text:
    In the Matter of the Judicial Settlement of the Accounts of A. MATILDA PIFFARD and CHARLES JONES, as Executors of the Last Will and Testament of DAVID PIFFARD, Deceased.

      Will — power of a testator to provide that a bequest shall, in case of the death of the legatee before the death of the testator, go as directed in a will then or thereafter to be executed by the legatee.

    By his will, dated July 24, 1876, David Piffard directed his executors to sell all his property, real and personal, and after the payment of his debts and funeral expenses he gave and bequeathed one-fifth of the remaining proceeds to his daughter, Sarah Eyre Piffard. By a codicil dated April 34,1878, after mailing changes in the executors named in the will, and confirming it in every respect not modified by the codicil, he added: “I do hereby direct that my said daughters, Sarah Eyre Piffard and Ann Matilda Piffard, named in my said will, shall have power, by their several wills heretofore or hereafter duly made and executed, to dispose of, devise and bequeath the share of my estate devised and bequeathed to them severally in and by my said will, and to that end I direct that such share or shares shall be paid over by my said executors to the executors or trustees named in and by the several wills of my said daughters, in case of the death of them, or either of them, in my lifetime, instead of to my said daughter or daughters; but if my said daughters shall survive me, then such shares shall be paid to them severally as now provided in and by my said will.”
    By codicils, made in 1878, 1880, 1881 and 1883, in one of which reference was made to the death of his daughter, Sarah Byre PifEard, slight changes were made, the will being in all other respects in each case confirmed. Sarah Eyre Piffard died on August 26,1881, leaving a will made on August 21, 1880, by which she disposed of all her property, which will was admitted to probate, and letters testamentary were issued to the persons named by her as executors on September 30, 1881.
    David PifEard died in 1883, and his will was duly admitted to probate in that year,

      Held, that the legacy, given to Sarah Eyre Piffard, did not lapse upon her death and that it should be paid by the executors of the will of David Piffard to her executors.

      Appeal from a portion of a decree of the Surrogate’s Court of Livingston county.
    By his will, under date of July 24,1876, David Piffard directed his executors to sell all his property, real and personal, and after the payment of his debts and funeral expenses he gave and bequeathed one-fifth of the remaining proceeds to his daughter, Sarah Eyre Piffard. By a codicil of the date of April 24,1878, he made some change in the executors named in his will, which he confirmed in every respect not modified by the codicil, and added : “ I do hereby direct that my said daughters, Sarah Eyre Piffard and Ann Matilda Piffard, named in my said will, shall have power, by their several wills heretofore or hereafter duly made and executed, to dispose of, devise and bequeath the share of my estate devised and bequeathed to them severally in and by my said will, and to that end I direct that such share or shares shall be paid over by my said executors to the executors or trustees named in and by the several wills of my said daughters in case of the death of them, or either of them, in my lifetime, instead of to my said daughter or daughters; but if my said daughters shall survive me, then such shares shall be paid to them severally as now provided in and by my said will.”
    Efe made another codicil of the date of April 24,1878, by which he made a further change of executors and declared his confirmation of the previous codicil.
    On March 6, 1880, he, by codicil, made some additional changes of executors, and in all other respects confirmed his will and the two previous codicils. By another codicil of date September 7, 1881, he refers to the death of his daughter Sarah Eyre Piffard, who had before been named as one of the executors of his will, makes some slight changes affecting no question here, and ratified and confirms the will and codicils except as thereby expressly changed. And on June 3, 1882, he makes another codicil, in which he says : “ I hereby ratify and confirm my said will and the four foregoing eodicils thereto except as the same are expressly changed or modified by this codicil.” He died June 27, 1883, and his will and the codicils were admitted to probate September 3, 1883, and letters testamentary issued to the executors.
    Sarah Eyre Piffard made her will August 21,1880, by which she made disposition of all her property. She died August 26, 1881, and her will went to probate, and letters testamentary were issued to the executors by her nominated September 30, 1881.
    The executors of the will of David Piffard pi-oeeeded on the assumption that the legacy to Sarah Eyre Piffard, by reason o.f her death before that of their testator, had lapsed, and that he died intestate as to that one-fifth of his estate bequeathed to her, and made distribution of it amongst his next of kin. And upon their accounting the executors filed an account accordingly.
    This was contested. And the surrogate determined that the legacy of one-fifth to Sarah Eyre Piffard had not lapsed, but that the power of appointment was executed by her will, and that such one-fifth, amounting to $6,005.94, should be paid by the distributees receiving it to the executors of her will. Decree was entered accordingly, from which this appeal is taken by the executors of the will of David Piffard.

      John R. Strang, for the executors, appellants.

      George F. Yeoman, for the executors of Sarah Eyre Piffard, respondents.

      F. R. Wilson, for Emma Piffard, contestant and respondent.
   Bradley, J.:

The question presented is whether the legatees of the will of Sara.li Eyre Piffard are entitled to the one-fifth part of the estate of David Piffard, deceased, by virtue of the power of appointment and direction given by his will.

If their right depended upon a mere power given by his will, without any other supporting provisions, and the execution of it by her will, there might be some difficulty in supporting their claim in view of the provisions of her will, and of the fact of her decease prior to that of the donor of the power. (Jones v. Southall, 32 Beav., 31.) And a like difficulty would be apparent if the affirmative finding of intent, in fact, on her part to execute the power, were requisite to such result. But the provisions of the will of David Piffard go farther and make the will of his daughter operate as execution of the power, in the event only that he survive her, otherwise the fund goes to her as its sole beneficial legatee. And the rule of the common law requiring affirmative evidence, in a will of intent to execute by it a power of appointment for its consummation, has been abrogated by the statute which provides that “ lands embraced in a power to devise shall pass by a will purporting to convey ail the real property of the testator, unless the intent that the will shall not operate as an execution of the power, shall appear expressly or by necessary implication.” (1 R. S., 737, § 126.) The rule declared by this statute is applicable to personal as well as to real property. (Cutting v. Cutting, 86 N. Y., 522; Hutton v. Benkard, 92 id., 296.)

It is, however, contended on the part of the appellants that her intent that her will should not operate as an execution of the power does appear by necessary implication, because her death was nearly two years prior to that of her father, and by her will the intent appears to dispose by it of her property only. It is quite true that the power expressed in his will did not become effectual as such until his death, and that at the time of her decease the fund in question was no part of her property, and her will was ineffectual to vest, at that time, any right to it in her legatees.

While no greater force could be given to her will than it then had, the operation, of its provisions may have become effectual, in some future event, to afford and vest rights which were inchoate at the time of her death. If permitted to apply to personal property, the statutory term applicable to powers as such, that given by the will of David Piffard, may be treated as a general and beneficial power. (1 R. S., 732, §§ 77-79.) No person other than the donee of the power had any interest in its execution ; and there is no apparent difficulty arising out of her death prior to that of the donor in the consummation of the execution of it, through the will o'f the former, if the provisions of the wills of both of them are such as to fairly require that result. This situation renders the consideration of the purpose of the father, as found in his will, somewhat important. He evidently intended to dispose of all his property by his will, and his purpose in that respect should be effectuated if circumstances permit. ( Vernon v. Vernon, 53 N. Y., 351.)

The situation which he had in view, to give effect to the execution of the power, was his survival of the donee of the power, and in that event only, he directed the payment of the fund (the one-fifth of the proceeds of his estate) to the executors of her will. Such direction is, in that event, unqualified by any provision of his will, but it may be deemed dependent upon the sufficiency of the provisions of the will of his daughter to dispose of the fund.

This right of execution of the power and disposition of the fund was not confined to a testamentary instrument made after that of the donor, by which the power was created, but he expressly gave the effect of execution of the power to the will of the donee, if it had been before then made. It would, therefore, seem that the execution of the power was not by him made dependent upon the actual intent in fact of the donee at the time of making her will, but only on the sufficiency of its provisions to carry the fund and permit her executors to dispose of or distribute it.

Miss Piffard disposed of all her property, by the terms of her will, and the words “ my property,” which she used in the will, cannot fairly be treated as words of limitation to property, the title to which was vested in her at the time of her decease, but embraced all property which she then or in any future event had the right to dispose of by her will pursuant to any power devolved upon her. (1 R. S., 737, § 126 ; Hutton v. Benkard, 92 N. Y., 295-301.) As the inquiry proceeds it is seen that after the death of the donee, and again eight months after her will was admitted to probate, the donor of the power, by further codicils to his will, distinctly ratified and confirmed the provisions of his will, giving the power of appointment and the direction to pay the fund to the executors of her will. lie thus continues to speak not only from the time those provisions were inserted in his will, but speaks also as of the time of the execution of the codicils. (Brown v. Clarke, 77 N. Y., 369-375.) And while they do not have the effect to add any force to the provisions of the will as before made, the confirmatory declarations in the codicils, after the death of his daughter and after the probate of her will, go in support of and seem to require the conclusion that his purpose was that the fund in question should pass by her will to the legatees named in it. "Whatever views may be entertained of the intent in fact of the donee, the legal effect of the provisions of the will of David Piffard was to impress upon her will the intent on her part to execute the power and to pass the fund to her legatees. This view effectuates the apparent intent of tbe donor and, as we think, violates no rule of construction or of law.

In White v. Hicks (33 N. Y., 383; affirming S. C., 43 Barb., 64) much discussion would have been obviated if the rule of intent declared by the statute had then been treated as applicable to powers relating to personal as well as real property. No other questions seem to require consideration.

The decree should be affirmed.

Smith, P. J., and Barker, J., concurred; Haight, J., not sitting.

Decree affirmed, without costs.


source: Caselaw Access Project

author: Bradley, J.:

license: Public Domain

text:
    JOHN CHADWICK, Appellant, v. DECIMUS R. BURROWS and Others, Respondents.

      Eight of one partner to transfer firm, property, in consideration of an agreement by the purchaser to pay a certain percentage upon the firm debts— when it will be sustained as against objecting creditors — a condition that the amount to be paid shall be received in full of the debt would invalidate it.

    The firm of Burrows & Lane having become insolvent, and Lane having absconded, a meeting of their creditors was held at which the property and liabilities of the firm were examined and ascertained. Upon the recommendation of all the creditors, except the plaintiff, the defendant Burrows executed an assignment of all the firm property to the defendant Potts, and in consideration thereof the said .Potts agreed to pay each of the creditors of the said firm forty per cent of the indebtedness of each creditor in full for such debt, and to accept the said assignment in full of his own claim, amounting to over $18,000. Potts subsequently paid to each creditor forty per cent of his claim according to the agreement, except that he did not pay the plaintiff for the reason that he would not receive it.
    The plaintiff having recovered a judgment, and issued an execution thereon, which was returned unsatisfied, brought this action, in which he claimed that the sale was fraudulent as against the creditors of the firm.

      Held, that the legal effect of the sale of the firm property to Potts, in view of the purpose and consideration, was not such as to charge the parties to it with the intent to hinder and delay the plaintiff in the collection of his debt, and thus render it fraudulent as against him.
    That the provision of the agreement, to the effect that Potts should pay " to each of the creditors of the said firm of Burrows & Lane forty per cent of the indebtedness of each creditor in full of such debt," was to be construed as applicable only to those creditors who consented to adopt the same and be bound thereby, and that any creditor who did not agree to be bound thereby was entitled to collect from Fotts forty per cent of tlie amount of liis claim, to be applied in satisfaction thereof to that extent and no further.
    12 seems, that if the right of the creditors to receive the amounts specified in the assignment had been made to depend upon the condition that they should discharge the entire debt due to them on receipt of the prescribed rate of forty per cent of their respective demands, it would have been held to be a stipulation for the advantage of the assignor which would have rendered the assignment invalid.
    That as the complaint contained allegations which would have permitted the Special Term to treat the case as within the statute, providing for creditors’ actions not resting upon fraudulent dispositions of property, and to grant the appropriate relief, the judgment should be so modified as to direct the payment by the defendant Potts to the plaintifE of the forty per cent, the purchase-price of the firm property, which he undertook to pay on account of the debt due to -the plaintiff.
    Appeal from a judgment, entered on tbe decision of the Niagara Special Term, dismissing the complaint on the merits.
    Decimus R. Burrows and Calvin G-. Lane were partners, carrying on the lumbering business at Tonawanda, N. Y., in the firm name ■of Burrows & Lane. The justice before whom the action was tried found, among other things, as follows: “ That the defendant Burrows and said Calvin G. Lane Were engaged in a general lumber business at Tonawanda, and that shortly prior to December 18, 1873, said Lane absconded from this State. The affairs of said firm being in an embarrassed condition, a meeting of the creditors of the said firm was called, and upon the recommendation of said creditors, all of them joining therein except this plaintiff, the said defendant Decimus R. Burrows, in behalf of his firm, made and executed an assignment of all the firm property, being the same property mentioned and described in the complaint in this action, to the defendant John E. Potts, and, in consideration thereof, the defendant John E. Potts agreed to pay each of the creditors of the said firm of Burrows & Lane forty per cent of the indebtedness of each creditor in full for such debt, and that he agreed to accept said assignment in full of his own claim, amounting to over $18,000; and that said John E. Potts did subsequently pay each of said creditors forty per cent of his claim, according to his said agreement to do so, except that he did npt pay this plaintiff forty per cent of his claim, for the reason that he would not receive it, and that this assignment, so made by said Decimus R. Burrows, on behalf of the firm of Burrows & Lane, to the defendant John E. Potts, was not made with the intent to hinder, delay or defraud the creditors of the said -firm of Burrows & Lane, nor any one of them, nor was it accepted by the defendant John E. Potts with such intent or purpose.”
    The plaintiff proceeded to judgment on his claim, and execution thereon having been returned unsatisfied, he, by this action, charges that such sale, and the sales of other property by Burrows individually to Potts, were fraudulent as against creditors. Also, that the defendant Potts has other property, etc., in his hands belonging to the firm, etc. Lane and George W. Sherman were named as defendants. The former was not served, and both he and Sherman afterwards died, and the action proceeded against the appellants only.

      A. K. Potter, for the appellant.

      Oeo. Wing, for the respondents.
   Bradley, J.:

The action is in the nature of a creditor’s bill to set aside the sales made by the firm of Burrows & Lane, and by Burrows to the defendant Potts, upon the charge that they were fraudulent as against the plaintiff, a creditor of the firm.

The trial court found and determined that the allegations of fraud were not supported and dismissed the complaint. The value of.the property of the firm transferred to Potts is not, nor is the amount of its ‘liabilities, found by the court. The evidence on those subjects was mainly that of the. plaintiff, and, in view of his relation to the action, it did not conclusively establish the facts to which he testified. The court was not requested to find on those propositions of fact; and, inasmuch as no finding was made in those respects, no question of the comparative amount in value of the property and of the liabilities of the firm is presented on this review to the prejudice of the result given by the decision of the trial court.

The inquiry, therefore, arises whether the legal effect of the sale of the firm property to Potts, in view of the purpose and consideration, was such as to charge the parties to it with the intent to hinder and delay the plaintiff in the collection of his debí, and thus render it fraudulent as against him. The one member of the firm had the right to sell the partnership property and apply the avails on the debts of the firm. (Mabbett v. White, 12 N. Y., 442; Graser v. Stellwagen, 25 id., 315.) The sale to Potts was absolute in terms. There was no reservation in the property or proceeds to inure to the benefit of the debtor firms in any event, other than that derived from the payment by Potts upon its debts, in performance of the consideration of the sale to Inin, unless an advantage may be found to have been reserved in the fact, as found by the court, that Potts “agreed to pay each of the creditors of the said firm of Burrows & Lane forty per cent of the indebtedness of each creditor in full of such debt.” If an assignment had been made to him, in trust for the creditors, and it had required them to satisfy their claims as a condition of receiving respectively stated sums, less than the full amount of their debts, the instrument would have been fraudulent and void, as against any creditors who had not consented to such a disposition of property. (Hyslop v. Clarke, 14 Johns., 458; Grover v. Wakeman, 11 Wend., 187; Armstrong v. Byrne, 1 Edw. Ch., 79 ; Spaulding v. Strang, 37 N. Y., 139.) The validity of an assignment, in trust for the benefit of creditors, requires that the assignor part with all control over the property assigned, and that it be unqualifiedly devoted to the payment of his debts, without any reservation for his own advantage. This is the condition on which lie is permitted to withdraw it from the ordinary process of the law. Although the sale here was in terms absolute, it was made under an arrangement that the vendee should apply the purchase-price upon the debts of. the vendors, and if such application was by the agreement, without the consent of the creditors, made to depend upon the condition that the creditors should discharge the entire debts due them on receipt of the prescribed rate of forty per cent of their respective amounts, it would seem to be a stipulation for the advantage of the vendor in the agreement of sale, which might not legally be sanctioned. The debtor firm was at liberty to sell its property for an'adequate consideration, and direct the payment of the purchase-money on a portion only of the debts, and in that manner give a preference to creditors. The consideration to be paid for the property here was the amount of the particular percentage of all the debts to be paid by the purchaser to the creditors. So far the agreement was valid. And so far as the agreement to pay that amount in full satisfaction of the debts applied to those creditors who had consented to such arrangement, it was also valid.

In view of the circumstances a fair construction of the agreement makes it in that respect applicable only to those creditors who, by their consent, adopted it. It certainly would not affect or apply to any others. This arrangement was brought about at a meeting of nearly all of the creditors, and made pursuant to their request. They were willing to take forty per cent in satisfaction of their claims. It was in view of the arrangement by and with them that the sale' and purchase were made. And Burrows was probably induced to make the transfer by reason of the understanding thus made with such creditors, so far as they could do it, that the firm property should go in satisfaction of the partnership liabilities. The title passed to Potts, and he assumed the obligation to pay for it by paying to all the creditors pro rata, a sum equal to such percentage of their debts against the firm. This would seem to give to the plaintiff the right to the stipulated rate to apply on his claim without any undertaking on his part to discharge the residue of his demand.

The expectation (if it existed) of Burrows that the discharge of all the debts could be produced by such payments, and the arrangement in that respect in the agreement of sale, could not affect the liability of Potts to make the payments which he undertook to make.

The evidence tends to prove that the creditors or some of them, who received such amount, assigned their claims to Potts. This evidently was done to carry out such arrangement to discharge the debts. The defendant Potts was not a trustee, and the payments required of him were not m&de in the execution of a power, but in the performance of an original obligation to pay his own debt created by his purchase. This liability of Potts was property within the reach of the several creditors to the extent of their rights, respectively, to appropriate it to the payment of their claims, and is distinguished from a power arising out of a trust, in its legal effect as against the creditors of the' vendor, if free from fraud in fact. The finding of the trial court that the sale and purchase of the firm property, and the conveyance by Burrows to Potts of the Canada property, and his interest in the house and lot at Tonawanda, were without any intent to hinder, delay or defraud the creditors of the firm, seems to be supported. The view thus taken here leads to the conclusion that the disposition, made of the case in that respect at Special Term was not error. But the rights of the plaintiff may properly be settled by the judgment in this action, and they should be, in view of the difficulty which may otherwise arise elsewhere, so as to declare his right to the pro rata sum of the proceeds of the sale of the firm property, by way of the abatement to that extent of the amount of his claim. The matter of the construction, before mentioned as to him, of the agreement and purchase and for the payment to the creditors, may not be so clear as to obviate discussion, but his right as a creditor to that portion of the purchase-money (as it remains unpaid), whether pursuant to the agreement to pay him forty per cent, or as a fund arising out of liability to pay for firm property purchased, seems clear.

The complaint contains allegations which would have permitted the Special Term to treat the case as within the statute providing for creditors’ actions not resting in fraudulent disposition of property as well as the common law creditors’ action founded upon the latter, and the court may have given such relief. (Code Civil Pro., § 1871.) This has taken the place of 2 Revised Statutes (173, § 38), and it is very likely that this relief would have been given if the attention of the court had- been specifically called to it, which the record does not show was in any manner done.

The judgment should be so modified as to direct the payment by the defendant Potts to the plaintiff of the portion of the purchase-price of the firm property which he undertook to pay on account of the debt due to the plaintiff, that is to say, forty per cent of such debt, to be applied in abatement thereof to the extent only of such payment, and as so modified affirmed, without costs to any party.

Smith, P. J., Barker and Haight, JJ., concurred.

Judgment modified so as to direct the payment by the defendant Potts to the plaintiff of the portion of the purchase-price of the firm property which he undertook to pay on account of the debt due the plaintiff, that is, forty per cent of such debt, to be applied in abatement of such debt to the extent of such payment only, and further modified by striking out the award of costs to the defendant, and as so modified affirmed, without costs of this appeal to either party.


text:
    THOMAS MOORE, Respondent, v. HENRY A. TAYLOR and JOSEPH C. TONE, Appellants. SAME, Respondent, v. SAME, Appellants.

      Contract for the construction of a raibroad — right of the person, contracting icith the company, to pay claims for services filed by laborers against a second sub-contractor, and apply the same inpayment of the amount due to a first sub-contractor to whom such person has sub-let the contract — when he does not lose this right by taking an assignment of the claims filed — right to recover, as damages for a breach of a contract, profits which would have been received if the contract had been completed — such damages are not recoverable where the breach complained of is simply a failure to pay an installment of money due by the terms of the contract.

    This action was brought by the plaintiff, a sub-contractor, to recover for work done and materials furnished prior to July 25,1882, under an agreement with the defendants, who were contractors for the construction of the Ontario Belt Railway, by which the plaintiff agreed to construct certain portions of the road-bed of the railroad company, at prices specified in the contract, and which were payable in cash, bonds and stock of the company in the proportion and at the times therein provided. The referee, before whom the action was tried, found that for the work done and materials furnished by the plaintiff under the agreement, prior to July 25,1882, he was entitled to recover the sum of $12,854, for which sum and interest thereon he directed a judgment.
    The referee also found that the plaintiff sub-let the work of construction to Moore & Sullivan, who entered upon the performance of the work; that in the latter part of July the laborers on the work became clamorous for their pay and insubordinate, refusing to work longer unless paid, and that they did quit on or before July twenty-ninth ; that Moore & Sullivan, with the plaintiff’s assent, on that day requested the defendants to pay the men or to furnish the money for that purpose, and proposed to give them security that the money should be paid to the laborers in case they furnished it; that after the defendants had refused to do this, the plaintiff made a demand on the defendants that payment be made to him.
    That on that day, and during several following days, the defendants procured a large number of the laborers to make and file their claims for unpaid services against the railroad company, amounting in all to about $6,940.10, under chapter 669 of 1871, and after the notices of such claims were handed to the person on whom the service was intended to be made, the claims were assigned to the defendants by the laborers, and the defendants paid to them respectively the amounts of their claims ; that none of these claims have been enforced, and no attempt has been made to collect them by action against the company, but that the defendants still hold them as assignees ; that these claims are or purport to be against Moore & Sullivan, and not the plaintiff.

      Held, that as it was admitted that the defendants entered' into a contract with the company for the construction of the road, the property of the company could be charged on default of the contractors, or sub-contractors, to pay the laborers.
    That as the company would be entitled to compel the defendants to reimburse it for any amount which it might be compelled to pay on account of such claims, the defendants had such an interest in seeing that such claims were paid by their immediate, or any subsequent, sub contractors, as required the payment so made by them to be treated as made for the plaintiff, and authorized the defendants to apply the amount thereof upon their indebtedness to him.
    That, in view of all the circumstances of the case, the taking of the assignments of the claims by the defendants could not be treated as an obstacle to the application of the amount of them in reduction of the recovery for the work done, on account of which the money was advanced.
    In a second action tried before the same referee, brought to recover for woik done after July twenty-fifth, and damages for a breach of the contract on the partof the defendants, the referee found that after August 1,1882, the plaintiff demanded of the defendant the payment of the money and bonds due him on the contract, and that they refused to pay the same, or any part thereof, except the sum of $6,000, whch they offered to pay to the plaintiff on his agreeing that it should be paid, under their direction, to the laborers; that the apportional payments provided for in the contract were intended by the parties to put the plaintiff in funds to pay his laborers and the expenses of doing said work and, therefore, became a very essential partof the contract; that on or about August twelfth the plaintiff abandoned the construction of the railroad, for the reason that the defendants refused to perform their part of said contract, in refusing to pay the said cash and bonds due on August first for work done up to July twenty-fifth, thus depriving him of the means to pay off his laborers and induce them to. continue the work; that the plaintiff was entitled to recover whatever damages he had sustained by reason of the defendants’ breach of the contract in the particulars stated.
    The referee allowed as damages the remainder obtained by deducting from the sum of the amount to be paid in cash the par value of the bonds and stock to be delivered and ten per cent of these amounts added thereto, the amount of the payments made and the estimated cost of completing the work.

      Held, that a claim made by the defendants that a right reserved by the contract— to the effect that in the event they should for any reason fail to continue the work and should notify the plaintiff to suspend or cease operations, a measurement should be made of and payment be made for the work done at specified rates — operated to defeat the right of the plaintiff to recover damages, or to claim anything otherwise than what was provided for as compensation by the contract, could not be sustained, as tlie facts proved did not bring the case witbin tbis provision of tbe contract.
    That it was error to allow tbe plaintiff to recover, as damages: tbe prospective profits wbicb tbe completion of tbe performance of bis contract would bave given bim.
    Tbe right to such relief does not arise out of every breach of a contract for the performance of services, but is dependent upon that wbicb operates as a denial of the right to proceed and complete tbe work contracted for.
    Mere default in payment of an installment, when it becomes due, is not a denial of the right of the contractor to continue in tbe performance of tbe services; and although it will permit bim to abandon tbe work and recover for what has already been done under it, it will not enable bim to recover tbe damages wbicb tbe law would give in case of a refusal to let bim proceed in the performance of tbe contract.
    - Appeals from judgments, entered upon the reports of a referee.
    On June 7, 1882, the defendants, being contractors with the Ontario Belt Railway for the construction of its road, entered into an agreement with the plaintiff by which the plaintiff agreed to do the work of graduation, bridging, masonry, track-laying, track-surfacing and distribution of ties, on the Rochester and Ontario Belt Railway, commencing at station (0), on the bluff of the Genesee river; thence on pleasure line to about station 67, at junction with the permanent line at station'380; thence along it to about station 616, at the shore of Lake Ontario; and in addition three sidings, aggregating about 2,600 feet of track, switches and frogs, and a branch of about 4,000 feet; the surfacing and track-laying in all about seven miles; the clearing and grubbing estimated about five acres; earth assumed to amount to 81,000 yards; rock, 1,000 yards; bridging, 30,000 feet, board measure; masonry, 200 cubic yards. The prices: earth, per cubic yard, twenty-five cents cash, five cents in bonds and five cents in stock; rock, per cubic yard, one dollar and twenty cents cash, five cents in bonds and five cents in stock; trestle bridging, per 1,000 feet, board measure, fifty dollars in cash, two dollars in bonds and two dollars in stock ; dry masonry, per cubic yard, two dollars and fifty cents cash, fifty cents in bonds and fifty cents in stock; track-laying, per mile, $250 cash, ten dollars in bonds and ten dollars in stock; track and sidings surfacing, $400 cash, twenty dollars in bonds and twenty dollars in stock; switches and frogs laid, each couple, $100 cash, five dollars in bonds and five dollars in stock; clearing and grubbing, per acre, forty dollars cash, three dollars in bonds and thi’ee dollars in stock. (The bonds and stock to be taken at seventy-five per cent of their par value.) Any extra work outside the agreement to be paid for monthly, in cash, with ten per cent added for superintendence, use of men and tools. But, notwithstanding these estimates and rates, the “ bulk-price ” to be paid to the plaintiff for the work is $28,500 cash, $4,500 in bonds and $4,500 in stock, at seventy-five per cent of their par value, equaling $6,000 of each, at par value. Payments to be made on account of the work as often as every two weeks, and payment of cash and bonds on or before August 1, 1882, for the total work done up to July twenty-fifth, and final payment in cash, bonds and stock, found to be due, within five days after the completion of the work. In the event that the defendants should fail to continue the work, and should notify the plaintiff to suspend operations, it was provided that the latter should be paid certain specified rates for the work done up to that time, and in addition, as liquidated damages, $1,000, if he shall not then have excavated as much as 20,000 yards of material, and $500 if he shall then have excavated more than 20,000 yards. And if it shall be determined to construct only the railroad from the junction at station three hundred and eighty from main line, and to abandon the pleasure line construction, from station O to station sixty-seven, the total payments shall be reduced by four thousand dollars cash, one thousand dollars bonds, at par, and one thousand dollars stock, at par, making the total payment under the contract aggregate twenty-four thousand five hundred dollars cash, five thousand dollars bonds, at par, and five thousand dollars stock, at par.
    The plaintiff entered upon the performance of the contract and continued the work until about the 1st day of August, 1882, when he substantially ceased and shortly thereafter abandoned the work uncompleted.
    The action number one was commenced August 4, 1882, to recover for work done up to July 25, 1882, and the plaintiff recovered $12,854 and interest, making together $14,897.78.
    Action number two was brought August 17, 1882, and the recovery was $15,988.37, and interest $2,512.73, making $18,501.10. This was made up of some work found to have been done after July twenty-fifth, and damages for breach, on the part of the defendant, of the contract; the larger part of the amount of the recovery was for such damages.
    The referee found that up to July 25, 1882, the work done and materials furnished under-the contract were :
    43,000 yards earth excavation, 142 yards rock excavation, one-tenth mile track laid, eight acres cleared and grubbed, thirty yards dry masonry,
    25,300 feet timber, extra work................ $2,727 27
    And ten per cent added......................... 272 73
    Making altogether, at the contract prices....... $17,854 00
    And deducting payment made J uly 10, 1882........ 5,000 00
    Leaves balance of.......................... $12,854 00
    Which, with interest from August 5,1882.......... 2,043 78
    Makes.................................... $14,897 78
    For which he directed judgment in action number one. That the whole amount of work done and material furnished by the plaintiff under the contact were 46,754 yards of earth excavation, one-twentieth mile of track surfacing, and extra work $3,947.60, and in other respects the amount of work was not increased any after the twenty-fifth of July, thus producing, subsequent to that date, 46,704 — 43,000 = 3,704 yards earth excavation; one-twentieth mile of surfacing, and extra work $3,947,60 — $2,727.27=$ 1,220.33, to which add ten per cent, $122.03.
    The referee also found that after the 1st day of August, 1882, the plaintiff demanded of the defendants the payment of the money and bonds due him on the contract and they “ refused to pay the same, or any part thereof,-except the sum of six thousand dollars, which the defendants offered to pay to plaintiff on condition that plaintiff would sign a receipt therefor embodying a condition that said six thousand dollars should be paid out under the direction of the defendants to the laborers for work they had done on said, road as shown by said pay-roll, which plaintiff refused to sign and defendants refused to pay.” That the apportional payments provided for in the contract “ were intended by the parties to put the plaintiff in funds to pay his laborers and expenses of doing said work, and, therefore, became a very essential part of the contract.” That on or about the 12th day of August, 1882, the plaintiff abandoned the construction of the railroad and the further work necessary to complete it, “ for the reason that the defendants refused to perform their part of said contract in refusingto pay the said cash and bonds due on the 1st day of August, .1882, for work done up to July 25, 1882, * * * thus depriving him of the means to pay off his laborers and procure their continuance at work.” And as matter of law the referee determined that the refusal of the defendants to make such payment was a violation and breach of the contract, “which absolved the plaintiff from further continuing ” the work under the contract, and that the plaintiff has the “ right to recover whatever damages he has sustained by reason of defendants’ breach of said contract in the particular stated.”
    The referee found that the expense of completing the work, as the plaintiff left it, was $8,000, and proceeds to make the statement ' that the full price to be paid is:
    Cash.................. $28,500 00
    In bonds, $4,500; in stock, $4,500................. 9,000 00
    Extra work, with ten per cent added............... 4,342 37
    Making.................................... $41,842 37

    And deducting amount recovered in action
    number one........................ $12,854 00
    The payment made July 10, 1882....... 5, 000 00
    The cost of completion of the work..... 8,000 00
    --- 25, 854 00
    Leaving a balance of........................ $15,988 37

    And concluded that the plaintiff is entitled to recover in action number two that sum, with interest added, making $18,501.10. The defendants excepted to the several conclusions of fact and law of the referee and appealed.

      McdVaughton 06 Olmsted and Frank R. Lawrence, for the appellants.

      J db Q. Van Voorhis, for the respondent.
   Bradley, J.:

There was some controversy on the trial in respect to the quantity of work performed under the contract. The accuracy of the estimates presented by the evidence of the respective parties was the subject of fair criticism. Those furnished on the part of the plaintiff were made without measurements, and those on the part of the defendants were estimates aided by partial measurements only. Thus was presented an apparent conflict in the evidence. No actual measurements or estimates were made by the defendants or their engineers, or those of the railway company prior to August first, of the work done up to July twenty-fifth, and there is some evidence tending to prove that then and thereafter there were difficulties in the way of making accurate measurements or estimates of the work done, occasioned by various causes, for which the plaintiff was not responsible, and that the measurements made on the part of the defendants and estimates founded upon them were not necessarily accura'e ; that the plaintiff himself and another engaged in the work were civil engineers, and that they made estimates with knowledge and observation of the work as it progressed. The estimates, so made by them were sufficient in extent to cover the amount of work found by the referee. The evidence, as a whole, in this respect presented a question of fact, and we cannot say, in the light in which he was permitted to view the evidence as it was adduced, that his finding is so against the weight of evidence as to justify the disturbance of his finding. We think his conclusion, as to the quantity of work done, was permitted by the evidence.

There is not a very clearly defined division of the work into that, done before and that done after the 25th July, 1882, but there is some evidence on the subject, which enabled the referee to make the severance and to support his conclusion in that respect.

The defendants allege the abandonment by the plaintiff of the work which he undertook to perform under the contract, and that a large number of persons gave notice to the railway company of their claims for labor done, and filed liens against the company for materials furnished and used in the work of construction under the contract in question ; that the defendants paid such claims, amounting to $6,910.10, and took assignments. They sought to charge the amounts so paid against the plaintiff as counter-claims. The referee did not allow to the defendants the sums so paid, but found that the plaintiff sub-let the work of construction, except the trestle bridge and the pile bridge work, to Moore & Sullivan, who entered upon the performance of the work; that in the latter part of July the laborers on the work became clamorous for their pay and insubordinate, refusing to work longer unless paid, and that they did quit on or before July twenty-ninth; that Moore & Sullivan, with plaintiff’s assent, on that day requested the defendants to pay the men, or to furnish the money for that purpose, and proposed to give the defendants security that the money should be paid to the laborers in case they furnished it, which the defendants refused to do, after which the plaintiff made the demand that payment be made to him ; that on July twenty-ninth, and during several following days, the defendants procured a large number of the laborers to make and file their claims for unpaid services against the railroad company, amounting in all to about $6,9J0.10, under chapter 669 of Laws of 1871, and after the notices of such claims were handed to the person on whom the service was intended, the claims were assigned to the defendants by the laborers, and the defendants paid to them, respectively, the amounts of their claims; that none of these claims have been enforced, and no attempt has been made to collect them by action against the company, but that the defendants still hold them, as assignees; that these claims are, or purport to be, against Moore & Sullivan, and not the plaintiff. And the referee determined that these alleged counter-claims were not demands against the plaintiff; that as against the railroad company they ceased to be enforceable before the answer in. this action was served; that the defendants hold them, as assignees, simply against Moore & Sullivan, and that the condition on which the defendants offered to pay the $6,000 to the plaintiff was one they had no right to require.

There was no specific contract between the railroad company and the defendants produced or proved upon the trial, but it appeared incidentally, in various ways, that they were contractors with the company for the construction of the road, and it was evidently assumed upon the trial that they had such relation to it. Their privity by contract was with the plaintiff only; and assuming that the latter had by contract snb-let a portion of the work to Moore & Sullivan, they were accountable directly to the plaintiff only for the performance of their contract, and they were primarily liable for the labor and materials obtained by and furnished to them by their request. But the work being done pursuant to a contract originally made with the railroad company, it and its property could be charged on default of the contractors, or sub-contractors, to pay the laborers, etc. (Laws of 1850, chap. 110, § 12, as amended by Laws of 1871, chap. 669, § 2; Laws 1875, chap. 392; Laws 1870, chap. 529.) And in the event the company should be required to pay such claims, it might require reimbursement from the party with whom it had contracted to do the work out of which they arose. As a consequence the party taking such contract would have an interest in seeing to it that such claims were paid by his immediate or any subsequent sub-contractor. And the obligation is implied, if not expressed, that such succeeding contractor will protect the party from whom he takes such relation by contract to perform the work, or any part of it, embraced in the original contract with the company, agains't such claims and liabilities by him incurred. The defendants seem to have been apprehensive that the money might not be applied in payment of the claims of the character before mentioned and, therefore, required assurance that it should be so appropriated. The plaintiff was unwilling- to give a receipt for the money containing such a condition, and the $6,000 which the defendants were then ready to pay was withheld from the plaintiff and defendants proceeded to pay the laborers. In aid of this Moore & Sullivan furnished to the defendants’ agent the pay-roll, and Sullivan advised such agent that he had sent word to their timekeeper to meet him at a place named so that payment could be made to the men, and such was the place where the men were paid ; and the referee has found that Moore & Sullivan, with plaintiff’s assent, requested the defendants to pay the men or to furnish the money for such purpose. By making such payment, with the assent of the plaintiff and Moore & Sullivan, the liability to them to that extent of the plaintiff would be discharged and the payment would be deemed made by the defendants for the plaintiff; and in that view there might be no difficulty in charging the latter with the amount if the defendants had not taken assignments of the claims for which they advanced the money to pay. By reason of taking such assignments it is contended that Moore & Sullivan remain liable to the defendants upon the claims, and, therefore, they cannot be asserted in this action against the plaintiff, treating the primary liability as that of Moore & Sullivan, only, to the men ; that is so, unless the peculiar situation and relation of the parties and the right of the claimants to charge the company, and that of the latter to seek reimbursement from the defendants, may be considered and given effect to afford the relief sought by them here.

The proceeding attending the act of payment, of having notices served upon the engineer of the company under the statute, and taking assignments, was evidently taken as a matter of precaution, so that the payments might be deemed as made to discharge the company and its property from a liability to pay, and thus protect themselves from liability to it. And while the apparent effect of the assignments was to vest in the defendants the title to the claims as against the parties primarily and personally liable to pay them, the purpose evidently was to take such title only as a means of making more effectual their purpose to apply the moneys, so advanced, upon the amount of compensation which they, by their contract, had agreed to pay the plaintiff for the work of construction of the railroad, and not with any view to create a liability of any other party to them for the amount so paid. They in this may have done, and probably did do, more than was necessary to put themselves in a position to charge the plaintiff with the payment so made, although the question of voluntary payment otherwise might have been raised. (Senear v. Woods, 74 N. Y., 615.) The question presented here is not without some difficulty, but we think these payments should, and may, be allowed to the defendants in this action number one. Proceedings were taken to charge the company, and it is not important what the inducement was to cause it, if it was legally done. This afforded to the defendants the right to step in and protect themselves by relieving the company. If they had not done this the right of the company would arise to pay and seek relief from the defendants and they, in turn, to charge the plaintiff, and if Moore & Sullivan, as his subcontractors, were first liable to pay, he could require allowance by, or reimbursement from, them to him. This circuity of action could result in no advantage to any party, and would, in practical effect, finally accomplish the application o 1 the amount involved, upon and in payment to that extent of the contracted compensation for the work. By charging this against the plaintiff he is relieved from so much of his liability to Moore & Sullivan, for their work. The taking the assignment, if an excessive act, was deemed a precautionary one to protect the defendants in making the payments, and, in view of the circumstances, cannot well be treated as an obstacle to the application of the amount of them in reduction of the recovery for the work done on account of which the money was advanced. The fact (if so) that because no action was commenced against the company to recover the claims, the right to do so was barred before the defendants answered in this action, is not important. The payment was made to relieve the company when the right to charge it existed, and after the preliminary steps had been taken which might result in that effect. The defendants had no right to maintain any action against the company on account of such claims. As between it and them, the primary liability was with' the defendants, and as to the company, the workmen were deemed paid by this act of the defendants, in any view that could be taken of the assignments.

This action is brought upon the contract between the plaintiff and defendants to recover for this work, and as between them it was deemed done by the plaintiff in performance of such contract. It was on account of this work that such payments were made, and they were made with the consent of Moore & Sullivan, who were in some manner acting through or under the plaintiff in the per-3’ormance of the contract between the latter and the defendants. We think the amount of these payments so made by the defendants properly should and can be allowed to the defendants by way of abatement of the plaintiff’s recovery.

The evidence about fares, etc., of the men, said to have been paid, by Moore & Sullivan, is somewhat indefinite. Nothing appeared on the' pay-rolls in that respect. They say they informed’the defendants’ agent that deduction should be made on that account from the moneys earned by the laborers, which he denies. Moore & Sullivan, knowing that the defendants were pi’oceeding to pay the men, and consenting to it, gave no information to enable them to make such deduction or to attempt to do it. And it does not appear that any arrangement had been made with the men by which they had become chargeable with any amount paid for their fares, etc. And Charles K. Moore adds to the effect that they intended to deduct out of the.last payment; that if they did it before then it would have created some disturbance, and that he did not know that this was io be the last pay-roll. There is no finding on this subject, and in view of the evidence we are unable to determine that the defendants were required to make the deduction at the time of payment, or'that they paid the men more than they were required to pay to discharge their claims for the work they had done. The correctness in the amount of the claims so paid is not questioned.

It is contended on the part of the defendants that the plain,tiff, without cause, abandoned the work before full performance of his contract, and that such fact should go in defense of action number one, as the provision of the contract for intermediate payments must be deemed conditional and dependent upon its complete performance. It is true that the agreement to pay in installments from time to time as the work progressed, rates of prices for it founded upon estimates was so far conditional that the payments should not exceed in amount the bulk price to be paid for the entire work, yet, inside of that, the plaintiff had the right to recover the installments provided for on performance, to the time and extent required by the contract, to enable him to demand payment of them, subject only to the right of the defendants to allege and establish, by way of abatement, such damages as they may have sustained by any subsequent breach of the contract on his part, which is the extent of the defense that could be made, founded upon such alleged abandonment. (Sickels v. Pattison, 14 Wend., 257; Snook v. Fries, 19 Barb., 313; Tipton v. Feitner, 20 N. Y., 423.) No facts are found, and none necessarily established by the evidence, which require the consideration in action number one, of the question of the alleged abandonment by the plaintiff or any further question in that • action.

But in action number two such abandonment, its cause and effect, have some importance. The referee finds, and it is assumed here, that the defendants refused to pay to the plaintiff, on the 1st day of August, 1882,'the sum lie was then entitled to demand and receive for work done up to July twenty-fifth, and that on or about the twelfth day of August the plaintiff abandoned the work for the reason that the defendants refused to pay the amount due on the first of that month.

The important question arising upon this state of facts is whether the plaintiff, in consequence of this breach of the contract, was entitled to recover, by way of damages, prospective profits or such profits as would result to him from a complete performance of the contract. The referee found that by this refusal to pay the plaintiff he was deprived of “ the means to pay off his laborers, and procure their continuance at work.” And, as conclusion of law, adds that such refusal was a violation and breach of the contract on the part of the defendants, which absolved the plaintiff from further performance; that he had the right to abandon the work and recover whatever damages he had sustained by reason of such breach, and then-proceeds to award him as such damages the difference between the contract-price and the estimated cost of the unperformed work of the contract. This was the corrrect rule for the measurement of damages if the plaintiff was, by the defendants, prevented from proceeding to complete performance, unless there was something in the contract to defeat the application of that rule. (Masterton v. The Mayor, 7 Hill., 61.) It is contended by the defendants’ counsel that the right reserved to the defendants by the provision of the contract, to the effect that in the event they should, for any reason, fail to continue the work, and should notify the plaintiff to suspend or cease operations, a measurement should be made of, and payment made for, the work done at specified rates, operated to defeat the right of the plaintiff to recover damages, or to claim anything otherwise than is provided for as compensation by the contract. That provision evidently, had reference to a suspension or discontinuance of the work by the defendants for some cause which might arise. They had no purpose to discontinue the work of construction. They urged the plaintiff to proceed, and, on his refusal to do so, they caused the work by other means to go on to completion.

The situation did not come within the provision last referred to of the contract. (Danolds v. The State, 89 N. Y., 36, 43.) The provision that in case it should be determined “to abandon the pleasure line construction, from station O to station sixty-seven, * * * the total payments shall be reduced by four thousand dollars cash, one thousand dollars bonds, at par, and one thousand dollars stock, at par, making the total payments under the contract aggregate twenty-four thousand five hundred dollars cash, five thousand dollars bonds, at par, and five thousand dollars stock, at par,” was made effectual by abandonment of construction of that branch of the line of road, as appears by the uncontradicted evidence of the plaintiff, which should, as against him, be treated as controlling the disposition of that question. If this fact had been observed and adopted by the referee, his estimation of the damages would have been $5,500 less than the amount by him awarded to the plaintiff. It appears that the case contains all the evidence which, in this court, presents the question of fact upon the evidence, although no request was made to find, and no finding made by the referee in that respect.

The more serious inquiry remains and is, whether, in any view which may be taken of the evidence, the plaintiff was permitted to recover, as damages, the prospective profits which the completion of performance by him of his contract would have given him ? The right to such relief does not arise out of every breach of a contract for the performance of services, but is dependent upon that which operates as a denial of the right to proceed to completion of the work contracted for. Mere default in payment of an installment, when it becomes due, is not a denial of the right of the contractor to continue in the performance of the service, and although it may be a breach which would permit him to abandon the work, and recover for that already done, it would not enable him to recover the damages which the law would give for refusal to let him proceed in performance of the contract.

There was no obstruction put in the way of such performance, other than the effect of the refusal to pay the installment due the first of August. The referee has found that the provision for payment, as the work progressed, “was a very essential condition,, bearing directly upon the performance of the contract by the plaintiff,” and that Moore & Sullivan were “ unable to go on with the same, in consequence solely of defendants’ refusal to pay the moneys due, according to tlieir contract.” There being nothing in the contract declaring the effect of failure to make any such payment, the question is one of the legal consequence of such default. Our attention is called to no case, yet, holding that a.breach of a stipulation to pay can be treated, in legal effect, as a denial of the right to proceed, in the performance of a contract, to perform service to completion by the other party, or as creating liability for a right to recover prospective profits, by way of damages, as a consequence. The failure to pay gives an immediate remedy, by action, to recover the stipulated amount, and this is not inconsistent with the right to continue to go forward with the work. The cause which permits the recovery of such damages rests upon a rule of law, having some degree of certainty, and is founded in the fact that the one party is prevented by the act of the other from realizing the benefit which the contract furnishes, and he is, therefore, entitled to recover the value of the stipulation, or covenant he has taken, of him who defeats such right. Such value is the amount' of profits to result from performance.

An agreement to make payment is generally an essential one, and the consequences of default in payment may, in fact, be more or less prejudicial, according to circumstances, but in. legal contemplation they are the same. The pecuniary condition and responsibility, of the parties have no bearing upon.this question. The rights at law flowing from or produced by a breach of contract arise at once from it and will support an action. If default in payment alone would afford a remedy as for exclusion from further performance, the right of action and of recovery of the entire value of the contract would immediately follow failure to pay, although it arose from mere temporary want of readiness to make payment. In this case the legal right of the plaintiff to proceed in the performance of the contract was not affected by the default of the defendants. But it is said that the defendants sought to and did embarrass the plaintiff by inciting the laborers to insist upon payment fortnightly, when otherwise they would have been content to take their pay monthly. There is no finding on that subject in this action number two to that effect, and in view of the evidence there is no occasion here for considering that question as bearing upon the proposition now under consideration. The men became insubordinate and quit work because they did not receive their pay as promptly as they desired, and this was probably occasioned by the default of the defendants, and may be attributable to a breach by them, in that respect, of the contract and as one of its consequences, as it is likely that the plaintiff was not, nor were Moore & Sullivan, prepared to pay them without receiving the funds from the defendants. But the latter early offered to furnish the money for that purpose upon the condition that it should be used to pay the men. We do not regard this as important upon the. question here in its legal aspect. The view taken of this case leads to the conclusion that the plaintiff was justified, by the breach on the part of the defendants, in abandoning the further performance of the contract, and entitled to recover for the work done. But the breach not being such as to deny to him the right and power to go forward with the work and perform, he could not recover, as damages, the value of his contract or (what may be understood to mean the same thing) prosjjective profits. There is nothing in the terms of the contract characterizing the consequence of default in payment of an installment other than such as may be implied by law. In view of the finding by the referee of the quantity of work done under the contract,

It amounted to.................................. $22)761 43

The recovery in action number one, $12,854, and payment, $5,000........................:........ 17,854 00

The balance unpaid is........................ $4 > 907 43

This result is reached by giving to the plaintiff the benefit of the payments provided by the contract to be made on the final estimate of the work when completed, in stock, for which the breach of the contract, as found by the referee, permits the allowance to the extent of the work performed. (Pinney v. Gleason, 5 Wend., 393.) This computation makes the amount awarded by the referee, as damages, $11,080.94.

If these views are correct the j'udgment in action number one should be reversed and new trial granted, costs to abide the event, unless the plaintiff stipulate to deduct from the amount of the recovery $6,940.10, and interest thereon from August 5,1882; and in that event the judgment be so modified, and as modified affirmed, without costs of this appeal to either party. And in action number two the judgment should be reversed and a new trial granted, costs to abide the event, unless the plaintiff stipulate to deduct from tlie amount of the recovery $11,080.94, and interest thereon from August 17, 1882; and in that case the judgment be so modified, and as modified affirmed, without costs of this appeal to either party.

Smith, P. J., Barker and Haight, JJ., concurred.

So ordered.


author: Haight, J.:

text:
    WILLIAM T. EATON, A. D. WHEELER and Others, Appellants, v. WALTER A. WILCOX and Others, Respondents.

      Lease of lands to be used for the purpose of boring for oil or gas — construction of covenants contained in it — when a covenant will be held void for uncertainty.

    On May 19, 1881, the defendant Foster leased to the plaintiffs fifteen acres of land, with “ the right to take, bore and mine for and gather all oil or gases found in and upon the premises, to have and to hold the same for the term of twelve years from this dato, or as long as oil is found in paying quantities,” the plaintiffs agreeing to give Foster one-eighth part of the oil produced and saved from the premises. By the lease the party of the second part (the plaintiffs) covenanted “ to commence operations for said mining purposes, and prosecute the same on some portion of the above-described premises within two years from this date, or thereafter pay to the party of the first part (Foster) dollars per until work is commenced. This lease shall he null and void, and at an end unless said second party shall, within six months from this date, commence and prosecute, with due diligence, unavoidable accidents excepted, the sinking and boring of one well on or in the vicinity of this lease, to a depth of. twelve hundred feet, unless oil in paying quantities is sooner found. * * * If the party of the second part fails to keep and perform the covenants and agreements by him to he kept and performed, then this lease shall he null and void, and surrendered to the party of the first part.”
    Within six months from the date of the lease the plaintiffs drilled a well of the required depth, natural gas being found at the depth of 1,045 feet in largo quantities, and some oil, but not in paying quantities, at 1,093 feet. The plaintiff used the gas for fuel in drilling the well, but not in any other manner. In the fall of 1882 the plaintiffs removed their engines, etc., leaving the casing in the well, and ceased to carry on mining operations.
    In February, 1884, Foster leased the premises to the defendant, Charles P. Thurston, who subsequently assigned such lease to the defendant, The Allegany Gas Company (Limited), for the same purposes, pursuant to which they entered into possession of the same and collected and sold the gas.
    In this action, brought by the plaintiffs to restrain the defendants from interfering with, or appropriating to their own use, the gas well and the gas therein, the referee lield that the suspension of work upon the premises and the neglect of the plaintiffs to prosecute the same from the spring of 1882, to the time of their demand, gave Foster the right to declare the plaintiffs’ rights under the lease forfeited, q,nd that the coinplaint should have been dismissed.

      Held, that he erred in so doing.
    That there was no covenant in the lease which required the plaintiffs to continue the boring of oil wells upon the premises until oil was obtained in paying quantities, under a penalty of forfeiting their rights by a faiure so to do.
    That the covenant requiring them to commence and prosecute operations for mining purposes within two years from the date of the lease, or thereafter pay to the party of the first part dollars per until work is commenced, was void for uncertainty, by reason of the blanks which were left in the vital and essential parts thereof.
    That the decision could not be sustained because the referee was of the impression that the lease was hard and unconscionable and that equity would not enforce the performance of it for the reason that it contained no provision for giving the lessor any part of the gas found upon the premises.
    That if a clause, providing that the lessor should have one-eighth part of the gas, had been omitted by mistake,, the contract might still be reformed so as to express the intention of the parties; that if it now expressed their intention the parlies must abide by it.
    The defendants claimed that the lease had expired by its own terms, as the provision that the lessees should “ have and hold the same for the term of twelve years from this date, or as long as oil is found in paying quantities,” limited the term to that period, during which oil was found in paying quantities.

      Held, that this claim was not well founded; that the term fixed was for twelve years, and as much longer as oil was found in paying quantities.
    Appeal from a judgment in favor o.f the defendants, entered in Allegany county upon the report of a referee.

      Hamilton Ward and Rufus Scott, for the appellants.

      Gary <& Rumsey, for the respondents.
   Haight, J.:

This action was brought to restrain the defendants from interfering with, and appropriating to their own use, a gas well and the gas therein, belonging to the plaintiffs. The referee has found, as facts, that on the 19th day of May, 1881, the defendant Harvey C. Foster leased to the plaintiffs fifteen acres of land situated in the town of "Wirt, Allegany county, “ the right to take, bore and mine for, and gather all oil or gases found in and upon the premises, to have and to hold the same for the term of twelve years from this date, or as long as oil is found in paying quantities.” In consideration whereof the plaintiffs agreed to give Foster one-eighth part of the oil produced and saved from the premises. The lease contained the following covenants: The party of the second part covenants to commence operations for said mining purposes, and prosecute the same on some portion of the above-described premises, within two years from this date, or thereafter pay to the party of the first part dollars per until work is commenced. This lease shall be null and void and at an end unless said second party shall, within six months from this date, commence and prosecute, with due diligence, unavoidable accidents excepted, the sinking and boring of one well on or in the vicinity of this lease, to a depth of twelve hundred feet, unless oil in paying quantities is sooner found. * * * If the party of the second part fails to keep and perform the covenants and agreements by him to be kept and performed, then this lease shall be null and void and surrendered to the party of the first part.” That the defendant Harvey C. Foster was the owner in fee of the premises ; that the lessees did, within six» months from the date .of the lease, commence and prosecute, with due diligence, unavoidable accidents excepted, the sinking and boring of one well on the lease to a depth of over 1,200 feet; that for that purpose they entered upon the premises, erected thereon a derrick and engine-house, and with their engine, boiler, tools and machinery placed therein by them, commenced drilling the forepart of the month of June, 1881, and first drilled to the depth of 1,093 feet, and after shutting down for about two weeks during the month of July, started up again and drilled to the depth of 1,500 feet, which depth was reached about the middle of the month of August, 1881; that drilling was then suspended and afterwards resumed, and in the winter and early spring of 1882, the well was put down 300 feet deeper, making the total depth of the well 1,800 feet, at an expense to the plaintiffs of about $3,000; that at the depth of 1,015 feet natural gas was found in large quantities, and at 1,093 feet some oil was found, not, however, in paying quantities; that the well was cased down to the rock, a depth of 285 feet, but wa3 never tubed for the purpose of obtaining oil; that the plaintiffs used the gas for fuel in drilling the last 300 feet, but did not utilize the gas in any other manner, tlie same being thereafter allowed to bum and go to waste; that the plaintiffs did not, after the spring of 1882, further prosecute operations for mining purposes on the premises or thereafter attempt to obtain oil on the premises; that in the fall of .1882 the plaintiffs removed their engines, boiler and machinery from the premises, leaving thereon their derrick and engine-house, the casing in the well and 150 feet of tubing which conducted the gas away from the well; that in tb,e fall of 1883, two or three joints cf tubing, of the length of about nineteen feet each, were taken to the well by the direction of one of the plaintiffs, but nothing was done with them there.

The referee further found, as facts, that on or about the 8th day of February, 1884, the defendant Foster, by an instrument in writing, let unto the defendant Charles P. Thurstone the premises described in the complaint, for the sole purpose of mining, drilling and excavating for petroleum, rock or carbon oil, or gas, or other valuable minerals, containing the following provision: “ It is further agreed that this instrument is subject to a lease of a part of said land made to Wilcox, Wheeler & Eaton, in case the same has not now or does not become forfeited or canceled, and if the well on said lease is used by the said party of the second part, he is to pay the party of the first part rent for the samé as if he had drilled it originally.” This lease was subsequently assigned to the defendant, the Allegany Gas Company (Limited), who subsequently entered into possession of the premises, took possession of this well and have ever since appropriated the gas therefrom, conducting it in pipes to the works of the company; that the well and gas have been and are of great value; that after the Allegany Gas Company entered into possession of the premises, the plaintiffs, on the 14th day of February, 1884, demanded of the company the right to enter the premises for the purpose of receiving their share of the gas taken from the well; that they were excluded from the well and from any share in the gas by the defendant, the Allegany Gas Company (Limited).

The referee further found, as conclusions of law, that the suspension of work upon the premises by the plaintiffs, and their neglect to prosecute the same from the spring of 1882 to the time of their demand, gave to the defendant Harvey C. Foster and his assigns the right to declare the plaintiffs’ rights under the lease forfeited; that the demise by Foster to Thurstone, and the possession so taken under his lease, operated as an election by Foster and his assigns to declare the plaintiffs’ lease forfeited for such failure, and the defendants were entitled to have the complaint dismissed* with costs.

The question thus presented depends upon the construction, which should be given to the covenants contained in the plaintiffs’' lease. Have the plaintiffs failed to keep and perform the covenants and agreements by them to be kept and performed so as to have forfeited the lease ? The referee has, as we have, seen* found, as a fact, that the covenant to commence and prosecute* with due diligence, unavoidable accidents excepted* the sinking and boring of one well on or in the vicinity of this, lease to, a. depth of 1,200 feet, unless oil in paying quantities is sooner found* within six months from the date of the lease, has been fully performed by the plaintiffs. But he takes the position in his opinion that the instrument, as a whole, is simply an oil lease, and that the phrase “ prosecute the same,” appearing in the first covenant quoted, required the plaintiffs to continue the boring of oil wells upon the premises until oil was obtained in paying quantities, and that by failing to do this they forfeited their rights under the lease. The difficulty with the learned referee’s conclusion is, that the lease is for all oil or gases found,” and that no such covenant appears in the lease. Had the lease contained such a covenant we should not hesitate to agree with him that there was a forfeiture. The covenant is not that they shall commence operations within two years and prosecute the same with diligence until oil in paying quantities is found or forfeit their rights under the lease, but it is that they shall commence operations -and prosecute the same within two years ■ from the date of the lease, or thereafter pay to the party of the first part dollars per until work is commenced (quite-a different covenant), and the referee has failed to point out any particular in which this covenant has been violated. But, again, it. will be observed that in this covenant blanks appear, constituting a. patent ambiguity which cannot even be supplied by parol evidence. The blanks appear in the vital and essential part of the covenant. They affect the entire covenant, and it consequently is void for uncer- - tainty. (2 Pars. on Cont., 557-563; The Blossburg and Corning Railroad Co. v. The Tioga Railroad Co., 1 Keyes, 486; Vandevoort v. Dewey (42 Hun, 68.)

The cases relied upon by the respondents are clearly distinguishable.

In the case of The Allegany Oil Company (Limited) v. The Bradford Oil Company (21 Hun, 26), the lease provided that pnless the lessee should commence to bore the well within the period of nine months from the date thereof, that then the lease .was to become void and cease to be of any binding effect. The lessee did not commence operations at all within the period agreed upon. The lease was, therefore, forfeited by its express provisions.

In the case of Brown v. Vandergrift (80 Pa. State, 142), the lease provided that the lessee should commence operations in sixty days and continue with due diligence, and if he should cease operations twenty days at any one time, the lessor might resume possession ; and that in case the lessee did not commence operations within the time specified he should pay thirty dollars per month until he should commence. He did not commence operations within the time, and paid four months rent, but omitted to pay for the next eleven months. After the premises had been again leased, and the lessee thereunder had entered into the possession thereof, the first lessee tendered the eleven months rent past due. It was held that the lease was forfeited.

In the case of Munroe v. Armstrong (96 Pa. State, 307), the lease was made exclusively for the purpose of producing oil. It provided that the work of boring for oil was to be commenced in ten days and continue with due diligence until success or abandonment, and if the lessee failed to get oil in paying quantities, or ceased work for thirty days at any time, the lease was to be forfeited and be void. It was held that a cessation of work for thirty days forfeited the lease in accordance with its express provisions.

The particulars in which the contracts in these cases differ from the one under consideration will readily be observed, for it contained no such forfeiture clause as appears in those cases. The referee also appeared to be of the impression that this lease was hard and unconscionable, and that equity would not enforce the performance of it, for the reason that it contained no provision for giving the lessor any part of the gas found upon the premises; that the plaintiffs might proceed and cover the premises with gas wells, and the lessor could obtain no benefit therefrom. The courts, however, are not called upon to make contracts- for parties. If it was the understanding of the parties that the lessor should have one-eighth of the gas, as well as of the oil found, and that clause was omitted from the contract through mistake, it may still be reformed so as to express the intention of the parties. If, however, it was the intention of the parties that the lessor should have one-eighth of the oil only, and that the lessee should have all of the gas found, in consideration for their testing the territory for oil, then we see no reason why the parties should not abide by the contract as made. True, the lessor would derive no income from the gas that was found on the premises, but he would have no right to deprive the plaintiffs of their right to the same.

If the theory of the referee is correct, it would be the duty of the plaintiffs to continue to bore wells upon these premises, until oil was found in paying quantities, and then if not found in paying quantities, and they ceased to bore further wells, even though a well had been bored upon each acre of the land, still they would forfeit their rights under the lease, even though every well was a valuable gas well. The plaintiffs, as the referee has found, have already expended $3,000 in boring the first well. It is quite possible that this sum is largely in excess of the value of the entire fifteen acres, for farming purposes. It is quite as hard and unconscionable to now deprive them of the right to use this valuable gas, found by them, and thus lose the money expended in the operation, as -it would be to require the lessor to live up to the contract made by him.

Again, suppose oil had been discovered, but not in paying quantities? Wells that would produce five or six barrels of oil per day, but not in sufficient quantities to pay the expenses of putting down the wells and gathering the same, could it be held that the plaintiffs forfeited their rights under the lease, because it was not found in paying quantities ? It appears to us that the contract should not be so construed. The plaintiffs, having performed the covenants on their part, would have the right to retain possession, for the purpose of gathering the oil which they had discovered, to reimburse themselves as far as possible.

The respondents contend that the lease has expired by its own terms ; that the provision providing that “ the lessees to have and to hold the same for the term of twelve years, from this date, or as long as oil is found in paying quantities,” fixed the term only for that period during which oil was found in paying quantities. If so, it must have expired before the plaintiffs commenced operations, for no oil was found in paying quantities after the date of the lease and before the well was bored. Such could not have been the meaning or intention of the parties. The term was for twelve years, or as long as oil is found in paying quantities, meaning twelve years and as much longer as oil is found in paying quantities.

The judgment should be reversed and a new trial ordered before another referee, with costs to abide the event. nl aifl toij'iT

Smith, P. J., Barker and Bradley, JJ., concurred.

Judgment reversed, and a new trial ordered before another referee, costs to abide event.


text:
    GILBERT M. VANDEVOORT, Plaintiff, v. MARY D. S. DEWEY, Defendant.

      Evidence — patrol evidence is inadmissible to explain a patent ambiguity — when a condition will be held invalid for uncertainty because of unfilled blanks therein.

    On February 29, 1876, Jedediah Dewey and the defendant Mary, his wife, conveyed a lot owned by the husband to their son, Albert, who, on the same day, executed a lease, which was duly recorded in the proper county clerk’s office, by which, in consideration of the said conveyance, he demised and leased to the said Jedediah and Mary, “during the natural lives of them, and the survivors of them, the house and garden spot ” where they then resided, being part of the premises conveyed to the son, reserving to the son “ the use and occupation of the south cellar under said house; and also reserving to said party of the first part the right to terminate this lease at any time after the decease of said Jedediah Dewey, at any time when the said party of the first part has an opportunity of selling the premises, of which said house and lot or garden spot are a part, by paying to said Mary D. S. Dewey the sum of dollars; and ■ also reserving to Maria E. Dewey, the sister of said party of the first part, the full and free right and privilege of a home in said house in as full and perfect manner as she now enjoys the same in said house with her father, the said Jedediah Dewey, so long as she remains unmarried.”

      The plaintiff, who claimed title to the premises under the foreclosure of a mortgage given on October 12, 1882, by the son, Albert, brought this action to recover the possession of the house and lot against the defendant, who, after the death of her husband, continued, and still continues, to occupy the premises.
    Upon the trial the plaintiff offered to prove that at the time the lease in question was executed the clause therein relating to the payment of any money was inserted by the draughtsman without the knowledge or direction of cither party to the lease; that it was so inserted for the purpose of providing for a nominal consideration only; that at the time of its execution the defendant expressly disclaimed any right under that provision to any money compensation for the surrender of her lease, and that she had, at divers times since, disclaimed any rights under that provision of the lease.

      Reid, that the evidence was properly excluded.
    That the failure to insert in the blank the amount that was to be paid to the defendant to terminate the lease was a patent and not a latent ambiguity, and could not be corrected by parol evidence.
    That as the clause pertaining to the termination of the lease failed to express the condition upon which the right so to do depended, and was void for uncertainty, the demise to the defendant contained in the lease stood without any condition for terminating it until it should expire by her death.
    Motion by the plaintiff for a new trial on exceptions ordered at the Ontario Circuit, to be heard at the General Term, in the first instance;

      W. H. Adams, for the plaintiff.

      Smith (& Hamlin, for the defendant.
   Haight, J.:

This action was ejectment to recover the possession of a house and lot. On the 29th day of February, 1876, one Jedediah Dewey, the husband of the defendant, was the owner of the lot in question, and on that day himself and wife executed and delivered to their son, Albert L. Dewey, a deed thereof, who, on the same day, executed and delivered to them a lease of which the following is a copy so far as is material to be here considered: “ A lease made and entered into this 29th day of February, 1876, between Albert Dewey, of the town of Manchester, in the county of Ontario and State of New York, of the first part, and Jedediah Dewey and Mary D. S. Dewey, of the same place, of the second part. Witnesseth: That in consideration of a conveyance of real estate and personal property this day made, and covenants and agreements herein contained, the said party of the first part has demised and leased, and does hereby demise and lease, to the said party of the second part during the natural lives of them, and the survivors of them, the following described premises, to wit: The house and garden spot where the said parties now reside, consisting of about one-fourth of an acre of land, and are a part of the premises this day deeded by said parties of the second part to said party of the first part, reserving, however, to the said party of the first part, the use and occupation of the south cellar under said house; and also reserving to said party of the first part the right to terminate this lease at any time after the decease of said Jedediah Dewey, at any time when the said party of the first part has an opportunity of selling the premises, of which said house and lot or garden spot arc a part, by paying to said Mary D. S. Dewey the sum of dollars; and also reserving to Maria E. Dewey, the sister of said party of the first part, the full and free right and privilege of a home in said house in as full and perfect manner as she now enjoys the same in said house with her father, the said Jedediah Dewey, so long as she remains unmarried.”

This lease was duly recorded in the office of the cleric of Ontario county on the 29th day of March, 1876. Subsequently and on the 12th day of October, 1882, Albert L. Dewey executed and delivered a moi’tgage upon the premises to one J. Addison Howland. The plaintiff derived title through a foreclosure of this mortgage. Jedediah Dewey is now deceased and his widow, the defendant, still continues to occupy the premises in question.

Upon the trial the plaintiff offered to prove that at the time the lease in question was executed the clause therein relating to the payment of any méney was inserted by the draughtsman without the knowledge or direction of either party to the lease; that it was so inserted for the purpose of providing for a nominal consideration only; that at the time of its execution the defendant expressly disclaimed any right under that provision to any money compensation for the surrender of the lease, and that she has, at divers times since, disclaimed any rights under that provision of the le^se. This offer was objected to by the defendant and denied by the court, the plaintiff taking an exception.’

The defect in the lease is in the omission to insert in the blank the amount that was to be paid to the defendant to terminate the lease at the decease of Jedediah Dewey. This defect is a patent and not a latent ambiguity, and consequently cannot be corrected by parol evidence. (2 Pars, on Cont., §57, 563 ; The Blossburg and Corning Railroad Co. v. The Tioga Railroad Co., 1 Keyes, 480.)

If the question was one of construction, as to the meaning of the contract, the language being such as to be capable of two or more constructions, parol evidence might be competent, but in the contract under consideration there is nothing in the provisions of the contract that gives us the least intimation as to the number of dollars that it was intended to insert in the contract, and it is, consequently, not a question of construction, but an omission which can only be supplied by the court making for the parties a contract which the parties have failed to make for themselves. This the courts have no power to do. It consequently follows that the offer to give parol evidence by the plaintiff’s counsel was properly excluded by the trial court, and that this clause of the lease is void for uncertainty; but it does not follow that the entire lease is void. The demise was to the defendant during her lifetime, The consideration was the deed in which she had joined with her husband to her son, the lessor. ' This part of the lease is separate and independent, and clearly expresses the intention of the parties. The defective clause pertains to the condition upon which the lease may be terminated. This clause fails to express the condition and is void for uncertainty. The lease, therefore, stands without any condition terminating it until it, by its terms, expires from the death of the defendant.

The lease was to Jedediah Dewey and the defendant. It was to furnish them a residence during life. It is possible that they had no right to sub-let to others. The provision in the lease, giving to Maria E. Dewey, the defendant’s daughter, the right and privilege of a home in the house, in the same manner as she enjoyed it with her father prior to the making of the lease, was possibly inserted for the purpose of preventing any question in reference to the defendant’s right to permit her daughter to occupy the premises; but the fact that the daughter has now ceased to live with her mother does not in any manner curtail or limit the estate of the mother in the premises.

The motion for new trial should, therefore, be denied, and judgment ordered for the derendant upon the nonsuit.

Barker and Bradley, JJ., concurred.

Motion for new trial denied, and judgment ordered for the defendant upon the nonsuit.