president of the corporation, is not executed in accordance with the by-laws, constitutes no defense to an action on such note in the hands of a bona fide holder, where the corporation has received the benefit of the proceeds. 1
    Appeal from a judgment, entered on a verdict directed by the court in favor of plaintiff.
    Daniel G. Thompson, for app’lts; John M. Bowers, for resp’t,
   O’BRIEN, J.

—The complaint alleges two causes of action upon two promissory notes, each for $2,500, made by the defendant corporation to the order of George H. Treadwell, and indorsed by him. The single defense set up is that the corporation did not make the notes. .Upon the first trial the complaint was dismissed, and the judgment entered upon such dismissal was subsequently by the general term reversed, upon the ground that “ whether the-president was authorized to make the notes should have been submitted to the jury.” As said in the opinion of the court:

“ The inherent power of the defendant corporation to bind itself by promissory notes was not questioned on the trial. The-sole question litigated at circuit was whether the president of the defendant had authority to bind it by these promissory notes.”

Upon additional evidence, the inquiry must now be as to whether the same question should have been submitted to the-jury, or whether the court was right in holding, as matter of law, that such authority was shown, and that a direction of a verdict, for the plaintiff was therefore proper. It is now made to appear that George H. Treadwell was the founder of the company, and, prior to its incorporation in 1892, had been engaged as a fur-manufacturer and dealer in Albany for years. Upon its incorporation, he became its president and general manager, and in either capacity seems to have taken upon himself the entire management of the business, manufacturing and financial. In the summer of 1898, during the financial distress, the company became in need of funds, which was known to the directors of the corporation. In December, 1892, and the summer of 1893, the company delivered $20,000 of notes, just like the ones in suit, to the firm of Hotchkiss & Oo.,'-brokers, for discount, and the latter firm sent the company $15,000, which went into its treasury, and was used by it in. its business. Treadwell testified that there were still other notes,, signed in the same way, and paid by the company, adding:

“It is true that, in December, 1892, and in' the winter of 1892r I was raising money for the needs of the manufacturing business of the company at Albany. I raised some by the signing, and sale and discount, of notes given by me, in the same manner that the notes in suit were given, and some by acceptances of the company. * * * I cannot say that the other officers of the company knew the method in which the manufacturing business was-conducted at Albany. I cannot be responsible for what they knew or what they didn’t know. The company manufactured fur and the moneys thus raised were used in the carrying on of the business. I think the other directors knew of the making of those notes. I can hardly give my reasons for that. They knew that-the money was being raised; and they knew it was being raised by me in some way, and they were doing anything at all to help the company. They we,re willing to let me do it, and they raised, no objection to the manner in whichl was doing it.

It was their business to know about it. They were directors and officers, and the same as I was. They saw the books of the company. The accounts were correctly kept. The moneys raised on those notes which I signed were entered in the books of the company, and the books were open to the inspection of the officers of the company.”

The evidence of this witness, upon whom the defense mainly relied, leaves no contrary inferences to be drawn, as it all points to, and tends to support, the view that, so far as third parties were concerned in dealing with the notes of this company, signed as they were, they had a right to conclude that they were authorized by the company. Other testimony besides this might be referred to as tending to show that the burden of raising money for the company by means of notes was placed upon George H. Tread-well as president and manager, and that he issued notes which were signed exactly as the ones in suit, and that, upon such notes, moneys were realized, which went into the treasury of the-company, and were used in its business, if not by the direct authoriziation, or with knowledge, at least with the acquiescence, of the other directors. There was no question but that Mr. Treadwell acted honestly and in good faith in his dealings 'with Hotchkiss- & Co., in his efforts to raise money for the company. The notes, therefore, had their inception honestly. They were put out for a worthy and necessary purpose. Nor is any defense made that the-bank was not a bona fide holder of the notes for value. The evidence shows that the bank advanced, by way of loan to Hotchkiss & Co., the sum of $10,000, and received therefor, as collateral security, among others, notes of the Treadwell Company, for which; when the latter became due, the notes in suit were substituted.

The only fact appearing to impair the force and effect of the-evidence adduced to show the authority of Mr. Treadwell torn alee the notes was á provision of the by-laws that “the treasurer, together with the president or the secretary, shall accept and indorse drafts, and sign promissory notes of the company.” In commenting upon these by-laws, which prescribed the power of the president and treasurer, and the argument, based thereon, that the note, not having been signed by the treasures, is not binding upon the company, the court, upon,the former appeal, said:

“In National Spraker Bank v. George C. Treadwell Co., 80 Hun, 363; 61 St. Rep. 817, it was held that the fact that a promissory note was not signed by the defendant’s treasurer, in accordance with the by-laws, constitutes no defense to an action on &. note in the hands of a bona fide holder, the corporation having received the benefit of the proceeds.”

The trial judge, in stating his reasons for a direction, correctly said:

“I assume that the president of the company, Mr. Treadwell, bad no direct authority, as such, under the by-laws, to made promissory notes binding the company, and that, by the restrictive provisions of those by-laws, obligations of the company might only be executed in a certain way. That would not render a promissory note signed in the way in which this was, and delivered under the circumstances under which the notes were delivered, of no force as against this corporation, if it is made to appear in the case that the conduct of the corporation was such,with reference to the acts of the president m similar matters, as to produce a well-founded belief that he was authorized to make promissory notes-of this character.”

This statement of the law is followed by a summary of the facts-proven in the case, which leaves nothing to be added by us, and. which, in our opinion, justified the ruling made, directing a verdict for the plaintiff.

We think the judgment was right, and should be affirmed, with ■costs.

All concur.


text:
    Garvin Machine Company, App’lt, v. Joseph Hutchinson, Resp’t.

      (Supreme Court, Appellate Division, First Department,

      Filed Feb. 7, 1896.)

    1. Contract—Sale of services.
    An agreement for the sale of any commodity not in existence at the time but which the vendor is to manufacture or put in a condition to be delivered, is not a contract of sale.
    & Same—Damages.
    Where, before' the completion of the entire work, the owner notifies the manufacturer to stop, the'former, by such act, renders himself liable to the manufacturer, not under the contract, but rather for the breach thereof, and' the manufacturer is then justified in treating the contract as broken and has a right to recover for the value of the work, labor, services and material that he employed on behalf of the owner in working under the contract, so far as he was permitted to do so.
    Appeal from a judgment dismissing the complaint. ■
    _ ___ Frederic R. Kellogg, for app’lt; Hector W. Thomas, for resp’t.
   O’BRIEN, J.

—The complaint unites two clauses of action: The •first, for the sale of foot presses at the agreed price of $140; and secondly, for the reasonable value of work, labor, and services and materials furnished in and about the manufacture of tools, fixtures and appurtenances for the making of an incandescent electric lamp switch. The evidence shows that the defendant, with a •view to making an electric switch, some of .the parts of which he had, and which it was necessary to arrange and put together, needed certain tools for that purpose. These had to be made, and in their manufacture certain foot presses were required. Accordingly, the defendant, in the first instance, gave two orders to the plaintiff,—the first, for “ two foot presses and tools for socket springs”; and the second, to “ punch and assemble 10,000 parts ■of socket.” While the terms used are technical, testimony was introduced throwing some light on what the defendant required, and-what the plaintiff did pursuant to these orders. It appears that the foot presses were a staple article, known as the “Bostwick presses,” which were kept in stock by the plaintiff in its storeroom, and were taken thence to a floor in plaintiff’s premises, and •some alterations made therein so as to adjust them to the use intended of making the tools required. These tools were to be made •after certain, drawings or plans furnished after consultation between the defendant and the plaintiff’s, draftsman. Two of such presses, and subsequently three more, which were found to be required, and were likewise adjusted to the purpose, were employed an making the necessary tools, the drawings for which, as well as the preliminary sketches, being based upon models and sample pieces delivered by defendant. After the tools were started and some of them nearly completed, changes were ordered from the original models by defendant, necessitating the making of new tools. The exact relation that the punching and assembling of the parts of socket bore to the electrical switch is not clear; but sufficient appears to show that in addition to completing some, at least, of the tools as changed, a number of the parts were punched, assembled, and produced with the tools called for by the first order, and that a number of such parts were actually delivered to and accepted by the defendant. Becoming dissatisfied, however, the defendant, upon the ground that the charges were large and the work unsatisfactory, ordered the plaintiff to stop work, which was done. Prior to that time the plaintiff had furnished a large amount of material and labor in making the tools, and in punching and assembling the parts supplied by the defendant, the details of which appear in plaintiff’s bill of particulars, as well as the prices charged therefor, which were sworn to as being fair and reasonable.

The question first presented is as to whether the plaintiff made outfits first cause of action for the sale and delivery of five presses, Beferring more particularly now to the testimony bearing upon this issue, we have that of Mr. Garvin, who states generally that “he sold and delivered .five1 foot presses,” at the agreed price of $28 apiece. In addition, we have a bill containing a statement of the sale and the delivery of the presses, which, upon request, was produced at the trial by the defendant, and which shows that it was rendered to and received by the latter. The criticism made upon this testimony is that it is a mere conclusion of Mr. Garvin, and is not supported by any facts. It is true there is no evidence of any order for more than two presses, and, were there anything to the contrary, this evidence might well be regarded as unsatisfactory and- inconclusive to sustain a claim for the agreed price of five presses. But we must remember that the defendant gave no testimony, having succeeded in obtaining a dismissal of plaintiff’s ■complaint after the completion of its testimony, and without being required to meet it.

Another criticism made is that, whatever force may be given to the conclusion of a sale and delivery and the bill rendered, other testimony shows that there was no delivery, the presses being removed simply from plaintiff’s storeroom to another portion of its premises. The answer to this, however, is that the contract between the parties apparently never contemplated any other delivery. The presses were to be emploj'ed on the plaintiff’s premises, after they had been changed and adapted to the use in making the tools which the defondant required to adjust the parts of the electric switch. As we have concluded that the referee erred in dismissing the complaint as to the second cause of action, it will be unnecessary for us to comment, farther, upon the strength of the plaintiff’s case as to the first, the reversal necessarily involving a new trial as to both causes -of action. But we deemed it proper to call attention to this evidence, which the referee seems to have overlooked, and which-we think has a bearing and should be considered upon the question of the sale and delivery of two»of the presses at least, if not of the five.

In regard to the second cause of action, the question presented is one that has been often mooted, and about which the authorities in different jurisdictions differ, as to whether, upon the facts as here presented, the arrangement or contract between the parties-was one of sale, or one for work, labor and services performed and materials furnished.

If this is to be regarded as a sale, and the action as one to recover the contract price, then what was said in Butler v. Butler, 77 N. Y. 472, would be applicable:

“ Doubtless, the plaintiff may in this, as in other cases where the performance of a contract has been prevented by the act or omission of the other party, recover what he lost thereby, if anything, or the damage sustained, if any. Hosmer v. Wilson, 7 Mich. 294. Such a case, however, was not presented to the referee, nor was it Suggested by the pleadings. The plaintiff neither claimed nor proved damages arising from the breach of the contract, nor from being prevented from performing it. On the contrary the cause of action was treated by the plaintiff and by the referee and court below as one where property bargained for had been delivered and title vested in the purchaser, and for which, therefore, the plaintiff, within well-settled rules of law, might, maintain the action and recover the purchase price; and such is-the contention of the learned counsel for the respondent upon this appeal. There is, however, nothing in the evidence to warrant'that view of the case or permit the application of such rule-of law.”

In referring to this question, the referee, in his opinion, says:

“ It is conceded that plaintiff did not complete and deliver the-tools, but, being willing to perform and having been stopped by defendant, the claim is that the company is entitled to recover upon a quantum meruit for the labor performed and material furnished. Assuming in the absence of any evidence on the part of defendant that there was a fulfillment of the contract on the part of the plaintiff in so far as it had been permitted to proceed, the question presented is whether in a contract for specific articles to be manufactured out .of materials of the vendor, and before the article liasacquired the character contracted for, and without any appropriation to the use of the vendee, the former can maintain an action-for the value of the labor and material expended. Of course, it is well settled that in the case of a contract for labor and services, where the defendant prevents the fulfillment, and plaintiff has been induced to expend his labor for him, he may recover its reasonable value in an action upon a quantum meruit.”

Taking the view that this was a sale, and that in form the action was to recover the contract price, the referee concluded that the complaint should be dismissed. He relies on the well-known-English decision of Atkinson v. Bell, 8 Barn. & C. 277, together with two Hew York decisions (McConihe v. Railroad Co., 20 N. Y. 495; Butler v. Butler, supra), and one in Connecticut (Allen v. Jarvis, 20 Conn. 38).

As to the relief that should be accorded plaintiff, no valid objection was interposed to the pleadings, and it would be a forced construction to hold that the action was in form, one to recover the contract price. The allegation of the complaint is that “ the plaintiff performed work, labor, and services, and furnished material, in and about the manufacture of tools, fixtures, and appurtenances for making an incandescent electric lamp switch, at the special interest and request of the defendant,” and that these “were reasonably worth the sum of $1,290.44, which sum the defendant promised and agreed to pay therefor.” This latter statement is proper pleading, and may be supported by proof of facts from which a promise to pay may be implied. The plaintiff neither by the complaint nor by the proof claimed that a definite contract for a certain number of tools was entered into for which the defendant agreed to pay a definite sum; but the character of the order itself, the allegations of the complaint, and the proof show that what the plaintiff is seeking by its second cause of action is to recover on a quantum meruit for the reasonable value of the work done and the materials furnished. Therefore, we are brought back to the position whence we started, apart from the pleadings, which present no insurmountable difficulty, — whether, upon the evidence, the plaintiff was entitled to relief for some amount, and whether the contract is to be construed as one exclusively for the ■sale of tools. Apart from the tools, concerning which we will speak later, the evidence shows that the plaintiff did perform a large amount of work, not upon its own materials, but upon those furnished by the defendant himself, and that the articles upon which this work had been done were thereafter, under the defendant’s specific instructions, actually delivered to and received by him, without any objection or rejection on his part, and that upon their receipt he stated he wanted more of the same kind. There was therefore, apart from the tools, some value in the work thus performed for the defendant, the amount of which it was the province of the referee to determine; and, whatsoever might be the facts as to the other branches of the case, he should have rendered judgment in plaintiff’s favor for that amount as ascertained, instead of refusing to accord the plaintiff any relief.

The English case of Atkinson v. Bell, supra, as well as Allen v. Jarvis, supra, which is based upon and follows Atkinson v. Bell, is a direct authority for the legal conclusion reached by the referee. The New York case of Butler v. Butler, supra, mentioned by the referee, and from which we have already quoted, does not bear directly upon the question we are now considering; and although McConihe v. Railroad Co., supra, is a seeming, if not a direct, authority, still we must construe it as overruled by later decisions.

Consideration of this question most frequently becomes necessary in cases where it is claimed that a given contract is within the provisions of the statute of frauds relating to sales. The leading case in this state is that of Cooke v. Millard, 65. N.Y. 356, wherein it is said:

“ There are, at least, three distinct views as to the meaning of the words in the statute. Those may be called, for the sake of convenience, the English, the Massachusetts, and the New York rules, as representing 'the decisions in the respective courts. The English rule lays especial stress upon the point whether the articles bargained for can be regarded as goods capable of sale by the professed seller at the time of delivery, without any reference to the inquiry whether they were in existence at the time of the contract or not. . (The Massachusetts rule, which for the present purposes is immaterial, is then stated by the court.) The New York - rule is still different, and it is held here by a long course of decisions that an agreement for the sale of any commodity not in existence at the time, but which the vendor is to manufacture or put in a condition to be delivered, such as flour from wheat not yet ground, or nails to be made from iron belonging to the manufacturer, is not a contract of sale. The New York rule lays stress on the word ‘sale.’ There must be a sale at. the time the contract is made.” ,

See, also, Parsons v. Loucks, 48 N. Y. 17 ; Higgins v. Murray, 73 N. Y. 252 ; Donnell v. Hearn, 12 Daly, 230 ; Hinds v. Kellogg 37 St. Rep. 356.

It will be seen, therefore, that, as to the second cause of action, we think the referee, by following the English rule too closely, has committed- error. Here the parties had made a contract whereby the plaintiff was to manufacture certain articles for the defendant, which were not to be delivered, but were to be used in connection with machinery to complete certain parts of an electric switch, which was the property of the defendant, and certain parts of which had been produced by the defendant himself for the purpose of having them punched and assembled. Before completion of the entire work, defendant notified'plaintiff to stop, which the latter was then bound to do, in preference to proceeding and putting defendant to an increased liability after he thus expressly repudiated the contract. By his act the defendant rendered himself liable to the plaintiff, not under the contract, but rather for a breach thereof, and what the plaintiff was entitled to recover was the damages sustained by him in consequence of the failure of the defendant to keep his contract. The plaintiff was then justified in treating the contract as broken, and had a right to recover for the value of the work, labor, services, and material that he employed on behalf of defendant in work 'under the contract so far as he was permitted to do so.

Of course, in this discussion, we have, as required by the rule, in determining'whether the complaint was properly dismissed, drawn the inferences therefrom favorably to the plaintiff; and we do not desire to intimate what upon a new trial might be the result if'the defendant upon his part could show, as his answer alleges, that performance by plaintiff was so improper, unskillful, and defective as to result in damage instead of benefit; our conclusion being that the plaintiff made out a prima facie case, and that the ruling dismissing the complaint was erroneous, for which the judgment should be reversed, and a new trial ordered before another referee,, with costs to the appellant to abide the event.

All concur»


author: 'RUMSEY, J.

text:
    William A. Harding as Administrator, etc., App’lt, v. Walter H. Field, Resp’t.

      (Supreme Court, Appellate Division, First Department,Filed

      February 7, 1896.)

      1. Principal and agent—Following proceeds.
    Where one occupies the relation of agent to another, and in that relations makes an investment for such other, with the money of its principal, the principal is entitled to, not only to the property bought, but to the proceeds of that property, so long as it can be traced and identified.

      2. Same.
    Where a broker has bought stocks or securities for his principal upon & margin, or upon any other contract, by virtue of which he is entitled to hold the property so bought as security for advances or loans made to his principal, he is not required to take the certificates or the bonds in the name of his principal, or to keep the securities which he originally purchased separate from the other stock of the same kind belonging to himself, but he sufficiently fulfills Ms obligation if he keeps on hand stock and securities of the same kind as those which he has purchased for his principal, ready to be delivered when it is his duty to do so.
    8. Same.
    The principal, when he seeks to recover his securities bought for him by the agent, is not called upon to put his finger upon the identical certificates, and he able to say that those were the ones purchased for him, but be sufficiently identifies them if he shows that the agent purchased that particular kind of securities and lias the necessary amount in his hands, which he can deliver upon demand.
    4. Same—Mingling trust funds.
    Where one, occupying a fiduciary relation to another, has mingled the trust funds with his own funds, drafts which he makes for his own purposes upon the common fund will be deemed to be drawn from his owb share, and the presumption will be that he intended to keep the trust funds intact to answer the legitimate claims made upon it.
    Appeal from a judgment entered in favor of defendant.
    T. D. Kenneson, for app’lt; H. R. Bayne, for resp’t,
   'RUMSEY, J.

J. — This action was originally brought by the administrator of Stone against the firm of Groodhart & Co., who were Stone’s brokers, to recover the sum of $8,629.43, which sum was the proceeds of certain stocks and bonds held by Goodhart & Go. as brokers for Stone. A claim was made to the money by Field, the- present defendant, and upon paying the money into court Goodhardt procured an order substituting Field as the defendant, ‘in the place of the firm of Goodhart & Co. After the substitution, the case was referred, and the referee reported in favor of the defendant, that he was entitled to • the money paid into court. From the judgment entered upon this report, the plaintiff appeals. It appeared upon the trial that for many years Stone had been an intimate friend of the defendant Field, and they had close personal and some business relations. In the year 1887 the defendant delivered to Stone certain securities which he then owned, requesting him to sell them at the best price he could, and to invest the proceeds in other stocks at his discretion. Stone made the sale of the securities, and bought stocks with the money received. These stocks were sold, by direction of Field, from time to time, and other stocks and securities were bought with the proceeds, and this process was continued until the death of Stone in the „ month- of March, 1891. Stone, as he bought the securities for Field, reported his purchases, and also reported the sales that he^ had made from time to time. As the result of his reports, it ap-, pears that, shortly before his death, there remained unsold of the„ securities bought for Field 600 shares of stock of the National Lead Trust, 200 shares of the stock of the Oregon Improvement Company, and a $1,000 bond of that company. Two hundred shares of the National Lead Trust were sold shortly before Stone’s death, and the remainder of the stock was in the possession of •Groodhart & Co. at the time he died. The stock was sold shortly after his death, and after crediting the proceeds to Stone, and •charging against the proceeds the balance due from him, there remained in the hands of Groodhart & Co. this sum of $8,629.43. The referee held that the securities in the hands of Groodhart & ■Go. were the property of Field, and he he was entitled to follow "the proceeds of their sale, and therefore was entitled to the money in the hands of the brokers, in preference to the administrator of-Stone. There is practically no dispute upon the facts in the case, and the only question is whether or not the inference drawn by the referee from those facts were warranted.

It is well settled that where one occupies the relation of agent to another, and in that relation makes an investment for such other, with-the money of his principal, the principal is entitled, not only to the property bought, but to the proceeds of that property, so • long as it can be traced and identified. It is also settled that where a broker has bought stocks or securities for his principal upon a margin, or upon any other contract, by virtue of which he is entitled to hold the property so bought as security for advances or loans made to his principal, he is not required to take the certificates or the bonds in the name of his principal, or to keep the securities which he originally purchased separate from the other stock of the same kind belonging to himself, but he sufficiently fulfills his obligation if he keeps on hand stock and securities of the same kind as those which he has purchased for his principal ready to be delivered when it is his duty to do so. Horton v. Morgan, 19 N. Y. 170; Caswell v. Putnam, 120 id. 153; 30 St. Rep. 878. The reason of this rule is that the broker has the right to the possession of the stock, and the transaction of business is made more convenient by permitting him to carry it in his own name, so long as he is entitled to possession of it. In this case, by the terms of the understanding between Stone and Field, Stone was to sell the stocks which he bought for Field whenever it was In his judgment profitable to do so, and to buy new stocks at his discretion, and to continue that mode of dealing. Under such a state of facts, we think the rule laid down in Caswell v. Putnam, supra, should apply, and that we should hold that Stone was not called upon to retain the identical certificates which he had bought for Field, but that he should be required only to keep on hand a sufficient quantity of stock of a like kind, so that, if at any time he was called upon to transmit it to his principal, he should be prepared to do so. This being the extent of the obligation of the agent, it necessarily follows, we think, that the principal, when he seeks to recover his securities bought for him by the agent, is not called upon to put his finger upon the identical certificates, and be able to say that- those were the ones he purchased for him, but he sufficiently identifies them if he shows that the agent purchased that particular kind of securities, and has the necessary amount in his hand, which he can deliver upon demand.

In this case it appeared, from the reports of Stone made to Field, that he had bought securities of the particular kind which are claimed to belong to the defendant, and that at the time of his death there was held for him by his brokers the precise amount which he was required to have on hand to enable him to deliver to Field just the number of shares and bonds that he was entitled to. It appeared also that Stone had no other stocks or bonds anywhere, except those in the hands of Goodhart & Co. This, we think, was a sufficient indentification of the securities as the property of Field. It is quite true that he represented to Field that he paid in full for the stock which was bought for his account and it is also true that he had in his hands sufficient money of Field to enable him to do so. It is claimed by the appellant that, because this stock was not paid for, but had been bought by Goodhart & Co. upon margins furnished by Stone, and had not been paid for in full, it cannot be the stock represented by Stone to Field to have been purchased for him, —that the identification fails. If it had been made to appear that Stone had in his possession other securities of the same kind which he had bought and paid for, there might be some force in the contention of the plaintiff; but as it does appear that Stone made no purchase of this sort of securities through anybody but Goodhart & Co., and he had no other securities of this kind except what lie bought in the same way, and that this was the purchase that he reported to Field as bought upon his account, it must be deemed that these were the securities which he had bought for Field, and that his representation that they were paid for was not true. The referee was not obliged to attach equal credit to the representation of Stone that he had paid for the stock as to that portion of it which represented that he had bought it. He might accept the one portion of the representation and discard the other,—which he evidently did.

It is fair to infer, from the testimony in the case, that Stone had .purchased through Goodhart, not only securities for Field, but also a considerable amount of the same kind of securities upon his own account. It appears that a good many of these were sold from time to time,- and the proceeds placed to Stone’s credit. Upon such a state of facts, the presumption is that the securities sold by Stone for his own account were his own property, and v that he retained in his possession or under his control those which he ought to have retained to enable him to deliver them to his principal when called, upon. In all cases, the presumption is that every man intends to do right rather than wrong, and to perform his duty rather than to violate it. Pom. Eq. Jur. § 420 ; Pennell v. Deffell, 4 De Gex, M. & G. 372, 382. In the case last cited, the rule is laid down that, when one occupying a fiduciary relation to another has mingled the trust funds with his own funds, the drafts which he makes for his own purposes upon the common fund will be deemed to be drawn from his own share, and the presumption will be that he intended to keep the trust fund intact to answer the legitimate claims upon it. The same rule is laid down in Knatchbull v. Hallett, 13 Ch. Div. 696. In that case Hallett was the agent of Mrs. Cottrill, and had in his possession a quantity of bonds of a particular kind belonging to his principal, which without right, he sold. The proceeds of these bonds were traced, and Mrs. Gottrill claimed against his estate that these proceeds should be paid over to her, rather than to the general creditors of the estate. The court held that her claim was well founded. It was said that, if a man mixed trust funds with his own, the whole would be treated as trust property, except'so far as he might be able to distinguish what was his own; that is to say, that where it appeared that the fund was the proceeds of trust property, it would be presumed that the cestui que trust was entitled to it, rather than the estate of the trustee. The broad principal was laid down in that case, as stated above, that, where the trustee had mingled trust moneys with his own, he could not be heard to say that he used the trust money instead of his own money, so long as he had the right to use his own money, or so long as there remained in his possession any money which could be traced to the trust fund. The principle laid down in that case, which is well established m equity' has been approved and adopted by the courts of this state. (Heidelbach v. National Park Bank, 87 Hun, 117; 57 St. Rep. 438; Importers & Traders Nat. Bank v. Peters, 123 M. Y. 272 ; 33 St. Rep. 182; and is quite sufficient to support the judgment here. When it had been made to appear (as it was, beyond any question) that the money now in court was the proceeds of the securities which Stone, had represented that he held for Field, the defendant’s case was made out,, and the referee could do nothing else than he did do,—which was to apply to the legal presumption that the fund in court was the proceeds of the securities' of the defendant, and require the money to be paid over to him.

The judgment must be affirmed, with costs.

All concur.


author: WILLIAMS, J.

text:
    Rochester Lamp Company, App’lt, v. John H. Brigham, Resp’t.

      (Supreme Court, Appellate Division, First Department,

      Filed Feb. 7, 1896.)

    1. Contempt—Service of order.
    To punish a party for contempt, the order which is disobeyed must be served personally upon him. -
    3. Motion and order—Effect of reversal.
    The reversal by the general term of an order vacating the original order for the examination of defendant before trial restores such original order and it thereupon becomes binding upon the defendant and his duty is to obey it.
    3. Same.
    In such case, it is not necessary that the order of the general term, fixing a time for the execution of the original order requiring the defendant to appear and be examined, ’should he personally served upon him within the state, in order to have jurisdiction of his person for the purpose of punishing him for contempt.
    4. Same—Order to show cause.
    Nor is it necessary that the order to show cause why the defendant shin'd not be punished for contempt should be personally served upon him within the state.
    Appeal from an order, denying motion to punish defendant for contempt in failing to appear and be examined as a witness before trial.
    On the 28th of June, 1895, an order was made by a judge of the court requiring the defendant to appear at chambers on the 8th day of July, 1895, for examination before trial, and to be there examined as a witness at the instance of the plaintiff as to the issues in the action, and directing the order and affidavit on which it was granted to be served upon the defendant within the state, on or before July 2, 1895. This order was personally served upon the defendant June 28, 1895, in Brooklyn, by delivering to and leaving with him copies of the order and affidavit, and showing him the judge’s signature to the original order. At the time and place specified in the order for the appearance and examination of the defendant, his attorneys appeared, and moved the judge then holding chambers to vacate the order. Thereupon the examination was adjourned by the judge to July 10, 1895. Thereafter, and on the same day, the judge made an order on such motion vacating the order for the examination. An appeal was taken from this latter order to the general term, and thereafter, and on the 18th day of October, 1805, the order appealed from was reversed, and an order to that effect was made by the general term. 85 N. Y. Supp. 1116. In and by such order of reversal, the general term required the defendant, in pursuance of the original order for the examination, to appear before one-of the judges of the^supreme court at chambers on the 22d day of November, 1805, and submit to such examination, and further ordered that service of the certified copy of the order on the defendant’s attorneys on or before November 1, 1895, should be sufficient. The defendant left the state about July 10, 4895, and has never returned. The certified copy of the general term order was served personally on the' defendant’s attorneys in New York City, November 1, 1895, and personally on- the defendant himself at Birmingham, England, November 4, 1895. The defendant failed to appear for examination November 22, 1895, and his default was taken by the judge then sitting at chambers. Upon papers showing the foregoing facts, an order was made December 8,1895, requiring the defendant to show cause at special term December. 11, 1895, why he should not be punished for contempt in failing to obey the mandate of the court to appear and submit to such examination, and ordering that service of this order upon the defendant or his attorney on or before December 4, 1895, should be sufficient. This order and the papers on which it was made were served personally on the defendant’s attorneys in New York City, December 8,1895, by delivering to and leaving with -them copies thereof, and at the same time showing them the signature of the judge to the original order. Upon the return of this order to show cause, after hearing the attorney for the respective parties, an order was made denying.the motion, and from such order this appeal is taken.
    Edward C. Perkins, for app’lt; Brigham & Baylis, for resp’t.
   WILLIAMS, J.

—The original order for examination was served personally upon the defendant within the -state. The court thereupon accquired jurisdiction of the defendant in this particular proceeding, as it already had jurisdiction of him in the action generlly. Tli: proceeding in his examination was a proceeding in the action. The original order, in legal effect, required the defendant to appear and submit to examination as a witness, not only on the day fixed in the order, but on such other days as the court or judge should by adjournment or otherwise direct. The examination of the defendant was never had, because, on his application, the original order was vacated by the judge before whom the proceeding was then pending. Having accomplished this result, the defendant left the state, went beyond the jurisdiction of -the court and judges, and has never since returned.. The reversal by the general term of the order vacating the original order for examination restored such original order, and it thereupon became binding upon the defendant, and his duty was to obey it. It was not 'necessary that the order of the general term fixing a time for the execution of the original order requiring the defendant lo appear and be examined should be personally served upon him within the state in order to have jurisdiction of his person for the purpose of punishing him for contempt. Jurisdiction had already been acquired in the proceeding, and was not lost by the vacating of an order on the application of the defendant. The proceeding was merely suspended pending-the appeal, and until the decision of the general term. The general term order, in effect, merely fixed a new time for him to comply -with the order originally made. Of that new time he had notice, and that was all that was needful. Upon learning that the original order was reinstated, and that the court required his presence thereunder upon a given day, it was his duty to present himself upon that given day, and submit to examination. To hold otherwise would be to ignore the substantial requirement of the original order, and to treat the time incident as its crucial mandate. Upon such a narrow construction of the time direction, every adjournment would have to be personally served, and the failure -to effect such service upon a single occasion would nulify the entire proceedings. We cannot, therefore, follow the extreme rule laid down in McCaulay v. Palmer, 40 Hun, 38. We quite agree that, to punish a party for contempt, the order which was disobeyed .must have been personlly served upon him. But that here was the original order, not the order of reinstatement. The latter was simply a judicial dilution to continue obedience to the original reinstated order; and the contempt consisted of failure to obey such original and reinstated order after notice of this judicial direction, as prescribed by the general term.

Hor was it necessary that the order to show cause why the defendant should not be punished for contempt should be personally served on the defendant within the state. It was properly served on his attorneys. Pitt v. Davison, 37 N. Y. 235; Zimmerman v. Zimmerman, 14 N. Y. Supp. 444.

The order appealed from should be reversed, with $10 costs and disbursements, and the motion remitted to the special term, to be heard upon the merits, when the court can give the defendant such time to appear and submit to examination as may be deemed reasonable under the circumstances.

All concur.


text:
    Marie Hatterman, by Guardian, etc., Resp’t, v. Henry Siemann et al., App’lts.

      (Supreme Court, Appellate Division, First Department,

      Filed February 7, 1896.)

    1. Pleading—Complaint—Negligence.
    A complaint for injuries from a disease contracted in washing infected clothing should allege the name and nature of disease, if known.
    2. Bill of particulars—Negligence.
    When a complaint, in such case, alleges the facts constituting such negligence and misconduct, a bill of particulars for special damages need not allege these facts.
    3. Pleading—More definite and certain.
    ' Where the complaint is not sufficiently specific as to the name, nature, character, or other description of the disease, an order requiring it to be made more definite and certain should be granted.
    Fred P. Hummel, for app’lts; John H. Whiting, for resp’ts.
   WILLIAMS, J.

—As far as the bill of particulars is concerned, we think the defendant entitled to no further relief. The complaint states with sufficient clearness that the. negligence and wrongful conduct on the part of defendants complained of consisted of their delivering to plaintiff, and directing her to wash and launder, the underclothing impregnated with the disease, she being ignorant of its condition. As to the name, nature, character, or other description of the disease, we think the complaint is not sufficiently specific, and that the order should have required it to be made more definite and' certain. The complaint describes the disease as a dangerous and contagious disease, of a venereal character. This is a very general description, and may cover a variety of diseases, very different in their particular characteristics, and readily distinguishable from each other. No affidavit on the part of the plaintiff was read in opppsition to the motion, tending to show that there was any difficulty in determining what the particular nature of the disease was. She, apparently is a young woman, as she appears and sues by a guardian; and she might not, of her own knowledge, be able to state the particular name or nature of the disease; yet she alleges in her complaint that she has expended large sums of money for medical treatment, medicine, and care in endeavoring to get cured of the disease, and, as far as appears, her medical, attendant has had no difficulty in determining the particular nature of the disease, and has informed her on the subject. It may well be important for the defendants to know in advance of the j;rial what the plaintiff claims the particular name and nature o*f the disease is, in order that they may be able to meet the question on the trial as to the plaintiff’s having contracted it in the manner she claims to have done. As there does not appear to be any difficulty in plaintiff’s disclosing in her complaint the fact called for, we-think the order should have required it to done.

The order should be modified by requiring plaintiff to make her complaint more definite and certain by alleging therein the name, nature, character, or other description of the disease claimed to have been contracted by her, and, as so amended, affirmed, with costs to abide event.

All concur.